Document:

exv10w46

 

EXHIBIT 10.46

PURCHASE AND SALE AGREEMENT

Timonium Professional Center, Timonium, MD

ARTICLE 1: PROPERTY/PURCHASE PRICE

     1.1 Certain Basic Terms.

	 	 	 
	(a) Purchaser and Notice Address:
	 	 
	Devindar S. Sidhu or permitted assignee
	 	 
	c/o Sidhu Associates, Inc.
	 	 
	Executive Plaza III, Suite 1000
	 	 
	11350 McCormick Road
	 	 
	Hunt Valley, MD 21031
	 	 
	Telephone: 410/329-1115
	 	 
	Facsimile: 410/329-1172
	 	 
	E-mail: dev@sidhuai.com
	 	 
	 
	 	 
	(b) Seller and Notice Address:

	 	With a copy to:
	ACC Timonium LLC, a Delaware limited

	 	Kennerly Lamishaw & Rossi
	liability company

	 	Attn: Howard Parelskin
	c/o Asset Capital Corporation, Inc.

	 	707 Wilshire Boulevard, Suite 1400
	Attn: Douglas O’B. Thompson

	 	Los Angeles, CA 90017
	4733 Bethesda Avenue, Suite 800

	 	Telephone: 213/426-2075
	Bethesda, MD 20814

	 	Facsimile: 213/596-5791
	Telephone: 301/656-2333

	 	E-mail: howardparelskin@klrfirm.com
	Facsimile: 301/656-1960
	 	 
	E-mail: dthompson@assetcapitalcorp.com
	 	 
	 
	 	 
	(c) Title Company (or such other title company or agent

	 	(d) Escrow Agent
	as Purchaser shall select):

	 	Chicago Title Insurance Company
	Chicago Title Insurance Company

	 	Attn: Dianne Boyle
	Attn: Dianne Boyle

	 	1129 20th Street, NW
	1129 20th Street, NW

	 	Washington, DC 20036
	Washington, DC 20036

	 	Telephone: 202/263-4745
	Telephone: 202/263-4745

	 	Facsimile: 202/955-5769
	Facsimile: 202/955-5769

	 	E-mail: boyled@ctt.com
	E-mail: boyled@ctt.com
	 	 

	 	 	 	 	 
	(e)

	 	Date of this Agreement:
	 	The latest date of execution by the Seller
and the Purchaser, as shown on the signature page hereto.
	 
	 	 	 	 
	(f)

	 	Purchase Price:
	 	$4,740,000.00. 
	 
	 	 	 	 
	(g)

	 	Earnest Money:
	 	$50,000.00 (the “Initial Earnest Money”), an
additional $50,000.00 (the “Additional Earnest Money”) as provided in
Paragraph 1.3, below, and/or any additional deposits of Earnest Money required
herein, plus interest thereon. 
	 
	 	 	 	 
	(h)

	 	Due Diligence Period:
	 	The period ending July 25, 2006.
	 
	 	 	 	 
	(i)

	 	Financing Contingency Period:
	 	The period ending August 11, 2006.

 

 

	 	 	 	 	 
	(j)

	 	Closing Date:
	 	As agreed between Seller and Purchaser, but no later than
September 12, 2006.
	 
	 	 	 	 
	(j)

	 	Broker:
	 	Blue & Obrecht Realty, LLC.

     1.2 Property. Subject to the terms of this Purchase and Sale Agreement (the
“Agreement”), Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from
Seller, the following property (the “Property”):

     (a) The real property described in Exhibit A, together with the buildings and
improvements thereon (the “Improvements”), and all appurtenances of the above-described
real property, including easements or rights-of-way relating thereto, and, without warranty, all
right, title, and interest, if any, of Seller in and to the land lying within any street or roadway
adjoining the real property described above or any vacated or hereafter vacated street or alley
adjoining said real property.

     (b) All of Seller’s right, title and interest, in and to all fixtures, furniture, equipment,
and other tangible personal property, if any, owned by Seller (the “Personal Property”)
presently located on such property, but excluding word processing and computer equipment, software
and accessories (including, without limitation, CPUs, printers, hubs, switches, firewalls,
networking equipment and modems) and any items of personal property owned by tenants, any managing
agent or others.

     (c) All of Seller’s interest, as landlord, in the “Leases,” being all leases and
rental agreements relating to the Improvements, and all amendments thereto, and including all
leases which may be made by Seller after the Date of this Agreement and before Closing as permitted
by this Agreement.

     (d) All of Seller’s right, title and interest, if any, in and to all of the following items,
to the extent assignable and without warranty (the “Intangible Personal Property”): (i)
licenses, and permits relating to the operation of the Property, (ii) the right to use the name of
the Property (if any) in connection with the Property, and (iii) if still in effect, guaranties and
warranties received by Seller from any contractor, manufacturer or other person in connection with
the construction or operation of the Property.

     1.3 Earnest Money. The Initial Earnest Money, in immediately available federal funds,
evidencing Purchaser’s good faith to perform Purchaser’s obligations under this Agreement, shall be
deposited by Purchaser with the Escrow Agent not later than the next business day after the Date of
this Agreement. In the event that Purchaser fails to timely deposit the Initial Earnest Money with
the Escrow Agent, this Agreement shall be of no force and effect. If Purchaser does not terminate
this Agreement pursuant to Paragraph 2.5 and Paragraph 2.7, Purchaser shall deposit
the Additional Earnest Money, in immediately available funds, with the Escrow Agent prior to the
expiration of the Financing Contingency Period, following which the Earnest Money shall be deemed
non-refundable and shall be disbursed to and retained by Seller in the event of a later termination
of this Agreement for any reason other than as a result of a material default by Seller. The
Earnest Money shall be held and disbursed by the Escrow Agent pursuant to the provisions of this
Agreement. The Earnest Money shall be applied to the Purchase Price at Closing.

ARTICLE 2: INSPECTIONS

     2.1 Property Information. Seller shall make available to Purchaser within 5 days
after the Date of this Agreement, to the extent in Seller’s possession, copies of, or access to
with the right to copy, the following (“Property Information”):

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     (a) copies of the existing Leases;

     (b) a current rent roll of the Property, in the customary form provided to Seller (the
“Rent Roll”);

     (c) operating statements for the two previous fiscal years (or such lesser period of Seller’s
ownership) and year-to-date (the “Operating Statements”);

     (d) a list and copies of any service or maintenance agreements, if any, relating to the
Property (“Service Contracts”);

     (e) any existing title survey of the Property (the “Existing Survey”);

     (f) any environmental reports prepared for Seller or Seller’s predecessors;

     (g) copies of the most recent property tax statements with respect to the Property; and

     (h) an inventory of all Personal Property.

     2.2 Intentionally Deleted.

     2.3 Inspections in General. During the Due Diligence Period, Purchaser, its agents,
and employees shall have the right to enter upon the Property for the purpose of making
non-invasive inspections at Purchaser’s sole risk, cost and expense. All of such entries upon the
Property shall be at reasonable times during normal business hours and after at least 24 hours
prior notice to Seller or Seller’s agent, and Seller or Seller’s agent shall have the right to
accompany Purchaser during any activities performed by Purchaser on the Property. Purchaser shall
not contact any tenant of the Property, any employees of Seller, any governmental agency or
instrumentality, or any other third person regarding the Property without the prior written consent
of Seller. Upon reasonable prior written notice and request from Purchaser, Seller shall notify
tenants of the Property and permit Purchaser to view occupied units, subject to the rights of
tenants under their leases and except to the extent specifically prohibited in such tenants’
leases. At Seller’s request, Purchaser shall provide Seller with a copy of the results of any
tests and inspections made by Purchaser, excluding only market and economic feasibility studies.
If any inspection or test disturbs the Property, Purchaser will restore the Property to the same
condition as existed before the inspection or test. Purchaser shall defend, indemnify Seller and
hold Seller, Seller’s members, officers, directors, agents, contractors and employees and the
Property harmless from and against any and all losses, costs, damages, claims, or liabilities,
including but not limited to, mechanic’s and materialmen’s liens and Seller’s attorneys’ fees,
arising out of or in connection with Purchaser’s inspection of the Property as allowed herein.
The provisions of this paragraph shall survive the Closing or the earlier termination of this
Agreement.

     2.4 Environmental Inspections and Release. The inspections under Paragraph
2.3 may include a non-invasive Phase I environmental inspection of the Property, but no Phase
II environmental inspection or other invasive inspection or sampling of soils, water, air or other
materials, including without limitation construction materials, for analytical testing, either as
part of the Phase I inspection or any other inspection, shall be performed without the prior
written consent of Seller, which may be withheld in its sole and absolute discretion, and if
consented to by Seller, the proposed scope of work and the party who will perform the work shall be
subject to Seller’s review and approval. At Seller’s request, Purchaser shall deliver to Seller
copies of any Phase II or other environmental report to which Seller consents as provided above.
Purchaser, for itself and any entity affiliated with Purchaser, waives and releases Seller and
Seller’s Affiliates (hereafter defined) from and against any liability or claim related to

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the Property arising under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, and the Toxic Substance Control Act, all as amended, or any other
cause of action based on any other state, local, or federal environmental law, rule or regulation;
provided, however, that if Purchaser is named as a responsible party in any litigation brought by a
party unrelated to Purchaser and Seller is not so named, then Purchaser may interplead Seller in
such action. The provisions of this paragraph shall survive the Closing or any earlier termination
of this Agreement. “Seller’s Affiliates” means (a) any entity that directly or indirectly
controls, is controlled by or is under common control with Seller, or (b) any entity at least a
majority of whose economic interest is owned by Seller; and the term “control” means the power to
direct the management of such entity through voting rights, ownership or contractual obligations.

     2.5 Termination During Due Diligence Period. If Purchaser determines, in its sole
discretion, before the expiration of the Due Diligence Period that the Property is unacceptable for
Purchaser’s purposes, Purchaser shall have the right to terminate this Agreement by giving to
Seller notice of termination before the expiration of the Due Diligence Period and the Initial
Earnest Money shall be immediately refunded to Purchaser upon request. In addition, upon such a
termination, Purchaser shall immediately return the Property Information and deliver all third
party studies and reports obtained during the course of Purchaser’s inspections and investigations
to Seller. If Purchaser does not give notice of termination prior to the expiration of the Due
Diligence Period, this Agreement shall continue in full force and effect.

     2.6 Purchaser’s Reliance on its Investigations. To the maximum extent permitted by
applicable law and except for Seller’s representations and warranties in Paragraphs 6.6 and
7.1 and any warranties of title contained in the Deed and the Assignment (hereafter
defined) delivered at the Closing (“Seller’s Warranties”), this sale is made and will be
made without representation, covenant, or warranty of any kind (whether express, implied, or, to
the maximum extent permitted by applicable law, statutory) by Seller. As a material part of the
consideration for this Agreement, Purchaser agrees to accept the Property on an “as is” and “where
is” basis, with all faults, and without any representation or warranty, all of which Seller hereby
disclaims, except for Seller’s Warranties. Except for Seller’s Warranties, no warranty or
representation is made by Seller with regard to the Property as to fitness for any particular
purpose, merchantability, design, quality, condition, operation or income, compliance with drawings
or specifications, absence of defects, absence of hazardous or toxic substances, absence of faults,
flooding, or compliance with laws and regulations including, without limitation, those relating to
health, safety, and the environment. Purchaser acknowledges that Purchaser has entered into this
Agreement with the intention of making and relying upon its own investigation of the physical,
environmental, economic use, compliance, and legal condition of the Property and that, other than
the Seller’s Warranties, Purchaser is not now relying, and will not later rely, upon any
representations and warranties made by Seller or anyone acting or claiming to act, by, through or
under or on Seller’s behalf concerning the Property. The provisions of this Paragraph 2.6
shall survive indefinitely any Closing or termination of this Agreement and shall not be merged
into the Closing documents.

     2.7 Financing Contingency. Purchaser, at its expense, shall apply for a loan (the
“Loan”) to finance its acquisition of the Property within 15 days following the Date of
this Agreement, and shall pay all lender fees and all fees for appraisals, inspections, reports and
other costs related to the Loan. If Purchaser is not able to obtain a commitment for the Loan in
an amount not less than 80% of the Purchase Price and on commercially reasonable terms prior to the
expiration of the Financing Contingency Period, Purchaser, at its sole option, shall have the right
to terminate this Agreement by giving to Seller notice of termination prior to the expiration of
the Financing Contingency Period, and the Earnest Money shall be immediately refunded to Purchaser
upon request. In addition, upon such a termination, Purchaser shall

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immediately return the Property Information to Seller. Failure of Purchaser to provide a
timely notice of termination shall be deemed a waiver by Purchaser of the provisions of this
Paragraph 2.7.

ARTICLE 3: TITLE AND SURVEY REVIEW

     3.1 Delivery of Title Commitment. Within 15 days following the Date of this
Agreement, Seller shall cause to be delivered to Purchaser a preliminary report or title commitment
issued by Chicago Title Insurance Company (the “Title Commitment”), covering the Property,
together with copies of all documents referenced in the Title Commitment. Purchaser, at its option
and expense, may obtain a current survey (the “Survey”) of the Property.

     3.2 Title Review and Cure. During the Due Diligence Period, Purchaser shall review
title to the Property as disclosed by the Title Commitment and, if obtained, the Survey. Seller
shall have no obligation to cure title objections except liens of an ascertainable amount created
by Seller, which liens Seller shall cause to be released at the Closing or affirmatively insured
over by Chicago Title Insurance Company. Seller further agrees to remove any exceptions or
encumbrances to title which are created by Seller after the Date of this Agreement without
Purchaser’s consent. Purchaser may terminate this Agreement and receive a refund of the Earnest
Money if Chicago Title Insurance Company revises the Title Commitment after the expiration of the
Due Diligence Period to add or modify exceptions in a material adverse manner, if such additions or
modifications are not acceptable to Purchaser and are not removed by the Closing Date. The term
“Permitted Exceptions” shall mean: the specific exceptions (exceptions that are not part of
the promulgated title insurance form) in the Title Commitment that Chicago Title Insurance Company
has not agreed to insure over or remove from the Title Commitment as of the end of the Due
Diligence Period and that Seller is not required to remove as provided above; items shown on the
Existing Survey or the Survey, if obtained, which have not been removed as of the end of the Due
Diligence Period and, if no Survey is obtained, then all matters that would be disclosed by an
accurate survey; real estate taxes not yet due and payable; and tenants in possession as tenants
only under the Leases.

     3.3 Intentionally Deleted.

ARTICLE 4: OPERATIONS AND RISK OF LOSS

     4.1 Ongoing Operations. During the pendency of this Agreement, Seller shall carry on
its business and activities relating to the Property, including leasing of the Property,
substantially in the same manner as it did before the Date of this Agreement.

     4.2 Performance under Leases and Service Contracts. During the pendency of this
Agreement, Seller will perform its material obligations under the Leases and Service Contracts and
other agreements that may affect the Property.

     4.3 New Contracts; New Leases. During the pendency of this Agreement, Seller will not
enter into any service contract or similar obligation that will be an obligation affecting the
Property subsequent to the Closing, except contracts entered into in the ordinary course of
business that are terminable without cause upon 30-days’ notice and without penalty or cancellation
fee, without the prior consent of Purchaser, which shall not be unreasonably withheld or delayed.
Prior to the expiration of the Due Diligence Period, Seller shall provide Purchaser with written
notice prior to entering into any new Lease, and following the expiration of the Due Diligence
Period, Seller shall not enter into any new Lease without the prior written consent of Purchaser.

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     4.4 Termination of Service Contracts. During the Due Diligence Period, Purchaser
shall notify Seller which Service Contracts Purchaser wishes to assume at Closing. Notwithstanding
the foregoing, Purchaser shall assume all Service Contracts that are not terminable on 30 days or
less notice or that require the payment of a termination charge (unless Purchaser agrees to pay
such termination charge). Purchaser shall pay any transfer or assignment charges due in connection
with its assumption of any Service Contracts. Notice of termination for all Service Contracts not
assumed by Purchaser shall be given by Seller not later than the Closing Date and any charges due
thereunder after the Closing Date and through the date of actual termination shall be included as a
prorated expense.

     4.5 Damage or Condemnation. Risk of loss resulting from any condemnation or eminent
domain proceeding which is commenced or has been threatened before the Closing, and risk of loss to
the Property due to fire, flood or any other cause before the Closing, shall remain with Seller.
If before the Closing the Property or any portion thereof shall be materially damaged, or if the
Property or any material portion thereof shall be subjected to a bona fide threat
of condemnation or shall become the subject of any proceedings, judicial, administrative or
otherwise, with respect to the taking by eminent domain or condemnation, then Purchaser may
terminate this Agreement by written notice to Seller given within 5 days after Purchaser learns of
the damage or taking, in which event the Earnest Money shall be returned to Purchaser. If the
Closing Date is within the aforesaid 5-day period, then Closing shall be extended to the next
business day following the end of said 5-day period. If no such election is made, and in any event
if the damage is not material, this Agreement shall remain in full force and effect and the
purchase contemplated herein, less any interest taken by eminent domain or condemnation, shall be
effected with no further adjustment, and upon the Closing of this purchase, Seller shall assign,
transfer and set over to Purchaser all of the right, title and interest of Seller in and to any
awards that have been or that may thereafter be made for such taking, and Seller shall assign,
transfer and set over to Purchaser any insurance proceeds that may thereafter be made for such
damage or destruction giving Purchaser a credit at Closing for any deductible under such policies.
For the purposes of this paragraph, the phrases “Material damage” and “Materially
damaged” means damage reasonably exceeding 10 percent of the Purchase Price to repair.

ARTICLE 5: CLOSING

     5.1 Closing. The consummation of the transaction contemplated herein
(“Closing”) shall occur on the Closing Date at the offices of the Escrow Agent.

     5.2 Conditions to the Parties’ Obligations to Close.

     (a) The obligation of Purchaser to consummate the transaction contemplated hereunder is
contingent upon the following:

     (i) Seller’s representations and warranties contained herein shall be true and correct
in all material respects as of the Date of this Agreement and the Closing Date;

     (ii) As of the Closing Date, Seller shall have performed its obligations hereunder and
all deliveries to be made at Closing have been tendered;

     (iii) There shall exist no actions, suits, arbitrations, claims, attachments,
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings, pending or threatened against Seller that would
materially and adversely affect Seller’s ability to perform its obligations under this
Agreement.

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     (b) The obligation of Seller to consummate the transaction contemplated hereunder is
contingent upon the following:

     (a) Purchaser’s representations and warranties contained herein shall be true and correct in
all material respects as of the Date of this Agreement and the Closing Date;

     (b) As of the Closing Date, Purchaser shall have performed its obligations hereunder and all
deliveries to be made at Closing have been tendered; and

     (c) There shall exist no actions, suits, arbitrations, claims, attachments, proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings, pending or threatened against Purchaser that would materially and adversely affect
Purchaser’s ability to perform its obligations under this Agreement.

     So long as a party is not in default hereunder, if any condition to such party’s obligation to
proceed with the Closing hereunder has not been satisfied as of the Closing Date, such party may,
in its sole discretion, terminate this Agreement by delivering written notice to the other party on
or before the Closing Date, or elect to close, notwithstanding the non-satisfaction of such
condition, in which event such party shall be deemed to have waived any such condition. In the
event this Agreement is terminated as a result of Seller’s default, the Earnest Money will be
refunded to Purchaser in accordance with the provisions of Paragraph 8.2. If such party
elects to close, notwithstanding the nonsatisfaction of such condition, there shall be no liability
on the part of the other party for nonsatisfaction of such condition or for breaches of
representations and warranties of which the party electing to close had knowledge as of the
Closing.

     5.3 Seller’s Deliveries in Escrow. On or before the Closing Date, Seller shall
deliver in escrow to the Escrow Agent the following:

     (a) Deed. A special or limited warranty deed (warranting title for acts by, through
or under Seller) (the “Deed”) in the form provided for under the law of the state where the
Property is located, or otherwise in conformity with the custom in such jurisdiction and
satisfactory to Seller, executed and acknowledged by Seller, conveying Seller’s title to the
Property, subject only to the Permitted Exceptions. Any discrepancy between the description of the
Property in the deed from Seller’s immediate grantor and in the Deed shall be quitclaimed by
Seller.

     (b) Bill of Sale and Assignment of Leases and Contracts. A Bill of Sale and
Assignment of Leases and Service Contracts in the form of Exhibit B attached hereto (the
“Assignment”), executed by Seller.

     (c) State Law Disclosures. Such disclosures and reports as are required by applicable
state and local law in connection with the conveyance of real property.

     (d) FIRPTA. A Foreign Investment in Real Property Tax Act affidavit executed by
Seller.

     (e) Additional Documents. Any additional documents that Escrow Agent or the Title
Company may reasonably require for the proper consummation of the transaction contemplated by this
Agreement.

     5.4 Purchaser’s Deliveries in Escrow. On or before the Closing Date, Purchaser shall
deliver in escrow to the Escrow Agent the following:

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     (a) Purchase Price. The Purchase Price, less the Earnest Money that is applied to the
Purchase Price, plus or minus applicable prorations, deposited by Purchaser with the Escrow Agent
in immediate, same-day federal funds wired for credit into the Escrow Agent’s escrow account at a
bank satisfactory to Seller.

     (b) Bill of Sale and Assignment of Leases and Contracts. Assignment, executed by
Purchaser.

     (c) State Law Disclosures. Such disclosures and reports as are required by applicable
state and local law in connection with the conveyance of real property.

     (d) Additional Documents. Any additional documents that Escrow Agent or the Title
Company may reasonably require for the proper consummation of the transaction contemplated by this
Agreement.

     5.5 Closing Statements. At the Closing, Seller and Purchaser shall deposit with the
Escrow Agent executed closing statements consistent with this Agreement in the form required by the
Escrow Agent.

     5.6 Intentionally Deleted.

     5.7 Possession. Seller shall deliver possession of the Property to Purchaser at the
Closing, subject to the Leases and the Permitted Exceptions.

     5.8 Post-Closing Deliveries. Immediately after the Closing, Seller shall deliver to
the offices of Purchaser’s property manager: the original Leases; originals of all contracts (or
copies if no originals are available) and receipts for deposits; all keys, if any, used in the
operation of the Property; and, if in Seller’s possession or control, a copy of any “as-built”
plans and specifications of the Improvements.

     5.9 Notice to Tenants. Seller and Purchaser shall deliver to each tenant immediately
after the Closing a notice regarding the sale in substantially the form Exhibit C attached
hereto, or such other form as may be required by applicable state law.

     5.10 Costs. Each party shall pay its portion of the following costs as indicated
below:

	 	 	 	 	 
	(a)	 	Survey — Purchaser
	(b)	 	Title Policy, if any — Purchaser
	(c)	 	Documentary, transfer, excise and similar fees and taxes —
Seller and Purchaser shall share equally all documentary, excise, transfer,
deed or similar taxes and fees imposed in connection with this transaction
under applicable state or local law
	(d)	 	Recording charges:
	 

	 	(i)
	 	Instruments to remove encumbrances that Seller
is obligated to remove — Seller
	 

	 	(ii)
	 	Deed — Purchaser
	(e)	 	Appraisals, engineering studies, termite inspections,
environmental inspections and other inspections and tests desired by Purchaser
— Purchaser
	(f)	 	Escrow Fees — The Escrow Agent’s escrow fee shall be evenly
divided between the parties. Purchaser shall pay any escrow cancellation fee
or other fees due upon a termination of this Agreement.
	(g)	 	Other — Each party shall pay its own attorneys’ fees. All
other costs shall be borne according to local custom.

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     5.11 Close of Escrow. The Escrow Agent, as agent for the Title Company, shall agree
in writing with Seller and Purchaser that recordation of the Deed constitutes its representation
that it is holding the closing documents, closing funds and closing statement and is prepared and
irrevocably committed to disburse the closing funds in accordance with the closing statements.
Upon satisfaction or completion of the foregoing conditions and deliveries, the parties shall
direct the Escrow Agent to immediately record and deliver the documents described above to the
appropriate parties and make disbursements according to the closing statements executed by Seller
and Purchaser and in accordance with escrow instructions by each party consistent with this
Agreement.

ARTICLE 6: PRORATIONS

     6.1 Prorations. The day of Closing shall belong to Purchaser and all prorations
hereinafter provided to be made as of the Closing shall each be made as of the end of the day
before the Closing Date. In each such proration set forth below, the portion thereof applicable to
periods beginning as of Closing shall be credited or charged to Purchaser and the portion thereof
applicable to periods ending as of Closing shall be credited or charged to Seller.

     (a) Taxes and Assessments. General real estate taxes and assessments imposed by
governmental authority and any assessments imposed by private covenant constituting a lien or
charge on the Property for the then current calendar year or other current tax period
(collectively, “Taxes”) not yet due and payable shall be prorated. If the Closing occurs
prior to the receipt by Seller of the tax bill for the calendar year or other applicable tax period
in which the Closing occurs, Purchaser and Seller shall prorate Taxes for such calendar year or
other applicable tax period based upon the most recent ascertainable assessed values and tax rates.
Any refund or rebate of Taxes resulting from a tax protest, challenge or appeal (an
“Appeal”) for a tax year ending prior to the Closing Date shall belong to Seller, whether
received before or after Closing, and Seller shall have the sole authority to prosecute such
Appeals. Any refund or rebate of Taxes, less costs incurred in connection therewith, resulting
from an Appeal for the tax year in which the Closing Date occurs shall be prorated between the
parties in the same manner as prescribed above, whether received before or after Closing, and
Seller shall have the sole authority to prosecute any such Appeal prior to the Closing Date and
after the Closing Date Seller and Purchaser shall mutually cooperate in the prosecution of any such
Appeal.

     (b) Collected Rent. All collected rent and other collected income (and any applicable
state or local tax on rent) under Leases in effect on the Closing Date shall be prorated. Seller
shall be charged with any rent and other income collected by Seller before Closing but applicable
to any period of time after Closing. Uncollected rent and other income shall not be prorated.
Purchaser shall apply rent and other income from tenants that are collected after the Closing first
to the obligations then owing to Purchaser for its period of ownership and to costs of collection,
remitting the balance, if any, to Seller. Any prepaid rents for the period following the Closing
Date shall be paid over by Seller to Purchaser. Purchaser will make reasonable efforts, without
suit, to collect any rents applicable to the period before Closing. Seller may pursue collection
as to any rent not collected by Purchaser within 6 months following the Closing Date provided that
Seller shall have no right to terminate any Lease or any tenant’s occupancy under any Lease in
connection therewith.

     (c) Utilities. Utilities, including water, sewer, electric, and gas, based upon the
last reading of meters prior to the Closing shall be prorated. Seller shall endeavor to obtain
meter readings on the day before the Closing Date, and if such readings are obtained, there shall
be no proration of such items. Seller shall pay at Closing the bills therefor for the period to
the day preceding the Closing, and Purchaser

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shall pay the bills therefor for the period subsequent thereto. If the utility company will
not issue separate bills, Purchaser will receive a credit against the Purchase Price for Seller’s
portion and will pay the entire bill prior to delinquency after Closing. If Seller has paid any
utilities no more than 30 days in advance in the ordinary course of business, then Purchaser shall
be charged its portion of such payment at Closing.

     (d) Fees and Charges under Leases. Seller shall be responsible for any leasing
commissions, tenant improvement costs and allowances, and other out of pocket costs (collectively,
“Tenanting Costs”) relating to any Leases existing as of the Date of this Agreement, and
Purchaser shall be responsible for any Tenanting Costs relating to any Leases executed on or
following the Date of this Agreement, and any such costs shall be subject to adjustment and
appropriate credits or charges at Closing.

     (d) Fees and Charges under Service Contracts, Licenses and Permits. Fees and charges
under such of the Service Contracts, licenses and permits as are being assigned to and assumed by
Purchaser at the Closing, on the basis of the periods to which such Service Contracts, licenses and
permits relate shall be prorated.

     6.2 Final Adjustment After Closing. If final prorations cannot be made at Closing for
any item being prorated under Paragraph 6.1, including Taxes, then Purchaser and Seller
agree to allocate such items on a fair and equitable basis as soon as invoices or bills are
available, with final adjustment to be made as soon as reasonably possible after the Closing, to
the effect that income and expenses are received and paid by the parties on an accrual basis with
respect to their period of ownership. Payments in connection with the final adjustment shall be
due within 30 days of written notice. Seller shall have reasonable access to, and the right to
inspect and audit, Purchaser’s books to confirm the final prorations.

     6.3 Service Contracts. Purchaser will assume the obligations arising from and after
the Closing Date under those Service Contracts that are not terminated as of the Closing Date.

     6.4 Tenant Deposits. All tenant security deposits in Seller’s possession, as
reflected on a final Rent Roll delivered to Purchaser (and interest thereon if required by law or
contract to be earned thereon) and not theretofore applied to tenant obligations under the Leases,
shall be transferred or credited to Purchaser at Closing or placed in escrow if required by law.
As of the Closing, Purchaser shall assume Seller’s obligations related to tenant security deposits.
Purchaser will indemnify, defend, and hold Seller harmless from and against all demands and claims
made by tenants arising out of the transfer or disposition of any security deposits transferred to
Purchaser and will reimburse Seller for any reasonable expenses (including all reasonable
attorneys’ fees) incurred or that may be incurred by Seller as a result of any such claims or
demands by tenants.

     6.5 Utility Deposits. Purchaser shall be responsible for making any deposits,
required with utility companies.

     6.6 Sale Commissions. Seller and Purchaser represent and warrant each to the other
that they have not dealt with any real estate broker, sales person or finder in connection with
this transaction other than Broker, Blue & Obrecht Realty, Inc. If this transaction is closed,
Seller shall pay Broker in accordance with their separate agreement. Purchaser is not responsible
for any fees due Broker. Broker is an independent contractor and is not authorized to make any
agreement or representation on behalf of either party. Except as expressly set forth above, if any
claim is made for broker’s or finder’s fees or commissions in connection with the negotiation,
execution or consummation of this Agreement or the transactions contemplated hereby, each party
shall defend, indemnify and hold harmless the other party from and against any such claim based
upon any statement, representation or agreement of such party.

10

 

ARTICLE 7: REPRESENTATIONS AND WARRANTIES

     7.1 Seller’s Representations and Warranties. As a material inducement to Purchaser to
execute this Agreement and consummate this transaction, Seller represents and warrants to Purchaser
that:

     (a) Organization and Authority. Seller (or each of them) has been duly organized and
is validly existing as a limited liability company, in good standing in their state of formation
and qualified to do business in the state in which the Property is located if required by
applicable law. Seller has the full right and authority and has obtained any and all consents
required to enter into this Agreement and to consummate or cause to be consummated the transactions
contemplated hereby. This Agreement has been, and all of the documents to be delivered by Seller
at the Closing will be, authorized and properly executed and constitutes, or will constitute, as
appropriate, the valid and binding obligation of Seller, enforceable in accordance with their
terms.

     (b) Conflicts and Pending Action. There is no agreement to which Seller is a party or
to Seller’s knowledge binding on Seller which is in conflict with this Agreement. There is no
action or proceeding pending or, to Seller’s knowledge, threatened against the Property, including
condemnation proceedings, or against the Seller which challenges or impairs Seller’s ability to
execute or perform its obligations under this Agreement.

     (c) Rent Roll and Operating Statements. To Seller’s knowledge, the Rent Roll provided
or to be provided to Purchaser is or will be true, correct and complete in all material respects as
of the date thereof. The Operating Statements were prepared by or for Seller in the ordinary
course of its business in the same manner as it prepares or obtains such reports for its other
properties and are the Operating Statements used and relied upon by Seller in connection with its
operation of the Property. Seller will furnish true and correct copies of all Leases affecting the
Property, and Seller represents and warrants that all such Leases have not been amended and are
currently in full force and effect.

     (d) Service Contracts. To Seller’s knowledge, the list of Service Contracts delivered
or to be delivered to Purchaser pursuant to this Agreement is or will be true, correct, and
complete in all material respects as of the date of its delivery. Neither Seller nor, to Seller’s
knowledge, any other party is in material default under any Service Contract.

     (e) Violations. To Seller’s knowledge, Seller has not received written notice from
any governmental entity of any violation by Seller of any law, rule or regulation affecting the
Property or its use including any environmental law or regulation, nor any written notice that the
Property is in violation of any applicable building or zoning code or ordinance, except for any
such matters which may have been previously cured by Seller.

     “Seller’s knowledge,” as used in this Agreement means the current actual knowledge of Douglas
Thompson, an asset manager of Asset Capital Corporation, Inc., who has responsibility for the
management of the Property, without any duty of inquiry or investigation. Purchaser’s sole remedy
in the event of a breach of any of the foregoing representations and warranties discovered prior to
Closing shall be to elect either to terminate this Agreement and seek return of Purchaser’s Earnest
Money, following which neither party shall have any further obligations hereunder, or to proceed to
Closing, waiving any claim against Seller and releasing Seller from any liability or obligations in
connection therewith. Seller’s maximum aggregate liability for damages arising from all breaches
of the foregoing representations discovered after Closing shall be limited to Purchaser’s actual
damages (and specifically excluding consequential, punitive and exemplary damages) not to exceed an
amount equal to the aggregate Earnest Money deposit made by Purchaser pursuant to this Agreement.

11

 

     7.2 Purchaser’s Representations and Warranties. As a material inducement to Seller to
execute this Agreement and consummate this transaction, Purchaser represents and warrants to Seller
that:

     (a) Intentionally Deleted.

     (b) Conflicts and Pending Action. There is no agreement to which Purchaser is a party
or to Purchaser’s knowledge binding on Purchaser which is in conflict with this Agreement. There
is no action or proceeding pending or, to Purchaser’s knowledge, threatened against Purchaser which
challenges or impairs Purchaser’s ability to execute or perform its obligations under this
Agreement.

ARTICLE 8: DEFAULT AND DAMAGES

     8.1 Default by Purchaser. If Purchaser shall default in its obligation to close
hereunder, Purchaser agrees that Seller shall have the right to terminate this Agreement and to
have the Escrow Agent deliver the Earnest Money to Seller as liquidated damages to recompense
Seller for time spent, labor and services performed, and the loss of its bargain. Purchaser and
Seller agree that it would be impracticable or extremely difficult to affix damages if Purchaser so
defaults and that the Earnest Money, together with the interest thereon, represents a reasonable
estimate of Seller’s damages. Seller’s sole remedy shall be to accept the Earnest Money as
Seller’s total damages and relief hereunder if Purchaser defaults in its obligation to close
hereunder, Seller waiving all other rights and remedies.

     8.2 Default by Seller. If Seller defaults in its obligation to sell and convey the
Property to Purchaser pursuant to this Agreement, Purchaser’s sole remedy shall be to elect one of
the following: (a) to terminate this Agreement, in which event Purchaser shall be entitled to the
return by the Escrow Agent to Purchaser of the Earnest Money, or (b) to bring a suit for specific
performance provided that any suit for specific performance must be brought within 90 days of
Seller’s default, to the extent permitted by law, Purchaser waiving the right to bring suit at any
later date. Purchaser agrees not to file a lis pendens or other similar notice against the
Property except in connection with, and after, the proper filing of a suit for specific
performance.

ARTICLE 9: EARNEST MONEY PROVISIONS

     9.1 Investment and Use of Funds. The Escrow Agent shall invest the Earnest Money in
government insured interest-bearing accounts satisfactory to Purchaser, shall not commingle the
Earnest Money with any funds of the Escrow Agent or others, and shall promptly provide Purchaser
and Seller with confirmation of the investments made. If the Closing under this Agreement occurs,
the Escrow Agent shall apply the Earnest Money against the Purchase Price due Seller at Closing.

     9.2 Contract Terminations. Upon a termination of this Agreement, either party to
this Agreement (the “Terminating Party”) may give written notice to the Escrow Agent and
the other party (the “Non-Terminating Party”) of such termination and the reason for such
termination. Such request shall also constitute a request for the release of the Earnest Money to
the Terminating Party. The Non-Terminating Party shall then have five business days in which to
object in writing to the release of the Earnest Money to the Terminating Party. If the
Non-Terminating Party provides such an objection, then the Escrow Agent shall retain the Earnest
Money until it receives written instructions executed by both Seller and Purchaser as to the
disposition and disbursement of the Earnest Money, or until ordered by final court order, decree or
judgment, which is not subject to appeal, to deliver the Earnest Money to a particular party, in
which event the Earnest Money shall be delivered in accordance with such notice, instruction,
order, decree or judgment.

12

 

     9.3 Interpleader. Seller and Purchaser mutually agree that in the event of any
controversy regarding the Earnest Money, unless mutual written instructions are received by the
Escrow Agent directing the Earnest Money’s disposition, the Escrow Agent shall not take any action,
but instead shall await the disposition of any proceeding relating to the Earnest Money or, at the
Escrow Agent’s option, the Escrow Agent may interplead all parties and deposit the Earnest Money
with a court of competent jurisdiction in which event the Escrow Agent may recover all of its court
costs and reasonable attorneys’ fees. Seller or Purchaser, whichever loses in any such
interpleader action, shall be solely obligated to pay such costs and fees of the Escrow Agent, as
well as the reasonable attorneys’ fees of the prevailing party in accordance with the other
provisions of this Agreement.

     9.4 Liability of Escrow Agent. The parties acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and for their convenience, that the Escrow Agent
shall not be deemed to be the agent of either of the parties, and that the Escrow Agent shall not
be liable to either of the parties for any action or omission on its part taken or made in good
faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for
any loss, cost or expense incurred by Seller or Purchaser resulting from the Escrow Agent’s mistake
of law respecting the Escrow Agent’s scope or nature of its duties. Seller and Purchaser shall
jointly and severally indemnify and hold the Escrow Agent harmless from and against all costs,
claims and expenses, including reasonable attorneys’ fees, incurred in connection with the
performance of the Escrow Agent’s duties hereunder, except with respect to actions or omissions
taken or made by the Escrow Agent in bad faith, in disregard of this Agreement or involving
negligence on the part of the Escrow Agent.

ARTICLE 10: MISCELLANEOUS

     10.1 Parties Bound. Except for an assignment pursuant to this Paragraph 10.1
or Paragraph 10.16, neither party may assign this Agreement without the prior written
consent of the other, and any such prohibited assignment shall be void. No assignment permitted
under this Agreement shall relieve the assigning party of any liability hereunder, whether arising
before or after the date of such assignment. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the respective legal representatives, successors, assigns,
heirs, and devisees of the parties.

     At Closing, Purchaser shall be permitted to assign this Agreement, the Earnest Money, and the
rights of “Purchaser” in connection therewith, to a “Purchaser’s Affiliate” without the prior
written consent of Seller, provided that Purchaser delivers written notice of its intent to do so
at least five (5) business days prior to the Closing Date. “Purchaser’s Affiliate” means
(a) any entity that directly or indirectly controls, is controlled by or is under common control
with Purchaser or members of his family, or (b) any entity at least a majority of whose economic
interest is owned by Purchaser or members of his family; and the term “control” means the power to
direct the management of such entity through voting rights, ownership or contractual obligations.

     10.2 Confidentiality. The Property Information and all other information, other than
matters of public record or matters generally known to the public, furnished to, or obtained
through inspection of the Property by, Purchaser, its affiliates, lenders, employees, attorneys,
accountants and other professionals or agents relating to the Property, will be treated by
Purchaser, its affiliates, lenders, employees and agents as confidential, and will not be disclosed
to anyone other than representatives and consultants of Purchaser, on a need-to-know basis, who
agree to maintain the confidentiality of such information, and will be returned to Seller by
Purchaser if the Closing does not occur. Purchaser shall make no public announcement or disclosure
of this Agreement or any non-public information related to this Agreement to outside brokers or
third parties before the Closing without the prior written consent of Seller. Purchaser shall not
record this Agreement or any memorandum of this Agreement. The confidentiality provisions of this
Paragraph 10.2 shall not apply to any disclosures made by Purchaser as required by law, by
court

13

 

order, or in connection with any subpoena served upon Purchaser; provided Purchaser shall
provide Seller with written notice before making any such disclosure. The provisions of this
Paragraph 10.2 shall survive Closing and the delivery and recordation of the Deed.

     10.3 Headings. The article and paragraph headings of this Agreement are for
convenience only and in no way limit or enlarge the scope or meaning of the language hereof.

     10.4 Invalidity and Waiver. If any portion of this Agreement is held invalid or
inoperative, then so far as is reasonable and possible the remainder of this Agreement shall be
deemed valid and operative, and effect shall be given to the intent manifested by the portion held
invalid or inoperative. The failure by either party to enforce against the other any term or
provision of this Agreement shall not be deemed to be a waiver of such party’s right to enforce
against the other party the same or any other such term or provision in the future.

     10.5 Governing Law. This Agreement shall, in all respects, be governed, construed,
applied, and enforced in accordance with the law of the state in which the Property is located.

     10.6 Survival. Unless otherwise expressly stated in this Agreement, each of the
covenants, obligations, representations, and agreements contained in this Agreement shall survive
the Closing and the execution and delivery of the Deed required hereunder only for a period of 12
months immediately following the Closing Date; provided, however the indemnification provisions of
Paragraph 2.3, 6.4 and 6.6 and the provisions of Paragraph 6.2
shall survive the termination of this Agreement or the Closing, whichever occurs, and shall not be
merged, until the applicable statute of limitations with respect to any claim, cause of action,
suit or other action relating thereto shall have fully and finally expired. Any claim brought
after Closing based upon a misrepresentation or a breach of a warranty contained in Article
7 of this Agreement shall be actionable or enforceable if and only if: (i) notice of such
claim is given to the party which allegedly made such misrepresentation or breached such covenant,
obligation, warranty or agreement within 12 months after the Closing Date; and (ii) the amount of
damages or losses as a result of such claim suffered or sustained by the party making such claim
exceeds $50,000.

     10.7 No Third Party Beneficiary. This Agreement is not intended to give or confer any
benefits, rights, privileges, claims, actions, or remedies to any person or entity as a third party
beneficiary or otherwise.

     10.8 Entirety and Amendments. This Agreement embodies the entire agreement between
the parties and supersedes all prior agreements and understandings relating to the Property except
for any confidentiality agreement binding on Purchaser, which shall not be superseded by this
Agreement. This Agreement may be amended or supplemented only by an instrument in writing executed
by the party against whom enforcement is sought.

     10.9 Time. Time is of the essence in the performance of this Agreement.

     10.10 Attorneys’ Fees. Should either party employ attorneys to enforce any of the
provisions hereof, the party against whom any final judgment is entered agrees to pay the
prevailing party all reasonable costs, charges, and expenses, including attorneys’ fees, expended
or incurred in connection therewith.

     10.11 Notices and Deliveries. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the addresses set forth in Paragraph 1.1.
Any such notices shall be either (a) sent by overnight delivery using a nationally recognized
overnight courier, in which case notice shall be deemed delivered one business day after deposit
with such courier, (b) sent by facsimile, with

14

 

written confirmation by overnight or first class mail, in which case notice shall be deemed
delivered upon receipt of confirmation transmission of such facsimile notice, or (c) sent by
personal delivery, in which case notice shall be deemed delivered upon receipt. A party’s address
may be changed by written notice to the other party; provided, however, that no notice of a change
of address shall be effective until actual receipt of such notice. Copies of notices are for
informational purposes only, and a failure to give or receive copies of any notice shall not be
deemed a failure to give notice. Notices given by counsel to the Purchaser shall be deemed given
by Purchaser, notices given by counsel to the Seller shall be deemed given by Seller, and notices
given to a party’s counsel shall be deemed given to the party. Notwithstanding the inclusion of a
party’s e-mail address in Paragraph 1.1, notices sent by e-mail shall not be effective
notice.

     10.12 Construction. The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction — to the effect that
any ambiguities are to be resolved against the drafting party — shall not be employed in the
interpretation of this Agreement or any exhibits or amendments hereto.

     10.13 Calculation of Time Periods. Unless otherwise specified, in computing any
period of time described herein, the day of the act or event after which the designated period of
time begins to run is not to be included and the last day of the period so computed is to be
included, unless such last day is a Saturday, Sunday or legal holiday for national banks in the
location where the Property is located, in which event the period shall run until the end of the
next day which is neither a Saturday, Sunday, or legal holiday. The last day of any period of time
described herein shall be deemed to end at 5:00 p.m. local time where the Property is located
unless otherwise noted. Any funds or documents delivered to Title Company or Escrow Agent shall
only be delivered on a business day, and any funds or documents delivered after 2:00 p.m. local
time where the Property is located shall be deemed delivered on the next business day.

     10.14 Procedure for Indemnity. The following provisions govern actions for indemnity
under this Agreement. Promptly after receipt by an indemnitee of notice of any claim, such
indemnitee will, if a claim in respect thereof is to be made against the indemnitor, deliver to the
indemnitor written notice thereof and the indemnitor shall have the right to participate in such
proceeding and, if the indemnitor agrees in writing that it will be responsible for any costs,
expenses, judgments, damages, and losses incurred by the indemnitee with respect to such claim, to
assume the defense thereof, with counsel mutually satisfactory to the parties; provided, however,
that an indemnitee shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnitor, if the indemnitee reasonably believes that representation of such
indemnitee by the counsel retained by the indemnitor would be inappropriate due to actual or
potential differing interests between such indemnitee and any other party represented by such
counsel in such proceeding. The failure of indemnitee to deliver written notice to the indemnitor
within a reasonable time after indemnitee receives notice of any such claim shall relieve such
indemnitor of any liability to the indemnitee under this indemnity only if and to the extent that
such failure is prejudicial to its ability to defend such action, and the omission so to deliver
written notice to the indemnitor will not relieve it of any other liability that it may have to any
indemnitee. If an indemnitee settles a claim without the prior written consent of the indemnitor,
then the indemnitor shall be released from liability with respect to such claim unless the
indemnitor has unreasonably withheld such consent.

     10.15 Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of such counterparts shall
constitute one Agreement. To facilitate execution of this Agreement, the parties may execute and
exchange by telephone facsimile counterparts of the signature pages.

15

 

     10.16 Section 1031 Exchange. Either party may consummate the purchase or sale (as
applicable) of the Property as part of a so-called like kind exchange (an “Exchange”)
pursuant to §1031 of the Internal Revenue Code of 1986, as amended (the “Code”), provided
that: (a) the Closing shall not be delayed or affected by reason of the Exchange nor shall the
consummation or accomplishment of an Exchange be a condition precedent or condition subsequent to
the exchanging party’s obligations under this Agreement; (b) the exchanging party shall effect its
Exchange through an assignment of this Agreement, or its rights under this Agreement, to a
qualified intermediary (c) neither party shall be required to take an assignment of the purchase
agreement for the relinquished or replacement property or be required to acquire or hold title to
any real property for purposes of consummating an Exchange desired by the other party; and (d) the
exchanging party shall pay any additional costs that would not otherwise have been incurred by the
non-exchanging party had the exchanging party not consummated the transaction through an Exchange.
Neither party shall by this Agreement or acquiescence to an Exchange desired by the other party
have its rights under this Agreement affected or diminished in any manner or be responsible for
compliance with or be deemed to have warranted to the exchanging party that its Exchange in fact
complies with §1031 of the Code.

     10.17 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     10.18 Limitation of Liability. Purchaser acknowledges that the liability of
Seller shall be limited to its interests in the Property and the proceeds of sale, and shall not
extent to any individual member, partner, officer, director, employee, agent, contractor or other
person acting for or on behalf of Seller. Further, as the interests of Seller are held as
tenants-in-common, the liability of each party composing Seller hereunder shall be joint (in
accordance with each party’s respective interest in the Property), and not several.

16

 

SIGNATURE PAGE TO

PURCHASE AND SALE AGREEMENT

Timonium Professional Center, Timonium, MD

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year
written below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ACC TIMONIUM LLC, a Delaware limited

liability company
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BY:	 	Asset Capital Partners, L.P., its sole member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	BY:	 	ACC GP, LLC, its general partner
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	BY:
	 	Asset Capital Corporation, Inc., its sole
member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 

	 	 	 	 	 	 	 	By:	 	/s/ William B. LeBlanc
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	William B. LeBlanc III
	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	6/27/06	 	 	 	 	 	Title:	 	President
	 	 	 	 	 	 	 	 	 	 	 
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	“Seller”
	

	Date:
	 	6/27/06	 	 	 	/s/ Devindar Sidhu	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	     DEVINDAR S. SIDHU
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	“Purchaser”

Escrow Agent has executed this Agreement in order to confirm that the Escrow Agent has received and
shall hold the Earnest Money and the interest earned thereon, in escrow, and shall disburse the
Earnest Money, and the interest earned thereon, pursuant to the provisions of Article 9.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	CHICAGO TITLE INSURANCE COMPANY
	 
	 	 	 	 	 	 	 	 	 	 
	

	 

	 	 	 	 	 	By:	 	/s/ Dianne E. Boyle
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	Dianne E. Boyle
	 

	 	 	 	 	 	 	 	 	 	 
	Date:

	 	6/28/06	 	 	 	 	 	Title:	 	Assistant Vice President &
Commercial Counsel
	 

	 	 
	 	 	 	 	 	 	 	 
	

	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	“Escrow Agent”

17exv10w1

 

EXHIBIT 10.1

Execution Copy

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

by and between

James Mahoney

and

INDYMAC BANK, F.S.B.

dated as of July 1, 2006

 

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Page
	1.	 	Term	 	 	 	 	1	 
	2.	 	Position, Duties and Responsibilities	 	 	 	 	1	 
	3.	 	Outside Affiliations	 	 	 	 	1	 
	4.	 	Compensation and Benefits	 	 	 	 	2	 
	 

	 	4.1	 	 	Base Salary
	 	 	 	 	2	 
	 

	 	4.2	 	 	Cash Incentive Compensation
	 	 	 	 	2	 
	 

	 	4.3	 	 	Equity Incentive Compensation
	 	 	 	 	2	 
	 

	 	4.4	 	 	Additional Benefits
	 	 	 	 	2	 
	5.	 	Termination of Employment	 	 	 	 	3	 
	 

	 	5.1	 	 	Grounds for Termination
	 	 	 	 	3	 
	 

	 	 	 	 	 	   5.1.1 Disability
	 	 	 	 	3	 
	 

	 	 	 	 	 	   5.1.2 Death
	 	 	 	 	3	 
	 

	 	 	 	 	 	   5.1.3 Cause
	 	 	 	 	3	 
	 

	 	 	 	 	 	   5.1.4 Poor Performance
	 	 	 	 	4	 
	 

	 	 	 	 	 	   5.1.5 Without Cause
	 	 	 	 	4	 
	 

	 	 	 	 	 	   5.1.6 Resignation
	 	 	 	 	4	 
	 

	 	5.2	 	 	Benefits Upon Termination
	 	 	 	 	4	 
	 

	 	 	 	 	 	   5.2.1 Disability
	 	 	 	 	4	 
	 

	 	 	 	 	 	   5.2.2 Death
	 	 	 	 	5	 
	 

	 	 	 	 	 	   5.2.3 Cause
	 	 	 	 	6	 
	 

	 	 	 	 	 	   5.2.4 Poor Performance
	 	 	 	 	6	 
	 

	 	 	 	 	 	   5.2.5 Without Cause
	 	 	 	 	6	 
	 

	 	 	 	 	 	   5.2.6 Resignation
	 	 	 	 	7	 
	 

	 	 	 	 	 	   5.2.7 Change in Control
	 	 	 	 	7	 
	 

	 	 	 	 	 	   5.2.8 Other Employment
	 	 	 	 	9	 
	 

	 	 	 	 	 	   5.2.9 Excise Tax
	 	 	 	 	9	 
	 

	 	 	 	 	 	   5.2.10 Release of Claims
	 	 	 	 	9	 
	6.	 	Restrictive Covenants	 	 	 	 	9	 
	 

	 	6.1	 	 	No Solicitation
	 	 	 	 	9	 
	 

	 	6.2	 	 	Basis for Non-Solicitation Agreement
	 	 	 	 	10	 
	 

	 	6.3	 	 	Confidentiality
	 	 	 	 	10	 
	 

	 	 	 	 	 	   6.3.1 Trade Secrets
	 	 	 	 	10	 
	 

	 	 	 	 	 	   6.3.2 Confidential Information
	 	 	 	 	10	 
	 

	 	 	 	 	 	   6.3.3 Non-Disclosure
	 	 	 	 	11	 
	 

	 	6.4	 	 	Conditional Payment
	 	 	 	 	11	 

- i -

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Page
	7.	 	Reimbursement of Business Expenses	 	 	 	 	11	 
	8.	 	Miscellaneous	 	 	 	 	11	 
	 

	 	8.1	 	 	Notice of Termination and Termination Date
	 	 	 	 	11	 
	 

	 	8.2	 	 	Successorship
	 	 	 	 	12	 
	 

	 	8.3	 	 	Notices
	 	 	 	 	12	 
	 

	 	8.4	 	 	Entire Agreement
	 	 	 	 	12	 
	 

	 	8.5	 	 	Waiver
	 	 	 	 	12	 
	 

	 	8.6	 	 	California Law
	 	 	 	 	12	 
	 

	 	8.7	 	 	Injunctive Relief
	 	 	 	 	12	 
	 

	 	8.8	 	 	Claims Procedures
	 	 	 	 	13	 
	 

	 	8.9	 	 	Severability
	 	 	 	 	13	 
	 

	 	8.10	 	 	Regulatory Intervention
	 	 	 	 	13	 
	 

	 	8.11	 	 	Counsel
	 	 	 	 	14	 

- ii -

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the “Agreement”) is entered into effective as
of July 1, 2006, by and between IndyMac Bank, F.S.B. (“IndyMac”) and James R. Mahoney (“Officer”)
and is an amendment and restatement of the Original Employment Agreement (defined below).

W I T N E S S E T H:

     WHEREAS, IndyMac and Officer are parties to that certain Employment Agreement, effective as of
the closing of the Purchase Agreement referred to therein (the “Original Employment Agreement”);
and

     WHEREAS, IndyMac and Officer desire to amend and restate the Original Employment Agreement
upon the terms and conditions set forth herein to extend the term thereof, and make other changes
thereto, in connection with the repurchase by IndyMac of all of the Officer’s shares of common
stock of Financial Freedom Senior Funding Corporation (“Financial Freedom”) which, after giving
effect to such repurchase, will result in Financial Freedom becoming a direct, wholly-owned
subsidiary of IndyMac;

     NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     1. Term. IndyMac agrees to employ Officer, and Officer agrees to serve IndyMac, in accordance
with the terms and conditions of this Agreement, for a period commencing on July 1, 2006 and ending
on June 30, 2011 (the “Initial Term”), unless Officer’s employment is earlier terminated as herein
provided. At the end of the Initial Term, the term of this Agreement shall be extended
automatically for additional successive periods of one-year (each such one-year renewal period, a
“Renewal Term”, and all Renewal Terms and the Initial Term, collectively, the “Term”), unless, in
each case, IndyMac or Officer shall have given written notice to the other at least 90 days prior
to the expiration of the Initial Term or any Renewal Term, as the case may be, stating that such
party has elected not to extend the Term of this Agreement.

     2. Position, Duties and Responsibilities. Officer initially shall serve as Co-Chief Executive
Officer (“Co-CEO”) and Chairman of the Board (as such, the “Chairman”) of Financial Freedom from
July 1, 2006 to December 31, 2006 and shall have such duties and responsibilities as are assigned
to him by IndyMac, provided that such duties and responsibilities shall be commensurate with his
position as Co-CEO and Chairman. Thereafter, Officer shall serve as the Chairman of Financial
Freedom and shall have such duties and responsibilities as are assigned to him by IndyMac, provided
that such duties and responsibilities shall be commensurate with his position as Chairman of the
Board. From January 1, 2007 to December 31, 2007, the Officer shall also be available to act as a
“special advisor” to the then-acting Chief Executive Officer of Financial Freedom. As used in this
Agreement, the term “Employer” means IndyMac Bancorp, Inc., or any successor public company
(“Public Company”), IndyMac, Financial Freedom and the subsidiaries of Financial Freedom.

 

 

     3. Outside Affiliations. During the period commencing on July 1, 2006 and ending on December
31, 2006, Officer agrees to devote Officer’s business time, attention, skill, and best efforts
exclusively to the business and affairs of Employer (to the extent applicable to Financial
Freedom), and from and after January 1, 2007, Officer agrees, as Chairman of Financial Freedom, to
devote such business time, attention, skill and best efforts, on a non-exclusive basis, to the
business and affairs of Employer (to the extent applicable to Financial Freedom ) based on such
commitment of time as shall be customary and usual for the office of Chairman of a corporation. In
addition, Officer agrees, during the Term, to faithfully perform such duties as may be assigned to
Officer (to the extent relating to Financial Freedom and the Public Company’s interests therein),
and to diligently promote the business, affairs and interests of Employer. Officer agrees to
conduct himself in compliance with Employer’s Code of Business Conduct and Ethics as shall be in
effect and made available in writing to Officer from time to time. Officer may sit on the board of
directors of any civic, educational or charitable organization without the prior written consent of
IndyMac, and from and after July 1, 2007 may serve as a director of such other companies, without
the prior written consent of IndyMac so long as such activities do not interfere in any material
respect with the performance of Officer’s duties and responsibilities hereunder. Notwithstanding
the foregoing sentence, during the Term, Officer shall not serve as a director of a company engaged
in the mortgage banking business without the prior written consent of IndyMac.

     4. Compensation and Benefits. During Officer’s employment during the Term, IndyMac (or Public
Company) shall provide to Officer the following compensation and benefits; provided that,
in the case of any benefit plan, Officer meets the eligibility requirements under the terms and
conditions of the relevant benefit plan. All compensation paid, or benefits provided, to Officer
by IndyMac (or Public Company) shall be aggregated in determining whether Officer has received the
compensation and benefits described herein. For all purposes of this Agreement, for the purpose of
determining Officer’s years or period of service with IndyMac or Employer or its affiliates under
this Agreement in connection with the determination of the amount of or eligibility for any
compensation, retirement benefits, severance benefits or other benefits provided hereunder, Officer
shall be credited with all years and months of service with Employer and its affiliates and with
Financial Freedom or its predecessor, Financial Freedom Holdings, Inc. (including when Financial
Freedom or such predecessor was majority owned by former owners, including Lehman Brothers Bank,
FSB), subject, to the extent required to comply with applicable law, to the terms and conditions of
the relevant plan.

          4.1 Base Salary. During Officer’s employment during the Term, IndyMac shall pay to Officer a
base salary at the annual rate set forth in Appendix A. Officer’s base salary shall be payable in
equal monthly or more frequent installments as are customary under Employer’s payroll practices
from time to time. IndyMac may, in its sole discretion, increase Officer’s base salary during the
term of this Agreement, but IndyMac will not decrease Officer’s base salary below the amount set
forth in Appendix A.

          4.2 Cash Incentive Compensation. During the Term, Officer will not be eligible to receive
annual or quarterly cash bonuses pursuant to Employer’s Senior Manager Cash Incentive Plan policy,
other than such cash bonuses that are payable to the Officer for the calendar year ending December
31, 2006 pursuant to and in accordance with the terms of the Original Employment Agreement;
provided that Officer shall be entitled to a pro rata portion of

 

 

such cash bonuses based on
the number of days elapsed between January 1, 2006 and July 1, 2006 in proportion to a year of 365
days, and any such bonuses shall be paid no later than March 15, 2007.

          4.3 Equity Incentive Compensation. During the Term, Officer will not be eligible to
participate in any incentive award plan or program that is maintained by Employer’s public company
parent, Public Company, or that is administered pursuant to Employer’s Stock Incentive Compensation
policy, other than with respect to awards granted to Officer under such plans or programs prior to
the date of this Agreement; provided, however, that all such awards (including all
stock options and restricted stock) that would otherwise have been awarded to the Officer pursuant
to the Original Employment Agreement, or such award plan or program, for 2006 shall be awarded to
the Officer (pro rata, based on the number of days elapsed between January 1, 2006 and July 1, 2006
in proportion to a year of 365 days) in accordance with the applicable provisions of the Original
Employment Agreement (or program or plan), and all such awards shall vest in accordance with the
provisions of the Original Employment Agreement.

          4.4 Additional Benefits. During Officer’s employment during the Term, Officer shall be
entitled to paid vacation and fringe benefits in accordance with, and subject to the terms and
conditions of, Employer’s policies and procedures in effect from time to time for officers of
Public Company that are Executive Vice Presidents and members of the Executive Committee (“Peer
Employees”). Officer shall also be eligible to enroll and participate in any health and welfare
benefit (medical, dental, vision, life, disability, flexible spending accounts), stock purchase,
profit-sharing, deferred compensation, or other benefit plans provided by Employer from time to
time to the extent generally applicable to Peer Officers and subject to the eligibility criteria
and terms and conditions of such plans. Any additional benefits above those noted above are set
forth in Appendix B. This Agreement does not affect or otherwise modify the provisions of any
other compensation, retirement or other benefit program or plan of Employer.

     5. Termination of Employment. The Officer’s employment with Employer is terminable as herein
provided.

          5.1 Grounds for Termination. Employer may, in its sole and absolute discretion, terminate
Officer’s employment on the following grounds:

               5.1.1 Disability. In the event of Officer’s inability to perform the essential functions of
his position (with or without reasonable accommodation) because of illness, injury or similar
incapacity (“Disability”), Officer’s employment may be terminated by Employer by giving Notice of
Termination as provided in Section 8.1. For purposes of this Agreement, Officer shall not be
considered to have a Disability if he is considered to be a “qualified individual with a
disability” under the Americans with Disabilities Act.

               5.1.2 Death. In the event of Officer’s death during the Term (“Death”), Officer’s employment
shall immediately and automatically terminate.

               5.1.3 Cause. Employer may terminate Officer’s employment by giving Notice of Termination at
any time for Cause. “Cause” means, as determined by Employer:

 

 

               (i) Officer’s intentional and material failure to perform Officer’s duties with Employer
(other than any such failure resulting from incapacity due to physical or mental illness), after a
written demand for performance is delivered to Officer by Employer which specifically identifies
the manner in which Employer believes that Officer has intentionally and materially failed to
perform Officer’s duties and, if such failure is curable, has not been substantially remedied (on a prospective
basis) within 30 days following receipt of such written demand; or

               (ii) Officer’s engaging in any illegal conduct (including the willful violation of any law,
rule or regulation of any governmental authority, other than traffic violations), gross misconduct
or gross negligence which is materially injurious to the Employer, its financial condition or its
reputation;

               (iii) Officer’s engaging in any act or omission to act which constitutes (a) a conviction
based upon fraud, theft, misappropriation or embezzlement, (b) regular alcohol or drug abuse, or
(c) willful and material violation of Employer’s Code of Business Conduct and Ethics or other
material written policies of Employer, which policies have been made known to Officer in writing.
For purposes of this Section 5.1.3, no act or failure to act on the part of Officer, shall be
considered “willful” unless it is done, or omitted to be done, by Officer in bad faith or without
reasonable belief that Officer’s action or omission was in the best interests of Employer; or

               (iv) Entry of an order by any state or federal regulatory agency either removing Officer from
Officer’s position with Employer or its affiliates or prohibiting Officer from participating in the
conduct of the affairs of Employer or any of its affiliates; or

               (v) Officer’s breach of the covenants set forth in Section 6 of this Agreement, or material
breach of any other provisions of this Agreement and, in each case, such breach shall have not been
substantially remedied (on a prospective basis) within 30 days following written notice of such
breach by IndyMac.

               5.1.4 Poor Performance. Employer may terminate Officer’s employment by giving Notice of
Termination at any time for Poor Performance. “Poor Performance” means Officer’s failure to
substantially perform Officer’s duties with Employer (other than any such failure resulting from
incapacity due to physical or mental illness), and Officer’s inability to cure such failure to
Employer’s reasonable satisfaction within 90 days following Employer’s delivery to Officer of a
written demand for substantial performance which specifically identifies the manner in which
Employer believes that Officer has substantially failed to perform Officer’s duties.

               5.1.5 Without Cause. Employer may, in its sole and absolute discretion, terminate Officer’s
employment other than for Cause, Death, Disability, or Poor Performance (“Without Cause”) by giving
Notice of Termination at any time for any reason.

               5.1.6 Resignation. Should Officer voluntarily resign Officer’s employment, either by giving
Notice of Termination during the Term or otherwise (“Resignation”), Officer’s employment shall
terminate immediately, unless Officer and Employer mutually agree on a later effective Termination
Date.

 

 

          5.2 Benefits Upon Termination. Notwithstanding any other agreements to the contrary, the
following benefits shall be the only termination benefits Officer is entitled to from Employer. In
the event that Officer’s employment terminates for any reason, Officer shall be entitled to receive
(i) all accrued but unpaid Base Salary and vacation benefits as of the Termination Date (“Accrued
Benefits”) and (ii) any other benefits already vested as of the Termination Date under any of
Employer’s applicable equity compensation, pension, retirement, medical or other welfare, cash
incentive compensation, or similar plans in which Officer participated immediately prior to
termination, subject to the terms and conditions of such plans (“Vested Benefits”).

               5.2.1 Disability. In the event that Officer’s employment terminates by reason of Disability,
Officer shall be entitled to receive the immediate vesting, to the extent not otherwise vested, of
all outstanding equity incentive awards previously granted to Officer by the Public Company
(including all awards granted pursuant to the Original Employment Agreement). Officer shall also
be entitled to payment of an amount equal to the product obtained by multiplying one-twelfth (1/12)
of Officer’s then-current base salary, reduced by 50%, by the number of whole months remaining from
the Termination Date until the end of the Term (as though such Disability shall not have occurred),
with such amount being paid in approximately equal monthly installments commencing on the six-month
anniversary of the Termination Date through the end of the calendar year in which the termination
occurs; provided, however, that to the extent such six-month anniversary occurs
after the end of the calendar year in which termination occurs, such amount shall be paid in a lump
sum on such six-month anniversary date. Such amount will be reduced by the amount of any cash
payments that would become due to Officer under the terms of Officer’s disability insurance or
other disability benefit plan funded by Employer or Employer’s tax-qualified Defined Benefit
Pension Plan during the period from the Termination Date until the end of the Term. In addition,
Officer shall be entitled for a period of time through the end of the Term (as though such
Disability shall not have occurred) or until Officer’s death, whichever first occurs, to
reimbursement by Employer of (a) the cost of any continued coverage under Employer’s group medical
insurance plan for the benefit of Officer, Officer’s spouse and dependents, if any, should he or
they elect continued coverage under COBRA, provided he or they were covered under the plan
immediately prior to Officer’s termination, and (b) the cost of continued coverage under Employer’s
life and long-term disability plans for the benefit of Officer, should Officer elect to obtain an
individual conversion policy, subject to the terms, conditions, and limitations contained in such
policy. Coverage under another group plan (e.g., through a new employer) other than an individual
conversion policy shall result in the immediate cessation of the reimbursement and continuation of
the applicable Employer benefit plans. If and to the extent required to prevent a liability under
Section 409A of the Code, Officer will pay the cost of such coverage for the first six months after
the Date of Termination, and Employer will reimburse Officer for such costs on the six-month
anniversary of Officer’s “separation from service” as defined in Section 409A of the Code, and such
costs for the remaining period of coverage shall be paid by Employer in accordance with the
applicable plan. All payments under this Section 5.2.1 shall be subject to Section 5.2.8, Section
5.2.10., Section 6, and to the additional benefit described in Section 5.2.9, if allowed by law and
by this Agreement.

 

 

               5.2.2 Death. In the event of Officer’s Death, such person or persons as Officer shall have
designated in writing or, in the absence of such a designation, Officer’s estate, shall be entitled
to receive the immediate vesting, to the extent not otherwise vested, of all equity incentive
awards previously granted to Officer by the Public Company (including all awards granted pursuant
to the Original Employment Agreement). Employer shall also, within forty-five (45) days following
Officer’s Death, pay to Officer’s designee or to Officer’s estate an amount equal to two times
Officer’s annual base salary in effect at the time of death, and for a period of twelve (12) months
following the date of Officer’s Death, reimburse such persons for the cost of any continued
coverage under Employer’s group medical insurance plan for the benefit of Officer’s spouse and
dependents, if any, should they elect continued coverage under COBRA, provided they were covered
under the plan immediately prior to Officer’s Death. Coverage under another group plan (e.g.,
through a new employer) shall result in the immediate cessation of the reimbursement and
continuation of the applicable Employer benefit plans. If and to the extent required to prevent a
liability under Section 409A of the Code, Officer’s estate will pay the cost of such coverage for
the first six months after the Date of Termination and Employer will reimburse Officer’s estate for
such costs on the six-month anniversary of Officer’s “separation from service” as defined in
Section 409A of the Code, and such costs for the remaining period of coverage shall be paid by
Employer in accordance with the applicable plan. All payments under this Section 5.2.2 shall be
subject to Section 5.2.10 and to the additional benefit described in Section 5.2.9, if allowed by
law and by this Agreement.

               5.2.3 Cause. In the event of Officer’s termination for Cause, Officer shall not be entitled
to any additional compensation or benefits, except as provided in Section 5.2 (including all Vested
Benefits).

               5.2.4 Poor Performance. In the event of Officer’s termination for Poor Performance, the
benefits payable to Officer shall depend upon Officer’s position and continuous service with
Employer or its affiliates. If Officer had sixty (60) or fewer months of continuous service as of
the Termination Date, Officer shall be entitled to payment of an amount equal to the lesser of (a)
the product obtained by multiplying Officer’s then-current annual base salary by 0.5, or (b) the
product obtained by multiplying one-twelfth (1/12) of Officer’s then-current annual base salary,
reduced by 50%, by the number of whole months remaining from the Termination Date until the end of
the Term (as though such termination for Poor Performance shall not have occurred). Such amount
shall be paid in approximately equal monthly installments commencing on the six-month anniversary
of the Termination Date through the end of the calendar year in which the termination occurs;
provided, however, that to the extent such six-month anniversary occurs after the
end of the calendar year in which termination occurs, such amount shall be paid in a lump sum on
such six-month anniversary date.

               If Officer had more than sixty (60) months of continuous service as of the Termination Date,
or if Officer is a person required to file reports pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, due to Officer’s status as a director, officer or principal
stockholder of Employer or of any of its affiliates (a “Section 16 Reporting Person”), Officer
shall be entitled to payment of an amount equal to the lesser of (a) Officer’s then-current annual
base salary, or (b) the product obtained by multiplying one-twelfth (1/12) of Officer’s
then-current annual base salary by the number of whole months remaining from the Termination Date
until the end of the Term (assuming no termination for Poor Performance). Such amount

 

 

shall be
paid in approximately equal monthly installments commencing on the six-month anniversary of the
Termination Date through the end of the calendar year in which the termination occurs;
provided, however, that to the extent such six-month anniversary occurs after the
end of the calendar year in which termination occurs, such amount shall be paid in a lump sum on
such six-month anniversary date.

               All payments under this Section 5.2.4 shall be subject to Section 5.2.8, Section 5.2.10.,
Section 6, and to the additional benefit described in Section 5.2.9, if allowed by law and by this
Agreement.

               5.2.5 Without Cause. In the event Officer’s employment is terminated by Employer Without
Cause, Officer shall be entitled to the immediate vesting, to the extent not otherwise vested, of
all equity incentive awards previously granted to Officer by the Public Company (including all
awards granted pursuant to the Original Employment Agreement), but only to the extent that any such
awards would, by their normal terms, vest within one (1) year of the Termination Date. Officer
shall also be entitled to payment of an amount equal to the lesser of (a) the product obtained by
multiplying Officer’s then-current annual base salary by 1.5, or (b) the product obtained by
multiplying one-twelfth (1/12) of Officer’s then-current base salary, increased by 100%, by the
number of whole months remaining from the Termination Date until the end of the Term (assuming no
termination Without Cause). Such amount shall be paid in approximately equal monthly installments
commencing on the six-month anniversary of the Termination Date through the end of the calendar
year in which the termination occurs; provided, however, that to the extent such
six-month anniversary occurs after the end of the calendar year in which termination occurs, such
amount shall be paid in a lump sum on such six-month anniversary date. In addition, Officer shall
be entitled for a period of twelve (12) months following the Termination Date, to reimbursement by
Employer of (a) the cost of any continued coverage under Employer’s group medical insurance plan
for the benefit of Officer, Officer’s spouse and dependents, if any, should he or they elect
continued coverage under COBRA, provided they were covered under the plan immediately prior to
Officer’s termination, and (b) the cost of continued coverage under Employer’s life and long-term
disability plans for the benefit of Officer, should Officer elect to obtain an individual
conversion policy, subject to the terms, conditions, and limitations contained in such policy.
Coverage under another group plan (e.g., through a new employer) other than an individual
conversion plan shall result in the immediate cessation of such reimbursement and continuation of
the applicable Employer benefit plans. If and to the extent required to prevent a liability under
Section 409A of the Code, Officer will pay the cost of such coverage for the first six months after
the Date of Termination and Employer will reimburse Officer for such costs on the six-month
anniversary of Officer’s “separation from service” as defined in Section 409A of the Code, and such
costs for the remaining period of coverage shall be paid by Employer in accordance with the
applicable plan. All payments under this Section 5.2.5 shall be subject to Section 5.2.8, Section
5.2.10., Section 6, and to the additional benefit described in Section 5.2.9, if allowed by law and
by this Agreement.

               5.2.6 Resignation. In the event of Officer’s Resignation, Officer shall not be entitled to
payment of any additional compensation or benefits, except as provided in Section 5.2 (including
the Vested Benefits).

 

 

               5.2.7 Change in Control.

               5.2.7.1 Determination of Change in Control. For purposes of this Agreement, “Change in
Control” shall have the meaning set forth in the IndyMac Bancorp, Inc. 2002 Incentive Plan, as
Amended and Restated, or if a subsequent incentive plan is adopted by the Board of Directors of the
Public Company and approved by the shareholders thereof, then the definition of “Change in Control”
in such subsequent plan, if applicable, shall be used for purposes of this Agreement;
provided, however, that for purposes of this Agreement, “Change in Control” shall
also be deemed to include (i) the sale of Financial Freedom (whether by merger, consolidation,
stock sale, asset sale (in which case the sale of all, substantially all, or a significant portion,
of the assets of Financial Freedom shall be deemed to constitute a sale), or otherwise) to any
party (other than an entity wholly-owned, directly or indirectly, by
Public Company), or (ii) the
completion of an underwritten, initial public offering of any equity securities, or instruments or
other rights (including options, warrants or debt instruments) convertible into or exchangeable for
equity securities, of Financial Freedom.

               5.2.7.2 Effect of Change of Control. If a Change in Control should occur during the Term,
and should Officer’s employment be terminated within two (2) years following the Change in Control
(i) by reason of Officer’s Disability or Death, or (ii) either by Employer or its successor Without
Cause, then, in lieu of any other benefits described elsewhere in this Agreement:

               (i) Employer shall pay Officer in a single severance payment on the six-month anniversary of
the Termination Date an amount in cash equal to two (2) times the sum of Officer’s then-current
annual base salary,

               (ii) Any unvested stock options and other equity grants shall become immediately and fully
vested, and any vested options (or other incentive awards that may be exercised) shall remain
exercisable until (a) the later of the fifteenth (15th) day of the third month following
the date the award otherwise would have expired if the exercise period had not been extended
pursuant to this provision, or December 31 of the calendar year in which the award otherwise would
have expired if the exercise period had not been extended pursuant to this provision, or (b) if
earlier, their full-term expiration,

               (ii) For a period of twelve (12) months following the Termination Date, Employer shall
reimburse Officer for (a) the cost of any continued coverage under Employer’s group medical
insurance plan for the benefit of Officer, Officer’s spouse and dependents, if any, should he or
they elect continued coverage under COBRA, provided he or they were covered under the plan
immediately prior to Officer’s termination, and (b) the cost of continued coverage under Employer’s
life and long-term disability plans for the benefit of Officer, should Officer elect to obtain an
individual conversion policy, subject to the terms, conditions, and limitations contained in such
policy; provided that, if and to the extent required to prevent a liability under Section 409A of
the Code, Officer will pay the cost of such coverage for the first six months after the Date of
Termination and Employer will reimburse Officer for such costs on the six-month anniversary of
Officer’s “separation from service” as defined in Section 409A of the Code, and such costs for the
remaining period of coverage shall be paid by Employer in accordance with the applicable plan, and

               (iv) Officer shall be entitled to any Accrued Benefits and any Vested Benefits.

 

 

               Notwithstanding anything contained herein, if a Change in Control occurs and Officer’s
employment with Employer is terminated prior to a Change in Control other than for Cause or Poor
Performance, and if such termination of employment or event was at the request, suggestion or
initiative of a third party who has taken steps reasonably calculated to effect a Change in
Control, then Officer upon occurrence of the Change in Control shall be entitled to receive the
payments and benefits set forth in this Section 5.2.7, in lieu of payments and benefits described
elsewhere in this Agreement. All payments under this Section 5.2.7 shall be subject to Section
5.2.8, Section 5.2.10., Section 6, and to the additional benefit described in Section 5.2.9, if
allowed by law and by this Agreement.

               5.2.8 Other Employment. Employer’s obligation to pay continuation benefits to Officer in the
event of Officer’s termination for Disability or by Employer Without Cause or for Poor Performance,
other than pursuant to Section 5.2.7, shall immediately cease in the event that Officer obtains
coverage under another group plan (e.g., through a new employer), whether as an employee,
independent contractor, consultant or otherwise.

               5.2.9 Excise Tax. In the event it should be determined that any payment or distribution by
Employer as the result of Officer’s termination of employment, in connection with a Change in
Control, on account of Poor Performance or Without Cause (a “Payment”) would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code or any interest or penalties are
incurred by Officer with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Officer
shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Officer of all taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Officer retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. In order to be
eligible for this benefit, Officer must have had more than ten (10) years of continuous service to
Employer or its affiliates as of the Termination Date or must immediately prior to the transaction
giving rise to the Change in Control be a Section 16 Reporting Person. If the law prohibits any
form of the foregoing benefit, then Employer and Officer understand and agree that this Section
5.2.9 is of no effect.

               5.2.10 Release of Claims. Employer’s obligation to pay any salary continuation benefits or
other amounts, awards, or benefits which otherwise were not vested as of the date of Officer’s
termination is expressly conditional upon the execution of a general release, executed by Officer,
of all claims or causes of action, whether known or unknown, that Officer may have or hold against
Employer including, but not limited to, any claims for breach of contract, for employment
discrimination or harassment, for wrongful termination or for other tortious conduct in connection
with Officer’s employment or its termination. Such release agreement shall be prepared by
Employer, shall be similar to the release(s) required to be signed by Peer Officers in connection
with their termination of employment, shall include an express waiver by Officer of California
Civil Code section 1542, and shall be promptly provided to Officer following termination of
employment. Officer shall be required to execute and return such release agreement to Employer
within twenty-one (21) days following receipt of such agreement from Employer.

 

 

6. Restrictive Covenants.

          6.1 No Solicitation. During employment and for a period of eighteen (18) months after
termination of employment, Officer shall not, directly or indirectly:

               6.1.1 Solicit, or cause to be solicited, any customers of Employer or Employer’s affiliates
for purposes of selling any products or services competitive with those of Employer or its
affiliates and with whom Officer had Material Contact in the twelve (12) months preceding
termination of employment. For purposes of this Agreement, Officer shall be deemed to have
“Material Contact” with a customer if (a) Officer had business dealings with the customer on
Employer’s behalf, or (b) Officer was responsible for supervising or coordinating the dealings
between the customer and Employer;

               6.1.2 Solicit for employment, offer, or cause to be offered employment, either on a full time,
part-time or consulting basis, to any person who was employed by Employer or its affiliates on the
date Officer’s employment terminated and with whom Officer had regular contact with during the
course of his employment by Employer, unless Officer shall have received the prior written consent
of Employer.

          6.2 Basis for Non-Solicitation Agreement. Officer understands and agrees that the
non-solicitation agreement contained in Section 6.1 is necessary to Employer because Officer has
access to Employer’s “Confidential Information” (as that term is defined in Section 6.3 below) and
Employer wishes to protect such Confidential Information from intentional and/or inadvertent
disclosure or use upon or after the termination of Officer’s employment with Employer. As
consideration, Employer expressly agrees to provide Officer with Confidential Information during
Officer’s employment with Employer.

          6.3 Confidentiality.

               6.3.1 Trade Secrets. “Trade Secrets” refers to information, without regard to form, that is
not publicly known about Employer’s business, that Employer has made reasonable efforts to maintain
as secret or confidential, and from which Employer derives economic value because it is not
generally known to those who are not affiliated with Employer and who can obtain economic value
from its use or disclosure. Trade Secrets include, but are not limited to, concepts, ideas,
customer lists, business lists, business and strategic plans, financial data, accounting
procedures, secondary marketing and hedging models, trade secrets, and computer programs and plans.
This definition shall not limit any definition of “trade secrets” or any equivalent term under
applicable state, local, or federal law.

 

 

               6.3.2 Confidential Information. “Confidential Information” refers to business information or
data of Employer that, although not a Trade Secret, is not generally known to the public and that
Employer desires and makes reasonable efforts to keep confidential. Confidential Information
includes, but is not limited to, concepts, ideas, customer lists, business lists, business and
strategic plans, financial data, accounting procedures, secondary marketing and hedging models,
trade secrets, computer programs and plans, information related to officers, directors, employees
and agents, operations materials and memoranda, personnel records and information, pricing and
financial information related to the Employer and suppliers, and any information marked
“Confidential” by Employer, and other proprietary information that does not rise to the level of a
Trade Secret. Confidential Information does not include data or information that (i) Employer has
voluntarily disclosed to the public, (ii) third parties have independently developed and disclosed
to the public, (iii) otherwise enters the public domain through lawful means or through no fault of
Officer, or (iv) is lawfully and rightfully disclosed to Officer following the date of this
Agreement by another party without an obligation to keep the information confidential. This
definition shall not limit any definition of “confidential information” or any equivalent term
under any applicable state, local or federal law.

               6.3.3 Non-Disclosure. Officer hereby acknowledges and agrees that Employer and its affiliates
have developed and own valuable information described above as Trade Secrets and Confidential
Information. Officer acknowledges and agrees that all such Trade Secrets and Confidential
Information are valuable assets of Employer, and if developed by Officer, are developed by Officer
in the course of Officer’s employment with Employer, and are the sole property of Employer.
Officer agrees that Officer will not divulge or otherwise disclose to any third party, directly or
indirectly, any Confidential Information or Trade Secrets, except to the extent such use or
disclosure is (i) required by applicable law or in response to a lawful inquiry from a governmental
or regulatory authority, (ii) lawfully obtainable from other sources, (iii) authorized by Employer
or (iv) in the case of Confidential Information only, necessary or appropriate to the performance
of this Agreement and in furtherance of Employer’s best interests. Officer acknowledges that this
restriction on disclosure of Confidential Information is limited to the period during Officer’s
employment and for eighteen (18) months thereafter. The parties acknowledge and agree that this
Agreement is not intended to, and does not, alter either Employer’s rights or Officer’s obligations
under any state or federal statutory or common law regarding trade secrets or unfair trade
practices.

          6.4 Conditional Payment. Officer’s right to receive payments of salary continuation, benefits
continuation or other non-vested compensation described in Section 5.2 is conditioned upon
Officer’s full compliance in all material respects with Section 6, other than any noncompliance
which is inadvertent or immaterial and does not cause material injury to Employer’s financial
condition or reputation. If Officer fails to comply in all material respects with the obligations
set forth in Section 6 as reasonably determined by the Chief Executive Officer, the Board of
Directors of Employer, or a committee of the Board, within eighteen (18) months after Officer’s
termination, then Officer shall not be entitled to any further salary continuation, benefits
continuation or other non-vested compensation from Employer, but only to the extent that any such
noncompliance is not inadvertent or immaterial and causes material injury to Employer’s financial
condition or reputation.

     7. Reimbursement of Business Expenses. During the Term, Officer shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by Officer in accordance with the
policies, practices and procedures of Employer to the extent applicable

 

 

generally to Peer Officers;
provided that any such reimbursement shall be made no later than March 15th of
the calendar year immediately following the calendar year in which such expenses were incurred.

     8. Miscellaneous.

          8.1 Notice of Termination and Termination Date. Any termination of Officer’s employment by
Employer or by Officer (including any Resignation) shall be communicated by a written Notice of
Termination to the other party, stating the specific termination provision in this Agreement relied
upon, if any, and setting forth in reasonable detail the facts and circumstances, if applicable,
claimed to provide a basis for termination. The failure by Employer to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Cause shall not waive any
right of Employer hereunder or preclude Employer from asserting such fact or circumstance in
enforcing Employer’s rights under this Agreement. The effective date of termination (“Termination
Date”) shall be (i) the date specified in the Notice of Termination, or (ii) in the event of
Officer’s Death, the date of Death, or (iii) in the event of a Change in Control, either the date
specified in the Notice of Termination or the last day of the Term should same not be renewed on
substantially comparable terms within two (2) years following the Change in Control.

          8.2 Successorship. This Agreement shall inure to the benefit of and shall be binding upon
Employer, its successors and assigns. This Agreement may not be assigned without the prior written
consent of the parties, other than in connection with a merger or sale of Public Company or the
sale of substantially all the assets of Public Company, or similar transaction. Notwithstanding
the foregoing, Employer may, without Officer’s consent, assign, whether by assignment agreement,
merger, operation of law or otherwise, this Agreement to the Public Company or to any successor of
the Public Company, subject to such assignee’s express assumption of all obligations of Employer
hereunder. The failure of any successor to or assignee of the Employer’s business and/or assets in
such transaction to expressly assume all obligations of Employer hereunder shall be deemed a
termination by the Company Without Cause.

          8.3 Notices. Any notices provided for in this Agreement shall be sent to Public Company at
its corporate headquarters, Attention: General Counsel, with a copy to the Human Resources
department at the same address, or to such other address as IndyMac may from time to time in
writing designate, and to Officer at such address as Officer may from time to time in writing
designate (or Officer’s business address of record in the absence of such designation). All
notices shall be deemed to have been given two (2) business days after they have been deposited as
certified mail, return receipt requested, postage paid and properly addressed to the designated
address of the party to receive the notices.

          8.4 Entire Agreement. This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and it replaces and supersedes any prior agreements between the
parties relating to said subject matter, including the Original Agreement; provided, however, that
all provisions of Employer’s Officer Handbook and any other written personnel policies of Employer
that are made available to Employer in writing shall be incorporated herein by this reference, and
Officer hereby expressly acknowledges that all provisions of the Officer Handbook and other written
policies are applicable to Officer’s employment relationship with

 

 

Employer, except to the extent
that any such provisions directly conflict with any term contained in this Agreement; PROVIDED,
FURTHER, THAT OFFICER HEREBY EXPRESSLY ACKNOWLEDGES THAT OFFICER HAS EXECUTED EMPLOYER’S STANDARD
MUTUAL AGREEMENT TO ARBITRATE CLAIMS CONCURRENTLY HEREWITH, WHICH REQUIRES THAT ANY DISPUTE UNDER
THIS AGREEMENT WILL BE ARBITRATED. No modifications or amendments of this Agreement shall be
valid unless made in writing and signed by the parties hereto.

          8.5 Waiver. The waiver of the breach of any term or of any condition of this Agreement shall
not be deemed to constitute the waiver of any other breach of the same or any other term or
condition.

          8.6 California Law. This Agreement shall be construed and interpreted in accordance with the
laws of California, without reference to its conflict of laws principles.

          8.7 Injunctive Relief. Employer and Officer acknowledge that the services Officer is
obligated to render under the provisions of this Agreement are of a special, unique, unusual,
extraordinary and intellectual character, which gives this Agreement peculiar value to Employer.
The loss of these services cannot be reasonably or adequately compensated in damages in an action
at law and it would be difficult (if not impossible) to replace these services. By reason thereof,
if either party violates any of the material provisions of this Agreement, the parties shall, in
addition to any other rights and remedies available under this Agreement, or under applicable law
or the Mutual Agreement to Arbitrate Claims, be entitled to seek injunctive relief, as permitted by
law, from an Arbitrator pursuant to Employer’s Arbitration Agreement, restraining the other from
committing or continuing any violation of this Agreement. The provisions hereof shall survive the
expiration, suspension or termination, for any reason, of this Agreement and shall be in addition
to, and not in lieu of, any other rights and remedies available to Employer at law or in equity.

          8.8 Claims Procedures. If Officer believes that he is entitled to a payment or benefit
hereunder which has not been received or which is different than that which is required by this
Agreement, Officer may file a claim in writing with the administrator pursuant to Employer’s claims
procedures applicable to Officer with respect to this Agreement. Employer shall provide to Officer
a copy of such claims procedures separately. Utilization of the claims procedures is a condition
of payment of benefits under the Agreement.

          8.9 Severability. If any provision of this Agreement is held invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full force and effect, and if any
provision is held invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.

          8.10 Regulatory Intervention. Notwithstanding anything in this Agreement to the contrary,
this Agreement is subject to the following terms and conditions:

               8.10.1 If Officer is suspended and/or temporarily prohibited from participating in the conduct
of Employer’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)), Employer’s

 

 

obligations hereunder shall be
suspended as of the date of service unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, Employer shall (i) pay Officer all or part of the compensation withheld
while Employer’s contract obligations were suspended, and (ii) reinstate any of Employer’s
obligations which were suspended.

               8.10.2 If Officer is removed and/or permanently prohibited from participating in the conduct
of Employer’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1818 (e)(4) and (g)(1)), all obligations of Employer under this Agreement
shall terminate as of the effective date of the order, but Officer’s vested rights (including all
Accrued Benefits and Vested Benefits) shall not be affected.

               8.10.3 If Employer is in default (as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813 (x)(1)), all obligations under this Agreement shall terminate as of
the date of default, but Officer’s vested rights (including all Accrued Benefits and Vested
Benefits) shall not be affected.

               8.10.4 All obligations under this Agreement shall be terminated, except to the extent
determined that continuation of the contract is necessary for the continued operation of Employer,
(i) by the Office of Thrift Supervision (“OTS”) at the time the Federal Deposit Insurance
Corporation (“FDIC”) enters into an agreement to provide assistance to or on behalf of Employer
under the authority contained in Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823
(c)); or (ii) by the OTS at the time the OTS approves a supervisory merger to resolve problems
related to operation of Employer or when Employer is determined by the OTS to be in an unsafe or
unsound condition. Any rights of Officer that shall have vested under this Agreement (including
all Accrued Benefits and Vested Benefits) shall not be affected by such action.

               8.10.5 With regard to the provisions of this Section 8.10:

               (i) Employer agrees to use its best efforts to oppose any such notice of charges as to which
there are reasonable defenses;

               (ii) In the event the notice of charges is dismissed or otherwise resolved in a manner that
will permit Employer to resume its obligations to pay compensation hereunder, Employer will
promptly make such payment hereunder; and

               (iii) During the period of suspension, the vested rights of the contracting parties shall not
be affected except to the extent precluded by such notice.

               8.10.6 Any termination related payments made to Officer by Employer pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.

          8.11 Counsel. Employer encourages Officer to review this Agreement with his or her personal
legal counsel and to take such other steps as may be necessary to fully understand the terms and
conditions hereof. Each party and his, her, or its counsel, if any, have reviewed this Agreement
and have been provided the opportunity to discuss this Agreement with the other party prior to its
execution.

 

 

	 	 	 	 	 	 	 	 	 	 	 
	EMPLOYER:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	IndyMac Bank, F.S.B.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	Dated:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: Mike Perry	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	EMPLOYEE:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Dated:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Name:

	 	James R. Mahoney	 	 	 	 	 	 	 	 

 

 

APPENDIX A

Base Salary

	 	 	 	 
	Officer Name:	 	James R. Mahoney
	Annual Base Rate for 7/1/06 to 6/30/07:
	 	$	1,500,000
	Annual Base Rate for 7/1/07 to 6/30/08:
	 	$	1,250,000
	Annual Base Rate for 7/1/08 to 6/30/09:
	 	$	1,000,000
	Annual Base Rate for 7/1/09 to 6/30/11:
	 	$	500,000

 

 

APPENDIX B

Additional Benefits

	 	 	 
	Officer Name:

	 	James R. Mahoney

IndyMac shall reimburse Officer for annual and monthly membership fees for his country club and
pacific club. Such membership fees shall be reimbursed no later than March 15th of the
calendar year immediately following the calendar year in which such fees were paid by Officer.

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