exv10w9






Exhibit 10.9




AGREEMENT AND PLAN OF MERGER



DATED AS OF APRIL 8, 2010



BY AND AMONG



YOUNAN PROPERTIES, L.P.,

a Maryland limited partnership



YOUNAN INVESTMENT PROPERTIES, L.P.,

a Delaware limited partnership



AND



THE SAE ENTITY MEMBERS

as set forth on Schedule I hereto







 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE I THE MERGERS
	 	 	3	 
	 
	 	 	 	 
	Section 1.01 THE MERGERS
	 	 	3	 
	Section 1.02 EFFECTIVE TIME
	 	 	3	 
	Section 1.03 EFFECT OF THE MERGERS
	 	 	3	 
	Section 1.04 ORGANIZATIONAL DOCUMENTS
	 	 	3	 
	Section 1.05 CONVERSION OF YIP INTERESTS AND SAE ENTITY MEMBER INTERESTS
	 	 	3	 
	Section 1.06 CANCELLATION AND RETIREMENT OF YIP INTEREST AND SAE ENTITY MEMBER INTEREST
	 	 	4	 
	Section 1.07 FRACTIONAL INTERESTS
	 	 	5	 
	Section 1.08 CALCULATION OF MERGER CONSIDERATION
	 	 	5	 
	Section 1.09 TRANSACTION COSTS
	 	 	5	 
	 
	 	 	 	 
	ARTICLE II CLOSING; TERM OF AGREEMENT
	 	 	5	 
	 
	 	 	 	 
	Section 2.01 CLOSING
	 	 	5	 
	Section 2.02 PAYMENT OF MERGER CONSIDERATION
	 	 	5	 
	Section 2.03 TAX WITHHOLDING
	 	 	8	 
	Section 2.04 FURTHER ACTION
	 	 	8	 
	Section 2.05 TERM OF THE AGREEMENT
	 	 	8	 
	Section 2.06 EFFECT OF TERMINATION
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF THE OPERATING PARTNERSHIP
	 	 	9	 
	 
	 	 	 	 
	Section 3.01 ORGANIZATION; AUTHORITY
	 	 	9	 
	Section 3.02 DUE AUTHORIZATION
	 	 	9	 
	Section 3.03 CONSENTS AND APPROVALS
	 	 	10	 
	Section 3.04 NO VIOLATION
	 	 	10	 
	Section 3.05 VALIDITY OF OP UNITS
	 	 	10	 
	Section 3.06 OP AGREEMENT
	 	 	10	 
	Section 3.07 LIMITED ACTIVITIES
	 	 	10	 
	Section 3.08 LITIGATION
	 	 	10	 
	Section 3.09 NO BROKER
	 	 	11	 
	Section 3.10 NO IMPLIED REPRESENTATIONS OR WARRANTIES
	 	 	11	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YIP AND THE SAE ENTITY MEMBERS
	 	 	11	 
	 
	 	 	 	 
	Section 4.01 ORGANIZATION; AUTHORITY
	 	 	11	 
	Section 4.02 DUE AUTHORIZATION
	 	 	12	 
	Section 4.03 CAPITALIZATION
	 	 	12	 
	Section 4.04 CONSENTS AND APPROVALS
	 	 	13	 






i









 






	 	 	 	 	 
	 	 	PAGE	 
	Section 4.05 NO VIOLATION
	 	 	13	 
	Section 4.06 LICENSES AND PERMITS
	 	 	13	 
	Section 4.07 COMPLIANCE WITH LAWS
	 	 	14	 
	Section 4.08 PROPERTIES
	 	 	14	 
	Section 4.09 INSURANCE
	 	 	15	 
	Section 4.10 ENVIRONMENTAL MATTERS
	 	 	15	 
	Section 4.11 EMINENT DOMAIN
	 	 	15	 
	Section 4.12 FINANCIAL STATEMENTS
	 	 	16	 
	Section 4.13 YIP TAXES
	 	 	16	 
	Section 4.14 SAE ENTITY MEMBER TAXES
	 	 	16	 
	Section 4.15 LITIGATION
	 	 	16	 
	Section 4.16 NO INSOLVENCY PROCEEDINGS
	 	 	17	 
	Section 4.17 SECURITIES LAW MATTERS
	 	 	17	 
	Section 4.18 NO BROKER
	 	 	17	 
	Section 4.19 NO IMPLIED REPRESENTATIONS OR WARRANTIES
	 	 	17	 
	Section 4.20 OWNERSHIP OF CERTAIN ASSETS
	 	 	18	 
	Section 4.21 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF YIP AND THE SAE ENTITY MEMBERS
	 	 	18	 
	 
	 	 	 	 
	ARTICLE V COVENANTS AND OTHER AGREEMENTS
	 	 	18	 
	 
	 	 	 	 
	Section 5.01 PRE-CLOSING COVENANTS
	 	 	18	 
	Section 5.02 CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS
	 	 	19	 
	Section 5.03 EXCLUDED ASSETS
	 	 	20	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL AGREEMENTS
	 	 	20	 
	 
	 	 	 	 
	Section 6.01 COMMERCIALLY REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP, YIP AND THE SAE ENTITY MEMBERS
	 	 	20	 
	Section 6.02 TAX AGREEMENT
	 	 	20	 
	Section 6.03 WITHHOLDING CERTIFICATE
	 	 	21	 
	Section 6.04 TAX ADVICE
	 	 	21	 
	Section 6.05 ALTERNATE TRANSACTION
	 	 	21	 
	Section 6.06 EXCLUSION OF ENTITIES
	 	 	21	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS PRECEDENT
	 	 	22	 
	 
	 	 	 	 
	Section 7.01 CONDITION TO EACH PARTY’S OBLIGATIONS
	 	 	22	 
	Section 7.02 CONDITIONS TO OBLIGATIONS OF YIP AND THE SAE ENTITY MEMBERS
	 	 	22	 
	Section 7.03 CONDITIONS TO OBLIGATION OF THE OPERATING PARTNERSHIP
	 	 	23	 
	 
	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS
	 	 	24	 
	 
	 	 	 	 
	Section 8.01 NOTICES
	 	 	24	 






ii









 






	 	 	 	 	 
	 	 	PAGE	 
	Section 8.02 DEFINITIONS
	 	 	25	 
	Section 8.03 COUNTERPARTS
	 	 	28	 
	Section 8.04 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES
	 	 	28	 
	Section 8.05 GOVERNING LAW
	 	 	28	 
	Section 8.06 ASSIGNMENT
	 	 	28	 
	Section 8.07 JURISDICTION
	 	 	28	 
	Section 8.08 DISPUTE RESOLUTION
	 	 	29	 
	Section 8.09 SEVERABILITY
	 	 	30	 
	Section 8.10 RULES OF CONSTRUCTION
	 	 	30	 
	Section 8.11 EQUITABLE REMEDIES
	 	 	31	 
	Section 8.12 WAIVER OF Section 1542 PROTECTIONS
	 	 	31	 
	Section 8.13 TIME OF THE ESSENCE
	 	 	31	 
	Section 8.14 DESCRIPTIVE HEADINGS
	 	 	31	 
	Section 8.15 NO PERSONAL LIABILITY CONFERRED
	 	 	31	 
	Section 8.16 AMENDMENTS
	 	 	31	 







iii









 








DEFINED TERMS




			
	TERM	 	SECTION
	Accredited Investor 

Affiliate 

Agreement 

Allocated Share 

Alternate Transaction 

Business Day 

Certificates of Merger 

CHI Purchase Agreement 

Closing 

Closing Date 

Code 

Consent Form 

Dispute 

DRULPA 

Effective Time 

Elected OP Unit Percentage 

Elected REIT Shares Percentage 

Entity Value 

Environmental Laws 

Escrow Agreement 

Excluded Assets 

Formation Transaction Documentation 

Formation Transactions 

Fund 

Fund Purchase Agreement 

Governmental Authority 

IPO 

IPO Closing Date 

IPO Price 

Laws 

Lease 

Liens 

Merger Consideration 

Mergers 

MLPA 

OP Units 

Operating Partnership 

Operating Partnership Agreement 

OP Material Adverse Effect 

Operating Partnership Subsidiary 

Organizational Documents 

Outside Date
	 	Section 8.02

Section 8.02

Introduction

Section 8.02

Section 8.02

Section 8.02

Section 1.02

Recitals

Section 2.01

Section 2.01

Section 8.02

Section 8.02

Section 8.08

Recitals

Section 1.02

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Section 5.03

Section 8.02

Section 8.02

Recitals

Recitals

Section 8.02

Recitals

Section 8.02

Section 8.02

Section 8.02

Section 4.08

Section 8.02

Section 1.05

Recitals

Recitals

Recitals

Introduction

Section 1.04

Section 8.02

Section 3.01

Section 8.02

Section 2.05






iv









 






			
	TERM	 	SECTION
	Ownership Limits 

Permitted Liens 

Person 

Pre-Formation Interests 

Pre-Formation Participants 

Principal 

Property 

Prospectus 

Registration Statement 

REIT 

REIT Shares 

Representation, Warranty and Indemnity Agreement 

SAE Entity Members 

SAE Entity Member Interest 

SAE Entity Member Material Adverse Effect 

SAE Entity Member Subsidiary 

Sale Consent 

SDAT 

Sale Consent 

SEC 

Securities Act 

Single Asset Entities 

Subsidiary 

Surviving Entity 

Tax 

Tax Protection Agreement 

Underwriting Agreement 

Valid Election 

YGHI 

YIP 

YIP Interest 

YIP Material Adverse Effect 

YIP Subsidiary 

YPI 

Younan Entities
	 	Section 1.05

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Section 4.01

Section 8.02

Section 2.05

Introduction

Recitals

Section 8.02

Introduction

Recitals

Section 8.02

Section 4.01

Section 2.02

Section 1.02

Section 2.03

Section 2.05

Section 8.02

Recitals

Section 8.02

Section 1.01

Section 8.02

Section 8.02

Section 8.02

Section 8.02

Recitals

Introduction

Recitals

Section 8.02

Section 4.01

Recitals

Section 8.02











v









 








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 L.P., a Maryland limited partnership (the
“Operating Partnership”) and a subsidiary of Younan Properties, Inc., a Maryland
corporation (the “REIT”), Younan Investment Properties, L.P., a Delaware limited
partnership (“YIP”), and the entities on Schedule I hereto (each a “SAE Entity
Member” and, collectively the “SAE Entity Members”).



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 Younan Properties, Inc., a California corporation (“YPI”), YIP or another
affiliate of YPI;



     WHEREAS, concurrently with the execution of this Agreement, the REIT will enter into an
agreement and plan of merger with YPI, pursuant to which YPI will merge with and into the REIT;



     WHEREAS, pursuant to this Agreement and immediately following the merger identified in the
preceding paragraph, (i) YIP will merge with and into the Operating Partnership pursuant to which
each partnership interest in YIP (the “YIP Interest”) will be converted automatically as
set forth herein into the right to receive cash, without interest, common units of partnership
interest in the Operating Partnership (the “OP Units”), shares of common stock of the REIT,
par value $.01 per share (the “REIT Shares”), or a combination of the foregoing;
provided that all holders of a YIP Interest that are not Accredited Investors will receive
cash; and (ii) thereafter, the SAE Entity Members will merge with and into the Operating
Partnership in the order set forth in Section 1.01 (together with the merger described in (i)
above, the “Mergers”) pursuant to which each membership interest in the SAE Entity Members
(the “SAE Entity Member Interest”) will be converted automatically as set forth herein into
the right to receive cash, without interest, OP Units, REIT Shares, or a combination of the
foregoing; provided that all holders of a SAE Entity Member Interest that are not
Accredited Investors will receive cash; provided further, that the Operating
Partnership may instead elect to cause YIP and/or any SAE Entity Member to contribute its assets
to the Operating Partnership in exchange for OP Units, as described herein, in connection with the
Alternate Transaction.



     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 certain agreements and plans 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 Section 17-211 of the Delaware Revised Uniform Limited Partnership
Act (the “DRULPA”), YIP may be merged with another entity, subject to the requisite
approval of the partners as provided in Section 17-211 of the DRULPA;



     WHEREAS, in accordance with applicable state law for each of the SAE Entity Members, each SAE
Entity Member may be merged with another entity, subject to the requisite approvals as provided in
applicable state law;



     WHEREAS, the REIT, as the general partner of the Operating Partnership and Zaya S. Younan, as
the sole limited partner of the Operating Partnership, has approved and authorized the Mergers and
the other Formation Transactions in accordance with the Maryland Revised Uniform Limited
Partnership Act (the “MLPA”) and the Operating Partnership Agreement;



     WHEREAS, the general partner of YIP and the managing member, manager or general partner, as
applicable, of each SAE Entity Member have each determined that it is advisable and in the best
interests of YIP and each SAE Entity Member, and their respective equity holders and limited
partners, as the case may be, to proceed with the Formation Transactions on the terms described in
this Agreement; and



     WHEREAS, YIP and each SAE Entity Member has obtained the requisite approval of their
respective limited partners, members or investors (or lenders, as applicable) to the Mergers and
the other Formation Transactions, applicable to YIP and each SAE Entity Member.



     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:



2









 





ARTICLE I




THE MERGERS



     Section 1.01 THE MERGERS. At the Effective Time (as defined below), and subject to and upon
the terms and conditions of this Agreement and in accordance with applicable Laws, YIP and each SAE
Entity Member shall be merged with and into the Operating Partnership in the order specified in
Exhibit D, whereby the separate existence of YIP and each SAE Entity Member shall cease,
and the Operating Partnership 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 and the Operating Partnership of the Underwriting
Agreement and (ii) following the satisfaction or waiver of the conditions set forth in Article VII,
the Operating Partnership, YIP and each of the SAE Entity Members shall file articles of merger or
similar documents with respect to each Merger (the “Certificates of Merger”) as may be
required by applicable Laws, with the State Department of Assessments and Taxation of Maryland
(“SDAT”), the Secretary of State of the State of Delaware, and each other jurisdiction
applicable to each SAE Entity Member providing that each Merger shall become effective upon filing
or at such later date and time set forth in the Certificate of Merger with respect to such Merger
that is not more than thirty (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 MERGERS. At the Effective Times, which shall be in the order
specified in Exhibit D, the effect of the Mergers shall be as provided in this Agreement,
the Certificates of Merger and applicable Laws.



     Section 1.04 ORGANIZATIONAL DOCUMENTS. At the Effective Time, (i) the certificate of limited
partnership of the Operating Partnership, as in effect immediately prior to the Effective Time,
shall be the certificate of limited partnership of the Surviving Entity until thereafter amended as
provided therein or in accordance with the MLPA, and (ii) the agreement of limited partnership of
the Operating Partnership, as amended and restated and in effect immediately prior to the Effective
Time (the “Operating Partnership Agreement”), shall be the agreement of limited partnership
of the Surviving Entity until thereafter amended as provided therein or in accordance with the
MLPA.



     Section 1.05 CONVERSION OF YIP INTERESTS AND SAE ENTITY MEMBER INTERESTS.



          (a) Under and subject to the terms and conditions of the respective Formation Transaction
Documentation, as the result of an irrevocable election indicated on a Consent Form submitted by a
Pre-Formation Participant or as a result of the failure of a Pre-Formation Participant to submit a
Consent Form, each Pre-Formation Participant is irrevocably bound to accept and entitled to
receive, as a result of and upon consummation of the Mergers or other Formation Transactions, a
specified share of the sponsors’ value of the Younan Entities as a




3









 







whole in the form of the right
to receive cash, REIT Shares and/or OP Units as calculated in
Section 1.05(b).




          At the Effective Time, by virtue of the Mergers and without any action on the part of the
parties hereto, except as set forth in Section 1.05(b), each YIP Interest and each SAE
Entity Member Interest shall be converted automatically into the right to receive cash, OP Units
and/or REIT Shares with an aggregate value equal to the Allocated Share of the Entity Value
represented by such YIP Interest or SAE Entity Member Interest, as applicable (collectively
referred to as the “Merger Consideration”) and each holder that receives OP Units in the
Mergers shall, upon receipt of such OP Units, be admitted as a limited partner of the Operating
Partnership in accordance with the MLPA and the Operating Partnership Agreement.




     Subject to Section 1.07 and Section 2.02(c), the form of payment of the Merger
Consideration for each YIP Interest and SAE Entity Member Interest so converted shall be as
follows:



                    (i) Cash: 100% of the Allocated Share of Entity Value for each YIP Interest and SAE
Entity Member Interest, as applicable, held by a Pre-Formation Participant who is not an Accredited
Investor shall be paid in cash.



                    (ii) OP Units. The Elected OP Unit Percentage of the Allocated Share of Entity Value
for each YIP Interest or SAE Entity Member Interest, as applicable, or portion thereof held by a
Pre-Formation Participant who is an Accredited Investor shall be distributed in the form of a
number of OP Units equal to the applicable portion of such Allocated Share divided by the IPO
Price.



                    (iii) REIT Shares. The Elected REIT Shares Percentage of the Allocated Share of
Entity Value for each YIP Interest or SAE Entity Member Interest or portion thereof held by a
Pre-Formation Participant who is an Accredited Investor shall be distributed in the form of a
number of REIT Shares equal to the applicable portion of such Allocated Share divided by the IPO
Price; provided that, to the extent such distribution of REIT Shares to the holder of the YIP
Interest or SAE Entity Member Interest, as applicable, would result in a violation of the
restrictions on ownership and transfer set forth in Section 6.2.1(a) of the REIT’s charter
(the “Ownership Limits”), such holder shall receive (x) the maximum number of REIT Shares
that would not result in a violation of the Ownership Limits, and (y) that number of OP Units equal
to the remaining number of REIT Shares included in the Elected REIT Shares Percentage for such YIP
Interest or SAE Entity Member Interest, as applicable.



          (b) Each YIP Interest or SAE Entity Member Interest issued and outstanding immediately prior
to the Effective Time that is owned by the REIT, the Operating Partnership or any of their direct
or indirect wholly-owned Subsidiaries (having been previously acquired by
the REIT, the Operating Partnership or any such Subsidiary thereof pursuant to the other
Formation Transactions) shall remain issued and outstanding, and no consideration shall be
delivered hereunder in exchange therefor.




     Section 1.06 CANCELLATION AND RETIREMENT OF YIP INTEREST AND SAE ENTITY MEMBER INTEREST.
Each YIP Interest and SAE Entity Member Interest converted



4









 







into the right to receive the Merger
Consideration pursuant to Section 1.05(a) shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder of such YIP
Interest or SAE Entity Member Interest, as applicable, so converted shall thereafter cease to have
any rights as a partner or member of YIP or any SAE Entity Member, as applicable, except the right
to receive the Merger Consideration applicable thereto.



     Section 1.07 FRACTIONAL INTERESTS.  No fractional OP Units or REIT Shares shall be issued in
the Mergers. All fractional OP Units or REIT Shares that a holder of YIP Interest or SAE Entity
Member Interest would otherwise be entitled to receive as a result of the Mergers and the other
Formation Transactions shall be aggregated, and each holder shall receive the number of whole OP
Units or REIT Shares resulting from such aggregation and, in lieu of any fractional OP Unit or REIT
Share resulting from such aggregation, an amount in cash determined by multiplying that fraction of
an OP Unit or REIT Share, as applicable, to which such holder would otherwise have been entitled,
by the IPO Price. No interest will be paid or will accrue on any cash paid or payable in lieu of
any fractional OP Unit or 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 YIP Interest or SAE Entity Member Interest.



     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.



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 Certificates 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”) in the order set forth on
Exhibit D. 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.



          (a) As soon as reasonably practicable after the Effective Time, the Surviving Entity (or its
successor in interest) shall deliver to each holder of YIP Interest or SAE Entity Member Interest,
whose YIP Interest or SAE Entity Member Interest, as applicable, have been




5









 







converted into the right
to receive the Merger Consideration pursuant to Section 1.05(a) hereof, the Merger
Consideration payable to such holder in the amounts and form provided in
Section 1.05(a) hereof. The issuance of the OP Units and admission of the recipients
thereof as limited partners of the Operating Partnership pursuant to
Section 1.05(a) shall
be evidenced by an amendment to Exhibit A of the Operating Partnership Agreement, and the
Operating Partnership shall deliver, or cause to be delivered, an executed copy of such amendment
to each Pre-Formation Participant receiving OP Units hereunder. 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 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



6









 






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



          (b) The Surviving Entity (or its successor in interest) shall not be liable to any holder of
YIP Interest or SAE Entity Member Interest, as applicable, for any portion of the Merger
Consideration delivered to a public official pursuant to any applicable abandoned property, escheat
or similar Law.




          (c) So long as some portion of the Merger Consideration with respect to a Younan Entity is in
the form of OP Units, the parties hereto intend and agree that, for United
States federal income tax purposes, the Merger of each such entity shall constitute an
“assets-over” partnership merger within the meaning of Treasury Regulations Section
1.708-1(c)(3)(i), and, as a result, that (i) any payment of cash or REIT Shares for the YIP
Interest or SAE Entity Member Interest, as applicable, of such holder in such entity shall be
treated as a sale of such YIP Interest or SAE Entity Member Interest, as applicable, by the holder
and a purchase of such YIP Interest or SAE Entity Member Interest, as applicable, by the Operating
Partnership for the cash and/or REIT Shares so paid under the terms of this Agreement in
accordance with Treasury Regulations Section 1.708-1(c)(4), and (ii) each such holder of the YIP
Interest or SAE Entity Member Interest, as applicable, who accepts cash and/or REIT Shares shall
explicitly agree and consent (the “Sale Consent”) to such treatment in their Consent Form
as a condition to electing such consideration. To the extent the Operating Partnership acquires
any YIP Interest or SAE Entity Member Interest as described above, or previously acquired such
interest, for United States federal income tax purposes the receipt by the Operating Partnership
of the portion of property attributable to such YIP Interest or SAE Entity Member Interest, as
applicable, shall be treated as a distribution by YIP or a SAE Entity Member, as applicable, in
redemption of such YIP Interest or SAE Entity Member Interest, as



7









 






applicable. Notwithstanding
Section 1.05(b) and any holder’s election as to the form of their Merger Consideration, if any
holder (other than a non-accredited investor), fails to execute a Sale Consent prior to the
Closing, such holder’s Merger Consideration shall consist solely of OP Units. Any cash paid as
the Merger Consideration to a non-accredited investor for a YIP Interest or SAE Entity Member
Interest shall be paid only after the receipt of a Sale Consent from such holder.




     Section 2.03 TAX WITHHOLDING.  The Operating Partnership, YIP and each SAE Entity Member as
applicable, shall be entitled to deduct and withhold from the consideration payable pursuant to
this Agreement to any holder of YIP Interest or SAE Entity Member Interest, as applicable, 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 holder of YIP Interest or SAE Entity Member Interest, as applicable, in respect of
which such deduction and withholding was made.



     Section 2.04 FURTHER ACTION.  If, at any time after the Effective Time, the Surviving Entity
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 Surviving Entity the right, title or interest in, to or under any of the rights, properties or
assets of YIP or any SAE Entity Member, as applicable, acquired or to be acquired by the Surviving
Entity as a result of, or in connection with, the Mergers or otherwise to carry out this Agreement,
the Surviving Entity shall be authorized to execute and deliver, in the name and on behalf of YIP
or any SAE Entity Member, as applicable, or otherwise, all such deeds, bills of sale, assignments
and assurances and to take and do, in the name and on behalf of YIP or any SAE Entity Member, as
applicable, 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 Surviving Entity 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 Mergers 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 Operating Partnership, YIP and each SAE Entity Member
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



8









 




 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, the Younan Entities shall bear all transaction costs and expenses related thereto in
proportion to their Allocable Percentage (as defined in Schedule II hereto).



ARTICLE III




REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF THE OPERATING PARTNERSHIP



     The Operating Partnership hereby represents and warrants to and covenants with YIP and each
SAE Entity Member as follows:



     Section 3.01
ORGANIZATION; AUTHORITY.  (a) The Operating Partnership has been duly formed and is
validly existing and in good standing under the Laws of its jurisdiction of formation, and, upon
the effectiveness of the Operating Partnership Agreement, will have 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
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, other than such
failures to be so qualified as would not, individually or in the aggregate, reasonably be expected
to have an OP Material Adverse Effect.



          (b) Schedule 3.01(b) sets forth as of the date hereof, (i) each Subsidiary of the
Operating Partnership (each a “Operating Partnership Subsidiary”), (ii) the ownership
interest therein of the Operating Partnership, and (iii) if not wholly owned by the Operating
Partnership, the identity and ownership interest of each of the other owners of such Operating
Partnership Subsidiary. Each Operating Partnership Subsidiary has been duly organized or formed
and is validly existing and is 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
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, other than such
failures to be so qualified as would not, individually or in the aggregate, reasonably be expected
to have an OP 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 Operating Partnership pursuant to this
Agreement or the other Formation Transaction Documentation) by the Operating Partnership has been
duly and validly authorized by all necessary actions required of the Operating Partnership. This
Agreement, the other Formation Transaction Documentation and each agreement, document and
instrument executed and delivered by or on behalf of the Operating Partnership pursuant to this
Agreement or the other Formation Transaction



9









 







Documentation constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligation of the Operating Partnership,
enforceable against the Operating Partnership 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 Certificates 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 Operating Partnership, in
connection with the execution, delivery and performance of this Agreement and the transactions
contemplated hereby and thereby, except for (i) 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 OP 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 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 Operating
Partnership, (B) any agreement, document or instrument to which the Operating Partnership or any of
its assets are bound or (C) any term or provision of any judgment, order, writ, injunction, or
decree binding on the Operating Partnership, 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 OP Material Adverse Effect.



     Section 3.05 VALIDITY OF OP UNITS.  The OP Units to be issued pursuant to this Agreement will
have been duly authorized and, when issued against the consideration therefor, will be validly
issued by the Operating Partnership, free and clear of all Liens created by the Operating
Partnership (other than Liens created by the Operating Partnership Agreement).



     Section 3.06 OP AGREEMENT.  Attached as Exhibit B hereto is a true and correct copy
of the Operating Partnership Agreement in substantially final form.



     Section 3.07 LIMITED ACTIVITIES.  Except for activities in connection with the IPO, the
Formation Transactions or the ordinary course of business, the Operating Partnership and the
Operating Partnership Subsidiaries have not engaged in any material business or incurred any
material obligations.



     Section 3.08 LITIGATION.  Except for actions, suits or proceedings covered by the policies of
insurance described in Schedule 3.08, there is no action, suit or proceeding pending or, to
the knowledge of the Operating Partnership, threatened against the Operating Partnership



10









 







or any
Operating Partnership Subsidiary other than actions, suits,
proceedings arising in the ordinary course of business from the
ownership and operation of the Operating Partnership, that
individually or in the aggregate, could reasonably be expected,
which, (a) if adversely determined, would, individually or
together with all such other actions, reasonably be expected to have a OP Material Adverse Effect,
or (b) to challenge or impair the ability of the Operating Partnership 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 OP Material Adverse Effect.



     Section 3.09 NO BROKER. The Operating Partnership 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 YIP, any SAE Entity Member or any 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 3.10 NO IMPLIED REPRESENTATIONS OR WARRANTIES.  Other than the representations and
warranties expressly set forth in this Article III, the Operating Partnership, 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 Operating
Partnership contained in this Agreement shall expire at the Closing.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF YIP AND THE SAE ENTITY MEMBERS



     Except as disclosed in the Prospectus or the schedules attached hereto, (i) YIP represents and
warrants to the Operating Partnership that the following statements are true and correct with
respect to YIP as of the Closing Date, and (ii) each SAE Entity Member represents and warrants to
the Operating Partnership that the following statements are true and correct solely with respect to
such SAE Entity Member as of the Closing Date:



     Section 4.01 ORGANIZATION; AUTHORITY.



          (a) YIP and each SAE Entity Member has been duly organized and is validly existing and in good
standing under the Laws of its jurisdiction of formation 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. YIP and each SAE Entity Member, 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 such failures to be so qualified as would not, individually or in the aggregate, reasonably be
expected to have a YIP Material Adverse Effect or a SAE Entity Member Material Adverse Effect, as
applicable.




11









 








          (b) Schedule 4.01(b) sets forth as of the date hereof with respect to YIP (i) each
Subsidiary of YIP (each a “YIP Subsidiary”), (ii) the ownership interest therein of YIP,
(iii) if not wholly owned by YIP, 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 YIP 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 YIP 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,
other than such failure to be so qualified as would not, individually or in the aggregate,
reasonably be expected to have a YIP Material Adverse Effect.




          (c) Schedule 4.01(c) sets forth as of the date hereof with respect to each SAE Entity
Member (i) each Subsidiary of the SAE Entity Members (each a “SAE Entity Member
Subsidiary”), (ii) the ownership interest therein of each SAE Entity Member, (iii) if not
wholly owned by a SAE Entity Member, the identity and ownership interest of each of the other
owners of such Subsidiary, and (iv) each Property. Each SAE Entity Member Subsidiary has been duly
organized and is validly existing and is 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 SAE Entity Member 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, other than such failures to be so qualified as would not, individually or
in the aggregate, reasonably be expected to have a SAE Entity Member Material Adverse Effect.




     Section 4.02 DUE AUTHORIZATION.  The execution, delivery and performance by YIP and each SAE
Entity Member of this Agreement and the other Formation Transaction Documentation (including any
agreement, document and instrument executed and delivered by or on behalf of YIP and each SAE
Entity Member 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 YIP and
each SAE Entity Member. This Agreement, the other Formation Transaction Documentation and each
agreement, document and instrument executed and delivered by or on behalf of YIP and each SAE
Entity Member 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 YIP and each SAE Entity Member, each enforceable against YIP and each SAE Entity
Member 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 YIP and each SAE Entity Member. All of the issued and outstanding equity interests of
YIP and each SAE Entity Member are duly authorized, validly issued and fully paid; and, to the
knowledge of the Operating Partnership, are not subject to preemptive rights or appraisal,
dissenters’ or other similar rights under the organizational documents of or any contract to which
YIP and each SAE Entity Member is a party or otherwise bound.



12









 





     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, qualification, designation, declaration or filing with, any Person or any Governmental
Authority or under any applicable Laws is required to be obtained by YIP, each SAE Entity Member or
any YIP Subsidiary or SAE Entity Member Subsidiary in connection with the execution, delivery and
performance of this Agreement, the other Formation Transaction Documentation to which YIP, any SAE
Entity Member or any YIP Subsidiary or SAE Entity Member Subsidiary, as applicable, is a party and
the transactions contemplated hereby and thereby, except 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 YIP Material Adverse Effect or a SAE Entity Member
Material Adverse Effect, as applicable.



     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 YIP, any SAE Entity Member or any YIP Subsidiary or SAE
Entity Member Subsidiary or (B) any agreement, document or instrument to which YIP, any SAE Entity
Member or any YIP Subsidiary or SAE Entity Member 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 YIP, any SAE Entity Member or any YIP Subsidiary or SAE Entity Member 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 YIP Material Adverse Effect or a
SAE Entity Member Material Adverse Effect, as applicable.



     Section 4.06 LICENSES AND PERMITS.  To the knowledge of YIP or any SAE Entity Member, as
applicable, 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 YIP Material Adverse Effect or a SAE Entity Member Material
Adverse Effect, as applicable. To the knowledge of YIP or any SAE Entity Member, as applicable,
none of YIP, any SAE Entity Member, any YIP Subsidiary or SAE Entity Member 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
YIP Material Adverse Effect or SAE Entity Member Material Adverse Effect, as applicable, nor has
any one 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



13









 




be expected to have a YIP Material Adverse Effect or
SAE Entity Member Adverse Effect, as applicable.




     Section 4.07 COMPLIANCE WITH LAWS. To the knowledge of YIP or any SAE Entity Member, as applicable, YIP, each SAE Entity
Member, each YIP Subsidiary and each SAE Entity Member 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 YIP Material Adverse Effect or SAE Entity Member
Adverse Effect, as applicable. To the knowledge of YIP or any SAE Entity Member, as applicable,
none of YIP, any SAE Entity Member, any YIP Subsidiary, any SAE Entity Member Subsidiary or any
third party 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 violations that would not, individually or in the aggregate,
reasonably be expected to have a YIP Material Adverse Effect or SAE Entity Member Material Adverse
Effect, as applicable.



     Section 4.08
PROPERTIES. (a) YIP, a SAE Entity Member, a YIP Subsidiary or SAE Entity Member
Subsidiary set forth on Schedule 4.08(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 the knowledge of YIP or any SAE Entity Member, as applicable, YIP, a SAE
Entity Member, a YIP Subsidiary or SAE Entity Member 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 4.08(a) as being owned by YIP, a SAE Entity Member, a YIP Subsidiary or SAE Entity
Member 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 YIP, any SAE Entity Member, any YIP
Subsidiary or SAE Entity Member 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 YIP Material Adverse Effect or SAE Entity Member Material Adverse Effect, as
applicable, to the knowledge of YIP or any SAE Entity Member, (1) none of YIP, any SAE Entity
Member, any YIP Subsidiary or any SAE Entity Member 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 YIP, any SAE Entity Member, any YIP Subsidiary or any SAE
Entity Member 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 the knowledge of YIP or any SAE Entity Member, 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






14









 







“land use” Law, except for
such violations that would not, individually or in the aggregate,
reasonably be expected to have a YIP Material Adverse Effect or SAE Entity Member Material
Adverse Effect, as applicable.




          (d) Except for matters that would not, individually or in the aggregate, reasonably be
expected to have a YIP Material Adverse Effect or SAE Entity Member Material Adverse Effect, as
applicable, (1) to the knowledge of YIP or any SAE Entity Member, none of YIP, any SAE Entity
Member, any YIP Subsidiary or any SAE Entity Member Subsidiary, or any other party to any Lease, is
in breach or default of any such Lease, (2) to the knowledge of YIP or any SAE Entity Member, 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 the knowledge of YIP or any SAE Entity Member, as applicable, each of
the leases (and all amendments thereto or modifications thereof) to which YIP, any SAE Entity
Member, any YIP Subsidiary or any SAE Entity Member Subsidiary is a party or by which YIP, any SAE
Entity Member, any YIP Subsidiary or any SAE Entity Member Subsidiary or any Property is bound or
subject (collectively, the “Leases”) is and will be valid and binding and in full force and
effect.




     Section 4.09 INSURANCE.  YIP, a SAE Entity Member, a YIP Subsidiary or a SAE Entity Member
Subsidiary has in place the public liability, casualty and other insurance coverage with respect to
each Property as YIP or any SAE Entity Member reasonably deems 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 the
knowledge of YIP or any SAE Entity Member, as applicable, none of YIP, any SAE Entity Member, any
YIP Subsidiary or any SAE Entity Member Subsidiary has received from any insurance company any
notices of cancellation or intent to cancel any insurance.



     Section 4.10 ENVIRONMENTAL MATTERS.  Except for matters that would not, individually or in
the aggregate, reasonably be expected to have a YIP Material Adverse Effect or SAE Entity Member
Material Adverse Effect, as applicable, to the knowledge of YIP or any SAE Entity Member, as
applicable, (A) YIP, each SAE Entity Member, each YIP Subsidiary and each SAE Entity Member
Subsidiary are in compliance with all Environmental Laws, (B) none of YIP, any SAE Entity Member,
any YIP Subsidiary or any SAE Entity Member Subsidiary have received any written notice from any
Governmental Authority or third party alleging that YIP, any SAE Entity Member, any YIP Subsidiary
or any SAE Entity Member 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 4.10 constitute the sole and exclusive representations
and warranties made by YIP and each SAE Entity Member concerning environmental matters.



     Section 4.11 EMINENT DOMAIN. Except as set forth on Schedule 4.11, there is no existing or, to the knowledge of
YIP or any SAE Entity Member, as applicable, 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 proceedings that



15









 







would not, individually or in the aggregate,
reasonably be expected to have a YIP Material Adverse Effect or SAE Entity Member Material Adverse
Effect, as applicable.



     Section 4.12 FINANCIAL STATEMENTS.  The financial statements of YIP and each SAE Entity
Member 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 YIP and each SAE Entity Member as of the dates indicated
therein and for the periods ended as indicated therein.



     Section 4.13 YIP TAXES.  Except as set forth in Schedule 4.13, (i) YIP and each of
the YIP 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,
(ii) no income or material non-income Tax returns filed by YIP or any YIP Subsidiaries are the
subject of a pending or ongoing audit, and (iii) except as would not have a YIP Material Adverse
Effect, no deficiencies for any Taxes have been proposed, asserted or assessed against YIP or any
of the YIP Subsidiaries, and no requests for waivers of the time to assess any such Taxes are
pending. Since its formation, for U.S. federal income tax purposes, YIP has been treated as a
partnership and not as a corporation or an association taxable as a corporation, and each of the
YIP Subsidiaries has been treated as a partnership or disregarded entity and not as a corporation
or an association taxable as a corporation.



     Section 4.14 SAE ENTITY MEMBER TAXES.  Except as set forth in Schedule 4.14, (i) each
SAE Entity Member and each of the SAE Entity Member 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, (ii) no income or material non-income Tax returns
filed by SAE Entity Member or any SAE Entity Member Subsidiaries are the subject of a pending or
ongoing audit, and (iii) except as would not have a SAE Entity Member Material Adverse Effect, no
deficiencies for any Taxes have been proposed, asserted or assessed against any SAE Entity Member
or any of the SAE Entity Member Subsidiaries, and no requests for waivers of the time to assess any
such Taxes are pending. Except as set forth in Schedule
4.14, since its formation, for U.S. federal income tax purposes, each SAE Entity
Member has been treated as a partnership and not as a corporation or an association taxable as a
corporation, and each of the SAE Entity Member Subsidiaries has been treated as a partnership
or disregarded entity and not as a corporation or an association taxable as a corporation.



     Section 4.15 LITIGATION.  Except for actions, suits or proceedings covered by the policies of
insurance described in Section 4.09, to the knowledge of YIP or any SAE Entity Member, as
applicable, there is no action, suit or proceeding pending or, to the knowledge of YIP or any SAE
Entity Member, threatened against or affecting YIP, any SAE Entity Member, any YIP Subsidiary, any
SAE Entity Member Subsidiary, or any officer, director, principal, managing member, general partner
or Affiliate of any of the foregoing other than actions, suits,



16









 







proceedings arising in the ordinary
course of business from the ownership and operation of Properties, which, if adversely determined
would have a YIP Material Adverse Effect or a SAE Entity Member Material Adverse Effect, as
applicable. There is no action, suit, or proceeding pending or, to the knowledge of YIP or any SAE
Entity Member, threatened against or affecting YIP, any SAE Entity Member, any YIP Subsidiary, any
SAE Entity Member Subsidiary or any officer, director, principal, managing member, general partner
or Affiliate of any of the foregoing which challenges or impairs the ability of YIP or any SAE
Entity Member 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. There is no judgment, decree, injunction, rule or order of a
Governmental Authority outstanding against YIP, any SAE Entity Member, any YIP Subsidiary, any SAE
Entity Member Subsidiary or any officer, director, principal, managing member, general partner or
Affiliate of any of the foregoing having, or which, insofar as reasonably can be foreseen, in the
future would have a YIP Material Adverse Effect or a SAE Entity Member Material Adverse Effect, as
applicable.



     Section 4.16 NO INSOLVENCY PROCEEDINGS.  No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are
pending or, to YIP’s and any SAE Entity Members’ knowledge, threatened against either YIP or any
SAE Entity Member, nor are any such proceedings contemplated by either YIP or any SAE Entity
Member.



     Section 4.17 SECURITIES LAW MATTERS.  YIP and the SAE Entity Members acknowledge that: (i)
the REIT and Operating Partnership intend the offer and issuance of any REIT Shares or OP Units to
any Pre-Formation Participants to be exempt from registration under the Securities Act and
applicable state securities laws by virtue of the status of such partner or member as an
“accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act
acquiring any REIT Shares or OP Units in a transaction exempt from registration pursuant to Rule
506 of Regulation D under the Securities Act, and (ii) in issuing any REIT Shares or OP Units
pursuant to the terms of this Agreement, the REIT and Operating Partnership are relying on the
representations made by each partner or member electing to receive REIT Shares or OP Units as
consideration in the Merger, which representations were set forth in
Appendix D to the Request for
Consent — Accredited Investor Representations Letter.



     Section 4.18 NO BROKER.  Neither of YIP nor any of the SAE Entity Members has entered into,
and each of them 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 Operating
Partnership or any Affiliate 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 4.19 NO IMPLIED REPRESENTATIONS OR WARRANTIES.  Other than the representations and
warranties expressly set forth in this Article IV, YIP and each SAE Entity Member shall not be
deemed to have made any other representation or warranty in connection with this Agreement or the
transactions contemplated hereby.



17









 





     Section 4.20 OWNERSHIP OF CERTAIN ASSETS.  Except as set forth in Schedule 4.20, none
of YIP or any SAE Entity Member owns any loan assets or other securities of any issuer except for
equity interests in other Younan Entities.



     Section 4.21 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF YIP AND THE SAE ENTITY MEMBERS.
The parties hereto agree and acknowledge that the representations and warranties set forth in this
Article IV shall not survive the Closing.



     Section 4.22 NON-FOREIGN STATUS. Neither the YIP nor any SAE Entity Member is a foreign
person (as defined in the Code) and none is, therefore, subject to the provisions of the Code
relating to the withholding of sales or exchange proceeds to foreign persons.



ARTICLE V




COVENANTS AND OTHER AGREEMENTS



     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), YIP and each SAE Entity Member shall use commercially reasonable efforts
to (and to cause each of the YIP Subsidiaries and SAE Entity Member Subsidiaries, as applicable,
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, YIP and each SAE Entity Member shall not (and shall not permit any of the YIP
Subsidiaries or SAE Entity Member Subsidiaries, as applicable, to) without the prior written
consent of the Operating Partnership:



          (a) (i) declare, set aside or pay any distributions in respect of any YIP Interests or SAE
Entity Member Interests, as applicable, except in the ordinary course of
business consistent with past practice and in accordance with the agreement of limited
partnership of YIP or the applicable governing document of a SAE Entity Member, (ii) issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for any
YIP Interest or SAE Entity Member Interest, as applicable, or make any other changes to the equity
capital structure of YIP, any SAE Entity Member or any YIP Subsidiary or SAE Entity Member
Subsidiary, or (iii) purchase, redeem or otherwise acquire any YIP Interest or SAE Entity Member
Interest or interests of any of the YIP Subsidiaries or SAE Entity Member 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 YIP, any of the YIP Subsidiaries or SAE Entity Member Subsidiaries or any other assets
of YIP, the YIP Subsidiaries, the SAE Entity Member or the SAE Entity Member Subsidiaries, as
applicable;




18









 








          (c) amend, modify or terminate any lease, contract or other instruments relating to the
Property, except in the ordinary course of business consistent with past practice;




          (d) amend its certificate of formation, certificate of organization, limited partnership
agreement, limited liability company agreement or operating agreement, as applicable;




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




          (f) materially alter the manner of keeping YIP, any SAE Entity Member or any YIP Subsidiary or
SAE Entity Member Subsidiary’s books, accounts or records or the accounting practices therein
reflected;




          (g) file an entity classification election pursuant to Treasury Regulation Section
301.7701-3(c) on Internal Revenue Service Form 8832 (Entity Classification Election) to treat YIP,
any SAE Entity Member, any YIP Subsidiary or any SAE Entity Member Subsidiary as an association
taxable as a corporation for United States federal income tax purposes; make or change any other
Tax elections; 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;




          (h) terminate or amend any existing insurance policies affecting the Property that results in
a material reduction in insurance coverage for the Property;




          (i) knowingly cause or permit YIP or any SAE Entity Member to violate, or fail to use
commercially reasonable efforts to cure any violation of, any applicable Laws; or




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




     Section 5.02 CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS.  As of the Closing,
YIP and each of the SAE Entity Members waives and relinquishes all rights and benefits otherwise
afforded to YIP or such SAE Entity Member (a) under its Organizational Documents, as applicable,
including, without limitation, any rights of appraisal, rights of first offer or first refusal,
buy/sell agreements, put, option or similar parallel exit or dissenter rights in connection with an
IPO and any right to consent to or approve of the sale or contribution by any partner or member, as
applicable, of YIP or such SAE Entity Member of their YIP Interests or SAE Entity Member Interests,
as applicable, to the Operating Partnerships and any and all notice provisions related thereto and
(b) for claims against YPI, the REIT or the Operating Partnership for breach by YIP or any SAE
Entity Member or any of their respective present or former officers, directors, managing members,
general partners or Affiliates of their fiduciary duties or similar obligations (including duties
of disclosure) to any of their respective present or former shareholders, members, partners, equity
interest holders or Affiliates or the terms of the applicable Organizational Documents. YIP and
each of the SAE Entity Members acknowledge that the agreements contained herein and the
transactions contemplated



19









 







hereby and any actions taken in contemplation of the transactions
contemplated hereby may conflict with, and may not have been contemplated by, the Organizational
Documents of YIP and each of the SAE Entity Members or other agreements among one or more holders
of YIP Interests or the SAE Entity Members Interests or one or more of the partners or members, as
applicable, of YIP or any of the SAE Entity Members. With respect to YIP and each of the SAE Entity
Members and each property in which the YIP Interests or SAE Entity Member Interests represent a
direct or indirect interest, YIP and each of the SAE Entity Members expressly give all consents
(and any consents necessary to authorize the proper parties in interest to give all consents) and
waivers they are entitled to give that are necessary or desirable to facilitate the contribution or
other Formation Transaction relating to YIP, such SAE Entity Member or such property. In addition,
if the transactions contemplated hereby occur, this Agreement shall be deemed to be an amendment to
the Organizational Documents of YIP and each of the SAE Entity Members to the extent the terms
herein conflict with the terms thereof, including without limitation, terms with respect to
allocations, distributions and the like. In the event the transactions contemplated by this
Agreement do not occur, nothing in this Agreement shall be deemed to be or construed as an
amendment or modification of, or commitment of any kind to amend or modify, the Organizational
Documents of YIP and each of the SAE Entity Members, which shall remain in full force and effect
without modification.



     Section 5.03 EXCLUDED ASSETS.  Prior to the Closing, YIP shall have distributed all of its
ownership interests in each of the assets identified on Schedule 5.03 (the “Excluded
Assets”) to the Principal.



ARTICLE VI




ADDITIONAL AGREEMENTS



     Section 6.01 COMMERCIALLY REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP, YIP AND THE SAE
ENTITY MEMBERS. Each of the Operating Partnership, YIP and each SAE Entity Member 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 AGREEMENT.



          (a) YIP, each SAE Entity Member and any of their Subsidiaries shall timely file or cause to be
timely filed when due all Tax returns required to be filed by or with respect to such Person 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.




20









 








          (b) The Operating Partnership shall prepare or cause to be prepared and file or cause to be
filed all income Tax returns of YIP, each SAE Entity Member and any of their Subsidiaries 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, the Operating Partnership shall deliver
such income Tax Returns to Principal for his review and approval, which shall not be unreasonably
withheld.




          (c) The Operating Partnership shall prepare or cause to be prepared all other Tax returns of
YIP, each SAE Entity member and any of their Subsidiaries.




          (d) In accordance with Section 704(c) of the Code, the Operating Partnership shall adopt and
use only the so-called “traditional method” described in Treasury Regulation
Section 1.704-3(b) with respect to any properties transferred directly or indirectly by YIP or the
SAE Entity Member, as applicable, to the Operating Partnership as a result of the Formation
Transactions, and therefore shall not make any curative or remedial allocations with respect to
such properties.




     Section 6.03 WITHHOLDING CERTIFICATE.  Prior to Closing, YIP and each SAE Entity Member shall
deliver to the Operating Partnership such forms and certificates, duly executed and acknowledged,
in form and substance reasonably satisfactory to the Operating Partnership (including any relevant
forms or certificates provided to YIP or the SAE Entity Member, as applicable, by the holders of
YIP Interest or SAE Entity Member Interests), certifying that the payment of consideration in each
Merger is exempt
from withholding under Section 1445 of the Code and any similar withholding rules under
applicable state or local Tax Laws.



     Section 6.04 TAX ADVICE.  The Operating Partnership makes no representations or warranties to
YIP, any SAE Entity Member or any holder of a YIP Interest or SAE Entity Member Interest regarding
the Tax treatment of the Mergers or the other Formation Transactions, or with respect to any other
Tax consequences to YIP, any SAE Entity Member or any holder of YIP Interest or SAE Entity Member
Interest of this Agreement, the Mergers or the other Formation Transactions. YIP and each SAE
Entity Member acknowledges that YIP and each SAE Entity Member and the holders of YIP Interest or
SAE Entity Member Interest, as applicable, are relying solely on their own Tax advisors in
connection with this Agreement, the Mergers and the other Formation Transactions and agreements
contemplated hereby.



     Section 6.05 ALTERNATE TRANSACTION. In the event that the Operating Partnership determines
that a structure change is desirable, the Operating Partnership may elect, and in such case YIP and
each SAE Entity Member hereby agree that the parties shall undertake the Alternate Transaction and
shall enter into such agreements as shall be necessary to consummate the Alternate Transaction.



     Section 6.06 EXCLUSION OF ENTITIES.  The parties hereby agree that the Operating Partnership
shall have the right, in its sole discretion, to exclude any of the SAE Entity Members



21









 







from the
Mergers after the date hereof until the Effective Time, provided that the Operating Partnership
shall provide prior written notice to such SAE Entity Member regarding such exclusion.



ARTICLE VII




CONDITIONS PRECEDENT



     Section 7.01 CONDITION TO EACH PARTY’S OBLIGATIONS.  The respective obligation of each party
to effect the Mergers 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.




          (c) FORMATION TRANSACTIONS. The merger of YPI with and into the REIT shall have been
consummated.






          (d) OPERATING PARTNERSHIP AGREEMENT. The Operating Partnership Agreement, in substantially
the form attached hereto as Exhibit B, shall have been executed and delivered by the
partners of the Operating Partnership and shall be in full force and effect and, except as
contemplated by Section 2.02 or the other Formation Transaction Documents, shall not have
been amended or modified.




     Section 7.02 CONDITIONS TO OBLIGATIONS OF YIP AND THE SAE ENTITY MEMBERS.  The obligation of
YIP and each SAE Entity Member to effect the Mergers 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 OP Material Adverse Effect,
each of the representations and warranties of the Operating Partnership 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).




          (b) PERFORMANCE BY THE OPERATING PARTNERSHIP. Except as would not have a OP Material Adverse
Effect, the Operating Partnership 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.




22









 








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




          (d) TAX PROTECTION AGREEMENT. Solely with respect to (i) YIP and (ii) any SAE Entity Member
that owns, directly or indirectly, an interest in any property specified in the Tax Protection
Agreement, the REIT and the Operating Partnership shall have entered into the Tax Protection
Agreement substantially in the form attached as Exhibit E, where applicable.




     Section 7.03 CONDITIONS TO OBLIGATION OF THE OPERATING PARTNERSHIP.  The obligations of the
Operating Partnership to effect the Mergers 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 Operating Partnership, in whole or in part):



          (a) REPRESENTATIONS AND WARRANTIES. Except as would not have a YIP Material Adverse Effect or
a SAE Entity Member Material Adverse Effect, as applicable, each of the representations and
warranties of YIP and the SAE Entity Members 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 YIP AND THE SAE ENTITY MEMBERS. YIP and each SAE Entity Member 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) IPO PROCEEDS. The REIT shall have received the proceeds from the IPO.




          (d) CONSENTS, ETC. All necessary consents or approvals of Governmental Authorities or third
parties (including lenders) for YIP and each SAE Entity Member to consummate the transactions
contemplated hereby shall have been obtained.




          (e) 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 YIP, each SAE Entity Member, any YIP Subsidiary or
SAE Entity Member Subsidiary and the Properties, taken as a whole.




          (f) 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 YIP and each SAE Entity
Member 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




23









 







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 or any SAE Entity Member to obtain any new title
insurance policy, endorsement or other written assurance from a title insurer for such Property in connection with the Closing.




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




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




          (i) TAX PROTECTION AGREEMENT. (i) YIP and (ii) each SAE Entity Member that owns, directly or
indirectly, an interest in any property specified in the Tax Protection Agreement, shall have
entered into the Tax Protection Agreement substantially in the form attached as Exhibit E
on behalf of the Pre-Formation Participants that hold Pre-Formation Interests of YIP or such SAE
Entity Member.




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 Operating Partnership to:



Younan Properties, L.P.

21700 Oxnard Street, Suite 800

Woodland Hills, California 91367

Facsimile: (818) 703-5907



if to YIP, to:



Younan Investment Properties, L.P.

21700 Oxnard Street, Suite 800

Woodland Hills, California 91367

Facsimile: (818) 703-5907

Attention: General Partner



if to a SAE Entity Member, to:





24









 





21700 Oxnard Street, Suite 800

Woodland Hills, California 91367


Facsimile: (818) 703-5907







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



          (a) “Accredited Investor” has the meaning set forth under Regulation D of the
Securities Act.




          (b) “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.




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




          (d) “Alternate Transaction” means a contribution of the assets held by a Single Asset
Entity to the Operating Partnership in exchange for the amount of cash and the number of OP Units
and/or REIT Shares that were to be issued pursuant to this Agreement.




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




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




          (g) “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.




          (h) “Elected OP Unit Percentage” means, with respect to any YIP Interest or SAE Entity
Member Interest, as applicable, the percentage of the Allocated Share of Entity Value for which the
holder thereof has made a Valid Election to receive the Merger Consideration in the form of OP
Units.




          (i) “Elected REIT Shares Percentage” means, with respect to any YIP Interest or SAE
Entity Member Interest, as applicable, the percentage of the Allocated Share of Entity Value for
which the holder thereof has made a Valid Election to receive the Merger Consideration in the form
of REIT Shares.






25









 





          (j)
“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.






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




          (l) “Escrow Agreement” means the Indemnity Escrow Agreement, dated as of the date
hereof, by and among the REIT, the Operating Partnership and the REIT, acting in the capacity of
Escrow Agent.




          (m) “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.




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




          (o) “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.




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




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




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




          (s) “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.




          (t) “OP 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
Operating Partnership and each Operating Partnership Subsidiary, taken as a whole.




          (u) “Organizational Documents” means the partnership, limited liability company or
similar agreement, as applicable, of YIP and each SAE Entity Member.




          (v) “Permitted Liens” means (i) Liens, or deposits made to secure the release of such
Liens, securing Taxes, the payment of which


26









 



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 YIP Material Adverse Effect or SAE Entity
Member Material Adverse Effect, as applicable.




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




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




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




          (z) “Principal” means Zaya Younan.




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




          (bb) “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.




          (cc) “SAE Entity Member 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 applicable SAE Entity Member and each subsidiary of such SAE Entity Member, taken as a
whole.




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




          (ee) “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.






27








 





          (ff) “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.





          (gg) “Tax Protection Agreement” means that certain Tax Protection Agreement dated as
of the date hereof, by and among the REIT, the OP and the parties identified as a signatory on
Schedule A thereto.




          (hh) “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.




          (ii) “Valid Election” means, with respect to any YIP Interest or SAE Entity Member
Interest, as applicable, an irrevocable election to receive all or a portion of its Allocated Share
of the Entity Value in the form of OP Units and/or REIT Shares as indicated on the properly
completed and timely received Consent Form of the holder of such YIP Interest or SAE
Entity Member Interest, as applicable, or a Consent Form as to which any deficiencies have
been waived by the REIT.




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




          (kk) “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 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.




28









 





     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 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 Operating
Partnership, on the one hand, and YIP or any SAE Entity Member, as applicable, on the other hand,
shall appoint one arbitrator within fifteen (15) days of a demand for arbitration. If the
Operating Partnership and YIP or any SAE Entity Member, as applicable, 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


29









 





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.




          (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,




30









 





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 Operating Partnership 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 Operating Partnership
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by YIP or
any SAE Entity Member 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
Operating Partnership is entitled under this Agreement or otherwise at law or in equity.




          Section 8.12 WAIVER OF SECTION 1542 PROTECTIONS.  As of the Closing, YIP and each SAE Entity
Member 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.




          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, partner, employee or
shareholder of the Operating Partnership, YIP and any SAE Entity Member.




          Section 8.16 AMENDMENTS.  This Agreement may be amended by appropriate instrument, without
the consent of YIP or any SAE Entity Member, at any time prior to the Effective Time.




[SIGNATURE PAGE FOLLOWS]






31









 








     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, L.P.

a Maryland limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Younan Properties, Inc.,

a Maryland corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Zaya S. Younan	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	Title:	 	 President	 	 











	 	 	 	 	 	 	 
	 	 	YOUNAN INVESTMENT PROPERTIES, L.P.

a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Younan Properties, Inc.

a California corporation

Its General Partner
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Zaya S. Younan	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	Title:	 	 President	 	 







	 	 	 	 	 	 	 
	 	 	YGH INVESTMENTS LLC

a California limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Zaya S. Younan	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	Title:	 	 Managing Member	 	 








	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI 9801 WESTHEIMER FUND LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Zaya S. Younan 	 	 
	 

	 	 	 	 	 	Title:	 	President 	 	 








	 	 	 	 	 	 	 	 	 	 	 
	 	 	YOUNAN TOWER FUND LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	 	 	 	 	Title:	 	 President	 	 










	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI ONE DALLAS CENTRE MM LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Zaya S. Younan 	 	 
	 

	 	 	 	 	 	Title:	 	 President	 	 










	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI ONE DALLAS CENTRE FUND LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	YPI One Dallas Centre MM LLC

a Delaware limited liability company

Its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 President	 	 











	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI THANKSGIVING TOWER FUND LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	 	 	 	 	Title:	 	 President	 	 









	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI CD PORTFOLIO PROPERTIES LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 /s/ Zaya S. Younan	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Zaya S. Younan 	 	 
	 

	 	 	 	 	 	Title:	 	 President	 	 










	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI ONE NORTH ARLINGTON FUND LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Investment Properties, LP

a Delaware limited partnership

Its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	 	 	 	 	Title:	 	President 	 	 










	 	 	 	 	 	 	 	 	 	 	 
	 	 	5401-5407 TRILLIUM LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Properties, LLC,

a California limited liability company

Its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Properties, Inc.,

a California corporation

Its Sole Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Zaya S. Younan 	 	 
	 

	 	 	 	 	 	Title:	 	 President	 	 









	 	 	 	 	 	 	 
	 	 	YGAZ LLC

a California limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Zaya S. Younan 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	Title:	 	 Managing Member	 	 










	 	 	 	 	 	 	 
	 	 	YPI S/WL LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Younan Properties, Inc.,

a California corporation

Its Sole Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Zaya S. Younan	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Zaya S. Younan	 	 
	 

	 	Title:	 	 President	 	 











32









 








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 an 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 an 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: Formation Transaction Documentation




Exhibit B: Operating Partnership Agreement




Exhibit C: Form of Registration Rights Agreement




Exhibit D: Order of Mergers




Exhibit E: Tax Protection Agreement




Exhibit F: Lock-Up Agreement









 









 








EXHIBIT A




Formation Transaction Documentation




	1.	 	Form of Younan Properties, Inc. Merger Agreement






	2.	 	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






	3.	 	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






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






	5.	 	Registration Rights Agreement






	6.	 	Representation, Warranty and Indemnity Agreement






	7.	 	Indemnity Escrow Agreement






	8.	 	Lock-Up Agreement






	9.	 	Tax Protection Agreement






	10.	 	Option Agreement (Savoy)




 









 












	11.	 	Management Agreement (Savoy)






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






	13.	 	Bylaws of Younan Properties, Inc.










 









 








EXHIBIT B




Operating Partnership Agreement



See Attached.









 









 








EXHIBIT C




Form of Registration Rights Agreement



See Attached.









 









 








EXHIBIT D




Order of Mergers


Each step within each “Transaction Step” below must be completed before the transactions in the
following “Transaction Step” may be completed. All transactions within each “Transaction Step” may
be completed simultaneously or in any order.




Transaction Step 1





	 	•	 	Forward Merger of YIP into the Operating Partnership





Transaction Step 2





	 	•	 	Forward Merger of YGH Investments LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of Younan Holdings LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of YPI 9801 Westheimer Fund LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of Younan Tower Fund LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of YPI One Dallas Centre MM LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of YPI Thanksgiving Tower Fund LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of YPI CD Portfolio Properties LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of YPI One North Arlington Fund LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of 5401-5407 Trillium LLC into the Operating Partnership
	 
	 	•	 	Forward Merger of YGAZ LLC into the Operating Partnership





Transaction Step 3





	 	•	 	Forward Merger of YPI One Dallas Centre Fund LLC into the Operating Partnership




 









 











EXHIBIT E




Tax Protection Agreement



See Attached.









 









 








EXHIBIT F




Lock-Up Agreement



See Attached.