Document:

Exhibit 10.66

 

	
  

  	
  STANDARD
  OFFER, AGREEMENT AND ESCROW

  
	
  INSTRUCTIONS
  FOR PURCHASE OF REAL ESTATE

  
	
  (Non-Residential)

  
	
  AIR
  Commercial Real Estate Association

  
	
   

  
	
   

  	
  June 3, 2005

  
	
  (Date
  for Reference Purposes)

  
			

 

1.             Buyer.

 

1.1   George A. Boukather Trust Dated October 10,
1989, As Amended, (“Buyer”) hereby offers to purchase the real
property, hereinafter described, from the owner thereof (“Seller”) (collectively, the “Parties” or individually, a “Party”), through an escrow (“Escrow”) to close on October 1, 2005 (“Expected
Closing Date”) to be held by Land America Lawyers Title (“Escrow Holder”) whose address is 18551 Von Karman Avenue, Suite 100, Phone No. (800) 800-2582, Facsimile No. (949)
223-5571 upon the terms and
conditions set forth in this agreement (“Agreement”).
Buyer shall have the right to assign Buyer’s rights hereunder, but any such assignment
shall not relieve Buyer of Buyer’s obligations herein unless Seller expressly
releases Buyer.

 

1.2   The term “Date of Agreement”
as used herein shall be the date when by execution and delivery (as defined in
paragraph 20.2) of this document or a subsequent counteroffer thereto, Buyer
and Seller have reached agreement in writing whereby Seller agrees to sell, and
Buyer agrees to purchase, the Property upon terms accepted by both Parties.

 

2.             Property.

 

2.1   The real property (“Property”) that is the subject of this offer consists of
(insert a brief physical description) that approximate 30,598 square foot two tenant industrial building on approximate 62,073 square feet
of land is located in the City of Laguna Hills, County of Orange, State of California,
is commonly known by the street address of 23456 South Pointe Drive, Laguna Hills,
CA 92688 and is legally described as:                                                                                                                                               
                                                                                                                                                                                                                      
(APN: 588-111-06).

 

2.2   If the legal description of the Property is
not complete or is inaccurate, this Agreement shall not be invalid and the
legal description shall be completed or corrected to meet the requirements of Land America Lawyers Title Co., Ryan Huntsman
(“Title Company”), which shall issue the title policy
hereinafter described.

 

2.3   The Property includes, at no additional cost
to Buyer, the permanent improvements thereon, including those items which
pursuant to applicable law are a part of the property, as well as the following
items, if any, owned by Seller and at present located on the Property:
electrical distribution systems (power panel, bus ducting, conduits,
disconnects, lighting fixtures); telephone distribution systems (lines, jacks
and connections only); space heaters; heating, ventilating, air conditioning
equipment (“HVAC”); air lines;
fire sprinkler systems; security and fire detection systems; carpets; window
coverings; wall coverings; and                                                    
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                             (collectively,
the “Improvements”).

 

2.4   The fire sprinkler monitor: o is owned by Seller and included in the Purchase
Price, or o is leased by Seller, and Buyer will need to
negotiate a new lease with the fire monitoring company.

 

2.5   Except as provided in Paragraph 2.3, the
Purchase Price does not include Seller’s personal property, furniture and
furnishings, and                                                                          all
of which shall be removed by Seller prior to Closing.

 

3.             Purchase Price.

 

3.1   The purchase price (“Purchase Price”) to be paid by Buyer to
Seller for the Property shall be $3,925,000, payable as follows:

	
   

  	
   

  	
  (a)   Cash down payment, including the Deposit as
  defined in paragraph 4.3 (or if an all cash transaction, the Purchase Price):

  	
   

  	
  $TBD

  
	
  (Strike
  if not

  applicable)

  	
   

  	
  (b)   Amount of “New Loan” as defined in paragraph
  5.1, if any:

  	
   

  	
  $TBD

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)   Buyer shall take title to the Property
  subject to the following existing deed(s) of

  	
   

  	
   

  
	
   

  	
   

  	
   trust (“Existing
  Deed(s) of Trust”) securing the existing promissory note(s) (“Existing Note(s)”):

  	
   

  	
   

  
	
   

  	
   

  	
  (i)    An Existing Note (“First Note”) with an unpaid principal
  balance as of the Closing of approximately: 

  	
   

  	
  $                                     

  
	
   

  	
   

  	
  Said First Note is payable
  at
  $                                                          per month,

  	
   

  	
   

  
	
  (Strike if not

  applicable)

  	
   

  	
  including interest at the
  rate of
                       %
  per annum until paid (and/or the entire unpaid balance is due on
                                                                  )
  .

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)   An Existing Note (“Second Note”) with an unpaid principal
  balance as of the Closing of approximately: 

  	
   

  	
  $                                     

  
	
   

  	
   

  	
  Said Second Note is
  payable at
  $                                                      per month,

  	
   

  	
   

  
	
   

  	
   

  	
  including interest at the
  rate of
                       %
  per annum until paid (and/or the

  	
   

  	
   

  
	
   

  	
   

  	
  entire unpaid balance is
  due on
                                                                  )
  .

  	
   

  	
   

  
	
  (Strike if not

  	
   

  	
  (d)   Buyer shall give Seller a deed of trust (“Purchase Money Deed of Trust”) on the

  	
   

  	
   

  
	
  Applicable)

  	
   

  	
  Property, to secure the
  promissory note of Buyer to Seller described in paragraph 6

  	
   

  	
   

  
	
   

  	
   

  	
  (“Purchase Money Note”) in the amount of: 

  	
   

  	
  $                                     

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Purchase Price: 

  	
   

  	
  $3,925,000

  

 

3.2   If Buyer is taking title to the Property
subject to, or assuming, an Existing Deed of Trust and such deed of trust
permits the beneficiary to demand payment of fees including, but not limited
to, points, processing fees, and appraisal fees as a condition to the transfer
of the Property, Buyer agrees to pay such fees up to a maximum of 1.5% of the
unpaid principal balance of the applicable Existing Note.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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  2000-AIR Commercial Real Estate Association

  	
  REVISED

  	
  Form OFA-4-8/00E

  
						

 

1

 

4.             Deposits.

 

4.1   o Buyer has delivered to Broker a check in
the sum of $                  
, payable to Escrow Holder, to be held by Broker until both Parties have
executed this Agreement and the executed Agreement has been delivered to Escrow
Holder, or ý  Buyer shall deliver to Escrow Holder a check
in the sum of $20,000 when both Parties have executed this Agreement
and the executed Agreement has been delivered to Escrow Holder. When cashed,
the check shall be deposited into the Escrow’s trust acount to be applied toward
the Purchase Price of the Property at the Closing. Should Buyer and Seller not
enter into an agreement for purchase and sale, Buyer’s check or funds shall,
upon request by Buyer, be promptly returned to Buyer.

 

4.2   Additional deposits:

(a) Within 5 business
days after the Date of Agreement, Buyer shall deposit with Escrow Holder the
additional sum of

$                                                    
to be applied to the Purchase Price at the Closing.

(b) Within 5 business
days after the contingencies discussed in paragraph 9.1 (a) through (k)
are approved or waived, Buyer shall deposit with Escrow Holder the additional
sum of $80,000 to be applied to the Purchase Price at the
Closing.

 

4.3   Escrow Holder shall deposit the funds
deposited with it by Buyer pursuant to paragraphs 4.1 and 4.2 (collectively the
“Deposit”), in a State or Federally
chartered bank in an interest bearing account whose term is appropriate and
consistent with the timing requirements of this transaction. The interest
therefrom shall accrue to the benefit of Buyer, who hereby acknowledges that
there may be penalties or interest forfeitures if the applicable instrument is
redeemed prior to its specified maturity. Buyer’s Federal Tax Identification
Number is                                                            .
NOTE: Such interest bearing account cannot be opened until Buyer’s Federal Tax
Identification Number is provided.

 

5.             Financing Contingency. (Strike if not applicable)

 

5.1   This offer is contingent upon Buyer obtaining
from an insurance company, financial institution or other lender, a commitment
to lend to Buyer a sum equal to at least 50% of the Purchase
Price, at terms reasonably acceptable to Buyer. Such loan (“New Loan”) shall be secured by a first deed
of trust or mortgage on the Property. If this Agreement provides for Seller to
carry back junior financing, then Seller shall have the right to approve the
terms of the New Loan. Seller shall have 7 days from receipt of the commitment
setting forth the proposed terms of the New Loan to approve or disapprove of
such proposed terms. If Seller fails to notify Escrow Holder, in writing, of
the disapproval within said 7 days it shall be conclusively presumed that
Seller has approved the terms of the New Loan.

 

5.2   Buyer hereby agrees to diligently pursue
obtaining the New Loan. If Buyer shall fail
to notify its Broker, Escrow Holder and Seller, in writing within 30 days following the Date of Agreement, that the New Loan
has not been obtained, it shall be conclusively presumed that Buyer has either
obtained said New Loan or has waived this New Loan contingency.

 

5.3   If, after due diligence, Buyer shall notify
its Broker, Escrow Holder and Seller, in writing, within the time specified in
paragraph 5.2 hereof, that Buyer has not obtained said New Loan, this Agreement
shall be terminated, and Buyer shall be entitled to the prompt return of the
Deposit, plus any interest earned thereon, less only Escrow Holder and Title
Company cancellation fees and costs, which Buyer shall pay.

 

6.             Seller Financing (Purchase Money Note). (Strike if not applicable)

 

6.1   The Purchase Money Note shall provide for
interest on unpaid principal at the rate of                        %
per annum, with principal and interest paid as follows:.
                                                            
                        
                                                          
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                         
                                                                                                                             
The Purchase Money Note and Purchase Money Deed of Trust shall be on the current
forms commonly used by Escrow Holder, and be junior and subordinate only to the
Existing Note(s) and/or the New Loan expressly called for by this Agreement.

 

6.2   The Purchase Money Note and/or the Purchase
Money Deed of Trust shall contain provisions regarding the following (see also
paragraph 10.3(b)):

 

(a) Prepayment. Principal may be prepaid in
whole or in part at any time without penalty, at the option of the Buyer.

 

(b) Late Charge. A late charge of 6% shall be
payable with respect to any payment of principal, interest, or other charges,
not made within 10 days after it is due.

 

(c) Due On Sale. In the event the Buyer sells
or transfers title to the Property or any portion thereof, then the Seller may,
at Seller’s option, require the entire unpaid balance of said Note to be paid
in full.

 

6.3   If the Purchase Money Deed of Trust is to be
subordinate to other financing, Escrow Holder shall, at Buyer’s expense prepare
and record on Seller’s behalf a request for notice of default and/or sale with
regard to each mortgage or deed of trust to which it will be subordinate.

 

6.4   WARNING: CALIFORNIA LAW DOES
NOT ALLOW DEFICIENCY JUDGEMENTS ON SELLER FINANCING. IF BUYER ULTIMATELY DEFAULTS
ON THE LOAN, SELLER’S SOLE REMEDY IS TO FORECLOSE ON THE PROPERTY.

 

7.             Real Estate Brokers.

 

7.1   The following real estate broker(s) (“Brokers”) and brokerage relationships exist
in this transaction and are consented to by the Parties (check the applicable
boxes):

 

	
  o

  	
   

  	
  represents Seller exclusively (“Seller’s Broker”);

  
	
   

  	
   

  	
   

  
	
  ý

  	
  Boukather and Associates, Scott Reid

  	
  represents Buyer exclusively (“Buyer’s
  Broker”); or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  represents both Seller and Buyer (“Dual
  Agency”).

  

 

The Parties acknowledge that
Brokers are the procuring cause of this Agreement. See paragraph 24 for
disclosures regarding the nature of a real estate agency relationship. Buyer shall
use the services of Buyer’s Broker exclusively in connection with any and all
negotiations and offers with respect to the Property for a period of 1 year
from the Date of Agreement.

 

7.2   Buyer and Seller each represent and warrant to
the other that he/she/it has had no dealings with any person, firm, broker or
finder in connection with the negotiation of this Agreement and/or the
consummation of the purchase and sale contemplated herein, other than the
Brokers named in paragraph 7.1, and no broker or other person, firm or entity,
other than said Brokers is/are entitled to any commission or finder’s fee in
connection with this transaction as the result of any dealings or acts of such
Party. Buyer and Seller do each hereby agree to indemnify, defend, protect and
hold the other harmless from and against any costs, expenses or liability for
compensation, commission or charges which may be claimed by any broker, finder
or other similar party, other than said named Brokers by reason of any dealings
or act of the indemnifying Party.

 

8.             Escrow and Closing.

 

8.1   Upon acceptance hereof by Seller, this
Agreement, including any counter-offers incorporated herein by the Parties,
shall constitute not only the agreement of purchase and sale between Buyer and
Seller, but also instructions to Escrow Holder for the consummation of the
Agreement through the Escrow. Escrow Holder shall not prepare any further
escrow instructions restating or amending the Agreement unless specifically so
instructed by the Parties or a Broker herein. Subject to the reasonable
approval of the Parties, Escrow Holder may, however, include its standard
general escrow provisions.

 

8.2   As soon as practical after the receipt of this
Agreement and any relevant counteroffers, Escrow Holder shall ascertain the
Date of Agreement as defined in paragraphs 1.2 and 20.2 and advise the Parties
and Brokers, in writing, of the date ascertained.

 

8.3   Escrow Holder is hereby authorized and
instructed to conduct the Escrow in accordance with this Agreement, applicable
law and custom and practice of the community in which Escrow Holder is located,
including any reporting requirements of the Internal Revenue Code. In the event
of a conflict between the law of the state where the Property is located and
the law of the state where the Escrow Holder is located, the law of the state
where the Property is located shall prevail.

 

8.4   Subject to satisfaction of the contingencies
herein described, Escrow Holder shall close this escrow (the “Closing”) by recording a general warranty
deed (a grant deed in California) and the other documents required to be
recorded, and by disbursing the funds and documents in accordance with this
Agreement.

 

8.5   Buyer and Seller shall each pay one-half of
the Escrow Holder’s charges and Seller shall pay the usual recording fees and
any required documentary transfer taxes. Seller shall pay the premium for a
standard coverage owner’s or joint protection policy of title insurance.

 

8.6   Escrow Holder shall verify that all of Buyer’s
contingencies have been satisfied or waived prior to Closing. The matters
contained in paragraphs

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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2

 

9.1 subparagraphs (b), (c),
(d), (e), (g), (i), (n), and (o), 9.4, 9.5, 12, 13, 14, 16, 18, 20, 21, 22, and
24 are, however, matters of agreement between the Parties only and are not
instructions to Escrow Holder.

 

8.7   If this transaction is terminated for
non-satisfaction and non-waiver of a Buyer’s Contingency, as defined in
paragraph 9.2, then neither of the Parties shall thereafter have any liability
to the other under this Agreement, except to the extent of a breach of any
affirmative covenant or warranty in this Agreement. In the event of such
termination, Buyer shall be promptly refunded all funds deposited by Buyer with
Escrow Holder, less only Title Company and Escrow Holder cancellation fees and
costs, all of which shall be Buyer’s obligation.

 

8.8   The Closing shall occur on the Expected
Closing Date, or as soon thereafter as the Escrow is in condition for Closing;
provided, however, that if the Closing does not occur by the Expected Closing
Date and said Date is not extended by mutual instructions of the Parties, a
Party not then in default under this Agreement may notify the other Party. Escrow
Holder, and Brokers, in writing that, unless the Closing occurs within 5
business days following said notice, the Escrow shall be deemed terminated
without further notice or instructions.

 

8.9   Except as otherwise provided herein, the
termination of Escrow shall not relieve or release either Party from any
obligation to pay Escrow Holder’s fees and costs or constitute a waiver,
release or discharge of any breach or default that has occurred in the
performance of the obligations, agreements, covenants or warranties contained
therein.

 

8.10 If this Escrow is terminated for any reason
other than Seller’s breach or default, then at Seller’s request, and as a
condition to the return of Buyer’s deposit, Buyer shall within 5 days after
written request deliver to Seller, at no charge, copies of all surveys,
engineering studies, soil reports, maps, master plans, feasibility studies and
other similar items prepared by or for Buyer that pertain to the Property.
Provided, however, that Buyer shall not be required to deliver any such report
if the written contract which Buyer entered into with the consultant who
prepared such report specifically forbids the dissemination of the report to
others.

 

9.            Contingencies to Closing.

 

9.1   The Closing of this transaction is contingent
upon the satisfaction or waiver of the following contingencies. IF BUYER FAILS TO NOTIFY ESCROW HOLDER, IN WRITING, OF
THE DISAPPROVAL OF ANY OF SAID CONTINGENCIES WITHIN THE TIME SPECIFIED THEREIN,
IT SHALL BE CONCLUSIVELY PRESUMED THAT BUYER HAS APPROVED SUCH ITEM, MATTER OR
DOCUMENT. Buyer’s conditional approval shall constitute disapproval,
unless provision is made by the Seller within the time specified therefore by
the Buyer in such conditional approval or by this Agreement, whichever is later,
for the satisfaction of the condition imposed by the Buyer. Escrow Holder shall
promptly provide all Parties with copies of any written disapproval or
conditional approval which it receives. With regard to subparagraphs (a) through
(l) the pre-printed time periods shall control unless a different number of
days is inserted in the spaces provided.

 

(a) Disclosure. Seller shall make to Buyer,
through escrow, all of the applicable disclosures required by law (See AIR
Commercial Real Estate Association (“AIR”)
standard form entitled “Seller’s Mandatory Disclosure Statement”) and provide
Buyer with a completed Property Information Sheet (“Property Information Sheet”) concerning the Property, duly
executed by or on behalf of Seller in the current form or equivalent to that
published by the AIR within 10 or                days
following the Date of Agreement. Buyer has 10 days from the receipt of said
disclosures to approve or disapprove the matters disclosed.

 

(b) Physical Inspection. Buyer has 10 or 15 business days from the receipt of the Property
Information Sheet or the Date of Agreement, whichever is later, to satisfy
itself with regard to the physical aspects and size of the Property.

 

(c) Hazardous Substance Conditions Report.
Buyer has 30 or 15
business days from the receipt of
the Property Information Sheet or the Date of Agreement, whichever is later, to
satisfy itself with regard to the environmental aspects of the Property. Seller
recommends that Buyer obtain a Hazardous Substance Conditions Report concerning
the Property and relevant adjoining properties. Any such report shall be paid
for by Buyer. A “Hazardous Substance”
for purposes of this Agreement is defined as any substance whose nature and/or
quantity of existence, use, manufacture, disposal or effect, render it subject
to Federal, state or local regulation, investigation, remediation or removal as
potentially injurious to public health or welfare. A “Hazardous Substance Condition” for purposes
of this Agreement is defined as the existence on, under or relevantly adjacent
to the Property of a Hazardous Substance that would require remediation and/or
removal under applicable Federal, state or local law.

 

(d) Soil Inspection. Buyer has 30 or 15 business days from the receipt of the Property
Information Sheet or the Date of Agreement, whichever is later, to satisfy
itself with regard to the condition of the soils on the Property. Seller
recommends that Buyer obtain a soil test report. Any such report shall be paid
for by Buyer. Seller shall provide Buyer copies of any soils report that Seller
may have within 10 days of the Date of Agreement.

 

(e) Governmental Approvals. Buyer has 30 or 15 business days from the Date of Agreement to satisfy
itself with regard to approvals and permits from governmental agencies or
departments which have or may have jurisdiction over the Property and which
Buyer deems necessary or desirable in connection with its intended use of the
Property, including, but not limited to, permits and approvals required with
respect to zoning, planning, building and safety, fire, police, handicapped and
Americans with Disabilities Act requirements, transportation and environmental
matters.

 

(f) Conditions of Title. Escrow Holder shall
cause a current commitment for title insurance (“Title Commitment”) concerning the Property issued by the Title
Company, as well as legible copies of all documents referred to in the Title
Commitment (“Underlying Documents”)
to be delivered to Buyer within 10 or                days
following the Date of Agreement. Buyer has 10 days from the receipt of the
Title Commitment and Underlying Documents to satisfy itself with regard to the
condition of title. The disapproval of Buyer of any monetary encumbrance, which
by the terms of this Agreement is not to remain against the Property after the
Closing, shall not be considered a failure of this contingency, as Seller shall
have the obligation, at Seller’s expense, to satisfy and remove such
disapproved monetary encumbrance at or before the Closing.

 

(g) Survey. Buyer has 30 or 15 business days from the receipt of the Title Commitment
and Underlying Documents to satisfy itself with regard to any ALTA title
supplement based upon a survey prepared to American Land Title Association (“ALTA”) standards for an owner’s policy by a
licensed surveyor, showing the legal description and boundary lines of the
Property, any easements of record, and any improvements, poles, structures and
things located within 10 feet of either side of the Property boundary lines.
Any such survey shall be prepared at Buyer’s direction and expense. If Buyer
has obtained a survey and approved the ALTA title supplement, Buyer may elect
within the period allowed for Buyer’s approval of a survey to have an ALTA
extended coverage owner’s form of title policy, in which event Buyer shall pay
any additional premium attributable thereto.

 

(h) Existing Leases and Tenancy Statements.
Seller shall within 10 or                days
of the Date of Agreement provide both Buyer and Escrow Holder with legible
copies of all leases, subleases or rental arrangements (collectively, “Existing Leases”) affecting the Property,
and with a tenancy statement (“Estoppel
Certificate”) in the latest form or equivalent to that published by
the AIR, executed by Seller and/or each tenant and subtenant of the Property.
Seller shall use its best efforts to have each tenant complete and execute an
Estoppel Certificate. If any tenant fails or refuses to provide an Estoppel
Certificate then Seller shall complete and execute an Estoppel Certificate for
that tenancy. Buyer has 10 days from the receipt of said Existing Leases and
Estoppel Certificates to satisfy itself with regard to the Existing Leases and
any other tenancy issues.

 

(i) Other Agreements. Seller shall within 10
or                days
of the Date of Agreement provide Buyer with legible copies of all other
agreements (“Other Agreements”)
known to Seller that will affect the Property after Closing. Buyer has 10 days
from the receipt of said Other Agreements to satisfy itself with regard to such
Agreements.

 

(j) Financing. If paragraph 5 hereof dealing
with a financing contingency has not been stricken, the satisfaction or waiver
of such New Loan contingency.

 

(k) Existing Notes. If paragraph 3.1(c) has
not been stricken, Seller shall within 10 or                days
of the Date of Agreement provide Buyer with legible copies of the Existing
Notes, Existing Deeds of Trust and related agreements (collectively, “Loan Documents”) to which the Property will
remain subject after the Closing. Escrow Holder shall promptly request from the
holders of the Existing Notes a beneficiary statement (“Beneficiary Statement”) confirming: (1) the
amount of the unpaid principal balance, the current interest rate, and the date
to which interest is paid, and (2) the nature and amount of any impounds
held by the beneficiary in connection with such loan. Buyer has 10 or 30 days from the receipt of the Loan Documents and Beneficiary Statements
to satisfy itself with regard to such financing. Buyer’s obligation to close is
conditioned upon Buyer being able to purchase the Property without acceleration
or change in the terms of any Existing Notes or charges to Buyer except as
otherwise provided in this Agreement or approved by Buyer, provided, however,
Buyer shall pay the transfer fee referred to in paragraph 3.2 hereof.

 

(l) Personal Property. In the event that any
personal property is included in the Purchase Price, Buyer has 10 or       days
from the Date of Agreement to satisfy itself with regard to the title condition
of such personal property. Seller recommends that Buyer obtain a UCC-1 report.
Any such report shall be paid for by Buyer. Seller shall provide Buyer copies
of any liens or encumbrances affecting such personal property that it is aware
of within 10 or                days
of the Date of Agreement.

 

(m) Destruction, Damage or Loss. There shall
not have occurred prior to the Closing, a destruction of, or damage or loss to,
the Property or any portion thereof, from any cause whatsoever, which would
cost more than $10,000.00 to repair or cure. If the cost of repair or cure is
$10,000.00 or less, Seller shall repair or cure the loss prior to the Closing.
Buyer shall have the option, within 10 days after receipt of written notice of
a loss costing more than $10,000.00 to repair or cure, to either terminate this
transaction or to purchase the Property notwithstanding such loss, but without
deduction or offset against the Purchase Price. If the cost to repair or cure
is more than $10,000.00, and Buyer does not elect to terminate this
transaction, Buyer shall be entitled to any insurance proceeds applicable to
such loss. Unless otherwise notified in writing, Escrow Holder shall assume no
such destruction, damage or loss has occurred prior to Closing.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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3

 

(n) Material Change. Buyer shall have 10 days
following receipt of written notice of a Material Change within which to
satisfy itself with regard to such change. “Material
Change” shall mean a change in the status of the use, occupancy,
tenants, or condition of the Property that occurs after the date of this offer
and prior to the Closing. Unless otherwise notified in writing, Escrow Holder
shall assume that no Material Change has occurred prior to the Closing.

 

(o) Seller Performance. The delivery of all
documents and the due performance by Seller of each and every undertaking and
agreement to be performed by Seller under this Agreement.

 

(p) Warranties. That each representation and
warranty of Seller herein be true and correct as of the Closing. Escrow Holder
shall assume that this condition has been satisfied unless notified to the
contrary in writing by any Party prior to the Closing.

 

(q) Brokerage Fee. Payment at the Closing of
such brokerage fee as is specified in this Agreement or later written
instructions to Escrow Holder executed by Seller and Brokers (“Brokerage Fee”). It is agreed by the
Parties and Escrow Holder that Brokers are a third party beneficiary of this Agreement
insofar as the Brokerage Fee is concerned, and that no change shall be made
with respect to the payment of the Brokerage Fee specified in this Agreement,
without the written consent of Brokers.

 

9.2   All of the contingencies specified in
subparagraphs (a) through (p) of paragraph 9.1 are for the benefit of, and
may be waived by, Buyer, and may be elsewhere herein referred to as “Buyer Contingencies.”

 

9.3   If any Buyer’s Contingency or any other matter
subject to Buyer’s approval is disapproved as provided for herein in a timely
manner (“Disapproved Item”),
Seller shall have the right within 10 days following the receipt of notice of
Buyer’s disapproval to elect to cure such Disapproved Item prior to the
Expected Closing Date (“Seller’s Election”).
Seller’s failure to give to Buyer within such period, written notice of Seller’s
commitment to cure such Disapproved Item on or before the Expected Closing Date
shall be conclusively presumed to be Seller’s Election not to cure such
Disapproved Item. If Seller elects, either by written notice or failure to give
written notice, not to cure a Disapproved Item, Buyer shall have the election,
within 10 days after Seller’s Election to either accept title to the Property
subject to such Disapproved Item, or to terminate this transaction. Buyer’s
failure to notify Seller in writing of Buyer’s election to accept title to the
Property subject to the Disapproved Item without deduction or offset shall
constitute Buyer’s election to terminate this transaction. Unless expressly
provided otherwise herein, Seller’s right to cure shall not apply to the
remediation of Hazardous Substance Conditions or to the Financing Contingency.
Unless the Parties mutually instruct otherwise, if the time periods for the
satisfaction of contingencies or for Seller’s and Buyer’s said Elections would
expire on a date after the Expected Closing Date, the Expected Closing Date
shall be deemed extended for 3 business days following the expiration of: (a) the
applicable contingency period(s), (b) the period within which the Seller
may elect to cure the Disapproved Item, or (c) if Seller elects not to
cure, the period within which Buyer may elect to proceed with this transaction,
whichever is later.

 

9.4   Buyer understands and agrees that until such
time as all Buyer’s Contingencies have been satisfied or waived, Seller and/or
its agents may solicit, entertain and/or accept back-up offers to purchase the
subject Property.

 

9.5   The Parties acknowledge that extensive local,
state and Federal legislation establish broad liability upon owners and/or
users of real property for the investigation and remediation of Hazardous
Substances. The determination of the existence of a Hazardous Substance
Condition and the evaluation of the impact of such a condition are highly
technical and beyond the expertise of Brokers. The Parties acknowledge that
they have been advised by Brokers to consult their own technical and legal
experts with respect to the possible presence of Hazardous Substances on this
Property or adjoining properties, and Buyer and Seller are not relying upon any
investigation by or statement of Brokers with respect thereto. The Parties
hereby assume all responsibility for the impact of such Hazardous Substances
upon their respective interests herein.

 

10.          Documents Required at or before Closing:

 

10.1    Five days prior to the Closing date Escrow
Holder shall obtain an updated Title Commitment concerning the Property from
the Title Company and provide copies thereof to each of the Parties.

 

10.2    Seller shall deliver to Escrow Holder in time
for delivery to Buyer at the Closing:

 

(a) Grant or general
warranty deed, duly executed and in recordable form, conveying fee title to the
Property to Buyer.

 

(b) If applicable, the
Beneficiary Statements concerning Existing Note(s).

 

(c) If applicable, the
Existing Leases and Other Agreements together with duly executed assignments
thereof by Seller and Buyer. The assignment of Existing Leases shall be on the
most recent Assignment and Assumption of Lessor’s Interest in Lease form published
by the AIR or its equivalent.

 

(d) If applicable,
Estoppel Certificates executed by Seller and/or the tenant(s) of the Property.

 

(e) An affidavit
executed by Seller to the effect that Seller is not a “foreign person” within
the meaning of Internal Revenue Code Section 1445 or successor statutes.
If Seller does not provide such affidavit in form reasonably satisfactory to
Buyer at least 3 business days prior to the Closing, Escrow Holder shall at the
Closing deduct from Seller’s proceeds and remit to Internal Revenue Service
such sum as is required by applicable Federal law with respect to purchases
from foreign sellers.

 

(f) If the Property is
located in California, an affidavit executed by Seller to the effect that
Seller is not a ‘‘nonresident” within the meaning of California Revenue and Tax
Code Section 18662 or successor statutes. If Seller does not provide such
affidavit in form reasonably satisfactory to Buyer at least 3 business days
prior to the Closing, Escrow Holder shall at the Closing deduct from Seller’s
proceeds and remit to the Franchise Tax Board such sum as is required by such
statute.

 

(g) If applicable, a
bill of sale, duly executed, conveying title to any included personal property
to Buyer.

 

(h) If the Seller is a
corporation, a duly executed corporate resolution authorizing the execution of
this Agreement and the sale of the Property.

 

10.3    Buyer shall deliver to Seller through Escrow:

 

(a) The cash portion of
the Purchase Price and such additional sums as are required of Buyer under this
Agreement shall be deposited by Buyer with Escrow Holder, by federal funds wire
transfer, or any other method acceptable to Escrow Holder as immediately
collectable funds, no later than 2:00 P.M. on the business day prior to
the Expected Closing Date.

 

(b) If a Purchase Money
Note and Purchase Money Deed of Trust are called for by this Agreement, the
duly executed originals of those documents, the Purchase Money Deed of Trust
being in recordable form, together with evidence of fire insurance on the improvements
in the amount of the full replacement cost naming Seller as a mortgage loss
payee, and a real estate tax service contract (at Buyer’s expense), assuring
Seller of notice of the status of payment of real property taxes during the
life of the Purchase Money Note.

 

(c) The Assignment and
Assumption of Lessor’s interest in Lease form specified in paragraph 10.2(c) above,
duly executed by Buyer.

 

(d) Assumptions duly
executed by Buyer of the obligations of Seller that accrue after Closing under
any Other Agreements.

 

(e) If applicable, a
written assumption duly executed by Buyer of the loan documents with respect to
Existing Notes.

 

(f) If the Buyer is a
corporation, a duly executed corporate resolution authorizing the execution of
this Agreement and the purchase of the Property.

 

10.4    At Closing, Escrow Holder shall cause to be
issued to Buyer a standard coverage (or ALTA extended, if elected pursuant to
9.1(g)) owner’s form policy of title insurance effective as of the Closing,
issued by the Title Company in the full amount of the Purchase Price, insuring
title to the Property vested in Buyer, subject only to the exceptions approved
by Buyer. In the event there is a Purchase Money Deed of Trust in this
transaction, the policy of title insurance shall be a joint protection policy
insuring both Buyer and Seller.

 

IMPORTANT:
IN A PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAY BE ADVISABLE TO OBTAIN
TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE
PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE
PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN
ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING.

 

11.          Prorations and Adjustments.

 

11.1    Taxes. Applicable real property taxes and special
assessment bonds shall be prorated through Escrow as of the date of the
Closing, based upon the latest tax bill available. The Parties agree to prorate
as of the Closing any taxes assessed against the Property by supplemental bill
levied by reason of events occurring prior to the Closing. Payment of the
prorated amount shall be made promptly in cash upon receipt of a copy of any supplemental
bill.

 

11.2    Insurance. WARNING:
Any insurance which Seller maintained will terminate on the Closing. Buyer is
advised to obtain appropriate insurance to cover the Property.

 

11.3    Rentals, Interest and
Expenses. Scheduled rentals,
interest on Existing Notes, utilities, and operating expenses shall be prorated
as of the date of Closing. The Parties agree to promptly adjust between
themselves outside of Escrow any rents received after the Closing.

 

11.4    Security Deposit. Security Deposits held by Seller shall be
given to Buyer as a credit to the cash required of Buyer at the Closing.

 

11.5    Post Closing Matters. Any item to be prorated that is not
determined or determinable at the Closing shall be promptly adjusted by the
Parties by appropriate cash payment outside of the Escrow when the amount due
is determined.

 

11.6    Variations in Existing Note
Balances. In the event that
Buyer is purchasing the Property subject to an Existing Deed of Trust(s), and
in the event that a Beneficiary Statement as to the applicable Existing Note(s)
discloses that the unpaid principal balance of such Existing Note(s) at the
Closing will be more or less than the amount set forth in paragraph 3.1(c) hereof
(“Existing Note Variation”), then
the Purchase Money Note(s) shall be reduced or increased by an amount equal to
such Existing Note Variation. If there is to be no Purchase Money Note, the
cash required at the Closing per paragraph 3.1(a) shall be reduced or
increased by the amount of such Existing Note Variation.

 

11.7    Variations in New Loan
Balance. In the event Buyer
is obtaining a New Loan and the amount ultimately obtained exceeds the amount
set forth in paragraph 5.1, then the amount of the Purchase Money Note, if any,
shall be reduced by the amount of such excess.

 

12.          Representation and Warranties of Seller and Disclaimers.

 

12.1    Seller’s warranties and representations shall survive
the Closing and delivery of the deed for a period of 3 years, and, are true,
material and

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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relied upon by Buyer and
Brokers in all respects. Seller hereby makes the following warranties and
representations to Buyer and Brokers:

 

(a) Authority of Seller. Seller is the owner
of the Property and/or has the full right, power and authority to sell, convey
and transfer the Property to Buyer as provided herein, and to perform Seller’s
obligations hereunder.

 

(b) Maintenance During Escrow and Equipment Condition At
Closing. Except as otherwise provided in paragraph

9.1(m) hereof, Seller shall maintain the Property until the Closing in its
present condition, ordinary wear and tear excepted. The HVAC, plumbing,
elevators, loading doors and electrical systems shall be in good operating
order and condition at the time of Closing.

 

(c) Hazardous Substances/Storage Tanks. Seller
has no knowledge, except as otherwise disclosed to Buyer in writing, of the
existence or prior existence on the Property of any Hazardous Substance, nor of
the existence or prior existence of any above or below ground storage tank.

 

(d) Compliance. Seller has no knowledge of any
aspect or condition of the Property which violates applicable laws, rules,
regulations, codes or covenants, conditions or restrictions, or of improvements
or alterations made to the Property without a permit where one was required, or
of any unfulfilled order or directive of any applicable governmental agency or
casualty insurance company requiring any investigation, remediation, repair,
maintenance or improvement be performed on the Property.

 

(e) Changes in Agreements. Prior to the
Closing, Seller will not violate or modify any Existing Lease or Other
Agreement, or create any new leases or other agreements affecting the Property,
without Buyer’s written approval, which approval will not be unreasonably
withheld.

 

(f) Possessory Rights. Seller has no knowledge
that anyone will, at the Closing, have any right to possession of the Property,
except as disclosed by this Agreement or otherwise in writing to Buyer.

 

(g) Mechanics’ Liens. There are no unsatisfied
mechanics’ or materialmens’ lien rights concerning the Property.

 

(h) Actions, Suits or Proceedings. Seller has
no knowledge of any actions, suits or proceedings pending or threatened before
any commission, board, bureau, agency, arbitrator, court or tribunal that would
affect the Property or the right to occupy or utilize same.

 

(i) Notice of Changes. Seller will promptly
notify Buyer and Brokers in writing of any Material Change (see paragraph
9.1(n)) affecting the Property that becomes known to Seller prior to the
Closing.

 

(j) No Tenant Bankruptcy Proceedings. Seller
has no notice or knowledge that any tenant of the Property is the subject of a
bankruptcy or insolvency proceeding.

 

(k) No Seller Bankruptcy Proceedings. Seller
is not the subject of a bankruptcy, insolvency or probate proceeding.

 

(l) Personal Property. Seller has no knowledge
that anyone will, at the Closing, have any right to possession of any personal
property included in the Purchase Price nor knowledge of any liens or
encumbrances affecting such personal property, except as disclosed by this
Agreement or otherwise in writing to Buyer.

 

12.2 Buyer hereby
acknowledges that, except as otherwise stated in this Agreement, Buyer is
purchasing the Property in its existing condition and will, by the time called
for herein, make or have waived all inspections of the Property Buyer believes
are necessary to protect its own interest in, and its contemplated use of, the
Property. The Parties acknowledge that, except as otherwise stated in this
Agreement, no representations, inducements, promises, agreements, assurances,
oral or written, concerning the Property, or any aspect of the occupational
safety and health laws, Hazardous Substance laws, or any other act, ordinance
or law, have been made by either Party or Brokers, or relied upon by either
Party hereto.

 

12.3 In the event that
Buyer learns that a Seller representation or warranty might be untrue prior to
the Closing, and Buyer elects to purchase the Property anyway then, and in that
event, Buyer waives any right that it may have to bring an action or proceeding
against Seller or Brokers regarding said representation or warranty.

 

12.4 Any environmental
reports, soils reports, surveys, and other similar documents which were
prepared by third party consultants and provided to Buyer by Seller or Seller’s
representatives, have been delivered as an accommodation to Buyer and without
any representation or warranty as to the sufficiency, accuracy, completeness,
and/or validity of said documents, all of which Buyer relies on at its own
risk. Seller believes said documents to be accurate, but Buyer is advised to
retain appropriate consultants to review said documents and investigate the
Property.

 

13.          Possession.

 

Possession of the Property
shall be given to Buyer at the Closing subject to the rights of tenants under
Existing Leases.

 

14.          Buyer’s Entry.

 

At any time during the Escrow
period, Buyer, and its agents and representatives, shall have the right at
reasonable times and subject to rights of tenants, to enter upon the Property
for the purpose of making inspections and tests specified in this Agreement. No
destructive testing shall be conducted, however, without Seller’s prior
approval which shall not be unreasonably withheld. Following any such entry or
work, unless otherwise directed in writing by Seller, Buyer shall return the
Property to the condition it was in prior to such entry or work, including the
recompaction or removal of any disrupted soil or material as Seller may
reasonably direct. All such inspections and tests and any other work conducted
or materials furnished with respect to the Property by or for Buyer shall be
paid for by Buyer as and when due and Buyer shall indemnify, defend, protect
and hold harmless Seller and the Property of and from any and all claims,
liabilities, losses, expenses (including reasonable attorneys’ fees), damages,
including those for injury to person or property, arising out of or relating to
any such work or materials or the acts or omissions of Buyer, its agents or
employees in connection therewith.

 

15.          Further Documents and Assurances.

 

The Parties shall each,
diligently and in good faith, undertake all actions and procedures reasonably
required to place the Escrow in condition for Closing as and when required by
this Agreement. The Parties agree to provide all further information, and to
execute and deliver all further documents, reasonably required by Escrow Holder
or the Title Company.

 

16.          Attorneys’ Fees.

 

If any Party or Broker brings
an action or proceeding (including arbitration) involving the Property whether
founded in tort, contract or equity, or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not
such action or proceeding is pursued to decision or judgment. The term “Prevailing Party” shall include, without
limitation, a Party or Broker who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party or Broker of its claim or defense. The attorneys’
fees award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys’ fees reasonably incurred.

 

17.          Prior Agreements/Amendments.

 

17.1    This Agreement supersedes any and all prior
agreements between Seller and Buyer regarding the Property.

 

17.2    Amendments to this Agreement are effective
only if made in writing and executed by Buyer and Seller.

 

18.          Broker’s Rights.

 

18.1 If this sale is not
consummated due to the default of either the Buyer or Seller, the defaulting
Party shall be liable to and shall pay to Brokers the Brokerage Fee that
Brokers would have received had the sale been consummated. If Buyer is the
defaulting party, payment of said Brokerage Fee is in addition to any
obligation with respect to liquidated or other damages.

 

18.2 Upon the Closing,
Brokers are authorized to publicize the facts of this transaction.

 

19.          Notices.

 

19.1 Whenever any Party,
Escrow Holder or Brokers herein shall desire to give or serve any notice,
demand, request, approval, disapproval or other communication, each such
communication shall be in writing and shall be delivered personally, by messenger
or by mail, postage prepaid, to the address set forth in this Agreement or by
facsimile transmission.

 

19.2 Service of any such
communication shall be deemed made on the date of actual receipt if personally
delivered. Any such communication sent by regular mail shall be deemed given 48
hours after the same is mailed. Communications sent by United States Express
Mail or overnight courier that guarantee next day delivery shall be deemed
delivered 24 hours after delivery of the same to the Postal Service or courier.
Communications transmitted by facsimile transmission shall be deemed delivered
upon telephonic confirmation of receipt (confirmation report from fax machine
is sufficient), provided a copy is also delivered via delivery or mail. If such
communication is received on a Saturday, Sunday or legal holiday, it shall be
deemed received on the next business day.

 

19.3 Any Party or Broker
hereto may from time to time, by notice in writing, designate a different
address to which, or a different person or additional persons to whom, all
communications are thereafter to be made.

 

20.          Duration of Offer.

 

20.1 If this offer is
not accepted by Seller on or before 5:00 P.M. according to the time
standard applicable to the city of Laguna Hills, California on
the date of June 8, 2005, it shall be deemed automatically revoked.

 

20.2 The acceptance of
this offer, or of any subsequent counteroffer hereto, that creates an agreement
between the Parties as described in paragraph 1.2, shall be deemed made upon
delivery to the other Party or either Broker herein of a duly executed writing
unconditionally accepting the last outstanding offer or counteroffer.

 

21.          LIQUIDATED DAMAGES. (This Liquidated Damages paragraph is applicable only
if initialed by both Parties).

 

THE PARTIES AGREE THAT IT
WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT,
THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR
WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYER’S BENEFIT, BUYER BREACHES
THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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DAMAGES IN THE AMOUNT OF $100,000. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY
FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY
CHARGES SHALL BE PAID BY SELLER.

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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22.          ARBITRATION OF DISPUTES. (This Arbitration of
Disputes paragraph is applicable only if initialed by both Parties.)

 

22.1         ANY CONTROVERSY AS TO WHETHER SELLER IS
ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF
DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL
RULES OF THE AMERICAN ARBITRATION ASSOCIATION (“COMMERCIAL RULES”). ARBITRATION HEARINGS SHALL BE HELD IN THE
COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED
BY 3 ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST 5
YEARS OF FULL TIME EXPERIENCE IN BOTH THE AREA WHERE THE PROPERTY IS LOCATED
AND THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT. THEY SHALL
BE APPOINTED UNDER THE COMMERCIAL RULES. THE ARBITRATORS SHALL HEAR AND DETERMINE
SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW, THE INTENTION OF THE
PARTIES AS EXPRESSED IN THIS AGREEMENT AND ANY AMENDMENTS THERETO, AND UPON THE
EVIDENCE PRODUCED AT AN ARBITRATION HEARING. PRE-ARBITRATION DISCOVERY SHALL BE
PERMITTED IN ACCORDANCE WITH THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO
ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEAST 2 OF THE 3
ARBITRATORS, BE RENDERED WITHIN 30 DAYS AFTER THE CONCLUSION OF THE HEARING,
AND MAY INCLUDE ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY PER
PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF
COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF
THE ARBITRATION HEARING TO APPEAR THEREAT.

 

22.2         BUYER’S RESORT TO OR PARTICIPATION IN SUCH
ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION
BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE
ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATED DAMAGES, IN WHICH
EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES
AND/OR SPECIFIC PERFORMANCE.

 

22.3         NOTICE: BY INITIALING IN THE SPACE BELOW YOU
ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION
OF DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE
SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE
TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE
COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

 

WE HAVE READ AND UNDERSTAND
THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED
IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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23.          Miscellaneous.

 

23.1         Binding Effect. This Agreement shall be binding on the Parties
without regard to whether or not paragraphs 21 and 22 are initialed by both of
the Parties. Paragraphs 21 and 22 are each incorporated into this Agreement
only if initialed by both Parties at the time that the Agreement is executed.

 

23.2         Applicable Law. This Agreement shall be governed by, and
paragraph 22.3 is amended to refer to, the laws of the state in which the Property
is located.

 

23.3         Time of Essence. Time is of the essence of this Agreement.

 

23.4         Counterparts. This Agreement may be executed by Buyer and
Seller in counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument. Escrow Holder,
after verifying that the counterparts are identical except for the signatures,
is authorized and instructed to combine the signed signature pages on one
of the counterparts, which shall then constitute the Agreement.

 

23.5         Waiver of Jury Trial.         THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS
AGREEMENT.

 

23.6         Conflict. Any conflict between the printed provisions of
this Agreement and the typewritten or handwritten provisions shall be controlled
by the typewritten or handwritten provisions.

 

24.          Disclosures Regarding The
Nature of a Real Estate Agency Relationship.

 

24.1 The Parties and Brokers agree that their
relationship(s) shall be governed by the principles set forth in the applicable
sections of the California Civil Code, as summarized in paragraph 24.2.

 

24.2 When entering into a discussion with a real
estate agent regarding a real estate transaction, a Buyer or Seller should from
the outset understand what type of agency relationship or representation it has
with the agent or agents in the transaction. Buyer and Seller acknowledge being
advised by the Brokers in this transaction, as follows:

 

(a) Seller’s Agent. A Seller’s agent under a
listing agreement with the Seller acts as the agent for the Seller only. A
Seller’s agent or subagent has the following affirmative obligations: (1) To the Seller: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyer and the Seller: a. Diligent
exercise of reasonable skills and care in performance of the agent’s duties. b.
A duty of honest and fair dealing and good faith. c. A duty to disclose all
facts known to the agent materially affecting the value or desirability of the
property that are not known to, or within the diligent attention and
observation of, the Parties. An agent is not obligated to reveal to either
Party any confidential information obtained from the other Party which does not
involve the affirmative duties set forth above.

 

(b) Buyer’s Agent. A selling agent can, with a
Buyer’s consent, agree to act as agent for the Buyer only. In these situations,
the agent is not the Seller’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Seller.
An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller: a. Diligent
exercise of reasonable skills and care in performance of the agent’s duties. b.
A duty of honest and fair dealing and good faith. c. A duty to disclose all
facts known to the agent materially affecting the value or desirability of the
property that are not known to, or within the diligent attention and
observation of, the Parties. An agent is not obligated to reveal to either
Party any confidential information obtained from the other Party which does not
involve the affirmative duties set forth above.

 

(c) Agent Representing Both Seller and Buyer. A
real estate agent, either acting directly or through one or more associate
licenses, can legally be the agent of both the Seller and the Buyer in a
transaction, but only with the knowledge and consent of both the Seller and the
Buyer. (1) In a dual agency situation, the agent has the following
affirmative obligations to both the Seller and the Buyer: a. A fiduciary duty
of utmost care, integrity, honesty and loyalty in the dealings with either
Seller or the Buyer. b. Other duties to the Seller and the Buyer as stated
above in their respective sections (a) or (b) of this paragraph 24.2. (2) In
representing both Seller and Buyer, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Seller
will accept a price less than the listing price or that the Buyer will pay a
price greater than the price offered. (3) The above duties of the agent in
a real estate transaction do not relieve a Seller or Buyer from the
responsibility to protect their own interests. Buyer and Seller should carefully
read all agreements to assure that they adequately express their understanding
of the transaction. A real estate agent is a person qualified to advise about
real estate. If legal or tax advice is desired, consult a competent
professional.

 

(d) Further Disclosures. Throughout this
transaction Buyer and Seller may receive more than one disclosure, depending
upon the number of

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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agents assisting in the
transaction. Buyer and Seller should each read its contents each time it is
presented, considering the relationship between them and the real estate agent
in this transaction and that disclosure. Brokers have no responsibility with
respect to any default or breach hereof by either Party. The liability
(including court costs and attorneys’ fees), of any Broker with respect to any
breach of duty, error or omission relating to this Agreement shall not exceed
the fee received by such Broker pursuant to this Agreement; provided, however,
that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.

 

24.3 Confidential Information: Buyer and Seller agree to identify to Brokers
as “Confidential” any communication or information given Brokers that is considered
by such Party to be confidential.

 

25.          Construction of Agreement. In construing this Agreement, all headings and
titles are for the convenience of the parties only and shall not be considered
a part of this Agreement. Whenever required by the context, the singular shall
include the plural and vice versa. Unless otherwise specifically indicated to
the contrary, the word “days” as used in this Agreement shall mean and refer to
calendar days. This Agreement shall not be construed as if prepared by one of
the parties, but rather according to its fair meaning as a whole, as if both
parties had prepared it.

 

26           Additional Provisions:

 

Additional provisions of this
offer, if any, are as follows or are attached hereto by an addendum consisting
of paragraphs                                 through                                         .
(If there are no additional provisions write “NONE”.)

 

27. Escrow shall close
within 90 days of removal of all contingencies or as soon as possible after all
Seller’s SEC requirements for the sale of corporate assets have been met and
Buyer’s loan financing has been funded.

 

ATTENTION:
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS AGREEMENT OR THE TRANSACTION TO WHICH IT RELATES. THE
PARTIES ARE URGED TO:

 

1.             SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS AGREEMENT.

 

2.             RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND
INVESTIGATE THE CONDITION OF THE PROPERTY. SAID INVESTIGATION SHOULD INCLUDE
BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE
ZONING OF THE PROPERTY, THE INTEGRITY AND CONDITION OF ANY STRUCTURES AND
OPERATING SYSTEMS, AND THE SUITABILITY OF THE PROPERTY FOR BUYER’S INTENDED
USE.

 

WARNING: IF
THE PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF
THIS AGREEMENT MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE
IN WHICH THE PROPERTY IS LOCATED.

 

NOTE:

 

1.             THIS FORM IS NOT FOR USE IN CONNECTION WITH THE
SALE OF RESIDENTIAL PROPERTY.

2.             IF THE BUYER IS A CORPORATION, IT IS RECOMMENDED THAT
THIS AGREEMENT BE SIGNED BY TWO CORPORATE OFFICERS.

 

The
undersigned Buyer offers and agrees to buy the Property on the terms and
conditions stated and acknowledges receipt of a copy hereof.

 

	
  BROKER:

  	
   

  	
  BUYER:

  
	
  Boukather and Associates

  	
   

  	
   

  	
  George A. Boukather Trust
  Dated October

  
	
   

  	
   

  	
  10, As Amended

  
	
  Attn: 

  	
  Scott Reid

  	
   

  	
  By:

  	
   

  
	
  Title: 

  	
  Director of Real Estate

  	
   

  	
  Date:

  	
   

  
	
  Address: 

  	
  1399 Logan Avenue,

  	
   

  	
  Name Printed:

  	
  George A. Boukather

  
	
  Costa Mesa, CA 92626

  	
   

  	
  Title:

  	
  President

  
	
  Telephone: 

  	
  (714) 636-7950

  	
   

  	
  Telephone/Facsimile:

  	
  (714) 636-7952/fax
  636-3296

  
	
  Facsimile: 

  	
  (714) 636-3296

  	
   

  	
   

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
  Name Printed:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
   

  	
   

  	
  Federal ID No.

  	
   

  
																	

 

27.          Acceptance.

 

27.1 Seller accepts the
foregoing offer to purchase the Property and hereby agrees to sell the Property
to Buyer on the terms and conditions therein specified.

 

27.2 Seller acknowledges
that Brokers have been retained to locate a Buyer and are the procuring cause
of the purchase and sale of the Property set forth in this Agreement. In
consideration of real estate brokerage service rendered by Brokers, Seller
agrees to pay Brokers a real estate Brokerage Fee in a sum equal to N/A % of the Purchase Price divided in such shares as said Brokers shall
direct in writing. This Agreement shall serve as an irrevocable instruction to
Escrow Holder to pay such Brokerage Fee to Brokers out of the proceeds accruing
to the account of Seller at the Closing.

 

27.3 Seller acknowledges
receipt of a copy hereof and authorizes Brokers to deliver a signed copy to
Buyer.

 

NOTE: A
PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER
THIS AGREEMENT.

 

	
  BROKER:

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
								

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

7

 

	
   

  	
   

  	
  Title:

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
  Name Printed:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
   

  	
   

  	
  Federal ID No.

  	
   

  
															

 

These forms
are often modified to meet changing requirements of law and needs of the
industry. Always write or call to make sure you are utilizing the most current form:
AIR Commercial Real Estate Association, 700 South Flower Street, Suite 600,
Los Angeles, CA 90017. (213) 687-8777.

 

©Copyright 2000-By AIR Commercial Real Estate Association.
All rights reserved.

No part of these works may be reproduced in any form without
permission in writing.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

8Exhibit 10.1

 

CONFORMED COPY

 

ELECTRO
SCIENTIFIC INDUSTRIES, INC.

 

DEFERRED
COMPENSATION PLAN

 

May 11,
2001

 

(As
Amended Though Amendment No. 2)

 

 

Electro
Scientific Industries, Inc.

an
Oregon corporation

13900 NW
Science Park Drive

	
  Portland,
  Oregon 97229

  	
   

  	
  Company

  

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Effective
  Date; Committee; Plan Year

  	
   

  
	
  2.

  	
  Eligibility

  	
   

  
	
  3.

  	
  Deferral Election

  	
   

  
	
  4.

  	
  Deferred Compensation
  Account

  	
   

  
	
  5.

  	
  Payment to the
  Participant

  	
   

  
	
  6.

  	
  Payment to a Beneficiary

  	
   

  
	
  7.

  	
  Withdrawals

  	
   

  
	
  8.

  	
  Amendment; Termination

  	
   

  
	
  9.

  	
  Claims
  Procedure

  	
   

  
	
  10.

  	
  General Provisions

  	
   

  

 

2

 

INDEX
OF TERMS

 

	
  Code

  	
  1.4

  	
   

  
	
  Committee

  	
  1.2

  	
   

  
	
  Company

  	
  Preamble

  	
   

  
	
  Compensation

  	
  3.2

  	
   

  
	
  Controlled Group of
  Corporations

  	
  5.2(b)

  	
   

  
	
  Credit Account

  	
  4.2

  	
   

  
	
  Deferral Election

  	
  3.1

  	
   

  
	
  Employer

  	
  1.1

  	
   

  
	
  Fixed Date Withdrawal

  	
  7.2

  	
   

  
	
  Participant

  	
  2

  	
   

  
	
  Plan

  	
  Preamble

  	
   

  
	
  Plan Year

  	
  1.3

  	
   

  

 

3

 

ELECTRO
SCIENTIFIC INDUSTRIES, INC.

 

DEFERRED
COMPENSATION PLAN

 

May 11,
2001

 

(As
Amended Through Amendment No. 2)

 

Electro
Scientific Industries

an
Oregon corporation

13900 NW
Science Park Drive

	
  Portland,
  Oregon  97229

  	
   

  	
  “Company”

  

 

The Company adopts this
Deferred Compensation Plan (the “Plan”) as a nonqualified plan of deferred
compensation for Company Officers.  The
purpose of the Plan is to provide an additional benefit to Company Officers as
a means to attract and retain highly effective individuals.

 

1.              Effective Date; Committee; Plan Year.

 

1.1         The Plan
shall become effective May 11, 2001. 
It shall apply to the Company and affiliates of the Company for whom an
Officer performs services.  The term “Employer”
refers to the Company or such affiliate for which such services are performed.

 

1.2         This Plan
shall be administered by the Compensation Committee of the Board of Directors
of the Company (the “Committee”).  The
Committee shall interpret the Plan, determine eligibility and the amount of
benefits, maintain records, determine interest rates and generally be
responsible for seeing that the purposes of the Plan are accomplished.  The Committee may delegate all or part of its
administrative duties to others.

 

1.3         The fiscal
year of the Plan (the “Plan Year”) shall be the Company’s fiscal year, which is
the 52 or 53 week period ending on the Saturday nearest May 31.

 

1.4         The Plan is
intended to be unfunded for purposes of deferring the time of taxation under
the Internal Revenue Code (the “Code” ) and for purposes of constituting an
unfunded plan maintained by an employer primarily for the purpose of providing
deferred compensation to a select group of management or highly compensated
employees under Title I of ERISA.

 

1

 

2.              Eligibility.

 

Officers
shall be eligible to participate in the Plan. 
“Officer” means an appointed officer of the Company whose functions are
not merely formal. “Participant” means an Officer who has elected to defer
Compensation pursuant to Section 3 for any Plan Year.

 

3.              Deferral Election.

 

3.1         An Officer
may elect to participate for each Plan Year by completing a form prescribed by
the Committee (a “Deferral Election”), signing it and returning it to the
Committee.  The Deferral Election
provides for a deferral of Compensation under 3.2.

 

3.2         “Compensation”
means an Officer’s salary earned and payable within the Plan Year or the
Officer’s annual bonus earned within the Plan Year and payable in the first
quarter of the next Plan Year.  A
Deferral Election shall specify the percentage of salary and annual bonus to be
deferred, subject to the following restrictions:

 

(a)                                  A deferral
of salary shall be for a minimum of 10% and a maximum of 50%, unless the Officer
defers none of the salary.

 

(b)                                 A deferral
of bonus shall be a minimum of 10% and a maximum of 100%, unless the Officer
defers none of the bonus.

 

3.3         To be
effective for a Plan Year, the Deferral Election must be returned before the
first day of the Plan Year, except as follows. 
An individual who becomes an Officer during a Plan Year may elect to
participate for the remainder of the Plan Year by completing, signing, and
returning to the Committee a Deferral Election within 30 days after becoming an
Officer.  A Deferral Election made during
the Plan Year shall apply to the Participant’s elected percentage of salary
payable after the Deferral Election is received by the Committee and to the
Participant’s elected percentage of a prorated portion of the bonus earned in
the Plan Year.  The prorated portion
shall be calculated by dividing the number of days remaining in the Plan Year
on the date the individual became an Officer by the total number of days in the
Plan Year.  An election made before the
start of a Plan Year shall be irrevocable as of the first day of the Plan Year
and an election made during a Plan Year shall be irrevocable when received by
the Committee.

 

3.4         The Employer
shall reduce the Participant’s Compensation by the amount deferred and shall
credit such amount to the Participant’s Account under Section 4.  FICA tax due on a Participant’s deferred
Compensation shall be withheld from the Participant’s remaining nondeferred
Compensation.  If the Participant has no
remaining nondeferred Compensation, such Participant shall pay cash to the
Employer in an amount sufficient to cover the FICA tax due.

 

4.              Deferred Compensation Account.

 

4.1         Each
Participant shall have an Account in the Plan. 
Compensation deferred by a Participant under Section 3 shall be
credited to the Account as of the date on which a Participant would have
received the Compensation had it not been deferred.

 

2

 

4.2         A
Participant’s Account shall be denominated in dollars.  The Account shall be credited with interest
on the balance in the Account until the entire Account has been paid out.  The rate of interest shall be the prime rate
published in The  Wall Street Journal on the last business
day preceding the start of the Plan Year plus one percentage point.  Interest shall be compounded yearly.  The Account also shall be reduced by
distributions to the Participant.

 

4.3         The Account
shall be established solely for the purpose of measuring the amount owed to a
Participant under the Plan and shall not give Participants any ownership rights
in any assets of the Company.

 

5.              Payment to the Participant.

 

5.1         A benefit
based on the Participant’s Account shall be payable upon a Termination of the
Participant.  “Termination” means a
termination of all the Participant’s employment with the controlled group of
corporations, as defined in Section 1563(a) of the Code, of which the
Company is a member.  If the Termination
constitutes a Retirement, the benefit shall be paid to the Participant in the
form determined under 5.2.  If not, the
benefit shall be equal to the balance of the Participant’s Account and shall be
paid to the Participant in a lump sum within 60 days following the date of
Termination.  “Retirement” means a
Termination when the Participant is age 65 or over or when the Participant is
age 55 or over and has at least 5 Years of Service. “Years of Service” shall be
determined as provided for vesting in the ESI Employee Savings Plan.

 

5.2         The benefit
payable upon Retirement shall be an amount equal to the Participant’s Account,
payable in one or more of the following forms, as elected by the Participant in
writing on a form provided by the Committee:

 

(a)  A lump sum payable in the January following
the Participant’s Retirement.

 

(b)  Five substantially equal annual
installments commencing in the January following the Participant’s
Retirement.

 

(c)  Ten substantially equal annual
installments commencing in the January following the Participant’s
Retirement.

 

5.3         A
Participant’s election under 5.2 shall apply to the entire Account of the
Participant until changed by a new election. 
A new election shall not be effective unless made at least 12 months
prior to the first day of the January in which payment to the Participant
is to be made in a lump sum or to commence in installments.

 

5.4         The Employer
shall withhold from benefit payments to the Participant any payroll deductions
required by law.  If payments of cash are
insufficient to cover the entire amount required to be withheld, the Employer
may withhold the required amounts from nondeferred compensation or require the
Participant to pay such amounts.

 

3

 

5.5         If a
Participant receiving installment payments becomes an employee of an Employer,
the installments shall stop and shall commence again when the Participant again
has a Termination.

 

6.              Payment to a Beneficiary.

 

6.1         Upon the
Participant’s death, a benefit equal to the Participant’s Account shall be paid
to the Participant’s Beneficiary in one of the following ways:

 

(a)  By a lump sum within 60 days
after the Participant’s death.

 

(b)                                 At the
Committee’s discretion, by a lump sum or installments in accordance with the
Participant’s election of payment form for Retirement.

 

6.2         “Beneficiary”
means the person or persons named by the Participant in the most recent
designation filed by the Participant with the Committee.  If no Beneficiary has been designated or all
designated Beneficiaries have died prior to the Participant’s death, the Beneficiary
shall be determined in the following order of priority:

 

(a)  The Participant’s surviving
spouse.

 

(b)  The Participant’s surviving
children in equal shares.

 

(c)  The Participant’s surviving
parents in equal shares.

 

(d)  The Participant’s estate.

 

6.3                                 If
a Beneficiary dies after the Participant and before the entire benefit of the
Beneficiary has been paid, it shall be paid to the estate of the deceased
Beneficiary.  If the Participant was
married at the time a designation of a spouse Beneficiary was made and is no
longer married to that spouse at the time of death, the benefit shall be paid
as though the former spouse predeceased the Participant.

 

7.              Withdrawals.

 

7.1         A
Participant or, after the Participant’s death, the Participant’s Beneficiary
may withdraw the Account in a lump sum of cash at any time before the Account
would otherwise be payable.  The amount
paid on such a withdrawal shall be discounted 10 percent from the stated
balance of the Account.  The other ten
percent shall be forfeited as a penalty for early withdrawal.

 

7.2         A
Participant may elect in a Deferral Election to receive the deferred amount for
that Plan Year in a lump sum of cash as of a fixed future date (“Fixed Date
Withdrawal”) to occur no sooner than 3 years after the first day of the
following Plan Year.  If Termination or
Retirement occurs before the Fixed Date Withdrawal, payment will be made in
accordance with 5.1 or 5.2, respectively.

 

4

 

7.3         A
Participant or, after the Participant’s death, the Participant’s Beneficiary
may withdraw amounts from an Account because of Financial Hardship, as
determined by the Committee, before those amounts otherwise would have been
paid.  The withdrawal shall be paid in a
lump sum of cash and shall be limited to the amount reasonably necessary to
meet the Financial Hardship.  “Financial
Hardship”  means an immediate and
substantial financial need that cannot be met from other reasonably available
resources and is caused by one or more of the following:

 

(a)  Medical expenses for the
Participant or Beneficiary, for a member of the immediate family or household,
or for another dependent.

 

(b)  Loss of or damage to a
Participant’s or Beneficiary’s possessions or property due to casualty.

 

(c)  Other extraordinary and
unforeseeable circumstances arising from events beyond the Participant’s or
Beneficiary’s control.

 

7.4         The
Committee shall establish guidelines and procedures for implementing
withdrawals.  An application shall be
written, be signed by the Participant or Beneficiary and include a statement of
facts causing the Financial Hardship, if applicable, and any other facts
required by the Committee.

 

8.              Amendment; Termination.

 

8.1         The Company
may amend this Plan effective the first day of any month by notice to the
Participants, except the rate of interest credited under 4.2 shall not be
reduced without the consent of a Participant as to the Participant’s Account
balance as of the date of the reduction.

 

8.2         At any time
the Company may terminate the Plan and pay out all amounts payable to the
Participants, spouses or other persons then entitled to  such amounts and thereby discharge all the
benefit obligations of the Plan.

 

8.3         If the
Internal Revenue Service issues a final ruling that any amounts deferred under
this Plan will be subject to current income tax, all amounts to which the
ruling is applicable shall be paid to the Participants within 30 days.

 

9.              Claims Procedure.

 

9.1         Any person
claiming a benefit or requesting an interpretation, ruling or information under
the Plan shall present the request in writing to the Committee, which shall
respond in writing as soon as practicable.

 

9.2         If the claim
or request is denied, the written notice of denial shall state:

 

(a)  The reasons for denial, with
specific reference to the Plan provisions on which the denial is based.

 

5

 

(b)  A description of any additional
materials or information required and an explanation of why it is necessary.

 

(c)  An explanation of the Plan’s
claim review procedure.

 

9.3         The initial
notice of denial shall normally be given within 90 days of receipt of the
claim.  If special circumstances require
an extension of time, the claimant shall be so notified and the time limit shall
be 180 days.

 

9.4         Any person
whose claim or request is denied or who has not received a response within the
time period described in 9.3 may request review by notice in writing to the
Committee.  The original decision shall
be reviewed by the Committee, which may, but shall not be required to, grant
the claimant a hearing.  On review,
whether or not there is a hearing, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing.

 

9.5         The decision
on review shall ordinarily be made within 60 days.  If an extension of time is required for a
hearing or other special circumstances, the claimant shall be so notified and
the time limit shall be 120 days.  The
decision shall be in writing and shall state the reasons and the relevant plan
provisions.  All decisions on review
shall be final and bind all parties concerned.

 

10.       General Provisions.

 

10.1                 If suit or
action is instituted to enforce any rights under this Plan, the prevailing
party may recover from the other party reasonable attorneys’ fees at trial and
on any appeal.

 

10.2                 Any notice
under this Plan shall be in writing and shall be effective when actually
delivered or, if mailed, when deposited as first class mail postage
prepaid.  Mail shall be directed to the
Company at the address stated in this Plan, to the Participant’s last known
home address shown in the Company’s records, or to such other address as a
party may specify by notice to the other parties.  Notices to an Employer or the Committee shall
be sent to the Company’s address.

 

10.3                 The rights
of a Participant under this Plan are personal. 
Except for the limited provisions of Section 6 no interest of a
Participant or one claiming through a Participant may be directly or indirectly
assigned, transferred or encumbered and no such interest shall be subject to
seizure by legal process or in any other way subjected to the claims of any
creditor.  A Participant’s rights to
benefits payable under this Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge or encumbrance.  Such rights shall not be subject to the
debts, contracts, liabilities, engagements or torts of the Participant or a
Beneficiary.

 

10.4                 Amounts
payable under this Plan shall be a general obligation of the Company and paid
out of its general assets.  If an
Employer merges, consolidates, or otherwise reorganizes or if its business or
assets are acquired by another company, this Plan shall continue with respect
to those eligible individuals who continue in the employ of the successor
company.

 

6

 

The
transition of Employers shall not be considered a termination of employment for
purposes of this Plan.  In such an event,
however, a successor corporation may terminate this Plan as to its Participants
on the effective date of the succession by notice to Participants within 30
days after the succession.

 

10.5                 The
Committee may decide that because of the mental or physical condition of a
person entitled to payments, or because of other relevant factors, it is in the
person’s best interest to make payments to others for the benefit of the person
entitled to payment.  In that event, the
Committee may in its discretion direct that payments be made as follows:

 

(a)  To a parent or spouse or a child
of legal age;

 

(b)  To a legal guardian; or

 

(c)  To one furnishing maintenance,
support, or hospitalization.

 

Adopted:
April 6, 2001

 

	
  COMPANY:

  	
  ELECTRO
  SCIENTIFIC INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  DONALD R. VANLUVANEE

  	
   

  
	
   

  	
   

  	
  Donald R. VanLuvanee

  
	
   

  	
   

  	
  President &
  CEO

  
	
   

  	
   

  
	
   

  	
  Executed: May 31,
  2001

  

 

7

 

AMENDMENT
NO. 1 EXECUTED AS FOLLOWS IS EFFECTIVE AS PROVIDED IN THE AMENDMENT:

 

Adopted:
 August 1, 2002

 

	
  COMPANY:

  	
  ELECTRO
  SCIENTIFIC INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  DAVID F. BOLENDER

  	
   

  
	
   

  	
   

  	
  David F. Bolender

  
	
   

  	
   

  	
  Acting Chief Executive
  Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
  Date signed:

  	
  August 1

  	
  , 2002

  
						

 

AMENDMENT
NO. 2 EXECUTED AS FOLLOWS IS EFFECTIVE AS PROVIDED IN THE AMENDMENT:

 

Adopted:  March 12, 2004

 

	
  COMPANY:

  	
  ELECTRO
  SCIENTIFIC INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JON D. TOMPKINS

  	
   

  
	
   

  	
  Name of signer

  
	
   

  	
   

  	
   

  
	
   

  	
  Title of signer:

  	
  JON D. TOMPKINS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date signed:

  	
  March 12

  	
  , 2004

  
							

 

8

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