Document:

Exhibit 10.1

AGREEMENT OF PURCHASE AND
SALE

 

1201
S. Alma School Road

Mesa,
Arizona

 

 

                This
Agreement of Purchase and Sale (“Agreement”)
is made and entered into by and between Purchaser and Seller.

 

RECITALS

 

A.                                     Defined terms
are indicated by initial capital letters. 
Defined terms shall have the meaning set forth herein, whether or not
such terms are used before or after the definitions are set forth.

 

B.                                  Purchaser desires to
purchase the Property and Seller desires to sell the Property, all upon the
terms and conditions set forth in this Agreement.

 

                NOW, THEREFORE, in
consideration of the mutual terms, provisions, covenants and agreements set
forth herein, as well as the sums to be paid by Purchaser to Seller, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Purchaser and Seller agree as follows:

 

ARTICLE 1.  Basic Information

1.1          Certain
Basic Terms.  The
following defined terms shall have the meanings set forth below:

1.1.1       Seller:      
AmeriVest Mesa Inc., an Arizona corporation.

1.1.2       Purchaser:  Crescent Real Estate Equities Limited
Partnership, a Delaware limited partnership.

1.1.3       Purchase Price:  Fifty-Five Million and No/100 Dollars
($55,000,000.00).

1.1.4       Earnest Money:  Three Million and No/100 Dollars
($3,000,000.00) (the “Earnest Money”),
including interest thereon, to be deposited in accordance with Section 3.1
below.

 

G-1

	
   

  	
  1.1.5

  	
  Title Company:

  	
  First American Title Insurance Company

  
	
   

  	
   

  	
   

  	
  2425 E. Camelback Road, Suite 300

  
	
   

  	
   

  	
   

  	
  Phoenix, Arizona 
  85016

  
	
   

  	
   

  	
   

  	
  Attn:  Carol
  Peterson

  
	
   

  	
   

  	
   

  	
  Telephone: 
  (602) 567-8109

  
	
   

  	
   

  	
   

  	
  Facsimile: 
  (602) 567-8101

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Escrow Agent:

  	
  First American Title Insurance Company

  
	
   

  	
   

  	
   

  	
  2425 E. Camelback Road, Suite 300

  
	
   

  	
   

  	
   

  	
  Phoenix, Arizona 
  85016

  
	
   

  	
   

  	
   

  	
  Attn::  Carol
  Peterson

  
	
   

  	
   

  	
   

  	
  Telephone: 
  (602) 567-8109

  
	
   

  	
   

  	
   

  	
  Facsimile: 
  (602) 567-8101

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.6

  	
  Seller’s Broker:  Cushman
  & Wakefield of Arizona, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.7

  	
  Purchaser’s Broker:  N/A

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.8

  	
  Effective Date:  The
  date on which this Agreement is executed 
  

  
	
  by the latter to sign of Purchaser
  or Seller, as indicated on the signature page of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.9

  	
  Property Information
  Delivery Date:  Intentionally deleted].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.10

  	
  Title Commitment Delivery
  Date:  [Intentionally deleted].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.11

  	
  Survey Delivery Date:  [Intentionally
  deleted].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.12

  	
  Title and Survey Review
  Period:  [Intentionally deleted].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.13

  	
  Inspection Period:  [Intentionally
  deleted].

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.14

  	
  Closing Date:  The
  date which is fifteen (15) days after the later 

  
	
  to occur of (i) the
  Effective Date and (ii) Purchaser’s receipt of written unconditional approval
  from Lender (defined herein) of Purchaser’s assumption of the Existing Loan
  (defined herein) pursuant to Section 12.17 hereof.

  

 

 

                

                

                

                

                

                

 

1.2          Closing
Costs.  Closing costs shall be
allocated and paid as follows:

	
  Cost

  	
   

  	
   

  	
  Responsible Party

  
	
  Title Commitment required
  to be delivered pursuant to Section 5.1

  	
   

  	
  Seller

  
	
  Premium for standard form
  Title Policy required to be delivered pursuant to Section 5.4

  	
   

  	
  Seller

  
	
  Premium for any upgrade of
  Title Policy for extended or additional coverage and any endorsements desired
  by Purchaser, any inspection fee charged by the Title Company, tax
  certificates, municipal and utility lien certificates, and any other Title
  Company charges relating to the issuance of the Title Policy

  	
   

  	
  Purchaser

  
	
  Costs of existing
  ALTA/ACSM Land Title Survey (with visible utilities only)

  	
   

  	
  Seller

  
	
  Any revisions,
  modifications or recertifications to Survey

  	
   

  	
  Purchaser

  
	
  Costs for UCC Searches

  	
   

  	
  Purchaser

  
	
  Recording fees

  	
   

  	
  Seller

  
	
  Any deed taxes,
  documentary stamps, transfer taxes, intangible taxes, mortgage taxes or other
  similar taxes, fees or assessments

  	
   

  	
  Seller

  
	
  Any escrow fee charged by
  Escrow Agent for holding the Earnest Money or conducting the Closing

  	
   

  	
  Purchaser 1⁄2

  Seller 1⁄2

  
	
  Real Estate Sales
  Commission to Seller’s Broker

  	
   

  	
  Seller

  
	
  Existing Loan Assumption
  Fee

  	
   

  	
  Purchaser

  
	
  All other closing costs,
  expenses, charges and fees as otherwise indicated below (Seller and Purchaser
  each pays its own legal fees and expenses)

  	
   

  	
  Purchaser/Seller

  

 

1.3          Notice
Addresses.

	
  Purchaser:

  	
  Crescent Real Estate
  Equities

  777 Main Street, Suite 2100

  Ft. Worth, TX 76102

  Attention: Dan Smith & Tom Miller

  Telephone: (817) 321-2100

  Facsimile: (817) 321-2015

  	
   

  	
  Copy to:

  	
  Jackson Walker L.L.P.

  1401 McKinney St., Suite 1900

  Houston, TX 77010

  Attention: Kurt Nondorf

  Telephone: (713) 752-4402

  Facsimile: (713) 308-4142

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Seller:

  	
  AmeriVest Mesa Inc.

  c/o AmeriVest Properties Inc.

  1780 South Bellaire Street, Suite 100

  Denver, Colorado 80222

  Attention: John B. Greenman

  Telephone: (303) 297-1800

  Facsimile: (303) 296-7353

  	
   

  	
  Copy to:

  	
  Jenkens & Gilchrist,
  P.C.

  1445 Ross Avenue, Suite 3200

  Dallas, Texas 75202

  Attention: Stephen R. Voelker, Esq.

  Telephone: (214) 855-4722

  Facsimile: (214) 855-4300

  

 

 

1.4          Index of
Certain Additional Defined Terms.

	
  Additional Property Information

  	
  Section 4.2

  
	
  Assignment

  	
  Subsection 7.3.2

  
	
  Casualty Notice

  	
  Section 6.2

  
	
  CERCLA

  	
  Section 11.3

  
	
  Claims

  	
  Section 11.4

  
	
  Closing

  	
  Section 7.1

  
	
  Deed

  	
  Subsection 7.3.1

  
	
  Due Diligence Termination
  Notice

  	
  Section 4.4

  
	
  Existing Loan

  	
  Section 7.6

  
	
  Hazardous Materials

  	
  Section 11.3

  
	
  Improvements

  	
  Subsection 2.1.1

  
	
  Independent Consideration

  	
  Section 3.2

  
	
  Intangible Personal
  Property

  	
  Subsection 2.1.4

  
	
  Land

  	
  Subsection 2.1.1

  
	
  Lease Files

  	
  Section 7.8

  
	
  Leases

  	
  Subsection 2.1.2

  
	
  Leasing Costs

  	
  Section 8.2

  
	
  Lender

  	
  Section 7.6

  
	
  Lender Consent

  	
  Section 12.17

  
	
  License Agreements

  	
  Section 2.1.5

  
	
  Material Damage

  	
  Subsection 6.2.1

  
	
  Note

  	
  Section 7.6

  
	
  Permitted Exceptions

  	
  Section 5.3

  
	
  Permitted Outside Parties

  	
  Section 4.7

  
	
  Processing Fee

  	
  Section 7.6

  
	
  Property

  	
  Section 2.1

  
	
  Return of Property
  Documents

  	
  Section 4.5

  
	
  Property Documents

  	
  Section 4.1

  
	
  Real Property

  	
  Subsection 2.1.1

  
	
  Reports

  	
  Section 4.5

  
	
  Service Contracts

  	
  Subsection 4.6

  
	
  Survey

  	
  Section 5.2

  
	
  Survival Period

  	
  Section 9.3

  
	
  Tangible Personal Property

  	
  Subsection 2.1.3

  
	
  Taxes

  	
  Section 8.1

  
	
  Tenant Estoppel
  Certificates

  	
  Section 4.3

  
	
  Tenant Receivables

  	
  Subsection 8.1.3

  
	
  Title Commitment

  	
  Section 5.1

  
	
  Title Policy

  	
  Section 5.4

  
	
  Unbilled Tenant
  Receivables

  	
  Subsection 8.1.3(a)

  
	
  Uncollected Delinquent
  Tenant Receivables

  	
  Subsection 8.1.3(a)

  

 

 

 

ARTICLE 2.  Property

2.1          Subject to the
terms and conditions of this Agreement, Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, the following property (collectively,
the “Property”):

2.1.1       Real
Property.  The land
described in Exhibit “A” attached hereto (the “Land”), together with (i) all
improvements located thereon (“Improvements”),
(ii) all and singular the rights, benefits, privileges, easements,
tenements, hereditaments, and appurtenances thereon or in anywise appertaining
thereto, (iii) all strips and gores and any land lying in the bed of any
street, road or alley, open or proposed, adjoining such Land, (iv) all
development rights, air rights, sewer rights and permits, water, water rights,
riparian rights and water stock relating to the Land and (v) all licenses,
permits, covenants and other rights-of-way, appurtenances or entitlements used
in connection with the beneficial use and enjoyment of the Land (collectively,
the “Real Property”).

2.1.2       Leases.  All leases of the Real Property (other than
License Agreements), including leases which may be made by Seller after the
Effective Date and prior to Closing as permitted by this Agreement (the “Leases”), and the Uncollected Delinquent
Tenant Receivables (defined herein).

2.1.3       Tangible
Personal Property.  All
equipment, machinery, furniture, furnishings, supplies and other tangible
personal property, if any, owned by Seller and now or hereafter located in and
used in connection with the operation, ownership or management of the Real
Property, but specifically excluding any items of personal property owned by
tenants at or on the Real Property and further excluding any items of personal
property owned by third parties and leased to Seller, and all deposits or
escrows made in connection with the Existing Loan (collectively, the “Tangible Personal Property”).

2.1.4       Intangible
Personal Property.  All
intangible personal property related to the Real Property and the Improvements,
including, without limitation: all trade names and trade marks associated with
the Real Property and the Improvements, including Seller’s rights and
interests, if any, in the name of the Real Property; the plans and
specifications and other architectural and engineering drawings for the
Improvements (including CAD drawings), if any; contract rights related to the
operation, ownership or management of the Real Property, including maintenance,
service, construction, supply and equipment rental contracts, if any, but not
including Leases or License Agreements (collectively, the “Service Contracts”) (but only to the extent
Seller’s obligations thereunder are expressly assumed by Purchaser pursuant to
this Agreement); warranties; governmental permits, approvals and licenses, if
any; and telephone exchange numbers and phone system (to the extent assignable)
(all of the items described in this Section 2.1.4 collectively referred
to as the “Intangible Personal Property”).

2.1.5       License
Agreements. All agreements (other than Leases), if any, for
the leasing or licensing of rooftop space or equipment, telecommunications
equipment, cable

 

access
and other space, equipment and facilities that are located on or within the
Real Property and generate income to Seller as the owner of the Real Property,
including agreements which may be made by Seller after the Effective Date and
prior to Closing as permitted by this Agreement (the “License Agreements”).

ARTICLE 3. 
Earnest Money

3.1          Deposit and Investment of Earnest
Money.  Within three (3) business days
after the Effective Date, Purchaser shall deposit the Earnest Money with Escrow
Agent.  Escrow Agent shall invest the
Earnest Money in federally insured interest-bearing accounts satisfactory to
Seller and Purchaser, shall not commingle the Earnest Money with any funds of
Escrow Agent or others, and shall promptly provide Purchaser and Seller with
confirmation of the investments made. 
Such account shall have no penalty for early withdrawal, and Purchaser
accepts all investment risks with regard to such account.  All interest earned on the Earnest Money
shall be deemed to be part of the Earnest Money for all purposes hereunder.

3.2          Independent
Consideration.  Notwithstanding
the terms of this Agreement, Seller shall retain One Hundred and No/100 Dollars
($100.00) as independent consideration for Seller’s performance hereunder (“Independent Consideration”) from the
proceeds of the Earnest Money delivered to the Escrow Agent by the Purchaser in
the event this Agreement is terminated pursuant to Section 7.2 hereof.

3.3          Form;
Failure to Deposit.  The Earnest
Money shall be in the form of a certified or cashier’s check or the wire
transfer to Escrow Agent of immediately available U.S. federal funds.  If Purchaser fails to timely deposit any
portion of the Earnest Money within the time period required, Seller may
terminate this Agreement by written notice to Purchaser, in which event any Earnest
Money that has previously been deposited by Purchaser with Escrow Agent shall
be delivered to Seller and thereafter the parties hereto shall have no further
rights or obligations hereunder, except for rights and obligations which, by
their terms, survive the termination hereof.

3.4          Disposition
of Earnest Money.  The Earnest
Money shall be applied as a credit to the Purchase Price at Closing.  In the event of a termination of this
Agreement by either Seller or Purchaser for any reason, Escrow Agent is
authorized to deliver the Earnest Money to the party hereto entitled to same
pursuant to the terms hereof on or before the tenth (10th) business day
following receipt by Escrow Agent and the non-terminating party of
written notice of such termination from the terminating party, unless the other
party hereto notifies Escrow Agent that it disputes the right of the other
party to receive the Earnest Money.  In
such event, Escrow Agent may interplead the Earnest Money into a court of
competent jurisdiction in the county in which the Earnest Money has been
deposited.  All reasonable attorneys’
fees and costs and Escrow Agent’s costs and expenses incurred in connection
with such interpleader shall be assessed against the party that is not awarded
the Earnest Money or, if the Earnest Money is distributed in part to both
parties, then in the inverse proportion of such distribution.

 

 

ARTICLE 4.   Due
Diligence

4.1          Due
Diligence Materials To Be Delivered. Purchaser acknowledges
receipt of all items listed on Exhibit “C” attached hereto
(collectively, the “Property Documents”).

4.2          Physical
Due Diligence.  Commencing
on the Effective Date and continuing until the Closing, Purchaser shall have
reasonable access to the Property at all reasonable times during  normal business hours, upon reasonable notice
to Seller with a representative of Seller present at the Property, and upon
appropriate notice to tenants as permitted or required under the Leases, for
the purpose of conducting reasonably necessary tests, including surveys and
architectural, engineering, geotechnical and environmental inspections and
tests, provided that (i) Purchaser must give Seller twenty-four (24)
hours’ prior telephone or written notice of any such inspection or test, and
with respect to any intrusive inspection or test (i.e., core sampling) must
obtain Seller’s prior written consent (which consent may be given, withheld or
conditioned in Seller’s reasonable discretion), and (ii) all such tests
shall be conducted by Purchaser in compliance with Purchaser’s responsibilities
set forth in Section 4.9 below. 
Purchaser shall bear the cost of all such inspections or tests and shall
be responsible for and act as the generator with respect to any wastes
generated by those tests.  Subject to the
provisions of Section 4.7 hereof, Purchaser or Purchaser’s
representatives may meet with any tenant; provided, however, Purchaser must
contact Seller at least twenty-four (24) hours in advance by telephone or
fax to inform Seller of Purchaser’s intended meeting and to allow Seller the
opportunity to attend such meeting if Seller desires.  Subject to the provisions of Section 4.7
hereof, Purchaser or Purchaser’s representatives may meet with any governmental
authority for any good faith, reasonable purpose in connection with the
transaction contemplated by this Agreement; provided, however, Purchaser must
contact Seller at least twenty-four (24) hours in advance by telephone or
fax to inform Seller of Purchaser’s intended meeting and to allow Seller the
opportunity to attend such meeting if Seller desires.

4.3          Estoppel
Certificates.  Seller
shall deliver to Purchaser as received, but no later than five (5) days prior
to the Closing Date, tenant estoppel certificates for no less than eighty-five
percent (85%) of the occupied net rentable square feet in the building,
including one hundred percent (100%) of all tenants leasing more than 15,000
square feet of the net rentable square feet in the building, and for Legacy
Restaurants, Inc., Metropolitan Life Insurance Company, and Bank of America,
all in the form of Exhibit ”E” attached hereto or such other form
as provided in the Leases (“Tenant Estoppel
Certificates”).  In the event
(i) Seller is unable to obtain such Tenant Estoppel Certificates, (ii)
Purchaser is not satisfied, in Purchaser’s sole and absolute discretion, with
the number of Tenant Estoppel Certificates delivered, or (iii) the form or
content of any such Tenant Estoppel Certificate, in Purchaser’s reasonable
judgment, materially differs from that set forth at Exhibit “E” or
provided for in any Lease, Purchaser may elect either to terminate this
Agreement or proceed to Closing as provided for in Section 7.2 of
the Agreement. Seller shall not be obligated to expend any funds in connection
with obtaining any such Tenant Estoppel Certificates, and the failure of Seller
to obtain any such Tenant Estoppel Certificates shall not be a breach or
default hereunder so long as Seller makes good faith efforts to obtain them.

4.4          Waiver of
Due Diligence/Termination Right.  Purchaser acknowledges that it has received
or had access to all Property Documents and conducted all inspections and tests
of

 

the Property that it
considers important.  Purchaser hereby
accepts the condition of the Property as suitable for its purposes and agrees
that Purchaser has no right to terminate this Agreement except as specifically
set forth herein.

4.5          Return of
Documents and Reports.  If
this Agreement terminates for any reason other than Seller’s default hereunder,
Purchaser shall promptly return and/or deliver to Seller all Property Documents
and copies thereof.  Additionally, if
this Agreement terminates for any reason other than Seller’s default, then
Purchaser must deliver to Seller, upon Seller’s request and at Seller’s sole
cost and expense, copies of all third party reports, investigations and
studies, other than economic analyses (collectively, the “Reports” and, individually, a “Report”) prepared for Purchaser in
connection with its due diligence review of the Property.  The Reports shall be delivered to Seller
without any representation or warranty as to the completeness or accuracy of
the Reports or any other matter relating thereto, and Seller shall have no
right to rely on any Report without the written consent of the party preparing
same.  Purchaser’s obligation to deliver
the Property Documents and the Reports to Seller shall survive the termination
of this Agreement.

4.6          Service
Contracts. 
Concurrently with the execution and delivery of this Agreement by
Purchaser, Purchaser will advise Seller in writing of which Service Contracts
it will assume and for which Service Contracts Purchaser requests that Seller
deliver written termination at or prior to Closing.  Seller shall deliver at Closing notices of
termination of all Service Contracts that are not so assumed.  Purchaser must assume the obligations arising
and accruing from and after the Closing Date under those Service Contracts that
Purchaser has agreed to assume.  Seller
shall pay on or before their due date any termination payments or monthly fees
arising subsequent to Closing for any Service Contracts that are not assumed by
Purchaser

4.7          Proprietary
Information; Confidentiality.  Purchaser acknowledges that the Property
Documents are proprietary and confidential and have been delivered to Purchaser
solely to assist Purchaser in determining the feasibility of purchasing the
Property.  Purchaser shall not use the
Property Documents for any purpose other than as set forth in the preceding
sentence.  Purchaser shall not disclose
the contents to any person other than to those persons who are responsible for
determining the feasibility of Purchaser’s acquisition of the Property,
including, without limitation, Purchaser’s attorneys, prospective lenders,
accountants, agents, consultants, partners, shareholders or as otherwise may be
required by law, rule, regulation or court order (collectively, “Permitted Outside Parties”).  Purchaser shall not divulge the contents of
the Property Documents and other information except in strict accordance with
the confidentiality standards set forth in this Section 4.7.  In permitting Purchaser to review the
Property Documents or any other information, Seller has not waived any
privilege or claim of confidentiality with respect thereto, and no third party
benefits or relationships of any kind, either express or implied, have been
offered, intended or created.

4.8          Limited
Representation and Warranty by Seller.  Purchaser acknowledges that, except as
expressly set forth in this Agreement, Seller has not made and does not make
any warranty or representation regarding the truth, accuracy or completeness of
the Property Documents or the source(s) thereof.  Purchaser further acknowledges that some if
not all of the Property Documents were prepared by third parties other than
Seller.  Except as expressly set

 

forth in this Agreement,
Seller expressly disclaims any and all liability for representations or
warranties, express or implied, statements of fact and other matters contained
in such information, or for omissions from the Property Documents, or in any
other written or oral communications transmitted or made available to
Purchaser.  Except as expressly set forth
in this Agreement, Purchaser shall rely solely upon its own investigation with
respect to the Property, including, without limitation, the Property’s
physical, environmental or economic condition, compliance or lack of compliance
with any ordinance, order, permit or regulation or any other attribute or
matter relating thereto.  Except as
expressly set forth in this Agreement, Seller has not undertaken any
independent investigation as to the truth, accuracy or completeness of the
Property Documents and is providing the Property Documents solely as an
accommodation to Purchaser.

4.9          Purchaser’s
Responsibilities.  In
conducting any inspections, investigations or tests of the Property and/or
Property Documents, Purchaser and its agents and representatives shall:  (i) not unreasonably disturb the tenants
or materially interfere with their use of the Property pursuant to their
respective Leases; (ii) not materially interfere with the operation and
maintenance of the Property; (iii) not damage any part of the Property or
any personal property owned or held by any tenant or any third party;
(iv) not injure or otherwise cause bodily harm to Seller, or its agents,
guests, invitees, contractors and employees or any tenants or their guests or
invitees; (v) comply with all applicable laws; (vi) promptly pay when
due the costs of all tests, investigations, and examinations done by or at
Purchaser’s direction with regard to the Property; (vii) not permit any
liens to attach to the Real Property by reason of the exercise of its rights
hereunder; (viii) repair any damage to the Real Property resulting
directly or indirectly from any such inspection or tests; and (ix) not
reveal or disclose prior to Closing any information obtained concerning the
Property and the Property Documents to anyone other than the Permitted Outside
Parties, in accordance with the confidentiality standards set forth in Section 4.7
above, or except as may be otherwise required by law.

4.10        Purchaser’s
Agreement to Indemnify. 
Purchaser indemnifies and holds Seller harmless from and against any and
all liens, claims, causes of action, damages, liabilities and expenses
(including reasonable attorneys’ fees) arising out of Purchaser’s inspections
or tests permitted under this Agreement or any violation of the provisions of Sections 4.2,
4.7 and 4.9; provided, however, the indemnity shall not extend to protect
Seller from any (i) pre-existing liabilities for matters merely discovered by
Purchaser (e.g., latent
environmental contamination) except to the extent Purchaser’s actions
materially aggravate any pre-existing liability of Seller, (ii) any
liabilities arising as a result of the willful misconduct or negligence of
Seller, its agents, representatives or employees, or (iii) any disclosures
required to be made by applicable law, rule, regulation or court order.  Purchaser’s obligations under this Section 4.10
shall survive the termination of this Agreement and shall survive the Closing.

ARTICLE 5.  Title and Survey

5.1          Title
Commitment.  Seller has
caused to be prepared and delivered to Purchaser: (i) a current commitment
for title insurance or preliminary title report (the “Title Commitment”) issued by the Title
Company, in the amount of the Purchase Price and for the issuance of an ALTA
extended Owner’s Policy of Title Insurance (Form Revised 10/17/92), with
Purchaser as

 

the proposed insured, and
(ii) copies of all documents of record referred to in the Title Commitment
as exceptions to title to the Property.

5.2          Updated
Survey.  Seller has provided an existing
as-built ALTA compliant survey current to within six (6) months (“Survey”) of the Real Property and
Improvements. Purchaser may, at Purchaser’s sole cost and expense, elect to
obtain a new survey or revise, modify, or re-certify the Survey to
otherwise satisfy Purchaser’s objectives.

5.3          Title and
Survey Review.  Purchaser
has reviewed title to the Property as disclosed by the Title Commitment and the
Survey, and Purchaser has made objections thereto in writing to Seller.  Seller has no obligation to cure title
objections except liens of an ascertainable monetary amount created by, under
or through Seller, which liens Seller shall cause to be released at or prior to
Closing (with Seller having the right to apply the Purchase Price or a portion
thereof for such purpose), and Seller shall deliver the Property free and clear
of any such liens (with the exception of the liens encumbering the Property and
securing the repayment of the Existing Loan). 
Seller further agrees to remove any exceptions or encumbrances to title
which are voluntarily created by, under or through Seller after the Effective
Date without Purchaser’s consent.  Except
as specifically set forth herein, all other objections to the Title Commitment
and the Survey are hereby waived.  The
term “Permitted Exceptions” shall
mean: the specific exceptions (excluding standard exceptions that are part of
the promulgated title insurance form for the Title Policy) in the Title
Commitment dated December 6, at 7:30 a.m., other than those that the Title
Company has indicated will be cured (or endorsed over) or that Seller is
required to remove as provided above; matters created by, through or under
Purchaser; items shown on the Survey, other than those that the surveyor has
agreed to cure; the liens encumbering the Property and securing the repayment
of the Existing Loan; real estate taxes for the year in which the Closing
occurs which are not yet due and payable; and rights of tenants under the
Leases.

5.4          Delivery of
Title Policy at Closing.  In
the event that the Title Company does not issue at Closing, or unconditionally
commit at Closing to issue, to Purchaser, an owner’s title policy in accordance
with the Title Commitment, insuring Purchaser’s title to the Property in the
amount of the Purchase Price, subject only to the standard exceptions and
exclusions from coverage contained in such policy and the Permitted Exceptions
(the “Title Policy”), Purchaser
shall have the right to terminate this Agreement, in which case the Earnest
Money shall be immediately returned to Purchaser and the parties hereto shall
have no further rights or obligations, other than those that by their terms
survive the termination of this Agreement.

ARTICLE 6.   Operations and Risk of Loss

6.1          Ongoing
Operations.  From the
Effective Date through Closing:

6.1.1       Leases,
Service Contracts and License Agreements.  Seller will timely perform its material
obligations under the Leases, Service Contracts and License Agreements.

6.1.2       New
Contracts.  Except as
provided in Subsection 6.1.4, Seller will not enter into any
contract that will be an obligation affecting the Property subsequent to the

 

Closing,
except contracts entered into in the ordinary course of business that are
terminable without cause and without the payment of any termination penalty on
not more than thirty (30) days’ prior notice.

6.1.3       Maintenance
of Improvements; Removal of Personal Property.  Subject to Sections 6.2 and 6.3,
Seller shall maintain all Improvements substantially in their present condition
(ordinary wear and tear and casualty excepted) and in a manner consistent with
Seller’s maintenance of the Improvements during Seller’s period of ownership,
including keeping appropriate insurance in force and effect.  Seller will not remove any Tangible Personal
Property except as may be required for necessary repair or replacement, and
replacement shall be of substantially similar quality and quantity as the
removed item of Tangible Personal Property.

(a)           Leasing;
License Agreements.  Seller will
not amend or terminate any existing Lease or License Agreement or enter into
any new Lease or new License Agreement without (i) providing Purchaser all
relevant supporting documentation, as reasonably determined by Seller,
including, without limitation, tenant financial information to the extent in
Seller’s possession, and (ii) obtaining Purchaser’s approval, unless the
new Lease or amendment to existing Lease is for a month-to-month
tenancy.  Purchaser agrees to give Seller
written notice of approval or disapproval of a proposed amendment or
termination of a Lease or License Agreement or new Lease or new License
Agreement within five (5) business days after Purchaser’s receipt of the items
in (i) of this Subsection 6.1.4.  If Purchaser does not respond to Seller’s
request within such time period, then Purchaser will be deemed to have approved
such amendment, termination or new Lease or new License Agreement.  Purchaser may withhold its consent at its
sole discretion, and Seller may not amend or terminate a Lease or License
Agreement or enter into a new Lease or new License Agreement without Purchaser’s
written consent, other than for a month-to-month tenancy.

6.2          Damage.  If prior to Closing the Property is damaged
by fire or other casualty,  Seller shall
estimate the cost to repair and the time required to complete repairs and will
provide Purchaser written notice of Seller’s estimation (the “Casualty Notice”) as soon as reasonably
possible after the occurrence of the casualty.

6.2.1       Material.  In the event of any Material Damage to or
destruction of the Property or any portion thereof prior to Closing, Purchaser
may, at its option, terminate this Agreement by delivering written notice to
Seller on or before the expiration of thirty (30) days after the date
Seller delivers the Casualty Notice to Purchaser (and if necessary, the Closing
Date shall be extended to give Purchaser the full thirty-day period to
make such election and to obtain insurance settlement agreements with Seller’s
insurers).  Upon any such termination,
the Earnest Money shall be immediately returned to Purchaser, and the parties
hereto shall have no further rights or obligations hereunder, other than those
that by their terms survive the termination of this Agreement.  If Purchaser does not so terminate this
Agreement within said thirty (30) day period, then the parties shall
proceed under this Agreement and close on schedule (subject to extension of Closing
as provided above), and as of Closing Seller shall assign to

 

Purchaser,
without representation or warranty by or recourse against Seller, all of Seller’s
rights in and to any insurance proceeds (including any rent loss insurance
applicable to any period on and after the Closing Date) payable to Seller as a
result of such damage or destruction and Purchaser shall assume full
responsibility for all needed repairs, and Purchaser shall receive a credit at
Closing for any deductible amount under such insurance policies.  For the purposes of this Agreement, “Material Damage” and “Materially Damaged” means damage which, in
Seller’s reasonable estimation, exceeds one percent (1%) of the Purchase Price
to repair or which will take longer than ninety (90) days to repair.

6.2.2       Not
Material.  If the
Property is not Materially Damaged, then neither Purchaser nor Seller shall
have the right to terminate this Agreement, and Seller shall, at its option,
either (i) repair the damage before the Closing in a manner reasonably
satisfactory to Purchaser, or (ii) credit Purchaser at Closing for the
reasonable cost to complete the repair (in which case Seller shall retain all
insurance proceeds and Purchaser shall assume full responsibility for all
needed repairs).

6.3          Condemnation.  If proceedings in eminent domain are
instituted with respect to the Property or any portion thereof, Purchaser may,
at its option, by written notice to Seller given within thirty (30) days after
Seller notifies Purchaser of such proceedings (and if necessary the Closing
Date shall be automatically extended to give Purchaser the full thirty-day
period to make such election), either: 
(i) terminate this Agreement, in which case the Earnest Money shall
be immediately returned to Purchaser and the parties hereto shall have no
further rights or obligations, other than those that by their terms survive the
termination of this Agreement, or (ii) proceed under this Agreement, in
which event Seller shall, at the Closing, assign to Purchaser its entire right,
title and interest in and to any condemnation award, and Purchaser shall have
the sole right after the Closing to negotiate and otherwise deal with the
condemning authority in respect of such matter. 
If Purchaser does not give Seller written notice of its election within
the time required above, then Purchaser shall be deemed to have elected
option (i) above.

ARTICLE 7.  Closing

7.1          Closing.  The consummation of the transaction
contemplated herein (“Closing”)
shall occur on the Closing Date at the offices of Escrow Agent (or such other
location as may be mutually agreed upon by Seller and Purchaser).  Funds shall be deposited into and held by
Escrow Agent in a closing escrow account with a bank satisfactory to Purchaser
and Seller.  Upon satisfaction or
completion of all closing conditions and deliveries, the parties shall direct
Escrow Agent to immediately record and deliver the closing documents to the
appropriate parties and make disbursements according to the closing statements
executed by Seller and Purchaser.

7.2          Conditions
to Parties’ Obligation to Close.  In addition to all other conditions set forth
herein, the obligation of Seller, on the one hand, and Purchaser, on the other
hand, to consummate the transactions contemplated hereunder are conditioned
upon the following:

7.2.1       Representations
and Warranties.  The other
party’s representations and warranties contained herein shall be true and
correct in all material respects as of the Effective Date and the Closing Date;

 

7.2.2       Deliveries.  As of the Closing Date, the other party shall
have tendered all deliveries to be made at Closing; and

7.2.3       Actions,
Suits, etc.  There shall
exist no pending or threatened actions, suits, arbitrations, claims,
attachments, proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings, against the other party that
would materially and adversely affect the operation or value of the Property or
the other party’s ability to perform its obligations under this Agreement.

So
long as a party is not in default hereunder, if any condition to such party’s
obligation to proceed with the Closing hereunder has not been satisfied as of
the Closing Date (or such earlier date as is provided herein), such party may,
in its sole discretion, terminate this Agreement by delivering written notice
to the other party on or before the Closing Date (or such earlier date as is
provided herein), or elect to close (or to permit any such earlier termination
deadline to pass) notwithstanding the non-satisfaction of such condition,
in which event such party shall be deemed to have waived any such
condition.  In the event such party
elects to close (or to permit any such earlier termination deadline to pass),
notwithstanding the non-satisfaction of such condition, said party shall
be deemed to have waived said condition, and there shall be no liability on the
part of any other party hereto for breaches of representations and warranties
of which the party electing to close had knowledge at the Closing.

7.3          Seller’s
Deliveries in Escrow.  As of or
prior to the Closing Date, Seller shall deliver in escrow to Escrow Agent the
following:

7.3.1       Deed.  A special warranty deed in the form attached
hereto as Exhibit “A-1” in form acceptable for recordation under
the law of the state where the Property is located and including a list of
Permitted Exceptions to which the conveyance shall be subject, executed and
acknowledged by Seller, conveying to Purchaser the Real Property (the “Deed”), together with an affidavit of real
property value in the form required by applicable law, executed and
acknowledged by Seller or its agent;

7.3.2       Bill
of Sale, Assignment and Assumption.  A Bill of Sale, Assignment and Assumption of
Leases and Contracts in the form of Exhibit ”B” attached hereto
(the “Assignment”), executed and
acknowledged by Seller, vesting in Purchaser the property described therein
free of any claims, except for the Permitted Exceptions to the extent
applicable;

7.3.3       Conveyancing
or Transfer Tax Forms or Returns.  Such conveyancing or transfer tax forms or
returns, if any, including an affidavit of property value executed and
acknowledged by Seller or its agent, as are required to be delivered or signed
by Seller by applicable state and local law in connection with the conveyance
of the Real Property;

7.3.4       FIRPTA.  A Foreign Investment in Real Property Tax Act
affidavit executed by Seller;

 

7.3.5       Authority.  Evidence of the existence, organization and
authority of Seller and of the authority of the persons executing documents on
behalf of Seller reasonably satisfactory to Purchaser and the underwriter for
the Title Policy;

7.3.6       Certified
Rent Roll.  A current
Rent Roll for the Property, certified by Seller to be true and correct in all
material respects as of the Closing Date;

7.3.7       Tax
Certificates. 
Certificates from the State of Arizona and the City of Mesa certifying
that all transaction privilege tax filings for the Property through the month
prior to the Closing Date have been properly filed and all transaction
privilege taxes have been paid, and copies of the state and local transaction
privilege tax filings for the Property made in the month in which the Closing
occurs (if the Closing occurs after the twentieth day of the month);

7.3.8       Loan
Assumption Documents.  Such
documents as may be reasonably required by Lender for Purchaser to be able to
assume the Existing Loan;

7.3.9       Additional
Documents.  Any
additional documents that Purchaser, Escrow Agent or the Title Company may
reasonably require for the proper consummation of the transaction contemplated
by this Agreement (provided, however, no such additional document shall expand
any obligation, covenant, representation or warranty of Seller or result in any
new or additional obligation, covenant, representation or warranty of Seller
under this Agreement beyond those expressly set forth in this Agreement); and

7.3.10     Tenant
Estoppel Certificates.  To
the extent available, the original Tenant Estoppel Certificates in the form and
content provided in Section 4.3.

7.4          Purchaser’s
Deliveries in Escrow.  As of or
prior to the Closing Date, Purchaser shall deliver in escrow to Escrow Agent
the following:

7.4.1       Bill
of Sale, Assignment and Assumption.  The Assignment, executed and acknowledged by
Purchaser;

7.4.2       Conveyancing
or Transfer Tax Forms or Returns.  Such conveyancing or transfer tax forms or
returns, if any, including an affidavit of property value executed and
acknowledged by Purchaser or its agent, as are required to be delivered or
signed by Purchaser by applicable state and local law in connection with the
conveyance of Real Property;

7.4.3       Loan
Assumption Documents.  Such
documents as may be reasonably required by Lender to evidence Purchaser’s
assumption of the Existing Loan;

7.4.4       Additional
Documents.  Any
additional documents that Seller, Escrow Agent or the Title Company may
reasonably require for the proper consummation of the transaction contemplated
by this Agreement (provided, however, no such additional document shall expand
any obligation, covenant, representation or warranty of Purchaser 

 

or
result in any new or additional obligation, covenant, representation or
warranty of Purchaser under this Agreement beyond those expressly set forth in
this Agreement); and

7.4.5       Authority.  Evidence of the existence, organization, and
authority of Purchaser and of the authority of the persons executing documents
on behalf of Purchaser reasonably satisfactory to Seller.

7.5          Closing
Statements.  As of or
prior to the Closing Date, Seller and Purchaser shall deposit with Escrow Agent
executed closing statements consistent with this Agreement in the form required
by Escrow Agent.

7.6          Purchase
Price.  At or before 1:00 p.m.
local time on the Closing Date, Purchaser shall deliver to Escrow Agent the
Purchase Price as follows: (a) Purchaser shall assume the unpaid principal
balance of and accrued and unpaid interest under that certain promissory note
(the “Note”) executed by Seller
and payable to the order of Allstate Life Insurance Company (“Lender”), in the original principal amount
of $24,750,000, dated September 8, 2003, secured by, among other things, a deed
of trust dated September 8, 2003, to First American Title Insurance Company,
Trustee, for the benefit of Lender, recorded in the real property records of
Maricopa, Arizona and all documents executed in connection therewith
(collectively, the “Existing Loan”),  (b) Purchaser’s payment of cash or current
funds in an amount equal to (i) the Purchase Price plus Five Thousand and
No/100 Dollars ($5,000.00) (the “Processing
Fee”) (as a reimbursement to Seller for the non-refundable loan
assumption and processing fee charged by Lender in connection with the
assumption of the Existing Loan), minus (ii) the Earnest Money, minus (iii) the
Outstanding Balance of the Note as of the Closing Date, subject to such
adjustments and prorations as set forth herein, in immediate, same-day
U.S. federal funds wired for credit into Escrow Agent’s escrow account, which
funds must be delivered in a manner to permit Escrow Agent to deliver good
funds to Seller on the Closing Date (and, if requested by Seller, by wire
transfer).

7.7          Possession.  Seller shall deliver possession of the
Property to Purchaser at the Closing subject only to the Permitted Exceptions.

7.8          Delivery of
Books and Records.  After the
Closing, Seller shall deliver to the offices of Purchaser’s property manager or
to the Real Property, to the extent in Seller’s or its property manager’s
possession or control, original copies of the following: all files for the
Leases, including amendments, guaranties, letter agreements and assignments
which are then in effect, and correspondence to and from the tenants
(collectively, the “Lease Files”);
License Agreements; maintenance records and warranties; plans and specifications;
licenses, permits and certificates of occupancy; copies or originals of all
books and records of account, contracts, and copies of correspondence with
tenants and suppliers; receipts for deposits, unpaid bills and other papers or
documents which pertain to the Property; all advertising materials; booklets;
keys; and other items, if any, used in the operation of the Property.  Purchaser agrees to allow Seller commercially
reasonable access to all such materials, and to make copies of same after
Closing, for all lawful purposes for a period of three (3) years following the
Closing Date, including the preparation of tax returns by Seller and for
supporting documentation, if needed.

 

7.9          Notice to
Tenants.  Seller and Purchaser shall
each execute, and Purchaser shall deliver to each tenant immediately after the
Closing, a notice regarding the sale in substantially the form of Exhibit ”D”
attached hereto, or such other form as may be required by applicable state
law.  This obligation on the part of
Purchaser shall survive the Closing.

ARTICLE 8.   Prorations, Deposits, Commissions

8.1          Prorations.  At Closing, the following items shall be
prorated as of the date of Closing with all items of income and expense for the
Property being borne by Purchaser from and after (but including) the date of
Closing:  Tenant Receivables (defined
below) and other income and rents that have been collected by Seller as of
Closing; fees and assessments; prepaid expenses and obligations under Service
Contracts assumed by Purchaser; accrued operating expenses; real and personal
ad valorem taxes (“Taxes”); and
any assessments by private covenant for the then-current calendar year of
Closing.  Specifically, the following
shall apply to such prorations and to post-Closing collections of Tenant
Receivables:

8.1.1       Taxes.  If Taxes for the year of Closing are not
known or cannot be reasonably estimated, Taxes shall be prorated based on Taxes
for the year prior to Closing and shall be reconciled between Seller and
Purchaser when actual Taxes are known. 
Any additional Taxes relating to the year of Closing or prior years
arising out of a change in the use of the Real Property or a change in
ownership shall be paid by Seller when due and payable, and Seller shall
indemnify Purchaser from and against any and all such Taxes, which
indemnification obligation shall survive the Closing.

8.1.2       Utilities.  Purchaser shall take all steps necessary to
effectuate the transfer of all utilities to its name as of the Closing Date,
and where necessary, post deposits with the utility companies.  Seller shall ensure that all utility meters
are read as of the Closing Date.  Seller
shall be entitled to recover any and all deposits held by any utility company
as of the Closing Date.

8.1.3       Tenant
Receivables.  Rents due
from tenants under Leases and from tenants or licensees under License
Agreements and operating expenses and/or taxes payable by tenants under Leases
(collectively, “Tenant Receivables”)
and not collected by Seller as of Closing shall not be prorated between Seller
and Purchaser at Closing but shall be apportioned on the basis of the period
for which the same is payable and if, as and when collected, as follows:

(a)           Tenant
Receivables and other income received from tenants under Leases and/or tenants
or licensees under License Agreements after Closing shall be applied in the
following order of priority: (i) first, to Tenant Receivables first
coming due after Closing and applicable to the period of time after
Closing, which amount shall be retained by Purchaser; (ii) second,
to Uncollected Delinquent Tenant Receivables (hereinafter defined); (iii) third,
to payment of Tenant Receivables first coming due after Closing but applicable
to the period of time before Closing, including, without limitation, the
Tenant Receivables described in Subsection 8.1.3(b) below
(collectively, “Unbilled Tenant Receivables”),
which amount shall be delivered to Seller; and (iv) fourth, to
payment of the current

 

 

Tenant
Receivables then due for the month in which the Closing Date occurs, which
amount shall be apportioned between Purchaser and Seller as of the Closing Date
as set forth in Section 8.1 hereof (with Seller’s portion thereof
to be delivered to Seller).  All Tenant
Receivables which were due and payable as of Closing for more than thirty (30)
days but not collected by Seller as of Closing, and all promissory notes and
payment plans for the payment of delinquent rents, and other obligations to pay
delinquent rents no matter how evidenced, plus any rents due but unpaid in the
month of Closing if the Tenant responsible for such rents is also delinquent
for any regularly scheduled monthly rent payment due in a month prior to the
month of Closing (collectively, “Uncollected
Delinquent Tenant Receivables”) shall be assigned to Purchaser at
Closing.  Purchaser shall remit to Seller
any such sums received by Purchaser to which Seller is entitled within
ten (10) business days after receipt thereof less reasonable, actual costs
and expenses of collection, including reasonable attorneys’ fees, court costs
and disbursements, if any.  Seller
expressly agrees that if Seller receives any amounts after the Closing Date
which are attributable, in whole or in part, to any period after the Closing
Date or to any Uncollected Delinquent Tenant Receivables, Seller shall remit to
Purchaser that portion of the monies so received by Seller to which Purchaser
is entitled within ten (10) business days after receipt thereof.  With respect to Unbilled Tenant Receivables,
Purchaser covenants and agrees to (A) bill the same when billable and
(B) cooperate with Seller to determine the correct amount of operating
expenses and/or taxes due.  The
provisions of this Subsection 8.1.3(a) shall survive the Closing.

(b)           If the final
reconciliation of operating expenses and/or taxes due under the Leases shows
that a net amount is owed by Seller to Purchaser, said amount shall be paid by
Seller to Purchaser within ten (10) business days of such final
reconciliation under the Leases.  If the
final reconciliation of operating expenses and/or taxes due under the Leases
shows that a net amount is owed by Purchaser to Seller, Purchaser shall, within
ten (10) business days of receipt of such funds from the tenants under the
Leases, remit said amount to Seller except to the extent such amount would be
due to a tenant with Uncollected Delinquent Tenant Receivables
outstanding.  Purchaser agrees to receive
and hold any monies received on account of such past due expenses and/or taxes
for Seller and to pay same promptly to Seller as aforesaid.  The provisions of this Subsection 8.1.3(b)
shall survive the Closing.

(c)           Seller will not
modify, amend, waive, renegotiate or settle any Tenant Receivable or any
promissory note or payment plan for the payment of delinquent rents or any
other obligations to pay delinquent rents no matter how evidenced (“Delinquent Rent Obligations”) without (i)
providing Purchaser all relevant supporting documentation, as reasonably
determined by Seller, including, without limitation, tenant financial
information to the extent in Seller’s possession, and (ii) obtaining
Purchaser’s approval, which approval may be withheld in Purchaser’s sole
discretion.  The existing Delinquent Rent
Obligations are reflected in Schedule 8.1.3.

 

8.2          Leasing Costs.  Seller agrees to pay or discharge at or prior
to Closing all leasing commissions, costs for tenant improvements, lease buyout
costs, moving allowances, design allowances, legal fees and other costs,
expenses and allowances incurred in order to induce a tenant to enter into a
Lease or Lease renewal or extension (collectively, “Leasing Costs”) that are due prior to Closing with respect to
Leases and License Agreements in force as of or prior to the Effective Date and
will also pay or discharge at or prior to Closing all Leasing Costs in the
amounts set forth and for the tenants named on Exhibit “G” attached
hereto; provided, however, that Seller shall have no obligation to pay, and
Purchaser shall assume the obligation to pay, all Leasing Costs that become due
and payable after the Closing Date (other than the Leasing Costs set forth on Exhibit
“G” attached hereto), including any Leasing Costs payable with respect to
any option to renew or option to expand that has not been exercised prior to
the Effective Date, which obligation shall survive the Closing.  As of Closing, Purchaser shall assume Seller’s
obligations for Leasing Costs incurred with respect to Leases and Lease
renewals and extensions and License Agreements and License Agreement renewals
and extensions executed subsequent to the Effective Date.

8.3          Closing
Costs.  Closing costs shall be
allocated between Seller and Purchaser in accordance with Section 1.2.

8.4          Final
Adjustment After Closing.  If
final bills are not available or cannot be issued prior to Closing for any item
being prorated under Section 8.1, then Purchaser and Seller agree
to allocate such items on a fair and equitable basis as soon as such bills are
available, final adjustment to be made as soon as reasonably possible after the
Closing.  Payments in connection with the
final adjustment shall be due within thirty (30) days of delivery of
written notice.  All such rights and
obligations shall survive the Closing.

8.5          Deposits.  All tenant and licensee security deposits
collected and not applied by Seller shall be transferred or credited to
Purchaser at Closing.  As of the Closing,
Purchaser shall assume Seller’s obligations related to tenant and licensee
security deposits, but only to the extent they are credited or transferred to
Purchaser.

8.6          Commissions.  Seller and Purchaser each represent and
warrant to the other that no real estate brokerage commission is payable to any
person or entity in connection with the transaction contemplated hereby, other
than the Seller’s Broker, and each agrees to and does hereby indemnify and hold
the other harmless against the payment of any commission to any other person or
entity claiming by, through or under Seller or Purchaser, as applicable.  This indemnification shall extend to any and
all claims, liabilities, costs and expenses (including reasonable attorneys’
fees and litigation costs) arising as a result of such claims and shall survive
the Closing.

8.7          Loan
Reserves and Escrows.  At Closing,
Seller shall assign to Purchaser any loan reserves or escrows held by Lender in
connection with the Existing Loan, and Seller shall receive a credit on the
settlement statement for the transferred reserves and escrows to the extent
actually assignable to Purchaser.

 

ARTICLE 9.  Representations and Warranties

9.1          Seller’s
Representations and Warranties.  Seller represents and warrants to Purchaser
that as of the Effective Date and as of the date of Closing:

9.1.1       Organization
and Authority. Seller has been duly organized, is validly existing
as an Arizona corporation, and is in good standing in the State of
Arizona.  Seller has the full right and
authority and has obtained any and all consents required to enter into this
Agreement and to consummate or cause to be consummated the transactions
contemplated hereby.  This Agreement has
been, and all of the documents to be delivered by Seller at the Closing will
be, authorized and executed and constitute, or will constitute, as appropriate,
the valid and binding obligation of Seller, enforceable in accordance with
their terms.

9.1.2       Conflicts
and Pending Actions.  There is no
agreement to which Seller is a party or, to Seller’s knowledge, that is binding
on Seller which is in conflict with this Agreement, which challenges or impairs
Seller’s ability to execute or perform its obligations under this
Agreement.  To Seller’s knowledge, there
is no action or proceeding or litigation pending or threatened against Seller
or relating to the Property.

9.1.3       Rent
Roll.  Exhibit ”F” is a
true, correct and complete rent roll in all material respects listing all
tenants of the Property.

9.1.4       Service
Contracts and License Agreements.  To Seller’s knowledge, the list and copies of
Service Contracts and License Agreements to be delivered to Purchaser pursuant
to this Agreement will be correct and complete in all material respects as of
the date of delivery.

9.1.5       Notices
from Governmental Authorities.  To Seller’s knowledge, Seller has not
received notice of any material violation of any laws (including, but not
limited to, environmental laws) 
applicable (or alleged to be applicable) to the Real Property, or any
part thereof, that has not been corrected, except as may be disclosed by the
Property Documents or otherwise disclosed in writing to Purchaser prior to the
date hereof.

9.1.6       Seller’s
Actions.  Seller has
not deposited or released any Hazardous Materials (as defined below) on the
Property in violation of any applicable laws, rule or regulations in existence
as of the Effective Date.

9.1.7       Zoning.  To Seller’s current actual knowledge, the
Property is properly zoned for its current use and is free from any use or
occupancy restrictions which prevent the continued present use of the Property.

9.1.8       Leases
and Personal Property. 
Seller has delivered to Purchaser true, correct and complete copies of
the documents evidencing the Leases.  The
Leases are in full force and effect and, to Seller’s knowledge, neither the
landlord nor the tenant is in default under any Lease.  Except for any provisions contained in the
documents creating, evidencing or securing the Existing Loan:

 

(a)           Seller has the
sole right to collect the rents under the Leases and neither such right, nor
any of the Leases, have been assigned, pledged, hypothecated, or otherwise
encumbered by Seller; and

(b)           The Personal
Property to be conveyed herein is otherwise free from any encumbrance.

9.1.9       Litigation.  Seller knows of no litigation or threatened
litigation affecting the Property or Seller’s ability to sell the Property.

9.1.10     Seller’s
Knowledge.  Seller represents
and warrants that John Greenman and Monica Dean are the persons most
knowledgeable with respect to the Property and the representations and
warranties contained herein.

9.1.11     Existing
Loan.

(a)           The unpaid
principal balance of and accrued and unpaid interest under the Existing Loan is
Twenty-Three Million Seven Hundred Thirty-Nine Thousand Two Hundred Ninety-Two
and 09/100 Dollars ($23,739,292.09) as of October 31, 2005.

(b)           To Seller’s
knowledge, Seller is not in default under any of the instruments creating or
evidencing the Existing Loan or the security thereof and, to Seller’s
knowledge, no event has occurred which, with the passage of time or the giving
of notice, or both, would constitute a default or event of default thereunder.

9.1.12     Privilege
Taxes.  Seller has paid, or will pay on
or before their due date, all transaction privilege taxes, including sales, use
or rental taxes (collectively, “Privilege
Taxes”), due on or before the Closing Date with respect to the
Property and has reserved, or will reserve before the Closing, amounts
necessary to pay Privilege Taxes due after the Closing Date in respect of
periods ending on or before the Closing Date. 
Seller has filed, or will timely file on or before their due date, all
tax returns required in connection with any Privilege Taxes.

9.2          Purchaser’s
Representations and Warranties.  Purchaser represents and warrants to Seller
that:

9.2.1       Organization
and Authority.  Purchaser
has been duly organized and is validly existing as a partnership in good standing
in the State of Delaware and is qualified to do business in the state in which
the Real Property is located.  Purchaser
has the full right and authority and has obtained any and all consents required
to enter into this Agreement and to consummate or cause to be consummated the
transactions contemplated hereby.  This
Agreement has been, and all of the documents to be delivered by Purchaser at
the Closing will be, authorized and properly executed and constitute, or will
constitute, as appropriate, the valid and binding obligation of Purchaser,
enforceable in accordance with their terms.

 

9.2.2       Conflicts
and Pending Action.  There is no
agreement to which Purchaser is a party or to Purchaser’s knowledge binding on
Purchaser which is in conflict with this Agreement and impairs Purchaser’s
ability to perform its obligations under this Agreement.  There is no action or proceeding pending or,
to Purchaser’s knowledge, threatened against Purchaser which challenges or
impairs Purchaser’s ability to execute or perform its obligations under this
Agreement.

9.3          Survival of
Representations and Warranties.  The representations and warranties set forth
in this Article 9 are made as of the Effective Date and, except in
the case of Subsection 9.1.5, are remade as of the Closing Date and
shall not be deemed to be merged into or waived by the instruments of Closing,
but shall survive the Closing for a period of nine (9) months (the “Survival Period”).  Notwithstanding any provision in this
Agreement to the contrary, Seller’s maximum liability for the breach of any or
all representations or warranties contained herein shall be limited to
$1,500,000.  Terms such as “to Seller’s
knowledge,” “to the best of Seller’s knowledge” or like phrases mean the actual
knowledge of John Greenman and Monica Dean, after reasonable inquiry and
investigation.  No broker, agent, or
party other than Seller is authorized to make any representation or warranty
for or on behalf of Seller.  Neither
party shall have any liability after Closing for the breach of a representation
or warranty hereunder of which the other party hereto had actual knowledge as
of Closing.  The provisions of this Section 9.3
shall survive the Closing.  Any breach of
a representation or warranty that occurs prior to Closing shall be governed by Article 10.

ARTICLE 10.   Default and Remedies

10.1        Seller’s
Remedies.  If
Purchaser fails to perform its obligations pursuant to this Agreement at or
prior to Closing for any reason except failure by Seller to perform hereunder
or a permitted termination hereunder, or if prior to Closing any one or more of
Purchaser’s representations or warranties are breached in any material respect,
Seller shall be entitled, as its sole remedy (except as provided in Sections 4.10,
8.6, 10.3 and 10.4 hereof), to terminate this Agreement and recover the
Earnest Money as liquidated damages and not as penalty, in full satisfaction of
claims against Purchaser hereunder. 
Seller hereby waives all other remedies, whether at law or in
equity.  Seller and Purchaser agree that
Seller’s damages resulting from Purchaser’s default are difficult, if not
impossible, to determine and the Earnest Money is a fair estimate of those
damages which has been agreed to in an effort to cause the amount of such
damages to be certain.  Notwithstanding
anything in this Section 10.1 to the contrary, in the event of
Purchaser’s default or a termination of this Agreement, Seller shall have all
remedies available at law or in equity in the event Purchaser or any party
related to or affiliated with Purchaser is asserting any claims or right to the
Property that would unreasonably delay or prevent Seller from having clear,
indefeasible and marketable title to the Property or if Purchaser has breached Section
12.13.  In all other events Seller’s
remedies shall be limited to those described in this Section 10.1
and Sections 4.10, 8.6, 10.3 and 10.4 hereof.  If Closing is consummated, Seller shall have
all remedies available at law or in equity in the event Purchaser fails to
perform any obligation that survives the Closing of this Agreement.

10.2        Purchaser’s
Remedies.  If Seller
fails to perform its obligations pursuant to this Agreement for any reason
except failure by Purchaser to perform hereunder or a permitted termination
hereunder, or if prior to Closing any one or more of Seller’s representations
or

 

warranties are breached in
any material respect, Purchaser shall elect, as its sole remedy, either to
(i) terminate this Agreement by giving Seller timely written notice of
such election prior to or at Closing and recover the Earnest Money,
(ii) enforce specific performance, or (iii) waive said failure or
breach and proceed to Closing. 
Notwithstanding anything herein to the contrary, Purchaser shall be
deemed to have elected to terminate this Agreement if Purchaser fails to file a
lawsuit asserting such claim or cause of action in the county in which the
Property is located within two (2) months following the scheduled Closing
Date.  Purchaser’s remedies shall be
limited to those described in this Section 10.2 and Sections 10.3
and 10.4 hereof.  If, however, the
equitable remedy of specific performance is not available, Purchaser may seek
any other right or remedy available at law or in equity.  If Closing is consummated, Purchaser shall
have all remedies available at law or in equity in the event Seller fails to
perform any obligation that survives the Closing of this Agreement.

10.3        Attorneys’
Fees.  In the event either party
hereto employs an attorney in connection with claims by one party against the
other arising from an alleged default under this Agreement, the non-prevailing
party shall pay the prevailing party all reasonable fees and expenses,
including attorneys’ fees, incurred in connection with such transaction.

10.4        Other Expenses.  If this Agreement is terminated due to the
default of a party, then the defaulting party shall pay any fees or charges due
to Escrow Agent for holding the Earnest Money as well as any escrow
cancellation fees or charges and any fees or charges due to the Title Company
for preparation and/or cancellation of the Title Commitment.

ARTICLE 11.  Disclaimers, Release and Indemnity

11.1        Disclaimers
By Seller.  Except as
expressly set forth in this Agreement and any document executed by Seller and
delivered to Purchaser at Closing, it is understood and agreed that Seller has
not at any time made and is not now making, and it specifically disclaims, any
warranties or representations of any kind or character, express or implied,
with respect to the Property, including, but not limited to, warranties or
representations as to (i) matters of title, (ii) environmental
matters relating to the Property or any portion thereof, including, without
limitation, the presence of Hazardous Materials in, on, under or in the vicinity
of the Property, (iii) geological conditions, including, without
limitation, subsidence, subsurface conditions, water table, underground water
reservoirs, limitations regarding the withdrawal of water, and geologic faults
and the resulting damage of past and/or future faulting, (iv) whether, and
to the extent to which the Property or any portion thereof is affected by any
stream (surface or underground), body of water, wetlands, flood prone area,
flood plain, floodway or special flood hazard, (v) drainage,
(vi) soil conditions, including the existence of instability, past soil
repairs, soil additions or conditions of soil fill, or susceptibility to
landslides, or the sufficiency of any undershoring, (vii) the presence of
endangered species or any environmentally sensitive or protected areas,
(viii) zoning or building entitlements to which the Property or any
portion thereof may be subject, (ix) the availability of any utilities to
the Property or any portion thereof including, without limitation, water,
sewage, gas and electric, (x) usages of adjoining property,
(xi) access to the Property or any portion thereof, (xii) the value,
compliance with the plans and specifications, size, location, age, use, design,
quality, description, suitability, structural integrity, operation, title to,
or physical or financial condition of the Property or any portion thereof, or
any income, expenses, charges, liens, encumbrances, rights or claims on or
affecting or pertaining to

 

the Property or any part
thereof, (xiii) the condition or use of the Property or compliance of the
Property with any or all past, present or future federal, state or local
ordinances, rules, regulations or laws, building, fire or zoning ordinances,
codes or other similar laws, (xiv) the existence or non-existence of
underground storage tanks, surface impoundments, or landfills, (xv) the
merchantability of the Property or fitness of the Property for any particular
purpose, (xvi) the truth, accuracy or completeness of the Property
Documents, (xvii) tax consequences, or (xviii) any other matter or
thing with respect to the Property.

11.2        Sale “As Is,
Where Is.”  Purchaser
acknowledges and agrees that upon Closing, Seller shall sell and convey to
Purchaser and Purchaser shall accept the Property “AS IS, WHERE IS, WITH ALL
FAULTS,” except to the extent expressly provided otherwise in this Agreement
and any document executed by Seller and delivered to Purchaser at Closing.  Except as expressly set forth in this
Agreement, Purchaser has not relied and will not rely on, and Seller has not
made and is not liable for or bound by, any express or implied warranties,
guarantees, statements, representations or information pertaining to the
Property or relating thereto (including specifically, without limitation, Property
information packages distributed with respect to the Property) made or
furnished by Seller or any real estate broker, agent or third party
representing or purporting to represent Seller, to whomever made or given,
directly or indirectly, orally or in writing. 
Purchaser will conduct such inspections and investigations of the
Property as Purchaser deems necessary, including, but not limited to, the
physical and environmental conditions thereof, and shall rely upon same.  Purchaser acknowledges that Seller has
afforded Purchaser a full opportunity to conduct such investigations of the
Property as Purchaser deemed necessary to satisfy itself as to the condition of
the Property and the existence or non-existence or curative action to be
taken with respect to any Hazardous Materials on or discharged from the
Property, and will rely solely upon same and not upon any information provided
by or on behalf of Seller or its agents or employees with respect thereto,
other than such representations, warranties and covenants of Seller as are
expressly set forth in this Agreement.

Purchaser’s
Initials   _______

 

11.3        “Hazardous
Materials” Defined.  For
purposes hereof, “Hazardous Materials”
means “Hazardous Material,” “Hazardous Substance,” “Pollutant or Contaminant,”
and “Petroleum” and “Natural Gas Liquids,” as those terms are defined or used
in Section 101 of CERCLA, and any other substances regulated because of
their effect or potential effect on public health and the environment,
including, without limitation, PCBs, lead paint, asbestos, urea formaldehyde,
radioactive materials, putrescible materials, and infectious materials.

11.4        Hazardous
Materials Indemnity.  Purchaser
agrees to indemnify and hold Seller harmless of and from any and all
liabilities, claims, demands, and expenses of any kind or nature (collectively “Claims”) which arise or accrue after
Closing, and which are in any way related to the ownership, maintenance, or
operation of the Property by Purchaser or its affiliates, including, without
limitation, in connection with Hazardous Materials. Seller agrees to indemnify
and hold Purchaser harmless of and from any and all Claims which arise or
accrue after Closing, and which are in any way related to the ownership,
maintenance, or operation of the Property prior to Closing by Seller or its
affiliates including, without limitation, in connection with Hazardous
Materials.

 

11.5        Survival.  The terms and conditions of this Article 11
shall expressly survive the Closing, and shall not merge with the provisions of
any closing documents.

                                Purchaser
acknowledges and agrees that the disclaimers and other agreements set forth
herein are an integral part of this Agreement and that Seller would not have
agreed to sell the Property to Purchaser for the Purchase Price without the
disclaimers and other agreements set forth above.

 

ARTICLE 12.  Miscellaneous

12.1        Parties
Bound; Assignment.  This
Agreement, and the terms, covenants, and conditions herein contained, shall
inure to the benefit of and be binding upon the heirs, personal
representatives, successors, and assigns of each of the parties hereto.  Purchaser may assign its rights under this
Agreement only upon the following conditions: 
(i) the assignee of Purchaser must be an affiliate of Purchaser or
an entity controlling, controlled by, or under common control with Purchaser,
(ii) the assignee of Purchaser shall assume all obligations of Purchaser
hereunder, but Purchaser shall remain primarily liable prior to Closing (and in
the event of any termination of this Agreement) for the performance of
Purchaser’s obligations, and (iii) a copy of the fully executed written
assignment and assumption agreement shall be delivered to Seller at least five
(5) days prior to Closing. Seller’s prior written consent will be required for
any other assignment of this Agreement, and may be withheld at Seller’s
discretion.

12.2        Headings.  The article, section, subsection, paragraph
and/or other headings of this Agreement are for convenience only and in no way
limit or enlarge the scope or meaning of the language hereof.

12.3        Invalidity
and Waiver.  If any
portion of this Agreement is held invalid or inoperative, then so far as is
reasonable and possible the remainder of this Agreement shall be deemed valid
and operative, and, to the greatest extent legally possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative.  The failure by either party to enforce
against the other any term or provision of this Agreement shall not be deemed
to be a waiver of such party’s right to enforce against the other party the
same or any other such term or provision in the future.

12.4        Governing
Law.  This Agreement shall, in all
respects, be governed, construed, applied, and enforced in accordance with the
law of the State of Arizona.

12.5        Survival.  Subject to Section 9.3 hereof, the
provisions of this Agreement that contemplate performance after the Closing and
the obligations of the parties not fully performed at the Closing shall survive
the Closing and shall not be deemed to be merged into or waived by the
instruments of Closing.

12.6        Entirety and
Amendments.  This
Agreement embodies the entire agreement between the parties and supersedes all
prior agreements and understandings of the parties relating to the Property.  This Agreement may be amended or supplemented
only by an instrument in writing executed by the party against whom enforcement
is sought.

12.7        Time.  Time is of the essence in the performance of
this Agreement.

 

12.8        Confidentiality.  Purchaser shall make no public announcement
or disclosure of any information related to this Agreement to outside brokers
or third parties, except as may be required by law, before the Closing, without
the prior written specific consent of Seller; provided, however, that Purchaser
may, subject to the provisions of Section 4.7, make disclosure of
this Agreement to its Permitted Outside Parties as necessary to perform its
obligations hereunder and as may be required under laws or regulations
applicable to Purchaser.

12.9        Notices.  All notices required or permitted hereunder
shall be in writing and shall be served on the parties at the addresses set
forth in Section 1.3.  Any
such notices shall, unless otherwise provided herein, be given or served
(i) by depositing the same in the United States mail, postage paid,
certified and addressed to the party to be notified, with return receipt
requested, (ii) by overnight delivery using a nationally recognized
overnight courier, (iii) by personal delivery, or (iv) by facsimile,
evidenced by confirmed receipt.  Notice
deposited in the mail or by overnight delivery in the manner hereinabove
described shall be effective upon deposit. 
Notice given in any other manner shall be effective when received by the
party to be notified, as evidenced by a verified confirmation (for facsimile)
or by signed delivery slip (for personal delivery).  A party’s address may be changed by written
notice to the other party; provided, however, that no notice of a change of
address shall be effective until actual receipt of such notice.  Copies of notices are for informational
purposes only, and a failure to give or receive copies of any notice shall not
be deemed a failure to give notice. 
Notices given by counsel to the Purchaser shall be deemed given by Purchaser
and notices given by counsel to the Seller shall be deemed given by Seller.

12.10      Construction.  The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and agree that the
normal rule of construction — to the effect that any ambiguities are
to be resolved against the drafting party — shall not be employed in
the interpretation of this Agreement or any exhibits or amendments hereto.

12.11      Calculation
of Time Periods.  Unless
otherwise specified, in computing any period of time described herein, the day
of the act or event after which the designated period of time begins to run is
not to be included and the last day of the period so computed is to be
included, unless such last day is a Saturday, Sunday or legal holiday for
national banks in the location where the Property is located, in which event
the period shall run until the end of the next day which is neither a Saturday,
Sunday, or legal holiday.  The last day
of any period of time described herein shall be deemed to end at 5:00 p.m.
local time in the State of Arizona.

12.12      Execution in
Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of such counterparts shall constitute one
Agreement.  To facilitate execution of
this Agreement, the parties may execute and exchange facsimile counterparts of
the signature pages, provided that executed originals thereof are forwarded to
the other party on the same day by any of the delivery methods set forth in Section 12.9
other than facsimile.

12.13      No
Recordation.  Without the
prior written consent of Seller, Purchaser shall not record or cause the
recordation of either this Agreement or any memorandum hereof, or any affidavit
pertaining hereto, without the prior written consent of Seller, which consent
may be arbitrarily withheld at Seller’s discretion.  Any such recordation shall constitute a
default

 

hereunder by Purchaser,
whereupon Seller shall have the remedies set forth in Section 10.1
hereof, as well as the right to take appropriate action to remove any such
cloud on the title to the Real Property.

12.14      Further
Assurances.  In addition
to the acts and deeds recited herein and contemplated to be performed, executed
and/or delivered by either party at Closing, each party agrees to perform,
execute and deliver, but without any obligation to incur any additional
liability or expense, on or after the Closing any further deliveries and
assurances as may be reasonably necessary to consummate the transactions
contemplated hereby or to further perfect the conveyance, transfer and
assignment of the Property to Purchaser.

12.15      Discharge of
Obligations.  The
acceptance of the Deed by Purchaser shall be deemed to be a full performance
and discharge of every representation and warranty made by Seller herein and
every agreement and obligation on the part of Seller to be performed pursuant
to the provisions of this Agreement, except those which are herein specifically
stated either to survive or to be performed after Closing.

12.16      No Third
Party Beneficiary.  The
provisions of this Agreement and of the documents to be executed and delivered
at Closing are and will be for the benefit of Seller and Purchaser only and are
not for the benefit of any third party, and accordingly, no third party shall
have the right to enforce the provisions of this Agreement or of the documents
to be executed and delivered at Closing.

12.17      Assumption
of Existing Loan.  Seller (at
no third party cost, expense or liability to Seller) agrees to assist Purchaser
in attempting to obtain the consent of Lender to allow Purchaser to assume the
Existing Loan (the “Lender Consent”).  The Lender Consent must include, to the
extent permitted by the Existing Loan, Lender’s written agreement to release
Seller and its constituent members of and from any loss, expense, liability or
other obligations arising subsequent to the assumption of the Existing Loan by
Purchaser, except that Seller will remain liable for claims, causes of action and
liabilities arising as a result of facts or circumstances which existed prior
to the date of assumption of the Existing Loan by Purchaser. Seller makes no
representation or warranty that Purchaser will be successful in securing such
Lender Consent.  At the Closing,
Purchaser shall pay the assumption fees arising under the Existing Loan
(including the beneficiary’s legal fees). 
At any time on or before the expiration of fifty (50) days following the
Effective Date, if Purchaser is unable for any reason to obtain Lender Consent
for Purchaser’s assumption of the Existing Loan on terms and conditions
acceptable to Purchaser, in its sole and absolute discretion, then Purchaser
may terminate this Agreement by written notice to Seller on or before the
expiration of fifty (50) days following the Effective Date, in which event this
Agreement shall terminate, the Earnest Money (minus the Independent
Consideration and the Processing Fee) shall be refunded to Purchaser and
neither Party shall have any further rights, liabilities or obligations
hereunder except as expressly set forth to the contrary in this Agreement.  If Lender Consent has not been obtained on or
before the date which is sixty-five (65) days following the Effective
Date, then either Seller or Purchaser may terminate this Agreement by written
notice to the other party on or before the expiration of sixty-five (65)
days following the Effective Date, in which event this Agreement shall
terminate, the Earnest Money (minus the Independent Consideration and the
Processing Fee) shall be refunded to Purchaser and neither Party shall have any
further rights, liabilities or obligations hereunder except as expressly set

 

forth
to the contrary in this Agreement.  If
this Agreement is terminated pursuant to this Section 12.17, Purchaser shall
pay to Lender its commercially reasonable third-party costs, fees and expenses
(including legal fees and expenses), if any, incurred up to such date of
termination for the approval process; provided, however, that if this Agreement
is terminated due to a default by Seller under this Agreement, then Purchaser
shall have no liability for Lender’s third-party costs, fees and expenses, and
Seller shall reimburse Lender for such costs, fees and expenses.  Purchaser shall pay such third party fees,
expenses and costs within ten days of Purchaser’s termination of this
Agreement.  The obligations contained in
this Section 12.17 shall survive the termination of this Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGES AND EXHIBITS TO FOLLOW]

 

SIGNATURE PAGE TO AGREEMENT OF

PURCHASE AND SALE

BY AND BETWEEN

AMERIVEST MESA INC.

AND

CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP

 

 

                IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year written below.

 

	
   

  	
  SELLER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERIVEST
  MESA INC.,

  
	
   

  	
  an Arizona corporation

  
	
   

  	
   

  	
   

  
	
  Date executed by Seller:

  	
   

  	
   

  
	
  December 16, 2005

  	
  By:

  	
  /s/ John B. Greenman

  
	
   

  	
  Name:

  	
  John B. Greenman

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
						

 

 

 

 

	
   

  	
  PURCHASER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CRESCENT
  REAL ESTATE EQUITIES

  
	
   

  	
  LIMITED
  PARTNERSHIP,

  
	
   

  	
  a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  
	
  Date executed by
  Purchaser:

  	
  By:

  	
  Crescent Real Estate
  Equities, Ltd.,

  
	
  December 16, 2005

  	
   

  	
  a Delaware corporation,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas G. Miller

  
	
   

  	
  Name:

  	
  Thomas G. Miller

  
	
   

  	
  Title:

  	
  Managing Director,
  InvestmentsExhibit
10.2

 

AMENDED CHANGE IN CONTROL
AND TERM EMPLOYMENT AGREEMENT

 

This AMENDED CHANGE IN CONTROL AND TERM EMPLOYMENT AGREEMENT (“Agreement”)
is entered into by and between AmeriVest Properties Inc., a Maryland
corporation (the “Company”), with offices at 1780 South Bellaire Street, Suite
100, Denver, Colorado 80222, and Kathryn L. Hale (the “Executive”), an
individual residing in the State of Colorado, dated as of this 16th day of
December, 2005.  For convenience, at
times the Company and Executive shall be referred to herein as the “Parties.”

WHEREAS, the Company recognizes that the current business environment
makes it difficult to attract and retain highly qualified executives unless a
certain degree of security can be offered to such individuals against
organizational and personnel changes which frequently follow changes in control
of a corporation; and

WHEREAS, even rumors of acquisitions or mergers may cause executives to
consider major career changes in an effort to assure financial security for themselves
and their families; and

WHEREAS, the Company desires to assure fair treatment of Executive
during her employment with the Company and in the event of a Change in Control
(as defined below) and to allow her to make critical career decisions without
undue time pressure and financial uncertainty, thereby increasing her
willingness to remain with the Company notwithstanding the outcome of a
possible Change in Control transaction; and

WHEREAS, the Company recognizes that Executive will be involved in evaluating
or negotiating any offers, proposals or other transactions which could result
in Changes in Control of the Company and believes that it is in the best
interest of the Company and its stockholders for Executive to be in a position,
free from personal financial and employment considerations, to be able to
assess objectively and pursue aggressively the interests of the Company’s
stockholders in making these evaluations and carrying on such negotiations; and

WHEREAS, the Board of Directors (the “Board”) of the Company believes
it is essential to provide Executive with compensation arrangements during her
employment with the Company and upon a Change in Control to provide Executive
with individual financial security in a manner competitive with other corporations,
and in order to accomplish these objectives, the Board has caused the Company
to enter into this Agreement.

NOW THEREFORE, the Parties, for good and valuable consideration, the
legal sufficiency of which is hereby acknowledged, and intending to be legally
bound, agree as follows:

1.             Employment.  Upon and subject to the terms provided
herein, the Company agrees to employ Executive, and Executive agrees to be
employed by the Company, as the Company’s Chief Financial Officer as set forth
in Section 4 of this Agreement.

2.             Operation and Term of
Agreement.  This Agreement
shall be effective immediately upon its execution.  This Agreement may be terminated by the
Company upon 24 months’ advance written notice to Executive, except as
otherwise provided in Section 4 of this Agreement; and provided, however, that
after a Change in Control of the Company during

 

the term of this Agreement, this Agreement shall
remain in effect until all of the obligations of the Parties under this
Agreement are satisfied and the Protection Period has expired.  Prior to a Change in Control, this Agreement
shall immediately terminate upon termination of Executive’s employment or upon
Executive’s ceasing to be an elected officer of the Company.

3.             Certain Definitions.  For purposes of this Agreement, the following
words and phrases shall have the following meanings:

(a)           “Cause” shall mean (i) the
continued failure by Executive to perform her material responsibilities and
duties toward the Company (other than any such failure resulting from Executive’s
incapacity due to physical or mental illness), (ii) the engaging by
Executive in willful or reckless conduct that is demonstrably injurious to the
Company monetarily or otherwise, (iii) the conviction of Executive of a
felony, or (iv) the commission or omission of any act by Executive that is
materially inimical to the best interests of the Company and that constitutes
on the part of Executive common law fraud or malfeasance, misfeasance, or
nonfeasance of duty; provided, however, that “cause” shall not include
Executive’s lack of professional qualifications.  For purposes of this Agreement, an act, or
failure to act, on Executive’s part shall be considered “willful” or “reckless”
only if done, or omitted, by her not in good faith and without reasonable
belief that her action or omission was in the best interest of the
Company.  The Executive’s employment
shall not be deemed to have been terminated for “cause” unless the Company
shall have given or delivered to Executive (A) reasonable notice setting
forth the reasons for the Company’s intention to terminate Executive’s
employment for “cause,” (B) a reasonable opportunity, at any time during
the 30-day period after Executive’s receipt of such notice, for
Executive, together with her counsel, to be heard before the Board, and
(C) a Notice of Termination (as defined in Section 13 below) stating
that, in the good faith opinion of not less than a majority of the entire
membership of the Board, Executive was guilty of the conduct set forth in
clauses (i), (ii), (iii) or (iv) of the first sentence of this
Section 3(a).

(b)           “Change in Control” shall mean a
change in control under Code Section 409A(a)(2).  As provided in Internal Revenue Service
Notice 2005-1 and Proposed Regulations Sections 1.409A-3(g)(5), a change of
control would include (A) any person (or more than one person acting as a
group) becoming the beneficial owner, directly or indirectly, of securities of
the Company representing 35 percent or more of the combined voting power of the
Company’s then outstanding securities; or (B) during any 12-month period,
the following persons cease for any reason to constitute a majority of the
Board:  individuals who at the beginning
of such period constitute the Board and new Directors each of whose election to
the Board or nomination for election to the Board by the Company’s security
holders was approved by a vote of more than 50 percent of the Directors then
still in office who either were Directors at the beginning of the period or
whose election or nomination for election was previously so approved; or
(C) the security holders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
that would result in the voting securities of the Company outstanding
immediately before the merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
Company or of such surviving entity) at least eighty percent (80%) of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation.  A Change of Control will
be deemed to have occurred if the security holders of the Company approve
a plan of complete liquidation of the

2

Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets.

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

(d)           “Disability,” for purposes of this
Agreement, shall mean total disability as defined in any long-term disability
plan sponsored by the Company in which Executive participates, or, if there is
no such plan or it does not define such term, then it shall mean the physical
or mental incapacity of Executive that prevents her from substantially
performing the duties of the office or position to which she was elected or
appointed by the Board for a period of at least 180 days and the incapacity is
expected to be permanent and continuous through Executive’s 65th birthday.

(e)           The “Change in Control Date” shall be
any date during the term of this Agreement on which a Change in Control
occurs.  Anything in this Agreement to
the contrary notwithstanding, if Executive’s employment or status as an elected
officer with the Company is terminated within six (6) months before the date on
which a Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated or intended to effect a Change in Control or
(ii) otherwise arose in connection with or anticipation of a Change in
Control, then for all purposes of this Agreement the “Change in Control Date”
shall mean the date immediately before the date of such termination.

(f)            “Good Reason” means:

(i)            the assignment to Executive within
the Protection Period of any duties inconsistent in any respect with Executive’s
position (including status, offices, titles and reporting requirements,
authority, duties or responsibilities), or any other action that results in a
diminution in such position, authority, duties, or responsibilities excluding
for this purpose an isolated, insubstantial, and inadvertent action not taken
in bad faith and that is remedied by the Company promptly after receipt of
notice given by Executive;

(ii)           a reduction by the Company in
Executive’s base salary in effect immediately before the beginning of the
Protection Period or as increased from time to time after the beginning of the
Protection Period;

(iii)          a failure by the Company to maintain
plans providing benefits at least as beneficial as those provided by any
benefit or compensation plan (including, without limitation, any incentive compensation
plan, bonus plan or program, retirement, pension or savings plan, life
insurance plan, health and dental plan or disability plan) in which Executive
is participating immediately before the beginning of the Protection Period, or
any action taken by the Company that would adversely affect Executive’s
participation in or reduce Executive’s opportunity to benefit under any of such
plans or deprive Executive of any material fringe benefit enjoyed by her
immediately before the beginning of the Protection Period; provided, however,
that a reduction in benefits under the Company’s tax-qualified retirement,
pension, or savings plans or its life insurance plan, health and dental plan,
disability plans or other insurance plans, which reduction applies generally to
participants in the plans and has a de minimis effect on Executive shall not
constitute “Good Reason” for termination by Executive;

 

3

(iv)          the Company’s requiring Executive,
without Executive’s written consent, to be based at any office or location in
excess of 50 miles from her office location immediately before the beginning of
the Protection Period, except for travel reasonably required in the performance
of Executive’s responsibilities;

(v)           any purported termination by the
Company of Executive’s employment for Cause other than as referred to in
Section 13 of this Agreement;

(vi)          any failure by the Company to obtain
the assumption of the obligations contained in this Agreement by any successor
as contemplated in Section 12(c) of this Agreement;

(vii)         a change in the location of Executive’s
office or the Company’s principal executive office to a place that is more than
fifty (50) miles from the present location; or

(viii)        any material breach of this Agreement by
the Company.

(g)           “Parent” means any entity that
directly or indirectly through one or more other entities owns or controls more
than 50 percent of the common stock and any other voting securities of the
Company.

(h)           “Protection Period” means the period
beginning on the Change in Control Date and ending on the last day of the 30th
full calendar month following the Change in Control Date.

(i)            “Subsidiary” means a company 50
percent or more of the voting securities of which are owned, directly or indirectly,
by the Company.

4.             Term
Employment Compensation.

(a)           Term
of Employment.  Subject to the
provisions set forth in this Agreement, the Company agrees to employ Executive
and Executive agrees to be employed by Company as its Chief Financial Officer,
as of the date hereof through May 31, 2006 (“Employment Period”).

(b)           Base
Salary.  As compensation for
the employment services rendered pursuant to this Agreement, from the date of
this Agreement until December 31, 2005, Company agrees to pay Executive a base
salary at an annual rate of $160,000.00, and thereafter at an annual rate to be
determined by the Board of Directors (in each case, the “Annual Base Salary”),
payable in installments in accordance with the Company’s standard payroll
practices, subject to such payroll and withholdings deductions as are required
by law or authorized by Executive. 
Executive shall be entitled to participate in all benefit plans in which
she is currently eligible to participate as of the date hereof.

(c)           Bonus.  Executive shall be eligible for a bonus
payable in cash in an amount of up to $50,000.00 during the Employment Period,
and thereafter at an amount to be determined by the Board of Directors, based
on Executive’s successful completion of various criteria as determined by the
Chief Executive Officer (“Bonus”, and collectively with the Annual Base

4

Salary, the “Annual Salary,” provided that if a Bonus
has not yet been determined for a particular period, the prior period Bonus
shall apply).

(d)           Office
and Duties.  Executive shall
continue to work under the direction of the Chief Executive Officer and shall
perform such tasks commensurate with her position as may from time to time be
assigned by the Board and the Company. 
Executive shall devote all business time, labor, skill, undivided
attention, and best ability to the performance of Executive’s duties hereunder
in a manner that will faithfully and diligently further the business and
interests of the Company.  Executive
shall not directly or indirectly pursue any other business activity that she is
not otherwise involved in as of the date of this Agreement without the prior
written consent of the Company, through its Chief Executive Officer and/or
Board, with the exception of passive personal investments not in breach of any
other term or provision hereof.

(e)(i)        Benefits
Upon Expiration of Employment Period.  In the event that Executive gives notice, on
or before April 1, 2006, of her intent to terminate Executive’s employment
effective on any date on or after the expiration of the Employment Period, and
given Executive’s competent satisfaction of the duties of the office of Chief
Financial Officer, and full satisfaction of all obligations set forth in this
Agreement, including all obligations set forth at Sections 1, 4(a), 4(d) and
this Section 4(e), and provided Executive executes on the date of her
termination of employment an Addendum to this Agreement wherein she ratifies
all the provisions of this Agreement and agrees that she shall be legally bound
by all releases and all other terms set forth in this Agreement as of the date
of Executive’s termination of employment, and provided Executive is not
terminated prior to the expiration of her Employment Period for Cause, Company
shall pay to Executive:

(A) Monthly payments in
an amount equal to one-twelfth of the Annual Salary then in effect, less all
applicable payroll and withholdings deductions as are required by law or
authorized by Executive, (“Severance”) for a period of seven (7) months
beginning on June 1, 2006 and ending on December 31, 2006 (“Severance Period”),
payable on a semi-monthly basis in accordance with regular Company pay periods;
and

(B) During the Severance
Period, Executive shall also receive the same insurance and other benefits that
are payable by Company to other corporate executives, including health, dental
and vision insurance.

Provided, however, in the
event Executive receives benefits pursuant to Section 6 or Section 7 of this
Agreement, Executive shall automatically forfeit any benefits otherwise due and
payable under this Section 4(e)(i).

                (e)(ii)       Additional
Benefits Payable upon Extension of
Employment Period.  Given
Executive’s satisfaction of all obligations set forth in Section 4(e)(i), for
every full month Executive elects to continue her employment with the Company
beyond the Employment Period (“Additional Severance Period”) and, provided that
she has not been otherwise terminated pursuant to Section 4(e)(iii) or 4(h) of
this Agreement, Executive shall be entitled to receive the following, in
addition to Severance received pursuant to Section 4(e)(i):

(A) An additional payment
equal to one-twelfth of the Annual Salary then in effect, less all applicable
payroll and withholdings deductions as are required by law or authorized by
Executive (“Additional Severance”), payable on a semi-monthly basis in

5

accordance with regular
Company pay periods, commencing during the month immediately following Executive’s
termination, until such time as Executive has received an Additional Severance
payment for each month of employment beyond the Employment Period; and

(B) During the Additional
Severance Period, Executive shall also receive the same insurance and other
benefits that are payable by Company to other corporate executives, including
health, dental and vision insurance.

Provided, however, in the event Executive receives
benefits pursuant to Section 6 or Section 7 of this Agreement, Executive shall
automatically forfeit any benefits otherwise due and payable under this Section
4(e)(ii).

(e)(iii)  Benefits
Upon Termination Without Cause. 
If in the discretion of the Company, the Company terminates Executive’s
employment prior to the expiration of Executive’s Employment Period and for
reasons not for Cause, the Company shall pay to Executive:

(A) Monthly payments in
an amount equal to one-twelfth of the Annual Salary then in effect (“Severance”),
less all applicable payroll and withholdings deductions as are required by law
or authorized by Executive, for a period of seven (7) months payable on a
semi-monthly basis in accordance with regular Company pay periods, commencing
during the month immediately following Executive’s termination (“Severance
Period”); and

(B) During the Severance
Period, Executive shall also receive the same insurance and other benefits that
are payable by Company to other corporate executives, including health, dental
and vision insurance.

Provided, however, in the
event Executive receives benefits pursuant to Section 6 or Section 7 of this
Agreement, Executive shall automatically forfeit any benefits otherwise due and
payable under this Section 4(e)(iii).

(e)(iv)     Consulting
Services.  In the event
Executive receives benefits pursuant to this Section 4(e), Executive shall
provide telecommuting consulting services to the Company of up to 5 hours per
week or 20 hours per month, for a period of six (6) months, and shall attend
in-person meetings as mutually agreed upon by the Parties.

(f)            Releases
in Exchange for Benefits Upon Expiration of Employment Period.  In exchange for the benefits payable to
Executive as set forth in Section 4(e) of this Agreement, Executive does hereby
voluntarily and knowingly release and discharge the Company and its successors,
subrogees, assigns, principals, agents, partners, heirs, employees,
shareholders, officers, directors, subsidiaries, affiliates, divisions,
associates and attorneys (collectively the “Released Parties”) from any and all
claims, actions, causes of action, liabilities, demands, rights, damages,
costs, attorneys’ fees, expenses and controversies of every kind and
description through the date of this Agreement. 
These releases shall include, by way of example and not limitation, all
claims which arise out of, relate to, or are based on (i) Executive’s
employment and/or association with the Released Parties and the termination
thereof, (ii) any and all contracts, binding promises and statements to, from
or between the Parties, (iii) the common laws of any state, (iv) Title VII of
the Civil Rights Act of 1964, as amended, (v) claims under the

6

Civil Rights Act of 1991, (vi) claims under 42 U.S.C.
§ 1981, § 1981a, § 1983, § 1985, or § 1988, (vii) the Age Discrimination in
Employment Act of 1967, as amended, (viii) the Employee’s Income Retirement
Security Act of 1974, as amended, (ix) claims under the Older Workers Benefit
Protection Act of 1990, and (x) claims under all other local, state and federal
statutes, any of which could be raised, filed and/or brought in any court of
competent jurisdiction and/or in any local, state and federal administration
agency or administration.  However,
Executive does not release any claims she may have under any stock option or
warrant agreements.

(i)            Nothing
contained herein shall be construed as a release of any claim Executive may
have to unemployment benefits.  Executive
may make a claim for such benefits, and the Released Parties will provide
truthful information in response to questions from the responsible State
agency.

(ii)           Notwithstanding
the recitation of the claims set forth in this Section 4(f), or whether quoted
herein or not, and for the purpose of effectuating a full and final release
herein between the Parties, Executive expressly acknowledges that all releases
agreed to by Executive in this Section 4(f) are intended to include and
contemplate the extinguishment, without limitation, of all claims which she now
has or does not know or suspect to exist in her favor at the time of the
execution hereof.

(g)           Executive
Warranties.  Executive warrants and represents as follows:

(i)            Executive has full and complete legal
capacity to enter into this Agreement, has read this Agreement, has had a
reasonable time to consider its terms, and agrees to the conditions and
obligations set forth in it.

(ii)           Executive has had twenty-one (21)
days to consider the Agreement, and, if Executive executes this Agreement
within less than twenty-one (21) days from the date of receipt, it is with the
express understanding that Executive had the full twenty-one (21) days
available if so desired.  Further,
Executive waives all rights to a twenty-one (21) day period to consider the
terms of Employee’s release of claims under the Age Discrimination in
Employment Act (“ADEA”) if Executive signs this Agreement prior to the
expiration of the twenty-one (21) day period.

(iii)          Executive has not relied on any
statement made by the Company, its agents or representatives, either express or
implied, or by statement or omission, in making her decision to enter into this
Agreement.  Executive voluntarily
executes this Agreement after having been advised by the Company to seek legal
counsel, and has had full opportunity to consult with legal counsel, and
without being pressured or influenced by any person, or by any statement or
representation of any person acting on behalf of another Party, including the
officers, agents and attorneys for any other Party.

(iv)          Executive has been informed and
understands that (i) to the extent that this Agreement waives or releases any
claims Executive might have under the ADEA, Executive may rescind such waiver
and release within seven (7) calendar days of the execution of this Agreement,
and (ii) any such rescission must be in writing and hand delivered to the
Company, or, if sent by mail, postmarked within the seven (7) day

7

period, sent only by
certified mail, return receipt requested, and addressed to the Company.

(v)           This Agreement is subject to the
terms of the Older Workers Benefit Protection Act of 1990 (“OWBPA”).  Executive acknowledges and agrees that she
is, voluntarily and with full knowledge of the consequences of such release,
releasing all claims, including any claims Executive has or could have brought
under the OWBPA and any claim(s) under the ADEA.

(vi)          Executive acknowledges and agrees that
this Agreement is written in a manner intended to be understood, and that
Executive understands this Agreement.

(vii)         Executive has had a full and fair
opportunity to investigate the facts underlying any claims that Executive
believes she may have against the Company. 
Executive enters into this Agreement acknowledging that there may be
facts of which she is not aware; but nonetheless enters into this Agreement
with the intent of providing the Company, and its affiliates, with a full and
final release of all known and unknown, suspected or unsuspected, foreseen or
unforeseen, matured or unmatured, liquidated or unliquidated, claims, based on
all known and unknown facts.

(h)           Termination
of Employment. 
Notwithstanding any other provision of this Agreement, Executive’s
employment may be terminated by the Company or Executive, as applicable, as
follows:  (i) expiration of the Employment
Period; (ii) termination for Cause; (iii) termination for Disability; (iv)
termination upon a Change in Control; (v) termination for Good Reason; (vi)
termination because of the death of Executive; (vii) termination without Cause;
and (viii) resignation.  The Executive
and the Company shall be bound by all provisions of this Agreement specifically
related to any benefit or obligation of Executive or the Company under any of
these circumstances.

(i)            Code
Section 409A Savings Provision. 
Notwithstanding anything in this Agreement to the contrary, the
following provisions related to payments treated as deferred compensation under
Code Section 409A shall apply:

                                (a)           If, on the date of Executive’s “separation
from service,” Executive is a “specified person,” within the meaning of
Sections 409A(a)(2)(A)(i) and 409A(a)(2)(B)(i) of the Code, and as a result of
such separation from service Executive would receive any payment that, absent
the application of these provisions, would be subject to the constructive
receipt, interest, and additional tax provisions of Code Section 409A(a), then
any such payment shall be made on the date that is the earliest of: (i) six (6)
months after Executive’s separation from service, (ii) Executive’s date of
death, or (iii) such other earliest date for which such payment will not be
subject to such constructive receipt, interest, and additional tax.

                (b)           It
is the intention of the parties that all amounts payable under this Agreement
not be subject to the constructive receipt, interest, and additional tax
resulting from the application of Code Section 409A.  To the extent such amounts could become
subject to such constructive receipt, interest, and additional tax, the parties
shall cooperate to amend this Agreement with the goal of giving Executive the
same or equivalent value of the benefits described in this Agreement in a
manner that does not result in such constructive receipt, interest, and
additional tax.  In the event the Company
does not so cooperate, the Company shall

8

indemnify Executive for any interest and additional
tax arising from the application of Code Section 409A, grossed-up for any other
income tax incurred by Executive related to the indemnification (i.e., indemnification
of such additional income tax), assuming the highest marginal income tax rates
apply to any taxable indemnification.

5.             Vesting
Upon Change of Control.  Upon
a Change of Control, any and all Common Shares, options, or other forms of
securities issued by the Company and beneficially owned by Executive (whether
granted before or after the date of this Agreement) that are unvested,
restricted, or subject to any similar restriction that would otherwise require
continued ownership by Executive beyond the Change of Control Date in order to
be vested in the hands of Executive shall vest automatically.

6.             Benefits Upon
Termination Within a Protection Period.  If, during a Protection Period, Executive’s
employment is terminated by the Company other than for Cause or Disability or
other than as a result of Executive’s death or if Executive terminates her
employment for Good Reason, the Company shall, subject to Section 10, pay
to Executive in a lump sum in cash, within 10 days after the date of
termination, the aggregate of the following amounts:

(a)           all earned and determinable, but
unpaid, wages and all earned and determinable, but unused, vacation through the
date of Executive’s termination, payable at the rate in effect at the time of
Executive’s termination;

(b)           a severance amount equal to 1.0 times
Executive’s “Annual Compensation.”  For
purposes of  Section 6 and Section 7 of
this Agreement, “Annual Compensation” shall be an amount equal to the sum of
(i) Executive’s annual base salary from the Company and its Subsidiaries
(including scheduled base salary increases or increases that are budgeted and
approved either by the Compensation Committee of the Board of Directors or by
the Board of Directors of the Company in advance of the Change of Control Date),
annualized for any partial year, and calculated based on the average for the
three year period ending on the December 31 after the Change in Control
Date (or of such shorter period if Executive has not been employed since the
commencement of the full three year period); and (ii) the amount of annual
bonus accrued by the Company for Executive for the year before the Change of
Control occurs; and

(c)           upon surrender by Executive of her
outstanding options to purchase common shares of the Company (“Common Shares”)
granted to Executive by the Company (the “Outstanding Options”) and any stock
appreciation rights (“SARs”), an amount in respect of each Outstanding Option
and SAR (whether vested or not) equal to the difference between the exercise
price of such Outstanding Options and SARs and the higher of (x) the fair
market value of the Common Shares at the time of such termination (but not less
than the closing price for the Common Shares on the New York Stock Exchange, or
such other national stock exchange on which such shares may be listed, on the
last trading day such shares traded prior to the date of termination), and
(y) the highest price paid for Common Shares or, in the cases of
securities convertible into Common Shares or carrying a right to acquire Common
Shares, the highest effective price (based on the prices paid for such
securities) at which such securities are convertible into Common Shares or at
which Common Shares may be acquired, by any person or group whose acquisition
of voting securities has resulted in a Change in Control of the

9

 

Company; provided, however, that this
Section 6(c) shall not apply to the surrender of any Outstanding Option
that is an incentive stock option (within the meaning of section 422 of the
Code).

(d)           However, in the event Executive
receives benefits pursuant to Section 4(e) or Section 7 of this Agreement,
Executive shall automatically forfeit any benefits otherwise due and payable
under this Section 6 of this Agreement.

If Executive is
terminated pursuant to this Section 6 and, in connection therewith, Executive
and the Company enter into a noncompetition agreement or a nonsolicitation
agreement, unless otherwise agreed by Executive and the Company, the amount
payable to Executive under the preceding provisions of this Section 6 shall be
reduced by the amount payable to Executive under such agreement(s).

7.             Executive’s Right to
Leave Employment.  At any time
during the six month period following a Change in Control Date, Executive shall
have the right to terminate Executive’s employment with the Company at
Executive’s sole discretion (the “Executive Termination Right”).  In the event Executive exercises Executive
Termination Right, the Company shall pay Executive in a lump sum in cash within
10 days after the date of termination the aggregate of the following amounts:

(a)           The amounts set forth in
Sections 6(a) and 6(c); and

(b)           1.0 times Executive’s Annual
Compensation.

(c)           However, in the event Executive
receives benefits pursuant to Section 4(e) or Section 6 of this Agreement,
Executive shall automatically forfeit any benefits otherwise due and payable
under this Section 7 of this Agreement.

If Executive exercises
Executive Termination Right and, in connection therewith, Executive and the
Company enter into a noncompetition agreement or a nonsolicitation agreement,
unless otherwise agreed by Executive and the Company, the amount payable to
Executive under the preceding provisions of this Section 7 shall be reduced by
the amount payable to Executive under such agreement(s).

8.             Non-exclusivity of
Rights.  Nothing in this
Agreement shall prevent or limit Executive’s continuing or future participation
in any benefit, bonus, incentive, or other plans, practices, policies, or
programs provided by the Company or any of its Subsidiaries and for which
Executive may qualify, nor shall anything in this Agreement limit or otherwise
affect such rights as Executive may have under any stock option or other
agreements with the Company or any of its Subsidiaries, except as otherwise
specified in this Agreement.  Amounts
that are vested benefits or that Executive is otherwise entitled to receive
under any plan, practice, policy, or program of the Company or any of its
Subsidiaries at or subsequent to the date of termination of employment shall be
payable in accordance with such plan, practice, policy, or program; provided,
however, that Executive shall not be entitled to severance pay, or benefits
similar to severance pay, except as otherwise set forth in this Agreement,
under any plan, practice, policy, or program generally applicable to employees
of the Company or any of its Subsidiaries.

10

9.             Full Settlement; No
Obligation to Seek Other Employment; Legal Expenses.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations under
this Agreement shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right, or action that the Company may have against
Executive or others, except as otherwise specified in this Agreement.  The Executive shall not be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement.  The Company agrees to pay, upon written
demand by Executive, all legal fees and expenses Executive may reasonably incur
as a result of any dispute or contest (regardless of outcome) by or with the
Company or others regarding the validity or enforceability of, or liability
under, any provision of this Agreement, except with respect to the provisions
set forth in Sections 1 and 4 and any provision in this Agreement defining any
term or terms referenced in Sections 1 and 4. 
In any such action brought by Executive for damages or to enforce any
provisions of this Agreement, she shall be entitled to seek both legal and
equitable relief and remedies, including, without limitation, specific
performance of the Company’s obligations under this Agreement, in her sole
discretion.

10.           Cut
Back in Benefits. 
Notwithstanding any other provision of this Agreement, the cash lump sum
or other payment(s) and other benefits otherwise to be provided pursuant to
Sections 4, 5, 6 and 7 of this Agreement (the “Severance Benefit”) shall
be reduced as described below if 
independent accountants for the Company (the “Accountants”) determine
(A) that Executive would, by reason of section 4999 of the Code, be required to
pay an excise tax on any  part of the
Severance Benefit or any part of any other payment or benefit to which
Executive is entitled under any plan, practice, policy, or program, and (B) the
amount of the Severance Benefit that Executive would retain on an after-tax
basis, present value basis would be increased as a result of such reduction by
an amount of at least $5,000.  If the
Severance Benefit is required to be reduced, it shall be reduced only to the
extent required, in the opinion of the Accountants, to prevent the imposition
upon Executive of the tax imposed under section 4999 of the Code.  The Company shall determine which elements of
the Severance Benefit shall be reduced to conform to the provisions of this
Section.  Any determination made by the
Accountants pursuant to this Section shall be conclusive and binding on
Executive.  The Executive shall promptly
provide to the Company such information regarding Executive tax situation as
the Company shall reasonably request in order to allow the Accountants to
perform calculations required by this Section 10.

11.           Confidential
Information.  The Executive
shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge, or data relating to the Company or any of
its Subsidiaries, and their respective businesses, obtained by Executive during
Executive’s employment with the Company or any of its Subsidiaries and that has
not become public knowledge (other than by acts of Executive or her
representatives in violation of this Agreement).  After the date of termination of Executive’s
employment with the Company, Executive shall not, without the prior written
consent of the Company, communicate or divulge any such information, knowledge,
or data to anyone other than the Company and those designated by it.  In no event shall an asserted violation of
the provisions of this Section constitute a basis for deferring or withholding
any amounts otherwise payable to Executive under this Agreement.

12.           Successors.

11

(a)           This Agreement is personal to
Executive and without the prior written consent of the Company shall not be
assignable by Executive otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure
to the benefit of and be enforceable by Executive’s legal representatives or
successor(s) in interest.  The Executive
may designate a successor (or successors) in interest to receive any and all
amounts due Executive in accordance with this Agreement should Executive be
deceased at any time of payment.  Such
designation of successor(s) in interest shall be made in writing and signed by
Executive, and delivered to the Company pursuant to Section 16(b).  This Section 12(a) shall not supersede
any designation of beneficiary or successor in interest made by Executive, or
separately covered, under any other plan, practice, policy, or program of the
Company.

(b)           This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns.

(c)           The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of the Company
and any Parent of the Company or any successor and without regard to the form
of transaction utilized to acquire the business or assets of the Company, to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or parentage had taken place. 
As used in this Agreement, “Company” shall mean the Company as defined
above and any successor to its business or assets as aforesaid (and any Parent
of the Company or any successor) that is required by this clause to assume and
agree to perform this Agreement or which otherwise assumes and agrees to
perform this Agreement.

13.           Notice
of Termination.  Any
termination of Executive’s employment by the Company for Cause or by Executive
for Good Reason shall be communicated by Notice of Termination to the other
party given in accordance with Section 16(b) of this Agreement.  For purposes of this Agreement, a “Notice of
Termination” means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated, and
(iii) if the date of termination is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 15
days after the giving of such notice). 
The failure by Executive to set forth in the Notice of Termination any
fact or circumstance that contributes to a showing of Good Reason shall not
waive any right of Executive under this Agreement or preclude Executive from
asserting such fact or circumstance in enforcing her rights.

14.           Requirements
and Benefits if Executive Is Employee of Subsidiary of Company.  If Executive is an employee of any Subsidiary
of the Company, she shall be entitled to all of the rights and benefits of this
Agreement as though she were an employee of the Company and the term “Company”
shall be deemed to include the Subsidiary by whom Executive is employed.  The Company guarantees the performance of its
Subsidiary under this Agreement.

15.           Arbitration.  The Company and Executive shall attempt to
resolve between them any dispute that arises under this Agreement.  If they cannot agree within ten days after
either party submits a demand for arbitration to the other party, then the
issue shall be submitted to

12

arbitration with each party having the right to
appoint one arbitrator and those two arbitrators mutually selecting a third
arbitrator.  The rules of the American
Arbitration Association for the arbitration of commercial disputes shall apply
and the decision of two of the three arbitrators shall be final.  The arbitrators must reach a decision within
60 days after the selection of the third arbitrator.  The arbitration shall take place in Denver,
Colorado.  The arbitrators shall apply
Colorado law.

16.           Miscellaneous.

(a)           This Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws. 
The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect.  This
Agreement is the entire agreement between the Parties.  This Agreement supersedes all prior oral or
written promises or agreements between the Parties.  This Agreement may not be amended or modified
other than by a written agreement executed by the Parties or their respective
successors and legal representatives.

(b)           All notices and other communications
under this Agreement shall be in writing and shall be given by hand delivery to
the other Party or by registered or certified mail, return receipt requested,
postage prepaid, to the addresses for each Party as first written above or to
such other address as either Party shall have furnished to the other in writing
in accordance with this Section.  Notices
and communications to the Company shall be addressed to the attention of the
Company’s Corporate Secretary.  Notice
and communications shall be effective when actually received by the addressee.

(c)           Whenever reference is made in this
Agreement to any specific plan or program of the Company, to the extent that
Executive is not a participant in the plan or program or has no benefit accrued
under it, whether vested or contingent, as set forth in Section 4 of this
Agreement or as of any Change in Control Date, then such reference shall be
null and void, and Executive shall acquire no additional benefit as a result of
such reference.

(d)           The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

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

(f)            The Executive’s failure to insist
upon strict compliance with any provision of this Agreement shall not be deemed
to be a waiver of such provision or any other provision.

(g)           Except as otherwise set forth herein,
upon a termination of Executive’s employment or upon Executive’s ceasing to be
an elected officer of the Company, in each case, prior to the Change in Control
Date, there shall be no further rights under this Agreement.

(h)           On or before the expiration of
Executive’s Employment Period, Employee shall return all Company property,
including all Company documents and records, in any form, and copies of all
Company documents and records, in any form, obtained or maintained during the
course of her/her employment with the Company.

13

(i)            The Parties agree not to make to any
person any statement that disparages the other Party, including, but not
limited to, statements regarding other Party’s work ethic, performance,
financial fitness, business practices, or business condition and/or similar
disparaging statements concerning the Company’s officers, directors, board
members, employees, and affiliates.

(j)            Executive covenants that she will
not initiate any lawsuit or proceeding, legal, administrative or other, or
otherwise assert any claim, action, cause of action, demand, right, or
controversy of any kind which she has herein released.  Executive will not provide any material assistance
in any currently pending or subsequent litigation against the Released Parties;
provided, however, that this restriction shall not prevent Executive from
responding to compulsory process.  In the
event Executive is subject to a compulsory disclosure, Executive shall first
give the Released Parties seventy-two (72) hours advance notice before she
makes any disclosure to allow the Released Parties to obtain appropriate
Protective Orders or other injunctive relief.

14

IN WITNESS WHEREOF,
Executive has set her hand to this Agreement and, pursuant to the authorization
from the Board, the Company has caused this Agreement to be executed as of the
day and year first above written.

 

	
   

  	
  AMERIVEST PROPERTIES INC.

  
	
   

  	
   

  
	
   

  	
  /s/
  Charles K. Knight

  
	
   

  	
  Charles
  K. Knight, President

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  /s/
  Kathryn L. Hale

  
	
   

  	
  Kathryn
  L. Hale

  
	
   

  	
   

  

 

 

15

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