Document:

Exhibit 10.25

 

PURCHASE AND SALE AGREEMENT

 

THIS
PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of this 19th day of February,
2008 (the “Execution Date”), by and between AXT, Inc., a Delaware
corporation (“Seller”), and Car West Auto Body, Inc, a California corporation,
or its assignee pursuant to Section 14.1 (“Buyer”).

 

RECITALS:

 

A.            Seller is the owner of the following
real property (collectively, the “Property”):

 

(1)           All
that certain real property commonly known as 4311 Solar Way, located in the
City of Fremont (the “City”), County of Alameda, State of California, as
legally described in Exhibit “A” attached hereto, together with all
easements, rights and privileges appurtenant thereto (collectively, the “Land”);
and

 

(2)           The
building located on the Land (the “Building”), together with all improvements
appurtenant thereto (the Building and such improvements being hereinafter
collectively referred to as the “Improvements”).

 

B.            Seller is prepared to sell and
convey the Property to Buyer and Buyer is prepared to purchase the Property
from Seller, all for the purchase price and on the other terms and conditions
hereinafter set forth.

 

AGREEMENT:

 

In
consideration of the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:

 

1.             Sale and Purchase. Seller hereby agrees to sell and convey the Property
to Buyer and Buyer hereby agrees to purchase and accept the Property from
Seller for the purchase price and subject to the other terms and conditions set
forth in this Agreement.

 

2.             Purchase Price. The purchase price for the Property (the “Purchase
Price”) shall be Five Million Six Hundred Thousand and no/100 Dollars ($5,600,000.00),
payable as follows:

 

2.1          Deposit.

 

2.1.1       Upon execution of this Agreement and the
opening of escrow, Buyer shall deliver to First American Title Insurance Company
(the “Escrow Agent”) at its office at 1737 N. First Street, Suite 100, San
Jose, California 95112, attention: Liz Zankich, to be held in escrow No. 338727
(the “Escrow”) and delivered in accordance with this Agreement, a deposit in
the amount of Three Hundred Thousand Dollars ($300,000) (the “Deposit”). If
Buyer elects not to terminate this Agreement during the Due Diligence Period
(defined below), then after the expiration of the Due Diligence Period the
Deposit shall be deemed non-refundable except as expressly provided in Section 5.8
or Article 9 or 10 below.

 

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2.1.2       The Deposit shall be deposited into the
Escrow in the form of cash, certified check, bank cashier’s check, wire
transfer or other form of readily available federally insured funds. The
Deposit shall be held by the Escrow Agent in an interest-bearing account. All
interest earned on the Deposit while in the Escrow shall be deemed to be part
of the Deposit and shall accrue to the benefit of Buyer (or Seller to the
extent provided in Sections 5.8 and/or 10.1 below).

 

2.1.3       At the Closing (as defined in Section 7.1),
the Deposit shall be applicable to the Purchase Price.

 

2.2          Remainder of Purchase Price. At the Closing, Buyer shall deliver to
the Escrow Agent, in cash, certified check, bank cashier’s check, wire
transfer, or other form of readily available federally insured funds, an amount
equal to the Purchase Price less the Deposit plus interest earned, if any,
together with Buyer’s share of closing costs and prorations due and payable by
Buyer in accordance with this Agreement. The Purchase Price, subject to
adjustments and apportionments set forth herein, shall be transferred through
the Escrow on the Closing Date to the order or account of Seller or such other
person as Seller may designate in writing.

 

3.             Seller’s Representations, Warranties and Covenants. Seller represents, warrants and
acknowledges to Buyer and covenants with Buyer as follows:

 

3.1          Authority. Seller is duly organized, validly existing and in
good standing under the laws of the State of California and all documents
executed by Seller shall be valid, legal and binding obligations of Seller at
Closing. No consent of any third party is required in order for Seller to
perform any of its obligations hereunder.

 

3.2          Contracts. Within five (5) business days after Escrow
Agent’s receipt of the Deposit, Seller shall deliver to Buyer copies of all
construction, equipment leasing, service, equipment, supply, utilities,
maintenance, or concession or other agreements relating to the ownership, use
or operation of the Property in Seller’s possession which are currently in
force with respect to the Property (collectively, the “Contracts”). Except as
to those Contracts that Buyer notifies Seller in writing, prior to the
expiration of the Due Diligence Period, that Buyer elects to assume at Closing,
all Contracts shall be terminated by Seller at Closing. Such Contracts, that
Buyer elects to continue in accordance with the preceding sentence, if
assignable by Seller at no cost to Seller (collectively, the “Assigned
Contracts”), shall be assigned to and assumed by Buyer at Closing. To Seller’s
actual knowledge, the items delivered to Buyer pursuant to this Section 3.2
shall be accurate and complete copies of all of the Contracts affecting the
Property.

 

3.3          Leases. Seller has not leased or licensed the Property to a
third party, and there are no other parties occupying, or with a right to
occupy, the Property.

 

3.4          Documents. Within five (5) business days after Escrow
Agent’s receipt of the Deposit, Seller shall deliver to Buyer all documents in
its possession regarding the Property, including without limitation documents
within the categories listed in Exhibit “D”, attached hereto (the “Property
Documents”). Buyer acknowledges receipt, prior to the Execution Date, of the

 

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Property Documents
prior to the date hereof, including without limitation documents relating to
the environmental condition of and remediation of the Property completed by
Seller and approved by the Fremont Fire Department in August, 2007. To Seller’s
actual knowledge, the items delivered to Buyer pursuant to this Section 3.4
are accurate and complete copies of all of the Property Documents affecting the
Property. Seller also shall make available to Buyer, in Seller’s office, all of
Seller’s books and records with respect to the Property.

 

3.5          Maintenance of Property; New Leases. Seller shall maintain the Property in
the condition existing on the date hereof, reasonable wear and tear excepted. During
the period from the Execution Date to the earlier of the Closing or termination
of this Agreement, Seller shall not enter into any leases, contracts or other
agreements or understandings which would be binding on the Property after the
Closing or result in any liability to Buyer upon or after Buyer’s purchase of
the Property, unless Buyer provides its written consent to Seller entering into
such agreements, which consent Buyer may withhold in its sole and absolute
discretion.

 

3.6          Violations. Other than with respect to the environmental
condition of the Property as disclosed in the Property Documents, Seller has
not received any written notice that the Property is in violation of any law,
zoning or building code.

 

3.7          Knowledge. When used in this Article, “Seller’s actual
knowledge” shall be limited to the actual knowledge of Seller’s officers and employees
(including Seller’s office manager) as of the date hereof, who have not
undertaken any special duty of investigation or inquiry with respect to the
subject matter of the representations and warranties contain in this Article.

 

4.             Buyer’s Representations, Warranties and Covenants. Buyer hereby represents, warrants and
acknowledges to Seller and covenants with Seller as follows:

 

4.1          Authority. Buyer has the power and authority to enter into and
to perform all of Buyer’s obligations pursuant to this Agreement and to
purchase the Property on the terms and conditions set forth herein. No consent
of any other party is required in order for Buyer to perform any of its
obligations hereunder.

 

4.2          No Conflict. This Agreement and Buyer’s purchase of
the Property hereunder do not violate any material terms or provisions of any
contract to which Buyer is a party.

 

4.3          Confidentiality. Until the Closing Date shall occur, Buyer
shall keep in confidence and not disclose any information or documents it
receives from Seller or the terms and conditions of this Agreement to any
person, firm or entity without the prior written authorization of Seller,
except that the information may be disclosed to (i) Buyer’s partners,
directors, officers, existing and potential financial sources, assignees,
lawyers, consultants, and representatives, including Buyer’s Agents (as defined
in Section 5.2.1 below) as needed to enable Buyer to complete its
obligations or exercise its rights hereunder, provided that Buyer obtain a
written agreement from such entities and persons to maintain the
confidentiality of such information and documents, or (ii) as required by
law or by regulatory or judicial process.

 

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4.4          “AS IS” Purchase. Other than as
expressly set forth in this Agreement, (a) Buyer acknowledges and agrees
that Buyer is acquiring the Property in its “AS IS” condition, WITH ALL FAULTS,
IF ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, and (b) neither
Seller nor any agents, representatives, or employees of Seller have made any
representations or warranties, direct or indirect, oral or written, express or
implied, to Buyer or Buyer’s Agents with respect to the condition of the
Property, its fitness for any particular purpose, or its compliance with any
laws, and Buyer is not aware of and does not rely upon any such representation.
Buyer acknowledges that the Due Diligence Period will have afforded Buyer the
opportunity to make such inspections (or have such inspections made by
consultants) as it desires of the Property and all factors relevant to its use,
including, without limitation, the interior, exterior, and structure of any
improvements on the Property, the condition of soils and subsurfaces, and the
status of all zoning, permitting and other entitlements relevant to the use or
contemplated use of the Property. Buyer acknowledges that during the Due
Diligence Period Buyer and Buyer’s Agents will independently and with the
assistance of Buyer’s professional advisors and consultants undertake whatever
non invasive studies, tests and investigation Buyer desires to conduct relating
to the Property (including, without limitation, economic reviews, engineering
analyses, environmental analyses and analyses of the records of any
governmental or quasi-governmental entity having jurisdiction over the
Property). Except as otherwise provided herein, Buyer is relying solely on its
own investigation as to the Property and its value and is assuming the risk
that adverse physical, economic or other conditions (including, without
limitation, adverse environmental conditions and the status of compliance with
the requirements of the Americans with Disabilities Act of 1990) may not have
been revealed by such investigation. Buyer agrees that the Property is to be
sold to and accepted by Buyer, at Closing, in the condition it is in at the end
of the Due Diligence Period “AS-IS.”

 

4.5          Release of Claims.

 

(a)           As of the Closing, Buyer hereby
completely releases and forever discharges Seller and Seller’s partners,
affiliates, employees, successors, assigns, heirs, agents, and representatives
from and against all claims, liabilities, demands, judgments, damages, losses,
and costs (collectively, “Claims”) arising from or related to the following: (i) any
Hazardous Materials in, on, beneath, discharged from, migrating from,
discharged to or migrating to the Property, including the soil or groundwater
thereof, at any time; and (ii) any use, handling, treatment, storage,
transportation or disposal of Hazardous Materials at or from the Property after
the Closing; and (iii) any latent or patent defect affecting the Property
(collectively, the “Released Matters”). As used in this Agreement, the term “Hazardous
Materials” shall have the meaning set forth in Exhibit “B” attached
hereto. In connection with such waiver and relinquishment, Buyer acknowledges
that it is aware that it hereafter may discover Claims or facts in addition to
or different from those which it now knows or believes to exist with respect to
the Released Matters, but that it is Buyer’s intention to fully, finally and
forever to settle and release all of the Released Matters in accordance with the
provisions of this Section 4.5, and the release set forth herein shall be
and remain in effect as a full and complete release notwithstanding the
discovery or existence of any such additional or different Claims or facts. The
foregoing release of Claims shall be binding on Buyer and all subsequent
owners, lessees and other transferees of the Property.

 

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(b)           In connection with Section 4.5(a) above,
Buyer expressly waives the benefits of Section 1542 of the California
Civil Code which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

                Buyer’s
Initials /s/ CM

 

5.             Conditions of Buyer’s Obligations. The Closing and Buyer’s obligations
under this Agreement to purchase the Property shall be subject to the
reasonable satisfaction, prior to the times prescribed herein, of the following
conditions, with Buyer to retain the right to waive, in writing, in whole or in
part, any of the following conditions (collectively, the “Contingencies”) at or
prior to the time prescribed herein for approval or disapproval by Buyer:

 

5.1          Title Report. Within three (3) business days
after the Execution Date, Seller shall deliver to Buyer a preliminary title
report prepared by First American Title Company (“Title Company”) with respect
to the Property (the “Title Report”), together with complete copies of all
exceptions set forth therein. Buyer shall have until 5:00 p.m. (Pacific
Time) on the date which is ten (10) days after receipt of the Title Report
(or the next business day if such date falls on a weekend or holiday) to notify
Seller and the Escrow Agent, in writing, of Buyer’s disapproval of any
exceptions or items shown thereon and to obtain, at Buyer’s sole cost, the
commitment of the Title Company to issue the Title Policy (as defined in Section 5.5
below), including such endorsements as Buyer may reasonably request. If Buyer
does not give Seller written notice of disapproval of any of the foregoing
items within the prescribed time, the Title Report and the supporting documents
shall be deemed approved (and all exceptions therein shall be deemed “Permitted
Exceptions” and this condition shall be deemed satisfied); provided, however,
Buyer may at any time during the foregoing ten (10) day period object to
any title matters affecting the Property. Within five (5) days of receipt
of Buyer’s notice of disapproval of any of the foregoing items, Seller shall notify
Buyer whether Seller is willing to remove any such item which Buyer has
disapproved. If Seller does not give Buyer written notice within the prescribed
period of time, Seller shall be deemed to have elected not to remove any such
item which Buyer has disapproved. If there are exceptions which Buyer has
disapproved and which Seller is not willing to remove at Seller’s expense,
Buyer shall have until the end of the Due Diligence Period (or such five (5) day
period for Seller’s response, whichever is later) to notify Seller in writing
of Buyer’s election to either (a) waive its disapproval and approve such
exceptions, or (b) terminate this Agreement and receive a refund of the
Deposit. If Buyer elects to waive its disapproval and approve any such
exceptions, or if Buyer does not expressly elect to terminate by timely
delivery of a Termination Notice, such exceptions then shall be deemed to
become Permitted Exceptions at the Closing.

 

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5.2          Due Diligence Period.

 

5.2.1       At all times during the period commencing on the
Execution Date until 5:00 p.m. (Pacific Time) on the day which is twenty (20)
days after the Execution Date, or the next business day if such date falls on a
weekend or holiday (the “Due Diligence Period”), Buyer, its authorized agents,
employees, consultants and representatives (“Buyer’s Agents”) shall have the
right to enter the Property at reasonable times and at reasonable intervals to
conduct and carry out any and all non invasive inspections, tests, and studies
as Buyer deems appropriate or Buyer’s lender requires. Buyer shall not have the
right to do any invasive testing of the Property or the Improvements located
thereon without the prior written consent of Seller, subject to subsection
5.2.2(g) below. Buyer shall provide notice to Seller of its intent to
enter the Property and provide Seller the right to accompany Buyer on such
entry. Buyer shall have the right to terminate this Agreement at any time prior
to the expiration of the Due Diligence Period at Buyer’s sole and absolute
discretion, for any reason whatsoever or for no reason, by delivering to Seller
written notice of Buyer’s election to terminate this Agreement no later than
5:00 p.m. (Pacific Time) of the last day of the Due Diligence Period (the “Termination
Notice”). Buyer’s failure to deliver the Termination Notice within the Due
Diligence Period shall conclusively be considered Buyer’s approval of all the
conditions and documents in Section 5.1 and this Section 5.2.

 

5.2.2       During the Due Diligence Period, Buyer
and Buyer’s Agents shall be granted a right of entry on the Property (a) to
perform such non invasive engineering, environmental and geological reviews as
Buyer shall deem appropriate, (b) examine all structural and mechanical
systems within the Improvements, (c) examine the books and records of
Seller relating to the operation of the Property, and (d) conduct such
other non invasive physical inspections and make such other reports as Buyer
shall deem appropriate for any purpose related to Buyer’s proposed use of the
Property. Buyer’s right of entry upon the Property shall be subject to, and
Buyer agrees to perform, each of the following conditions and covenants, all of
which shall survive the expiration or termination of this Agreement and the
delivery of the Deed (as defined in Section 7.2.1 below):

 

(a)           Buyer shall pay all costs, expenses,
liabilities, and charges incurred by Buyer or related to Buyer’s entry;

 

(b)           Buyer, at Buyer’s sole cost, shall repair
all damage or injury caused by Buyer or Buyer’s Agents in connection with any
such inspection or entry and shall return the Property to the condition
existing prior to such entry;

 

(c)           Any entry upon the Property shall be upon
reasonable notice to Seller, shall be at reasonable times and shall not
interfere with the Seller’s operations on the Property. Seller, at its sole
expense, shall have the right to accompany Buyer and Buyer’s Agents during any
entry upon the Property and to require that Buyer and Buyer’s Agents comply with
Seller’s safety and security procedures;

 

(d)           Buyer shall keep the Property free and
clear of all liens arising out of the activities of Buyer or Buyer’s Agents
conducted upon the Property;

 

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(e)           Buyer shall indemnify and hold Seller
harmless from any lien, loss, claim, liability, or expense, including attorneys’
fees and costs, arising out of or in connection with the activities of Buyer or
Buyer’s Agents on or about the Property;

 

(f)            Buyer shall provide liability insurance,
with a combined single limit of liability not less than One Million Dollars ($1,000,000),
either under Buyer’s policy or such insurance provided by Buyer’s Agents. Seller
shall be named as an additional insured upon such insurance. Buyer shall
provide proof of such insurance reasonably acceptable to Seller prior to, and
as a condition of, any such entry; and

 

(g)           Prior to performing any invasive testing,
Buyer shall obtain Seller’s written approval, which approval may be withheld in
Seller’s sole and absolute discretion, with respect to the scope of work
intended to be performed and shall provide Seller an opportunity to confer,
either directly or through Seller’s consultants, with Buyer’s environmental
consultants in order to determine whether to permit any sampling or testing of
surface or subsurface soils, surface water or ground water or to refine the
scope of the work to be performed. Seller and its consultants shall be entitled
to take “split samples” of any samples obtained by Buyer and its consultants. Seller
shall bear all expenses of its own environmental consultants in reviewing Buyer’s
work plan and analyzing any split samples.

 

5.2.3       Prior to the Closing, all information
derived from Buyer’s tests and test results shall, to the extent permissible
under existing law, remain confidential and not be disclosed to any party other
than as is necessary to consummate the transaction contemplated hereby or to
exercise Buyer’s rights hereunder including, without limitation, Buyer’s counsel
and its consultants. Seller shall be entitled to receive copies of all tests
and test results together with the right, as a party of interest, to be able to
access the consultant’s file information and work product in the event the
Closing does not occur, unless the Closing does not occur because of Seller’s
default under this Agreement. Buyer shall obtain all consultants’ consent to
the foregoing as a part of any retention agreement. Seller’s rights shall
survive the termination of this Agreement. Buyer shall bear the costs and
expenses with respect to its feasibility studies hereunder, including, but not
limited to, all environmental matters and investigations.

 

5.3          Performance. Seller shall have performed, observed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed, observed and complied with on its part prior to or
as of the Closing hereunder.

 

5.4          Documents and Deliveries. All instruments and documents required
on Seller’s part to effectuate the Closing, as set forth herein and the
transactions contemplated hereby shall be delivered to Buyer or the Escrow
Agent, as required hereby, and shall be in form and substance consistent with
the requirements herein.

 

5.5          Title Policy. At the Closing, Title Company shall
have delivered to Buyer either (a) a CLTA owner’s standard policy of title
insurance (the “Title Policy”), insuring Buyer’s fee simple title to the
Property in the amount of the Purchase Price subject only to the Permitted
Exceptions, or (b) Title Company’s irrevocable commitment to issue such
policy.

 

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5.6          Condition of Property. Subject to the terms and conditions of Article 9
below, the physical condition of the Property shall be substantially the same
on the day of Closing as on the date of Buyer’s execution of this Agreement,
reasonable wear and tear excepted.

 

5.7          Accuracy of Representations. All of the representations and
warranties of Seller contained in this Agreement shall have been true and
correct in all material respects when made, and shall be true and correct in
all material respects on the date of Closing (as defined in Section 7.1
below) with the same effect as if made on and as of such date

 

5.8          Failure of Conditions. If any conditions set forth in this Article 5
are not satisfied or waived in writing by Buyer at or prior to the times
prescribed therein, then all rights, obligations and liabilities of Seller and
Buyer under and pursuant to this Agreement shall terminate (except for any
obligations or liabilities under this Agreement which specifically set forth
that such obligations or liabilities shall survive the termination of this
Agreement), and the Escrow Agent shall, without further notice to or from any
party, and without liability therefor, cancel and terminate the Escrow. Upon
such termination, the Deposit shall be paid to Seller to the extent it has
become nonrefundable in accordance with this Agreement, unless the failure of a
condition is caused solely by Seller’s breach of a representation, warranty
covenant or obligation of Seller arising under this Agreement, subject to Section 10.2
below (a “Seller’s Breach), in which event the Deposit shall be refunded to
Buyer.

 

5.9          Copies of Reports. In the event of termination of this
Agreement, Buyer shall promptly return to Seller all documents delivered by
Seller to Buyer and, after termination of this Agreement for any reason other
than as a result of Seller’s default hereunder, Buyer shall provide copies to
Seller of all reports and studies obtained or developed by Buyer or Buyer’s
consultants with respect to the Property at no cost to Seller, and delivery of
such documents shall be a condition to any right of Buyer to a return of the
Deposit, to the extent refundable to Buyer.

 

6.             Conditions of Seller’s Obligations. The Closing and Seller’s obligations
under this Agreement to sell the Property shall be subject to the satisfaction,
prior to the times prescribed herein, of the following conditions, with Seller
to retain the right to waive in writing, in whole or in part, any of the
following conditions at or prior to the time prescribed herein for approval or
disapproval by Seller:

 

6.1          Accuracy of Representations. All of the representations and
warranties of Buyer contained in this Agreement shall have been true and
correct in all material respects when made, and shall be true and correct in
all material respects on the date of Closing with the same effect as if made on
and as of such date.

 

6.2          Performance. Buyer shall have performed, observed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed, observed and complied with on its part prior to or
as of the Closing hereunder.

 

6.3          Documents and Deliveries. All instruments and documents required
on Buyer’s part to effectuate the Closing and the transactions contemplated
hereby shall be delivered to Seller or the Escrow Agent, as required hereby,
shall be in form and substance consistent with the requirements herein, and all
funds to be deposited into the Escrow pursuant hereto shall have been timely
deposited.

 

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6.4          Failure of Conditions. If any conditions precedent to Seller’s
obligations hereunder are not timely satisfied or waived in writing by Seller,
as set forth in this Article 6 and including, but not limited to, timely
delivery of the Deposit or other funds required to be deposited by Buyer into
the Escrow, then Seller shall have the option, exercisable by written notice to
Buyer at or prior to the Closing, of declining to proceed with the Closing. In
such event, except as expressly set forth herein, all obligations and
liabilities of the parties under this Agreement shall terminate (except for any
obligations or liabilities under this Agreement which specifically set forth
that such obligations or liabilities shall survive the termination of this
Agreement) and (a) all documentation delivered to Buyer pursuant hereto
shall be returned to Seller, (b) all third party reports obtained by Buyer
with respect to the Property shall be delivered to Seller at no cost to Seller,
if requested by Seller, and (c) the Deposit shall be paid to Seller to the
extent is has become nonrefundable in accordance with this Agreement.

 

7.             Closing; Deliveries.

 

7.1          Closing Date. The closing of the transaction
described in this Agreement (the “Closing”) shall take place on the later of (i) the
date which is thirty (30) days after the expiration of the Due Diligence Period
(or the next business day if such date falls on a weekend or holiday), or (ii) March 18,
2008 (the Closing Date”). Upon Seller’s request, Buyer shall confirm in writing
the date on which the Due Diligence Period expires hereunder and/or the Closing
Date. The Closing shall be deemed to occur as of the moment the Deed is
recorded and the Purchase Price is disbursed to Seller.

 

7.2          Seller’s Closing Deposits. At or prior to the Closing, Seller
shall deposit the following into the Escrow for recordation and/or delivery to
Buyer at the Closing:

 

7.2.1       Grant Deed. A grant deed, duly executed and acknowledged by
Seller and in proper form for recording (the “Deed”), subject to the Permitted
Exceptions.

 

7.2.2       Assignment of Contracts. If Buyer elects to assume any
Contracts, an assignment to Buyer of all of Seller’s right, title and interest
in the Assigned Contracts, if any, in the form attached hereto as Exhibit “C,”
which shall provide for an assumption by Buyer of all obligations of assignor
thereunder from and after the date of the Closing.

 

7.2.3       Contracts. Originals or copies certified by Seller of the Assigned
Contracts, if any, which may be delivered outside of the Escrow, at Seller’s
election.

 

7.2.4       FIRPTA. A certification and affidavit as required by the
Foreign Investors Property Tax Act, as amended, and the comparable provisions
of California law.

 

7.2.5       Other Documents. Such resolutions, authorizations,
bylaws or other corporate/partnership documents or agreements relating to
Seller as may be reasonably requested.

 

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7.3          Buyer’s Closing Deposits. At or prior to the Closing, Buyer shall
deposit into the Escrow for delivery to Seller at the Closing the following:

 

7.3.1       Balance of Purchase Price. The balance of the Purchase Price in
cash or by wire transfer in the amount required under Article 2 hereof for
delivery to Escrow Agent.

 

7.3.2       Assignment of Contracts. The assignment of the Assigned
Contracts to be assumed by Buyer pursuant to Section 3.3 herein.

 

7.3.3       Other Documents. Such other instruments and documents as
reasonably may be required to effectuate this Agreement and consummate the
transactions contemplated hereby.

 

8.             Apportionments; Expenses.

 

8.1          Apportionments.

 

8.1.1       Taxes, Utilities and Operating Expenses. All real estate taxes, charges and any
assessments affecting the Property and all charges for utilities, insurance and
other operating expenses of the Property, if any, shall be prorated on a per
diem basis as of midnight on the date before Closing. If any real estate taxes,
charges or assessments or any charges for utilities, insurance and other
operating expenses of the Property have not been finally assessed or billed to
Seller as of midnight on the date before Closing, then the same shall be
adjusted at Closing based upon the most recently issued bills therefor and
shall be re-adjusted outside of the Escrow when final bills are issued.

 

8.1.2       Charges under Assigned Contracts. The unpaid monetary obligations of
Seller with respect to any of the Assigned Contracts, if any, shall be prorated
on a per diem basis as of midnight before the date of the Closing.

 

8.2          Expenses. The expenses and costs of the transactions
contemplated by this Agreement shall be borne by the parties as follows, all of
which obligations shall survive the Closing:

 

8.2.1       Advisors. Subject to Section 14.10 hereof, each party will
pay all its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, (a) all
costs and expenses stated herein to be borne by such party, and (b) all of
its own respective accounting, legal and appraisal fees.

 

8.2.2       Seller’s Expenses. Seller shall pay at the Closing (a) the
premium attributable to a CLTA title policy for Buyer, (b) fifty percent
(50%) of all escrow fees, and (c) all city and county transfer taxes.

 

8.2.3       Buyer’s Expenses. Buyer shall pay at the Closing (a) all
premiums for Buyer’s title policy over and above a CLTA title policy and all endorsements,
and (b) fifty percent (50%) of all escrow fees.

 

10

 

8.2.4       Other Fees. All other Closing costs if any, shall be
divided by the parties in accordance with the custom of Alameda County.

 

8.3          Possession. Possession of the Property shall be surrendered to
Buyer at the Closing free and clear of any rights of possession of others.

 

9.             Casualty and Condemnation; Insurance.

 

9.1          Threshold Amount for Termination Option. If, at any time prior to the date of
Closing, Improvements having a replacement value of Five Hundred Thousand
Dollars ($500,000) or more are destroyed or damaged as a result of fire or any
other casualty whatsoever, or as a result of the Property being condemned or
taken by eminent domain proceedings by any public authority, the Property’s
value is reduced by Five Hundred Thousand Dollars ($500,000) or more, then, at
Buyer’s option, to be exercised by written notice to Seller, this Agreement
shall terminate, and the Deposit shall be returned to Buyer, and except as
expressly set forth herein, neither party shall have any further liability or
obligation to the other hereunder. Buyer shall exercise such termination right,
if at all, within fifteen (15) days after receipt of notice from Seller
advising Buyer of such damage or taking.

 

9.2          Allocation of Compensation. If there is any damage or destruction
or condemnation or taking, as above set forth, and if (a) the resulting
reduction in the value of the Property is less than Five Hundred Thousand
Dollars ($500,000), or (b) Buyer elects not to terminate this Agreement as
provided above, then Buyer shall pay the Purchase Price in full at the Closing
and the Property shall belong to Buyer, provided that (i) in the case of a
taking, all condemnation proceeds paid or payable to Seller shall be paid or
assigned to Buyer at the Closing; or (ii) in the case of a casualty,
Seller shall assign to Buyer all rights to any insurance proceeds paid or
payable under the applicable insurance policies. In no event shall Seller have
any obligation to restore any damage to the Property caused by or arising from a
condemnation or casualty event, nor shall Buyer have the right to terminate
this Agreement as a result thereof other than as provided in Section 9.1
above.

 

10.          Remedies for Buyer’s Default and Seller’s
Default.

 

10.1        Buyer’s Default. IN THE EVENT BUYER BREACHES OR FAILS TO
PERFORM ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT, THEN
SELLER SHALL, AS ITS SOLE REMEDY THEREFOR, BE ENTITLED TO RECEIVE THE DEPOSIT
MADE PURSUANT TO SECTION 2 HEREOF, INCLUDING ALL INTEREST EARNED AND
ACCRUED THEREON, AS LIQUIDATED DAMAGES (AND NOT AS A PENALTY) IN LIEU OF, AND
AS FULL COMPENSATION FOR, ALL OTHER RIGHTS OR CLAIMS OF SELLER AGAINST BUYER BY
REASON OF SUCH DEFAULT. THEREUPON THIS AGREEMENT SHALL TERMINATE AND THE
PARTIES SHALL BE RELIEVED OF ALL FURTHER OBLIGATIONS AND LIABILITIES HEREUNDER,
EXCEPT FOR THOSE OBLIGATIONS WHICH EXPRESSLY SURVIVE CLOSING OR TERMINATION OF
THIS AGREEMENT. BUYER AND SELLER ACKNOWLEDGE THAT THE DAMAGES TO SELLER
RESULTING FROM BUYER’S BREACH WOULD BE DIFFICULT, IF NOT IMPOSSIBLE TO
ASCERTAIN WITH ANY ACCURACY, AND THAT THE LIQUIDATED DAMAGE AMOUNT SET FORTH IN
THIS

 

11

 

SECTION REPRESENTS
BOTH PARTIES’ EFFORTS TO APPROXIMATE SUCH POTENTIAL DAMAGES. NOTWITHSTANDING
THE FOREGOING, OR ANY OTHER PROVISION TO THE CONTRARY, THIS SECTION 10.1
SHALL IN NO WAY LIMIT OR RESTRICT SELLER’S RECOVERY UNDER SECTION 5.2
ABOVE AND/OR SECTION 14.10 BELOW.

 

	
   

  	
  /s/ WC

  	
  Seller’s Initials

  	
  /s/ CM

  	
  Buyer’s Initials

  

 

10.2        Seller Breach Before Closing. In the event that the Closing does not
occur as a result of a Seller’s Breach which is not cured by Seller within five
(5) days after written notice from Buyer to Seller of such Seller’s Breach,
Buyer shall be entitled to (a) bring an action for specific performance if
filed and served upon Seller within sixty (60) days after the occurrence of
such alleged breach, or (b) terminate this Agreement, obtain a refund of
the Deposit, if made, and pursue any remedies at law to which it may be legally
entitled; provided, however, that (i) Seller’s liability for any such
Seller’s Breach shall be limited to claims for which the damages are not less
than Fifty Thousand Dollars ($50,000) and shall be subject to an aggregate
maximum sum of Five Hundred Thousand Dollars ($500,000), and (ii) Seller
shall in no event have any liability for matters disclosed to Buyer in any documents
and information produced for Buyer pursuant to this Agreement or discovered by
Buyer prior to termination of this Agreement, and (iii) Seller shall have
no liability for any such Seller’s Breach unless such damage claim is expressly
asserted by Buyer in an action filed and served on Seller within one (1) year
following the termination of the Agreement.

 

10.3        Seller Breach After Closing. In the event the Closing does occur and
Buyer discovers a Seller’s Breach, (a) Seller’s liability for a Seller’s
Breach shall be limited to claims for which the damages are not less than Fifty
Thousand Dollars ($50,000) and which shall be subject to an aggregate maximum
of Five Hundred Thousand Dollars ($500,000), (b) Seller shall in no event
have any liability for matters disclosed to Buyer in documents produced or made
available to Buyer by Seller or discovered by Buyer prior to the Closing if
Buyer elects to proceed to close this transaction notwithstanding the
disclosure or discovery of such matters prior to the Closing, and (c) Seller
shall have no liability for any Seller’s Breach unless such damage claim is
asserted by Buyer in an action filed and served on Seller within one (1) year
following the Closing.

 

11.          Further Assurances. Seller and Buyer each agrees to perform such other
acts, and to execute, acknowledge and deliver, prior to, at or subsequent to
the Closing, such other instruments, documents and other materials as the other
may reasonably request and as shall be necessary in order to effect the
consummation of the transactions contemplated hereby.

 

12.          Notices. All notices and other communications provided for
herein shall be in writing and shall be sent to the address set forth below (or
such other address as a party may hereafter designate for itself by notice to
the other parties as required hereby) of the party for whom such notice or
communication is intended:

 

12

 

If to Seller:

 

AXT, Inc.

4281 Technology Drive

Fremont, California 94538

Attn: Wilson Cheung 

Fax: (510) 438-4793

Phone: (510) 438-4735

 

With a copy to:

 

DLA Piper US LLP

2000 University Avenue

East Palo Alto, California 94303

Attn:     Austin Stewart, Esq.

Fax:     (650) 833-2001

Phone: (650) 833-2250

 

If to Buyer:

 

Car West Auto Body, Inc.

6077 Dublin Blvd.

Dublin, California
94568

Attn: Craig Moe

Fax: (925) 829-4610

Phone: (925) 829-5571

 

Any
such notice or communication shall be sufficient if sent by registered or
certified mail, return receipt requested, postage prepaid; by hand delivery; by
overnight courier service; or by telecopy with an original by regular mail. Any
such notice or communication shall be effective when delivered to the office of
the addressee or upon refusal of such delivery.

 

13.          Brokers. Seller is represented by CB Richard Ellis (“Seller’s
Broker”), and Buyer is not represented by any broker. If and when the Closing
occurs, Seller shall pay a brokerage commission to Seller’s Broker pursuant to
a separate agreement with Seller’s Broker. Except for the Seller’s Broker set
forth herein, each party represents to the other that it has not dealt with any
broker, agent, or finder for which a commission or fee is payable in connection
with this Agreement. Each party shall indemnify, defend, and hold harmless the
other party from any claims, demands, or judgments for commissions or fees
based on the claimant’s representation or alleged representation of the
indemnifying party in this transaction. The provisions of this Section 14
shall survive the Closing or the termination of this Agreement.

 

14.          Miscellaneous.

 

14.1        Assignability. Buyer shall have the right to assign
its rights under this Agreement to a corporation, partnership, limited
liability company, tenancy-in-common, or other entity in which Buyer holds,
directly or indirectly, a fifty percent (50%) or greater interest and

 

13

 

which is
controlled by Buyer (i.e., Buyer has the right to direct the management and
operation of such entity). Except as expressly set forth herein, Buyer may not
assign or transfer all or any portion of its rights or obligations under this
Agreement to any other individual, entity or other person without the consent
thereto by Seller, which may be withheld in Seller’s absolute discretion.

 

14.2        Governing Law; Parties in Interest. This Agreement shall be governed by the
law of the State of California and shall bind and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, assigns and personal representatives.

 

14.3        Recording. Upon Buyer’s written request, Seller agrees to
execute and deliver a memorandum of this Agreement, in form and substance
acceptable to Seller, to be recorded in the Official Records of Alameda County,
with such memorandum to be prepared and recorded at Buyer’s expense; provided,
however, that as a condition to Seller’s agreement to allow Buyer to record
such a memorandum in the Official Records of Alameda County, (i) Buyer
shall not record such memorandum other than by arranging for Title Company to
do so, (ii) at the time it provides the memorandum to the Title Company, Buyer
shall also provide an original, executed and notarized release of such
memorandum, the form of which shall be subject to Seller’s prior written
approval, and (iii) Buyer agrees and acknowledges that this Section 14.3
shall constitute irrevocable instructions to Title Company that, in the event
this Agreement is terminated for any reason whatsoever, Title Company shall
record such release in the Official Records of Alameda County without the requirement
of any further notice from or consent by any party.

 

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

 

14.5        Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.

 

14.6        Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.

 

14.7        Exhibits. All Exhibits which are referred to herein and which
are attached hereto or bound separately and initialed by the parties are
expressly made and constitute a part of this Agreement.

 

14.8        Survival. Unless otherwise expressly stated in this Agreement,
the warranties, representations and covenants of Seller and Buyer shall
terminate as of the Closing and shall be deemed to have merged with the Deed. The
warranties, representations and covenants of Article 3 (subject to the
limitations in Section 3.7 and Article 10), Article 4, Sections 5.2.2,
5.2.3, 5.9, 9.2, and Articles 10, 11 & 13 and Section 14.10
hereof shall survive the Closing or any earlier termination of this Agreement.

 

14.9        Entire Agreement; Amendments. This Agreement and the Exhibits hereto
set forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and

 

14

 

contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written, except as contained herein. This Agreement may not be changed
orally but only by an agreement in writing, duly executed by or on behalf of
the party or parties against whom enforcement of any waiver, change,
modification, consent or discharge is sought.

 

14.10      Attorneys’ Fees. If there is any legal action or
proceeding between Seller and Buyer arising from or based upon this Agreement,
the unsuccessful party to such action or proceeding shall pay to the prevailing
party all costs and expenses, including reasonable attorneys’ fees and
disbursements incurred by the prevailing party in such action or proceeding and
in any appeal in connection therewith, and such costs, expenses, attorneys’
fees and disbursements shall be included in and as part of such judgment.

 

14.11      Documentary Transfer Tax. Either party shall, at the time of
recording the Grant Deed, in accordance with California Revenue and Taxation
Code Section 11932, be entitled to require that the amount of the
documentary transfer tax due be shown on a separate paper which shall be
affixed to the Grant Deed subsequent to recording.

 

14.12      Tax Deferred Exchange: Each party agrees to cooperate with the
other party for the purpose of effecting a tax deferred exchange pursuant to
Internal Revenue Code Section 1031. Buyer and Seller agree that the
consummation of this Agreement is not predicated or conditioned upon the
completion of any such exchange and such exchange shall not delay the Close of
Escrow hereunder. Neither party shall incur any additional liability or
financial obligation (including legal fees) as a consequence of the other party’s
contemplated exchange and the exchanging party agrees to hold the other party
harmless from any liability that may arise from the other party’s participation
therein. In no event shall the non-exchanging party be required to take title
to any property other than the Property.

 

15.          Escrow Agent. Escrow Agent shall hold the Deposit in accordance
with the terms and provisions of the escrow instructions to be given to Escrow
Agent by the parties in a form consistent with this Agreement.

 

             IN WITNESS WHEREOF, the parties
have executed and delivered this Agreement as of the date first above
written.

 

15

 

 

BUYER:

 

CAR WEST AUTO BODY, INC.,

a California corporation

 

 

	
  By:

  	
  /s/ Craig Moe

  	
   

  
	
   

  	
  President

  	
   

  

 

SELLER:

 

AXT, INC.,

a Delaware corporation

 

 

 

	
  By:

  	
  /s/ Wilson W. Cheung

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
  Chief Financial Officer

  	
   

  

 

16

 

ACKNOWLEDGEMENT

 

Escrow
Holder executes this Agreement below solely for the purpose of acknowledging
that it agrees to be bound by the provisions hereof to the extent applicable to
the express obligations of Escrow Holder hereunder.

 

ESCROW
HOLDER:

 

FIRST
AMERICAN TITLE
INSURANCE COMPANY

 

 

 

	
  By:

  	
  /s/ Liz Zankich

  	
   

  
	
  Name:

  	
  Liz Zankich

  	
   

  
	
  Title:

  	
  Senior
  Escrow Officer

  	
   

  
	
  Date:

  	
  2/20/08

  	
   

  

 

17

 

EXHIBIT A

 

LEGAL DESCRIPTION
OF THE REAL PROPERTY

 

The Land referred to
herein is situated in the City of Fremont, County of Alameda, State of
California, and is described as follows:

 

Being all of Lot 16 and Lot
20, Tract 4390, filed September 15, 1980, in Book 120, Pages 96
through 98 of Maps, Alameda County Records, pursuant to that certain “Declaration
of Merger” Recorded August 24, 1995, as Instrument No. 95192202,
Alameda County Official Records.

 

APN: 525-1652-012-01

 

1

 

EXHIBIT B

 

DEFINITION OF HAZARDOUS MATERIALS

 

The
term “Hazardous Materials” means material, waste, chemical, compound,
substance, mixture, or byproduct that is identified, defined, designated,
listed, restricted or otherwise regulated under Environmental Laws (as defined
hereinbelow) as a “hazardous constituent,” “hazardous substance,” “hazardous
material,” “extremely hazardous material,” “hazardous waste,” “acutely
hazardous waste,” “hazardous waste constituent,” “infectious waste,” “medical
waste,” “biohazardous waste,” “extremely hazardous waste,” “pollutant,” “toxic
pollutant,” or “contaminant,” or any other formulation intended to classify
substances by reason of properties that are deleterious to the environment,
natural resources or public health or safety including, without limitation,
ignitability, corrosiveness, reactivity, carcinogenicity, toxicity, and
reproductive toxicity. The term “Hazardous Materials” shall include, without
limitation, the following:

 

                (i) A “Hazardous Substance”,
“Hazardous Material”, “Hazardous Waste”, or “Toxic Substance” under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Section 9601, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. Section 5101, et seq. or the Solid Waste Disposal Act, 42
U.S.C. Section 6901, et seq., including any regulations promulgated
thereunder, as any of the foregoing may be amended;

 

                (ii) An “Acutely Hazardous
Waste”, “Extremely Hazardous Waste”, “Hazardous Waste”, or “Restricted
Hazardous Waste”, under Section 25110.02, 25115, 25117 or 25122.7 of the
California Health and Safety Code, or is listed pursuant to Section 25140
of the California Health and Safety Code, as any of the foregoing may be
amended;

 

                (iii) A “Hazardous Material”,
“Hazardous Substance” or “Hazardous Waste” under Section 25260, 25281,
25316, 25501, or 25501.1 of the California Health and Safety Code, as any of
the foregoing may be amended;

 

                (iv) “Oil” or a “Hazardous
Substance” under Section 311 of the Federal Water Pollution Control Act,
33 U.S.C. Section 1321, as may be amended, as well as any other
hydrocarbonic substance, fraction, distillate or by-product;

 

                (v) Any substance or
material defined, identified or listed as an “Acutely Hazardous Waste,” “Extremely
Hazardous Material”, “Extremely Hazardous Waste”, “Hazardous Constituent”, “Hazardous
Material”, “Hazardous Waste”, “Hazardous Waste Constituent”, or “Toxic Waste”
pursuant to Division 4.5, Chapters 10 or 11 of Title 22 of the California
Code of Regulations, as any of the foregoing may be amended;

 

                (vi) Any substance or
material listed by the State of California as a chemical known by the State to
cause cancer or reproductive toxicity pursuant to Section 25249.8 of the
California Health and Safety Code, as may be amended;

 

1

 

                (vii) A “Biohazardous Waste”
or “Medical Waste” under Section 117635 or 117690 of the California Health
and Safety Code, as may be amended;

 

                (viii) Polychlorinated
biphenyls, asbestos, and any asbestos containing material; and/or

 

                (ix) A substance that, due
to its characteristics or interaction with one or more other materials, wastes,
chemicals, compounds, substances, mixtures, or byproducts, damages or threatens
to damage the environment, natural resources or public health or safety, or is
required by any law or public entity to be remediated, including remediation
which such law or public entity requires in order for the property to be put to
any lawful purpose.

 

As
used herein, the term “Environmental Laws” means any applicable foreign,
federal, state, or local law, statute, regulation, rule, ordinance, permit,
prohibition, restriction, license, order, requirement, agreement, consent, or
approval, or any decision, opinion, determination, judgment, directive, decree
or order of any executive, administrative or judicial authority at any
applicable foreign, federal, state or local level (whether now existing or
subsequently adopted or promulgated) relating to pollution or the protection of
the environment, ecology, natural resources or public health and safety.

 

2

 

EXHIBIT C

 

ASSIGNMENT AND
ASSUMPTION OF CONTRACTS

 

This
Assignment and Assumption of Contracts (“Assignment of Contracts”) is entered
as of this             
day of                                 ,
200    , by and between                                                 ,
a                                                                   
(“Assignor”), and                                                         
(“Assignee”).

 

The
parties make this Assignment of Contracts on the basis of the following facts,
intentions and understandings:

 

A.            Assignor shall convey contemporaneously herewith to
Assignee certain real property and all improvements thereon (the “Property”)
located at
                                                 ,
in the City of
                              ,
California, as more particularly described in Exhibit “A” attached to that
certain Purchase and Sale Agreement (the “Contract of Sale”) dated                           ,
200    , by and between Assignor, as “Seller”, and
Assignee, as “Buyer”.

 

B.            Assignor has previously entered into various contracts
identified on Schedule “1” hereto (the “Contracts”) that Assignee has agreed in
writing to assume.

 

C.            Assignor and Assignee now wish to enter into this
Assignment of Contracts from Assignor to Assignee.

 

NOW,
THEREFORE, in consideration of the mutual covenants and promises of the
parties, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

1.             Assignment. Assignor hereby assigns all of Assignor’s right,
title and interest in and to the Contracts to Assignee.

 

2.             Assumption. Assignee accepts the assignment from Assignor and
hereby assumes all of the Assignor’s obligations, duties, responsibilities and
liabilities with respect to the Contracts arising from and after the date
hereof and agrees to pay, perform and discharge, when due, all of the duties
and obligations on the part of Assignor to be paid, performed or discharged in
connection with the Contracts from and after the date hereof.

 

1

 

IN
WITNESS WHEREOF, the parties hereby have executed this Assignment and
Assumption of Contracts that day and year first above written.

 

ASSIGNOR:

 

 

	
   

  	
   

  
	
  a

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ASSIGNEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  a

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

2

 

Schedule 1

 

Contracts

 

3

 

EXHIBIT D

 

PROPERTY DOCUMENTS

 

Pursuant to Section 3.4
of the Agreement, Seller shall provide to Buyer documents within the following
categories, to the extent in Seller’s possession and to the extent such
Property Documents are non-proprietary and non-confidential:

 

	
  A.

  	
   

  	
  Copies of past three (3) years
  tax bills;

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Copies of all contracts
  entered into by Seller with respect to the Property, including, but not
  limited to, management agreements, leasing commission agreements (especially
  relative to any unpaid current or future commissions), service contracts and
  labor union contracts;

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  The most current,
  certified “as built” property survey;

  
	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Final “as built” plans
  and specifications, to the extent available, including soils reports and
  structural, mechanical and electrical calculations for all improvements;

  
	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Copies of all reports
  and studies relating to environmental, soils, geological and ground water
  conditions or the presence or use of any toxic or hazardous substances
  relating to the Property;

  
	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Copies of all Use
  Permits, Building Permits, Certificates of Occupancy and any other similar
  kinds of governmental approvals and permits respecting the Property; and

  
	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Copies of all casualty,
  liability and other insurance policies for the Property; copies of any claims
  filed against such insurance and copies of all insurance loss control
  reports; and copies of fire department inspections reports.

  

 

1EXHIBIT 10.1F

 

 

NOTICE OF GRANT
OF PERFORMANCE SHARE UNITS

AND

PERFORMANCE
SHARE UNIT AGREEMENT

 

	
  <<First>><<Last>>

  <<Address>>

  <<City>>,<< State>> <<
  ZIP>>

  <<Country>>

  	
  PSU
  No.:

  Plan:

  ID:

  Location:

  	
  PSU08000

  2007

  <<Emp ID>>

  <<BU>>

  

 

Effective <<Grant Date>>, pursuant to the 2007 Long-Term
Incentive Plan (the “Plan”) you have been granted           
Performance Share Units which constitute the right to receive, if earned
pursuant to their terms, the cash equivalent 
of            shares
(the “Shares”) of Common Stock of Textron Inc. valued as provided in the
Performance Share Unit Terms and Conditions (1/2008).

This
grant is governed by the Performance Share Unit Terms and Conditions
(1/2008)  and the Plan, both of which are
available on the Textron Enterprise Intranet and is subject to the Performance
Share Unit Non-Competition Agreement (1/2008 version) attached hereto.

The Performance Period is the period beginning on <<Start
Date>> and ending on <<End Date>>.  The unit distribution for the performance measures
outlined below may range from 0% to 150% based on actual performance for the
Performance Period, as provided in the chart below. The cash value of the
Performance Share Units will be paid contingent on the achievement of the
following goals established at the beginning of the cycle, subject to earlier
expiration or termination of your Performance Share Units as provided in the
Performance Share Unit Terms and Conditions (1/2008):

 

	
  Measure

  	
   

  	
  Weighting

  	
   

  	
  Performance Required to Earn Payout

  	
   

  	
  % of Component Earned*

  	
   

  	
  Units

  
	
  EPS  Target of $[]

  	
   

  	
  50%

  	
   

  	
  <80%

  80%

  100%

  120%

  	
   

  	
  0

  50%

  100%

  150%

  	
   

  	
  <<Units>>

  
	
  Enterprise ROIC-WACC

  	
   

  	
  50%

  	
   

  	
  0

  800 b.p.

  1600 b.p.

  	
   

  	
  0

  100%

  150%

  	
   

  	
  <<Units>>

  

 

*Intermediate
performance earns a corresponding payout with respect to that component.

 

By
your signature and the Company’s signature below, you and the Company agree
that this grant is governed by the Performance Share Unit Terms and Conditions
(1/2008)  and the Plan, both of which are
available on the Textron Enterprise Intranet. 
In addition, you agree that this grant is subject to the Performance
Share Unit Non-Competition Agreement (1/2008 version) attached hereto, the
terms of which are fully incorporated herein.

 

	
  TEXTRON
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date

  

 

	
  Agreed
  by:

  	
   

  	
   

  	
   

  

 

 

TEXTRON INC.

TEXTRON 2007 LONG-TERM INCENTIVE PLAN

PERFORMANCE
SHARE UNIT TERMS AND CONDITIONS

(1/2008)

 

 

·                  Pursuant to the
2007 Long-Term Incentive Plan (the “Plan”), Textron has awarded to executive
the number of Performance Share Units set forth on the applicable Notice of
Grant signed by Textron and Grantee on the terms and conditions herein set
forth. Each Performance Share Unit constitutes the right to receive cash equal
to the fair market value of one share of Common Stock of Textron Inc. for each
Performance Share Unit earned by the executive, as determined in accordance
with the Plan, the Notice of Grant, the Performance Share Unit Non-Competition
Agreement (1/2008), and these Performance Share Unit Terms and Conditions
(1/2008). The earned Performance Share Units payable to the executive in
accordance with the provisions of this agreement shall be paid solely in cash
based on the fair market value of the Common Stock (determined based on the average of the closing prices of Textron’s common stock, as reported on
the New York Stock Exchange, for the first ten trading days immediately following the end of the Performance
Period).

 

·                  When the applicable Performance Period ends, Textron
will issue to the executive cash equal to the aggregate value of the
Performance Share Units earned by the executive, reduced by the amount needed
to satisfy required statutory minimum withholding taxes.   The cash payment shall be made prior to the March 15
following the end of the Performance Period.

 

·                  If the executive’s employment with Textron shall
terminate for “Cause,” all Performance Share Units awarded to the executive for
which the applicable Performance Period has not ended shall be forfeited.

 

·                  Except as otherwise provided herein, the executive
shall forfeit outstanding Performance Share Units if the executive’s employment
with Textron ends for any reason prior to the end of the Performance Period
applicable to such Performance Share Units, provided that if the executive’s
employment ends prior to such date and at least one year after the date of
grant because of “Disability,” death or after the executive has become eligible
for “Early or Normal Retirement,” the executive or the executive’s estate will
receive a cash payment at the end of the Performance Period for a “Pro-Rata
Portion” of such Performance Share Units, to the extent that the financial
performance goals applicable to the Performance Share Units have been achieved
upon the completion of such Performance Period.

 

·                  Notwithstanding the above, the applicable Performance
Period for the Performance Share Units which may be paid pursuant to this Award
shall end immediately upon a “Change in Control” of Textron, as defined in the
Plan. In such instance, Textron shall pay the full value of the Performance
Share Units to the executive (or to the executive’s estate in the event of the
executive’s death prior to payment) as soon as administratively practical after
the Change in Control, provided that the accelerated payment does not violate Section 409A
of the Internal Revenue Code.  If the
accelerated payment of the Award would violate Section 409A of the
Internal Revenue Code, the payment shall be made on the date when the
Performance Share Unit would have been paid if no Change in Control had
occurred. Note: Sale of a business unit usually does not constitute a Change in
Control as defined in the Plan.

 

·                  The number of Performance Share Units awarded to the
executive hereunder shall be equitably adjusted in the event of a stock split,
stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, or any other corporate event affecting the Common Stock, as
provided in the Plan, in order to preserve the benefits or potential benefits
intended to be made available to the Grantee.

 

·                  Nothing in this document shall confer upon the
executive the right to continue in the employment of Textron or affect any
right that Textron may have to terminate the employment of the executive.

 

·                  The Performance Share Units shall not be assignable or
transferable by the executive.

 

·                  The executive shall not have voting rights nor will
the executive qualify for dividends with respect to the  Performance Share Units during the
Performance Period.

 

·                  The Performance Share Units shall be subject to the
terms and conditions of the Plan in all respects.

 

 

DEFINITIONS

“Cause”

 

“Cause” shall mean: (i) an
act or acts of willful misrepresentation, fraud or willful dishonesty (other
than good faith expense account disputes) by the executive which in any case is
intended to result in his or another person or entity’s substantial personal
enrichment at the expense of Textron; (ii) any willful misconduct by the
executive with regard to Textron, its business, assets or employees that has,
or was intended to have, a material adverse impact (economic or otherwise) on
Textron; (iii) any material, willful and knowing violation by the
executive of (x) Textron’s Business Conduct Guidelines, or (y) any of
his or her fiduciary duties to Textron which in either case has, or was
intended to have, a material adverse impact (economic or otherwise) on Textron;
(iv) the willful or reckless behavior of the executive with regard to a
matter of a material nature which has a material adverse impact (economic or
otherwise) on Textron; (v) the executive’s willful failure to attempt to
perform his or her duties or his or her willful failure to attempt to follow
the legal written direction of the Board, which in either case is not remedied
within ten (10) days after receipt by the executive of a written notice
from Textron specifying the details thereof; or (vi) the executive’s
conviction of, or pleading nolo contendere or guilty to, a felony (other than (x) a
traffic infraction or (y) vicarious liability solely as a result of his
position provided the executive did not have actual knowledge of the actions or
in actions creating the violation of the law or the executive relied in good
faith on the advice of counsel with regard to the legality of such action or
inaction (or the advice of other specifically qualified professionals as to the
appropriate or proper action or inaction to take with regard to matters which
are not matters of legal interpretation); No action or inaction should be
deemed willful if not demonstrably willful and if taken or not taken by the
executive in good faith as not being adverse to the best interests of Textron.
Reference in this paragraph to Textron shall also include direct and indirect
subsidiaries of Textron, and materiality and material adverse impact shall be measured
based on the action or inaction and the impact upon, and not the size of,
Textron taken as a whole, provided that after a Change in Control, the size of
Textron, taken as a whole, shall be a relevant factor in determining
materiality and material adverse impact.

 

“Performance Period”

 

For the purposes of this
grant, the Performance Period means, for any Performance Share Unit, the three
fiscal year period over which the applicable performance goals are measured.

 

“Early or Normal
Retirement”

 

“Early retirement” with
Textron is defined as attainment of age 60 or the completion of 20 years of
vesting service or the attainment of age 55 with the completion of 10 years of
vesting service. “Normal retirement” with Textron is age 65.

 

“Disability”

 

“Disability” shall mean,
for purposes of this Award, the inability of the executive to engage in any
substantial gainful activity due to injury, illness, disease, bodily or mental
infirmity which can be expected to result in death or is expected to be
permanent.  An individual shall not be
considered disabled unless executive furnishes proof of the existence
thereof.  Textron may require the
existence or non-existence of a disability to be determined by a physician
whose selection is mutually agreed upon by the executive (or his or her
representatives) and Textron.

 

“Pro-Rata
Portion”

 

“Pro-Rata Portion” shall
mean the number of complete or partial months of executive’s active service to
Textron during the Performance Period divided by the number of months in the Performance
Period.  An employee must be employed by
Textron for a minimum of one year after the grant date before pro-rata
Performance Share Units may be paid.  The
Pro-Rata Portion of an Award shall be payable to an executive only to the
extent that the financial performance goals for the Performance Share Units are
satisfied during the Performance Period.

 

Example: On
March 1, 2008, an executive was granted 2,500 Performance Share Units
constituting the right to receive cash equivalent to the value of 2,500 Shares
to be paid following completion of the 2008-2010 fiscal year Performance
Period, if the applicable performance goals are met.

 

The executive terminates employment with
Textron on August 30, 2009 after having attained age 55 with the
completion of 10 years of vesting service.

 

 

Because the executive’s age and years of service
qualify as ‘early retirement’ and executive was employed by Textron for one
year after the grant date, the executive is eligible to receive the cash
equivalent of a pro-rata portion of the Performance Share Units if the
Performance Share Units are earned pursuant to their terms.  Assuming that the financial performance goals
for the Performance Share Units are satisfied at the 100% level at the
completion of the Performance Period, the number of Shares earned would be
calculated as follows:

 

	
  Performance Period

  	
   

  	
  Shares

  	
   

  	
  Number of Complete or Partial Months Employed by Textron During the
  Performance Period

  	
   

  	
  Number of Months in the Performance Period

  	
   

  	
  Pro-Rata Portion

  	
   

  
	
  01/01/08-12/31/10

  	
   

  	
  2,500

  	
  x

  	
  20 *

  	
  ÷

  	
  36

  	
  =

  	
  1,388 shares (paid
  January 2011) 

  	
   

  

 

* January 1,
2008 — August 30, 2009 (20 completed)

 

 

TEXTRON INC.

 

PERFORMANCE SHARE UNIT NON-COMPETITION AGREEMENT

 

(1/2008)

 

You have been granted
Performance Share Units (“PSUs”) pursuant to the Textron 2007 Long-Term
Incentive Plan (the “Plan”).  Textron
grants Performance Share Units to attract, retain and reward employees, to
increase identification with Textron’s interests and the interests of Textron’s
shareholders, and to provide incentive for remaining with and enhancing the
value of Textron over the long-term.  In
consideration for granting Performance Share Units to you, please acknowledge
that you have read and agree to this Performance Share Unit Non-Competition
Agreement by signing the attached Notice of Grant of Performance Share Unit and
Performance Share Unit Agreement.

 

Agreement
regarding Your  Performance Share Units

 

1.                          Forfeiture of PSUs and
required repayment if you engage in certain competitive activities

If at any time during
the Performance Period (as defined in the Notice of Grant of Performance Share
Unit and Performance Share Unit Agreement) while you are a Company employee, or
within two years after the termination of your employment, you do any of the
following activities:

 

(a)                      engage
in any business which competes with the Company’s business (as defined in
Paragraph 2) within the Restricted Territory (as defined in Paragraph 3); or

 

(b)                     solicit customers, business or orders or
sell any products and services (i) in competition with the Company’s
business within the Restricted Territory or (ii) for any business,
wherever located, that competes with the Company’s business within the
Restricted Territory; or

 

(c)                      divert,
entice or otherwise take away customers, business or orders of the Company
within the Restricted Territory, or attempt to do so; or

 

(d)                     promote
or assist, financially or otherwise, any firm, corporation or other entity
engaged in any business which competes with the Company’s business within the
Restricted Territory;

 

then your right to receive all
Performance Share Units shall be forfeited effective the date you enter into
such activity, and you will be required to repay Textron an amount equal to the
fair market value of any PSU earned and paid to you from and after the date
beginning 180 days prior to the earlier of (a) your termination of
employment or (b) the date you engage in such activity, or at any time
after such date.  You will be in
violation of Paragraph 1 if you engage in any or all of the activities
discussed in this Paragraph directly as an individual or indirectly as an
employee, representative, consultant or in any other capacity on behalf of any
firm, corporation or other entity.

 

2.                          Company’s business —
defined

For the purpose of this
Agreement:

 

(a)           the
Company shall include Textron and all subsidiary, affiliated or related
companies or operations of Textron, and

 

(b)          the
Company’s business shall include the products manufactured, marketed and sold
and/or the services provided by any operation of the Company for which you have
worked or to which you were assigned or had responsibility (either direct or
supervisory), at the time of the termination of your employment and any time
during the two-year period prior to such termination.

 

3.                          Restricted Territory — defined

For the purpose of
Paragraph 1, the Restricted Territory shall be defined as and limited to:

 

(a)                   the
geographic area(s) within a one hundred (100) mile radius of any and all
Company location(s) in or for which you have worked or to which you were
assigned or had responsibility (either direct or supervisory), at the time of
the termination of your employment and at any time during the two-year period
prior to such termination; and

 

 

(b)                  all
of the specific customer accounts, whether within or outside of the geographic
area described in (a) above, with which you have had any contact or for
which you have had any responsibility (either direct or supervisory), at the
time of termination of your employment and at any time during the two-year
period prior to such termination.

 

4.                          Forfeiture of PSUs and required repayment if you engage in certain
solicitation activities

If you directly or
indirectly solicit or induce or attempt to solicit or induce any employee(s),
sales representative(s), agent(s) or consultant(s) of the Company to
terminate their employment, representation or other association with the
Company, then your right to receive all PSUs shall be forfeited effective the
date you enter into such activity and you will be required to repay Textron an
amount equal to the fair market value of any PSU earned and paid  to you from and after the date beginning 180
days prior to the earlier of (a) your termination of employment or (b) the
date you engage in such activity, or at any time after such date.

 

5.                          Forfeiture of PSUs  and required repayment if you disclose
confidential information

You specifically
acknowledge that any trade secrets or confidential business and technical
information of the Company or its suppliers or customers, whether reduced to
writing, maintained on any form of electronic media, or maintained in your mind
or memory and whether compiled by you or the Company, derives independent
economic value from not being readily known to or ascertainable by proper means
by others who can obtain economic value from its disclosure or use; that
reasonable efforts have been made by the Company to maintain the secrecy of
such information; that such information is the sole property of the Company or
its suppliers or customers and that any retention, use or disclosure of such
information by you during your employment (except in the course of performing
your duties and obligations of employment with the Company) or after
termination thereof, shall constitute a misappropriation of the trade secrets
of the Company or its suppliers or customers. 
If you directly or indirectly misappropriate any such trade secrets,
then your right to receive all PSUs shall be forfeited effective the date you enter
into such activity and you will be required to repay Textron an amount equal to
the fair market value of any PSU earned and paid to you from and after the date
beginning 180 days prior to the earlier of (a) your termination of
employment or (b) the date you engage in such activity, or at any time
after such date.

 

6.                          Organization and
Compensation Committee Discretion

You may be released from
your obligations under Paragraph 1, 4 and 5 above only if the Organization and
Compensation Committee of the Board of Directors (or its duly appointed agent)
determines in its sole discretion that such action is in the best interests of
Textron.

 

7.                          Severability

 

The parties agree
that each provision contained in this Agreement shall be treated as a separate
and independent clause, and the unenforceability of any one clause shall in no
way impair the enforceability of any of the other clauses herein.  Moreover, if one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively
broad as to scope, activity or subject, then such provisions shall be construed
by the appropriate judicial body by limiting and reducing it or them, so as to
be enforceable to the extent compatible with the applicable law.

 

2

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