Document:

Exhibit 10.24

 

PURCHASE
AND SALE AGREEMENT

 

 

by
and between

 

 

405
MATEO REAL ESTATE, LLC, a Delaware limited liability company

 

 

as Seller

 

 

and

 

 

JOE’S
JEANS, INC., a Delaware corporation

 

 

as
Buyer

 

 

Dated as of

 

January 11, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1
  Purchase and Sale Agreement

  	
   

  	
  1

  
	
   

  	
  1.1

  	
  Agreement to Purchase and Sell

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 The
  Property

  	
   

  	
  1

  
	
   

  	
  2.1

  	
  Description of the Property

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3
  Purchase Price; Deposit; Adjustments

  	
   

  	
  2

  
	
   

  	
  3.1

  	
  Purchase Price

  	
   

  	
  2

  
	
   

  	
  3.2

  	
  Deposit

  	
   

  	
  2

  
	
   

  	
  3.3

  	
  Balance of Purchase Price

  	
   

  	
  2

  
	
   

  	
  3.4

  	
  Prorations of Taxes

  	
   

  	
  2

  
	
   

  	
  3.5

  	
  Utilities/Leases

  	
   

  	
  3

  
	
   

  	
  3.6

  	
  Estimates

  	
   

  	
  3

  
	
   

  	
  3.7

  	
  Adjustment Payments

  	
   

  	
  3

  
	
   

  	
  3.8

  	
  Calculation of Prorations

  	
   

  	
  4

  
	
   

  	
  3.9

  	
  Seller’s Closing Costs

  	
   

  	
  4

  
	
   

  	
  3.10

  	
  Buyer’s Closing Costs

  	
   

  	
  4

  
	
   

  	
  3.11

  	
  Survival

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4
  Representations, Warranties, Covenants and Agreements

  	
   

  	
  4

  
	
   

  	
  4.1

  	
  Seller’s Representations and Warranties

  	
   

  	
  4

  
	
   

  	
  4.2

  	
  Seller’s Covenants

  	
   

  	
  6

  
	
   

  	
  4.3

  	
  Buyer’s Representations and Warranties

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5
  Access and Inspection

  	
   

  	
  7

  
	
   

  	
  5.1

  	
  Access for Investigations

  	
   

  	
  8

  
	
   

  	
  5.2

  	
  Access

  	
   

  	
  8

  
	
   

  	
  5.3

  	
  Communications with Governmental Authorities

  	
   

  	
  8

  
	
   

  	
  5.4

  	
  Indemnity and Insurance Requirements

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6
  Title and Survey

  	
   

  	
  9

  
	
   

  	
  6.1

  	
  Title and Survey Review

  	
   

  	
  9

  
	
   

  	
  6.2

  	
  Title Objections and Monetary Liens

  	
   

  	
  9

  
	
   

  	
  6.3

  	
  Required State of Title

  	
   

  	
  9

  
	
   

  	
  6.4

  	
  Personal Property

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7
  Conditions to Seller’s and Buyer’s Performance

  	
   

  	
  9

  
	
   

  	
  7.1

  	
  Conditions to Seller’s Obligations

  	
   

  	
  9

  
	
   

  	
  7.2

  	
  Conditions to Buyer’s Obligations

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8
  Closing

  	
   

  	
  10

  
	
   

  	
  8.1

  	
  Escrow Closing

  	
   

  	
  10

  
	
   

  	
  8.2

  	
  Seller’s Closing Deliveries

  	
   

  	
  11

  
	
   

  	
  8.3

  	
  Buyer’s Closing Deliveries

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9
  Casualty and Condemnation

  	
   

  	
  12

  
	
   

  	
  9.1

  	
  Damage or Destruction/Eminent Domain

  	
   

  	
   

  

 

 

	
  ARTICLE 10 Brokerage Commissions

  	
   

  	
  12

  
	
   

  	
  10.1

  	
  Representations and Indemnity

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11
  Default, Termination and Remedies

  	
   

  	
  13

  
	
   

  	
  11.1

  	
  Seller Default

  	
   

  	
  13

  
	
   

  	
  11.2

  	
  BUYER DEFAULT

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12
  Miscellaneous

  	
   

  	
  14

  
	
   

  	
  12.1

  	
  Assignment

  	
   

  	
  14

  
	
   

  	
  12.2

  	
  Notices

  	
   

  	
  14

  
	
   

  	
  12.3

  	
  Interpretation

  	
   

  	
  15

  
	
   

  	
  12.4

  	
  Captions

  	
   

  	
  16

  
	
   

  	
  12.5

  	
  No Third-Party Beneficiaries

  	
   

  	
  16

  
	
   

  	
  12.6

  	
  Amendments

  	
   

  	
  16

  
	
   

  	
  12.7

  	
  Integration

  	
   

  	
  16

  
	
   

  	
  12.8

  	
  Choice of Law

  	
   

  	
  16

  
	
   

  	
  12.9

  	
  Counterparts

  	
   

  	
  16

  
	
   

  	
  12.10

  	
  Business Day

  	
   

  	
  16

  
	
   

  	
  12.11

  	
  Time of the Essence

  	
   

  	
  16

  
	
   

  	
  12.12

  	
  Use of Proceeds to Clear Title

  	
   

  	
  16

  
	
   

  	
  12.13

  	
  Submission not an Offer or Option

  	
   

  	
  16

  
	
   

  	
  12.14

  	
  Attorney’s Fees

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13
  Escrow Provisions

  	
   

  	
  17

  
	
   

  	
  13.1

  	
  Escrow Deposits

  	
   

  	
  17

  
	
   

  	
  13.2

  	
  Designee

  	
   

  	
  18

  
	
   

  	
  13.3

  	
  Survival

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  A

  	
  Description
  of the Real Property

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
  Description
  of Leases and Material Agreements

  	
   

  	
   

  
	
  EXHIBIT
  C

  	
  Description
  of Intangible Property

  	
   

  	
   

  
	
  EXHIBIT
  D

  	
  Title
  Commitment

  	
   

  	
   

  
	
  EXHIBIT
  E

  	
  Form
  of Deed

  	
   

  	
   

  
	
  EXHIBIT
  F

  	
  Form
  of Bill of Sale and General Assignment

  	
   

  	
   

  
	
  EXHIBIT
  G

  	
  Form
  of Seller Certification

  	
   

  	
   

  
	
  EXHIBIT
  H

  	
  Form
  of Title Affidavit

  	
   

  	
   

  
	
  EXHIBIT
  I

  	
  Form
  of Buyer Certification

  	
   

  	
   

  
	
  EXHIBIT
  J

  	
  Form
  of FIRPTA Affidavit

  	
   

  	
   

  
	
  EXHIBIT
  K

  	
  List
  of Apparatus, Equipment, Appliances & Inventory

  	
   

  	
   

  
	
  EXHIBIT
  L

  	
  List
  of Personal Property

  	
   

  	
   

  
	
  EXHIBIT
  M

  	
  List
  of Intangible Property

  	
   

  	
   

  
	
  EXHIBIT
  N

  	
  Escrow
  Agent Wire Instructions

  	
   

  	
   

  
	
  EXHIBIT
  O

  	
  List
  of Tax Proceedings, Protests and Assessments

  	
   

  	
   

  

 

 

PURCHASE
AND SALE AGREEMENT

 

This Purchase and Sale
Agreement (this “Agreement”)
is entered into as of the 11th day of January, 2010 by and
between 405 MATEO REAL ESTATE, LLC, a Delaware limited liability company (“Seller”) having an address of c/o
The Kor Group, 1212 S. Flower Street, Suite 100, Los Angeles, CA 90015 and
JOE’S JEANS, INC., a Delaware corporation (“Buyer”)
having an address of 5901 S. Eastern Avenue, Commerce, CA 90040.

 

RECITALS

 

Seller is the owner of the
Property (as defined in Section 2.1). 
Seller desires to sell the Property to Buyer, and Buyer desires to buy
the Property from Seller, all on and subject to the terms and conditions
hereinafter set forth.

 

ARTICLE 1

Purchase and Sale Agreement

 

1.1                                 Agreement to
Purchase and Sell.  In
consideration of the mutual undertakings and covenants of the parties set forth
in this Agreement, and for other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, Seller agrees to sell
the Property to Buyer, and Buyer agrees to buy the Property from Seller, on and
subject to the terms and conditions contained in this Agreement.

 

ARTICLE 2

The Property

 

2.1                                 Description of
the Property.  The “Property” consists of the
following:

 

(a)                                  The land
located in Los Angeles, Los Angeles County, California more particularly
described in Exhibit A attached hereto (the
“Land”);

 

(b)                                 all rights,
privileges and easements appurtenant to the Land owned by Seller, including,
without limitation, all minerals, oil, gas, and other hydrocarbon substances on
and under the Land, as well as all zoning and development rights, air rights,
water, water rights and water stock relating to the Land, any rights to any
land lying in the bed of any existing dedicated street, road or alley adjoining
the Land and to all strips and gores adjoining the Land, and any other
easements, rights-of-way, or appurtenances used in connection with the
beneficial use and enjoyment of the Land (collectively referred to as the “Appurtenances”);

 

(c)                                  all
improvements and fixtures located on the Land, if any, together with all plans,
specifications, reports, engineering, seismic or environmental studies,
drawings, specifications, plans and prints, in Seller’s possession or control,
related to the construction, alteration and modification thereof (collectively,
the “Improvements”);

 

(d)                                 all of Seller’s
right, title and interest in and to all apparatus, equipment, appliances and
inventory used in connection with the operation or occupancy of the
Improvements, if any, as more particularly described and set forth on Exhibit K  attached hereto and made
a part hereof (which, together with the Land, Appurtenances and Improvements,
is collectively referred to as the “Real Property”);

 

1

 

(e)                                  all tangible
personal property owned by Seller that is located on the Real Property and used
in the ownership, operation and maintenance of the Real Property including,
without limitation, all books, records and files of Seller relating to the Real
Property, as more particularly set forth on Exhibit L
attached hereto and made part hereof (collectively, the “Personal
Property”);

 

(f)                                    all of Seller’s
right, title and interest in and to all leases, licenses, occupancy or related
agreements or tenancies together with any amendments and/or modifications
thereto affecting the Property as more particularly set forth on Exhibit B attached hereto and made a
part hereof (collectively, the “Leases”);
and

 

(g)                                 Seller’s
interest in and to any contracts, licenses, warranties, permits certificates of
occupancy, entitlements and other written authorizations and approvals
necessary for the use, operation, maintenance or ownership of the Real
Property, if and only to the extent the same may be assigned or quitclaimed by
Seller without any expense to Seller and only to the extent that the same are
in effect as of the Closing Date, as more particularly set forth on Exhibit M attached hereto and made
a part hereof (the “Intangible Property”).

 

ARTICLE 3

Purchase Price; Deposit;
Adjustments

 

3.1                                 Purchase Price.  On the Closing Date, the Buyer agrees to pay
Six Million Seven Hundred Fifty Thousand and No/100 Dollars ($6,750,000.00)
(the “Purchase Price”), subject to adjustment
and as otherwise provided herein.

 

3.2                                 Deposit.

 

(a)                                  Five Hundred
Thousand and No/100 Dollars ($500,000.00) (the “Deposit”)
shall be delivered by Buyer to Chicago Title Insurance Company (the “Escrow Agent”) concurrently with
Seller’s execution of this Agreement in the form of a wire transfer made
payable to the order of Escrow Agent, pursuant to the wire instructions set
forth on Exhibit N, attached
hereto.  From and after the expiration of
the Feasibility Period, the Deposit shall be nonrefundable except as expressly
set forth herein.  On the Closing (as
hereinafter defined), the Deposit, and, at Buyer’s sole option, any interest
earned thereon, shall be applied toward the payment of the Purchase Price.

 

3.3                                 Balance of
Purchase Price.  On or
before the Closing Date (as hereinafter defined) Buyer will deposit with the
Escrow Agent the balance of the Purchase Price (i.e., the Purchase Price less
the Deposit, subject to the adjustments provided for herein) by wire transfer
of immediately available federal funds (the “Cash
Balance”).  On the Closing
Date, subject to the terms and conditions specified herein, Buyer shall direct
the Escrow Agent to apply the Cash Balance to the Purchase Price by
transferring such amounts to Seller.

 

3.4                                 Prorations of
Taxes.  All real and personal property
taxes attributable to the then current fiscal tax year for the Property in
which the Closing occurs shall be prorated and adjusted as of the Closing Date
as an adjustment at the Closing (regardless of whether such taxes and special
assessments are then due and payable or delinquent).  If the tax statements for the fiscal year
during which the Closing Date occurs are not finally determined, then the tax
figures for the immediately prior fiscal year will be used for the purposes of
prorating taxes on the Closing Date, with a further adjustment to be made after

 

2

 

the Closing Date as soon as
such tax figures are finalized.  All
special assessments that may be amortized over a number of years will be
prorated as of the Closing Date, with Seller responsible only for the period
ending on the day prior to the Closing Date. 
Any tax refunds or proceeds (including interest thereon) on account of a
favorable determination resulting from a challenge, protest, appeal or similar
proceeding relating to taxes and assessments relating to the Property (i) for
all tax periods occurring prior to the applicable tax period in which the
Closing occurs will be retained by and paid exclusively to Seller and (ii) for
the applicable tax period in which the Closing occurs will be prorated as of
the Closing Date after reimbursement to Seller and Buyer, as applicable, for
all reasonable and out of pocket fees, costs and expenses (including reasonable
attorneys’ and consultants’ fees) incurred by Seller or Buyer, as applicable,
in connection with such proceedings such that Seller will retain and be paid
that portion of such tax refunds or proceeds as is applicable to the portion of
the applicable tax period prior to the Closing Date and Buyer will retain and
be paid that portion of such tax refunds or proceeds as is applicable to the
portion of the applicable tax period from and after the Closing Date.  Seller represents that all tax proceedings,
protests and assessments relating to the Property are set forth on Exhibit O attached hereto and made
a part hereof.  Seller will not settle
any tax protests or proceedings listed on, nor will Seller institute any new
tax protests or proceeds not listed on, Exhibit O
in either event without the consent of Buyer, which consent shall be in Buyer’s
sole and absolute discretion to the extent that same would adversely affect the
taxes on the Property for any period after the Closing.  Subject to the immediately preceding sentence
and to the extent reflected on the attached Exhibit O,
Buyer will reasonably cooperate with Seller and Seller shall remain responsible
for and control any tax protests or proceedings for any period for which taxes
are adjusted between the parties under this Agreement.  Buyer and Seller will cooperate in pursuit of
any such proceedings and in responding to reasonable requests of the other for
information concerning the status of and otherwise relating to such proceedings;
provided, however, that neither party shall be obligated to incur any
out-of-pocket fees, costs or expenses in responding to the requests of the
other.

 

3.5                                 Utilities/Leases.  Seller will cause all meters for electricity,
gas, water, sewer or other utility usage at the Property to be read on the
Closing Date.  Seller will pay all
charges for such utility charges that have accrued on or prior to the Closing
Date.  If the utility companies are
unable or refuse to read the meters on the Closing Date, all charges for such
utility charges to the extent unpaid will be prorated and adjusted as of the
Closing Date based on the most recent bills. 
Seller shall provide notice to Buyer five (5) days prior to the Closing
Date setting forth (i) that utility meters will be read as of the Closing Date
or (ii) that utility meters will not be read on the Closing Date along with a
copy of the most recent bill for any utility charges that are to be prorated
and adjusted as of the Closing Date.  All
collected rent (whether fixed monthly rentals, additional rentals, escalation
rentals, retroactive rentals, operating cost pass-throughs or other sums and
charges payable by tenants under any lease), income and expenses from any
portion of the Property shall be prorated as of the Closing Date (prorated for
any partial month).  Buyer shall receive
all collected rent and income attributable to dates from and after the Closing
Date.  Seller shall receive all collected
rent and income attributable to dates prior to the Closing Date.

 

3.6                                 Estimates.  If, on the Closing Date, the precise figures
necessary for any of the foregoing adjustments are not capable of
determination, then those adjustments will be made on the basis of good faith
estimates of Seller and Buyer using currently available information, and final
adjustments shall be made within one (1) year after the Closing Date or sooner
to the extent precise figures are determined or become available.

 

3.7                                 Adjustment
Payments.  The net
amount of all adjustments to be made under this Article 3 will be paid
on the Closing Date in immediately available funds.  All post-closing adjustments will be made in
immediately available funds.

 

3

 

3.8                                 Calculation of
Prorations.  All
apportionments and prorations made hereunder shall be made based on the number
of days of ownership of the Property in the period applicable to the
apportionment, with Buyer entitled to income and responsible for expenses for
the Closing Date and thereafter. 
Prorations of annual payments will be made based on the number of days
of ownership in the applicable annual period.

 

3.9                                 Seller’s
Closing Costs.  At the
Closing, Seller shall pay and be responsible for the amount due for (i) deed
stamps, conveyance tax, county documentary tax or any other tax or charge substituted
therefor imposed in connection with the consummation of the transaction
contemplated hereby; (ii) fifty percent (50%) of any municipal documentary
transfer tax or any other tax or charge substituted therefor imposed in
connection with the consummation of the transaction contemplated hereby; (iii) recording
charges for the deed and any instrument that releases or discharges any lien as
required by Article 6; (iv) the premium for the CLTA portion of the
Owner’s policy of title insurance, if any, issued to Buyer at Closing pursuant
to the Title Commitment; (v) the cost of any title insurance endorsements issued to cure any Title
Objection (defined below) that Seller has elected to cure; (vi) fifty percent
(50%) of any fees charged by Escrow Agent; and (vii) Seller’s counsel’s fees
and expenses.

 

3.10                           Buyer’s Closing
Costs.  At the Closing, Buyer shall
pay and be responsible for (i) recording charges (other than as listed in Section
3.9); (ii) fifty percent (50%) of any municipal documentary transfer tax or
any other tax or charge substituted therefor imposed in connection with the
consummation of the transaction contemplated hereby; (iii) charges necessary to
obtain an update of the existing Survey, as applicable; (iv) charges necessary
to update the Survey and obtain the title insurance policy and all endorsements
thereto described in Section 6.1 in excess of the premium for the CLTA
portion of the Owner’s policy of title insurance; (v) fifty percent (50%) of
any fees charged by Escrow Agent; and (vi) Buyer’s counsel’s fees and expenses.

 

3.11                           Survival.  The provisions of Article 3 will
survive the Closing.

 

ARTICLE 4

Representations, Warranties,
Covenants and Agreements

 

4.1                                 Seller’s
Representations and Warranties.  Seller makes the representations and warranties
to Buyer that are set forth below, as of the date of this Agreement and as of
the Closing Date.  Buyer acknowledges (i)
that Buyer has entered into this Agreement with the intention of making and
relying upon its own investigation of the physical, environmental, economic and
legal condition of the Property, and (ii) that, other than as specifically set
forth below in this Section 4.1, Seller is not making and has not at any
time made any representation or warranty of any kind or nature, either oral or
written, directly or indirectly, expressed, implied, statutory or otherwise,
with respect to the Property, including, without limitation, representations or
warranties as to habitability, merchantability, fitness for a particular
purpose, title (other than Seller’s limited warranty of title set forth in the
Deed), zoning, tax consequences, latent or patent physical or environmental
condition, health or safety matters, utilities, operating history or
projections, valuation, projections, the applicability of any laws, rules or
regulations or compliance therewith. 
Based upon Buyer’s familiarity with the Property, Buyer’s due diligence
relating the Property and Buyer’s experience and knowledge as to the market in
which the Property is situated and as to investment in and operation of real
estate in the nature of the Property and commercial real estate in general,
Buyer shall purchase the Property on the Closing Date in its “AS IS, WHERE IS
AND WITH ALL FAULTS” condition, without any representation or warranty
whatsoever, as aforesaid, except as set forth in this Section 4.1, and
Buyer fully assumes the risk that adverse latent or patent physical,
structural, environmental, economic or legal conditions may not have been
revealed by Buyer’s investigations.  Seller
and Buyer acknowledge that the Purchase Price to be paid to Seller for the
Property has taken into account that the Property is being sold subject to the
foregoing provisions of this Section 4.1.

 

4

 

(a)                                  Seller is the
owner of the Property and Seller has the right, power and authority to enter
into and perform the terms and provisions of this Agreement.  This Agreement has been duly authorized,
executed and delivered by Seller and all consents required under Seller’s
organizational documents or by law have been obtained.  All documents that are to be executed by
Seller and delivered to Buyer on the Closing Date have been, or on the Closing
Date will be, duly executed, authorized and delivered by Seller.  This Agreement and all such documents are,
and on the Closing Date will be, legal, valid and binding obligations of
Seller, enforceable in accordance with their terms.  The entering into and performance by Seller
of the transactions contemplated by this Agreement will not violate or breach
any agreement, covenant or obligations binding on Seller.

 

(b)                                 Except as
specified on Schedule 1 attached hereto,
there are no actions, suits or proceedings (including arbitration proceedings)
with respect to which Seller has received service of process that could have
any adverse effect on any portion of the Property, Seller’s interest therein,
or Seller’s ability to perform its obligations hereunder, at law or in equity
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.

 

(c)                                  Seller has not
received any written notice of a condemnation action or threatened condemnation
against the Property.

 

(d)                                 There are no
Leases or parties in possession of all or any portion of the Property, except
as set forth in Exhibit B,
attached hereto and made part hereof.

 

(e)                                  Seller has not
received any written notice alleging a violation of Environmental Laws with
respect to the Property.  As used herein,
“Environmental Laws”) shall mean all federal state and local laws,
statues, rules, codes, ordinances, regulations, orders, judgments, decrees,
binding and enforceable guidelines, policies or common law now or hereafter in
effect and in each case as amended, or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment in each case, to the extent binding, relating to the
environment, the protection of health or Hazardous Materials (as defined below),
including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act, 42 USC §9601 et seq.; the Resource Conservation
and Recovery Act, 42 USC §6901 et seq.; the Federal Water Pollution Control
Act, 33 USC §1251 et seq.; the Toxic Substances Control Act, 15 USC §2601 et
seq.; the Clean Air Act, 42 USC §7401 et seq.; the Safe Drinking Water act, 42
USC §3803 et seq.; the Oil Pollution Act of 1990, 33 USC §2701 et seq.; the
Emergency Planning and Community Right-to-Know Act of 1986, 42 USC §11001 et seq.;
the Hazardous Material Transportation Act, 49 USC §1801 et seq.; and the
Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state, local or
foreign counterparts or equivalents, in each case as amended from time to
time.  Seller hereby assigns to Buyer as
of the Closing Date all claims, counterclaims, defenses or actions, whether at
common law, or pursuant to any other applicable federal or state or other laws
which Seller may have against any third parties relating to the existence of
any Hazardous Materials in, at, on, under or about the Property. For purposes
hereof, “Hazardous Material(s)” means and includes any pollutant, contaminant, waste,
material, compound or substance or substance (whether in the form of liquids,
solids or gases, and whether or not airborne) regulated by any federal, state,
local or Environmental Laws.

 

(f)                                    There are no
other material contracts or agreements related to the use, ownership or
operation of the Property, except as set forth in Exhibit B
and Exhibit M, attached hereto and made
part hereof.

 

5

 

(g)                                 Seller is not a
foreign corporation, foreign partnership or foreign estate (as such terms are
defined in Section 1445 of the Internal Revenue Code).

 

(h)                                 Seller has
delivered or made available to Buyer all Environmental Reports in Seller’s
possession or control.

 

(i)                                     There are no
mechanic’s or materialman’s liens or similar claims or liens now asserted
against the Property for work performed or commenced prior to the date hereof
other than as described in the Title Commitment

 

(j)                                     Seller is not
bankrupt or insolvent under any applicable Federal or state standard, and Seller
has not filed for protection or relief under any applicable bankruptcy or
creditor protection statute and has not been threatened by creditors with an
involuntary application of any applicable bankruptcy or creditor protection
statute.

 

(k)                                  If Seller is
notified of any legal proceedings instituted against the Property prior to
Closing, Seller represents and covenants that Seller shall, as soon as
reasonably practicable, give notice thereof to Buyer.

 

The
representations and warranties contained herein may be relied upon by the party
receiving the same and shall survive the Closing Date for a period of nine (9) months
from and after the Closing Date (the “Survival Period”).  If a written claim is made within the
Survival Period, the Survival Period shall toll with respect to such claim
while such claim is outstanding.  Buyer
shall not make any claim on account of a breach of representations or
warranties unless and until the aggregate measure of such claims exceeds
$25,000.  In no event shall the liability
for Seller to Buyer for any breaches of any representations or warranties set
forth in this Section 4.1 exceed $250,000, in the aggregate.

 

4.2                                 Seller’s
Covenants.  Seller
hereby covenants and agrees with Buyer that:

 

(a)                                  At all times
from the execution of this Agreement to the earlier of the termination of this
Agreement and the Closing Date, it shall maintain such casualty insurance on
the Improvements as is presently insured, as more particularly set forth on Exhibit P attached hereto and made
a part hereof.

 

(b)                                 From and after
the Feasibility Termination Date (defined below) (provided this Agreement has
not otherwise terminated as provided herein) through the earlier of the
termination of this Agreement and the Closing Date, Seller shall not enter into
any new contracts or agreements (including, without limitation, any leases,
licenses or occupancy agreements) or place, or permit to be placed, any
encumbrance on the Property, if such contract or encumbrance would survive the
Closing, without the prior written consent of Buyer, which may be granted or
withheld in Buyer’s sole discretion.

 

4.3                                 Buyer’s
Representations and Warranties.  Buyer hereby represents and warrants to
Seller, as of the date of this Agreement and as of the Closing Date, that this
Agreement has been duly authorized, executed and delivered by Buyer and all
consents required under Buyer’s organizational documents or by law have been
obtained.  All documents that are to be
executed by Buyer and delivered to Buyer on the Closing Date have been, or on
the Closing Date will be, duly executed, authorized and delivered by
Buyer.  This Agreement and all such
documents are, and on the Closing Date will be, legal, valid and binding
obligations of Buyer, enforceable in accordance with their terms and do not,
and at the time of the Closing Date will not, violate any provisions of any
agreement or judicial or administrative order to which Buyer is a party or to
which Buyer is subject.

 

6

 

ARTICLE 5 

Access and Inspection

 

5.1                                 Feasibility
Period.

 

(a)                                  Within three (3)
business days following the full execution and delivery of this Agreement into
Escrow, Seller shall deliver or cause to be delivered, at Seller’s sole cost
and expense, to Buyer any reasonable due diligence materials in Seller’s
possession or control (collectively, “Due Diligence Materials”)
including:

 

1.   Copies of all Leases and tenancy agreements
and all amendments thereto,  assignments
and subleases thereof, memorandums of lease, tenant estoppels (given within the
past two (2) years), lease guaranties and all relevant correspondence with
tenants, and a current rent roll listing all tenants and the material terms of
their respective leases (“Rent Roll”);

 

2.       Copies of any and all
service, vendor, management, maintenance, repair, and employment contracts; and
other written agreements which affect the Property or its operation as set
forth in Exhibit M, attached hereto;

 

3.       Copies of any and all
building plans, specifications, soils, environmental and other reports,
surveys, and studies of the Property (“Environmental Reports”);

 

4.       The title commitment issued
by Chicago Title Insurance Company (the “Title Company”)
that is attached hereto as Exhibit D
(the “Title Commitment”) as well as the
ALTA/ACSM Land Title Survey of the Property (the “Survey”);
and

 

5.       Copies of property tax bills
for the last twenty four (24) months, relating to the Property.

 

In addition, Seller shall
promptly deliver to Buyer such other information relating to the Property that
is specifically and reasonably requested by Buyer of Seller in writing during
the Feasibility Period to the extent such information either is in the
possession or control of Seller, or any affiliate of Seller (collectively, “Other Documents”).  If Buyer terminates this Agreement for any
reason, then within three (3) business days thereafter Buyer shall return to
Seller all Due Diligence Materials and Other Documents and, at Seller’s written
request, shall deliver to Seller copies of any final reports prepared by
Buyer’s consultants (other than confidential attorney-client or attorney work
product privileged documents and any design or construction drawings, plans,
reports, or cost estimates relating to any potential new construction on or
development of the Property) relating in any way to the Property without any
representation or warranty with respect thereto.

 

(b)                                 As used in this
Agreement, the term “Feasibility Period”
shall refer to a period of time beginning as of the date of this Agreement and
ending at 5:00 p.m., California time, on the first business day that is forty
five (45) days after the date of this Agreement (“Feasibility
Termination Date”).  Buyer
may elect, by written notice to Seller at any time prior to the Feasibility
Termination Date, to terminate this Agreement for any reason or no reason,
which election shall, in any event, be in Buyer’s sole and absolute
discretion.  If Buyer does not send
written notice of its desire to terminate on or before the Feasibility Termination
Date, Buyer shall be deemed to have elected to proceed with the Closing subject
only to the remaining conditions expressly set forth in this Agreement.  Upon any termination of this Agreement
pursuant to this Section 5.1(b), Buyer shall be entitled to a refund of
the Deposit, together with interest thereon (if any), and neither party shall
have any further obligations to the other hereunder (except under provisions of
this Agreement which specifically state that they survive termination).

 

7

 

5.2                                 Access for
Investigations.  Seller
agrees that Buyer and its authorized agents or representatives shall be
entitled to enter upon the Property during normal business hours (i.e., 9:00 am
— 5:00 pm Los Angeles time) subject to the terms of this Section 5.2;
provided, however, that Seller shall afford Buyer, upon reasonable notice, with
reasonable access to the Property after normal business hours (including on
weekends) for certain inspections requiring same, including without limitation
air quality and asbestos testing.  All
investigations of the Property made by or on behalf of Buyer will be at Buyer’s
sole cost and expense and will be performed without causing any damage to the
Property or any unreasonable interruption in the operations of the
Property.  Buyer shall not cause any
adverse impact to the Property and will restore the Property in a timely manner
at Buyer’s sole cost to the condition that existed immediately prior to the
Property investigations.  All
investigations of the Property or any materials regarding the ownership,
management, leasing, use or operation of the Property by Buyer or its agents or
representatives prior to or from and after the date hereof are collectively
called the “Property Investigations.”  Seller shall have the right to have one or
more of its agents or representatives accompany Buyer and Buyer’s agents at all
times while Buyer or Buyer’s agents are on the Property for purposes of
conducting Property Investigations. 
Prior to any entry upon the Property, Buyer shall provide Seller with
sufficient evidence to show that Buyer and Buyer’s agents, who are to enter
upon the Property, are adequately covered by policies of insurance issued by a
carrier reasonably acceptable to Seller insuring Buyer and Seller against any
and all liability arising out of Buyer’s or Buyer’s agents’ entry upon and
Property Investigation of the Property, including without limitation any loss
or damage to the Property, with coverage as set forth in Section 5.4.  Without first obtaining Seller’s prior
written consent, Buyer shall only conduct a visual inspection, with no right to
conduct any physical testing, boring, sampling or removal (collectively “Physical Testing”) of any portion
of the Property.  If Buyer wishes to
conduct any Physical Testing of the Property, Buyer shall submit a work plan to
Seller for Seller’s prior written approval, such approval not to be
unreasonably withheld, conditioned or delayed, which work plan Seller may
modify, limit or disapprove in its reasonable discretion.  Buyer will promptly provide Seller with a
copy of any report, draft report or evaluation (“Reports”)
that indicates the presence of hazardous substances on the Property or the
violation of any applicable law, or any other Report prepared in connection
with the Property Investigations.  Except
as specifically provided below, Buyer agrees to keep confidential and not to
disclose the results of any Property Investigations or the contents of any
Reports.

 

5.3                                 Communications
with Governmental Authorities.  If Buyer determines that Buyer is required by
applicable law to notify a federal, state or local governmental agency or any
other party with respect to the conditions at the Property as a result of any
Property Investigation, Buyer shall promptly notify Seller and Seller shall
make such disclosure as required by applicable
law.

 

5.4                                 Indemnity and
Insurance Requirements. 
Buyer assumes all risk associated with the Property Investigations and
agrees to indemnify, defend and hold Seller, Seller’s employees, consultants
and contractors harmless against any claim or demand on account of any loss,
damage or injury to any person or property solely by reason of any act or
omission by Buyer or Buyer’s consultants or employees in connection with the
Property Investigations.  Buyer agrees at
all times during the entries onto the Property that either Buyer or its
contractors will carry comprehensive general liability insurance on an
occurrence basis (including contractual liability, contractor’s protective
liability, personal injury and property damage coverage) in a combined single
limit of at least $1,000,000, with a deductible of no more than $50,000,
employer’s liability in the amount of $500,000 (each accident) and the
statutory limit with respect to workers compensation.  The provisions of this Section 5.4
shall survive the Closing or any termination of this Agreement.

 

8

 

ARTICLE 6

Title and Survey

 

6.1                                 Title and
Survey Review.  Buyer shall
promptly review the Title Commitment and the Survey.  Other than matters objected to in writing by
Buyer prior to the expiration of the Feasibility Period, all matters (a) disclosed
on the Title Commitment and/or Survey, (b) first appearing in the land records
of Los Angeles County with respect to the Property prior to the effective date
of the Title Commitment, and (c) any and all matters created by or through
Buyer, shall be referred to herein collectively as the “Permitted
Exceptions.”

 

6.2                                 Title
Objections and Monetary Liens.  If (i) Buyer objects in writing prior to the
expiration of the Feasibility Period, or (ii) Buyer becomes aware, prior to the
expiration Feasibility Period, of a matter affecting title to the Property that
(a) came into existence after the date of this Agreement, (b) is not disclosed
on the Title Commitment or Survey and (c) has a material adverse effect on the
value and/or use of the Property, Buyer shall have the right to notify Seller
that Buyer objects to such matter disclosed in the Title Commitment and/or
Survey (a “Title Objection”).  The Closing shall be extended for a period of
up to thirty (30) days to permit Seller to cure any Title Objections that it
elects to attempt to cure (the “Cure Period”),
and except as expressly set forth in this Section 6.2, Seller shall have
no obligation to cure any Title Objection. 
Seller shall remove any encumbrances or exceptions to title that are
created by, through or under Seller after the date of the Title Commitment and
that are not consented to by Buyer under the terms hereof.  Notwithstanding the foregoing, with respect
to monetary liens secured by a deed of trust or mechanic’s liens resulting from
works of improvement authorized by Seller that may be satisfied by payment of
an ascertainable amount (“Monetary Liens”),
Seller shall remove or cure by payment of funds from Closing.  If the Title Objections are not cured prior
to Closing, Buyer will have the option as its sole and exclusive remedies to
either (i) terminate this Agreement and receive a refund of the Deposit,
together with interest thereon pursuant to Section 5.1(b) or (ii) proceed
to close without any reduction in the Purchase Price.  If Buyer elects the latter, any uncured Title
Objections shall be deemed Permitted Exceptions.

 

6.3                                 Required State
of Title.  At the
Closing, Seller shall convey by grant deed to Buyer (or to Buyer’s nominee)
good and clear record and marketable fee simple title to all of the Land and
the Improvements free and clear of any and all tenancies and other occupancies,
liens, encumbrances, conditions, easements, assessments, restrictions and other
conditions, except for the following:

 

(a)                                  The lien, if
any, for real estate taxes not yet due and payable;

 

(b)                                 All matters of
record and all matters that would be shown by a current survey and inspection
of the Property; and

 

(c)                                  Provisions of
existing building zoning laws.

 

6.4                                 Personal
Property.  At the
Closing, Seller shall convey the Personal Property to Buyer by bill of sale and
general assignment substantially in the form attached hereto as Exhibit F.

 

ARTICLE 7

Conditions to Seller’s and
Buyer’s Performance

 

7.1                                 Conditions to
Seller’s Obligations.  The
obligations of Seller to consummate the transaction contemplated by this
Agreement are, in addition to the other terms and conditions of this Agreement,
subject to the following (any one or more of which may be waived in whole or in
part by Seller at its discretion):

 

9

 

(a)                                  The
representations and warranties made by Buyer in this Agreement being true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date, and Buyer shall deliver a certificate to such effect at
Closing;

 

(b)                                 Buyer having
performed in all material respects all covenants and obligations required by
this Agreement to be performed by Buyer on or prior to the Closing Date; and

 

(c)                                  Payment of the
Purchase Price, as adjusted and prorated hereunder.

 

7.2                                 Conditions to
Buyer’s Obligations.  The
obligations of Buyer to consummate the transaction contemplated by this
Agreement are, in addition to the other terms and conditions of this Agreement,
subject to the following (any one or more of which may be waived in whole or in
part by Buyer at its discretion):

 

(a)                                  The
representations and warranties made by Seller in this Agreement being true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date, and Seller shall deliver a certificate to such effect at
Closing

 

(b)                                 The issuance of
an irrevocable commitment by the Title Company that the Title Company is ready,
willing, and able to issue, upon payment of Title Company’s regularly scheduled
premium, (A) an American Land Title Association (ALTA) extended owner’s policy
of title insurance in the face amount of the Purchase Price which must have
endorsements as required by Buyer, showing title to the Property vested in
Buyer subject only to the Permitted Exceptions, the lien of real property taxes
for the current fiscal year not yet due or payable, and the standard preprinted
exceptions and stipulations of the Title Commitment and owner’s title insurance
policy

 

(c)                                  The Leases
shall have expired and all tenants thereunder shall have vacated the Property;

 

(d)                                 The Los Angeles
County Fire Department shall have signed-off that the violation specified in Schedule 1 has been remediated; and

 

(e)                                  Seller having
performed in all material respects all covenants and obligations in all
material respects required by this Agreement to be performed by Seller on or
prior to the Closing Date.

 

ARTICLE 8

Closing

 

8.1                                 Escrow Closing.  Except as otherwise expressly provided in
this Agreement, the consummation of the transaction contemplated in this
Agreement (the “Closing”)
shall occur at 10:00 a.m. at the offices of Chicago Title Insurance Company,
700 S. Flower Street, Suite 800, Los Angeles, CA 90017 on the date that is
thirty (30) days after the expiration of the Feasibility Termination Date (the
“Closing Date”), unless further
extended as provided herein below.  It is
agreed that time is of the essence in this Agreement.

 

10

 

8.2                                 Seller’s
Closing Deliveries.  On the
Closing Date, Seller shall deliver or cause to be delivered at its expense each
of the following items to Buyer:

 

(a)                                  A duly executed
and acknowledged grant deed conveying the Real Property and the Improvements to
Buyer with title as provided in Section 6.3, such deed to be in the form
attached hereto as Exhibit E;

 

(b)                                 A duly executed
and acknowledged bill of sale and general assignment conveying the Personal
Property and the Intangible Property to Buyer in the form attached hereto as Exhibit F;

 

(c)                                  A duly executed
and acknowledged certificate of non-foreign status from Seller in the form
attached hereto as Exhibit G;

 

(d)                                 A Certificate
from Seller in the form attached hereto as Exhibit H
stating that all representations and warranties set forth in Section 4.1
remain true, accurate and complete in all material respects as of the Closing
Date.

 

(e)                                  A duly executed
and acknowledged affidavit to the Title Company in the form attached hereto as Exhibit I, together with a
so-called “gap indemnity” in the form required by the Title Company;

 

(f)                                    Evidence
reasonably satisfactory to the Title Company of Seller’s authority to convey
the Property pursuant to this Agreement in form and substance satisfactory to
the Title Company;

 

(g)                                 An irrevocable
commitment by the Title Company that the Title Company is ready, willing, and
able to issue, upon payment of Title Company’s regularly scheduled premium, (A)
an American Land Title Association (ALTA) extended owner’s policy of title
insurance in the face amount of the Purchase Price which must have endorsements
as required by Buyer, showing title to the Property vested in Buyer subject
only to the Permitted Exceptions, the lien of real property taxes for the
current fiscal year not yet due or payable, and the standard preprinted
exceptions and stipulations of the Title Commitment and owner’s title insurance
policy;

 

(h)                                 A counterpart
original of the closing statement setting forth the Purchase Price, the closing
adjustments and the application of the Purchase Price as adjusted;

 

(i)                                     Any and all
transfer tax returns, declarations of value or other documents required under
applicable law or necessary for recordation of the deed;

 

(j)                                     All books, records,
plans, specifications, contracts, agreements and other instruments or documents
to the extent requested by Buyer and in the possession of Seller related to the
construction, operation and maintenance of the Property;

 

(k)                                  Such other
instruments as the Title Company may reasonably request to effectuate the
transaction contemplated by this Agreement; and

 

(l)                                     Keys,
combinations and codes to all locks and/or security systems on the Property in
Seller’s possession or control, if any.

 

8.3                                 Buyer’s Closing
Deliveries.  On the
Closing Date, Buyer shall deliver or cause to be delivered at its expense each
of the following to Seller:

 

11

 

(a)                                  A duly executed
bill of sale and general assignment in the form attached hereto as Exhibit F;

 

(b)                                 A counterpart
original of the closing statement setting forth the Purchase Price and the
closing adjustments;

 

(c)                                  Such other
instruments as Seller may reasonably request to effectuate the transaction
contemplated by this Agreement without additional liability or expense to
Buyer;

 

(d)                                 Evidence
reasonably satisfactory to the Title Company of Buyer’s authority to acquire
the Property pursuant to this Agreement in form and substance satisfactory to
the Title Company;

 

(e)                                  A Certificate
from Buyer in the form attached hereto as Exhibit J
stating that all representations and warranties set forth in Section 4.3
remain true, accurate and complete as of the Closing Date; and

 

(f)                                    Any and all
transfer tax returns, declarations of value or other documents required under
applicable law or necessary for recordation of the deed.

 

ARTICLE 9

Casualty and Condemnation

 

If the Improvements on the
Property are destroyed or damaged, other than to a de minimis extent,
or if condemnation proceedings are commenced against the Property between the
date of this Agreement and the Closing, Buyer may terminate this
Agreement.  If Buyer, however, elects to
accept the Property, all proceeds of insurance or condemnation awards payable
to Seller by reason of the destruction, damage, or condemnation shall be paid
or assigned to Buyer.  In the event of
damage to the Property costing less than One Hundred Thousand and No/100
Dollars ($100,000.00) to repair, Seller shall elect, in Seller’s sole and
absolute discretion, to repair the damage prior to the Closing, or Buyer shall
accept the Property in its then existing condition and receive a credit against
the Purchase Price in an amount equal to the cost of repairing the damage, as
reasonably determined by Seller. If Buyer elects to terminate this Agreement
pursuant to this Section, Escrow Agent shall immediately return the Deposit,
together with interest thereon, to Buyer and neither party shall have any
further duties or responsibilities under this Agreement, except as specified in
Section 5.4 herein.

 

ARTICLE 10

Brokerage Commissions

 

Seller and Buyer each
mutually represent and warrant to the other that they have not dealt with, and
are not obligated to pay, any fees or commissions to any broker in connection
with the transaction contemplated by this Agreement other than Mike Smith of
Lee & Associates and Aleks Trifunovic of The Klabin Company (the “Brokers”).  Seller is responsible for the compensation of
the Brokers pursuant to a separate written agreement.  Seller hereby agrees to indemnify, defend and
hold Buyer harmless from and against all liabilities, costs, damages and
expenses (including reasonable attorneys’ fees) arising from any claims for
brokerage or finder’s fees, commissions or other similar fees in connection
with the transaction covered by this Agreement insofar as such claims shall be
based upon alleged arrangements or agreements made by Seller or on Seller’s
behalf, including, but not limited to the Brokers.  Buyer hereby agrees to indemnify, defend and
hold Seller harmless from and against all liabilities, costs, damages and
expenses (including reasonable attorneys’ fees) arising from any claims for
brokerage or finders’ fees, commissions or other similar fees in connection
with the transaction covered by this Agreement insofar as such claims shall be
based upon alleged arrangements or agreements made by Buyer or on Buyer’s
behalf, exclusive of the Brokers.  The
covenants and agreements contained in this Article 10 shall survive the
termination of this Agreement or the Closing of the transaction contemplated
hereunder.

 

12

 

ARTICLE 11 

Default, Termination and
Remedies

 

11.1                           Seller Default.  If Seller materially breaches or shall have
failed in any material respect on the Closing Date to have performed any of the
covenants and agreements contained in this Agreement that are to be performed
by Seller on or before the Closing Date, any representation or warranty of
Seller herein was untrue when made, or Seller shall have caused any
representation or warranty to become untrue between the date of this Agreement
and the Closing, then Buyer shall have the right to either (i) seek actual,
monetary damages for Seller’s breach up to a maximum amount of $100,000 or (ii)
take any and all legal actions necessary to compel Seller’s specific
performance hereunder (it being acknowledged that damages at law would be an
inadequate remedy), and to consummate the transaction contemplated by this
Agreement in accordance with the provisions of this Agreement, provided that
any action to compel Seller’s specific performance must be properly commenced
by Buyer no later than thirty (30) days following Seller’s breach.  If Buyer proceeds with the Closing with
knowledge of any event described in the foregoing sentence, Buyer shall be
deemed to have waived such event and shall have no rights or remedies against
Seller with respect to such event following the Closing.  In no event shall Seller be liable to Buyer
for any consequential or punitive damages based upon any breach of this
Agreement, including, without limitation, breaches of representation or
warranty.  Buyer further agrees that
recourse for any liability of Seller under this Agreement or any document or
instrument delivered simultaneously or in connection with or pursuant to this
Agreement shall be limited, in addition to any other limitations set forth in
this Agreement, (i) solely to the assets of Seller, including the Property, if
Closing has not occurred, and (ii) following the Closing, to the extent of the
Purchase Price allocated and distributed to Seller (as each may be further
limited by this Agreement).  Subject to
applicable principles of fraudulent conveyance and subject to Buyer’s ability
to pursue and recover claims pursuant to Section 4.1, in no event shall
Buyer seek satisfaction for any obligation from any partners, members,
managers, shareholders, officers, directors, employees, agents, legal
representatives, successors or assigns of any Seller, nor shall any of the
foregoing have any personal liability for any such obligations of any
Seller.    Seller acknowledges that
Seller’s obligations with respect to the representations or warranties under Section
4.1 of this Agreement, which expressly survive the Closing, shall be
considered a “liability” for purposes of any distribution limitation imposed
under the organizational laws applicable to Seller , its members and/or its
respective partners, members and shareholders and such acknowledgement shall
survive the Closing and the recordation of the grant deed as provided herein,
and shall not be deemed merged into the grant deed or other documents and
instruments delivered at the Closing.  If
all of the conditions listed in Section 7.2 have not been satisfied or
waived, Buyer may elect to terminate this Agreement and receive the Deposit,
together with any interest thereon pursuant to this Agreement, and this
Agreement shall be null and void without further recourse to either party
hereto.  Buyer specifically waives the right
to file any lis pendens or any lien against the
Property unless and until it has irrevocably elected to seek specific
performance of this contract and has filed an action seeking such remedy.  Notwithstanding the foregoing, the provisions
of this Section 11.1 shall not limit, and Buyer shall have the right to
bring a separate action with respect to the provisions of Section 10 and
Section 12.13.

 

13

 

11.2                           BUYER DEFAULT.  IF ALL OF THE CONDITIONS TO CLOSING CONTAINED
IN SECTION 7.2 HAVE BEEN SATISFIED AND BUYER DEFAULTS IN ITS OBLIGATION
TO CLOSE HEREUNDER, AND SELLER IS NOT OTHERWISE IN DEFAULT HEREUNDER, SELLER
SHALL BE ENTITLED TO RECEIVE THE DEPOSIT AS LIQUIDATED DAMAGES AS ITS SOLE
REMEDY HEREUNDER, IN LIEU OF ALL OTHER REMEDIES AVAILABLE TO SELLER AT LAW OR
IN EQUITY FOR SUCH DEFAULT.  SELLER AND
BUYER AGREE THAT THE DAMAGES RESULTING TO SELLER AS A RESULT OF SUCH DEFAULT BY
BUYER AS OF THE DATE OF THIS AGREEMENT ARE DIFFICULT OR IMPOSSIBLE TO ASCERTAIN
AND THE LIQUIDATED DAMAGES SET FORTH IN THE PRECEDING SENTENCE CONSTITUTE
BUYER’S AND SELLER’S REASONABLE ESTIMATE OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, THE PROVISIONS
OF THIS SECTION 11.2 SHALL NOT LIQUIDATE, AND SELLER SHALL HAVE THE
RIGHT TO BRING A SEPARATE ACTION WITH RESPECT TO, THE PROVISIONS OF SECTION 5.4,
ARTICLE 10 AND SECTION 12.13. 
BY INITIALING BELOW, BUYER AND SELLER AGREE TO THE PROVISIONS OF THIS SECTION
11.2.  IN NO EVENT SHALL EITHER PARTY
BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL OR PUNITIVE DAMAGES BASED UPON ANY
BREACH OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, BREACHES OF
REPRESENTATIONS OR WARRANTIES.

 

 

	
  /MBC/

  	
   

  	
  /BK/

  
	
  Buyer’s Initials

  	
   

  	
  Seller’s Initials

  

 

ARTICLE 12 

Miscellaneous

 

12.1                           Assignment.  Buyer may not assign any of Buyer’s rights or
duties hereunder without the prior written consent of Seller, which consent may
be withheld by Seller in its sole and absolute discretion.  Notwithstanding the previous sentence, Buyer
shall have the right, upon written notice to Seller delivered no later than ten
(10) days prior to the Closing with reasonable written substantiation, to
assign Buyer’s rights hereunder, without the need for obtaining Seller’s
consent, to an entity that controls, is controlled by, or shares common control
with Buyer, for purposes of taking title to the Property at Closing; provided,
however, in the event of an assignment pursuant to the foregoing, the named
Buyer herein shall remain jointly and severally liable with any assignee(s) for
all obligations of Buyer under this Agreement. 
The covenants and agreements contained in this Agreement shall extend to
and be obligatory upon the permitted successors and assigns of the respective
parties to this Agreement.

 

12.2                           Notices.  Any notice required or permitted to be
delivered under this Agreement shall be in writing and shall be deemed given (i)
when delivered or refused by hand during regular business hours, (ii) three (3)
days after being sent by United States Postal Service, registered or certified
mail, postage prepaid, return receipt requested and first class mail, postage
prepaid, (iii) the next business day if sent by a reputable national overnight
express mail service that provides tracing and proof of receipt or refusal of
items mailed, or (iv) when sent if sent by facsimile during business hours (if
such facsimile is confirmed and the notice is subsequently sent by one of the
other methods in this Section 12.2 no later than one (1) Business Day
thereafter), addressed to Seller or Buyer, as the case may be, at the address
or addresses or facsimile number set forth below or such other addresses as the
parties may designate in a notice similarly sent.  Any notice given by a party to Escrow Agent
shall be simultaneously given to the other party.  Any notice given by a party to the other
party relating to its entitlement to the Deposit shall be simultaneously given
to the Escrow Agent.  Notices to Seller,
Buyer and/or Escrow Agent shall be delivered as follows:

 

14

 

(a)                                  If to Seller:

 

c/o The Kor Group

1212 S. Flower St., Suite 100

Los Angeles, CA 90015

Attn:  Mr. Jeff Smith

Phone:  (323) 930-3722

Fax:  (323) 930-3701

 

with copies to:

 

Iaffaldano, Shaw &
Young, LLP

888 S. Figueroa St., Suite 2170

Los Angeles, CA 90017

Attn:  Jason R. Morgan, Esq.

Phone:  (213) 455-3357

Facsimile: (213) 674-4389

 

Lubert-Adler Management West,
Inc.

1401 Ocean Avenue, Suite 350

Santa Monica, CA 90401

Attention: Mrs. Doris Liang
McDowall

Phone: (310) 496-4145

Facsimile: (310) 496-4131

 

(b)                                 If to Buyer:

 

Joe’s
Jeans, Inc.

5901
S. Eastern Avenue

Commerce, CA 90040

Attention: Mr. Marc Crossman, President/CEO

Facsimile: (323) 837-3791

 

with
copies to:

 

Freeman,
Freeman & Smiley LLP

3415
S. Sepulveda Blvd., Suite 1200

Los
Angeles, California 90034

Attention:
Bruce M. Smiley, Esq.

Facsimile:
(310) 391-4042

 

(c)                                  If to the
Escrow Agent:

 

Chicago Title Insurance Company

Attn: Mike Slinger & Patricia Schlageck

700 S. Flower Street, Suite 800

Los Angeles, CA 90017

Phone: (213) 612-4131

Facsimile: (213) 612-4133

 

12.3                           Interpretation.  Words of any gender used in this Agreement
shall be held and construed to include any other gender, and words of a
singular number shall be held to include the plural and vice versa, unless the
context requires otherwise.

 

15

 

12.4                           Captions.  The captions used in connection with the
Articles of this Agreement are for convenience only and shall not be deemed to
extend, limit or otherwise define or construe the meaning of the language of
this Agreement.

 

12.5                           No Third-Party
Beneficiaries.  Nothing in
this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto and their respective successors and assigns, any
rights or remedies under or by reason of this Agreement.

 

12.6                           Amendments.  This Agreement may be amended only by a
written instrument executed by Seller and Buyer.

 

12.7                           Integration.  This Agreement (including the schedules and
exhibits) embodies the entire agreement between Seller and Buyer with respect
to the transactions contemplated in this Agreement, and there have been and are
no covenants, agreements, representations, warranties or restrictions between
Seller and Buyer with regard thereto other than those set forth or provided for
in this Agreement.

 

12.8                           Choice of Law.  This Agreement shall be construed under and
in accordance with the laws of the State where the Property is located.

 

12.9                           Counterparts.  This Agreement may be executed in two (2) or
more counterparts, each of which shall be an original but such counterparts
together shall constitute one and the same instrument notwithstanding that both
Buyer and Seller are not signatory to the same counterpart.

 

12.10                     Business Day.  If any date hereunder (including the Closing
Date) falls on a Saturday, Sunday or a date when banks are closed for business
in the State in which the Property is located, the date applicable shall be the
next business day.

 

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

 

12.12                     Submission not
an Offer or Option.  The
submission of this Agreement or a summary of some or all of its provisions for
examination or negotiation by Buyer or Seller does not constitute an offer by
Seller or Buyer to enter into an agreement to sell or purchase the Property,
and neither party shall be bound to the other with respect to any such purchase
and sale until a definitive agreement satisfactory to the Buyer and Seller in
their sole discretion is executed and delivered by both Seller and Buyer.

 

12.13                     Attorneys’ Fees.  If any action of proceeding is brought by
either party to enforce or interpret the provisions of this Agreement, the
prevailing party in such action or proceeding shall have its reasonable
attorneys’ fees, court costs and fees of experts paid by the other party.

 

12.14                     Tax Deferred
Exchange.  Buyer and
Seller hereby agree to cooperate with each other and shall execute any and all
documents necessary, in the form reasonably approved by the both parties, which
shall assign all of such party’s right, title and interest in and to this
Agreement to an intermediary, which intermediary shall complete the
sale/purchase of the Property, in order to accommodate a tax-deferred exchange
for such party pursuant to the provisions of Section 1031 of the Internal
Revenue Code of 1986, as amended so long as same does not adversely affect the
other party and provided, however neither party shall incur additional costs,
expenses or liabilities in assisting the party with the tax-deferred exchange other
than for review of the exchange documents, such exchange shall not delay the
Closing, nor shall either party be required to take title to other property.

 

16

 

ARTICLE 13 

Escrow Provisions

 

13.1                           Escrow Deposits.  Portions of the Deposit and any other sums
(including, without limitation, any interest earned thereon) that the parties
agree shall be held in escrow (herein collectively called the “Escrow Deposits”), shall be held by
the Escrow Agent, in trust, and disposed of only in accordance with the
following provisions:

 

(a)                                  The Escrow
Agent shall invest the Escrow Deposits in government insured interest-bearing
instruments reasonably satisfactory to both Buyer and Seller, shall not
commingle the Escrow Deposits with any funds of the Escrow Agent or others, and
shall promptly provide Buyer and Seller with confirmation of the investments
made.

 

(b)                                 If the Closing
occurs, the Escrow Agent shall deliver the Escrow Deposits to, or upon the
instructions of, Seller on the Closing Date.

 

(c)                                  If for any
reason the Closing does not occur, the Escrow Agent shall deliver the Escrow
Deposits to Seller or Buyer only upon receipt of a written demand therefor from
such party, subject to the following provisions of this Section 13.1(c).  If for any reason the Closing does not occur
and either party makes a written demand upon the Escrow Agent for payment of
the Escrow Deposits, the Escrow Agent shall give written notice to the other
party of such demand.  If the Escrow
Agent does not receive a written objection from the other party to the proposed
payment within five (5) business days after the giving of such notice, the
Escrow Agent is hereby authorized to make such payment.  If the Escrow Agent does receive such written
objection within such period, the Escrow Agent shall continue to hold such
amount until otherwise directed by written instructions signed by Seller and
Buyer or a final judgment of a court of competent jurisdiction.

 

(d)                                 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 Liabilities (including reasonable attorneys’
fees, expenses and disbursements) incurred by Seller or Buyer resulting from
the Escrow Agent’s mistake of law respecting the Escrow Agent’s scope or nature
of its duties.  Seller and Buyer shall
jointly and severally indemnify and hold the Escrow Agent harmless from and against
all losses, costs, claims, damages and expenses (including reasonable
attorneys’ fees, expenses and disbursements) 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.

 

(e)                                  Buyer shall pay
any income taxes on any interest earned on the Escrow Deposits, it being agreed
that the interest earned on the Deposit shall be Buyer’s sole property and may,
at Buyer’s sole option, be applied to the Purchase Price hereunder at
Closing.  Buyer represents and warrants
to the Escrow Agent that its taxpayer identification number is 11-2928178.

 

(f)                                    The Escrow Agent
has executed this Agreement in the place indicated on the signature page hereof
in order to confirm that the Escrow Agent has received and shall hold the
Escrow Deposits in escrow, and shall disburse the Escrow Deposits pursuant to
the provisions of this Article 13.

 

17

 

13.2                           Designee.  In order to comply with information reporting
requirements of Section 6045(e) of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations thereunder, the parties agree (a) that
the Escrow Agent (the “Designee”)
is hereby designated as the party who shall be responsible for reporting the
contemplated sale of the Property to the Internal Revenue Service (the “IRS”) on IRS Form 1099-S; (b) to
provide the Designee with the information necessary to complete Form 1099-S; (c)
that the Designee shall not be liable for the actions taken under this
Agreement, or for the consequences of those actions, except as they may be the
result of gross negligence or willful misconduct on the part of the Designee;
and (d) that the Designee shall be indemnified by the parties for any costs or
expenses incurred as a result of the actions taken hereunder, except as they
may be the result of gross negligence or willful misconduct on the part of the
Designee.  The Designee shall provide all
parties to this transaction with copies of the IRS Forms 1099-S filed with the
IRS and with any other documents used to complete IRS Form 1099-S.

 

13.3                           Survival.  The provisions of this Article 13
shall survive the Closing (and not be merged therein) or earlier termination of
this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

18

 

IN
WITNESS WHEREOF, the parties have executed this instrument as of the day and
year first set forth above.

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  405
  MATEO REAL ESTATE, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  405
  Mateo Real Estate Holding Company, LLC, a Delaware limited liability company,
  Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  KOR/KSI
  IV, LLC, a Delaware limited liability company, Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Bradford Korzen

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Bradford Korzen

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Member/Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  JOE’S
  JEANS, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Marc Crossman

  
	
   

  	
  Name:
  Marc Crossman

  
	
   

  	
  Title: President and CEO

  

 

 

ACCEPTANCE BY ESCROW HOLDER:

 

Chicago Title hereby acknowledges that it has received a fully
executed counterpart of the foregoing Agreement and agrees to act as Escrow
Holder thereunder and to be bound by and perform the terms thereof as such
terms apply to Escrow Holder.

 

 

	
  Dated:

  	
  1/21/10

  	
   

  	
  Chicago Title Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Patricia Schlageck

  
	
   

  	
   

  	
  Its: 

  	
  AVP, Sr. Commercial Escrow Officer

  

 

19

 

EXHIBIT A

 

Description of Real Property

 

PARCEL 1:

 

LOTS 233 AND 234 OF MILLS
AND WICKS EXTENSION OF SECOND STREET AND ADJOINING SUBDIVISIONS, IN THE CITY OF
LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN
BOOK 13 PAGES 87 AND 88 OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.

 

PARCEL 2:

 

LOTS 229, 230, 231 AND 232
OF MILLS AND WICKS EXTENSION OF SECOND STREET AND ADJOINING SUBDIVISIONS, IN
THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 13 PAGES 87 AND 88 OF MISCELLANEOUS RECORDS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

PARCEL 3:

 

LOT “A” OF TRACT NO. 2401,
IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER
MAP RECORDED IN BOOK 23 PAGE 43 OF MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.

 

20

 

“FOR INFORMATIONAL PURPOSES
ONLY”

 

THE ABOVE PROPERTY IS ALSO
DESCRIBED AS FOLLOWS:

 

LOTS 229, 230, 231, 232,
233, AND 234 OF MILLS’ AND WICK’S EXTENSION OF SECOND STREET AND ADJOINING
SUBDIVISIONS, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 13, PAGES 87 AND 88 OF MISCELLANEOUS
RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH LOT
“A” OF TRACT NO. 2401, IN SAID CITY, AS PER MAP RECORDED IN BOOK 23, PAGE 43 OF
MAPS, IN SAID OFFICE OF THE COUNTY RECORDER, DESCRIBED AS FOLLOWS:

 

BEGINNING AT THE NORTHEAST
CORNER OF SAID LOT “A”, SAID CORNER BEING THE INTERSECTION OF THE SOUTHERLY
RIGHT OF WAY LINE OF FOURTH STREET, 40 FOOT HALF WIDTH, AND THE WESTERLY LINE
OF MATEO STREET, 30 FOOT HALF WIDTH; THENCE SOUTH 35° 47’ 45” WEST, ALONG THE
WESTERLY LINE OF SAID MATEO STREET, A DISTANCE OF 208.76 FEET, TO THE SOUTHEAST
CORNER OF SAID LOT “A”; THENCE NORTH 27° 35’ 07” WEST, ALONG THE SOUTHERLY LINE
OF SAID LOT “A”, A DISTANCE OF 26.88 FEET; THENCE CONTINUING ALONG SAID
SOUTHERLY LINE NORTH 26° 54’ 32” WEST, A DISTANCE OF 91.50 FEET, TO THE
SOUTHWEST CORNER OF SAID LOT “A”, SAID POINT ALSO BEING THE SOUTHERLY CORNER OF
SAID LOT 234; THENCE NORTH 40° 07’ 18” WEST, ALONG THE SOUTHERLY LINE OF SAID
LOTS 234 AND 233, A DISTANCE OF 82.15 FEET TO THE SOUTHWEST CORNER OF SAID LOT
233; THENCE SOUTH 89° 57’ 52” WEST, ALONG THE SOUTHERLY LINE OF SAID LOTS 232,
231, AND 230, A DISTANCE OF 108.33 FEET, TO THE SOUTHWESTERLY CORNER OF SAID
LOT 230, ALSO BEING THE EASTERLY LINE OF MOLINO STREET, 30 FOOT HALF WIDTH;
THENCE NORTH 08° 13’ 50” WEST, ALONG THE EASTERLY LINE OF SAID MOLINO STREET
AND THE SOUTHWESTERLY LINES OF SAID LOTS 230 AND 229, A DISTANCE OF 103.90
FEET, TO THE WESTERLY CORNER OF SAID LOT 229; THENCE NORTH 35° 44’ 39” EAST,
ALONG THE NORTHWESTERLY LINE OF SAID LOT 229, A DISTANCE OF 123.65 FEET, TO THE
NORTHWESTERLY CORNER OF SAID LOT 229, ALSO SAID CORNER BEING THE SOUTHERLY
RIGHT OF WAY LINE OF SAID FOURTH STREET; THENCE SOUTH 54° 10’ 30” EAST, ALONG
THE SOUTHERLY RIGHT OF WAY LINE OF SAID FOURTH STREET, A DISTANCE OF 345.18
FEET TO THE POINT OF BEGINNING.

 

END
OF LEGAL DESCRIPTION

 

21

 

EXHIBIT B

 

Description of Leases and Material Agreements

 

1.               That certain AIR Commercial Real Estate Association Standard
Industrial/Commercial Single-Tenant Lease — Gross dated February 4, 2008 by and
between Seller and CW Productions Ltd., a California corporation (as sublet to
Italian Fabrics, Inc., a California corporation pursuant to that certain
Standard Sublease dated October 5, 2009).

 

22

 

EXHIBIT C

Description of Intangible Property

 

23

 

EXHIBIT D

Title Commitment

 

24

 

EXHIBIT E

Form of Deed

 

RECORDING
REQUESTED BY AND

WHEN RECORDED
MAIL TO:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
			

 

MAIL TAX
STATEMENTS TO:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
  GRANT DEED

  

 

	
  Assessor’s Parcel Number:

  	
   

  	
   

  

 

In accordance
with Section 11932 of the California Revenue and Taxation Code, Grantor has
declared the amount of the transfer tax that is due by a separate statement
that is not being recorded with this Grant Deed.

 

FOR VALUABLE
CONSIDERATION, receipt of which is hereby acknowledged, the undersigned, 405
Mateo Real Estate, LLC, a Delaware limited liability company (“Grantor”), hereby grants to                                  
, a                               
(“Grantee”), that certain real
property in the City of Los Angeles, County of Los Angeles, State of California
described in Exhibit A attached hereto and incorporated herein, together with
all buildings and improvements located thereon (the “Property”).

 

25

 

	
  Dated: ________ ___ , 2010

  	
   

  
	
   

  	
   

  
	
   

  	
  405
  MATEO REAL ESTATE, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

MAIL TAX
STATEMENTS AS SET FORTH ABOVE

 

26

 

ALL PURPOSE
ACKNOWLEDGMENT

 

	
  STATE OF CALIFORNIA

  	
  }

  
	
  COUNTY OF

  	
   

  	
   

  	
  }

  
				

 

On                                             
before me, (here insert name and title of the officer), personally appeared                                     
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

 

	
  Signature

  	
   

  	
   

  

(NOTARY SEAL)

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  ATTENTION
  NOTARY: 

  	
  Although the information requested below is
  OPTIONAL, it could prevent fraudulent attachment of this certificate to
  another document.

  

 

THIS CERTIFICATE MUST
BE ATTACHED TO Title of Document Type                                    

THE DOCUMENT DESCRIBED AT RIGHT.  Number of Pages           Date
of Document                          
Signer(s) Other Than Named Above                                   .

 

27

 

EXHIBIT F

Form of Bill of Sale and General Assignment

 

This Bill of Sale and
General Assignment  (this “Assignment”), is made as of               
      , 2010, by and between 405 Mateo
Real Estate, LLC, a Delaware limited liability company (“Seller”)
and                                     ,
a                                                        (“Buyer”).

 

WHEREAS, pursuant to the
terms of that certain Purchase and Sale Agreement, dated as of                      ,
2010, by and between Seller and Buyer (as the same may be amended or modified,
the “Agreement”), Seller agreed to sell
to Buyer, inter alia, certain real property, the
improvements located thereon and certain rights appurtenant thereto, all as
more particularly described in the Agreement (collectively, the “Real Property”).  Initially capitalized terms not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Agreement; and

 

WHEREAS, by deed of even
date herewith, Seller conveyed the Real Property to Buyer; and

 

WHEREAS, in connection with
the above described conveyance Seller desires to sell, transfer and convey to
Buyer certain items of tangible and intangible personal property as hereinafter
described.

 

NOW, THEREFORE, in
consideration of the receipt of TEN AND NO/100 DOLLARS ($10.00) and other good
and valuable consideration paid in hand by Buyer to Seller, the receipt and
sufficiency of which are hereby acknowledged, Seller has GRANTED, CONVEYED,
SOLD, TRANSFERRED, SET OVER and DELIVERED and by these presents does hereby
GRANT, SELL, TRANSFER, SET OVER and DELIVER to Buyer, its legal
representatives, successors and assigns, and Buyer hereby accepts all right,
title and interest in and to

 

(a)                                 all tangible
personal property owned by Seller that is located on the Real Property and used
in the ownership, operation and maintenance of the Real Property including,
without limitation, the property listed on Schedule 1, and all books,
records and files of Seller relating to the Real Property, (collectively, the “Personal Property”);

 

(b)                                 all of Seller’s
right, title and interest in and to all leases, licenses, occupancy or related
agreements or tenancies affecting the Property (collectively, the “Leases”); and

 

(c)                                  Seller’s
interest in and to any contracts, licenses, permits and other written
authorizations necessary for the use, operation or ownership of the Real
Property, if and only to the extent the same may be assigned or quitclaimed by
Seller and only to the extent that the same are in effect as of the Closing Date
(the “Intangible Property”).

 

Seller makes no covenant,
warranty or representation with respect to the Personal Property, the Leases or
the Intangible Property except as expressly set forth in and limited by the
Agreement.

 

Buyer hereby accepts the
Personal Property, the Leases and the Intangible Property and agrees to assume
all liabilities and obligations related to the Personal Property, the Leases
and the Intangible Property arising or accruing from and after the date hereof.  Notwithstanding anything to the contrary
contained herein, Seller shall remain responsible for all liabilities related
to the Personal Property, the Leases and the Intangible Property arising or
accruing prior to the Closing Date; provided, however, that Seller shall also
retain the benefit of any warranties or indemnities contained in any of the
Intangible Property and Leases for events giving rise to liability prior to the
Closing Date for which Seller would continue to be responsible.

 

28

 

This Assignment may be
executed in counterparts, each of which shall be an original and all of which
counterparts taken together shall constitute one and the same agreement.

 

If
any term or provision of this Assignment or the application thereof to any
persons or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Assignment or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of
this Assignment shall be valid and enforced to the fullest extent permitted by
law.

 

IN
WITNESS WHEREOF, Seller and Buyer have executed this Assignment as of the date
first set forth above.

 

 

	
   

  	
  Seller:

  
	
   

  	
   

  
	
   

  	
  405
  MATEO REAL ESTATE, LLC, a Delaware

  limited
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
                            
         , a Delaware limited

  liability company, its        

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
                      ,

  
	
   

  	
   

  	
   

  	
                                  

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Buyer:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                                , a

  
	
   

  	
                                                                

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

29

 

EXHIBIT G

Form of FIRPTA Affidavit

 

Section 1445 of the
Internal Revenue Code provides that a transferee of a United States real
property interest must withhold tax if the transferor is a foreign person.  For U.S. tax purposes (including Section 1445), the
owner of a disregarded entity (which has legal title to a U.S. real property
interest under local law) will be the transferor of the property and not the
disregarded entity.  To inform the
transferee that withholding of tax is not required upon the disposition of a
United States real property interest by 405 MATEO REAL ESTATE, LLC, a Delaware
limited liability company (“Seller”), the
undersigned hereby certifies the following on behalf of Seller:

 

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

 

2.                                      Seller is not a
disregarded entity as defined in §1.1445-2(b)(2)(iii); and

 

3.                                      Seller’s U.S.
employer taxpayer identification number is 20-5945243; and

 

4.                                      Seller’s office
address is c/o The Kor Group, 1212 Flower Street, Suite 100, Los Angeles,
CA 90015.

 

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

 

The undersigned declares that he has examined this
certification and to the best of his knowledge and belief it is true, correct
and complete, and he further declares that he has authority to sign this document
on behalf of Seller.

 

Dated:                               ,
2010.

 

	
   

  	
  405
  MATEO REAL ESTATE, LLC, a Delaware

  limited
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
                     , a Delaware
  limited

  liability
  company, its           

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
                                   ,

  
	
   

  	
   

  	
   

  	
                                      

  

 

30

 

ALL PURPOSE
ACKNOWLEDGMENT

 

	
  STATE OF CALIFORNIA

  	
  }

  
	
  COUNTY OF                                            

  	
  }

  

 

On                                             
before me, (here insert name and title of the officer), personally appeared                            
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the
instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

 

	
  Signature

  	
   

  	
   

  
	
   

  	
  (NOTARY SEAL)

  

 

	
   

  	
   

  

 

	
  ATTENTION NOTARY:

  	
  Although the information requested below is
  OPTIONAL, it could prevent fraudulent attachment of this certificate to
  another document.

  

 

THIS CERTIFICATE MUST
BE ATTACHED TO Title of Document Type                                                        

THE DOCUMENT DESCRIBED AT RIGHT. 
Number of Pages           Date
of Document                                            
Signer(s) Other Than Named Above                                                                   .

 

31

 

EXHIBIT H

Form of Seller’s Certification

 

Reference
is made to that certain Purchase and Sale Agreement (the “Agreement”) dated as
of                       ,
2010, by and between 405 Mateo Real Estate, LLC, a Delaware limited liability
company (“Seller”) and                                     ,
a                                                
(“Buyer”).

 

Pursuant
to Section 8.2(d) of the Agreement, Seller hereby certifies that
Seller’s representations and warranties set forth in Section 4.1 remain
true, accurate and complete in all material respects as of the date of this
certificate.

 

 

Dated:                            ,
2010.

 

	
   

  	
  405
  MATEO REAL ESTATE, LLC, a Delaware

  limited
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
                                     , a Delaware
  limited

  liability
  company, its        

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

32

 

EXHIBIT I

 

FORM OF TITLE AFFIDAVIT

 

OWNER’S DECLARATION

 

The
undersigned hereby declares as follows:

 

*1.                               *[Fill in the
applicable paragraph and strike the others.]

 

*A.                             That Declarant
is the owner or lessee, as the case may be, of certain premises  (“Owner”) located at                           
                               ,
in County, State of                                     ,
further described as follows:  See
Preliminary Report/Commitment No.                for  full legal description (“the Land”).

 

*B.                             That Declarant
is the                                                          
of                                         ,
a corporation, which is the owner or lessee, as the case may be, of certain
premises (“Owner”) located at                                                     
in County, State of                           , further
described as follows:  See Preliminary
Report/Commitment No.          
for full legal description (“the Land”).

 

*C.                             That Declarant
is the                                    of
                                  ,
a partnership, which is the owner or lessee, as the case may be, of certain
premises (“Owner”) located at                                                         ,
in                      
County, State of                     ,
further described as follows:  See
Preliminary Report/Commitment No.               
for full legal description.

 

*D.                             The Declarant
is the                                                   of                                        ,
which is the managing member of              
                    ,
a                     limited liability company, which is the owner
or lessee, as the case may be, of certain premises (“Owner”) located at                                                                   in                     County, State of                           
, further described as follows:  See
Preliminary Report/Commitment No.    
            for full legal description (“the Land”).

 

**2.                        **[Fill in the
applicable paragraph and strike the other.]

 

**A.                      That during the
period of six months immediately preceding the date of this declaration no work
has been done, no surveys or architectural or engineering plans have been
prepared, and no materials have been furnished in connection with the erection,
equipment, repair, protection or removal of any building or other structure on
the Land or in connection with the improvement of the Land in any manner
whatsoever.

B.                                    That during the
period of six months immediately preceding the date of this declaration certain
work has been done and materials furnished in connection with

[STATE GENERAL NATURE OF THE
WORK]

 

33

 

upon the Land in the approximate total sum of $                               , but that
no work whatever remains to be done and that no materials remain to be
furnished to complete the construction in full compliance with the plans and specifications,
nor are there any unpaid bills incurred for labor and materials used in making
such improvements or repairs upon the Land, or for the services of architects,
surveyors or engineers, except as follows:                  .

 

Owner, by the undersigned Declarant, agrees to indemnify and hold
harmless Chicago Title Insurance Company against any and all claims arising
therefrom.

 

3.                                      That Owner has not
previously conveyed the Land; is not a debtor in bankruptcy (and if a
partnership, the general partner thereof is not a debtor in bankruptcy); and
has not received notice of any pending court action affecting the title to the
Land.

 

4.                                      That except as shown in the
above-referenced Preliminary Report/Commitment, there are no unpaid or
unsatisfied security deeds, mortgages, deeds of trust, Uniform Commercial Code
financing statements, claims of lien, special assessments for sewage or street
improvements, or taxes that constitute a lien against the Land or that affect
the Land but have not been recorded in the public records.

 

5.                                      That the Land is currently
in use as                                                               ;
that occupy/occupies the Land; and that the following are all of the leases or
other occupancy rights affecting the land:

 

.

 

[Please provide a current rent roll to
Chicago Title Insurance Company.]

 

6.                                      That there are no other
persons or entities that assert an ownership interest in the Land, nor are
there unrecorded easements, claims of easement, or boundary disputes that
affect the Land.

 

7.                                      That there are no
outstanding options to purchase or rights of first refusal affecting the Land.

 

8.                                      That, if the Land is
improved with one or more health care facilities, there are no unpaid amounts
of public funds advanced under any act set forth below or any state statute
enacted pursuant to any of said acts:

 

The Hill-Burton Act (42 USC 291, et seq.); the Health Research
Facilities Act of 1956 (42 USC 292, et seq.); the Health Professions
Educational Assistance Act of 1963 (42 USC 293, et seq.); the Nurse Training
Act of 1964 (42 USC 296 et seq.); the National Health Planning and Resources
Development Act of 1974 (42 USC 300k, et seq.); the Special Health Revenue
Sharing Act of 1975 (42 USC 2689 et seq.); the Developmentally Disabled
Assistance and Bill of Rights Act (42 USC 6002 et seq.); the Higher Education
Facilities Act (20 USC 701 et seq.); the Community Health Centers Act (42 USC
2693 et seq.); the Architectural Barriers Act of 1968 (20 USC 1132d-11 et
seq.).

 

34

 

9.                                      That this declaration is
made with the intention that Chicago Title Insurance Company (“the Company”)
and its policy issuing agents will rely upon it in issuing their title
insurance policies and endorsements. 
Owner, by the undersigned Declarant, agrees to indemnify the Company
against loss or damage (including attorneys’ fees, expenses, and costs)
incurred by the Company as a result of any untrue statement made herein.

 

I
declare under penalty of perjury that the foregoing is true and correct.

 

Dated
this            day of                    , 2010.

 

405
Mateo Real Estate, LLC

A
Delaware limited liability company

 

	
  By:

  	
  405
  Mateo Real Estate Holding Company, LLC

  	
   

  
	
   

  	
  A
  Delaware limited liability company,

  	
   

  
	
   

  	
  Sole
  Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KOR/KSI
  IV, LLC

  	
   

  
	
   

  	
   

  	
  A
  Delaware limited liability company

  	
   

  
	
   

  	
   

  	
  Managing
  Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 

SUBSCRIBED
AND SWORN TO (or affirmed) before me on this             
day of                            ,                   
by                                             
proved to me on the basis of satisfactory evidence to be the person(s) who
appeared before me.

 

 

	
  Notary
  Signature:

  	
   

  	
   

  

 

 

(Notary Seal)

 

*                                         Fill in
the applicable paragraph and strike the others.

**                                  Fill in
the applicable paragraph and strike the other.

 

35

 

EXHIBIT J

 

FORM OF BUYER CERTIFICATION

 

Reference
is made to that certain Purchase and Sale Agreement (the “Agreement”) dated as
of               
       , 2010, by and between 405 Mateo Real
Estate, LLC, a Delaware limited liability company (“Seller”) and                                     ,
a                       
                          
(“Buyer”).

 

Pursuant
to Section 8.3(e) of the Agreement, Buyer hereby certifies that
Buyer’s representations and warranties set forth in Section 4.3 remain
true, accurate and complete in all material respects as of the date of this
certificate.

 

 

Dated:                      
      , 2010.

 

 

	
   

  	
   

  	
  ,
  a

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

36

 

EXHIBIT K

 

LIST OF APPARATUS, EQUIPMENT, APPLIANCE & INVENTORY

 

37

 

EXHIBIT L

 

LIST OF PERSONAL PROPERTY

 

38

 

EXHIBIT M

 

LIST OF INTANGIBLE PROPERTY

 

39

 

EXHIBIT N

 

ESCROW AGENT WIRE INSTRUCTIONS

 

CHICAGO TITLE COMPANY

700 S. FLOWER ST., SUITE
800

LOS ANGELES, CA 90017

 

Phone (213) 488-4358 /
Fax: (213) 612-4138

 

WIRING INSTRUCTIONS

 

BANK OF AMERICA

1850 GATEWAY BLVD.

CONCORD, CA 94520

 

	
  ABA/Routing No:

  	
  XXXXX

  
	
   

  	
   

  
	
  Credit/Acct Name:

  	
  CHICAGO TITLE COMPANY

  
	
   

  	
   

  
	
  Account Number:

  	
  XXXXX

  
	
   

  	
   

  
	
  Reference:

  	
  XXXXX

  
	
   

  	
   

  
	
  Phone Advice to:

  	
  Patricia M. Schlageck

  

 

Please Reference: ESCROW
NUMBER AND ESCROW OFFICER

 

40

 

EXHIBIT O

 

LIST OF TAX PROCEEDINGS, PROTESTS & ASSESSMENTS

 

41

 

SCHEDULE
1

 

ACTIONS, SUITS OR PROCEEDINGS

 

1.             Superior Court Case No. 9HY06292.  The Property was cited by the City for
violation of Subsection D of Section 57.01.35 of the Los Angeles Municipal
Code (as it relates to fire life safety items at the Property).  The
violation was referred to the City Attorney by the Los Angeles Fire
Department.  The City Attorney filed a criminal complaint against the
Seller and certain individuals on or about September 23, 2009, despite
the fact that all violations had been remediated.   As
soon as Seller learned of the complaint, Seller hired counsel for the Property
and all defendants.  Counsel for the Seller appeared at an
arraignment in November and advised the City Attorney that all
violations were remediated before the complaint was filed.  The City
Attorney is presently confirming those representations with the Fire
Department.  Seller expects that the matter will be favorably resolved.
  Seller shall pay all costs and fees associated with curing the violation
and causing the complaint to be dismissed.

 

42Exhibit 10.15

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”)
is made effective as of January 1, 2009 (the “Effective Date”), by
and among TORCH ENERGY ADVISORS INCORPORATED, a Delaware corporation (“TEAI”);
RESACA EXPLOITATION, INC., a Texas corporation (formerly known as RESACA
EXPLOITATION, LP, a Delaware limited partnership) (the “Employer”); and
DENNIS HAMMOND, an individual resident of the State of Texas (the “Executive”).
The Employer and the Executive are each a “party” and are together “parties”
to this Agreement. TEAI joins in this Agreement for the purposes of Section.

 

RECITALS

 

WHEREAS, the Employer, TEAI and the Executive are parties to that
certain Employment Agreement, dated August 1, 2007 (the “Original
Employment Agreement”), pursuant to which the Executive accepted
co-employment with TEAI and the Employer; and

 

WHEREAS, the Employer, TEAI and the Executive desire to amend and
restate the Original Employment Agreement to reflect the Employer as the sole
employer of the Executive, all upon the terms and conditions set forth in this
Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the employment compensation to be
paid to the Executive and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, agree as follows:

 

Section 1.                                          Definitions. For the purposes
of this Agreement, the following terms have the meanings specified or referred
to in this Section 1.

 

“Affiliate” means any person or entity
that, directly or indirectly, controls or is controlled by or is under common
control with the person in question, including without limitation, in the case of the
Executive, any partnership, group, joint venture, corporation, association or
other entity involving such Executive or any family member of such Executive.

 

“Agreement” refers to this Amended and Restated Employment
Agreement, including any exhibits attached hereto, as amended from time to time.

 

“Basic Compensation” means Salary and Benefits.

 

“Benefits” is defined in Section 3.1(b).

 

“Board of Directors” refers to the Board of Directors of the
Employer.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Stock” means the shares of common stock, par value $0.01
per share, of the Employer.

 

“Confidential Information” means any and all:

 

 

(a)                             trade secrets
(as defined herein) concerning the business and affairs of any member of the
Employer Group, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples,
inventions and ideas, past, current, and planned research and development,
current and planned manufacturing or distribution methods and processes, customer
lists, current and anticipated customer requirements, price lists, market
studies, business plans, computer software and programs (including object code
and source code), computer software and database technologies, systems,
structures, and architectures (and related formulae, compositions, processes,
improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information, however
documented, that is a trade secret;

 

(b)                            information
concerning the business and affairs of any member of the Employer Group (which
includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques and
materials), however documented; and

 

(c)                             notes,
analysis, compilations, studies, summaries, and other material prepared by or
for any member of the Employer Group containing or based, in whole or in part,
on any information included in the foregoing.

 

“Disability” is defined in Section 6.2.

 

“Effective Date” is the date stated in the first paragraph of
this Agreement.

 

“Employee Invention” shall mean any idea, invention, technique,
modification, process, or improvement (whether patentable or not), any
industrial design (whether registerable or not), any mask work, however fixed
or encoded, and any work of authorship (whether or not copyright protection may
be obtained for it) created, conceived or developed by the Executive, either
solely or in conjunction with others, during the Employment Period (i) while
performing his duties for any member of the Employer Group and/or (ii) by
utilizing the Employer’s office space, equipment, supplies or facilities and
which relates to or has applications in the business of any member of the
Employer Group or any such item created by the Executive, either solely or in
conjunction with others, following termination of the Executive’s employment
with the Employer, that is based upon or uses Confidential Information.

 

“Employer” is defined in the first paragraph of this Agreement.

 

“Employer Group” means the Employer and all subsidiaries and
Affiliates of Employer.

 

“Employment Period” is the Term of the Executive’s employment
under this Agreement.

 

“Executive” is defined in the first paragraph of this Agreement.

 

“for cause” is defined in Section 6.3.

 

“Incentive Compensation” is defined in Section 3.2(b).

 

“Options” is defined in Section 3.2(a).

 

 

“Original Employment Agreement” is defined in the Recitals to
this Agreement.

 

“person” is any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, or governmental
body.

 

“Post-Employment Period” is defined in Section 8.2.

 

“Proprietary Items” is defined in Section 7.2(a)(iv).

 

“Restricted Shares” is defined in Section 3.2(a).

 

“Salary” is defined in Section 3.1(a).

 

“TEAI” is defined in the first paragraph of this Agreement.

 

“Term” is defined in Section 2.2.

 

“trade secrets” shall mean the whole or any part of any
scientific or technical information, design, process, procedure, formula, or
improvement that has value and that the owner has taken measures to prevent
from becoming available to persons other than those selected by the owner to
have access for limited purposes.

 

Section 2.                                          Employment Terms and Duties.

 

2.1                                 Employment. The Employer
hereby employ the Executive, and the Executive hereby accepts employment with
the Employer, upon the terms and conditions set forth in this Agreement.

 

2.2                                 Employment
Period. Subject to the provisions of Section 6, the  term of the Executive’s
employment under this Agreement will commence upon the Effective Date and end
on August 1, 2010, unless otherwise terminated in accordance with the
terms hereof (the “Term”).

 

2.3                                 Duties. The Executive
will have such duties as are assigned or delegated to the Executive by the
Board of Directors or the Chief Executive Officer of the Employer, and will
initially serve as the President and Chief Operating Officer of the Employer.
The Executive will devote reasonable business time, attention, skill, and
energy to the businesses of the Employer,
will use his best efforts to promote the success of the Employer’s businesses,
and will cooperate fully with the Board of Directors and the Chief Executive
Officers of the Employer in the advancement of the best interests of the
Employer. Nothing in this Section 2.3, however, will prevent the Executive
from engaging in additional activities in connection with personal investments
and community affairs that are not inconsistent with the Executive’s duties
under this Agreement, including but not limited to lectures and presentations.
The Executive may retain any compensation from such additional activities. If
the Executive is elected as a director of the Employer or as a director or
officer of any Affiliate of the Employer, the Executive will fulfill his duties
as such director or officer without additional compensation.

 

 

Section 3.                                          Compensation.

 

3.1                                 Basic
Compensation.

 

(a)                                  Salary. During the
Employment Period, the Executive will be paid an annual salary of $250,000 (the
“Salary”), which will be payable to the Executive in equal periodic
installments according to the Employer’s customary payroll practices, but no
less frequently than semi-monthly.

 

(b)                                 Benefits. The Executive
will, during the Employment Period, be permitted to participate in such
pension, profit sharing, life insurance, hospitalization, major medical, dental
and other employee benefit plans of the Employer that may be in effect from
time to time, to the extent the Executive is eligible under the terms of those
plans, including but not limited to participation in the Employer’s 401(k) plan,
which, as of the Effective Date, provides for (i) a six-year graded
vesting schedule and (ii) an employer matching contribution made by the
Employer of up to three percent (3%) of a participant’s compensation, and as
may change from time to time (collectively, the “Benefits”).

 

3.2                                 Incentive
Compensation.

 

(a)                                  Option Grants
and Restricted Stock Awards. On July 17, 2008, the
Executive was granted stock options to purchase 1,383,881 shares of Common
Stock at an exercise price of £1.30 per share (the “Options”). On July 17, 2008, the Executive was awarded 922,587 shares of restricted
Common Stock (the “Restricted Shares”) The Options were granted and the
Restricted Shares were awarded to the Executive pursuant to the terms and
conditions of the Resaca Exploitation, Inc. 2008 Stock Incentive Plan. The
Executive shall be entitled to participate in the
stock option, stock awards or stock appreciation rights plans of the
Employer in effect from time to time, and shall be eligible to receive grants
thereunder upon the terms and conditions established solely by the Board of
Directors.

 

(b)                                 Other Incentive
Compensation. The Executive shall be eligible to receive
additional compensation (“Incentive Compensation”) as determined by the
Board of Directors in its sole discretion.

 

Section 4.                                          Facilities and Expenses. The Employer
will furnish the Executive office space, equipment, supplies, and such other
facilities and personnel as the Employer deems necessary or appropriate for the
performance of the Executive’s duties under this Agreement. The Employer will
pay on behalf of the Executive (or reimburse the Executive for) reasonable
expenses incurred by the Executive at the request of, or on behalf of, the
Employer in the performance of the Executive’s duties pursuant to this
Agreement, and in accordance with the Employer’s employment policies, including
reasonable expenses incurred by the Executive in attending business meetings,
in appropriate business entertainment activities, and for promotional expenses.
The Executive must file expense reports with respect to such expenses in
accordance with the Employer’s policies then in effect.

 

Section 5.                                          Vacations and Holidays; Car Allowance.

 

5.1                                 Vacations and
Holidays. The Executive will be entitled to four (4) weeks
paid vacation during each year of the Employment Period in accordance with the
vacation policies of

 

 

the Employer in effect for its employees from time to time. The
Executive may not use more than ten (10) consecutive business days of
vacation at any one time without the prior written consent of the Board of
Directors or the Chief Executive Officer of the Employer. The Executive will
also be entitled to the paid holidays (eleven (11) paid holidays per year) and
other paid leave set forth in the Employer’s policies.

 

5.2                                 Transportation
Allowance. The Employer shall reimburse the Executive (following
the submission of appropriate expense reports in accordance with the Employer’s
policies then in effect) for automobile mileage incurred by the Executive in
the performance of his duties hereunder up to a monthly amount of $113.00.

 

5.3                                 Fitness Program. The Employer will pay 100% of the Executive’s initiation fee and 50% of the Executive’s
monthly dues for membership to the Downtown
Club.

 

Section 6.                                          Termination.

 

6.1                                 Events of
Termination. The Employment Period, the Executive’s Basic Compensation,
Incentive Compensation and any and all  other rights of
the Executive under this Agreement or otherwise as an employee of the Employer will terminate (except as otherwise provided in this Section 6):

 

(a)                                  upon the death
of the Executive;

 

(b)                                 upon the
Disability of the Executive (as defined in Section 6.2), immediately upon
notice from either party to the other;

 

(c)                                  for cause (as
defined in Section 6.3), immediately upon notice from the Employer to the
Executive, or at such later time as such notice may specify;

 

(d)                                 upon the
voluntary retirement from or voluntary termination of employment by the
Executive; or

 

(e)                                  upon
termination by the Employer for any reason other than those set forth in Section 6.1(a) through
6.1(d) above.

 

6.2                                 Definition of
Disability. For purposes hereof, the term “Disability”
shall have the same meaning as the term “total and permanent disability” is
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended.

 

6.3                                 Definition of “For
Cause”. For purposes of Section 6.1, the phrase “for cause” means:
(a) the Executive’s continued and unreasonable failure to perform his
obligations under this Agreement; (b) the Executive’s failure to adhere to
any written policy of the Employer; (c) the appropriation (or attempted
appropriation) of a material business opportunity of the Employer, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the Employer; (d) the
misappropriation (or attempted misappropriation) of any of the Employer’s funds
or property; (e) the conviction of, the indictment for (or its procedural
equivalent), or the entering of a guilty plea or plea of no contest with respect
to, a felony, the equivalent thereof, or any other crime with respect to which
imprisonment is a punishment; or (f) the conviction of the Executive by a
court of competent jurisdiction of a crime involving moral turpitude.

 

 

6.4                                 Termination Pay. Effective
upon the termination of this Agreement, the Employer will be obligated to pay
the Executive (or, in the event of his death, his designated beneficiary as
defined below) only such compensation as is provided in this Section 6.4,
and in lieu of all other amounts and in settlement and complete release of all
claims the Executive may have against the Employer, TEAI and their Affiliates.
For purposes of this Section 6.4, the Executive’s designated beneficiary
will be such individual beneficiary or trust, located at such address, as the
Executive may designate by notice to the Employer from time to time or, if the
Executive fails to give notice to of such a beneficiary, the Executive’s
estate. Notwithstanding the preceding sentence, the Employer will not have a
duty, in any circumstances, to attempt to open an estate on behalf of the
Executive, to determine whether any beneficiary designated by the Executive is
alive or to ascertain the address of any such beneficiary, to determine the
existence of any trust, to determine whether any person or entity purporting to
act as the Executive’s personal representative (or the trustee of a trust
established by the Executive) is duly authorized to act in that capacity, or to
locate or attempt to locate any beneficiary, personal representative, or
trustee.

 

(a)                                  Termination by
the Employer for Cause or Voluntarily by the Executive. If the
Employer terminates this Agreement for cause, or if the Executive voluntarily
terminates his employment for any reason, the Executive will be entitled to
receive his Salary through the date such termination is effective, but will not
be entitled to any additional compensation, including any Incentive
Compensation for the year during which such termination occurs or any
subsequent year of the Employment Period, and any Options or other Incentive
Compensation that are not vested in full shall terminate immediately.

 

(b)                                 Termination
upon Disability. If this Agreement is terminated by a party as a
result of the Executive’s Disability, as determined under Section 6.2, the
Employer will pay the Executive his Salary through the remainder of the
calendar month during which such termination is effective and Executive will
not be entitled to any additional compensation, including any Incentive Compensation
for the year during which such termination occurs or any subsequent year of the
Employment Period.

 

(c)                                  Termination
upon Death. If this Agreement is terminated because of the
Executive’s death, the Executive’s estate will be entitled to receive his Salary
through the end of the calendar month in which his death occurs and Executive’s
estate will not be entitled to any additional compensation, including any
Incentive Compensation for the year during which such termination occurs or any
subsequent year of the Employment Period.

 

(d)                                 Other
Termination. If this Agreement is terminated by the Employer
for any reason other than pursuant to Sections 6.1(a), 6.1(b), or 6.1(c),
above, the Employer will pay the Executive his Salary for the remaining amount
of the Term in the same form and timing as under the Employer’s regular payroll
practices; provided, however, that if the payment of any compensation or
benefit hereunder would be subject to additional taxes and interest under Code Section 409A
because the timing of such payment is not delayed as provided in Code Section 409A
for a “specified employee”, then if the Executive is a “specified employee”
(within the meaning of Code Section 409A), any such payment that the
Executive would otherwise be entitled to receive during the first six (6) months
following the date of termination shall be accumulated and paid or provided, as
applicable, within ten (10) days after the date that is six (6) months
following the date of termination, or such earlier date upon which such amount
can be

 

 

paid or provided under Code Section 409A without being subject to
such additional taxes and interest.

 

(e)                                  Benefits. The Executive’s
accrual of, or participation in plans providing for, the Benefits will cease at
the effective date of the termination of this Agreement, and the Executive will
be entitled to accrued Benefits pursuant to such plans only as provided in such
plans. The Executive will not receive, as part of his termination pay pursuant
to this Section 6, any payment or other compensation for any vacation,
holiday, sick leave, or other leave unused on the date the notice of
termination is given under this Agreement.

 

Section 7.                                          Non-Disclosure Covenant; Employee Inventions.

 

7.1                                 Acknowledgments
by the Executive. The Executive acknowledges that (a) during the
Employment Period and as a part of his employment, the Employer will give the
Executive access to Confidential Information; (b) public disclosure of
such Confidential Information could have an adverse effect on the Employer,
other members of the Employer Group and their respective businesses; (c) because
the Executive possesses substantial technical expertise and skill with respect
to the Employer’s business, the Employer desires to obtain exclusive ownership
of each Employee Invention, and the Employer will be at a substantial
competitive disadvantage if it fails to acquire exclusive ownership of each
Employee Invention; and (d) the provisions of this Section 7 are
reasonable and necessary to prevent the improper use or disclosure of
Confidential Information and to provide the Employer with exclusive ownership
of all Employee Inventions.

 

7.2                               Agreement of the
Executive. In consideration of the Confidential Information, compensation
and benefits to be paid or provided to the Executive by the Employer under this
Agreement, the Executive covenants as follows:

 

(a)                                  Confidentiality.

 

(i)                                     During and
following the Employment Period, the Executive will hold in confidence the
Confidential Information and will not disclose it to any person except with the
specific prior written consent of the Employer or except as otherwise expressly
permitted by the terms of this Agreement.

 

(ii)                                  Any trade
secrets of each member of the Employer Group will be entitled to all of the
protections and benefits under any applicable law. If any information that a
member of the Employer Group deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this Agreement,
such information will, nevertheless, be considered Confidential Information for
purposes of this Agreement. The Executive hereby waives any requirement that
any member of the Employer Group submit proof of the economic value of any
trade secret or post a bond or other security.

 

(iii)                               None of the
foregoing obligations and restrictions applies to any part of the Confidential
Information that the Executive demonstrates was or became generally available
to the public other than as a result of a disclosure by the Executive.

 

(iv)                              The Executive
will not remove from the Employer’s premises (except to the extent such removal
is for purposes of the performance of the

 

 

Executive’s duties at home or while traveling, or except as otherwise
specifically authorized by the Employer) any document, record, notebook, plan,
model, component, device, or computer software or code, whether embodied in a
disk or in any other form, of the Employer or any other member of the Employer
Group (collectively, the “Proprietary Items”). The Executive recognizes
that, as between the Employer and the Executive, all of the Proprietary Items,
whether or not developed by the Executive, are the exclusive property of the
Employer and the other members of the Employer Group. Upon termination of this
Agreement by either party, or upon the request of the Employer during the
Employment Period, the Executive will return to the Employer all of the
Proprietary Items in the Executive’s possession or subject to the Executive’s
control, and the Executive shall not retain any copies, abstracts, sketches, or
other physical embodiment of any of the Proprietary Items.

 

(b)                                 Employee
Inventions. Each Employee Invention will belong exclusively to
the Employer. The Executive acknowledges that all of the Executive’s writing,
works of authorship, and other Employee Inventions are works made for hire and
the property of the Employer, including any copyrights, patents, or other
intellectual property rights pertaining thereto. If it is determined that any
such works are not works made for hire, the Executive hereby assigns to the
Employer all of the Executive’s right, title, and interest, including all
rights of copyright, patent, and other intellectual property rights, to or in
such Employee Inventions. The Executive covenants that he will promptly:

 

(i)            disclose to the
Employer in writing any Employee Invention;

 

(ii)           assign to the
Employer or to a party designated by the Employer, at the Employer’s request
and without additional compensation, all of the Executive’s right to any
Employee Invention for the United States and all foreign jurisdictions;

 

(iii)          execute and
deliver to the Employer such applications, assignments, and other documents as
the Employer may request in order to apply for and obtain patents or other
registrations with respect to any Employee Invention in the United States and
any foreign jurisdictions;

 

(iv)          sign all other
papers necessary to carry out the above obligations; and

 

(v)           give testimony
and render any other assistance in support of the Employer’s rights to any
Employee Invention.

 

7.3                                 Disputes or
Controversies. The Executive recognizes that should a dispute or controversy
arising from or relating to this Agreement be submitted for adjudication to any
court, arbitration panel, or other third party, the preservation of the secrecy
of Confidential Information may be jeopardized. All pleadings, documents,
testimony, and records relating to any such adjudication will be maintained in
secrecy and will be available for inspection by the Employer, the Executive,
and their respective attorneys and experts, who will agree, in advance and in
writing, to receive and maintain all such information in secrecy, except as may
be limited by them in writing.

 

 

Section 8.                                          Non-Interference and Non-Disparagement.

 

8.1                                 Acknowledgments
by the Executive. The Executive acknowledges that: (a) the services
to be performed by him under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; (b) the Employer’s business is
international in scope and its services and products are designated to be
marketed throughout the world; (c) the Employer competes with other
businesses that are or could be located in any part of the United States or the
world; (d) the provisions of this Section 8 are
reasonable and necessary to protect the Employer’s business; and (e) in
connection with the fulfillment of his duties hereunder and as an employee of
the Employer, the Employer will provide the Executive with Confidential
Information necessitating the execution of the covenants contained in this Section 8.

 

8.2                                 Covenants of
the Executive. In consideration of the acknowledgments by the Executive,
and in consideration of the compensation, benefits and Confidential Information
to be paid or provided to the Executive by the Employer, the Executive
covenants that he will not, directly or indirectly:

 

(a)                                  whether for the
Executive’s own account or the account of any other person (i) at any time
during the Employment Period and the Post-Employment Period, solicit, employ,
or otherwise engage as an employee, independent contractor, or otherwise, any
person who is an employee (or was an employee within two (2) years of the
date in question) of the Employer or any member of the Employer Group at any
time during the Employment Period or in any manner induce or attempt to induce
any employee of the Employer or any member of the Employer Group to terminate
his or her employment with the Employer or member of the Employer Group; or (ii) at
any time during the Employment Period and the Post-Employment Period, interfere
with the Employer’s or a member of the Employer Group’s relationship with any
person, including any person who at any time during the Employment Period was
an employee, contractor, supplier, or customer of the Employer or member of the
Employer Group; or

 

(b)                                 at any time
during or after the Employment Period, disparage the Employer, other members of
the Employer Group or any of their shareholders, partners, directors, officers,
managers, members, employees, or agents.

 

For purposes of this Section 8.2, the term “Post-Employment
Period” means the greater of (i) the one (1) year period
beginning on the date of termination or expiration of the Executive’s employment
with the Employer or the termination or expiration of this Agreement or (ii) the
time period while the Executive is receiving severance payments from the
Employer pursuant to Section 6.4(d).

 

If any covenant in this Section 8.2 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive. The period of time applicable to any covenant in this Section 8.2
will be extended by the duration of any violation by the Executive of such
covenant.

 

The Executive will, while the covenant under this Section 8.2 is
in effect, give notice to the Employer, within ten (10) days after
accepting any other employment, of the identity of the Executive’s employer.
The Employer may notify such employer that the Executive is bound by

 

 

this Agreement and, at the Employer’s election, furnish such employer
with a copy of this Agreement or relevant portions thereof.

 

Section 9.                                          General
Provisions.

 

9.1                                 Injunctive
Relief and Additional Remedy. The Executive acknowledges
that the injury that would be suffered by the Employer as a result of a breach
of the provisions of this Agreement (including any provision of Sections 7 and
8) would be irreparable and that an award of monetary damages to the Employer
for such a breach would be an inadequate remedy. Consequently, the Employer
will have the right, in addition to any other rights it may have, to obtain
injunctive relief to restrain any breach or threatened breach or otherwise to
specifically enforce any provision of this Agreement, and the Employer will not
be obligated to post bond or other security in seeking such relief.

 

9.2                                 Covenants of
Sections 7 and 8 are Essential and Independent Covenants. The covenants
by the Executive in Sections 7 and 8 are essential elements of this Agreement,
and without the Executive’s agreement to comply with such covenants, the
Employer would not have entered into this Agreement or employed the Executive.
The Employer and the Executive have independently consulted with their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenants, with specific regard to the
nature of the business conducted by the Employer.

 

If the Executive’s employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of the Executive in Sections 7 and 8.

 

9.3                                 Representations
and Warranties by the Executive. The Executive represents
and warrants to the Employer that the execution and delivery by the Executive
of this Agreement do not, and the performance by the Executive of the Executive’s
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both: (a) violate any judgment, writ, injunction or
order of any court, arbitrator or governmental agency applicable to the
Executive; or (b) conflict with, result in the breach of any provisions of
or the termination of, or constitute a default under, any agreement to which
the Executive is a party or by which the Executive is or may be bound.

 

9.4                                 Obligations
Contingent on Performance. The obligations of the Employer hereunder,
including its obligation to pay the compensation provided for herein, are
contingent upon the Executive’s performance of the Executive’s obligations
hereunder.

 

9.5                                 Waiver. The rights
and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in exercising
any right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim
or right arising out of this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will
be applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.

 

 

9.6                                 Binding Effect;
Delegation, Assignment or Transfer of Duties Prohibited; Assignment. This
Agreement shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. The duties and covenants of the Executive under this Agreement,
being personal, may not be delegated, assigned or transferred. No party shall
assign this Agreement or its or his rights and duties hereunder, or any
interest herein, without the prior written consent of the other parties;
provided, however, this Agreement may be transferred by operation of law to any
successor in interest to the Employer.

 

9.7                                 Notices. All notices,
consents, waivers, and other communications under this Agreement must be in
writing and will be deemed to have been duly given when (a) delivered by
hand (with written confirmation of receipt); (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested and signed for by the party required to receive
notice; or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other parties):

 

	
  If to the Employer:

  
	
   

  
	
  Resaca Exploitation, Inc.

  
	
  1331 Lamar, Suite 1450

  
	
  Houston Texas 77010

  
	
  Attention:

  	
  General
  Counsel

  
	
  Telephone:

  	
  (713)
  753-1204

  
	
  Telefax:

  	
  (713)
  655-1711

  
	
   

  
	
  with a copy (which shall not constitute notice) to:

  
	
   

  
	
  Haynes and Boone, LLP

  
	
  One Houston Center

  
	
  1221 McKinney, Suite 2100

  
	
  Houston, Texas 77010

  
	
  Attention:

  	
  Bryce
  D. Linsenmayer, Esq.

  
	
  Telephone:

  	
  (713)
  547-2007

  
	
  Telefax:

  	
  (713)
  236-5540

  
	
   

  
	
  If to the Executive:

  
	
   

  
	
  Dennis Hammond

  
	
  11906 Kimberley

  
	
  Houston, Texas 77024

  
	
  Telephone:

  	
  (713)
  468-4102

  
	
  Telefax:

  	
  (713)
  468-1582

  
			

 

9.8                                 Entire
Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written,
between the parties hereto with respect to the subject matter

 

 

hereof. This Agreement may not be amended orally, but only by an
agreement in writing signed by the parties hereto.

 

9.9                               Governing Law. This
Agreement will be governed by the laws of the State of Texas without regard to
conflicts of laws principles.

 

9.10                           Arbitration. In the event
that there shall be any dispute arising out of or in any way relating to this
Agreement, the contemplated transactions, any document referred to or incorporated herein by reference or
centrally related to the subject matter hereof, or the subject matter of any of
the same, the parties covenant and agree as follows:

 

(a)                                  The parties
shall first use their reasonable best efforts to resolve such dispute among
themselves, with or without mediation.

 

(b)                                 If the parties
are unable to resolve such dispute among themselves, such dispute shall be
submitted to binding arbitration in Houston, Texas, under the auspices of, and
pursuant to the rules of, the American Arbitration Association’s
Commercial Arbitration Rules as then in effect, or such other procedures
as the parties may agree to at the time, before a tribunal of three (3) arbitrators.
If the dispute is between or among the Executive and the Employer, one of such
arbitrators shall be selected by the Executive, one of such arbitrators shall
be selected by the Employer, and the third of which shall be selected by the
two (2) arbitrators so selected. Any award issued as a result of such
arbitration shall be final and binding between the parties, and shall be
enforceable by any court having jurisdiction over the party against whom
enforcement is sought. A ruling by the arbitrators shall be non-appealable. The
parties agree to abide by and perform any award rendered by the arbitrators. If
the Executive or the Employer seeks enforcement of the terms of this Agreement
or seeks enforcement of any award rendered by the arbitrators, then the
prevailing party (designated by the arbitrators) to such proceeding(s) shall
be entitled to recover its or his costs and expenses (including applicable
travel expenses) from the non-prevailing party, in addition to any other relief
to which it or he may be entitled. If a dispute arises and one party fails or
refuses to designate an arbitrator within thirty (30) days after receipt of a
written notice that an arbitration proceeding is to be held, then the dispute
shall be resolved solely by the arbitrator designated by the other party and
such arbitration award shall be as binding as if three (3) arbitrators had
participated in the arbitration proceeding. The Executive or the Employer may
cause an arbitration proceeding to commence by giving the other party(ies)
notice in writing of such arbitration. The Executive and the Employer covenant
and agree to act as expeditiously as practicable in order to resolve all
disputes by arbitration. Notwithstanding anything in this Section 9.10 to
the contrary, neither the Executive, nor the Employer shall be precluded from
seeking court action in the event the action sought is either injunctive
action, a restraining order or other equitable relief. The arbitration
proceeding shall be held in English.

 

(c)                                  Legal process
in any action or proceeding referred to in Section 9.10(b) may be
served on any party anywhere in the world.

 

(d)                                 Except as
expressly provided herein and except for injunctions and other equitable
remedies that are required in order to enforce this Agreement, no action may be
brought in any court of law and EACH OF THE
PARTIES WAIVES ANY RIGHTS THAT IT MAY HAVE TO BRING A CAUSE OF ACTION IN
ANY COURT OR IN ANY PROCEEDING INVOLVING A JURY TO THE MAXIMUM EXTENT

 

 

PERMITTED BY LAW. Each party acknowledges that
it has been represented by legal counsel of its own choosing and has been
advised of the intent, scope and effect of this Section 9.10 and has
voluntarily entered into this Agreement and this Section 9.10.

 

9.11                           Section Headings;
Construction. The headings of Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation.
All references to “Section” or “Sections” refer to the
corresponding Section or Sections of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word “including” does not limit the preceding words or
terms.

 

9.12                           Severability. If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

 

9.13                           Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

 

9.14                        WAIVER OF JURY TRIAL. THE
PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT.

 

9.15                           Amendment and
Restatement of Original Employment Agreement. The Executive, the
Employer and TEAI agree that the Original Employment Agreement is hereby
amended and restated in its entirety and, effective as of the Effective Date, (i) the
Original Employment Agreement shall be of no further force and effect, and (ii) all
rights and obligations the Executive, the Employer and TEAI may have had under
the Original Employment Agreement shall be superseded by this Agreement.

 

[Signature page follows]

 

 

IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of January 1, 2009 and effective as of the Effective Date.

 

	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  RESACA
  EXPLOITATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mary Lou Fry

  
	
   

  	
   

  	
  Mary
  Lou Fry

  
	
   

  	
   

  	
  Vice
  President, General Counsel and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Dennis Hammond

  
	
   

  	
  DENNIS
  HAMMOND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TEAI:

  
	
   

  	
   

  
	
   

  	
  TORCH
  ENERGY ADVISORS INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Chris Work

  
	
   

  	
   

  	
  Chris
  Work

  
	
   

  	
   

  	
  Vice
  President

  

 

Signature page

Dennis Hammond Amended and Restated Employment Agreement

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