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HomeMy WebLinkAbout1997-06-10 - AGENDA REPORTS - 26407 N GOLDEN VALLEY RD (2)City Manai Item to.be Rick Putnam milWi11 II�i 319 DATE: June 10, 1997 SUBJECT: ACQUISITION OF PROPERTY AT 26407 NORTH GOLDEN VALLEY ROAD FOR RECREATIONAL USE DEPARTMENT: Parks, Recreation and Community Services In March 1997 staff presented to the City Council a report outlining the dramatic increase in participation in recreation programs since the City's incorporation in 1987. It was stated in that report that nearly all of the City's 200 programmatic sports and recreational offerings are at or near capacity, and in many cases require extensive waiting lists: This situation was and is particularly true of the City's youth sports programs. As a result of the growing participation in City activities coupled with the lack of adequate athletic and gymnasium space, staff proposed establishing a priority registration for. Santa Clarita residents in youth basketball. Upon review and discussion of the report, City Council requested that staff further explore opportunities throughout the City of Santa Clarita for either the rental or acquisition of properties conducive to solving the growing recreation participation needs in the community. Staff has explored all known and available warehouses, unused facilities and other locations that may be suitable for recreation and gymnasium -type activities. Consideration was given to the rental or acquisition of space in the following locations: the American Cyanamid Building (the temporary City Hall during earthquake recovery); the Valencia Industrial Center; warehouse space in the vicinity of Springbrook Avenue (Thatcher Glass Company); and the Merle Norman warehousing and manufacturing plant on Golden Valley Road in Santa Clarita. Based upon evaluation of the advantages and disadvantages of the available sites explored, staff focused its effort on the potential acquisition of the Merle Norman facility located at 26407 North Golden Valley Road in Santa Clarita. This facility is centrally located southwest of the Home Depot (see attachments), and is in the relative proximity of Mountasia and other recreational amenities, e.g., batting cages, bowling alley and a private outdoor soccer arena. i i i'...• iFiriir •1'k :� 1..i The site is comprised of 20 acres of land and three free-standing warehouse facilities, each of approximately 21,000 square feet. The site also contains approximately five acres of relatively flat, roughly graded property that could be developed into additional athletic field space. Immediate community needs that could be accommodated in this facility include basketball, volleyball, gymnastics, aerobics, wrestling, roller hockey, etc. This facility also has tremendous capability for the development of public-private and public -public partnerships, which could include the William S. Hart Union High School District, the YMCA, the Boys and Girls Club, the various community social service organizations, as well as the arts and cultural organizations that exist within the Santa Clarita Valley. The facility offers a significant opportunity to accommodate the varied and rapidly growing recreational needs of this community, as well as potentially alleviating field maintenance and transit operating needs. The negotiated purchase price for this property is $3,080,000; the funds for which are available in the General Fund Balance or other funding alternatives that will be examined during the sixty (60) day escrow period. The acquisition and use of this site as a community recreation facility has been found by the Planning Department to conform to the City's General Plan. The Parks and Recreation Commission supports and recommends acquisition of this property. It is recommended that the City Council: 1. Authorize the acquisition of the Merle Norman property for $3,080,000, located at 26407 North Golden Valley Road in Santa Clarita, subject to all terms and conditions contained in the purchase agreement dated June 2, 1997; 2. Authorize the City Manager to execute all documents necessary in the acquisition of this property. REP:mat PRCOUNC1L\mmr=n3.697 T to A W N v CY) N ROC YON I � N v^�j '• i j v^ • I . r l � _s I � N v^�j '• i j v^ • I . CITY OF SANTA CLARITA Golden Valley Road Network 71�, Y —T. ....... vb U LEGEND CUT/FILL CATCHPOINT RDWY CENTERLINE CUT/FILL CATCHPOINT 4 A? k cANYON i j; ROAD CIA q 0� 4 WA T-Y-LININTERNATIONAL cte1,.'McLrch 1997 Re, pttcf3.dwg . I' t 27Q0- 4 STANDARD OFFER, AGREEMENT AND ESCROW `�►���� INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Non -Residential) ° American Industrial Real Estate Association June 2, 1997 (Date for Reference Purposes) 1. Buyer. 1.1 City of Santa Clarita (the"Buyer") hereby offers to purchase the real property, hereinafter described, from the ownerthereof (the "Seller") (collectively, the "Parties" or individually, a "Party"), through an escrow(the"Escrow') to close on ninety (90) days from Date of Agreement (the"Expected Closing Date') to be held by Commerce Escrow Company (the "Escrow Holder") whose address is 1545 Wilshire Blvd., Suite #600, Los Angeles, CA 90017 , Phone No. k4 U) 404-202 J , Facsimile No.% 4122 404-V411 upon the terms and conditions set forth in this agreement (the "Agreement' ). Buyer shall have the right to assign Buyer's rights hereunder, but any such assignment shall not relieve Buyer of Buyers obligations herein unless the Seller expressly releases Buyer. 1.2 The term "Date of Agreement as used herein shall be the date when by execution and delivery (as defined in paragraph 202) of this document or a subsequent counter-offer thereto, Buyer and Seller have reached agreement in writing whereby Seller agrees to sell, and Buyer agrees to purchase, the Property upon terms accepted by both Parties. 2. Property. 2.1 The real property (the "Propert ") that is the subject of this offer consists of (insert a brief physical description) three (3) buildings totaling approximately. 63,760 square feet situated on approximately 4.5 acres of excess land which is rough graded is located in the city of Santa Clarita County of Los Angeles Stateof California Js commonly known by the street address of 26407 N. Golden Valley Road and is legally described as: to be furnished by title company in escrow 2.2 If the legal description of the Property is not complete or is inaccurate, this Agreement shall not be invalid and the legal description shall be completed or corrected to meet the requirements of Old Republic . Title Company (the "Title Company"), which Title Company shall Issue the title policy hereinafter described. 2.3 The Property includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which the law of the state in which the Property is located provides is part of the Property, as well as the following items, if any, owned by Seller and presently located in the Property: electrical distribution systems (power panels, buss ducting, conduits, disconnects, lighting fixtures), telephone distribution systems (lines, tacks and connections), space heaters, air conditioning equipment, air lines, fire sprinkler systems, security systems, carpets, window coverings, wall coverings, and See attached Addendum to this Aereement (collectively, the "Improvements"). 2.4 If the Property is located in the State of California, the Broker(s) is/are required under the Alquist-Priolo Special Studies Zones Act, to disclose to a prospective purchaser of real property whether the property being purchased is located within a delineated special studies zone (a zone that encompasses a potentially or recently active trace of an earthquake fault that is deemed by the State Geologist to be sufficiently active and well defined enough to constitute a potential hazard to structures from surface faulting or fault (creep). If the Property is located within such a special studies zone, its development may require a geologic report from a state registered geologist. In accordance with such law, the Broker(s) hereby Inform(s) Buyer that the Property: O (a) Is not within such a special studies zone. R) (b) Is within such a special studies zone. 2.5 If (1) the Property is located in the State of California, (2) the Improvements were constructed prior to 1975, and (3) the Improvements include structures with (i) pre -cast (e.g., tilt -up) concrete or reinforced masonry walls together with wood frame floors or roofs or (ii) unreinforced masonry walls, California law requires that Seller or Seller's Broker provide Buyer with a copy of The Commercial Property Owner's Guide to Earthquake Safety (the "Booklet") published by the California Seismic Safety Commission. Seller and Seller's Broker hereby Inform Buyer that the Property: ❑ (a) meets the foregoing requirements, and Seller and Seller's Broker are required to provide Buyer with a copy of the Booklet. Seller or Seller's Broker shall, within five (5) business days of the Date of Agreement, deliver to Buyer a copy of the Booklet and a completed "Commercial Property Earthquake Weakness Disclosure Report" contained in the Booklet duly executed by Seller. Within five (5) business days of Buyer's receipt of said Disclosure Report. Buyer shall deliver a duly countersigned copy of the same to Escrow Holder, with a copy to Seller and Seller's Broker. Escrow Holder is hereby instructed that the Escrow shall not close unless and until Escrow Holder has received the Disclosure Report duly signed by both Seller and Buyer. ❑ (b) does not meet the foregoing requirements requiring the delivery of the Booklet. 3. Purchase Price. 3.1 The purchase price (the "Purchase Price") to be paid by Buyer to Seller for the Property shall be $ 3,080,000.00 , payable as follows: (a) Cash down payment, Including the Deposit as defined in paragraph 4.3 (or if an all cash 2,080,000.00 transaction, the Purchase Price): $ (Strike it not applicable) (Strike if not applicable) (c) Buyer shall take title to the Property subject to the following existing deed(s) of trust ("Existing Deed(s) of Trust") securing the existing promissory hotels) ("Existing Note(s)"): (i) An Existing Note (the "First Note') withLanunpaidd principal balance as of the Cl approximately: Said existing note is payable at $ per month, including interest at the rate of °/ num until paid (and/or the entire unpaid balance is due on )• (ii) An Existing Note (the "Seco ) with an unpaid principal balance as of the Closing of approximately: Said Exi ' e is payable at $ per month, ding interest at the rate of °h per annum until paid (and/or the entire (Strike if not (d) Buyer shall give Seller a deed of trust (the "Purchase Money Deed of Trust") on the Property, applicable) to securethe promissory note of Buyerto Sellerdescribed in Paragraph6(the"Purchase Money 1,000,000.00 Note") in the amount of: $ Total Purchase Price: $ 3,080,000.00 3.2 If an Existing Deed of Trust permits the beneficiary thereof to require payment of a transfer fee as a condition to the transfer of the Property subject to such Existing Deed of Trust, Buyer agrees to pay transfer fees and costs of up to one and one-half percent (1'/2%) of the unpaid principal balance of the applicable Existing Note. 4. Deposits. will 4.1 Buyer lareay deliveria check in the sum of $ 50, 000.00 , payable to Commerce Escrow Company 17 held uncashed until the Date Price of the Property at the Clo: or funds shall, upon request by Initials 3reement. When cashed, the check i as defined in paragraph 6.3. Should er, be promptly returned to Buyer. §1989 -American Industrial Real Estate Association Teck applicable box) H forthwith deposited in the payee's trust account losited into the payee's trust account to be applied toward the Purchase Seller not enter into an agreement for purchase and sale, Buyers check PAGE 1 Initials FORM 729-R-11/94 U on removal of Buyer's contingencies, 30,000.00 4.2 uyer shall deposit with Escrow Holder the additional sum of $ , to be applied to the Purchase Price -at the Closing. 4.3 The funds deposited with Escrow Holder by or on behalf of Buyer under paragraphs 4.1 and 4.2, above (collectively the "Deposit"), shall be deposited by Escrow Holder in such State or Federally charteredbankas Buyer may select and in such interest-bearing account or accounts as Escrow ' Holder or Broker(s) deem appropriate and consistent with the timing requirements of this transaction. The interest therefrom shall accrue to the benefit of Buyer, who hereby acknowledges that there may be penalties or interest forteitures if the applicable instrument is redeemed prior to its specified maturity. Buyer's Federal Tax Identification Number is - from any correspondent or agent thereof, a commitment to lend to Buyer a sum not less than $ , at a fixed interest rate not to exceed °k per annum, payable in equal monthly installments, including interest, amortized ov enod of not less than _years and all due in not less than _years, or at a variable interest rate commencing at an interest rate no eceed To per annum, amortized over a period of not less than —years and all due in not less than years, and ineither c , ith loan fees not to exceed "/o of the amount of the new loan (the "New Loan"). The New Loan shall be secured by a first deed of tr on the Property and shall be upon the following additional terms and conditions: and upon such others terms and conditions as are u required by such lender. 5.2 Buyer hereby agrees to diligen sue obtaining the New Loan. If Buyer shall fail to notify its Broker, Escrow Holder and Seller, in writing within days following th of Agreement, that the New Loan has not been obtained, it shall be conclusively presumed that Buyer has either obtained said New Loan o waived this New Loan contingency. 5.3 If, aft diligence, Buyer shall notify its Broker, Escrow Holder and Seller, in writing, within the time specified In Paragraph 5.2 hereof, that Buyer has to said New Loan, this Agreement shall be terminated, and Buyer shall be entitled to the prompt return of Buyer's Deposit and any oth s deposited by or for Buyerwith Escrow Holder or Seller, plus any Interest earned thereon, less only Escrow Holder and Title Company cancellation 6. Purchase Money Note. (Strike if not applicable) 6.1 inmross S, pa'C -- tollmua See attached Addendum to this Agreement The Purchase Money Note and Purchase Money Deed of Trust shall be on the current forms commonly used by Escrow Holder, and be junior and subordinate only to the Existing Note(s) and/or New Loan expressly called for by this Agreement. 6.2 The Purchase Money Note and the Purchase Money Deed of Trust shall contain provisions regarding the following: (a) Prepayment. Principal maybe prepaid in whole or in part at anytime without penalty, at the option of Buyer. (b) Late Charge. A late charge of 6% shall be payable with respect to any payment of principal, interest, or other charges, not made within ten (10) days after it is due. (c) Due On Safe. In the event the Buyer sells or transfers title to the Property or any portion thereof, then the Seller may, at Sellers option, require the entire unpaid balance of the Purchase Money Note to be then paid in full. 7. Real Estate Brokers. 7.1 The following real estate broker(s) (collectively, the "Brokers") and brokerage relationships exist in this transaction and are consented to by the parties (check applicable boxes): - - ® CB Cotitmercial represents Seller exclusively ("Seller's Broker") • Realty Advisory Group represents Buyer exclusively ("Buyer's Broker"); or ❑ represents both Seller and Buyer ("Dual Agency"). (Also see Paragraph 26.) (the "Broker(s)"), all such named Broker(s) being the procuring cause(s) of this Agreement. See paragraph 26 for Disclosures Regarding the Nature of a Real Estate Agency Relationship. Buyer shall use the services of Buyers Broker exclusively in connection with any and all negotiations and offers with respect to the property described in paragraph 2.1 for a period of one year from the date above. 7.2 Buyer and Seller each represent and warrant to the other that he/she/it has had no dealings with any person, firm, broker or finder in connection with the negotiation of this Agreement and/or the consummation of the purchase and sale contemplated herein, other than the Broker(s) named in paragraph 7.1, and no broker or other person, firm or entity, other than said Broker(s) is/are entitled to any commission or finder's fee in connection with this transaction as the result of any dealings or acts of such Party. Buyer and Seller do each hereby agree to indemnify, defend, protect and hold the other harmless from and against any costs, expenses or liability for compensation, commission or charges which may be claimed by any broker, finder or other similar party, other than said named Broker(s) by reason of any dealings or act of the indemnifying Party. 8. Escrow and Closing. 8.1 - Upon acceptance hereof by Seller, this Agreement, including any counter-offers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller, but also instructions to Escrow Holder for the consummation of the Agreement through the Escrow. Escrow Holder shall not prepare any further escrow instructions restating or amending this Agreement unless specifically so instructed by the Parties of a Broker herein. 8.2 Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law, custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code. In the event of a conflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the Property is located shall prevail. 8.3 Subject to satisfaction of the contingencies herein described, Escrow Holder shall close this escrow (the "Closing") by recording the grant deed and other documents required to be recorded and by disbursing the funds and documents in accordance with this Agreement. 8.4 If this transaction is terminated for non -satisfaction and non -waiver of a Buyer's Contingency, as definedinparagraph 9.4, then neither of the Parties shall thereafter have any liability to the other under this Agreement, except to the extent of the breach of any affirmative covenant or warranty in this Agreement that may have been involved. In the event of such termination. Buyer shall be promptly refunded all funds deposited by or on behalf of Buyer with a Broker, Escrow Holder or Seller, less only Title Company and Escrow Holder cancellation tees and costs, all of which shall be Buyer's obligation. 8.5 The Closing shall occur on the Expected Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and the Expected Closing Date is not extended by mutual instructions of the Parties, a Party hereto not then in default under this Agreement may notify the other Party, Escrow Holder, and Broker(s), in writing that, m ilese il o Glesi §50eme ill this Agreem RIIW� d �'g'i'� ,df hd 'ra'L°i'6�t°rd2� N�'i'B dtn* 8.6 s r ment d scrows a e eeme erminated an scrow of er shall forthwith return all monies and documents, less only Escrow Holder's reasonable fees and expenses, to the Party who deposited them. Such Party shall indemnify and hold Escrow Holder harmless in connection with such retm. However, no refunds or documents shall be returned to a party claimed by written notice to Escrow Holder to be in default under this Agreement. 'Paragraph 8.5 hereof, 8.7 Except as otherwise provided herein, the termination of Escrow and this Agreement and/or the return of deposited funds or documents shall not relieve or release either Buyer or Seller from any obligation to pay Escrow Holder's fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements; covenants or warranties contained herein. 8.8 If this Agreement terminates for any reason other than Seller's breach or default, then at Seller's request, and as a condition to the return of Buyer's deposit, Buyer shall within five (5) days after written request deliver to Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. 9. Contingencies to Closing. 9.1 The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies: (a) Disclosure. Buyer's receipt and written approval, within ten(10) days after delivery to Buyer, of a completed Property Information Sheet (the "Property Information Sheet"), concerning the Property, duly executed by or on behalf of Seller in the current form or equivalent to that published by the American Industrial Real Estate Association (the "A.I.R.")- Seller shall provide Buyerwith the Property Information Sheet within ten (10) days following the Date of Agreement. See also paragraph 2.5 for possible additional disclosure and contingency regarding a "Commercial Property Earthquake Weakness Disclosure Report." (b) Physical Inspection. Buyers written approval, within ten (10) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of an Inspection by Buyer, at Buyers expense, of the physical aspects of the Property. Initials PAGE 2 Initials (c) Hazardous Substance Conditions Report. Buyer's written approval, within thirty (30) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a Hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Such report will be obtained at Buyers direction and expense. A "Hazardous Substance" for purposes of this Agreement is defined as any substance whose nature and/or quantity of existence, use, manufacture, disposal or effect, render it subject to Federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare. A "Hazardous Substance Condition" for purposes of this Agreement is defined as the existence on, under or relevantly adjacent to the Property of a Hazardous Substance that would require remediation and/or removal under applicable Federal, state or local law. (d) Soil Inspection. Buyer's written approval, within thirty (30) days after the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a soil test report concerning the Property. Said report shall be obtained at Buyer's direction and expense. Seller shall promptly provide to Buyer copies of any existing soils reports that Seller may have. (e) GovernmentalApprovals. Buyers receipt, within fifteen (15) days of the Date of Agreement, of all approvals and permits from governmental agencies or departments which have or may have jurisdiction over the Property which Buyer deems necessary or desirable in connection with Its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped access, transportation and environmental matters. Buyer's failure to deliver to Escrow Holder and Seller written notice terminating this Agreement prior to the expiration of said fifteen (15) day period as a result of Buyer's failure to obtain such approvals and permits shall be conclusively deemed to be Buyer's waiver of this condition to Buyer's obligations under this Agreement. (f) Condition of Title. Buyer's written approval of a current preliminary title report concerning the Property (the "PTR") issued by the Title Company, as well as all documents (the "Underlying Documents") referred to in the PTR, and the issuance by the Title Company of the title policy described in 10.1. Seller shall cause the PTR and all Underlying Documents to be delivered to Buyer promptly after the Date of Agreement. Buyer's approval is to be given within ten(10)days after receipt of said PTR and legible copies of all Underlying Documents. The disapproval by Buyer of any monetary encumbrance, which by the terms of this Agreement is not to remain against the Property afterthe Closing, shall not be considered a failure of this condition, as Seller shall have the obligation, at Seller's expense, to satisfy and remove such disapproved monetary encumbrance at or before the Closing. (g) Survey. Buyers written approval, within thirty (30) days after receipt of the PTR and Underlying Documents, of an ALTA title supplement based upon a survey prepared to American Land Title Association (the "ALTA") standards for an owner's policy by a licensed surveyor, showing the legal description and boundary lines of the Property, any easements of record, and any improvements, poles, structures and things located within ten (10) feet either side of the Property boundary lines. The survey shall be prepared at Buyer's direction and expense. If Buyer has obtained a survey and approved the ALTA title supplement, Buyer may elect within the period allowed for Buyer's approval of a survey to have an ALTA extended coverage owner's form of title policy, in which event Buyer shall pay any additional premium attributable thereto. (h) Existing Leases and Tenancy Statements. Buyer's written approval, within ten(10) days after receipt of legible copies of all leases,subleases or rental arrangements (collectively the "Existing Leases") affecting the Property, and a statement (the "Tenancy Statement") in the latest form or equivalent to that published by the A.I.R., executed by Seller and each tenant and subtenant of the Property. Seller shall use its best efforts to provide Buyer with said Existing Leases and Tenancy Statements promptly after the Date of Agreement. (i) Other Agreements. Buyers written approval, within ten (10) days after receipt, of a copy of any other agreements ("Other Agreements") known to Sellerthat will affect the Property beyond the Closing. Seller shall cause said copies to be delivered to Buyer promptly atter the Date of Agreement. (j) Financing. If paragraph 5 hereof dealing with a financing contingency has not been stricken, the satisfaction or waiver of such New Loan contingency. (k) Existing Notes. If paragraph 3.1 (c) has not been stricken; Buyers written approval, within ten (10) tlays atter receipt, of conformed and le able copies of the Existing Notes, Existing Deeds of Trust and related agreements (collectively the "Loan Documents") to which the Property will remain subject after the Closing, including a beneficiary statement (the "Beneficiary Statement") executed by the holders of the Existing Notes confirming: (1) the amount of the unpaid principal balance, the current interest rate, and the date to which interest is paid, and (2) the nature and amount of any impounds held to the beneficiary in connection with said loan. Seller shall use its best efforts to provide Buyer with said Loan Documents and Beneficiary Statement promptly after the Date 0f AgeemenL Buyers obligation to close is further conditioned upon Buyers being able to purchase the Property without acceleration or change in the terms of any Existing Notes or charges to Buyerexcept as otherwise provided in this Agreement or approved by Buyer, provided, however. Buyer shall pay the transfer fee referred to in paragraph 3.2 hereof. (1) Destruction, Damage or Loss. There shall not have occurred prior to the Closing, a destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure. If the cost of repair or cure is $10,000.00 or less, Seller shall repair or cure the loss priorto the Closing. Buyer shall have the option, within ten (10) days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to either terminate this transaction or to purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price. If the cost to repair orcure is more than $10,000.00, and Buyer does not elect to terminate this transaction, Buyer shall be entitled to any insurance proceeds appl icable to such loss. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume no destruction, damage or loss costing more than $10,000.00 to repair or cure has occurred prior to Closing. (m) Material Change. No Material Change, as hereinafter defined, shall have occurred with respect to the Property that has not been approved in writing by Buyer. For purposes of this Agreement, a "Material Change" shall be a change in the status of the use, occupancy, tenants, or condition of the Property as reasonably expected by the Buyer, that occurs after the date of this offer and prior to the Closing. Buyer shall have ten (10) days following receipt of written notice from any source of any such Material Change within which to approve or disapprove same. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume that no Material Change has occurred prior to the Closing. (n) Seller Performance. The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement. (o) Breach of Warranty. That each representation and warranty of Seller herein be true and correct as of the Closing. Escrow Holder shall assume that this condition has been satisfied unless notified to the contrary in writing by Buyer or Broker(s) prior to the Closing. (p) Broker's Fee. Payment at the Closing of such Brokers Fee as is specified in this Agreement or later written instructions to Escrow Holder executed by Seller and Broker(s). It is agreed by Buyer, Seller and Escrow Holder that Broker(s) is/are a third party beneficiary of this Agreement insofar as the Broker's fee is concerned, and that no change shall be made by Buyer, Seller or Escrow Holder with respect to the time of payment, amount of payment, or the conditions to payment of the Broker's fee specified in this Agreement, without the written consent of Broker(s). 92 All of the contingencies specified in sub -paragraphs (a) through (p) of paragraph 9.1 are for the benefit of, and may be waived by, Buyer, and may be elsewhere herein referred to as "Buyer Contingencies" 9.3. If Buyer shall fail, within the applicable time specified, to approve or disapprove in writing to Escrow Holder, Seller and the other Party's Broker, any item, matter or document subject to Buyer's approval under thetermsof this Agreement, it shall be conclusively presumed that Buyer has approved such item, matter or document. Buyer's conditional approval.shall constitute a disapproval, unless provision is made by the Seller within the time specified therefor by the Buyer in the conditional approval or by this Agreement, whichever is later, for the satisfaction of the condition imposed by the Buyer. 9.4 1f any Buyer's Contingency is not satisfied or if Buyer. disapproves any matter subject to its approval within the lime period applicable thereto {"Disapproved Item"), Seller shall have the right within ten (10) days following the expiration of the time period applicable to such Buyer Contingency or receipt of notice of Buyer's disapproval, as the case may be, to elect to cure such Disapproved Item prior to the Expected Closing Date ("Sellers Election"). Seller's failure to give to Buyer within said ten (10) day period, written notice of Seller's commitment to cure such Disapproved Item on or before the Expected Closing Date shall be conclusively presumed to be Seller's Election not to cure such Disapproved Item. If Seller elects, either by written notice or failure to give written notice, not tc cure a Disapproved Item, Buyer shall have the election, within ten (70) days after Seller's Election to either accept title to the Property subject to that Disapproved Item, or 10 terminate this vansaction. Buyers failure to elect termination by wrinen notice to Seller within said ten (10) day period shall constitute BuYer'a election to accept title t0 the Property subject t0 that Disapproved Item without deduction or offset. Unless expressly provided otherwise herein, Sellers right to cure shall not apply to Hazardous Substance Conditions referenced in paragreph 9.1 (c) or to the Financing Contingency set forth in paragraph 5. Unless the parties mutually Instruct otherwise, if the time periods for the satisfaction of contingences or for Seller's and Buyer's said Elections would expire on a date atter the Expected Closing Date, the Expected Closing Date shall be deemed extended to coincide with the expiration of three (3) business days following the expiration of: (a) the applicable contingency period(s), (b) the period within which the Seller may elect to cure the Disapproved Item, or (c) if Seller elects not to cure, the period within which Buyer may elect to terminate this transaction, whichever is later. 9.5 Buyer understands and agrees that unti l such time as all Buyer's Contingencies have been satisfied or waived, Seller and/or its agents may solicit, entertain and/or accept back-up offers to purchase the subject Property in the event the transaction covered by this Agreement is not consummated. 9.6 As defined in subparagraph 9.1(c), Buyer and Seller acknowledge that extensive local, state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remediation of a Hazardous Substance Condition. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Broker(s). Buyer and Selleracknowledge that they have been advised by Broker(s) to consult their own technical and legal experts with respectto the possible Hazardous Substance Condition aspects of this Property or adjoining properties, and Buyer and Seller are not relying upon any investigation by or statement of Broker(s) with respect thereto. Buyer and Seller hereby assume all responsibility for the impact of such Hazardous Substance Conditions upon their respective interests herein. 10. Documents Required at Closing: 10.1 Escrow Holder shall cause to be issued to Buyer a standard coverage (or ALTA extended, if so elected under paragraph 9.1(f)) owner's form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a PurchaseMoneyDeed of Trust in this transaction, the policy of title insurance shall be a joint protection policy insuring both Buyer and Seller. "IMPORTANT: INA PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAYBE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING." 102 Seller shall deliver or cause to be delivered to Escrow Holder in time for delivery to Buyer at the Closing, an original ink signed: (a) Grant deed (or equivalent), duly executed and in recordable form, conveying fee title to the Property to Buyer. (b) If paragraph 3.1(c) has not been stricken, the Beneficiary Statements concerning Existing Note(s). Initials PAGE 3 Initials (c) If applicable, the Existing Leases and Other Agreements together with duly executed assignments thereof by Seller and Buyer. The assignment of Existing Leases shall be on the most recent Assignment and Assumption of Lessor's Interest in Lease form published by the A.I.R. or its equivalent. (d) If applicable, the Tenancy Statements executed by Seller and the Tenant(s) of the Property. - (e) An affidavit executed by Sellerto the effect that Seller is not a "foreign person" within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit inform reasonably satisfactory to Buyer at least three (3) business days prior to the Closing, Escrow Holder shall at the Closing deduct from Sellers proceeds and remit to Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers. 10.3 Buyer shall deliver or cause to be delivered to Seller through escrow; (a) The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement for prorations, expenses and adjustments. The balance of the cash portion of the Purchase Price, including Buyer's escrow charges and other cash charges, if any, shall be deposited by Buyer with Escrow Holder, by cashier's check drawn upon a local major banking institution, federal funds wire transfer, or any other method acceptable to Escrow Holder as immediately collectable funds, no later than 11.00 o'clock A.M. on the business day prior to the Expected Closing Date. (b) If a Purchase Money Note and Purchase Money Deed of Trust are called for by this Agreement, the duly executed originals of those documents, the Purchase Money Deed of Trust being In recordable form, together with evidence of fire insurance on the improvements in the amount of the full replacement cost naming Seller as a mortgage loss payee, and a real estate tax service contract (at Buyer's expense), assuring Seller of notice of the status of payment of real property taxes during the life of the Purchase Money Note. (c) The assumption portion of the Assignment and Assumption of Lessors Interest in Lease form specified in paragraph 10.2(x), above, duly executed by Buyer with respect to the obligations of the Lessor accruing after the Closing as to each Existing Lease. (d) Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any Other Agreements. (e) If applicable, a written assumption duly executed by Buyer of the loan documents with respect to Existing Notes. 11. Prorations, Expenses and Adjustments. 11.1 Taxes, Real property taxes payable by the owner of the Property shall be prorated through Escrow as of the date of the Closing, based upon the latest tax bill available. The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of events occurring prior to the Closing. Payment shall be made promptly in cash upon receipt of a copy of any such supplemental bill of the amount necessary to accomplish such proration. Seller shall pay and discharge in full at or before the Closing the unpaid balance of any special assessment bonds. 11.2 Insurance. If Buyer elects to take an assignment of the existing casualty and/or liability insurance that is maintained by Seller, the current premium therefor shall be prorated through Escrow as of the date of Closing. 11.3 Rentals, Interest and Expenses. Collected rentals, interest on Existing Notes, utilities, and operating expenses shall be prorated as of the date of Closing. The Parties agree to promptly adjust between themselves outside of Escrow any rents received after the Closing. 11A Security Deposit Security Deposits held by Seller shall be given to Buyer by a credit to the cash required of Buyer at the Closing. 11.5 Post Closing Matters. Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined. 11.6 Variations In Existing Note Balances. In the event that Buyer is taking title to the Property subject to an Existing Deed of Trust(s), and in the event that a Beneficiary Statement as to the applicable Existing Note(s) discloses that the unpaid principal balance of such Existing Note(s) at the Closing will be more or less than the amount set forth in paragraph 3.1 (c) hereof (the "Existing Note Variation"), then the Purchase Money Note(s) shall be reduced ur increased by an amount equal to such Existing Note Variation. If there is to be no Purchase Money Note, the cash required at the Closing per Paragraph 3.1(a) shall be reduced or increased by the amount of such Existing Note Variation. 11.7 Variations to New Loan Balance. In the event Buyer is obtaining a New Loan and in the event that the amount of the New Loan actually obtained is greater than the amount set forth in Paragraph 5.1 hereof, the Purchase Money Note, if one is called for in this transaction, shall be reduced by the excess of the actual face amount of the New Loan over such amount as designated in Paragraph 5.1 hereof. 11.8 Escrow Costs and Fees. Buyer and Seller shall each pay one-half of the Escrow Holder's charges and Seller shall pay the usual recording fees and any required documentary transfer taxes. Seller shall pay the premium for a standard coverage owner's or joint protection policy of title insurance. 12. Representation and Warranties of Seller and Disclaimer. 12.1 Seller's warranties and representations shall survive the Closing and delivery of the deed, and, unless otherwise noted herein, are true, material and relied upon by Buyer and Broker(s) in all respects, both as of the Date of Agreement, and as of the date of Closing. Seller hereby makes the following warranties and representations to Buyer and Broker(s): (a) Authority of Seller. Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein, and to perform Seller's obligations hereunder. (b) Maintenance During Escrow and Equipment Condition At Closing. Except as otherwise provided in paragraph 9.1(1) hereof dealing with destruction, damage or loss, Seller shall maintain the Property until the Closing in its present condition, ordinary wear and tear excepted. The heating, ventilating, air conditioning, plumbing, elevators, loading doors and electrical systems shall be in good operating order and condition at the time of Closing. (c) Hazardous SubstancesiStorage Tanks. Seller has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance (as defined in paragraph 9.1(c)), nor of the existence or prior existence of any above or below ground storage tank or tanks. (d) Compliance. Seller has no knowledge of any aspect or condition of the Property which violates applicable laws, rules, regulations, codes, or covenants, conditions or restrictions, or of improvements or alterations made to the Property without a permit where one was required, or of any unfulfilled order or directive of any applicable governmental agency or casualty insurance company that any work of investigation, remediation, repair, maintenance or improvement is to be performed on the Property. (e) Changes In Agreements. Prior to the Closing, Seller will not violate or modify, orally or in writing, any Existing Lease or Other Agreement, or create any new leases or other agreements affecting the Property, without Buyer's written approval, which approval will not be unreasonably withheld. (f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property, except as disclosed by this Agreement or otherwise in writing to Buyer. (g) Mechanics' L/ens. There are no unsatisfied mechanic's or materialman's lien rights concerning the Property. (h) Actions, Suits or Proceedings. Seller has no knowledge of any actions, suits or proceedings pending or threatened before any commission, board, bureau, agency, instrumentality, arbitrator(s) court or tribunal that would affect the Property or the right to occupy or utilize same. (i) Notice of Changes. Seller will promptly notify Buyer and Broker(s) in writing of any Material Change (as defined in paragraph 9.1(m)) affecting the Property that becomes known to Seller prior to the Closing. (j) No Tenant Bankruptcy Proceedings. Seller has no notice or knowledge that any tenant of the Property Is the subject of a bankruptcy or insolvency proceeding. (k) No Seller Bankruptcy Proceedings. Seller is not the subject of a bankruptcy, insolvency or probate proceeding. 12.2 Buyer hereby acknowledges that, except as otherwise stated in this Agreement, Buyer is purchasing the Property in its existing condition and will, by the time called for herein, make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the Occupational Safety and Heaitb Act, hazardOlus substance laws, or aen other act, ordinance or law, h v be8p made by either Party or Br %or, o relied upon by either Party hereto. Sub] ect on y to the 7 p�ossess� reTmor.eTY O,A�eJl,P,r uur9uant to ttiisl Ureement, Buyer agrees to purchase the p p y SS 111iSSS , SSubb3ect to alt au 13.1 Possession of the Property shall be given to Buyer at the Closing subject to the rights of tenants under Existing Leases. 14. Buyer's Entry. 14.1 At anytime during the Escrow period, Buyer, and its agents and representatives, shall have the right at reasonable times and subject to rights of tenants under Existing Leases, to enter upon the Property for the purpose of making inspections and tests specified in this Agreement. Following any such entry or work, unless otherwise directed in writing by Seller, Buyer shall return the Property to the condition it was In prior to such entry or work, including the recompaction or removal of any disrupted soil or material as Seller may reasonably direct. All such Inspections and tests and any other work conducted or materials furnished with respect to the Property by or for Buyer shall be paid for by Buyer as and when due and Buyer shall indemnify, defend, protect and hold harmless Seilerand the Propertyof and from any and all claims, liabilities, demands, losses, costs, expenses (including reasonable attorney's fees), damages or recoveries, including those for injury to person or property, arising out of or relating to any such work or materials orthe acts or omi si ns of Buyer, its agents or employees in connection therewith. However, Buyer shall not do any drilling or coring wit�lout 15. Further Documents and Assurances. Seller's prior approval and will not disclose the results* 15.1 Buyer and Seller shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for Closing as and when required by this Agreement Buyer and Seller agree to provide all further information, and to execute and deliver all further documents and instruments, reasonably required by Escrow Holder or the Title Company. 16. Attorneys' Fees. 16.1 In the event of any litigation or arbitration between the Buyer, Seller, and Broker(s), or any of them, concerning this transaction, the prevailing party shall be entitled to reasonable attorney's fees and costs. The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred In good faith. 17. Prior Agreements/Amendments. 17.1 The contract in effect as of the Date of Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property. 172 Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller. *of any reports of any inspections or investigations allowed under the terms of this Agreement to any third person or entity without Seller's prior written consent, unless required by law to do so. Initials PAGE 4 Initials 18. Broker's Rights. 18.1 It this sale shall not be consummated due to the default of either the Buyer or Seller, the defaulting party shall be liable to and shall pay to Broker(s) the commission that Broker(s) would have received had the sale been consummated. This obligation of Buyer, if Buyer is the defaulting party, is in addition to any obligation with respect to liquidated damages. 182. Upon the Closing, Broker(s) is/are authorized to publicize the facts of this transaction, with -Seller's prior written 19. Notices. consent. 19.1 Whenever any Party hereto, Escrow Holder or Broker(s) herein shall desire to give or serve any notice, demand, request, approval or other communication, each such communication shall be in writing and shall be delivered personally, by messenger or by mail, postage prepaid, addressed as set forth adjacent to that party's or Broker's signature on this Agreement or by telecopy with receipt confirmed by telephone. Service of any such communication shall be deemed made on the date of actual receipt at such address. 19.2 Any Party or Broker hereto may from time to time, by notice in writing served upon the other Party as aforesaid, designate a different address to which, or a different person or additional persons to whom, all communications are thereafter to be made. 20. Duration of Offer. 20.1 If this offer shall not be accepted by Seller on or before 5:00 P.M. according to the time standard applicable to the city of Santa Clarita on the date of June 9, 1997 it shall be deemed automatically revoked. 20.2 The acceptance of this offer, or of any subsequent counter-offer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party or either Broker herein of a duly executed writing unconditionally accepting the last outstanding offer or counter-offer. 21. LIQUIDATED DAMAGES. (This liquidated Damages paragraph is applicable only if initialled by both parties.) 21.1 THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYER'S BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $80.000.00 PLUS INTEREST, IF ANY, ACCRUED THEREON. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Buyer Initials Seller Initials 22. ARBITRATION OF DISPUTES. (This Arbitration of Disputes paragraph is applicable only if initialled by both parties and is subject to paragraph 23, below.) 22.1 ANY CONTROVERSYASTO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES (the "COMMERCIAL RULES") OF, THE AMERICAN ARBITRATION ASSOCIATION. HEARINGS ON SUCH ARBITRATION SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY THREE (3) ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST FIVE (5) FULL TIME YEARS OF EXPERIENCE IN THE AREA WHERE THE PROPERTY IS LOCATED, IN THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT AND SHALL BE APPOINTED UNDER THE COMMERCIAL RULES. THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW AND THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT, AS THESAME MAY HAVE BEEN DULY MODIFIED IN WRITING BY THE PARTIES PRIOR TO THE ARBITRATION, UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING SCHEDULED AT THE REQUEST OF EITHER PARTY. SUCH PRE - ARBITRATION DISCOVERY SHALL BE PERMITTED AS IS AUTHORIZED UNDER THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEASTTWO WO (2) OF THE THREE (3) ARBITRATORS, BE RENDERED WITHIN THIRTY (30) DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS' FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYER'S RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATION DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY INITIALLING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREETO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Buyer Initials Seller Initials 23. Applicable Law. 23.1 This Agreement shall be governed by, and paragraph 22.3 amended to refer to, the laws of the state in which the Property is located. 24. Time of Essence. 24.1 Time is of the essence of this Agreement. 25. Counterparts. 25.1 This Agreement maybe executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement. 26. Disclosures Regarding The Nature of a Real Estate Agency Relationship. 26.1 The Parties and Broker(s) agree that their relationship(s) shall be governed by the principles set forth in California Civil Code, Section 2375. as summarized in the following paragraph 26.2. 26.2 When entering into a discussion with areal estate agent regarding areal estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seller acknowledge being advised by the Broker(s) in this transaction, as follows: (a) Seller's Agent. A Seller's agent under a listing agreement with the Seller acts as the agent for the Seller only. A.Seller's agent or subagent has the following affirmative obligations: (1) To the Seller: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyer and the Seller. a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or, desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b) Buyer's Agent. A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Sellers agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer. A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller., a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. C. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. Initials PAGE 5 Initials (c)Agent Representing Both Seller and Buyer. Areal estate agent, either acting directly or through one or more associate licenses. can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual -agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Seller or the Buyer. b. Other duties to the Seller and the Buyer as stated above in their respective sections (a) or (b) of this paragraph 26.2.-(2) fn representing both Seller and Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered. (3) The above ,duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Seller should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advise is desired, consult a competent professional. (d) Further Disclosures. Throughout this transaction Buyer and Seller may receive more than one disclosure, depending upon the number of agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate agent in this transaction and that disclosure. 26.3 Confidential Information:. Buyer and Seller agree to identify to Broker(s) as "Confidential" any communication or information given Broker(s) that is considered by such Party to be confidential. - - 27. Additional Provisions: Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraphs 29.1 through 29.8 , (It will be presumed no other provisions are included unless specified here.) *See attached Addendum Paragraph 29.8 to this. Agreement *BUYER AND SELLER HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN AND ARE NOW ADVISED BY THE BROKER(S) TO CONSULT AND RETAIN THEIR OWN EXPERTS TO ADVISE AND REPRESENT THEM CONCERNING THE LEGAL AND INCOME TAX EFFECTS OF THIS AGREEMENT, AS WELL AS THE CONDITION AND/OR LEGALITY OF THE PROPERTY, THE IMPROVEMENTS AND EQUIPMENT THEREIN, THE SOIL THEREOF, THE CONDITION OFTITLE THERETO, THE SURVEY THEREOF, THE ENVIRONM ENTALASPECTSTH EREOF, THE INTENDED AND/OR PERMITTED USAGE THEREOF, THE EXISTENCE AND NATURE OF TENANCIES THEREIN, THE OUTSTANDING OTHER AGREEMENTS, IF ANY, WITH RESPECT THERETO, AND THE EXISTING OR CONTEMPLATED FINANCING THEREOF, AND THAT THE BROKER(S) IS/ARE NOT TO BE RESPONSIBLE FOR PURSUING THE INVESTIGATION OF ANY SUCH MATTERS UNLESS EXPRESSLY OTHERWISE AGREED TO IN WRITING BY BROKER(S) AND BUYER OR SELLER. THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY. 1. this Agreement has been filled In, it has been prepared for submission to your attorney for his approval. No representation or recommendation is made by the real estate Broker(s) or their agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction Involved herein.The undersigned Buyer offers and agrees to buy the property an the terms and conditions stated and acknowledges receipt of a copy hereof. .TTe73:fiA Realty Advisory Group, Inc. By /Date Michael J. Gallivan Name Printed: Michael J. Gallivan Title: Director 211 Alta Avenue, Suite G _ Address Santa Monica, CA 90402 (310) 458-0668 (310) 451-8625 Telephone Facsimile No. BUYER: of Santa Clarita By /Date George Caravalho Name Printed: George Caravalho Title: City Manager 23920 Valencia Blvd., Suite 11300 Address Santa Clarita, CA 91355 (805) 286-4000 (805) 255-1996 Telephone Facsimile No. 28. Acceptance. 28.1 Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified. 28.2 Seller acknowledges that Broker(s) has/have been retained to locate a Buyer and is/are the procuring cause of the purchase and sale of the Property set forth in this Agreement. In consideration of real estate brokerage service rendered by Broker(s), Seller agrees to pay Broker(s) a real estate brokerage fee in a sum equal to 6 % of the Purchase Price (the "Broker(s) Fee") divided equally in such shares as said Broker(s) shall direct in writing. As is provided in paragraph 9.1(p), this Agreement shall serve as an irrevocable instruction to Escrow Holder to pay such brokerage fee to Broker(s) out of the proceeds accruing to the account of Seller at the Closing. - 28.3 Seller acknowledges receipt of a copy hereof and authorizes the Broker(s) to deliver a signed copy to Buyer. NOTE: A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT. BROKER: CB Commercial Real Estate Group, Inc. By Doug Sonderegger Craig Peters ate Name Printed: Doug S.ondereggerit Craig Peters Title: Sr. Vice President/1st Vice.President 15303 Ventura Blvd., Suite 11200 Address Sherman Oaks, CA 91403 SELLER: Merle Norman Cosmetics, Inc. By Name Printed: Title: (818) 907-4607/4616 (818) 907-4702 Telephone Facsimile No. Telephone Facsimile No. PAGE 6 These forms ate often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current toren: American Industrial Real Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777. @Copyright 1989 -By American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced in any form without permission In writing. FORM 729-R•3.1/90 ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. 2.3 Seller will include the security system as part of the purchase, but Seller shall have the option, at the termination of its tenancy, to remove the "Closed Circuit TV slow scan video transmitter unit", which removal, by itself, should not effect the operability of the balance of the system. The balance of the system will be left in place. Buyer agrees to accept the system "AS -IS", where -is, without warranty from Seller as to its condition or operability. 29.1 A decision has been made by the City of Santa Clarita to acquire the subject property. It is the City's preference to acquire the property through an arm's length negotiation pursuant to this Agreement. However, the City intends to acquire the property for public use through condemnation should the purchase pursuant to this Agreement not be consummated. 29.2 Within ten (10) days after the commencement of escrow, Seller shall provide Buyer with access to all documents and tangible things in the possession or under the custody or control of Seller which relate to the subject property and which reasonably relate to the Seller's fulfillment of the terms and conditions of this agreement and the Seller's obligations hereunder. Seller shall provide such access to such documents and tangible things at its offices located at 15180 Bledsoe Street, Sylmar, California, at any mutually agreeable time, and subject to 24 hours notice by Buyer of its intention to inspect such records. 29.3 Buyer and Seller shall enter into a mutually acceptable leaseback agreement, based upon the A.I.R. Net Lease Form, by the terms of which Seller shall leaseback `Building 3" for one (1) year from the Close of Escrow, with two (2) six-month options, exercisable by Seller in its sole discretion, to extend the lease term for up to one additional year. Seller shall, additionally, have the right and option to rent "Building 1" on a month-to-month basis for up to one year following the Close of Escrow; Seller shall notify Buyer at least ten (10) days prior to the Close of Escrow if its elects to exercise its option; Seller is not required to rent "Building 1" for any term and may, instead, deliver possession thereof to Buyer at the Close of Escrow; Buyer may not terminate this month-to-month tenancy absent default by Seller in the payment of rents or other default. Seller shall provide Buyer with at least thirty (30) days written notice of its intention to vacate "Building 1". The monthly rental rate for each building shall be $0.40 per square foot per month, triple net ("NNN"). There shall be no increase in rent during the initial or extended term(s). Seller and Buyer shall each pay their respective pro -rata share of taxes (or City's equivalent), insurance and maintenance. Seller shall maintain and transfer possession of the buildings in the condition described in this Agreement, the same as if possession of the buildings had been transferred at the Close of Escrow. The Lease Agreement shall provide additional limitations on Seller's obligations to pay for maintenance, capital improvements and any and all current governmental regulations or any enacted or imposed limitations prior to the termination of Seller's tenancy. The parties agree to negotiate these terms in good faith. 29.4 Buyer is aware that Seller does not have fee title to Lot 75 of (Tentative) Tract No. 42670, which is part of the property subject to this Agreement. Seller has an easement only, and Buyer acknowledges that Seller has provided Buyer with a copy of the recorded Easement. Seller shall assign its easement rights in said Lot 75 to Buyer and Buyer agrees that Seller has no obligation to deliver fee title to Lot 75 as a contingency of this Agreement. 29.5 Buyer shall be entitled to elect to pay the purchase price of $3,080,000.00 in one of two ways, in the sole discretion of Buyer, as follows: (i) Buyer may pay the entire purchase price in cash at the Close of Escrow; or, ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. (ii) Buyer may pay $2,080,000.00 in cash at the Close of Escrow, with the balance of $1,000,000.00 paid in the form of a Note Secured by a First Deed of Trust on the property (such Note and Deed of Trust to be in a form acceptable to Seller), which Note, with all accrued interest thereon, shall be due and payable in full on or before July 1, 1998, and which Note shall bear interest at the rate of ten percent (10%) per annum until paid. Buyer shall give Seller and escrow written notice of its election no later than sixty (60) days from the "commencement of escrow", which shall be the date typed onto the escrow instructions by the escrow officer. 29.6 For purposes of this Agreement, including but not limited to Seller's disclosures, the phrase "Seller's knowledge" or similar phrases shall mean the actual knowledge, without investigation or inquiry, of the current employees, officers and directors of Seller only. 29.7 The $80,000.00 referred to in Paragraphs 4.1, 4.2 and 21.1 of this Agreement shall become non-refundable upon the earlier of (i) the removal of all contingencies, or (ii) sixty (60) days after the commencement of escrow. 29.8 In addition to the contingencies specified in Paragraph 9 herein, Buyer shall have sixty (60) days from commencement of escrow to determine the feasibility of the purchase of the Property. At any time prior to the expiration of said period, Buyer shall have the right in its sole and absolute discretion to cancel this escrow; provided, however, that Buyer shall pay all escrow cancellation fees in the event of such cancellation. CONSULT YOUR ATTORNEY/ADVISORS - This document has been prepared for approval by your attorney. No representation or recommendation is made by CB Commercial Real Estate Group, Inc. or the American Industrial Real Estate Association (A.I.R.) or the agents or employees of this document or the transaction to which it relates. These are questions for your attorney. On any real estate transaction, it is recommended that you consult with a professional, such as a civil engineer, industrial hygienist or other person with experience in evaluating the condition of the property, including the possible presence of asbestos, hazardous materials and underground storage tanks. In addition, please be advised that an Owner or Tenant of real property may be subject to the Americans with Disabilities Act (the ADA), a Federal law codified at 42 USC Section 12101 et seq. Among other requirements of the ADA that could apply to your property, Title III of the ADA requires Owners and Tenants of "public accommodations" to remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons by January 26, 1992. The regulations under Title III of the ADA are codified at 28 CFR Part 36. sAdrsonder\merle.add ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED NNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. CB Commercial recommends that you and your attorney, engineer and/or architect review the ADA and the regulations, and, if appropriate, your proposed sale agreement, to determine if this law would apply to you, and the nature of the requirement. BUYER: By: Date: DS:sjf s Adrsonde6inerle.add SELLER: 440 STANDARD OFFER, AGREEMENT AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Non -Residential) American Industrial Real Estate Association June 2, 1997 (Date for Reference Purposes) 1. Buyer. 1.1 City of Santa Clarita (the -Buyer-) hereby offers to purchase the real property, hereinafter described, from the owner thereof (the "Setter") (collectively, the "Parties" or individually, a "Party"), through an escrow (the "Escrow") to close on ninety (90) days from Date of Agreement (the "Expected Closing Date") to be held by Commerce Escrow Company (the "Escrow Holder') whose address is 1545 Wilshire Blvd. Suite #600 Los Angeles, CA 90017 Phone No. (213) 484-0855 , Facsimile No. (213) 484-0417 upon the terms and conditions set forth in this agreement (the "Agreement"). Buyer shall have the right to assign Buyers rights hereunder, but any such assignment shall not relieve Buyer of Buyer's obligations herein unless the Seller expressly releases Buyer. 1.2 The term "Date of Agreement as used herein shall be the date when by execution and delivery (as defined in paragraph 20.2) of this document or a subsequent counter-offer thereto, Buyer and Seller have reached agreement in writing whereby Seller agrees to sell, and Buyer agrees to purchase, the Property upon terms accepted by both Parties. 2. Property. 2.1 The real property (the "Property") that is the subject of this offer consists of (insert a brief physical description) three (3) buildines totaline approximately 63,760 square feet situated on approximately is located in the City of Santa Clarita , County of Los Angeles State of California is commonly known by the street address of 26407 N. Golden Valley Road and is legally described as: to be furnished by title company in escrow 2.2 It the legal description of the Property is not complete or isinaccurate, this Agreement shall not be invalid and the legal description shall be completed or corrected to meet the requirements of Old Republic Title Company (the "Title Company"), which Title Comparw shall issue the title policy hereinafter described. 2.3 The Property includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which the law of the state in which the Property is located provides is part of the Property, as well as the following items, if any, owned by Seller and presently located in the Property: electrical distribution systems (power panels, buss ducting, conduits, disconnects, lighting fixtures), telephone distribution systems (lines, jacks and connections), space heaters, air conditioning equipment, air lines, fire sprinkler systems, security systems, carpets, window coverings, wall coverings, and See attached Addendum to this Agreement (collectively, the "Improvements"). 2.4 lithe Property is located in the State of California, the Broker(s) is/are required under the Alquist-Priolo Special Studies Zones Act, to disclose to a prospective purchaser of real property whether the property being purchased is located within a delineated special studies zone (a zone that encompasses a potentially or recently active trace of an earthquake fault that is deemed by the State Geologist to be sufficiently active and well defined enough to constitute a potential hazard to structures from surface faulting or fault (creep). If the Property is located within such a special studies zone, its development may require a geologic report from a state. registered geologist. In accordance with such law, the Broker(s) hereby inform(s) Buyer that the Property: 0 (a) Is not within such a special studies zone. bd (b) Is within such a special studies zone. 2.5 If (1) the Property is located in the State of California, (2) the Improvements were constructed prior to 1975, and (3) the Improvements include structures with (i) pre -cast (e.g., tilt -up) concrete or reinforced masonry walls together with wood frame floors or roofs or (ii) unreinforced masonrywalls, California law requires that Seller or Seller's Broker provide Buyer with a copy of The Commercial Property Owners Guide to Earthquake Safety (the "Booklet") published by the California Seismic Safety Commission. Seller and Sellers Broker hereby inform Buyer that the Property: 0 (a) meets the foregoing requirements, and Seller and Seller's Broker are required to provide Buyer with a copy of the Booklet. Seller or Sellers Broker shall, within five (5) business days of the Date of Agreement, deliver to Buyer a copy of the Booklet and a completed "Commercial Property Earthquake Weakness Disclosure Report" contained in the Booklet duly executed by Seller. Within five (5) business days of Buyers receipt of said Disclosure Report, Buyer shall deliver a duly countersigned copy of the same to Escrow Holder, with a copy to Seller and Sellers Broker. Escrow Holder is hereby instructed that the Escrow shall not close unless and until Escrow Holder has received the Disclosure Report duly signed by both Seller and Buyer. 0 (b) does not meet the foregoing requirements requiring the delivery of the Booklet. 3. Purchase Price. 3.1 The purchase price (the "Purchase Price") to be paid by Buyer to Seller for the Property shall be g 3.080,000.00 , payable as follows: (a) Cashdownpayment, Including the Deposit as defined in paragraph 4.3 (or if an all cash 2,080,000.00 transaction, the Purchase Price): $ (Strike if not applicable) Ir� I WSHAI @14'g - ' 'Alga -_ .. .` -- ��- (Strike if not applicable) (c) Buyer shall take title to the Property subject to the following existing deed(s) of trust ("Existing Deed(s) of Trust") securing the existing promissory note(s) ("Existing Note(s)"): (i) An Existing ote (the "First Note") with an unpaid principal balance as o the Cl approximately. $ Said existing note is payable at $_ per month, including interest at the rate of . unpaid balance is due on — (ii) An Existing Note (the "Seco of approximately: Said E :i a is payable at until paid (and/or the entire an unpaid principal balance as of the per month, interest at the rate of % per annum until paid (and/or the entire (Strike if not (d) Buyer shall give Seller a deed of trust (the "Purchase Money Deed of Trust") on the Property, applicable) tosecure the promissory note of Buyerto Sellerdescribed in Paragraph 6(the"Purchase Money 1,000,000.00 Note") in the amount of: $ Total Purchase Price: $ 3,080,000-00 3.2 If an Existing Deed of Trust permits the beneficiary thereof to require payment of a transfer fee as a condition to the transfer of the Property subject to such Existing Deed of Trust. Buyer agrees to pay transfer fees and costs of up to one and one-half percent (1'k°h) of the unpaid principal balance of the applicable Existing Note. 4. Deposits. will 4.1 Buyer WwbW, deliveria check in the sum of$ 50,000.00 ,payableto Commerce Escrow Company to be (check applicable box) 91 forthwith deposited in the payee's trust account 0 held uncashed until the Date of Agreement. When cashed, the check shall be deposited into the payee's trust account to be applied toward the Purchase Price of the Property at the Closing, as defined in paragraph 8.3. Should Buyer and Seller not enter into an agreement for purchase and sale, Buyer's check or funds shall, upon request by Buyer, be promptly returned to Buyer. Initials PAGE 1 Initials 01989 -American Industrial Real Estate Association FORM 729-R-3-1/94 Upon removal of 5uyer's contingencies, 30 OD0.O0 42 .Buyer shall deposit with Escrow Holder the additional sum of $ • , to be applied to the Purchase Price at the Closing. 4.3 The funds deposited with Escrow Holder by or on behalf of Buyer under paragraphs 4.1 and 4.2; above (collectively the "Deposit"), shall be deposited by Escrow Holder in such State or Federally chartered bank as Buyer may select and in such interest-bearing account or accounts as Escrow Holder or Broker(s) deem appropriate and consistent with the timing requirements of this transaction. The interest therefrom shall accrue to the benefit of Buyer, who hereby acknowledges thatthere may be penalties or interest forteitures if the applicable instrument is redeemed prior to its specified maturity. Buyers Federal Tax Identification Number is from any correspondent or agent thereof, a commitment to lend to Buyer a sum not less than $ , at a fixed interest rate not to exceed _% per annum, payable in equal monthly installments, including interest, amortized ove enod of not less than _years and all due in not less than _years, or at a variable interest rate commencing at an interest rate no :ceed %per annum, amortized over a period of not less than _years and all due in not less than _ years, and in either c ith loan fees not to exceed °h of the amount of the new loan (the "New Loan"). The New Loan shall be secured by a first deed oft on the Property and shall be upon the following additional terms and conditions: and upon such others terms and conditions as are u required by such lender. 5.2 Buyer hereby agrees to diligen sue obtaining the New Loan. If Buyer shall fail to notify its Broker, Escrow Holder and Seller, in writing within days following th of Agreement, that the New Loan has not been obtained, it shall be conclusively presumed that Buyer has either obtained said New Loan o waived this New Loan contingency. 5.3 If, aft diligence, Buyer shall notify its Broker, Escrow Holder and Seller, in writing, within the time specified in Paragraph 5.2 hereof, that Buyer has tained said New Loan, this Agreement shall be terminated, and Buyer shall be entitled to the prompt return of Buyer's Deposit and any otbgs4olTds deposited by orfor Buyerwith Escrow Holderor, Seller, plus any interestearned thereon, less only Escrow Holderand Title Company cancellation 6. Purchase Money Note. (Strike if not applicable) 6.1 k�mroct to bo p7ia ac fonaaie. 40ip 40 41-1,8 Ek lum, 414P 40iPO4-em4— See attached Addendum to this Agreement The Purchase Money Note and Purchase Money Deed of Trust shall be on the current forms commonly used by Escrow Holder, and be junior and subordinate only to the Existing Note(s) and/or New Loan expressly called for by this Agreement. 6.2 The Purchase Money Note and the Purchase Money Deed of Trust shall contain provisions regarding the following: (a) Prepayment. Principal maybe prepaid in whole or in part at anytime without penalty, at the option of Buyer. (b) Late Charge. A late charge of 6% shall be payable with respect to any payment of principal, interest, or other charges, not made within ten (10) days after it is due. (c) Due On Sale. In the event the Buyer sells or transfers title to the Property or any portion thereof, then the Seller may, at Sellers option, require the entire unpaid balance of the Purchase Money Note to be then paid in full. 7. Real Estate Brokers. 7.1 The following real estate broker(s) (collectively, the "Brokers") and brokerage relationships exist in this transaction and are consented to by the parties (check applicable boxes): • CS Commercial represents Seller exclusively ("Seller's Broker") • Realty Advisory Group represents Buyer exclusively ("Buyer's Broker; or ❑ represents both Seller and Buyer ("Dual Agency"). (Also see Paragraph 26.) (the "Broker(s)"), all such named Broker(s) being the procuring cause(s) of this Agreement. See paragraph 26 for Disclosures Regarding the Nature of a Real Estate Agency Relationship. Buyer shall use the services of Buyers Broker exclusively in connection with any and all negotiations and offers with respect to the property described in paragraph 2.1 for a period of one year from the date above. 72 Buyer and Seller each represent and warrant to the other that he/she/it has had no dealings with any person, firm, broker or finder in connection with the negotiation of this Agreement and/orthe consummation of the purchaseand sale contemplated herein, otherthan the Broker(s) named in paragraph 7.1, and no broker orother person, firm or entity, otherthan said Broker(s) is/are entitled to any commission or tinders fee in connection with thistransaction as the result of any dealings or acts of such Party. Buyer and Seller do each hereby agree to indemnify, defend, protect and hold the other harmless from and against any costs, expenses or liability for compensation, commission or charges which maybe claimed by any broker, finder or other similar parry, other than said named Broker(s) by reason of any dealings or act of the Indemnifying Party. 8. Escrow and Closing. 8.1 Upon acceptance hereof by Seiler, this Agreement, including any counter-offers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller, but also instructions to Escrow Holder for the consummationofthe Agreement through the Escrow. Escrow Holder shall not prepare any further escrow instructions restating or amending this Agreement unless specifically so instructed by the Parties of a Broker herein. 8.2 Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law, custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code. In the event of a conflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the Property is located shall prevail. 8.3 Subject to satisfaction of the contingencies herein described, Escrow Holder shall close this escrow (the "Closing") by recording the grant deed and other documents required to be recorded and by disbursing the funds and documents in accordance with this Agreement. 8.4 If this transaction is terminated for non -satisfaction and non -waiver of a Buyers Contingency, as defined in paragraph 9.4, then neither of the Parties shall thereafter have any liability to the other under this Agreement, except to the extent of the breach of any affirmative covenant or warranty in this Agreement that may have been involved. In the event of such termination, Buyer shall be promptly refunded all funds deposited by or on behalf of Buyer with a Broker, Escrow Holderor Seller, less only Title Company and Escrow Holder cancellation fees and costs, all of which shall be Buyer's obligation. 8.5 The Closing shall occur on the Expected Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and the Expected Closing Date is not extended by mutual instructions of the Parties, a Party hereto not then in default under this Agreement may notify the other Party, Escrow Holder, and Broker(s), in writing that, this Agreem II d hp r or 1 8.6 s r ment d scrow s a eme ermmated an scrow eltler shall forthwith return all monies and documents, less only Escrow Holder's reasonable fees and expenses, to the Party who deposited them. Such Party shall indemnify and hold Escrow Holder harmless in connection with such retYm. However, Po refunds or comments shall be returned to a party claimed by written notice to Escrow Holder to be in default under this Agreement. Paragraph 8.5 hereof, 8.7 Except as otherwise provided herein, the termination of Escrow and this Agreement and/or the return of deposited funds or documents shall not relieve or release either Buyer or Seller from any obligation to pay Escrow Holder's fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements, covenants or warranties contained herein. 8.8 If this Agreement terminates for any reason other than Seller's breach or default, then at Sellers request, and as a condition to the return of Buyers deposit, Buyer shall within five (5) days after written request deliver to Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. 9. Contingencies to Closing. 9.1 The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies: (a) Disclosure. Buyer's receipt and written approval, within ten (10) days after delivery to Buyer, of a completed Property Information Sheet (the "Property Information Sheet"), concerning the Property, duly executed by or on behalf of Seller in the current form or equivalent to that published by the American Industrial Real Estate Association (the "A.I.R."). Seller shall provide Buyerwith the Property Information Sheet within ten (10) days following the Date of Agreement. See also paragraph 2.5for possible additional disclosure and contingency regarding a "Commercial Property Earthquake Weakness Disclosure Report' (b) Physical Inspection. Buyers written approval, within ten (10) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of an inspection by Buyer, at Buyers expense, of the physical aspects of the Property. Initials PAGE 2 Initials (c) Hazardous Substance Conditions Report. Buyer s written approval, within thirty (30) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a Hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Such report will be obtained at Buyers direction and expense. A "Hazardous Substance" for purposes of this Agreement is defined as any substance whose .nature and/or quantity of existence, use, manufacture, disposal or effect, render it subject to Federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare.A"Hazardous Substance Co ndition"forpurposes of this Agreement is defined le the existence on. under or relevantly adjacent to the Property of a Hazardous Substance that would require remediation and/or removal under applicable Federel, state or local law. (d) Soil Inspection. Buyers written approval, within thirty(30)days after the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a soil test report concerning the Property. Said report shall be obtained at Buyers direction and expense. Seller shall promptly provide to Buyer copies of any existing soils reports that Seller may have. - (e) GovernmentalApprovals. Buyers receipt, within fifteen (15) days of the Date of Agreement, of all approvals and permits from governmental agencies or departments which have or may have jurisdiction over the Property which Buyer deems necessary or desirable in connection with its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped access, transportation and environmental matters. Buyers failure to deliver to Escrow Holder and Seller written notice terminating this Agreement prior t0 the expiration of said fifteen (15) day period as a result of Buyers failure to obtain such approvals and permits shall be conclusively deemed to be Buyers waiver of this condition to Buyers obligations under this Agreement. (f) Condition of Title. Buyers written approval of a current preliminary title report concerning the Property (the "PTR") issued by the Title Company, aswell as all documents (the "Underlying Documents") referred to in the PTR, and the issuance by the Title Company of the title policy described in 10.1. Seller shall cause the PTR and all Underlying Documents to be delivered to Buyer promptly after the Date of Agreement. Buyer's approval is to be given within ten (10) days after receipt of said PTR and legible copies of all Underlying Documents. The disapproval by Buyer of any monetary encumbrance; which by the terms of this Agreement is not to remain against the Property after the Closing, shall not be considered a failure of this condition, as Seller shall have the obligation, at Sellers expense, to satisfy and remove such disapproved monetary encumbrance at or before the Closing. (g) Survey. Buyers written approval, within thirty (30) days after receipt of the PTR and Underlying Documents, of an ALTA title supplement based upon a survey prepared to American Land Title Association (the "ALTA") standards for an owners policy by licensed surveyor, showing the legal description and boundary lines of the Property, any easements of record, and any improvements, poles, structures and things located within ten (10) feet either side of the Property boundary lines. The survey shall be prepared at Buyers direction and expense. If Buyer has obtained a survey and approved the ALTA title supplement. Buyer may elect within the period allowed for Buyers approval of a survey to have an ALTA extended coverage owner's form of title policy, in which event Buyer shall pay any additional premium attributable thereto. (h) Existing Leases and Tenancy Statements. Buyers written approval, within ten (10) days after receipt of legible copies of all leases, subleases or rental arrangements (collectively the "Existing Leases") affecting the Property, and a statement (the 'Tenancy Statement") in the latest form or equivalent to that published by the A.I.R., executed by Seller and each tenant and subtenant of the Property. Seller shall use its best efforts to provide Buyer with said Existing Leases and Tenancy Statements promptly after the Date of Agreement. (i) Other Agreements. Buyers written approval, within ten (10) days after receipt, of a copy of any other agreements ("Other Agreements") known to Seller that will affect the Property beyond the Closing. Seller shall cause said copies to be delivered to Buyer promptly after the Date of Agreement. (j) Financing. If paragraph 5 hereat dealing with a financing contingency has not been stricken, the satisfaction or waiver of such New Loan contingency. (k) Existing Notes. If paragraph 3.1 (c) has not been stricken, Buyer's written approval, within ten (10) clays atter receipt, of conformed and legible copies of the Existing Notes, Existing Deeds of Trust and related agreements (collectively the "Loan Documents") to which the Property will remain subject after the Closing, including a beneficiary statement (the "Beneficiary Statement") executed by the holders of the Existing Notes confirming: (1) the amount of the unpaid principal balance, the current interest rate, and the date to which Interest is paid, and (2) the nature and amount of any impounds held by the beneficiary in connection with said loan- Seller shall use its best efforts to provide Buyer with said Loan Documents and Beneficiary Statement promptly after the Date of Agreement. Buyer's obligation to close is further conditioned upon Buyer's being able to purchase the Property without acceleration or change in the terms of any Existing Notes or charges to Buyer except as otherwise provided in this Agreement or approved by Buyer, provided, however, Buyer shall pay the transfer fee referred to in paragraph 3.2 hereof. (1) Destruction, Damage or Loss. There shall not have occurred prior to the Closing; a destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure. If the cost of repair or cure is $10,000.00 or less, Seller shall repair or cure the loss priorto the Closing. Buyer shall have the option, within ten (10) days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to either terminate this transaction orto purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price. If the cost to repair or cure is more than $10,000.00, and Buyer does not elect to terminate this transaction, Buyer shall be entitled to any insurance proceeds applicable to such loss. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume no destruction, damage or loss costing more than $10,000.00 to repair or cure has occurred prior to Closing. (m) Material Change. No Material Change, as hereinafter defined, shall have occurred with respect to the Property that has not been approved in writing by Buyer. For purposes of this Agreement, a "Material Change" shall be a change in the status of the use, occupancy, tenants, or condition of the Property as reasonably expected by the Buyer, that occurs after the date of this offer and prior to the Closing. Buyer shall have ten (10) days following receipt of written notice from any source of any such Material Change within which to approve or disapprove same. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume that no Material Change has occurred prior to the Closing. (n) Seller Performance. The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement (o) Breach of Warranty. That each representation and warranty of Seller herein be true and correct as of the Closing. Escrow Holder shall assume that this condition has been satisfied unless notified to the contrary in writing by Buyer or Broker(s) prior to the Closing. (p) Broker's Fee. Payment at the Closing of such Brokers Fee as is specified in this Agreement or later written Instructions to Escrow Halder executed by Seller and Broker(s). It is agreed by Buyer, Seller and Escrow Holder that Broker(s) is/are a third party beneficiary of this Agreement insofar as the Broker's fee is concerned, and that no change shall be made by Buyer, Seller or Escrow Holder with respect to the time of payment, amount of payment, or the conditions to payment of the Broker's fee specified in this Agreement, without the written consent of Broker(s). 9.2 All of the contingencies specified in sub -paragraphs (a) through (p) of paragraph 9.1 are for the benefit of, and may be waived by, Buyer, and may be elsewhere herein referred to as "Buyer Contingencies" 9.3. If Buyer shall fail, within the applicable time specified, to approve or disapprove in writing to Escrow Holder, Seller and the other Party's Broker, any item, matter or document subject to Buyers approval under the terms of this Agreement, it shall be conclusively presumed that Buyer has approved such item, matter or document. Buyers conditional approval shall constitute a disapproval, unless provision is made by the Seller within the time specified therefor by the Buyer In the conditional approval or by this Agreement, whichever is later, for the satisfaction of the condition imposed by the Buyer. 9.4 If any Buyer's Contingency is not satisfied or if Buyer disapproves any matter subject t0 its approval within the time period applicable thereto {"Disapproved Item"), Seller shall have the right within tenf10) days tollowing the expiration of the time period applicable to such Buyer Contingency or receipt of -notice of Buyers disapproval, as the case may be, to effect to cure such Disapproved Item prior to the Expected Closing Date ("Seller's Election"). Sellers failure to giveto Buyer within said ten (10) day period, written notice of Seller's Commitment to cure such Disapproved Item on or before the Expected Closing Date shall be conclusively presumed to be Sellers Election not to cure such Disapproved Item. If Seller elects, either by written notice or failure to give written notice, not to cure a Disapproved Item, Buyer shall have the election, within ten (10) days after Sellers Election to either accept title to the Property subject to Shat Disapproved Item, or to terminate this transaction. Buyers failure to elect termination by written notice to Seller within said ten (10) day period shall constitute Buyer's election to accept title to the Property subject to that Disapproved Item without deduction or offset. Unless expressly provided otherwise herein, Seller's right to cure shall not apply to Hazardous Substance Conditions referenced in paragraph 9.1 (c) or to the Financing Contingency set forth in paragraph 5. Unless the parties mutually instruct otherwise, if the time periods for the satisfaction of contingencies or for Seller's and Buyer's said Elections would expve on a date after the Expected Closing Date, the Expected Closing Date shall be deemed extended to coincide with the expiration of three (3) business days tollowing the expiration of: (a) the applicable contingency period(s), (b) the period within which the Seller may elect to cure the Disapproved Item, or (c) If Seller elects not to cure, the period within which Buyer may elect to terminate this transaction, whichever is later. 9.5 Buyer understands and agrees that until such time as all Buyer's Contingencies have been satisfied orwaived, Seller and/or its agents may solicit, entertain and/or accept back-up offers to purchase the subject Property In the event the transaction covered by this Agreement is not consummated. 9.6 As defined.in subparagraph 9.1(c), Buyer and Seller acknowledge that extensive local, state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remediation of a Hazardous Substance Condition. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Broker(s). Buyer and Seller acknowledge that they have been advised by Broker(s) to consult their own technical and legal experts with respect to the possible Hazardous Substance Condition aspects of this Property or adjoining properties, and Buyer and Seller are not relying upon any investigation by or statement of Broker(s) with respect thereto. Buyer and Seller hereby assume all responsibility for the impact of such Hazardous Substance Conditions upon their respective Interests herein. 10. Documents Required at Closing: 10.1 Escrow Holder shall cause to be issued to Buyer a standard coverage (or ALTA extended, if so elected under paragraph 9.1(1)) owner's form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a Purchase Money Deed of Trust in this transaction, the policy of title insurance shall be a joint protection policy insuring both Buyer and Seller. "IMPORTANT: INA PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAYBE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACOUIRING." 10.2 Seller shall deliver or cause to be delivered to Escrow Holder in time for delivery to Buyer at the Closing, an original ink signed: (a) Grant deed (or equivalent), duly executed and in recordable form, conveying fee title to the Property to Buyer. (b) 1f paragraph 3.1(c) has not been stricken, the Beneficiary Statements concerning Existing Note(s). Initials PAGE 3 Initials (c) If applicable, the Existing Leases and Other Agreements together with duly executed assignments thereof by Seller and Buyer. The assignment of Existing Leases shall be on the most recent Assignment and Assumption of Lessor's Interest in Lease form published by the A.I.R. or its equivalent. (d) If applicable, the Tenancy Statements executed by Seller and the Tenant($) of the Property. - - (e) An affidavit executed by Seller to the effect that Seller is not a "foreign person" within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit inform reasonably satisfactory to Buyer at least three (3) business days prior to the Closing, Escrow Holder shall at the Closing deduct from Seller's proceeds and remit to Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers. 10.3 Buyer shall deliver or cause to be delivered to Seller through escrow: (a) The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement for proration, expenses and adjustments. The balance of the cash portion of the Purchase Price, including Buyers escrow charges and other cash charges, if any, shall be deposited by Buyer with Escrow Holder, by cashiers check drawn upon a local major banking institution, federal funds wire transfer, or any other method acceptable to Escrow Holder as Immediately collectable funds, no later than 11:00 o'clock A.M. on the business day prior to the Expected Closing Date. (b) If a Purchase Money Note and Purchase Money Deed of Trust are called for by this Agreement, the duly executed originals of those documents, the Purchase Money Deed of Trust being in recordable form, together with evidence of fire insurance on the improvements in the amount of the full replacement cost naming Seller as a mortgage loss payee, and a real estate tax service contract (at Buyers expense), assuring Seller of notice of the status of payment of real property taxes during the life of the Purchase Money Note. (c) The assumption portion of the Assignment and Assumption of Lessor's Interest in Lease form specified in paragraph 10.2(c), above, duly executed by Buyer with respect to the obligations of the Lessor accruing after the Closing as to each Existing Lease. (d) Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any Other Agreements. (e) If applicable, a written assumption duly executed by Buyer of the loan documents with respect to Existing Notes. 11. Proration, Expenses and Adjustments. 11.1 Taxes. Real property taxes payable by the owner of the Property shall be prorated through Escrow as of the date of the Closing, based upon the latest tax bill available. The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of events occurring prior to the Closing. Payment shall be made promptly in cash upon receipt of a copy of any such supplemental bill of the amount necessary to accomplish such proration. Sellershall pay and discharge in full at or before the Closing the unpaid balance of any special assessment bonds. 11.2 Insurance. If Buyer elects to take an assignment of the existing casualty and/or liability insurance that is maintained by Seller, the current premium therefor shall be prorated through Escrow as of the date of Closing. 11.3 Rentals, Interest and Expenses. Collected rentals, interest on Existing Notes, utilities, and operating expenses shall be prorated as of the date of Closing. The Parties agree to promptly adjust between themselves outside of Escrow any rents received after the Closing. 11.4 Security Deposit. Security Deposits held by Seller shall be given to Buyer by a credit to the cash required of Buyer at the Closing. 11.5 Post Closing Matters. Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined. 11.6 Variations In Existing Note Balances. In the event that Buyer is taking title to the Property subject to an Existing Deed of Trust(s), and in the event that a Beneficiary Statement as to the applicable Existing Note(s) discloses that the unpaid principal balance of such Existing Note(s) at the Closing will be more or less than the amount set forth in paragraph 3.1(c) hereof (the "Existing Note Variation"), then the Purchase Money Note(s) shall be reduced ur increased by an amount equal to such Existing Note Variation. If there is to be no Purchase Money Note, the cash required at the Closing per Paragraph 3.1(a) shall be reduced or increased by the amount of such Existing Note Variation. 11.7 Variations In New Loan Balance. In the event Buyer is obtaining a New Loan and in the event that the amount of the New Loan actually obtained is greater than the amount set forth in Paragraph 5.1 hereof, the Purchase Money Note, if one is called for in this transaction, shall be reduced by the excess of the actual face amount of the New Loan over such amount as designated in Paragraph 5.1 hereof. 11.8 Escrow Costs and Fees. Buyer and Seller shall each pay one-half of the Escrow Holders charges and Seller shall pay the usual recording fees and any required documentary transfer taxes. Seller shall pay the premium for a standard coverage owner's or joint protection policy of title insurance. 12 Representation and Warranties of Seller and Disclaimer. 12.1 Seller's warranties and representations shall survive the Closing and delivery of the deed, and, unless otherwise noted herein, are true, material and relied upon by Buyer and Broker(s) in all respects, both as of the Date of Agreement, and as of the date of Closing. Seller hereby makes the following warranties and representations to Buyer and Broker(s): (a) Authority ofSeller. Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein, and to perform Sellers obligations hereunder. (b) Maintenance During Escrow and Equipment Condition At Closing. Except as otherwise provided in paragraph 9.1(1) hereof dealing with destruction, damage or loss, Seller shall maintain the Property until the Closing in its present condition, ordinary wear and tear excepted. The heating, ventilating, air conditioning, plumbing, elevators, loading doors and electrical systems shall be in good operating order and condition at the time of Closing. (c) Hazardous Substances/Storage Tanks. Seller has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance (as defined in paragraph 9.1(c)), nor of the existence or prior existence of any above or below ground storage tank or tanks. (d) Compliance. Seller has no knowledge of any aspect or condition of the Property which violates applicable laws, rules, regulations, codes, or covenants, conditions or restrictions, or of improvements or alterations made to the Property without a permit where one was required, or of any unfulfilled order or directive of any applicable governmental agency or casualty insurance company that any work of investigation, remediation, repair, maintenance or improvement is to be performed on the Property. (e) Changes in Agreements. Prior to the Closing, Seller will not violate or modify, orally or in writing, any Existing Lease or Other Agreement, or create any new leases or other agreements affecting the Property, without Buyers written approval, which approval will not be unreasonably withheld. (f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property,except as disclosed by this Agreement or otherwise in writing to Buyer. (g) Mechanics' Llens. There are no unsatisfied mechanic's or materialman's lien rights concerning the Property. (h) Actions, Suits or Proceedings. Seller has no knowledge of any actions, suits or proceedings pending or threatened before any commission, board, bureau: agency, instrumentality, arbitrators) court or tribunal that would affect the Property or the right to occupy or utilize same. (1) Notice of Changes. Seller will promptly notify Buyer and Broker(s) in writing of any Material Change (as defined in paragraph 9.1(m)) affecting the Property that becomes known to Seller prior to the Closing. (j) No Tenant Bankruptcy Proceedings. Seller has no notice or knowledge that any tenant of the Property is the subject of a bankruptcy or insolvency proceeding. (k) No Seller Bankruptcy Proceedings. Seller is not the subject of a bankruptcy, insolvency or probate proceeding. 12.2- Buyer hereby acknowledges that, except as otherwise stated in this Agreement, Buyer is purchasing the Property in its existing condition and will, by the time called for herein, make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the Occupational Safety and Healtb Act, hazardqus substan a laws, or an other act, ordinance or law, h ve beggqq made by either Party or Br ker, o relied upon by either Party hereto. Subject only to We T pFessesswgree ants oT, aISer psurijectttooar i h Ceement, Buyer agrees to purchase the 13.1 Possession of the Property shall be given to Buyer at the Closing subject to the rights of tenantsunderExisting Leases. 14. Buyer's Entry. 14.1 At anytime during the Escrow period, Buyer, and its agents and representatives, shall have the right at reasonable times and subject to rights of tenants under Existing Leases, to enter upon the Property for the purpose of making inspections and tests specified in this Agreement. Following any such entry or work, unless otherwise directed in writing by Seller, Buyer shall return the Property to the condition it was in prior to such entry or work, including the recompaction or removal of any disrupted soil or material as Seller may reasonably direct. All such inspections and tests and any other work conducted or materials furnished with respect to the Property by or for Buyer shall be paid for by Buyer as and when due and Buyer shall indemnify, defend, protect and hold harmless Seller and the Property of and from any and all claims, I iabi I ities, demands, losses, costs, expenses (including reasonable attorney's fees), damages or recoveries, Including those for injury to person or property, arising out of or relating to any such work or materials or the acta or omi§sins of Buyer, its agents or employees in connection therewith. However, Buyer shall not do any drilling or coring tout 15. Further Documents and Assurances. Seller 's.prior approval and will not disclose the results* 15.1 Buyer and Seller shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for Closing as and when required by this Agreement. Buyer and Seller agree to provide all further Information, and to execute and deliver all further documents and instruments, reasonably required by Escrow Holder or the Title Company. 16 Attorneys' Fees. 16.1 In the event of any litigation or arbitration between the Buyer, Seller, and Broker(s), or any of them, concerning this transaction, the prevailing party shall be entitled to reasonable attorney's fees and costs. The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred in good faith. 17- Prior Agreements/Amendments. 17.1 The contract in effect as of the Date of Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property. 172 Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller. *of any reports of any inspections or investigations allowed under the terms of this Agreement to any third person or entity without Seller's prior written consent, unless required by law to do so. Initials PAGE 4 Initials 18. Broker's Rights. 18.1 If this sale shall not be consummated due to the default of either the Buyer or Seller, the defaulting parry shall be liable to and shall pay to Broker(s) the commission that Broker(s) would have received had the sale been consummated. This obligation of Buyer, ifBuyer is the defaulting party, is in addition to any obligation with respect to liquidated damages. 18.2 Upon the Closing, Broker(s) is/are authorized to publicize the facts of this transaction, With Seller's prior Written 19. Notices. consent. 19.1 Whenever any Party hereto, Escrow Holder or Broker(s) herein shall desire to give or serve any notice, demand, request, approval or other communication, each such communication shall be in writing and shall be delivered personally, by messenger or by mail, postage prepaid, addressed as set forth adjacent to that party's or Broker's signature on this Agreement or by telecopy with receipt confirmed by telephone. Service of any such communication shall be deemed made on the date of actual receipt at such address. 19.2 Any Party or Broker hereto may from time to time, by notice In writing served upon the other Party as aforesaid, designate a different address to which, or a different person or additional persons to whom, all communications are thereafter to be made. 20. Duration of Offer. 20.1 If this offer shall not be accepted by Seller on or before 5:00 P.M. according to the time standard applicable to the city of Santa Clarita on the date of June 9, 1997 it shall be deemed automatically revoked. 20.2 The acceptance of this offer, orof any subsequent counteroffer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party or either Broker herein of a duly executed writing unconditionally accepting the last outstanding offer or counteroffer. 21. LIQUIDATED DAMAGES. (This Liquidated Damages paragraph Is applicable only if Initialled by both parties.) 21.1 THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS.TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYER'S BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $80.000.00 PLUS INTEREST, IF ANY, ACCRUED THEREON. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Buyer initiels Seller Initials 22. ARBITRATION OF DISPUTES.(ThIsArbitration of Disputesparagraphis applicable onlylfinitialledby both parties andis sub/echo paragraph 23, below.) 22.1 ANY CONTROVERSYASTO WHETHER SELLER IS ENTITLEDTO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES (the "COMMERCIAL RULES") OF, THE AMERICAN ARBITRATION ASSOCIATION. HEARINGS ON SUCH ARBITRATION SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY THREE (3) ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST FIVE (5) FULL TIME YEARS OF EXPERIENCE IN THE AREA WHERE THE PROPERTY IS LOCATED, IN THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT AND SHALL BE APPOINTED UNDER THE COMMERCIAL RULES.' THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW AND THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT, AS THE SAME MAY HAVE BEEN DULY MODIFIED IN WRITING BY THE PARTIES PRIOR TO THE ARBITRATION, UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING SCHEDULED AT THE REQUEST OF EITHER PARTY. SUCH PRE - ARBITRATION DISCOVERY SHALL BE PERMITTED AS IS AUTHORIZED UNDER THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEAST TWO (2) OF THE THREE (3) ARBITRATORS, BE RENDERED WITHIN THIRTY (30) DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS' FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYER'S RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATION DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY I NITIALLI NG IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED INA COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF TH E MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Buyer Initials Seller initials 23. Applicable Law. 23.1 This Agreement shall be governed by, and paragraph 22.3 amended to refer to, the laws of the state in which the Property is located. 24. Time of Essence. 24.1 Time is of the essence of this Agreement. 25. Counterparts. 25.1 This Agreement maybe executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement. 26. Disclosures Regarding The Nature eta Real Estate Agency Relationship. 26.1 The Parties and Broker(s) agree that their relationship(s) shall be governed by the principles set forth in California Civil Code, Section 2375, as summarized in the following paragraph 26.2. 26.2 When entering into a discussion with areal estate agent regarding areal estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seller acknowledge being advised by the Broker(s) in this transaction, as follows: (a) Seller's Agent. A Seller's agent under a listing agreement with the Seller acts as the agent for the Seller only. A Seller's agent or subagent has the following affirmative obligations: (1) To the Seller: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyerand the Seller: a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b) Buyer's Agent. A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Seller's agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller: a. Diligent exercise of reasonable skill and care in performance of the agent's duties. to. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not Involve the affirmative duties set forth above. Initials PAGE 5 Initials (c) Agent Representing Both Seller and Buyer. Areal estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealingswith.either Seller orthe Buyer. b_ Other duties to the Seller and the Buyer as stated above in their respective sections (a) or '(b) of this paragraph 26-.2.-(2) In representing both eller nd Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Setler will accept a price Tess than the listing price or [hat the Buyer will Pay a price greater than the price offered. (3) The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Seller should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advise is desired, consult a competent professional. (d) Further Disclosures. Throughout this transaction Buyer and Seiler may receive more than one disclosure, depending upon the number of agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate agent in this transaction and that disclosure. 26.3 Confidential Information: Buyer and Seller agree to identify to Broker(s) as "Confidential" any communication or information given Broker(s) that is considered by such Party to be confidential. 27. Additional Provisions: - 291 Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraphs through 29 . ditio. $ (It will be presumed no other provisions are included unless specified here.) *See attached Addendum Paragraph 29.8 to this Agreement *BUYER AND SELLER HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN AND ARE NOW ADVISED BY THE BROKER(S) TO CONSULT AND RETAIN THEIR OWN EXPERTS TO ADVISE AND REPRESENT THEM CONCERNING THE LEGAL AND INCOMETAX EFFECTS OF THIS AGREEMENT, AS WELL AS THE CONDITION AND/OR LEGALITY OF THE PROPERTY, THE IMPROVEMENTS AND EQUIPMENT THEREIN, THE SOIL THEREOF, THE CONDITION OFTITLE THERETO, THE SURVEY THEREOF, THE ENVIRONMENTAL ASPECTS THEREOF, THE INTENDED AND/OR PERMITTED USAGE THEREOF,THE EXISTENCEAND NATURE OF TENANCIES THEREIN, THE OUTSTANDING OTHER AGREEMENTS, IF ANY, WITH RESPECTTHERETO, AND THE EXISTING OR CONTEMPLATED FINANCING THEREOF, AND THAT THE BROKER(S) IS/ARE NOT TO BE RESPONSIBLE FOR PURSUING THE INVESTIGATION OF ANY SUCH MATTERS UNLESS EXPRESSLY OTHERWISE AGREED TO IN WRITING BY BROKER (S) AND BUYER OR SELLER. THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY. 1. this Agreement has been filled in, It has been prepared for submission to your attorney for his approval. No representation or recommendation Is made by the real estate Broker(s) or their agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction Involved herein.The undersigned Buyer offers and agrees to buy the property on the terms and conditions stated and acknowledges receipt of a copy hereof. BROKER: BUYER: Realty Advisory Group, Inc. City of Santa Clarita By /Date Michael J. Gallivan Name Printed: Michael J. Gallivan Title: Director 211 Alta Avenue, Suite G Address Santa Monica, CA 90402 By /Date George Caravalho Name Printed: George Caravalho Title: City Manager 23920 Valencia Blvd., Suite 11300 Address Santa Clarita, CA 91355 (310) 458-0668 (310) 451-8625 (805) 286-4000 (805) 255-1996 Telephone Facsimile No. Telephone Facsimile No. 28. Acceptance. 28.1 Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified. 28.2 Seller acknowledges that Broker(s) has/have been retained to locate a Buyer and is/are the procuring cause of the purchase and sale of the Property set forth in this Agreement. In consideration of real estate brokerage service rendered by Broker(s), Seller agrees to pay Broker(s) a real estate brokerage fee in a sum equal to 6 % of the Purchase Price (the "Broker(s) Fee") divided equally in such shares as said Broker(s) shall direct in writing. As is provided in paragraph 6.1(p), this Agreement shall serve as an irrevocable Instruction to Escrow Holder to pay such brokerage fee to Broker(s) out of the proceeds accruing to the account of Seller at the Closing. 28.3 Seiler acknowledges receipt of a copy hereof and authorizes the Broker(s) to deliver a signed copy to Buyer. NOTE: A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT. BROKER: CB Commercial Real Estate GIOUD. Inc. By Date Doug Sonderegger Craig Peters Name Printed: Doug Sonderegger/Craig Peters Title: Sr. Vice President/1st Vice President 15303 Ventura Blvd., Suite 11200 Address Sherman Oaks, CA 91403 (818) 907-4607/4616 (818) 907-4702 Telephone Facsimile No. SELLER: Merle Norman Cosmetics, Inc. By Name Printed: Title: Address Telephone Facsimile No. PAGE 6 These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form: American Industrial Real Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687.8777. oCopyright 1989-ey American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced In any form without permission In writing. FORM 729-113.1/94 ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2,1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. 2.3 Seller will include the security system as part of the purchase, but Seller shall have the option, at the termination of its tenancy, to remove the "Closed Circuit TV slow scan video transmitter unit", which removal, by itself, should not effect the operability of the balance of the system. The balance of the system will be left in place. Buyer agrees to accept the system "AS -IS", where -is, without warranty from Seller as to its condition or operability. 29.1 A decision has been made by the City of Santa Clarita to acquire the subject property. It is the City's preference to acquire the property through an arm's length negotiation pursuant to this Agreement. However, the City intends to acquire the property for public use through condemnation should the purchase pursuant to this Agreement not be consummated. 29.2 Within ten (10) days after the commencement of escrow, Seller shall provide Buyer with access to all documents and tangible things in the possession or under the custody or control of Seller which relate to the subject property and which reasonably relate to the Seller's fulfillment of the terms and conditions of this agreement and the Seller's obligations hereunder. Seller shall provide such access to such documents and tangible things at its offices located at 15150 Bledsoe Street, Sylmar, California, at any mutually agreeable time, and subject to 24 hours notice by Buyer of its intention to inspect such records. 29.3 . Buyer and Seller shall enter into a mutually acceptable leaseback agreement, based upon the A.I.R. Net Lease Form, by the terms of which Seller shall leaseback `Building 3" for one (1) year from the Close of Escrow, with two (2) six-month options, exercisable by Seller in its sole discretion, to extend the lease term for up to one additional year. Seller shall, additionally, have the right and option to rent `Building 1" on a month-to-month basis for up to one year following the Close of Escrow; Seller shall notify Buyer at least ten (10) days prior to the Close of Escrow if its elects to exercise its option; Seller is not required to rent "Building 1" for any term and may, instead, deliver possession thereof to Buyer at the Close of Escrow; Buyer may not terminate this month-to-month tenancy absent default by Seller in the payment of rents or other default. Seller shall provide Buyer with at least thirty (30) days written notice of its intention to vacate "Building 1". The monthly rental rate for each building shall be $0.40 per square foot per month, triple net ("NNN" ). There shall be no increase in rent during the initial or extended term(s). Seller and Buyer shall each pay their respective pro -rata share of taxes (or City's equivalent), insurance and maintenance. Seller shall maintain and transfer possession of the buildings in the condition described in this Agreement, the same as if possession of the buildings had been transferred at the Close of Escrow. The Lease Agreement shall provide additional limitations on Seller's obligations to pay for maintenance, capital improvements and any and all current governmental regulations or any enacted or imposed limitations prior to the termination of Seller's tenancy. The parties agree to negotiate these terms in good faith. 29.4 Buyer is aware that Seller does not have fee title to Lot 75 of (Tentative) Tract No. 42670, which is part of the property subject to this Agreement. Seller has an easement only, and Buyer acknowledges that Seller has provided Buyer with a copy of the recorded Easement. Seller shall assign its easement rights in said Lot 75 to Buyer and Buyer agrees that Seller has no obligation to deliver fee title to Lot 75 as a contingency of this Agreement. 29.5 Buyer shall be entitled to elect to pay the purchase price of $3,080,000.00 in one of two ways, in the sole discretion of Buyer, as follows: (i) Buyer may pay the entire purchase price in cash at the Close of Escrow; or, ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. (ii) Buyer may pay $2,080,000.00 in cash at the Close of Escrow, with the balance of $1,000,000.00 paid in the form of a Note Secured by a First Deed of Trust on the property (such Note and Deed of Trust to be in a form acceptable to Seller), which Note, with all accrued interest thereon, shall be due and payable in full on or before July 1, 1998, and which Note shall bear interest at the rate of ten percent (10%) per annum until paid. Buyer shall give Seller and escrow written notice of its election no later than sixty (60) days from the "commencement of escrow", which shall be the date typed onto the escrow instructions by the escrow officer. 29.6 For purposes of this Agreement, including but not limited to Seller's disclosures, the phrase "Seller's knowledge" or similar phrases shall mean the actual knowledge, without investigation or inquiry, of the current employees, officers and directors of Seller only. 29.7 The $80,000.00 referred to in Paragraphs 4.1, 4.2 and 21.1 of this Agreement shall become non-refundable upon the earlier of (i) the removal of all contingencies, or (ii) sixty (60) days after the commencement of escrow. 29.8 In addition to the contingencies specified in Paragraph 9 herein, Buyer shall have sixty (60) days from commencement of escrow to determine the feasibility of the purchase of the Property. At any time prior to the expiration of said period, Buyer shall have the right in its sole and absolute discretion to cancel this escrow; provided, however, that Buyer shall pay all escrow cancellation fees in the event of such cancellation. CONSULT YOUR ATTORNEY/ADVISORS - This document has been prepared for approval by your attorney. No representation or recommendation is made by CB Commercial Real Estate Group, Inc. or the American Industrial Real Estate Association (A.I.R.) or the agents or employees of this document or the transaction to which it relates. These are questions for your attorney. On any real estate transaction, it is recommended that you consult with a professional, such as a civil engineer, industrial hygienist or other person with experience in evaluating the condition of the property, including the possible presence of asbestos, hazardous materials and underground storage tanks. In addition, please be advised that an Owner or Tenant of real property may be subject to the Americans with Disabilities Act (the ADA), a Federal law codified at 42 USC Section 12101 et seq. Among other requirements of the ADA that could apply to your property, Title III of the ADA requires Owners and Tenants of "public accommodations" to remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons by January 26, 1992. The regulations under Title III of the ADA are codified at 28 CFR Part 36. s 9drsonder\merl e.add ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. CB Commercial recommends that you and your attorney, engineer and/or architect review the ADA and the regulations, and, if appropriate, your proposed sale agreement, to determine if this law would apply to you, and the nature of the requirement. BUYER: By: Date: DS:sjf SAdMndcrlmcdc.add SELLER: Date: STANDARD OFFER, AGREEMENT AND ESCROW #40 INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Non -Residential) American Industrial Real Estate Association June 2, 1997 (Date for Reference Purposes) 1. Buyer. 1.1 City of Santa Clarita (the "Buyer") hereby offers to purchase the real property, hereinafter described.1rom the owner thereof (the "Seller') (collectively, the' Parties" or individually, a "Party"). through an escrow (the "Escrow") to close on ninety (90) days from Date of Agreement (the "Expected Closing Date") to be held by Commerce Escrow Company (the "Escrow Holder') whose address is 1545 Wilshire Blvd., Suite Ii600, Los Angeles, CA 90017 Phone No. (Zls) 4d4—Ud00 , Facsimile No. t412/ 404_y4 i upon the terms and conditions set forth in this agreement (the "Agreement"). Buyer shall have the right to assign Buyer's rights hereunder, but any such assignment shall not relieve Buyer of Buyer's obligations herein unless the Seller expressly releases Buyer. 1.2 The term "Date of Agreement as used herein shall be the date when by execution and delivery (as defined in paragraph 20.2) of this document or a subsequent counter-offer thereto, Buyer and Seller have reached agreement in writing whereby Seller agrees to sell, and Buyer agrees to purchase. the Property upon terms accepted by both Parties. 2. Property. 2.1 The real property (the "Propel') that is the subject of this offer consists of (insert a brief physical description) t-lhrpP (4) hiuitdinoa totaline annroximately 63.760 square feet situated on is located in the City of Santa Clarita , County of Los Angeles State of California is commonly known by the street address of 26407 N. Golden Valley Road and is legally described as: to be furnished by title company in escrow 2.2 If the legal description of the Property is not complete or is Inaccurate, this Agreement shall not be invalid and the legal description shall be completed or corrected to meet the requirements of Old Republic Title Company (the "Title Company"), which Title Company shall issue the title policy hereinafter described. 2.3 The Property includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which the law of the state in which the Property is located provides is part of the Property, as well as the following items, if any; owned by Seller and presently located in the Property: electrical distribution systems (power panels, buss ducting, conduits, disconnects, lighting fixtures), telephone distribution systems (lines, tacks and connections), space heaters, air conditioning equipment, air lines, fire sprinkler systems, security systems, carpets, window coverings, wall coverings, and See attached Addendum to this Agreement (collectively, the "Improvements"). 2.4 If the Property is located in the State of California, the Broker(s) is/are required under the Alquist-Priolo Special Studies Zones Act, to disclose to a prospective purchaser of real property whether the property being purchased is located within a delineated special studies zone (a zone that encompasses a potentially or recently active trace of an earthquake fault that is deemed by the State Geologist to be sufficiently active and well defined enough to constitute a potential hazard to structures from surface faulting or fault (creep). If the Property is located within such a special studies zone, its development may require a geologic report from a state registered geologist. In accordance with such law, the Broker(s) hereby inform(s) Buyer that the Property: 11 (a) Is not within such -a special studies zone. 5d (b) Is within such a special studies zone. 2.5 If (1) the Property is located in the State of California, (2) the Improvements were constructed prior to 1975, and (3) the Improvements include structures with (i) pre -cast (e.g., tilt -up) concrete or reinforced masonry walls together with wood frame floors or roofs or (ii) unreinforced masonry walls, California law requires that Seller or Seller'sBrokerprovide Buyer with a copy of The Commercial Property Owner's Guide to Earthquake Safety (the "Booklet") published by the California Seismic Safety Commission. Seller and Seller's Broker hereby inform Buyerthat the Property: ❑ (a) meets the foregoing requirements, and Seller and Seller's Broker are required to provide Buyer with a copy of the Booklet. Seller or Sellers Broker shall, within five (5) business days of the Date of Agreement, deliver to Buyer a copy of the Booklet and a completed "Commercial Property Earthquake Weakness Disclosure Report" contained in the Booklet duly executed by Seller. Within five (5) business days of Buyers receipt of said Disclosure Report, Buyer shall deliver a duly countersigned copy of the same to Escrow Holder, with a copy to Seller and Sellers Broker. Escrow Holder is hereby instructed that the Escrow shall not close unless and until Escrow Holder has received the Disclosure Report duly signed by both Seller and Buyer. ❑ (b) does not meet the foregoing requirements requiring the delivery of the Booklet. 3. Purchase Price. 3.1 The purchase price (the "Purchase Price") to be paid by Buyer to Seller for the Property shall be $ 3,080,000.00 , payable as follows: (a) Cash down payment, including the Deposit as defined in paragraph 4,3 (or if an all cash 2,080,000.00 transaction, the Purchase Price): $ (Strike if not applicable) (Strike if not applicable) ;c) Buyer shall take title to the Property subject to the following existing deed(s) of trust ("Existing Deed(s) of Trust") securing the existing promissory note(s) ("Existing Note(s)"): (i) An Existing Note (the "First Note") with an unpaid principal balance as of the Cl approximately: Said existing note Is payable at $ per month, including interest at the rate of unpaid balance is due on (ii) An Existing Note (the "Seco )with an of approximately: until paid (and/or the entire as of the Closing Said Exi a is payable at $ per month, wtlfrd,�ng interest at the rate of °h per annum until paid (and/or the entire (Strike it not(tl) Buyer shall give Seller a deed of trust (the "Purchase Money Deed of Trust") on the Property, applicable) to secure the promissory note of Buyer to Seller described in Paragraph 6 (the "Purchase Money $ 1,000,000.00 Note") in the amount of: Total Purchase Price: $ 3,080,000.00 3.2 If an Existing Deed of Trust permits the beneficiary thereof to require payment of a transfer fee as a condition to the transfer of the Property subject to such Existing Deed of Trust, Buyer agrees to pay transfer fees and costs of up to one and one-half percent (1'h%) of the unpaid principal balance of the applicable Existing Note. 4. Deposits. will 4.1 Buyer W,etiy-deliver9a check in the sum of $ 50, 000.00 , payable to Commerce Escrow Company , to be (check applicable box) H forthwith deposited in the payee's trust account 11 held uncashed until the Date of Agreement. When cashed, the check shall be deposited into the payee's trust account to be applied toward the Purchase Price of the Property at the Closing, as defined in paragraph 8.3. Should Buyer and Seller not enter into an agreement for purchase and sale, Buyer's check or funds shall, upon request by Buyer, be promptly returned to Buyer. Initials PAGE 1 Initials @1989 -American Industrial Real Estate Association FORM 729-R-3-1/94 Uon removal of 5u erts contingencies, 30 000.00 4.2 uyer shall deposit with Escrow Holder the additional sum of $ to be applied to the Purchase Price at the Closing. 4.3 The funds deposited with Escrow Holder by or on behalf of Buyer under paragraphs 4.1 and 4.2, above (collectively the "Deposit"). shall be deposited by Escrow Holder in such State or Federally chartered bank as Buyer may select and in such interest-bearing account or accounts as Escrow Holder or Broker(s) deem appropriate and consistent with the timing requirements of this transaction. The interest therefrom shall accrue to the benefit of Buyer, who hereby acknowledges that there may be penalties or interest forfeitures if the applicable instrument is redeemed prior to its specified maturity. Buyers Federal Tax Identification Number is 5. R to lei IS so iNne ley. fell Me if lei eppAice6fe! from any correspondent or agent thereof, a commitment to lend to Buyer a sum not less than $ at a fixed interest rate not to exceed _h per annum, payable in equal monthly installments, including interest, amortized ov encid of not less than _years and all due in not less than _years, or at a variable interest rate commencing at �interest teed _%perannum, amortized over aperiod of not less than _years and all due In not less than _years, and in an fees not to exceed _%of the amount of the new loan (the "New Loan"). The New Loan shall be secured by a first deed oft and shall be upon the following additional terms and conditions: and upon such others terms and conditions as are u required by such lender. 5.2 Buyer hereby agrees to diligen sue obtaining the New Loan. If Buyer shall fail to notify its Broker, Escrow Holder and Seller, in writing within _ days following thtPeetof Agreement, that the New Loan has not been obtained, it shall be conclusively presumed that Buyer has either obtained said New Loan o waived this New Loan contingency. 5.3 If. aft diligence, Buyer shall notify its Broker, Escrow Holder and Seller, in writing, within the time specified in Paragraph 52 hereof, that Buyer has twined said New Loan, this Agreement shall be terminated, and Buyer shall be entitled to the prompt return of Buyer's Deposit and any oth sdeoosited bvorfor Buverwith Escrow Holderor, Seller, plusany interest eamedthereon, less only Escrow Holderand Title Company cancellation S. Purchase Money Note. (Strike if not applicable) 6.7 'Fliep"alaselie SINS "! :a .r See attached The Purchase Money Note and Purchase Money Deed of Trust shall be on the current forms commonly used by Escrow Holder, and be junior and subordinate only to the Existing Note(s) and/or New Loan expressly called for by this Agreement. 6.2 The Purchase Money Note and the Purchase Money Deed of Trust shall contain provisions regarding the following: (a) Prepayment. Principal may be prepaid in whole or in part at any time without penalty, at the option of Buyer. (b) Late Charge. A late charge of 6% shall be payable with respect to any payment of principal, interest, or other charges, not made within ten (10) days after it is due. (c) Due On Sate. In the event the Buyer sells or transfers title to the Property or any portion thereof, then the Seller may, at Sellers option, require the entire unpaid balance of the Purchase Money Note to be then paid in full. 7. Real Estate Brokers. 7.1 The following real estate broker(s) (collectively, the "Brokers") and brokerage relationships exist in this transaction and are consented to by the parties (check applicable boxes): • CB Commercial represents Seller exclusively ("Seller's Broker") • Realty Advisory Group represents Buyer exclusively ("Buyer's Broker"); or — ❑ represents both Seller and Buyer ("Dual Agency"). (Also see Paragraph 26.) (the "Broker(s)"), all such named Broker(s) being the procuring cause(s) of this Agreement. See paragraph 26 for Disclosures Regarding the Nature of a Real Estate Agency Relationship. Buyer shall use the services of Buyers Broker exclusively in connection with any and all negotiations and offers with respect to the property described in paragraph 2.1 for a period of one year from the date above. 7.2 Buyer and Seller each represent and warrant to the other that he/she/it has had no dealings with any person, firm, broker or finder in connection withthe negotiation of this Agreement and/or the consummation of the purchase and sale contemplated herein, other than the Broker(s) named in paragraph 7.1, and no brokeror other person, firm or entity, other than said Broker(s) is/are entitled to any commission orfinder's fee in connection with this transaction as the result of any dealings or acts of such Party. Buyer and Seller do each hereby agree to Indemnity, defend, protect and hold the other harmless from and against any costs, expenses or liability for compensation, commission or charges which may be claimed by any broker, finder or other similar party, other than said named Broker(s) by reason of any dealings or act of the indemnifying Party. & Escrow and Closing. 8.1 Upon acceptance hereof by Seller, this Agreement, including any counter-offers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller, but also instructions to Escrow Holder for the consummation of the Agreement through the Escrow. Escrow Holder shall not prepare any further escrow instructions restating or amending this Agreement unless specifically so instructed by the Parties of a Broker herein. 8.2 Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law, custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code, In the event of aconflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the Property is located shall prevail. 8.3 Subject to satisfaction of the contingencies herein described, Escrow Holder shall close this escrow (the "Closing") by recording the grant deed and other documents required to be recorded and by disbursing the funds and documents in accordance with this Agreement. 8.4 If this transaction is terminated for non -satisfaction and non -waiver of a Buyers Contingency, as defined in paragraph 9-4, then neither of the Parties shall thereafter have any liability to the other under this Agreement, except to the extent of the breach of any affirmative covenant or warranty in this Agreement that may have been involved. In the event of such termination, Buyer shall be promptly refunded all funds deposited by or on behalf of Buyer with a Broker, Escrow Holderor, Seller, less only Title Company and Escrow Holder cancellation fees and costs, all of which shall be Buyer's obligation. 8.5 The Closing shall occur on the Expected Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and the Expected Closing Date is not extended by mutual instructions of the Parties, a Party hereto not then in default under this Agreement may notify the other Party, Escrow Holder, and Broker(s), in writing that, this Agreem,o yi���(r�d gJgi�Kd4�v' hr r�1J,%1pr ff t�tW n* 8.6 s r ment d scrow s a e eeme erminated an scrow of er shall forthwith return all monies and documents, less only Escrow Holder's reasonable fees and expenses, to the Party who deposited them. Such Party shall indemnify and hold Escrow Holder harmless in connection with such retm. However, no refunds or documents shall be returned to a party claimed by written notice to Escrow Holder to be in default under this Agreement. Paragraph 8.5 hereof, 8.7 Except as otherwise provided herein, the termination of Escrow and this Agreement and/or the return of deposited funds or documents shall not relieve or release either Buyer or Seller from any obligation to pay Escrow Holder's fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements, covenants or warranties contained herein. 6.8 If this Agreement terminates for any reason other than Sellers breach or default, then at Sellers request, and as a condition to the return of Buyer's deposit, Buyer shall within five (5) days after written request deliver to Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. 9. Contingencies to Closing. 9.1 The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies: (a) Disclosure. Buyer's receipt and written approval, within ten (10) days after delivery to Buyer, of a completed Property Information Sheet (the "Property Information Sheet"). concerning the Property, duly executed by or on behalf of Seller in the current form or equivalent to that published bythe American Industrial Real Estate Association (the "A.I.R.') Seller shall provide Buyer with the Property Information Sheet within ten (10) days following the Date of Agreement. See also paragraph 2.5 for possible additional disclosure and contingency regarding a"Commercial Property Earthquake Weakness Disclosure Report." (b) Physical Inspection. Buyer's written approval, within ten (10) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of an inspection by Buyer, at Buyer's expense, of the physical aspects of the Property. Initials PAGE 2 Initials (c) Hazardous Substance Conditions Report Buyers written approval, within thirty (30) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a Hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Such report will be obtained at Buyers direction and expense. A "Hazardous Substance" for purposes of this Agreement is defined as any substance whose nature and/or quantity of existence, use, manufacture, disposal or effect, render it subject to Federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare. A "Hazardous Substance Condition" for purposes of this Agreement is defined as the existence on, under or relevantly adjacent to the Property of a Hazardous Substance that would require remediation and/or removal under applicable Federal, state or local law. (d) Soil inspection. Buyer's written approval, within thirty (30) days after the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a soil test report concerning the Property. Said report shall be obtained at Buyers direction and expense. Seller shall promptly provide to Buyer copies of any existing soils reports that Seller may have. (e) GovernmentalApprovals. Buyers receipt, within fifteen (15) days of the Date of Agreement; of all approvals and permits from governmental agencies or departments which have or may have jurisdiction over the Property which Buyer deems necessary or desirable in connection with its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped access, transportation and environmental matters. Buyers failure to deliver to Escrow Holder and Seller written notice terminating this Agreement prior to the expiration of said fifteen (15) day period as a result of Buyers failure to obtain such approvals and permits shall be conclusively deemed to be Buyers waiver of this condition to Buyer's obligations under this Agreement. (f) Condition of Title. Buyer's written approval of a current preliminary title report concerning the Property (the "PTR") issued by the Title Company, as well as all documents (the "Underlying Documents") referred to In the PTR, and the issuance by the Title Company of the title policy described in 10.1. Seller shall cause the PTR and all Underlying Documents to be delivered to Buyer promptly after the Date of Agreement. Buyer's approval is to be given within ten (10) days after receipt of said PTR and legible copies of all Underlying Documents. The disapproval by Buyer of any monetary encumbrance, which by the terms of this Agreement is not to remain against the Property afterthe Closing, shall not be considered a failure of this condition, as Seller shall have the obligation, at Sellers expense, to satisfy and remove such disapproved monetary encumbrance at or before the Closing. (g) Survey. Buyer's written approval, within thirty (30) days after receipt of the PTR and Underlying Documents, of an ALTA title supplement based upon a survey prepared to American Land Title Association (the "ALTA") standards for an owners policy by a licensed surveyor, showing the legal description and boundary lines of the Property, any easements of record, and any improvements, poles, structures and things located within ten (10) feet either side of the Property boundary lines. The survey shall be prepared at Buyers direction and expense. If Buyer has obtained a survey and approved the ALTA title supplement. Buyer may elect within the period allowed for Buyer's approval of a survey to have an ALTA extended coverage owner's form of title policy, in which event Buyer shall pay any additional premium attributable thereto. (h) Existing Leases and Tenancy Statements.Buyer's written approval, within ten (10) days after receipt of legible copies of all leases, subleases or rental arrangements (collectively the "Existing Leases") affecting the Property, and a statement (the "Tenancy Statement") in the latest form or equivalent to that published by the A.I.R., executed by Seller and each tenant and subtenant of the Property. Seller shall use its best efforts to provide Buyer with said Existing Leases and Tenancy Statements promptly after the Date of Agreement. (i) Other Agreements. Buyers written approval, within ten(10)days after receipt, of a copy of any other agreements ("Other Agreements") known to Seller that will affect the Property beyond the Closing. Seller shall cause said copies to be delivered to Buyer promptly afterthe Date of Agreement. (j) Financing. If paragraph 5 hereof dealing with a financing contingency has not been stricken, the satisfaction or waiver of such New Loan contingency. (k) Existing Notes. If paragraph 3.1(c) has not been stricken, Buyers written approval, within ten (10) days atter receipt, of conformed and legible copies of the Existing Notes, Existing Deeds of Trust and related agreements (collectively the "Loan Documents') to which the Property will remain subject afterthe Closing, including a beneficiary statement (the "Beneficiary Statement") executed by the holders of the Existing Notes confirming: (1) the amount of the unpaid principal balance, the current interest rate, and the date to which interest is paid, and (2) the nature and amount of any impounds held by the beneficiary in connection with said loan. Seller shall use its best efforts to provide Buyer with said Loan Documents and Beneficiary Statement promptly after the Date of Agreement. Buyer's obligation to close is further conditioned upon Buyers being able to purchase the Property without acceleration or change in the terms of any Existing Notes or charges to Buyerexcept as otherwise provided in this Agreement or approved by Buyer, provided, however, Buyer shall pay the transfer fee referred to in paragraph 3.2 hereof. (1) Destruction, Damage or Loss. There shall not have occurred prior to the Closing, a destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure. If the cost of repair or cure is $10,000.00 or less, Seller shall repair or cure the loss prior to the Closing. Buyer shall have the option, within ten (10) days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to either terminate this transaction or to purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price. 11 the cost to repair or cure is more than $10,000.00, and Buyer does not elect to terminate this transaction, Buyer shall be entitled to any insurance proceeds applicable to such loss. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume no destruction, damage or loss costing more than $10,000.00 to repair or cure has occurred prior to Closing. (m) Material Change. No Material Change, as hereinafter defined, shall have occurred with respect to the Property that has not been approved in writing by Buyer. For purposes of this Agreement, a "Material Change" shall be a change in the status of the use, occupancy, tenants, or condition of the Property as reasonably expected by the Buyer, that occurs after the date of this offer and prior to the Closing. Buyer shall have ten (10) days following receipt of written notice from any source of any such Material Change within which to approve or disapprove same. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume that no Material Change has occurred prior to the Closing. (n) Seller Performance. The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement. (o) Breach of Warranty. That each representation and warranty of Seller herein be true and correct as of the Closing. Escrow Holder shall assume that this condition has been satisfied unless notified to the contrary in writing by Buyer or Broker(s) prior to the Closing. (p) Broker's Fee. Payment at the Closing of such Brokers Fee as is specified in this Agreement or later written instructions to Escrow Holder executed by Seller and Broker(s). It is agreed by Buyer, Seller and Escrow Holder that Broker(s) is/are a third party beneficiary of this Agreement insofar as the Broker's fee is concerned, and that no change shall be made by Buyer, Seller or Escrow Holderwith respectto the time of payment, amount of payment, or the conditions to payment of the Brokers fee specified In this Agreement, without the written consent of Broker(s). 9.2 All of the contingencies specified in sub -paragraphs (a) through (p) of paragraph 9.1 are for the benefit of, and may be waived by. Buyer, and may be elsewhere herein referred to as "Buyer Contingencies.' 9.3. If Buyer shall fail, within the applicable time specified, to approve or disapprove in writing to Escrow Holder, Seller and the other Party's Broker, any item, matter or document subject to Buyer's approval under the terms of this Agreement, it shall be conclusively presumed that Buyer has approved such item, matter or document. Buyers conditional approval shall constitute a disapproval, unless provision is made by the Seller within the time specified therefor by the Buyer in the conditional. approval or by this Agreement, whichever is later, for the satisfaction of the condition imposed by the Buyer. 9.4 if any Buyer's Contingency Is not satisfied or if Buyer disapproves any matter subject to its approval within the time period applicable thereto ("Disapproved Item"); Seller shall have the right within ten (10) days following the expiration of the time period applicable to such Buyer Contingency or receipt of notice of Buyer's disapproval, as the case may be, to elect to cure such Disapproved Item prior to the Expected Closing Date ("Seller's Election"). Seller's failure to Sive to Buyer within said ten (1 0) day period, written notice of Sellers commitment to cure such Disapproved Item on or before the Expected Closing Date shalt be conclusively presumed to be Seller's Election not to cure such Disapproved Item. If Seller elects, either by written notice or failure to give written notice, not to cure a Disapproved Item, Buyer shall have the election, within ten (10) days after Sellers Election to either accept title to the Property subject to that Disappproved Item, or to terminate this transaction. Buyer's failure to elect termination by written notice to Seller within said ten (10) day period shall constitute BuYer's election to accept title to the Property subject to that Disapproved Item without deduction or offset. Unless expressly provided otherwise herein, Seller s right to cure shall not applylo Hazardous Substance Conditions referenced in paragraph 9.1 (c) or to the Financing Contingency set forth in paragraph 5. Unless the parties mutually instruct otherwise, if the time periods for the satisfaction of contingencies or for Seller's and Buyer's said Elections would expire on a date after the Expected Closing Date, the Expected Closing Date shall be deemed extended to coincide with the expiration of three (3) business days following the expiration of: (a) the applicable contingency period($), (b) the period within which the Seller may elect to cure the Disapproved Item, or (c) if Seller elects not to cure, the period within which Buyer may elect to terminate this transaction, whichever is later. 9.5 Buyer understands and agrees that until such time as all Buyer's Contingencies have been satisfied or waived, Seller and/or its agents may solicit, entertain and/or accept back-up offers to purchase the subject Property in the event the transaction covered by this Agreement Is not consummated. 9.6 As defined in subparagraph 9.1(c), Buyer and Seller acknowledge that extensive local, state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remediation of a Hazardous Substance Condition. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Broker(s). Buyer and Selleracknowledge that they have been advised by Broker(s) to consult theirown technical and legal expertswith respect to the possible Hazardous Substance Condition aspects of this Property or adjoining properties, and Buyer and Seller are not relying upon any investigation by or statement of Broker(s) with respect thereto. Buyer and Seller hereby assume all responsibility for the impact of such Hazardous Substance Conditions upon their respective interests herein. 1D. Documents Required at Closing: 10.1 Escrow Holder shall cause to be issued to Buyer a standard coverage (or ALTA extended, If so elected under paragraph 9.1(f)) owner's form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a Purchase Money Deed of Trust in this transaction, the policy of title insurance shall be a joint protection policy Insuring bath Buyer and Seller. "IMPORTANT: INA PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAYBE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND -ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING." 10.2 Seller shall deliver or cause to be delivered to Escrow Holder in time for delivery to Buyer at the Closing, an original ink signed: (a) Grant deed (or equivalent), duly executed and in recordable form, conveying fee title to the Property to Buyer. (b) If paragraph 3.1(c) has not been stricken, the Beneficiary Statements concerning Existing Note(s). Initials PAGE 3 Initials (c) If applicable, the Existing Leases and Other Agreements together with duly executed assignments thereof by Seller and Buyer. The assignment of Existing Leases shall be on the most recent Assignment and Assumption of Lessor's Interest in Lease form published by the A.I.R. or its equivalent (d) If applicable, the Tenancy Statements executed by Seller and the Tenant(s) of the Property. (e) An affidavit executed by Seller to the effect that Seller is not a "foreign person" within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit inform reasonably satisfactory to Buyer at least three (3) business days prior to the Closing, Escrow Holder shall at the Closing deduct from Seller's proceeds and remit to Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers. 10.3 Buyer shall deliver or cause to be delivered to Seller through escrow: (a) The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement for prorations, expenses and adjustments. The balance of the cash portion of the Purchase Price, including Buyer's escrow charges and other cash charges, if any, shall be deposited by Buyer with Escrow Holder, by cashiers check drawn upon a local major banking institution; federal funds wire transfer, or any other method acceptable to Escrow Holder as immediately collectable funds, no later than 11:00 d clock A.M. on the business day prior to the Expected Closing Date. (b) If a Purchase Money Note and Purchase Money Deed of Trust are called for by this Agreement, the duly executed originals of those documents, the Purchase Money Deed of Trust being In recordable form, together with evidence of fire insurance on the Improvements in the amount of the full replacement cost naming Seller as a mortgage loss payee, and a real estate tax service contract (at Buyers expense), assuring Seller of notice of the status of payment of real property taxes during the life of the Purchase Money Note. - - (c) The assumption portion of the Assignment and Assumption of Lessors Interest in Lease form specified in paragraph 10.2(c), above, duly executed by Buyer with respect to the obligations of the Lessor accruing after the Closing as to each Existing Lease. (d) Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any Other Agreements. (e) If applicable, a written assumption duly executed by Buyer of the loan documents with respect to Existing Notes. 11. Proration, Expenses and Adjustments. 11.1 Taxes. Real property taxes payable by the owner of the Property shall be prorated through Escrow as of the date of the Closing, based upon the latest tax bill available. The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of eventsoccurring prior to the Closing. Payment shall be made promptly in cash upon receipt of a copy of any such supplemental bill of the amount necessary to accomplish such proration. Seller shall pay and discharge in full at or before the Closing the unpaid balance of any special assessment bonds. 11.2 Insurance. If Buyer elects to take an assignment of the existing casualty and/or liability Insurance that is maintained by Seller, the current premium therefor shall be prorated through Escrow as of the date of Closing. 11.3 Rentals, Interest and Expenses. Collected rentals, interest on Existing Notes, utilities, and operating expenses shall be prorated as of the date of Closing. The Parties agree to promptly adjust between themselves outside of Escrow any rents received after the Closing. 11A Security Deposit. Security Deposits held by Seller shall be given to Buyer by a credit to the cash required of Buyer at the Closing. 11.5 Post Closing Matters. Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined. 11.6 Variations In Existing Note Balances. In the event that Buyer is taking title to the Property subject to an Existing Deed of Trust(s), and in the event that a Beneficiary Statement as to the applicable Existing Note(s) discloses that the unpaid principal balance of such Existing Note(s) at the Closing will be more or less than the amount set forth in paragraph 3.1(c) hereof (the "Existing Note Variation"), then the Purchase Money Note(s) shall be reduced cr increased by an amount equal to such Existing Note Variation. If there is to be no Purchase Money Note, the cash required at the Closing per Paragraph 3.1(a) shall be reduced or increased by the amount of such Existing Note Variation. 11.7 Variations In New Loan Balance. In the event Buyer is obtaining a New Loan and in the event that the amount of the New Loan actually obtained is greater than the amount set forth in Paragraph 5.1 hereof, the Purchase Money Note, if one is called for in this transaction, shall be reduced by the excess of the actual face amount of the New Loan over such amount as designated in Paragraph 5.1 hereof. 11.8 Escrow Costs and Fees. Buyer and Seller shall each pay one-half of the Escrow Holder's charges and Seller shall pay the usual recording fees and any required documentary transfer taxes. Seller shall pay the premium for a standard coverage owners or joint protection policy of title insurance. 12. Representation and Warranties of Seller and Disclaimer. 12.1 Sellers warranties and representations shall survive the Closing and delivery of the deed, and, unless otherwise noted herein, are true, material and relied upon by Buyer and Broker(s) in all respects, both as of the Date of Agreement, and asof the date of Closing. Seller hereby makes the following warranties and representations to Buyer and Broker(s): (a) Authority of Seller. Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein, and to perform Sellers obligations hereunder. (b) Maintenance During Escrow and Equipment Condition At Closing. Except as otherwise provided in paragraph 9.1(1) hereof dealing with destruction, damage or loss, Seller shall maintain the Property until the Closing in its present condition, ordinary wear and tear excepted_ The heating, ventilating, air conditioning, plumbing, elevators, loading doors and electrical systems shall be in good operating order and condition at the time of Closing. (c) Hazardous Substances/Storage Tanks. Seiler has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance (as defined in paragraph 9.1(c)), nor of the existence or prior existence of any above or below ground storage tank or tanks. (d) Compliance. Seller has no knowledge of any aspect or condition of the Property which violates applicable laws, rules, regulations, codes, or covenants, conditions or restrictions, or of improvements or alterations made to the Property without a permit where one was required, or of any u nfulfi lied order or directive of any applicable governmental agency or casualty insurance company that any work of investigation, remediation, repair, maintenance or improvement is to be performed on the Property. (e) Changes in Agreements. Prior to the Closing, Seller will not violate or modify, orally or in writing, any Existing Lease or Other Agreement, or create any new leases or other agreements affecting the Property, without Buyer's written approval, which approval will not be unreasonably withheld. (f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property, except as disclosed by this Agreement or otherwise in writing to Buyer. (g) Mechanics' Llens. There are no unsatisfied mechanic's or materialman's lien rights concerning the Property. (h)- Actions, Suits or Proceedings. Seller has no knowledge of any actions, suits or proceedings pending or threatened before any Commission, board, bureau, agency, instrumentality, arbitrator(s) court or tribunal that would affect the Property or the right to occupy orutilize same_ (i) Notice of Changes. Seller will promptly notify Buyer and Broker(s) in writing of any Material Change (as defined in paragraph 9:1(m)) affecting The Property that becomes known to Seller prior to the Closing. (j) No Tenant Bankruptcy Proceedings. Seller has no notice or knowledge that any tenant of the Property is the subject of a bankruptcy. or insolvency proceeding. (k) No Seller Bankruptcy Proceedings. Seller is not the subject of a bankruptcy, insolvency or probate proceeding. 12.2 Buyer hereby acknowledges that, except as otherwise stated in this Agreement. Buyer is purchasing the Property in its existing condition and will, by the time called for herein, make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the Occupational Safety and Health Act, hazardous substanyye laws, or an other act, ordinance or law, h ve a qmade by either Party or Br Ker, or relied upon by either Party hereto. Sub j ee t only to the � pFosesso§reemi Cy A e Sir $ quant o ti t £ Bement, Buyer agrees to purchase the RUN a auI us 13.1 Possession of the Property shall be given to Buyer at the Closing subject to the rights of tenants under Existing Leases. 14. Buyer's Entry. 14.1 At anytime during the Escrow period, Buyer, and its agents and representatives, shall have the right at reasonable times and subject to rights of tenants under Existing Leases, to enter upon the Property for the purpose of making inspections and tests specified in this Agreement. Following any such entry or work, unless otherwise directed in writing by Seller, Buyer shall return the Property to the condition it was in prior to such entry or work, including the recompaction or removal of any disrupted soil or material as Seller may reasonably direct. All such inspections and tests and any other work conducted or materials furnished with respectto the Property by or for Buyer shall be paid forby Buyer as and when due and Buyershall indemnify, defend, protect and hold harmless Seller and the Property of and from any and all claims, liabilities, demands, losses, costs, expenses (including reasonable attorney's fees), damages or recoveries, including those for Injury to person or property, arising out of or relating to any such wgrk or materials or the actp or omi s. ns of Buyer, its agents or employees in connection therewith. However, Buyer shall not do any drilling or coring w tout 15. Further Documents and Assurances. Seller's prior approval and will not disclose the results* 15.1 Buyer and Seller shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for Closing as and when required by this Agreement. Buyer and Seller agree to provide all further information, and to execute and deliver all further documents and instruments, reasonably required by Escrow Holder or the Title Company. 16. Attorneys' Fees. 16.1 In the event of any litigation or arbitration between the Buyer, Seller, and Broker(s), or any of them, concerning this transaction, the prevailing party shall be entitled to reasonable attorney's fees and costs. The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred in good faith. 17. Prior Agreements/Amendments. 17.1 The contract in effect as of the Date of Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property. 172 Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller. *of any reports of any inspections or investigations allowed under the terms of this Agreement to any third person or entity without Seller's prior written consent, unless required by law to do so. Initials PAGE 4 mmais 18. Broker's Rights. 18.1 If this sale shall not be consummated due to the default of either the Buyer or Seller, the defaulting p shall be liable to and shall pay to Broker(s) the commission that Broker(s) would have received had the sale been consummated. This obligation of Buyer, if Buyer is the defaulting party, Is in addition to any obligation with respect to liquidated damages. - 18.2 Upon the Closing, Broker(s)Is/are authorized to publicize the facts of this transaction, with Seller's prior written 19. Notices. consent. 19.1 Whenever any Party hereto, Escrow Holder or Broker(s) herein shall desire to give or serve any notice, demand, request, approval or other communication, each such communication shall be in writing and shall be delivered personally, by messenger or by mail, postage prepaid, addressed as set forth adjacent to that party's or Brokers signature on this Agreement or by telecopy with receipt confirmed by telephone. Service of any such communication shall be deemed made on the date of actual receipt at such address. _ 192 Any Party or Broker hereto may from time to time, by notice in writing served upon the other Parry as aforesaid, designate a different address to which, or a different person or additional persons to whom, all communications are thereafter to be made. 20. Duration of Offer. 20.1 If this offer shall not be accepted by Seller on or before 5:00 P.M, according to the time standard applicable to the city of Santa Clarity on the date of June 9, 1997 , it shall be deemed automatically revoked. 202 The acceptance of this offer, orof any subsequent counteroffer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party oreither Broker herein of a duly executed writing unconditionally accepting the last outstanding offer or counteroffer. 21. LIQUIDATED DAMAGES. (This Liquidated Damages paragraph Is applicable only it initialled by both parties.) 21.1 THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYER'S BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $80.000.00 PLUS INTEREST, IF ANY, ACCRUED THEREON. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Buyer Initials Seller Initials 22. ARBITRATION OF DISPUTES.(ThisArbitration ofDisputesparagraph is applicable only itinitialledby both parties and is subject to paragraph 23, below.) 22.1 ANY CONTROVERSY ASTO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES (the "COMMERCIAL RULES") OF, THE AMERICAN ARBITRATION ASSOCIATION. HEARINGS ON SUCH ARBITRATION SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY THREE (3) ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST FIVE (5) FULL TIME YEARS OF EXPERIENCE IN THE AREA WHERE THE PROPERTY IS LOCATED, IN THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT AND SHALL BE APPOINTED UNDER THE COMMERCIAL RULES. THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW AND THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT, AS THE SAME MAY HAVE BEEN DULY MODIFIED IN WRITING BY THE PARTIES PRIOR TO THE ARBITRATION, UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING SCHEDULED AT THE REQUEST OF EITHER PARTY. SUCH PRE - ARBITRATION DISCOVERY SHALL BE PERMITTED AS IS AUTHORIZED UNDER THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEAST TWO (2) OF TH E THREE (3) ARBITRATORS, BE RENDERED WITHIN THIRTY (30) DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS' FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYER'S RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATION DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY INITIALLING IN THE SPACE BELOWYOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED INA COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE"ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Buyer initials Seller Initials 23. Applicable Law. 23.1 This Agreement shall be governed by, and paragraph 22.3 amended to refer to, the laws of the state in which the Property is located. 24. Time of Essence. 24.1 Time is of the essence of this Agreement. 25. Counterparts. 25.1 This Agreement maybe executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement. 26. Disclosures Regarding The Nature of a Real Estate Agency Relationship. 26.1 The Parties and Broker(s) agree that their relationship(s) shall be governed by the principles set forth in California Civil Code, Section 2375, as summarized in the following paragraph 26.2. 262 When entering into a discussion with areal estate agent regarding areal estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seller acknowledge being advised by the Broker(s) in this transaction, as follows: (a) Seller's Agent. A Seller's agent under a listing agreement with the Seller ads as the agent for the Seiler only. A Seller's agent or subagent has the following affirmative obligations: (1) To the Seller: Afiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyer and the Seller: a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith_ c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b) Buyer's Agent. A selling agent can, with a Buyers consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Sellers agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer: A fiduciary duty of utmost care, integrity; honesty, and loyalty In dealings with the Buyer. (2) To the Buyer and the Seller: a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to [he agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent Is not obligated to reveal to either Party any confidential information obtained from the other Parry which does not involve the affirmative duties set forth above. Initials PAGE 5 Initials (c) Agent Representing Both Seller and Buyer. Areal estate agent, either acting directly or through one or more associate licenses. can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer. a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Seller or the Buyer. b. Other duties to the Seller and the Buyer as stated above in their respective sections (a) or (b) of this paragraph 26.2. (2) In representing both Seller and Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered. (3) The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Seller should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advise is desired, consult a competent professional. (d) Further Disclosures. Throughout this transaction Buyer and Seller may receive more than one disclosure, depending upon the number of agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate agent in this transaction and that disclosure. 26.3 Confidential Information: Buyer and Seller agree to identify to Broker(s) as "Confidential' any communication or information given Broker(s) that is considered by such Party to be confidential - 27. Additional Provisions: Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraphs 29.1 through 29.8 (It will be presumed no other provisions are included unless specified here.) *See attached Addendum Paragraph 29.8 to this Agreement *BUYER AND SELLER HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN AND ARE NOW ADVISED BY THE BROKER(S) TO CONSULT AND RETAIN THEIR OWN EXPERTS TO ADVISEAND REPRESENTTHEM CONCERNING THE LEGALAND INCOMETAX EFFECTS OF THIS AGREEMENT, AS WELL AS THE CONDITION AND/OR LEGALITY OF THE PROPERTY, THE IMPROVEMENTS AND EQUIPMENT THEREIN, THE SOIL THEREOF, THE CONDITION OF TITLE TH ER ETO, THE SURVEY THEREOF, THE ENVIRONMENTAL ASPECTS THEREOF, THE INTENDEDAND/OR PERMITTED USAGE THEREOF, THE EXISTENCE AND NATURE OF TENANCIES THEREIN, THE OUTSTANDI NG OTHER AGREEMENTS, IF ANY, WITH RESPECT THERETO, AND THE EXISTING OR CONTEMPLATED FINANCING THEREOF, AND THAT THE BROKER(S) IS/ARE NOT TO BE RESPONSIBLE FOR PURSUING THE INVESTIGATION OF ANY SUCH MATTERS UNLESS EXPRESSLY OTHERWISE AGREED TO IN WRITING BY BROKER(S) AND BUYER OR SELLER. THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY. L this Agreement has been filled in, it has been prepared for submission to your attorney for his approval. No representation or recommendation is made by the real estate Broker(s) or their agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction involved herein.The undersigned Buyer offers and agrees to buy the property on the terms and conditions stated and acknowledges receipt of a copy hereof. BROKER: BUYER: Realty Advisory Group, Inc. City of Santa Clarita By /Date Michael J. Gallivan Name Printed: Michael J. Gallivan Title: Director 211 Alta Avenue, -Suite G Address Santa Monica, CA 90402 By (Date George Caravalho Name Printed: George Caravalho Title: City Manager 23920 Valencia Blvd., Suite #300 Address Santa Clarita, CA 91355 (310) 458-0668 (310) 451-8625 (805) 286-4000 (805) 255-1996 Telephone Facsimile No. Telephone Facsimile No. 28. Acceptance. 28.1 Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified. 28.2 Seller acknowledges that Broker(s) has/have been retained to locate a Buyer and is/are the procuring cause of the purchase and sale of the Property set forth in this Agreement. In consideration of real estate brokerage service rendered by Broker(s), Seller agrees to pay Broker(s) a real estate brokerage fee in a sum equal to 6 % of the Purchase Price (the "Broker(s) Fee") divided equally in such shares as said Broker(s) shall direct in writing. As Is provided in paragraph 9.1(p), this Agreement shall serve as an Irrevocable instruction to Escrow Holder to pay such brokerage fee to Broker(s) out of the proceeds accruing to the account of Seller at the Closing. 28.3 Seller acknowledges receipt of a copy hereof and authorizes the Broker(s) to deliver a signed copy to Buyer. NOTE: A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT. BROKER: SELLER: CB Commercial Real Estate Group, Inc. Merle Norman Cosmetics, Inc. By Date By Doug Sonderegger Craig Peters Name Printed:. Doug Sonderegger/Craig Peters Name Printed: Title: Sr. Vice President/1st Vice President Title: 15303 Ventura Blvd., Suite #200 Address Sherman Oaks, CA 91403 (818) 907-4607/4616 (818) 907-4702 Telephone Facsimile No. Address Telephone Facsimile No. PAGE 6 These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form: American Industrial Real Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. 12131687-8777. cCopyright 1989 -By American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced In any form without permission in writing. FORM 729-R-3-1/94 ADDENDUM TO STANDARD OFFER,'AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997; BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. 2.3 Seller will include the security system as part of the purchase, but Seller shall have the option, at the termination of its tenancy, to remove the "Closed Circuit TV slow scan video transmitter unit", which removal, by itself, should not effect the operability of the balance of the system. The balance of the system will be left in place. Buyer agrees to accept the system "AS -IS", where -is, without warranty from Seller as to its condition or operability. 29.1 A decision has been made by the City of Santa Clarita to acquire the subject property. It is the City's preference to acquire the property through an arm's length negotiation pursuant to this Agreement. However, the City intends to acquire the property for public use through condemnation should the purchase pursuant to this Agreement not be consummated. 29.2 " Within ten (10) days after the commencement of escrow, Seller shall provide Buyer with access to all documents and tangible things in the possession or under the custody or control of Seller which relate to the subject property and which reasonably relate to the Seller's fulfillment of the terms and conditions of this agreement and the Seller's obligations hereunder. Seller shall provide such access to such documents and tangible things at its offices located at 15180 Bledsoe Street, Sylmar, California, at any mutually agreeable time, and subject to 24 hours notice by Buyer of its intention to inspect such records. 29.3 Buyer and Seller shall enter into a mutually acceptable leaseback agreement, based upon the A.I.R. Net Lease Form, by the terms of which Seller shall leaseback "Building 3" for one (1) year from the Close of Escrow, with two (2) six-month options, exercisable by Seller in its sole discretion, to extend the lease term for up to one additional year. Seller shall, additionally, have the right and option to rent `Building 1" on a month-to-month basis for up to one year following the Close of Escrow; Seller shall notify Buyer at least ten (10) days prior to the Close of Escrow if its elects to exercise its option; Seller is not required to rent "Building 1" for any term and may, instead, deliver possession thereof to Buyer at the Closb of Escrow; Buyer may not terminate this month-to-month tenancy absent default by Seller in the payment of rents or other default. Seller shall provide Buyer with at least thirty (30) days written notice of its intention to vacate `Building 1". The montlily rental rate for each building shall be $0.40 per square foot per month, triple net ("NNN"). There shall be no increase in rent during the initial or extended term(s). Seller and Buyer shall each pay their respective pro -rata share of taxes (or City's equivalent), insurance and maintenance. Seller shall maintain and transfer possession of the buildings in the condition described in this Agreement, the same as if possession of the buildings had been transferred at the Close of Escrow. The Lease Agreement shall provide additional limitations on Seller's obligations to pay for maintenance, capital improvements and any and all current governmental regulations or any enacted or imposed limitations prior to the termination of Seller's tenancy. The parties agree to negotiate these terms in good faith. 29.4 Buyer is aware that Seller does not have fee title to Lot 75 of (Tentative) Tract No. 42670, which is part of the property subject to this Agreement. Seller has an easement only, and Buyer acknowledges that Seller has provided Buyer with a copy of the recorded Easement. Seller shall assign its easement rights in said Lot 75 to Buyer and Buyer agrees that Seller has no obligation to deliver fee title to Lot 75 as a contingency of this Agreement. 29.5 Buyer shall be entitled to elect to pay the purchase price of $3,080,000.00 in one of two ways, in the sole discretion of Buyer, as follows: (i) Buyer may pay the entire purchase price in cash at the Close of Escrow; or, ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. (ii) Buyer may pay $2,080,000.00 in cash at the Close of Escrow, with the balance of $1,000,000.00 paid in the form of a Note Secured by a First Deed of Trust on the property (such Note and Deed of Trust to be in a form acceptable to Seller), which Note, with all accrued interest thereon, shall be due and payable in full on or before July 1, 1998, and which Note shall bear interest at the rate of ten percent (10%) per annum until paid. Buyer shall give Seller and escrow written notice of its election no later than sixty (60) days from the "commencement of escrow", which shall be the date typed onto the escrow instructions by the escrow officer. 29.6 For purposes of this Agreement, including but not limited to Seller's disclosures, the phrase "Seller's knowledge" or similar phrases shall mean the actual knowledge, without investigation or inquiry, of the current employees, officers and directors of Seller only. 29.7 The $80,000.00 referred to in Paragraphs 4.1, 4.2 and 21.1 of this Agreement shall become non-refundable upon the earlier of (i) the removal of all contingencies, or (ii) sixty (60) days after the commencement of escrow. 29.8 In addition to the contingencies specified in Paragraph 9 herein, Buyer shall have sixty (60) days from commencement of escrow to determine the feasibility of the purchase of the Property. At any time prior to the expiration of said period, Buyer shall have the right in its sole and absolute discretion to cancel this escrow; provided, however, that Buyer shall pay all escrow cancellation fees in the event of such cancellation. CONSULT YOUR ATTORNEY/ADVISORS - This document has been prepared for approval by your attorney. No representation or recommendation is made by CB Commercial Real Estate Group, Inc. or the American Industrial Real Estate Association (A.I.R.) or the agents or employees of this document or the transaction to which it relates. These are questions for your attorney. On any real estate transaction, it is recommended that you consult with a professional, such as a civil engineer, industrial hygienist or other person with experience in evaluating the condition of the property, including the possible presence of asbestos, hazardous materials and underground storage tanks. In addition, please be advised that an Owner or Tenant of real property may be subject to the Americans with Disabilities Act (the ADA), a Federal law codified at 42 USC Section 12101 et seq. Among other requirements of the ADA that could apply to your property, Title III of the ADA requires Owners and Tenants of "public accommodations" to remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons by January 26, 1992. The regulations under Title III of the ADA are codified at 28 CFR Part 36. s 1drsonder%merle.add ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE'PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. CB Commercial recommends that you and your attorney, engineer and/or architect review the ADA and the regulations, and, if appropriate, your proposed sale agreement, to determine if this law would apply to you, and the nature of the requirement. BUYER: By: Date: DS:sjf Odmonder\merleadd SELLER: Date: �o\1C STANDARD OFFER, AGREEMENT AND ESCROW #o„` INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Non -Residential) American Industrial Real Estate Association June 2, 1997 (Date for Reference Purposes) 1. Buyer. 1.1 City of Santa Clarita (the "Buyer") hereby offers to purchase the real property, hereinafter described, from the owner thereof (the "Seller") (collectively, the "Parties" or individually, a "Party"), through an escrow (the "Escrow") to close on ninety (90) days from Date of Agreement (the "Expected Closing Date") to be held by Commerce Escrow Company- (the "Escrow Holder") whose address is 1545 Wilshire Blvd , Suite #1600 Los Angeles i CA 90017 Phone No. (213) 484-0855 , Facsimile No. (213) 484-0417 upon the terms and conditions set forth In this agreement (the "Agreement"). Buyer shall have the right to assign Buyer's rights hereunder, but any such assignment shall not relieve Buyer of Buyer's obligations herein unless the Seller expressly releases Buyer. 1.2 The term "Date of Agreement as used herein shall be the date when by execution and delivery (as defined in paragraph 20.2) of this document or a subsequent counter-offer thereto, Buyer and Seller have reached agreement in writing whereby Seller agrees to sell, and Buyer agrees to purchase, the Property upon terms accepted by both Parties. 2. Property. 2.1 The real property (the "Proper that lathe subject of this offer consists of (insert a brief physical description) f+YPP (1) h„ildinoa tots iniz anvroxitnately 63.760 square feet situated on approximately is located in the City of Santa Clarita , County of Los Angeles State of California , is commonly known by the street address of 26407 N and is legally described as: to be furnished by title company in escrow 2.2 If the legal description of the Property Is not complete or is inaccurate, this Agreement shall not be invalid and the legal description shall be completed or corrected to meet the requirements of Old Republic Title Company (the "Title Company'), which Title Companv shall issue the title policy hereinafter described. 2.3 The Property Includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which the law of the state in which the Property is located provides is part of the Property, as well as the following items, if any, owned by Seller and presently located in the Property: electrical distribution systems (power panels, buss ducting, conduits, disconnects, lighting fixtures), telephone distribution systems (lines, tacks and connections), space heaters, airconditioning equipment, air lines, fire sprinkler systems, security systems, carpets, window coverings, wall coverings, and See attached Addendum to this Agreement (collectively; the "Improvements"). 2.4 If the Property is located in the State of California, the Broker(s) is/are required under the Alquist-Priolo Special Studies Zones Act, to disclose to a prospective purchaser of. real property whether the property being purchased is located within a delineated special studies zone (a zone that encompasses a potentially or recently active trace of an earthquake fault that is deemed by the State Geologist to be sufficiently active and well defined enough to constitute a potential hazard to structures from surface faulting or fault (creep). If the Property is located within such a special studies zone, its development may require a geologic report from a state registered geologist. In accordance with such law, the Broker(s) hereby informs) Buyer that the Property: O (a) Is not within such a special studies zone. fel (b) Is within such a special studies zone. 2.5 If (1) the Property is located in the State of California, (2) the Improvements were constructed prior to 1975, and (3) the Improvements include structures with (1) pre -cast (e.g., tilt -up) concrete or reinforced masonry walls together with wood frame floors or roofs or (ii) unreinforced masonry walls, California law requires that Seller or Seller's Broker provide Buyer with a copy of The Commercial Property Owner's Guide to Earthquake Safety (the "Booklet") published by the California Seismic Safety Commission. Sellerand Sellers Broker hereby inform Buyer that the Property: ❑ (a) meets the foregoing requirements, and Seller and Seller's Broker are required to provide Buyer with a copy of the Booklet. Seller or Seller's Broker shall, within five (5) business days of the Date of Agreement, deliver to Buyer a copy of the Booklet and a completed "Commercial Property Earthquake Weakness Disclosure Report" contained in the Booklet duly executed by Seller. Within five (5) business days of Buyers receipt of said Disclosure Report, Buyer shall deliver a duly countersigned copy of the same to Escrow Holder, with a copy to Seller and Seller's Broker. Escrow Holder is hereby instructed that the Escrow shall not close unless and until Escrow Holder has received the Disclosure Report duly signed by both Seller and Buyer. ❑ (b) does not meet the foregoing requirements requiring the delivery of the Booklet. 3. Purchase Price. 3.1 The purchase price (the "Purchase Price") to be paid by Buyer to Seller for the Property shall be $ 3,080,000.00 , payable as follows: (a) Cash down payment, including the Deposit as defined in paragraph 4.3 (or if an all cash$ 2,080,000.00 transaction, the Purchase Price): (Strike if not r applicable) (Strike if not applicable) (c) Buyer shall take title to the Property subject to the following existing deed(s) of trust ("Existing Deed(s) of Trust") securing the existing promissory note(s) ('Existing Note(s)" : (i) An Existing Note (the "First Note") with an unpaid principal balance as o the Cl gSf approximately: Said existing note is payable at $ per month_ including interest at the rate of unpaid balance is due on — (ii) An Existing Note (the "Seco of approximately: until paid (and/or the entire with an unpaid principal balance as of the Said Ex a is payable at $ per month, wreruld-ing interest at the rate of °h per annum until paid (and/or the entire (Strike if not (d) Buyer shall give Seller a deed of trust (the "Purchase Money Deed of Trust") on the Property, applicable) to secure the promissory note of Buyerto Sellerdescribed in Paragraph 6(the"Purchase Money$ 1,000,000.00 Note") in the amount of: Total Purchase Price: $ 3,080,000.00 3.2 It an Existing Deed of Trust permits the beneficiary thereof to require payment of a transfer fee as a condition to the transfer of the Property subject to such Existing Deed of Trust, Buyer agrees to pay transfer fees and costs of up to one and one-half percent (1'h%) of the unpaid principal balance of the applicable Existing Note. 4. Deposits. will 4.1 Buyer herelty deliverl a check in the sum of$ 50,000.00 ,payableto Commerce Escrow Company ,to, be (check applicable box) E forthwith deposited in the payees trust account ❑ held uncashed until the Date of Agreement. When cashed, the check shall be deposited into the payees trust account to be applied toward the Purchase Price of the Property at the Closing, as defined in paragraph 8.3. Should Buyer and Seiler not enter into an agreement for purchase and sale, Buyer's check or funds shall, upon request by Buyer, be promptly returned to Buyer. Initials PAGE 1 Initials 01989 -American Industrial Real Estate Association FORM 729 -R3 -1r94 "Mremoval of bu errs contingencies, 30,000.00 4.2 uyer shall deposit with Escrow Holder the additional sum of $ , to be applied to the Purchase Price at the Closing. 4.3 The funds deposited with Escrow Holder by or on behalf of Buyer under paragraphs 4.1 and 4.2, above (collectively the "Deposit"), shall be deposited by Escrow Holder in such State or Federally chartered bank as Buyer may select and in such interest-bearing account or accounts as Escrow Holder or Broker(s) deem appropriate and consistent with the timing requirements of this transaction. The interest therefrom shall accrue to the benefit of Buyer, who hereby acknowledges that there may be penalties or interest forteitures if the applicable instrument is redeemed prior to its specified maturity.. Buyer's Federal Tax Identification Number is from any correspondent or agent thereof, a commitment to lend to Buyer a sum not less than $ at a fixed interest rate not to exceed % per annum, payable in equal monthly installments, including interest, amortized than—years and all due in not less than _years, or at a variable interest rate commencing at an interest rate no ( amortized over a period of not less than _years and all due in not less than _years, and in either of the amount of the new loan (the "New Loan"). The New Loan shall be secured by a first deed of tr on' additional terms and conditions: of not less perannum, rth loan fees not to exceed Property and shall be upon the following and upon such others terms and conditions as are u required by such lender. 5.2 Buyer hereby agrees to diligen sue obtaining the New Loan. If Buyer shall fail to notify its Broker, Escrow Holder and Seller, in writing within _days following th of Agreement, that the New Loan has not been obtained, it shall be conclusively presumed that Buyer has.either obtained said New Loan o waived this New Loan contingency. 5.3 if, aft diligence, Buyer shall notify its Broker, Escrow Holder and Seller, in writing, within the time specified in Paragraph 5.2 hereof, that Buyer has tained said New Loan, this Agreement shall be terminated, and Buyer shall be entitled to the prompt return of Buyer's Deposit and any oth s deposited by or for Buyer with Escrow Holder or Seller, plus any interest earned thereon, less only Escrow Holder and Title Company cancellation 6. Purchase Money Note. (Strike if not applicable) 6.1 ic•xest 4tiLanpsid nv °avows. See attached Addendum to this Agreement The Purchase Money Note and Purchase Money Deed of Trust shall be on the current forms commonly used by Escrow Holder, and be junior and subordinate only to the Existing Note(s) and/or New Loan expressly called for by this Agreement. 6.2 The Purchase Money Note and the Purchase Money Deed of Trust shall contain provisions regarding the following: (a) Prepayment. Principal maybe prepaid in whole or in part at anytime without penalty, at the option of Buyer. (b) Late Charge. A late charge of 6% shall be payable with respect to any payment of principal, interest, or other charges, not made within ten (10) days after it is due. (c) Due On Sale. in the event the Buyer sells or transfers title to the Property or any portion thereof, then the Seller may, at Seller's option, require the entire unpaid balance of the Purchase Money Noteto be then paid in full. 7. Real Estate Brokers. 7.1 The following real estate broker(s) (collectively, the "Brokers') and brokerage relationships exist in this transaction and are consented to by the parties (check applicable boxes): ® CB Commercial represents Seller exclusively ("Seller's Broker") Im Realty Advisory Group represents Buyer exclusively ("Buyer's Broker"); or ❑ represents both Seller and Buyer ("Duat Agency"). (Also see Paragraph 26.) (the "Broker(s)"), all such named Broker(s) being the procuring cause(s) of this Agreement. See paragraph 26 for Disclosures Regarding the Nature of a Real Estate Agency Relationship. Buyer shall use the services of Buyers Broker exclusively in connection with any and all negotiations and offers with respect to the property described in paragraph 2.1 for a period of one year from the date above. 7.2 Buyer and Seller each represent and warrant to the other that he/she/it has had no dealings with any person, firm, broker or finder in connection with the negotiation of this Agreement and/or the consummation of the purchase and sale contemplated herein, other than the Broker(s) named In paragraph 7.1, and no broker or other person, firm or entity, other than said Broker(s) is/are entitled to any commission orfinder's fee in connection with this transaction as the result of any dealings or acts of such Party. Buyer and Seller do each hereby agree to indemnify, defend, protect and hold the other harmless from and against any costs, expenses or liability for compensation, commission or charges which may be claimed by any broker, finder or other similar party, other than said named Broker(s) by reason of any dealings or act of the indemnifying Party. 8. Escrow and Closing. 8.1 Upon acceptance hereof by Seller, this Agreement, including any counter-offers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller, but also instructions to Escrow Halder for the consummation of the Agreement through the Escrow. Escrow Holder shall not prepare any further escrow instructions restating or amending this Agreement unless specifically so instructed by the Parties of a Broker herein. 8.2 Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law, custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code. In the event of a conflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the Property is located shall prevail. 8.3 Subject to satisfaction of the contingencies herein described, Escrow Holder shall close this escrow (the "Closing") by recording the grant deed and other documents required to be recorded and by disbursing the funds and documents in accordance with this Agreement. 8.4 If this transaction is terminated for non -satisfaction and non -waiver of a Buyer's Contingency, as defined in paragraph 9.4, then neither of the Parties shall thereafter have any liability to the other under this Agreement, except to the extent of the breach of any affirmative covenant or warranty in this Agreement that may have been involved. In the event of such termination, Buyer shall be promptly refunded all funds deposited by or on behalf of Buyer with a Broker, Escrow Holder, or Seller, less only Title Company and Escrow Holder cancellation fees and costs, all of which shall be Buyer's obligation. 8.5 The Closing shall occur on the Expected Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and the Expected Closing Date is not extended by mutual instructions of the Parties, a Party hereto not then in default under this Agreement may notify the other Party, Escrow Holder, and Broker(s), in writing that, 8.6 monies -nd docu- Mitis Abr�menfbBd Fscr6vi shall be deemed terminated and Lscrow Holder snau forthwith return all aments, less only Escrow Holder's reasonable fees and expenses, to the Party who deposited them. Such Party shall indemnify and hold Escrow Holder harmless in connection with such retyrn. However, no refunds or documents shall be returned to a party claimed by written notice to Escrow Holder to be in default under this Agreement. wParagraph 8.5 hereof , 8.7 Except as otherwise provided herein, the termination of Escrow and this Agreement and/or the return of deposited funds or documents shall not relieve or release either Buyer or Seller from any obligation to pay Escrow Holder's fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements, covenants or warranties contained herein. 8.8 If this Agreement terminates for any reason other than Sellers breach or default, then at Sellers request, and as a condition to the return of Buyer's deposit, Buyer shall within five (5) days after written request deliver to Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. 9. Contingencies to Closing. 9.1 The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies: (a) Disclosure. Buyer's receipt and written approval, within ten (10) days after delivery to Buyer, of a completed Property Information Sheet (the "Property Information Sheet"), concerning the Property, duly executed by or on behalf of Seller in the current form or equivalent to that published bythe American Industrial Real Estate Association (the"A.I.R "). Sellershall provide Buyerwith the Property Information Sheet within ten (10) daysfollowing the Date of Agreement See also paragraph 2.5 for possible additional disclosure and contingency regarding a"Commercial Property Earthquake Weakness Disclosure Report." (b) Physical Inspection. Buyer's written approval, within ten (10) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of an inspection by Buyer, at Buyers expense, of the physical aspects of the Property. Initials PAGE 2 Initials (c) Hazardous Substance Conditions Report. Buyers written approval, within thirty (30) days following the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a Hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Such report will be obtained at Buyers direction and expense. A "Hazardous Substance" for purposes of this Agreement is defined as any substance whose nature and/or quantity of existence, use, manufacture, disposal or effect, render it subject to Federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health orwelfare. A "Hazardous Substance Condition" for purposes of this Agreement is defined as the existence on, under or relevantly adjacent to the Property of a Hazardous Substance that would require remediation and/or removal under applicable Federal, state or local law. (d) Soil Inspection. Buyers written approval, within thirty (30) days after the later of the Date of Agreement or receipt by Buyer of the Property Information Sheet, of a soil test report concerning the Property. Said report shall be obtained at Buyers direction and expense. Seller shall promptly provide to Buyer copies of any existing soils reports that Seller may have. - (e) GovernmentalApprovals. Buyers receipt, within fifteen (15) days of the Date of Agreement, of all approvals and permits from governmental agencies or departments which have or may have jurisdiction over the Property which Buyer deems necessary or desirable in connection with its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped access, transportation and environmental matters. Buyers failure to deliver to Escrow holder and Seller written notice terminating this Agreement prior to the expiration of said fifteen (15) day period as a result of Buyers failure to obtain such approvals and permits shall be conclusively deemed to be Buyers waiver of this condition to Buyer's obligations under this Agreement. (f) Condition of Title. Buyers written approval of a current preliminary title report concerning the Property (the "PTR") issued by the Title Company, as well as all documents (the "Underlying Documents") referred to in the PTR, and the issuance by the Title Company of the title policy described in 10.1. Seller shall cause the PTR and all Underlying Documents to be delivered to Buyer promptly after the Date of Agreement. Buyer's approval is to be given within ten (10) days after receipt of said PTR and legible copies of all Underlying Documents. The disapproval by Buyer of any monetary encumbrance, which by the terms of this Agreement is not to remain against the Property after the Closing, shall -not be considered a failure of this condition, as Seller shall have the obligation, at Sellers expense, to satisfy and remove such disapproved monetary encumbrance at or before the Closing. (g) Survey. Buyers written approval, within thirty (30) days after receipt ofthePTR and Underlying Documents, of an ALTA title supplement based upon a survey prepared to American Land Title Association (the "ALTA") standards for an owners policy by a licensed surveyor, showing the legal description and boundary lines of the Property, any easements of record, and any improvements, poles, structures and things located within ten (10) feet either side of the Property boundary lines. The survey shall be prepared at Buyers direction and expense. If Buyer has obtained a survey and approved the ALTA title supplement, Buyer may elect within the period allowed for Buyers approval of a survey to have an ALTA extended coverage owners form of title policy, in which event Buyer shall pay any additional premium attributable thereto. (h) Existing Leases and TenancyStatements. Buyers written approval, within ten (10) days after receipt of legible copies of all leases, subleases or rental arrangements (collectively the "Existing Leases") affecting the Property, and a statement (the "Tenancy Statement") in the latest form or equivalent to that published by the A.I.R., executed by Seller and each tenant and subtenant of the Property. Seller shall use its best efforts to provide Buyer with said Existing Leases and Tenancy Statements promptly after the Date of Agreement. (i) Other Agreements. Buyer's written approval, within ten (10) days after receipt. of a copy of any other agreements ("Other Agreements") known to Seilerthat will affect the Property beyond the Closing. Seller shall cause said copies to be delivered to Buyer promptly afterthe Date of Agreement. (j) Financing. If paragraph 5 hereof dealing with a financing contingency has not been stricken, the satisfaction or waiver of such New Loan contingency. (k) Existing Notes. If paragraph 3.1(c) has not been stricken, Buyers written approval, within ten (10) days atter receipt, of conformed and legible copies of the Existing Notes, Existing Deeds of Trust and related agreements (collectively the "Loan Documents") to which the Property will remain subject after the Closing, Including a beneficiary statement (the "Beneficiary Statement") executed by the holders of the Existing Nates confirming: (1) the amount of the unpaid principal balance, the current interest rate, and the date to which interest is paid, and (2) the nature and amount of any impounds held by the beneficiary in connection with said loan. Seller shall use its best efforts to provide Buyer with said Loan Documents and Beneficiary Statement promptly after the Date of Agreement. Buyer's obligation to close Is further conditioned upon Buyers being able to purchase the Property without acceleration or change in the terms of any Existing Notes or charges to Buyerexcept as otherwise provided in this Agreement or approved by Buyer, provided, however, Buyer shall pay the transfer fee referred to in paragraph 3.2 hereof. (1) Destruction, Damage or Loss. There shall not have occurred prior to the Closing, a destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure. If the cost of repair or cure is $10,000.00 or less, Seiler shall repair or cure the loss prior to the Closing. Buyer shall have the option, within ten (10) days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to eitherterminate this transaction or to purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price. If the cost to repairer cure is more than $10,000.00, and Buyer does not elect to terminate this transaction, Buyershall be entitled to any insurance proceeds applicableto such loss. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume no destruction, damage or loss costing more than $10,000.00 to repair or cure has occurred prior to Closing. (m) Material Change. No Material Change, as hereinafter defined, shall have occurred with respect to thePropertythat hasnotbeen approved in writing by Buyer. For purposesofthis Agreement, a "Material Change" shall be a change in the status of the use, occupancy, tenants, or condition of the Property as reasonably expected by the Buyer, that occurs after the date of this offer and prior to the Closing. Buyer shall have ten (10) days following receipt of written notice from any source of any such Material Change within which to approve or disapprove same. Unless otherwise notified in writing by either Party or Broker, Escrow Holder shall assume that no Material Change has occurred prior to the Closing. (n) Seller Performance. The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement. (o) Breach of Warranty. That each representation and warranty of Seller herein be true and correct as of the Closing. Escrow Holder shall assume that this condition has been satisfied unless notified to the contrary in writing by Buyer or Broker(s) prior to the Closing. (p) Broker's Fee. Payment at the Closing of such Broker's Fee as is specified in this Agreement or later written instructions to Escrow Holder executed by Seiler and Broker(s). It is agreed by Buyer, Seller and Escrow Holder that Broker(s) is/are a third party beneficiary of this Agreement insofar as the Brokers fee is concerned, and that no change shall be made by Buyer, Seller or Escrow Holderwith respect to the time of payment, amount of payment, or the conditions to payment of the Brokers fee specified in this Agreement, without the written consent of Broker(s). 9.2 All of the contingencies specified in sub -paragraphs (a) through (p) of paragraph 9.1 are for the benefit of, and may be waived by, Buyer, and may be elsewhere herein referred to as "Buyer Contingencies" 9.3. It Buyer shall fail, within the applicable time specified, to approve or disapprove in writing to Escrow Holder, Seller and the other Party's Broker, any item, matter or document subject to Buyer's approval under the terms of this Agreement, it shall be conclusively presumed that Buyer has approved such item, matter or document. Buyers conditional approval shall constitute a disapproval, unless provision is made by the Seller within the time specified therefor by the Buyer in the conditional approval or by this Agreement, whichever is later, for the satisfaction of the condition imposed by the Buyer. 9.4 If any Buyer's Contingency is not satisfied or if Buyer disapproves any matter subject to its approval within the time period applicable thereto ("Disapproved Item"), Seller shall have the right within ten (10) days following the expiration of the time period applicable to such Buyer Contingency or receipt of notice of Buyers disapproval, as the case may be, to elect to are such Disapproved Item prior to the Expected Closing Date ("Seller's Election"). Seller's failure to give to Buyer within said ten (10) day period, written notice of Seller's commitment to cure such Disapproved Item on or before the Expected Closing Date shall be conclusively presumed to be Seller's Election not to cure such Disapproved. Item. If Seller elects, either by written notice or failure to give written notice, not to cure a Disapproved Item, Buyer shall have the election, within ten (10) days after Seller's Election to either accept title to the Proppeerty subject to that DisappProved Item, or to terminate this Vansaction. Buyer's failure to elect termination by written notice to Seller within said len (10) tlay period shall constitute Buffer's election to accept title to the Property subject to that Disapproved Item without deduction or offset. Unless expressly provided otherwise herein, Sellers right to cure shall not apply to Hazardous Substance Conditions referenced in paragraph 9.1 (c) or to the Financing Contingency set forth in paragraph 5. Unless the parties mutually instruct otherwise, if the time periods for the satisfaction of contingencies or for Seller's and Buyer's said Elections would expire on a date after the Expected Closing Date, the Expected Closing Date shall be deemed extended to coincide with the expiration of three (3) business days following the expiration of:( the applicable contingency period(s), (b) the period within which the Seller may elect to cure the Disapproved Item, or (c) if Seller elects not to cure, the period within which Buyer may elect to terminate this transaction, whichever is later. 9.5 Buyer understands and agrees that until such time as all Buyers Contingencies have been satisfied or waived, Seller and/or its agents may solicit, entertain and/or accept back-up offers to purchase the subject Property in the event the transaction covered by this Agreement is not consummated. 9.6 As defined in subparagraph 9.1(c), Buyer and Seller acknowledge that extensive local, state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remediation of a Hazardous Substance Condition. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Broker(s). Buyer and Seller acknowledge that they have been advised by Broker(s) to consult their own technical and legal expertswith respectto the possible Hazardous Substance Condition aspects of this Property oradjoining properties, and Buyer and Sellerare not relying upon any investigation by or statement of Broker(s) with respect thereto. Buyer and Seller hereby assume all responsibility for the impact of such Hazardous Substance Conditions upon their respective interests herein. 10. Documents Required at Closing: 10.1 Escrow Holder shall cause to be issued to Buyer a standard coverage (or ALTA extended, if so elected under paragraph 9.1(f)) owners form policy of title Insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, Insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a Purchase Money Deed of Trust in this transaction, the policy of title insurance shall be a joint protection policy insuring both Buyer and Seller. "IMPORTANT: INA PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAYBE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCE$ WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING." 10.2 Seller shall deliver or cause to be delivered to Escrow Holder in time for delivery to Buyer at the Closing, an original ink signed: (a) Grant deed (or equivalent), duly executed and in recordable form, conveying fee title to the Property to Buyer. (b) If paragraph 3.1(c) has not been stricken, the Beneficiary Statements concerning Existing Note(s). Initials PAGE 3 Initials (c) If applicable, the Existing Leases and Other Agreements together with duly executed assignments thereof by Seller and Buyer. The assignment of Existing Leases shall be on the most recent Assignment and Assumption of Lessor's Interest in Lease form published by the A.I.R. or its equivalent. .. ......_ _..... .. .. (d) If applicable, the Tenancy Statements executed by Seller and the Tenant(s) of the Property. (e) An affidavit executed by Seller to the effect that Seller is not a "foreign person" within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit inform reasonahly satisfactory to Buyer at least three (3) business days prior to the Closing, Escrow Holder shall at the Closing deduct from Seller's proceeds and remit to Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers. 10.3 Buyer shall deliver or cause to be delivered to Seller through escrow: (a) The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement for prorations, expenses and adjustments. The balance of the cash portion of the Purchase Price, including Buyer's escrow charges and other cash charges, if any, shall be deposited by Buyer with Escrow Holder, by cashier's check drawn upon a local major banking institution, federal funds wire transfer, or any other method acceptable to Escrow Holder as immediately collectable funds, no later than 11:00 o'clock A.M. on the business day prior to the Expected Closing Date. (b) If a Purchase Money Note and Purchase Money Deed of Trust are called for by this Agreement, the duly executed originals of those documents, the Purchase Money Deed of Trust being in recordable form, together with evidence of fire insurance on the improvements In the amount of the full replacement cost naming Seller as a mortgage loss payee, and a real estate tax service contract (at Buyer's expense), assuring Seller of notice of. the status of payment of real property taxes during the life of the Purchase Money Note. (c) The assumption portion of the Assignment and Assumption of Lessor's Interest in Lease form specified in paragraph 10.2(c), above, duly executed by Buyer with respect to the obligations of the Lessor accruing after the Closing as to each Existing Lease. (d) Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any Other Agreements. (e) If applicable, a written assumption duly executed by Buyer of the loan documents with respect to Existing Notes. 11. Proration, Expenses and Adjustments. 11.1 Taxes. Real property taxes payable by the owner of the Property shall be prorated through Escrow as of the date of the Closing, based upon the latest tax bill available.. The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of events occurring prior to the Closing. Payment shall be made promptly in cash upon receipt of a copy of any such supplemental bill of the amount necessary to accomplish such proration. Sellershall pay and discharge in full at or before the Closing the unpaid balance of any special assessment bonds. 11.2 Insurance. If Buyer elects to take an assignment of the existing casualty and/or liability insurance that is maintained by Seller, the current premium therefor shall be prorated through Escrow as of the date of Closing. 11.3 Rentals, Interest and Expenses. Collected rentals, interest on Existing Notes, utilities, and operating expenses shall be prorated as of the date of Closing. The Parties agree to promptly adjust between themselves outside of Escrow any rents received after the Closing. 11A Security Deposit Security Deposits held by Seller shall be given to Buyer by a credit to the cash required of Buyer at the Closing. 11.5 Post Closing Matters. Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined. 11.6 Variations In Existing Note Balances. In the event that Buyer is taking title to the Property subject to an Existing Deed of Trust(s), and in the event that a Beneficiary Statement as to the applicable Existing Note(s) discloses that the unpaid principal balance of such Existing Note(s) at the Closing will be more or less than the amount set forth in paragraph 3.1(c) hereof (the "Existing Note Variation"), then the Purchase Money Note(s) shall be reduced or increased by an amount equal to such Existing Note Variation. If there is to be no Purchase Money Note, the cash required at the Closing per Paragraph 3.1(a) shall be reduced or increased by the amount of such Existing Note Variation. 11.7 Variations In New Loan Balance. In the event Buyer is obtaining a New Loan and In the event that the amount of the New Loan actually obtained is greater than the amount set forth in Paragraph 5.1 hereof, the Purchase Money Note, if one is called for in this transaction, shall be reduced by the excess of the actual face amount of the New Loan over such amount as designated in Paragraph 5.1 hereof. 11.8 Escrow Costs and Fees. Buyer and Seller shall each pay one-half of the Escrow Holder's charges and Seller shall pay the usual recording fees and any required documentary transfer taxes. Seller shall pay the premium for a standard coverage owner's or joint protection policy of title insurance. 12 Representation and Warranties of Seller and Disclaimer. 12.1 Sellers warranties and representations shall survive the Closing and delivery of the deed, and, unless otherwise noted herein, are true, material and relied upon by Buyer and Broker(s) in all respects, both as of the Date of Agreement, and as of the date of Closing. Seller hereby makes the following warranties and representations to Buyer and Broker(s): (a) Authority ofSeller. Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein, and to perform Seller's obligations hereunder. (b) Maintenance During Escrow and Equipment Condition At Closing. Except as otherwise provided in paragraph 9.1(1) hereof dealing with destruction, damage of loss, Seller shall maintain the Property until the Closing in its present condition, ordinary wear and tear excepted. The heating, ventilating, air conditioning, plumbing, elevators, loading doors and electrical systems shall be in good operating order and condition at the time of Closing. (c) Hazardous Substances/Storage Tanks. Seller has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance (as defined in paragraph 9.1(c)), nor of the existence or prior existence of any above or below ground storage tank or tanks. _ (d) Compliance. Seller has no knowledge of any aspect or condition of the Property which violates applicable laws, rules, regulations, codes, or covenants, conditions or restrictions, or of improvements or alterations made to the Property without a permit where one was required, or of any unfulfilled order or directive of any applicable governmental agency or casualty insurance company that any work of investigation, remediation, repair, maintenance or improvement is to be performed on the Property. (e) Changes in Agreements. Prior to the Closing, Seller will not violate or modify, orally or in writing, any Existing Lease or Other Agreement, or create any new leases or other agreements affecting the Property, without Buyers written approval, which approval will not be unreasonably withheld. (f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property, except as disclosed by this Agreement or otherwise in writing to Buyer. (g) Mechanics' Liens. There are no unsatisfied mechanic's or materialman's lien rights concerning the Property. (h) Actions, Suits or Proceedings. Seller has no knowledge of any actions, suits or proceedings pending or threatened before any commission, board, bureau, agency, instrumentality, arbitrator(s) court or tribunal that would affect the Property or the right to occupy or utilize same. (i) Notice of Changes. Seller will promptly notify Buyer and Broker(s) in writing of any Material Change (as defined in paragraph 9.1(m)) affecting The Property that becomes known to Seller prior to the Closing. (j) No Tenant Bankruptcy Proceedings. Seller has no notice or knowledge that any tenant of the Property is the subject of a bankruptcy or insolvency proceeding. (k) No Seller Bankruptcy Proceedings. Seller is not the subject of a bankruptcy, insolvency or probate proceeding. 12.2 Buyer hereby acknowledges that, except as otherwise stated in this Agreement, Buyer is purchasing the Property in its existing condition and Will. by the time called for herein, make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the Occupational Safety and Health gct,.hazardqus substanye laws, or an other act, ordinance or law, h v be.gqmade b either Partor Br ker, o relied upon by either Party hereto. Sub] ect onlly to trie t p�ossessa ree nnt� oQe*SP'. gt�g�uant Party 11 .�11rfeement, Buyer agrees to purchase the u ect to a au s. 13.1 Possession of the Property shall be given to Buyer at the Closing subject to the rights of tenants under Existing Leases. 14. Buyer's Entry. 14.1 At anytime during the Escrow period, Buyer, and its agents and representatives, shall have the right at reasonable times and subject to rights of tenants under Existing Leases, to enter upon the Property for the purpose of making inspections and tests specified in this Agreement. Following any such entry or work, unless otherwise directed in writing by Seller, Buyer shall return the Property to the condition it was in prior to such entry or work, including the recompaction or removal of any disrupted soil or material as Seller may reasonably direct. All such inspections and tests and any other work conducted or materials furnished with respect to the Property by or for Buyer shall be paid for by Buyer as and when due and Buyer shall indemnify, defend, protect and hold harmless Seller and the Property of and from any and all claims, liabilities, demands, losses, costs, expenses (including reasonable attorney's fees), damages or recoveries, including those for injury to person or property, arising out of or relating to any such work or materials orthe acts oromi�sins of Buyer, its agents or employees In connection therewith. However, Buyer shall not do any drilling or coring wit%% 15. Further Documents and Assurances. Seller s prior approval and will not disclose the result 15.1 Buyer and Seiler shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for Closing as and when required by this Agreement. Buyer and Seller agree to provide all further information, and to execute and deliver all further documents and instruments, reasonably required by Escrow Holder or the Title Company. 16. Atlomeys' Fees. 16.1 In the event of any litigation or arbitration between the Buyer, Seller, and Broker(s), or any of them, concerning this transaction, the prevailing party shall be entitled to reasonable attorney's fees and costs. The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred in good faith. 17. Prior Agreements/Amendments. 17.1 The contract in effect as of the Date of Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property. 172 Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller. *of any.reports of any inspections or investigations allowed under the terms of this Agreement to any third person or entity without Seller's prior written consent, unless required by law to do so. Initials PAGE 4 Initials 18. Brokers Rights. 18.1 If this sale shall not be consummated due to the default of either the Buyer or Seller, the defaulting party shall be liable to and shall pay to Broker(s) the commission that Broker(s) would have received had the sale been consummated. This obligation of Buyer, if Buyer is the defaulting party, is in addition to .any obligation with respect to liquidated damages. 182 Upon the Closing, Broker(s) is/are authorized to publicize the facts of this transaction With Seller's prior written 19. Notices. consent. 19.1 Whenever any Party hereto, Escrow Holder or Broker(s) herein shall desire to give or serve any notice, demand, request, approval or other communication, each such communication shall be In writing and shall be delivered personally, by messenger or by mail, postage prepaid, addressed as set forth adjacent to that party's or Broker's signature on this Agreement or by telecopy with receipt confirmed by telephone. Service of any such communication shall be deemed made on the date of actual receipt at such address. 19.2 Any Party or Broker hereto may from time to time, by notice in writing served upon the other Party as aforesaid, designate a different address to which, ora different person or additional persons to whom, all communications are thereafter to be made. 20. Duration of Offer. 20.1 If this offer shall not be accepted by Seller on or before 5:00 P.M. according to the time standard applicable to the city of Santa Clarity on the date of June 9v 1997 , it shall be deemed automatically revoked. 20.2 The acceptance of this offer, or of any subsequent counter-offer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party or either Broker herein of a duly executed writing unconditionally accepting the last outstanding offer or counter-offer. 21. LIQUIDATED DAMAGES. (This liquidated Damages paragraph is applicable only it initialled by both parties.) 21.1 THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYER'S BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $80, 000.00 PLUS INTEREST, IF ANY, ACCRUED THEREON. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Buyer Initials - Seller Initials 22. ARBITRATION OF DISPUTES. (This Arbitration of Disputes paragraph is applicable only1fInitialied byboth parties and is subject to paragraph 23, below.) 22.1 ANY CONTROVERSY AS TO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES (the "COMMERCIAL RULES")OF, THE AMERICAN ARBITRATION ASSOCIATION. HEARINGS ON SUCH ARBITRATION SHALL BEHELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY THREE (3) ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST FIVE (5) FULL TIME YEARS OF EXPERIENCE IN THE AREA WHERE THE PROPERTY IS LOCATED, IN THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT AND SHALL BE APPOINTED UNDER THE COMMERCIAL RULES. THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW AND THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT, AS THE SAME MAY HAVE BEEN DULY MODIFIED IN WRITING BY THE PARTIES PRIOR TO THE ARBITRATION; UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING SCHEDULED AT THE REQUEST OF EITHER PARTY. SUCH PRE - ARBITRATION DISCOV ERY SHALL BE PERMITTED AS IS AUTHORIZED UN DER THE COMMERCIAL RULES OR STATE LAW APPLICABLETO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEASTTWO (2) OFTHETHREE (3) ARBITRATORS; BE RENDERED WITHIN THIRTY (30) DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS' FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYER'S RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATION DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY INITIALLING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED INA COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Buyer Initials Seiler Initials 23. Applicable Law. 23.1 This Agreement shall be governed by, and paragraph 22.3 amended to refer to, the laws of the state in which the Property is located. 24. Time of Essence. 24.1 Time is of the essence of this Agreement. 25. Counterparts. 25.1 This Agreement maybe executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement 26. Disclosures Regarding The Nature of a Real Estate Agency Relationship. 26.1 The Parties and Broker(s) agree that their relationship(s) shall be governed by the principles set forth in California Civil Code, Section 2375, as summarized in the following paragraph 26.2. 26.2 When entering into a discussion with areal estate agent regarding areal estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seiler acknowledge being advised by the Broker(s) in this transaction, as follows: (a) Seller's Agent. A Seller's agent under a listing agreement with the Seller acts as the agent for the Seller only. A Sellers agent or subagent has the following affirmative obligations: (1) To the Seller., A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyer and the Seller, a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b) Buyer's Agent. A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Sellers agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer. A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller., a. Diligent exercise of reasonable skill and care in performance of the agent's duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent Is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. Initials PAGES Initials (c) Agent Representing Both Seller and Buyer. Areal estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Seller or the Buyer. b. Other duties to the Sellerand the Buyer as stated above in their respective sections (a) or, (b) of this paragraph 262.(2) fn repiesehting hoth Seller and Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered. (3) The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Setter should carefully read all agreements to assure that they adequately express their understanding of the transaction. Areal estate agent is a person qualified to advise about real estate. If legal or tax advise is desired, consult a competent professional. (d) Further Disclosures. Throughout this transaction Buyer and Seller may receive more than one disclosure, depending upon thenumber of agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate agent in this transaction and that disclosure. 26.3 Confidential Information: Buyer and Seller agree to identify to Broker(s) as "Confidential' any communication or information given Broker(s) that is considered by such Party to be confidential. - 27. Additional Provisions: Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraphs 29.1 through 29.8 (It will be presumed no other provisions are included unless specified here.) *See attached Addendum Paragraph 29.8 to this Agreement *BUYER AND SELLER HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN AND ARE NOW ADVISED BY THE BROKER(S) TO CONSULT AND RETAIN THEIR OWN EXPERTS TO ADVISEAND REPRESENTTHEM CONCERNING THE LEGAL AND INCOME TAX EFFECTS OF THIS AGREEMENT, AS WELL AS THE CONDITION AND/OR LEGALITY OF THE PROPERTY, THE IMPROVEMENTS AND EQUIPMENT THEREIN, THE SOIL THEREOF, THE CONDITION OFTITLETHERETO, THE SURVEYTHEREOF, THE ENVIRONM ENTALASPECTS TH EREOF, THE INTENDED AND/OR PERMITTED USAGE THEREOF, THE EXISTENCE AND NATURE OF TENANCIES THEREIN, THE OUTSTANDING OTHER AGREEMENTS, IFANY, WITH RESPECTTHERETO, AND THE EXISTING OR CONTEMPLATED FINANCING THEREOF, AND THAT THE BROKER(S) IS/ARE NOT TO BE RESPONSIBLE FOR PURSUING THE INVESTIGATION OF ANY SUCH MATTERS UNLESS EXPRESSLY OTHERWISE AGREED TO IN WRITING BY BROKER(S) AND BUYER OR SELLER. THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY. I. this Agreement has been filled in, it has been prepared for submission to your attorney for his approval. No representation or recommendation Is made by the real estate Broker(s) or their agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction Involved herein.The undersigned Buyer offers and agrees to buy the property on the terms and conditions stated and acknowledges receipt of a copy hereof. BROKER: Realty Advisory Group, Inc. By /Data Michael J. Gallivan Name Printed: Michael J. Gallivan Title: Director 211 Alta Avenue, Suite G Address Santa Monica, CA 90402 (310) 458-0668 (310) 451-8625 Telephone Facsimile No. BUYER: City of Santa Clarita By /Date George Caravalho Name Printed: George Caravalho Title: City Manager 23920 Valencia Blvd., Suite #300 Address Santa Clarita, CA 91355 (805) 286-4000 (805) 255-1996 Telephone Facsimile No. 28. Acceptance. 28.1 Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified. 28.2 Seller acknowledges that Broker(s) has/have been retained to locate a Buyer and is/are the procuring cause of the purchase and sale of the Property set forth in this Agreement In consideration of real estate brokerage service rendered by Broker(s). Seller agrees to pay Broker(s) a real estate brokerage fee in a sum equal to 6 % of the Purchase Price (the "Broker(s) Fee") divided equally in such shares as said Broker(s) shall direct in writing. As is provided in paragraph 9.1(p), this Agreement shall serve as an irrevocable instruction to Escrow Holder to pay such brokerage fee to Broker(s) out of the proceeds accruing to the account of Seller at the Closing. 28.3 - Seller acknowledges receipt of a copy hereof and authorizes the Broker(s) to deliver a signed copy to Buyer. NOTE: A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT. BROKER: CB Cotttmercial Real Estate Group, Inc. By at Doug Sonderegger Craig Peters Name Printed: Doug .Sonderegger/Craig Peters Title: Sr. Vice President/1st Vice President 15303 Ventura Blvd., Suite (1200 Address Sherman Oaks, CA 91403 (818) 907-4607/4616 (818) 907-4702 Telephone Facsimile No. SELLER: Merle Norman Cosmetics, Inc. By Name Printed: Title: Address Telephone Facsimile No. PAGE 6 These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form: American Industrial Real Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687.8777. ®Copyright 1989 -By American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced In any form without permission in writing. FORM 729-R-3.1/94 ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. 2.3 Seller will include the security system as part of the purchase, but Seller shall have the option, at the termination of its tenancy, to remove the "Closed Circuit TV slow scan video transmitter unit", which removal, by itself, should not effect the operability of the balance of the system. The balance of the system will be left in place. Buyer agrees to accept the system "AS -IS", where -is, without warranty from Seller as to its condition or operability. 29.1 A decision has been made by the City of Santa Clarita to acquire the subject property. It is the City's preference to acquire the property through an amt's length negotiation pursuant to this Agreement. However, the City intends to acquire the property for public use through condemnation should the purchase pursuant to this Agreement not be consummated. 29.2 Within ten (10) days after the commencement of escrow, Seller shall provide Buyer with access to all documents and tangible things in the possession or under the custody or control of Seller which relate to the subject property and which reasonably relate to the Seller's fulfillment of the terms and conditions of this agreement and the Seller's obligations hereunder. Seller shall provide such access to such documents and tangible things at its offices located at 15180 Bledsoe Street, Sylmar, California, at any mutually agreeable time, and subject to 24 hours notice by Buyer of its intention to inspect such records. 29.3 Buyer and Seller shall enter into a mutually acceptable leaseback agreement, based upon the A.I.R. Net Lease Form, by the terms of which Seller shall leaseback "Building 3" for one (1) year from the Close of Escrow, with two (2) six-month options, exercisable by Seller in its sole discretion, to extend the lease term for up to one additional year. Seller shall, additionally, have the right and option to rent `Building I" on a month-to-month basis for up to one year following the Close of Escrow; Seller shall notify Buyer at least ten (10) days prior to the Close of Escrow if its elects to exercise its option; Seller is not required to rent "Building 1" for any term and may, instead, deliver possession thereof to Buyer at the Close of Escrow; Buyer may not terminate this month-to-month tenancy absent default by Seller in the payment of rents or other default. Seller shall provide Buyer with at least thirty (30) days written notice of its intention to vacate "Building 1". The monthly rental rate for each building shall be $0.40 per square foot per month, triple net ("NNN"). There shall be no increase in rent during the initial or extended term(s). Seller and Buyer shall each pay their respective pro -rata share of taxes (or City's equivalent), insurance and maintenance. Seller shall maintain and transfer possession of the buildings in the condition described in this Agreement, the same as if possession of the buildings had been transferred at the Close of Escrow. The Lease Agreement shall provide additional limitations on Seller's obligations to pay for maintenance, capital improvements and any and all current governmental regulations or any enacted or imposed limitations prior to the termination of Seller's tenancy. The parties agree to negotiate these terms in good faith. 29.4 Buyer is aware that Seller does not have fee title to Lot 75 of (Tentative) Tract No. 42670, which is part of the property subject to this Agreement. Seller has an easement only, and Buyer acknowledges that Seller has provided Buyer with a copy of the recorded Easement. Seller shall assign its easement rights in said Lot 75 to Buyer and Buyer agrees that Seller has no obligation to deliver fee title to Lot 75 as a contingency of this Agreement. 29.5 Buyer shall be entitled to elect to pay the purchase price of $3,080,000.00 in one of two ways, in the sole discretion of Buyer, as follows: (i) Buyer may pay the entire purchase price in cash at the Close of Escrow; or, 9i ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. (ii) Buyer may pay $2,080,000.00 in cash at the Close of Escrow, with the balance of $1,000,000.00 paid in the form of a Note Secured by a First Deed of Trust on the property (such Note and Deed of Trust to be in a form acceptable to Seller), which Note, with all accrued interest thereon, shall be due and payable in full on or before July 1, 1998, and which Note shall bear interest at the rate of ten percent (10%) per annum until paid. Buyer shall give Seller and escrow written notice of its election no later than sixty (60) days from the "commencement of escrow", which shall be the date typed onto the escrow instructions by the escrow officer. 29.6 For purposes of this Agreement, including but not limited to Seller's disclosures, the phrase "Seller's knowledge" or similar phrases shall mean the actual knowledge, without investigation or inquiry, of the current employees, officers and directors of Seller only. 29.7 The $80,000.00 referred to in Paragraphs 4.1, 4.2 and 21.1 of this Agreement shall become non-refundable upon the earlier of (i) the removal of all contingencies, or (ii) sixty (60) days after the commencement of escrow. 29.8 In addition to the contingencies specified in Paragraph 9 herein, Buyer shall have sixty (60) days from commencement of escrow to determine the feasibility of the purchase of the Property. At any time prior to the expiration of said period, Buyer shall have the right in its sole and absolute discretion to cancel this escrow; provided, however, that Buyer shall pay all escrow cancellation fees in the event of such cancellation. CONSULT YOUR ATTORNEY/ADVISORS - This document has been prepared for approval by your attorney. No representation or recommendation is made by CB Commercial Real Estate Group, Inc. or the American Industrial Real Estate Association (A.I.R.) or the agents or employees of this document or the transaction to which it relates. These are questions for your attorney. On any real estate transaction, it is recommended that you consult with a professional, such as a civil engineer, industrial hygienist or other person with experience in evaluating the condition of the property, including the possible presence of asbestos, hazardous materials and underground storage tanks. In addition, please be advised that an Owner or Tenant of real property may be subject to the Americans with Disabilities Act (the ADA), a Federal law codified at 42 USC Section 12101 et seq. Among other requirements of the ADA that could apply to your property, Title III of the ADA requires Owners and Tenants of "public accommodations" to remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons by January 26, 1992. The regulations under Title III of the ADA are codified at 28 CFR Part 36. s AdrsondeAnicrl e. add ADDENDUM TO STANDARD OFFER, AGREEMENT, AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE DATED JUNE 2, 1997, BY THE CITY OF SANTA CLARITA, FOR THE PROPERTY COMMONLY KNOWN AS 26407 N. GOLDEN VALLEY ROAD, SANTA CLARITA, CALIFORNIA. CB Commercial recommends that you and your attorney, engineer and/or architect review the ADA and the regulations, and, if appropriate, your proposed sale agreement, to determine if this law would apply to you, and the nature of the requirement. BUYER: By: Date: DS:sjf sAdrsonder\merle.add SELLER: