Document:

nen_EX_10_17

		
			                                                                                                                               Exhibit 10.17
		

		
			 
		

		
			PURCHASE AND SALE CONTRACT
		

		
			AND JOINT ESCROW INSTRUCTIONS
		

		
			between
		

		
			Avalon II MASSACHUSETTS Value I, L.P. 
		

		
			SELLER
		

		
			and
		

		
			Residences at captain parker, llc
		

		
			BUYER
		

		
			 
		

		
			Captain Parker Arms Apartments
		

		
			Lexington, Massachusetts
		

		
			 
		

		
			as of August_27_, 2015
		

		
			 
		

		
			

		 

		

			8457297.7

		

 

TABLE OF CONTENTS
		

		
			DESCRIPTION OF PROPERTY1
		

		
			Property1 
		

		
			Marks Excluded2 
		

		
			SALE SUBJECT TO LEASES2 
		

		
			PURCHASE PRICE AND PAYMENT2 
		

		
			Purchase Price2 
		

		
			Deposit3 
		

		
			Purchase Price Adjustments3 
		

		
			CONVEYANCE OF TITLE3 
		

		
			Title Policy3 
		

		
			Post Signing Title Objections4 
		

		
			CLOSING4 
		

		
			Escrow Instructions4 
		

		
			Closing Date5 
		

		
			Seller Deliveries5 
		

		
			Buyer Deliveries6 
		

		
			PROPERTY INSPECTION7 
		

		
			Omitted7 
		

		
			Property Inspection7 
		

		
			CONDITIONS TO CLOSING8 
		

		
			Buyer’s Conditions8 
		

		
			DEFAULT8 
		

		
			Seller Default8 
		

		
			Buyer Default9 
		

		
			Attorneys’ Fees.9 
		

		
			DAMAGE OR DESTRUCTION; CONDEMNATION9 
		

		
			Damage or Destruction9 
		

		
			Condemnation10 
		

		
			“AS-IS” SALE10 
		

		
			Disclaimers10 
		

		
			Release11 
		

		
			Negotiated Provision11 
		

		
			REPRESENTATIONS AND WARRANTIES11 
		

		
			Knowledge Standard13 
		

		
			Limitations13 
		

		
			Representations and Warranties of Buyer13 
		

		
			OPERATIONS13 
		

		
			Operational Covenants13 
		

		
			Operating Contracts14 
		

		
			CLOSING ADJUSTMENTS AND COSTS15 
		

		
			Adjustments and Pro-rated Items15 
		

		
			True-Up16 
		

		
			Closing Costs16 
		

		
			Closing Statement17 
		

		
			BROKER17 
		

		
			Indemnity17 
		

		
			Payment of Commission17 
		

		
			MISCELLANEOUS PROVISIONS17 
		

		
			Recording17 
		

		
			Notice17 
		

		
			Captions18 
		

		
			Successors and Assigns18 
		

		
			Governing Law19 
		

		
			Multiple Counterparts19 
		

		
			Entire Agreement19 
		

		
			Post Closing Obligations19 
		

		
			Waiver of Jury Trial19 
		

		
			Additional Offers19 
		

		
			Like-Kind Exchange20 
		

		
			Time of the Essence20 
		

		
			Attorneys’ Fees.20 
		

		
			CONFIDENTIALITY20 
		

		
			DUTIES AND RESPONSIBILITIES OF ESCROW AGENT20 
		

		
			Application of Deposit20 
		

		
			Dispute21 
		

		
			Liability; Miscellaneous21 
		

		
			
		

		
			EXHIBITS
		

		
			Exhibit ADescription of Real Property
		

		
			Exhibit BPersonal Property
		

		
			Exhibit CLeases and Rent Roll
		

		
			Exhibit DForm of Deed
		

		
			Exhibit EForm of Bill of Sale
		

		
			Exhibit FForm of Assignment and Assumption Agreement (re: Leases)
		

		
			Exhibit GForm of Assignment and Assumption Agreement (re: Contracts)
		

		
			Exhibit HForm of FIRPTA Affidavit
		

		
			Exhibit IIntentionally Omitted
		

		
			Exhibit JLitigation
		

		
			Exhibit KTitle Commitment
		

		
			Exhibit LMaintenance Covenant
		

		
			 
		

		
			

		 

		

			i

		

		

			8457297.7

		

 

PURCHASE AND SALE CONTRACT
		

		
			THIS PURCHASE AND SALE CONTRACT AND JOINT ESCROW INSTRUMENTS (the “Contract”) is made as of August__, 2015, by and between Avalon II Massachusetts Value I, L.P., a Delaware limited partnership (“Seller”), and Residences at Captain Parker, LLC, a Massachusetts limited liability company (“Buyer”).
		

		
			Seller owns certain land in the Town of Lexington, County of  Middlesex, and the Commonwealth of Massachusetts, and the buildings and improvements thereon, comprising a multifamily residential housing complex consisting of 94 multifamily apartment units, and commonly known as “Captain Parker Arms”.
		

		
			Seller desires to sell and Buyer desires to purchase the Property (as hereinafter defined) on the terms and subject to the conditions set forth herein.
		

		
			For the consideration hereinafter named, and for other good and valuable consideration, receipt of which is acknowledged hereby, the parties do hereby agree as follows:
		

			
	
			
				 ARTICLE 1.
			DESCRIPTION OF PROPERTY

			
	
			
				 1.1
			Property

		
			Seller agrees to sell and Buyer agrees to buy upon the terms and conditions hereinafter set forth:
		

			
	
			
				 (i)
			Certain premises located in the Town of Lexington, County of Middlesex and the Commonwealth of Massachusetts, commonly known as “Captain Parker Arms”, as more particularly described in Exhibit A attached hereto and incorporated herein by reference, together with all right, title and interest of Seller in and to (x)  all rights, privileges, transferable easements, development rights, covenants, tenements, hereditaments and appurtenances thereto, including, without limitation, any easements, rights of way or other interests in, on, or under any land, highway, alley, street or right of way abutting or adjoining such premises, and (y) any walls, sidewalks, or land lying in the bed of any street (opened or proposed) adjacent to or abutting or adjoining such premises (collectively, the “Real Property”);

			
	
			
				 (ii)
			all buildings and other improvements located thereon (the “Improvements”, and, together with the Real Property, the “Premises”);

			
	
			
				 (iii)
			all items of personal property owned by Seller and located on the Premises or used in connection with the ownership or operation of the Premises, described in Exhibit B attached hereto and incorporated herein by reference, including, without implied limitation, whether or not listed on Exhibit B, all furniture, fixtures, equipment, machines, apparatus, appliances, supplies and personal property of every nature and description and all replacements thereof including the Seller’s domain name www.captainparkerarms.com (collectively, the “Personal Property”) but expressly excluding (a) items of personal property owned by Seller and used in connection with the Property as part of Seller’s integrated systems of ownership, management and/or operations of apartment projects, such as, by way of example and without limitation, the computer software for the key track system, all software related to the computer and phone systems, toll free telephone numbers, other software, corporate licenses, and management and financial reporting systems and software, (b) utility deposits, (c) non-refundable resident fees received by Seller, and (d) lump sum payments previously received under any contract or leases (but not including resident leases);

		 

		

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				 (iv)
			all of the Leases (as hereinafter defined), including Leases entered into after the Effective Date as permitted by this Contract, and (to the extent located at the Property only) all tenant files and book and records pertaining to the Premises (but excluding any confidential or proprietary materials); and

			
	
			
				 (v)
			to the extent assignable and within Seller’s possession or control only, all intangible property used or useful in connection with the foregoing, including, without limitation, all contract rights, plans, specifications, drawings and prints relating to the construction of the Improvements, guarantees, licenses, permits and warranties and the domain name used in connection with the Premises, but excluding any engineering (such as structural, mechanical, environmental and geotechnical) reports or studies of any kind (collectively, the “Intangible Property”).  

		
			All items referred to in clauses (i), (ii), (iii), (iv), and (v) are herein sometimes collectively referred to as the “Property”.  
		

			
	
			
				 1.2
			Marks Excluded

		
			In connection with the ownership, management and operation of the Property and other properties owned and/or managed by Seller, Seller has used and may continue to use the tradenames, trademarks and service marks “Archstone”, “AVA”, “Avalon”, “Avalon on”, Avalon at”, “Avalon by the”, “Avalon on the”, “Avalon at the”, “AvalonBay”, “Avalon Communities”, “a Avalon”, “D’Tails”, “eaves”, “eaves by Avalon”, fleur de lis, “Great Apartments. Great Service. Guaranteed”, “Leaders in Urban Living”, “Live Awesome”, “Live Up”, “Seal of Service”, “Time Well Spent” and “Where We Want, We Live” (collectively, the “Marks”).  Notwithstanding anything herein express or implied to the contrary, Buyer acknowledges that it has no interest in and is not acquiring any right to the Marks and agrees and acknowledges that the Marks are trademarks and service marks owned by Seller and that the Marks are and will continue to be the sole property of Seller.  Included in the intangible property to be conveyed to Buyer pursuant to Section 1.1(v) shall be Seller’s right, if any (and then only to the extent assignable by Seller) to the name “Captain Parker Arms” as it relates solely to the use in connection with the Property and such name shall not be deemed part of the Marks.  Following the Closing, Buyer shall have no rights to use or display any of the Marks for any purpose whatsoever.  Within sixty (60) days after the Closing, Buyer will remove any and all signs, materials, documents, inventory, amenities, supplies or other matter containing the Marks.  Buyer agrees that it shall not challenge or contest in any way (i) Seller’s registration or application for registration of the Marks with the U.S. Patent & Trademark Office, or with any other trademark office; (ii) the validity of the Marks; (iii) Seller’s exclusive worldwide ownership of the Marks; or (iv) Seller’s right to grant to others licenses to use the Marks.  The provisions of this Section 1.2 shall survive the Closing and the delivery of the Deed.  
		

			
	
			
				 ARTICLE 2.
			SALE SUBJECT TO LEASES

		
			Subject to the provisions of Article 4 hereof, the Premises will be conveyed subject to certain leases (hereinafter called the “Leases”) described in Exhibit C attached hereto and incorporated herein by reference, or as hereafter added pursuant to the provisions of Article 12 hereof.
		

			
	
			
				 ARTICLE 3.
			PURCHASE PRICE AND PAYMENT

			
	
			
				 3.1
			Purchase Price

		
			The total purchase price (the “Purchase Price”) for the Property is Thirty One Million Six Hundred Thousand and 00/100 Dollars ($31,600,000.00) which, subject to Sections 3.2 and 3.3, shall be payable to Seller through Escrow (as hereinafter defined), at the Closing (as hereinafter defined), in 

		 

		

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			8457297.7

		

 

lawful currency of the United States of America in immediately available funds by wire transfer to an account designated to Escrow Agent by Seller.  Seller and Buyer expressly acknowledge and agree that no portion of the Purchase Price is allocated to the Personal Property or to the Intangible Property.  
		

			
	
			
				 3.2
			Deposit

		
			Within two (2) business days following the execution of this Contract and the opening of an escrow in connection herewith (the “Escrow”) with Escrow Agent at Commonwealth Land/Chicago Title, 265 Franklin Street, 8th Floor, Boston, MA 02110,  Attention: Philip Tanner (the “Escrow Agent”), as security for Buyer’s performance hereunder, Buyer shall make an initial deposit (the “Deposit”) of One Million and 00/100 Dollars ($1,000,000.00) with Escrow Agent to be held and disbursed by Escrow Agent according to the terms of this Contract.   The account will be opened in the name of Escrow Agent for the benefit of Buyer who warrants and represents to Escrow Agent that Buyer’s Employee Identification Number is 47-4809875.  Upon payment, the Deposit shall be the property of Seller and shall be non-refundable except as expressly provided in this Contract.  The Deposit shall be applied in reduction of the Purchase Price payable at the Closing.  
		

		
			 
		

			
	
			
				 3.3
			Purchase Price Adjustments

		
			The payment on account of the Purchase Price required to be deposited by Buyer into Escrow and paid to Seller at the Closing shall be increased or decreased, as the case may be, to account for all items to be apportioned or prorated pursuant to this Contract.
		

			
	
			
				 ARTICLE 4.
			CONVEYANCE OF TITLE

			
	
			
				 4.1
			Title Policy

		
			At Closing, Seller shall convey and transfer to Buyer such fee simple marketable title to the Premises as will enable the Title Company (as hereinafter defined) to issue to Buyer an Owner’s Policy of Title Insurance (ALTA Form 2006) (the “Title Policy”) covering the Premises, in the full amount of the Purchase Price (subject only to the Permitted Exceptions).  Notwithstanding anything contained herein to the contrary, the Premises shall be conveyed subject to the following matters, which shall be deemed to be Permitted Exceptions:
		

			
	
			
				 (a)
			the rights of tenants, as tenants only, under the Leases and any new Leases entered into between the date hereof and Closing in accordance with the terms of this Contract;

			
	
			
				 (b)
			the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the date of Closing, subject to adjustment as herein provided;

			
	
			
				 (c)
			local, state and federal laws, ordinances or governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Property; and

			
	
			
				 (d)
			those matters which are listed as exceptions or exclusions from coverage under that certain Commitment for Title Insurance issued by First American Title Insurance Company (“Escrow Agent” or “Title Company”), with an effective date of July 10, 2015, a copy of which is attached as Exhibit K hereto; provided, however, that at Closing, Seller will be obligated to discharge the mortgage financing referenced in Item 4 of Schedule B-1 of said title commitment in accordance with customary Massachusetts practice .

		
			

		 

		

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(e)those matters or state of facts which are shown on the ALTA survey of the Property prepared by Precision Land Surveying, Inc. dated as of June 9, 2015, a copy of which has been provided to Buyer.
		

			
	
			
				 4.2
			Post Signing Title Objections

		
			Buyer may prior to Closing, notify Seller in writing of any objection to title (excluding objections to title which are or are deemed to be Permitted Exceptions) arising after the date hereof (hereinafter “New Title Matters”).  In the event Buyer shall so notify Seller of any objection(s) to any New Title Matter, Seller shall have the right, but not the obligation, to cure such objection(s), other than any defects, objections or exceptions which comprise mortgages or liens voluntarily created by or on behalf of Seller, and, to a maximum of $50,000 in the aggregate, involuntary liens over a liquidated sum which can be satisfied by payment of a liquidated amount, which Seller agrees that it shall be obligated to either pay, discharge or comply with at or before the Closing or make arrangement with the Title Company to insure (at normal rates) without such objection as an exception in Buyer’s Title Policy.  In the event there are any objections for any New Title Matter which Seller is not obligated to either pay, discharge, comply or otherwise cure at or before the Closing, then within three (3) business days after receipt of Buyer’s notice of objection(s), Seller shall notify Buyer in writing whether Seller elects to attempt to cure such objection(s).  Failure of Seller to give such notice shall be deemed an election by Seller not to cure such objection(s).  If Seller elects to attempt to cure any such matter, Seller shall use reasonable efforts to cure such objections.  If Seller elects not to cure any objection(s) specified in Buyer’s notice which Seller is not required hereby to either pay, discharge, comply or otherwise cure, or if Seller is unable to effect a cure prior to the Closing, Buyer shall have the following options to be given by written notice within three (3) business days of Seller’s notice or deemed election:  (i) to accept a conveyance of the Property subject to the Permitted Exceptions, specifically including any New Title Matter objected to by Buyer which Seller is unwilling or unable to cure (which such matter(s) shall thereafter be deemed to be a Permitted Exception), without reduction of the Purchase Price, or (ii) to terminate this Contract by sending written notice thereof to Seller, and upon delivery of such notice of termination, this Contract shall terminate, the Deposit shall returned to Buyer, and thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except for the Surviving Obligations, as hereinafter defined.
		

		
			4.3The Buyer is a publicly traded entity and is required to provide the SEC with information regarding the acquisition prior to closing which will disclose the fact of the Purchase and Sale Agreement with Seller, the property address, and purchase price.  Seller agrees to cooperate with Buyer at no cost to Seller in connection with this filing.
		

			
	
			
				 ARTICLE 5.
			CLOSING

			
	
			
				 5.1
			Escrow Instructions

		
			Upon mutual execution of this Contract, Buyer and Seller shall deposit an executed counterpart of this Contract with Escrow Agent and this Contract shall serve as instructions to Escrow Agent for consummation of the purchase and sale contemplated hereby.  Seller and Buyer shall execute such supplemental escrow instructions as may be appropriate to enable Escrow Agent to comply with the terms of this Contract, provided such supplemental escrow instructions are not in conflict with this Contract as it may be amended in writing from time to time.  In the event of any conflict between the provisions of this Contract and any supplementary escrow instructions signed by Buyer and Seller, the terms of this Contract shall control.
		

		 

		

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				 5.2
			Closing Date

		
			The closing of the transactions contemplated hereunder (the “Closing”) shall take place through escrow on September 18, 2015 (the “Closing Date”).   Time is of the essence.  In the event the Closing does not occur on or before the Closing Date, Escrow Agent shall, unless it is notified by both parties to the contrary within five (5) days after the Closing Date, and subject to the provisions of Sections 3.2 and 8.2 below, return to the depositor thereof items which were deposited under Section 5.3 or Section 5.4.  Any such return shall not, however, relieve Buyer or Seller of any liability it may have for its or his wrongful failure to consummate the Closing.  
		

			
	
			
				 5.3
			Seller Deliveries

		
			At or before the Closing, Seller shall deliver to Escrow Agent or Buyer (as applicable) the following documents in the forms attached hereto or otherwise reasonably satisfactory in form and substance to Seller and Buyer and their counsel, properly executed and acknowledged as required:
		

			
	
			
				 (i)
			An original deed (the “Deed”) in the form of Exhibit D attached hereto and incorporated herein by reference;

			
	
			
				 (ii)
			Four (4) duly executed counterparts of an original Bill of Sale in the form of Exhibit E attached hereto and incorporated herein by reference;

			
	
			
				 (iii)
			Four (4) duly executed counterparts of an original of an Assignment and Assumption Agreement relating to the Leases and security deposits, key deposits, last month’s rent and accrued interest thereon to the extent required by the Lease or applicable law but excluding any of such deposits which are non-refundable (collectively, the “Security Deposits”) in the form attached hereto as Exhibit F and incorporated herein by reference (the “Lease Assignment”);

			
	
			
				 (iv)
			Originals of all Leases, any renewals thereof and all amendments thereto, and copies of Lease records, service contracts, guarantees, licenses, permits, warranties and all other non-confidential and nonproprietary books, records and files, maintained by Seller or Seller’s property manager relating to the construction, leasing, operation and maintenance of the Property, to the extent in Seller’s possession or control and located at the Premises (excluding Seller’s corporate records); 

			
	
			
				 (v)
			Four (4) duly executed counterparts of an original of an Assignment and Assumption Agreement in the form attached hereto as Exhibit G and incorporated herein by reference relating to the Intangible Property and Operating Contracts, as hereinafter defined (the “Contract Assignment”);

			
	
			
				 (vi)
			To the extent not previously delivered originals or copies of all certificates of occupancy in Seller’s possession or control for all of the Improvements that form a part of the Property and all tenant occupied space included within such buildings;

			
	
			
				 (vii)
			Four (4) duly executed counterparts of an original certification of non foreign status in the form attached hereto as Exhibit H and incorporated herein by reference;

			
	
			
				 (viii)
			Evidence satisfactory to the Title Company that all necessary approvals and/or consents by the directors of Seller have been delivered and such other evidence satisfactory to the Title Company of Seller’s authority and the authority of the signatory on behalf of Seller to convey the Premises pursuant to this Contract;

		 

		

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				 (ix)
			Originals or a copy of all as built plans and specifications, architectural and engineering drawings, utilities layout plans, topographical plans and the like for the Improvements (if in Seller’s possession or control if not delivered at the Premises);

			
	
			
				 (x)
			All Security Deposits, together with accrued interest thereon if payable under the Leases or pursuant to applicable law;

			
	
			
				 (xi)
			Affidavits sufficient for the Title Company to delete any exceptions for parties in possession (other than tenants under the Leases, as tenants only) and mechanics’ or materialmen’s liens from the Title Policy;

			
	
			
				 (xii)
			A Rent Roll certified as true and correct in all material respects as of five days before the Closing Date which certification shall be subject to the qualifications and limitations set forth in Section 11.3;

			
	
			
				 (xiii)
			A signed copy of a closing statement setting forth the Purchase Price, the closing adjustments and prorations and the application thereof at the Closing (the “Closing Statement”);

			
	
			
				 (xiv)
			Four (4) duly executed counterparts of a certification by Seller that all representations and warranties made by Seller in this Contract are true and correct in all material respects on the date of Closing;

			
	
			
				 (xv)
			A copy of a standard tenant notification letter in a form to be drafted by Buyer and reasonably satisfactory to Seller and as required by law; and

			
	
			
				 (xvi)
			Such other documents as are reasonably necessary to consummate the transactions herein contemplated in accordance with the terms of the Contract, provided that in no event shall Seller be required to deliver any item which increases its liabilities or obligations after the Closing.

			
	
			
				 5.4
			Buyer Deliveries

		
			At or before the Closing, Buyer shall deliver, or cause to be delivered, to Escrow Agent or Seller the following payment and documents, in the forms attached hereto or otherwise reasonably satisfactory in form and substance to Seller and Buyer and their counsel, properly executed and acknowledged as required:
		

			
	
			
				 (i)
			The Purchase Price, with a credit in the amount of the Deposit, as adjusted in accordance with Section 3.3 hereof;

			
	
			
				 (ii)
			Four (4) duly executed counterparts of an original of the Lease Assignment;

			
	
			
				 (iii)
			Four (4) duly executed counterparts of an original of the Contract Assignment;

			
	
			
				 (iv)
			A signed copy of the Closing Statement; and

			
	
			
				 (v)
			Such other documents as are reasonably necessary to consummate the transactions herein contemplated in accordance with the terms of the Contract, provided that in no event shall Buyer be required to deliver any item which increases his liabilities or obligations after the Closing.

		 

		

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				 ARTICLE 6.
			PROPERTY INSPECTION

			
	
			
				 6.1
			Omitted

			
	
			
				 6.2
			Property Inspection

			
	
			
				 (a)
			Seller shall make the Property available at reasonable times (but in no event during weekends, holidays or after Close of Business) to Buyer and his agents, consultants, representatives, lenders, investors, and engineers for such inspections and tests as Buyer deems appropriate, including for Buyer’s engineering inspection(s), hazardous materials inspections, site evaluations, and such other inspections and tests as Buyer deems appropriate.  Buyer shall give Seller at least twenty-four (24) hours’ prior notice of any visit or tests describing who will visit and the nature of such visit and/or tests.  Seller shall be entitled to have a representative present during any visits or tests.  Other than for the purpose of routine review of public records and other customary requests made in connection with Buyer’s inspection of the Property (but in no event shall such requests involve any inspection of the Property by any governmental official), the Buyer Parties (as defined below) may not meet with any governmental authority regarding the Property without Seller’s prior written consent; which consent shall not be unreasonably withheld, conditioned or delayed.  If Seller’s consent is obtained by Buyer, Buyer shall provide to Seller at least two (2) business days prior written notice of the intended contact and shall permit Seller to have a representative present when Buyer has such contact with any governmental official or representative.  No invasive tests (including, without limitation, tests for mold, soils and water samples and soils borings) shall be conducted without Seller’s consent, which consent may be withheld in Seller’s sole discretion, and all investigations shall be subject to the rights of tenants and shall be done in a manner which minimizes disruption to tenants.  Buyer shall not (i) unreasonably disturb the tenants or unreasonably interfere with their use of the Property pursuant to their respective leases; (ii) unreasonably interfere with the operation and maintenance of the Property; (iii) damage any part of the Property or any personal property owned or held by any tenant or any third party; (iv) injure or otherwise cause bodily harm to any person; or (v) permit any liens to attach to the Property by reason of the exercise of his rights hereunder.

			
	
			
				 (b)
			To the fullest extent permitted by law, Buyer hereby indemnifies and holds Seller and Seller’s agents and representatives harmless from, all claims, liabilities, liens, damages, losses, costs, expenses, including reasonable attorneys’ fees (collectively, “Claims”) to the extent arising out of (i) any entry onto the Property, or any inspections performed, by Buyer or any of his employees, agents, representatives or contractors (“Buyer Parties”), or (ii) a breach of this Contract by Buyer.  Buyer shall not have any liability to Seller under the foregoing indemnity or otherwise for any Claim that arises out of (i) the mere discovery of a pre-existing condition on the Property by the Buyer Parties that is not exacerbated by the Buyer Parties and (ii) the gross negligence or willful misconduct of Seller or Seller’s agents or representatives.

			
	
			
				 (c)
			Buyer waives and releases any Claims against Seller or Seller’s affiliates, subsidiaries, successors, assigns, agents and representatives for property damages or bodily injury to the Buyer Parties arising out of the exercise of the rights under this Contract other than claims which arise from the gross negligence or willful misconduct of Seller or Seller’s affiliates, subsidiaries, successors, assigns, agents or representatives.

			
	
			
				 (d)
			Buyer and his contractors shall each provide Seller with evidence of $2,000,000 commercial general liability insurance, naming Seller and AvalonBay Communities, Inc. as additional insureds, prior to entering the Premises, and such other insurance coverage as may reasonably be required by Seller.  Buyer shall (i) promptly repair any damage to the Property and restore any areas disturbed 

		 

		

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	resulting directly or indirectly from any inspections substantially to their condition existing immediately prior to the performance of such inspections and (ii) comply with all applicable laws.

		
			(e)It is expressly understood and agreed that, notwithstanding Seller making the Property and certain information related thereto available for Buyer’s inspection and investigation as set forth in this Article 6, Buyer’s obligation to close on his acquisition of the Property is without any contingency whatsoever with respect to  the condition or repair of the Property or the value, expense of operation, or income potential thereof, or as to any other fact or condition which has or might affect the Property or the condition, repair, value, expense of operation or income potential of the Property or any portion thereof.
		

		
			(f)The provisions of this Section 6.2 shall survive the termination of this Contract. 
		

			
	
			
				 ARTICLE 7.
			CONDITIONS TO CLOSING

			
	
			
				 7.1
			Buyer’s Conditions

		
			Without limiting any other conditions to Buyer’s obligations to close set forth in this Contract, the obligations of Buyer under this Contract are subject to the satisfaction at the time of  Closing of each of the following conditions (any of which may be waived in whole or in part by Buyer at or prior to Closing):
		

			
	
			
				 (i)
			All of the representations by Seller set forth in this Contract or any Exhibit attached hereto shall be true and correct in all material respects, provided that change to any representation or warranty based on any modifications to the Rent Roll or any other action of Seller which is permitted by this Contract shall not constitute a condition of Closing; and

			
	
			
				 (ii)
			Seller shall have performed, observed, and complied in all material respects with all covenants and agreements required by this Contract to be performed by Seller at or prior to Closing.

		
			If any condition set forth in this Section 7.1 is not met, Buyer may (x) waive any of the foregoing conditions and proceed to Closing on the Closing Date with no offset or deduction from the Purchase Price, (y) terminate this Contract and receive a return of the Deposit from Escrow Agent, or (z) if such failure constitutes a default by Seller as specified in Section 8.1, Buyer shall have the remedies set forth in said Section 8.1.
		

			
	
			
				 ARTICLE 8.
			DEFAULT

			
	
			
				 8.1
			Seller Default

		
			If Seller fails to fulfill any of its obligations hereunder or if there is a willful and material breach by Seller of any of its representations and warranties hereunder prior to the Closing, and such failure or breach continues for thirty (30) days after written notice from Buyer to Seller (other than Seller’s obligations to deliver the documents set forth in Section 5.3 as to which no notice or cure period shall apply), Buyer shall have any one of the following rights and remedies:
		

			
	
			
				 (i)
			Buyer shall have the right to terminate this Contract by notice to Seller, in which event the Deposit together with interest thereon shall be paid to Buyer, and all obligations of the parties under this Contract shall terminate except for Buyer’s Surviving Obligations; or

		 

		

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				 (ii)
			Buyer shall have the right to waive the breach or default and proceed to Closing in accordance with the provisions of this Contract without reduction of the Purchase Price; or

			
	
			
				 (iii)
			Buyer may seek specific performance for Seller’s failure to execute and deliver the documents necessary to convey the Property to Buyer.  If the remedy of specific performance is not available, Buyer shall be entitled to its third party costs and expenses incurred in connection with this Agreement up to the maximum amount of $500,000.00.

			
	
			
				 8.2
			Buyer Default

		
			IF THE SALE OF THE PROPERTY IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER THIS CONTRACT ON THE PART OF THE BUYER, BUYER AND SELLER AGREE THAT IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE THE AMOUNT AND EXTENT OF DETRIMENT TO SELLER.  BUYER AND SELLER THEREFORE AGREE THAT BUYER’S DEPOSIT PLUS ACCRUED INTEREST THEREON IS A REASONABLE ESTIMATE OF SELLER’S DAMAGES AND THAT SELLER SHALL BE ENTITLED TO SAID SUM AS LIQUIDATED DAMAGES, WHICH SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY, EITHER AT LAW OR IN EQUITY, AS A RESULT OF SUCH DEFAULT.  IN SUCH EVENT, THE SELLER SHALL RETAIN THE DEPOSIT.  TO SIGNIFY THEIR AWARENESS AND AGREEMENT TO BE BOUND BY THE TERMS AND PROVISIONS OF THIS SECTION, BUYER AND SELLER HAVE SEPARATELY INITIALED THIS SECTION.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 8.2 SHALL LIMIT ANY RECOVERY BY SELLER UNDER ANY INDEMNITIES MADE BY BUYER HEREIN OR SELLER’S RIGHTS TO ANY ATTORNEYS’ FEES OR COSTS RECOVERABLE BY SELLER HEREUNDER.
		

		
			SELLER’S INITIALS:  _____BUYER’S INITIALS:  ______

		

			
	
			
				 8.3
			Attorneys’ Fees.

		
			Nothing in this Article 8 shall limit any recovery by either party of its or his attorneys’ fees if it prevails in any litigation or claim brought against the other party relating to performance under this Contract in accordance with Section 15.13 below.
		

			
	
			
				 ARTICLE 9.
			DAMAGE OR DESTRUCTION; CONDEMNATION

			
	
			
				 9.1
			Damage or Destruction

			
	
			
				 (a)
			In the event of partial damage or destruction of the Property of a type which can, under the circumstances, be expected in the reasonable judgment of Seller and Buyer to be restored or repaired at a cost of $1,000,000 or less, then, this Contract shall be consummated on the Closing Date at the Purchase Price, and unless such damage has been repaired by Seller prior to Closing to substantially the same condition that existed immediately prior to such damage or destruction, Seller shall assign to Buyer the physical damage proceeds and claims of any insurance policies to which Seller is entitled to receive, less any amounts expended by Seller for partial restoration and with a credit to Buyer for the amount of any deductible or self-insured retention.

			
	
			
				 (b)
			In the event that the Property shall have been damaged by fire or casualty, the cost of repair or restoration of which would, in the reasonable judgment of Seller and Buyer, exceed the sum of $1,000,000, then unless, prior to the Closing, Seller has previously repaired or restored the Property to its former condition that existed immediately prior to such fire or casualty (which Seller may 

		 

		

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			8457297.7

		

 

	elect to do in its sole discretion), at Buyer’s election, Seller shall either (a) pay over or assign to Buyer, on delivery of the Deed all physical damage proceeds and claims of any insurance policies to which Seller is entitled to receive, less any amounts reasonably expended by Seller for partial restoration, with a credit to Buyer for the sum of (x) the amount of any deductible or self-insured retention plus (y) the amount of the cost to repair or restore the physical damage in an amount agreed to by Buyer and Seller, less any amounts expended by Seller for partial restoration and in no event exceeding $1,000,000 in the aggregate, or (b) direct Escrow Agent to return the Deposit to Buyer in which case, except for the Surviving Obligations, all other obligations of the parties hereto shall cease and this Contract shall terminate and be without further recourse or remedy to the parties hereto.

			
	
			
				 (c)
			In the event of damage or destruction to the Property caused by an uninsured casualty, and if Seller, at its sole election, does not credit Buyer with the amount necessary to fully restore the Property, Buyer, by written notice to Seller, may terminate this Contract.  In such event, the Deposit shall be returned to Buyer and except for the Surviving Obligations, all other obligations of the parties hereto shall cease and this Contract shall terminate and be without further recourse or remedy to the parties hereto.

			
	
			
				 9.2
			Condemnation

		
			If, prior to the Closing, any portion of the Property is taken under power of eminent domain, Buyer may elect to terminate this Contract by giving written notice of his election to Seller within fourteen (14) days after receiving notice of such destruction or taking.  In such event the Deposit shall be returned to Buyer and except for the Surviving Obligations, all other obligations of the parties hereto shall cease and this Contract shall terminate and be without further recourse or remedy to the parties hereto.  If Buyer does not give such written notice within such fourteen (14) day period, this Contract shall be consummated on the Closing Date at the Purchase Price, and Seller will assign to Buyer Seller’s portion of any condemnation award, in both cases, up to the amount of the Purchase Price.
		

			
	
			
				 ARTICLE 10.
			 “AS-IS” SALE

			
	
			
				 10.1
			Disclaimers

		
			Except as set forth in this Contract, the Property is being acquired by Buyer in an “AS IS” “WHERE IS” condition and “WITH ALL FAULTS” existing as of the Closing Date.  Buyer acknowledges that it will be acquiring the Property on the basis of his own investigations.  Except as expressly set forth in this Contract, no representations or warranties have been made or are made and no responsibility has been or is assumed by Seller or by any officer, person, firm, agent or representative acting or purporting to act on behalf of the Seller as to condition or repair of the Property or the value, expense of operation, or income potential thereof, the reliability of any information furnished to Buyer or as to any other fact or condition which has or might affect the Property or the condition, repair, value, expense of operation or income potential of the Property or any portion thereof.  The parties agree that all understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Contract and the Exhibits hereto annexed, which alone fully and completely express their agreement, and that this Contract has been entered into after full investigation, or with the parties satisfied with the opportunity afforded for investigation, neither party relying upon any statement or representation by the other unless such statement or representation is specifically embodied in this Contract or the Exhibits annexed hereto.  Buyer acknowledges that Seller has required Buyer to inspect fully the Property and investigate all matters relevant thereto, and to rely solely upon the results of Buyer’s own inspections or other information obtained or otherwise available to Buyer, provided that the foregoing shall not diminish Buyer’s rights with respect to any representations or warranties expressly made by Seller in this Contract.
		

		 

		

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			8457297.7

		

 

			
	
			
				 10.2
			Release

		
			Except with respect to a breach of any representation or warranty expressly made by Seller in this Contract, Buyer hereby expressly releases the Seller Group (hereinafter defined) from any and all claims, losses, proceedings, damages, causes of action, liability, costs or expenses (including attorneys’ fees) arising from, in connection with or caused by (a) Buyer’s reliance upon any of the Property Information or statements, representations or assertions contained therein, (b) inaccuracy, incompleteness or unreliability of any of the Property Information.  Except with respect to a breach by Seller of any representation or warranty expressly contained herein, Buyer hereby waives, releases and forever discharges Seller, any shareholder, officer, director, employee, agent or person acting on behalf of Seller and any affiliate of Seller (the “Seller Group”) of and from any and all claims, actions, causes of action, demands, rights, damages, liabilities and costs whatsoever, direct or indirect, known or unknown, which Buyer now has or which may arise in the future, against any of the Seller Group related in any way to the Property.  Except with respect to a breach of any representation or warranty expressly made by Seller in this Contract, Buyer hereby agrees not to assert any claim for contribution, cost, recovery or otherwise against the Seller Group relating directly or indirectly to the physical condition of the Property including, without limitation, the existence of oil, lead paint, lead, radon, asbestos, mold, or hazardous materials or substances on, or the environmental condition of, the Property, whether known or unknown.  
		

			
	
			
				 10.3
			Negotiated Provision

		
			Buyer realizes, agrees and acknowledges that factual matters now unknown to Buyer may have given or hereafter give rise to claims which are presently unknown, unanticipated and unsuspected, and the release provided in this Article 10 has been negotiated and agreed upon in light of that realization. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to be a release of any liability Seller may have to third parties arising prior to the Closing Date.  This Article 10 shall survive the Closing and delivery of the Deed.
		

		
			TO SIGNIFY THEIR AWARENESS AND AGREEMENT TO BE BOUND BY THE TERMS AND PROVISIONS OF THIS ARTICLE 10, BUYER AND SELLER HAVE SEPARATELY INITIALED BELOW.
		

		
			SELLER INITIALS:  _____BUYER’S INITIALS:  ______
		

			
	
			
				 ARTICLE 11.
			REPRESENTATIONS AND WARRANTIES

		
			11.1Representations and Warranties of Seller
		

		
			In order to induce Buyer to enter into this Contract and to consummate the purchase of the Property, Seller hereby represents and warrants to Buyer as of the date of this Contract and as of the Closing Date (updated to reflect the then state of facts) as follows:
		

			
	
			
				 (a)
			Seller is a limited partnership duly and validly organized and existing and governed by the laws of Delaware and qualified to do business in the State.  This Contract and all documents that are to be executed by Seller and delivered to Buyer at the Closing are, or at the time of Closing will be, duly authorized, executed and delivered by Seller, and all consents required under Seller’s organizational documents or by law have been or will have been obtained.

			
	
			
				 (b)
			To Seller’s actual knowledge Exhibit C hereto (the “Rent Roll”) is, in all material respects, a true, complete and correct listing of all Leases in effect as of a date not earlier than thirty (30) days preceding the date of this Contract at the Property.  

		 

		

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			8457297.7

		

 

			
	
			
				 (c)
			Seller has made available to Buyer true and complete copies of the Leases, and all extensions, renewals and amendments thereto.

			
	
			
				 (d)
			To Seller’s actual knowledge, except as set forth in the Rent Roll, the rents set forth in the Leases are being collected on a current basis and no tenant has paid rent more than one (1) month in advance.  

			
	
			
				 (e)
			Except for those contracts set forth in Exhibit I attached hereto and incorporated herein by reference (the “Assumed Contracts”), there are no management, service, supply and maintenance agreements, equipment leases, or other contracts and agreements with respect to or affecting the Property as of the date of this Contract which will be binding on Buyer from and after the Closing. 

			
	
			
				 (f)
			To Seller’s actual knowledge and except as set forth in any reports delivered by Seller to Buyer, Seller has not received any written notice from governmental authorities advising Seller of any violation of any law or regulation applicable to the Property which has not been cured, including, without limitation, any applicable laws or regulations relating to zoning, building code or the presence, now or in the past, on, under or affecting the Property of asbestos, mold, lead, radon or hazardous material, waste or substances in violation of applicable law, which remains uncured.  As used in this Contract, hazardous material, waste or substances means material, waste or substances which pose a serious hazard to human health and the use, generation, processing, storage, release, discharge and presence thereof is regulated by the State or the United States of America.  

			
	
			
				 (g)
			Except as set forth in Exhibit J attached hereto and incorporated herein by reference, to the Seller’s actual knowledge, there is not now pending nor has there been threatened in writing, any action, suit or proceeding against or affecting Seller or the Property before or by any federal or state court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision or finding, upon consummation of the sale contemplated hereby to Buyer or otherwise, may reasonably be expected to have a material adverse effect on the business or prospects of or on the condition or operations of the Property, or would interfere with Seller's ability to consummate the transactions by this Contract.

			
	
			
				 (h)
			Seller is not a “foreign person” as defined by the Internal Revenue Code (“IRC”), Section 1445.  Seller will execute and deliver to Buyer at Closing an affidavit or certification in compliance with IRC Section 1445.

			
	
			
				 (i)
			Seller is in compliance with the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) (the “Order”) and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in any enabling legislation or other Executive Orders or regulations in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the “Orders”).

			
	
			
				 (j)
			Seller has not filed any petition seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such petition been filed against Seller.

			
	
			
				 (k)
			Seller has not granted to any third-party other than Buyer any right or option to purchase the Property (or any portion thereof Property).  Seller has not transferred nor agreed to transfer any development or air rights pertaining to the Property.  

			
	
			
				 (l)
			Seller is not a party to any union contracts, collective bargaining agreements, labor agreements or employee benefit plans with respect to the use or operation of the Property.

		 

		

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			8457297.7

		

 

			
	
			
				 11.4
			Knowledge Standard

		
			Any representations and warranties made to the actual knowledge of Seller shall be deemed to be the current, conscious knowledge of Pat Gniadek, the Senior Vice President for Investments, and Sarah Mathewson, the Senior Vice President for Operations for the region in which the Property is located, without imputation of knowledge or duty of any investigation or inquiry.
		

			
	
			
				 11.5
			Limitations

		
			Seller shall not be liable to Buyer for any representation or warranty which is untrue at the time of Closing and with respect to which Buyer had actual knowledge thereof at that time; provided, however, if Buyer obtains knowledge of any matters between the date hereof and the Closing, which matters cause Seller’s representations and warranties not to be true and correct in any material respect,  Buyer may (x) terminate this Contract and receive a return of the Deposit from Escrow Agent, or (y) if such untrue statement is a result of a willful and material breach by Seller, Buyer shall have the right to exercise the remedy set forth in clause (i) of Section 8.1.  Furthermore, any claim for a breach of representation and warranty by Seller must be commenced within six (6) months after Closing.  No single claim may be brought against Seller unless the amount of the claims exceeds Fifty Thousand Dollars ($50,000), and Seller’s liability for all claims, in the aggregate, shall be capped at Five Hundred Thousand Dollars ($500,000), which sum shall be Seller’s sole liability.  The provisions of this Section 11.3 shall survive the Closing.
		

			
	
			
				 11.6
			Representations and Warranties of Buyer

		
			Buyer hereby represents and warrants to Seller as of the date hereof and as of the Closing Date as follows:
		

			
	
			
				 (a)
			This Contract and all documents executed by Buyer that are to be delivered to Seller at the Closing are, or at the time of Closing will be, duly authorized, executed and delivered by Buyer.  This Contract and such documents are, or at the Closing will be, legal, valid, and binding obligations of Buyer, and do not, and, at the time of Closing will not, violate any provisions of any agreement or judicial order to which Buyer is a party or to which it is subject.

			
	
			
				 (b)
			There are no proceedings pending or, to Buyer’s knowledge, threatened against him in any court or before any governmental authority or any tribunal which, if adversely determined, would have a material adverse effect on his ability to purchase the Property or to carry out his obligations under this Contract.

			
	
			
				 (c)
			Buyer shall indemnify and defend Seller against and hold Seller harmless from any and all losses, costs, damages, liabilities and expenses (including, without limitation, reasonable counsel fees) arising out of any breach by Buyer of his representations and warranties hereunder.

			
	
			
				 (d)
			Buyer is in compliance with the Orders.

			
	
			
				 ARTICLE 12.
			OPERATIONS

			
	
			
				 12.1
			Operational Covenants

			
	
			
				 (a)
			Between the date hereof and the Closing, Seller agrees hereby that it will maintain and rent the Property in its customary manner in accordance with practices currently in effect.  Seller agrees not to enter into any Leases of greater than twenty-four months (unless so required by law).  

		 

		

			13

		

		

			8457297.7

		

 

	Until the Closing Date, Seller shall maintain insurance on the Premises as currently insured.  Seller agrees to apply or cause to be applied any of the security deposits under the Leases only in the ordinary course of business consistent with Seller’s past practices.

			
	
			
				 (b)
			Seller shall not remove any material item of the Personal Property from the Premises unless the same is obsolete and is replaced by tangible personal property of equal or greater utility and value.  

			
	
			
				 (c)
			Seller shall not without the prior written consent of Buyer, which consent shall not be unreasonably withheld, enter into any contract (but excluding leases entered into in the ordinary course of business) which could bind Buyer or the Property after the Closing unless the same may be canceled on thirty (30) days’ notice at no cost.  Failure of Buyer to respond within three (3) business days of written request from Seller for consent shall be deemed consent by Buyer.

			
	
			
				 (d)
			Seller will give Buyer prompt notice of the commencement prior to Closing of any litigation affecting the Property that would impair Seller’s right to sell the Property or be binding upon Buyer.

			
	
			
				 (e)
			All of Seller’s and Seller’s manager’s on-site employees shall have their employment at the Property terminated as of the Closing Date.

			
	
			
				 (f)
			Seller will not voluntarily create any lien or encumbrance to attach to the Property.

			
	
			
				 12.2
			Operating Contracts

			
	
			
				 (a)
			Not later than seven (7) business days after the date hereof, Buyer shall give Seller notice specifying any operating contracts currently in place at the Property (excluding any property management agreements, or master agreements between Seller and the respective vendor that cover the Property and other properties of Seller and its affiliates) which Buyer elects to assume (the “Operating Contracts”), if any.    

			
	
			
				 (b)
			Buyer shall assume all of the Operating Contracts and the Assumed Contracts.

			
	
			
				 (c)
			If any assignment of an Operating Contract requires the consent of the vendor and Seller is unable to obtain the required consent, then the Operating Contract shall be terminated by Seller at its expense.

		
			(d)Seller has executed a contract with Pisapia Electric (the “Construction Contract”) for certain electrical work to be performed on the Property (the “Work”) in the amount of $29,400.00.  In the event that the Work is not completed prior to the Closing Date, Seller shall assign the Construction Contract to Buyer and shall Buyer shall receive a credit against the Purchase Price for the cost of the portion of the Work that remains and has yet to be paid for, based on a statement from the contractor.  After the Closing, Seller shall not have any liability or obligation whatsoever with respect to the Work.
		

		
			(e)Buyer acknowledges that Seller is required to record a covenant obligating the Buyer and any successor in title to maintain the tribute located on the Property to the family that was responsible for the original development of the Property (the “Tribute”).  The Tribute is reflected in the Deed as well as in the Maintenance Covenant attached hereto as Exhibit L, which shall be recorded at the Closing.
		

		 

		

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				 ARTICLE 13.
			CLOSING ADJUSTMENTS AND COSTS

			
	
			
				 13.1
			Adjustments and Pro-rated Items

			
	
			
				 (a)
			General.  Except as otherwise expressly set forth in this Article 13, all items of income and expense at the Property that are customarily prorated, including real estate taxes, personal property taxes and assessments, utility bills, rents and other income, operating expenses, and Operating Contract payments (under Operating Contracts assumed by Buyer), shall be prorated through escrow with all items of income and expense allocated (i) to Seller for the period up to the Closing Date, and (ii) to Buyer for the period from and after the Closing Date.

			
	
			
				 (b)
			Real Estate Taxes and Special Assessments.  If Closing occurs before the current year's tax or assessment bills are available, an estimated proration shall be made on the most recent assessed value and the current tax or assessment rates.  Within thirty (30) days after receipt of the current year’s tax or assessment bill, Buyer shall deliver a copy to Seller and Buyer shall refund to Seller any amount overpaid by Seller or Seller shall pay to Buyer the amount of any deficiency in the proration.  If an estimated proration was made, the provisions of this subsection 13.1(b) shall survive the Closing Date for a period of thirty (30) days following issuance of the current year’s tax or assessment bill.  

			
	
			
				 (c)
			Utilities.

			
	
			
				 (i)
			Seller shall terminate all utility accounts in its name as of the Closing Date.  Any deposits in connection with such utility accounts shall be released to Seller and shall not be assigned to Buyer at Closing.  Buyer shall arrange to have all necessary utility accounts opened and deposits made in Buyer’s name as of the Closing Date.  To the extent utilities are in the name of any tenant, Buyer shall notify the utility providers that, as of the Closing Date, upon the termination of any utilities in the name of any tenant, the utility service shall revert to Buyer and Seller shall have no liability therefor.

			
	
			
				 (d)
			Uncollected Rents.

			
	
			
				 (i)
			Any amounts characterized as rents or additional rents under the Leases, including any charges or fees charged to tenants, that have accrued but remain uncollected by Seller as of the Closing Date (the “Uncollected Rents”) shall not be prorated.  For a period of twelve (12) months following the Closing Date, Buyer agrees to bill tenants of the Property for the Uncollected Rents and the Uncollected Utilities (collectively, the “Uncollected Receivables”) and to take any additional actions reasonably requested by Seller to collect the Uncollected Receivables, but Buyer shall not be obligated to (i) incur any out‐of‐pocket third party expense in connection with such actions (unless Seller has agreed to reimburse the same), or (ii) take any action to terminate a tenancy.

			
	
			
				 (ii)
			If and only if a tenant is current in the payment of all rents accruing from and after the Closing Date, Buyer shall pay to Seller the Uncollected Receivables as and when collected by Buyer.  Seller reserves the right to bring suit against tenants of the Property to collect Uncollected Receivables owed to Seller, but Seller shall not, subsequent to Closing, bring suit for possession of the premises occupied by such tenants.

			
	
			
				 (iii)
			Buyer’s obligation to bill and collect Uncollected Receivables under subsections 13.1(c) and 13.1(d) shall survive for a period of twelve (12) months following the Closing Date.

		 

		

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			8457297.7

		

 

			
	
			
				 (e)
			Operating Expenses.  All operating expenses of the Property, including the cost of licenses, permits, and association fees, if any, shall be prorated.  

			
	
			
				 (f)
			Brokerage Commissions.  On the Closing Date, Seller shall give Buyer a credit for any unpaid obligations for brokerage commissions or finders’ fees incurred in connection with any Lease pursuant to which the tenant has commenced occupancy prior to the Closing Date.

			
	
			
				 (g)
			Insurance Premiums.  Insurance premiums shall not be prorated.  Neither insurance policies nor, except as contemplated in Article 5, any claims or amounts payable under insurance policies will be assigned to Buyer.  Seller shall be entitled to all refunds of any premiums for insurance policies maintained by Seller with respect to the Property.

			
	
			
				 (h)
			Non-refundable Deposits.  Non-refundable fees or deposits, including pet deposits, amenity fees, pet fees, application fees, or parking fees, paid by tenants to Seller prior to the Closing Date shall not be prorated.  Buyer shall receive a credit for all Security Deposits, together with accrued interest as required by the Leases or by law. 

			
	
			
				 13.2
			True-Up

		
			On or prior to the ninetieth (90th) day following the Closing Date (the “Re-Adjustment Deadline”), Seller and Buyer shall make a one-time readjustment, if necessary, to the proration of income and expenses at Closing in accordance with Section 13.1.  To facilitate such readjustment, Buyer shall provide to Seller updated operating statements (including an updated rent roll and accounts receivable roll-up from the Closing Date to the date of such readjustment) for the Property not less than five (5) business days prior to the Re-Adjustment Deadline.    Except as otherwise specified, the provisions of Section 13.1 and 13.2 shall survive the Closing until the later of the Re-Adjustment Deadline, or the date that Buyer and Seller complete the readjustment pursuant to this Section 13.2.  
		

		
			 
		

			
	
			
				 13.3
			Closing Costs

		
			Except as hereinafter specifically provided, Seller and Buyer shall allocate all closing costs between them in accordance with standard practice in the local jurisdiction in which the Property is located.  Each of Seller and Buyer shall be responsible for preparing such documents as it is obligated to deliver pursuant to Article 5 hereof and for its or his own legal expenses.  Seller and Buyer agree to allocate closing costs as follows:
		

		
			(i)Transfer taxes shall be paid by Seller.
		

		
			 
		

		
			(ii)Buyer shall pay the premium for Buyer’s Title Policy.  
		

		
			 
		

		
			(iii)Expenses for the Survey shall be paid by Seller and the costs of any updates to the same shall be paid by Buyer.
		

		
			 
		

		
			(iv)The cost of preparation and recordation of any releases and termination statements required to clear title to the Property shall be paid by Seller.
		

		
			 
		

		
			(v)The cost of recordation of the Deed shall be paid by Buyer.
		

		
			 
		

		
			(vi)Escrow charges, if any, shall be shared equally by Seller and Buyer.
		

		
			 
		

		 

		

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				 13.4
			Closing Statement

		
			The Closing Statement shall be prepared by Escrow Agent at the Closing and shall set forth the manner of computation of the closing adjustments and costs.
		

		
			 
		

			
	
			
				 ARTICLE 14.
			BROKER

			
	
			
				 14.1
			Indemnity

		
			Each party represents hereby to the other that it dealt with no broker in the consummation of this Contract except for NAI Hunneman Commercial (“Broker”), and each party indemnifies the other from any claim arising from the breach of such representation by the indemnifying party.  This indemnity shall survive Closing.
		

			
	
			
				 14.2
			Payment of Commission

		
			Any commission due  Broker shall be paid by Seller, through the Escrow upon the Closing, as provided in a separate agreement between Seller and Broker, and Escrow Agent shall obtain and provide to Buyer and Seller a receipt from Broker at Closing. 
		

			
	
			
				 ARTICLE 15.
			MISCELLANEOUS PROVISIONS

			
	
			
				 15.1
			Recording

		
			It is agreed hereby that this Contract shall not be filed for recording with any governmental body.
		

			
	
			
				 15.2
			Notice

		
			Any notice, consent or approval required or permitted to be given under this Contract shall be in writing and shall be deemed to have been given upon (i) hand delivery, (ii) one business day after being deposited with Federal Express or another reliable overnight courier service for next day deliver, (iii) upon facsimile or e-mail  transmission (except that if the date of such transmission is not a business day, then such notice shall be deemed to be given on the first business day following such transmission), or (iv) two business days after being deposited in the United States mail, registered or certified mail, postage prepaid, return receipt required, and addressed as follows:
		

		
			To Seller:c/o AvalonBay Communities, Inc.
Attention:  Patrick Gniadek, Vice President, Investments
AvalonBay Communities, Inc.
Ballston Tower
671 N. Glebe Road, Suite 800
Arlington, Virginia 22203
Fax: 703-329-1459
Email:  pat_gniadek@avalonbay.com
		

		
			With copies to:c/o AvalonBay Communities, Inc.
Attention:  Legal Department 
Ballston Tower
671 N. Glebe Road, Suite 800
Arlington, Virginia 22203
Fax:  (703) 329-4830
Email: brian_lerman@avalonbay.com 
		

		
			and to:Goulston & Storrs
400 Atlantic Avenue 
Boston, Massachusetts  02110
Attention:  Steven Schwartz, Esq.
Fax:  (617) 574-4112
Email: sschwartz@goulstonstorrs.com
		

		
			 
		

		
			To Buyer:Residences at Captain Parker, LLC
39 Brighton Avenue
Boston, MA  02134
Fax No.: (617)  780-0039
Email:  cvaleri@thehamiltoncompany.com
Attention: Carl Valeri
		

		
			With a copy to:Saul Ewing LLP
131 Dartmouth Street, Suite 501
		

		
			Boston, MA  02116
Fax No.: (617) 912-0920
Email:  smichael@saul.com
Attention:  Sally E. Michael
 
		

		
			To Escrow Agent:Commonwealth Land /Chicago Title
		

		
			265 Franklin Street, 8th Floor
		

		
			Boston, MA  02110
		

		
			Fax:  _______________________
		

		
			Attention:  Philip Tanner
		

		
			e-mail:  _______________________
		

		
			 
		

		
			or such other address as either party may from time to time specify in writing to the other.
		

			
	
			
				 15.3
			Captions

		
			The captions in this Contract are inserted only for the purpose of convenient reference and in no way define, limit or prescribe the scope or intent of this Contract or any part hereof.
		

			
	
			
				 15.4
			Successors and Assigns

			
	
			
				 (a)
			This Contract shall be binding upon the parties hereto and their respective successors and assigns.

			
	
			
				 (b)
			Subject to Buyer’s right to assign this Contract, without first obtaining the prior written approval of Seller to an affiliate of Buyer, in which case Buyer shall remain up to the Closing fully liable hereunder but upon providing Buyer with notice of such assignment to such affiliate no later than five (5) business days prior to the Closing), Buyer may not assign this Contract nor any of the rights or benefits thereof including, without limitation, the benefit of the representations and warranties 

		 

		

			17

		

		

			8457297.7

		

 

	contained in Article 11 hereof, to any third party either before or after the Closing without the written consent of Seller which may be given or withheld in Seller’s sole discretion, and any such unauthorized attempted assignment shall be null and void.  As used herein, an affiliate is a person or entity controlled by, under common control with, or controlling another person or entity.

			
	
			
				 15.5
			Governing Law

		
			The laws of the state, commonwealth, or federal district in which the Property is located (the “State”) shall govern the validity, construction, enforcement and interpretation of this Contract.
		

			
	
			
				 15.6
			Multiple Counterparts

		
			This Contract may be executed in any number of identical counterparts.  If so executed, each of such counterparts shall constitute this Contract.  In proving this Contract, it shall not be necessary to produce or account for more than one such counterpart. This Contract may be executed by facsimile signatures or electronic delivery of signatures which shall be binding on the parties hereto.  The parties agree to deliver original signatures as soon as reasonably practical thereafter.
		

			
	
			
				 15.7
			Entire Agreement

		
			The parties understand and agree that their entire agreement is contained herein and that no warranties, guarantees, statements, or representations shall be valid or binding on a party unless set forth in this Contract.  It is further understood and agreed that all prior understandings and agreements heretofore had between the parties are merged in this Contract which alone fully and completely expresses their agreement and that the same is entered into after full investigation, neither party relying on any statement or representation not embodied in this Contract.  This Contract may be changed, modified, altered or terminated only by a written agreement signed by the parties hereto.
		

			
	
			
				 15.8
			Post Closing Obligations

		
			After the Closing, Seller and Buyer shall cooperate with one another at reasonable times and on reasonable conditions and shall execute and deliver such instruments and documents as may be necessary in order fully to carry out the intent and purposes of the transactions contemplated hereby.  Except for such instruments and documents as the parties were originally obligated to deliver by the terms of this Contract, such cooperation shall be without additional cost or liability.  The provisions of this section shall survive the Closing and delivery of the Deed.
		

			
	
			
				 15.9
			Waiver of Jury Trial

		
			EACH OF SELLER AND BUYER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT EITHER OR BOTH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS CONTRACT OR ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.
		

			
	
			
				 15.10
			Additional Offers

		
			Seller shall not negotiate with, accept “back up” offers from, or enter into a binding or non-binding agreement with, any other party with respect to the purchase and sale of the Property.
		

		 

		

			18

		

		

			8457297.7

		

 

			
	
			
				 15.11
			Like-Kind Exchange

		
			Each party agrees to cooperate reasonably with the other party in effecting an exchange transaction which includes the Property pursuant to Section 1031 of the United States Internal Revenue Code, provided that any exchange initiated by either party shall be at such party’s sole cost and expense, nor delay the Closing.  In addition, the initiating party shall indemnify and hold the other party harmless from any and all cost, expense or liability incurred solely as a result of the other party accommodating such tax deferred exchange.  The provisions of this paragraph shall survive the Closing indefinitely.
		

			
	
			
				 15.12
			Time of the Essence

		
			Time is of the essence of this Contract.  As used in this Contract, the term “business day” shall mean any day other than a Saturday, Sunday or recognized federal holiday or a recognized state holiday of the State.  If the last date for performance by either party under this Agreement occurs on a day which is not a business day, then the last date for such performance shall be extended to the next occurring business day. 
		

			
	
			
				 15.13
			Attorneys’ Fees.    

		
			In the event of any controversy, claim or dispute between the parties affecting or relating to the subject matter or performance of this Contract, the prevailing party shall be entitled to recover from the nonprevailing party all of its or his reasonable expenses, including reasonable attorneys’ and accountants’ fees.
		

			
	
			
				 ARTICLE 16.
			CONFIDENTIALITY

		
			Buyer agrees to hold all materials and information related to the Property and this transaction, including the existence and terms of this Contract, whether received from Seller, third parties, or generated by Buyer, in the strictest confidence and not disclose the same to any third parties; provided, however, Buyer may disclose such information for use only in connection with evaluating this transaction to his employees, consultants, attorneys, potential investors, potential lenders and their advisors, representatives and agents so long as such persons are informed by Buyer of the confidential nature of such information and are directed by Buyer to treat such information confidentially.  If this Contract is terminated prior to the Closing Date, all such confidences shall continue to be maintained.  In the event this Contract is terminated,  Buyer and his employees, consultants, advisors, attorneys, and agents shall deliver to the Seller, upon request, all documents and other materials, and all copies thereof, obtained from Seller or its agents in connection with this Contract.  By execution of this Contract, Escrow Agent hereby agrees to maintain the existence of this Contract and the nature and details of the transaction contemplated hereby in confidence, unless Escrow Agent is required by law to disclose some or all of such information.
		

			
	
			
				 ARTICLE 17.
			DUTIES AND RESPONSIBILITIES OF ESCROW AGENT

			
	
			
				 17.1
			Application of Deposit

		
			Escrow Agent shall deliver the Deposit to Seller or Buyer promptly after receiving a joint written notice from Seller and Buyer directing the disbursement of the same, such disbursement to be made in accordance with such direction.  If Escrow Agent receives written notice from Buyer or Seller that the party giving such notice is entitled to the Deposit, which notice shall describe with reasonable specificity the reasons for such entitlement, then Escrow Agent shall (i) promptly give notice to the other party of  Escrow Agent’s receipt of such notice enclosing a copy of such notice and (ii) subject to the provisions of 

		 

		

			19

		

		

			8457297.7

		

 

the following section, on the tenth (10th) business day after the giving of the notice referred to in clause (i) above, deliver the Deposit to the party claiming the right to receive it.  
		

			
	
			
				 17.2
			Dispute

		
			If Escrow Agent shall be uncertain as to its duties or actions hereunder or shall receive instructions or a notice from Buyer or Seller which are in conflict with instructions or a notice from the other party or which, in the reasonable opinion of Escrow Agent, are in conflict with any of the provisions of this Contract, it shall not disburse the Deposit and shall take any of the following courses of action:
		

			
	
			
				 (a)
			Hold the Deposit (and any other documents received by Escrow Agent) as provided in this Contract and decline to take any further action until Escrow Agent receives a joint written direction from Buyer and Seller or any final, non-appealable order or judgment of a court of competent jurisdiction directing the disbursement of the Deposit (and, if applicable such other documents), in which case Escrow Agent shall then disburse the Deposit (and, if applicable, such other documents) in accordance with such direction;

			
	
			
				 (b)
			In the event of litigation between Buyer and Seller, Escrow Agent may deliver the Deposit (and any other documents received by Escrow Agent) to the clerk of any court in which such litigation is pending; or

			
	
			
				 (c)
			Escrow Agent may deliver the Deposit (and any other documents received by Escrow Agent) to a court of competent jurisdiction and therein commence an action for interpleader, the cost thereof to Escrow Agent to be borne by whichever of Buyer or Seller does not prevail in the litigation.

			
	
			
				 17.3
			Liability; Miscellaneous

			
	
			
				 (a)
			Escrow Agent shall not be liable for any action taken or omitted in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Contract and it may rely, and shall be protected in acting or refraining from acting in reliance upon an opinion of counsel and upon any directions, instructions, notice, certificate, instrument, request, paper or other documents believed by it to be genuine and to have been made, sent, signed or presented by the proper party or parties.  In no event shall Escrow Agent’s liability hereunder exceed the aggregate amount of the Deposit.  Escrow Agent shall be under no obligation to take any legal action in connection with the Deposit or this Contract or to appear in, prosecute or defend any action or legal proceedings which would or might, in its sole opinion, involve it in cost, expense, loss or liability unless, in advance, and as often as reasonably required by it, Escrow Agent shall be furnished with such security and indemnity as it finds reasonably satisfactory against all such cost, expense, loss or liability.  Notwithstanding any other provision of this Contract, Buyer and Seller jointly indemnify and hold harmless Escrow Agent against any loss, claims, liabilities, actions, suits or proceedings at law or in equity, or other expenses incurred without bad faith on its part and arising out of or in connection with its services under the terms of this Contract, including, without limitation, attorneys’ fees and the cost and expense of defending itself against any claim of liability.  

			
	
			
				 (b)
			Escrow Agent shall not be bound by any modification of this Contract affecting Escrow Agent’s duties hereunder unless the same is in writing and signed by Buyer, Seller and Escrow Agent.  From time to time on or after the date hereof, Buyer and Seller shall deliver or cause to be delivered to Escrow Agent such further documents and instruments that fall due, or cause to be done such further acts as Escrow Agent may reasonably request (it being understood that the Escrow Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of 

		 

		

			20

		

		

			8457297.7

		

 

	this Contract, to evidence compliance with this Contract or to assure itself that it is protected in acting hereunder.

			
	
			
				 (c)
			Unless otherwise agreed in writing by Buyer and Seller, Escrow Agent shall serve hereunder without fee for its services as escrow agent, but shall be entitled to reimbursement for expenses incurred hereunder, which expenses shall be paid and borne equally by Buyer and Seller, unless such expenses are associated with litigation between Buyer and Seller, in which event they shall be borne by the party that does not prevail in the litigation.  Escrow Agent agrees that it will not seek reimbursement for the services of its employees or partners, but only for its actual and reasonably incurred out of pocket expenses.

		
			(d)Buyer and Seller hereby agree that Escrow Agent may rely on facsimile and/or electronic transmissions of instructions made, sent, signed or presented by or on behalf of Buyer and/or Seller.
		

		
			(e)Escrow Agent shall not be required to invest or disburse any funds that are not collected funds.  Without limitation, Escrow Agent shall not be liable for any loss or impairment of funds deposited in escrow in the course of collection or while on deposit with a financial institution resulting from failure, insolvency or suspension of such financial institution.
		

		
			IN WITNESS WHEREOF, the parties hereto have executed this Contract as of the day and date first written above.
		

		
			SELLER:
		

		
			 
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P.,
		

		
			a  Delaware limited partnership
		

		
			 
		

		
			By:AvalonBay Fund II Subsidiary GP, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Value Added Fund II, L.P.,
		

		
			a  Delaware limited partnership
		

		
			its Sole Member
		

		
			 
		

		
			By:AvalonBay Capital Management II, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Communities, Inc.,
		

		
			a  Maryland corporation,
		

		
			its Sole Member
		

		
			 
		

		
			By:
		

		
			Name:
		

		
			Title:
		

		
			
		

		
			 
		

		
			 
		

		
			BUYER:     RESIDENCES AT CAPTAIN PARKER, LLC
		

		
			 
		

		
			 
		

		
			 
		

		
			By:___________________________
		

		
			      Harold Brown, Manager
		

		
			 
		

		
			ESCROW AGENT:
		

		
			COMMONWEALTH LAND/CHICAGO TITLE
		

		
			 
		

		
			 
		

		
			By:_______________________________
		

		
			Name:    Philip Tanner
		

		
			Title:
		

		
			 
		

		
			 
		

		
			

		 

		

			21

		

		

			8457297.7

		

 

EXHIBIT A
		

		
			DESCRIPTION OF REAL PROPERTY
		

		
			Lot 14 as more particularly described as follows: 
		

		
			
		

		
			 
		

		
			

		 

		

			A-1

		

		

			8457297.7

		

 

EXHIBIT B
		

		
			PERSONAL PROPERTY INVENTORY
		

		
			
		

		
			

		 

		

			B-1

		

		

			8457297.7

		

 

		

		
			
		

		
			 
		

		
			

		 

		

			B-2

		

		

			8457297.7

		

 

EXHIBIT C
		

		
			RENT ROLL
		

		
			
		

		
			
		

		
			

		 

		

			C-1

		

		

			8457297.7

		

 

		

		
			
		

		
			 
		

		
			

		 

		

			B-2

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT D
		

		
			FORM OF DEED
		

		
			QUITCLAIM DEED
		

		
			 
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P., a Delaware limited partnership, having an address of Ballston Tower, 671 N. Glebe Road, Suite 800, Arlington, Virginia 22203 (“Grantor”) for consideration paid and in full consideration of _________________________ Dollars ($_______________)  grants to _____________________________________, a _____________, with an address of 
		

		
			____________________________ ("Grantee"), with QUITCLAIM COVENANTS, those certain parcels of land with the buildings thereon situated in Lexington, Middlesex County, Massachusetts, more particularly described in Exhibit A attached hereto and made a part hereof (the "Property").
		

		
			 
		

		
			The Property currently includes a tribute to members of the family that owned the beneficial interests in the entities that originally constructed and operated the improvements on the Premises, in the location and as shown on the sketch plan attached hereto as Exhibit B (the “Tropeano Family Tribute”).  The Property is being conveyed subject to the obligation that Grantee and its successors and assigns shall maintain the Tropeano Family Tribute in good condition and repair and in compliance with applicable law for so long as the Property is used for multi-family residential purposes, as set forth on the instrument recorded herewith.
		

		
			 
		

		
			The Property is conveyed subject to, and with the benefit of, all matters of record to the extent the same are in force and applicable.
		

		
			 
		

		
			For Grantor's title see deed filed with the Middlesex County South Registry District of the Land Court as Document No. 1572274. See also Certificate of Title No. 249627.
		

		
			 
		

		
			WITNESS the execution hereof under seal as of the _____ day of __________, 2015.
		

		
			 
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P.,
		

		
			a  Delaware limited partnership
		

		
			 
		

		
			By:AvalonBay Fund II Subsidiary GP, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Value Added Fund II, L.P.,
		

		
			a  Delaware limited partnership
		

		
			its Sole Member
		

		
			 
		

		
			By:AvalonBay Capital Management II, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Communities, Inc.,
		

		
			a  Maryland corporation,
		

		
			its Sole Member
		

		
			 
		

		
			By:
		

		
			Name:
		

		
			Title:
		

		
			 
		

		
			State of Virginia
		

		
			County of Suffolk
		

		
			On this ____ day of ____________, 2015, before me the undersigned Notary Public, personally appeared ________________ the ________________ of AvalonBay Communities, Inc., a Maryland corporation, in its capacity as sole member of AvalonBay Capital Management II, LLC, a Delaware limited liability company, as the sole member of  AvalonBay Value Added Fund II, L.P., a Delaware limited partnership, as the sole member of AvalonBay Fund II Subsidiary GP, LLC, a Delaware limited liability company, as the general partner of Avalon II Massachusetts Value I, L.P., a Delaware limited partnership, and proved to me through satisfactory evidence of identification, which was ___________________, to be the person whose name is signed on the preceding or attached documents, and acknowledged to me that ____________________ signed it voluntarily for its stated purposes in his capacity as aforesaid.
		

		
			 
		

		
			
		

		
			Notary Public
		

		
			My Commission expires:
		

		
			 
		

		
			[Affix Official Notarial Seal]
		

		
			 
		

		
			 
		

		
			

		 

		

			D-1

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT A
		

		
			Legal Description
		

		
			 
		

		
			 
		

		
			

		 

		

			 

		

		

			D-2

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT E
		

		
			BILL OF SALE
		

		
			[_________________] (“Seller”), for and in consideration of the sum of ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, does hereby bargain, sell, grant, transfer, assign, and convey to __________________________, a ___________________ (“Buyer”), its successors and assigns, for its and their own use and benefit, forever, any and all personal property owned by Seller and now at, in or upon or used in connection with the premises known as “____________”, located in the Town of __________, County of _________, and the State of ___________, and more particularly described in Exhibit A attached hereto (the “Premises”).  Said personal property to include the following:
		

		
			All items of personal property owned by Seller and located on the Premises or used in connection with the ownership or operation of the Premises, described in Exhibit B attached hereto and incorporated herein by reference, including, without implied limitation, whether or not listed on Exhibit B, all furniture, fixtures, equipment, machines, apparatus, appliances, supplies and personal property of every nature and description and all replacements thereof, but expressly excluding (a) items of personal property owned by Seller and used in connection with the Property as part of Seller’s integrated systems of ownership, management and/or operations of apartment projects, such as, by way of example and without limitation, the computer software for the key track system, computer and phone systems and software, corporate licenses, and management and financial reporting systems and software, (b) utility deposits, (c) non-refundable and non-recurring deposits and (d) lump sum payments previously made under any contracts or leases.
		

		
			Seller makes no warranty, express or implied, as to the condition of the personal property or its merchantability of fitness for any particular purpose.  By its acceptance of this Bill of Sale, Buyer acknowledges that it has fully inspected the personal property and Buyer accepts the same in its present use and “as is condition”.
		

		
			Seller does hereby agree to warrant and defend title to said personal property other than the Trade Name and intangible property unto Buyer, its successors and assigns.
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P.,
		

		
			a  Delaware limited partnership
		

		
			 
		

		
			By:AvalonBay Fund II Subsidiary GP, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Value Added Fund II, L.P.,
		

		
			a  Delaware limited partnership
		

		
			its Sole Member
		

		
			 
		

		
			By:AvalonBay Capital Management II, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Communities, Inc.,
		

		
			a  Maryland corporation,
		

		
			its Sole Member
		

		
			 
		

		
			By:
		

		
			Name:
		

		
			Title:
		

		
			
		

		
			Date:  __________________, 2015 
		

		
			 
		

		
			

		 

		

			E-1

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT F
		

		
			ASSIGNMENT AND ASSUMPTION AGREEMENT (RE: LEASES)
		

		
			THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of this _____ day of _______________, 201_, by and between _________________________, a ___________  (“Assignor”) and _________________________, a ___________ (“Assignee”).
		

		
			Assignee has this date purchased from Assignor certain real property (the “Premises”), known as “___________” in Town of ___________, County of ___________, and the State of _________, all more particularly described on Exhibit A attached hereto made a part hereof, and
		

		
			WHEREAS, under the terms and conditions of the Purchase and Sale Contract pursuant to which the Premises were purchased, it was contemplated that Assignor and Assignee would enter into this Assignment;
		

		
			NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto do hereby agree as follows:
		

		
			1.Assignor hereby transfers and assigns to Assignee all right, title and interest of Assignor, if any, in and to the following described property:
		

		
			(a)All leases, subleases and other occupancy agreements relating to or affecting the Premises, together with all guarantees of obligations of tenants and other parties under such leases and agreements, said leases and other agreements being more fully described in Exhibit B attached hereto and hereby made a part hereof (all together, the “Leases”); and 
		

		
			(b)The current outstanding balance of all security deposits, key deposits, pet deposits, and prepaid rents, together with all interest accrued thereon if payable under the Leases or applicable law, as more fully described on Exhibit C hereto but excluding any non-refundable deposits (collectively, the “Security Deposits”).
		

		
			TO HAVE AND TO HOLD all of the foregoing unto the Assignee, its successors and assigns, from and after the date hereof, subject to the terms, covenants, conditions and provisions contained herein.
		

		
			2.Assignee hereby accepts the foregoing assignment of the Leases and Security Deposits and does hereby covenant that with respect thereto that Assignee hereby assumes all the duties and obligations of Assignor accruing from and after the date hereof under the Leases and with respect to the Security Deposits.
		

		
			3.This Agreement and the obligations of the parties hereunder shall survive the closing of the transactions referred to in the Purchase and Sale Contract, shall be binding upon and inure to the benefit of the parties hereto, their respective legal representatives, successors and assigns and shall be governed by and construed in accordance with the laws of the State of ____________ and may not be modified or amended except by written agreement signed by both parties.
		

		
			IN WITNESS WHEREOF, the parties have executed this agreement under seal on the day and year first above written.
		

		
			

		 

		

			F-1

		

		

			8457297.7

		

 

		

			 

		

ASSIGNEEASSIGNOR
		

		
			 
		

		
			
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P.,
		

		
			a  Delaware limited partnership
		

		
			 
		

		
			By:AvalonBay Fund II Subsidiary GP, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Value Added Fund II, L.P.,
		

		
			a  Delaware limited partnership
		

		
			its Sole Member
		

		
			 
		

		
			By:AvalonBay Capital Management II, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Communities, Inc.,
		

		
			a  Maryland corporation,
		

		
			its Sole Member
		

		
			 
		

		
			By:
		

		
			Name:
		

		
			Title:
		

		
			
		

		
			 
		

		
			

		 

		

			F-2

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT G
		

		
			ASSIGNMENT AND ASSUMPTION AGREEMENT (RE: CONTRACTS)
		

		
			THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of this _____ day of _______________, 201_, by and between ________________________, a ________________________  (“Assignor”) and ________________________, a ________________________ (“Assignee”).
		

		
			WITNESSETH:
		

		
			WHEREAS, Assignee has this date purchased from Assignor certain real property (the “Premises”), known as “____________” in Town of ___________, County of _____________, and the State of ____________ all more particularly described on Exhibit A attached hereto made a part hereof, and
		

		
			WHEREAS, under the terms and conditions of the Purchase and Sale Contract pursuant to which the Premises were purchased, it was contemplated that Assignor and Assignee would enter into this Assignment;
		

		
			NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto do hereby agree as follows:
		

		
			1.Assignor hereby transfers and assigns to Assignee all right, title and interest of Assignor, if any, in and to the following described property:
		

		
			(a)All those certain service, supply and maintenance agreements, equipment leases and other contracts with respect to or affecting the Premises which Buyer has elected to assume pursuant to the Purchase and Sale Contract for the Premises, all as specifically listed on Schedule “Contracts” attached hereto and made a part hereof (collectively, the “Contracts”);
		

		
			(b)Any and all rights to the name “___________” (“Name”).
		

		
			TO HAVE AND TO HOLD all of the foregoing unto the Assignee, its successors and assigns, from and after the date hereof, subject to the terms, covenants, conditions and provisions contained herein.
		

		
			2.Assignee hereby accepts the foregoing assignment of the Contracts and Name and does hereby covenant that with respect thereto Assignee hereby assumes all the duties and obligations of Assignor accruing from and after the date hereof under the Contracts.
		

		
			3.This Agreement and the obligations of the parties hereunder shall survive the closing of the transactions referred to in the Purchase and Sale Contract, shall be binding upon and inure to the benefit of the parties hereto, their respective legal representatives, successors and assigns and shall be governed by and construed in accordance with the laws of the State of _________ and may not be modified or amended except by written agreement signed by both parties.
		

		
			IN WITNESS WHEREOF, the parties have executed this agreement on the day and year first above written.
		

		
			ASSIGNEEASSIGNOR
		

		
			 
		

		
			
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P.,
		

		
			a  Delaware limited partnership
		

		
			 
		

		
			By:AvalonBay Fund II Subsidiary GP, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Value Added Fund II, L.P.,
		

		
			a  Delaware limited partnership
		

		
			its Sole Member
		

		
			 
		

		
			By:AvalonBay Capital Management II, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Communities, Inc.,
		

		
			a  Maryland corporation,
		

		
			its Sole Member
		

		
			 
		

		
			By:
		

		
			Name:
		

		
			Title:
		

		
			
		

		
			 
		

		
			

		 

		

			G-1

		

		

			8457297.7

		

 

		

			 

		

SCHEDULE “CONTRACTS”
		

		
			 
		

		
			

		 

		

			G-2

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT H
		

		
			CERTIFICATION OF NON-FOREIGN STATUS
		

		
			ENTITY TRANSFEROR
		

		
			Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.  For U.S. tax purposes (including section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity.  To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by [__________________] (“Transferor”), the undersigned hereby certifies the following on behalf of Transferor:
		

		
			1.Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);
		

		
			2.Transferor is not a disregarded entity as defined in §1.1445-2(b)(2)(iii) [or Transferor is a disregarded entity and _______ is its sole member];
		

		
			3.Transferor’s U.S. employer identification number is _________________; and
		

		
			4.Transferor’s office address is __________________________________________________.
		

		
			Transferor understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment or both.
		

		
			Under penalties of perjury, I declare that I have examined this certification, and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of Transferor.
		

		
			Date:  _____________________
		

		
			___________________,  
		

		
			a _____________
		

		
			 
		

		
			By:  ___________________________
		

		
			Name:
		

		
			Title:
		

		
			 
		

		
			

		 

		

			H-1

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT I
		

		
			 Services Agreement with Comcast of Massachusetts III Inc. dated February 28, 2013.  
		

		
			MDU Broadband Services Agreement with RCB-BecoCom, LLC dated July 1, 2014.   
		

		
			 
		

		
			

		 

		

			I-1

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT J
		

		
			SCHEDULE OF LITIGATION
		

		
			 
		

		
			None.
		

		
			

		 

		

			J-1

		

		

			8457297.7

		

 

		

			 

		

EXHIBIT K
		

		
			TITLE COMMITMENT
		

		
			

		 

		

			2

		

		

			8457297.7

		

		

			 

		

 

		

			 

		

		

		
			

		 

		

			3

		

		

			8457297.7

		

		

			 

		

 

		

			 

		

		

		
			

		 

		

			4

		

		

			8457297.7

		

		

			 

		

 

		

			 

		

		

		
			

		 

		

			5

		

		

			8457297.7

		

		

			 

		

 

		

			 

		

		

		
			

		 

		

			6

		

		

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EXHIBIT L
		

		
			 
		

		
			COVENANT FOR MAINTENANCE 
		

		
			 
		

		
			 
		

		
			WHEREAS,  AVALON II MASSACHUSETTS VALUE I, L.P., a Delaware limited partnership, having an address of Ballston Tower, 671 N. Glebe Road, Suite 800, Arlington, Virginia (“Owner”) is the owner of certain property in the Town of Lexington, County of Middlesex, Commonwealth of Massachusetts more particularly described on Exhibit A annexed hereto (the “Premises”);
		

		
			 
		

		
			WHEREAS, Owner has constructed on the Premises a tribute to members of the family that owned the beneficial interests in the entities that originally constructed and operated the improvements on the Premises (the “Tropeano Family Tribute”);
		

		
			 
		

		
			WHEREAS, the Tropeano Family Tribute is shown on the Plan attached as Exhibit B annexed hereto; and
		

		
			 
		

		
			WHEREAS, the Owner wishes to ensure that the Tropeano Family Tribute is maintained on the Property in accordance with the terms of this Covenant for Maintenance (this “Covenant”); 
		

		
			 
		

		
			NOW, THEREFORE, the Owner hereby covenants as follows:
		

		
			 
		

		
			(1)For the maximum period allowed by law, but in no event longer than 60 years from the date hereof, and only for so long as the Premises are used for multi-family residential purposes (the “Term”), the Owner shall maintain the Tropeano Family Tribute in good condition and repair and in compliance with applicable law.  In addition, for the Term, the Owner shall include the name “Captain Parker” within any names given to the Property.  The foregoing obligations are for the benefit of, and may be enforced by, Charlene Tropeano Dorman, her children Bianca Dorman Humphries, Lydia Dorman Smith and Todd Dorman, and their heirs.
		

		
			 
		

		
			(2)Any owner of the Premises shall have liability under this Covenant solely for events that occur during the period of time it owns the Premises.
		

		
			 
		

		
			(3)The terms hereof shall run with the Premises, and be binding upon the Owner and its successors in interest, grantees and assigns for Term.
		

		
			 
		

		
			For Owner’s title, see Quitclaim Deed dated July 26, 2011, filed with the Middlesex South District County Registry District of the Land Court as Document No. 1572274.
		

		
			 
		

		
			[Signatures appear on next page]
		

		
			 
		

		
			 
		

		
			

		 

		

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IN WITNESS WHEREOF the Owner undersigned has hereto set its duly authorized hand and seal this ______ day of _____________________, 2015.
		

		
			 
		

		
			 
		

		
			AVALON II MASSACHUSETTS VALUE I, L.P.,
		

		
			a  Delaware limited partnership
		

		
			
		

		
			By:AvalonBay Fund II Subsidiary GP, LLC,
		

		
			a  Delaware limited liability company,
		

		
			its General Partner
		

		
			 
		

		
			By:AvalonBay Value Added Fund II, L.P.,
		

		
			a  Delaware limited partnership
		

		
			its Sole Member
		

		
			 
		

		
			By:AvalonBay Capital Management II, LLC, a Delaware limited liability company, its General Partner
		

		
			 
		

		
			By:AvalonBay Communities, Inc., a Maryland corporation, its Sole Member
		

		
			 
		

		
			By:_____________________Name:  Patrick J. Gniadek
		

		
			Title:  
		

		
			
		

		
			

		 

		

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			State of Virginia
		

		
			County of Suffolk
		

		
			 
		

		
			On this ____ day of ____________, 2015, before me the undersigned Notary Public, personally appeared ________________ the ________________ of AvalonBay Communities, Inc., in its capacity as xxxxxxx, and proved to me through satisfactory evidence of identification, which was ___________________, to be the person whose name is signed on the preceding or attached documents, and acknowledged to me that ____________________ signed it voluntarily for its stated purposes.
		

		
			 
		

		
			
		

		
			____________________________Notary Public
		

		
			My Commission expires: _________
		

		
			 
		

		
			[Affix Official Notarial Seal]
		

		
			 
		

		
			 
		

		
			

		 

		

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EXHIBIT A
		

		
			Property Description
		

		
			EXHIBIT B
		

		
			Tropeano Family Tribute
		

		
			 
		

		
			 
		

		 

		

			L-1

		

		

			8457297.7ex10-1.htm

Exhibit 10.1

 

AMENDED AND RESTATED

 

EMPLOYMENT, CONFIDENTIALITY AND NONCOMPETE AGREEMENT

 

Build-A-Bear Workshop, Inc., a Delaware corporation (“Company”), and Eric Fencl (“Employee”) entered into an Employment, Confidentiality and Noncompete Agreement effective as of April 14, 2015 (“Prior Agreement”). This Amended and Restated Employment, Confidentiality and Noncompete Agreement (“Agreement”) is entered into effective as of March 7, 2016 (“Effective Date”) by and between the Company and Employee and completely amends and supersedes the Prior Agreement.

 

WHEREAS, Company desires to continue to employ and Employee desires to be employed as the Chief Administrative Officer, General Counsel and Secretary of Company from and after the Effective Date.

 

WHEREAS, Company has pioneered the retail concept of “make your own” stuffed plush toys, including animals and dolls, and is engaged in, among other things, the business of production, marketing, promotion and distribution of plush stuffed toys, clothing, accessories and similar items, including without limitation, the ownership, management, franchising, leasing and development of retail stores in which the basic operation is the selling of such items, and the promotion of the related concepts and characters through merchandising and mass media. Company is headquartered and its principal place of business is located in, and this Agreement is being signed in, St. Louis, Missouri.

 

WHEREAS, Company conducts business in selected locations throughout the United States and internationally directly and through franchise arrangements.

 

WHEREAS, Company has expended a great deal of time, money and effort to develop and maintain its proprietary Confidential Information (as defined herein) which is material to Company and which, if misused or disclosed, could be very harmful to Company’s business.

 

WHEREAS, the success of Company depends to a substantial extent upon the protection of its Confidential Information and goodwill by all of its employees.

 

WHEREAS, Company compensates its employees to, among other things, develop and preserve goodwill with its customers, landlords, suppliers and partners on Company’s behalf and business information for Company’s ownership and use.

 

WHEREAS, if Employee were to leave Company, Company, in all fairness, would need certain protections in order to prevent competitors of Company from gaining an unfair competitive advantage over Company or diverting goodwill from Company, or to prevent Employee from misusing or misappropriating the Confidential Information.

 

 

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NOW, THEREFORE, in consideration of the compensation and other benefits of Employee’s employment by Company and the recitals, mutual covenants and agreements hereinafter set forth, Employee and Company agree as follows:

 

1.                Emploment Services

 

(a)     As of the Effective Date, Employee shall continue to be employed by Company, and Employee accepts such continued employment, upon the terms and conditions hereinafter set forth. Employee shall serve as Chief Administrative Officer, General Counsel and Secretary throughout the Employment Period, and agrees to do so on a full-time basis. Employee shall carry out such duties as are assigned to him by Company’s Chief Executive Officer. 

 

(b)     Employee agrees that throughout Employee’s employment with Company, Employee will (i) faithfully render such services as may be delegated reasonably to Employee by Company, (ii) devote substantially all of Employee’s entire business time, good faith, best efforts, ability, skill and attention to Company’s business, and (iii) follow and act in accordance with all of the rules, policies and procedures of Company which are applicable to its senior executives, including but not limited to working hours, sales and promotion policies, and specific Company rules. 

 

(c)     “Company” means Build-A-Bear Workshop, Inc. or one of its Subsidiaries. The term “Subsidiary” means any corporation, joint venture or other business organization in which Build-A-Bear Workshop, Inc. now or hereafter, directly or indirectly, owns or controls more than fifty percent (50%) interest. 

 

2.             Term of Employment. The term of this Agreement shall commence on the Effective Date first set forth above, and shall end on the third anniversary of the Effective Date, unless sooner terminated as provided in Section 4 hereof (the “Renewal Term”). Following the Renewal Term, this Agreement shall renew for successive one-year periods (each a “Renewal Period”; collectively, the Renewal Term and each Renewal Period, the “Employment Period”), unless either party notifies the other party of its decision not to renew the Agreement at least sixty (60) days prior to the third anniversary of the Effective Date or the expiration of any Renewal Period, or unless the Agreement is sooner terminated as provided in Section 4 hereof. For the avoidance of doubt, if either party provides notice of non-renewal of the Agreement at least sixty (60) days prior to the end of the Renewal Term or the end of any Renewal Period, then the Agreement shall expire.

 

3.            Compensation.

 

(a)     Base Salary. Throughout the Employment Period, Company shall pay Employee as compensation for his services an annual base salary of not less than Three Hundred Twenty Seven Thousand Eight Hundred Dollars ($327,800), payable in accordance with Company’s usual practices. Employee’s annual base salary rate shall be reviewed by the Compensation Committee of the Board of Directors (the “Compensation Committee”) at least annually and may be subject to adjustment following each fiscal year so that Employee’s salary will be commensurate with similarly situated executives with firms similarly situated to Company. However, Employee’s annual base salary rate shall not be subject to decrease at any time during the Employment Period.

 

 

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(b)     Bonus. Should Company meet or exceed the sales, profits and other objectives established by the Compensation Committee for any fiscal year, Employee shall be eligible to receive a bonus for such fiscal year in the amount as determined by the Compensation Committee; provided however, the target bonus opportunity established for Employee in any given fiscal year will be set by the Compensation Committee at not less than fifty percent (50%) of Employee’s earned annual base pay for such fiscal year. Any bonus payable to Employee will be payable in cash, stock or stock options, or combination thereof, all as determined by the Board of Directors or any duly authorized committee thereof, and unless (to the extent consistent with Section 409A of the Code) a different payout schedule is applicable for all executive employees of Company, any such bonus payment will be payable in a single, lump sum payment in the calendar year that contains the April 30th immediately following such fiscal year, but no later than April 30th of such year. In the event of termination of this Agreement because of Employee’s death or disability (as defined by Section 4.1(b)), termination by Company without Cause pursuant to Section 4.1(c), or pursuant to Employee’s right to terminate this Agreement for Good Reason under Section 4.1(d), (1) any bonus for the fiscal year preceding the fiscal year in which such termination occurs shall be paid at the time and in the form such bonus would have been paid had Employee’s employment continued until the payment date, and (2) the bonus for the fiscal year in which such termination occurs shall be pro-rated based on the number of full calendar weeks during the applicable fiscal year during which Employee was employed hereunder, based on the bonus amount that Employee would have earned based on actual performance for the fiscal year had Employee’s employment not terminated, and shall be paid at the time and in the form such bonus would have been paid had Employee’s employment continued; provided, however, in the event of termination of this Agreement because of Employee’s termination by Company without Cause pursuant to Section 4.1(c) or pursuant to Employee’s right to terminate this Agreement for Good Reason under Section 4.1(d) and such termination is on the date of a Change in Control or during a period of twenty-four (24) months after a Change in Control, Employee’s target bonus for the fiscal year in which such termination occurs shall be prorated based on the number of full calendar weeks during the applicable fiscal year during which Employee was employed hereunder and shall be paid within thirty (30) days of such termination (subject to any delay in payout required under Section 4.2(b)). Notwithstanding anything herein to the contrary, no bonus shall be payable hereunder in the event that Employee’s employment terminates for any other reason prior to the date on which any bonus is actually paid. 

 

Such bonus, if any, shall be payable after Company’s accountants have determined the sales and profits and have issued their audit report with respect thereto for the applicable fiscal year, which determination shall be binding on the parties. Any such bonus shall be paid in the calendar year that contains the April 30 immediately following such fiscal year, but no later than April 30th of such year. 

 

(c)     Equity Awards. Employee may have been granted in the past, and may in the future be granted, a certain number of restricted shares and/or stock options to purchase shares of Company’s common stock (the “Common Stock”) and/or other awards, pursuant to the terms set forth more particularly in the stock option and/or restricted stock and/or other award agreements (“Stock Agreement”) used in connection with the Build-A-Bear Workshop, Inc. 2004 Stock Incentive Plan (or any successor plan) (the “Plan”). The Plan and applicable Stock Agreement(s) shall govern any grants of restricted shares and/or stock options to purchase shares of Company’s Common Stock and/or such other awards.

 

(d)     Discounts. Employee and his immediate family will be entitled to a minimum 20% discount for all merchandise purchased at Company’s stores.

 

 

3

 

 

(e)     Vacation. Employee shall be entitled to paid vacation and paid sick leave on the same basis as may from time to time apply to other Company executive employees generally. Vacations will be scheduled with the approval of Company’s Chief Executive Officer. One-third of one year’s vacation (or any part of it) may be carried over to the next year; provided that such carry over is used in the first calendar quarter of the next year. Unless otherwise approved by Company’s Chief Executive Officer, all unused vacation shall be forfeited. No more than two weeks of vacation can be taken at one time. Employee shall also be entitled to one (1) additional day per calendar year of paid vacation to be taken in the month of his birthday.

 

(f)     Other. Employee shall be eligible for such other perquisites as may from time to time be awarded to Employee by Company payable at such times and in such amounts as Company, in its sole discretion, may determine. All compensation under this Agreement shall be subject to customary withholding taxes and other employment taxes as required with respect thereto. Throughout the Employment Period, Employee shall also qualify for all rights and benefits for which Employee may be eligible under any benefit plans including group life, medical, health, dental and/or disability insurance or other benefits (“Welfare Benefits”) which are provided for employees generally at his then current location of employment.

 

4.               Termination Provisions.

 

4.1     Termination of Employment. Prior to the expiration of the Employment Period, this Agreement and Employee’s employment may be terminated as follows:

 

(a)     Upon Employee’s death;

 

(b)     By Company upon thirty (30) days’ prior written notice to Employee in the event Employee, by reason of permanent physical or mental disability (which shall be determined by a physician selected by Company or its insurers and acceptable to Employee or Employee’s legal representative (such agreement as to acceptability not to be withheld unreasonably)), following such time as Employee has been unable to perform the essential functions of his position, with or without reasonable accommodation, for the longer of: (i) six (6) consecutive months or (ii) the maximum health leave provided under Company’s Health Leave of Absence policy for Employee’s length of service with Company; provided, however, Employee shall not be terminated due to permanent physical or mental disability unless or until said disability also entitles Employee to benefits under such disability insurance policy as is provided to Employee by Company, provided however that continued entitlement to disability benefits coverage shall be not required where Employee fails to qualify for benefits coverage continuation due to an act or omission by Employee.

 

(c)     By Company with or without Cause. For the purposes of this Agreement, “Cause” shall mean: (i) Employee’s engagement in any conduct which, in Company’s reasonable determination, constitutes gross misconduct, or is illegal, unethical or improper provided such conduct brings detrimental notoriety or material harm to Company; (ii) gross negligence or willful misconduct; (iii) any act which results in a conviction for a felony involving moral turpitude, fraud or misrepresentation; (iv) a material breach of a material provision of this Agreement by Employee, or (v) failure of Employee to follow a written directive of the Chief Executive Officer or the Board of Directors within thirty (30) days after receiving such notice, provided that such directive is reasonable in scope and is otherwise within the Chief Executive Officer’s or the Board’s reasonable business judgment, and is reasonably within Employee’s control; provided Employee does not cure said conduct or breach as set forth in (i)-(v)(to the extent curable) within thirty (30) days after the Chief Executive Officer or the Board of Directors provides Employee with reasonably-detailed written notice of said conduct or breach accompanied by a clear written statement of Company’s intent to terminate the Employee’s employment for Cause in the absence of a cure. Cause shall not exist unless and until the Employee (and his counsel if he wishes) has been afforded an opportunity prior to the actual date of termination to discuss the matter with the Board of Directors at a duly-called Board meeting at which the matter is timely placed on the agenda and the Board subsequently votes to terminate the relationship for Cause.

 

 

4

 

 

(d)     By the Employee with or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean (i) a material breach of a material provision of this Agreement by Company, (ii) Company’s issuance of a notice of non-renewal of this Agreement under Section 2, (iii) a material diminution in Employee’s total annual compensation, including base salary, annual bonus opportunity and long-term incentives, (iv) a material diminution in Employee’s authority, duties or responsibilities, or (v) a change in the geographic location at which Employee must perform services hereunder of more than twenty-five (25) miles; provided, that, Employee provides the Board of Directors with written notice of Good Reason within thirty (30) days of the date on which Employee becomes aware of the condition alleged to give rise to Good Reason, Company does not cure such condition within thirty (30) days after such notice (to the extent curable), and Employee terminates his employment within ninety (90) days following the onset of one or more conditions giving rise to Good Reason. 

 

4.2     Impact of Termination.

 

(a)     Survival of Covenants. Upon termination of this Agreement, all rights and obligations of the parties hereunder shall cease, except termination of employment pursuant to Section 4 or otherwise shall not terminate or otherwise affect the rights and obligations of the parties pursuant to Sections 5 through 13 hereof.

 

(b)     Severance. In the event during the Employment Period (i) Company terminates Employee’s employment without Cause pursuant to Section 4.1(c) or (ii) the Employee terminates his employment for Good Reason pursuant to Section 4.1(d), subject to the execution and non-revocation of a release and waiver of all claims described below, Company shall continue his base salary in accordance with its regular payroll practices for a period of (A) twelve (12) months, commencing on the date that is thirty (30) days after the termination in the case of a termination of employment either prior to a Change in Control or following a period of twenty-four (24) months after a Change in Control or (B) eighteen (18) months, commencing on the date that is thirty (30) days after the termination in the case of a termination of employment during the twenty-four (24) month period immediately following a Change in Control. Notwithstanding anything herein to the contrary, receipt of any payment in connection with a termination of employment shall be conditioned on Employee signing a release and waiver of all claims against Company and its affiliates within thirty (30) days after his termination of employment, in such form and manner as Company shall reasonably prescribe, which release shall become effective and irrevocable within thirty (30) days after Employee’s termination of employment. Employee shall accept these payments in full discharge of all obligations of any kind which Company has to his except obligations, if any (i) for post-employment benefits expressly provided under this Agreement and/or at law, (ii) to repurchase any capital stock of Company owned by Employee (as may or may not be set forth in the applicable stock agreement); or (iii) for indemnification under separate agreement by virtue of Employee’s status as a director/officer of Company. Employee shall also be eligible to receive a bonus with respect to the year of termination to the extent provided in Section 3(b).

 

 

5

 

 

For purposes of these severance pay provisions and any other term of this Agreement which provides for a payment upon termination of employment, Employee shall be considered as having terminated employment only if such termination constitutes a “separation from service” within the meaning of Section 409A of the Code, and any proposed or final regulations and guidance promulgated thereunder. Notwithstanding anything herein to the contrary, in the event that Employee is determined to be a specified employee within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service, to the extent required to avoid any adverse tax consequences under Section 409A of the Code. Any payments that would have been made during such 6-month period shall be made in a lump sum on the first payroll date which is more than six months following the date Employee separates from service with Company. Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code. In no event may Employee, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. This Agreement shall be interpreted and administered in a manner consistent with Section 409A of the Code.

 

For purposes of this Agreement, “Change in Control” shall mean: (i) the purchase or other acquisition (other than from Company) by any person, entity or group of persons, within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (“Act”) (excluding, for this purpose, Company or its subsidiaries or any employee benefit plan of Company or its subsidiaries), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of 20% or more of either the then-outstanding shares of common stock of Company or the combined voting power of Company’s then-outstanding voting securities entitled to vote generally in the election of directors; (ii) individuals who, as of the date hereof, constitute Company’s Board of Directors (and, as of the date hereof, the “Incumbent Board”) cease for any reason to constitute at least a majority of Company’s Board of Directors, provided that any person who becomes a director subsequent to the date hereof whose election, or nomination for election by Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act) shall be, for purposes of this Section, considered as though such person were a member of the Incumbent Board; (iii) a reorganization, merger or consolidation involving Company, in each case with respect to which persons who were the stockholders of Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of, respectively, the common stock and the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated corporation’s then-outstanding voting securities; or (iv) a liquidation or dissolution of Company, or the sale of all or substantially all of the assets of Company.

 

 

6

 

 

(c)     Termination due to Employee Non-Renewal of Term or Termination by Employee without Good Reason. If the Agreement expires either at the end of the Renewal Term or at the end of any Renewal Period, due to the issuance of notice of non-renewal by Employee under Section 2, then no severance under Section 4.2(b) shall be paid to the Employee and his employment shall terminate upon the anniversary date. If Employee terminates his employment without Good Reason, then no severance under Section 4.2(b) shall be paid to Employee and his employment shall terminate on the effective date of such termination. For the avoidance of doubt, if Company ends the employment relationship either at the end of the Renewal Term or at the end of any Renewal Period without Cause under Section 4.1(c), Company shall remit to Employee the severance specified in Section 4.2(b) provided Company has received the release and waiver referred to in Section 4.2(b).

 

(d)     Welfare Benefits. Upon termination or expiration of this Agreement for any reason, Employee shall be provided with such Welfare Benefits continuation notices, rights and obligations as may be required under federal or state law (including COBRA). In the event that Employee becomes entitled to any severance under paragraph 4.2(b) above, the Company shall pay Employee, within thirty (30) days of his termination of employment, a single lump sum equal to eighteen multiplied by the monthly Company-paid portion of health, dental and vision plan coverage premiums for those benefits in which Employee and his dependents are enrolled on the date of termination of employment.

 

5.            Confidential Information.

 

(a)     Employee agrees to keep secret and confidential, and not to use or disclose to any third parties, except as directly required for Employee to perform Employee’s employment responsibilities for Company, any of Company’s proprietary Confidential Information.

 

(b)     Employee acknowledges and confirms that certain data and other information (whether in human or machine readable form) that comes into his possession or knowledge (whether before or after the date of this Agreement) and which was obtained from Company, or obtained by Employee for or on behalf of Company, and which is identified herein (the “Confidential Information”) is the secret, confidential property of Company. This Confidential Information includes, but is not limited to:

 

(1)     lists or other identification of customers or prospective customers of Company;

 

(2)     lists or other identification of sources or prospective sources of Company’s products or components thereof, its landlords and prospective landlords and its current and prospective alliance, marketing and media partners (and key individuals employed or engaged by such parties);

 

(3)     all compilations of information, correspondence, designs, drawings, files, formulae, lists, machines, maps, methods, models, studies, surveys, scripts, screenplays, artwork, sketches, notes or other writings, plans, leases, records and reports;

 

(4)     financial, sales and marketing data relating to Company or to the industry or other areas pertaining to Company’s activities and contemplated activities (including, without limitation, leasing, manufacturing, transportation, distribution and sales costs and non-public pricing information);

  

 

7

 

 

(5)     equipment, materials, designs, procedures, processes, and techniques used in, or related to, the development, manufacture, assembly, fabrication or other production and quality control of Company’s products, stores and services;

 

(6)     Company’s relations with its past, current and prospective customers, suppliers, landlords, alliance, marketing and media partners and the nature and type of products or services rendered to, received from or developed with such parties or prospective parties;

 

(7)     Company’s relations with its employees (including, without limitation, salaries, job classifications and skill levels); and

 

(8)     any other information designated by Company to be confidential, secret and/or proprietary (including without limitation, information provided by customers, suppliers and alliance partners of Company).

 

Notwithstanding the foregoing, the term Confidential Information shall not consist of any data or other information which has been made publicly available or otherwise placed in the public domain other than by Employee in violation of this Agreement.

 

(c)     During the Employment Period, Employee will not copy, reproduce or otherwise duplicate, record, abstract, summarize or otherwise use, any papers, records, reports, studies, computer printouts, equipment, tools or other property owned by Company except as expressly permitted by Company in writing or required for the proper performance of his duties on behalf of Company.

 

6.     Post-Termination Restrictions. Employee recognizes that (i) Company has spent substantial money, time and effort over the years in developing and solidifying its relationships with its customers, suppliers, landlords and alliance, marketing and media partners and in developing its Confidential Information; (ii) long-term customer, landlord, supplier and partner relationships often can be difficult to develop and require a significant investment of time, effort and expense; (iii) Company has paid its employees to, among other things, develop and preserve business information, customer, landlord, vendor and partner goodwill, customer, landlord, vendor and partner loyalty and customer, landlord, vendor and partner contacts for and on behalf of Company; and (iv) Company is hereby agreeing to employ and pay Employee based upon Employee’s assurances and promises not to divert goodwill of customers, landlords, suppliers or partners of Company, either individually or on a combined basis, or to put himself in a position following Employee’s employment with Company in which the confidentiality of Company’s Confidential Information might somehow be compromised. Accordingly, Employee agrees that during the Employment Period and for the period of time set forth below following termination of employment, provided termination is in accordance with the terms of Section 4.1(b), (c), or (d), or due to expiration of the Agreement due to non-renewal by either party, Employee will not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise):

 

 

8

 

 

(a)     for one (1) year, engage in, assist or have an interest in, or enter the employment of or act as an agent, advisor or consultant for, any person or entity which is engaged in, or will be engaged in, the development, manufacture, supplying or sale of a product, process, service or development which is competitive with a product, process, service or development on which Employee worked or with respect to which Employee has or had access to Confidential Information while at Company (“Restricted Activity”), and which is located within the United States or within any country where Company has established a retail presence either directly or through a franchise arrangement; provided, however, that following termination of her employment, Employee shall be entitled to be an employee of an entity that engages in Restricted Activity so long as: (i) the sale of stuffed plush toys is not a material business of the entity; (ii) Employee has no direct or personal involvement in the sale of stuffed plush toys; and (iii) neither Employee, her relatives, nor any other entities with which she is affiliated own more than 1% of the entity. As used in this paragraph 6, “material business” shall mean that either (A) greater than 10% of annual revenues received by such entity were derived from the sale of stuffed plush toys and related products, or (B) or the entity otherwise annually derives or is projected to derive annual revenues in excess of $5 million from a retail concept that is similar in any material regard to Company; or

 

(b)     for one (1) year, induce or attempt to induce any employee, consultant, partner or advisor of Company to accept employment or an affiliation with any other entity.

 

7.     Acknowledgment Regarding Restrictions. Employee recognizes and agrees that the restraints contained in Section 6 (both separately and in total), including the geographic scope thereof in light of Company’s marketing efforts, are reasonable and enforceable in view of Company’s legitimate interests in protecting its Confidential Information and customer goodwill and the limited scope of the restrictions in Section 6. 

 

8.     Inventions.

 

(a)     Any and all ideas, inventions, discoveries, patents, patent applications, continuation-in-part patent applications, divisional patent applications, technology, copyrights, derivative works, trademarks, service marks, improvements, trade secrets and the like (collectively, “Inventions”), which are developed, conceived, created, discovered, learned, produced and/or otherwise generated by Employee, whether individually or otherwise, during the time that Employee is employed by Company, whether or not during working hours, that relate to (i) current and anticipated businesses and/or activities of Company, (ii) the current and anticipated research or development of Company, or (iii) any work performed by Employee for Company, shall be the sole and exclusive property of Company, and Company shall own any and all right, title and interest to such Inventions. Employee assigns, and agrees to assign to Company whenever so requested by Company, any and all right, title and interest in and to any such Invention, at Company’s expense, and Employee agrees to execute any and all applications, assignments or other instruments which Company deems desirable or necessary to protect such interests, at Company’s expense.

 

 

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(b)     Employee acknowledges that as part of his work for Company he may be asked to create, or contribute to the creation of, computer programs, documentation and other copyrightable works. Employee hereby agrees that any and all computer programs, documentation and other copyrightable materials that he has prepared or worked on for Company, or is asked to prepare or work on by Company, shall be treated as and shall be a “work made for hire,” for the exclusive ownership and benefit of Company according to the copyright laws of the United States, including, but not limited to, Sections 101 and 201 of Title 17 of the U.S. Code (“U.S.C.”) as well as according to similar foreign laws. Company shall have the exclusive right to register the copyrights in all such works in its name as the owner and author of such works and shall have the exclusive rights conveyed under 17 U.S.C. §§ 106 and 106A including, but not limited to, the right to make all uses of the works in which attribution or integrity rights may be implicated. Without in any way limiting the foregoing, to the extent the works are not treated as works made for hire under any applicable law, Employee hereby irrevocably assigns, transfers, and conveys to Company and its successors and assigns any and all worldwide right, title, and interest that Employee may now or in the future have in or to the works, including, but not limited to, all ownership, U.S. and foreign copyrights, all treaty, convention, statutory, and common law rights under the law of any U.S. or foreign jurisdiction, the right to sue for past, present, and future infringement, and moral, attribution, and integrity rights. Employee hereby expressly and forever irrevocably waives any and all rights that he may have arising under 17 U.S.C. §§ 106A, rights that may arise under any federal, state, or foreign law that conveys rights that are similar in nature to those conveyed under 17 U.S.C. §§ 106A, and any other type of moral right or droit moral.

 

9.          Company Property. Employee acknowledges that any and all notes, records, sketches, computer diskettes, training materials and other documents relating to Company obtained by or provided to Employee, or otherwise made, produced or compiled during the Employment Period, regardless of the type of medium in which they are preserved, are the sole and exclusive property of Company and shall be surrendered to Company upon Employee’s termination of employment and on demand at any time by Company.

 

10.     Nondisparagement. Employee agrees that he will not in any way disparage Company or its affiliated entities, officers, or directors; and the officers and directors shall not in any way disparage Employee. Further, Employee agrees that he will neither make nor solicit any comments, statements, or the like to the media or to third parties that may be considered to be derogatory or detrimental to the good name or business reputation of Company or any of its affiliated entities, officers or directors; and the officers and directors will neither make nor solicit any comments, statements, or the like to the media or to third parties that may be considered to be derogatory or detrimental to the good name or business reputation of Employee.

 

11.     Non-Waiver of Rights. Either party’s failure to enforce at any time any of the provisions of this Agreement or to require at any time performance by the other party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement, or any part hereof, or the right of the non-breaching party thereafter to enforce each and every provision in accordance with the terms of this Agreement.

 

12.     Company’s Right to Injunctive Relief. In the event of a breach or threatened breach of any of Employee’s duties and obligations under the terms and provisions of Sections 5, 6, or 8 hereof, Company shall be entitled, in addition to any other legal or equitable remedies it may have in connection therewith (including any right to damages that it may suffer), to seek temporary, preliminary and permanent injunctive relief restraining such breach or threatened breach, without the necessity of posting any bond. Employee hereby expressly acknowledges that the harm which might result to Company’s business as a result of any noncompliance by Employee with any of the provisions of Sections 5, 6 or 8 would be largely irreparable. 

 

 

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13.     Judicial Enforcement. If any provision of this Agreement is adjudicated to be invalid or unenforceable under applicable law in any jurisdiction, the validity or enforceability of the remaining provisions thereof shall be unaffected as to such jurisdiction and such adjudication shall not affect the validity or enforceability of such provisions in any other jurisdiction. To the extent that any provision of this Agreement is adjudicated to be invalid or unenforceable because it is overbroad, that provision shall not be void but rather shall be limited only to the extent required by applicable law and enforced as so limited. The parties expressly acknowledge and agree that this Section is reasonable in view of the parties’ respective interests.

 

14.     Employee Representations. Employee represents that the execution and delivery of the Agreement and Employee’s employment with Company do not violate any previous employment agreement or other contractual obligation of Employee. Employee further represents and agrees that he will not, during his employment with Company, improperly use or disclose any proprietary information or trade secrets of former employers and will not bring on to the premises of Company any unpublished documents or any property belonging to his former employers unless consented to in writing by such employers.

 

15.     Amendments. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referring hereto, and signed by the parties hereto. This Agreement supersedes all prior agreements and understandings between Employee and Company to the extent that any such agreements or understandings conflict with the terms of this Agreement.

 

16.     Assignments. This Agreement shall be freely assignable by Company to and shall inure to the benefit of, and be binding upon, Company, its affiliates, successors and assigns and/or any other entity which shall succeed to the business presently being conducted by Company. Being a contract for personal services, neither this Agreement nor any rights hereunder shall be assigned by Employee.

 

17.     Choice of Forum and Governing Law. In light of Company’s substantial contacts with the State of Missouri, the parties’ interests in ensuring that disputes regarding the interpretation, validity and enforceability of this Agreement are resolved on a uniform basis, and Company’s execution of, and the making of, this Agreement in Missouri, the parties agree that: (i) any litigation involving any noncompliance with or breach of the Agreement, or regarding the interpretation, validity and/or enforceability of the Agreement, shall be filed and conducted in the state or federal courts in St. Louis City or County, Missouri; and (ii) the Agreement shall be interpreted in accordance with and governed by the laws of the State of Missouri, without regard for any conflict of law principles.

 

18.     Notices. Except as otherwise provided for herein, any notices to be given by either party to the other shall be affected by personal delivery in writing or by mail, registered or certified, postage prepaid, with return receipt requested. Mailed notices shall be addressed as follows:

 

 

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(a)     If to Company:

 

Sharon Price John 

Chief Executive Officer and Chief President Bear

1954 Innerbelt Business Center

St. Louis, MO 63114

 

With copy to:

 

Eric Fencl

Chief Administrative Officer & General Counsel

1954 Innerbelt Business Center

St. Louis, MO 63114

 

 

(b)     If to Employee:

 

Eric Fencl

                         
                    

19.     Arbitration.     Any controversy or claim arising out of, or relating to this Agreement, the breach thereof, or Employee’s employment by Company, shall, at Company’s sole option, be settled by binding arbitration in the County of St. Louis in accordance with the employment rules then in force of the American Arbitration Association, and judgment upon the award rendered may be entered and enforced in any court having jurisdiction thereof. The controversies or claims subject to arbitration at Company’s option under this Agreement include, without limitation, those arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 1981, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, the Missouri Human Rights Act, local laws governing employment, and the statutory and/or common law of contract and tort. In the event Employee commences any action in court which Company has the right to submit to binding arbitration, Company shall have sixty (60) days from the date of service of a summons and complaint upon Company to direct in writing that all or any part of the dispute be arbitrated. Any remedy available in any court action shall also be available in arbitration. 

 

 

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20.     Excise Taxes. Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment, benefit, vesting or distribution to or for the benefit of Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would but for this Section 20 be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable successor provisions (the “Excise Tax”), then the Payments shall be either (i) provided to Employee in full, or (ii) provided to Employee as to such lesser extent which would result in no portion of such Payments being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Employee on an after-tax basis, of the greatest amount of Payments, notwithstanding that all or some portion of such Payments may be subject to the Excise Tax. Any determination required under this Section 20 shall be made in writing in good faith by the Company's independent certified public accountants, appointed prior to any change in ownership (as defined under Code Section 280G(b)(2), and/or tax counsel selected by such accountants (the “Accounting Firm”) in accordance with the principles of Section 280G of the Code. In the event of a reduction of Payments hereunder, the Payments shall be reduced as follows: (i) first from cash payments which are included in full as parachute payments, (ii) second from equity awards which are included in full as parachute payments, (iii) third from cash payments which are partially included as parachute payments, and (iv) fourth from equity awards that are partially included as parachute payments. In applying these principles, any reduction or elimination of the Payments shall be made in a manner consistent with the requirements of Code Section 409A and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. For purposes of making the calculations required by this Section 20, the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and Employee shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination under this Section 20. All fees and expenses of the Accounting Firm shall be borne solely by the Company.

If, notwithstanding any reduction described in this Section 20, the Internal Revenue Service (the “IRS”) determines that Employee is liable for the Excise Tax as a result of the receipt of the Payments as described above, then Employee shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that Employee challenges the final IRS determination, a final judicial determination, a portion of the Payments equal to the “Repayment Amount.” The Repayment Amount with respect to the Payments shall be the smallest such amount, if any, as shall be required to be paid to the Company so that Employee's net after-tax proceeds with respect to the Payments (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the Payments shall be zero if a Repayment Amount of more than zero would not result in Employee’s net after-tax proceeds with respect to the Payments being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, Employee shall pay the Excise Tax.

Notwithstanding any other provision of this Section 20, if (i) there is a reduction in the Payments as described in this Section 20, (ii) the IRS later determines that Employee is liable for the Excise Tax, the payment of which would result in the maximization of Employee’s net after-tax proceeds (calculated as if Employee’s Payments had not previously been reduced), and (iii) Employee pays the Excise Tax, then the Company shall pay to Employee those Payments which were reduced pursuant to this subsection as soon as administratively possible after Employee pays the Excise Tax so that Employee’s net after-tax proceeds with respect to the Payments are maximized.

 

For the avoidance of doubt, Employee acknowledges she is solely responsible for the payment of any Excise Tax and that the Company will not reimburse or otherwise indemnify her for such amount. Any reimbursements or repayments provided under this subsection shall be made strictly in accordance with Section 409A of the Code, including Treasury Regulation 1.409A-3(i)(1)(v).

 

 

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Notwithstanding anything in this Agreement to the contrary, if any payments or benefits due to Employee hereunder would cause the application of an accelerated or additional tax under Section 409A of the Code (“Section 409A”), such payments or benefits shall be restructured in a manner which does not cause such an accelerated or additional tax. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Employee’s separation from service shall instead be paid on the first (1st) business day after the date that is six (6) months following Employee’s date of termination (or death, if earlier). In the event that Employee receives reduced payments and benefits as a result of the application of this paragraph, reduction shall be made from payments and benefits which are determined not to be nonqualified deferred compensation for purposes of Section 409A of the Code first, and then shall be made (to the extent necessary) out of payments and benefits which are subject to Section 409A of the Code and which are due at the latest future date, to the extent such reduction would not trigger adverse tax consequences under Section 409A of the Code. 

 

 

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21.     Headings. Section headings are provided in this Agreement for convenience only and shall not be deemed to substantively alter the content of such sections.

 

PLEASE NOTE: BY SIGNING THIS AGREEMENT, EMPLOYEE IS HEREBY CERTIFYING THAT EMPLOYEE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT TO ASK ANY QUESTIONS EMPLOYEE HAS ABOUT THE AGREEMENT AND HAS RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS EMPLOYEE’S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of March 7, 2016.

 

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY COMPANY.

 

 

 

	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Eric Fencl
	
 

	
 
	
 
	
Eric Fencl
	
 

	
 
	
 
	
 
	
 

 

	
 
	
BUILD-A-BEAR WORKSHOP, INC.
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Sharon Price John
	
 

	
 
	
Name:
	
Sharon Price John
	
 

	
 
	
Title:
	
Chief Executive Officer
	
 

 

 

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