Agreement Of Purchase & Sale & Joint Escrow

AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS


SELLER: STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE FOR AMERITECH PENSION TRUST


BUYER: MERIDIAN INDUSTRIAL TRUST, INC.


May 29, 1997


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TABLE OF CONTENTS


Page


1. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 2


2. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


3. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


4. Condition of Title . . . . . . . . . . . . . . . . . . . . . . . . . 3


5. Contingency Period . . . . . . . . . . . . . . . . . . . . . . . . . 4


6. Tenant and Lender Estoppel Certificates. . . . . . . . . . . . . . . 6


7. Buyer's Representations and Warranties . . . . . . . . . . . . . . . 7


8. Representations and Warranties of Seller . . . . . . . . . . . . . .15


9. Covenants and Interim Responsibilities of Seller . . . . . . . . . .20


10.A Shareholders' Meeting; Preparation of Proxy Statement. . . . . . . .20


10.B Covenants of Buyer . . . . . . . . . . . . . . . . . . . . . . . . .21


11. Conditions of Closing. . . . . . . . . . . . . . . . . . . . . . . .22


12. Deposits By Seller . . . . . . . . . . . . . . . . . . . . . . . . .23


13. Deposits By Buyer. . . . . . . . . . . . . . . . . . . . . . . . . .24


14. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . .25


15. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25


16. Disbursements and Other Actions by Escrow Holder . . . . . . . . . .26


17. Damage or Condemnation Prior to Closing. . . . . . . . . . . . . . .27


18. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . .28


19. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .28


20. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28


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21. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29


22. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29


23. Required Actions of Buyer and Seller . . . . . . . . . . . . . . . .29


24. Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . .29


25. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .29


26. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


27. No Obligations to Third Parties. . . . . . . . . . . . . . . . . . .30


28. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


29. Amendment to this Agreement. . . . . . . . . . . . . . . . . . . . .30


30. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


31. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . .30


32. Fees and Other Expenses. . . . . . . . . . . . . . . . . . . . . . .30


33. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .30


34. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . .30


35. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


36. Computation of Periods . . . . . . . . . . . . . . . . . . . . . . .31


37. Indemnification of Escrow Holder.. . . . . . . . . . . . . . . . . .31


38. Buyer's Audit Rights . . . . . . . . . . . . . . . . . . . . . . . .31


39. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .31


40. Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32


41. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32


42. Restriction on Transfer of Acquisition Common Stock. . . . . . . . .33


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LIST OF DEFINED TERMS


Page No.
-------- 1996 Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1997 Form 10-Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1997 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Acquisition Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Amended and Restated Excepted Holder Agreement . . . . . . . . . . . . . . . . 9 Ardenwood Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Assignment of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Assignment of Note and Liens . . . . . . . . . . . . . . . . . . . . . . . . .24 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Bill of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Certification Regarding Withholding. . . . . . . . . . . . . . . . . . . . . .24 Close of Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Condition of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Contingency Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Conveying Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Current SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Deeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Delinquent Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Environmental Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Escrow Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 General Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Governmental Entity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Group A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Group B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Group B Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Group C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Group C Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Harvest Business Park Loan . . . . . . . . . . . . . . . . . . . . . . . . . . 5


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Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Intangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 1 Investor Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 8 knowledge of Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Lender Estoppel Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 6 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Major Environmental Matter . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Opening of Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Pension-Held REIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Rancho Downey Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Rancho Downey Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 1 Rancho Downey Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Rancho Downey Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Registration Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 8 REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 REOC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 SEC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Seller's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Series B Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Series B Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Shareholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Tenant Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 6


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Title Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to the best of Seller's knowledge. . . . . . . . . . . . . . . . . . . . . . .19 Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17


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AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS


THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("AGREEMENT") is made and entered into May 29, 1997, and constitutes an agreement by which MERIDIAN INDUSTRIAL TRUST, INC., a Maryland corporation ("BUYER"), agrees to buy, and STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE FOR AMERITECH PENSION TRUST ("SELLER"), agrees to sell or cause the sale of the following:


A. Certain of the properties listed on EXHIBIT A, as provided below (each of which is referred to herein as a "PROJECT" and collectively as the "PROJECTS"), each of which is located on the tract of land which is described by street address on EXHIBIT A (collectively, the "LAND").


B. Any and all structures, buildings, facilities, or other improvements situated on the Land (collectively, the "IMPROVEMENTS").


C. All rights, privileges, easements, and appurtenances to the Land or the Improvements. The term "REAL PROPERTY" herein shall refer collectively to the Land, the Improvements and all such attendant rights, privileges, easements and appurtenances.


D. All tangible personal property (excluding cash items) owned by the applicable Conveying Entity relating to the Real Property and used at the Real Property and in the operation of the Real Property (collectively, the "PERSONAL PROPERTY").


E. The landlord's interest in all leases affecting the Real Property (collectively, the "LEASES").


F. All intangible property owned by the applicable Conveying Entity used in connection with the Real Property or the Personal Property (collectively, the "INTANGIBLE PERSONAL PROPERTY").


G. The secured promissory note (the "RANCHO DOWNEY NOTE") dated March 27, 1990, in the original principal sum of $21,500,000, as amended to be $23,300,000 by amendment dated December 21, 1991, executed by Fremont Rancho, Ltd., payable to the order of Harris Trust & Savings Bank, as Trustee for the Ameritech Pension Trust, together with all liens securing payment thereof; the mortgagee's title policy insuring such liens; all documents executed as further evidence of, to secure, or otherwise in connection with the indebtedness evidenced by the Rancho Downey Note (the "RANCHO DOWNEY LOAN DOCUMENTS"); all escrow, security and other deposits made in connection therewith; and all other rights of Seller with respect thereto (collectively, the "RANCHO DOWNEY LOAN"). The land, improvements, and other property securing the Rancho Downey Loan are herein called the "RANCHO DOWNEY PROPERTY".


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H. The Real Property, the Personal Property, the Leases and the Intangible Personal Property relating to a particular Project are collectively referred to herein as a "PROPERTY," and when relating to all Projects are collectively referred to herein as the "PROPERTIES."


The terms and conditions of this Agreement and the instructions to Chicago Title Insurance Company (the "ESCROW HOLDER" and "TITLE COMPANY") with regard to the escrow (the "ESCROW") created pursuant hereto are as follows:


1. PURCHASE AND SALE.


(a) For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller agrees to sell or cause the sale of the Rancho Downey Loan and the Properties to Buyer, and Buyer agrees to purchase the Rancho Downey Loan and the Properties from Seller (or the applicable Conveying Entity), upon the terms and conditions set forth herein.


(b) Seller and Buyer acknowledge that title to certain of the Properties and to the Rancho Downey Loan are held by separate corporations affiliated with Seller (the "CONVEYING ENTITIES"). Each of the Conveying Entities is listed on SCHEDULE 1(b). Subject to Section 1.(d) below, Seller agrees to take all action reasonably necessary and appropriate to cause each Conveying Entity to take such action as may be necessary to consummate the transactions herein contemplated.


(c) As more particularly reflected on EXHIBIT A, the Properties have been divided into three groupings, "GROUP A", "GROUP B" and "GROUP C". The parties' current intent is that Buyer will acquire Group A and Group B, subject to satisfaction of certain conditions as set forth below. If such conditions cannot be satisfied in a timely fashion as herein provided, then the parties intend that Buyer shall acquire Group C instead of Group B as herein provided.


(d) The Properties in Group B are subject to certain liens securing existing mortgages, and as a condition of the conveyance of Group B to Buyer, the Seller must obtain a release of such liens (the "GROUP B RELEASE"). Seller shall attempt to obtain the Group B Release but shall not be required to take any action that, in Seller's judgment, would be unduly burdensome in terms of cost, time, or otherwise, to obtain the Group B Release. Seller shall keep Buyer informed of the status of its negotiations with the requisite parties to obtain the Group B Release. If the Group B Release has not been obtained by the Closing Date, then Seller may elect to extend the Closing Date for Group B for an additional period not to exceed 60 days. In such event, the Closing shall occur as otherwise herein provided with regard to Group A, and this Agreement shall remain in effect as to Group B and Group C. If, at the end of such extended period, Seller has not obtained the Group B Release, or if Seller shall determine prior to the Closing Date or prior to the end of such extended period that the Group B Release is not going to be obtained, then Seller shall give written notice thereof to Buyer (the "GROUP C NOTICE") and shall sell to Buyer and Buyer shall acquire Group C as otherwise herein provided, and the Closing Date therefor shall be fifty-five (55) days after the date on which the Group C Notice is given to Buyer. Seller shall notify Buyer of any extension in the Closing Date for Group B by written notice specifying the date to which the Closing Date for Group B will be extended not later than three (3) days prior to the original Closing Date.


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(e) If Seller does not obtain the Group B Release and is therefore unable to convey Group B to Buyer, then concurrently with the Closing of the acquisition of Group C, Seller shall reimburse Buyer for all of its out-of- pocket due diligence costs expended in conducting due diligence investigations of Group B, including accounting, fiscal inspection, environmental, legal expenses and other expenses, up to a maximum reimbursement of $8,700 per Project.


2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for the Properties and the Rancho Downey Loan shall be payable as follows: At Closing, Buyer shall deposit or cause to be deposited with Escrow Holder validly issued certificated shares representing the Acquisition Common Stock. The "ACQUISITION COMMON STOCK" shall be the number of shares of Common Stock reflected opposite each Property (and the Rancho Downey Loan) on EXHIBIT A. "COMMON STOCK" means Buyer's common stock, par value $.001 per share.


3. ESCROW.


(a) OPENING OF ESCROW. For the purposes of this Agreement, the Escrow shall be deemed opened (the "OPENING OF ESCROW") on the date Escrow Holder distributes to Buyer and Seller an executed counterpart of this Agreement.


(b) CLOSE OF ESCROW. For purposes of this Agreement, the "CLOSE OF ESCROW" or "CLOSING" shall be defined as the date or dates that each of the special warranty deeds, or their equivalents (collectively, the "DEEDS") conveying the respective Land and Improvements for each Project (subject to the terms hereof) to Buyer are recorded or, as applicable, the date the Rancho Downey Loan is assigned to Buyer, and the Acquisition Stock therefor is delivered to Seller as herein provided. The Escrow shall close on or before the earlier of (1) July 11, 1997, or (2) fifteen (15) days after the end of the Contingency Period, unless extended by mutual agreement of Buyer and Seller or, as to Group B or Group C, unless extended as provided in Section 1.(d) ("CLOSING DATE"), provided that the deposits required of the parties herein have been made by Seller and Buyer. On or before three (3) business days before the scheduled Closing Date, Escrow Holder shall prepare a proforma closing statement, setting forth the estimated adjustments and prorations as of the scheduled Closing Date, for the Properties being acquired at such Closing (and, if applicable, the Rancho Downey Loan).


4. CONDITION OF TITLE. It shall be a condition to Buyer's obligations hereunder that Title Company shall be committed to issue a Texas Owner's Policy of Title Insurance (with respect to Properties located in Texas) and an ALTA Owner's Extended Coverage Title Insurance together with such endorsements thereto as Buyer may reasonably require and which are approved by the Title Company prior to expiration of the Contingency Period (collectively, the "TITLE POLICIES"), each in the amount of the Purchase Price allocated to such Property (as reflected on EXHIBIT A), showing fee title to the respective Land and Improvements vested in Buyer, subject only to the following (as it relates to each Property, the "CONDITION OF TITLE"):


(a) A lien to secure payment of real estate taxes, not delinquent;


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(b) Matters affecting the Condition of Title created by or with the written consent of Buyer; and


(c) If applicable, the Harvest Business Park Loan and the Ardenwood Loan; and


(d) Exceptions disclosed by a current Texas Form Title Commitment (with respect to Properties located in Texas) or a current extended coverage ALTA Title Commitment (with respect to all other Properties) (respectively, a "COMMITMENT") with respect to the Land and Improvements relating to each Property issued by the Title Company and which are approved or deemed approved by Buyer in accordance with this section. Seller shall provide Buyer with each Commitment for the Properties in Group A and Group B, together with legible copies of the instruments underlying any exceptions referred to in each such Commitment (respectively, the "EXCEPTIONS") within fourteen (14) days following Opening of Escrow, and a survey relating to each Property in Group A and Group B of the Land and Improvements complying with the standards for a Texas Society of Professional Surveyors Category 1A, Condition II survey (with respect to Properties located in Texas) or the standards for an ALTA survey (with respect to all other Properties) (respectively, a "SURVEY"), within twenty-one (21) days following the Opening of Escrow; the Surveys may be updates of prior surveys provided they locate all the Improvements and contain a current certificate satisfactory to Buyer. The Commitments and Exceptions, and the Surveys for Properties in Group C shall be delivered within fourteen (14) and twenty-one (21) days, respectively, following the giving of the Group C Notice. Each Survey shall be: (1) prepared by a licensed land surveyor in the respective state where the Property is located, and (2) certified to Title Company, Buyer and any other entity reasonably required by Buyer, in form reasonably acceptable to Buyer. If, on or before fifteen (15) days following receipt of each Commitment, Exceptions and Survey, Buyer disapproves any items described therein, (Buyer agreeing that it will exercise a commercial reasonableness standard in disapproving of any such item), Seller shall thereafter have the right to attempt to eliminate or ameliorate to Buyer's satisfaction such matters as Buyer shall have so disapproved on or before fifteen (15) days following receipt of Buyer's disapproval notice, but in no event later than the expiration of the Contingency Period (as hereafter defined). Seller shall give written notice to Buyer within such fifteen (15) day period whether Seller is unable or unwilling to eliminate such disapproved matters. If Seller so notifies Buyer that it is unable or unwilling to eliminate any such disapproved matters, Buyer shall have the right, exercisable by written notice delivered to Seller and Escrow Holder on or before the expiration of the Contingency Period, with respect to any Property for which such disapproved matters have not been cured to Buyer's satisfaction, to: (A) waive its prior disapprovals of those matters which Seller is unable or unwilling to eliminate as to some or all of the Properties, in which event such disapproved matters with respect to such Properties shall be deemed approved; or (B) terminate the Escrow with respect to those Properties for which such disapproved matters have not been cured to Buyer's satisfaction, in which event this Agreement shall continue to be in effect with respect only to those Properties for which Buyer has not terminated the Escrow (subject to Section 41).


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5. CONTINGENCY PERIOD.


(a) INSPECTION OF PROPERTIES. For a period of (1) as to Group A and Group B, forty-five (45) days from the Opening of Escrow, and (2) as to Group C, forty-five (45) days after Seller delivers the Group C Notice (the "CONTINGENCY PERIOD"), Buyer shall have the right to satisfy itself that the physical and legal aspects of each Property and the Rancho Downey Property are acceptable to Buyer and that the net operating income budgeted by Seller for the Properties and the Rancho Downey Property reflects a commercially reasonable calculation of the projected net operating income (based on industry standards) that may be expected to be reasonably obtained from operating the Properties and holding the Rancho Downey Loan. Buyer will not begin its inspections as to Group C until Seller has given the Group C Notice. Buyer's obligations hereunder shall be conditioned upon Buyer's satisfaction with or waiver of such matters concerning the physical and legal aspects and the net operating income of the Properties and the Rancho Downey Property, which satisfaction or waiver shall be in Buyer's sole and absolute discretion. If Buyer, at any time on or before the expiration of the Contingency Period, fails to approve or waive, in a writing delivered to Seller and Escrow Holder, the matters set forth in this section with respect to a Property or the Rancho Downey Property (other than with respect to a Major Environmental Matter), then all of such matters shall be deemed disapproved with respect to such Property or the Rancho Downey Property, in which case Buyer may, prior to the expiration of the Contingency Period, terminate the Escrow with respect to all Properties as to which Closing has not then occurred, in which event the Escrow, this Agreement and the rights and obligations of the parties hereunder shall terminate with respect to all Properties as to which Closing has not then occurred. Notwithstanding the foregoing, if a Property or the Rancho Downey Property is subject to a Major Environmental Matter, then Buyer may, prior to the expiration of the Contingency Period, terminate the Escrow with respect to such Property or the Rancho Downey Loan, in which event this Agreement shall continue to be in effect with respect only to those Properties and the Rancho Downey Property for which Buyer has not terminated the Escrow (subject to Section 41). As used herein, a "MAJOR ENVIRONMENTAL MATTER" shall mean an environmental condition as to a Property or the Rancho Downey Property that is set forth in a written report prepared by an independent third party and which would cause the value of the subject Property or the Rancho Downey Property to be reduced by 10% or more.


(b) REVIEW OF DOCUMENTS. Seller shall provide access to Buyer, on or before the date that is five (5) days following the Opening of Escrow, (or, as to Group C, following the giving of the Group C Notice), the schedules and copies of the documents described on EXHIBIT B as to the relevant Properties. Seller shall provide full legal descriptions of each Tract of the Land to Buyer within five (5) days following the Opening of Escrow; after approval by Buyer, such descriptions shall be deemed incorporated into this Agreement. As to those documents relevant to the ownership, operation and maintenance of particular Property, or the Rancho Downey Property, Buyer will have access to the records at the offices of Seller's management agents (I.E, at the offices of Cabot or ...