Document:

exhibit10_1.htm

 

 

CONTRACT OF SALE AND PURCHASE

 

THIS CONTRACT OF SALE AND PURCHASE (this "Contract") is made as of the 13th day of May, 2010 by and between AJ IRVINE OWNER CORPORATION, a Delaware corporation ("Seller") and HINES GLOBAL REIT PROPERTIES LP, a Delaware limited partnership ("Purchaser").

 

Terms which are used in this Contract and not otherwise defined herein shall have the meanings ascribed to such terms in ARTICLE 14 hereof.

 

In consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree as follows:

 

ARTICLE 1

 

 

SALE OF THE PROPERTY

 

1.1 Seller agrees to sell and convey unto Purchaser, and Purchaser agrees to purchase and accept from Seller, for the price and subject to the terms, covenants, conditions and provisions set forth herein, all of the following (sometimes referred to herein in the aggregate as the "Property"):

 

(a) all of the land located at 17600 Gillette Avenue, Irvine, CA 92614, and more particularly described in Exhibit A annexed hereto and made a part hereof for all purposes (the "Land"), together with all right, title and interest, if any, of Seller, in and to: (i) strips or gores, if any, between the Land and abutting properties, whether owned or claimed by deed, limitations or otherwise, and whether or not they are located inside or outside of the boundaries of the Land, (ii) any land lying in or under the bed of any highway, avenue, street, road, alley, easement or right-of-way, open or proposed, in, on, across, abutting or adjacent to the Land, to the center line thereof, and (iii) all easement rights, air rights, development rights and water rights in or upon the Land and all other rights and appurtenances belonging or in anywise pertaining to the Land or the Improvements described below (the items in this Section 1.1(a)) referred to collectively, the "Real Property");

 

(b) all of the buildings and other structures and improvements situated on the Land (collectively, the "Improvements");

 

(c) all of Seller's rights, title and interest in (x) all mechanical, electrical, heating, air conditioning and plumbing systems, fixtures and equipment; all carpets, drapes and other furnishings; and all other machinery, equipment, fixtures and personal property of every kind and character, and all accessories and additions thereto owned by Seller and located in or on the Land or Improvements, and (y) all furniture and artwork, owned by Seller and located in or on the Land or Improvements, a schedule of the items in clause (y) is set forth on Schedule 1.1(c) annexed hereto and made a part hereof (collectively, the "Personalty"); but specifically excluding any items of personal property owned by the Tenants (herein defined);

 

(d) all of Seller's right, title and interest in leases in effect (but specifically excluding Subleases defined below, collectively, the "Leases") that grant a possessory interest in and to any space situated in the Improvements or that otherwise grant rights with regard to use of all or any portion of the Land or Improvements, a schedule of which is annexed hereto and made a part hereof as Exhibit B, together with all rentals paid or payable by the tenants under such Leases (individually, a "Tenant" and collectively, the "Tenants") for any period of time beginning on or subsequent to the date of Closing (as hereinafter defined), and all security and other deposits paid by the Tenants under such Leases (collectively, the "Security Deposits"), together with Seller's interest, if any, in the subleases and other occupancy agreements listed on Exhibit B-1 annexed hereto and made a part hereof (the "Subleases");

 

(e) all of Seller's right, title and interest in assignable leasing, service, management, supply and maintenance contracts relating to the Land, Improvements or Personalty (subject to Section 3.4 below) (the "Operating Agreements");

 

(f) all of Seller's right, title and interest in assignable warranties and guaranties of Seller, if any, relating to the Land, Improvements or Personalty (collectively, the "Warranties");

 

(g) all of Seller's right, title and interest in plans, specifications and architectural floor plans pertaining to the Property;

 

(h) all keys to locks on the Land and Improvements;

 

(i) all of Seller's right, title and interest in all trade names, trademarks, logos, service marks utilized by Seller in connection with the operation of the Property (other than variations of Seller's name); and

 

(j) all other rights, privileges and appurtenances owned by Seller and in any way related to the properties described in this ARTICLE 1.

 

ARTICLE 2

 

 

CONSIDERATION

 

2.1 Purchase Price.  The purchase price ("Purchase Price") for the Property is Twenty Million Seven Hundred Fifty Thousand Dollars ($20,750,000), which shall be payable (subject to prorations and other credits provided for in this Contract) by Purchaser to Seller at Closing and as follows:

 

2.1.1 No later than one (1) day following the date hereof, Purchaser shall deliver a deposit with Fidelity National Title, whose address is 1300 Dove Street, Suite 310, Newport Beach, CA 92660 (the "Title Company"), in the sum of Five Hundred Thousand Dollars ($500,000) (together with any interest thereon, collectively, the "Earnest Money") in good funds to be held and disbursed in accordance with the terms the this Contract.  The Title Company shall deposit the Earnest Money in an interest-bearing account maintained at California Bank & Trust, 4350 La Jolla Village Drive, Suite 350 located in San Diego, California.  Purchaser shall provide the Title Company with a Form W-9 that sets forth that Purchaser's federal taxpayer identification, and it will promptly execute such reasonably requested documentation as the Title Company may reasonably require to enable the Title Company to comply with the deposit instructions set forth herein.  If Purchaser fails to deliver the Earnest Money within one (1) day following the date hereof, then, in such event, this Contract shall be deemed terminated automatically without any further notices or action being required.

 

2.1.2 If the transaction contemplated by this Contract is consummated in accordance with the terms and provisions hereof, the Earnest Money (including any accrued interest thereon) shall be credited against the Purchase Price and paid to Seller at Closing.  If the transaction is not so consummated, the Earnest Money (including any accrued interest thereon) shall be held and delivered by the Title Company as hereinafter provided.

 

2.1.3 At the Closing, the balance of the Purchase Price shall be paid to or as directed by Seller, in cash by wire transfer of immediately available federal funds.  The amount of $500,000 shall be held back from the Purchase Price in an interest bearing account with the Title Company for the purpose of securing the representations and warranties of Seller under this Contract (the "Holdback"), for a period of six (6) months commencing from the Closing Date, as more particularly described in an Escrow Agreement ("Escrow Agreement") which shall be executed and delivered on the Closing Date by Purchaser and Seller in the form annexed hereto and made a part hereof as Exhibit 2.1.4 (which Escrow Agreement provides for the release of the Holdback to Seller upon the expiration of such 6 month period subject to claims of Purchaser as more particularly described in the Escrow Agreement).

 

ARTICLE 3

 

 

INSPECTION

 

3.1 Matters to be Submitted.  Seller has delivered to Purchaser or made available at the offices of Seller's property manager, Professional Real Estate Services, Inc., or Seller's asset manager, Falcon Real Estate Investment Company, L.P. (such property manager and such asset manager are collectively, the "Property Manager"), the following items (collectively, the "Submission Matters"); provided, however, that Seller shall have no obligation to deliver to Purchaser any Submission Matters which are not actually in Seller's possession or the possession of the Property Manager.  Neither Seller nor the Property Manager shall be obligated to take legal action or incur any material expense or effort in order to obtain any Submission Matters that are in the possession of third parties:

 

(a) a copy of each of the Leases and the Subleases;

 

(b) a rent roll for the Property, dated no later than thirty (30) days prior to the Effective Date ("Rent Roll");

 

(c) annual operating statements for the Property detailing income and expenses, including capital expenses, and occupancy for calendar years 2007, 2008 and 2009 and for the calendar months of the current year through the month preceding the date hereof;

 

(d) copies of all current (if available) real estate and personal property tax bills and if such current bills are not available, copies of all such bills for the most recent period for which such bills are available, together with evidence that all taxes due and payable with respect to the Property have been paid in full to the latest payment date;

 

(e) copies of all certificates of occupancy for the Improvements and copies of all other permits and licenses issued by any Governmental Authority with respect to the Property;

 

(f) plans, specifications and architectural floor plans for the Improvements;

 

(g) copies of all environmental site evaluations and any other reports and written materials relating to the presence or absence of hazardous materials or any other environmental condition at the Property (the "Environmental Reports");

 

(h) copies of all outstanding contracts of leasing, service, management, supply or maintenance which affect any portion of the Property or its operation, regardless of whether such contracts are assignable;

 

(i) the items listed on the letter from the Broker (as hereinafter defined) to Purchaser, dated May 1, 2010, a copy of which is annexed hereto and made a part hereof as Schedule 1;

 

(j) [Intentionally Blank];

 

(k) copies of tax returns filed by Seller for the years 2007, 2008 and 2009 (if filed);

 

(l) copies of the Seller's title insurance policy and surveys; and

 

(m) accounting books and records of Seller regarding property management for the past three years, including accounts payables and accounts receivables with access to named suppliers, lenders, contractors, and employees; including complete access to books and records of the Property Manager.

 

3.2 Inspection Period.

 

3.2.1 Purchaser shall have the period commencing on the Effective Date and ending 6:00 p.m. Eastern time on June 2, 2010 (the "Inspection Period") to review the Submission Matters and to enter or to have its authorized representatives and its and their agents, employees and representatives enter upon the Property or any part thereof at any reasonable time, subject to the rights of Tenants and subtenants occupying space in the Property pursuant to the Leases and the Subleases, as the case may be, for the purpose of reviewing the books and records relating to the Property, including all records relating to operating income and expenses of the Property and the originals of any of the Submission Matters submitted to Purchaser, and for the further purpose of conducting physical inspections of the Property and making, at Purchaser's sole risk and expense, such other inspections, examinations, investigations and tests as Purchaser considers appropriate; provided, however, that all such inspections, examinations, investigations and tests shall be conducted pursuant to and in accordance with that certain Access Agreement, dated as of May 5, 2010, between Seller and Purchaser, the terms and provisions of which are hereby incorporated into this Contract by this reference.

 

3.3 Right of Termination.

 

3.3.1 During the Inspection Period, Purchaser shall be entitled, for any reason or for no reason in Purchaser's sole and absolute discretion, judgment and opinion, including, without limitation, if Purchaser shall disapprove and be dissatisfied with any aspect of the Property or any Submission Matters, and as its sole remedy, to terminate this Contract by giving written notice to Seller ("Termination Notice") on or before 6:00 p.m. Eastern time on the last day of the Inspection Period, whereupon all of the provisions of this Contract except subsection 3.2.1, and Section 12.1 hereof (the "Surviving Obligations") shall terminate and the Earnest Money (including any accrued interest thereon) shall be returned to Purchaser.  Upon such termination, neither Seller nor Purchaser shall have any further rights, obligations or liabilities hereunder, other than the Surviving Obligations.  If Purchaser fails to deliver written notice of termination by the end of the Inspection Period, this Contract shall be binding and Purchaser shall have no further right to terminate this Contract except as expressly provided herein.

 

3.4 Assumption of Operating Agreements.  Unless Purchaser terminates this Contract prior to the expiration of the Inspection Period, Purchaser may provide Seller with written notice of those Operating Agreements which are terminable without cause upon written notice or upon sale of the Property and which Purchaser desires to have terminated.  Seller shall, promptly following the expiration of the Inspection Period, deliver notice of termination with respect to all Operating Agreements specified in such notice.  Notwithstanding the foregoing, Seller shall terminate any property management agreement and/or exclusive leasing agreement as of the Closing Date, and such termination shall be a condition to Purchaser's obligation to close the purchase of the Property hereunder.  Notwithstanding the foregoing, it is understood and agreed that (x) Purchaser has instructed Seller to terminate the Operating Agreements listed on Exhibit C annexed hereto and made a part hereof as of Closing (and Seller has agreed to deliver a termination notice with respect to such Operating Agreements as of Closing), and (y) the Operating Agreements listed on Exhibit C hereto require at least 30 days prior notice of termination, accordingly, Purchaser shall assume the Operating Agreements set forth on Exhibit C hereto to the extent such terminations are not effective yet as of Closing due to such notice requirement.

 

ARTICLE 4

 

 

TITLE AND SURVEY

 

4.1 Title Report.  Seller has delivered to Purchaser and Purchaser has acknowledged receipt of a current preliminary title report from the Title Company, together with all information and documents referred to in the exceptions of such title report (the "Title Report") covering the Real Property and the Improvements.

 

4.2 UCC Searches.  Seller shall order, within five (5) days following the Effective Date, at Seller's sole cost and expense, current searches of the Uniform Commercial Code records of the Office of the Secretary of State of Delaware covering Seller (collectively, the "UCC Searches"), together with copies of all financing statements which appear thereon, and shall request that a duplicate of the UCC Searches be delivered to Seller's counsel.

 

4.3 Survey.  Seller has delivered and Purchaser has acknowledged receipt of an as-built ALTA survey of the Real Property dated no more than thirty (30) days prior to the Effective Date (collectively, the "Survey").

 

4.4 Review of Title and Survey.  Purchaser may advise Seller in writing and in reasonable detail, not later than (a) with respect to matters and exceptions set forth in the Title Report, the UCC Searches or the Survey, five (5) business days prior to the last day of the Inspection Period and (b) with respect to matters and exceptions first raised in any amendment or update to the Title Report or the UCC Searches that could reasonably be expected to materially and adversely impact the Property or are voluntarily created by Seller after the date of the Title Report (unless consented to by Purchaser, such consent not to be unreasonably withheld, conditioned or delayed with respect to matters that are required by law or existing agreements), three (3) business days after its receipt of such amendment or update to the Title Report or the UCC Searches (but no later than the Closing Date), what matters and exceptions shown or referred to in the amended and updated Title Report or any updated or amended UCC Searches, if any, are not acceptable to Purchaser (the "Title Objections").  Seller shall have two (2) business days after receipt of Purchaser's Title Objections to give Purchaser notice that (x) Seller will remove any Title Objections from title (or, if acceptable to the Title Company, in its reasonable judgment, afford the Title Company necessary information or certifications to permit it to insure over such exceptions) or (y) except as provided below, Seller elects not to cause such exceptions to be removed or insured over.  Seller's failure to provide notice to Purchaser as to any Title Objection shall be deemed an election by Seller not to remove the Title Objection.  If Seller so notifies or is deemed to have notified Purchaser that Seller will not remove or insure over any or all of the Title Objections, Purchaser shall have until the expiration of the Inspection Period to determine, as its sole options, whether (i) to proceed with the purchase and take the Property subject to such exceptions that are not to be removed or cured (which exceptions shall then become "Permitted Encumbrances" as defined below) or (ii) to terminate this Contract.  Purchaser's failure to give Seller notice shall be deemed to be an election by Purchaser under clause (i) in the immediately preceding sentence.  If Purchaser timely terminates this Contract in accordance with this Section 4.4, the Title Company shall promptly return the Earnest Money (and all interest thereon) to Purchaser, and neither Seller nor Purchaser shall have any further rights, obligations or liabilities hereunder, other than the Surviving Obligations.  Any title encumbrances or exceptions affecting the Property, including, without limitation, those set forth in the Title Report, the UCC Searches or on the Survey which Purchaser does not object in writing during the review periods provided above in this Section 4.4 shall be deemed to be permitted exceptions to title ("Permitted Encumbrances").  In all cases, the following exceptions shall also be deemed "Permitted Encumbrances" in addition to the matters defined as such in the preceding sentences: (A) liens for real estate taxes and assessments that are not yet due and payable (or substantially comparable language), (B) rights of the Tenants under the Leases and subtenants under the Subleases, (C) recorded lease and sublease documents, including subordination, nondisturbance and attornment agreements, (D) zoning, building and other governmental and quasi-governmental laws, codes and regulations, and (E) any matter pertaining to the REA.

 

4.5 Cure of Objections to Status of Title.  In the event there are Title Objections that Seller has elected to remove or cure as provided in Section 4.4 above and Purchaser has not terminated the Contract, Seller shall have until the originally-scheduled Closing Date or may adjourn the originally-scheduled Closing Date for up to 30 days (the "Cure Period") to remove or cure such Title Objections, and the removal or cure of such Title Objections shall be a condition to Purchaser's obligation to close the purchase of the Property hereunder.  If Seller fails to remove or cure such Title Objections or any of the Must Cure Matters (as defined below) by the originally-scheduled Closing Date (as may be adjourned), then, Purchaser, as its sole remedy, may terminate this Contract by written notice to Seller on or before the Closing Date (as may be adjourned), in which event the Earnest Money (including any accrued interest thereon) shall be returned to Purchaser and neither Seller nor Purchaser shall have any further rights, obligations or liabilities hereunder, other than the Surviving Obligations. Notwithstanding the foregoing, Seller shall, at its sole cost and expense, without any written demand being required from Purchaser: (i) cancel the internal master lease ("Master Lease") between Seller and AJ Irvine Tenant Corporation ("Master Lessee") of the Property and cause to be terminated any recorded memoranda of such Master Lease, and (ii) cause to be terminated and discharged the mortgage encumbering the Property in favor of Bank of America and any other loan documents recorded with respect to the loan secured by such mortgage, or (iii) any monetary lien on the Real Property affirmatively created by Seller (collectively, the "Must Cure Matters"); provided, however, that (x) Seller shall have no obligation whatsoever to discharge or terminate any Must Cure Matter related to the REA, and (ii) in lieu of discharging or terminating any Must Cure Matter, Seller may cause the Title Company to insure Purchaser's title to the Real Property without exception for any Must Cure Matter.

 

4.6 Evidence of Title.  Delivery of title in accordance with the foregoing (and subject to the Permitted Encumbrances) shall be evidenced by the willingness of the Title Company to issue, at Closing, its extended coverage Owner's ALTA Policy of Title Insurance in the amount of the Purchase Price showing title to the Real Property vested in Purchaser, subject only to the Permitted Encumbrances (the "Title Policy").  The Title Policy may contain such endorsements as reasonably required by Purchaser, provided that the issuance of such endorsements shall not be a condition to Purchaser's closing obligations hereunder.  It is an express condition to Purchaser's obligation to close the purchase of the Property hereunder that the Title Company (or another reputable title company licensed in the State of California chosen by Seller and reasonably acceptable to Purchaser) issues the Title Policy or is irrevocably bound and committed to issue the Title Policy at Closing.

 

ARTICLE 5

 

 

REPRESENTATIONS AND WARRANTIES

 

5.1 Seller's Representations.  Seller represents and warrants to Purchaser as of the Effective Date (subject to terms of Section 7.2.5(b)(ii) hereof) as follows:

 

5.1.1 Seller is duly organized, validly existing and in good standing under the laws of the state of its creation, and is qualified or registered to do business and is in good standing in the state in which the Property is located, with full power and authority to enter into and execute this Contract and to consummate the transactions contemplated hereby.  Seller has received all requisite organizational, Governmental Authority, and other third-party approvals (including the final approval of any lender or lenders whose lien encumbers the Property) necessary for the execution of this Contract, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, and this Contract constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.  To Seller's actual knowledge, neither the execution of this Contract nor the performance of Purchaser of its obligations hereunder will violate, be in conflict with result in a breach of, or constitute any event of default or default under:  (a) any law applicable to Seller, or (b) any loan or financing agreement or any other material agreement (including Seller's organizational documents) affecting the Seller and/or the Property.

 

5.1.2 To Seller's actual knowledge, Seller has not engaged in or knowingly permitted any operations or activities upon, or any use or occupancy of the Property for the purpose of or in any way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping, or disposal of any Hazardous Materials in violation of Applicable Laws.  To Seller's actual knowledge, Seller has received no written notice from any Governmental Authority of any material violation of any Applicable Laws (including, without limitation, any laws, rules or regulations pertaining to the protection of the environment or Hazardous Materials) which has not been cured.  To Seller's actual knowledge, Seller has delivered or made available to Purchaser copies of all environmental reports, tests, evaluations, studies and assessments (including any available Phase I or Phase II environmental site assessments), and any material correspondence relating to material environmental matters, with respect to the Property, to the extent in each case in the possession or control of Seller or the Property Manager.

 

5.1.3 To Seller's actual knowledge, except as disclosed to Purchaser in the Title Report or Exhibit D hereto, there are no actions, suits, or proceedings pending or to Seller's actual knowledge, threatened in writing in any court or before or by any Governmental Authority against or affecting the Property.

 

5.1.4 There are no pending eminent domain or condemnation proceedings against the Property or any part thereof and to Seller's actual knowledge, no such proceedings are presently threatened in writing or contemplated by any authority with the power of eminent domain.

 

5.1.5 Master Lessee is, and as of the Closing Date Seller will be, the owner of the lessor's interest under the applicable Leases and neither Master Lessee nor Seller has made any assignment of Seller's interest in the Leases, other than in connection with the Master Lease.

 

5.1.6 Seller is not a party to any agreements pursuant to which any leasing commissions are due and owing with respect to the current term of any of the Leases, or which may be owed by Purchaser after Closing.

 

5.1.7 The list of Leases set forth on Exhibit B constitutes all of the Leases (and specifically excludes any Subleases), currently in effect with respect to the Property.  To Seller's actual knowledge, there are no Subleases currently in effect with respect to the Property except for the Subleases listed on Exhibit B-1 hereto.  There are no other leases or occupancy agreements to which Seller is a party or to which, to Seller's knowledge, any predecessor-in-title of Seller is a party currently affecting the Property other than the Leases.  Seller has delivered or made available to Purchaser true, correct and complete copies of the Leases, and to Seller's actual knowledge, the Subleases.  As of the date hereof, to Seller's actual knowledge, Seller has not received any written notice that any Tenant, Subtenant or any guarantor of any Lease or Sublease has, during the term of its Lease or Sublease (as applicable), filed for bankruptcy, voluntarily or involuntarily, or been adjudicated bankrupt or admitted in writing its inability to pay its debts as they become due.  Except as disclosed on Exhibit B or Exhibit B-1:

 

(a) All of the Leases are in full force and effect, there are no outstanding notices of default by Seller to any Tenant and, to Seller's actual knowledge, Seller has not received any written notices of outstanding defaults by either the landlord or the respective Tenant or Subtenant under any Lease or Sublease (as applicable);

 

(b) None of the Leases have been modified or amended.  For purposes of the foregoing, estoppel certificates and subordination, nondisturbance and attornment agreements are not deemed to be modifications or amendments of Leases and may not be disclosed in Exhibit B hereto;

 

(c) Seller has not received written notification that there are any pending claims asserted by any Tenants for offsets against rent or any other monetary claims against the landlord.  There are no unpaid tenant improvement allowances or unpaid leasing commissions owed with respect to any Lease.

 

5.1.8 Except as disclosed on Exhibit D annexed hereto and made a part hereof, Seller has not received written notification that there are any pending claims asserted against Seller under the that certain Declaration and Grant of Easements and Reciprocal Easement Agreement, dated December 14, 2000, and recorded January 18, 2001 in the Official Records of Orange County, California ("Official Records"), as Instrument No. 20010029308, as amended by that certain Amendment No. 1 to Declaration and Grant of Easements and Reciprocal Easement Agreement recorded September 27, 2001, in the Official Records as Instrument No. 20010684534 (the "REA").

 

5.1.9 Seller is not a foreign person subject to withholding tax as required by Section 1445 of the Internal Revenue Code.

 

5.1.10 Seller is not an employee benefit plan (a "Plan") subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") and none of its assets constitutes or will constitute (or are or will be deemed, for purposes of ERISA or Section 4975 of the Code, or, if applicable, any substantially similar federal, state, local or foreign law, to constitute) assets of any such Plan.  Seller has no employees at the Property.

 

5.1.11 To Seller’s actual knowledge, Seller is not a party to any Operating Agreement which will not be terminated as of Closing other than the Operating Agreements listed on Exhibit C hereto.  To Seller's actual knowledge, Seller has delivered or made available to Purchaser true and correct copies of such Operating Agreements listed on Exhibit C hereto.

 

5.2 Seller's Knowledge.  When used in this Contract or in any certificate or other document delivered pursuant hereto, the phrase "to the best of Seller's knowledge," "to Seller's knowledge," or derivations thereof shall be construed to mean the current, actual knowledge of Scott Bennett without any obligation to make investigation or inquiry regarding the Property other than of Janine Padia of Professional Real Estate Services, Inc., and without obligation to make any investigation of the files, documents or studies in the possession of other persons, and shall not include any knowledge which may be imputed to Seller or of any other person.  Seller represents that Scott Bennett is the person charged with responsibility for supervising the management, operation and disposition of the Property by Seller.  Purchaser acknowledges that the individuals named above are named solely for the purpose of defining and narrowing the scope of Seller's knowledge and not for the purpose of imposing any liability on or creating any duties running from such individuals to Purchaser.  Purchaser covenants that it will bring no action of any kind against such individuals, related to or arising out of these representations and warranties.

 

5.3 Purchaser's Representations.  Purchaser represents and warrants to Seller as of the Effective Date and as of the Closing Date, as follows:

 

5.3.1 Purchaser is duly organized, validly existing and in good standing under the laws of the state of its formation and is, or will be as of Closing, qualified to do business and in good standing in the state in which the Property is located, with full power and authority to enter into and execute this Contract and to consummate the transactions contemplated hereby.  Purchaser has received all requisite entity approvals necessary for the execution of this Contract and the consummation of the transactions contemplated hereby and this Contract constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting debtors' and creditors' rights generally and general equitable provisions.

 

5.3.2 To Purchaser's knowledge, neither the execution of this Contract nor the performance by Purchaser of its obligations hereunder will violate, be in conflict with, result in a breach of  or constitute (with due notice or lapse of time, or both) a default under any law applicable to Purchaser.

 

5.4 Survival.  The representations and warranties made by Seller in this Contract, including in Section 5.1 and 12.1 hereof, and the representations and warranties made by Purchaser in this Contract, including in Section 5.3 hereof shall be effective as of the Effective Date and continue in full force and effect after the Closing for a period of six (6) months; provided, however, that any claim arising by reason of a claimed breach of such representations and warranties must be stated in a written notice to Seller and filed in a court of competent jurisdiction on or before the date which is six (6) months from the Closing Date.  Notwithstanding the foregoing, if, prior to the Closing, Purchaser obtains actual knowledge that any representation or warranty of Seller is inaccurate and Purchaser nonetheless proceeds with the Closing, Seller shall have no liability for any such matter as to which Purchaser had actual knowledge prior to Closing.  When used in this Contract or in any certificate or other document delivered pursuant hereto, the phrase "to the best of Purchaser's knowledge," "to Purchaser's knowledge," or derivations thereof shall be construed to mean the current, actual knowledge of any of the following individuals (the "Purchaser Knowledge Individuals"):  Paul Twardowski and Ray Lawler, without any obligation to make investigation or inquiry regarding the Property, and without obligation to make any investigation of the files, documents or studies in the possession of other persons, and shall not include any knowledge which may be imputed to Purchaser or of any other person.  Purchaser represents that the Purchaser Knowledge Individuals are the individuals charged with responsibility for supervising the acquisition of the Property by Purchaser.

 

5.5 Limitation of Seller's Liability.  Notwithstanding any other provision of this Contract, any agreement or other instrument contemplated by this Contract, in no event will Seller's liability to Purchaser under this Contract or the agreement and documents contemplated hereby, or any rights which Purchaser might otherwise have at law, in equity, by statute, or otherwise exceed the amount of the Holdback, except for the claims made under Article 12 hereof, adjustments made under Section 7.2.6 or for claims for fraud or willful or intentional misrepresentation of the representations set forth in Section 5.1 hereof (which shall not be subject to the limitations of this Section 5.5).  Without limiting the generality of the foregoing, the general and limited partners, employees, agent or affiliate of Seller will not in any manner be personally or individually liable for the obligations of Seller hereunder or for any claims related to this Contract, any agreement or other instrument contemplated by this Contract, or the Property.  The provisions of this Section 5.5 shall survive the Closing.

 

5.6 As Is; Release.  (a)                                Purchaser acknowledges that Purchaser will have the opportunity to independently and personally inspect the Property and that Purchaser has entered into this Contract based upon its ability to make such examination and inspection.  The Property is to be sold to and accepted by Purchaser at Closing in its then present condition "AS IS, WITH ALL FAULTS, (WHETHER LATENT, PATENT OR DETECTABLE OR NOT) AND WITHOUT ANY WARRANTY WHATSOEVER, EXPRESS OR IMPLIED", and without any reduction in the Purchase Price for any change in the physical or financial condition occurring from and after the Effective Date except for the express representations and warranties of Seller contained in Section 5.1 and elsewhere in this Contract.  Notwithstanding anything contained herein to the contrary, it is understood and agreed that, except for the express representations and warranties of Seller contained in Section 5.1 and elsewhere in this Contract, Seller and Seller's agents or employees have not made and are not now making, and they specifically disclaim, any warranties, representations or guaranties of any kind or character, express or implied, oral or written, past, present or future, with respect to the Property, including, but not limited to, warranties, representations or guaranties as to (1) matters of title; (2) environmental matters of any kind relating to the Property, the Land or the Improvements or any portion thereof (including the condition of the soil or groundwater beneath the Property); (3) geological conditions, including, without limitation, subsidence, subsurface conditions, water table, underground water reservoirs, limitations regarding the withdrawal of water and earthquake faults and the resulting damage of past and/or future earthquakes; (4) whether, and to the extent to which the Property or any portion thereof is affected by any stream (surface or underground), body of water, flood prone area, flood plain, floodway or special flood hazard; (5) drainage; (6) soil conditions, including the existence of instability, past soil repairs, soil additions or conditions of soil fill, or susceptibility to landslides, or the sufficiency of any under shoring; (7) zoning to which the Property or any portion thereof may be subject; (8) the availability of any utilities to the Property or any portion thereof including, without limitation, water, sewage, gas and electric; (9) usages of adjoining property; (10) access to the Property or any portion thereof, (11) the value, compliance with the plans and specifications, size, location, age, use, design, quality, description, suitability, structural integrity, operation, title to, or physical or financial condition of the Property or any portion thereof, or any income, expenses, charges, liens, encumbrances, rights or claims on or affecting or pertaining to the Property or any part thereof; (12) the presence of Hazardous Materials (hereinafter defined) in or on, under or in the vicinity of the Property; (13) the condition or use of the Property or compliance of the Property with any or all past, present or future federal, state or local ordinances, rules, regulations or laws, building, fire or zoning ordinances, codes or other similar laws; (14) the existence or non-existence of underground storage tanks; (15) any other matter affecting the stability or integrity of the Real Property; (16) the potential for further development of the Property; (17) the existence of vested land use, zoning or building entitlements affecting the Property; (18) the REA; (19) the merchantability of the Property or fitness of the Property for any particular purpose (Purchaser affirming that Purchaser has not relied on Seller's or Seller's agents' or employees' skill or judgment to select or furnish the Property for any particular purpose, and that Seller makes no warranty that the Property is fit for any particular-purpose); or (19) tax consequences.  EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND TO PURCHASER, INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE PROPERTY AND ANY IMPROVEMENTS LOCATED THEREON, OR THEIR SUITABILITY FOR ANY PARTICULAR PURPOSE OR OF MERCHANTABILITY.  PURCHASER SHALL RELY ON ITS INVESTIGATIONS OF THE PROPERTY IN DETERMINING WHETHER TO ACQUIRE IT.

 

(b) Seller and its partners, shareholders, officers, directors, agents, employees, Property Manager, controlling persons and affiliates (individually a "Seller Party" and collectively the "Seller Parties") are hereby released from all responsibility and liability regarding the condition (including the presence in the soil, air, structures and surface and subsurface waters, of materials or substances that have been or may in the future be determined to be toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, handled and/or removed from the Property under current or future federal, state and local laws, regulations or guidelines), valuation, salability or utility of the Property, or its suitability for any purpose whatsoever, excluding, however, any right to implead Seller only in connection with any third-party personal injury or personal property claims brought against Purchaser arising from the period during Seller's ownership of the Property which were not caused by Purchaser's actions and/or inactions.  Without limitation, Purchaser specifically releases Seller from any claims it may have against Seller now or in the future under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., as amended; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et  seq.,  as amended; any other analogous state or federal statute; and common law arising from the environmental conditions of the Property or the presence of Hazardous Materials, solid wastes, or any other pollutants or contamination the Property; provided, however, that the foregoing release shall not apply to Seller only with respect to (1) the representations and warranties of Seller contained in this Contract, and (x) Seller's express covenants (1) contained herein which expressly survive the Closing hereunder, and (y) contained in any closing documents delivered in connection with this Contract that expressly survive the Closing.

 

(c) Except as set forth in Section 5.1 hereof, Purchaser acknowledges that any information of any type which Purchaser has received or may receive from any Seller Party, including, without limitation, any environmental reports and surveys, is furnished on the express condition that Purchaser shall make an independent verification of the accuracy of such information, all such information being furnished without any warranty whatsoever.

 

5.7 THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART OF THE CONSIDERATION FOR SELLER'S ENTERING INTO THIS CONTRACT, AND SHALL SURVIVE CLOSING.

 

ARTICLE 6

 

 

CONDITIONS TO CLOSING

 

6.1 Tenant Estoppel.

 

6.1.1 Estoppel Requirement.  Subject to the further terms of this Article 6, it shall be a condition to Closing that Purchaser shall have received an executed estoppel certificate from the Tenant listed on Exhibit B hereto (a "Tenant Estoppel").  Seller agrees to use commercially reasonable best efforts to obtain the Tenant Estoppel.  In the event that Seller is unable to deliver the required Tenant Estoppel by the Closing Date, Purchaser may either:  (a) elect not to purchase the Property, at which time the Earnest Money (including any accrued interest thereon) shall be returned to Purchaser and this Contract shall be null and void and neither party shall have any further rights or obligations under this Contract, except for the Surviving Obligations; or (b) elect to purchase the Property notwithstanding Purchaser's failure to receive the required Tenant Estoppel, in which event Purchaser shall be deemed to have waived the condition contained in this Section 6.1.1 (and Purchaser's failure to elect option (b) above in writing prior to Closing shall be deemed an election of option (a)).  Seller agrees to use commercially reasonable efforts to obtain an estoppel certificate from Backbone Entertainment under its Sublease (it being understood and agreed that (i) it shall not be a condition to Purchaser's obligation to Closing that Purchaser shall have received an estoppel certificate from Backbone Entertainment, and (ii) Seller shall not be required to expend any funds or incur any liability whatsoever to obtain such estoppel certificate from Backbone Entertainment).

 

6.1.2 Procedures for Obtaining Estoppel Letters.

 

(a) The form of Tenant Estoppel is annexed hereto and made a part hereof as Schedule 3.  As soon as reasonably practicable, but in any event no later than seven (7) business days prior to the end of the Inspection Period, Seller will cause the Property Manager to prepare a draft tenant estoppel for Backbone Entertainment and deliver the same to Purchaser for review and approval.  Purchaser shall have 5 (five) business days to object in writing to Seller to the proposed tenant estoppel.  In the event that Purchaser has not objected in writing to Seller to the proposed tenant estoppel within 5 (five) business days, such tenant estoppel shall be deemed approved and Seller may deliver same to Backbone Entertainment for execution.

 

(b) Seller shall deliver to Purchaser each executed tenant estoppel received from a Tenant or Backbone Entertainment promptly following receipt thereof.  In the event that Purchaser has not objected in writing to Seller to the executed Tenant Estoppel within two (2) business days, such executed Tenant Estoppel shall be deemed approved.

 

(c) Purchaser shall have no right to object to an executed Tenant Estoppel solely because (i) the certifications with respect to absence of defaults or rights of offset have been qualified as being to the Tenant's knowledge or as being subject to any similar qualification, (ii) the Lease has not been attached, (iii) the Tenant has substituted its own form of estoppel, so long as the Tenant's form contains substantially the same information as the form estoppel, (iv) Tenant has modified or deleted paragraphs 11, 12 or 13 of the Tenant Estoppel contained on Schedule 3 hereto, or (v) the Tenant has made any other qualifications. to the Tenant Estoppel which are not adverse qualifications.

 

(d) In the event that the Closing Date is extended (without implying any obligation on the part of either party to grant such an extension), the executed estoppels approved by Purchaser shall remain approved through the extended Closing Date.

 

6.2 REA Estoppel.

 

6.2.1 Estoppel Requirement.  Subject to the further terms of this Article 6, it shall be a condition to Closing that Purchaser shall have received an executed estoppel certificate (the "REA Estoppel") from the owner of Parcel B under the REA.  In the event that Seller is unable to deliver the REA Estoppel by the Closing Date, then, in any such event, Purchaser may either:  (a) elect not to purchase the Property, at which time the Earnest Money (including any accrued interest thereon) shall be returned to Purchaser and this Contract shall be null and void and neither party shall have any further rights or obligations under this Contract, except for the Surviving Obligations; or (b) elect to purchase the Property notwithstanding Purchaser's failure to receive the REA Estoppel, in which event Purchaser shall be deemed to have waived the condition contained in this Section 6.2.1 (and Purchaser's failure to elect option (b) above in writing prior to Closing shall be deemed an election of option (a)).

 

6.2.2 Procedures for Obtaining the REA Estoppel.

 

(a) Within two (2) days after the Effective Date, Seller shall deliver the REA Estoppel (in the form attached hereto and made a part hereof as Schedule 2) to the owner of Parcel B under the REA.

 

(b) Seller shall deliver to Purchaser the executed REA Estoppel promptly following receipt thereof.  In the event that Purchaser has not objected in writing to Seller to the REA Estoppel within two (2) business days, such executed REA Estoppel shall be deemed approved.

 

(c) Purchaser shall have no right to object to the executed REA Estoppel solely because (i) the certifications with respect to absence of defaults or rights of offset have been qualified as being to the owner's knowledge or as being subject to any similar qualification, (ii)  the owner of Parcel B has substituted its own form of estoppel, so long as the owner's form contains substantially the same information as the form REA Estoppel, or (iii) the owner of Parcel B has made any other qualifications to the REA Estoppel which are not material adverse qualifications; it being understood and agreed that in no event shall Purchaser have the right to object to the REA Estoppel on account of any matter disclosed in Exhibit D hereto.

 

(d) In the event that the Closing Date is extended (without implying any obligation on the part of either party to grant such an extension), the executed REA Estoppel approved by Purchaser shall remain approved through the extended Closing Date.

 

ARTICLE 7

 

 

CLOSING

 

7.1 Closing Date.  Subject to the satisfaction of all conditions precedent to Closing as set forth in Section 7.2.5 below, the consummation of the purchase and sale of the Property pursuant to the terms of this Contract (the "Closing") shall be consummated through an escrow with the Title Company no later than June 7, 2010, or at such earlier date and time as may be mutually agreed upon in writing by Seller and Purchaser (the "Closing Date").  The wire transfer of the cash portion of the Purchase Price shall be deposited with the Title Company no later than 2:00 p.m. Eastern time on the Closing Date.

 

7.2 Closing Matters.

 

7.2.1 Seller's Closing Documents.  At Closing, Seller shall execute, deliver and acknowledge the following documents and deposit the same with the Title Company:

 

(a) A deed (the "Deed") in the form of Exhibit F annexed hereto and made a part hereof, modified to the extent necessary to conform with recording and other similar requirements of the State of California and County of Orange, subject only to a lien for ad valorem taxes for the year of Closing not yet due and payable and the Permitted Encumbrances;

 

(b) A bill of sale and assignment of Seller's interest in and to all the Leases, Operating Agreements and other elements of the Property described therein (the "Assignment") in the form of Exhibit G annexed hereto and made a part hereof;

 

(c) An affidavit with respect to Seller's status as a United States taxpayer in the form of Exhibit H annexed hereto and made a part hereof;

 

(d) A notice of sale ("Sale Notice"), in a form prepared by Purchaser, reasonably satisfactory to Seller and Purchaser, addressed to each Tenant and advising them of the sale of the Property and the address to which rent should be paid and notices should be sent after Closing;

 

(e) An owner's affidavit of title in favor of the Title Company, in the form of Exhibit I annexed hereto and made a part hereof (subject to de minimus modifications);

 

(f) The Escrow Agreement;

 

(g) A California 593-C Certificate;

 

(h) the Closing Statement; and

 

(i) Such other documents reasonably requested by Title Company to evidence Seller's authority to sell the Property contemplated hereby.

 

7.2.2 Other Closing Actions by Seller.  In addition to the documents to be executed and delivered by Seller pursuant to Section 7.2.1, at Closing Seller shall:

 

(a) To the extent available and in Seller's or Property Manager's possession, deliver to Purchaser at the Closing or at the Property originals of the Leases, the Subleases, the Operating Agreements to be assumed by Purchaser, the Warranties and the other Submission Matters;

 

(b) Deliver possession of the Property to Purchaser, subject to the rights of Tenants and the Permitted Encumbrances;

 

(c) Deliver all available keys then in Seller's possession to locks located in the Improvements to Purchaser; and

 

(d) Deliver such evidence of the authority and capacity of Seller and its representatives as Purchaser, Purchaser's counsel or the Title Company may reasonably require.

 

7.2.3 Purchaser's Closing Documents.  At Closing, Purchaser shall execute, deliver and acknowledge the following documents and deposit the same with the Title Company:

 

(a) The Assignment;

 

(b) The Sale Notice;

 

(c) The Closing Statement;

 

(d) The Escrow Agreement; and

 

(e) Such other and documents as may be reasonably required by the Seller or Title Company to consummate the purchase of the Property contemplated hereby.

 

7.2.4 Other Closing Actions by Purchaser.  In addition to the documents to be executed, delivered and acknowledged by Purchaser pursuant to Section 7.2.3, Purchaser shall, no later than 2:00 p.m. Eastern time on the Closing Date:

 

(a) Deliver the Purchase Price to the Title Company (less the amount of Earnest Money (including any accrued interest thereon) on deposit); and

 

(b) Deliver such evidence of the authority and capacity of Purchaser and its representatives as Seller, Seller's counsel or the Title Company may reasonably require.

 

7.2.5 Conditions Precedent.

 

(a) Seller's obligations under this Contract are subject to satisfaction of the following conditions precedent which may be waived in writing in whole or in part by Seller, on or before the Closing Date:

 

(i) Purchaser shall have paid or tendered payment of the Purchase Price pursuant to the terms hereof;

 

(ii) Purchaser shall have delivered to or for the benefit of Seller, on or before the Closing Date, all of the documents and items required to be delivered by Purchaser pursuant to Section 7.2.3 and 7.2.4 hereof, and Purchaser shall have performed all of its obligations hereunder to be performed on the Closing Date; and

 

(iii) All of Purchaser's representations and warranties made in this Contract shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if then made.

 

(b) Purchaser's obligations under this Contract are subject to the satisfaction of the following conditions precedent which may be waived in writing in whole or in part by Purchaser, on or before the Closing Date:

 

(i) Seller shall have delivered to or for the benefit of Purchaser, on or before the Closing Date, all of the documents and items required to be delivered by Seller pursuant to Section 7.2.1 and 7.2.2 hereof and Seller shall have performed all of its obligations hereunder to be performed on the Closing Date;

 

(ii) All of Seller's representations and warranties contained in this Contract shall be true and correct in all material respects as of the Closing Date (it being understood and agreed that if (x) at any time prior to the expiration of the Inspection Period Seller has any knowledge that the representations or warranties contained in this Contract are not true or correct, and (y) Seller provides notice of such facts to Purchaser, then, in any such event, (A) Seller's representations and warranties contained in this Contract shall be deemed modified by such facts, and (B) after the expiration of the Inspection Period, Purchaser shall have no right to terminate this Contract on account of any such new facts identified by Seller prior to the expiration of the Inspection Period);

 

(iii) The Title Company shall have issued or shall be irrevocably bound and committed to issue the Title Policy with liability in the amount of the Purchase Price insuring title to the Real Property vested in Purchaser as required under Section 4.6 hereof;

 

(iv) Seller shall have delivered to Purchaser the Tenant Estoppel as required by Section 6.1 hereof;

 

(v) Seller shall have delivered to Purchaser the REA Estoppel as required by Section 6.2 hereof; and

 

(vi) Seller shall deliver evidence of the termination of all Operating Agreements subject to the terms of Section 3.4 hereof.

 

7.2.6 Prorations and Adjustments.  All rentals, revenues and other income generated by the Property and (except to the extent such items are to paid directly by Tenant pursuant to the terms of the Lease) all utilities, real estate taxes, maintenance charges and other operating expenses incurred in connection with the ownership, management and operation of the Property shall be paid or shall be prorated between Seller and Purchaser in accordance with the provisions set forth below.  For purposes of such prorations and adjustments, Purchaser shall be deemed to own the Property as of 12:00 a.m. on the Closing Date and therefore be entitled to any revenues and be responsible for any expenses for the entire Closing Date.  Any apportionments and prorations which are not expressly provided for below shall be made in accordance with the customary practice in the area in which the Property is located.  Seller and Purchaser shall prepare a schedule of adjustments at least three (3) business days prior to the Closing Date and shall be part of the settlement statement for the transaction (the "Closing Statement").  Any net adjustment in favor of Purchaser shall be credited against the Purchase Price at the Closing.  Any net adjustment in favor of Seller shall be paid in cash at the Closing by Purchaser to Seller.  A copy of the Closing Statement agreed upon by Seller and Purchaser shall be executed and delivered by Seller and Purchaser at the Closing.

 

(a) Monthly rents (including fixed and additional rent paid on a monthly basis) for the month in which the Closing occurs shall be prorated on a cash basis on the basis of the actual number of days in the month during which the Closing occurs.

 

(b) Ad valorem taxes (real and personal) for the tax year during which the Closing occurs shall be prorated and adjusted at Closing on a cash basis (it being understood and agreed that Seller has paid such taxes for the tax year in which Closing will occur, and, accordingly, if Tenant and the owner of Parcel B reimburse Seller for such taxes paid by Seller, then, in such event, there shall not be a proration for such taxes at Closing).  Any refund or credit of real property taxes for the year prior to the year of Closing shall remain the sole property of Seller (except to the extent such refund or credit is the property of a Tenant or Owner of Parcel B pursuant to the terms of the applicable Lease) and, if paid or credited to Purchaser, shall be promptly paid to Seller.  Seller shall be entitled to its pro rata share of any refund or credit of real property taxes for the year in which the Closing occurs, and Purchaser shall pay same promptly following receipt of such refund or credit.

 

(c) (i) To the extent Tenants are reimbursing Seller for common area maintenance, parking and other operating expenses (collectively, "CAM Charges"), CAM Charges that will become due and payable with respect to the year in which the Closing occurs (the "CAM Lease Year"), including quarterly or annual payments, reconciliations and so called "rebillings" or "true ups", shall be prorated at Closing on an accrual basis.  If the amounts of such additional rent cannot be determined as of the Closing Date or have not yet been billed to Tenants or the owner of Parcel B, then the proration shall be done on the basis of actual amounts to the extent available, and otherwise on the basis of a reasonable estimate by Seller and Purchaser of the amount expected to be due thereon.  If proration is based upon estimates, then a further adjustment shall be made after the Closing when actual amounts are known.  In the event that Seller has received CAM Charges payments in excess of its actual CAM Charges for the CAM Lease Year, Purchaser shall be entitled to receive a credit against the Purchase Price for the excess.  In the event that the Seller has received CAM Charges payments less than its actual CAM Charges, to the extent that the Leases provide for a "true up" at the end of the CAM Lease Year, Seller shall be entitled to receive any deficit, but only after Purchaser has received any true up payment from Tenant or the owner of Parcel B, as the case may be.  Upon receipt by either party of any CAM Charges true up payment from Tenant or the owner of Parcel B, as the case may be, the party receiving the same shall provide to the other party its allocable share of the true up payment within five (5) business days of the receipt thereof.

 

(ii) Purchaser and Seller acknowledge and agree that (w) Seller has paid for insurance at the Property for period in which the Closing will occur, (x) Tenant and the owner of Parcel B have reimbursed Seller for the cost of such insurance, (y) accordingly, there shall be no proration for insurance at Closing, and (z) Seller (not Purchaser) shall reimburse within ninety (90) days of the Closing Tenant and the owner of Parcel B their proportionate share of any refund received by Seller on account of any insurance coverage cancelled at Closing, to the extent required under the Lease and/or the REA.

 

(d) Additional rent for services provided or damages, including electricity, HVAC, steam, water, cleaning, overtime services, sundry charges, indemnity payments and similar charges, shall be prorated based on the period during which such additional rent accrued.

 

(e) All costs, expenses, charges and fees relating to the ownership, management, operation, maintenance and repair of the Property, including electricity, gas, water and sewer charges, telephone and other public utilities, common area maintenance charges, personal property taxes, excise taxes on rent, business occupational taxes, charges payable under Operating Agreements, fees payable under transferable licenses for the operation of the Property and other items (except to the extent Tenant is responsible for paying same directly), shall be prorated on a cash basis as of the Closing Date based upon the actual number of days in the month during which the Closing occurs.  To the extent feasible, utility meters (except to the extent accounts are in the name of Tenant) shall be read on the date prior to the date of Closing and all utilities thereafter used shall be paid for by Purchaser and all utilities theretofore used shall be paid by Seller.

 

(f) Purchaser shall pay Seller a sum equal to all outstanding cash utility deposits, if any, paid by Seller in connection with the Property upon delivery by Seller of satisfactory evidence of same and Seller shall assign all of its rights to those deposits to Purchaser.

 

(g) Any post-Closing adjustments shall be made as soon as practicable after the Closing.  Purchaser shall provide an accounting, accompanied by reasonable documentary evidence of the rents, revenues and expenses in question.

 

(h) Payments under the REA shall be prorated at Closing on an accrual basis.  If the amounts of such payments under the REA have not been determined as of the Closing Date or have not yet been billed to the owner of Parcel B under the REA, then the proration shall be done on the basis of actual amounts to the extent available, and otherwise on the basis of a reasonable estimate by Seller of the amount expected to be due thereon.  If proration is based upon estimates, then a further adjustment shall be made after the Closing when actual amounts are known.

 

(i) A final reconciliation of the prorated items shall be made by Purchaser and Seller no later than six (6) months after Closing.  The provisions of this Section 7.2.6 shall survive the Closing for a period of six (6) months.

 

7.3 Closing Costs.  Seller shall pay the cost of the Survey, and it shall pay the escrow fee charged by the Title Company, any documentary transfer taxes, its share of the prorations as set forth in Section 7.2.6 hereof and its own attorney's fees.  Purchaser shall pay the costs of all inspections undertaken by it pursuant to ARTICLE 3 hereof, all fees and charges for recording the Deed and any other instruments to be filed or recorded at Closing, its proportionate share of the prorations as set forth in Section 7.2.6 hereof, and its own attorney's fees.  The base cost of a CLTA Title Policy shall be paid by Seller.  The incremental cost of an extended coverage ALTA Title Policy and any endorsements requested by Purchaser shall be paid by Purchaser.  Except as otherwise provided in this Section, all other expenses hereunder shall be paid by the party incurring such expenses.

 

ARTICLE 8

 

 

DAMAGE TO PROPERTY

 

8.1 Casualty; Condemnation.  Seller agrees to give Purchaser prompt notice of any casualty affecting the Land, the Improvements or the Personalty between the date hereof and the Closing Date or of any actual or threatened (in writing) taking or condemnation of all or any portion of the Land or the Improvements.

 

8.1.1 If prior to the Closing there shall occur:

 

(a) damage to the Property caused by fire or other casualty which would cost  $1,500,000 or more to repair or restore, as reasonably determined by Seller in good faith or any such damage that would allow the Tenant listed on Exhibit B to terminate its Lease, in connection with such damage ("Material Casualty"); or

 

(b) the taking or condemnation of all or any portion of the Land and/or the Improvements that would allow the Tenant listed on Exhibit B to terminate its Lease, or would materially interfere with the continuing use of the Improvements for its permitted use ("Material Taking");

 

then, in any such event, Purchaser may give notice to Seller within ten (10) days after Purchaser has received the notice referred to above or at the Closing, whichever is earlier, stating whether or not Purchaser intends to terminate this Contract by reason of such Material Casualty or Material Taking ("Casualty/Condemnation Termination Notice").  If Purchaser does not timely give a Casualty/Condemnation Termination Notice, then the Closing shall take place as provided herein without abatement of the Purchase Price, and Seller shall assign to Purchaser at the Closing without recourse or warranty all interest of Seller in and to any insurance proceeds or condemnation awards which may be payable to Seller on account of any such occurrence and Purchaser shall receive as a credit against the Purchase Price the amount of any unpaid deductible applicable to such insurance proceeds (less any portion of the deductible that has been applied to covered losses).

 

8.1.2 If prior to the Closing there shall occur damage to the Property other than a Material Casualty, or a taking or condemnation other than a Material Taking, then, in any such event, Purchaser shall be obligated to close title with respect to the Property pursuant to this Contract, but there shall be assigned to Purchaser at Closing without recourse or warranty all interest of Seller in and to any insurance proceeds or condemnation awards which may be payable to Seller on account of any such occurrence and Purchaser shall receive as a credit against the Purchase Price the amount of any unpaid deductible applicable to such insurance proceeds (less any portion of the deductible that has been applied to covered losses).

 

ARTICLE 9

 

 

INTERIM AND POST-CLOSING RESPONSIBILITIES

 

9.1 Interim Responsibilities.

 

9.1.1 Management of the Property.  Seller agrees that during the period between the Effective Date and the Closing Date:

 

(a) Seller will manage the Property or will cause the Property to be managed under policies substantially similar to those existing prior to the Effective Date; provided, however, that Seller shall have no obligation to make any capital improvements or replacements to the Property or any portion thereof;

 

(b) Prior to the expiration of the Inspection Period, Seller shall not enter into any new Lease or any amendment or modification (including termination) of any existing Lease (or consent to any new Sublease or any amendment or modification to any Sublease), other than an amendment to evidence Tenant's exercise of a right to renewal, extension or expansion in accordance with the terms set forth in the Lease, without Purchaser's prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.  After the expiration of the Inspection Period, Seller shall not enter into any new Lease or any amendment or modification (including termination) of any existing Lease (or consent to any new Sublease or any amendment or modification to any Sublease), other than an amendment to evidence Tenant's exercise of a right to renewal, extension or expansion in accordance with the terms set forth in the Lease, without the prior written consent of Purchaser, which consent shall be granted or withheld in Purchaser's sole and absolute discretion;

 

(c) Seller will maintain property and liability insurance coverage in the ordinary course of Seller's business with respect to the Property from the date hereof through the Closing Date or earlier termination of this Contract;

 

(d) Seller will not grant any lien or cause any instrument to be recorded that would further encumber the Property in any manner, other than subordination, non-disturbance and attornment agreements with respect to Leases entered into in accordance with the terms hereof or liens or encumbrances to be discharged as of the Closing Date;

 

(e) Seller shall provide prompt notice of any material actions, suits, or proceedings (including any eminent domain or condemnation proceeding) pending or to Seller's actual knowledge, threatened in writing in any court or before or by any Governmental Authority against or affecting the Property which arise after the date hereof and of which Seller has actual knowledge of, except as disclosed to Purchaser in the Title Report or Exhibit D hereto;

 

(f) During the pendency of this Contract, Seller will not enter into any service or maintenance contract that will be an obligation affecting the Property (excluding Leases and Subleases as provided above) subsequent to the Closing, except contracts entered into in the ordinary course of business that are terminable without cause and without fee, charge, or penalty on 30-days' notice, without the prior consent of the Purchaser, which shall not be unreasonably withheld or delayed;

 

(g) Seller shall not transfer or remove any material Personalty owned by Seller from the Improvements except for the purpose of repair or replacement thereof.  Any items of Personal Property replaced after the date hereof will be promptly installed prior to Closing and will be of similar quality of the item of Personalty being replaced;

 

(h) To the extent sent or received by or on behalf of Seller after the date hereof, Seller shall from the date hereof until Closing, promptly deliver to Purchaser copies of written default notices under Leases, and all written notices of litigation or material actions initiated by a Governmental Authority which would affect the Property after the Closing Date.

 

(i) Seller shall endeavor to deliver to Purchaser copies of any bills for real and personal property taxes and assessments and copies of any notices pertaining to real estate taxes or valuations that are received by Seller after the date hereof.

 

9.2 Post Closing Collection of Rents.  Purchaser shall use commercially reasonable efforts to collect rents and additional rents and payments under the REA that were delinquent as of the Closing Date, or that were unbilled as of the Closing Date, in the ordinary course of Purchaser's operation of the Property following Closing.  Any payments received from Tenants or the owner of Parcel B under the REA after the Closing which are either designated as payments for common area maintenance adjustments, escalations, payments for utilities or services, indemnity, recoveries or other similar items, or which are otherwise readily identifiable as such, and which accrued prior to Closing, shall be adjusted between Seller and Purchaser and Seller's share thereof shall be paid immediately and shall not be applied to outstanding current rents.  Any rents or payments under the REA collected after Closing which were delinquent as of Closing shall be applied first to the month in which Closing occurred, then to current rents or payments under the REA and then, out of any excess remaining, Purchaser shall reimburse Seller for Seller's pro rata portion of any remaining delinquent rents or payments under the REA owing as of the Closing Date; provided, however, that Purchaser shall not be obligated to institute any lawsuit or other collection procedures to collect such delinquent rents or payments under the REA.  If, after using such efforts, Purchaser is unable to collect any delinquent rents or payments under the REA, Purchaser shall have no liability for its failure to do so and Seller shall have the right to use any available remedies to collect such amounts, other than any effort to terminate any Lease or the REA.

 

ARTICLE 10

 

 

REMEDIES

 

10.1 Seller's Remedies.  NOTWITHSTANDING ANYTHING CONTAINED IN THIS CONTRACT, IF PURCHASER HAS NOT TERMINATED THIS CONTRACT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD IN ACCORDANCE WITH THE TERMS OF THIS CONTRACT, AND THE SALE OF THE PROPERTY TO PURCHASER IS NOT CONSUMMATED DUE TO A DEFAULT UNDER THIS CONTRACT BY PURCHASER (AND SELLER HAS PERFORMED ALL OF ITS COVENANTS HEREUNDER AND ALL CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE TO BE PERFORMED BY SELLER HAVE BEEN SATISIFED), SELLER SHALL BE ENTITLED TO RETAIN THE EARNEST MONEY AS SELLER'S LIQUIDATED DAMAGES AS SELLER'S SOLE AND EXCLUSIVE REMEDY.  THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF PURCHASER'S FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS CONTRACT, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS CONTRACT, THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE.  THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676, AND 1677.  THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION.

 

THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION.

 

SELLER'S INITIALS: _______  PURCHASER'S INITIALS:___________

 

10.2 Purchaser's Remedies.  In the event Seller fails to perform its obligations to sell and convey the Property pursuant to this Contract for any reason except (a) failure by Purchaser to close the purchase of the Property when required to by this Contract, or (b) a proper termination of this Contract by Seller or Purchaser pursuant to the terms hereof, Purchaser may, as its sole remedy, either: (1) enforce specific performance of this Contract against Seller, or (2) terminate this Contract by giving Seller timely written notice of such election prior to or at Closing; provided, however, in the event (x) such termination is due to Seller's intentional willful breach or default to convey title to the Property, Purchaser shall be entitled to recover from Seller the actual reasonable out-of-pocket expenses incurred by Purchaser (not to exceed $50,000) and paid to (A) Purchaser's attorneys in connection with the negotiation of this Contract, and (B) to Purchaser's attorneys and unrelated and affiliated third party consultants, contractors, suppliers or other third parties in connection with the performance of examinations, inspections and/or investigations pursuant to this Contract or determining the feasibility of Purchaser's acquisition of the Property pursuant to this Contract, or (y) specific performance is not available because Seller has conveyed the Property to another party, or Seller has voluntarily encumbered the Real Property with a mortgage, deed of trust or financing lien in violation of this Contract that Seller does not cause to be released at Closing or otherwise cause the Title Company to insure Purchaser's title to the Real Property without exception for such matters, then, Purchaser may pursue any and all remedies available at law or in equity, including the recovery of its costs and expenses but excluding a claim for consequential, special and/or punitive damages.  In the event Purchaser elects to terminate this Contract, the Earnest Money (including any accrued interest thereon) shall be returned to Purchaser and thereafter, other than the Surviving Obligations, neither Purchaser nor Seller shall have any further rights or obligations hereunder, except as provided above in this Section 10.2.

 

10.3 Attorney's Fees.  In the event either party hereto is required to employ an attorney because of the other party's default, the defaulting party shall pay the non-defaulting party's reasonable attorney's fees incurred in the enforcement of this Contract, it being understood and agreed that the determination of the prevailing party shall be included in the matters which are the subject of such action, arbitration, appeal or suit.  The terms of this Section shall survive the Closing.

 

10.4 Disposition of Earnest Money.  In the event of a termination of the Contract by Purchaser prior to the end of the Inspection Period, Purchaser shall also deliver written notice of its election to terminate the Contract to the Title Company, and the Title Company shall promptly thereafter deliver the Earnest Money (and all interest earned thereon) to Purchaser without any action required by the Seller.  After the expiration of the Inspection Period, in the event of a termination of this Contract by either Seller or Purchaser, the Title Company is authorized to deliver the Earnest Money (including any accrued interest thereon) to the party entitled to same pursuant to the terms hereof on or before the fifth (5th) business day following receipt by the Title Company and the non-terminating party of written notice of such termination from the terminating party, unless the other party hereto notifies the Title Company that it disputes the right of the other party to receive the Earnest Money (including any accrued interest thereon) prior to the expiration of such five (5) business-day period.  In such event the Title Company shall interplead the Earnest Money (including any accrued interest thereon) into a court of competent jurisdiction in the county in which the Property is located, unless otherwise instructed by both Purchaser and Seller.  All attorneys' fees and costs and expenses of the Title Company incurred in connection with such interpleader shall be assessed against the party that is not awarded the Earnest Money in the event that such Earnest Money is interplead or if the Earnest Money (including any accrued interest thereon) is distributed in part to both parties, then in the inverse proportion of such distribution.

 

ARTICLE 11

 

 

MISCELLANEOUS

 

11.1 Entire Contract.  This Contract contains the entire agreement of the parties hereto and supersedes and replaces any letter of intent or term sheet between the parties, which the parties hereby agree is null and void and of no further force or effect.  There are no other agreements, oral or written, and this Contract can be amended only by written agreement signed by the parties hereto, and by reference made a part hereof.

 

11.2 Binding.  This Contract, and the terms, covenants, and conditions herein contained, shall be covenants running with the Land and shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. Purchaser shall have no right to assign its rights or delegate its duties under this Contract to any person or entity without Seller's prior written consent, which may be withheld, delayed or conditioned in Seller's sole and absolute discretion.  For the purposes hereof, a change of direct interests in Purchaser shall constitute an assignment prohibited hereunder (subject to the immediately succeeding sentence).  Notwithstanding the foregoing, Purchaser may assign this Contract to a direct or indirect wholly-owned and controlled affiliate of Purchaser without the necessity of any approval or consent from the Seller (it being understood and agreed that Purchaser named herein shall not be released in connection with any such assignment).  The terms of this Section shall not survive the Closing.

 

11.3 Notice.  Any notice, communication, request, reply or advice (collectively, "Notice") provided for or permitted by this Contract to be made or accepted by either party must be in writing.  Notice may, unless otherwise provided herein, be given or served by: (a) depositing the same in the United States mail, postage paid, registered or certified, and addressed to the party to be notified, with return receipt requested or by delivering the same to such party, or an agent of such party, (b) personal delivery, (c) reputable overnight courier, or (d) facsimile transmission.  Notice deposited in the mail in the manner hereinabove described shall be effective three (3) business days following such deposit in the mail.  Other methods of notice will be deemed to have been given either at the time of personal delivery, or, in the case of a reputable overnight courier, as of the date of first attempted delivery on a business day (between the hours of 9:00 A.M. and 6:00 P.M. Eastern time) at the address or in the manner provided herein, or, in the case of facsimile transmission, upon receipt if on a business day (between the hours of 9:00 A.M. and 6:00 P.M. Eastern time) and, if not on a business day (or during such hours), on the next business day.  For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows:

 

	
  

	
Purchaser:

	
Hines Global REIT Properties LP

	
  

	
2800 Post Oak Boulevard

	
  

	
Suite 4800

	
  

	
Houston, TX 77056

	
  

	
Attention:

	
Charles N. Hazen

	
  

	
Facsimile:

	
(713) 966-2075

	
  

	
With copy to:

	
Hines Global REIT Properties LP

	
  

	
c/o Hines Global REIT Advisors LP

	
  

	
2800 Post Oak Boulevard

	
  

	
Suite 4800

	
  

	
Houston, TX 77056

	
  

	
Attention:

	
Jason P. Maxwell, Esq.

	
  

	
Facsimile:

	
(713) 966-2075

	
  

	
Seller:

	
AJ Irvine Owner Corp

	
  

	
c/o HSBC Securities (USA) Inc.

	
  

	
452 Fifth Avenue

	
  

	
New York, NY  10018

	
  

	
Attention:

	
Irfan A. Khan

	
  

	
Facsimile:

	
(212) 525-8143

	
  

	
With copy to:

	
Gibson, Dunn & Crutcher LLP

	
  

	
200 Park Avenue

	
  

	
New York, NY  10166

	
  

	
Attention:  David J. Furman, Esq.

	
  

	
Facsimile: (212) 351-4035

 

The parties hereto shall have the right from time to time to change their respective addresses, and each shall have the right to specify as its address any other address within the United States of America by at least five (5) days written notice to the other party.

 

11.4 Reporting Person.  Purchaser and Seller hereby designate Title Company as the "reporting person" pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986, as amended.  The terms of this Section shall survive the Closing.

 

11.5 Time.  Time is of the essence in all things pertaining to the performance of this Contract.

 

11.6 Governing Law.  This Contract shall be construed in accordance with the internal laws of the State of California, notwithstanding any conflict of laws doctrines of such state or other jurisdiction to the contrary.

 

11.7 Currency.  All dollar amounts are expressed in United States currency.

 

11.8 Section Headings.  The section headings contained in this Contract are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several sections hereof.

 

11.9 No Survival of Obligations.  Except as otherwise expressly otherwise provided herein, the terms, conditions, warranties, representations, obligations and rights set forth herein shall not survive Closing.

 

11.10 Business Days.  In the event that any date or any period provided for in this Contract shall end on a Saturday, Sunday or legal holiday, the applicable date or period shall be extended to the first business day following such Saturday, Sunday or legal holiday.

 

11.11 Irrevocable Option.  To the extent that this Contract is ever construed as an option agreement, Seller and Purchaser hereby acknowledge that independent consideration for such option in the sum of $100.00 has been (or will upon demand, be) paid to Seller by Purchaser, and based on such consideration and the mutual covenants of Seller and Purchaser contained herein, Seller hereby agrees that any such option granted Purchaser is irrevocable, and Seller shall not terminate said option without the prior written consent of Purchaser, except as may be expressly provided for herein.

 

11.12 No Recordation.  Without the prior written consent of Seller, which may be given or withheld in Seller's sole and absolute discretion, there shall be no recordation of either this Contract or any memorandum hereof, or any affidavit pertaining hereto, and any such recordation of this Contract or memorandum hereof by Purchaser without such prior written consent of Seller shall constitute a default hereunder by Purchaser, whereupon this Contract shall, at the option of Seller, terminate and be of no further force and effect and all Earnest Money (including any accrued interest thereon) deposited hereunder shall be immediately delivered to Seller, whereupon the parties shall have no further duties or obligations one to the other.  Notwithstanding the foregoing, the Seller acknowledges that the General Partner of the Purchaser is a non-traded public REIT that is required to make certain public disclosures, and it consents to the filing of this Contract by Purchaser with the U.S. Securities and Exchange Commission and making all other disclosures required by any Governmental Authority.

 

11.13 Prohibited Persons and Transactions.

 

11.13.1 Neither Purchaser nor any of its Affiliates is a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control ("OFAC") of the Department of the Treasury (including those named on OFAC's Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other similar governmental action, law, rule or regulation and is not and will not engage in any prohibited dealings or transactions with such persons or entities.  Purchaser represents and warrants to Seller that Purchaser has previously delivered to Seller a true, correct and complete ownership chart in all material respects.

 

11.13.2 Neither Seller nor any of its Affiliates, nor any of their respective partners, members, shareholders or other equity owners, and none of their respective employees, officers, directors, representatives or agents is a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of OFAC (including those named on OFAC's Specially Designated and Blocked Persons List) or under any statute, executive order(including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other similar governmental action, rule or regulation and is not and will not  engage in any prohibited dealings or transactions with such persons or entities.

 

11.13.3 The terms of this Section shall survive the Closing.

 

11.14 WAIVER OF TRIAL BY JURY.  EACH OF SELLER AND PURCHASER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF MATTERS RELATED TO THIS CONTRACT, WHICH WAIVER IS INFORMED AND VOLUNTARY.  THE TERMS OF THIS SECTION SHALL SURVIVE THE CLOSING.

 

11.15 No Waiver.  Failure by any party to enforce against any other party any term or provision of this Contract shall not waive such party's right to enforce against any other party the same or any other term or provision.  No waiver by any party hereto of any condition hereunder for its benefit shall constitute a waiver of any other or further right, nor shall any single or partial exercise of any right preclude any other or further exercise thereof or any other rights.  The waiver of any breach hereunder shall not be deemed to be a waiver of any other or subsequent breach hereof.  No extensions of time for the performance of any obligations shall be deemed or construed as an extension of time for the performance of any other obligation.

 

11.16 Cooperation with Purchaser's Auditors and SEC Filing Requirements. For a period of twelve (12) months following the Closing, Seller shall provide to Purchaser (at Seller's sole cost and expense) copies of, or shall provide Purchaser access to, factual information as may be reasonably requested by Purchaser, and in the possession or control of Seller, or its property manager or accountants, to enable Purchaser's auditor (Deloitte & Touche LLP or any successor auditor selected by Purchaser) to conduct an audit required under Section 3-14 of Regulation S-X as promulgated by the Securities and Exchange Commission.  Notwithstanding anything contained herein, (x) Purchaser shall be responsible for all costs and expenses associated with this audit, (y) Seller shall reasonably cooperate (at no cost to Seller) with Purchaser's auditor in the conduct of such audit, and (z) in no event shall Seller or its Affiliates incur any liability whatsoever in connection with such audit or be required to provide any certifications or statements in connection therewith.  This provision shall survive closing for a period of twelve (12) months.

 

11.17 Further Assurances.  In addition to the obligations required to be performed hereunder by the parties hereto at or prior to Closing, each party, from and after the Closing, shall execute, acknowledge and deliver such other instruments, documents, certificates, and notices, and take such actions as may reasonably be required in order to effectuate the purposes of this Contract; provided, however, no party shall be obligated to provide any further assurance that would increase the liabilities or obligations of such party hereunder or reduce the rights and benefits of such party hereunder.  The terms of this Section shall survive the Closing.

 

11.18 Construction of Agreement.  This Contract shall not be construed more strictly against one party than against the other merely by virtue of the fact that it may have been prepared primarily by counsel for one of the parties, it being recognized that both Purchaser and Seller have contributed substantially and materially to the preparation of this Contract.

 

11.19 No Obligations to Third Parties.  Except as otherwise expressly provided herein, the execution and delivery of this Contract shall not be deemed to confer any rights upon, nor obligate any of the parties hereto, to any person or entity other than the parties hereto.

 

ARTICLE 12

 

 

REAL ESTATE COMMISSIONS

 

12.1 Commissions.  Seller and Purchaser each hereby severally represents to the other party hereto that it has not contacted any agent, broker or other similar party with respect to the transactions contemplated by this Contract other than Cushman & Wakefield of California, Inc. (the "Broker"), who was retained by Seller and for whose compensation Seller shall be solely liable pursuant to a separate agreement.  Seller hereby agrees to indemnify and hold Purchaser harmless from the claims of any agent, broker or other similar party claiming by, through or under Seller with respect to the transactions contemplated by this Contract and this indemnification shall survive the Closing.  Purchaser hereby agrees to indemnify and hold Seller harmless from the claims of any agent, broker or other similar party claiming by, through or under Purchaser with respect to the transactions contemplated by this Contract other than the Broker, and this indemnification shall survive the Closing or earlier termination of this Contract.

 

ARTICLE 13

 

 

ESCROW PROVISIONS

 

13.1 By executing the joinder hereto, Title Company agrees to hold the Earnest Money (including any accrued interest thereon) pursuant to the provisions of Article 2 and upon the following terms:

 

13.1.1 The Title Company shall have no duties or responsibilities other than those expressly set forth herein.  The Title Company shall have no duty to enforce any obligation of any person to make any payment or delivery or to enforce any obligation of any person to perform any other act.  The Title Company shall be under no liability to the other parties hereto or to anyone else by reason of any failure on the part of any party hereto (other than the Title Company) or any maker, guarantor, endorser or other signatory of any document or any other person to perform such person's obligations under any such document.  Except for amendments to this Contract hereinafter referred to and except for joint instructions given to the Title Company by Seller and Purchaser relating to the Earnest Money (including any accrued interest thereon), Title Company shall not be obligated to recognize any agreement between any or all of the persons referred to herein, notwithstanding that references thereto may be made herein and whether or not it has knowledge thereof.

 

13.1.2 In its capacity as escrow agent, the Title Company shall not be responsible for the genuineness or validity of any security, instrument, document or item deposited with it and shall have no responsibility other than to faithfully follow the instructions contained herein, and it is fully protected in acting in accordance with any written instrument given to it hereunder by any of the parties hereto and reasonably believed by the Title Company to have been signed by the proper person.  The Title Company may assume that any person purporting to give any notice hereunder has been duly authorized to do so.  The Title Company is acting as a stakeholder only with respect to the Earnest Money (including any accrued interest thereon).  Promptly after the receipt by the Title Company of (a) notice of any demand by either party claiming that it is entitled to the Earnest Money (including any accrued interest thereon) (including, without limitation, a notice terminating this Contract) or (b) any other claim or the commencement of any action, suit or proceeding by either party, the Title Company shall, if a claim in respect thereof is to be made against any of the other parties hereto, send a copy of such notice to the other party and inform the other party of such claim; but the failure by the Title Company to give such notice shall not relieve any party from any liability which such party may have to the Title Company hereunder.  If the Title Company shall receive written notice from either party within ten (10) business days after delivery of such notice instructing the Title Company not to deliver the Earnest Money (including any accrued interest thereon) to the other party or to otherwise hold the Earnest Money (including any accrued interest thereon), or if for any reason there is any dispute or uncertainty concerning any action to be taken hereunder, the Title Company shall take no action and shall continue to hold the Earnest Money (including any accrued interest thereon) until it has received instructions in writing executed by Seller and Purchaser or until directed by a final order of judgment of a court of competent jurisdiction, whereupon the Title Company shall take such action in accordance with such instructions or such order.  Notwithstanding anything contained in this Section 13.1 any other provision herein to the contrary, prior to the expiration of the Inspection Period, the Title Company shall promptly return the Earnest Money to Purchaser upon its written demand therefore as provided in Section 10.4 of this Contract without any notice required from Seller.

 

13.1.3 It is understood and agreed that the duties of the Title Company are purely ministerial in nature.  The Title Company shall not be liable to the other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of reasonable judgment, except for acts of willful misconduct or gross negligence.  The Title Company may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Title Company), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is reasonably believed by the Title Company to be genuine and to be signed or presented by the proper person or persons.  The Title Company shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Contract or any of the terms hereof, unless evidenced by a final judgment or decree of a court of competent jurisdiction in the State of California, or a Federal court in such jurisdiction or a writing delivered to the Title Company signed by the proper party or parties and, if the duties or rights of the Title Company are affected, unless it shall give its prior written consent thereto.

 

13.1.4 The Title Company shall have the right to assume in the absence of written notice to the contrary from the proper person or persons that a fact or an event by reason of which an action would or might be taken by the Title Company does not exist or has not occurred, without incurring liability to the other parties hereto or to anyone else for any action taken or omitted, or any action suffered by it to be taken or omitted, in good faith and in the exercise of reasonable judgment, in reliance upon such assumption.

 

13.1.5 Except in connection with the Title Company's willful misconduct or gross negligence, the Title Company shall be indemnified and held harmless jointly and severally by the other parties hereto from and against any and all expenses or loss suffered by the Title Company (as escrow agent), including reasonable attorneys' fees, in connection with any action, suit or other proceeding involving any claim, which arises out of or relates to this Contract, the services of the Title Company hereunder or the monies held by it hereunder.

 

13.1.6 From time to time on and after the date hereof, Seller and Purchaser shall deliver or cause to be delivered to the Title Company such further documents and instruments and shall do and cause to be done such further acts as the Title Company shall reasonably request (it being understood that the Title Company shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Contract, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

13.1.7 The Title Company may resign at any time as the escrow agent hereunder upon giving five (5) days' prior written notice to that effect to both Seller and Purchaser.  In such event, the successor escrow agent shall be a nationally recognized title insurance company or other person acceptable to both Seller and Purchaser.  Such party that will no longer be serving as escrow agent shall deliver, against receipt, to such successor escrow agent, the Earnest Money (including any accrued interest thereon) held by such party, to be held by such successor escrow agent pursuant to the terms and provisions of this Contract.  If no such successor has been designated on or before such party ceases to be escrow agent hereunder, whether by resignation or otherwise, its obligations as escrow agent shall continue until such successor is appointed, provided, however, its sole obligation thereafter shall be to safely keep all monies then held by it and to deliver the same to the person, firm or corporation designated as its successor or until directed by a final order or judgment of a court of competent jurisdiction, whereupon the Title Company shall make disposition thereof in accordance with such order; provided further, however, that the Title Company, in such event, shall deliver the Earnest Money (including any accrued interest thereon) against receipt, to any bank or trust company or title insurance company operating in California selected by such party.  If no successor escrow agent is designated and qualified within five (5) days after its resignation is effective, such party that will no longer be serving as escrow agent may apply to any court of competent jurisdiction for the appointment of a successor escrow agent.

 

ARTICLE 14

 

 

DEFINITIONS

 

As used in this Contract, the following terms shall have the respective meanings ascribed to them.

 

14.1 Affiliate or affiliate shall mean, with reference to a Person, (a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person, (b) any officer, director or partner of such Person, or (c) any company of which such Person is an officer, director or partner.  For the purposes hereof, the term "control" (including "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and the policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

14.2 Applicable Laws shall mean any and all presently existing and future judicial decisions, statutes, rulings, rules, regulations, permits, certificates or ordinances of any Governmental Authority applicable to the Property.

 

14.3 Effective Date shall mean the date on which this Contract has been executed and delivered by all parties hereto.

 

14.4 Governmental Authority shall mean the United States, the state, the county, the city, or any other political subdivision in which the Property is located, and any other political subdivision, agency or instrumentality exercising jurisdiction over the Property.

 

14.5 Hazardous Material shall mean any substance:

 

(a) the presence of which requires investigation or remediation under any statute, regulation, ordinance, order or policy of a Governmental Authority; or

 

(b) which is defined as a "hazardous waste," "hazardous substance," pollutant, or contaminant under any federal, state, or local statute, regulation, rule, or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.) and/or the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.).

 

14.6 Person shall mean any individual, partnership, limited liability company, corporation, trust or other entity.

  

  

  

 

IN WITNESS WHEREOF, this Contract has been duly executed in multiple counterparts (each of which is to be deemed original for all purposes) by the parties hereto.

SELLER:

AJ IRVINE OWNER CORPORATION,

a Delaware corporation

By:           __________________________

Its:           __________________________

PURCHASER:

HINES GLOBAL REIT PROPERTIES LP

By:           Hines Global REIT, Inc.,

Its general partner

By:           __________________________

Its:           __________________________

 

  

  

  

 

JOINDER BY TITLE COMPANY

 

The undersigned, referred to in the foregoing Contract as the "Title Company," hereby acknowledges receipt of a fully executed copy (or executed counterparts) of the foregoing Contract on this ____ day of May, 2010, and accepts the obligations of the Title Company as set forth therein.  Upon receipt, the Title Company hereby agrees to hold the Earnest Money (including any accrued interest thereon) as directed in this Contract and to distribute the Earnest Money (including any accrued interest thereon) in accordance with the terms and provisions of the Contract.

FIDELITY NATIONAL TITLE

By:                                                                

Name:                                                                

Title:                                                                

Address:                      1300 Dove Street

Suite 310

Newport Beach, CA 92660

Telephone:                      (213) 505-2375

  

  

  

 

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

Exhibit A                                           Description of Land

 

Exhibit B                                           Schedule of Leases

 

Exhibit B-1                                           Schedule of Subleases

 

Exhibit C                                           Schedule of Operating Agreements

 

Exhibit D                                           Schedule of REA Matters

 

Exhibit E                                           Intentionally Blank

 

Exhibit F                                           Deed

 

Exhibit G                                           Assignment

 

Exhibit H                                           Non-Foreign Affidavit

 

Exhibit I                                           Owner's Affidavit

 

Exhibit 2.1.4                                           Holdback Escrow Agreement

 

Schedule 1                                           Transmittal Letter

 

Schedule 1.1(c)                                           Seller Personal Property

 

Schedule 2                                           Form REA Estoppel

 

Schedule 3                                           Tenant Estoppel

  

  

  

EXHIBIT A

 

 

Land Description

 

	  	
EXHIBIT A

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EXHIBIT A

-2-

	  

  

  

  

	  	
EXHIBIT A

-3-

	  

  

  

  

EXHIBIT B

 

 

Schedule of Leases

 

1.           Lease, dated as of October 18, 2000, between HGN Gillette LLC, as Landlord, and FCB Worldwide, Inc., as Tenant.

	  	
EXHIBIT B

-1-

	  

  

  

  

EXHIBIT B-1

 

 

Schedule of Subleases

 

Capita Sublease

 

1.           Sublease Agreement, dated as of January 1, 2006, between FCB Worldwide, Inc., as Tenant, and Capita Technologies Corporation, Inc., as Subtenant.

 

2.           Landlord's Consent to Sublease, dated as of February 28, 2006, between AJ Irvine Owner Corporation, Inc., as Landlord via assignment from HGN Gillette LLC, and FCB Worldwide, Inc., as Tenant.

 

Backbone Sublease

 

3.           Sublease Agreement, dated as of September 15, 2006, between FCB Worldwide, Inc., as Tenant, and The Collective, Inc., as Subtenant.

 

4.           Landlord's Consent to Sublease, dated as of October 23, 2007, between AJ Irvine Owner Corporation, Inc., as Landlord via assignment from HGN Gillette LLC, and FCB Worldwide, Inc., as Tenant.

 

5.           Assignment and Assumption Agreement, dated as of December 31, 2007, between The Collective, Inc., as Assignor of Sublease, Backbone Entertainment, as Assignee of Sublease, and Foundation 9 Entertainment, Inc., as Guarantor of Assignor.

	  	
EXHIBIT B-1

-1-

	  

  

  

  

EXHIBIT C

 

 

Schedule of Operating Agreements

 

1.           Service Agreement, dated as of September 1, 2001, between HGN Gillette LLC, as Owner, and Classic Property Services, as Contractor.

 

2.           Service Agreement, dated as of June 2006, between AJ Irvine Tenant Corporation as Owner, and Sundown Lighting Electrical, as Contractor.

 

3.           Service Agreement, dated as of September 1, 2008, between AJ Irvine Tenant Corporation, as Owner, and DMS Landscape Services, as Contractor.

	  	
EXHIBIT C

-1-

	  

  

  

  

EXHIBIT D*

 

REA Summary of Open Issues

Summary of Open Issues

	
·  

	
In February of 2009, Parcel A and B owners agreed in principle to amend the REA.  The goal of the amendment was to eliminate the sharing of costs altogether.  Parcel A owner would retain use of the patio area, and maintain it at its own expense and Parcel B owner would retain the 32 parking spaces and pay a monthly fee to use them.   After 2 months of negotiations, the parties still could not agree on a monthly fee for the parking spaces.  Parcel A owner was also getting very close to selling the property and the future owner did not want to amend the REA prior to close.  As such, Parcel A owner stopped negotiations.  This buyer eventually fell out and negotiations on amending the REA have not resumed since.  This issue will remain open.

	
·  

	
Parcel A owner sealed and restriped its parking lot in 2006 at a total cost of $37,120.  The project included minimal asphalt removal Per the terms of the REA, 34.08% of the cost of the project was reimbursed by Parcel B Owner.   Parcel A owner allowed for the reimbursement to take place over a 3 year period.  Parcel B owner informed Parcel A Owner that they will be repairing their parking lot under the terms of the self help clause in the REA.   Parcel B owner provided Parcel A owner with a scope of work for this project that, in Parcel A owner’s opinion, far exceeded the necessary repairs.  The bid included the removal and replacement of nearly 60% of the total parking lot area and a total cost of approximately $121,000.  Parcel A owner objected to the scope and provided a bid to seal and strip the lot with a Petro Mat method of repair for those areas in need at a significantly reduced cost of $79,500.  Parcel B owner objected to this scope.

The last correspondence with Parcel B owner was on 11/6/09 when the parties agreed to the option of a one-time reimbursement of 65.92% of the scope of work we recommended or reimbursement of the scope they recommended over a 3-year period, barring a change in ownership.  Parcel A owner has never committed to one option or the other because the work has never been scheduled.  Parcel A owner was originally informed that the project would begin in September of 2009.  The project was delayed then and again in December.  It is our understanding that the project is still on hold at the discretion of Parcel B owner.  This issue is included in the recorded Notice of Assessment dated 5/28/09.

  
*      Purchaser and Seller acknowledge and agree that Seller is not making any representation or warranty whatsoever as to whether the summary set forth in this Exhibit D is true, correct or complete.

 

	  	
EXHIBIT D*

-1-

	  

Parcel A owner received a revised proposal to repair the Parcel B parking lot on May 10, 2010 from United Paving.  At the recommendation of United Paving, Petro-Mat is no longer a viable repair method for the Parcel B parking lot due to the current condition of the parking surface.  Per the terms of the lease agreement, the Parcel A owner’s proportionate share of the parking lot expense would be reimbursable by the tenant.  This issue cannot be reasonably resolved prior to the anticipated close, as the work has not been completed or even scheduled.  This issue will remain open.

	
·  

	
In January of 2010, Parcel B owner informed Parcel A owner that they were experiencing water intrusion into their building along the Southwest wall.  The outside of this wall marks the end of the Drainage Easement Area.  Parcel B owner had a Geo Tech study done of their building.  This was an update to several other similar reports that they had performed in 2000, 2002, and 2004.  Just as in the earlier reports, the most recent report confirmed that the Parcel B building was experiencing foundation cracking due to the fact that it sits on highly expansive soil.  Nowhere in the report (or the previous reports) does the engineer suggest that the building issues are a result of inadequate drainage facilities.  The report does recommend adding a concrete swale along the southwest wall to minimize water getting into the soil within the 2-3 feet adjacent to the building.  Parcel B owner performed this work at a total cost of $21,432.  They are expecting Parcel A owner to pay for $14,127 of the cost per the terms of the REA.  Parcel A owner had originally refused to share the cost of this project, as it is not a required repair or replacement of existing drainage facilities, as defined in the REA.  Per the terms of the lease agreement, the Parcel A owner’s proportionate share of this expense would be reimbursable by the tenant.  Parcel A owner has since credited the FIDM account $14,127 in order to resolve this issue.

	
·  

	
In February of 2010, Parcel B owner requested that a study of the stormwater management system be performed, citing a referral by a civil engineer, recommendations in the current GeoTech report and its history at the property.   Granted there were the heavy rains and some parking lot flooding that the properties experienced in February of 2010, but Parcel B owner has never produced a recommendation from a civil engineer and there is no recommendation in the Geo Tech report to study the existing drainage facilities.  To the best of our knowledge, we have no complaints regarding the drainage facilities prior to January of 2010.  Parcel A owner objected because the rains in February were nothing more than an isolated weather event and, more importantly, the existing system, which was designed by a qualified engineer and inspected and approved by a qualified code inspector, has served the properties well over the past 15 years.  Parcel A owner has not agreed to this study, but assumes Parcel B owner will conduct the study under the self-help provision of the REA. Per the terms of the lease agreement, the Parcel A owner’s proportionate share of this expense would be reimbursable by the tenant. Parcel A owner has since offered to share in the cost of the study per the terms of the REA so long as the parties agree on the scope, but any issues that are raised as a result of the study would remain open.

	
·  

	
In March of 2010, Parcel B owner requested that a dual sump pump be installed in the catch basis of the Drainage Easement Area, per current code.  After researching the issue,

 

 

	  	
EXHIBIT D*

-2-

	  

	
 

	
it was determined by Parcel A owner that the property is grandfathered in under the code at time of the construction and therefore no action is required. Per the terms of the lease agreement, the Parcel A owner’s proportionate share of this expense would be reimbursable by the tenant.  Parcel A owner has since agreed to install a dual sump pump and share the costs per the terms of the REA in order to resolve the issue.

  
*      Purchaser and Seller acknowledge and agree that Seller is not making any representation or warranty whatsoever as to whether the summary set forth in this Exhibit D is true, correct or complete.

	  	
EXHIBIT D*

-3-

	  

  

  

  

 

	  	
EXHIBIT D*

-4-

	  

  

  

  

 

 

	  	
EXHIBIT D*

-5-

	  

  

  

  

 

 

	  	
EXHIBIT D*

-6-

	  

  

  

  

EXHIBIT E

 

 

Intentionally Blank

	  	
EXHIBIT E

-1-

	  

  

  

  

EXHIBIT F

 

Deed

	
RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:

 

 

	  

Assessor's Parcel Number: __________________________________

The undersigned grantor declares:

 

Documentary Transfer Tax not shown, pursuant to Section 11932 of the Revenue and Taxation Code, as amended.

 

GRANT DEED

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, AJ IRVINE OWNER CORPORATION, a Delaware corporation ("Grantor"), does hereby GRANT to HINES GLOBAL REIT _________ LP, a Delaware limited partnership, all of that certain real property in the City of Irvine , County of Orange, State of California, as more particularly described in Exhibit "A" attached hereto and made a part hereof, together with all rights of way, easements and appurtenances thereto, all improvements thereon and all of the estate, right, title, interest, either at law or in equity, of the Grantor in the real property collectively, the "Property"), SUBJECT TO any and all rights, easements, rights of way, charges, licenses, declarations, reservations, covenants, conditions, restrictions, leases, agreements, liens, encumbrances and any and all matters of record affecting or encumbering the use, occupancy, possession or title to the Property, all applicable land use laws, ordinances, rules, regulations and permits, and non-delinquent city, county and special district taxes, levies and assessments.

 

IN WITNESS WHEREOF, Grantor has caused this instrument to be executed on this ____ day of _________________, 2010.

AJ IRVINE OWNER CORPORATION,

a Delaware corporation

By: ____________________________

Its: ____________________________

Mail Tax Statements To:                                                      ____________________

____________________

Attn: ________________

___________, CA ______

	  	
EXHIBIT F

-1-

	  

  

  

  

EXHIBIT G

 

 

Bill of Sale and Assignment

 

THAT AJ IRVINE OWNER CORPORATION, a Delaware corporation ("Assignor"), for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration paid by HINES GLOBAL REIT __________, LP, a Delaware limited partnership ("Assignee"), the receipt and sufficiency of which are hereby acknowledged, has GRANTED, SOLD, ASSIGNED, TRANSFERRED, CONVEYED AND DELIVERED and does by these presents GRANT, SELL, ASSIGN, TRANSFER, CONVEY and DELIVER unto Assignee, all of Assignor's right, title and interest in and to the following (collectively, the "Assigned Property"):

 

(a)           all mechanical, electrical, heating, air conditioning and plumbing systems, fixtures and equipment; all furniture, carpets, drapes, artwork and other furnishings; and all other machinery, equipment, fixtures and personal property of every kind and character, and all accessories and additions thereto, owned by Assignor and located in or on the land located at 17600 Gillette Avenue, Irvine, CA and more particularly described on Exhibit A attached hereto (the "Land"), the buildings and other structures and improvements situated on the Land (collectively, the "Improvements"), and the operations thereon (collectively, the "Personalty"), but specifically excluding any items of personal property owned by the Tenants;

 

(b)           all leases in effect (collectively, the "Leases"), that grant a possessory interest in and to any space situated in the Improvements or that otherwise grant rights with regard to use of all or any portion of the Land or Improvements, together with all rentals paid or payable by the tenants under such Leases (individually, a "Tenant" and collectively, the "Tenants") for any period of time beginning on or subsequent to the date hereof, and all security and other deposits paid by the Tenants under such Leases (collectively, the "Security Deposits"), together with Assignor's interest, if any, in any subleases and other occupancy agreements;

 

(c)           all leasing, service, management, supply and maintenance contracts described on Exhibit C attached hereto ("Operating Agreements");

 

(d)           all assignable warranties and guaranties held by Assignor, if any, relating to the Land, Improvements or Personalty;

 

(e)           all plans, specifications and architectural floor plans pertaining to the Property;

 

(f)           all trade names, trademarks, logos, service marks used by Assignor in connection with the operation of the Land and Improvements (except for derivations of Assignor's name); and

 

(g)           all other rights, privileges and appurtenances owned by Assignor and in any way related to the properties described above;

 

	  	
EXHIBIT G

-1-

	  

 

Subject, however, to the exceptions to title and other matters set forth on Exhibit B attached hereto and made a part hereof for all purposes (the "Permitted Exceptions");

 

TO HAVE AND TO HOLD THE Assigned Property, subject to the Permitted Exceptions, unto Assignee, its heirs, personal representatives, successors and assigns forever.  Assignee hereby assumes and agrees to perform the liabilities and obligations of Assignor with respect to the Assigned Property, to the extent such liabilities and obligations arise or are properly performable and allocable to the period of time on and after the date hereof.  Assignee agrees to indemnify Assignor and hold Assignor harmless from and against any and all claims, liens, damages, demands, causes of action, liabilities, lawsuits, judgments, losses, costs and expenses (including but not limited to attorneys' fees and expenses) asserted against or incurred by Assignor relating to any period from and after the date of Closing and by reason of or arising out of any failure by Assignee to perform or observe the obligations, covenants, terms and conditions of any Lease or Operating Agreement assumed by Assignee hereunder.  Seller's obligations hereunder are expressly subject to the provisions of Sections 5.4, 5.5 and 5.6 of the Contract of Sale and Purchase dated as of May 13, 2010, between Assignor, as Seller and Assignee, as Purchaser ("Contract").  Any rental and other payments under the Leases and Contract shall be prorated between the parties as provided in the Contract.  Assignor agrees to indemnify Assignee and hold Assignee harmless from and against any and all claims, liens, damages, demands, causes of action, liabilities, lawsuits, judgments, losses, costs and expenses (including but not limited to attorneys' fees and expenses) asserted against or incurred by Assignee relating to any period prior to the date of Closing and by reason of or arising out of any failure by Assignor to perform or observe the obligations, covenants, terms and conditions of any Lease or Operating Agreement assumed by Assignee hereunder.

 

This Assignment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  This Assignment shall be governed and construed in accordance with the laws of the State in which the Land is located, without giving effect to principles of conflicts of laws.

 

EXECUTED this _______ day of ________________, 2010.

ASSIGNOR:

AJ IRVINE OWNER CORPORATION,

a Delaware corporation

By:           _______________________

Its:           _______________________

ASSIGNEE:

HINES GLOBAL REIT _________ LP

	  	
EXHIBIT G

-2-

	  

By:           __________________________

Its:           __________________________

	  	
EXHIBIT G

-3-

	  

  

  

  

EXHIBIT H

 

 

Non-Foreign Affidavit

 

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 AJ IRVINE OWNER CORPORATION ("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);

 

3.           Transferor's U.S. employer identification number is _____________; and

 

4.           Transferor's office address is c/o [Falcon Real Estate Investment Company, LP, 5005 LBJ Freeway - Suite 1130, Dallas, Texas 75244.]

 

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.

SELLER

AJ IRVINE OWNER CORPORATION,

a Delaware corporation

By:           _______________________

Its:           _______________________

Source CFR, Section 1.1445-2T(b)(2)(iii)(B)

	  	
EXHIBIT H

-1-

	  

  

  

  

EXHIBIT I

 

 

Owner's Affidavit

 

The undersigned, in his or her capacity of the entity stated below ("Seller"), and not individually, being duly sworn, hereby says as follows:

 

1.           The sale of the real property commonly known as 17600 Gillette Avenue, Irvine, CA (the "Property"), as more particularly described in Exhibit A hereto and in the Title Commitment issued by First American Title Insurance Company(the "Title Company"), has been duly authorized by all requisite corporate action.

 

2.           To Seller's knowledge, no person known to Seller is entitled to occupy the Property except pursuant to the Leases set forth on Exhibit B hereto.

 

3.           All improvements to the Property have been completed; and all labor, services and materials supplied to the Property for improvements, fixtures and furnishing at the request of Seller have been, or will in the ordinary course of business be, paid in full except:  None.

 

4.           All real property taxes and assessments lawfully due and payable which could become a lien against the Property have been paid in full.

 

5.           Seller is not a "foreign person" as that term is defined in Section 1445 of the Internal Revenue Code, as amended.

 

This Affidavit is given on behalf of Seller in order to induce Title Company to issue and Owner's Policy of Title Insurance and required endorsements.

 

Executed as of ______________, 2010.

SELLER

AJ IRVINE OWNER CORPORATION,

a Delaware corporation

By:           ______________________

Its:           ______________________

	  	
EXHIBIT I

-1-

	  

  

  

  

EXHIBIT 2.1.4

 

 

Holdback Escrow Agreement

 

This HOLDBACK ESCROW AGREEMENT (the "Escrow Agreement") is entered into this ___day of __________,2010, by and among AJ IRVINE OWNER CORPORATION, a Delaware corporation (the "Seller"), HINES GLOBAL REIT __________, LP, a Delaware limited partnership ("Purchaser"), and FIDELITY NATIONAL TITLE, as escrow agent (the "Escrow Agent").  The parties recite and agree as follows.

 

Recitals

 

A.           Seller and Purchaser have entered into that certain Contract of Sale and Purchaser, dated as of May 13, 2010 (the "Agreement").

 

B.           Seller and Purchaser have agreed that the sum of $500,000 shall be held back from the Purchase Price due Seller under the Agreement in escrow (the "Holdback") for the purpose of securing certain of Seller's representations and warranties following the closing of the transactions contemplated by the Agreement.

 

C.           To establish and set forth procedures for administration of the Holdback, Seller, Purchaser and Escrow Agent desire to enter into this Escrow Agreement.

 

Agreement

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

 

1.           Defined Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meanings provided in the Agreement.

 

2.           Appointment of Escrow Agent.  Seller and Purchaser hereby appoint Escrow Agent to act as escrow agent on the terms and conditions herein set forth and Escrow Agent accepts such appointment on such terms and conditions.

 

3.           Deposit and Investment of Funds.  Escrow Agent hereby acknowledges receipt of the Holdback in the amount of $500,000, and shall hold, safeguard, and distribute the amounts so received in accordance with and subject to the terms of this Escrow Agreement.  Escrow Agent shall deposit such funds received by it hereunder into an interest bearing account (the "Escrow Account") established for such purpose, which shall be established under Seller's Federal Employer Identification Number.  Escrow Agent shall invest and reinvest the Holdback from time to time during the term of the escrow hereunder, upon direction of Seller, in one or more of the following investments (the "Obligations"):

 

(a)           direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America; and

 

	  	
EXHIBIT 2.1.4

-1-

	  

(b)           money market funds authorized to invest solely in direct obligations of the United States of America.

 

No Obligation shall have a maturity later than thirty (30) days after the date of the Escrow Agent's investment therein.  Interest and other earnings on the Obligations shall be paid to Seller from time to time periodically.  Any loss incurred from an investment shall be borne by the Escrow Account, except for losses resulting from the gross negligence or willful misconduct of the Escrow Agent. Investment and reinvestment of the Escrow Account shall be made only in Obligations.

 

4.           Holdback Period.  The Holdback shall remain in the Escrow Account, upon the terms and conditions set forth in this Escrow Agreement, for a period of six (6) months (the "Holdback Period") following the date hereof.

 

5.           Notification of Claims.  If any action, suit, proceeding, claim, demand, or any other matter arises for which Purchaser demands payment from Seller under the Agreement or if there is any breach by Seller under the Agreement, any of the foregoing constituting a "Claim" hereunder, Purchaser shall notify Seller and Escrow Agent of such Claim, and the amount or estimate of such Claim.  All Claims by Purchaser must be certified by a duly authorized representative of Purchaser, must be made in good faith and must include reasonable detail supporting such Claim.

 

6.           Distribution of Escrow Funds.  Upon receipt of a notice of a Claim by Purchaser as described in Section 5 hereinabove, Escrow Agent shall notify Seller of such Claim and request that Seller provide in writing to Escrow Agent its authorization to either (i) pay to Purchaser from the Escrow Account the amount of such Claim, or (ii) upon receipt of a certificate by a duly authorized representative of Seller that disputes the Claim, Escrow Agent shall retain and continue to hold the funds in the amount of such Claim until the earlier to occur of (a) mutual written instructions from Seller and Purchaser as to the disbursement of such amount, or (b) an final order, decree, or judgment of a court or other tribunal of competent jurisdiction and, if by such order, decree, or judgment, time for appeal has expired and no appeal has been perfected, directing the disbursement of such amount.

 

To the extent the Escrow Agent has been notified of any Claim pursuant to the first paragraph of this Section 6, Purchaser has filed suit against Seller with respect to such Claim no later than 30 days following notice of a Claim, and such Claim is pending (and unresolved) on the date the Holdback Period expires, then an amount (the "Retained Amount") equal to the lesser of:

 

(i)           one hundred percent of the amount of all such pending Claims; or

 

(ii)           the remainder of the Escrow Funds

 

shall be retained in the Escrow Account and remain subject to the terms of this Escrow Agreement until distributed in accordance with the final disposition of the underlying Claim, as directed either by (i) mutual written instructions from Seller and Purchaser, or (ii) by the final order, decree or judgment of a court or other tribunal of competent jurisdiction and, if by such 

 

	  	
EXHIBIT 2.1.4

-2-

	  

order, decree or judgment, time for appeal has expired and no appeal has been perfected, directing the disbursement of such funds.

 

7.           Release of Remaining Funds to Seller.  On the date the Holdback Period expires, the current balance in the Escrow Account, less the Retained Amount shall be paid to Seller.  After the date the Holdback Period expires and upon resolution of all pending Claims as provided in Section 6 hereinabove, and payment out of the Escrow Account to Purchaser of all amounts determined to be due under such Claims, the remaining balance of the Escrow Account shall be paid to Seller.

 

8.           Termination of Escrow Account.  The escrow provided for hereunder shall terminate and the Escrow Agent shall be discharged on the date on which all of the Escrow Account is distributed in accordance with Section 6 hereof.

 

9.           Escrow Agent.  The Escrow Agent shall have no duty or obligation hereunder other than to take such specific actions as are required of it from time to time under the provisions hereof, and it shall incur no liability hereunder or in connection herewith for anything whatsoever other than as a result of its own gross negligence or willful misconduct.  Purchaser and Seller agree to indemnify, hold harmless and defend the Escrow Agent from and against any and all losses, claims, liabilities and expenses, including the reasonable fees of its counsel, which it may suffer or incur hereunder, or in connection herewith, except such as shall result from its own gross negligence, willful misconduct or failure to follow the instructions contained herein..

 

It is understood and agreed that should any dispute arise with respect to the payment, ownership or right of possession of the Escrow Account, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, all or any part of the Escrow Account until such dispute shall have been settled either by mutual agreement by the parties concerned or by the final order, decree or judgment of a court or other tribunal of competent jurisdiction and, if by such order, decree or judgment, time for appeal has expired and no appeal has been perfected, but the Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. Escrow Agent shall further have the right to commence an action in interpleader and obtain an order from the court allowing Escrow Agent to deposit the Holdback with the court, in which case Escrow Agent shall have no further liability or obligation with respect to this Escrow Account or the Holdback.

 

10.           Notices.

 

(a)           All notices, demands, requests, consents and waivers under this Escrow Agreement shall be in writing, shall refer to this Escrow Agreement and shall be (i) delivered personally, (ii) sent by registered or certified mail, postage prepaid, return receipt requested, (iii) sent by a nationally recognized overnight courier, or (iv) sent by telecopier, with written confirmation of the receipt of such telecopy, addressed as set forth below.  If delivered personally, any notice shall be deemed to have been given on the first (1st) business day on or after the date delivered or refused.  If mailed, any notice shall be deemed to have been given on the earlier to occur of the first (1st) business day on or after the date of delivery or the third (3rd) business day after such notice has been deposited in the U.S. mail in accordance with this Section 10.  If sent by overnight courier, any notice shall be deemed to have been given on the 

 

	  	
EXHIBIT 2.1.4

-3-

	  

 

first (1st) business day on or after the date following the date such notice was delivered to or picked up by the courier.  If sent by telecopier, any notice shall be deemed to have been given upon receipt.  Copies of all notices shall be given in accordance with the above as follows:

 

If to Seller:

AJ Irvine Owner Corp.

c/o HSBC Securities (USA) Inc.

452 Fifth Avenue

New York, NY  10018

Attention:  Irfan A. Khan

Facsimile: (212) 525-8143

 

and with a copy to:

 

Gibson, Dunn & Crutcher LLP

 

200 Park Avenue

 

New York, New York 10166

 

Attention:                        David J. Furman, Esq.

Telephone No.:                                212-351-4000

Telecopier No.:                                212-351-4035

 

If to Purchaser:

 

Hines Global REIT Properties LP

2800 Post Oak Boulevard

Suite 4800

Houston, Texas 77056

Attention:                        Charles Hazen

Telephone No.:                         713-966-7602

Telecopier No.:                         713-966-2075

 

and with c copy to :

Hines Global REIT Properties LP

c/o Hines Interests Limited Partnership

2800 Post Oak Boulevard

Suite 4800

Houston, Texas 77056

Attention:                        Jason P. Maxwell, Esq.

Telephone No.:                         713-966-7638

Telecopier No.:                         713-966-2075

If to Escrow Company:

Fidelity National Title

1300 Dove Street

Suite 310

Newport Beach, CA 92660

 

	  	
EXHIBIT 2.1.4

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(b)           Any counsel designated above or any replacement counsel which may be designated respectively by Seller or Purchaser or such counsel by written notice to the other parties is hereby authorized to give notices hereunder on behalf of its respective client.

 

11.           Governing Law.  This Escrow Agreement shall be governed by, interpreted under, and construed and enforced in accordance with, the laws of the State of California.

 

12.           Further Assurances.  Each of the parties shall execute and deliver such additional instruments and other documents and shall take such reasonable further actions as may be necessary or appropriate to effectuate, carry out and comply with all of the terms of this Escrow Agreement; provided, however, no party shall be obligated to provide any further assurance that would materially increase the liabilities or obligations of such party hereunder or materially reduce the rights and benefits of such party hereunder.

 

13.           Successors and Assigns.  This Escrow Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

14.           Amendment.  This Escrow Agreement may be altered, modified or amended only in such manner as may be mutually agreed upon in writing by each of the parties hereto.

 

15.           Counterparts.  This Escrow Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

16.           Prevailing Party.  If any party hereto brings any action or suit against the other party hereto by reason of any breach of any of the agreements or provisions of this Escrow Agreement, then, in such event, the prevailing party, as determined in such action or suit, shall be entitled to have and recover from the other party or parties all costs and expenses of such action or suit, including, without limitation, reasonable attorneys' fees and expenses resulting therefrom; it being understood and agreed that the determination of the prevailing party shall be included in the matters which are the subject of such action or suit.

 

(Signatures on following page)

	  	
EXHIBIT 2.1.4

-5-

	  

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the day and year first written above.

 

SELLER:

AJ IRVINE OWNER CORPORATION,

a Delaware corporation

By:           __________________________

Its:           __________________________

PURCHASER:

HINES GLOBAL REIT ___________ LP

By:           __________________________

Its:           __________________________

ESCROW AGENT

FIDELITY NATIONAL TITLE

By:           __________________________

Its:           __________________________

	  	
EXHIBIT 2.1.4

-6-

	  

  

  

  

SCHEDULE 1

 

 

Transmittal Letter

 

 

	  	
SCHEDULE 1

1

	  

  

  

 

  

 

	  	
SCHEDULE 1

-2-

	  

  

  

  

	  	
SCHEDULE 1

-3-

	  

  

  

  

SCHEDULE 1.1(c)

 

 

Seller Personal Property

None.

	  	
SCHEDULE 1.1(c)

-1-

	  

  

  

  

SCHEDULE 2

 

 

Parcel B Owner Estoppel Certificate

 

	
TO:

	
AJ Irvine Owner Corporation

	
  

	
c/o Falcon Real Estate Investment Co., LP

	
  

	
10815 Rancho Bernardo Road, Suite 120

	
  

	
San Diego, CA 92127-2187

	
  

	
Attention: Scott A. Sweeney

and

	
  

	
Hines Global REIT Properties LP

2800 Post Oak Boulevard, Suite 4800

	
  

	
Houston, TX 77056

	
  

	
Attention: Charles N. Hazen and Jason P. Maxwell, Esq.

 

	
RE:

	
That certain Declaration and Grant of Easements and Reciprocal Easement Agreement dated as of December 14, 2000 and recorded on January 18, 2001 in the Official Records of Orange County, California, as Instrument Number 20010029308 (the "Original REA"), as amended by that certain Amendment No. 1 to Declaration and Grant of Easements and Reciprocal Easement Agreement dated as of September 24, 2001 and recorded on September 27, 2001 in the Official Records of Orange County, California, as Instrument Number 20010684534 (the "First Amendment to REA", and collectively with the Original REA, the "REA")

 

The undersigned hereby certifies as follows:

 

	
  

	
1.

	
That the undersigned owns fee simple title to all of the real property located in Orange County, California, designated as "Parcel B" in the REA.

 

	
  

	
2.

	
That the undersigned is, and holds all right, title and interest of, "Parcel B Owner" under the REA.

 

	
  

	
3.

	
That the Original REA is unmodified, except as described in the recitals hereinabove.

 

	
  

	
4.

	
That the REA is in full force and effect.

 

	
  

	
5.

	
That Parcel B Owner is responsible for its percentage share of real property taxes, insurance, common area maintenance and parking structure maintenance pursuant to the REA.

 

	
  

	
6.

	
That neither the undersigned, as Parcel B Owner under the REA, nor AJ Irvine Owner Corporation, as "Parcel A Owner" under the REA, is in default in the performance of their respective obligations under the REA, except as follows:

 

	  	
SCHEDULE 2

-1-

	  

 

	
  

	
________________________________________________________________

 

	
  

	
________________________________________________________________

 

	
  

	
________________________________________________________________.

 

	
  

	
7.

	
That the undersigned is not currently entitled to payment or reimbursement of any sums under the REA from Parcel A Owner, and the undersigned has no claims against or disputes with Parcel A Owner for any past occurrences or conditions, except as follows:

 

	
  

	
________________________________________________________________

 

	
  

	
________________________________________________________________

 

	
  

	
________________________________________________________________.

 

Each individual executing this Estoppel Certificate hereby represents and warrants that he or she is signing on behalf of the undersigned and is authorized to do so.

 

This Estoppel Certificate may be relied upon by AJ Irvine Owner Corporation, as Parcel A Owner under the REA, Hines Global REIT Properties LP (or its assignee, designee or nominee), as a prospective transferee of Parcel A Owner, and any prospective lender of Hines Global REIT Properties LP (or its assignee, designee or nominee).

 

	
  

	
"PARCEL B OWNER":

 

	
  

	
FIDM PROPERTIES, INC.,

 

	
  

	
a California corporation

By:                                                                

Name:                                                                

Title:                                                                

Date:                                                                

By:                                                                

Name:                                                                

Title:                                                                

Date:                                                                

	  	
SCHEDULE 2

-2-

	  

  

  

  

State of California )

 

County of ______________________                                                                )

 

Subscribed and sworn to (or affirmed) before me on this _____ day of__________________, 2010, by________________________________________, proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me.

 

Seal:                                                                

 

Signature                                                                

State of California )

 

County of ______________________                                                                )

 

Subscribed and sworn to (or affirmed) before me on this _____ day of__________________, 2010, by________________________________________, proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me.

 

Seal:                                                                

 

Signature                                                                

	  	
SCHEDULE 2

-3-

	  

  

  

  

SCHEDULE 3

 

 

TENANT ESTOPPEL CERTIFICATE

 

The undersigned tenant ("Tenant"), in recognition that Hines Global REIT Properties LP, a Delaware limited partnership (and its successors and assigns, collectively, the "Buyer"), is considering an acquisition of the Premises (defined below), and that it may obtain debt financing in connection with the acquisition and financing of the Premises from one of more lenders (collectively with their successors and assigns, "Lender"), hereby certifies to Buyer and Lender that:

1.           The undersigned is the Tenant under that certain lease dated October 20, 2000 (the "Lease") executed by HGN GILLETTE, LLC as landlord and as predecessor to AJ Irvine Owner Corp. (collectively, "Landlord"), and the undersigned as tenant respecting the entire net rentable area of space at those certain premises located at the building commonly known as 17600 Gillette Avenue in the City of Irvine, County of Orange, State of California (the "Premises").

2.           Pursuant to the Lease, Tenant has paid to Landlord a security deposit of $0.00 (no Security Deposit); the term of the Lease commenced on April 1, 2001 and expires on March 31, 2016; the current monthly Base Rent is $232,212.39; the next rental payment in the amount of $232,212.39 is due on [TO BE INSERTED]; no rent has been prepaid); and Tenant has fully paid all Base Rent.

3.           Pursuant to the Lease and that certain Declaration and Grant of Easements and Reciprocal Easement recorded September 27, 2001, Tenant is obligated to reimburse Landlord for its percentage share of all real property taxes, operating expenses, common area maintenance and insurance expenses affecting the Premises.

 

	  	
SCHEDULE 3

1

	  

 

4.           The Lease is in full force and effect, a complete and correct copy of the Lease and all amendments, modifications and supplements thereto is attached to this Tenant Estoppel Certificate as Exhibit A, and there are no other amendments, modifications or supplements thereto except as set forth in Exhibit A hereto, and there is no other lease agreements or understandings between Landlord and Tenant affecting the Premises and any rights to parking, whether oral or written, except as follows:

	
·  

	
Acknowledgement of Term Commencement Date, dated May 17, 2001;

	
·  

	
Notice of Rent Increase, dated September 25, 2003;

	
·  

	
Sublease Agreement (with FCB affiliate) dated January 1, 2006, by and between FCB Worldwide ("Tenant") and Capita Technologies ("Subtenant");

 

	
·  

	
Notice of Rent Increase, dated April 1, 2006;

 

	
·  

	
Sublease Agreement dated September 15, 2006, by and between FCB Worldwide ("Tenant") and The Collective, Inc ("Subtenant");

 

	
·  

	
Notice of Lease Assignment from FCB Worldwide, Inc. to Draftfcb, Inc., dated March 24, 2008;

 

	
·  

	
Verbal Notice of Rent Increase, effective October 1, 2008;

 

	
·  

	
Assignment of Lease Guaranty from True North Communications to Interpublic Group of Companies, dated May 8, 2009.

 

5.           Tenant has accepted and taken possession of the Premises for use as general business offices and is in occupancy thereof; and Tenant is not aware of any defects in the Premises or the Parking Structure.

6.           Landlord has satisfied all commitments made to induce Tenant to enter into the Lease, Landlord is not in any respect in default in the performance of the terms and provisions of the Lease, Tenant has no actual knowledge of any event or condition that, which with the give of notice and/or the passage of time, would constitute a default under the Lease, and there are no 

 

	  	
SCHEDULE 3

2

	  

 

existing defenses which the undersigned has against the full enforcement of the Lease by Landlord.

7.           Tenant is not in any respect in default under the Lease, Tenant has no knowledge of any event or condition that, which with the giving of notice and/or the passage of time, would constitute a default under the Lease and Tenant has not assigned, transferred or hypothecated the Lease or any interest therein or subleased all or any portion of the Premises, except as set forth in Paragraph 4 above.

8.           Tenant has no defenses and has not acquired any right to offset, or to take a credit against, the Base Rent or any other amounts coming due under the Lease, and Tenant has no actual knowledge of any event or condition that, which with the giving of notice and/or the passage of time, would enable Tenant to acquire a right to offset, or to take a credit against Base Rent or other amounts coming due under the Lease, and no free periods of rent or other concessions or rent abatements have been granted to Tenant.

9.           Tenant does not have any remaining right or option to renew or extend the term of the Lease, nor any preferential right or option to purchase all of any portion of the Premises.

10.           Except as set forth in the Lease, Tenant has no right to terminate or cancel the Lease.  Tenant does not have any remaining right or option to terminate the Lease based upon delays in construction.

11.           To the best of Tenant's knowledge, there are no unpaid rental, lease or similar commissions payable with respect to the Lease.

12.           There are no actions, whether voluntary or otherwise, pending or threatened against Tenant (or any guarantor of Tenant's obligations pursuant to the Lease) under the bankruptcy or insolvency laws of the United States or any state thereof, and there are no 

 

	  	
SCHEDULE 3

3

	  

 

attachments, executions, assignments for the benefit of creditors, or voluntary or involuntary proceedings under the U.S. Bankruptcy Code or any other debtor relief laws pending or threatened against Tenant (or any guarantor of Tenant's obligations pursuant to the Lease).

13.           Tenant has not used, stored, disposed of or transported at, in, to for from the Premises or any portion of the building thereon any substance classified, listed or regulated as hazardous or toxic under any applicable federal, state or local laws, orders, rules or regulations (other than minor quantities of such substances which are used in the course of ordinary office operations and in compliance with all applicable laws).

14.           The correct name and mailing address of Tenant for notice purposes under the Lease is as follows _________________________________________.

This certificate has been given to Buyer and Lender with the understanding that Buyer will rely on it in connection with the acquisition of the Premises and Lender will rely on it in connection with the financing of the Premises.  The individual executing this instrument hereby personally certifies that he or she is duly authorized to sign, acknowledge and deliver this Estoppel Certificate to Buyer and Lender.

Dated: ____________________                                                                           TENANT

FCB WORLDWIDE, INC.,

a Delaware corporation

By:  _________________________

Name:

Its:

Date: _________________________

	  	
SCHEDULE 3

-4-

	  

  

  

  

 

GUARANTOR'S ACKNOWLEDGMENT

 

The undersigned (a) has guaranteed the obligations of the Tenant under the Lease referred to above (covering the Premises commonly known as 17600 Gillette Avenue, Irvine, California), (b) consents to the matters set forth above and agrees to be bound thereby, and (c) acknowledges that the guaranty executed by the undersigned is in full force and effect and will not be supplemented, modified, amended or terminated without the prior written consent of both the then existing landlord and lender.

Guarantor

INTERPUBLIC GROUP OF COMPANIES, INC.

By:  _____________________________

[Printed Name and Title]

 

	  	
SCHEDULE 3

-5-ex101.htm

 

EXHIBIT 10.1

 

Alpha Natural Resources, Inc.

2010 Long-Term Incentive Plan

    Section 1.  Purpose.  The purpose of this Plan is to advance the interests of Alpha and its stockholders by providing incentives to certain Eligible Persons who contribute significantly to the strategic and long-term performance objectives and growth of the Company.

    

    Section 2.  Definitions.  Certain capitalized terms applicable to this Plan are set forth in Appendix A.

 

    Section 3.  Administration.  This Plan shall be administered by the Committee.  The Committee shall have all the powers vested in it by the terms of this Plan, such powers to include, but not limited to, exclusive authority to select the Eligible Persons to be granted Awards under this Plan, to determine the type, size, terms and conditions of the Award to be made to each Eligible Person selected, to modify or waive the terms and conditions of any Award that has been granted, to determine the time when Awards will be granted, to establish performance objectives, to make any adjustments necessary or desirable as a result of the granting of Awards to Eligible Persons located outside the United States, to prescribe the form of the agreements evidencing Awards made under this Plan, and to incorporate clawback or other recoupment provisions to Awards granted hereunder that would protect the Company and its stockholders from actions such as fraudulent activities in connection with financial restatements and/or due to ethical misconduct. Awards may, in the discretion of the Committee, be made under this Plan in assumption of, or in substitution for, outstanding Awards previously granted by (i) the Company, (ii) any predecessor of the Company, or (iii) a company acquired by the Company or with which the Company combines. The number of Common Shares underlying such substitute awards shall be counted against the aggregate number of Common Shares available for Awards under this Plan.

 

    The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, and to make any other determinations that it deems necessary or desirable for the administration of this Plan. The Committee may correct any defect or omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to carry it into effect. Any decision of the Committee in the interpretation and administration of this Plan, as described in this Plan, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their Beneficiaries or Permitted Transferees). The Committee may act only by a majority of its members, except that the members thereof may authorize any one or more of their members or any officer of the Company to execute and deliver documents or to take any other ministerial action on behalf of the Committee with respect to Awards made or to be made to Participants.

 

    No member of the Committee and no officer of the Company shall be liable for anything done or omitted to be done by such member or officer, by any other member of the Committee or by any other officer of the Company in connection with the performance of duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. In addition to all other rights of indemnification and reimbursement to which a member of the Committee and an officer of the Company may be entitled, the Company shall indemnify and hold harmless each such member or officer who was or is a party or is threatened to be made a party to any threatened, pending or completed proceeding or suit in connection with the performance of duties under this Plan against expenses (including reasonable attorneys’ fees), judgments, fines, liabilities, losses and amounts paid in settlement actually and reasonably incurred by him or her in connection with such proceeding or suit, except for his or her own willful misconduct or as expressly provided otherwise by statute. Expenses (including reasonable attorneys’ fees) incurred by such a member or officer in defending any such proceeding or suit shall be paid by the Company in advance of the final disposition of such proceeding or suit upon receipt of a written affirmation by such member or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification and a written undertaking by or on behalf of such member or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company as authorized in this Section.

 

  

  

  

    Section 4.  Participation.  Consistent with the purposes of this Plan, the Committee shall have exclusive power to select the Eligible Persons who may participate in this Plan and be granted Awards under this Plan. Eligible Persons may be selected individually or by groups or categories, as determined by the Committee in its discretion.

 

    Section 5.  Awards under this Plan.

 

(a)           Types of Awards.  Awards under this Plan may include, but need not be limited to, one or more of the following types, either alone or in any combination thereof:  (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Restricted Stock Units, (v) Performance Grants and (vi) any other type of Award deemed by the Committee in its discretion to be consistent with the purposes of this Plan (including, but not limited to, Other Share-Based Awards, and Awards to be made to Participants who are foreign nationals or are employed or performing services outside the United States).

(b)           Maximum Number of Common Shares that May be Issued.  The maximum aggregate number of Common Shares available for issuance under Awards granted under this Plan, including Incentive Stock Options, shall be 3,250,000. No Eligible Person may receive: (i) Stock Options or Stock Appreciation Rights under this Plan for more than 250,000 Common Shares in any one fiscal year of the Company; (ii) Performance Grants (denominated in Common Shares) for more than 250,000 Common Shares in any one fiscal year of the Company and (iii) Performance Grants (denominated in cash) for more than $5,000,000 in any one fiscal year of the Company. The foregoing limitations shall be subject to adjustment as provided in Section 16, but only to the extent that any such adjustment will not affect the status of:  (i) any Award intended to qualify as performance-based compensation under Section 162(m) of the Code; (ii) any Award intended to qualify as an Incentive Stock Option or (iii) any Award intended to comply with, or qualify for an exception to, Section 409A of the Code. Common Shares issued pursuant to this Plan may be either authorized but unissued shares, treasury shares, reacquired shares or any combination thereof. If any Common Shares covered by an award terminate, lapse, are forfeited or cancelled, or such Award is otherwise settled without the delivery of the full number of Common Shares underlying the Award, including Common Shares withheld to satisfy tax withholding obligations, then such Common Shares to the extent of any such forfeiture, termination, lapse, cancellation, payment, etc., shall again be, or shall become available for issuance under this Plan; provided, however, that Common Shares (i) delivered in payment of the exercise price of a Stock Option, (ii) not issued upon the net settlement or net exercise of Stock Appreciation Rights, or (iii) delivered to or withheld by the Company to pay withholding taxes related to a Stock Option or Stock Appreciation Right, shall not become available again for issuance under this Plan.

(c)           Rights with Respect to Common Shares and Other Securities.  Except as provided in subsection 8(c) with respect to Awards of Restricted Stock and unless otherwise determined by the Committee in its discretion, a Participant to whom an Award is made (and any Person succeeding to such a Participant’s rights pursuant to this Plan) shall have no rights as a stockholder with respect to any Common Shares or as a holder with respect to other securities, if any, issuable pursuant to any such Award until the date a stock certificate evidencing such Common Shares or other evidence of ownership is issued to such Participant or until Participant's ownership of such Common Shares shall have been entered into the books of the registrar in the case of uncertificated shares.

  

  

  

  

    Section 6.  Stock Options.  The Committee may grant Stock Options; provided that an Incentive Stock Option may be granted only to Eligible Persons who are employees of Alpha or any parent or subsidiary of Alpha within the meaning of Code Sections 424(e) and (f), including a subsidiary which becomes such after adoption of the plan.  Each Stock Option granted or sold under this Plan shall be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with this Plan and shall comply with the applicable terms and conditions of this Section and this Plan, and with such other terms and conditions, including, but not limited to, restrictions upon the Stock Option or the Common Shares issuable upon exercise thereof, as the Committee, in its discretion, shall establish.

(a)           The exercise price of a Stock Option shall not be less than the Fair Market Value of the Common Shares subject to such Stock Option on the date of grant, as determined by the Committee; provided, however, if an Incentive Stock Option is granted to a Ten Percent Employee, such exercise price shall not be less than 110% of such Fair Market Value at the time the Stock Option is granted.

(b)           The Committee shall determine the number of Common Shares to be subject to each Stock Option.

(c)           Any Stock Option may be exercised during its term only at such time or times and in such installments as the Committee may establish.

(d)           A Stock Option shall not be exercisable:

(i)           in the case of any Incentive Stock Option granted to a Ten Percent Employee, after the expiration of five years from the date it is granted, and, in the case of any other Stock Option, after the expiration of ten years from the date it is granted; and

(ii)           no shares shall be issued unless payment in full is made for the shares being acquired under such Stock Option at the time of exercise as provided in subsection 6(h).

 

 (e)           The Committee shall determine in its discretion and specify in each agreement evidencing a Stock Option the effect, if any, the termination of the Participant’s employment with or performance of services for the Company shall have on the exercisability of the Stock Option; provided, however, that an Incentive Stock Option that is exercised at a time that is beyond the time an Incentive Stock Option may be exercised in order to qualify as such under the Code shall cease to be an Incentive Stock Option.

(f)           In the case of an Incentive Stock Option, the amount of the aggregate Fair Market Value of Common Shares (determined at the time of grant of the Stock Option) with respect to which Incentive Stock Options are exercisable for the first time by an employee of the Company during any calendar year (under all such plans of his or her employer corporation and its parent and subsidiary corporations) shall not exceed $100,000 or such other amount as is specified in the Code.

(g)           It is the intent of Alpha that Nonqualified Stock Options granted under this Plan not be classified as Incentive Stock Options, that the Incentive Stock Options granted under this Plan be consistent with and contain or be deemed to contain all provisions required under Section 422 and the other appropriate provisions of the Code and any implementing regulations (and any successor provisions thereof), and that any ambiguities in construction shall be interpreted in order to effectuate such intent. If a Stock Option is intended to be an Incentive Stock Option, and if for any reason such Stock Option (or portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Stock Option (or portion thereof) shall be regarded as a Nonqualified Stock Option granted under this Plan; provided that such Stock Option (or portion thereof) otherwise complies with this Plan’s requirements relating to Nonqualified Stock Options. In no event shall any member of the Committee or the Company (or its employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of a Stock Option to qualify for any reason as an Incentive Stock Option.

  

  

  

(h)           For purposes of payments made to exercise Stock Options, such payment shall be made in such form (including, but not limited to, cash, Common Shares, the surrender of another outstanding Award under this Plan, broker assisted cashless exercise or any combination thereof) as the Committee may determine in its discretion.

   

            Section 7.  Stock Appreciation Rights.  The Committee may grant Stock Appreciation Rights. Each Award of Stock Appreciation Rights granted under this Plan shall be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with this Plan and shall comply with the applicable terms and conditions of this Section and this Plan, and with such other terms and conditions, including, but not limited to, restrictions upon the Award of Stock Appreciation Rights or the Common Shares issuable upon exercise thereof, as the Committee, in its discretion, shall establish.

(a)           The Committee shall determine the number of Common Shares to be subject to each Award of Stock Appreciation Rights.

(b)           Any Stock Appreciation Right may be exercised during its term only at such time or times and in such installments as the Committee may establish and shall not be exercisable after the expiration of ten years from the date it is granted.

(c)           The Committee shall determine in its discretion and specify in each agreement evidencing an Award of Stock Appreciation Rights the effect, if any, the termination of the Participant’s employment with or performance of services for the Company shall have on the exercisability of the Award of Stock Appreciation Rights.

(d)           An Award of Stock Appreciation Rights shall entitle the holder to exercise such Award and to receive from Alpha in exchange thereof, without payment to Alpha, that number of Common Shares having an aggregate value equal to the excess of the Fair Market Value of one Common Share, at the time of such exercise, over the exercise price, times the number of Common Shares subject to the Award, or portion thereof, that is so exercised or surrendered, as the case may be.  Stock Appreciation Rights shall have an exercise price no less than the Fair Market Value of the Common Shares covered by the right on the date of grant.

(e)           A Stock Appreciation Right may provide that it shall be deemed to have been exercised at the close of business on the business day preceding the expiration date of the Stock Appreciation Right, or such other date as specified by the Committee, if at such time such Stock Appreciation Right has a positive value. Such deemed exercise shall be settled or paid in the same manner as a regular exercise thereof as provided in subsection 7(d) of this Agreement.

  

  

  

  

    Section 8.  Restricted Stock and Restricted Stock Units.  The Committee may grant Awards of Restricted Stock and Restricted Stock Units. Each Award of Restricted Stock or Restricted Stock Units under this Plan shall be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with this Plan and shall comply with the applicable terms and conditions of this Section and this Plan, and with such other terms and conditions as the Committee, in its discretion, shall establish.

(a)           The Committee shall determine the number of Common Shares to be issued to a Participant pursuant to the Award of Restricted Stock or Restricted Stock Units, and the extent, if any, to which they shall be issued in exchange for cash, other consideration, or both.

(b)           Until the expiration of such period as the Committee shall determine from the date on which the Award is granted and subject to such other terms and conditions as the Committee, in its discretion, shall establish (the “Restricted Period”), a Participant to whom an Award of Restricted Stock is made shall be issued, but shall not be entitled to the delivery of, a stock certificate or other evidence of ownership representing the Common Shares subject to such Award. The standard vesting schedule applicable to Awards of Restricted Stock and Restricted Stock Units shall provide for vesting of such Awards, in one or more increments, over a service period of no less than three years (not including special vesting terms set forth therein); provided, however, this limitation shall not apply to Awards granted to non-employee directors of the Board that are received pursuant to the Company's compensation program applicable to non-employee directors of the Board, or adversely affect a Participant's rights under another plan or agreement with the Company.

(c)           Unless otherwise determined by the Committee in its discretion, a Participant to whom an Award of Restricted Stock has been made (and any Person succeeding to such a Participant’s rights pursuant to this Plan) shall have, after issuance of a certificate for the number of Common Shares awarded (or after the Participant's ownership of such Common Shares shall have been entered into the books of the registrar in the case of uncertificated shares) and prior to the expiration of the Restricted Period, ownership of such Common Shares, including the right to vote such Common Shares and to receive dividends or other distributions made or paid with respect to such Common Shares, provided that, such Common Shares, and any new, additional or different shares, or Other Alpha Securities or property, or other forms of consideration that the Participant may be entitled to receive with respect to such Common Shares as a result of a stock split, stock dividend or any other change in the corporation or capital structure of Alpha, shall be subject to the restrictions set forth in the Award and this Plan.

(d)           The Committee shall determine in its discretion and specify in each agreement evidencing an Award of Restricted Stock or Restricted Stock Units the effect, if any, the termination of the Participant’s employment with or performance of services for the Company during the Restricted Period shall have on such Award.

(e)           The Committee may grant Dividend Equivalents to Participants in connection with Awards of Restricted Stock Units.  The Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Common Shares, or other investment vehicles as the Committee may specify; provided that, unless otherwise determined by the Committee, Dividend Equivalents shall be subject to all conditions and restrictions of the underlying Restricted Stock Units to which they relate. 

 

  

  

  

    Section 9.  Performance Grants.

(a)           Grant.  Subject to the limitations set forth in Section 5(b), the Committee may grant a Performance Grant which shall consist of a right that is (i) denominated in cash, Common Shares or any other form of Award issuable under this Plan (or any combination thereof), (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals applicable to such performance periods as the Committee shall establish and (iii) payable at such time and in such form as the Committee shall determine. Unless otherwise determined by the Committee, any such Performance Grant shall be evidenced by an Award agreement containing the terms of the Award, including, but not limited to, the performance criteria and such terms and conditions as may be determined, from time to time, by the Committee, in each case, not inconsistent with this Plan.  In relation to any Performance Grant, the performance period may consist of one or more calendar years or other fiscal period of at least 12 months in length for which performance is being measured.

(b)           Terms and Conditions.  For Awards intended to be performance-based compensation under Section 162(m) of the Code, Performance Grants shall be conditioned upon the achievement of pre-established goals relating to one or more of the following performance measures, as determined in writing by the Committee and subject to such modifications as specified by the Committee: cash flow; cash flow from operations; earnings (including, but not limited to, earnings before interest, taxes, depreciation and amortization or some variation thereof); earnings per share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; capital expenditures; debt; debt reduction; working capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; productivity; delivery performance; safety record and/or performance; stock price; return on equity; total or relative increases to stockholder return; return on invested capital; return on assets or net assets; revenue; income or net income; operating income or net operating income; operating profit or net operating profit; gross margin, operating margin or profit margin; and completion of acquisitions, business expansion, product diversification, new or expanded market penetration, and other non-financial operating and management performance objectives. To the extent consistent with Section 162(m) of the Code, the Committee may determine, at the time the performance goals are established, that certain adjustments shall apply, in whole or in part, in such manner as determined by the Committee, to exclude the effect of any of the following events that occur during a performance period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; business combinations, reorganizations and/or restructuring programs, including, but not limited to, reductions in force and early retirement incentives; currency fluctuations; and any extraordinary, unusual, infrequent or non-recurring items, including, but not limited to, such items described in management’s discussion and analysis of financial condition and results of operations or the financial statements and notes thereto appearing in Alpha's annual report for the applicable period. Performance measures may be determined either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and measured over a period of time including any portion of a year, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous fiscal years’ results or to a designated comparison group, in each case as specified by the Committee.

(c)           Preestablished Performance Goals.  For Awards intended to be performance-based compensation under Section 162(m) of the Code, performance goals relating to the performance measures set forth above shall be preestablished in writing by the Committee, and achievement thereof certified in writing prior to payment of the Award, as required by Section 162(m) and Treasury Regulations promulgated thereunder. All such performance goals shall be established in writing no later than ninety (90) days after the beginning of the applicable performance period. In addition to establishing minimum performance goals below which no compensation shall be payable pursuant to a Performance Grant, the Committee, in its sole discretion, may create a performance schedule under which an amount less than or more than the target award may be paid so long as the performance goals have been achieved.

(d)           Additional Restrictions/Negative Discretion.  The Committee, in its sole discretion, may also establish such additional restrictions or conditions that must be satisfied as a condition precedent to the payment of all or a portion of any Performance Grants. Such additional restrictions or conditions need not be performance-based and may include, among other things, the receipt by a Participant of a specified annual performance rating, the continued employment by the Participant and/or the achievement of specified performance goals by the Company, business unit or Participant. Furthermore, and notwithstanding any provision of this Plan to the contrary, the Committee, in its sole discretion, may retain the discretion to reduce the amount of any Performance Grant to a Participant if it concludes that such reduction is necessary or appropriate based upon: (i) an evaluation of such Participant’s performance; (ii) comparisons with compensation received by other similarly-situated individuals working within the Company’s industry; (iii) the Company’s financial results and conditions or (iv) such other factors or conditions that the Committee deems relevant; provided, however, the Committee shall not use its discretionary authority to increase any Award that is intended to be performance-based compensation under Section 162(m) of the Code.

(e)           Payment of Performance Awards.  Performance Grants may be paid in a lump sum or in installments following the close of the performance period or, in accordance with procedures established by the Committee, on a deferred basis.

 

  

  

  

    Section 10.  Other Share-Based Awards.  The Committee may grant Other Share-Based Awards, which shall consist of any right that is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of Common Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Shares (including, without limitation, securities convertible into Common Shares), as deemed by the Committee to be consistent with the purposes of this Plan. Subject to the terms of this Plan and any applicable Award agreement, the Committee shall determine the terms and conditions of any such Other Share-Based Award. The standard vesting schedule applicable to Other Share-Based Awards granted under this Section 10 shall provide for vesting of such Awards, in one or more increments, over a service period of no less than three years (not including special vesting terms set forth therein); provided, however, this limitation shall not apply to Awards granted to non-employee directors of the Board that are received pursuant to the Company's compensation program applicable to non-employee directors of the Board, or adversely affect a Participant's rights under another plan or agreement with the Company.

 

    Section 11.  Section 409A. Notwithstanding any provision of the Plan or an Award agreement to the contrary, if any Award or benefit provided under this Plan is subject to the provisions of Section 409A, the provisions of the Plan and any applicable Award agreement shall be administered, interpreted and construed in a manner necessary in order to comply with Section 409A or an exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted or construed), and the following provisions shall apply, as applicable:

(a)           If a Participant is a Specified Employee for purposes of Section 409A and a payment subject to Section 409A (and not excepted therefrom) to the Participant is due upon Separation from Service, such payment shall be delayed for a period of six (6) months after the date the Participant Separates from Service (or, if earlier, the death of the Participant).  Any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period unless another compliant date is specified in the applicable agreement.

(b)           For purposes of Section 409A, and to the extent applicable to any Award or benefit under the Plan, it is intended that distribution events qualify as permissible distribution events for purposes of Section 409A and shall be interpreted and construed accordingly. Whether a Participant has Separated from Service will be determined by the Committee based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A.  For this purpose, a Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A.

(c)           The grant of Nonqualified Stock Options, Stock Appreciation Rights and other stock rights subject to Section 409A shall be granted under terms and conditions consistent with Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not constitute a deferral of compensation under Section 409A.  Accordingly, any such Award may be granted to Eligible Persons of Alpha and its subsidiaries and affiliates in which Alpha has a controlling interest.  In determining whether Alpha has a controlling interest, the rules of Treas. Reg. § 1.414(c)-2(b)(2)(i) shall apply; provided that the language "at least 50 percent" shall be used instead of "at least 80 percent" in each place it appears; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(b)(5)(iii)(E)(i)), the language "at least 20 percent" shall be used instead of "at least 80 percent" in each place it appears.  The rules of Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 shall apply for purposes of determining ownership interests.

(d)           In no event shall any member of the Committee or the Company (or its employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Award to satisfy the requirements of Section 409A.

 

    Section 12.  Deferred Payment of Awards.  The Committee, in its discretion, may specify the conditions under which the payment of all or any portion of any cash compensation, or Common Shares or other form of payment under an Award, may be deferred until a later date. Deferrals shall be for such periods or until the occurrence of such events, and upon such terms and conditions, as the Committee shall determine in its discretion, in accordance with the provisions of Section 409A; provided, however, that no deferral shall be permitted with respect to Options or Stock Appreciation Rights.

 

 

 

 

    Section 13. Transferability of Awards.  A Participant’s rights and interest under this Plan or any Award may not be assigned or transferred, hypothecated or encumbered in whole or in part either directly or by operation of law or otherwise, including, but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner; provided, however, the Committee may permit such transfer to a Permitted Transferee; and provided, further, that, unless otherwise permitted by the Code, any Incentive Stock Option granted pursuant to this Plan shall not be transferable other than by will or by the laws of descent and distribution, and shall be exercisable during the Participant’s lifetime only by Participant or by such Permitted Transferee.

 

    Section 14.  Amendment or Substitution of Awards under this Plan.  The terms of any outstanding Award under this Plan may be amended or modified from time to time after grant by the Committee in its discretion in any manner that it deems appropriate (including, but not limited to, acceleration of the date of exercise of any Award and/or payments under any Award) in accordance with the terms of the Plan; provided that no such amendment or modification shall: (i) accelerate the vesting or exercisability of any Awards other than in connection with a Participant's death, disability, retirement or a change in control or other transaction contemplated by Section 16 hereof; provided further, the foregoing limitation shall not apply to (A) Awards for up to five percent (5%) of the aggregate number of Common Shares authorized for issuance under the Plan, or (B) any Performance Grant the payment of which remains contingent upon the attainment of the performance goal; or (ii) adversely affect in a material manner any right of a Participant under the Award without his or her written consent.  Notwithstanding the foregoing or any provision of an Award to the contrary, the Committee may at any time (without the consent of any Participant) modify, amend or terminate any or all of the provisions of an Award to the extent necessary to conform the provisions of the Award with Section 162(m), Section 409A or any other provision of the Code or other applicable law, the regulations issued thereunder or an exception thereto, regardless of whether such modification, amendment or termination of the Award shall adversely affect the rights of a Participant. The Committee may, in its discretion, permit holders of Awards under this Plan to surrender outstanding Awards in order to exercise or realize the rights under other Awards, or in exchange for the grant of new Awards, or require holders of Awards to surrender outstanding Awards as a condition precedent to the grant of new Awards under this Plan.  Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, Common Shares, Other Alpha  Securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Shares or Other Alpha Securities, or similar transaction(s)), the terms of outstanding Options or SARs may not be amended to reduce the exercise price of such outstanding Options or SARs or cancel outstanding Options or SARs in exchange for Options or SARs or cash or similar securities like stock awards with an exercise price that is less than the exercise price of the original Options or SARs without obtaining stockholder approval.

 

    Section 15.  Termination of a Participant.  For all purposes under this Plan, the Committee shall determine whether a Participant has Separated from Service, terminated employment with, or the performance of services for, the Company; provided, however, an absence or leave approved by the Company, to the extent permitted by applicable provisions of the Code, shall not be considered an interruption of employment or performance of services for any purpose under this Plan.

 

  

  

  

    Section 16.  Dilution and Other Adjustments.  In the event a dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Common Shares, Other Alpha Securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Shares or Other Alpha Securities, issuance of warrants or other rights to purchase Common Shares or Other Alpha Securities or other similar corporate transaction or event affects the Common Shares such that an adjustment is determined by the Committee to be necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then the Committee shall, in an equitable manner, (i) adjust any or all of (a) the aggregate maximum number of Common Shares or Other Alpha Securities (or number and kind of other securities or property) with respect to which Awards may be granted under this Plan pursuant to Section 5(b), (b) the individual maximum number of Common Shares that may be granted as Stock Options, Stock Appreciation Rights and Performance Grants (denominated in Common Shares) to a Participant pursuant to Section 5(b) of this Plan, (c) the number of Common Shares or Other Alpha Securities (or number and kind of other securities or property) subject to outstanding Awards and (d) the grant or exercise price with respect to any outstanding Award; (ii) if deemed appropriate, provide for an equivalent Award or substitute Award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect; or (iii) if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; provided, that, in each case, any such adjustment shall be performed in accordance with the applicable provisions of Code and the Treasury Regulations issued thereunder so as to not affect the status of: (A) any Award intended to qualify as performance-based compensation under Section 162(m) of the Code; (B) any Award intended to qualify as an Incentive Stock Option under Section 422 of the Code or (C) any Award intended to comply with, or qualify for an exception to, Section 409A of the Code. Unless otherwise provided by the Committee, all outstanding Awards shall terminate immediately prior to the consummation of any dissolution or liquidation of the Company. Any such termination or adjustment made by the Committee will be final, conclusive and binding for all purposes of this Plan.

 

    Section 17.  Designation of Beneficiary by Participant.  A Participant may name a beneficiary to receive any payment to which such Participant may be entitled with respect to any Award under this Plan in the event of his or her death, on a written form to be provided by and filed with the Committee, and in a manner determined by the Committee in its discretion (a “Beneficiary”). The Committee reserves the right to review and approve Beneficiary designations. A Participant may change his or her Beneficiary from time to time in the same manner, unless such Participant has made an irrevocable designation. Any designation of a Beneficiary under this Plan (to the extent it is valid and enforceable under applicable law) shall be controlling over any other disposition, testamentary or otherwise, as determined by the Committee in its discretion. If no designated Beneficiary survives the Participant and is living on the date on which any amount becomes payable to such a Participant’s Beneficiary, such payment will be made to the legal representatives of the Participant’s estate, and the term “Beneficiary” as used in this Plan shall be deemed to include such Person or Persons. If there are any questions as to the legal right of any Beneficiary to receive a distribution under this Plan, the Committee in its discretion may determine that the amount in question be paid to the legal representatives of the estate of the Participant, in which event the Company, the Board, the Committee, the Designated Administrator (if any), and the members thereof, will have no further liability to anyone with respect to such amount.

 

  

  

  

    Section 18.  Miscellaneous Provisions.

(a)           Any proceeds from Awards shall constitute general funds of Alpha.

(b)           No fractional shares may be delivered under an Award, but in lieu thereof a cash or other adjustment may be made as determined by the Committee in its discretion.

(c)           No Eligible Person or other Person shall have any claim or right to be granted an Award under this Plan. Determinations made by the Committee under this Plan need not be uniform and may be made selectively among Eligible Persons under this Plan, whether or not such Eligible Persons are similarly situated. Neither this Plan nor any action taken under this Plan shall be construed as giving any Eligible Person any right to continue to be employed by or perform services for the Company, and the Company specifically reserves the right to terminate the employment of or performance of services by Eligible Persons at any time and for any reason.

(d)           No Participant or other Person shall have any right with respect to this Plan, the Common Shares reserved for issuance under this Plan or in any Award, contingent or otherwise, until written evidence of the Award shall have been delivered to the Participant and all the terms, conditions and provisions of this Plan and the Award applicable to such Participant (and each Person claiming under or through such him or her) have been met.

(e)           Notwithstanding anything to the contrary contained in this Plan or in any Award agreement, each Award shall be subject to the requirement, if at any time the Committee shall determine, in its sole discretion, that such requirement shall apply, that the listing, registration or qualification of any Award under this Plan, or of the Common Shares, Other Alpha Securities or property or other forms of payment issuable pursuant to any Award under this Plan, on any stock exchange or other market quotation system or under any federal or state law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the exercise or settlement thereof, such Award shall not be granted, exercised or settled in whole or in part until such listing, registration, qualification, consent or approval shall have been effected, obtained and maintained free of any conditions not acceptable to the Committee. Notwithstanding anything to the contrary contained in this Plan or in any Award agreement, no Common Shares, Other Alpha Securities or property or other forms of payment shall be issued under this Plan with respect to any Award unless the Committee shall be satisfied that such issuance will be in compliance with applicable law and any applicable rules of any stock exchange or other market quotation system on which such Common Shares are listed.  If the Committee determines that the exercise of any Stock Option or Stock Appreciation Right would fail to comply with any applicable law or any applicable rules of any stock exchange or other market quotation system on which Common Shares are listed, the Participant holding such Stock Option or Stock Appreciation Right shall have no right to exercise such Stock Option or Stock Appreciation Right until such time as the Committee shall have determined that such exercise will not violate any applicable law or any such applicable rule, provided that such Stock Option or Stock Appreciation Right shall not have expired prior to such time.

(f)           It is the intent of Alpha that this Plan and Awards hereunder comply in all respects with Rule 16b-3 and Sections 162(m), 409A and 422, and (i) the provisions of the Plan shall be administered, interpreted and construed in a manner necessary to comply with Rule 16b-3 and Sections 162(m), 409A and 422, the regulations issued thereunder or an exception thereto (or disregarded to the extent the Plan cannot be so administered, interpreted or construed); and (ii) in no event shall any member of the Committee or the Company (or its employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Award to satisfy the requirements of Rule 16b-3 and Sections 162(m),  409A and 422.

  

  

  

(g)           The Company shall have the right to deduct from any payment made under this Plan any federal, state, local or foreign income or other taxes required by law to be withheld with respect to such payment. It shall be a condition to the obligation of Alpha to issue Common Shares, Other Alpha Securities or property, other securities or property, or other forms of payment, or any combination thereof, upon exercise, settlement or payment of any Award under this Plan, that the Participant (or any Beneficiary or Person entitled to act) pay to Alpha, upon its demand, such amount as may be required by the Company for the purpose of satisfying any liability to withhold federal, state, local or foreign income or other taxes. If the amount requested is not paid, Alpha may refuse to issue Common Shares, Other Alpha Securities or property, other securities or property, or other forms of payment, or any combination thereof. Notwithstanding anything in this Plan to the contrary, the Committee may, in its discretion, permit an Eligible Person (or any Beneficiary or Person entitled to act) to elect to pay a portion or all of the amount requested by the Company for such taxes with respect to such Award, at such time and in such manner as the Committee shall deem to be appropriate (including, but not limited to, by authorizing Alpha to withhold, or agreeing to surrender to Alpha on or about the date such tax liability is determinable, Common Shares, Other Alpha Securities or property, other securities or property, or other forms of payment, or any combination thereof, owned by such Person or a portion of such forms of payment that would otherwise be distributed, or have been distributed, as the case may be, pursuant to such Award to such Person, having a market value equal to the amount of such taxes); provided, however, that any broker-assisted cashless exercise shall comply with the requirements of Financial Accounting Standards Board, Accounting Standards Codification, Topic 718 and any withholding satisfied through a net-settlement shall be limited to the minimum statutory withholding requirements.

(h)           The expenses of this Plan shall be borne by the Company; provided, however, the Company may recover from a Participant or his or her Beneficiary, heirs or assigns any and all damages, fees, expenses and costs incurred by the Company arising out of any actions taken by a Participant in breach of this Plan or any agreement evidencing such Participant’s Award.

(i)           This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Award under this Plan, and rights to the payment of Awards shall be no greater than the rights of the Company’s general creditors.

(j)           By accepting any Award or other benefit under this Plan, each Participant (and each Person claiming under or through him or her) shall be conclusively deemed to have indicated his or her acceptance and ratification of, and consent to, any action taken under this Plan by the Company, the Board, the Committee or the Designated Administrator (if applicable).

(k)           The appropriate officers of the Company shall cause to be filed any reports, returns or other information regarding Awards under this Plan or any Common Shares issued pursuant to this Plan as may be required by applicable law and any applicable rules of any stock exchange or other market quotation system on which Common Shares are listed.

(l)           The validity, construction, interpretation, administration and effect of this Plan, and of its rules and regulations, and rights relating to this Plan and to Awards granted under this Plan, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware.

(m)           Records of the Company shall be conclusive for all purposes under this Plan or any Award, unless determined by the Committee to be incorrect.

(n)           If any provision of this Plan or any Award is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of this Plan or any Award, but such provision shall be fully severable, and this Plan or Award, as applicable, shall be construed and enforced as if the illegal or invalid provision had never been included in this Plan or Award, as applicable.

(o)           The terms of this Plan shall govern all Awards under this Plan and in no event shall the Committee have the power to grant any Award under this Plan that is contrary to any of the provisions of this Plan.

(p)           For purposes of interpretation of this Plan, the masculine pronoun includes the feminine and the singular includes the plural wherever appropriate. 

 

  

  

  

    Section 19.  Plan Amendment or Suspension.  This Plan may be amended or suspended in whole or in part at any time from time to time by the Committee; provided that no such change or amendment shall be made without stockholder approval if such approval is necessary to qualify for or comply with any tax or regulatory requirement or other applicable law for which the Committee deems it necessary or desirable to qualify or comply. No amendment of this Plan shall adversely affect in a material manner any right of any Participant with respect to any Award previously granted without such Participant’s written consent, except as permitted under Section 14.  Notwithstanding the foregoing or any provision of the Plan to the contrary, the Committee may at any time (without the consent of any Participant) modify, amend or terminate any or all of the provisions of the Plan to the extent necessary to conform the provisions of the Plan with Section 162(m), Section 409A or any other provision of the Code or other applicable law, the regulations issued thereunder or an exception thereto, regardless of whether such modification, amendment or termination of the Plan shall adversely affect the rights of a Participant.

 

    Section 20.  Plan Termination.  This Plan shall terminate upon the earlier of the following dates or events to occur:

(a)           upon the adoption of a resolution of the Board terminating this Plan; or

(b)           the tenth anniversary of the Effective Date.

 

    Section 21.  Effective Date.  This Plan shall be effective on May 19, 2010 (the "Effective Date"), subject to its approval by the stockholders of Alpha; provided that, no Incentive Stock Options shall be exercisable under the Plan unless the stockholders of Alpha approve the Plan within twelve (12) months after the Effective Date of this amendment and restatement; provided, further, no award that is intended to be performance-based within the meaning of Section 162(m) shall be paid prior to stockholder approval of the material terms of the Plan. 

 

    Section 22.  Governing Law.  This Plan and any Award granted under this Plan as well as any determinations made or actions taken under this Plan shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without regard to its choice or conflicts of laws principles.

  

  

  

APPENDIX A

 

 

The following terms shall have the meaning indicated:

 

    “Alpha” shall mean Alpha Natural Resources, Inc., a Delaware corporation.

 

    “Award” shall mean an award of rights to an Eligible Person under this Plan.

 

    “Beneficiary” has the meaning set forth in Section 16.

 

    “Board” shall mean the board of directors of Alpha.

 

    “Code” shall mean the Internal Revenue Code of 1986, as it now exists or may be amended from time to time, and the rules and regulations promulgated thereunder, as they may exist or may be amended from time to time.

 

    “Committee” shall mean the person or persons responsible for administering this Plan. The Board shall constitute the Committee until the Board appoints a Board Committee, after which time the Board Committee shall constitute the Committee, provided, however, that at any time the Board may designate itself as the Committee or designate itself to administer certain of the Committee’s authority under this Plan, including administering certain Awards under this Plan; provided, however, that a Board Committee must approve Awards granted to non-employee directors of the Board. The Board or the Board Committee may designate a Designated Administrator to constitute the Committee or to administer certain of the Committee’s authority under this Plan, including administering certain Awards under this Plan, subject to the right of the Board or the Board Committee, as applicable, to revoke its designation at any time and to make such designation on such terms and conditions as it may determine in its discretion. For purposes of this definition, the “Board Committee” shall mean a committee of the Board designated by the Board to administer this Plan. The Board Committee (i) shall be comprised of not fewer than three directors, (ii) shall meet any applicable requirements under Rule 16b-3, including any requirement that the Board Committee consist of “Non-Employee Directors” (as defined in Rule 16b-3), (iii) shall meet any applicable requirements under Section 162(m), including any requirement that the Board Committee consist of “outside directors” (as defined in Treasury Regulation §1.162-27(e)(3)(i) or any successor regulation), and (iv) shall meet any applicable requirements of any stock exchange or other market quotation system on which Common Shares are listed. For purposes of this definition, the “Designated Administrator” shall mean one or more Company officers and/or directors designated by the Board or a Board Committee to act as a Designated Administrator pursuant to this Plan in compliance with applicable law or rule.

 

    “Company” shall mean Alpha and any parent, affiliate or subsidiary of Alpha, including any affiliates or subsidiaries which become such after adoption of this Plan.

 

    “Common Shares” shall mean shares of common stock, par value $0.01 per share, of Alpha and stock of any other class into which such shares may thereafter be changed.

 

  

  

  

    “Dividend Equivalents” shall mean an Award of cash or other Awards with a Fair Market Value equal to the dividends which would have been paid on the Common Shares underlying an outstanding Award of Restricted Stock Units had such Common Shares been outstanding.

 

    “Effective Date” has the meaning set forth in Section 21.

 

    “Eligible Person(s)” shall mean those persons who are full or part-time employees of the Company or other individuals who perform services for the Company, including, without limitation, directors who are not employees of the Company and consultants and independent contractors who perform services for the Company.

 

    “Exchange Act” shall mean the Securities Exchange Act of 1934, as it now exists or may be amended from time to time, and the rules promulgated thereunder, as they may exist or may be amended from time to time.

 

    “Fair Market Value” shall mean (i) with respect to the Common Shares, as of any date (A) if the Company's Common Shares are listed on any established stock exchange, system or market, the closing market price of the Common Shares as quoted in such exchange, system or market on such date as reported in the Wall Street Journal or such other source as the Committee deems reliable or (B) in the absence of an established market for the Common Shares, as determined in good faith by the Committee or (ii) with respect to property other than Common Shares, the value of such property, as determined by the Committee, in its sole discretion.

 

    “Incentive Stock Option” shall mean a Stock Option that is an incentive stock option as defined in Section 422 of the Code. Incentive Stock Options are subject, in part, to the terms, conditions and restrictions described in Section 6.

 

    “Nonqualified Stock Option” shall mean a Stock Option that is not an incentive stock option as defined in Section 422 of the Code. Nonqualified Stock Options are subject, in part, to the terms, conditions and restrictions described in Section 6.

 

    “Other Alpha Securities” shall mean Alpha securities (which may include, but need not be limited to, unbundled stock units or components thereof, debentures, preferred stock, warrants, securities convertible into Common Shares or other property) other than Common Shares.

 

    “Participant” shall mean an Eligible Person to whom an Award has been granted under this Plan.

 

    “Performance Grant” shall mean an Award subject, in part, to the terms, conditions and restrictions described in Section 9, pursuant to which the recipient may become entitled to receive cash, Common Shares, Other Alpha Securities any other form of award issuable under this Plan payment, or any combination thereof, as determined by the Committee.

 

  

  

  

    “Permitted Transferee” means (i) any person defined as an employee in the Instructions to Registration Statement Form S-8 promulgated by the Securities and Exchange Commission, as such Form may be amended from time to time, which persons include, as of the date of adoption of this Plan, executors, administrators or beneficiaries of the estates of deceased Participants, guardians or members of a committee for incompetent former Participants, or similar persons duly authorized by law to administer the estate or assets of former Participants, and (ii) Participants’ family members who acquire Awards from the Participant other than for value, including through a gift or a domestic relations order. For purposes of this definition, “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests. For purposes of this definition, neither (i) a transfer under a domestic relations order in settlement of marital property rights, nor (ii) a transfer to an entity in which more than fifty percent of the voting or beneficial interests are owned by family members (or the Participant) in exchange for an interest in that entity is considered a transfer for “value”.

 

    “Person” means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind.

 

    “Plan” shall mean this Alpha Natural Resources, Inc. 2010 Long-Term Incentive Plan.

 

    “Restricted Period” has the meaning set forth in subsection 8(b).

 

    “Restricted Stock” shall mean an Award of Common Shares that are issued subject, in part, to the terms, conditions and restrictions described in Section 8.

 

    “Restricted Stock Units” shall mean an Award of the right to receive either (as the Committee determines) Common Shares or cash equal to the Fair Market Value of a Common Share, issued subject, in part, to the terms, conditions and restrictions described in Section 8.

 

    “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act and any successor rule.

 

    “Section 162(m)” shall mean §162(m) of the Code, any rules or regulations promulgated thereunder, as they may exist or may be amended from time to time, or any successor to such section.

 

    “Section 409A” shall mean §409A of the Code, any rules or regulations promulgated thereunder, as they may exist or may be amended from time to time, or any successor to such section.

 

    "Section 422" shall mean §422 of the Code, any rules or regulations promulgated thereunder, as they may exist or may be amended from time to time, or any successor to such section.

 

  

  

  

  "Separation from Service" and "Separate from Service" shall mean the Participant's death, retirement or other termination of employment or service with the Company (including all persons treated as a single employer under Section 414(b) and 414(c) of the Code) that constitutes a "separation from service" (within the meaning of Section 409A).  For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language "at least 50 percent" shall be used instead of "at least 80 percent" in each place it appears in Section 1563(a)(1), (2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language "at least 20 percent" shall be used instead of "at least 80 percent" in each place it appears.

 

     "Specified Employee" means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company as determined in accordance with Section 409A and the procedures established by the Company.

    “Stock Appreciation Right” shall mean an Award of a right to receive (without payment to Alpha) cash, Common Shares, Other Alpha Securities or property, or other forms of payment, or any combination thereof, as determined by the Committee, based on the increase in the value of the number of Common Shares specified in the Stock Appreciation Right. Stock Appreciation Rights are subject, in part, to the terms, conditions and restrictions described in Section 7.

 

    “Stock Option” shall mean an Award of a right to purchase Common Shares. The term Stock Option shall include Nonqualified Stock Options, Incentive Stock Options and Purchased Options.

 

    “Ten Percent Employee” shall mean an employee of Alpha or any parent or subsidiary of Alpha who owns stock representing more than ten percent of the voting power of all classes of stock of Alpha or any parent or subsidiary of Alpha within the meaning of Code Sections 424(e) and (f).

 

    “Treasury Regulation” shall mean a final, proposed or temporary regulation of the Department of Treasury under the Code and any successor regulation.

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