exv10w15






Exhibit
10.15




AGREEMENT AND PLAN OF MERGER




DATED AS OF APRIL 8, 2010



BY AND AMONG



YOUNAN PROPERTIES, L.P.

a Maryland limited partnership



YPI 4851 LBJ FUND MERGER SUB LLC

a Delaware limited liability company



AND



YPI 4851 LBJ FUND, L.P.

a Delaware limited partnership







 










 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE I THE MERGER
	 	 	3	 
	 
	 	 	 	 
	Section 1.01 THE MERGER
	 	 	3	 
	Section 1.02 EFFECTIVE TIME
	 	 	3	 
	Section 1.03 EFFECT OF THE MERGER
	 	 	3	 
	Section 1.04 CERTIFICATE OF FORMATION; LIMITED LIABILITY COMPANY AGREEMENT 
	 	 	3	 
	Section 1.05 CONVERSION OF SPE MEMBERSHIP INTERESTS
	 	 	3	 
	Section 1.06 CANCELLATION AND RETIREMENT OF SPE LLC INTERESTS
	 	 	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
	 	 	7	 
	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 AND
MERGER SUB
	 	 	8	 
	 
	 	 	 	 
	Section 3.01 ORGANIZATION; AUTHORITY
	 	 	9	 
	Section 3.02 DUE AUTHORIZATION
	 	 	9	 
	Section 3.03 CONSENTS AND APPROVALS
	 	 	9	 
	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
	 	 	10	 
	Section 3.10 NO IMPLIED REPRESENTATIONS OR WARRANTIES
	 	 	11	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SPE
	 	 	11	 
	 
	 	 	 	 
	Section 4.01 ORGANIZATION; AUTHORITY
	 	 	11	 
	Section 4.02 DUE AUTHORIZATION
	 	 	12	 
	Section 4.03 CAPITALIZATION
	 	 	12	 
	Section 4.04 CONSENTS AND APPROVALS
	 	 	12	 
	Section 4.05 NO VIOLATION
	 	 	12	 






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	 	 	PAGE	 
	Section 4.06 LICENSES AND PERMITS
	 	 	12	 
	Section 4.07 COMPLIANCE WITH LAWS
	 	 	13	 
	Section 4.08 PROPERTIES
	 	 	13	 
	Section 4.09 INSURANCE
	 	 	14	 
	Section 4.10 ENVIRONMENTAL MATTERS
	 	 	14	 
	Section 4.11 EMINENT DOMAIN
	 	 	14	 
	Section 4.12 FINANCIAL STATEMENTS
	 	 	14	 
	Section 4.13 TAXES
	 	 	15	 
	Section 4.14 LITIGATION
	 	 	15	 
	Section 4.15 NO INSOLVENCY PROCEEDINGS
	 	 	15	 
	Section 4.16 SECURITIES LAW MATTERS
	 	 	15	 
	Section 4.17 NO BROKER
	 	 	16	 
	Section 4.18 NO IMPLIED REPRESENTATIONS OR WARRANTIES
	 	 	16	 
	Section 4.19 OWNERSHIP OF CERTAIN ASSETS
	 	 	16	 
	Section 4.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SPE
	 	 	16	 
	Section 4.21 NON-FOREIGN STATUS
	 	 	16	 
	 
	 	 	 	 
	ARTICLE V COVENANTS AND OTHER AGREEMENTS
	 	 	16	 
	 
	 	 	 	 
	Section 5.01 PRE-CLOSING COVENANTS
	 	 	16	 
	Section 5.02 CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS
	 	 	17	 
	Section 5.03 EXCLUDED ASSETS
	 	 	18	 
	 
	ARTICLE VI ADDITIONAL AGREEMENTS
	 	 	18	 
	 
	 	 	 	 
	Section 6.01 COMMERCIALLY REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP AND THE
SPE
	 	 	18	 
	Section 6.02 OBLIGATIONS OF MERGER SUB
	 	 	18	 
	Section 6.03 TAX AGREEMENT
	 	 	19	 
	Section 6.04 WITHHOLDING CERTIFICATE
	 	 	19	 
	Section 6.05 TAX ADVICE
	 	 	19	 
	Section 6.06 ALTERNATE TRANSACTION
	 	 	19	 
	Section 6.07 EXCLUSION OF ENTITIES
	 	 	20	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS PRECEDENT
	 	 	20	 
	 
	 	 	 	 
	Section 7.01 CONDITION TO EACH PARTY’S OBLIGATIONS
	 	 	20	 
	Section 7.02 CONDITIONS TO OBLIGATIONS OF THE SPE
	 	 	20	 
	Section 7.03 CONDITIONS TO OBLIGATION OF THE OPERATING PARTNERSHIP AND MERGER SUB
	 	 	21	 
	 
	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS
	 	 	22	 
	 
	 	 	 	 
	Section 8.01 NOTICES
	 	 	22	 
	Section 8.02 DEFINITIONS
	 	 	23	 
	Section 8.03 COUNTERPARTS
	 	 	26	 






ii









 






	 	 	 	 	 
	 	 	PAGE	 
	Section 8.04 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES
	 	 	26	 
	Section 8.05 GOVERNING LAW
	 	 	26	 
	Section 8.06 ASSIGNMENT
	 	 	26	 
	Section 8.07 JURISDICTION
	 	 	27	 
	Section 8.08 DISPUTE RESOLUTION
	 	 	27	 
	Section 8.09 SEVERABILITY
	 	 	28	 
	Section 8.10 RULES OF CONSTRUCTION
	 	 	28	 
	Section 8.11 EQUITABLE REMEDIES
	 	 	29	 
	Section 8.12 WAIVER OF SECTION 1542 PROTECTIONS
	 	 	29	 
	Section 8.13 TIME OF THE ESSENCE
	 	 	29	 
	Section 8.14 DESCRIPTIVE HEADINGS
	 	 	29	 
	Section 8.15 NO PERSONAL LIABILITY CONFERRED
	 	 	29	 
	Section 8.16 AMENDMENTS
	 	 	29	 











iii









 








DEFINED TERMS




	 	 	 
	TERM	 	SECTION
	Accredited Investor

	 	Section 8.02
	Affiliate

	 	Section 8.02
	Agreement

	 	Introduction
	Allocable Percentage

	 	Schedule II
	Allocated Share

	 	Section 8.02
	Alternate Transaction

	 	Section 8.02
	Business Day

	 	Section 8.02
	Certificate of Merger

	 	Section 1.02
	CHI Purchase Agreement

	 	Recitals
	Closing

	 	Section 2.01
	Closing Date

	 	Section 2.01
	Code

	 	Section 8.02
	Consent Form

	 	Section 8.02
	DLLCA

	 	Recitals
	Dispute

	 	Section 8.08
	Effective Time

	 	Section 1.02
	Elected OP Unit Percentage

	 	Section 8.02
	Elected REIT Shares Percentage

	 	Section 8.02
	Entity Value

	 	Section 8.02
	Environmental Laws

	 	Section 8.02
	Escrow Agreement

	 	Section 8.02
	Excluded Assets

	 	Section 5.03
	Formation Transaction Documentation

	 	Section 8.02
	Formation Transactions

	 	Section 8.02
	Fund

	 	Recitals
	Fund Purchase Agreement

	 	Recitals
	Governmental Authority

	 	Section 8.02
	IPO

	 	Recitals
	IPO Closing Date

	 	Section 8.02
	IPO Price

	 	Section 8.02
	Joinder Date

	 	Section 6.02
	Laws

	 	Section 8.02
	Liens

	 	Section 8.02
	Lock-Up Agreement

	 	Section 8.02
	Losses

	 	Section 3.10
	Merger

	 	Recitals
	Merger Consideration

	 	Section 1.05
	Merger Sub

	 	Introduction
	MLPA

	 	Recitals
	OP Material Adverse Effect

	 	Section 8.02
	OP Units

	 	Recitals
	Operating Partnership

	 	Introduction






iv









 






	 	 	 
	TERM	 	SECTION
	Operating Partnership Agreement

	 	Section 8.02
	Operating Partnership Subsidiary

	 	Section 3.01
	Organizational Documents

	 	Section 8.02
	Outside Date

	 	Section 2.05
	Ownership Limits

	 	Section 1.05
	Permitted Liens

	 	Section 8.02
	Person

	 	Section 8.02
	Pre-Formation Interests

	 	Section 8.02
	Pre-Formation Participants

	 	Section 8.02
	Principal

	 	Section 8.02
	Property

	 	Section 4.01
	Prospectus

	 	Section 8.02
	Registration Statement

	 	Section 2.05
	REIT

	 	Introduction
	REIT Material Adverse Effect

	 	Section 8.02
	REIT Shares

	 	Recitals
	Representation, Warranty and Indemnity Agreement

	 	Section 8.02
	SAE Entity Members

	 	Recitals
	Sale Consent

	 	Section 2.02
	SEC

	 	Section 2.05
	Securities Act

	 	Section 8.02
	Single Asset Entities

	 	Recitals
	SPE

	 	Introduction
	SPE LLC Agreement

	 	Section 8.02
	SPE LLC Interest

	 	Recitals
	SPE Material Adverse Effect

	 	Section 8.02
	SPE Subsidiary

	 	Section 4.01
	Subsidiary

	 	Section 8.02
	Surviving Entity

	 	Section 1.01
	Tax

	 	Section 8.02
	Tax Protection Agreement

	 	Section 8.02
	Underwriting Agreement

	 	Section 8.02
	Valid Election

	 	Section 8.02
	YGHI

	 	Recitals
	YIP

	 	Recitals
	Younan Entities

	 	Section 8.02
	YPI

	 	Recitals











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”), YPI 4851 LBJ Fund, L.P., a Delaware limited partnership (the
“SPE”), and YPI 4851 LBJ Fund Merger Sub LLC, a Delaware limited liability company to be
formed prior to the Effective Time (defined below) and to be wholly-owned by the Operating
Partnership and one or more of its Affiliates (“Merger Sub”).



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, including the SPE, the “Single Asset
Entities”) and managed by Younan Investment Properties L.P., a Delaware limited partnership
(“YIP”) and subsidiary of Younan Properties, Inc., a California corporation
(“YPI”), YPI, 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, concurrently with the execution of this Agreement, the Operating Partnership will
enter into an agreement and plan of merger with YIP and certain other entities each as described on
Schedule I hereto (the “SAE Entity Members”) that are direct or indirect partners
or members of the respective Single Asset Entities, pursuant to which, immediately following the
merger identified in the preceding paragraph, (i) YIP will merge with and into the Operating
Partnership and (ii) thereafter, the SAE Entity Members will merge with and into the Operating
Partnership in the order set forth in the merger agreement for such entities;



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



     WHEREAS, YGH Investments LLC, a California limited liability company (“YGHI”) and an
SAE Entity Member will assign to YPI its rights and obligations under that certain purchase
agreement (the “CHI Purchase Agreement”) to acquire all of Chung Hsien International LP’s
interests in 4041 Central Plaza LLC, a Delaware limited liability company, which rights and
obligations will be assigned to the Operating Partnership as a result of the merger of YPI into the
REIT and the REIT’s contribution of the assets of YPI to the Operating Partnership, and immediately
after such merger and contribution, the Operating Partnership will consummate the transactions
contemplated by the CHI Purchase Agreement.



 









 





     WHEREAS, concurrently with the execution of this Agreement, the REIT and the Operating
Partnership will enter into an agreement and plan of merger with each of the other 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, pursuant to this Agreement, Merger Sub will merge with and into the SPE, with the SPE
as the surviving entity (the “Merger”), pursuant to which each membership interest in the
SPE (the “SPE LLC 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
that are not Accredited Investors will receive cash;



     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 18-209 of the Delaware Limited Liability Company Act (the
“DLLCA”), the Merger Sub may be merged with another entity, subject to the requisite
approval of the members as provided in Section 18-209 of the DLLCA;



     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 Merger and
the other Formation Transactions in accordance with the Maryland Revised Uniform Limited
Partnership Act (the “MLPA”) and the Operating Partnership Agreement;



     WHEREAS, the Board of Directors of the REIT has determined that it is advisable and in the
best interest of the REIT to proceed with the Formation Transactions on the terms described in this
Agreement;



     WHEREAS, the manager of the SPE has determined that it is advisable and in the best interest
of the SPE and its members to proceed with the Formation Transactions on the terms described in
this Agreement; and



     WHEREAS, the SPE has obtained the requisite approval of the limited partners, members or
investors (or lenders, as applicable) of the SPE to the Merger and the other Formation Transactions
applicable to the SPE.



     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 MERGER



     Section 1.01 THE MERGER. At the Effective Time (as defined below), and subject to and upon
the terms and conditions of this Agreement and in accordance with the DLLCA, Merger Sub shall be
merged with and into the SPE, whereby the separate existence of Merger Sub shall cease, and the SPE
shall continue its existence under Delaware law as the surviving entity (hereinafter sometimes
referred to as the “Surviving Entity”).



     Section 1.02 EFFECTIVE TIME. Subject to and upon the terms and conditions of this Agreement,
concurrently with or as soon as practicable after (i) the execution by the REIT of the Underwriting
Agreement and (ii) following the satisfaction or waiver of the conditions set forth in Article VII,
the Operating Partnership, Merger Sub and the SPE shall file a certificate of merger or similar
document with respect to the Merger (the “Certificate of Merger”) as may be required by the
DLLCA, with the Secretary of State of the State of Delaware, providing that the Merger shall become
effective upon filing or at such later date and time set forth in the Certificate of Merger that is
not more than thirty (30) days after the acceptance of the Certificate of Merger by the Secretary
of State of the State of Delaware 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 the DLLCA.



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



     Section 1.04 CERTIFICATE OF FORMATION; LIMITED LIABILITY COMPANY AGREEMENT. At the Effective
Time, (i) the certificate of formation of the Merger Sub, as in effect immediately prior to the
Effective Time, shall be the certificate of formation of the Surviving Entity until thereafter
amended as provided therein or in accordance with the DLLCA, and (ii) the Limited Liability Company
Agreement of the Merger Sub, as amended and restated and in effect immediately prior to the
Effective Time, shall be the limited liability company agreement of the Surviving Entity until
thereafter amended as provided therein or in accordance with the DLLCA.



     Section 1.05 CONVERSION OF SPE MEMBERSHIP 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 Merger or other Formation Transactions, a
specified share of the sponsors’ value of the Younan Entities as a whole in the form of the right
to receive cash, REIT Shares and/or OP Units as calculated in Section 1.05(b).



3









 





          (b) At the Effective Time, by virtue of the Merger and without any action on the part of the
Operating Partnership, the SPE or the holders of any interest in the SPE, except as set forth in
Section 1.05(c), each SPE LLC 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 SPE LLC Interest (collectively referred to as the “Merger
Consideration”) and each holder that receives OP Units in the Merger shall upon receipt of such
OP Units, be admitted as a limited partner of the Operating Partnership in accordance with the
DLLCA 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 SPE LLC Interest so converted shall be as follows:




          (i) Cash: 100% of the Allocated Share of Entity Value for each SPE LLC
Interest 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 SPE LLC 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
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 SPE LLC 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
SPE LLC Interests 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 SPE LLC
Interest.



          (c) Each SPE LLC 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 SPE LLC INTERESTS. Each SPE LLC Interest
converted into the right to receive the Merger Consideration pursuant to
Section 1.05(b) shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of such SPE LLC Interest so converted shall
thereafter cease to have any rights as a member of the SPE, except the right to receive the Merger
Consideration applicable thereto.



4









 





     Section 1.07 FRACTIONAL INTERESTS. No fractional OP Units or REIT Shares shall be issued in
the Merger. All fractional OP Units or REIT Shares that a holder of SPE LLC Interests would
otherwise be entitled to receive as a result of the Merger 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.



          (a) 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
SPE LLC Interests.



     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”).
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 SPE LLC Interests whose SPE LLC Interests
have been converted into the right to receive the Merger Consideration pursuant to
Section 1.05(b) hereof, the Merger Consideration payable to such holder in the amounts and
form provided in Section 1.05(b) 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(b) 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



5









 




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 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




6









 






	 	 	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
SPE LLC Interests 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 is in the form of OP Units, the
parties hereto intend and agree that, for United States federal income tax purposes, the Merger
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 SPE LLC
Interests of such holder shall be treated as a sale of such SPE LLC Interests by the holder and a
purchase of such SPE LLC Interests 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 SPE LLC Interests 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 SPE LLC Interests as described above, or previously acquired such interests, for
United States federal income tax purposes the receipt by the Operating Partnership of the portion
of property attributable to such SPE LLC Interests shall be treated as a distribution by the SPE
LLC in redemption of such SPE LLC Interests. 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 SPE LLC Interests shall be paid only after the receipt of a Sale
Consent from such holder.



     Section 2.03 TAX WITHHOLDING. The REIT, the Operating Partnership, Merger Sub and the SPE, as
applicable, shall be entitled to deduct and withhold from the consideration payable pursuant to
this Agreement to any holder of SPE LLC Interests such amounts required to



7









 




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 SPE LLC Interests 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 the SPE acquired or to be acquired by the Surviving Entity as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the Surviving Entity shall be
authorized to execute and deliver, in the name and on behalf of each of the Operating Partnership
and the SPE or otherwise, all such deeds, bills of sale, assignments and assurances and to take and
do, in the name and on behalf of each of the Operating Partnership and the SPE 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 Merger shall not have been consummated on or prior to March 31, 2011 (such date is
hereinafter referred to as the “Outside Date”).



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



     If this Agreement shall terminate for any reason prior to completion of the Formation
Transactions, 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 AND MERGER SUB



     Each of the Operating Partnership and Merger Sub hereby represents and warrants to and
covenants with the SPE as follows:



8









 





     Section 3.01 ORGANIZATION; AUTHORITY.



          (a) Each of the Operating Partnership and Merger Sub has been duly organized or formed and is
validly existing and in good standing under the Laws of its jurisdiction of incorporation or
formation, as applicable, and has all requisite power and authority to enter this Agreement and the
other Formation Transaction Documentation and to carry out the transactions contemplated hereby and
thereby, and to own, lease and/or operate its property and to carry on its business as presently
conducted. Each of the Operating Partnership and Merger Sub, 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 OPMaterial 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 and Merger Sub pursuant to this
Agreement or the other Formation Transaction Documentation) by the Operating Partnership and Merger
Sub, have been duly and validly authorized by all necessary actions required of each of the
Operating Partnership and Merger Sub, respectively. This Agreement, the other Formation
Transaction Documentation and each agreement, document and instrument executed and delivered by or
on behalf of each of the Operating Partnership and Merger Sub 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 each of the Operating Partnership and Merger
Sub, each enforceable against each of the Operating Partnership and Merger Sub, 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 as shall have been obtained 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 Governmental Authority or
under any applicable Laws is required to be obtained by the Operating Partnership or Merger Sub in
connection with the execution, delivery and performance of this Agreement



9









 






and the transactions contemplated hereby, except for (i) those consents, waivers, approvals,
authorizations, orders, licenses, permits, registrations, qualifications, designations,
declarations or filings, the failure of which to obtain or to file would not, individually or in
the aggregate, reasonably be expected to have an 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
any of the Operating Partnership or Merger Sub, (B) any agreement, document or instrument to which
the Operating Partnership or Merger Sub or any of their respective assets are bound or (C) any term
or provision of any judgment, order, writ, injunction, or decree binding on any of the Operating
Partnership or Merger Sub, 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 an 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 C 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, neither the Operating Partnership nor
the Merger Sub has 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 or Merger Sub, threatened against the Operating
Partnership or Merger Sub which, (i) if adversely determined, would, individually or together with
all such other actions, reasonably be expected to have an OP Material Adverse Effect, or (ii)
challenges or impairs the ability of the Operating Partnership or Merger Sub 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 an OP Material Adverse Effect.



     Section 3.09 NO BROKER. Each of the Operating Partnership and Merger Sub has not entered
into, and covenants that it will not enter into, any agreement, arrangement or



10









 




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 fees, 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 and Merger Sub 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 and Merger Sub contained in this Agreement shall expire at Closing.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF THE SPE



     Except as disclosed in the Prospectus or the schedules hereto, the SPE represents and warrants
to the Operating Partnership that the following statements are true and correct as of the Closing
Date:



     Section 4.01 ORGANIZATION; AUTHORITY.



          (a) The SPE has been duly organized and is validly existing and in good standing under the
Laws of the State of Delaware, 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 its Property and to carry on its business as
presently conducted. The SPE, 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 SPE
Material Adverse Effect.



          (b) Schedule 4.01(b) sets forth as of the date hereof with respect to the SPE (i) each
Subsidiary of the SPE (each a “SPE Subsidiary”), (ii) the ownership interest therein of the
SPE, (iii) if not wholly owned by the SPE, the identity and ownership interest of each of the other
owners of such Subsidiary, and (iv) each office, residential or other property owned by the SPE or
such Subsidiary or leased pursuant to a ground lease (each a “Property”). Each SPE
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 SPE 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 SPE Material Adverse Effect.



11









 





     Section 4.02 DUE AUTHORIZATION. The execution, delivery and performance by the SPE of this
Agreement and the other Formation Transaction Documentation (including any agreement, document and
instrument executed and delivered by or on behalf of the SPE 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 the SPE. This Agreement, the other Formation
Transaction Documentation and each agreement, document and instrument executed and delivered by or
on behalf of the SPE pursuant to this Agreement or the other Formation Transaction Documentation
constitutes, or when executed and delivered will constitute, the legal, valid and binding
obligation of the SPE, each enforceable against the SPE 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 the SPE. All of the issued and outstanding equity interests of the SPE are duly
organized, validly issued and fully paid; and, to the knowledge of the SPE, and are not subject to
preemptive rights or appraisal, dissenters’ or other similar rights under the organizational
documents of or any contract to which the SPE is a party or otherwise bound.



     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 the SPE or any of the SPE
Subsidiaries in connection with the execution, delivery and performance of this Agreement, the
other Formation Transaction Documentation to which the SPE or any of the SPE Subsidiaries 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 SPE Material Adverse Effect.



     Section 4.05 NO VIOLATION. None of the execution, delivery or performance of this Agreement,
any agreement contemplated hereby between the parties to this Agreement and the transactions
contemplated hereby between the parties to this Agreement does or will, with or without the giving
of notice, lapse of time, or both, violate, conflict with, result in a breach of, or constitute a
default under or give to others any right of termination, acceleration, cancellation or other right
under, (A) the organizational documents of the SPE or any SPE Subsidiary (B) any agreement,
document or instrument to which the SPE or any SPE 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 the SPE or any SPE 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 SPE Material Adverse Effect.



     Section 4.06 LICENSES AND PERMITS. To the knowledge of the SPE, 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)



12









 




are assignable to the Operating Partnership, except in each case for items that, if not so
obtained, obtainable and/or assigned, would not, individually or in the aggregate, reasonably be
expected to have a SPE Material Adverse Effect. To the knowledge of the SPE, none of the SPE or
any SPE 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 SPE Material Adverse Effect, nor has any of them received any
written notice of violation from any Governmental Authority or written notice of the intention of
any entity to revoke any of them, that in each case has not been cured or otherwise resolved to the
satisfaction of such Governmental Authority and that would not, individually or in the aggregate,
reasonably be expected to have a SPE Material Adverse Effect.




     Section 4.07 COMPLIANCE WITH LAWS. To the knowledge of the SPE, the SPE and each SPE
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 SPE
Material Adverse Effect. To the knowledge of the SPE, none of the SPE, any SPE 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 SPE Material Adverse Effect.



     Section 4.08 PROPERTIES.



          (a) The SPE or a SPE Subsidiary set forth on Schedule 4.08(a) is insured under a
policy of title insurance as the owner of, and, to the knowledge of the SPE, the SPE or a SPE
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 the SPE
or a SPE 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 the SPE or any SPE 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 SPE Material Adverse Effect, to the knowledge of the SPE, (1) none of the SPE,
any SPE 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 the SPE or any SPE 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.



13









 





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



          (d) Except for matters that would not, individually or in the aggregate, reasonably be
expected to have a SPE Material Adverse Effect, (1) to the knowledge of the SPE, none of the SPE,
any SPE Subsidiary, or any other party to any Lease, is in breach or default of any such Lease, (2)
to the knowledge of the SPE, 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 the SPE each of the
leases (and all amendments thereto or modifications thereof) to which the SPE or any SPE Subsidiary
is a party or by which the SPE or any SPE 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. The SPE or a SPE Subsidiary has in place the public liability,
casualty and other insurance coverage with respect to each Property as the SPE 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 the SPE, neither the SPE nor any SPE 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 SPE Material Adverse Effect, to the knowledge of the
SPE, (A) the SPE and the SPE Subsidiaries are in compliance with all Environmental Laws, (B)
neither the SPE nor any SPE Subsidiary have received any written notice from any Governmental
Authority or third party alleging that the SPE, any SPE Subsidiary or any Property is not in
compliance with applicable Environmental Laws, and (C) there has not been a release of a hazardous
substance on any of the Properties that would require investigation or remediation under applicable
Environmental Laws. The representations and warranties contained in this Section 4.10
constitute the sole and exclusive representations and warranties made by the SPE 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 the SPE, 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 would not, individually or in the aggregate,
reasonably be expected to have a SPE Material Adverse Effect.



     Section 4.12 FINANCIAL STATEMENTS. The financial statements of the SPE 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



14









 




involved (except as may be indicated in the notes thereto), subject, in the case of unaudited
statements, to normal year-end audit adjustments, and fairly present in all material respects the
financial condition and results of operations of the SPE as of the dates indicated therein and for
the periods ended as indicated therein.




     Section 4.13 TAXES. Except as set forth in Schedule 4.13, (i) the SPE and each of the
SPE 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 the SPE or any SPE Subsidiaries are the subject
of a pending or ongoing audit, and (iii) except as would not have a SPE Material Adverse Effect, no
deficiencies for any Taxes have been proposed, asserted or assessed against the SPE or any of the
SPE 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, the SPE has been treated as a
partnership and not as a corporation or an association taxable as a corporation, and each of its
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 LITIGATION. Except for actions, suits or proceedings covered by the policies of
insurance described in Section 4.09, to the knowledge of the SPE, there is no action, suit
or proceeding pending or, to the knowledge of the SPE, threatened against the SPE or any SPE
Subsidiary, or any officer, director, principal, managing member, general partner or Affiliate of
any of the foregoing other than actions, suits, proceedings arising in the ordinary course of
business from the ownership and operation of the Properties, which, if adversely determined, would
have a SPE Material Adverse Effect. There is no action, suit, or proceeding pending or, to the
knowledge of the SPE, threatened against or affecting the SPE, SPE Subsidiary or any officer,
director, principal, managing member, general partner or Affiliate of any of the foregoing, which
challenges or impairs the ability of the SPE 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 the SPE, SPE 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 SPE
Material Adverse Effect.



     Section 4.15 NO INSOLVENCY PROCEEDINGS. No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are
pending or, to the SPE’s knowledge, threatened against the SPE, nor are any such proceedings
contemplated by the SPE.



     Section 4.16 SECURITIES LAW MATTERS. The SPE acknowledges that: (i) the REIT and Operating
Partnership intend the offer and issuance of any REIT Shares or OP Units to any Pre-Formation
Participant 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



15









 




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 4.17 NO BROKER. The SPE has not entered into, and covenants that it will not enter
into, any agreement, arrangement or understanding with any Person or firm which will result in the
obligation of the 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 4.18 NO IMPLIED REPRESENTATIONS OR WARRANTIES. Other than the representations and
warranties expressly set forth in this Article IV, the SPE shall not be deemed to have made any
other representation or warranty in connection with this Agreement or the transactions contemplated
hereby.



     Section 4.19 OWNERSHIP OF CERTAIN ASSETS. Except as set forth in Schedule 4.19, the
SPE does not own any loan assets or other securities of any issuer except for equity interests in
other Younan Entities.



     Section 4.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SPE. The parties hereto agree
and acknowledge that the representations and warranties set forth in this Article IV shall not
survive the Closing.



     Section 4.21 NON-FOREIGN STATUS. The SPE is not a foreign person (as defined in the Code) and
is not, therefore, subject to the provisions of the Code relating to the withholding of sales or
exchange proceeds to foreign persons.



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), the SPE shall use commercially reasonable efforts to (and to cause each of
the SPE Subsidiaries to) conduct its businesses and operate and maintain the Properties in the
ordinary course of business consistent with past practice and use commercially reasonable efforts
to preserve intact its current business organizations and preserve its relationships with
customers, tenants, suppliers, advertisers and others having business dealings with it, in each
case consistent with past practice. In addition, and without limiting the generality of the
foregoing, during the period from the date hereof to the Closing Date and except in connection with
the Formation Transactions, the SPE shall not (and shall not permit any of the SPE Subsidiaries to)
without the prior written consent of the REIT:



          (a) (i) declare, set aside or pay any distributions in respect of any of the SPE LLC
Interests, except in the ordinary course of business consistent with past practice and in



16









 




accordance with the SPE LLC Agreement, (ii) issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any SPE LLC Interests or make any other
changes to the equity capital structure of the SPE or any SPE Subsidiary, or (iii) purchase, redeem
or otherwise acquire any SPE LLC Interests or member interests of any of the SPE 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 the SPE or any of the SPE Subsidiaries or any other assets of the SPE or SPE
Subsidiaries;



          (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 or the SPE LLC Agreement;



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



          (f) materially alter the manner of keeping such SPE or SPE 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 the
SPE or any of its Subsidiaries 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 the SPE 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,
the SPE waives and relinquishes all rights and benefits otherwise afforded to the SPE (a) under the
Organizational Documents of the SPE 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 the members of the SPE of their



17









 




SPE LLC Interests to the Operating Partnership, the REIT or any direct or indirect subsidiary
thereof and any and all notice provisions related thereto and (b) for claims against YPI, the REIT
or the Operating Partnership for breach by the SPE or any SPE Subsidiary 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. The SPE acknowledges that the agreements
contained herein and the transactions contemplated 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 the SPE or other agreements among one or more holders of such SPE LLC
Interests or one or more of the members of the SPE. With respect to the SPE and each property in
which a SPE LLC Interest of the SPE represents a direct or indirect interest, the SPE expressly
gives all consents (and any consents necessary to authorize the proper parties in interest to give
all consents) and waivers it is entitled to give that are necessary or desirable to facilitate the
contribution or other Formation Transaction relating to the SPE or property. In addition, if the
transactions contemplated hereby occur, this Agreement shall be deemed to be an amendment to the
Organizational Documents of the SPE 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 the SPE, which shall remain in full force and effect
without modification.




     Section 5.03 EXCLUDED ASSETS. Prior to the Closing, the SPE 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 AND THE SPE. Each
of the Operating Partnership and the SPE 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 OBLIGATIONS OF MERGER SUB. Subject to the terms of this Agreement, the Operating
Partnership shall take all reasonable action necessary to cause Merger Sub (i) to be formed prior
to the Effective Time and become a party to this Agreement by executing a counterpart of this
Agreement where indicated on the signature page hereof (the date of such execution, the
“Joinder Date”) and (ii) to perform its obligations under this Agreement



18









 




and to consummate the Merger on the terms and conditions set forth in this Agreement. All
representations, warranties, covenants, agreements, rights and obligations of Merger Sub herein
shall become effective as to Merger Sub as of the Joinder Date.




     Section 6.03 TAX AGREEMENT.



          (a) The SPE and any of its 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.



          (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 the SPE 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 6.04 WITHHOLDING CERTIFICATE. Prior to Closing, the SPE 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 the SPE by the holder of SPE LLC Interests), certifying that the payment
of consideration in the Merger is exempt from withholding under Section 1445 of the Code and any
similar withholding rules under applicable state or local Tax laws.



     Section 6.05 TAX ADVICE. The Operating Partnership makes no representations or warranties to
the SPE or any holder of SPE LLC Interests regarding the Tax treatment of the Merger or the other
Formation Transactions, or with respect to any other Tax consequences to the SPE or any holder of
SPE LLC Interests of this Agreement, the Merger or the other Formation Transactions. The SPE
acknowledges that the SPE and the holders of SPE LLC Interests are relying solely on their own Tax
advisors in connection with this Agreement, the Merger and the other Formation Transactions and
agreements contemplated hereby.



     Section 6.06 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 the SAE
hereby agrees that the parties shall undertake the Alternate Transaction



19









 




and shall enter into such agreements as shall be necessary to consummate the Alternate
Transaction.




     Section 6.07 EXCLUSION OF ENTITIES. The parties hereby agree that the Operating Partnership
shall have the right, in its sole discretion, to exclude any of the Single Asset Entities from the
Mergers after the date hereof until the Effective Time, provided that the Operating Partnership
shall provide prior written notice to such Single Asset Entities 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 Merger and to consummate the other transactions contemplated by this Agreement to
occur on the Closing Date is subject to the written satisfaction or waiver on or prior to the
Effective Time, of the following conditions:



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



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



          (c) FORMATION TRANSACTIONS. The mergers of (i) YPI with and into the REIT, (ii) YIP with and
into the Operating Partnership, and (iii) the SAE Entity Members with and into the Operating
Partnership shall have been consummated.



          (d) OPERATING PARTNERSHIP AGREEMENT. The Operating Partnership Agreement, in substantially
the form attached hereto as Exhibit C, 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 THE SPE. The obligation of the SPE to effect the
Merger and to consummate the other transactions contemplated by this Agreement to occur on the
Closing Date are further subject to satisfaction of the following:



          (a) REPRESENTATIONS AND WARRANTIES. Except as would not have a REIT Material Adverse Effect,
each of the representations and warranties of the REIT, the Operating Partnership and Merger Sub
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



20









 




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 AND MERGER SUB. Except as would not have a REIT
Material Adverse Effect, each of the Operating Partnership and Merger Sub shall have performed all
agreements and covenants required by this Agreement to be performed or complied with by it on or
prior to the Closing Date.



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



          (d) TAX PROTECTION AGREEMENT. Solely with respect to each SPE 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 A, where applicable.



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



          (a) REPRESENTATIONS AND WARRANTIES. Except as would not have a SPE Material Adverse Effect,
each of the representations and warranties of the SPE 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 THE SPE. The SPE 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 the SPE 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 the SPE and the Properties, taken as a whole.



21









 





          (f) LOCK-UP AGREEMENT. Each of the Pre-Formation Participants owning interests in the SPE
shall have entered into the Lock-Up Agreement substantially in the form attached as Exhibit
E.



          (g) TAX PROTECTION AGREEMENT. Each SPE 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 A on behalf of the Pre-Formation
Participants that hold SPE LLC Interests.



          (h) 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, the SPE shall, to the extent
available, use commercially reasonable efforts to cause the title insurer under such policy to
deliver or cause to be delivered to the Operating Partnership a so-called “fairway” endorsement,
“merger” endorsement or other written assurance from such insurer, in each case in form and
substance reasonably acceptable to the REIT and 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.



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



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, Inc.

21700 Oxnard Street, Suite 800

Woodland Hills, California 91367

Facsimile: (818) 703-5907

Attention: Chief Executive Officer




if to the SPE, to:




YPI 4851 LBJ Fund, L.P.

21700 Oxnard Street, Suite 800

Woodland Hills, California 91367




22









 





Facsimile: (818) 703-5907

Attention: Chief Executive Officer




     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 SPE LLC Interest, or portion thereof, as separately communicated to each
holder of a SPE LLC 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 SPE LLC Interest, 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 SPE LLC Interest, 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.



          (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.




23









 





          (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 B 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) “Lock-Up Agreement” means that certain Lock-Up Agreement, by and between the
underwriters and each investor of the REIT and/or the OP.



          (u) “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.



          (v) “Operating Partnership Agreement” means the agreement of limited partnership of
the Operating Partnership, as amended and restated and in effect immediately prior to the Effective
Time.



          (w) “Organizational Documents” means the limited liability company agreement of the
SPE.




24









 





          (x) “Permitted Liens” means (i) Liens, or deposits made to secure the release of such
Liens, securing Taxes, the payment of which is not delinquent or the payment of which (including,
without limitation, the amount or validity thereof) is being contested in good faith by appropriate proceedings for which adequate reserves have been made in accordance with GAAP;
(ii) zoning, entitlement, building and other land use Laws imposed by governmental agencies having
jurisdiction over the Properties; (iii) covenants, conditions, restrictions, easements for public
utilities, encroachments, rights of access or other non-monetary matters that do not materially
impair the use of the Properties for the purposes for which they are currently being used or
proposed to be used in connection with the relevant Person’ 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 the title policies 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 SPE Material Adverse Effect.




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



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



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



          (bb) “Principal” means Zaya Younan.



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



          (dd) “REIT Material Adverse Effect” means any material adverse change in any of the
assets, business, condition (financial or otherwise), results of operation or prospects of the
REIT.



          (ee) “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.



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



          (gg) “SPE LLC Agreement” means the limited liability company agreement of Single Asset
Entity, LLC.



          (hh) “SPE 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 SPE
and each SPE Subsidiary, taken as a whole.




25









 







          (ii) “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.



          (jj) “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.



          (kk) “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.



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



          (mm) “Valid Election” means, with respect to any SPE LLC Interest, an irrevocable
election to receive all or a portion of its Allocated Share 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 SPE LLC Interest, as applicable, or a Consent Form as to which any deficiencies have been
waived by the REIT.



          (nn) “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



26









 





assigned (except by
operation of law) by any party without the prior written consent of the other parties, and any
attempted assignment without such consent shall be null and void and of no force and effect.



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



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



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



          (b) Any Dispute (including the determination of the scope or applicability of this agreement
to arbitrate) that is not resolved pursuant to Section 8.08(a) above shall be submitted to
final and binding arbitration in California before one neutral and impartial arbitrator, in
accordance with the Laws of the State of California for agreements made in and to 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 and the SPE shall appoint one arbitrator within fifteen (15) days of a demand for
arbitration. If the Operating Partnership and the SPE 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



27









 





of fact and
conclusions of law, shall be filed with JAMS and mailed to the parties no later than thirty (30)
days after the close of the arbitration hearing. The arbitration award shall be final and binding
on the parties and not subject to collateral attack. Judgment upon the arbitration award may be
entered in any federal or state court having jurisdiction thereof.




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



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



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



     Section 8.10 RULES OF CONSTRUCTION.



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



          (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,



28









 







any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time, amended, qualified or supplemented, including (in the
case of agreements and instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.



     Section 8.11 EQUITABLE REMEDIES. The parties agree that irreparable damage would occur to the
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 the SPE 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, the SPE 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 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, Merger Sub and the SPE.



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



[SIGNATURE PAGE FOLLOWS]






29









 








     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	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	YPI 4851 LBJ FUND, L.P.

a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	YPI 4851 LBJ, GP, LLC

a Delaware limited liability company

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Younan Investment Properties, L.P.

a Delaware limited partnership

Its Sole Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Younan Properties, Inc.

a California corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

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






30









 





	 	 	 	 	 	 	 	 	 
	AGREED AND ACCEPTED as of	 	 
	 
	 	 	 	 	 	 	 	 
	April 8, 2010,	 	 
	 
	 	 	 	 	 	 	 	 
	YPI 4851 LBJ FUND MERGER SUB LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	Younan Properties, L.P.

a Maryland limited partnership

Its Sole Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Younan Properties, Inc.

a Maryland corporation

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Zaya S. Younan	 	 
	 

	 	 	 	Name:
	 	Zaya S. Younan

	 	 
	 

	 	 	 	Title:	 	President	 	 











 









 








SCHEDULE I




List of SAE Entity Members:



1.    YGH Investments, LLC


2.    YPI 9801 Westheimer Fund, LLC


3.    Younan Tower Fund, LLC


4.    YPI One Dallas Centre MM, LLC


5.    YPI One Dallas Centre Fund, LLC


6.    YPI Thanksgiving Tower Fund, LLC


7.    YPI CD Portfolio Properties, LLC


8.    YPI One North Arlington Fund, LLC


9.    5401-5407 Trillium, LLC


10.  YGAZ, LLC


11.  YPI S/WL LLC




List of Single Asset Entities:



1.    5959 Topanga Fund, LLC


2.    YPI 555 St Charles Fund, LLC


3.    YPI North Belt Portfolio, LLC


4.    YPI 1010 Lamar, LLC


5.    YPI Two Westlake Park, LLC


6.    YPI Norfolk Tower Partners, L.P.


7.    YPI 4851 LBJ Fund, L.P.


8.    YP KPMG Centre Owner, LLC


9.    YPI Park Central Holding, L.P.


10.  YPI Central Expressway Holding, L.P.


11.  YPI Embassy Plaza, LLC


12.  One Graystone GP, LLC









 









 








SCHEDULE II




Calculation of Target Entity Value



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



EV = AP
x [TIV/(1-COP) – AA] + EA;



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



where:




EV = Entity Value;

AP = Allocable Percentage;

TIV = Total Inside Value;

COP = Cash Out Percentage;

AA = Aggregate Adjustment; and

EA = Entity Adjustment.



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



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



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






 









 







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



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



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



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



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



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



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



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



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







 









 







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



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



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



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



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



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



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









 









 








EXHIBITS





			
	Exhibit A:	 	Tax Protection Agreement






			
	Exhibit B:	 	List of Formation Transaction Documentation






			
	Exhibit C:	 	Operating Partnership Agreement






			
	Exhibit D:	 	Form of Registration Rights Agreement






			
	Exhibit E:	 	Lock-Up Agreement










 









 








EXHIBIT A




Tax Protection Agreement



See Attached.









 









 








EXHIBIT B


Formation Transaction Documentation



Form of Younan Properties, Inc. Merger Agreement



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



•   YGH Investments, LLC


•   YPI 9801 Westheimer Fund, LLC


•   Younan Tower Fund, LLC


•   YPI One Dallas Centre MM, LLC


•   YPI One Dallas Centre Fund, LLC


•   YPI Thanksgiving Tower Fund, LLC


•   YPI CD Portfolio Properties, LLC


•   YPI One North Arlington Fund, LLC


•   5401-5407 Trillium, LLC


•   YGAZ, LLC


•   YPI S/WL LLC



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



•   5959 Topanga Fund, LLC


•   YPI 555 St Charles Fund, LLC


•   YPI North Belt Portfolio, LLC


•   YPI 1010 Lamar, LLC


•   YPI Two Westlake Park, LLC


•   YPI Norfolk Tower Partners, L.P.


•   YPI 4851 LBJ Fund, L.P.


•   YP KPMG Centre Owner, LLC


•   YPI Park Central Holding, L.P.


•   YPI Central Expressway Holding, L.P.


•   YPI Embassy Plaza, LLC


•   One Graystone GP, LLC



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



Registration Rights Agreement



Representation, Warranty and Indemnity Agreement



Indemnity Escrow Agreement



Lock-Up Agreement



Tax Protection Agreement



Option Agreement (Savoy)







 









 







Management Agreement (Savoy)



Articles of Amendment and Restatement of Younan Properties, Inc.



Bylaws of Younan Properties, Inc.









 









 








EXHIBIT C




Operating Partnership Agreement



See Attached.









 









 








EXHIBIT D




Form of Registration Rights Agreement 



See Attached.









 









 








EXHIBIT E




Lock-Up Agreement



See Attached.