Document:

hgr_terryfrancoispsa.htm

Exhibt 10.1

 

AGREEMENT OF PURCHASE AND SALE

AND JOINT ESCROW INSTRUCTIONS

 

THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is made and entered into as of the 7th day of August,  2012, by and between GLL TERRY FRANCOIS BLVD., LLC, a Delaware limited liability company (“Seller”), and HINES GLOBAL REIT 550 TERRY FRANCOIS LP, a Delaware limited partnership (“Buyer”), with reference to the following facts:

 

R E C I T A L S:

 

A.           Seller is the owner of certain real property located at 550 Terry Francois Boulevard in the City and County of San Francisco (“City”), State of California and more particularly described on Exhibit A attached hereto (the “Land”).  The Land is improved with an office building consisting of six stories (the “Building”).

 

B.           The Property is located within the Mission Bay South Redevelopment Project Area, which is part of the Mission Bay Development Area, and is subject to the existing Development Entitlements.

 

C.           Seller desires to sell, and Buyer desires to purchase, all of Seller’s right, title and interest in and to the following property (collectively, the “Property”) upon the terms and subject to conditions hereinafter set forth:

 

(i)           the Land, together with (a) all improvements located thereon, including, without limitation, the Building (the “Improvements”), and (b) all and singular the rights, benefits, privileges, easements, tenements, hereditaments, and appurtenances thereon or in anywise appertaining thereto (collectively, the “Real Property”);

 

(ii)           that certain Mission Bay Office Lease dated November 22, 2000, by and between Seller (as successor to the original landlord) and The Gap, Inc., a Delaware corporation (“Tenant”) as amended (the “Lease”);

 

(iii)           the equipment, machinery, furniture, furnishings, supplies and other tangible personal property owned by Seller and now or hereafter located in or used in connection with the operation, ownership or management of the Real Property (collectively, the “Tangible Personal Property”); and

 

(iv)           to the extent assignable, all intangible personal property related to the Real Property and the Improvements, including, without limitation:  all trade names and trademarks associated with the Real Property and the Improvements, including the name of the Real Property; the plans and specifications and other architectural and engineering drawings for the Improvements, if any; guaranties and warranties, if any; assignable contract rights related to the construction, consulting, maintenance, repair, operation or management of the Real Property, if any (collectively, the “Service Contracts”), a list of which Service Contracts is attached hereto as Exhibit B; Seller’s interest in the Development Entitlements and all governmental permits, approvals and licenses, if any; and telephone exchange numbers (collectively, the “Intangible Personal Property”);

 

PROVIDED, HOWEVER, that the Property shall not include any of the Excluded Personalty.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree that the terms and conditions of this Agreement and the instructions to the Escrow Holder with regard to the Escrow created pursuant hereto are as follows:

 

A G R E E M E N T:

 

1. Certain Basic Definitions.  For purposes of this Agreement, the following terms shall have the following definitions:

 

1.1 “Affiliate”

 

 means (a) an entity that directly or indirectly controls, is controlled by, or is under common control with the person or entity in question, or (b) an entity at least a majority of whose economic interest is owned by the person or entity in question; and the term “control” means the power to direct the management of such entity through voting rights, ownership or contractual obligations.

 

1.2 “Agreement Regarding Successor Project Labor Agreement”

 

 means that certain Agreement Regarding Successor Project Labor Agreement dated as of November 10, 2005 between Prior Owner and Catellus Operating Limited Partnership, on the one hand, and Seller, on the other.

 

1.3 “Applicable Laws”

 

 means all laws, ordinances, rules, regulations and requirements of all Governmental Authorities that are applicable to the Property, including without limitation, the Federal Occupational Health and Safety Act, the Americans with Disabilities Act of 1990, Title 24 of the California Code of Regulations and all Environmental Laws, as amended from time to time.

 

1.4 “Assignment Agreement”

 

 means an Assignment, Assumption and Release Agreement in substantially the form attached hereto as Exhibit C (subject to such modifications as may be reasonably requested by the Redevelopment Agency, including, without limitation, that Paragraphs 9.13 and 9.14 thereof be deleted).

 

1.5 “Assignment of Contracts”

 

 means an Assignment and Assumption of Contracts in the form attached hereto as Exhibit D.

 

1.6 “Assignment of Lease”

 

 means an Assignment and Assumption of Lease in the form attached hereto as Exhibit E.

 

1.7 “Assignment of Successor Project Labor Agreement”

 

 means an Assignment and Assumption of Agreement Regarding Successor Labor Agreement in the form attached hereto as Exhibit F.

 

1.8 “Assignment of Tax Payment Agreement”

 

 means an Assignment and Assumption of Tax Payment Agreement in the form attached hereto as Exhibit G.

 

1.9  “Bill of Sale”

 

 means a Bill of Sale in the form attached hereto as Exhibit H.

 

1.10 “Block 26/27 Owners”

 

 has the meaning set forth in Paragraph 26.6.

 

1.11 “Building”

 

 has the meaning set forth in Recital A.

 

1.12 “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in San Francisco, California are authorized or required to close under the laws of the State of California or applicable federal law.

 

1.13 “Buyer Exculpation Parties”

 

 has the meaning set forth in Paragraph 29.18.

 

1.14 “Buyer Parties”

 

 means Buyer and Buyer’s Affiliates (and each of their Affiliates) including, but not limited to, Buyer’s or such companies’ officers, directors, shareholders, members, partners, agents, employees, managers and attorneys.

 

1.15 “Buyer’s Address”

 

 means:

 

Hines Global REIT 550 Terry Francois Blvd. LP

c/o Hines Interests Limited Partnership

2800 Post Oak Boulevard, Suite 5000

Houston, Texas 777056

Attention:  Charles N. Hazen

Facsimile No.:  (713) 966-7851

with a copy to:

Hines Global REIT 550 Terry Francois Blvd. LP

c/o Hines Interests Limited Partnership

2800 Post Oak Boulevard, Suite 5000

Houston, Texas 777056

Attention:  Jason P. Maxwell

Facsimile No.:  (713) 966-2075

1.16 “Buyer’s Agents”

 

 means Buyer’s directors, officers, managers, employees, agents, investors, counsel, consultants and contractors.

 

1.17 “Buyer’s Certificate”

 

 has the meaning set forth in Paragraph 8.2.2.

 

1.18 “Buyer’s Counsel’s Address”

 

 means:

 

Baker Botts L.L.P.

2001 Ross Avenue, Suite 600

Dallas, Texas 75201

Attention:  Jonathan W. Dunlay

Facsimile No.:     (214) 661-4711

1.19  “Buyer’s Due Diligence Notice”

 

 has the meaning set forth in Paragraph 6.5.

 

1.20 “California Affidavit”

 

 means a California Form 593-C.

 

1.21 “CFD Assessments”

 

 means the special taxes levied or to be levied on the Property and other property in the Mission Bay Development Area in accordance with the terms and conditions of the “Rate and Method of Apportionment of Special Tax” applicable to the CFDs.

 

1.22 “CFDs”

 

 means, collectively, Redevelopment Agency of the City and County of San Francisco Community Facilities District No.  5 (Mission Bay Maintenance District) (the “Maintenance CFD”), Redevelopment Agency of the City and County of San Francisco Community Facilities District No.  6 (Mission Bay South Public Improvements) (the “Infrastructure CFD”), each established under the Mission Bay South Financing Plan (which is annexed to the South OPA as Attachment E), and San Francisco Community Facilities District 90-1 (Public School Facilities) (the “Public School CFD”).

 

1.23 “City”

 

 has the meaning set forth in Recital A.

 

1.24 “Claims”

 

 means claims, demands, losses, liabilities, damages (excluding consequential and punitive damages), liens, obligations, interest, injuries, penalties, fines, actions, lawsuits or other proceedings (including informal proceedings), judgments and awards and costs and expenses (including reasonable attorneys’ fees and costs, consultant and expert fees and costs and court costs) of whatever kind or nature, known or unknown, contingent or otherwise, including, without limitation, any action or proceeding brought by or on behalf of any homeowners’ or similar association or member thereof, and including the reasonable costs of carrying out the terms of any judgment, settlement, consent, decree, stipulated judgment or other partial or complete termination of any such action or proceeding.

 

1.25 “Close of Escrow”

 

 means the time of recording of the Grant Deed in the Official Records.

 

1.26 “Closing Date”

 

 means the date on which the Close of Escrow occurs.

 

1.27 “Confidential Information”

 

 means (i) any and all documents, materials, soil samples, ground water samples and other information relating to the Property furnished or made available to Buyer by Seller or its agents, including, without limitation, the files and documents made available to Buyer pursuant to Paragraph 6.1, (ii) all written summaries and abstracts thereof generated by Buyer in the course of conducting its inspections, review of books and records, and other due diligence activities relating to the Property (including, without limitation, matters relating to the environmental condition of the Property except where otherwise already a publicly available document); and (iii) the results of all inspections, analyses, studies and similar reports relating to the Property prepared by or for Buyer utilizing the information acquired through the exercise of Buyer’s inspection rights, provided that the term “Confidential Information” does not include such portions of materials, documents or other information which are or become generally available to the public, provided that Buyer is not the party making such documents or information available to the public.

 

1.28 “Cure Extension Notice”

 

 has the meaning set forth in Paragraph 14.

 

1.29 “Current Tax Period”

 

 means the fiscal year of the applicable taxing authority during which the Close of Escrow occurs.

 

1.30 “Deposit”

 

 has the meaning set forth in Paragraph 3.1.1.

 

1.31 “Development Easements”

 

 has the meaning set forth in Paragraph 26.2.

 

1.32 “Development Entitlements”

 

 means those documents and materials governing development of the Property listed on Exhibit I attached hereto.

 

1.33 “Diversity Program”

 

 has the meaning set forth in Paragraph 27.2.1.

 

1.34 “Effective Date”

 

 means the date of this Agreement.

 

1.35 “Environmental Covenant”

 

 means the Covenant and Environmental Restriction on Property in favor of the RWQCB attached hereto as Exhibit J.

 

1.36 “Environmental Laws”

 

 means any and all federal, state, or local environmental health and/or safety laws, regulations, standards, decisions of courts, ordinances, rules, codes, orders, decrees, directives, guidelines, plans, risk management plans, recorded property covenants, and/or restrictions, permits, or permit conditions currently existing and as amended, enacted, issued or adopted in the future relating to the environment or to any Hazardous Material (including, without limitation, the Risk Management Plan, and the Environmental Covenant) which are or become applicable to the Property.

 

1.37 “ERISA”

 

 has the meaning set forth in Paragraph 14.7.

 

1.38 “Escrow”

 

 means an escrow to be opened with the Escrow Holder to facilitate the transaction contemplated in this Agreement.

 

1.39 “Escrow Holder”

 

 means First American Title Insurance Company.

 

1.40 “Escrow Holder’s Address”

 

 means:

 

First American Title Insurance Company

National Commercial Services

100 Spear Street, Suite 1600

San Francisco, California  94105

Attention:  Heather Kucala

Facsimile No.:  (415) 398-1750

Telephone No.:  (415) 837-2295

 

1.41 “Estoppel Certificate”

 

 has the meaning set forth in Paragraph 8.1.2(a).

 

1.42 “Excluded Materials”

 

 has the meaning set forth in Paragraph 6.1.1.

 

1.43 “Excluded Environmental Claims”

 

 has the meaning set forth in Paragraph 16.1.3.

 

1.44 “Excluded Personalty”

 

 means any and all fixtures, furniture, furnishings, equipment or other personal property (including, without limitation, trade fixtures in, on, around or affixed to the Building) owned or leased by Tenant or any managing agent, leasing agent, contractor or employee at the Building; provided however, that the Excluded Personalty shall not include, and Seller shall cause to be conveyed to Buyer, any personal property located at the Property that is owned by any managing agent to the extent that the cost of such personal property was paid for or reimbursed by Seller or its predecessor in title.

 

1.45 “FIRPTA Certificate”

 

 means a certificate of non-foreign status in the form attached hereto as Exhibit K.

 

1.46  “General Assignment”

 

 means a General Assignment in the form attached hereto as Exhibit L.

 

1.47  “Governmental Authority”

 

 means any local, state or federal governmental agency, court, board, bureau or other authority having jurisdiction with respect to the Property, including, without limitation, the California Regional Water Quality Control Board.

 

1.48 “Grant Deed”

 

 means a grant deed in substantially the form attached hereto as Exhibit M.

 

1.49 “Guarantor”

 

 means Hines Global REIT Properties, L.P.

 

1.50 “Hazardous Material”

 

 means any substance, material or waste that, because of its quantity, concentration or physical or chemical characteristics poses a present or potential hazard to human health and safety or to the environment, including, but not limited to, petroleum, petroleum-based products, natural gas, or any substance, material or waste (including, without limitation, biohazardous waste, medical waste and sharps waste) that is, or shall be, listed, regulated or defined by federal, state or local statute, regulation, rule, ordinance or other governmental requirement to be hazardous, acutely hazardous, extremely hazardous, toxic, radioactive, biohazardous, infectious, or otherwise dangerous.

 

1.51 “Immediately Available Funds”

 

 means cash, a bank cashier’s check or a confirmed wire transfer of funds.

 

1.52 “Improvements”

 

 has the meaning set forth in Recital C.

 

1.53 “Inspection Period”

 

 means the period commencing on the Effective Date and ending at 5:00 p.m. (California time) on August 15, 2012.

 

1.54 “Inspection Work”

 

 has the meaning set forth in Paragraph 6.1.1.

 

1.55 “Intangible Personal Property”

 

 has the meaning set forth in Recital C.

 

1.56 “Land”

 

 has the meaning set forth in Recital A.

 

1.57 “Lease”

 

 has the meaning set forth in Recital C.

 

1.58 “Legal Costs”

 

 has the meaning set forth in Paragraph 22.

 

1.59  “Limitation Period”

 

 has the meaning set forth in Paragraph 14.

 

1.60  “Master Commercial Declaration”

 

 means the Master Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Mission Bay Commercial recorded in the Official Records on January 16, 2001 as Document No.  2001-G889923-00 at Reel H804, Image 0058, as the same has been or may hereafter be amended.

 

1.61 “Master Developer”

 

 means FOCIL-MB, LLC and its successors and assigns in its capacity as master developer under the South OPA.

 

1.62 “Material Adverse Change”

 

  means the occurrence of any action, event or a change in circumstance which (i) causes or renders a Seller Representation, that was true when made, to no longer be true as of the Closing Date, (ii) does not result from the act or omission of Buyer or any of Buyer’s Agents, and (iii) results in damages to Buyer or a reduction in value of the Property in excess of Five Million and No/100 Dollars ($5,000,000.00), excluding any action, event or change in circumstance that was disclosed to Seller in writing prior to expiration of the Inspection Period.

 

1.63 “MBCMC”

 

 has the meaning set forth in Paragraph 26.4.

 

1.64 “Mission Bay Development Area”

 

 means that certain real property located in the City and County of San Francisco and generally bounded by Townsend Street, Third Street, relocated Terry Francois Boulevard, Mariposa Street and Seventh Street.

 

1.65 “Mission Bay South Redevelopment Project Area”

 

 means the area located in the City and County of San Francisco that is the subject of the South OPA.

 

1.66 “Notice”

 

 has the meaning set forth in Paragraph 20.

 

1.67 “OFAC”

 

 has the meaning set forth in Paragraph 14.6.

 

1.68 “Official Records”

 

 means the Official Records of the Recorder of the City and County of San Francisco, California.

 

1.69 “Outside Closing Date”

 

 means August 31, 2012, subject to extension as expressly provided in Paragraph 8.3.3.

 

1.70 “Owner’s Affidavit”

 

 has the meaning set forth in Paragraph 9.12.

 

1.71 “Parking Estoppel”

 

 has the meaning set forth in Paragraph 8.1.2(b).

 

1.72 “Parking Structure Easement Agreement”

 

 has the meaning set forth in Paragraph 26.6.

 

1.73 “Permitted Encumbrances”

 

 has the meaning set forth in Paragraph 8.1.1.

 

1.74 “Person”

 

 has the meaning set forth in Paragraph 14.6.

 

1.75 “PILOT Agreement”

 

 has the meaning set forth in Paragraph 26.7.

 

1.76 “Pre-Existing Condition”

 

 has the meaning set forth in Paragraph 6.4.

 

1.77 “Prior Owner”

 

 means Mission Bay S26a/S28, LLC, a Delaware limited liability company.

 

1.78 “Proceeding”

 

 has the meaning set forth in Paragraph 14.

 

1.79 “Project Labor Agreement”

 

 means the Mission Bay Project Labor Agreement dated October 8, 1990, as the same may have been amended.

 

1.80 “Property”

 

 has the meaning set forth in Recital C.

 

1.81 “Purchase Price”

 

 means One Hundred Eighty Million and No/100 Dollars ($180,000,000).

 

1.82 “Real Property”

 

 has the meaning set forth in Recital C.

 

1.83 “Redevelopment Agency”

 

 means the Redevelopment Agency of the City and County of San Francisco.

 

1.84 “Reimbursable Expenses”

 

 means the lesser of (a) the actual out of pocket expenses incurred by Buyer in connection with this Agreement or Buyer’s proposed purchase of the Property, including, but not limited to due diligence costs, survey costs and legal fees, and (b) One Hundred Fifty Thousand and No/Dollars ($150,000).

 

1.85  “Risk Management Plan”

 

 and “RMP” mean the Risk Management Plan for the Mission Bay Development Area, as more particularly described on Exhibit I attached hereto, as the same may have been or hereafter be amended.

 

1.86 “RWQCB”

 

 means the Regional Water Quality Control Board, San Francisco Bay Region.

 

1.87 “Scheduled Closing Date”

 

 has the meaning set forth in Paragraph 4.2.

 

1.88 “Seller Knowledge Individuals”

 

 has the meaning set forth in Paragraph 14.

 

1.89 “Seller Parties”

 

 means Seller and Seller’s Affiliates (and each of their Affiliates), and Seller’s or such companies’ officers, directors, shareholders, agents, employees, managers and attorneys.

 

1.90 “Seller Representation Update”

 

 has the meaning set forth in Paragraph 28.

 

1.91 “Seller’s Address”

 

 means:

 

c/o GLL Real Estate Partners, Inc.

199 Fremont Street, Suite 1150

San Francisco, California  94105

Attn:  David Wall

Facsimile No.:   (415) 814-8101

Telephone No.:  (415) 814-8111

 

1.92 “Seller’s Broker”

 

 has the meaning set forth in Paragraph 21.

 

1.93 “Seller’s Counsel’s Address”

 

 means:

 

Bradley Arant Boult Cummings LLP

1600 Division Street, Suite 700

Nashville, Tennessee  37203

Attention:  John R. Haynes. Esq.

Telephone No.:  (615) 252-2343

Facsimile No.  (615) 252-6343

 

1.94 “Seller’s Surviving Covenants”

 

 has the meaning set forth in Paragraph 5 below.

 

1.95 “Seller’s Title Notice”

 

 has the meaning set forth in Paragraph 7.1.2.

 

1.96 “Service Contracts”

 

 has the meaning set forth in Recital C.

 

1.97 “South OPA”

 

 means the Mission Bay South Owner Participation Agreement listed on Exhibit I attached hereto.

 

1.98 “Specially Designated Nationals and Blocked Persons”

 

 has the meaning set forth in Paragraph 14.6.

 

1.99  “Surviving Obligations”

 

 means obligations expressly stated in this Agreement to survive the termination hereof.

 

1.100 “Tangible Personal Property”

 

 has the meaning set forth in Recital C.

 

1.101  “Tax Allocation Debt Promissory Note”

 

 means a Mission Bay South Tax Allocation Debt Promissory Note in the form attached hereto as Exhibit N.

 

1.102 “Tax Payment Agreement”

 

 means that certain Tax Payment Agreement dated as of November 10, 2005 between FOCIL-MB, LLC and Seller and recorded in the Official Records on November 14, 2005 as Instrument No.  2005I070743.

 

1.103 “Tenant”

 

 has the meaning set forth in Recital C.

 

1.104 “Tenant Notice”

 

 means a Notice to Tenant in the form attached hereto as Exhibit O.

 

1.105 “Tenant Receivables”

 

 has the meaning set forth in Paragraph 12.3.

 

1.106 “Title Company”

 

 means First American Title Insurance Company.

 

1.107 “Title Policy”

 

 has the meaning set forth in Paragraph 7.2.

 

1.108 “Title Report”

 

 has the meaning set forth in Paragraph 7.1.

 

1.109 “TMA”

 

 has the meaning set forth in Paragraph 26.4.

 

1.110 “Transfer”

 

 means to sell, assign, convey, lease, sublease, mortgage, hypothecate or otherwise alienate.

 

1.111 “Transferee”

 

 means any natural person, corporation, firm, partnership, limited liability company, association, joint venture, governmental or political subdivision or agency or any similar entity to whom a Transfer is made.

 

1.112 “Unacceptable Encumbrances”

 

 has the meaning set forth in Paragraph 7.1.1.

 

1.113 “Unavoidable Delay”

 

 means a delay that is caused by strikes or other labor disputes, acts of God, inability to obtain labor or materials despite commercially reasonable efforts (financial condition excepted), lawsuits brought by plaintiffs who are not Affiliates of the person claiming the benefit of the Unavoidable Delay (except to the extent caused by the negligence of the person claiming the benefit of the Unavoidable Delay), but only to the extent that an injunction or restraining order has been issued by a court of competent jurisdiction preventing performance, unforeseeable restrictions imposed or mandated by Governmental Authorities in issuing requisite approvals or consents, enemy action, terrorism, civil commotion, fire, flood, earthquake or any other unforeseeable event beyond the reasonable control of the person claiming the benefit of the Unavoidable Delay.

 

1.114 “Unbilled Tenant Receivables”

 

 has the meaning set forth in Paragraph 12.3.1.

 

1.115 “Uncollected Delinquent Tenant Receivables”

 

 has the meaning set forth in Paragraph 12.3.1.

 

1.116 “U.S.  Person”

 

 has the meaning set forth in Paragraph 14.6.

 

1.117 “Voluntary Monetary Liens”

 

 means (i) any deeds of trust or other monetary liens granted or consented to by Seller against the Property during its period of ownership, including any such matter assumed by Seller and (ii) any valid mechanic’s, materialman’s or similar liens for work performed at the Property arising pursuant to work under contracts entered into by Seller or Seller Parties, excluding, however, (a) the Tax Payment Agreement (excluding any delinquencies thereunder) and (b) non-delinquent liens described in the Parking Structure Easement Agreement.

 

2. Purchase and Sale

 

.  Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller, for the Purchase Price and upon the terms and subject to the conditions herein set forth; provided, however, that Buyer shall have no obligation to assume any Service Contracts under which Seller is in default as of the Close of Escrow.

 

3. Payment of Purchase Price

 

.

 

3.1 Purchase Price

 

.  The Purchase Price for the Property shall be paid by Buyer as follows:

 

3.1.1 Deposit.  Within five (5) Business Days after the Effective Date, Buyer shall deposit with Escrow Holder the sum of Fifteen Million and No/100 Dollars ($15,000,000.00) (the “Deposit”) in Immediately Available Funds.  Escrow Holder shall place the Deposit an interest-bearing commercial account at a bank which participates in the FDIC transaction guarantee program affording FDIC insurance to the full amount of the Deposit.  All interest earned on the Deposit shall be added to and become part of the Deposit.

 

3.1.2 Delivery, Application and Disposition of Deposit

 

.

 

(a) Buyer’s failure to deliver the Deposit as required by Paragraph 3.1.1 shall constitute a default by Buyer hereunder and shall entitle Seller, by written notice to Buyer and to Escrow Holder, to terminate this Agreement as of the date of Buyer’s receipt of such termination notice.

 

(b) The Deposit shall be applicable to the Purchase Price upon the Close of Escrow.  If Buyer terminates this Agreement and the Escrow created hereunder in accordance with the provisions of Paragraph 6.5, Paragraph 7.1.3 (other than for Seller’s inability to either eliminate or ameliorate an Unacceptable Encumbrance which Seller has committed to cure), Paragraph 7.1.3 (but only with respect to Seller’s inability to either eliminate or ameliorate an Unacceptable Encumbrance which Seller has committed to cure), Paragraph 7.1.4, Paragraph 8.3.1, Paragraph 18.1, Paragraph 19, or Paragraph 28 or if Seller terminates this Agreement pursuant to Paragraph 8.3.2 (other than because of a failure of the closing conditions in Paragraph 8.2.1 or Paragraph 8.2.2), then in each case the Deposit shall be disbursed to Buyer. The Deposit shall be retained by Seller pursuant to Paragraph 17.1 if the Close of Escrow does not occur for any reason other than (i) Buyer’s termination of this Agreement in accordance with Paragraph 6.5, Paragraph 7.1.3, Paragraph 7.1.4, Paragraph 8.3.1, Paragraph 18.1, Paragraph 19, or Paragraph 28 or (ii) Seller’s failure to convey the Property to Buyer as provided herein and where such failure constitutes a default by Seller hereunder.  If this Agreement is terminated for any reason other than Seller’s default before the Close of Escrow (whether the Deposit is retained by Seller or returned to Buyer pursuant hereto), both Seller and Buyer shall be relieved of all further obligations and liabilities under this Agreement, except for the Surviving Obligations.

 

3.1.3 Closing Funds

 

.  In no event later than one (1) Business Day in advance of Close of Escrow, Buyer shall deposit or cause to be deposited with Escrow Holder, in Immediately Available Funds, the balance of the Purchase Price plus or minus Escrow Holder’s estimate of Buyer’s share of closing costs, prorations and charges payable pursuant to this Agreement.

 

3.2 Independent Consideration

 

.  At the same time as the delivery of the Deposit to the Escrow Holder, Buyer shall deliver to Seller in cash the sum of $100.00 (the “Independent Contract Consideration”) which amount has been bargained for and agreed to as consideration for Buyer’s exclusive option to purchase the Property and the right to inspect the Property during the Inspection Period provided herein, and for Seller’s execution and delivery of this Agreement.  The Independent Contract Consideration is in addition to and independent of all other consideration provided in this Agreement, and is nonrefundable in all events.

 

4. Escrow

 

.

 

4.1 Opening of Escrow

 

.  Escrow shall be deemed opened on the date Escrow Holder shall have received a fully executed original or originally executed counterparts of this Agreement from both Buyer and Seller, together with the Deposit from Buyer.  Buyer and Seller agree to execute, deliver and be bound by any reasonable or customary supplemental escrow instructions of Escrow Holder or other instruments as may reasonably be required by Escrow Holder in order to consummate the transaction contemplated by this Agreement.  Any such supplemental instructions shall not conflict with, amend or supersede any portions of this Agreement unless expressly consented or agreed to in writing by Buyer and Seller.

 

4.2 Close of Escrow.  The closing of the transaction contemplated by this Agreement and the Escrow shall occur on August 31, 2012 (such scheduled date, as it may be extended as expressly provided elsewhere in this Agreement, being referred to in this Agreement as the “Scheduled Closing Date”; and the actual date of the closing, the “Closing Date”).  Buyer acknowledges that Seller’s existing financing may only be prepaid on the date on which Seller’s monthly installment payment is due, being August 31, 2012 or, if applicable, October 1, 2012 such that Close of Escrow must occur on August 31, 2012 unless the Scheduled Closing Date and the Outside Closing Date are extended in accordance with Paragraph 8.3.3 below.

 

5. Seller’s Covenants

 

.  Seller covenants with Buyer as follows:

 

5.1 No Conveyances

 

.  After the Effective Date, Seller shall not, without the prior written consent of Buyer, voluntarily convey any interest in the Property; provided, however, that nothing contained herein shall prohibit Seller from granting Development Easements in accordance with Paragraph 26.2.

 

5.2 Leasing

 

.  Seller shall not enter into or consent to any modification of the Lease, assignment of the Lease or sublease of the Property without the prior approval of Buyer, which approval shall not be unreasonably withheld or delayed prior to expiration of the Inspection Period, but which approval may be granted or withheld in Buyer’s sole and absolute discretion after expiration of the Inspection Period; provided, however, that Buyer acknowledges that any assignment or sublease undertaken by Tenant as a matter of right without Seller’s consent shall not constitute a breach of the foregoing covenant.

 

5.3 Operation and Maintenance

 

.  Subject to the terms and conditions of this Agreement and to Tenant’s rights and obligations under the Lease, Seller shall operate and maintain the Property in the ordinary and usual course of business and consistent with its past practice throughout the entire period from the Effective Date hereof until the Close of Escrow.

 

5.4 Significant Changes

 

.  Seller shall promptly notify Buyer of the occurrence after the Effective Date of any event or circumstance actually known to Seller’s Knowledge Individuals (without any duty to con­duct any investigation of any nature) that makes or would make any of the Seller Representations materially and adversely false if the same were remade as of the date that a Seller’s Knowledge Individual obtains knowledge of such event or circumstance.

 

5.5 Books and Records

 

.  Upon Close of Escrow, Seller will provide to Buyer originals, or if originals are unavailable, copies, of the books and records relating to the operation of the Property maintained by Seller during Seller’s ownership thereof (excluding the Excluded Materials), to the extent same are in Seller’s possession.

 

 The covenants set forth in Paragraphs 5.1, 5.2 and 5.5 above shall survive the Close of Escrow for the Limitation Period and shall be referred to as "Seller's Surviving Covenants".

 

6. Condition of Property

 

.

 

6.1 Inspection and Studies; Review of Seller’s Files

 

.

 

6.1.1 Commencing on the Effective Date, and continuing thereafter through the Close of Escrow, Buyer shall have the right, at Buyer’s sole cost and expense, but subject in all events to Buyer’s compliance with Applicable Laws and the provisions of this Agreement, to conduct a physical inspection of the Property and any engineering, geologic, use, development or other feasibility studies that Buyer chooses to perform.  Additionally, to the extent in Seller’s possession, Seller shall make available to Buyer, either at Seller’s offices in San Francisco, California, by posting such materials to the diligence website or by delivering copies thereof to Buyer or Buyer’s counsel: plans and specifications; environmental and engineering reports relating to the Property; copies of the Lease (including any and all amendments, riders, licenses, work letters, inducement letters, side letters, etc.); copies of the Service Contracts; copies of Seller’s books and records relating to the operation of the Property; but excluding, however, Seller’s income tax records, Seller’s corporate records, copies of Seller’s existing loan documents, any records relating to Seller’s selling or financing negotiations, appraisals and financial or valuation analyses generated by or made on behalf of Seller and those documents which are protected by the attorney-client and/or attorney work product privileges (all such excluded items, the “Excluded Materials”), none of which are part of the Property.  Buyer shall have the right to review such files and documents (excluding the Excluded Materials).  Such investigations and other work, inspections and entries onto the Property are referred to herein as the “Inspection Work.”  Buyer acknowledges that the right to review such files and/or documents is a courtesy to Buyer, and that, without limiting the provisions of this Paragraph 6 or Paragraphs 14 or 16 below, Seller does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information contained in Seller’s files or in the documents produced by Seller, including, without limitation, any environmental audit or report (if any), and further that Seller and the Seller Parties shall have no responsibility for the contents and accuracy of such disclosures.

 

6.1.2 Buyer agrees that the obligations of Seller in connection with Buyer’s purchase of the Property shall be governed by this Agreement irrespective of the contents of any such disclosures or the timing or delivery thereof, and that Buyer shall rely upon its own independent review concerning matters contained in such files and/or documents.  Further, Buyer acknowledges and agrees that it shall not conduct interviews of any Seller employee, contractor, agent or other Seller Party except as expressly agreed to in writing by Seller in advance and upon such terms and conditions as Seller may establish.  Buyer may interview Tenant at the Property; provided, however, that Buyer must notify Seller by telephone or email at least forty-eight (48) hours in advance to inform Seller of Buyer’s intended meeting and to allow a representative of Seller the opportunity to attend such meeting.

 

6.1.3 If this Agreement is not terminated pursuant to the provisions of this Paragraph 6, then whether or not a Phase I environmental assessment has been undertaken with respect to the Property, Buyer shall be deemed to have agreed, in accordance with the provisions of Paragraph 16.1 below, to accept title to the Property subject to any Hazardous Material(s) discovered on the Property.  Buyer agrees that, without limiting any other provision of this Agreement, but subject to Paragraph 16.1 Seller shall be under no obligation to Buyer to remediate or remove any Hazardous Material(s) discovered on the Property as a result of the Inspection Work.

 

6.1.4 If the Close of Escrow shall not occur for any reason other than Seller’s default, Buyer shall:  (a) if requested by Seller, promptly deliver to Seller and without representation or warranty, the originals of all tests, reports and inspections of the Property (provided the same do not restrict such delivery to a third party) made and conducted by unrelated third parties for Buyer’s benefit that are in the possession or control of Buyer or Buyer’s Representatives, provided, that Seller reimburses Buyer for costs incurred by Buyer to obtain such third party reports, and (b) promptly return to Seller copies of all due diligence materials delivered by Seller to Buyer and shall destroy all copies and abstracts thereof.  Notwithstanding anything to the contrary contained in this Agreement, Buyer shall be entitled to retain one copy of such information to the extent necessary in order to comply with any applicable laws or regulations, and shall only be required to use commercially reasonable efforts to return or destroy any materials stored electronically, and neither Buyer nor any other Buyer Parties shall be required to return or destroy any electronic copy of the materials created pursuant to Buyer’s standard electronic backup and archival procedures.

 

6.2 Buyer’s Entry on the Property

 

.  Buyer’s physical inspection of the Property shall be conducted by employees of Hines Interests Limited Partnership  and other Buyer’s Agents during normal business hours and/or at times mutually acceptable to Buyer and Seller (Seller hereby agreeing to authorize after hours inspections to the extent permitted by Tenant and Seller is given at least two (2) Business Day's advance notice thereof by telephone or email), and Seller shall have the right to be present during any entry onto the Property by Buyer or Buyer’s Agents.  All investigations made by Buyer will be at Buyer’s sole cost and expense and will be performed without causing any damage to the Property (inadvertent damage will be corrected by Buyer) or any interruption (other than minor interruptions caused by a walk through of the Property) in the business operations of Tenant at the Property and otherwise subject to Tenant’s rights under the Lease.  Buyer shall take all reasonable precautions to minimize the impact on the Property and Tenant, and if permission for testing is given by Seller, Buyer will restore the Property in a timely manner at Buyer’s sole cost to the condition that existed immediately prior to the Property investigations.  With respect to any invasive testing or borings of the Property, Buyer must obtain Seller’s advance written approval of the scope of such proposed activities, which approval may be withheld or conditioned in its sole and absolute discretion.  Buyer agrees that any such physical inspection of the Property shall be conducted and performed by Buyer and its Agents in a good and workmanlike manner, and Buyer shall be solely responsible for the prompt payment of all costs and expenses incurred in connection therewith, including, without limitation, all laboratory, installation, operating and capital costs, all insurance premiums, all consultants’ fees, all disposal costs and reasonable attorneys’ and experts’ fees.   The provisions of the Access and Indemnity Agreement among Seller, Buyer and Guarantor shall remain in full force and effect and is incorporated herein by this reference to the extent not inconsistent or less restrictive than with the terms of this Agreement.

 

6.3 Insurance

 

.  Prior to conducting any physical inspection or testing at the Property, including, without limitation, boring, drilling and sampling of soil, Buyer shall obtain, and during the period of such inspection or testing shall maintain, at its expense, commercial general liability insurance (including contractual liability coverage provided under standard ISO coverage) and personal injury liability coverage, with Seller and its managing agent, if any, as additional insureds, from an insurer reasonably acceptable to Seller, which insurance policies must have limits for bodily injury and death of not less than Three Million Dollars ($3,000,000) for any one occurrence and not less than Three Million Dollars ($3,000,000) for property damage liability for any one occurrence.  Prior to making any entry upon the Property, Buyer shall furnish to Seller a certificate of insurance evidencing the foregoing coverage.

 

6.4 Indemnification

 

.  Buyer shall protect, indemnify, defend (with counsel reasonably acceptable to Seller) and hold harmless Seller and the Seller Parties from and against, any and all Claims suffered or incurred by Seller or any Seller Parties arising directly or indirectly out of or as a consequence of any Inspection Work, or other activities conducted on, under or about the Property by Buyer or Buyer’s Agents.  The foregoing indemnification shall include, without limitation, the following:  (a) personal injury claims, (b) payment of liens or encumbrances (including, without limitation, mechanic’s or materialmen’s liens) filed or recorded against the Property as a consequence of the Inspection Work, or any other activities conducted on the Property by Buyer or Buyer’s Agents, (c) sums paid in settlement of Claims, (d) reasonable attorney’s fees, consulting fees and expert fees, (e) loss of use or damage to the Property as a result of any Inspection Work, or other activities conducted on, under or about the Property by Buyer or Buyer’s Agents, (f) loss of use or damage to the Property as a result of any Inspection Work, or other activities conducted on, under or about the Property by Buyer or Buyer’s Agents, (g) termination of or rental abatement under the Lease; and/or (h) Claims arising from any breach by Buyer or Buyer’s Agents of the terms, covenants or obligations to be performed or observed by Buyer and/or Buyer’s Agents under this Agreement; provided, however, that the foregoing indemnification shall not include any Claims to the extent resulting from (i) the negligence or willful misconduct of Seller, or (ii) the mere discovery of any pre-existing environmental condition (a “Pre-Existing Condition”), except to the extent such Pre-Existing Condition is exacerbated (other than by discovery) by any act or omission of Buyer or any of Buyer’s Agents.  Buyer’s indemnification obligations set forth in this Paragraph 6.4 shall survive any termination of this Agreement and Close of Escrow.  In addition, Buyer hereby forever and unconditionally waives, relinquishes, discharges and releases Seller and Seller Parties from any and all Claims incurred in the performance of the Inspection Work, or any other work undertaken by or on behalf of Buyer pursuant to this Agreement, except as a result of the negligence or willful misconduct of Seller and/or any Seller Parties.

 

6.5 Buyer’s Due Diligence Notice

 

.  Before the expiration of the Inspection Period, Buyer shall elect, in its sole and absolute discretion, either (a) to approve all matters relating to the Property, including, but not limited to, the physical condition of the Property and its condition or suitability for Buyer’s intended use or development, or (b) to terminate this Agreement.  Buyer shall make this election by giving written notice thereof to Seller and Escrow Holder (“Buyer’s Due Diligence Notice”) before the expiration of the Inspection Period.  If Buyer shall timely elect to terminate this Agreement as provided herein, this Agreement shall be terminated, the Deposit shall be paid to Buyer, each of Seller and Buyer shall bear one-half of any Escrow cancellation and similar fees, and the parties shall have no further rights or obligations under this Agreement, except for the Surviving Obligations.  If Buyer does not give Seller Buyer’s Due Diligence Notice before expiration of the Inspection Period, Buyer shall be deemed to have elected to terminate this Agreement.

 

6.6 Limitation on Seller’s Liability

 

.  Without limiting any other disclaimer or release of Seller liability under this Agreement, and except as provided otherwise in Paragraph 14, Buyer agrees that Seller shall not have any liability, obligation or responsibility of any kind with respect to any of the following:

 

6.6.1 the content or accuracy of any report, sample results study, opinion or conclusion of any soils, toxic, environmental or other engineer or other person or entity who has examined the Property or any aspect thereof;

 

6.6.2 the content or accuracy of any information disclosed to Buyer by any engineer or consultant (including any of Seller’s engineers or consultants), planner or other government employee in connection with Buyer’s review of the Property;

 

6.6.3 the availability of building or other permits or approvals for the Property by any state or local governmental bodies with jurisdiction over the Property;

 

6.6.4 the availability or capacity of sewer, water or other utility connections to the Property;

 

6.6.5 the content or accuracy of any materials and other information given to Buyer by Seller or reviewed by Buyer with respect to the Property; or

 

6.6.6 the timing or nature of development of other property in the vicinity of the Property.

 

7. Condition of Title

 

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7.1 Buyer’s Title Review

 

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7.1.1 Seller has delivered to Buyer a standard preliminary title report with respect to the Property, together with the underlying documents relating to the Schedule B exceptions set forth in such report (“Title Report”) and Seller’s most current survey ("Survey").  Buyer shall have the right, at its cost, to update the Survey.  Buyer shall have until the date that is five (5) Business Days prior to the expiration of the Inspection Period (the “Title Notice Date”) to give Seller written notice (“Buyer’s Title Notice”) of Buyer’s disapproval or conditional approval of any matters shown in the Title Report or on the Survey other than the Permitted Encumbrances described in 8.1.1(a)-(d) (the “Unacceptable Encumbrances”).  The failure of Buyer to give Buyer’s Title Notice on or before the Title Notice Date shall be conclusively deemed to constitute Buyer’s approval of the condition of title to the Property.  Notwithstanding anything contained herein to the contrary, Buyer shall not be required to object to, and Seller shall cause to be removed as an exception from the Title Policy, all Voluntary Monetary Liens.

 

7.1.2 If Buyer disapproves or conditionally approves in writing any matter of title shown in the Title Report, then Seller may, but shall have no obligation to, within three (3) Business Days following its receipt of Buyer’s Title Notice, elect to eliminate or ameliorate to Buyer’s satisfaction the Unacceptable Encumbrances by giving Buyer written notice (“Seller’s Title Notice”) of those Unacceptable Encumbrances, if any, which Seller agrees to so eliminate or ameliorate by the Closing Date; provided, however, that Seller shall have no obligation to pay any consideration or incur any liability in order to eliminate or ameliorate such Unacceptable Encumbrances other than Voluntary Monetary Liens and provided Buyer shall have the right to approve, which approval shall not be unreasonably withheld, all endorsements issued by the applicable title insurer.

 

7.1.3 If Seller does not elect to eliminate or ameliorate all of the Unacceptable Encumbrances, or if Buyer disapproves Seller’s Title Notice, or if Seller fails to timely deliver Seller’s Title Notice, then Buyer shall have the right, upon delivery of written notice to Seller and Escrow Holder on or before the expiration of the Inspection Period, either to: (a) waive its prior disapproval, in which event the Unacceptable Encumbrances shall be deemed unconditionally approved without any credit or offset to the Purchase Price, subject to any cure obligations expressly undertaken by Seller in the Seller’s Title Notice; or (b) terminate this Agreement and the Escrow, in which event the Deposit shall be disbursed to Buyer, Buyer and Seller shall each pay one-half (1/2) of all Escrow cancellation and similar fees and the parties shall have no further rights or obligations under this Agreement, except for the Surviving Obligations.  Failure to take either one of the actions described in clauses (a) and (b) above shall be deemed to be Buyer’s election to take the action described in clause (a) above.  For avoidance of doubt, if this Agreement remains in effect following the expiration of the Inspection Period, then the Unacceptable Encumbrances shall thereafter consist of and mean only those objections which Seller has cured or committed to endeavor to cure and any Voluntary Monetary Liens, and all other matters shown on the Title Report (including, without limitation, any matters as to which Buyer objected but Seller elected not to cure) shall be deemed to be Permitted Encumbrances and any prior objections by Buyer with respect thereto shall be deemed waived.  If, in Seller’s Title Notice, Seller has agreed to either eliminate or ameliorate to Buyer’s satisfaction by the Closing Date certain Unacceptable Encumbrances described in Buyer’s Title Notice (other than Voluntary Monetary Loans, which Seller shall be obligated to remove in all events), but Seller is unable to do so, then Buyer shall have the right (which shall be Buyer’s sole and exclusive right or remedy for such failure), upon delivery to Seller and Escrow Holder on or before the Closing Date of a written notice to either:  (i) waive its prior disapproval, in which event such Unacceptable Encumbrances shall be deemed unconditionally approved without any credit or offset to the Purchase Price; or (ii) terminate this Agreement and the Escrow, in which event (A) the Deposit shall be disbursed returned to Buyer, (B) Seller shall bear all Escrow cancellation and similar fees, and (C) the parties shall have no further rights or obligations under this Agreement, except for the Surviving Obligations.  Notwithstanding the previous sentence, if Seller’s Title Notice provides that Seller will attempt to (as opposed to commit to) eliminate or ameliorate the Unacceptable Encumbrances and Seller is thereafter unable to do so, then the Deposit shall be disbursed Buyer and the parties shall each pay one half (1/2) of all Escrow cancellation and similar fees.  Failure to take either one of the actions described in clauses (i) and (ii) above shall be deemed to be Buyer’s election to take the action described in clause (ii) above.

 

7.1.4 If the Title Report is amended or supplemented by the Title Company to include exceptions that did not appear on the Title Report delivered to Buyer and which are not expressly permitted under Paragraph 5.1 above, then Buyer shall have until the later of the last day of the Inspection Period or five (5) Business Days following Buyer’s receipt of any such amended or supplemented Title Report to notify Seller of any disapproved item disclosed in the amended or supplemented Title Report.  If Seller is unwilling to commit to remove any of the exceptions objected to by Buyer prior to the Close of Escrow which materially and adversely affect the Lease or the use of the Property, then Buyer may terminate this Agreement by delivering notice thereof in writing to Seller by the earlier to occur of (a) the Scheduled Closing Date, or (b) five (5) Business Days after Seller’s written notice to Buyer of Seller’s unwillingness to eliminate one or more of such title exceptions.  If Buyer terminates this Agreement pursuant to its rights set forth in the preceding sentence, the Deposit shall be disbursed to Buyer and neither party shall have any further obligations under this Agreement except for the Surviving Obligations; provided, however, that if the new title matter was executed by Seller in violation of this Agreement, Seller shall pay to Buyer an amount equal to the Reimbursable Expenses.

 

7.2 Title Policy

 

.  As provided in Paragraph 8.1.1, Buyer’s obligation to purchase the Property on the Closing Date is subject to the willingness of the Title Company to issue an ALTA extended coverage policy of title insurance in the current form of the Title Company and in the amount of the Purchase Price (the “Title Policy”) showing title to the Property vested in Buyer subject only to the Permitted Encumbrances.  Buyer shall pay any endorsement fees and survey fees incurred in connection with the issuance of the Title Policy.

 

8. Conditions to Close of Escrow

 

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8.1 Conditions to Buyer’s Obligations

 

.  Buyer’s obligation to purchase the Property is subject to the satisfaction of the following conditions for Buyer’s benefit (or Buyer’s waiver thereof, it being agreed that Buyer may waive any or all of such conditions) on or before the dates designated below for the satisfaction of such conditions:

 

8.1.1 Title Condition

 

.  The Title Company shall be prepared to issue at the Close of Escrow, upon payment of the premium therefor, the Title Policy, containing such endorsements as the Title Company shall agree to issue prior to expiration of the Inspection Period (without any unsatisfied Schedule B-2 requirement relating to such endorsements other than Seller’s delivery of the Owner’s Affidavit), subject only to the printed exclusions in the policy jacket, the title matters approved or deemed approved by Buyer pursuant to Paragraph 7.1 and the following additional title exceptions (collectively, the “Permitted Encumbrances”):

 

(a) a lien to secure payment of general and special real property taxes and assessments required pursuant to any Mello-Roos District, including the CFDs, not delinquent, and the lien, if any, to secure payment of assessments, not delinquent, under the Development Entitlements, in each case to the extent shown on the Title Report;

 

(b) the lien of supplemental taxes assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code;

 

(c) matters affecting title to the Property created by or with the written consent of Buyer, including, without limitation, any Development Easements; and

 

(d) all items which would be disclosed by an accurate, updated ALTA/ACSM Survey of the Property or a physical inspection of the Property.

 

8.1.2 Estoppel Certificate

 

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(a) On or prior to the Close of Escrow, Buyer shall have received an Estoppel Certificate, executed by Tenant, substantially and materially in the form of the estoppel certificate attached hereto as Exhibit P (the “Estoppel Certificate”), which Estoppel Certificate shall be dated within forty-five (45) days of the Close of Escrow; provided that, if, after receiving the form of the Estoppel Certificate attached hereto, Tenant instead delivers a different or modified estoppel that includes the items required to be covered in any estoppel certificate delivered by Tenant pursuant to the Lease, such estoppel certificate shall qualify as an “Estoppel Certificate” and shall satisfy the foregoing condition as long as the Estoppel Certificate delivered by Tenant does not disclose any material default under the Lease by Seller.

 

(b) On or prior to the Close of Escrow, Buyer shall have received an estoppel certificate from the Garage Owner (as such term is defined in the Parking Structure Easement Agreement) that is not Seller, substantially and materially in the form of the estoppel certificate required under the Parking Structure Easement Agreement (each, a “Parking Estoppel”), which Parking Estoppels shall be dated within forty-five (45) days of the Close of Escrow and include clauses (i) and (ii) below.  Notwithstanding anything to the contrary contained in this Agreement, for any Parking Estoppel not obtained prior to the Close of Escrow, Seller may cause this condition to be satisfied by delivering a representation letter, executed by Seller, certifying that to Seller’s Actual Knowledge, (i) there have been no amendments or modifications to the Parking Structure Easement Agreement and (ii) there are no material defaults by Seller under the Parking Structure Easement Agreement.  Seller’s liability under any such representation letter shall be subject to the aggregate liability limit set forth in Paragraph 18.2 and shall expire and be of no further force or effect on the earlier of (i) the expiration of the Limitation Period, and (ii) the date that Buyer receives the missing Parking Estoppel, provided that such Parking Estoppel does not contain adverse information inconsistent with Seller’s representation letter.

 

8.1.3 Seller’s Downdated Representations and Warranties

 

. The Seller Representations in Paragraphs 14.1, 14.2. 14.3.1, 14.3.2. 14.3.5. 14.6, 14.7, 14.9, 14.10 and 14.11 shall be true and correct in all material respects as though remade effective as of the Scheduled Closing Date

 

8.1.4 No Material Adverse Change

 

.  There shall not have occurred any Material Adverse Change as of the Scheduled Closing Date, subject to extension as provided in Paragraph 28 below.

 

8.1.5 Seller’s Obligations

 

.  As of the Close of Escrow, Seller shall have performed in all material respects all of the obligations required to be performed by Seller under this Agreement prior to the Scheduled Closing Date, subject to extension as provided in Paragraph 28 below.

 

8.1.6 Assignment Agreement

 

.  Receipt by Escrow Holder of the Assignment Agreement, duly executed by the Redevelopment Agency.

 

8.1.7 Tenant and Lease

 

.  The Lease shall be in full force and effect, and Tenant shall not be in default due to its failure to pay base rent, tax, insurance and expense reimbursements due under the Lease; provided, that Tenant’s challenge to taxes, insurance and other expense pass through charged by Seller shall not constitute a default by Tenant as long as Tenant has disputed such charged billed to Tenant in accordance with the dispute procedures set forth in the Lease.

 

8.2 Conditions to Seller’s Obligations

 

.  Seller’s obligation to consummate the transaction contemplated by this Agreement is subject to satisfaction of the following conditions for Seller’s benefit (or Seller’s waiver thereof, it being agreed that Seller may waive any or all of such conditions):

 

8.2.1 Buyer’s Obligations

 

.  Buyer shall have delivered the funds required hereunder and shall have performed all other covenants, undertakings and obligations, and complied with all conditions required by this Agreement to be performed or complied with by Buyer at or before the Close of Escrow.

 

8.2.2 Certification of Representations

 

.  Buyer shall have certified to Seller (“Buyer’s Certificate”) that its representations and warranties in Paragraph 15 are true and correct as of the Close of Escrow as though originally made as of the date of the Buyer’s Certificate.

 

8.2.3 Assignment Agreement

 

.  Receipt by Escrow Holder of the Assignment Agreement, duly executed by the Redevelopment Agency.

 

8.3 Failure of Conditions

 

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8.3.1 Failure of Buyer’s Conditions

 

.  If any one or more of the conditions to Buyer’s obligations, as set forth in Paragraph 8.1 or elsewhere in this Agreement, is not either fully performed, satisfied or waived in writing on or before the Scheduled Closing Date (including any extension of the same as provided in Paragraph 8.3.3 below), then Buyer may elect, by written notice to Seller and Escrow Holder, to terminate this Agreement, in which event the Deposit shall be disbursed as provided in Paragraph 3.1.2(b), each party shall bear one-half (1/2) of all Escrow cancellation and similar fees (except to the extent expressly provided in this Agreement to the contrary) and the parties shall have no further rights or obligations under this Agreement, except for the Surviving Obligations.  Nothing in this Paragraph shall be construed to limit any of Buyer’s rights or remedies under Paragraph 18 in the event of a default by Seller hereunder, including any failure of a condition due to Seller's default hereunder.

 

8.3.2 Failure of Seller’s Conditions

 

.  If any one or more of the conditions to Seller’s obligations, as set forth in Paragraph 8.2 or elsewhere in this Agreement, is not either fully performed, satisfied or waived in writing on or before the Scheduled Closing Date (including any extension of the same as provided in Paragraph 8.3.3 below), then Seller may elect, by written notice to Buyer and Escrow Holder, to terminate this Agreement, in which event the Deposit shall be disbursed to Buyer, each party shall bear one-half (1/2) of all Escrow cancellation and similar fees (except to the extent expressly provided in this Agreement to the contrary) and the parties shall have no further rights or obligations under this Agreement, except for the Surviving Obligations.  Nothing in this Paragraph shall be construed to limit any of Seller’s rights or remedies under Paragraph 17 in the event of a default by Buyer or failing to purchase the Property.

 

8.3.3 Extension of Scheduled Closing Date

 

.  If the conditions set forth in Paragraph 8.1 or Paragraph  8.2 above are not satisfied as of the Scheduled Closing Date, either Buyer or Seller, whichever party is the party whose conditions were not satisfied, may, by written notice to the other, extend the Scheduled Closing Date and the Outside Closing Date until October 1, 2012 as to all conditions.

 

9. Deposits by Seller

 

.  At least one (1) Business Day before the Close of Escrow, Seller shall deposit or cause to be deposited with Escrow Holder the following documents and instruments:

 

9.1 Grant Deed

 

.  One (1) original counterpart of the Grant Deed, duly executed by Seller and acknowledged.

 

9.2 Assignment Agreement

 

.  Four (4) original counterparts of the Assignment Agreement, duly executed by Seller and acknowledged.

 

9.3 Assignment of Lease

 

.  Two (2) original counterparts of the Assignment of Lease, duly executed by Seller.

9.4 Assignment of Contracts

 

.  Two (2) original counterparts of the Assignment of Contracts, duly executed by Seller.

 

9.5 General Assignment

 

.  Two (2) original counterparts of the General Assignment, duly executed by Seller.

 

9.6 Assignment of Successor Project Labor Agreement

 

.  Two (2) original counterparts of the Assignment of Successor Project Labor Agreement, duly executed by Seller.

 

9.7 Assignment of Tax Payment Agreement

 

.  Three (3) original counterparts of the Assignment of Tax Payment Agreement, duly executed by Seller and acknowledged.

 

9.8 Bill of Sale

 

.  A Bill of Sale, duly executed by Seller.

 

9.9 California Affidavit

 

.  A California Affidavit, duly executed by Seller.

 

9.10 FIRPTA Certificate

 

.  A FIRPTA Certificate, duly executed by Seller’s owner.

 

9.11 Tenant Notice

 

.  The Tenant Notice, duly executed by Seller.

 

9.12 Other Instruments

 

.  Such other instruments and documents as are required by the terms of this Agreement, including any transfer tax affidavits and the Owner’s Affidavit in the form of Exhibit Q (“Owner’s Affidavit”).

 

10. Deposits by Buyer

 

.  Buyer shall deposit or cause to be deposited with Escrow Holder the Deposit, which is to be applied towards the payment of the Purchase Price, and the balance of the Purchase Price, in Immediately Available Funds, in the amounts and at the times set forth in Paragraph 3.  In addition, Buyer shall deposit with Escrow Holder at least one (1) Business Day before the Close of Escrow such other documents and instruments as are required pursuant to this Agreement, including, without limitation, the following:

 

10.1 Grant Deed

 

.  One (1) original counterpart of the Grant Deed, duly executed by Buyer and acknowledged.

 

10.2 Assignment Agreement

 

.  Four (4) original counterparts of the Assignment Agreement, duly executed by Buyer and acknowledged.

 

10.3 Assignment of Lease

 

.  Two (2) original counterparts of the Assignment of Lease, duly executed by Buyer.

 

10.4 Assignment of Contracts

 

.  Two (2) original counterparts of the Assignment of Contracts, duly executed by Buyer.

 

10.5 General Assignment

 

.  Two (2) original counterparts of the General Assignment, duly executed by Buyer.

 

10.6 Assignment of Successor Project Labor Agreement

 

.  Two (2) original counterparts of the Agreement Regarding Successor Project Labor Agreement, duly executed by Buyer.

 

10.7 Assignment of Tax Payment Agreement

 

.  Three (3) original counterparts of the Assignment of Tax Payment Agreement, duly executed by Buyer and acknowledged.

 

10.8 Tax Allocation Debt Promissory Note

 

.  Four (4) duplicate originals of the Tax Allocation Debt Promissory Note.

 

10.9 Buyer’s Certificate

 

.  The Buyer’s Certificate, duly executed by Buyer.

 

10.10 Other Instruments

 

.  Such other instruments and documents as are required by the terms of this Agreement.

 

11. Costs and Expenses

 

.  The cost of the Title Policy shall be paid by Seller, and the cost of any endorsements to the Title Policy shall be paid by Buyer.  The escrow fee of Escrow Holder shall be divided equally between Seller and Buyer.  Seller shall pay all documentary transfer taxes payable in connection with the recordation of the Grant Deed.  Buyer shall pay all recording fees.  Each of Seller and Buyer shall pay the fees of its own counsel, subject to Seller’s obligation to pay to Buyer certain Reimbursable Expenses when specifically provided in this Agreement.  Except as otherwise expressly provided in this Agreement, if, as a result of no fault of Buyer or Seller, Escrow fails to close, Buyer and Seller shall share equally all of Escrow Holder’s cancellation and similar fees as a result of such termination.

 

12. Prorations

 

.  Upon the Close of Escrow, the following items shall be prorated as of the Closing Date with all items of income and expense for the Property being borne by Seller before the Closing Date and being borne by Buyer from and after (and including) the Closing Date:  rent and other income and rents; pre-paid rent; fees and assessments; prepaid expenses and obligations under Service Contracts that are not terminated upon the Close of Escrow; accrued operating expenses; real and personal ad valorem taxes and assessments and all other charges included on any tax bill from the applicable tax assessor’s office; and any assessments by private covenant for the then-current calendar year of the Close of Escrow.  Specifically, but without limitation, the following shall apply to such prorations:

 

12.1 Taxes and Assessments

 

.  Real and personal property taxes and taxes and assessments pursuant to any Mello-Roos District affecting the Property (including the CFDs) shall be prorated on the basis that Seller is responsible for (a) all such taxes for the fiscal year of the applicable taxing authorities occurring before the Current Tax Period, and (b) that portion of such taxes for the Current Tax Period determined on the basis of the number of days that have elapsed from the first day of the Current Tax Period to the Closing Date, inclusive, whether or not the same shall be payable before the Close of Escrow.  If as of the Close of Escrow the actual tax bills for the year or years in question are not available and the amount of taxes to be prorated cannot be ascertained, then rates and assessed valuation of the previous year, with known changes, shall be used, and when the actual amount of taxes and assessments for the year or years in question shall be determinable, then such taxes and assessments will be re-prorated between the parties to reflect the actual amount of such taxes and assessments.  Notwithstanding the foregoing, to the extent Tenant is responsible for reimbursement or payment of such taxes and assessments pursuant to the Lease, the amount payable by the Tenant in excess of base year taxes shall not be prorated except to the extent that Seller has received estimated payments and has not yet applied the same to the tax or assessment to which Tenant’s reimbursement or payment is attributed.

 

12.2 Utilities

 

.  To the extent utilities are not maintained in Tenant’s name, Buyer shall take all steps necessary to effectuate the transfer of all utilities to its name as of the Closing Date, and where necessary post deposits with the utility companies.  In such case, Seller shall endeavor to have all utility meters read as of the Closing Date.  Seller shall be entitled to recover any and all deposits held by any utility company as of the Closing Date or, at Seller’s option, to the extent transferable and refundable to Buyer, take a credit for same on the closing statement described in Paragraph 12.4.

 

12.3 Tenant Receivables

 

.  Rent received by Seller prior to the Closing Date, including any amounts payable for operating expenses and taxes, that applies to the period of time after the Closing Date shall be paid to Buyer at the Close of Escrow.  Rent due from Tenant under the Lease and operating expenses, taxes and/or other amounts payable by Tenant under the Lease but not yet received as of the Closing Date (collectively, “Tenant Receivables”) shall not be prorated at the Close of Escrow, but shall be apportioned on the basis of the period for which the same is payable and if, as and when collected, as follows:

 

12.3.1 Buyer shall apply rent and other income and payments received from Tenant under the Lease after the Close of Escrow in the following order of priority:  (a) first, to the Buyer’s reasonable costs of collection; (b) second, to payment of Tenant Receivables first coming due after the Close of Escrow and applicable to the period of time after the Close of Escrow, which amount shall be retained by Buyer; (c) third, to the payment of the current Tenant Receivables then due for the month in which the Closing Date occurs, which amount shall be apportioned between Buyer and Seller as of the Closing Date as set forth in Paragraph 12 (with Seller’s portion thereof to be delivered to Seller);; (d) fourth, to payment of Tenant Receivables first coming due after the Close of Escrow but applicable to the period of time before the Close of Escrow, including, without limitation, the Tenant Receivables described in Paragraph 12.3.2 (“Unbilled Tenant Receivables”), which amount shall be delivered to Seller; and (e) thereafter, to delinquent Tenant Receivables which were due and payable as of the Close of Escrow but not collected by Seller as of the Close of Escrow (collectively, “Uncollected Delinquent Tenant Receivables”), which amount shall be delivered to Seller.  Notwithstanding the foregoing, at any time from and after the date that is ninety (90) days after the Close of Escrow, Seller shall have the right to pursue the collection of Uncollected Delinquent Tenant Receivables without prejudice to Seller’s rights or Buyer’s obligations hereunder; provided, however, Seller shall have no right to terminate or cancel the Lease or to cause Tenant to be evicted or to exercise any other “landlord” remedy (as set forth in the Lease) against Tenant other than to sue for collection.  Any sums received by Buyer to which Seller is entitled shall be held in trust for Seller on account of such past due rents payable to Seller, and Buyer shall remit to Seller any such sums received by Buyer to which Seller is entitled within ten (10) Business Days after receipt thereof less reasonable, actual costs and expenses of collection, including reasonable attorneys’ fees, court costs and disbursements, if any.  If Seller receives any amounts after the Close of Escrow which are attributable, in whole or in part, to any period after the Closing Date, then Seller shall remit to Buyer that portion of the monies so received by Seller to which Buyer is entitled within ten (10) Business Days after receipt thereof.  With respect to Unbilled Tenant Receivables, Buyer covenants and agrees to (i) bill the same when billable (based on information furnished by Seller), and (ii) cooperate with Seller to determine the correct amount of operating expenses and/or taxes due.

 

12.3.2 Without limiting the generality of Paragraph 12.3.1(b), if the final reconciliation or determination of operating expenses and/or taxes due under the Lease shows that a net amount is owed by Seller to Buyer (i.e., Seller collected an amount greater than the amounts incurred through the Close of Escrow), Buyer’s pro rata portion shall be paid by Seller to Buyer within ten (10) Business Days of such final determination under the Lease.  If the final determination of operating expenses and/or taxes due under the Lease shows that a net amount is owed by Buyer to Seller (i.e., Seller collected an amount less than the amounts incurred through the Close of Escrow), Buyer shall, within ten (10) Business Days of such final determination, remit to Seller, Seller’s portion of operating expenses and/or taxes for the period up to and including the Closing Date, if, as and when received.  A preliminary adjustment will be made at the Close of Escrow.  Buyer agrees to receive and hold any monies received on account of such past due expenses and/or taxes in trust for Seller and to pay same promptly to Seller as aforesaid.

 

12.4 Escrow Statement

 

.  At least two (2) Business Days before the Close of Escrow, the parties hereto shall make a good faith effort to each agree upon all of the prorations to be made and submit a statement to the Escrow Holder (or sign a statement prepared by Escrow Holder) setting forth such prorations.  If any prorations, apportionments or computations made under this Paragraph 12 shall require final adjustment, then the parties hereto shall make the appropriate adjustments promptly when accurate information becomes available and either party hereto shall be entitled to an adjustment to correct the same.  Any corrected adjustment or proration will be paid in cash to the party entitled thereto.

 

12.5 Survival

 

.  The provisions of this Paragraph 12 shall survive the Close of Escrow.

 

13. Disbursements and Other Actions by Escrow Holder

 

.  Upon the Close of Escrow, Escrow Holder shall promptly undertake all of the following in the manner indicated:

 

13.1 Prorations

 

.  Prorate all matters referenced in Paragraph 12 based upon the statement delivered into Escrow signed by each of the parties.

 

13.2 Recording

 

.  Cause the Grant Deed, the Assignment Agreement, the Assignment of Tax Payment Agreement and any other documents that the parties hereto may mutually direct to be recorded in the Official Records and conformed copies thereof, showing all recording information, to be delivered to Buyer and Seller.

 

13.3 Funds

 

.  Disburse from funds deposited by Buyer with Escrow Holder as follows: (a) first, deduct all items chargeable to the account of Seller pursuant to this Agreement or as directed by Seller; (b) next, disburse the balance of the Purchase Price and any additional amounts owed to Seller under this Agreement to or as directed by Seller by wire transfer in accordance with instructions received from Seller; and (c) next, disburse the remaining balance of the funds, if any, to Buyer.

 

13.4 Title Policy

 

.  Direct the Title Company to issue the Title Policy to Buyer.

 

13.5 Documents to Seller

 

.  Deliver to Seller three (3) fully executed originals of the Assignment Agreement, one (1) fully executed original Assignment of Lease, one (1) fully executed original Assignment of Contracts, one (1) fully executed original General Assignment, one (1) fully executed original Assignment of Successor Project Labor Agreement, one (1) fully executed original Assignment of Tax Payment Agreement, one (1) copy of the Bill of Sale, one (1) copy of the California Affidavit, one (1) copy of the FIRPTA Certificate, one (1) copy of the Tenant Notice, four (4) originals of the Tax Allocation Debt Promissory Note, one (1) fully executed original of the Buyer’s Certificate and any other documents to be delivered to Seller hereunder.

 

13.6 Documents to Buyer

 

.  Deliver to Buyer one (1) fully executed original of the Assignment Agreement, one (1) fully executed original Assignment of Lease, one (1) fully executed original Assignment of Contracts, one (1) fully executed original General Assignment, one (1) fully executed original Assignment of Successor Project Labor Agreement, one (1) fully executed Assignment of Tax Payment Agreement, the original Bill of Sale, one (1) copy of the California Affidavit, one (1) copy of the FIRPTA Certificate, the original Tenant Notice, one (1) copy of the Tax Allocation Debt Promissory Note, and one (1) copy of the Buyer’s Certificate and any other documents to be delivered to Buyer hereunder.

 

14. Seller’s Representations and Warranties

 

.  Seller hereby represents and warrants to Buyer as of the date hereof (each a “Seller Representation” and collectively the “Seller Representations”):

 

14.1 Formation

 

.  Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

14.2 Authority

 

.  Seller has full power and authority to enter into and perform this Agreement in accordance with its terms.  This Agreement and all documents executed by Seller which are to be delivered to Buyer at the Close of Escrow are, and at the time of the Close of Escrow will be, duly authorized, executed and delivered by Seller, and at the time of the Close of Escrow will be the legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, do not and, at the time of the Close of Escrow will not, violate any provision of any agreement or judicial order to which Seller or the Property is subject.

 

14.3 Lease

 

.

 

14.3.1 Seller has delivered to Buyer, or made available to Buyer for review, a true and complete copy of the Lease (and all amendments thereto) as maintained by Seller in its files and used by Seller in connection with its ownership, management and operation of the Property, and, to Seller’s Actual Knowledge, the same represents a true and complete copy of the Lease.

 

14.3.2 Seller has not received any written notices from Tenant asserting that Seller is in default in any material respects under the Lease (other than defaults that have been cured).

 

14.3.3 Seller has not given any written notices to Tenant asserting that Tenant is in default in any material respect under the Lease (other than defaults that have been cured).

 

14.3.4 To Seller’s Actual Knowledge, Tenant is not in material default under the Lease.

 

14.3.5 Seller has not entered into an agreement that will be binding on Buyer that provides for the payment of any commissions, finder’s fees or other compensation to any broker or any other person or entity with respect to the Lease.

 

14.4 Service Contracts

 

.  Exhibit B is a true, correct and complete list of the Service Contracts in effect as of the date hereof which are not intended to be terminated as of the Close of Escrow and Seller has delivered to Buyer, or made available to Buyer for review, true and complete copies of all Service Contracts, set forth on Schedule B.  To Seller’s Actual Knowledge, Seller is in compliance with all of the Service Contracts in all material respects.

 

14.5 Actions

 

.  There is no action, suit, litigation, hearing or administrative proceeding pending against Seller or, to Seller’s Actual Knowledge, threatened with respect to all or any portion of the Property in each case which is not or would not be covered by insurance.

 

14.6 OFAC

 

.  Seller is not an individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, limited liability company, unincorporated organization, real estate investment trust, government or any agency or political subdivision thereof, or any other form of entity (collectively, a “Person”) with whom a United States citizen, entity organized under the laws of the United States or its territories or entity having its principal place of business within the United States or any of its territories (collectively, a “U.S.  Person”) is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) (including those executive orders and lists published by OFAC with respect to Persons that have been designated by executive order or by the sanction regulations of OFAC as Persons with whom U.S.  Persons may not transact business or must limit their interactions to types approved by OFAC [“Specially Designated Nationals and Blocked Persons”]) or otherwise.

 

14.7 ERISA

 

.  Neither Seller nor the Property constitutes either (a) an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which is subject to Title I of ERISA, or (b) a “plan” as defined in Section 4975(a) of Internal Revenue Code (“Code”) (the plans described in subparagraphs (a) and (b) being collectively referred to as a “Plan”).

 

14.8 No Violations

 

.  To Seller’s Actual Knowledge, except for any violations cured on or before the Effective Date, Seller has not received written notice of the violation of any law, ordinance, rule, regulation or order applicable to the Property relating to safety, health, building, fire, zoning, or Hazardous Materials during Seller’s period of ownership.

14.9 Contracts

 

.  To Seller’s Actual Knowledge, there are no service, maintenance or management contracts or similar agreements to which Seller is a party and that would be binding on Buyer or the Property after the Close of Escrow, except for the agreements to be assumed by Buyer at the Close of Escrow pursuant to this Agreement and described on Schedule B.

 

14.10 Bankruptcy

 

.  Seller has not (a) made a general assignment for the benefit of creditors, (b) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors, (c) suffered the appointment of a receiver to take possession of all, or substantially all, of Seller’s assets, (d) suffered the attachment or other judicial seizure of all, or substantially all, of Seller’s assets, (e) admitted in writing its inability to pay its debts as they come due, or (f) made an offer of settlement, extension or composition to its creditors generally.

 

14.11 Employees

 

.  There are no employees of Seller engaged in the operation, management or maintenance of the Property.  Seller is not a party to any collective bargaining agreement or employment agreement with respect to the Property.

 

Any and all uses of the phrase “to Seller’s Actual Knowledge” or other references to Seller’s knowledge in this Agreement shall mean the actual, present, conscious knowledge of David Wall and Doug Baker (collectively, the “Seller Knowledge Individuals”) as to a fact at the time given (including at the time of any updates made after the Effective Date) without any investigation or inquiry.  Without limiting the foregoing, Buyer acknowledges that the Seller Knowledge Individuals have not performed and are not obligated to perform any investigation or review of any files or other information in the possession of Seller, or to make any inquiry of any persons, or to take any other actions in connection with the representations and warranties of Seller set forth in this Agreement.  Neither the actual, present, conscious knowledge of any other individual or entity, nor the constructive knowledge of the Seller Knowledge Individuals or of any other individual or entity, shall be imputed to the Seller Knowledge Individuals.

 

The Seller Representations and Seller’s Surviving Covenants shall survive the Close of Escrow for nine (9) months (the “Limitation Period”).  Additionally, Excluded Environmental Claims are subject to, and must be brought within, the Limitation Period, and Buyer shall not have, and hereby waives, the right to bring any such claims after the expiration of the Limitation Period.  Each such Seller Representation and Seller’s Surviving Covenants shall automatically be null and void and of no further force and effect on the nine (9) month anniversary of the Closing Date unless, prior to such nine (9) month anniversary, Buyer shall have provided Seller with a notice alleging that Seller is in breach of such Seller Representation or Seller’s Surviving Covenants and specifying in reasonable detail the nature of such breach.  Buyer shall allow Seller thirty (30) days after its notice within which to cure such breach or if such breach cannot be cured within such thirty (30) day period, and Seller notifies Buyer it wishes to extend its cure period (the “Cure Extension Notice”), such additional reasonable period of time as is required to cure the same (not to exceed ninety (90) days in the aggregate) (the “Outside Cure Date”) so long as such cure has been commenced within such thirty (30) day period and is being diligently pursued to completion.  If Seller fails to cure such breach (including payment of all actual Damages (defined below) suffered by Buyer) after written notice thereof, Buyer’s sole remedy (subject to Paragraph 18.2) shall be to commence a legal proceeding against Seller alleging that Seller shall be in breach of such representation or warranty or in breach of Seller’s Surviving Covenants and that Buyer shall have suffered actual damages as a result thereof (a “Proceeding”), which Proceeding must be commenced, if at all, within sixty (60) days after the expiration of the Limitation Period; provided, however, that if Buyer gives Seller written notice of such a breach within the Limitation Period, and Seller subsequently sends a Cure Extension Notice, then Buyer shall have until the date which is thirty (30) days after the Outside Cure Date to commence such Proceeding.  If Buyer shall have timely commenced a Proceeding and a court of competent jurisdiction shall, pursuant to a final, non-appealable order in connection with such Proceeding, determine that (1) Seller breached the applicable Seller Representation or the applicable Seller’s Surviving Covenants, (2) Buyer suffered actual damages (the “Damages”) by reason of such breach, and (3) Buyer did not have actual knowledge of such breach on or prior to the Close of Escrow, then Buyer shall be entitled to receive an amount equal to the Damages subject to the limitations contained in this Agreement.  Any such Damages, subject to the limitations contained in this Agreement, shall be paid within thirty (30) days following the entry of such final, non-appealable order and delivery of a copy thereof to Seller.  After Close of Escrow and prior to December 31, 2012, Seller shall maintain a liquid net worth of $5,000,000.  On or after December 31, 2012, Seller may distribute any remaining net sales proceeds or other assets of Seller to its investors, as long as Seller maintains, for the remainder of the Limitation Period, a liquid net worth equal to the lesser of (i) $5,000,000, or (ii) an amount determined by Seller, in good faith, sufficient to satisfy any written claim of breach delivered by Buyer to Seller pursuant to Article 14 above.  In no event shall Damages include, or Buyer be entitled to recover, consequential or punitive damages under any circumstances.

 

The Seller Representations are subject to the following limitations:  (i) subject to Paragraph 8.1.7, Seller does not represent or warrant that the Lease or any particular Service Contract will be in force or effect as of the Close of Escrow or that Tenant or the contractors thereunder, as applicable, will not be in default thereunder, and (ii) to the extent that Seller has delivered to Buyer any leases, contracts or other information with respect to the Property at any time prior to Buyer’s delivery of a Buyer’s Due Diligence Notice, and such leases, contracts or other information contain provisions inconsistent with any of such representations and warranties, then such representations and warranties shall be deemed modified to conform to such provisions, and (iii) Seller shall not be deemed in breach of its representations and warranties contained in Paragraph 14.4 if Buyer does not assume responsibility for the Service Contract(s) which violate(s) such representations and warranties and neither Buyer nor the Property would otherwise be bound thereby.

 

15. Buyer’s Representations and Warranties

 

.  Buyer hereby represents and warrants to Seller as of the date hereof and as of the Close of Escrow as follows:

 

15.1 Formation

 

.  Buyer is a limited partnership, duly organized and existing in good standing under the laws of the State of Delaware.

 

15.2 Authority

 

.  Buyer has full power and authority to enter into and perform this Agreement in accordance with its terms.  This Agreement and all documents executed by Buyer which are to be delivered to Seller at the Close of Escrow are, and at the time of the Close of Escrow will be, duly authorized, executed and delivered by Buyer and are, and at the time of the Close of Escrow will be the legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms.

 

15.3 Not Tax-Exempt

 

.  Buyer is not a tax-exempt entity.

 

15.4 OFAC

 

.  Buyer is not a Person with whom a U.S.  Person is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise.

 

15.5 ERISA

 

.  Buyer is not acquiring the Property with the assets of an employee benefit plan (as defined in Section 3(3) of ERISA), or, if plan assets will be used to acquire the Property, Buyer will deliver to Seller at the Close of Escrow a certificate containing such factual representations as shall permit Seller and its counsel to conclude that no prohibited transaction would result from the consummation of the transactions contemplated by this Agreement.  Buyer is not a “party in interest” within the meaning of Section 3(3) of ERISA with respect to any beneficial owner of Seller.

 

16. Buyer Acknowledgements

 

.

 

16.1 Condition of Property

 

.

 

16.1.1 Buyer acknowledges and agrees that it is purchasing the Property based upon Buyer’s inspection and investigation of the Property, all physical, legal, entitlement and economic aspects of the Property, and all documents related thereto, or its opportunity to do so, including, without limitation, review of the financial information, the Lease (and the rights of Tenant thereunder), building permits, certificates of occupancy, environmental audits and assessments, toxic reports, surveys, investigation of land use and development rights, development restrictions and conditions that are or may be imposed by any Governmental Authority, agreements with associations affecting or concerning the Property, the condition of title, soils and geological reports, engineering and structural tests, insurance contracts, contracts for work in progress, marketing studies, cost-to-complete studies, governmental agreements and approvals, architectural plans and site plans, and, AS A MATERIAL INDUCEMENT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY SELLER, BUYER IS PURCHASING THE PROPERTY IN AN “AS IS, WHERE IS” PHYSICAL CONDITION AND IN AN “AS IS” STATE OF REPAIR, WITH ALL FAULTS, without relying upon any representations or warranties, express, implied or statutory, of any kind, except as expressly set forth in Paragraph 14 and in the documents executed and delivered at the Close of Escrow ("Closing Documents").  Without limiting the above, Buyer acknowledges that neither Seller, except as expressly set forth in Paragraph 14 or in the Closing Documents, nor any other party has made any representations or warranties, statements or promises, express or implied, to Buyer or anyone acting on behalf of Buyer on which Buyer is relying as to any matters, directly or indirectly, concerning the Property or the condition, use or development thereof, including, but not limited to, the Land, the Improvements, the Lease, infrastructure, if any, development rights and exactions, expenses associated with the Property, taxes, assessments, bonds, permissible uses, title exceptions, water or water rights, topography, utilities, zoning of the Property, soil, subsoil, architectural plans, site plans, the purposes for which the Property is to be used, drainage, environmental or building laws, rules or regulations, Hazardous Material or any other matters affecting or relating to the Property.  The closing of the purchase of the Property by Buyer hereunder shall be conclusive evidence that (a) Buyer has fully and completely inspected (or has caused to be fully and completely inspected) the Property, and (b) Buyer accepts the Property as being in good and satisfactory condition and suitable for Buyer’s purposes.

 

16.1.2 Buyer shall perform and rely upon its own investigation concerning its intended use of the Property, the Property’s fitness therefor, and the availability of such intended use under Applicable Laws.  Buyer further acknowledges and agrees that Seller’s cooperation with Buyer in connection with Buyer’s due diligence review of the Property, whether by providing the Title Report, environmental and other reports, the Development Entitlements and other documents, or permitting inspection of the Property, shall not be construed as any warranty or representation, express or implied, of any kind with respect to the Property, or with respect to the accuracy, completeness, or relevancy of any such documents except as specifically provided in Paragraph 14 above or in the Closing Documents.

 

16.1.3 Without limiting the generality of the foregoing, except with respect to Claims arising out of a breach of Seller’s Warranties or Seller’s Surviving Covenants or the Closing Documents, Buyer, for itself and, to the maximum extent permitted by Applicable Laws, on behalf of its Transferees with respect to all or a part of the Property, hereby expressly waives, releases and relinquishes any and all Claims that Buyer or such Transferees may now or hereafter have against any Seller Party, and their respective successors and assigns, whether known or unknown, arising from or related to the condition or use of the Property or under the Lease (including, without limitation, any construction defects, errors or omissions on or in the Property, the presence of Hazardous Materials or other toxic substances or any other conditions (whether patent, latent or otherwise) affecting the Property, or any other law or regulation applicable thereto, or the valuation, salability, utility or suitability of the Property), with respect to any past, present or future presence or existence of Hazardous Material at, on, about, under or within any part of the Property, or with respect to any past, present or future violations of any Applicable Laws, now or hereafter enacted, regulating or governing the use, handling, storage, release or disposal of Hazardous Material at, on, about, under or within any part of the Property, including, without limitation, (a) any and all rights Buyer or such Transferees may now or hereafter have to seek contribution from Seller under Section 113(f)(i) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C.A.  §9613), as the same may be further amended or replaced by any similar law, rule or regulation, (b) any and all rights Buyer or such Transferees may now or hereafter have against Seller under the Carpenter-Presley-Tanner Hazardous Substances Account Act (California Health and Safety Code, Section 25300 et seq.), as the same may be further amended or replaced by any similar law, rule or regulation, (c) any and all Claims, whether known or unknown, now or hereafter existing, with respect to the Property under Section 107 of CERCLA (42 U.S.C.A.  §9607), and (d) any and all Claims, whether known or unknown, based on nuisance, trespass or any other common law or statutory provisions.  Buyer further acknowledges and agrees that this release shall be given full force and effect according to each of its expressed terms and provisions, including, but not limited to, those relating to unknown and suspected claims, damages and causes of action.

 

SUBJECT TO THE LIMITATIONS SET FORTH IN PARAGRAPHS 14 AND 18.2, THE FOREGOING WAIVER AND RELEASE SHALL NOT APPLY TO AND BUYER FULLY RESERVES ALL RIGHTS AND REMEDIES IT MAY HAVE AGAINST SELLER (AND SELLER AGREES THAT BUYER CAN NAME SELLER IN AN ACTION OR CROSS CLAIM, COUNTERCLAIM OR COMMENCE OTHER APPROPRIATE LEGAL PROCEEDINGS AGAINST IT) WITH RESPECT TO STATUTORY CLAIMS FOR CONTRIBUTION RESULTING FROM:  (A) CLAIMS BY ANY THIRD PARTY BASED ON SELLER’S STORAGE, USE OR DISPOSAL OF HAZARDOUS MATERIALS ON THE PROPERTY DURING ITS PERIOD OF OWNERSHIP; AND/OR (B) ANY DEMAND OR ORDER OF A GOVERNMENTAL AGENCY REQUIRING THE INVESTIGATION, MONITORING AND/OR REMEDIATION OF HAZARDOUS MATERIALS ORIGINALLY RELEASED ON OR FROM THE PROPERTY BY SELLER DURING ITS PERIOD OF OWNERSHIP (THE “EXCLUDED ENVIRONMENTAL CLAIMS”).

 

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BUYER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 (“SECTION 1542”), WHICH IS SET FORTH BELOW:

 

“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.”

 

BY INITIALING BELOW, BUYER HEREBY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE WAIVERS AND RELEASES CONTAINED IN THIS PARAGRAPH 17.1.3:

 

RTS

Buyer’s Initials

 

The waivers and releases by Buyer herein contained shall survive the Close of Escrow and the recordation of the Grant Deed and will not be deemed merged into the Grant Deed upon its recordation.

 

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16.2 Subsequent Owners or Occupants

 

.  Buyer acknowledges that the Property is subject to the Environmental Covenant, and Buyer hereby covenants to comply with the Environmental Covenant.  Without limiting the generality of the foregoing, the Environmental Covenant requires all Owners and Occupants (as therein defined) to include the following statement in all purchase agreements or leases (or other grant of right or possession) relating to the Property:

 

“a.           The land described herein may contain hazardous materials in soils and in the ground water under the property, and is subject to a deed restriction (Covenant and Restriction) dated as of February 23, 2000, and recorded on March 21, 2000, in the Official Records of San Francisco County, California, as Document No.  2000G748552, which Covenant and Restriction imposes certain covenants, conditions, and restrictions on usage of the property described herein.  This statement is not a declaration that a hazard exists.

 

“b.           In all future leases, licenses, permits, or other agreements between, on the one hand, an Owner or Occupant, and, on the other hand, another entity, which authorizes such entity to undertake or to engage in activities that are subject to one or more requirements set forth in the Risk Management Plan (RMP), the contracting Owner or Occupant will provide a copy of the RMP or its relevant provisions prior to execution of such agreements and ensure that such agreements contain covenants that (a) such entity will comply with the RMP (to the extent the RMP applies to the entity’s activities); (b) such entity will obligate other entities with which it contracts for construction, property maintenance or other activities which may disturb soil or groundwater to comply with the applicable provisions of the RMP; and (c) such entity (and the entities with which it so contracts) will refrain from interfering with Owner’s or Occupant’s compliance with the RMP.

 

“c.           In all agreements between an Owner and another entity providing for access to the Property for the purpose of environmental mitigation, monitoring or remediation (“Environmental Responses”) by such entity, the Owner will provide that entity with a copy of the RMP prior to execution of such agreement and ensure that such agreements contain covenants by the entity that the entity will (a) comply with the RMP (to the extent the RMP applies to the entity’s activities); and (b) obligate any person or company with which it contracts for Environmental Response that may disturb soil or groundwater to comply with the applicable provisions of the RMP.”

 

16.3 RMP

 

.  Buyer hereby acknowledges receipt of the RMP.

 

16.4 San Francisco Soils Analysis Disclosure

 

.  Buyer acknowledges and understands that the Property is located in an area of the City and County of San Francisco subject to the requirements of Article 20 of the San Francisco Public Works Code and Article 22A of the San Francisco Health Code, and in accordance with the requirements of Section 1233 of the San Francisco Health Code, Buyer hereby acknowledges receipt of a summary of such Articles, a copy of which is attached to the RMP as Exhibit F.

 

16.5 Natural Hazards Disclosures

 

.  Buyer acknowledges that Seller has complied with the disclosure obligations relating to seismic, geologic and other natural hazards imposed on Seller by California law by delivering to Buyer a Natural Hazards Disclosure Report.

 

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17. Buyer’s Default

 

.

 

17.1 LIQUIDATED DAMAGES

 

.   IF, AND ONLY IF, BUYER SHALL DEFAULT BY FAILING TO CLOSE THIS TRANSACTION WITHOUT LEGAL EXCUSE, SELLER’S SOLE AND EXCLUSIVE REMEDY BY REASON THEREOF SHALL BE TO TERMINATE THIS AGREEMENT AND, UPON SUCH TERMINATION, SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE DEPOSIT (AND ANY INTEREST EARNED THEREON) AS LIQUIDATED DAMAGES FOR BUYER’S DEFAULT HEREUNDER, IT BEING AGREED THAT THE DAMAGES BY REASON OF BUYER’S DEFAULT ARE DIFFICULT, IF NOT IMPOSSIBLE, TO ASCERTAIN, AND THAT THE AMOUNT OF THE DEPOSIT (AND ANY INTEREST THEREON) REPRESENTS THE PARTIES’ REASONABLE ESTIMATE OF SUCH DAMAGES AND THEREAFTER BUYER AND SELLER SHALL HAVE NO FURTHER RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT EXCEPT FOR THOSE THAT ARE EXPRESSLY PROVIDED IN THIS AGREEMENT TO SURVIVE THE TERMINATION HEREOF.  THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.  IF SELLER PROPERLY TERMINATES THIS AGREEMENT PURSUANT TO A RIGHT GIVEN TO IT HEREUNDER AND BUYER TAKES ANY ACTION WHICH INTERFERES WITH SELLER’S ABILITY TO SELL, EXCHANGE, TRANSFER, LEASE, DISPOSE OF OR FINANCE THE PROPERTY OR TAKE ANY OTHER ACTIONS WITH RESPECT THERETO (INCLUDING, WITHOUT LIMITATION, THE FILING OF ANY LIS PENDENS OR OTHER FORM OF ATTACHMENT AGAINST THE PROPERTY), THEN THE NAMED BUYER (AND ANY PERMITTED ASSIGNEE OF BUYER’S INTEREST HEREUNDER) SHALL BE LIABLE FOR ALL LOSS, COST, DAMAGE, LIABILITY OR EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES, COURT COSTS AND DISBURSEMENTS AND CONSEQUENTIAL DAMAGES) INCURRED BY SELLER BY REASON OF SUCH ACTION TO CONTEST BY BUYER; PROVIDED, THAT THE FOREGOING SHALL NOT BE DEEMED TO PROHIBIT BUYER FROM FILING AN ACTION FOR SPECIFIC PERFORMANCE AS PROVIDED IN PARAGRAPH 18 OR FROM CHALLENGING SELLER’S RIGHT TO TERMINATE THIS AGREEMENT WITH THE UNDERSTANDING AND LIMITATION THAT BUYER MAY NOT UNDER ANY CIRCUMSTANCES BE PERMITTED TO FILE ANY LIEN LIS PENDENS OR OTHER FORM OF ATTACHMENT AGAINST THE PROPERTY IN CONNECTION WITH SUCH ACTION FOR SPECIFIC PERFORMANCE OR CHALLENGE.

 

SELLER’S INITIALS:  JS JC                                                                BUYER’S INITIALS:  ____

 

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17.2 Other Seller Remedies

 

.

 

17.2.1 Nothing contained in this Paragraph 17 shall serve to waive or otherwise limit (a) Seller’s remedies or damages for claims of Seller against Buyer with respect to any obligations of Buyer that, by the terms of this Agreement, survive the Close of Escrow or any termination of this Agreement before the Close of Escrow, including, without limitation, Buyer’s indemnification obligations under Paragraph 6.4 or (b) Seller's rights to obtain from Buyer all costs and expenses of enforcing the liquidated damage provision contained in Paragraph 17.1, including Legal Costs.

 

17.2.2 The parties agree that Seller would suffer material injury or damage not compensable by the payment of money if Buyer were to breach or violate its confidentiality obligations under Paragraph 24.  Accordingly, notwithstanding the provisions of Paragraph 17.1, in addition to all other remedies that Seller may have, Seller may bring an action in equity or otherwise for specific performance to enforce compliance with Paragraph 24 of this Agreement, or an injunction to enjoin the continuance of any such breach or violation thereof.  Buyer agrees to waive any requirement for a bond in connection with any such injunctive or other equitable relief.

 

18. Seller’s Default

 

.

 

18.1 Buyer’s Remedies

 

.  If (a) Seller shall default in any of its obligations to be performed on the Scheduled Closing Date or (b) Seller shall default in the performance of any of its material obligations to be performed prior to the Scheduled Closing Date and, with respect to any default under this clause (b) only, such default shall continue for five (5) business days after notice to Seller,  Buyer as its sole remedy by reason thereof (in lieu of prosecuting an action for damages or proceeding with any other legal or equitable course of conduct, the right to bring such actions or proceedings being expressly and voluntarily waived by Buyer, to the extent legally permissible, following and upon advice of its counsel) shall have the right, subject to the other provisions of this Paragraph 18.1, (i) to seek to obtain specific performance of Seller’s obligations hereunder, provided that any action for specific performance shall be commenced within ninety (90) days after Buyer obtains actual knowledge of such default, and if Buyer prevails thereunder, Seller shall reimburse Buyer for all reasonable legal fees, court costs and all other reasonable costs of such action or (ii) to terminate this Agreement and receive a return of the Deposit; provided, that if and only if Seller’s affirmative and intentional conduct in violation of this Agreement causes the remedy of specific performance to not be available to Buyer, Seller shall also pay Buyer within ten (10) days after Buyer’s demand therefor (which shall be accompanied by reasonable back-up documentation) an amount equal to the Reimbursable Expenses, it being understood that if Buyer fails to commence an action for specific performance within ninety (90) days after such default, Buyer’s sole remedy shall be to terminate this Agreement and receive a return of the Deposit and reimbursement of the Reimbursable Expenses, if applicable.  If Buyer elects to seek specific performance of this Agreement, then as a condition precedent to any suit for specific performance, Buyer shall on or before the Scheduled Closing Date, time being of the essence, fully perform all of its obligations hereunder which are capable of being performed (other than the payment of the Purchase Price, which shall be paid as and when required by the court in the suit for specific performance).  Upon such return and delivery, this Agreement shall terminate and neither party hereto shall have any further obligations hereunder  except for those that are expressly provided in this Agreement to survive the termination hereof.

 

18.2 Liability Limitations

 

.  Notwithstanding anything to the contrary set forth in this Agreement, Seller’s liability for any and all claims arising out of any covenant, representation or warranty of Seller contained in this Agreement and in any document executed by Seller pursuant to this Agreement, including, without limitation, any instruments delivered at the Close of Escrow, and any Excluded Environmental Claims shall, subject to the limitations of survival set forth in Paragraph 14, be limited to claims in excess of One Hundred Thousand Dollars ($100,000) in the aggregate (provided that for such claims, Buyer shall be entitled to recover from the first dollar of any loss incurred, subject to the following aggregate liability limit), and Seller’s aggregate liability for any and all such claims shall not exceed Five Million Dollars ($5,000,000); provided that the foregoing limitation shall not apply to (i) Seller's obligations under Paragraph 12, (ii) Seller's obligations under Paragraph 21, or (iii) any action by Buyer for specific performance of Seller's obligations hereunder.

 

19. Damage or Condemnation Before Close of Escrow

 

.  Seller shall promptly notify Buyer of any casualty to the Property (or the parking facilities required pursuant to the Lease) or any pending or threatened condemnation proceeding affecting the Property or such parking facilities before the Close of Escrow following Seller’s obtaining Actual Knowledge or Seller’s receipt of written notice of such casualty or condemnation proceeding.  If any such damage or actual or overtly threatened proceeding relates to or may result in the loss of any material portion of the Property (as set forth below), Buyer shall have the right, within ten (10) days after receiving written notice of such damage, destruction or proceeding from Seller (but in any event prior to the Close of Escrow), either to: (a) terminate this Agreement, in which event the Deposit and all funds deposited into Escrow by Buyer shall be disbursed to Buyer  and neither party shall have any further rights or obligations hereunder except for the Surviving Obligations, or (b) continue this Agreement in effect, in which event upon the Close of Escrow, Buyer shall be entitled to any compensation, awards, or other payments or relief resulting from such casualty or condemnation proceeding relating to the Property and there shall be no adjustment to the Purchase Price, provided, however, Buyer shall receive a credit against the cash due at Closing for the amount of the deductible on such casualty insurance policy less any amounts reasonably and actually expended by Seller to remedy any unsafe conditions at the Property, in no event to exceed the amount of the loss, and provided further, that in the event such amount spent by Seller to remedy unsafe conditions shall exceed the amount of the deductible on such casualty insurance policy, then to the extent such excess is reimbursed by the insurance carrier after Close of Escrow, Buyer shall deliver such excess amount to Seller, within five (5) business days of its receipt of any casualty insurance proceeds received on account of such casualty).  A failure by Buyer to notify Seller in writing within such ten (10) day period will be deemed an election to proceed under clause (b) above.  If Buyer elects (or is deemed to elect) to proceed under clause (b) above, Seller shall not compromise, settle or adjust any claims to such proceeds without Buyer’s prior written consent.  For the purpose of this Paragraph 19, damage to the Property or a condemnation action affecting a portion thereof shall be deemed to involve a material portion of the Property if the reasonably estimated cost of restoration or repair of such damage or the amount of the condemnation award with respect to such taking shall exceed fifteen percent (15%) of the Purchase Price or permit Tenant to terminate the Lease (unless said right has been waived by Tenant) or to abate rent.  If Buyer shall not have the right to terminate this Agreement as a result of such damage or condemnation proceeding, Buyer shall accept the Property in its then condition (without any abatement or reduction in the Purchase Price, provided, however, Buyer shall receive a credit against the cash due at Closing for the amount of the deductible on such casualty insurance policy less any amounts reasonably and actually expended by Seller to remedy any unsafe conditions at the Property, in no event to exceed the amount of the loss, and provided further, that in the event such amount spent by Seller to remedy unsafe conditions shall exceed the amount of the deductible on such casualty insurance policy and is reimbursed by the insurance carrier, then Buyer shall deliver such excess amount to Seller, within five (5) business days of its receipt of any casualty insurance proceeds received on account of such casualty) in which case Buyer shall proceed with the Close of Escrow and Buyer will be entitled to an assignment of all of Seller’s rights to any insurance proceeds or any award in connection with such taking, as the case may be.  If any such non-material damage or taking occurs, Seller shall not compromise, settle or adjust any claims to such insurance proceeds or such award, as the case may be, without Buyer’s prior written consent.  Notwithstanding anything to the contrary, if there is a casualty that entitles Tenant to rental abatement under the Lease, then Buyer’s obligation to close is additionally conditioned upon (i) the agreement by Seller’s property manager to manage the Property for Buyer on Seller’s property manager’s standard terms, and (ii) Seller’s property manager’s existing rental interruption insurance continuing to cover the lost rent during the duration of Tenant’s rent abatement period.  Notwithstanding the foregoing, in the event of a casualty where Buyer does not have the right to terminate this Agreement, if the estimated cost to repair and/or restore any such damage exceeds the sum of the insurance proceeds assigned to Buyer plus the deductible, then Buyer shall have the right to terminate this Agreement unless Seller elects to credit against the Purchase price at Closing the amount of such excess.  The provisions of Paragraph 19 shall survive the Close of Escrow.

 

20. Notices

 

.  All notices, requests, approvals, demands, directions or other communications required or permitted hereunder (generally, a “Notice”) shall be in writing and shall be personally delivered, sent by a reputable overnight courier service, sent by registered or certified mail, postage prepaid, return receipt requested, or sent by telecopy or facsimile and shall be deemed received upon the earlier of (a) if personally delivered or sent by overnight courier, the date of delivery to the address of the party to receive such Notice, (b) if mailed, the date of delivery as shown on the sender’s registry or certification receipt, or (c) if sent by telecopy or facsimile, the date and time transmission is confirmed if such time is prior to 5:00 PM, and the next Business Day if such time is after 5:00 PM (using the time in effect at the address of the party to receive such Notice).  A copy of any Notice sent by telecopy or facsimile also must be personally delivered or sent by reputable overnight courier service (in accordance with this Paragraph) within forty-eight (48) hours of the transmission of such Notice by telecopy or facsimile, provided that failure to deliver such copy within forty-eight (48) hours will not invalidate any Notice sent by telecopy or facsimile.  All Notices to Seller shall be sent to Seller’s Address with a copy to Seller’s Counsel’s Address.  All Notices to Buyer shall be sent to Buyer’s Address with a copy to Buyer’s Counsel’s Address.  All Notices to Escrow Holder shall be sent to Escrow Holder’s Address.  Notice of change of address shall be given by written notice in the manner detailed in this Paragraph.  Rejection or other refusal to accept or the inability to deliver because of a changed address of which no Notice was given shall be deemed to constitute receipt of the Notice sent.

 

21. Brokers

 

.  Each party represents to the other that it has not dealt with any broker, finder or intermediary with respect to this transaction other than Eastdil Secured (“Seller’s Broker”).  Buyer agrees to indemnify and hold harmless Seller from any Claims in connection with an assertion by any person for a real estate broker’s commission, finder’s fee or other compensation based upon any statement, representation or agreement of Buyer, and Seller agrees to indemnify and hold Buyer harmless from any such Claims (including by Seller’s Broker) based upon any statement, representation or agreement of Seller.  Each party’s obligations set forth in this Paragraph 21 shall survive the termination of this Agreement and Escrow before the Close of Escrow and shall survive the Close of Escrow.

 

22. Legal Fees

 

.  Should either party hereto institute any action or proceeding in court or any other dispute resolution mechanism against the other party, by reason of or alleging the failure of the other party to comply with any or all of its obligations hereunder, whether for declaratory or other relief, then the party that prevails in such action, proceeding or dispute resolution shall be entitled, in addition to any other recovery or relief, to its reasonable attorneys’ fees and expenses and consultant and expert fees and expenses related thereto (whether at the administrative, trial or appellate levels) (“Legal Costs”).  Any judgment, order, or award entered in such action, proceeding, or dispute resolution shall contain a specific provision providing for the recovery of attorneys’ fees and costs and consultant and expert fees and expenses incurred in enforcing, perfecting and executing such judgment.  A party shall be deemed to have prevailed in any such action or proceeding (without limiting the generality of the foregoing) if such action is dismissed upon the payment by the other party of the sums allegedly due or the performance of obligations allegedly not complied with, or if such party obtains substantially the relief sought by it in the action, irrespective of whether such action is prosecuted to judgment.  As used in this Agreement, the term “Legal Costs” shall include, without limitation, reasonable attorneys’ and experts’ fees, costs and expenses incurred in the following: (a) post judgment motions and appeals; (b) contempt proceedings; (c) garnishment, levy, and debtor and third party examinations; (d) discovery; and (e) bankruptcy litigation.  This Paragraph 22 shall survive any termination of this Agreement before the Close of Escrow and shall also survive the recordation of the Grant Deed and the Close of Escrow and shall not be deemed merged into the Grant Deed upon its recordation.

 

23. Transfers

 

.  Buyer shall not Transfer its rights and/or obligations under this Agreement without the written consent of Seller, which consent Seller may withhold in its sole and absolute discretion; provided, that, Buyer may assign this Agreement to an Affiliate of Buyer without Seller’s Consent.  If Seller consents to any Transfer of Buyer’s rights and/or obligations under this Agreement, Buyer shall deliver to Seller, at least five (5) days before the closing date of the proposed Transfer, an originally executed assumption agreement from the Transferee under which the Transferee assumes all of the duties and obligations of Buyer under this Agreement and any other agreement or instrument contemplated by this Agreement.  Except as specifically set forth above, any attempt by Buyer to Transfer its rights and/or obligations under this Agreement without the written consent of Seller shall be voidable at Seller’s option.  Any permitted Transfer shall not relieve, alter or release the assigning party from its primary liability under this Agreement.

 

24. Confidentiality

 

.

 

24.1 Buyer’s Obligations

 

.  Buyer shall keep all Confidential Information in the strictest confidence, and shall not disclose any Confidential Information to any third parties except as expressly permitted herein, and will take all measures necessary to safeguard such information in order to preserve its confidentiality.  Under no circumstances shall Buyer use any of the Confidential Information for any purpose other than the investigation of the Property in connection with its purchase as contemplated under this Agreement.  Without limiting the generality of the foregoing, Buyer may not disclose Confidential Information to any third parties, other than to Buyer’s Agents or Buyer Parties, prospective lenders, partners, and investors, but then only to the extent Buyer’s Agents or Buyer Parties, prospective lenders, partners, and investors, need to review the Confidential Information for purposes of analyzing Buyer’s proposed purchase of the Property and only provided that Buyer instructs such Buyer’s Agents to keep the Confidential Information strictly confidential as required by this Agreement.  Buyer agrees to use diligent efforts to prevent Buyer’s Agents and Buyer Parties from making any unauthorized disclosure of the Confidential Information and, in all events, shall be responsible for the acts of Buyer’s Agents or Buyer Parties with respect to the Confidential Information.  Notwithstanding the foregoing or any other Section of this Agreement to the contrary, Seller recognizes that Hines Global REIT, Inc. may disclose  to the U.S. Securities and Exchange Commission (“SEC”) and other applicable governmental authorities, financial statements and/or other communications of such information regarding the transactions contemplated hereby and any such information relating to the Property, but only to the extent necessary under federal or state securities laws, rules, or regulations (including SEC rules and regulations), generally accepted accounting principles, or other accounting rules and procedures.  Without limiting the foregoing, after Closing Hines Global REIT, Inc. may file this Agreement (excluding Exhibits) with the SEC and may file a form “8K” and/or prospectus to which this Agreement (excluding Exhibits) is attached.

 

24.2 Required Disclosure

 

.  If Buyer becomes legally compelled to disclose all or any part of the Confidential Information or the existence of this Agreement or the transaction contemplated hereby, Buyer shall, unless prohibited by applicable law from doing so, provide Seller with prompt written notice so that Seller may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Paragraph 24.  If such protective order or other remedy is not obtained, Seller will waive compliance with provisions of this Paragraph to allow Buyer to comply with such legal obligation.

 

24.3 Disclosure of Transaction

 

.  Prior to the Closing Date, Buyer and Seller shall confer and agree on a press release to be issued jointly by Buyer and Seller disclosing the transaction and the appropriate time for making such release.  Neither Buyer nor Seller shall issue any press releases (or other public statements) with respect to the transaction contemplated in this Agreement without approval of the other party, which approval may not be unreasonably withheld; provided, however, that Seller or Buyer may make such reports and other disclosures as are required by applicable law or as otherwise deemed necessary, desirable or required by Seller or Buyer or their parent entities in the course of their operations.  Notwithstanding the foregoing, Buyer may, without Seller’s consent, issue a simple press release or simple advertisement disclosing the sale of the Property to Buyer as long as such press release or advertisement does not disclose the purchase price or other terms of the Agreement or the identity of Seller or its Affiliates.

 

24.4 Survival

 

.  The terms, covenants and conditions contained in Paragraph 24 shall survive any termination of this Agreement and Escrow before the Close of Escrow, but shall not survive the Close of Escrow.

 

25. Community Facilities Districts

 

.  Buyer acknowledges that, pursuant to the CFDs, a lien of Special Tax has been established with respect to the Property.  Nothing herein shall be deemed to require Seller to reimburse Buyer for any CFD Assessments, other taxes or public or private assessments that may now or hereafter be owing with respect to the Property, all of which shall be the sole responsibility of Buyer, subject, however, to proration of the foregoing to the extent the same relate to the period prior to Close of Escrow.  If requested, by Seller, Buyer shall execute additional instruments whereby Buyer acknowledges the existence of the CFDs and that Buyer is aware of the terms and conditions thereof.

 

26. Additional Covenants and Easements

 

.

 

26.1 Entitlement Covenants, Changes

 

.  Buyer shall not seek to effect any change or amendment to the existing subdivision map or record any further parcel or final map of the Property or any portion thereof or facilities thereon.  Buyer shall not change or attempt to change any zoning or obtain or apply for any zoning variance or exception or seek to modify the Development Entitlements without Seller’s prior written consent, which consent shall not be unreasonably withheld.  The terms of this Paragraph 26.1 shall survive the Close of Escrow until the date that is one (1) year after the Close of Escrow.

 

26.2 Development Easements - Before Close of Escrow

 

.  Before the Close of Escrow, Seller shall have the right, subject to the limitations set forth below, to record covenants, conditions and restrictions against the Property, and to grant, convey or dedicate easements, rights and rights-of-way on and over the Property to utility companies, local water and sewer districts, the City and other Governmental Authorities, property owners’ associations and other entities that service the Property or properties located nearby or adjacent thereto, and to adjacent property owners, for the purpose of facilitating the development, or regulating the operation and maintenance, of the Property or other property in Mission Bay, including, without limitation, public access, landscape maintenance, adjacent sidewalk maintenance, and sewer, water and storm drain easements (the types of covenants, easements, rights and rights-of-way described in the foregoing are, collectively, referred to herein as “Development Easements”); provided, however, that before Seller records, grants, conveys or dedicates any Development Easements hereunder, Seller shall furnish Buyer with a copy of the proposed Development Easements for Buyer’s review and approval, which approval shall not be unreasonably withheld or conditioned.  Buyer shall approve or disapprove any proposed Development Easements within ten (10) Business Days following its receipt thereof; Buyer’s failure to approve or disapprove any proposed Development Easements within such ten (10) Business Day period shall constitute Buyer’s approval thereof.  Notwithstanding the foregoing to the contrary, Seller shall not be required to obtain Buyer’s approval of proposed Development Easements if such Development Easements (a) will not materially and adversely affect the development of the Property, and (b) are materially consistent with the Development Entitlements.

 

26.3 Development Easements – Following Close of Escrow

 

.  Upon and following the Close of Escrow, Buyer shall, at the written request of Master Developer or Prior Owner, grant, consent to, convey or dedicate Development Easements, provided that such Development Easements (a) are required, in the sole determination of Master Developer or Prior Owner, as applicable, for the development of other property in Mission Bay or to establish reasonable conditions, covenants and restrictions regulating the operation and maintenance of the Property or other property in Mission Bay; (b) will not materially and adversely affect the development of the Property; and (c) are materially consistent with the material terms of the Development Entitlements.  Buyer’s obligations set forth in this Paragraph 26.3 shall survive the Close of Escrow and shall not be merged with the Grant Deed.

 

26.4 Master Association and Transportation Management Association

 

.  Buyer acknowledges that the owner of the Property is or will be a member of the Mission Bay Commercial Maintenance Corporation (“MBCMC”) and Buyer is obligated to participate in a Transportation Management Association (the “TMA”) that was formed to implement and administer the Transportation System Management Plan for the Mission Bay Development Area.  Buyer further acknowledges that the Property is subject to the covenants, conditions and restrictions contained in the Master Commercial Declaration and to participation in the Master Association and TMA, and that Buyer will be responsible for all assessments that may be owing with respect to the Property following the Close of Escrow with respect to the Master Association and TMA.  This Paragraph 26.4 shall survive the Close of Escrow and not be merged with the Grant Deed.

 

26.5 Project Labor Agreement

 

.  Buyer acknowledges that Seller is a party to the Agreement Regarding Successor Project Labor Agreement.  In connection with the Close of Escrow, Buyer shall execute and deliver the Assignment of Successor Project Labor Agreement.  After the Close of Escrow, Buyer shall, if requested by the other parties to the Agreement Regarding Successor Project Labor Agreement or the Council (as defined in the Agreement Regarding Successor Project Labor Agreement), enter into an agreement in substantially the form of the Agreement Regarding Successor Project Labor Agreement.  This Paragraph 26.5 shall survive the Close of Escrow and not be merged with the Grant Deed.

 

26.6 Parking Structure

 

.  A parking structure (the “Parking Structure”) constructed on Block 27 provides parking for Block 26a, Block 28, Block 27 and Block 26 (the owners of said Blocks are collectively referred to as the “Block 26/27 Owners”).  The respective rights and obligations of each of the Block 26/27 Owners with respect to the use, operation and maintenance of the Parking Structure are set forth in that certain Easement Agreement dated as of December 14, 2007 and recorded in the Official Records on December 14, 2007 as Instrument No.  2007I502747 (the “Parking Structure Easement Agreement”).

 

26.7 Agency Approval of Transfers to Exempt Entities

 

.  Buyer, on behalf of itself and its successors, agrees that during the Term (as defined in the South OPA) of the South OPA Buyer will not Transfer the Property, or any portion thereof, to any entity for any use that is or could be exempt from property taxation without first obtaining (a) from such tax exempt entity a binding contractual commitment, in form and substance reasonably satisfactory to the Redevelopment Agency, the City, Prior Owner and Master Developer, obligating such entity to make a payment in lieu of taxes (“PILOT Agreement”) equal to the full amount of the property taxes that would have been assessed against the Property notwithstanding the ownership or use by a tax exempt entity, or (b) Buyer entering into a PILOT Agreement, in form and substance reasonably satisfactory to the Redevelopment Agency, the City and Master Developer, for the benefit of the Redevelopment Agency and the City, requiring the full payment of property taxes (or a payment in lieu thereof in an amount equal to the property taxes) that would have been assessed against the Property notwithstanding such occupancy by such tax exempt entity, or (c) the written consent of the Redevelopment Agency, the City and Prior Owner, in their respective sole discretion.  Buyer agrees not to request an adjustment to the Base Year Value for the South Plan Area (as defined in the South OPA) as a result of any permitted Transfer to an entity exempt from property taxation.  For purposes hereof, “Base Year Value” means the aggregate assessed value of property within the South Plan Area on the assessment roll last equalized prior to the effective date of the ordinance adopting the Mission Bay South Redevelopment Plan (as defined in the South OPA) and the term “last equalized” has the meaning set forth in Section 2052 of the California Revenue and Taxation Code.  Buyer shall include in all agreements for the Transfer of the Property, or any portion thereof, a contractually binding provision requiring that unless the Redevelopment Agency, the City and Prior Owner in their respective sole discretion agree otherwise, any such Transferee (or subsequent Transferee of such Transferee) that is a tax-exempt entity enter into a PILOT reasonably satisfactory to the Redevelopment Agency, the City, Prior Owner and Master Developer consistent with this Paragraph 26.7.  Buyer’s obligations under this Paragraph 26.7 shall survive the Close of Escrow and shall not be merged with the Grant Deed.

 

26.8 Future Dedication

 

.  Buyer shall cooperate reasonably with the Master Developer and its affiliated companies, successors and assigns in connection with the future dedication of South Street and any other property abutting the Property intended to be dedicated to the appropriate Governmental Authority.  This Paragraph 26.8 shall survive the Close of Escrow and not be merged with the Grant Deed.

 

26.9 Transfer Notice

 

.  After the Close of Escrow, Seller shall send the notice required by Section 3.4 of the Environmental Covenant.  This Paragraph 26.9 shall survive the Close of Escrow and not be merged with the Grant Deed.

 

27. Compliance with Development Entitlements

 

.

 

27.1 Generally

 

.  Before the expiration of the Inspection Period, Buyer shall have reviewed the Development Entitlements, including, without limitation, the RMP and Environmental Covenant and related documents listed on Exhibit J attached hereto.  Buyer covenants to perform all obligations or other actions to be performed by Buyer under this Agreement in accordance with the Development Entitlements and all Applicable Laws, and agrees that it shall be solely responsible for all fees and costs related to any development of the Property occurring after the Close of Escrow.

 

27.2 Diversity Program

 

.

 

27.2.1 Without limiting the generality of Paragraph 27.1, Buyer expressly acknowledges that it has received and reviewed the Program in Diversity/Economic Development Program, attached as Attachment H to the South OPA (the “Diversity Program”).  Buyer agrees to comply with all of the provisions of the Diversity Program applicable to the Property or Buyer’s construction, use or development of the Property.  Buyer acknowledges that Schedule 4, Section I.C of the Diversity Program references the City-wide “First Source Hiring Program” (FSHP) adopted by the City and County of San Francisco August 3, 1998 and codified at San Francisco Administrative Code Sections 83.1-83.1(8).  The FSHP is designed to identify entry-level positions associated with employees engaged in construction work for certain commercial development projects and to provide first interview opportunity to graduates of city-sponsored training programs.  Buyer acknowledges that its activities with respect to the Property are or may be subject to the FSHP, and that the FSHP and the Diversity Program may impose obligations on Buyer, including good faith efforts to meet requirements and goals regarding interviewing, recruiting, hiring and retention of individuals.  Buyer agrees to comply with any applicable requirements contained in the FSHP or the Diversity Program.

 

27.2.2 Buyer expressly acknowledges that the Diversity Program provides for the arbitration of certain disputes under the circumstances therein set forth.  Consequently, with respect thereto and as to the subject matter thereof, Buyer agrees to be bound by the applicable arbitration provisions.

 

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NOTICE:  BY INITIALING IN THE SPACE BELOW, BUYER IS AGREEING TO HAVE ANY DISPUTE CONCERNING THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION SET FORTH IN THE DIVERSITY PROGRAM DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND BUYER IS GIVING UP ANY RIGHTS IT MIGHT POSSESS TO HAVE A DISPUTE LITIGATED IN COURT OR A JURY TRIAL.  BY INITIALING IN THE SPACE BELOW, BUYER IS GIVING UP ITS JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION REFERENCED ABOVE.  IF BUYER REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, BUYER MAY BE COMPELLED TO ARBITRATE UNDER THE CALIFORNIA CODE OF CIVIL PROCEDURE.  BUYER’S AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

 

BUYER HAS READ AND UNDERSTANDS THE FOREGOING AND AGREES TO SUBMIT DISPUTES CONCERNING THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION SET FORTH IN THE DIVERSITY PROGRAM TO A NEUTRAL ARBITRATOR.

 

RTS

Buyer’s Initials

 

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27.3 Non-Discrimination

 

.  Without limiting the generality of Paragraph 27.1, Buyer acknowledges that the South OPA expressly provides that there shall be no discrimination against or segregation of persons or groups of persons or any employee or applicant for employment on account of race, color, creed, religion, national origin, ancestry, sex, marital or domestic partner status, familial status, lawful source of income (as defined in Section 3304 of the San Francisco Police Code), gender identity, sexual orientation, age or disability (including, without limitation, HIV/AIDS status) in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property.  All deeds, leases or contracts for the sale, lease, sublease or other transfer of all or any portion of the Property are required to contain the foregoing nondiscrimination and non-segregation provision.

 

27.4 Mitigation Measures

 

.  Without limiting the generality of Paragraph 27.1, Buyer expressly acknowledges that the South OPA contains mitigation measures relating to the Property.  Buyer acknowledges that it will comply with and do all things necessary to perform the obligations of Owner (as defined in the South OPA) now or hereafter pertaining to the Property.

 

27.5 Survival

 

.  This Paragraph 27 shall survive the Close of Escrow and not be merged with the Grant Deed.

 

28. Seller Representation Update

 

.  At the Close of Escrow, Seller shall deliver an instrument (the “Seller Representation Update”) advising Buyer in what respects the Seller Representations are inaccurate as of the Closing Date as if remade on the Closing Date.  If the Seller Representation Update shall give rise to Buyer’s right under Paragraph 8.1 not to effect the Close of Escrow hereunder, Buyer shall advise Seller of the reasons therefor and Seller shall have up to an additional thirty (30) days to attempt to satisfy the conditions precedent set forth in Paragraph 8.1, including, if Seller so elects by written notice to Buyer, by extending the Scheduled Closing Date, if necessary.

 

29. Miscellaneous

 

.

 

29.1 Survival of Covenants

 

.  In addition to the provisions otherwise expressly set forth herein, (a) the representations and warranties of Buyer and Seller set forth in this Agreement, and (b) all covenants made by Buyer and Seller in this Agreement pursuant to which Buyer and Seller will, by the terms of such covenants, have continuing rights or obligations under this Agreement following the Close of Escrow shall survive the recordation of the Grant Deed and the Close of Escrow and shall not be deemed merged into the Grant Deed upon its recordation; provided, however, that the survival of the Seller Representations and Seller’s Surviving Covenants is subject to the Limitation Period set forth in Paragraph 14.

 

29.2 Required Actions of Buyer and Seller

 

.  Buyer and Seller agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the purchase and sale of the Property and shall use good faith efforts to accomplish the Close of Escrow in accordance with the provisions hereof; provided, however, that Seller shall not be required to execute any instrument to induce the Title Company to issue the Title Policy other than (i) certificates regarding authorizing resolutions, consents or other evidence of Seller’s authority, (ii) the Owner’s Affidavit, and (iii) any document that Seller agrees to deliver pursuant to the Seller’s Title Notice.

 

29.3 Time of Essence

 

.  Time is of the essence of each and every term, condition, obligation and provision hereof.  All references herein to a particular time of day shall be deemed to refer to San Francisco, California time.

 

29.4 Counterparts

 

.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute a single agreement with the same effect as if both parties had signed the same signature page.  Any signature page from any counterpart of this Agreement, signed only by one party, may be detached from such counterpart and re-attached to any other counterpart of this Agreement that has a signature page signed only by the other party.

 

29.5 Captions

 

.  Any captions to, or headings of, the Paragraphs or subparagraphs of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof.

 

29.6 No Obligations to Third Parties

 

.  Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties hereto, to any person or entity other than the parties hereto.

 

29.7 Exhibits

 

.  The Exhibits attached hereto are hereby incorporated herein by this reference for all purposes.

 

29.8 Amendment to this Agreement

 

.  The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto.

 

29.9 Waiver

 

.  The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof.

 

29.10 Applicable Law

 

.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California.

 

29.11 Fees and Other Expenses

 

.  Except as otherwise provided herein, each of the parties shall pay its own fees and expenses in connection with this Agreement.

 

29.12 Entire Agreement

 

.  This Agreement supersedes any prior agreements, negotiations and communications, oral or written, including any letter of intent or letter of understanding previously executed by such parties, if any, and, contains the entire agreement between Buyer and Seller as to the subject matter hereof.  No subsequent agreement, representation, or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party shall be of any effect unless it is in writing and executed by the party to be bound thereby.

 

29.13 Partial Invalidity

 

.  If any portion of this Agreement as applied to either party or to any circumstances shall be adjudged by a court to be void or unenforceable, such portion shall be deemed severed from this Agreement and shall in no way effect the validity or enforceability of the remaining portions of this Agreement.

 

29.14 Successors and Assigns

 

.  Subject to the provisions of Paragraph 23, this Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto.

 

29.15 Independent Counsel

 

.  Buyer and Seller each acknowledge that: (a) they have been represented by independent counsel in connection with this Agreement; (b) they have executed this Agreement with the advice of such counsel; and (c) this Agreement is the result of negotiations between the parties hereto and the advice and assistance of their respective counsel.  The fact that this Agreement was prepared by Seller’s counsel as a matter of convenience shall have no import or significance.  Any uncertainty or ambiguity in this Agreement shall not be construed against Seller because Seller’s counsel prepared this Agreement in its final form.

 

29.16 No Recorded Memorandum

 

.  Neither party shall record this Agreement or any short form memorandum of this Agreement.

 

29.17 Deadlines

 

.  If the last day of any period to give notice, reply to a notice or undertake any action under this Agreement occurs on a Saturday, Sunday or bank, City or Redevelopment Agency holiday, then the last day for such undertaking, action, giving or replying to notice shall be the next succeeding Redevelopment Agency business day.

 

29.18 Exculpation

 

.

 

29.18.1 Buyer agrees that it does not have and will not have any claims or causes of action against any disclosed or undisclosed officer, director, employee, trustee, shareholder, partner, member, principal, parent, subsidiary or other affiliate of Seller, or any officer, director, employee, trustee, shareholder, partner or principal of any such parent, subsidiary or other affiliate (collectively, the “Seller Exculpation Parties”), arising out of or in connection with this Agreement or the transactions contemplated hereby.  Buyer agrees to look solely to Seller and its assets (including the Purchase Price) for the satisfaction of any liability or obligation arising under this Agreement or the transactions contemplated hereby, or for the performance of any of the covenants, warranties or other agreements contained herein or in documents executed pursuant hereto, and further agrees not to sue or otherwise seek to enforce any personal obligation against any of the Seller Exculpation Parties with respect to any matters arising out of or in connection with this Agreement (or any documents executed pursuant hereto) or the transactions contemplated hereby.  Without limiting the generality of the foregoing provisions of this Paragraph 29.18.1, Buyer hereby unconditionally and irrevocably waives any and all claims and causes of action of any nature whatsoever it may now or hereafter have against the Seller Exculpation Parties, and hereby unconditionally and irrevocably releases and discharges the Seller Exculpation Parties from any and all liability whatsoever which may now or hereafter accrue in favor of Buyer against the Seller Exculpation Parties in connection with or arising out of this Agreement (or any documents executed pursuant hereto) or the transactions contemplated hereby.  Notwithstanding the foregoing, the foregoing limitation shall not apply in the event of an improper distribution by Seller to its Members in breach of the last sentence of the second to last paragraph of Paragraph 14 but only to the extent of such improper distribution.

 

29.18.2 Seller agrees that it does not have and will not have any claims or causes of action against any disclosed or undisclosed officer, director, employee, trustee, shareholder, partner, principal, parent, subsidiary or other affiliate of Buyer, including, or any officer, director, employee, trustee, shareholder, partner, member, or principal of any such parent, subsidiary or other affiliate of Buyer (collectively, the “Buyer Exculpation Parties”), arising out of or in connection with this Agreement or the transactions contemplated hereby.  Subject to and without modification of the liquidated damage provisions set forth in Paragraph 17.1 above, Seller agrees to look solely to Buyer and its assets for the satisfaction of any liability or obligation arising under this Agreement or the transactions contemplated hereby, or for the performance of any of the covenants, warranties or other agreements contained herein or in documents executed pursuant hereto, and further agrees not to sue or otherwise seek to enforce any personal obligation against any of the Buyer Exculpation Parties with respect to any matters arising out of or in connection with this Agreement (or any documents executed pursuant hereto) or the transactions contemplated hereby.  Without limiting the generality of the foregoing provisions of this Paragraph 29.18.2, Seller hereby unconditionally and irrevocably waives any and all claims and causes of action of any nature whatsoever it may now or hereafter have against the Buyer Exculpation Parties, and hereby unconditionally and irrevocably releases and discharges the Buyer Exculpation Parties from any and all liability whatsoever which may now or hereafter accrue in favor of Seller against the Buyer Exculpation Parties in connection with or arising out of this Agreement (or any documents executed pursuant hereto) or the transactions contemplated hereby.

 

29.18.3 The provisions of this Paragraph 29.18 shall survive the termination of this Agreement and the Close of Escrow and not be merged with the Grant Deed.

 

29.19 Cooperation With Buyer’s Auditors and SEC Filings

 

.  Seller shall reasonably cooperate with Buyer to provide Buyer (at Buyer’s sole cost and expense) copies of, or reasonable access to, such information as may be reasonably requested by Buyer, to the extent in the possession of Seller, to enable Buyer’s auditor (Deloitte & Touche LLP or any successor auditor selected by Buyer) to conduct an audit of the expenses of the operation of the Property for the year to date of the year in which Closing occurs and the year immediately preceding the year in which Closing occurs.  Seller shall cooperate with Buyer’s auditor on, and subject to, the same terms as set forth above in this Section in the conduct of such audit.  In addition, Seller agrees to provide to Buyer’s auditor, if requested by such auditor, historical expense statements for the operation of the Property, whether required before or after Closing, but only to the extent such expense statements are in the possession of Seller.  Without limiting the foregoing, Seller shall furnish to Buyer such Property expenses information as may be reasonably required by Buyer or any affiliate of Buyer to make any filings required by law with the SEC or other governmental authority; provided the foregoing obligations of Seller shall be limited to providing such information or documentation as may be in the possession of Seller.  This Section will survive the Close of Escrow.

 

29.20 Guaranty

 

.  Guarantor joins in this Agreement solely for the purpose of irrevocably, absolutely and unconditionally guaranteeing the payment and performance by Buyer of its obligations pursuant to Paragraph 6.4 of this Agreement.  Guarantor understands and agrees that Seller may look first to Guarantor as primary obligor for the payment and the performance of Buyer’s obligations guaranteed by Guarantor, including, but not limited to, for the payment of damages arising from Buyer’s breach of such obligations, together with costs of enforcement of such guaranty.  Guarantor waives and relinquishes all rights and defenses of a guarantor or surety, now existing or hereafter arising, known or unknown, and Guarantor agrees that the validity of this section and Guarantor’s obligations hereunder shall not be affected, delayed, limited or impaired by any event whatsoever, including, but not limited to, (i) the merger, consolidation, dissolution, cessation of business or liquidation of Buyer, (ii) the financial decline or bankruptcy of Buyer, (iii) any stay, extension or discharge that may be granted to Buyer by any court in proceedings under the Bankruptcy Code, or any amendments thereof, or under any other law, (iv) Seller’s compromise or settlement, with or without release, of any other party, (v) Seller’s failure to file suit against Buyer, regardless of whether Buyer is becoming insolvent, is believed to be about to leave the state or any other circumstance, (vi) Seller’s failure to give the Guarantor notice of Buyer’s breach, (vii) the unenforceability of any liability, obligation or covenant against Buyer for any reason, (viii) the execution, modification or amendment of this Agreement, (ix) Buyer’s failure to exercise diligence in collection or enforcement, (x) the termination of any relationship between the Guarantor and Buyer, or (xi) Buyer’s change of name or the use of any other name.  Guarantor shall not be entitled to require that Seller or Buyer marshal assets, and the benefit of any rule of law or equity to the contrary is hereby expressly waived by the Guarantor.  Guarantor waives all suretyship defenses to the maximum extent permitted under applicable law.

 

 

 

 

 

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IN WITNESS WHEREOF, Buyer, Guarantor and Seller have executed this Agreement as of the day and year first written above.

 

	
“Buyer”

	
HINES GLOBAL REIT 550 TERRY FRANCOIS LP, a 

Delaware limited partnership

 

	  	
By:  HINES GLOBAL REIT 550 TERRY FRANCOIS

        GP LLC, a Delaware limited liability company, its 

        general partner

	  	  
	 	By: 	 /s/ Ryan T. Sims	 
	 	Name: 	 Ryan T. Sims	 
	  	Title: 	 Manager	 
	  	  

 

THE UNDERSIGNED GUARANTOR EXECUTED THIS AGREEMENT SOLELY FOR PURPOSES OF AGREEING TO SECTION 29.20 ABOVE.

 

 

	
“Guarantor”

	
HINES GLOBAL REIT PROPERTIES, L.P.

 

	  	
By:  Hines Global REIT, Inc.

        General Partner

	  	  
	 	By: 	 /s/ Ryan T. Sims	 
	  	Title: 	Chief Financial Officer and Secretary	 
	  	  

 

 

  

  

  

	  	  
	
“Seller”

	
GLL TERRY FRANCOIS BLVD., LLC,

a Delaware limited liability company

	  	  
	  	
By: GLL USA Management LLC

       Its Manager

	  	  
	 	By:        	 /s/ Jochecn Schnier	 	 
	 	Name: 	 Jochen Schnier	 
	  	Title: 	 Chief Operating Officer	 
	  	  
	 	By: 	/s/ James H. Cunningham, Jr. 	 
	 	Name: 	James H. Cunningham, Jr. 	 
	  	Title: 	Chief Financial Officer 	 
	  	  
	  	  

 

 

 

  

  

  

Acceptance by Escrow Holder:

 

First American Title Insurance Company hereby acknowledges that it has received originally executed counterparts or a fully executed original of the foregoing Agreement of Purchase and Sale and Joint Escrow Instructions 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:  August 7, 2012

	
First American Title Insurance Company

	  	  
	  	  
	  	By: 	 
/s/ Ted V. Bigornia

	
 

	  	  
	  	Name: 	Ted V. Birgornia	
 

	  	           Its:  Authorized AgentEX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT is dated as of August 30, 2012 and shall become effective as of the
1st day of October, 2012 (the “Effective Date”), by and among Southwest Bancorp, Inc., a
bank holding company organized under the laws of the State of Oklahoma (the “Company”), the
Stillwater National Bank and Trust Company, a national bank organized under the laws of the United
States, and the Bank of Kansas, a state bank chartered under the laws of the State of Kansas (each,
a “Bank” and, collectively, the “Banks” and collectively with the Company, the “Employer”), and
Mark W. Funke (the “Executive”).

BACKGROUND:

The Company and the Banks each desire to employ the Executive as its President and Chief
Executive Officer on the terms and conditions set forth below and Executive desires to accept such
employment subject to such terms and conditions.

AGREEMENT:

In consideration of the above premises and the mutual agreements hereinafter set forth,
effective as of the Effective Date, the parties hereby agree as follows:

1. Duties.

1.1 Positions. The Executive shall be employed as the President and Chief Executive
Officer of the Company and the President and Chief Executive Officer of each of the Subsidiary
Banks and shall perform and discharge faithfully the duties and responsibilities which may
reasonably be assigned to the Executive from time to time in connection with the conduct of the
businesses. The duties and responsibilities of the Executive shall be commensurate with similar
positions at other publicly-traded community bank holding companies and community banks. The
Executive shall report directly to the Boards of Directors. During the Term, at appropriate
intervals and with the consent of the Executive, the Company and each Subsidiary Bank shall
nominate the Executive as a candidate for election or re-election to their respective Boards of
Directors, subject to any necessary regulatory non-objections.

1.2 Full-Time Status. In addition to the duties and responsibilities specifically
assigned to the Executive pursuant to Section 1.1 hereof, the Executive shall:  

(a) subject to Section 1.3, devote substantially all of the Executive’s time,
energy and skill during regular business hours to the performance of the duties of the
Executive’s employment (reasonable vacations and reasonable absences due to illness
excepted) and faithfully and industriously perform such duties;

(b) diligently follow and implement all reasonable and lawful management policies and
decisions communicated to the Executive by the Board of Directors; and

(c) timely prepare and forward to the Board of Directors all reports and accountings as
may be requested of the Executive.

1.3 Permitted Activities. The Executive shall devote substantially all of the
Executive’s entire business time, attention and energies to the Business of the Employer and shall
not during the Term be engaged (whether or not during normal business hours) in any other
significant business or professional activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage, but as long as the following activities do not unreasonably
interfere with the Executive’s obligations to the Employer, this shall not be construed as
preventing the Executive from:

(a) investing the Executive’s personal assets in any manner which will not require any
material services on the part of the Executive in the operation or affairs of the entity and
in which the Executive’s participation is primarily that of an investor; provided that such
investment activity following the Effective Date shall not result in the Executive owning
beneficially at any time one percent (1%) or more of the equity securities of any Competing
Business; or

(b) participating in civic and professional affairs and organizations and conferences,
preparing or publishing papers or books, or teaching or serving on the board of directors of
an entity so long as any such participation does not unreasonably interfere with the ability
of the Executive to effectively discharge the Executive’s duties hereunder; provided
further, that the Board of Directors may direct the Executive in writing to resign from any
such organization and/or cease such activities should the Board of Directors reasonably
conclude that continued membership and/or activities of the type identified would not be in
the best interests of the Employer.

2. Term.

(a) Subject to earlier termination in accordance with Subsection (b) below,
this Agreement shall remain in effect for the Term. If the Agreement is in effect at the
end of the Initial Term, the Term shall be renewed automatically for successive twelve-month
periods unless and until one party gives written notice to the other of its or the
Executive’s intent not to extend this Agreement with such written notice to be given not
less than ninety (90) days prior to the end of the Initial Term or any such twelve-month
period. In the event such notice of non-extension is properly given, this Agreement shall
terminate at the end of the remaining Term then in effect even if the Executive continues to
provide services to the Employer as an employee following the expiration of the Term and the
resulting termination of the Agreement.

(b) Notwithstanding the provisions of Subsection (a), the Executive shall be
employed on an at-will basis in that, at any time during the Term, the Employer and the
Executive may each effect an earlier termination of the Term and a resulting termination of
the Executive’s employment pursuant to Section 4.1 hereof.

3. Compensation. The Employer shall pay the Executive the following during the Term,
except as otherwise provided below:

3.1 Annual Base Salary. The Executive shall be compensated at an annual base rate of
Four Hundred and Twenty-Five Thousand and No/100 Dollars ($425,000.00) (the “Annual Base Salary”).
The Executive’s Annual Base Salary shall be payable in accordance with the Employer’s normal
payroll practices.

3.2 Signing Bonus. The Employer shall pay the Executive a one-time signing bonus
comprised of the following components:

(a) a payment in cash equal to Forty Thousand and No/100 Dollars ($40,000.00), payable
within thirty (30) days following the Effective Date; and

(b) a restricted stock award representing the opportunity to earn a number of shares of
Company common stock having a value equal to Four Hundred and Sixty Thousand and No/100
Dollars ($460,000.00) based on the per share closing price of Company common stock as of
today’s date as reported by the NASDAQ Stock Market. In determining the number of shares of
Company common stock subject to the restricted stock award by applying the foregoing
formula, the number of shares will be rounded to the nearest one hundred share increment.
The restricted stock award will be granted within forty-five (45) days of the Effective Date
and will vest one-hundred eighty (180) days after the grant date, provided the Executive
remains in the continuous employ of the Employer through such date, and will be subject to
such other general terms and conditions in the form of award employed by the Employer for
grants of this type. The restricted shares will be held in escrow by the Employer until
vested and will be delivered to the Executive as soon as practicable thereafter.

3.3 Annual Incentive Compensation.

(a) The Executive shall be eligible to receive annual bonus compensation, if any, as
may be determined by, and based on performance measures established by, the Board of
Directors upon the recommendation of the Compensation Committee of the Board of Directors
(the “Committee”) consistent with the Employer’s strategic planning process and in
consultation with the Executive, pursuant to any incentive compensation program as may be
adopted from time to time by the Board of Directors, based on recommendations by the
Committee (an “Annual Bonus”). The Executive shall be eligible for an Annual Bonus
opportunity equal to one hundred percent (100%) of Annual Base Salary.

(b) Any Annual Bonus earned shall be payable in cash and/or shares of Company common
stock, as determined by the Board of Directors, in the year following the year in which the
bonus is earned in accordance with the Employer’s normal practices for the payment of
short-term incentives, but not later than March 15th.

(c) Notwithstanding any provision of Subsections (a) and (b) above to the
contrary, a minimum Annual Bonus for each of calendar years 2012 and 2013 shall be payable
in the amount of Three Hundred Thousand and No/100 Dollars ($300,000.00), two-thirds of each
such minimum Annual Bonus shall be paid in cash and the remaining one-third shall be paid in
the form of a restricted stock award. In determining the number of shares of Company common
stock subject to each such restricted stock award, the per share closing price of Company
common stock shall be averaged over the period commencing with the thirtieth-day preceding
December 31 of the applicable calendar year (i.e., 2012 in the case of the first minimum
Annual Bonus and 2013 in the case of the second Annual Bonus) and ending on the thirtieth
day after such December 31 as such closing prices are reported by the NASDAQ Stock Market.
The number of shares subject to each restricted stock award will be rounded to the nearest
one hundred share increment. Each restricted stock award will be granted at the time annual
bonuses are paid for the applicable calendar year in accordance with the Employer’s normal
practices for the payment of short-term incentives, but not later than March
15th. Each restricted stock award will vest in full on the third anniversary of
the grant date, subject to the Executive’s continuing employment, and will be subject to
such other general terms and conditions in the form of award employed by the Employer for
grants of this type. The restricted shares will be held in escrow by the Employer until
vested and will be delivered to the Executive as soon as practicable thereafter.

(d) Commencing with calendar year 2014 and continuing through calendar year 2016, fifty
percent (50%) of the Executive’s Annual Bonus opportunity shall be subject to the following
performance conditions:

(1) no Subsidiary Bank has a Classified Asset Ratio (“CAR”), determined at
the end of the applicable calendar year greater than: (i) forty percent (40%) in
calendar year 2014; (ii) thirty-five percent (35%) in calendar year 2015; and
(iii) thirty-five percent (35%) in calendar year 2016. For purposes of this
Subsection (d), CAR is defined as: (Total Classified Loans + Other Real
Estate Owned) / (Tier 1 Capital + Allowance for Loan and Lease Losses);

(2) the Employer is not under any memorandum of understanding or formal
agreement with any regulator during the applicable calendar year or at any time
prior to the date the Annual Bonus is otherwise payable; and

(3) Total Shareholder Return for the applicable calendar year is in the top
twenty-fifth (25th) percentile of total shareholder returns for banks
in a mutually agreed upon peer group; provided, however, with respect to any
applicable calendar year, if the only criterion precluding payment of the portion
of the Annual Bonus subject to the conditions in this Subsection (d) is
the Total Shareholder Return condition and the Company’s Total Shareholder Return
for such calendar year exceeds the fiftieth (50th ) percentile, then a
percentage of the portion of the Annual Bonus subject to the conditions in this
Subsection (d) will be payable. The percentage payable shall be four
percent (4%) multiplied by the number of whole numbers above the fiftieth
(50th) percentile ranking that the Company achieves for its Total
Shareholder Return.

The fifty percent (50%) of each Annual Bonus opportunity that is subject to the provisions
of this Subsection (d) shall be forfeited if and to the extent the condition(s)
set forth in Clauses (1), (2) or (3) are not satisfied. The remaining fifty
percent (50%) of each such Annual Bonus opportunity for calendar years 2014 through 2016
shall be subject to such discretionary performance criteria as may be established by the
Committee pursuant to Subsection (a) above.

(e) The payment of any Annual Bonus shall be subject to any approvals or non-objections
required by any regulator of the Employer, and any other restrictions under applicable law.

3.4 Equity Compensation.

(a) As soon as practicable following the Effective Date, the Executive shall be granted
a one-time performance stock award entitling him to earn up to 138,600 shares of Company
common stock. The performance measure shall be Total Shareholder Return and continuing
employment shall be a service condition both during and for a three-year period following
the date the applicable performance measure is satisfied. The number of shares satisfying
the performance measure shall be based upon the level of Total Shareholder Return achieved
over each of the calendar years from 2013 through 2016 in accordance with the following
table:

	 	 	 
	Total Shareholder Return Achieved
	 	Performance Shares Satisfying

the Performance Measure

	 
	 	 

	20%

30%

40%

50%

60%

70%

80%

90%
	 	3,850

7,700

11,550

15,400

19,250

23,100

26,950

30,800

To the extent a Total Shareholder Return for any applicable calendar year is earned above
the threshold percentage level (i.e., twenty percent (20%)), any previously unearned
performance shares allocated to a lower percentage level under the table above shall be
deemed to have satisfied the performance measure for that calendar year. Once considered to
have met a performance measure for an applicable calendar year, performance shares are not
eligible to be earned again despite successive achievement of Total Shareholder Returns at
or above the threshold level. Performance shares granted pursuant to this Subsection
(a) will be held in escrow by the Employer until earned and vested. Performance shares
that have been earned shall be subject to a three-year vesting period commencing with the
last day of the calendar year for which the performance shares are considered to have been
earned Vested performance shares will be delivered to the Executive as soon as practicable
after the expiration of the vesting period. The performance stock award will be subject to
the Executive’s continuing employment and will be subject to such other general terms and
conditions in the form of award employed by the Employer for grants of this or similar type.

Notwithstanding the preceding provisions of this Subsection (a), the number of
performance shares that can be earned with respect to any applicable calendar year is capped
in accordance with the following table:

	 	 	 
	Applicable Calendar Year	 	Performance Share Cap
	2013	 	34,650
	2014

2015

2016

	 	69,300

103,950

138,600

Any performance shares that have met a performance measure for an applicable calendar year
that exceed the performance share cap for that calendar year may be earned in a subsequent
applicable calendar year if the performance measure attained for any such subsequent
applicable calendar year treat the performance shares as having been earned for that
subsequent applicable calendar year in accordance with the first table set forth in this
Subsection (a). The numbers set forth in the tables of this Subsection (a)
shall be adjusted to reflect any stock splits, stock dividends or similar events affecting
            shares of Company common stock.

(b) As soon as practicable following the first day of calendar years 2013 through 2016,
the Executive shall be granted an annual performance stock award each entitling him to earn
up to 14,400 shares of Company common stock. The performance measure shall be Return on
Average Equity and continuing employment shall be a service condition both during and for a
three-year period following the date the applicable performance measure is satisfied. The
number of shares satisfying the performance measure shall be based upon the percentage of
Return on Average Equity achieved for the calendar year for which the award is granted in
accordance with the following table:

	 	 	 
	Return on Average Equity

	 	Performance Shares Earned
	 

	 	 
	7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

	 	3,600

5,400

7,200

9,000

10,800

12,600

14,400

Performance shares granted pursuant to this Subsection (b) will be held in escrow by
the Employer until earned and vested. Performance shares that have been earned shall be
subject to a three-year vesting period commencing with the last day of the calendar year for
which the performance shares are considered to have been earned Vested performance shares
will be delivered to the Executive as soon as practicable after the expiration of the
vesting period. The performance stock award will be subject to the Executive’s continuing
employment and will be subject to such other general terms and conditions in the form of
award employed by the Employer for grants of this or similar type.

The numbers set forth in the tables of this Subsection (b) shall be adjusted to
reflect any stock splits, stock dividends or similar events affecting shares of Company
common stock.

(c) With respect to the performance stock awards contemplated under both
Subsections (a) and (b), each of the following conditions must be satisfied for any
performance shares to be earned under Subsection (a) with respect to a calendar year
even if the Total Shareholder Return performance measure for that calendar year is satisfied
and for any performance shares to be earned under Subsection (b) even if the Return
on Average Equity performance measure for that calendar year is satisfied:

(1) no Subsidiary Bank has a CAR, determined at the end of the applicable
calendar year greater than: (i) forty percent (40%) in calendar year 2014; (ii)
thirty-five percent (35%) in calendar year 2015; and (iii) thirty-five percent
(35%) in calendar year 2016;

(2) the Company, on a consolidated basis, and each Subsidiary Bank must
maintain a “common equity tier 1 capital ratio” (as defined by the Employer’s
banking regulators) of not less than the greater of (i) nine percent (9%) and (ii)
two percent (2%) more than the minimum standard set by the Employer’s banking
regulators, determined as of the last day of each applicable calendar year; and

(3) the Employer is not under any memorandum of understanding or formal
agreement with any regulator during the applicable calendar year.

If any one of the foregoing conditions is not satisfied for an applicable calendar year,
then no performance shares shall be considered earned with respect to that calendar year
with respect to the performance stock award under Subsection (a) and the annual
performance stock awarded under Subsection (b) for that calendar year shall be
forfeited.

(d) For calendar years from and after 2017, the Executive shall be eligible to
participate in equity awards on no less favorable a basis than similarly situated
executives.

(e) All shares of Company common stock issued to the Executive pursuant to the terms of
this Agreement shall be further subject to restrictions on transferability unless and until
the Executive holds fully earned and vested shares of Company common stock having a fair
market value that equals or exceeds three (3) times his then Annual Base Salary. Once the
Executive attains the threshold ownership level, any shares of Company common stock
exceeding the threshold ownership level shall not be subject to the transferability
restrictions. However, if once attained, the shares of Company common stock owned by the
Executive fall below the threshold ownership level (whether due to a decline in the value of
the shares or otherwise), the Executive shall be obligated to attain once again the
threshold ownership level, which obligation remains in effect throughout the Term. Any
            shares of Company common stock subject to awards granted after the date of any failure to
maintain the threshold ownership level shall be subject to the restrictions on
transferability contemplated by this Subsection (e) until the threshold ownership
level is once again attained. This transferability restriction, however, shall not preclude
the Executive from tendering back to the Company or selling to third parties a number of
            shares of Company common stock having a fair market value equal to the minimum required tax
withholding obligations resulting from earning and becoming vested in shares subject to
equity awards granted pursuant to this Agreement. For purposes of this Subsection
(e), the threshold ownership level shall be measured as of each December 31 during the
Term and the determination of the value of Company common stock for this purpose shall be
based on the per share closing price of Company common stock averaged over the thirty-day
period immediately preceding such December 31, as such closing prices are reported by the
NASDAQ Stock Market. If the target ownership level is satisfied as of any such December 31,
it shall be deemed satisfied until the immediately succeeding December 31.

(f) The Executive agrees to waive his right to any dividends otherwise payable on
            shares of Company common stock awarded pursuant to this Section 3.4 with respect to
record dates falling on dates prior to the date the underlying shares of Company common
stock are earned in accordance with the terms of the award(s).

3.5 Business and Professional Education Expenses; Memberships. Subject to the
reimbursement policies from time to time adopted by the Board of Directors and consistent with the
annual budget approved for the period during which an expense was incurred, the Employer
specifically agrees to reimburse the Executive for reasonable and necessary business expenses
incurred by the Executive in the performance of the Executive’s duties hereunder; provided,
however, that as a condition of any such reimbursement, the Executive shall submit verification of
the nature and amount of such expenses in accordance with such reimbursement policies and in
sufficient detail to comply with rules and regulations promulgated by the United States Treasury
Department. Examples of appropriate categories of expenses include membership in professional and
civic organizations, professional development, and customer entertainment. The Executive
acknowledges that the Employer makes no representation with respect to the taxability or
nontaxability of the benefits provided under this Section 3.5.

3.6 Paid Vacation. The Executive shall be entitled to no less than twenty-five (25)
days of paid vacation per calendar year, prorated for any partial calendar year of service. The
provisions of this Section 3.6 shall apply notwithstanding any less generous paid leave
policy then maintained by the Employer, but the use of Executive’s paid vacation leave shall
otherwise be determined in accordance with the Employer’s paid leave policy as in effect from time
to time.

3.7 Benefits. In addition to the benefits specifically described in this Agreement,
the Executive shall be entitled to such benefits as may be available from time to time to similarly
situated executives. All such benefits shall be awarded and administered in accordance with the
written terms of any applicable benefit plan or, if no written terms exist, the Employer’s standard
policies and practices relating to such benefit.

3.8 Withholding. The Employer may deduct from each payment of compensation hereunder
all amounts required to be deducted and withheld in accordance with applicable federal and state
income, FICA and other withholding requirements.

3.9 Reimbursement of Expenses; In-Kind Benefits. All expenses eligible for
reimbursements described in this Agreement must be incurred by the Executive during the Term of
this Agreement to be eligible for reimbursement. Any in-kind benefits provided by the Employer
must be provided during the Term of this Agreement. The amount of reimbursable expenses incurred,
and the amount of any in-kind benefits provided, in one taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits provided, in any other taxable year. Each category
of reimbursement shall be paid as soon as administratively practicable, but in no event shall any
such reimbursement be paid after March 15th of the calendar year following the calendar
year in which the expense was incurred. Neither rights to reimbursement nor in-kind benefits are
subject to liquidation or exchanges for other benefits.

3.10 Clawback of Compensation. The Executive agrees to repay any compensation
previously paid or otherwise made available to the Executive under this Agreement that is subject
to recovery under any applicable law (including any rule of any exchange or service through which
the securities of the Company are then traded), including, but not limited to, the following
circumstances:

(a) where such compensation was in excess of what should have been paid or made
available because the determination of the amount due was based, in whole or in part, on
materially inaccurate financial information of the Employer where the Employer has been
required to prepare an accounting restatement due to material noncompliance of the Employer,
as a result of misconduct, with any financial reporting requirement under the federal
securities laws;

(b) where the Executive has committed, is substantially responsible for, or has
violated, the respective acts, omissions, conditions, or offenses outlined under 12 C.F.R.
Section 359.4(a)(4); and

(c) if a Subsidiary Bank becomes, and for so long as a Subsidiary Bank remains, subject
to the provisions of 12 U.S.C. Section 1831o(f), where such compensation exceeds the
restrictions imposed on the senior executive officers of such an institution.

The Executive agrees to return promptly any such compensation properly identified by the Employer
by written notice provided pursuant to Section 13. If the Executive fails to return such
compensation promptly, the Executive agrees that the amount of such compensation may be deducted
from any and all other compensation owed to the Executive by the Employer. If the Executive is
then employed by the Employer, the Executive acknowledges that the Employer may take appropriate
disciplinary action (up to, and including, Termination of Employment) if the Executive fails to
return such compensation. The Executive acknowledges the Employer’s rights to engage in any legal
or equitable action or proceeding in order to enforce the provisions of this Section 3.10.
The provisions of this Section 3.10 shall be modified to the extent, and remain in effect
for the period, required by applicable law.

3.11 Apportionment of Obligations. The obligations for the payment of the amounts
otherwise payable pursuant to this Section 3 shall be apportioned between the Company and
the Banks as they may agree from time to time in their sole discretion.

4. Termination; Suspension or Reduction of Benefits.

4.1 Termination of Employment. During the Term, the Termination of Employment of the
Executive and this Agreement may be effected immediately in the event of (a) a termination of the
Executive by the Employer for Cause; (b) a termination of the Executive by the Employer without
Cause; (c) a resignation by the Executive for Good Reason; (d) a resignation by the Executive for
Constructive Termination within twelve (12) months following a Change of Control; (e) a resignation
by the Executive without Good Reason; or (f) the Executive’s death or Disability. Notwithstanding
anything to the contrary in the preceding sentence, the Executive must give at least ninety (90)
days advance written notice prior to the Executive’s effective date of resignation pursuant to
Section 4.1(e).

4.2 Severance. If, during the Term, the Executive experiences a Termination of
Employment by the Employer without Cause pursuant to Section 4.1(b) or the Executive
resigns the Executive’s employment with the Employer (i) for Good Reason pursuant to Section
4.1(c), or (ii) for Constructive Termination within twelve (12) months following a Change of
Control pursuant to Section 4.1(d), then, upon such Termination of Employment, for a period
of twelve (12) months thereafter, the Employer will pay severance to the Executive, with the amount
of each monthly payment equal to the Applicable Fraction of the Annual Base Salary in effect as of
the effective date of the Termination of Employment. Monthly severance payments, or portions
thereof, shall be paid in accordance with the Employer’s regular payroll practices, commencing with
the first payroll date that is more than sixty (60) days following the date of the Executive’s
Termination of Employment. In addition, any service condition contained in any equity awards
outstanding in favor of the Executive shall be deemed to have been satisfied immediately prior to
the effective date of the Termination of Employment and shares of Company common stock subject to
any performance stock awards granted pursuant to Subsections (a) and (b) of Section
3.4 shall be earned if and to the extent applicable performance measures are attained and the
applicable conditions in Subsection (c) of Section 3.4 remain satisfied as of the fiscal
year ending with or within the twelve-month period immediately following the effective date of the
Termination of Employment.

4.3 Golden Parachute Limitations. Notwithstanding any provision of this Agreement to
the contrary, if any amount or benefit to be paid or provided under this Agreement or otherwise
payable to the Executive by the Employer would be an “Excess Parachute Payment,” within the meaning
of Section 280G of the Code, but for the application of this sentence, then the payments and
benefits to be paid or provided under this Agreement will be reduced to the minimum extent
necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as
so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing
reduction will be made only if and to the extent that such reduction would result in an increase in
the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into
account the excise tax imposed pursuant to Section 4999 of the Code, any tax imposed by any
comparable provision of state law, and any applicable federal, state and local income and
employment taxes). Whether requested by the Executive or the Employer, the determination of
whether any reduction in such payments or benefits to be provided under this Agreement or otherwise
is required pursuant to the preceding sentence will be made at the expense of the Employer by the
Employer’s independent accountants. In the event the payments to the Executive are required to be
reduced pursuant to this Section 4.3, the portions of the payments that would be paid
latest in time will be reduced first and if multiple portions of the payments to be reduced are
paid at the same time, any non-cash payments will be reduced before any cash payments, and any
remaining cash payments will be reduced pro rata.

4.4 Effect of Termination of Employment.

(a) Upon Executive’s Termination of Employment hereunder for any reason, the Employer
shall have no further obligations to the Executive or the Executive’s estate with respect to
this Agreement, except for the payment of any compensation, benefits or other amounts earned
and owing under Section 3 through the effective date of the termination of the
Agreement and, if applicable, any payments set forth in Section 4.2.

(b) Notwithstanding any other provision of this Agreement to the contrary, as a
condition of the Employer’s provision of severance benefits in connection with the
Executive’s Termination of Employment pursuant to Section 4.2, the Executive must
execute within such period of time following Termination of Employment as is permitted by
the Employer (and not timely revoke during any revocation period provided pursuant to such
release) a release and non-disparagement agreement in substantially the form attached hereto
as Exhibit “A.” Any payments of severance shall accrue from the date of the Executive’s
Termination of Employment, with any accrued but unpaid severance being paid on the date of
the first payment as provided in Section 4.2.

(c) If the Executive is a member of the Board of Directors and the Executive’s
employment is terminated by the Employer or by the Executive pursuant to Section
4.1, the Executive shall immediately resign from the Executive’s position on the
Board(s) of Directors, effective no later than the date the Executive’s employment is
terminated.

(d) Notwithstanding any provision in the Agreement to the contrary, to the extent
necessary to avoid the imposition of tax on the Executive under Code Section 409A, any
payments that are otherwise payable to the Executive within the first six (6) months
following the effective date of Termination of Employment, shall be suspended and paid as
soon as practicable following the end of the six-month period following such effective date
if, immediately prior to the Executive’s Termination of Employment, the Executive is
determined to be a “specified employee” (within the meaning of Code Section
409A(a)(2)(B)(i)) of the Employer (or any related “service recipient” within the meaning of
Code Section 409A and the regulations thereunder). Any payments suspended by operation of
the foregoing sentence shall be paid as a lump sum within thirty (30) days following the end
of such six-month period. Payments (or portions thereof) that would be paid latest in time
during the six-month period will be suspended first.

(e) Notwithstanding any provision in this Agreement to the contrary, if the Employer
elects not to renew the Term of this Agreement at the end of the Initial Term or any
twelve-month anniversary thereof pursuant to Section 2(a), any service condition
contained in any equity awards outstanding in favor of the Executive shall be deemed to have
been satisfied immediately prior to the effective date of the Termination of Employment and
            shares of Company common stock subject to any performance stock awards awarded pursuant to
Subsections (a) and (b) of Section 3.4 shall be earned if and to the extent
applicable performance measures are attained and the applicable conditions in Subsection
(c) of Section 3.4 remain satisfied as of the fiscal year ending with or within
the twelve-month period immediately following the effective date of the Termination of
Employment.

4.5 Regulatory Limitations.

(a) FDIC Golden Parachute Limitations. Notwithstanding anything contained in
this Agreement to the contrary, no payments shall be made pursuant to Section 4 or
any other provision herein or otherwise in contravention of the requirements of Section
18(k) of the Federal Deposit Insurance Act (the “FDIA”) (12 U.S.C. 1828(k)) and Part 359 of
the FDIC Rules and Regulations, 12 C.F.R. 359 (collectively, the “FDIC Golden Parachute
Restrictions”). In the event any such payments become due and payable under this Agreement
at a time when such payments would constitute “golden parachute payments,” other than
“golden parachute payments” for which the concurrence or consent of the appropriate federal
banking agency has been received as contemplated by the FDIC Golden Parachute Restrictions,
the obligation on the part of the Employer to make any such payments shall become null and
void. In addition, nothing in the preceding sentence shall impose an obligation on the part
of the Employer to petition the FDIC (and/or other regulatory agency having jurisdiction
over the Employer) for its concurrence or consent.

(b) Other Bank Regulatory Limitations. If the Executive is removed from office
and/or permanently prohibited from participating in the conduct of the affairs of any
depository institution by an order issued under Section 8(e) or 8(g) of the FDIA (12 U.S.C.
1818(e) and (g)), the Employer shall have the right to terminate all obligations of the
Employer under this Agreement as of the effective date of such order, except for the payment
of Annual Base Salary due and owing under Section 3.1 on the effective date of said
order, and reimbursement under Section 3.5 of expenses incurred as of the effective
date of termination. If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of a Subsidiary Bank’s affairs by a notice
served under Section 8(e) or 8(g) of the FDIA (12 U.S.C. 1818(e) and (g)), the Employer
shall have the right to suspend all obligations of the Employer under this Agreement as of
the date of service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Employer shall reinstate prospectively (in whole or in part) any of its
obligations which were suspended. If the FDIC is appointed receiver or conservator under
Section 11(c) of the FDIA (12 U.S.C. 1821(c)) of the Company or any depositary institution
controlled by the Company, the Employer shall have the right to terminate all obligations of
the Employer under this Agreement as of the date of such receivership or conservatorship,
other than any rights of the Executive that vested prior to such appointment. If the
Employer is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under
this Agreement shall terminate as of the date of default, but the vested rights of the
parties shall not be affected. If the FDIC provides open bank assistance under Section
13(c) of the FDIA (12 U.S.C. 1823(c)) to the Company or any depositary institution
controlled by the Company, but excluding any such assistance provided to the industry
generally, the Employer shall have the right to terminate all obligations of the Employer
under this Agreement as of the date of such assistance, other than any rights of the
Employee that vested prior to the FDIC action. If the FDIC requires a transaction under
Section 13(f) or 13(k) of the FDIA (12 U.S.C. 1823(f) and (k)) by the Company or any
depository institution controlled by the Company, the Employer shall have the right to
terminate all obligations of the Employer under this Agreement as of the date of such
transaction, other than any rights of the Employee that vested prior to the transaction.
Notwithstanding the foregoing provisions of this Section 4.5 (b), any vested rights
of the Executive may be subject to such modifications that are consistent with the authority
of the FDIC.

(c) Regulatory Approval. Notwithstanding the timing for the payment of monthly
severance amounts described in Section 4.2, no such payments shall be made or
commence, as applicable, that require the concurrence or consent of the appropriate federal
banking agency of the Employer pursuant to 12 C.F.R. Section 359 prior to the receipt of
such concurrence or consent. Any payments suspended by operation of this Section
4.5(c) shall be paid as a lump sum within thirty (30) days following receipt of the
concurrence or consent of the appropriate federal banking agency of the Employer or as
otherwise directed by such federal banking agency.

(d) State Banking Limitations. All obligations under this Agreement are
further subject to such conditions, restrictions, limitations and forfeiture provisions as
may separately apply pursuant to any applicable state banking laws.

5. Employer Information.

5.1 Ownership of Employer Information. All Employer Information received or
developed by the Executive or by the Employer while the Executive is employed by the Employer will
remain the sole and exclusive property of the Employer.

5.2 Obligations of the Executive. The Executive agrees:

(a) to hold Employer Information in strictest confidence;

(b) not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate
Employer Information or any physical embodiments of Employer Information to any unauthorized
recipient; and

(c) in any event, not to take any action causing or fail to take any action necessary
in order to prevent any Employer Information from losing its character or ceasing to qualify
as Confidential Information or a Trade Secret;

provided, however, that none of the foregoing obligations shall preclude the Executive from making
any disclosures of Employer Information required by law. This Section 5 shall survive for
a period of two (2) years following termination of this Agreement for any reason with respect to
Confidential Information, and shall survive termination of this Agreement for any reason for so
long as is permitted by applicable law, with respect to Trade Secrets.

5.3 Delivery upon Request or Termination. Upon request by the Employer, and in any
event upon the Executive’s Termination of Employment with the Employer, the Executive will promptly
deliver to the Employer all property belonging to the Employer, including, without limitation, all
Employer Information then in the Executive’s possession or control.

6. No Appropriation. The Executive agrees that during the Executive’s employment by the
Employer hereunder, and for the duration of the Post-Termination Period, the Executive will not
(except on behalf of or with the prior written consent of the Employer) appropriate for his own
benefit or the benefit of a third party any banking opportunity properly belonging to the Employer
the usurpation of which constitutes a breach of the Executive’s fiduciary duty as an officer of the
Employer under applicable law.

7. Non-Solicitation of Customers. The Executive agrees that during the Executive’s
employment by the Employer hereunder, and in the event of the Termination of Employment, regardless
of the reason, for the duration of the Post-Termination Period, the Executive will not (except on
behalf of or with the prior written consent of the Employer) on the Executive’s own behalf or in
the service or on behalf of others, solicit, divert or appropriate or attempt to solicit, divert or
appropriate, any business from any of the Employer’s customers, including prospective customers
actively sought by the Employer, with whom the Executive has or had material contact during the
last two (2) years of the Executive’s employment with Employer, for purposes of providing products
or services that are competitive with those provided by the Employer.

8. Non-Solicitation of Employees. The Executive agrees that during the Executive’s
employment by the Employer hereunder, and in the event of the Termination of Employment, regardless
of the reason, for the duration of the Post-Termination Period, the Executive will not (except on
behalf of or with the prior written consent of the Employer) on the Executive’s own behalf or in
the service or on behalf of others, solicit, or recruit or attempt to solicit, or recruit, any
employee of the Employer with whom the Executive had material contact during the last two (2) years
of the Executive’s employment, whether or not such employee is a full-time employee or a temporary
employee of the Employer, such employment is pursuant to written agreement, for a determined
period, or at will.

9. Non-disparagement. The Executive agrees that during the Executive’s employment by the
Employer hereunder, and for a period of one (1) year thereafter, the Executive will not make any
untruthful statement (written or oral) that could reasonably be perceived as disparaging to the
Employer or any Affiliate. Employer agrees that during the Executive’s employment by the Employer
hereunder, and for a period of one (1) year thereafter, the members of their respective Boards of
Directors and all executive officers of the Company and the Subsidiary Banks (collectively, the
“Persons to be Advised”) will not make any untruthful statement (written or oral) that could
reasonably be perceived as disparaging to the Executive. Employer will advise the Persons to be
Advised that a non-disparagement agreement is in effect, and will use reasonable efforts to enforce
compliance with this non-disparagement agreement. Notwithstanding the foregoing agreement, the
parties hereto recognize and acknowledge that the Employer will not be liable for unauthorized
remarks by individuals employed by or otherwise associated with the Employer, other than the
Persons to be Advised and if the Persons to be Advised are required by any applicable law,
regulation, statute, subpoena, court order, or other compulsory process to disclose information
related to the Executive’s employment, such disclosure of truthful information shall not constitute
a breach of this Agreement. Moreover, this Section 9 shall not apply to any
communications: (a) between the Employer and its independent public auditors; (b) necessary to
comply fully with all applicable requirements and policies of federal and state laws; (c) necessary
to cooperate fully with any investigation or request for information from any state or federal
governmental agency, stock exchange, or regulatory organization; (d) necessary in the course of
preparing and filing appropriate tax returns or dealing with federal or state taxing authorities;
or (e) made in connection with any judicial or administrative proceeding or arbitration with
respect to which such communications are relevant.

10. Remedies. The Executive agrees that the covenants contained in Sections 5 through
9 of this Agreement are of the essence of this Agreement; that each of the covenants is
reasonable and necessary to protect the business, interests and properties of the Employer, and
that irreparable loss and damage will be suffered by the Employer should the Executive breach any
of the covenants. Therefore, the Executive agrees and consents that, in addition to all the
remedies provided by law or in equity, the Employer shall be entitled to a temporary restraining
order and temporary and permanent injunctions to prevent a breach or contemplated breach of any of
the covenants. If the Employer alleges that the Executive has materially breached any of the
Executive’s obligations pursuant to Sections 5, 6, 7, 8 and/or 9 and the Executive disputes such
allegation, the Employer may withhold any future payments owed to the Executive hereunder until the
dispute is finally resolved or determined by either mutual agreement of the parties or by
arbitration pursuant to Section 16. The Employer and the Executive agree that all remedies
available to the Employer shall be cumulative.

11. Severability. The parties agree that each of the provisions included in this Agreement
is separate, distinct and severable from the other provisions of this Agreement and that the
invalidity or unenforceability of any Agreement provision shall not affect the validity or
enforceability of any other provision of this Agreement. Further, if any provision of this
Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a
conflict between the provision and any applicable law or public policy, the provision shall be
redrawn to make the provision consistent with, and valid and enforceable under, the law or public
policy.

12. No Set-Off by the Executive. The existence of any claim, demand, action or cause of
action by the Executive against the Employer whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.

13. Notice. All notices, requests, waivers and other communications required or permitted
hereunder shall be in writing and shall be either personally delivered, sent by reputable overnight
courier service or mailed by first class mail, return receipt requested, to the recipient at the
address below indicated:

	 	 	 	If to the Company:

Southwest Bancorp, Inc.

Attn: Chairman, Board of Directors

608 South Main Street

Stillwater, Oklahoma 74074

	 	 	 	If to the Stillwater National Bank and Trust Company:

Stillwater National Bank and Trust Company

Attn: Chairman, Board of Directors

608 South Main Street

Stillwater, Oklahoma 74074

	 	 	 	If to the Bank of Kansas:

Bank of Kansas

Attn: Chairman, Board of Directors

1002 Central Street

Harper, Kansas 67058

If to the Executive:

Mark W. Funke

4801 Oakdale Farm Road

Edmond, Oklahoma 73013

or such other address or to the attention of such other person as the recipient party shall have
specified by prior written notice to the sending party. All such notices, requests, waivers and
other communications shall be deemed to have been effectively given: (a) when personally delivered
to the party to be notified; (b) five (5) business days after deposit in the United States Mail
postage prepaid by certified or registered mail with return receipt requested at any time other
than during a general discontinuance of postal service due to strike, lockout, or otherwise (in
which case such notice, request, waiver or other communication shall be effectively given upon
receipt) and addressed to the party to be notified as set forth above; or (c) two (2) business days
after deposit with a national overnight delivery service, postage prepaid, addressed to the party
to be notified as set forth above with next-business-day delivery guaranteed. A party may change
that party’s notice address given above by giving the other party ten (10) days’ written notice of
the new address in the manner set forth above.

14. Successors; Assignment. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the
Employer, as applicable, including without limitation, a purchaser of all or substantially all the
assets of the Employer. If the Agreement is assigned pursuant to the foregoing sentence, the
assignment shall be by novation and the Employer shall have no further liability hereunder, and the
successor or assign, as applicable, shall become the “Employer” hereunder, but the Executive will
not be deemed to have experienced a Termination of Employment by virtue of such assignment. The
Agreement is a personal contract and the rights and interest of the Executive may not be assigned
by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive
and the Executive’s personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.

15. Waiver. A waiver by one party to this Agreement of any breach of this Agreement by any
other party to this Agreement shall not be effective unless in writing, and no waiver shall operate
or be construed as a waiver of the same or another breach on a subsequent occasion.

16. Arbitration. The parties agree that Executive’s employment and this Agreement relate
to interstate commerce, and that any and all disputes, claims or controversies between Executive
and the Employer which may arise out of or relate to Executive’s employment relationship or this
Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the
termination of this Agreement. Any arbitration shall be before a single arbitrator in accordance
with the American Arbitration Association’s National Rules for the Resolution of Employment
Disputes pertaining to individually-negotiated contracts and shall be undertaken pursuant to the
Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma unless the parties
mutually agree on another location. Unless parties mutually agree to self-administer the
arbitration or to use a different arbitration service, it will be administered by the Dallas, Texas
office of the American Arbitration Association. The decision of the arbitrator will be enforceable
in any court of competent jurisdiction. The parties agree that punitive, liquidated or indirect
damages shall not be awarded by the arbitrator unless such damages would have been awarded by a
court of competent jurisdiction. The arbitrator shall also have the discretion and authority to
award costs and attorney fees to the prevailing party or, alternatively, may order each party to
bear its own costs and attorney fees in connection with the arbitration to the extent permitted by
applicable law. Nothing in this Agreement to arbitrate, however, shall preclude the Employer from
obtaining injunctive relief from a court of competent jurisdiction prohibiting any breaches by
Executive of Sections 5 through 10 of this Agreement.

17. Applicable Law and Choice of Forum. This Agreement shall be construed and enforced
under and in accordance with the laws of the State of Oklahoma without regard to its conflicts of
law principles. The parties agree that any appropriate federal or state court located in, or
having jurisdiction over, Oklahoma County, Oklahoma shall have exclusive jurisdiction of any case
or controversy arising under or in connection with this Agreement shall be a proper forum in which
to adjudicate such case or controversy. The parties consent and waive any objection to the
jurisdiction or venue of such courts.

18. Interpretation. Words importing any gender include all genders. Words importing the
singular form shall include the plural and vice versa. The terms “herein,” “hereunder,” “hereby,”
“hereto,” “hereof” and any similar terms refer to this Agreement. Any captions, titles or headings
preceding the text of any article, section or subsection herein are solely for convenience of
reference and shall not constitute part of this Agreement or affect its meaning, construction or
effect.

19. Entire Agreement; Counterparts. This Agreement embodies the entire and final agreement
of the parties on the subject matter stated in this Agreement. No amendment or modification of
this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing
and signed by all parties. All prior understandings and agreements relating to the subject matter
of this Agreement are hereby expressly terminated. This Agreement may be executed in one or more
counterparts each of which will be deemed to be an original but all of which together will
constitute one and the same instrument.

20. Rights of Third Parties. Nothing herein expressed is intended to or shall be construed
to confer upon or give to any person, firm or other entity, other than the parties hereto and their
permitted assigns, any rights or remedies under or by reason of this Agreement.

21. Survival. The obligations of the parties pursuant to Sections 3.10, 4 through 10,
16, 17 and 21, as applicable, shall survive the Executive’s Termination of Employment hereunder
for the period designated under each of those respective sections.

22. Representation Regarding Restrictive Covenants. The Executive represents that the
Executive is not and will not become a party to any non-competition or non-solicitation agreement
or any other agreement which would prohibit the Executive from entering into this Agreement or
providing the services for the Employer contemplated by this Agreement on or after the Effective
Date. In the event the Executive is subject to any such agreement, this Agreement shall be
rendered null and void and the Employer shall have no obligations to the Executive under this
Agreement.

23. Section 409A. It is the intent of the parties that any payment to which the Executive
is entitled under this Agreement be exempt from Section 409A of the Code, to the maximum extent
permitted under Section 409A. However, if any such amounts are considered to be “nonqualified
deferred compensation” subject to Section 409A, such amounts shall be paid and provided in a
manner, and at such time and form, as complies with the applicable requirements of Section 409A to
avoid the unfavorable tax consequences provided therein for non-compliance. Neither the Executive
nor the Employer shall intentionally take any action to accelerate or delay the payment of any
amounts in any manner which would not be in compliance with Section 409A without the consent of the
other party. For purposes of this Agreement, all rights to payments shall be treated as rights to
receive a series of separate payments to the fullest extent allowed by Section 409A. To the extent
that some portion of the payments under this Agreement may be bifurcated and treated as exempt from
Section 409A under the “short-term deferral” or “separation pay” exemptions, then such amounts may
be so treated as exempt from Section 409A. To the extent that the requirements of Section 409A are
determined to be applicable to any provision of this Agreement, such provision shall be construed
in a manner that complies with Section 409A and any provision required for compliance with Section
409A that is omitted from this Agreement shall be incorporated herein by reference and shall apply
retroactively, if necessary, and be deemed a part of this Agreement to the same extent as though
expressly set forth herein. If any provision of this Agreement would cause Executive to incur any
additional tax or interest under Section 409A, the Employer shall, upon Executive’s specific
request, use its reasonable business efforts to in good faith reform such provision to comply with
Section 409A; provided, that to the maximum extent practicable, the original intent and economic
benefit to Executive and the Employer of the applicable provision shall be maintained, but the
Employer shall have no obligation to make any changes that could create any additional economic
cost or loss of benefit to the Employer. The Employer shall not have any liability to Executive
with respect to tax obligations that result under any tax law and makes no representation with
respect to the tax treatment of the payments and/or benefits provided under this Agreement.

24. Primary Office. The Executive’s primary office or worksite shall be in the Oklahoma
City, Oklahoma metropolitan area (notwithstanding that the home office of the Company will remain
Stillwater, Oklahoma), subject to travel necessary for the performance of his duties hereunder.

25. No Mitigation. The Executive shall have no obligation to seek employment or otherwise
mitigate his damages under this Agreement and amounts payable to the Executive under this Agreement
shall not be reduced whether or not the Executive obtains other employment.

26. Indemnification and Insurance. The Employer shall, as provided for in the Company’s
Articles and Bylaws, defend, indemnify and hold harmless the Executive and the Executive’s heirs,
estate, executors and administrators against any costs, losses, claims, suits, proceedings, damages
or liabilities to which they may become subject to arising from, based on, or relating to the
Executive’s employment by the Employer or the Executive’s service as an officer or member of the
Board of Directors of the Employer or any Affiliate, including without limitation reimbursement for
any legal or other expenses reasonably incurred by the Executive in connection with investigating
and defending against any such costs, losses, claims, suits, proceedings, damages or liabilities.
The Employer shall provide to the Executive an opportunity to enter into an indemnification
agreement with the same substantive terms offered to other directors and officers. The Employer
shall maintain directors and officers liability insurance in commercially reasonable amounts (as
reasonably determined by the Board of Directors), and the Executive shall be covered under such
insurance to the same extent as other similarly situated executives of the Employer; provided,
however, that the Employer shall not be required to maintain such insurance coverage if the Board
of Directors determines that it is unavailable at reasonable cost, provided that the Executive is
given written notice of any such determination promptly after it is made.

27. Definitions. Whenever used in this Agreement, the following terms and their variant
forms shall have the meanings set forth below:

(a) “Affiliate” shall mean any entity which controls, is controlled by, or is
under common control with another entity. For this purpose, “control” means ownership of
more than fifty percent (50%) of the ordinary voting power of the outstanding equity
securities of an entity.

(b) “Agreement” shall mean this Agreement and any appendices incorporated
herein together with any amendments hereto made in the manner described in this Agreement.

(c) “Applicable Fraction” means one-fourth (1/4), if the
qualifying Termination of Employment occurs on or before December 31, 2014; one-sixth
(1/6), if the qualifying Termination of Employment occurs after
December 31, 2014 but on or before December 31, 2015; and one-twelfth
(1/12), if the qualifying Termination of Employment occurs after
December 31, 2015.

(d) “Board of Directors” shall mean the board of directors of the Company
and/or of the Subsidiary Banks, as the context requires and, where appropriate, includes any
committee thereof or other designee.

(e) “Business of the Employer” shall mean the business conducted by the
Employer, which is the business of commercial and consumer banking.

(f) “Cause” shall mean:

(1) a material breach of the terms of this Agreement by the Executive not cured
by the Executive within ten (10) business days after the Executive’s receipt of
Employer’s written notice thereof, including, without limitation, failure by the
Executive to perform in all material respects the Executive’s duties and
responsibilities in the manner and to the extent required under this Agreement;

(2) any act by the Executive of fraud against, material misappropriation from,
or material dishonesty to the Employer;

(3) conviction of the Executive of a crime involving breach of trust or moral
turpitude or any felony;

(4) conduct by the Executive that amounts to willful misconduct, gross and
willful insubordination, or gross neglect or inattention to the Executive’s duties
and responsibilities hereunder, including prolonged absences without the written
consent of the Board of Directors;

(5) conduct in material violation of the Employer’s written code of conduct as
the same may be in force from time to time not cured by the Executive within ten
(10) business days after the Executive’s receipt of Employer’s written notice
thereof;

(6) receipt of any form of notice, written or otherwise, that any regulatory
agency having jurisdiction over the Employer intends to institute any form of formal
regulatory action against the Executive; or

(7) Executive’s removal and/or permanent prohibition from participating in the
conduct of the Employer’s affairs by an order issued under Section 8(e)(4) or
8(g)(1) of the FDIA (12 U.S.C. 1818(e)(4) and (g)(1)).

(g) “Change of Control” means for purposes of this Agreement the occurrence of
any of the following events on or after the Effective Date:

(1) the date any entity or person, including a group as defined in
Section 13(d)(iii) of the Securities Exchange Act of 1934 shall become the
beneficial owner of, or shall have obtained voting control over, fifty
percent (50%) or more of the outstanding common shares of either the Company
or Stillwater National Bank and Trust Company (“SNB-Stillwater”);

(2) the date the shareholders of either the Company or SNB-Stillwater
approve a definitive agreement (i) to merge or consolidate either the
Company or SNB-Stillwater with or into another corporation in which either
the Company or SNB-Stillwater, respectively, is not the continuing or
surviving corporation or pursuant to which any common shares of either the
Company or SNB-Stillwater would be converted into cash, securities, or other
property of another, other than a merger of either the Company or
SNB-Stillwater in which holders of common shares immediately prior to the
merger have the same proportionate interest of common stock of the surviving
corporation immediately after the merger as immediately before, or (ii) to
sell or otherwise dispose of substantially all of the assets of either the
Company or SNB-Stillwater; or

(3) the date there shall have been change in a majority of the Board of
Directors of either the Company or SNB-Stillwater within a 12-month period
unless the nomination of each new director was approved by the vote of
two-thirds (2/3) of directors then still in office who were in office at the
beginning of the 12-month period.

(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

(i) “Competing Business” shall mean any entity (other than the Employer and its
Affiliates) that is conducting business that is the same or substantially the same as the
Business of the Employer.

(j) “Confidential Information” means data and information relating to the
business of the Employer and its Affiliates (which does not rise to the status of a Trade
Secret) which is or has been disclosed to the Executive or of which the Executive became
aware as a consequence of or through the Executive’s relationship to the Company and its
Affiliates and which has value to the Employer and its Affiliates and is not generally known
to its competitors. Confidential Information shall not include any data or information that
has been voluntarily disclosed to the public by the Employer or its Affiliates, provided
that such public disclosure shall not be deemed to be voluntary when made without
authorization by the Executive or any other employee of Employer, or that has been
independently developed and disclosed by others, or that otherwise enters the public domain
through lawful means.

(k) “Constructive Termination” shall mean any of the following which occurs
after the effective date of a Change of Control:

(1) the material reduction of the Executive’s Annual Salary, Annual Bonus
opportunity, opportunity to earn equity compensation, or other benefits, each as
provided in this Agreement;

(2) a material diminution in the Executive’s authority, duties or
responsibilities or a change in his position such that he ceases to hold the title
of, or serve in the role as, President and Chief Executive Officer of the Company or
any successor;

(3) the assignment of any duties materially inconsistent with the Executive’s
position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities under this Agreement; or

(4) an involuntary relocation of the Executive’s primary office or worksite to
a place that is beyond a twenty (20) mile radius from 6301 Waterford Boulevard in
Oklahoma City, Oklahoma.

(l) “Disability” shall mean that the Executive suffers from a physical or
mental disability or infirmity that qualifies the Executive for disability benefits under
any accident and health plan maintained by the Employer that provides income replacement
benefits due to disability or, if the Employer does not maintain such a plan, the
Executive’s inability to perform the essential functions of the Executive’s job for a period
of ninety (90) or more days, with or without reasonable accommodation, as a result of a
physical or mental disability or infirmity, as reasonably determined by the Employer.

(m) “Employer Information” shall mean Confidential Information and Trade
Secrets.

(n) “Good Reason” shall mean any of the following which occurs on or after the
Effective Date:

(1) a material reduction of the Executive’s Annual Base Salary from its then
current rate, other than a reduction that also is applied to substantially all other
executive officers of the Employer if Executive’s reduction is substantially
proportionate to, or no greater than, the reduction applied to substantially all
other executive officers;

(2) a material diminution in the Executive’s authority, duties or
responsibilities or a change in his position such that he ceases to hold the title
of, or serve in the role as, President and Chief Executive Officer of the Company or
any successor;

(3) the assignment of any duties materially inconsistent with the Executive’s
position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities under this Agreement;

(4) an involuntary relocation of the Executive’s primary office or worksite to
a place that is beyond a twenty (20) mile radius from 6301 Waterford Boulevard in
Oklahoma City, Oklahoma; or

(5) a material breach of the terms of this Agreement by the Employer;

provided, however, that for a Termination of Employment by the Executive to be for Good
Reason, the Executive must notify the Employer in writing of the event giving rise to Good
Reason within thirty (30) days following the occurrence of the event (or, if later, thirty
(30) days following the Executive’s knowledge of occurrence of the event), the event must
remain uncured after the expiration of thirty (30) days following the delivery of written
notice of such event to the Employer by the Executive, and the Executive must resign
effective no later than sixty (60) days following the Employer’s failure to cure the event
and must give at least thirty (30) days advance written notice prior to the Executive’s
effective date of resignation.

(o) “Initial Term” shall mean that period of time commencing on the Effective
Date and ending December 31, 2016, subject to any earlier Termination of Employment of the
Executive under this Agreement as provided for in Sections 2(b) and 4.1.

(p) “Post-Termination Period” shall mean twelve (12) months following the
effective date of the Executive’s Termination of Employment.

(q) “Return on Average Equity” shall mean the Company’s net income after tax
divided by average shareholders’ equity, determined by adding shareholder equity value at
the beginning and end of the applicable calendar year and dividing that result by two (2).

(r) “Subsidiary Bank” shall mean each subsidiary bank as may be wholly-owned by
the Company from time to time.

(s) “Term” shall mean the Initial Term and any subsequent extension periods,
subject to any earlier Termination of Employment of the Executive under this Agreement as
provided for in Sections 2(b) and 4.1.

(t) “Termination of Employment” shall mean a termination of the Executive’s
employment where either (1) the Executive has ceased to perform any services for the
Employer and all affiliated companies that, together with the Employer, constitute the
“service recipient” within the meaning of Code Section 409A (collectively, the “Service
Recipient”) or (2) the level of bona fide services the Executive performs for the Service
Recipient after a given date (whether as an employee or as an independent contractor)
permanently decreases (excluding a decrease as a result of military leave, sick leave, or
other bona fide leave of absence if the period of such leave does not exceed six months, or
if longer, so long as the Executive retains a right to reemployment with the Service
Recipient under an applicable statute or by contract) to no more than twenty percent (20%)
of the average level of bona fide services performed for the Service Recipient (whether as
an employee or an independent contractor) over the immediately preceding 36-month period (or
the full period of service if the Executive has been providing services to the Service
Recipient for less than 36 months).

(u) “Total Shareholder Return” shall mean the total return to a Company
shareholder, including any cash dividends paid, expressed as a percentage by comparing the
Ending Stock Price for calendar years 2013 through 2016 with the Beginning Stock Price using
the following formula: (Ending Stock Price plus cumulative cash dividends paid minus
Beginning Stock Price) divided by the Beginning Stock Price. For purposes of this
Subsection (u), the term “Beginning Stock Price” means the average per share closing
price of Company common stock, as reported by the NASDAQ National Market, over the last ten
(10) trading days immediately preceding today’s date, adjusted to reflect subsequent stock
splits, stock dividends and similar events affecting shares of Company common stock, and the
term “Ending Stock Price” means the average per share closing price of Company common stock,
as reported by the NASDAQ National Market, over the ten (10) trading days immediately
preceding and immediately following the date of the Company’s public release of fourth
quarter financial results for the applicable calendar year.

(v) “Trade Secrets” shall mean Employer or Affiliate information including, but
not limited to, technical or nontechnical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data, financial plans, product
plans or lists of actual or potential customers or suppliers which:

(1) derives economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; and

(2) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.

[Signatures are on the Following Page]

IN WITNESS WHEREOF, the Employer and the Executive have executed and delivered this
Agreement as of the date first shown above.

Southwest Bancorp, Inc.:

By:/s/ Priscilla Barnes

Signature

Priscilla Barnes

Print Name

Senior Executive Vice President and COO

Title

Stillwater National Bank and Trust Company:

By:/s/ Priscilla Barnes

Signature

Priscilla Barnes

Print Name

Senior Executive Vice President and COO

Title

Bank of Kansas:

By:/s/ Priscilla Barnes

Signature

Priscilla Barnes

Print Name

Senior Executive Vice President and COO

Title

Executive:

/s/ Mark W. Funke

Mark W. Funke

Exhibit “A”

SEVERANCE AGREEMENT AND

FULL AND FINAL RELEASE OF CLAIMS

This Severance Agreement and Full and Final Release of Claims (“Agreement”) is made and
entered into by and among Southwest Bancorp, Inc., a bank holding company organized under the laws
of the State of Oklahoma (the “Company”), the Stillwater National Bank and Trust Company, a
national bank organized under the laws of the United States, and the Bank of Kansas, a state bank
chartered under the laws of the State of Kansas (collectively, the “Employer”), and Mark W. Funke
(the “Executive”).

SEPARATION. Executive’s employment with the Employer will terminate on      
or such later date as may be determined by the parties (“Separation Date”). The parties
acknowledge that Executive’s termination from employment will result in a “Separation from Service”
as defined in Section 409A of the Internal Revenue Code. Executive further agrees that the
Executive hereby resigns as an officer and director of the Employer and any related or affiliated
entities as of the Separation Date.

CONSIDERATION. In consideration of the Executive’s decision to enter into this
Agreement, the Employer will (i) continue to employ Executive through the Separation Date, (ii) and
will provide Executive severance pay and treat equity awards in accordance with the terms of the
employment agreement between the Employer and the Executive dated     , 2012 (the
“Employment Agreement”), and (iii) otherwise satisfy all of the Employer’s obligations under the
Employment Agreement which survive the Executive’s Termination of Employment (as defined in the
Employment Agreement). Federal, state and local tax withholdings and other legal deductions may be
applied to the above consideration as determined by the Employer in its sole discretion.

Whether or not Executive executes this Agreement, the Employer will pay Executive any and all
wages for all hours worked up to and through the Separation Date within the appropriate time frame
required by applicable law. If Executive fails or refuses to execute this Agreement, or if
Executive revokes this Agreement as provided herein, Executive will not be entitled to the
consideration set forth above.

3. FULL AND FINAL RELEASE.

(a) In consideration of the payments being provided to Executive above, Executive, for
himself, his attorneys, heirs, executors, administrators, successors and assigns, fully, finally
and forever releases and discharges the Employer and all other affiliated companies, as well as its
and their successors, assigns, officers, owners, directors, agents, representatives, attorneys, and
employees (all of whom are referred to throughout this Agreement as the “Releasees”), of and from
all claims, demands, actions, causes of action, suits, damages, losses, and expenses, of any and
every nature whatsoever, as a result of actions or omissions occurring through the date Executive
signs this Agreement.

Specifically included in this waiver and release are, among other things, any and all claims
related to any severance pay plan, any and all claims related to Executive’s employment and
separation from employment or otherwise, including without limitation: (1) Title VII of the Civil
Rights Act of 1964, as amended by the Civil Rights Act of 1991; (2) the Americans with Disabilities
Act, as amended; (3) 42 U.S.C. § 1981; (4) the Age Discrimination in Employment Act (29 U.S.C. §§
621-624); (5) 29 U.S.C. § 206(d)(1); (6) Executive Order 11246; (7) Executive Order 11141;
(8) Section 503 of the Rehabilitation Act of 1973; (9) Executive Retirement Income Security Act
(ERISA); (10) the Occupational Safety and Health Act; (11) the Worker Adjustment and Retraining
Notification (WARN) Act; (12) the Family and Medical Leave Act; (13) the Ledbetter Fair Pay Act;
and (14) other federal, state and local discrimination laws, including the Oklahoma
Anti-Discrimination Act and 85 O.S. Section 341 under Oklahoma’s Workers’ Compensation Act.

Executive further acknowledges that Executive is releasing, in addition to all other claims,
any and all claims based on any tort, whistle-blower, personal injury, defamation, invasion of
privacy or wrongful discharge theory; retaliatory discharge theory; any and all claims based on any
oral, written or implied contract or on any contractual theory (including the Employment
Agreement); any claims based on a severance pay plan; and all claims based on any other federal,
state or local Constitution, regulation, law (statutory or common), or other legal theory, as well
as any and all claims for punitive, compensatory, and/or other damages, back pay, front pay, fringe
benefits and attorneys’ fees, costs or expenses.

(b) Nothing in this Agreement, however, is intended to waive Executive’s entitlement to
vested benefits under any 401(k) plan or other benefit plan provided by the Employer.
Furthermore, the parties specifically agree that this release does not cover, and Executive
expressly reserves, indemnification rights existing to the Executive as a current or former
director and/or officer of the Employer under the Articles and Bylaws of the Employer and pursuant
to applicable state law and in accordance with any D&O policy existing for former officers and
directors of the Employer. Finally, the above release does not waive claims that Executive could
make, if available, for unemployment or workers’ compensation or claims that cannot be released by
private agreement.

(c) Executive understands that this Agreement does not bar the Executive from filing a
complaint and/or charge with any appropriate federal, state, or local government agency or
cooperating with said agency in its investigation. Executive agrees, however, that the Executive
shall not be entitled to receive any relief or recovery (monetary or otherwise) in connection with
any complaint or charge brought against the Releasees, without regard as to who brought said
complaint or charge.

4. ADVICE OF COUNSEL. Executive acknowledges that the Executive has been and is
hereby advised by the Employer to consult with an attorney in regard to this matter. Executive
understands that Executive is responsible for the costs of any such legal services incurred in
connection with such consultation.

5. POST-EMPLOYMENT COOPERATION. Executive agrees to reasonably cooperate with the
Employer in the defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Employer which relate to events or occurrences
that transpired or which failed to transpire while Executive was employed by the Employer.
Executive also agrees to cooperate reasonably with the Employer in connection with any internal
investigation or review, or any investigation or review by any federal, state or local regulatory
authority, relating to events or occurrences that transpired or failed to transpire while Executive
was employed by the Employer. Executive’s reasonable cooperation in connection with such matters
shall include, but not be limited to, providing information to counsel, being available to meet
with counsel to prepare for discovery or trial and acting as a witness on behalf of the Employer at
a mutually convenient times. If the Executive is called upon to cooperate in connection with any
such matter, then the Executive shall be entitled to a fair and reasonable per diem fee and
reimbursement of any expenses incurred at the request of the Employer.

6. NO OTHER CLAIMS. Executive represents that Executive has not filed, nor assigned
to others the right to file, nor are there currently pending, any complaints, charges or lawsuits
against the Releasees with any governmental agency or any court or in any arbitration forum.

7. NON-ADMISSION OF LIABILITY OR WRONGFUL CONDUCT. This Agreement shall not be
construed as an admission by the Employer of any liability or acts of wrongdoing or discrimination,
nor shall it be considered to be evidence of such liability, wrongdoing, or discrimination.

8. RETURN OF PROPERTY. Executive acknowledges, understands, and agrees that Executive
will turn over to        all documents, files, memoranda, records, Employer Information
(as defined in the Employment Agreement), credit cards, records, books, manuals, computer
equipment, computer software, pagers, cellular phones, facsimile machines, PDAs, keys and
electronic keys or access cards into the building and any other equipment or documents, and all
other physical or electronic property of similar type that Executive received from the Employer
and/or that Executive used in the course of his employment with the Employer and that are the
property of the Employer. Executive agrees that Executive will not delete, destroy or erase any
data stored on or associated with such property, including but not limited to data stored on
computers, servers, phones, or other electronic devices. Executive further agrees to return to
     any and all hard copies of any documents which are the subject of a document
preservation notice or other legal hold and to notify        of the location of any
electronic documents which are subject to a legal hold.

9. CONFIDENTIALITY. The nature and terms of this Agreement are strictly confidential
and they have not been and shall not be disclosed by Executive at any time to any person (including
the Employer’s employees) except Executive’s lawyer, accountant, or immediate family without the
prior written consent of an officer of the Employer, except as necessary in any legal proceedings
directly related to the provisions and terms of this Agreement, to prepare and file income tax
forms, or pursuant to court order after reasonable notice to the Employer. Executive may disclose
that Executive is subject to an agreement not to disclose trade secrets and confidential
information where necessary to comply with such confidentiality agreement. Executive agrees that
Executive is responsible for informing these persons of the confidential nature of this Agreement
and that any breach of this confidentiality provision by any of these persons shall be deemed a
breach by Executive.

10. GOVERNING LAW. This Agreement shall be interpreted under the laws of the State of
Oklahoma.

11. SEVERABILITY. The provisions of this Agreement are severable, and if any part of
this Agreement except Paragraphs 3 or 5 are found by a court of law to be unenforceable, the
remainder of the Agreement will continue to be valid and effective, and the court is authorized to
amend relevant provisions of the Agreement to carry out the intent of the parties to the extent
legally permissible. If Paragraph 3 or 5 is found by a court of competent jurisdiction to be
unenforceable, the parties agree to seek a determination by the court as to the rights of the
parties, including whether Executive is entitled under those circumstances and the relevant law to
retain the benefits paid to Executive under this Agreement.

12. SOLE AND ENTIRE AGREEMENT. This Agreement and the Employment Agreement set forth
the entire agreement between the parties with respect to the subject matters covered by this
Agreement and the Employment Agreement; provided however, that any continuing obligations of
confidentiality, non-disparagement, non-appropriation and/or non-solicitation under any other
agreement shall survive. Any other prior agreements between or directly involving the parties
to the Agreement and the Employment Agreement with respect to the subject matters covered by this
Agreement and the Employment Agreement are superseded by the terms of this Agreement and the
Employment Agreement and thus are rendered null and void.

13. NO OTHER PROMISES. Executive affirms that the only consideration for his signing
this Agreement is that set forth in Paragraph 2, that no other promise or agreement of any kind has
been made to or with Executive by any person or entity to cause Executive to execute this document,
and that Executive fully understands the meaning and intent of this Agreement, including but not
limited to, its final and binding effect.

14. ACKNOWLEDGEMENTS.

(a) Executive acknowledges, understands and agrees that Executive has been notified of
Executive’s rights under the Family and Medical Leave Act (FMLA) and state leave laws. Executive
further acknowledges, understands and agrees that Executive has not been denied any leave requested
under the FMLA or applicable state leave laws and that, to the extent applicable, Executive has
been returned to Executive’s job, or an equivalent position, following any FMLA or state leave
taken pursuant to the FMLA or state laws.

(b) Executive acknowledges, understands and agrees that it is Executive’s obligation to make a
timely report, in accordance with the Employer’s policy and procedures, of any work related injury
or illness. Executive further acknowledges, understands and agrees that Executive has reported to
the Employer’s management personnel any work related injury or illness that occurred up to and
including Executive’s last day of employment.

15. NO VIOLATION OF THE LAW. Executive represents and acknowledges that, except as
set forth on Schedule I attached hereto, Executive is unaware of any conduct, actions or inactions
by the Employer or anyone employed by the Employer which would violate any federal, state or local
law, any common law, or any rule promulgated by any administrative body. Executive further
acknowledges that Executive has disclosed to        any relevant facts known to
Executive of any conduct which violates in any material respect any Employer policy or standard.

16. LEGALLY BINDING AGREEMENT. Executive understands and acknowledges that this
Agreement contains a full and final release of claims against the Employer; and that Executive has
agreed to its terms knowingly, voluntarily, and without intimidation, coercion or pressure.

17. ADVICE OF COUNSEL / CONSIDERATION AND REVOCATION PERIODS. Executive hereby
acknowledges and agrees that this Agreement and the termination of Executive’s employment and all
actions taken in connection therewith are in compliance with the Age Discrimination in Employment
Act and the Older Workers Benefit Protection Act and that the releases set forth herein shall be
applicable, without limitation, to any claims brought under these Acts. Executive acknowledges
that the Executive has been and is hereby advised by the Employer to consult with an attorney in
regard to this matter. Executive understands that Executive is responsible for the costs of any
such legal services incurred in connection with such consultation. Executive further acknowledges
that Executive has been given more than twenty-one (21) days from the time that Executive receives
this Agreement to consider whether to sign it. Executive shall have seven (7) days from the date
Executive signs this Agreement to revoke the Agreement. To revoke, Executive must ensure that
written notice is delivered to       , 608 South Main Street, Stillwater, Oklahoma 74074,
by the end of the day on the seventh calendar day after Executive signs this Agreement. If
Executive does not revoke this Agreement within seven (7) days of signing, this Agreement will
become final and binding on the day following such seven (7) day period.

[Signatures are on the Following Page]

1

This Agreement includes a release of all known and unknown claims through the date of this
Agreement. Executive should carefully consider all of its provisions before signing it.
Executive’s signature below indicates Executive’s understanding and agreement with all of the terms
in this Agreement.

Southwest Bancorp, Inc.

Date: By:

Full Name:       

Title:       ]

Stillwater National Bank and Trust Company

Date: By:

Full Name:       

Title:       

Bank of Kansas

Date: By:

Full Name:       

Title:       

Date:

Mark W. Funke

Schedule I

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