AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS

 

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                                                                    EXHIBIT 99.1

 

                         AGREEMENT FOR PURCHASE AND SALE

                    OF REAL PROPERTY AND ESCROW INSTRUCTIONS

 

THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS

("AGREEMENT") between GREIT - 525 AND 600 B STREET, LP, a Virginia limited

partnership ("SELLER"), and HINES-SUMISEI US CORE OFFICE PROPERTIES, LP, a

Delaware limited partnership ("BUYER"), is made and entered into as of the date

this Agreement is executed by both Seller and Buyer (the "EFFECTIVE DATE"), with

reference to the following facts:

 

      A.     Seller owns a certain fee simple interest in real property located

            in San Diego County, California, and more specifically described in

            Exhibit A attached hereto, improved by a 22-story office and retail

            building (the "BUILDING") containing approximately 423,546 rentable

            square feet of space and an attached 5-story parking garage, and

            commonly known as Golden Eagle Plaza, and such other assets, as the

            same are herein described.

 

      B.     Subject to the terms and conditions contained in this Agreement,

            Seller desires to sell to Buyer, and Buyer desires to purchase from

            Seller the Land and the associated assets.

 

NOW, THEREFORE, in consideration of the mutual covenants, premises and

agreements herein contained, the parties hereto do hereby agree as follows:

 

1.     Purchase and Sale.

 

      1.1.   The purchase and sale includes, and at Close of Escrow (hereinafter

            defined) Seller shall sell, assign, grant and transfer to Buyer, all

            of Seller's right, title, estate and interest in and to all of the

            following (hereinafter sometimes collectively, the "PROPERTY"):

 

           1.1.1. The Land described on Exhibit A attached hereto, together

                  with (i) all easements, privileges and rights belonging or in

                  any way appurtenant to the Land, (ii) any land lying in the

                  bed of any street, road, alley or right-of-way, open or

                  closed, adjacent to or abutting the Land, and (iii) any and

                  all air rights, subsurface rights, development rights,

                  entitlements, wastewater capacities and credit reservations,

                  and water rights pertaining to the Land (all of the foregoing

                  being collectively referred to herein as the "LAND");

 

           1.1.2. All structures, buildings, improvements, machinery, fixtures,

                  and equipment affixed or attached to the Land, all gas and

                  electric systems, lighting, heating, ventilating, and air

                  conditioning equipment and systems, elevators, radiators,

                  incinerators, furnaces, hot water heaters, water,

 

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                  sewage, and plumbing systems, fire protection and security

                  systems, and all other fixtures attached to the Land and

                  buildings (collectively, the "IMPROVEMENTS", and together with

                  the Land, the "REAL PROPERTY");

 

           1.1.3. All leases (the "LEASES"), including associated amendments,

                  with all persons ("TENANTS") leasing the Real Property or any

                  part thereof now existing or hereafter entered into in

                  accordance with the terms hereof prior to Close of Escrow,

                  together with all security deposits and other deposits in the

                  possession or control of Seller or its affiliates (or their

                  respective agents, representatives and/or employees), and all

                  of Seller's right, title and interest in and to all

                  guarantees, letters of credit and other similar credit

                  enhancements providing additional security for such Leases;

 

           1.1.4. All tangible and intangible personal property owned by Seller

                  located on or used in connection with the Real Property,

                  including, specifically, without limitation, all sculptures,

                  paintings and other artwork, all equipment, furniture, tools

                   and supplies, all plans and specifications and other

                  architectural and engineering drawings, if any, with respect

                  to the Land and the Improvements, and any other personal

                  property and all related intangibles as are owned by Seller

                  and currently located in, on or about and are used for the

                  operation, maintenance, administration or repair of the Real

                  Property, including Seller's interest, if any, in the name

                  "Golden Eagle Plaza" (the "PERSONAL PROPERTY");

 

           1.1.5. To the extent assignable, all Contracts (as defined below)

                  and Commission Agreements (as defined below) as of the

                  Effective Date and that are entered into by Seller after the

                  date of this Agreement and prior to the Closing in accordance

                  with the terms of this Agreement, in each case to the extent

                  approved by Buyer in accordance with Section 5.2 below, but

                  excluding any Contracts and Commission Agreements terminated

                  by Seller on or before the Closing in accordance with Section

                  5.2 and the Existing Management Agreement (as defined below)

                  terminated by Seller on or before the Closing in accordance

                  with Section 7.1.6; and

 

           1.1.6. To the extent transferable, all building permits,

                  certificates of occupancy and other certificates, permits,

                  consents, authorizations, variances or waivers, dedications,

                  subdivision maps, licenses and approvals from any governmental

                  or quasi-governmental agency, department, board, commission,

                  bureau or other entity or instrumentality relating to the

                  Property (the "PERMITS").

 

2.     Purchase Price.

 

      Subject to the charges, prorations and other adjustments set forth in this

      Agreement, the total Purchase Price of the Property shall be One Hundred

      Sixteen Million Eight Hundred

 

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Thousand and No/100 Dollars ($116,800,000.00) (the "PURCHASE PRICE"), payable as

follows:

 

      2.1.   Deposit/Further Payments.

 

           2.1.1. Concurrent with Opening of Escrow (as hereinafter defined),

                  Buyer shall deposit into Escrow (as hereinafter defined) the

                  amount of Four Million and No/100 Dollars ($4,000,000.00) (the

                   "DEPOSIT"), in the form of a wire transfer payable to Chicago

                  Title Insurance Company, 700 Flower Street, Suite 920, Los

                  Angeles, California 90017(the "ESCROW HOLDER") -- Susan Chio,

                  escrow officer, 213.488.4300 (phone) -- 213.891.0834 (fax).

                  Escrow Holder shall place the Deposit into an interest bearing

                  money market account at a bank or other financial institution

                  reasonably satisfactory to Buyer. If Buyer terminates (or is

                  deemed to have terminated) this Agreement for any reason

                  during the Inspection Period (as hereinafter defined), the

                  Deposit and all interest earned thereon shall be returned to

                  Buyer. If the Closing occurs, the Deposit and all interest

                  earned thereon shall be credited to Buyer's account at the

                  Close of Escrow.

 

           2.1.2. On or before Close of Escrow, Buyer shall deposit into Escrow

                  the balance of the Purchase Price, by wire transfer payable to

                  Escrow Holder.

 

3.     Title to Property.

 

      3.1.     Title Insurance.

 

           Escrow Holder will obtain a Form B 1970 ALTA Extended Coverage

           Owner's Policy of Title Insurance (the "TITLE POLICY") issued to

           Buyer from Chicago Title Insurance Company or any other nationally

           recognized title company Buyer, in its sole discretion, selects (the

            "TITLE COMPANY") in the amount of the Purchase Price. The Title

           Policy shall insure that fee simple title in the Property is vested

           in Buyer, subject only to the Permitted Exceptions (hereafter

           defined).

 

      3.2.     Procedure for Approval of Title.

 

           During the Inspection Period, Buyer shall review and approve the

           Title Documents (hereinafter defined) and the Survey (hereinafter

           defined). If the Title Documents or Survey reflect or disclose any

           defect, exception or other matter affecting the Property ("TITLE

           DEFECTS") that is unacceptable to Buyer, then prior to the expiration

           of the Inspection Period, Buyer shall provide Seller with written

            notice of such Title Defects. Within three (3) business days after

           receipt of Buyer's written notice of Title Defects, Seller may, at

           its sole option, notify Buyer and Escrow Holder, in writing, of

           Seller's election to cure or remove any or all of such Title Defects

           to Buyer's satisfaction prior to the Close of Escrow, and provide

           sufficient evidence of Seller's ability to so cure or remove such

           Title

 

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                  Defects. Notwithstanding the foregoing, and without any

                  obligation of further written notice by either party, Buyer

                  hereby objects to (i) any and all Title Defects caused by or

                   on behalf of Seller and arising during the period from and

                  after the expiration of the Inspection Period and prior to the

                  Close of Escrow ("SELLER TITLE DEFECTS") and (ii) any and all

                  monetary liens and encumbrances (other than liens for

                  non-delinquent general real property taxes) ("MONETARY

                  DEFECTS"), and Seller, at its sole cost and expense, hereby

                  agrees to cause all such Seller Title Defects and Monetary

                  Defects to be cured and removed from title to the Property

                  prior to or at the Close of Escrow. Prior to the Close of

                  Escrow, Seller shall cause to be cured or removed to Buyer's

                   satisfaction, all Title Defects Seller elected to cure or

                  remove pursuant to this Section 3.2 (including, without

                  limitation, all Seller Title Defects and Monetary Defects),

                  and Seller's failure to do so shall constitute a default by

                  Seller hereunder. Unless Seller provides written notice to

                  Buyer within the aforementioned three (3) business day period

                  that Seller elects to cure or remove any particular Title

                  Defects (other than any Seller Title Defects and Monetary

                  Defects), Seller shall be deemed to have elected not to cure

                  or remove such Title Defects, and Buyer shall be entitled, as

                   Buyer's sole and exclusive remedies, either (i) to terminate

                  this Agreement and to obtain a refund of the Deposit and all

                  interest earned thereon by providing written notice of

                  termination to Seller and returning the Due Diligence Items

                  (hereinafter defined) before the later to occur of (A) the end

                  of the Inspection Period, or (B) that date which is three (3)

                  business days after Seller's notice (or deemed election) not

                  to cure such Title Defects, or (ii) to waive Buyer's

                  objections to such Title Defects (other than any Seller Title

                  Defects and Monetary Defects) and to close this transaction as

                  otherwise contemplated herein. If Buyer shall fail to timely

                  terminate this Agreement in accordance with item (i) of the

                  immediately preceding sentence, then all matters shown on the

                   Survey or described in the Title Report (hereinafter defined),

                  except for Seller Title Defects, Monetary Defects and any

                  Title Defects that Seller has agreed to cure in writing, shall

                  be deemed "PERMITTED EXCEPTIONS".

 

4.     Due Diligence Items.

 

      4.1.    Seller shall deliver to Buyer upon the Effective Date the

             following items (collectively with the items set forth in Section

             4.2 below, the "DUE DILIGENCE ITEMS"):

 

            4.1.1. The most recent existing ALTA survey of the Property (as

                  Buyer may elect, at its expense, to have updated, the

                  "SURVEY");

 

           4.1.2. A copy of Seller's existing title policy;

 

           4.1.3. A current preliminary title report or title commitment (the

                  "TITLE REPORT") for the issuance of the Title Policy from the

                  Title Company, together with legible and complete copies of

                  all documents constituting exceptions to

 

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                  the title as reflected in the Title Report (collectively

                  referred to hereinafter as the "TITLE DOCUMENTS");

 

           4.1.4. A schedule of all service contracts, Commission Agreements

                  (as defined below) and Existing Management Agreements (as

                  defined below) affecting the Property;

 

           4.1.5. A schedule of all Security Deposits and Non-Cash Security

                   Deposits (as each is defined below) in the possession or

                  control of Seller or its affiliates (or the agents,

                  representatives and/or employees of Seller or its affiliates);

 

           4.1.6. Copies of all (i) service contracts, warranties, guaranties,

                  maintenance, repair, supply, consulting or other agreements

                  affecting the Property (collectively, the "CONTRACTS"); (ii)

                  lease brokerage agreements, leasing commission agreements or

                  other agreements providing for payments of any amounts for

                  leasing activities or procuring tenants with respect to the

                  Property or any portion or portions thereof (the "COMMISSION

                   AGREEMENTS"); and (iii) agreements currently in effect

                  relating to the management and leasing of the Property (the

                  "EXISTING MANAGEMENT AGREEMENT", in each case to the extent

                  the same are in the possession or control of Seller or its

                  affiliates (or the agents, representatives and/or employees of

                  Seller or its affiliates);

 

           4.1.7. A current certified rent roll (the "RENT ROLL") and

                   delinquency report, both dated as near as possible to the

                  Effective Date but in no event more than fifteen (15) days

                  prior to the Effective Date;

 

           4.1.8. Any and all capital expenditure budgets and reports, to the

                  extent the same are in the possession or control of Seller or

                  its affiliates (or the agents, representatives and/or

                  employees of Seller or its affiliates);

 

           4.1.9. A schedule of all current or pending litigation with respect

                  to the Property or any part, thereof, if any;

 

          4.1.10. Copies of any correspondence to or from governmental

                  agencies to the extent the same are in the possession or

                   control of Seller or its affiliates (or the agents,

                  representatives and/or employees of Seller or its affiliates);

 

          4.1.11. Copies of unaudited financial statements covering the period

                  of Seller's ownership of the Property;

 

          4.1.12. Copies of (i) the property tax assessments and tax bills for

                  the past three (3) calendar years, (ii) insurance policies and

                  premiums, (iii) utility statements and contracts and (iv)

                  operating expense reconciliations and base year calculations

                  with supporting documentation for all Tenants, to

 

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                  the extent the same are in the possession or control of Seller

                  or its affiliates (or the agents, representatives and/or

                  employees of Seller or its affiliates);

 

          4.1.13. A copy of Guarantor's current financial statement;

 

          4.1.14. Copies of any and all Leases (including any and all

                  amendments, riders, licenses, work letters, inducement

                  letters, side letters, indemnity and reimbursement agreements,

                  and similar agreements) and copies of all guaranties and

                  letters of credit relating thereto or required thereby, all

                  sublease approvals, consents and related agreements and copies

                  of all subleases to the extent the same are in the possession

                  or control of Seller or its affiliates (or the agents,

                  representatives and/or employees of Seller or its affiliates);

 

          4.1.15. A schedule of all outstanding Leasing Costs (hereinafter

                  defined); and

 

          4.1.16. An inventory of all Personal Property located on the

                  Property, used in the maintenance of the Property or stored

                  for future use at the Property and an inventory of all

                  furniture and appliances used in the units, if any.

 

      4.2.   Seller shall make the following available for inspection by Buyer

            during ordinary business hours at Seller's management office:

 

           4.2.1. All site plans, leasing plans, as-built plans, area

                  calculations, surveys, drawings, plans and specifications

                  (ADA, architectural, engineering, landscaping, interiors,

                  etc.), construction documents, computerized or CAD documents

                   and electronic files, mechanical, engineering, physical

                  inspection, electrical, structural, soils, geotechnical,

                  foundation, seismic and similar reports and/or audits relative

                  to the Property in the possession of Seller or its authorized

                  representatives or agents, if any;

 

           4.2.2. Any and all documentation which is in the possession of

                  Seller or its authorized representatives or agents in

                   connection with the environmental condition of the Property

                  (including all Phase I and, if applicable, Phase II

                  assessments and reports, all asbestos, air quality and mold

                  reports and studies and any remediation or monitoring plans);

 

           4.2.3. Copies of any and all certificates of occupancy, permits,

                  governmental entitlements/approvals and similar documents in

                  the possession of Seller or its authorized representatives or

                  agents;

 

           4.2.4. The Tenant files, books and records relating to the ownership

                  and operation of the Property; and

 

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           4.2.5. Copies of all maintenance schedules, records or reports

                  relating to the Property.

 

From and after the Effective Date until the Closing, Buyer may reasonably

request additional items in connection with its Inspections and Seller shall

promptly deliver or make available such additional items to the extent the same

are in the possession or control of Seller or its affiliates (or the agents,

representatives and/or employees of Seller or its affiliates), but such requests

during such period shall not operate to extend the Inspection Period.

 

5.     Inspections.

 

      Buyer, at its sole expense, shall have the right to conduct feasibility,

      environmental, engineering and physical studies or other tests, as well as

      to conduct studies to evaluate the legal, financial and operational

      documentation of the Property (collectively, the "INSPECTIONS") at any

      time during the Inspection Period (hereinafter defined). Buyer, and its

      duly authorized agents or representatives, shall be permitted to enter

      upon the Property at all reasonable times during the Inspection Period in

      order to conduct engineering studies, soil tests, tenant interviews and

      any other Inspections and/or tests that Buyer may deem necessary or

      advisable. Buyer must arrange all Inspections of the Property with Seller

      at least twenty-four (24) hours in advance of any Inspections. Seller

      shall also make available for inspection by Buyer copies of the Due

      Diligence Items listed in Section 4 above. In the event that the review

      and/or Inspection conducted pursuant to this paragraph shows any fact,

      matter or condition to exist with respect to the Property that is

      unacceptable to Buyer, or if Buyer is otherwise dissatisfied with the

      Property for any or no reason, in Buyer's sole subjective discretion, then

      Buyer shall be entitled, as its sole and exclusive remedies, to (1)

      terminate this Agreement and obtain a refund of the Deposit plus all

      accrued interest thereon, or (2) waive the objection, and close the

      transaction as otherwise contemplated herein. Buyer agrees to promptly

      discharge any liens that may be imposed against the Property as a result

      of the Inspections and to defend, indemnify and hold Seller harmless from

      all, claims, suits, losses, costs, expenses (including without limitation

      court costs and attorneys' fees), liabilities, judgments and damages

      incurred by Seller as a result of any Inspections, other than to the

      extent arising from (i) any act or omission of Seller or its employees,

      representatives, agents or consultants, or (ii) any pre-existing

      liabilities, conditions or other matters merely discovered by Buyer or its

      employees, representatives, agents or consultants (e.g., latent

      environmental contamination, latent construction or other physical defects

      or conditions, etc.). Buyer's indemnification obligations hereunder shall

      expressly exclude consequential or punitive damages. Said indemnification

      obligations shall survive the Closing or earlier termination of this

      Agreement for a period of one (1) year.

 

        5.1.   Approval.

 

                 5.1.1. Buyer shall have from the Effective Date through and

                        including July 1, 2005 (the "INSPECTION PERIOD") to

                        approve or disapprove the Inspections. If Buyer shall

                        fail to notify Seller and Escrow Holder of its approval

                         of the

 

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                        Inspections in writing within the Inspection Period, the

                        condition of the Property shall be deemed disapproved,

                        and this Agreement and the Escrow shall automatically

                        terminate, whereupon the Deposit and all interest earned

                        thereon shall be immediately returned to Buyer, and

                        Buyer shall not be entitled to purchase the Property,

                        Seller shall not be obligated to sell the Property to

                        Buyer and the parties shall be relieved of any further

                        obligation to each other with respect to the Property,

                        except as provided in Section 5 above.

 

                 5.1.2. Notwithstanding anything to the contrary contained

                        herein, Buyer hereby agrees that, in the event this

                        Agreement is terminated for any reason, upon written

                        request from Seller, Buyer shall promptly and at its

                        sole expense return to Seller all Due Diligence Items

                        which have been delivered by Seller to Buyer in

                        connection with the Inspections, along with copies of

                        all reports, drawings, plans, studies, summaries,

                        surveys, maps and other data prepared by third parties

                         relating to the Property, subject to restrictions on

                        Buyer's ability to make any such materials available to

                        Seller that are imposed in any agreement with a third

                        party consultant preparing any such reports or materials

                        (the "BUYER'S REPORTS"); provided, however, that

                        delivery of such copies and information by Buyer shall

                        be without warranty or representation whatsoever,

                        express or implied, including without limitation, any

                        warranty or representation as to ownership, accuracy,

                        adequacy or completeness thereof or otherwise. Buyer

                        shall cooperate with Seller at no expense to Buyer in

                        order to obtain a waiver of any such limitations.

 

                 5.1.3. Notwithstanding any contrary provision of this

                        Agreement, Buyer acknowledges that Seller is not

                        representing or warranting that any of the Due Diligence

                        Items prepared by third parties are accurate or

                        complete, such as the Survey, engineering reports and

                        the like. Seller advises Buyer to independently verify

                        the facts and conclusions set forth therein, provided

                        however, Seller warrants that it has no knowledge of any

                        material errors or misstatements in such information

                        regarding the Property.

 

         5.2.     Contracts; Commission Agreements. On or before the end of the

                 Inspection Period, Buyer will designate in a written notice to

                 Seller which Contracts and Commission Agreements Buyer will

                 assume and which Contracts and Commission Agreements must be

                 terminated by Seller at Closing (and Buyer agrees not to

                 designate for such termination any Contract or Commission

                 Agreements that require more than thirty (30) days notice of

                 termination be given to the other party thereto). Taking into

                 account any credits or prorations to be made pursuant to

                 Section 6.7 for payments coming due after Closing but accruing

                 prior to Closing, Buyer will assume the obligations arising

                 from and after the Closing under those Contracts and Commission

 

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                   Agreements which Buyer has designated will not be terminated.

                   Seller, without cost to Seller, shall terminate at Closing

                    all Contracts and Commission Agreements that are not so

                   assumed.

 

6.     Escrow.

 

      6.1.   Opening.

 

            The purchase and sale of the Property shall be consummated through

            an escrow ("ESCROW") to be opened with Escrow Holder within two (2)

            business days after the Effective Date. Escrow shall be deemed to be

            opened as of the date fully executed copies (or counterparts) of

            this Agreement are delivered to Escrow Holder by Buyer and Seller

            ("OPENING OF ESCROW"). This Agreement shall be considered as the

            Escrow instructions between the parties, with such further

            instructions as Escrow Holder shall require in order to clarify its

            duties and responsibilities. If Escrow Holder shall require further

            Escrow instructions, Escrow Holder may prepare such instructions on

            its usual form. Such further instructions shall be promptly signed

            by Buyer and Seller and returned to Escrow Holder within three (3)

            business days of receipt thereof. In the event of any conflict

            between the terms and conditions of this Agreement and such further

            instructions, the terms and conditions of this Agreement shall

            control.

 

      6.2.   Close of Escrow.

 

           6.2.1. Escrow shall close ("CLOSE OF ESCROW" or "CLOSING") on July

                  15, 2005, subject to Seller's options to extend such Closing

                  date pursuant to and in accordance with the provisions of

                  Section 9.

 

      6.3.   Buyer Required to Deliver.

 

           Buyer shall deliver to Escrow the following:

 

           6.3.1. Concurrently with the Opening of Escrow, the Deposit;

 

            6.3.2. On or before Close of Escrow, the payment required by Section

                  2.1.2, subject to the Closing adjustments, credits and

                  prorations contemplated hereby;

 

           6.3.3. On or before Close of Escrow, such other documents as Title

                  Company may reasonably require from Buyer in order to issue

                  the Title Policy;

 

           6.3.4. An original counterpart executed by Buyer of an assignment

                  and assumption agreement (the "ASSIGNMENT AND ASSUMPTION

                  AGREEMENT") in substantially the form attached hereto as

                  Exhibit B, whereby Seller

 

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                  assigns and conveys to Buyer all of Seller's right, title and

                  interest in and to the Leases, the Contracts and the Permits;

 

           6.3.5. A counterpart Closing statement (the "CLOSING STATEMENT")

                  setting forth the Purchase Price and all amounts charged

                   against Buyer pursuant to Section 6.7 of this Agreement.

 

      6.4.   Seller Required to Deliver.

 

           On or before Close of Escrow, Seller shall deliver to Escrow the

           following:

 

           6.4.1. A duly executed and acknowledged grant deed, conveying fee

                  simple title to the Property in favor of Buyer, in

                  substantially the form attached hereto as Exhibit D (the

                  "GRANT DEED");

 

           6.4.2. An executed certificate of non-foreign status, in form

                  reasonably acceptable to Buyer, and a duly executed California

                  Form 593-C (Real Estate Withholding Certificate) or its

                  then-current equivalent, stating that Seller is exempt from

                  any withholding of Seller's proceeds from the sale of the

                  Property under the California Revenue and Taxation Code;

 

           6.4.3. A bill of sale of the Personal Property, if any, without

                  warranty (the "BILL OF SALE"), in favor of Buyer and duly

                  executed by Seller, in substantially the form attached hereto

                  as Exhibit C;

 

           6.4.4. An original counterpart executed by Seller of the Assignment

                   and Assumption Agreement;

 

           6.4.5. A counterpart Closing Statement setting forth the Purchase

                  Price and all amounts charged against Seller pursuant to

                  Section 6.7 of this Agreement;

 

           6.4.6. Such other documents as Title Company may reasonably require

                  from Seller in order to issue the Title Policy;

 

           6.4.7. A letter from Seller addressed to each Tenant informing such

                  Tenant of the change in ownership and directing that future

                  rent payments be made to Buyer (the "TENANT LETTERS"):

 

           6.4.8. [Intentionally deleted];

 

           6.4.9. All Non-Cash Security Deposits (defined below) in accordance

                  with Section 6.7.1(e);

 

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          6.4.10. Such reasonable and customary owner's affidavit and

                  indemnities for mechanics' liens and other matters, in each

                  case as may be required by the Title Company to issue the

                  Policy;

 

          6.4.11. The Guaranty (as defined below) set forth in Section 25

                  hereof, duly executed by Guarantor for the benefit of Buyer;

                  and

 

          6.4.12. A copy of corporate Resolutions, certified by the Secretary

                  or Assistant Secretary thereof to be in force and unmodified

                  as of the date and time of Closing, authorizing the

                  transactions contemplated herein (including the Guaranty), the

                  execution and delivery of the documents required hereunder

                  (including the Guaranty), and designating the signatures of

                  the persons who are to execute and deliver all such documents

                  on behalf of Seller and Guarantor or such other documentation

                  as Buyer or Buyer's title insurer may reasonably require to

                  establish that this Agreement, the transaction contemplated

                   herein, and the execution and delivery of the documents

                  required hereunder (including the Guaranty), are duly

                  authorized, executed and delivered.

 

          The documents delivered by Seller pursuant to Section 6.4 above shall

          hereinafter collectively be referred to as the "CLOSING DOCUMENTS".

           

 

          On the Close of Escrow, Seller shall deliver to Buyer the following:

 

          6.4.13. All keys to all buildings and other improvements located on

                  the Property, combinations to any safes thereon, and security

                  devices therein in Seller's possession; and

 

          6.4.14. All records and files relating to the ownership, management

                  or operation of the Property, including, without limitation,

                  all insurance policies, all security contracts, originals of

                  all Leases (to the extent in Seller's possession or control),

                  all Tenant files (including correspondence), property tax

                  bills, and all general ledgers, invoices, check copies and

                  calculations used to prepare statements of rental increases

                  under the Leases and statements of common area charges,

                  insurance, property taxes and other charges which are paid by

                  Tenants.

 

      6.5.   Buyer's Costs.

 

           At Closing, Buyer shall pay the following:

 

           6.5.1. One-half (1/2) of Escrow Holder's fees, costs and expenses;

 

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           6.5.2. The cost of the "ALTA portion" of the Title Policy and any

                  endorsements (other than those which are Seller's obligation

                  under Section 6.6.2 below) thereto requested by Buyer;

 

           6.5.3. Any cost of updating the existing Survey, to the extent not

                  previously paid by Buyer;

 

           6.5.4. Buyer's attorneys' fees; and

 

           6.5.5. All other costs customarily borne by purchasers of real

                  property in San Diego, California;

 

      6.6.   Seller's Costs.

 

           At Closing, Seller shall pay (or provide Buyer with a credit) for

           the following:

 

           6.6.1. One-half (1/2) of Escrow Holder's fees, costs and expenses;

 

           6.6.2. The cost of the "CLTA portion" of the Title Policy and, if

                  requested in order to insure over any title defect that Seller

                  elected to or is required to cure, any endorsement thereto to

                  insure over such title defect;

 

           6.6.3. The cost of recording the Grant Deed and such other

                  instruments as the Title Company may consider necessary to be

                  recorded;

 

            6.6.4. General prorated general real estate taxes and assessments;

 

           6.6.5. The amount of any special assessments due as of the Closing;

 

           6.6.6. Prorated charges for Contracts and any other obligations

                  assumed by Buyer and any other operating expense items for

                  which payments are made in arrears;

 

           6.6.7. Prorated prepaid rents, parking fees and charges, and other

                  charges prepaid under the Leases;

 

           6.6.8. Security Deposits (other than Non-Cash Security Deposits) in

                  accordance with Section 6.7.1(e);

 

           6.6.9. Any and all costs and expenses associated with the transfer,

                  reissuance or amendment of any letters of credit or similar

                  security for the Leases as required by Section 6.7.1(e) below;

 

          6.6.10. All costs and expenses required to release and discharge

                  fully all Seller Title Defects and Monetary Defects

                   (including, without limitation, any and

 

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                  all prepayment, yield maintenance, defeasance and other costs

                  and expenses associated therewith);

 

          6.6.11. The cost of any real estate transfer tax, deed tax, stamp

                  fee or conveyance fee, including all city or county transfer

                  taxes and conveyance fees;

 

          6.6.12. All brokerage fees payable in connection with this

                   transaction, as required by Section 21 of this Agreement;

 

          6.6.13. All tenant inducements, improvement costs, tenant

                  improvement allowances, brokerage commissions and other costs

                  and expenses relating to the Leases which are Seller's

                  obligation under this Agreement;

 

          6.6.14. Seller's attorneys' fees; and

 

          6.6.15. All other costs not itemized above which are customarily

                  borne by sellers of real property in San Diego, California.

 

      6.7.   Prorations.

 

           6.7.1. Items to be Prorated. The following shall be prorated between

                  Seller and Buyer as of the Close of Escrow, with the Buyer

                  being deemed the owner of the Property as of the Close of

                  Escrow:

 

                              (a) Taxes and Assessments. All non-delinquent real

                        property taxes, assessments and other governmental

                        impositions of any kind or nature, including, without

                        limitation, any special assessments or similar charges,

                        unless the same do not constitute Permitted Exceptions

                        hereunder (collectively, "TAXES"), which relate to the

                        tax year within which the Closing occurs based upon the

                        actual number of days in the tax year. With respect to

                        any portion of the Taxes which are payable by any Tenant

                        directly to the authorities, no proration or adjustment

                        shall be made. The proration for Taxes shall be based

                        upon the most recently issued tax bill for the Property.

                         If the most recent tax bill is not for the current tax

                        year, then the parties shall reprorate within thirty

                        (30) days of the receipt of the tax bill for the current

                        tax year. Upon the Close of Escrow and subject to the

                        adjustment provided above, Buyer shall be responsible

                        for real estate taxes and assessments on the Property

                        payable from and after the Close of Escrow. In no event

                        shall Seller be charged with or be responsible for any

                        increase in the Taxes on the Property resulting from the

                        sale of the Property to Buyer or from any improvements

                        made or leases entered into after the Close of Escrow.

                        Notwithstanding the foregoing, Seller will be

                        responsible for and will indemnify and hold Buyer

                        harmless from and against any reassessed or supplemental

                        tax bills to the extent they relate to the period of

                        time prior to the Close of Escrow (e.g.,

 

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                         related to Seller's purchase of the Property in the year

                        2004). With respect to all periods for which Seller has

                        paid Taxes, Seller hereby reserves the right to

                        institute or continue any proceeding or proceedings for

                        the reduction of the assessed valuation of the Property,

                        and, in its sole discretion, to settle the same. Seller

                        shall have sole authority to control the progress of,

                        and to make all decisions with respect to, such

                        proceedings but shall provide Buyer with copies of all

                        communications with the taxing authorities. All net tax

                        refunds and credits attributable to any period prior to

                        the Close of Escrow which Seller has paid or for which

                        Seller has given a credit to Buyer shall belong to and

                         be the property of Seller, provided, however, that any

                        such refunds and credits that are the property of

                        Tenants under Leases shall be promptly remitted by

                        Seller directly to such Tenants or to Buyer for the

                        credit of such Tenants. All net tax refunds and credits

                        attributable to any period subsequent to the Close of

                        Escrow shall belong to and be the property of Buyer.

                        Buyer agrees to cooperate with Seller as may be

                        reasonably necessary in connection with the prosecution

                        of any such proceedings and to take all steps, whether

                         before or after the Close of Escrow, as may be

                        reasonably necessary to carry out the intention of this

                        subparagraph, including the delivery to Seller promptly

                        following receipt of Seller's request therefor, of any

                        relevant books and records, including receipted tax

                        bills and cancelled checks used in payment of such

                        Taxes, the execution of any and all consent or other

                        documents, and the undertaking of any acts reasonably

                        necessary for the collection of such refund by Seller;

                        provided, however, Buyer shall not be obligated to incur

                         any liability, cost or expense as a result of such

                        cooperation.

 

                              (b) Rents. Buyer will receive a credit at the

                        Close of Escrow for all rents collected by Seller prior

                        to the Closing and allocable to the period from and

                        after the Close of Escrow based upon the actual number

                        of days in the month. No credit shall be given the

                         Seller for accrued and unpaid rent or any other

                        non-current sums due from Tenants ("DELINQUENT RENT")

                        until these sums are paid, and Seller shall retain the

                        right to collect any such rent; provided, however,

                        Seller shall not have the right to sue any Tenant for

                        nonpayment of rent, to file an unlawful detainer action

                        or otherwise seek in any manner to terminate such

                        Tenant's lease or disturb its possession thereunder.

                        Buyer shall cooperate with Seller after Closing to

                        collect any Delinquent Rent as of the Closing; provided,

                         however, Buyer shall not be obligated to sue any Tenants

                        or exercise any legal remedies under the Leases or to

                        incur any expense over and above its own regular

                        collection expenses. All payments collected from Tenants

                        after Closing shall first be applied, after deducting

                        therefrom any cost or expense incurred by Buyer in

                        collecting such amounts, to the month in

 

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                        which the Closing occurs and prorated appropriately,

                        then to any rent due to Buyer for the period after

                        Closing and finally to any rent due to Seller for the

                        period prior to Closing. If rents or any portion thereof

                        received by Seller or Buyer after the Closing are due

                        and payable to the other party by reason of this

                        allocation, the appropriate sum shall promptly be paid

                        to the other party.

 

                              (c) CAM Expenses. To the extent that Tenants are

                        reimbursing the landlord for common area maintenance and

                        other operating expenses (collectively, "CAM CHARGES"),

                        CAM Charges shall be prorated at Closing and again

                        subsequent to Closing, as of the date of Closing on a

                        Lease-by-Lease basis, with each party being entitled to

                        receive a portion of the CAM Charges payable under each

                        Lease for the CAM Lease Year (defined below) in which

                         Closing occurs, which portion shall be equal to the

                        actual CAM Charges incurred during the party's

                        respective periods of ownership of the Property during

                        the CAM Lease Year. As used herein, the term "CAM LEASE

                        YEAR" means the twelve (12) month period as to which

                        annual CAM Charges are owed under each Lease. Five (5)

                        days prior to Closing, Seller shall submit to Buyer an

                        itemization of its actual CAM Charges through such date

                        and the amount of CAM Charges received by Seller as of

                        such date, together with an estimate of CAM Charges to

                        be incurred prior to, but not including, the Close of

                        Escrow. In the event that Seller has received CAM

                        Charges payments in excess of its actual CAM Charges,

                         Buyer shall be entitled to receive a credit against the

                        Purchase Price for the excess. In the event that the

                        Seller has received CAM Charges payments less than its

                        actual CAM Charges, to the extent that the Leases

                        provide for a "true up" at the end of the CAM Lease

                        Year, Seller shall be entitled to receive any deficit,

                        but only after Buyer has received any true up payment

                        from the Tenants. Upon receipt by either party of any

                        CAM Charges true up payment from a Tenant, the party

                        receiving the same shall provide to the other party its

                         allocable share of the true up payment within five (5)

                        business days of the receipt thereof.

 

                              (d) Operating Expenses. All operating expenses

                        (including all charges under the Contracts assumed by

                        Buyer) shall be prorated, and as to each service

                        provider, operating expenses payable or paid to such

                        service provider in respect to the billing period of

                         such service provider in which the Close of Escrow

                        occurs (the "CURRENT BILLING PERIOD"), shall be prorated

                        on a per diem basis based upon the number of days in the

                         Current Billing Period prior to the Close of Escrow and

                        the number of days in the Current Billing Period from

                        and after the Close of Escrow, and assuming that all

                        charges are incurred uniformly during the Current

                        Billing Period. If actual bills for the Current Billing

 

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                        Period are unavailable as of the Close of Escrow, then

                         such proration shall be made on an estimated basis based

                        upon the most recently issued bills, subject to

                        readjustment upon receipt of actual bills.

 

                              (e) Security Deposits; Prepaid Rents. Prepaid

                        rentals and other Tenant charges and security deposits

                        (including any portion thereof which may be designated

                        as prepaid rent) required under the Leases (the

                        "SECURITY DEPOSITS"), to the extent the Security

                        Deposits are in the possession or control of Seller or

                        its affiliates (or their respective agents,

                        representatives and/or employees) and have not been

                        otherwise applied by Seller to any obligations of any

                        Tenants under the Leases or otherwise returned to the

                        Tenants, subject to confirmation by the Tenant Estoppel

                        Certificates (defined below), shall be credited against

                        the Purchase Price, and upon the Closing, Buyer shall

                        assume full responsibility for all Security Deposits to

                        be refunded to the Tenants under the Leases (to the

                        extent the same are required to be refunded by the terms

                        of such Leases). In the event that any Security Deposits

                         are in the form of letters of credit or other financial

                        instruments (the "NON-CASH SECURITY DEPOSITS"), Seller

                        will, at Closing, deliver said Non-Cash Security

                        Deposits to Buyer, and Buyer will not receive a credit

                        against the Purchase Price for such Non-Cash Security

                        Deposits. In order to facilitate the naming of Buyer as

                        beneficiary under any and all such Non-Cash Security

                        Deposits after Closing (the necessity of which the

                        parties hereto acknowledge), Seller will, upon Buyer's

                        request, execute any documentation that Buyer, any

                         issuer of any such Non-Cash Security Deposit and/or any

                        applicable Tenant consider necessary to transfer and/or

                        reissue said Non-Cash Security Deposit to Buyer. After

                        Closing and until Buyer is so named as beneficiary under

                        any such Non-Cash Security Deposit, Seller will draw

                        upon such Non-Cash Security Deposit at the direction of

                        and for the benefit of Buyer.

 

                              (f) Leasing Costs. Seller shall receive a credit

                        at the Closing for all leasing costs, including tenant

                        improvement and refurbishments costs and allowances (the

                         "LEASING COSTS"), and its prorata leasing commissions,

                        previously paid by Seller in connection with any new

                        Lease or modification to an existing Lease which was

                        entered into after the Effective Date and which is

                        approved or deemed approved by Buyer pursuant to this

                        Agreement, which approval included approval of the

                        Leasing Costs. The Seller's prorata share shall be equal

                        to a fraction which has as its numerator the number of

                        months left in the base term of the Lease after the

                        Close of Escrow and which has as its denominator the

                        number of months in the base term of the Lease. Seller

                        shall pay (or provide Buyer with a credit at the

                        Closing) for all Leasing Costs with respect to the

                        premises leased as of the Effective Date by the Tenants

                        pursuant to the Leases in effect as of the Effective

                        Date, to the extent that such Leasing Costs are unpaid

                        as of the Close of Escrow.

 

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                              (g) Percentage Rent. Any percentage rents due or

                        paid under any of the Leases ("PERCENTAGE RENT") shall

                        be prorated between Buyer and Seller outside of Closing

                        as of the Close of Escrow on a Lease-by-Lease basis, as

                        follows: (a) Seller shall be entitled to receive that

                        portion of the Percentage Rent under each Lease for the

                        Lease Year (hereinafter defined) in which Closing

                        occurs, which portion shall be the ratio of the number

                        of days of said Lease Year in which Seller was landlord

                         under the Lease to the total number of days in the Lease

                        Year; provided, however, Buyer shall be entitled to

                        deduct from Seller's portion thereof a prorata portion

                        of any reasonable third-party costs incurred by Buyer in

                        collecting same, and (b) Buyer shall receive the balance

                        of Percentage Rent paid under each Lease for the Lease

                        Year. As used herein, the term "LEASE YEAR" means the

                        twelve (12) month period as