exv10w8






Exhibit
10.8




AGREEMENT AND PLAN OF MERGER




DATED
AS OF APRIL 8, 2010



BY AND AMONG



YOUNAN PROPERTIES, INC.,

a California corporation



AND



YOUNAN PROPERTIES, INC.,

a Maryland corporation













 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE I THE MERGER
	 	 	2	 
	 
	 	 	 	 
	Section 1.01 THE MERGER
	 	 	2	 
	Section 1.02 EFFECTIVE TIME
	 	 	2	 
	Section 1.03 EFFECT OF THE MERGER
	 	 	3	 
	Section 1.04 ORGANIZATIONAL DOCUMENTS
	 	 	3	 
	Section 1.05 CONVERSION OF YPI STOCK
	 	 	3	 
	Section 1.06 CANCELLATION AND RETIREMENT OF YPI STOCK
	 	 	3	 
	Section 1.07 FRACTIONAL INTERESTS
	 	 	3	 
	Section 1.08 CALCULATION OF MERGER CONSIDERATION
	 	 	3	 
	Section 1.09 TRANSACTION COSTS
	 	 	4	 
	Section 1.10 TAX CONSEQUENCES
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II CLOSING; TERM OF AGREEMENT
	 	 	4	 
	 
	 	 	 	 
	Section 2.01 CLOSING
	 	 	4	 
	Section 2.02 PAYMENT OF MERGER CONSIDERATION
	 	 	4	 
	Section 2.03 TAX WITHHOLDING
	 	 	6	 
	Section 2.04 FURTHER ACTION
	 	 	6	 
	Section 2.05 TERM OF THE AGREEMENT
	 	 	6	 
	Section 2.06 EFFECT OF TERMINATION
	 	 	6	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF THE REIT
	 	 	6	 
	 
	 	 	 	 
	Section 3.01 ORGANIZATION; AUTHORITY
	 	 	7	 
	Section 3.02 DUE AUTHORIZATION
	 	 	7	 
	Section 3.03 CONSENTS AND APPROVALS
	 	 	7	 
	Section 3.04 NO VIOLATION
	 	 	8	 
	Section 3.05 VALIDITY OF REIT SHARES
	 	 	8	 
	Section 3.06 LIMITED ACTIVITIES
	 	 	8	 
	Section 3.07 LITIGATION
	 	 	8	 
	Section 3.08 NO BROKER
	 	 	8	 
	Section 3.09 NO IMPLIED REPRESENTATIONS OR WARRANTIES
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YPI
	 	 	9	 
	 
	 	 	 	 
	Section 4.01 ORGANIZATION; AUTHORITY
	 	 	9	 
	Section 4.02 DUE AUTHORIZATION
	 	 	9	 
	Section 4.03 CAPITALIZATION
	 	 	9	 
	Section 4.04 CONSENTS AND APPROVALS
	 	 	10	 
	Section 4.05 NO VIOLATION
	 	 	10	 
	Section 4.06 LICENSES AND PERMITS
	 	 	10	 
	Section 4.07 COMPLIANCE WITH LAWS
	 	 	10	 






i









 






	 	 	 	 	 
	 	 	PAGE	 
	Section 4.08 NO INSOLVENCY PROCEEDINGS
	 	 	11	 
	Section 4.09 PROPERTIES
	 	 	11	 
	Section 4.10 NO BROKER
	 	 	12	 
	Section 4.11 INSURANCE
	 	 	12	 
	Section 4.12 ENVIRONMENTAL MATTERS
	 	 	12	 
	Section 4.13 EMINENT DOMAIN
	 	 	12	 
	Section 4.14 FINANCIAL STATEMENTS
	 	 	12	 
	Section 4.15 TAXES
	 	 	12	 
	Section 4.16 NON-FOREIGN STATUS
	 	 	13	 
	Section 4.17 NO IMPLIED REPRESENTATIONS OR WARRANTIES
	 	 	13	 
	Section 4.18 LITIGATION
	 	 	13	 
	Section 4.19 EMPLOYEES
	 	 	14	 
	Section 4.20 CONTRACTS AND COMMITMENTS
	 	 	14	 
	Section 4.21 OWNERSHIP OF CERTAIN ASSETS
	 	 	14	 
	Section 4.22 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF YPI
	 	 	14	 
	 
	 	 	 	 
	ARTICLE V COVENANTS REGARDING CONDUCT OF BUSINESS BY YPI
	 	 	14	 
	 
	 	 	 	 
	Section 5.01 PRE-CLOSING COVENANTS
	 	 	14	 
	Section 5.02 EXCLUDED ASSETS
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL AGREEMENTS
	 	 	16	 
	 
	 	 	 	 
	Section 6.01 COMMERCIALLY REASONABLE EFFORTS BY THE REIT AND YPI
	 	 	16	 
	Section 6.02 TAX MATTERS
	 	 	16	 
	Section 6.03 ALTERNATE TRANSACTION
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS PRECEDENT
	 	 	17	 
	 
	 	 	 	 
	Section 7.01 CONDITION TO EACH PARTY’S OBLIGATIONS
	 	 	17	 
	Section 7.02 CONDITIONS TO OBLIGATIONS OF YPI
	 	 	17	 
	Section 7.03 CONDITIONS TO OBLIGATION OF THE REIT
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS
	 	 	19	 
	 
	 	 	 	 
	Section 8.01 NOTICES
	 	 	19	 
	Section 8.02 DEFINITIONS
	 	 	20	 
	Section 8.03 COUNTERPARTS
	 	 	22	 
	Section 8.04 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES
	 	 	22	 
	Section 8.05 GOVERNING LAW
	 	 	23	 
	Section 8.06 ASSIGNMENT
	 	 	23	 
	Section 8.07 JURISDICTION
	 	 	23	 
	Section 8.08 DISPUTE RESOLUTION
	 	 	23	 
	Section 8.09 SEVERABILITY
	 	 	24	 
	Section 8.10 RULES OF CONSTRUCTION
	 	 	24	 
	Section 8.11 EQUITABLE REMEDIES
	 	 	25	 






ii









 






	 	 	 	 	 
	 	 	PAGE	 
	Section 8.12 WAIVER OF SECTION 1542 PROTECTIONS
	 	 	25	 
	Section 8.13 TIME OF THE ESSENCE
	 	 	25	 
	Section 8.14 DESCRIPTIVE HEADINGS
	 	 	25	 
	Section 8.15 NO PERSONAL LIABILITY CONFERRED
	 	 	26	 
	Section 8.16 AMENDMENTS
	 	 	26	 






iii









 






DEFINED TERMS




			
	TERM	 	SECTION
	Affiliate 

Agreement 

Allocable Percentage 

Alternate Transaction 

Business Day 

CCC 

Certificate of Merger 

CHI Purchase Agreement 

Closing 

Closing Date 

Code 

Consent Form 

Dispute 

Effective Time 

Entity Value 

Environmental Laws 

Excluded Assets 

Formation Transaction Documentation 

Formation Transactions 

Fund 

Fund Purchase Agreement 

Governmental Authority 

IPO 

IPO Closing Date 

IPO Price 

Laws 

Lease 

Liens 

Merger 

Merger Consideration 

MGCL 

OP Units 

Operating Partnership 

Outside Date 

Permitted Liens 

Person 

Pre-Formation Interests 

Pre-Formation Participants 

Principal 

Property 

Prospectus 

Registration Statement
	 	Section 8.02

Introduction

Schedule II

Section 8.02

Section 8.02

Recitals

Section 1.02

Recitals

Section 2.01

Section 2.01

Section 8.02

Section 8.02

Section 8.08

Section 1.02

Section 8.02

Section 8.02

Section 5.02

Section 8.02

Section 8.02

Recitals

Recitals

Section 8.02

Recitals

Section 8.02

Section 8.02

Section 8.02

Section 4.09

Section 8.02

Recitals

Section 1.05

Section 1.01

Recitals

Recitals

Section 2.05

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Section 4.01

Section 8.02

Section 2.05






iii









 






			
	TERM	 	SECTION
	REIT 

REIT Charter 

REIT Material Adverse Effect 

REIT Shares 

REIT Subsidiary 

Representation, Warranty and Indemnity Agreement 

SAE Entity Members 

SDAT 

SEC 

Securities Act 

Shareholder 

Single Asset Entities 

Subsidiary 

Surviving Entity 

Tax 

Underwriting Agreement 

YGHI 

YIP 

Younan Entities 

YPI 

YPI Material Adverse Effect 

YPI Stock 

YPI Subsidiary 

YPI’s Knowledge
	 	Introduction

Section 1.04

Section 8.02

Recitals

Section 3.01

Section 8.02

Recitals

Section 1.02

Section 2.05

Section 8.02

Section 1.05

Recitals

Section 8.02

Section 1.01

Section 8.02

Section 8.02

Recitals

Recitals

Section 8.02

Introduction

Section 8.02

Recitals

Section 4.01

Section 8.02






iv









 






AGREEMENT AND PLAN OF MERGER




     This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of
April 8, 2010, by and among Younan Properties, Inc., a Maryland corporation (the
“REIT”), and Younan Properties, Inc., a California corporation (“YPI”).



RECITALS




     WHEREAS, the REIT desires to consolidate the ownership of a portfolio of office and certain
other properties currently owned, directly or indirectly, by certain asset entities, each as
described on Schedule I hereto (collectively, the “Single Asset Entities”) and
managed by YPI, Younan Investment Properties L.P., a Delaware limited partnership and subsidiary
of YPI (“YIP”), or another affiliate of YPI;



     WHEREAS, pursuant to this Agreement, YPI will merge with and into the REIT, with the REIT as
the surviving entity (the “Merger”), pursuant to which all of the shares of YPI (the
“YPI Stock”) will be converted automatically as set forth herein into the right to receive
shares of common stock of the REIT, par value $.01 per share (the “REIT Shares”);



     WHEREAS, the parties hereto intend the Merger to constitute a reorganization within the
meaning of Section 368(a) of the Code and intend for this Agreement to constitute a plan of
reorganization within the meaning of Section 368 of the Code, provided, however, that the REIT may
instead elect to cause YPI to contribute its assets to Younan Properties, L.P., a Maryland limited
partnership (the “Operating Partnership”) and subsidiary of the REIT in exchange for
partnership interest in the Operating Partnership (“OP Units”), as described herein, in
connection with the Alternate Transaction.



     WHEREAS, concurrently with the execution of this Agreement, the Operating Partnership will
enter into an agreement and plan of merger with YIP and certain other entities, each as described
on Schedule I hereto (the “SAE Entity Members”), that are direct or indirect
partners or members of certain of the Single Asset Entities, pursuant to which, immediately
following the Merger, (i) YIP will merge with and into the Operating Partnership and (ii)
thereafter, the SAE Entity Members will merge with and into the Operating Partnership in the order
set forth in the merger agreement for such entities;



     WHEREAS, an Affiliate of the Principal will assign to the Operating Partnership its rights and
obligations under that certain purchase agreement (the “Fund Purchase Agreement”) between
Affiliate and Passco Younan Fund I LLC, a Delaware limited liability company (the “Fund”),
pursuant to which Affiliate has agreed to purchase certain interests held by the Fund, which rights
and obligations will be assigned to the Operating Partnership as a result of the merger of
Affiliate with and into the Operating Partnership, and the Operating Partnership will purchase the
interests from the Fund pursuant to the terms of the Fund Purchase Agreement;



     WHEREAS, YGH Investments LLC, a California limited liability company (“YGHI”) and an
SAE Entity Member will assign to YPI its rights and obligations under that certain purchase
agreement (the “CHI Purchase Agreement”) to acquire all of Chung Hsien International LP’s
interests in 4041 Central Plaza LLC, a Delaware limited liability company, which rights













 




and obligations will be assigned to the Operating Partnership as a result of the merger of YPI
into the REIT and the REIT’s contribution of the assets of YPI to the Operating Partnership, and
immediately after such merger and contribution, the Operating Partnership will consummate the
transactions contemplated by the CHI Purchase Agreement.




     WHEREAS, concurrently with the execution of this Agreement, the REIT and the Operating
Partnership will enter into an agreement and plan of merger with certain of the Single Asset
Entities, pursuant to which, immediately following the mergers identified in the preceding
paragraphs, the Operating Partnership will acquire directly or indirectly certain of the interests
in the Single Asset Entities in consideration of each such interest’s allocated share of the
respective value of the Single Asset Entity;



     WHEREAS, the Formation Transactions relate to the proposed initial public offering (the
“IPO”) of the REIT Shares, following which the REIT will operate as a self-administered and
self- managed real estate investment trust within the meaning of Section 856 of the Code;



     WHEREAS, in accordance with the California Corporations Code (the “CCC”), YPI may be
merged with another entity, subject to the requisite approval of its board of directors, as
provided in Sections 1200 and 1201 of the CCC;



     WHEREAS, the Board of Directors of the REIT and its stockholder have determined that it is
advisable and in the best interests of the REIT to proceed with the Merger on the terms described in
this Agreement; and



     WHEREAS, the Board of Directors of YPI has determined that it is advisable and in the best
interests of YPI and its stockholders to proceed with the Merger on the terms described in this
Agreement.



     NOW, THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and other terms contained in this Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:



ARTICLE I




THE MERGER



     Section 1.01 THE MERGER. At the Effective Time (as defined below), and subject to and upon the terms and conditions
of this Agreement and in accordance with the Maryland General Corporation Law (“MGCL”) and
the CCC, YPI shall be merged with and into the REIT, whereby the separate existence of YPI shall
cease, and the REIT shall continue its existence under Maryland law as the surviving entity
(hereinafter sometimes referred to as the “Surviving Entity”).



     Section 1.02 EFFECTIVE TIME. Subject to and upon the terms and conditions of this Agreement, concurrently with or as soon as
practicable after (i) the execution by the REIT of the Underwriting Agreement and (ii)
following the satisfaction or waiver of the conditions set forth in Article VII, the REIT and YPI
shall file the articles of merger or similar document (the “Certificate of Merger”) as may
be required by applicable Laws, with the State Department of



2









 







Assessments and Taxation of Maryland
(“SDAT”) and the Secretary of State of the State of California, providing that the Merger
shall become effective upon filing or at such later date and time set forth in the Certificate of
Merger that is not more than 30 days after the acceptance of the Certificate of Merger by the SDAT
for record (the “Effective Time”) together with any certificates and other filings or
recordings related thereto, in such forms as are required by, and executed in accordance with, the
relevant provisions of applicable Laws.



     Section 1.03 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the
Certificate of Merger and the applicable provisions of the CCC and the MGCL.



     Section 1.04 ORGANIZATIONAL DOCUMENTS. At the Effective Time, (i) the charter of the REIT, as in effect immediately prior to the
Effective Time (the “REIT Charter”), shall be the charter of the Surviving Entity until
thereafter amended as provided therein or in accordance with the MGCL, and (ii) the bylaws of the
REIT, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving
Entity until thereafter amended as provided therein or in accordance with the MGCL.



     Section 1.05 CONVERSION OF YPI STOCK.



          (a) Under and subject to the terms and conditions of this Agreement, Zaya Younan, as sole
stockholder in YPI (the “Shareholder”), shall receive, as a result of and upon consummation
of the Merger, REIT Shares as calculated in Section 1.05(b).




          (b) At the Effective Time, by virtue of the Merger and without any action on the part of the
parties hereto, the YPI Stock issued and outstanding immediately prior to the Effective Time will
be canceled and extinguished and will be converted automatically into the right to receive upon
surrender of the certificate representing such shares of YPI Stock, a number of REIT Shares equal
to the Equity Value divided by the IPO Price (the “Merger Consideration”).




     Section 1.06 CANCELLATION AND RETIREMENT OF YPI STOCK. Each share of YPI Stock converted into the right to receive the Merger Consideration
pursuant to Section 1.05(b) shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of such YPI Stock so converted
shall thereafter cease to have any rights as a shareholder of YPI, except the right to receive the
Merger Consideration applicable thereto.



     Section 1.07 FRACTIONAL INTERESTS. No fractional REIT Shares shall be issued in the Merger. In lieu of any fractional REIT
Share, the Shareholder shall receive an amount in cash determined by multiplying the fraction of a
REIT Share the Shareholder would otherwise have been entitled to receive by the IPO Price. No
interest will be paid or will accrue on any cash paid or payable in lieu of any fractional REIT
Share.



     Section 1.08 CALCULATION OF MERGER CONSIDERATION. As soon as practicable following the determination of the IPO Price and prior to the
Effective Time, all calculations relating to the Merger Consideration shall be performed in good
faith by, or under the direction of, the REIT, and shall be final and binding upon the holders of
YPI Stock.



3









 





     Section 1.09 TRANSACTION COSTS. If the Closing occurs, the REIT and the Operating Partnership shall be solely responsible
for all transaction costs and expenses of the REIT, the Operating Partnership and the Younan
Entities in connection with the Formation Transactions and the IPO, which include, but are not
limited to, the underwriting discounts and commissions.



     Section 1.10 TAX CONSEQUENCES. Unless the parties hereto undertake the Alternate Transaction, such parties intend for the
Merger to constitute a reorganization within the meaning of Section 368(a) of the Code. The
parties hereto adopt this Agreement as a plan of reorganization within the meaning of Treasury
Regulations Section 1.368-2(g).



ARTICLE II




CLOSING; TERM OF AGREEMENT



     Section 2.01 CLOSING. Unless this Agreement shall have been terminated pursuant to Section 2.05, and
subject to the satisfaction or waiver of the conditions in Article VII, the filing of the
Certificate of Merger, the Effective Time and the closing of the other transactions contemplated by
this Agreement shall be the day on which the REIT receives the proceeds from the IPO from the
underwriters (the “Closing” or the “Closing Date”). The Closing shall take place
at the offices of Latham & Watkins LLP, 355 South Grand Avenue, Los Angeles, California 90071 or
such other place as determined by the REIT in its sole discretion. The Closing hereunder and the
closing of the IPO shall be deemed concurrent for all purposes.



     Section 2.02 PAYMENT OF MERGER CONSIDERATION. As soon as reasonably practicable after the Effective Time, the REIT shall deliver to the
Shareholder, the Merger Consideration in the amounts and form provided in
Section 1.05(b) hereof. Each certificate representing REIT Shares issuable as Merger
Consideration shall bear the following legend:




THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION,
UNLESS THE TRANSFEROR DELIVERS TO THE CORPORATION AN OPINION OF COUNSEL SATISFACTORY
TO THE CORPORATION, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES OR “BLUE SKY” LAWS.




THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN
FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE



4









 






CORPORATION’S
CHARTER, (I) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE
CORPORATION’S COMMON STOCK IN EXCESS OF      % (IN VALUE OR NUMBER OF SHARES) OF
THE OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN
EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE);
(II) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF
THE CORPORATION IN EXCESS OF      % OF THE VALUE OF THE TOTAL OUTSTANDING SHARES
OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN
WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY
BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK THAT WOULD RESULT IN THE
CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(h) OF THE CODE OR OTHERWISE
CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY
TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL
STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO
BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY
OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR
CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE
LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON
TRANSFER OR OWNERSHIP SET FORTH IN (I) THROUGH (III) ABOVE ARE VIOLATED, THE
SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A
TRUSTEE OF A TRUST FOR THE BENEFIT OF
ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY TAKE OTHER
ACTIONS, INCLUDING REDEEMING SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE
BOARD OF DIRECTORS IN ITS SOLE AND ABSOLUTE DISCRETION IF THE BOARD OF DIRECTORS
DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE
RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS,
ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID
AB INITIO. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE
CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY
OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED
TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE.
REQUESTS



5









 







FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT
ITS PRINCIPAL OFFICE.



     Section 2.03 TAX WITHHOLDING. The REIT and YPI, as applicable, shall be entitled to deduct and withhold from the
consideration payable pursuant to this Agreement to the Shareholder such amounts required to be
deducted and withheld with respect to the making of such payment under the Code or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the Shareholder.



     Section 2.04 FURTHER ACTION. If, at any time after the Effective Time, the REIT shall determine or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the REIT the right, title or
interest in, to or under any of the rights, properties or assets of YPI acquired or to be acquired
by the REIT as a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the REIT shall be authorized to execute and deliver, in the name and on behalf of YPI or
otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of YPI or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in, to and under such
rights, properties or assets in the REIT or otherwise to carry out this Agreement.



     Section 2.05 TERM OF THE AGREEMENT. This Agreement shall terminate automatically if (i) the initial registration statement of
the REIT for the IPO (the “Registration Statement”) has not been filed with the Securities
and Exchange Commission (“SEC”) by August 31, 2010, or (ii) the Merger shall not have been
consummated on or prior to March 31, 2011 (such date is hereinafter referred to as the “Outside
Date”).



     Section 2.06 EFFECT OF TERMINATION. In the event of termination of this Agreement for any reason, all obligations on the part
of the REIT and YPI under this Agreement shall terminate, except that the obligations set forth in
Article VIII shall survive; it being understood and agreed, however, for the avoidance of doubt,
that if this Agreement is terminated because one or more of the conditions to a non-breaching
party’s obligations under this Agreement are not satisfied by the Outside Date as a result of the
other party’s material breach of a covenant, representation, warranty or other obligation under
this Agreement or any other Formation Transaction Documentation, the non-breaching party’s right to
pursue all legal remedies with respect to such breach will survive such termination unimpaired.



     If this Agreement shall terminate for any reason prior to completion of the Formation
Transactions, YPI shall bear all transaction costs and expenses related thereto in proportion to
its Allocable Percentage (as defined in Schedule II hereto).



ARTICLE III




REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF THE REIT



     The REIT hereby represents and warrants to and covenants with YPI as follows:



6









 





     Section 3.01 ORGANIZATION; AUTHORITY.



          (a) The REIT has been duly incorporated and is validly existing and in good standing under the
Laws of its jurisdiction of incorporation and has all requisite power and authority to enter this
Agreement and the other Formation Transaction Documentation and to carry out the transactions
contemplated hereby and thereby, and to own, lease and/or operate its property and to carry on its
business as presently conducted and, to the extent required under applicable Law, is qualified to
do business and is in good standing in each jurisdiction in which the nature of its business or the
character of its property make such qualification necessary, other than such failures to be so
qualified as would not, individually or in the aggregate, reasonably be expected to have a REIT
Material Adverse Effect.




          (b) Schedule 3.01(b) sets forth as of the date hereof, (i) each Subsidiary of the REIT
(each a “REIT Subsidiary”), (ii) the ownership interest therein of the REIT, and (iii) if
not wholly owned by the REIT, the identity and ownership interest of each of the other owners of
such REIT Subsidiary. Each REIT Subsidiary has been duly organized or formed and is validly
existing and in good standing under the Laws of its jurisdiction of organization or formation, as
applicable, has all power and authority to own, lease and/or operate its property and to carry on
its business as presently conducted and, to the extent required under applicable Law, is qualified
to do business and is in good standing in each jurisdiction in which the nature of its business or
the character of its property make such qualification necessary, other than such failures to be so
qualified as would not, individually or in the aggregate, reasonably be expected to have a REIT
Material Adverse Effect.




     Section 3.02 DUE AUTHORIZATION. The execution, delivery and performance of this Agreement and the other Formation
Transaction Documentation (including each agreement, document and instrument executed and delivered
by or on behalf of the REIT pursuant to this Agreement or the other Formation Transaction
Documentation) by the REIT has been duly and validly authorized by all necessary actions required
of the REIT. This Agreement, the other Formation Transaction Documentation and each agreement,
document and instrument executed and delivered by or on behalf of the REIT pursuant to this
Agreement or the other Formation Transaction Documentation constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligation of the REIT, enforceable against
the REIT in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar Laws relating to creditors’ rights and general principles of equity.



     Section 3.03 CONSENTS AND APPROVALS. Except for the filing of the Certificate of Merger in accordance with Section 1.02
hereof or in connection with the IPO and the consummation of the Formation Transactions, no
consent, waiver, approval, authorization, order, license, permit or registration of, qualification,
designation, declaration or filing with, any Person or Governmental Authority or under any
applicable Laws is required to be obtained by the REIT, in connection with the execution, delivery
and performance of this Agreement and the transactions contemplated hereby, except for (i) those
consents, waivers, approvals, authorizations, orders, licenses, permits, registrations,
qualifications, designations, declarations or filings, the failure of which to obtain or file would
not, individually or in the aggregate, reasonably be expected to have a REIT Material Adverse
Effect, or (ii) those consents of the Pre-Formation Participants under the organizational documents
of the applicable Younan Entity, the



7









 







failure of which to obtain would not, individually or in the
aggregate, reasonably be expected to cause a material adverse effect.



     Section 3.04 NO VIOLATION. None of the execution, delivery or performance of this Agreement, the other Formation
Transaction Documentation, any agreement contemplated hereby between the parties to this Agreement
and the transactions contemplated hereby between the parties to this Agreement does or will, with
or without the giving of notice, lapse of time, or both, violate, conflict with, result in a breach
of, or constitute a default under or give to others any right of termination, acceleration,
cancellation or other right under, (A) the organizational documents of the REIT, (B) any agreement,
document or instrument to which the REIT or any of its assets are bound or (C) any term or
provision of any judgment, order, writ, injunction, or decree binding on the REIT, except for, in
the case of clause (B) or (C), any such breaches or defaults that would not, individually or in the
aggregate, reasonably be expected to have a REIT Material Adverse Effect.



     Section 3.05 VALIDITY OF REIT SHARES. The REIT Shares to be issued pursuant to this Agreement will have been duly authorized by
the REIT and, when issued against the consideration therefor, will be validly
issued, fully paid and non-assessable and free and clear of all Liens created by the REIT
(other than Liens created by the REIT Charter).



     Section 3.06 LIMITED ACTIVITIES. Except for activities in connection with the IPO, the Formation Transactions or the
ordinary course of business, the REIT and the REIT Subsidiaries have not engaged in any material
business or incurred any material obligations.



     Section 3.07 LITIGATION. Except for actions, suits or proceedings covered by the policies of insurance described in
Schedule 3.07, there is no action, suit or proceeding pending or, to the knowledge of the
REIT, threatened against the REIT or any REIT Subsidiary which, (i) if adversely determined, would,
individually or together with all such other actions, reasonably be expected to have a REIT
Material Adverse Effect. There is no action, suit or proceeding pending or, to the knowledge of
the REIT, threatened against the REIT which challenges or impairs the ability of the REIT to
execute or deliver, or materially perform its obligations under, this Agreement and the documents
executed by it pursuant to this Agreement or to consummate the transactions contemplated hereby or
thereby, except as would not, individually or in the aggregate, reasonably be expected to have a
REIT Material Adverse Effect.



     Section 3.08 NO BROKER. The REIT has not entered into, and covenants that it will not enter into, any agreement,
arrangement or understanding with any Person or firm which will result in the obligation of YPI or
any of its Affiliates thereof to pay any finder’s fee, brokerage commission or similar payment in
connection with the transaction contemplated by this Agreement (other than underwriting discounts,
commissions and other fees and expenses to be paid by the REIT in connection with the IPO and any
related financing transactions).



     Section 3.09 NO IMPLIED REPRESENTATIONS OR WARRANTIES. Other than the representations and warranties expressly set forth in this Article III, the
REIT, shall not be deemed to have made any other representation or warranty in connection with this
Agreement or the transactions contemplated hereby. All representations, warranties and covenants
of the REIT contained in this Agreement shall expire at Closing.



8









 





ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF YPI



     Except as disclosed in the Prospectus or the schedules hereto, YPI hereby represents and
warrants to the REIT that as of the Closing Date:



     Section 4.01 ORGANIZATION; AUTHORITY. YPI has been duly organized and is validly existing and in good standing under the Laws of
the State of California, and has all requisite power and authority to enter into this Agreement,
each agreement contemplated hereby and to carry out the transactions contemplated hereby and
thereby, and to own, lease and/or operate Property and to carry on its business as presently
conducted. YPI, to the extent required under applicable Laws, is qualified to do business and is
in good standing in each jurisdiction in which the nature of its business or the character of a
Property make such qualification necessary, other than in such jurisdictions where the failure to
be so qualified would not, individually or in the aggregate, reasonably be expected have a YPI
Material Adverse Effect.



          (a) Schedule 4.01(b) sets forth as of the date hereof, (i) each Subsidiary of YPI
(each a “YPI Subsidiary”), (ii) the ownership interest therein of YPI, (iii) if not wholly
owned by YPI, the identity and ownership interest of each of the other owners of such Subsidiary,
and (iv) each office, or other property owned by such Subsidiary or leased pursuant to a ground
lease (each a “Property”). Each YPI Subsidiary has been duly organized and is validly
existing and in good standing under the Laws of its jurisdiction of organization, and has all power
and authority to own, lease and/or operate its Property and to carry on its business as presently
conducted. Each YPI Subsidiary, to the extent required under applicable Laws, is qualified to do
business and is in good standing in each jurisdiction in which the nature of its business or the
character of its Property make such qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, reasonably be expected to have a YPI
Material Adverse Effect.




     Section 4.02 DUE AUTHORIZATION. The execution, delivery and performance by YPI of this Agreement and the other Formation
Transaction Documentation (including each agreement, document and instrument executed and delivered
by or on behalf of YPI pursuant to this Agreement or the other Formation Transaction Documentation)
to which it is a party have been duly and validly authorized by all necessary actions required of
YPI. This Agreement, the other Formation Transaction Documentation and each agreement, document
and instrument executed and delivered by or on behalf of YPI pursuant to this Agreement or the
other Formation Transaction Documentation constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of YPI, each enforceable against YPI in
accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar Laws relating to creditors’ rights and general principles of equity.



     Section 4.03 CAPITALIZATION. Schedule 4.03 sets forth as of the date hereof the ownership of YPI. All of the
issued and outstanding equity interests of YPI are duly authorized, validly issued and fully paid;
and, to YPI’s Knowledge, are not subject to preemptive rights or appraisal, dissenters’ or other
similar rights under the organizational documents of or any contract to which YPI is a party or
otherwise bound.



9









 





     Section 4.04 CONSENTS AND APPROVALS. Except as shall have been satisfied on or prior to the Closing Date, no consent, waiver,
approval, authorization, order, license, permit or registration of, or filing with, any Person or
any Governmental Authority or under any applicable Laws is required to be obtained by YPI or any of
the YPI Subsidiaries in connection with the execution, delivery and performance of this Agreement,
the other Formation Transaction Documentation to which YPI or any of the YPI Subsidiaries is a
party and the transactions contemplated hereby and thereby, except (i) for those consents, waivers,
approvals, authorizations, orders, licenses, permits, registrations, qualifications, designations,
declarations or filings, the failure of which to obtain or to file would not, individually or in
the aggregate, reasonably be expected to have a YPI Material Adverse
Effect, or (ii) those consents of the Pre-Formation Participants
under the organizational documents of the applicable Younan Entity,
the failure of which to obtain would not individually or in the
aggregate reasonably be expected to cause a Material Adverse Effect.



     Section 4.05 NO VIOLATION. None of the execution, delivery or performance of this Agreement, any agreement
contemplated hereby between the parties to this Agreement and the transactions contemplated hereby
between the parties to this Agreement does or will, with or without the giving of notice, lapse of
time, or both, violate, conflict with, result in a breach of, or constitute a default under or give
to others any right of termination, acceleration, cancellation or other right under, (A) the
organizational documents of YPI or any YPI Subsidiary or (B) any agreement, document or instrument
to which YPI or any YPI Subsidiary or any of their respective assets or properties are bound by or
(C) any term or provision of any judgment, order, writ, injunction, or decree binding on YPI or any
YPI Subsidiary, except for, in the case of clause (B) or (C), any such breaches or defaults that
would not, individually or in the aggregate, reasonably be expected to have a YPI Material Adverse
Effect.



     Section 4.06 LICENSES AND PERMITS. To YPI’s Knowledge, all notices, licenses, permits, certificates and authorizations
required for the continued use, occupancy, management, leasing and operation of the Properties have
been obtained or can be obtained without material cost, are in full force and effect, are in good
standing and (to the extent required in connection with the transactions contemplated by the
Formation Transaction Documentation) are assignable to the Operating Partnership, except in each
case for items that, if not so obtained, obtainable and/or transferred, would not, individually or in
the aggregate, reasonably be expected to have a YPI Material Adverse Effect. To YPI’s Knowledge,
none of YPI or any YPI Subsidiary or any third party has taken any action that (or failed to take
any action the omission of which) would result in the revocation of any such notice, license,
permit, certificate or authorization where such revocation or revocations would, individually or in
the aggregate, reasonably be expected to have a YPI Material Adverse Effect, nor has any of them
received any written notice of violation from any Governmental Authority or written notice of the
intention of any entity to revoke any of them, that in each case has not been cured or otherwise
resolved to the satisfaction of such Governmental Authority and that would not, individually or in
the aggregate, reasonably be expected to have a YPI Material Adverse Effect.



     Section 4.07 COMPLIANCE WITH LAWS. To YPI’s Knowledge, YPI and each YPI Subsidiary have conducted their business in compliance
with all applicable Laws, except for such failures that would not, individually or in the
aggregate, reasonably be expected to have a YPI Material Adverse Effect. None of YPI or any YPI
Subsidiary has been informed in writing of any continuing violation of any such Laws or that any
investigation has been commenced and is continuing or is contemplated respecting any such possible
violation, except in each case for



10









 







violations that would not, individually or in the aggregate,
reasonably be expected to have a YPI Material Adverse Effect.



     Section 4.08 NO INSOLVENCY PROCEEDINGS. No attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending or, to YPI’s Knowledge,
threatened against either YPI or any YPI Subsidiary, nor are any such proceedings contemplated by
either YPI or any YPI Subsidiary.



     Section 4.09
PROPERTIES. (a) YPI or a YPI Subsidiary set forth on
Schedule 4.09(a) is insured under a policy of
title insurance as the owner of (except for the Property known as One
Graystone Centre for which there is no owner’s policy of title
insurance), and, to YPI’s Knowledge, YPI or a YPI Subsidiary is the owner of,
the fee simple estate (or, in the case of certain Properties, the leasehold estate) to the Property
identified on Schedule 4.09(a) as being owned by YPI or YPI Subsidiary, in each case free
and clear of all Liens except for Permitted Liens. Prior to the effective time of the Merger
contemplated hereby, none of YPI or any YPI Subsidiary shall take or omit to take any action to
cause any Lien to attach to any Property, except for Permitted Liens and Liens, if any, given to
secure mortgage indebtedness encumbering such Property.



          (b) Except for matters that would not, individually or in the aggregate, reasonably be
expected to have a YPI Material Adverse Effect, to YPI’s Knowledge, (1) none of YPI, any YPI
Subsidiary, nor any other party to any material agreement affecting any Property (other than a
Lease (as such term is hereinafter defined) for space within such Property), is in breach or
default of any such agreement, (2) no event has occurred or has been threatened in writing, which
with or without the passage of time or the giving of notice, or both, would, individually or
together with all such other events, constitute a default under any such agreement, or would,
individually or together with all such other events, reasonably be expected to cause the
acceleration of any material obligation of any party thereto or the creation of a Lien upon any
asset of YPI or any YPI Subsidiary, except for Permitted Liens, and (3) all agreements affecting
any Property required for the continued use, occupancy, management, leasing and operation of such
Property (exclusive of space Leases) are valid and binding and in full force and effect.




          (c) To YPI’s Knowledge, as presently conducted, none of the operation of the buildings,
fixtures and other improvements comprising a part of the Properties is in violation of any
applicable building code, zoning ordinance or other “land use” Law, except for such violations that
would not, individually or in the aggregate, reasonably be expected to have a YPI Material Adverse
Effect.




          (d) Except for matters that would not, individually or in the aggregate, reasonably be
expected to have a YPI Material Adverse Effect, (1) to YPI’s Knowledge, none of
YPI, any YPI Subsidiary, or any other party to any Lease, is in breach or default of any such
Lease, (2) to YPI’s Knowledge, no event has occurred or has been threatened in writing, which with
or without the passage of time or the giving of notice, or both, would, individually or together
with all such other events, constitute a default under any Lease, or would, permit termination,
modification or acceleration under such Lease, and (3) to YPI’s Knowledge each of the leases (and
all amendments thereto or modifications thereof) to which YPI or any YPI Subsidiary is a party or
by which YPI or any YPI Subsidiary or any Property is bound or subject (collectively, the
“Leases”) is and will be valid and binding and in full force and effect.




11









 








     Section 4.10
NO BROKER. YPI has not entered into, and covenants that it will not enter into, any agreement, arrangement
or understanding with any Person or firm which will result in the obligation of the REIT or any of
its Affiliates to pay any finder’s fee, brokerage commission or similar payment in connection with
the transactions contemplated by this Agreement (other than underwriting discounts, commissions and
other fees and expenses to be paid by the REIT in connection with the IPO and any related financing
transactions).



     Section 4.11 INSURANCE. YPI or a YPI Subsidiary has in place the public liability, casualty and other insurance
coverage with respect to each Property as YPI and the YPI Subsidiary reasonably deem necessary and
in all cases including such coverage as is required under the terms of any continuing loan or
Lease. Each of the insurance policies with respect to the Property is in full force and effect in
all material respects and all premiums due and payable thereunder have been fully paid when due.
To YPI’s Knowledge, neither YPI nor any YPI Subsidiary has received from any insurance company any
notices of cancellation or intent to cancel any insurance.



     Section 4.12 ENVIRONMENTAL MATTERS. Except for matters that would not, individually or in the aggregate, reasonably be expected to
have a YPI Material Adverse Effect, to YPI’s Knowledge (A) YPI and the YPI Subsidiaries are in
compliance with all Environmental Laws, (B) neither YPI nor any YPI Subsidiary have received any
written notice from any Governmental Authority or third party alleging that YPI, any YPI Subsidiary
or any Property is not in compliance with applicable Environmental Laws, and (C) there has not been
a release of a hazardous substance on any of the Properties that would require investigation or
remediation under applicable Environmental Laws. The representations and warranties contained in
this Section 4.12 constitute the sole and exclusive representations and warranties made by
YPI concerning environmental matters.



     Section 4.13
EMINENT DOMAIN. Except as set forth on Schedule 4.13, there is no existing or, to YPI’s Knowledge,
proposed or threatened condemnation, eminent domain or similar proceeding, or private purchase in
lieu of such a proceeding which would affect any of the Properties, except for such proceeding that
would not, individually or in the aggregate, reasonably be expected to have a YPI Material Adverse
Effect.



     Section 4.14 FINANCIAL STATEMENTS. The financial statements of the Younan Entities included in the Prospectus have been prepared
in all material respects in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the notes thereto),
subject, in the case of unaudited statements, to normal year-end audit adjustments, and fairly
present in all material respects the financial condition and results of operations of the Younan
Entities as of the dates indicated therein and for the periods ended as indicated therein.



     Section 4.15 TAXES. Except as set forth in Schedule 4.15(a), (i) YPI and each of the YPI Subsidiaries has
timely and properly filed all Tax returns and reports required to be filed by it (after giving
effect to any filing extension properly granted by a Governmental Authority having authority to do
so) and all such returns and reports are accurate and complete in all material respects, and has
paid (or had paid on its behalf) all Taxes as required to be paid by it, and (ii) except as would
not, individually or in the aggregate, reasonably be expected to have a



12









 







YPI Material Adverse
Effect, no deficiencies for any Taxes have been proposed, asserted or assessed against YPI or any
of the YPI Subsidiaries, and no requests for waivers of the time to assess any such Taxes are
pending.



          (a) Except as set forth in Schedule 4.15(b), (i) there are no pending or threatened
audits, assessments or other actions for or relating to any liability in respect of income or
material non-income Taxes of YPI or any YPI Subsidiaries, (ii) there are no matters under
discussion with any Tax authority with respect to income or material non-income Taxes that are
likely to result in an additional liability for income Taxes with respect to YPI or any YPI
Subsidiary and (iii) neither YPI nor any YPI Subsidiary is, or has ever been, a party to or bound
by any Tax indemnity agreement, Tax sharing agreement, Tax allocation agreement or similar
contract.




          (b) Except as set forth in Schedule 4.15(c), at all times since January 1, 2003, YPI
(including any “predecessor corporation” (within the meaning of Treasury Regulations Section
1.1374-1(e)) to YPI) has continuously qualified as an “S corporation” within the meaning of Section
1361(a)(1) of the Code and all applicable corresponding provisions of state and local law, and no
Tax authority has claimed in writing that YPI does not qualify as an S corporation. YPI has never
elected to treat any Subsidiary as a “qualified subchapter S subsidiary,” within the meaning of
Section 1361(b)(3)(B) of the Code.




          (c) Except as set forth in Schedule 4.15(d), YPI does not have any current or
accumulated earnings and profits which were generated by any entity that was not a REIT, an S
corporation or a regulated investment company at the time such earnings and profits were generated.




     Section 4.16 NON-FOREIGN STATUS. YPI is not a foreign person (as defined in the Code) and is not, therefore, subject to the
provisions of the Code relating to the withholding of sales or exchange proceeds to foreign
persons.



     Section 4.17 NO IMPLIED REPRESENTATIONS OR WARRANTIES. Other than the representations and warranties expressly set forth in this Article IV, YPI
shall not be deemed to have made any other representation or warranty in connection with this
Agreement or the transactions contemplated hereby.



     Section 4.18 LITIGATION. Except for actions, suits or proceedings covered by the policies of insurance described in
Section 4.11, there is no action, suit or proceeding pending or, to YPI’s Knowledge or the
knowledge of any other YPI Subsidiary, threatened against or affecting YPI or any YPI Subsidiary,
other than actions, suits, proceedings arising in the ordinary course of business from the
ownership and operation of YPI, the Operating Partnership and the Properties, that, individually or
in the aggregate, could reasonably be expected, (a) if adversely determined, would have a YPI
Material Adverse Effect or (b) to challenge or impair the ability of the YPI or any other YPI
Subsidiary to execute or deliver, or materially perform its obligations under, this Agreement and
the documents executed by it pursuant to this Agreement or to consummate the transactions
contemplated hereby or thereby, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.



13









 





     Section 4.19 EMPLOYEES. Except for YPI, no Younan Entity or Subsidiary has or has ever had any employees. Except as
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect, no Younan Entity or any of its Subsidiaries is delinquent in payments to any of its
employees, consultants or independent contractors for any wages, salaries, commissions, bonuses, or
other direct compensation for any service performed or amounts required to be reimbursed to such
employees, consultants or independent contractors. YPI has: (a) complied in all material respects
with all applicable laws related to employment, (b) withheld and paid to the appropriate
governmental entity or is holding for payment not yet due to such governmental entity all amounts
required to be withheld from employees and (c) no policy, practice, plan or program of paying
severance or pay or any form of severance compensation in connection with the termination of
employment service and no agreement pursuant to which it would be required to pay severance to any
director, officer, employee or consultant, except with respect to clauses (a), (b) and (c) as would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



     Section 4.20 CONTRACTS AND COMMITMENTS. Except as set forth in the organizational documents of each Younan Entity or as otherwise
disclosed in the Prospectus, YPI is not a party to any agreements for the sale of its assets, for
the grant to any Person of any preferential right to purchase any such assets or the acquisition of
any operating business, assets or capital stock of any other corporation, entity or business, other
than in the ordinary course of business, entered into during the last twelve (12) months.



     Section 4.21 OWNERSHIP OF CERTAIN ASSETS. Except as set forth in Schedule 4.21, none of YPI or any YPI Subsidiary owns any
loan assets or other securities of any issuer except for equity interests in other Younan Entities.



     Section 4.22 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF YPI. The parties hereto agree and acknowledge that the representations and warranties set forth
in this Article IV shall not survive the Closing.



ARTICLE V




COVENANTS REGARDING CONDUCT OF BUSINESS BY YPI



     Section 5.01 PRE-CLOSING COVENANTS. During the period from the date hereof to the Closing Date (except as otherwise provided for
or contemplated by this Agreement or in connection with the Formation Transactions), YPI shall use
commercially reasonable efforts to (and to cause each of the YPI Subsidiaries to) conduct its
businesses and operate and maintain the Properties in the ordinary course of business consistent
with past practice and use commercially reasonable efforts to preserve intact its current business
organizations and preserve its relationships with customers, tenants, suppliers, advertisers and
others having business dealings with it, in each case consistent with past practice. In addition,
and without limiting the generality of the foregoing, during the period from the date hereof to the
Closing Date and except in connection with the Formation Transactions, YPI shall not (and shall not
permit any of the YPI Subsidiaries to) without the prior written consent of the REIT:



14









 





          (a) (i) other than distributions to the Principal described in Section 5.02 hereof,
any distributions to the Principal in connection with the Principal’s payment of any Taxes related
to the Principal’s ownership of YPI Stock and any distributions in the ordinary course of business
consistent with past practice and in accordance with the governing documents of YPI, declare, set
aside or pay any distributions in respect of any YPI Stock, (ii) issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for any YPI Stock or make any
other changes to the equity capital structure of YPI or any YPI Subsidiary, or (iii) purchase,
redeem or otherwise acquire any YPI Stock or interests of any of the YPI Subsidiaries or any other
securities thereof;




          (b) issue, deliver, sell, transfer, dispose, mortgage, pledge, assign or otherwise encumber,
or cause the issuance, delivery, sale, transfer, disposition, mortgage, pledge, assignment or
otherwise encumbrance of, any limited liability company, partnership interests or other equity
interests in any of the YPI Subsidiaries or any other assets of YPI; provided, however, that YPI
may transfer, assign or contribute a note or debt instrument of YIP held by YPI to YIP;




          (c) amend its charter or bylaws;




          (d) adopt a plan of liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or reorganization;




          (e) materially alter the manner of keeping YPI or a YPI Subsidiary’s books, accounts or
records or the accounting practices therein reflected;




          (f) make or change any Tax elections (including YPI’s election to be taxed as an S
corporation, except that YPI may terminate its election to be taxed as an S corporation up to three
days prior to the expected pricing of the IPO without the consent of the REIT); settle or
compromise any claim, notice, audit report or assessment in respect of Taxes; change any annual Tax
accounting period; adopt or change any method of Tax accounting; file any amended Tax return; enter
into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing
agreement relating to any Tax; surrender of any right to claim a Tax refund; or consent to any
extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;




          (g) engage in any action (or omit to take any action) that could reasonably be expected to
cause the Merger to fail to qualify as a reorganization under Section 368(a) of the Code; or




          (h) authorize, commit or agree to take any of the foregoing actions.




     Section 5.02 EXCLUDED ASSETS. Prior to the Closing, YPI shall have distributed all of its ownership interests in each of the
assets identified on Schedule 5.02 (the “Excluded Assets”) to the Principal.



15









 





ARTICLE VI




ADDITIONAL AGREEMENTS



     Section 6.01 COMMERCIALLY REASONABLE EFFORTS BY THE REIT AND YPI. Each of the REIT and YPI shall use commercially reasonable efforts and cooperate with each
other in (i) promptly determining whether any filings are required to be made or consents,
approvals, waivers, permits or authorizations are required to be obtained (under any applicable Law
or regulation or from any Governmental Authority or third party) in connection with the
transactions contemplated by this Agreement, and (ii) promptly making (or causing to be made) any
such filings, in furnishing information required in connection therewith and in timely seeking to
obtain any such consents, approvals, waivers, permits and authorizations.



     Section 6.02 TAX MATTERS. YPI shall timely file or cause to be timely filed when due all Tax returns required to be
filed by or with respect to YPI or its Subsidiaries on or prior to the Closing Date and shall pay
or cause to be paid all Taxes shown due thereon. All such Tax returns (including, for the
avoidance of doubt, any amended Tax returns) shall be prepared in a manner consistent with past
practice, except as otherwise required by applicable law.



          (a) The REIT shall prepare or cause to be prepared and file or cause to be filed all income
Tax returns of YPI which are due after the Closing Date. All such income Tax returns (including,
for the avoidance of doubt, any amended Tax returns) shall be prepared in a manner consistent with
past practice, except as otherwise required by applicable law. No later than thirty (30) days
prior to the due date (including extensions) for filing such income Tax returns, REIT shall deliver
such income Tax returns to Shareholder for his review and approval, which shall not be unreasonably
withheld.




          (b) The REIT shall prepare or cause to be prepared all other Tax returns of YPI.




          (c) The REIT and YPI will each use its reasonable best efforts to cause the Merger to qualify,
and will use its reasonable best efforts not to, and not to permit or cause any of its Subsidiaries
to, take any action that could reasonably be expected to prevent or impede the Merger from
qualifying, as a reorganization within the meaning of Section 368 of the Code.




          (d) Unless otherwise required pursuant to a “determination” within the meaning of Section
1313(a) of the Code, each of the REIT and YPI shall report the Merger as a “reorganization” within
the meaning of Section 368(a) of the Code for federal income tax purposes.




          (e) Following the Merger, the REIT will comply with the record-keeping and information filing
requirements of Treasury Regulation Section 1.368-3.




          (f) Prior to Closing, YPI shall deliver to the REIT (i) such forms and certificates, duly
executed and acknowledged, in form and substance reasonably satisfactory to the REIT, certifying
that the Merger is exempt from withholding under Section 1445 of the Code




16









 






and (ii) a properly
executed California Franchise Tax Board Form 593-C certifying that the Merger is exempt from
California state withholding tax.



          (g) The REIT makes no representations or warranties to YPI or any holder of YPI Stock
regarding the Tax treatment of the Merger or the other Formation Transactions, or any of the Tax
consequences to YPI or any holder of YPI Stock of this Agreement, the Merger or the other Formation
Transactions. YPI acknowledges that YPI and the Shareholder are relying solely on their own Tax
advisors in connection with this Agreement, the Merger and the other Formation Transactions and
agreements contemplated hereby.




     Section 6.03 ALTERNATE TRANSACTION. In the event that the REIT receives advice of its counsel that the Merger could fail to
qualify as a reorganization within the meaning of Section 368(a) of the Code or otherwise
determines that a structure change is desireable, the REIT may elect, and in such case the
Shareholder, YPI and the REIT hereby agree that the parties and the Operating Partnership shall
undertake the Alternate Transaction and shall enter into such agreements as shall be necessary to
consummate the Alternate Transaction.



ARTICLE VII




CONDITIONS PRECEDENT



     Section 7.01 CONDITION TO EACH PARTY’S OBLIGATIONS. The respective obligation of each party to effect the Merger and to consummate the other
transactions contemplated by this Agreement to occur on the Closing Date is subject to the written
satisfaction or waiver on or prior to the Effective Time, of the following conditions:



          (a) REGISTRATION STATEMENT. The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings by the SEC seeking a
stop order. This condition may not be waived by any party.




          (b) NO INJUNCTION. No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree, judgment, injunction,
stay or other order (whether temporary, preliminary or permanent), in any case which is in effect
and which prevents or prohibits consummation of any of the transactions contemplated in this
Agreement nor shall any of the same brought by a Governmental Authority of competent jurisdiction
be pending or threatened that seeks the foregoing.




     Section 7.02 CONDITIONS TO OBLIGATIONS OF YPI. The obligation of YPI to effect the Merger and to consummate the other transactions
contemplated by this Agreement to occur on the Closing Date are further subject to satisfaction of
the following:



          (a) REPRESENTATIONS AND WARRANTIES. Except as would not have a REIT Material Adverse Effect,
each of the representations and warranties of the REIT contained in this Agreement shall be true
and correct in all respects at the Closing as if made again at that time (except to the extent that
any representation or warranty speaks as of an earlier date, in which case it must be true and
correct only as of that earlier date).







17









 





          (b) PERFORMANCE BY THE REIT. Except as would not have a REIT Material Adverse Effect, the
REIT shall have performed all agreements and covenants required by this Agreement to be performed
or complied with by it on or prior to the Closing Date.





          (c) IPO PROCEEDS. The REIT shall have received the proceeds from the IPO.




          (d) REGISTRATION RIGHTS AGREEMENT. The REIT shall have entered into the registration rights
agreement substantially in the form attached as Exhibit B. This condition may not be
waived by any party.




          (e) OWNERSHIP WAIVER. Based on the shareholder representation letter described in Section
7.03(h), the Board of Directors of the REIT shall have granted an exception to the Common Stock
Ownership Limit (as defined in the REIT Charter) and the Aggregate Stock Ownership Limit (as
defined in the REIT Charter) set forth in the REIT Charter, providing
the Shareholder with an Excepted Holder Limit (as defined in the REIT Charter) of      %,
or such lower limit as is necessary for the Shareholder to own the Merger Consideration without a
violation of the Common Stock Ownership Limit or the Aggregate Stock Ownership Limit set forth in
the REIT Charter.




     Section 7.03 CONDITIONS TO OBLIGATION OF THE REIT. The obligations of the REIT to effect the Merger and to consummate the other transactions
contemplated by this Agreement to occur on the Closing Date are further subject to satisfaction of
the following conditions (any of which may be waived by the REIT, in whole or in part):



          (a) REPRESENTATIONS AND WARRANTIES. Except as would not have a YPI Material Adverse Effect,
each of the representations and warranties of YPI contained in this Agreement, as well as those of
the Principal under the Representation, Warranty and Indemnity Agreement, shall be true and correct
in all respects at the Closing as if made again at that time (except to the extent that any
representation or warranty speaks as of an earlier date, in which case it must be true and correct
only as of that earlier date).




          (b) PERFORMANCE BY YPI. YPI shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed or complied with by it on or prior to the
Closing Date.




          (c) CONSENTS, ETC. All necessary consents or approvals of Governmental Authorities or third
parties (including lenders) for YPI to consummate the transactions contemplated hereby shall have
been obtained.




          (d) NO MATERIAL ADVERSE CHANGE. There shall have not occurred between the date hereof and the
Closing Date any material adverse change in any of the assets, business, condition (financial or
otherwise), results of operation or prospects of YPI, any YPI Subsidiaries and the Properties,
taken as a whole.




          (e) CONTINUATION OF TITLE POLICIES. To the extent that any existing title policy for a
Property does not recognize the Operating Partnership or its applicable Subsidiary following the
Closing as an “insured” under and as of the date of such policy, then




18









 







YIP shall, to the extent
available, use commercially reasonable efforts to cause the title insurer under such policy to
deliver or cause to be delivered to the Operating Partnership a so-called “fairway” endorsement,
“merger” endorsement or other written assurance from such insurer, in each case in form and
substance reasonably acceptable to the Operating Partnership, to the effect that the Operating
Partnership or its applicable Subsidiary following the Closing will be recognized as the “insured”
under and as of the date of such policy; provided, however, that it
is acknowledged and agreed that a no owner's policy of title
insurance currently exists with respect to the Property known as One
Graystone Centre, and the foregoing shall not be deemed or construed
to require YIP to obtain any new title insurance policy, endorsement
or other written assurance from a title insurer for such Property in
connection with Closing.




          (f) REPRESENTATION, WARRANTY AND INDEMNITY AGREEMENT. The Principal shall have entered into
the Representation, Warranty and Indemnity Agreement.




          (g) LOCK-UP AGREEMENT. Each of the Pre-Formation Participants owning interests in each of the
SAE Entity Members shall have entered into the Lock-Up Agreement substantially in the form attached
as Exhibit C.




          (h) SHAREHOLDER REPRESENTATION LETTER. The Shareholder shall have executed and delivered a
letter to the REIT setting forth certain representations and undertakings related to the
Shareholder’s ownership of REIT Shares in a form reasonably acceptable to the Board of Directors of
the REIT and which allows the Board of Directors of the REIT to reasonably conclude that the
ownership waiver and Excepted Holder Limit granted in Section 7.02(e) will not jeopardize
the REIT’s status as a real estate investment trust under the Code and make the other
determinations required by the REIT Charter in connection with granting such waiver and Excepted
Holder Limit.




ARTICLE VIII




GENERAL PROVISIONS



     Section 8.01 NOTICES. All notices and other communications under this Agreement shall be in writing and shall be
deemed given when (i) delivered personally, (ii) five (5) Business Days after being mailed by
certified mail, return receipt requested and postage prepaid, (iii) one (1) Business Day after
being sent by a nationally recognized overnight courier or (iv) transmitted by facsimile if
confirmed within twenty four (24) hours thereafter by a signed original sent in the manner provided
in clause (i), (ii) or (iii) to the parties at the following addresses (or at such other address
for a party as shall be specified by notice from such party):


if to the REIT to:



Younan Properties, Inc.

21700 Oxnard Street, Suite 800

Woodland Hills, California 91367

Facsimile: (818) 703-5907

Attention: Chief Executive Officer



if to YPI, to:



Younan Properties, Inc.

21700 Oxnard Street, Suite 800

Woodland Hills, California 91367

Facsimile: (818) 703-5907

Attention: Chief Executive Officer





19









 








     Section 8.02 DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings.



          (a) “Affiliate” means, with respect to any Person, a Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with the specified Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”) as used with
respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.




          (b) “Allocated Share” means an amount equal to the applicable percentage of the Entity
Value allocated to each Pre-Formation Interest, or portion thereof, as separately communicated to
each holder of a Pre-Formation Interest together with the Consent Form.




          (c) “Alternate Transaction” means a contribution of the assets held by YPI to the
Operating Partnership in exchange for a number of OP Units equal to the number of REIT shares that
were to be issued pursuant to this Agreement.




          (d) “Business Day” means any day that is not a Saturday, Sunday or legal holiday in
the State of California.




          (e) “Code” means the Internal Revenue Code of 1986, as amended.




          (f) “Consent Form” means the forms provided to each holder of Pre-Formation Interests
to consent to the Formation Transactions and to make such holder’s irrevocable elections with
respect to consideration to be received in the Formation Transactions.




          (g) “Entity Value” means that portion of the sponsors’ value of the Younan Entities as
a whole attributable to a particular target entity under any Merger Agreement (whether a Single
Asset entity, a SAE Entity Member, YIP or YPI, as the case may be) calculated pursuant to
Schedule II.




          (h) “Environmental Laws” means all federal, state and local Laws governing pollutions
or the protection of human health or the environment.




          (i) “Formation Transaction Documentation” means all of the agreements and plans of
merger (including this Agreement) relating to all target entities and all contribution agreements,
if any, and related documents and agreements substantially in the forms accompanying the Request
for Consent dated March 12, 2010 and identified in Exhibit A hereto, pursuant to which all
of the equity interests in the Younan Entities held by the Pre-Formation Participants are to be
acquired by the REIT or the Operating Partnership, directly or indirectly, as part of the Formation
Transactions.







20









 





          (j) “Formation Transactions” means the transactions contemplated by this Agreement and
the other Formation Transaction Documentation.





          (k) “Governmental Authority” means any government or agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or foreign.




          (l) “IPO Closing Date” means the closing date of the IPO.




          (m) “IPO Price” means the initial public offering price of a REIT Share in the IPO.




          (n) “Laws” means laws, statutes, rules, regulations, codes, orders, ordinances,
judgments, injunctions, decrees and policies of any Governmental Authority.




          (o) “Liens” means all pledges, claims, liens, charges, restrictions, controls,
easements, rights of way, exceptions, reservations, leases, licenses, grants, covenants and
conditions, encumbrances and security interests of any kind or nature whatsoever.




          (p) “Permitted Liens” means (i) Liens, or deposits made to secure the release of such
Liens, securing Taxes, the payment of which is not delinquent or the payment of which (including,
without limitation, the amount or validity thereof) is being contested in good faith by appropriate
proceedings for which adequate reserves have been made in accordance with GAAP; (ii) zoning,
entitlement, building and other land use Laws imposed by governmental agencies having jurisdiction
over the Properties; (iii) covenants, conditions, restrictions, easements for public utilities,
encroachments, rights of access or other non-monetary matters that do not materially impair the use
of the Properties for the purposes for which they are currently being used or proposed to be used
in connection with the relevant Person’s business; (iv) Liens securing financing or credit
arrangements existing as of the Closing Date; (v) Liens arising under leases in effect as of the
Closing Date; (vi) any
exceptions contained in any title policy (including any policy issued
to a secured lender) relating to the Properties as of the Closing
Date; (vii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or
incurred in the ordinary course of business that are not yet due and payable and which are not, in
the aggregate, material to the business, operations and financial condition of the Properties so
encumbered; and (viii) any matters that would not have a YPI Material Adverse Effect.




          (q) “Person” means an individual, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization or other entity.




          (r) “Pre-Formation Interests” means the interests in the Single Asset Entities and the
SAE Entity Members held by the Pre-Formation Participants.




          (s) “Pre-Formation Participants” means the holders of the direct and indirect equity
interests in the relevant Younan Entities immediately prior to the Formation Transactions.




          (t) “Principal” means Zaya Younan.




          (u) “Prospectus” means the REIT’s final prospectus as filed with the SEC.




21









 








          (v) “REIT Material Adverse Effect” means any material adverse change in any of the
assets, business, condition (financial or otherwise), results of operation or prospects of the REIT
and each REIT Subsidiary, taken as a whole.




          (w) “Representation, Warranty and Indemnity Agreement” means the Representation,
Warranty and Indemnity Agreement, dated as of the date hereof, by and among the REIT, the Operating
Partnership and the Principal.




          (x) “Securities Act” means the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder.




          (y) “Subsidiary” of any Person means any corporation, partnership, limited liability
company, joint venture, trust or other legal entity of which such Person owns (either directly or
through or together with another Subsidiary of such Person) either (i) a general partner, managing
member or other similar interest, or (ii)(A) 10% or more of the voting power of the voting capital
stock or other equity interests, or (B) 10% or more of the outstanding voting capital stock or
other voting equity interests of such corporation, partnership, limited liability company, joint
venture or other legal entity.




          (z) “Tax” means all federal, state, local and foreign income, property, withholding,
sales, franchise, employment, excise and other taxes, tariffs or governmental charges of any nature
whatsoever, including estimated taxes, together with penalties, interest or additions to Tax with
respect thereto.




          (aa) “Underwriting Agreement” means that certain underwriting agreement, by and
between the REIT, the Operating Partnership and certain underwriters set forth therein, pursuant to which the REIT will issue
and sell shares in the IPO.




          (bb) “YPI Material Adverse Effect” means any material adverse change in any of the
assets, business, condition (financial or otherwise), results of operation or prospects of YPI and
each YPI Subsidiary, taken as a whole.




          (cc) “YPI’s Knowledge” means the actual current knowledge of each of the Principal,
Robert Peddicord, Andres R. Gavinet, Adam I. Knowlton, John R. Cook and Joy DeBacker, without duty
of investigation or inquiry.




          (dd) “Younan Entities” means YPI, YIP, the SAE Entity Members and the Single Asset
Entities collectively.




     Section 8.03 COUNTERPARTS. This Agreement may be executed in counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have been signed by
each party and delivered to each other party.



     Section 8.04 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement and the Consent Form, including, without limitation, the exhibits and
schedules hereto and thereto, constitute the entire agreement and supersede each prior agreement
and understanding, whether written or oral, among the parties regarding the subject matter of this



22









 







Agreement. This Agreement is not intended to confer any rights or remedies on any Person other
than the parties hereto.



     Section 8.05 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the Laws of the
State of California, regardless of any Laws that might otherwise govern under applicable principles
of conflicts of Laws thereof.



     Section 8.06 ASSIGNMENT. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit
of, the parties hereto and their respective heirs, legal representatives, successors and assigns;
provided, however, that this Agreement may not be assigned (except by operation of law) by any
party without the prior written consent of the other parties, and any attempted assignment without
such consent shall be null and void and of no force and effect.



     Section 8.07 JURISDICTION. The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal
court sitting in the County of Los Angeles, with respect to any dispute arising out of this
Agreement or any transaction contemplated hereby to the extent such courts would have subject
matter jurisdiction with respect to such dispute and (b) irrevocably waive, and agree not to assert
by way of motion, defense, or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that the action is brought in an inconvenient forum, or that the
venue of the action is improper.



     Section 8.08 DISPUTE RESOLUTION. The parties intend that this Section 8.08 will be valid, binding, enforceable,
exclusive and irrevocable and that it shall survive any termination of this Agreement.



          (a) Upon any dispute, controversy or claim arising out of or relating to this Agreement or the
enforcement, breach, termination or validity thereof (“Dispute”), the party raising the
Dispute will give written notice to the other parties to the Dispute describing the nature of the
Dispute following which the parties to such Dispute shall attempt for a period of ten (10) Business
Days from receipt by the parties of notice of such Dispute to resolve such Dispute by negotiation
between representatives of the parties hereto who have authority to settle such Dispute. All such
negotiations shall be confidential and any statements or offers made therein shall be treated as
compromise and settlement negotiations for purposes of any applicable rules of evidence and shall
not be admissible as evidence in any subsequent proceeding for any purpose. The statute of
limitations applicable to the commencement of a lawsuit shall apply to the commencement of an
arbitration hereunder, except that no defense based on the running of the statute of limitations
will be available based upon the passage of time during any such negotiation. Regardless of the
foregoing, a party shall have the right to seek immediate injunctive relief pursuant to
Section 8.08(c) below without regard to any such 10-day negotiation period.




          (b) Any Dispute (including the determination of the scope or applicability of this agreement
to arbitrate) that is not resolved pursuant to Section 8.08(a) above shall be submitted to
final and binding arbitration in California before one neutral and impartial arbitrator, in
accordance with the Laws of the State of California for agreements made in and to




23









 







be performed in
that State. The arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures, as in effect on the date hereof. Each of the REIT and YPI shall
appoint one arbitrator within fifteen (15) days of a demand for arbitration. If
the REIT and YPI cannot mutually agree upon an arbitrator within such 15-day period, the
arbitrator shall be appointed by JAMS in accordance with its Comprehensive Arbitration Rules and
Procedures, as in effect on the date hereof. The arbitrator shall designate the place and time of
the hearing. The hearing shall be scheduled to begin as soon as practicable and no later than
sixty (60) days after the appointment of the arbitrator (unless such period is extended by the
arbitrator for good cause shown) and shall be conducted as expeditiously as possible. The award,
which shall set forth the arbitrator’s findings of fact and conclusions of law, shall be filed with
JAMS and mailed to the parties no later than thirty (30) days after the close of the arbitration
hearing. The arbitration award shall be final and binding on the parties and not subject to
collateral attack. Judgment upon the arbitration award may be entered in any federal or state
court having jurisdiction thereof.




          (c) Notwithstanding the parties’ agreement to submit all Disputes to final and binding
arbitration before JAMS, the parties shall have the right to seek and obtain temporary or
preliminary injunctive relief in any court having jurisdiction thereof. Such courts shall have
authority to, among other things, grant temporary or provisional injunctive relief in order to
protect any party’s rights under this Agreement. Without prejudice to such provisional remedies as
may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority
to grant provisional remedies and to direct the parties to request that any court modify or vacate
any temporary or preliminary relief issued by such court, and to award damages for the failure of
any party to respect the arbitral tribunal’s orders to that effect.




          (d) The prevailing party shall be entitled to recover its costs and reasonable attorneys’
fees, and the non-prevailing party shall pay all expenses and fees of JAMS, all costs of the
stenographic record, all expenses of witnesses or proofs that may have been produced at the
direction of the arbitrator, and the fees, costs, and expenses of the arbitrator. The arbitrator
shall allocate such costs and designate the prevailing party or parties for these purposes.




     Section 8.09 SEVERABILITY. Each provision of this Agreement will be interpreted so as to be effective and valid under
applicable law, but if any provision is held invalid, illegal or unenforceable under applicable law
in any jurisdiction, then such invalidity, illegality or unenforceability will not affect any other
provision, and this Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been included herein.



     Section 8.10 RULES OF CONSTRUCTION.



          (a) The parties hereto agree that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and, therefore, waive the application of
any law, regulation, holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or document.




24









 








          (b) The words “hereof,” “herein” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without limitation.” All terms
defined in this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
The definitions contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter genders of such
terms. Unless explicitly stated otherwise herein, any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time, amended, qualified or supplemented,
including (in the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments thereto and
instruments incorporated therein. References to a Person are also to its permitted successors and
assigns.




     Section 8.11 EQUITABLE REMEDIES. The parties agree that irreparable damage would occur to the REIT in the event that any of
the provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the REIT shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement by YPI and to enforce specifically the terms and
provisions hereof in any federal or state court located in California, this being in addition to
any other remedy to which the REIT is entitled under this Agreement or otherwise at law or in
equity.



     Section 8.12 WAIVER OF SECTION 1542 PROTECTIONS. As of the Closing, YPI expressly acknowledges that it has had, or has had and waived, the
opportunity to be advised by independent legal counsel and hereby waives and relinquishes all
rights and benefits afforded by Section 1542 of the California Civil Code and does so understanding
and acknowledging the significance and consequence of such specific waiver of Section 1542 which
provides:




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



     Section 8.13 TIME OF THE ESSENCE. Time is of the essence with respect to all obligations under this Agreement.



     Section 8.14 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for convenience only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.



25









 





     Section 8.15 NO PERSONAL LIABILITY CONFERRED. This Agreement shall not create or permit any personal liability or obligation on the part
of any officer, director, employee or shareholder of the REIT and YPI.



     Section 8.16 AMENDMENTS. This Agreement may be amended by appropriate instrument, without the consent of YPI, at any
time prior to the Effective Time; provided, that no such amendment, modification or
supplement shall be made that alters the amount or changes the form of the consideration to be
delivered pursuant to the Merger without the prior written consent of YPI.



[SIGNATURE PAGE FOLLOWS]








26









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their
respective duly authorized officers, all as of the date first written above.



	 	 	 	 	 
	 	YOUNAN PROPERTIES, INC.

a Maryland corporation

 	 
	 	By:  	/s/
Zaya S. Younan	 
	 	Name:  	Zaya S. Younan	 
	 	Title:  	President	 
	 
	 	YOUNAN PROPERTIES, INC.

a California corporation

 	 
	 	By:  	/s/
Zaya S. Younan	 
	 	Name:  	Zaya S. Younan	 
	 	Title:  	President	 













 





SCHEDULE I




List of SAE Entity Members:





	 	1.	 	YGH Investments, LLC
	 
	 	2.	 	YPI 9801 Westheimer Fund, LLC
	 
	 	3.	 	Younan Tower Fund, LLC
	 
	 	4.	 	YPI One Dallas Centre MM, LLC
	 
	 	5.	 	YPI One Dallas Centre Fund, LLC
	 
	 	6.	 	YPI Thanksgiving Tower Fund, LLC
	 
	 	7.	 	YPI CD Portfolio Properties, LLC
	 
	 	8.	 	YPI One North Arlington Fund, LLC
	 
	 	9.	 	5401-5407 Trillium, LLC
	 
	 	10.	 	YGAZ, LLC
	 
	 	11.	 	YPI S/WL LLC





List of Single Asset Entities:





	 	1.	 	5959 Topanga Fund, LLC
	 
	 	2.	 	YPI 555 St. Charles Fund, LLC
	 
	 	3.	 	YPI North Belt Portfolio, LLC
	 
	 	4.	 	YPI 1010 Lamar, LLC
	 
	 	5.	 	YPI Two Westlake Park, LLC
	 
	 	6.	 	YPI Norfolk Tower Partners, L.P.
	 
	 	7.	 	YPI 4851 LBJ Fund, L.P.
	 
	 	8.	 	YP KPMG Centre Owner, LLC
	 
	 	9.	 	YPI Park Central Holding, L.P.
	 
	 	10.	 	YPI Central Expressway Holding, L.P.
	 
	 	11.	 	YPI Embassy Plaza, LLC
	 
	 	12.	 	One Graystone GP, LLC










 









 








SCHEDULE II




Calculation of Target Entity Value



     For purposes of each Merger Agreement, “Entity Value” of the particular target entity subject
to such Merger Agreement shall be calculated pursuant to the formula set forth below. Capitalized
terms used in this Schedule II shall have the meanings set forth below and capitalized terms used
herein without definition shall have the meanings assigned to such terms in the Agreement.



EV = AP x [TIV/(1-COP) –AA] + EA;



provided, however, that if the resulting Entity Value for a target entity subject to a Merger
Agreement is a negative amount (a “Net Deficit”), then the REIT shall exercise one of the
following options, as determined by the REIT in its sole and absolute discretion: (A) reduction of
the Entity Value attributable to either YIP or YPI, or any combination of the two, by an aggregate
amount equal to the Net Deficit plus $100,000, with the net effect that the recalculated Entity
Value for such target entity is at least $100,000, or (B) selection of the target entity to which
the Net Deficit is attributable as an Eliminated Entity,



where:




EV = Entity Value;

AP = Allocable Percentage;

TIV = Total Inside Value;

COP = Cash Out Percentage;

AA = Aggregate Adjustment; and

EA = Entity Adjustment.



“Actual Balance” shall mean: (i) with respect to each Existing Loan to be assumed in connection
with the IPO, the principal amount of and past due unpaid interest on such Existing Loan as of the
IPO Closing Date; (ii) with respect to each Existing Loan to be prepaid, repaid or refinanced in
connection with the IPO, the principal amount of and past due unpaid interest on such Existing Loan
to be prepaid, repaid or refinanced; (iii) the actual amount of cash to be paid to Passco Younan
Fund I, LLC, a Delaware limited liability company (“Passco”), or affiliated entity as of
the IPO Closing Date pursuant to the Passco Agreement; and (iv) the actual amount of cash to be
paid to Chung Hsien International LP, a Texas limited partnership (“CHI”), or affiliated
entity as of the IPO Closing Date pursuant to the CHI Agreement.



“Aggregate Adjustment” shall mean the sum (which may be a positive or negative number) of all
Entity Adjustments for every target entity, excluding Eliminated Entities.



“Allocable Percentage” shall mean with respect to each target entity subject to a Merger Agreement,
the percentage set forth opposite its name in Appendix B to this Schedule II; provided, however,
that in the event a target entity is selected as or otherwise becomes for any reason an Eliminated
Entity, then: (i) the Allocable Percentage for each remaining target entity subject to a Merger
Agreement shall be recalculated as a fraction, the numerator of which is the






 









 







original Allocable Percentage for such target entity and the denominator of which is (A) 100 minus
(B) the Allocable Percentage of the Eliminated Entity; and (ii) the Allocable Percentage of the
Eliminated Entity shall be zero and provided, further, that in the event a target entity is not
included in the Formation Transactions pursuant to a merger but a portion of the Pre-Formation
Interests in such entity is contributed to the Operating Partnership or a subsidiary of the
Operating Partnership (such entity, a “Contribution Target Entity”), then the Allocable
Percentage for the Contribution Target Entity and for each remaining target entity subject to a
Merger Agreement shall be proportionately adjusted to take into account the portion of the
Pre-Formation Interests in the Contribution Target Entity that will not be so contributed.



“Base Balance” shall mean: (i) with respect to each Existing Loan, the principal amount of such
Existing Loan set forth on Appendix C to this Schedule II; (ii) with respect to the Passco
Agreement $13,835,000; and (iii) with respect to the CHI Agreement $15,568,039.



“Cash Out Percentage” shall mean the sum (with such sum of percentages expressed as a decimal) for
all target entities of a percentage calculated for each target entity as follows: multiply the
aggregate Allocated Shares with respect to such target entity held by all non-accredited investors
in such target entity by the Allocable Percentage for such target entity.



“CHI Agreement” shall mean that certain agreement, by and between YGH Investments, LLC, a Delaware
limited liability company (“YGHI”), and CHI or an affiliated entity, pursuant to which YGHI
will acquire all of CHI’s interests in 4041 Central Plaza, LLC, a Delaware limited liability
company.



“Eliminated Entity” shall mean any target entity subject to a Merger Agreement that is excluded
pursuant to the terms of the Formation Transaction Documentation from the Formation Transactions.



“Entity Adjustment” shall mean with respect to each target entity that is an obligor with respect
to any Existing Loan, and if applicable to such target entity, that is subject to the Passco
Agreement or the CHI Agreement, the difference between the Base Balance minus the Actual Balance
(whether a positive or negative number) with respect to all Existing Loans relating to such target
entity, and if applicable the Passco Agreement and the CHI Agreement.



“Equity Plan” shall mean the incentive award plan to be adopted by the REIT upon completion of the
IPO.



“Existing Loan” shall mean each mortgage or mezzanine loan secured by a Property listed on Appendix
C to this Schedule II.



“Incentive Equity” shall mean the product of (i) the sum of (A) the aggregate number of REIT Shares
(x) actually awarded to employees and directors of the REIT under the Equity Plan as of the IPO
Closing Date and (B) the aggregate number of LTIP Units actually awarded to employees and directors
of the REIT under the Equity Plan as of the IPO Closing Date, whether vested or unvested; times
(ii) the IPO Price.







 









 







“LTIP Units” has the definition as set forth in the Equity Plan of the REIT.



“Passco Agreement” shall mean that certain agreement, by and between an affiliate of the Principal
and Passco or an affiliated entity pursuant to which such affiliate of the Principal has agreed to
purchase certain interests held by the Fund.



“Public Equity” shall mean the product of: (i) the aggregate number of REIT Shares sold to the
public in the IPO (excluding the over-allotment option, if any); times (ii) the IPO Price.



“Private Placement Equity” shall mean the product of: (i) the aggregate number of REIT Shares sold
to the Principal in a private placement completed in conjunction with the IPO; times (ii) the IPO
Price.



“Total Equity” shall mean the product of: (i) the sum of (A) the aggregate number of REIT Shares to
be outstanding immediately following the IPO Closing Date (excluding the over-allotment option, if
any), and (B) the aggregate number of OP Units (x) to be outstanding immediately following the IPO
Closing Date other than OP Units held by the REIT and (y) issuable upon conversion of LTIP Units
awarded under the Equity Plan as of the IPO Closing Date, whether vested or unvested; times (ii)
the IPO Price.



“Total Inside Value” shall mean the sum of: (i) Total Equity; minus (ii) Public Equity; minus (iii)
Private Placement Equity; minus (iv) Incentive Equity.



Attached as Appendix A to this Schedule II are calculations of hypothetical Entity Value for a
hypothetical Younan Entity for purposes of Article I of the Agreement based solely on current
estimates and a hypothetical amount of sponsors’ value of the Younan Entities as a whole. The
figures and calculations included in Appendix A are for illustrative purposes only and shall not be
binding on the REIT, the Operating Partnership or any Pre-Formation Participant.









 









 





EXHIBITS




Exhibit A: List of Formation Transaction Documentation




Exhibit B: Form of Registration Rights Agreement




Exhibit C: Lock-Up Agreement









 









 








EXHIBIT A

Formation Transaction Documentation



•  Form of Younan Properties, Inc. Merger Agreement



•  Form of Younan Investment Properties, L.P. Merger Agreement, including with respect to the
following SAE Entity Members:





	 	•	 	YGH Investments, LLC
	 
	 	•	 	YPI 9801 Westheimer Fund, LLC
	 
	 	•	 	Younan Tower Fund, LLC
	 
	 	•	 	YPI One Dallas Centre MM, LLC
	 
	 	•	 	YPI One Dallas Centre Fund, LLC
	 
	 	•	 	YPI Thanksgiving Tower Fund, LLC
	 
	 	•	 	YPI CD Portfolio Properties, LLC
	 
	 	•	 	YPI One North Arlington Fund, LLC
	 
	 	•	 	5401-5407 Trillium, LLC
	 
	 	•	 	YGAZ, LLC
	 
	 	•	 	YPI S/WL LLC




•  Form of Single Asset Entities Merger Agreement, including with respect to the following Single
Asset Entities:





	 	•	 	5959 Topanga Fund, LLC
	 
	 	•	 	YPI 555 St. Charles Fund, LLC
	 
	 	•	 	YPI North Belt Portfolio, LLC
	 
	 	•	 	YPI 1010 Lamar, LLC
	 
	 	•	 	YPI Two Westlake Park, LLC
	 
	 	•	 	YPI Norfolk Tower Partners, L.P.
	 
	 	•	 	YPI 4851 LBJ Fund, L.P.
	 
	 	•	 	YP KPMG Centre Owner, LLC
	 
	 	•	 	YPI Park Central Holding, L.P.
	 
	 	•	 	YPI Central Expressway Holding, L.P.
	 
	 	•	 	YPI Embassy Plaza, LLC
	 
	 	•	 	One Graystone GP, LLC




•  Amended and Restated Agreement of Limited Partnership of Younan Properties, L.P.



•  Registration Rights Agreement



•  Representation, Warranty and Indemnity Agreement



•  Indemnity Escrow Agreement



•  Lock-Up Agreement



•  Tax Protection Agreement



•  Option Agreement (Savoy)







 









 







•  Management Agreement (Savoy)



•  Articles of Amendment and Restatement of Younan Properties, Inc.



•  Bylaws of Younan Properties, Inc.









 









 








EXHIBIT B




Form of Registration Rights Agreement



See Attached.





 









 








EXHIBIT C




Lock-Up Agreement



See Attached.