Document:

exhibit 10.2 ward avenue psa

Exhibit 10.2

PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS

PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, 
a Delaware limited liability company
“SELLER”
and
SENIOR HOUSING PROPERTIES TRUST,
a Maryland real estate investment trust
“BUYER”

February 15, 2012

This Agreement contains representations and warranties by the parties thereto and are not intended to be and should not be relied upon by any other person.  A party's representations and warranties were made solely for the benefit of the other party and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to the party making the representation and warranty if it proves to be inaccurate; (ii) may have been qualified in this Agreement by disclosures that were made to the other party in connection with the negotiation of this Agreement (provided that any specific facts that contradict the representations and warranties in this Agreement in any material respect have been disclosed); (iii) may apply contract standards of “materiality” that are different from “materiality” under applicable securities laws; and (iv) were made only as of the date of this Agreement or such other date or dates as may be specified in this Agreement.

TABLE OF CONTENTS
		
	Article 1 CERTAIN DEFINITIONS
	1

		
	Article 2 PURCHASE, PURCHASE PRICE AND PAYMENT
	            10

		
	Article 3 ESCROW
	            15

Article 4 ACKNOWLEDGMENT OF BUYER INVESTIGATIONS;
 NEW TITLE EXCEPTIONS                                            16        
		
	Article 5 PRE-CLOSING OBLIGATIONS OF SELLER and BUYER
	            22

		
	Article 6 SELLER'S DELIVERIES
	            25

		
	Article 7 BUYER'S DELIVERIES
	            27

		
	Article 8 CONDITIONS TO CLOSING;  CLOSING; DEFAULT; REMEDIES
	            28

		
	Article 9 REPRESENTATIONS AND WARRANTIES OF SELLER
	            35

		
	Article 10 REPRESENTATIONS, WARRANTIES,  COVENANTS AND AGREEMENTS OF BUYER
	            39

		
	Article 11 COSTS, EXPENSES AND PRORATIONS
	            42

		
	Article 12 ESCROW PROVISIONS
	            47

		
	Article 13 BROKERS
	            49

		
	Article 14 MISCELLANEOUS
	            50

EXHIBITS

A    Legal Description of Land
B    Assignment and Assumption of Ground Lease and Conveyance of Improvements;
Consent of Ground Lessor to Assignment and Assumption of Ground Lease
C    Bill of Sale
D and
D-1    Certificates of Non-Foreign Status
E    Assignment and Assumption of Leases and Security Deposits
F    Seller's Certificate
G    Assignment of Permits, Entitlements and Intangible Property
H    Form of Tenant Estoppel Certificate
I    Form of Ground Lessor Estoppel Certificate
J    Form of Title Affidavit

SCHEDULES
1.0        Seller's Deliveries
2.0        Contracts
2.3(a)(iv)    Loan Assumption Items
3.0        Leases
4.1(a)        Tenant Lease Financials
4.1(b)(iv)    Initial Title Exceptions
9.5(a)        Tenant Defaults
9.11        Loan Documents
9.12        Exception Schedule

PURCHASE AND SALE AGREEMENT 
AND JOINT ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (“Agreement”) is made and entered into and effective as of the 15th day of February, 2012 (“Effective Date”), by and between PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company (“Seller”), and SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust (“Buyer”), each of whom shall sometimes separately be referred to herein as a “Party” and both of whom shall sometimes collectively be referred to herein as the “Parties,” and constitutes a binding purchase and sale agreement between Seller and Buyer.
FOR GOOD AND VALUABLE CONSIDERATION RECEIVED, the Parties mutually agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
In addition to those terms defined elsewhere in this Agreement, the following terms have the meanings set forth below:
 “Agreement” shall mean this Purchase and Sale Agreement dated as of the Effective Date, by and between Seller and Buyer, together with all Exhibits and Schedules attached hereto.
“ALTA” shall mean American Land Title Association.
“ALTA Survey” shall have the meaning given such to term in Section 4.1(b) hereof.
“ALTA Title Policy Costs” shall mean the cost differential between the premium for an ALTA Leasehold Owner's Policy of Title Insurance with Standard Coverage and the premium for an ALTA Owner's Policy of Title Insurance with Extended Coverage.
“Assignment and Assumption of Ground Lease” shall mean the Assignment and Assumption of Ground Lease and Conveyance of Improvements; Consent of Ground Lessor to Assignment and Assumption of Ground Lease, in the form of Exhibit “B,” attached hereto.
“Assignment and Assumption of Leases and Security Deposits” shall mean the Assignment and Assumption of Leases and Security Deposits, in the form of Exhibit “E,” attached hereto.  
“Assignment of Permits, Entitlements and Intangible Property” shall mean the Assignment of Permits, Entitlements and Intangible Property, in the form of Exhibit “G,” attached hereto.
“Bill of Sale” shall mean the Bill of Sale, in the form of Exhibit “C,” attached hereto. 
“Building” shall mean that certain commercial office building located at 1100 Ward Avenue, Honolulu, Hawaii, consisting of approximately two hundred three thousand two hundred twenty (203,220) net rentable square feet, together with all related facilities and improvements, located on the Land.
“Business Day” shall mean a Calendar Day, other than a Saturday, Sunday or a day observed as a legal holiday by the United States federal government, the Commonwealth of Massachusetts, or the state of Hawaii.

“Buyer” shall mean Senior Housing Properties Trust, a Maryland real estate investment trust.
 “Buyer's Due Diligence Documentation” shall mean all surveys, studies, reports, governmental applications, permits, maps, plans, specifications and other documents in Buyer's possession or control regarding the Property including, but not limited to, all such surveys, studies, reports and other documents that Buyer contracted with third parties to be prepared.
“Buyer's Exchange” shall have the meaning given to such term in Section 14.15 hereof.
“Buyer's Loan Assumption Processing Fees Cap” shall have the meaning given to such term in Section 2.3(b)(i) hereof. 
“Calendar Day” shall mean any day of the week including a Business Day.
“Cash” shall mean legal tender of the United States of America represented by either: (a) a cashier's or certified check currently dated, payable to Escrow Agent or order, and honored upon presentation for payment; or (b) good funds wire transferred or otherwise deposited into Escrow Agent's account at Escrow Agent's direction.
“Cash Purchase Price” shall have the meaning given to such term in Section 2.4 hereof.
“Certificates of Non-Foreign Status” shall mean collectively, that certain Certificate of Non-Foreign Status and that certain Certification for Exemption from the Withholding of Tax on the Disposition of Hawaii Real Property, in the form of Exhibit “D” and Exhibit “D-1”, respectively, attached hereto.
“Closing” shall have the meaning given to such term in Section 8.4 hereof.
“Closing Date” shall have the meaning given to such term in Section 8.4 hereof. 
“Closing Deposit” shall have the meaning given to such term in Section 2.4(c) hereof.
“Closing Statement” shall mean a so-called “Settlement Statement” in a form and substance reasonably satisfactory to Buyer and Seller, showing (among other things) the Purchase Price as adjusted by any adjustments or apportionments provided for in this Agreement.
“Code” shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent federal revenues laws.
“Confidential Information” shall have the meaning given to such term in Section 4.1(a) hereof. 
“Contracts” shall mean all written contracts and agreements relating to the management, maintenance and/or operation of the Property, together with all supplements, amendments and modifications thereto and which are described on Schedule “2.0” attached hereto and made a part hereof and which shall include any additional agreements entered into after the Effective Date pursuant to Section 5.1(c) hereof.  
“Conveyance Tax Certificate” shall have the meaning given to such term in Section 6.1(b) hereof.
“Delinquent Revenues” shall have the meaning given to such term in Section 11.2(a)(i) hereof.
“Disapproved New Title Exception” and “Disapproved New Title Exceptions” shall have the meanings given to such terms in Section 4.1(c) hereof.

“Disapproved New Title Exceptions Cure Completion Notice” shall have the meaning given to such term in Section 4.1(c) hereof.
“Disapproved New Title Exceptions Cure Deadline” shall mean the earliest to occur of: (a) thirty (30) Calendar Days after the date of Seller's Disapproved New Title Exceptions Cure Notice; (b) the date Seller delivers a Disapproved New Title Exceptions Cure Completion Notice to Buyer; or (c) the Closing Date.
“Disapproved New Title Exceptions Cure Election Deadline” shall have the meaning given to such term in Section 4.1(c) hereof.
“Disapproved New Title Exceptions Cure Notice” shall have the meaning given to such term in Section 4.1(c) hereof.
“Disapproved New Title Exceptions Notice” shall have the meaning given to such term in Section 4.1(c) hereof.
“Effective Date” shall have the meaning given to such term in the Preamble of this Agreement.
“Environmental Conditions” shall have the meaning given to such term in Section 10.5 hereof.
“Environmental Laws” shall mean all present federal, state or local laws, ordinances, codes, statutes, regulations, administrative rules, policies and orders, and other authorities, which relate to the environment and/or which classify, regulate, impose liability, obligations, restrictions on ownership, occupancy, transferability or use of the Real Property, and/or list or define hazardous substances, materials, wastes, contaminants, pollutants and/or Hazardous Materials and any similar federal, state or local laws and ordinances and the regulations published and/or promulgated pursuant thereto and other state and federal laws relating to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, disposal or transportation of any Hazardous Materials.
“ERISA” shall have the meaning given to such term in Section 10.4 hereof.
“Escrow” shall have the meaning given to such term in Article 3 hereof.
“Escrow Agent” shall mean First American Title Company, Inc. located at 1177 Kapiolani Boulevard, Honolulu, Hawaii  96814  Attn:  Jill Kauka; Direct Telephone Number: 808-457-3784; Facsimile Number:  866-713-7850; Email:  jkauka@firstam.com.  
“Estoppel Certificate” shall mean any Tenant Estoppel Certificate.
“Estoppel Cure Completion Notice” shall have the meaning given to such term in Section 5.1(e)(ii) hereof.
“Estoppel Cure Deadline” shall mean the earliest to occur of: (a) thirty (30) Calendar Days after the Estoppel Cure Election Deadline; (b) the date Seller delivers an Estoppel Cure Completion Notice to Buyer; or (c) the Closing Date.  
“Estoppel Cure Election Deadline” shall have the meaning given to such term in Section 5.1(e)(i) hereof. 
“Estoppel Cure Notice” shall have the meaning given to such term in Section 5.1(e)(i) hereof.

“Estoppel Delivery Deadline” shall mean ten (10) Business Days prior to the Closing Date.
“Estoppel Objection Matter” shall have the meaning given to such term in Section 5.1(e)(i) hereof.
“Estoppel Objection Notice” shall have the meaning given to such term in Section 5.1(e)(i) hereof.
“Excess Loan Assumption Processing Fees” shall have the meaning given to such term in Section 2.3(b) hereof. 
“Fee Interest Closing Date” shall mean the date of consummation (closing) of the transactions contemplated by the Fee Interest Purchase Agreement, pursuant to and in accordance with the Fee Interest Purchase Agreement.
“Fee Interest Purchase Agreement” shall mean that certain Purchase and Sale Agreement, dated of even date herewith, by and between the Ground Lessor, as the seller, and Senior Housing Properties Trust, as the buyer, relating to the purchase and sale of the Land, as the same may be amended and assigned from time to time.  
“Fee Lender” shall mean U.S. Bank, National Association, as successor trustee for the Registered Holders of GS Mortgage Securities Corporation II, Commercial Mortgage Pass-Through Certificates, Series 2006-GG6, as assignee, by mesne assignments, of Greenwich Capital Financial Products, Inc., and its successors and assigns. 
“General Provisions” shall have the meaning given to such term in Article 3 hereof.
“Ground Lease” shall mean that certain Ground Lease, dated December 20, 2005, by and between Ground Lessor and Seller, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619, as amended from time to time. 
“Ground Lessor” shall mean 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, as the holder of the ground lessor's interest under the Ground Lease.
“Ground Lessor Estoppel Certificate” shall have the meaning given to such term in Section 5.1(f) hereof.
“Ground Lessor Estoppel Deadline” shall have the meaning given to such term in Section 5.1(f) hereof.
“Guaranty” shall have the meaning given to such term in Section 2.3(a)(i) hereof. 
“Hazardous Materials”  shall mean all hazardous wastes, toxic substances, pollutants, contaminants, radioactive materials, flammable explosives, and other materials defined or classified as “hazardous substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,” “toxic pollutants,” “petroleum substances” or “infectious waste” under any Environmental Laws in effect as of the Effective Date, which are regulated by reason of actual or threatened risk of toxicity causing injury or illness.  
“Information” shall have the meaning given to such term in Section 4.4 hereof.
“Improvements” shall mean all buildings, structures, fixtures, trade fixtures and other improvements located on the Land, including, but not limited to, the Building.
“Indemnification Agreement” shall have the meaning given to such term in Section 2.3(a)(i) hereof. 

“Independent Consideration” shall have the meaning given to such term in Section 2.4(b).
“Initial Deposit” shall have the meaning given to such term in Section 2.4(a) hereof.
“Intangible Property” shall have the meaning given to such term in Section 2.1(c) hereof.
“Land” shall mean that certain parcel of real property located in the City of Honolulu County of Honolulu, State of Hawaii, the legal description of which is set forth on Exhibit “A,” attached hereto and incorporated herein by reference. 
“Laws”  shall mean, collectively, all laws, ordinances, statutes, codes, rules, regulations, agreements, judgments, orders and decrees now or hereafter enacted, promulgated, or amended, of the United States, the states, the counties, the cities or any other political subdivisions in which the Property is located and any other political subdivision, agency or instrumentality exercising jurisdiction over the owner of the Property, the Property or the use of the Property or any other legal requirements applicable to the Property, including, without limitation, Environmental Laws and those relating to zoning, construction, occupancy, occupational health and safety or fire safety.
“Leases” shall have the meaning given to such term in Section 2.1(d) hereof.
“Leasing Commissions” shall mean any and all commissions, finder's fees or similar payments in connection with the initial term of any Lease, or in connection with any options to expand the leased premises or extend the term of any Lease exercised by a Tenant prior to the Effective Date.
“Lender” shall mean U.S. Bank National Association, as Trustee for Morgan Stanley Capital I, Inc., Commercial Mortgage Pass-Through Certificates, Series 2006-HQ8, as assignee of LaSalle Bank National Association, a national banking association, and its successors and assigns. 
“Lender's Consent” shall have the meaning given to such term in Section 2.3(a)(iii) hereof.
“Lenders' Consent to Assignment” shall have the meaning given to such term in Section 8.1(j) hereof. 
“Loan” shall mean that certain loan evidenced by a Promissory Note, dated December 20, 2005, executed by Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, in favor of Lender, in the original principal amount of Thirty Eight Million Dollars ($38,000,000.00), which loan is secured by, among other things, that certain Mortgage, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing, dated December 20, 2005 and recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369620, as amended by that certain Amendment to Mortgage, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing, dated March 9, 2006 and recorded in said Office as Land Court Document No. 3401671, and as assigned to Lender by instrument dated March 28, 2006, and recorded in said Office as Land Court Document 3525600.  
“Loan Assumption” shall have the meaning given to such term in Section 2.3(a) hereof.
“Loan Assumption Conditions” shall have the meaning given to such term in Section 2.3(a) hereof.
“Loan Assumption Documents” shall mean any and all documents, agreements and instruments required or necessary to effectuate the Loan Assumption.
 “Loan Assumption Fee” shall mean the loan assumption fee payable to Lender in connection with 

the Loan Assumption pursuant to Section 15(c)(iii) of the Mortgage, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing executed in connection with the Loan, in an amount equal to one-half of one-percent (0.5%) of the Loan Principal Balance as of the Loan Assumption.  Notwithstanding anything in this Agreement to the contrary, the term “Loan Assumption Fee” shall not include the Loan Assumption Processing Fees.
“Loan Assumption Processing Fees” shall mean all costs, fees and expenses payable to Lender in connection with processing the Loan Assumption including all application or review fees, processing fees and costs, lender/servicer/senior servicer/rating agency legal fees and costs (including any retainer), legal opinion fees and costs and all other costs, fees and expenses incurred and/or required to be paid to Lender in connection with processing the Loan Assumption.  Notwithstanding any provision in this Agreement to the contrary, the term “Loan Assumption Processing Fees” shall not include the Loan Assumption Fee.
“Loan Documents” shall have the meaning given such term in Section 9.11 hereof.
“Loan Principal Balance” shall have the meaning given to such term in Section 2.3(b) hereof.  
“Losses” shall mean any and all losses, claims (including, without limitation, any and all mechanics' or materialmen's liens or claims of liens), demands, causes of action, lawsuits, arbitrations, injuries, damages, costs, fees and expenses (including attorneys' fees and costs of litigation).
“Major Tenant” and “Major Tenants” shall mean: (i) Straub Clinic & Hospital; and/or (ii) First Insurance, individually or collectively, as the context may require.
“Material Loss” shall mean damage, loss or destruction to any portion of the Real Property, the loss of which (i) is equal to or greater than One Million Dollars ($1,000,000.00) (measured by the cost of repair or replacement) in the aggregate, or (ii) as a direct result thereof, permits any Major Tenant to terminate its Lease.
“Material Taking” shall mean an eminent domain or condemnation proceeding that expressly identifies a taking of: (a) any portion of the net rentable area of the Real Property; or (b) any of the parking spaces or other portions of the Real Property which would as a direct result thereof (i) give rise to a Major Tenant having the right to terminate its Lease, (ii) materially and adversely affect access to the Real Property, (iii) materially and adversely affect the current use of the Building, and/or (iv) render the remainder of the Real Property in non-compliance with any applicable material Law, Lease, Permitted Title Exception or other material contract affecting the Real Property, and with respect to clauses (ii), (iii) and (iv) respectively, Seller does not or is otherwise unable to provide an alternative means of reasonable access to the Real Property, a cure of the material adverse effect on the current use of the Building, or a cure for such non-compliance, as applicable, that is reasonably acceptable to Buyer.
 “Minor Taking” shall have the meaning given to such term in Section 8.3(b) hereof.
“Monetary Obligations” shall mean any and all liens, liabilities and encumbrances placed, or caused to be placed, of record against the Real Property by the acts or omissions of Seller, evidencing a monetary obligation that can be removed by the payment of money, including, without limitation, delinquent real property taxes, deeds of trust, mortgages, mechanic's liens, attachment liens, execution liens, tax liens and judgment liens.  Notwithstanding the foregoing, the term “Monetary Obligations” shall not include, and shall specifically exclude, non-delinquent real property taxes and assessments, all liens, liabilities and encumbrances relating to the Permitted Title Exceptions and any matters caused by any act or omission of Buyer, or its agents or representatives.  

“New Lease” shall have the meaning given to such term in Section 5.1(b) hereof.
“Non-Material Loss” shall mean damage, loss or destruction to any portion of the Real Property, the loss of which is not a Material Loss. 
“Notice” shall have the meaning given to such term in Section 14.2 hereof. 
“OFAC” shall have the meaning given to such term in Section 9.10 hereof.
“Operating Expenses” shall have the meaning given to such term in Section 11.2(a)(ii) hereof.
“Outside Closing Date” shall have the meaning given to such term in Section 8.4 hereof.
“Party” or “Parties” shall have the meanings given to such terms in the Preamble of this Agreement.
“Permits and Entitlements” shall have the meaning given to such term in Section 2.1(f) hereof.
“Permitted Title Exceptions” shall have the meaning given to such term in Section 4.1(b) hereof.
“Person” shall mean any individual, corporation, partnership, limited liability company or other entity.
“Personal Property” shall have the meaning given to such term in Section 2.1(b) hereof.
 “Preliminary Title Report” shall have the meaning given to such term in Section 4.1(b) hereof.
“Property” shall have the meaning given to such term in Section 2.1 hereof.
“Property Expense Reconciliation” shall have the meaning given to such term in Section 11.2(b)(ii) hereof.
“Property Expense Reimbursement Shortfall” shall have the meaning given to such term in Section 11.2(b)(iii) hereof.
“Property Expense Reimbursement Surplus” shall have the meaning given to such term in Section 11.2(b)(iii) hereof.
“Property Expenses” shall have the meaning given to such term in Section 11.2(b) hereof.
“Proposed New Lease” shall have the meaning given to such term in Section 5.1(b) hereof.
“Proration Date” shall have the meaning given to such term in Section 11.2(a) hereof.
“Purchase Price” shall have the meaning given to such term in Section 2.2 hereof.
“Real Property” shall have the meaning given to such term in Section 2.1(a) hereof.
“Reconciliation Period” shall have the meaning given to such term in Section 11.2(b) hereof.
“Released Parties” shall have the meaning given to such term in Section 10.7 hereof.
“Representatives” shall have the meaning given to such term in Section 4.4 hereof.
“Revenues” shall have the meaning given to such term in Section 11.2(a)(i) hereof.

“Scheduled Closing Date” shall have the meaning given to such term in Section 8.4 hereof.
“Security Deposits” shall mean the remaining balance as of the Closing of all security deposits received by Seller from the Tenants pursuant to the Leases to secure the performance of such Tenant's obligations under such Leases, whether in the form of cash, negotiable instruments, letters of credit or other forms of security, to the extent the same shall not have been properly applied to the applicable Tenant's obligations under such Tenant's Lease.
“Seller” shall mean Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company.
“Seller's Broker” shall mean Eastdil Secured located at 100 Wilshire Boulevard, Suite 1500, Santa Monica, California 90401.
“Seller's Broker's Commission” shall have the meaning given to such term in Article 13 hereof.
“Seller's Certificate” shall mean the Seller's Certificate, in the form of Exhibit “F,” attached hereto. 
“Seller's Deliveries” shall have the meaning given to such term in Section 4.1(a) hereof.
“Seller's Exchange” shall have the meaning given to such term in Section 14.14 hereof.
“Seller's Loan Assumption Processing Fees Cap” shall have the meaning given to such term in Section 2.3(b) hereof.  
“Shidler” shall have the meaning given to such term in Section 2.3(a) hereof. 
“Taxes” shall have the meaning given to such term in Section 11.2(a)(iii) hereof.
“Tenant Estoppel Certificates” shall have the meaning given to such term in Section 5.1(e) hereof.
“Tenant Inducement Costs” shall mean: (a) all out-of-pocket payments required under a Lease to be paid by the landlord thereunder to or for the benefit of the Tenant thereunder which is in the nature of a tenant inducement including, without limitation, tenant improvements, tenant improvement costs, tenant improvement allowances, lease buyout costs, moving, design and refurbishment allowances and reimbursements; and (b) any economic concessions granted to a Tenant under a Lease, including, without limitation, rent holidays, free rent periods, reduced rent periods, rent accrual and deferment periods and similar economic concessions, accrued as of the Closing Date.  
“Tenant Lease Financials” shall have the meaning given to such term in Section 4.1(a) hereof.
“Tenants” shall mean those Persons renting or occupying space in the Real Property under the Leases.  Reference to a “Tenant” shall mean any one of the Tenants, as the context requires.
“Third Party Reports” shall have the meaning given to such term in Section 4.1(a) hereof.
“Title Insurer” shall mean First American Title Insurance Company, located at 4380 La Jolla Village Drive, Suite #110, San Diego, California 92122; Attn: Skip Santy; Direct: (858) 410-2155; FAX: (877) 461-2093; E-mail: ssanty@firstam.com.  
“Title Policy” shall have the meaning given to such term in Section 8.1(c) hereof.

“Transaction Documents” shall mean the Assignment and Assumption of Ground Lease, the Bill of Sale, the Certificates of Non-Foreign Status, the Assignment and Assumption of Leases and Security Deposits, the Assignment of Permits, Entitlements and Intangible Property, the Loan Assumption Documents, the Ground Lessor Estoppel Certificate, the Conveyance Tax Certificate, and all other instruments or agreements to be executed and delivered pursuant to this Agreement or any of the foregoing.
ARTICLE 2
PURCHASE, PURCHASE PRICE AND PAYMENT

Section 2.1Purchase and Sale of Property.  Subject to the terms and conditions set forth in this Agreement, on the Closing, Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase from Seller, all of the following property (collectively, the “Property”):

(a)Real Property.  All of Seller's right, title and interest in and to: (i) the Ground Lease (including, without limitation, the leasehold interest in the Land); (ii) the Improvements, including, without limitation, Seller's interest in the Improvements reserved under that certain Limited Warranty Deed and Reservation of Rights dated December 20, 2005 and recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369618; (iii) all easements, rights-of-way, development rights, entitlements, air rights and appurtenances relating or appertaining to the Land and/or the Improvements, and (iv) any streets or alleys which are adjacent to the Land (collectively, the “Real Property”).

(b)Personal Property.  All equipment, furniture, fixtures, facilities, machinery, tools, appliances, furnishings, inventories, supplies and other items of tangible personal property owned by Seller and located on the Real Property as of the Effective Date (collectively, the “Personal Property”).  The Personal Property will be itemized and specifically set forth on the Bill of Sale attached hereto as Exhibit “C”.  The Personal Property is subject to depletion, replacement and addition in the ordinary course of Seller's business so long as depletion and replacement of such Personal Property is substituted with items of equal or better quality and shall be conveyed to Buyer at Closing free and clear of any liens or encumbrances.

(c)Intangible Property.  To the extent assignable, all of Seller's right, title and interest, if any, in and to all intangible property arising from or used in connection with the ownership, use, operation, or maintenance of the Real Property or Personal Property, including, without limitation: (i) warranties, guarantees and bonds from third parties relating to the Real Property or Personal Property; (ii) copyrights, trade names, trademarks, trademark registrations and internet domain names, if any, owned and used by Seller in connection with the ownership and operation of the Property, together with the goodwill of the business appurtenant thereto; provided, however, in no event shall such trade name or trademarks, if any, to be assigned to Buyer pursuant hereto include the trade name “Pacific Office Properties” or any derivatives thereof, or any of the trademarks related thereto, (iii) all Tenant files, (iv) the Tenant Lease Financials, as included with Seller's Deliveries, and (v) all plans and specifications owned and used by Seller in connection with the ownership and operation of the Property (collectively, the “Intangible Property”).

(d)Leases and Security Deposits.  Except as to Seller's rights to Delinquent Revenues in accordance with Section 11.1 hereof, all of Seller's right, title and interest, if any, in, to and under all leases and occupancy agreements set forth on Schedule “3.0” attached hereto and in effect on the Closing with respect to the Real Property, and any New Leases, and any amendments and guarantees relating thereto (collectively, the “Leases”), together with all of Seller's right, title and interest in and to the Security Deposits and other collateral relating to the Leases.  The term “Leases” shall specifically exclude the Ground Lease.  

(e)Intentionally Deleted.  

(f)Permits and Entitlements.  To the extent assignable, all of Seller's right, title and interest, if any, in and to all permits, licenses, certificates of occupancy, approvals, authorizations and orders obtained from any governmental authority and relating to the Real Property or the business of owning, maintaining and/or managing the Real Property (collectively, the “Permits and Entitlements”).

Section 2.2Purchase Price.  The purchase price for the Property shall be the sum of Fifty-Three Million Nine Hundred Ninety-Five Thousand Three Hundred Sixty-Nine Dollars ($53,995,369.00) (the “Purchase Price”).  The Purchase Price shall consist of the Loan Assumption pursuant to Section 2.3 below and the Cash Purchase Price pursuant to Section 2.4 below, subject to the prorations and adjustments set forth in this Agreement including, without limitation, Article 11 hereof.  The Purchase Price shall be paid to Seller in accordance with the terms and conditions set forth in Sections 2.3 and 2.4 hereof.  In connection with the filing of the Conveyance Tax Certificate, allocation of the Purchase Price among the Property shall be as reasonably determined by Seller.

Section 2.3Loan Assumption.  

(a)    Loan Assumption Conditions.  On the Closing, Buyer shall, subject to the terms of this Agreement, purchase and acquire the Property subject to the Loan and shall assume the Loan and the Loan Principal Balance as of the Proration Date (“Loan Assumption”), provided that all of the following terms and conditions shall have been satisfied (collectively, the “Loan Assumption Conditions”):
(i)    As a condition to Seller's obligation to proceed to the Closing, the Lender shall have consented in writing to the release and discharge of Seller and Seller's affiliates from any liability arising or accruing on the Loan subsequent to the Closing including, without limitation, the release and discharge of Jay H. Shidler (“Shidler”) and all other applicable guarantors/indemnitors from: (a) any and all liability arising or accruing subsequent to the Closing under that certain Guaranty, dated December 20, 2005, executed by Shidler and all other applicable guarantors/indemnitors for the benefit of Lender (the “Guaranty”); and (b) any and all liability arising or accruing subsequent to the Closing under that certain Hazardous Substances Indemnification Agreement, dated December 20, 2005, executed by Shidler and all other applicable guarantors/indemnitors for the benefit of Lender (the “Indemnification Agreement”). 
(ii)    Intentionally Deleted.
(iii)    As a condition to each Party's obligation to proceed to the Closing, Buyer will have secured in writing Lender's consent to the Loan Assumption (said consent to the Loan Assumption and said consent to the release of Seller and Seller's affiliates referenced under item (i) above are collectively referred to herein as “Lender's Consent”) upon terms and conditions reasonably satisfactory to Buyer and Seller; provided, however, if Lender does not require any change in the interest rate, term, or material terms of the Loan, including, without limitation, any material changes to the Loan covenants or required collateral (other than said release and discharge described in item (i) above), and, without Seller's approval at its sole discretion, does not impose any obligation or requirement on Seller as a condition to Lender's Consent (other than payment of the Loan Assumption Fee and Loan Assumption Processing Fees as provided for herein) in such a manner as to increase the obligations or liabilities of Seller under the Loan Documents, the Parties agree that the Lender's Consent shall have been obtained on terms that are reasonably satisfactory to Buyer and Seller. 
(iv)    As a condition to each Party's obligation to proceed to the Closing, Lender shall have executed and delivered to Seller and Buyer at Closing the Loan Assumption Documents consistent with the terms of 

the Lender's Consent and in a form reasonably satisfactory to Buyer and Seller.  Notwithstanding the foregoing, the Loan Assumption Documents shall be deemed reasonably satisfactory to Buyer if they (a) do not include any changes in the interest rate, term, or other material terms of the Loan, including, without limitation, any material changes to the Loan covenants or required collateral (other than said release and discharge described in item (i) above), or otherwise increase the obligations or liabilities of Buyer under the Loan Documents being assumed, (b) do not restrict the trading, issuance or encumbrance of publicly traded shares of Buyer or any of its affiliates, either in the Loan Assumption Documents or the underlying Loan Documents being assumed, (c) include the current balance outstanding under the Loan Documents and the escrow amounts currently being held by Lender, and (d) address the items set forth in Schedule “2.3(a)(iv)” attached hereto, to Buyer's reasonable satisfaction. 
In the event one or more of the Loan Assumption Conditions are not satisfied for any reason, neither Seller nor Buyer shall be deemed to be in default of their respective obligations under this Agreement solely as a result thereof and, in such a case, either Seller or Buyer may elect to terminate this Agreement and the Escrow pursuant to the provisions of Section 8.5 hereof.
(b) Loan Assumption Covenants.  Within five (5) Business Days after the Effective Date, Seller and Buyer shall jointly apply to Lender to secure approval of the Loan Assumption and Lender's Consent.  Buyer hereby agrees to and shall: (i) pay all Loan Assumption Processing Fees required by Lender within three (3) Business Days after Seller's written notice to Buyer of Lender's request or requirement for the payment of such Loan Assumption Processing Fees, which notice shall include written evidence of such request or requirement for the payment of Loan Assumption Processing Fees from Lender and/or any other applicable third parties; provided, however, Buyer's obligations to pay Loan Assumption Processing Fees under this Section 2.3(b) shall not exceed the sum of Fifty Thousand Dollars ($50,000.00), in the aggregate (the “Buyer's Loan Assumption Processing Fees Cap”); (ii) after submitting the application to secure approval of the Loan Assumption, exercise commercially reasonable efforts to pursue Lender's Consent until such time as Lender's Consent is secured or denied or the earlier termination of this Agreement and inform Seller in writing of any response from Lender pertaining to any of the Loan Assumption Conditions; (iii) pay the balance of such Loan Assumption Processing Fees on or before the Closing as required by Lender, subject to Buyer's Loan Assumption Processing Fees Cap; (iv) pay the Loan Assumption Fee on the Closing; and (v) execute and deliver to Lender, or shall cause to be executed and delivered to Lender, all financial, completion and other guarantees, together with all environmental indemnification agreements reasonably required to be executed and delivered by Lender as a condition precedent for the granting of Lender's Consent to the Loan Assumption in a form reasonably satisfactory to Buyer; provided, however, that the terms of such guarantees and environmental indemnification agreements are no more onerous than the terms of the Guaranty and the Indemnification Agreement.  Buyer shall reasonably cooperate with Seller in connection with the Loan Assumption process and securing Lender's Consent including, without limitation, furnishing to Lender all documentation and information reasonably requested by Lender in connection with the Loan Assumption process.  Seller shall reasonably cooperate with Buyer in connection with the Loan Assumption process including, without limitation, furnishing to Lender all information reasonably requested by Lender in connection with the Loan Assumption process.  Seller shall also pay to Lender all Loan Assumption Processing Fees required by Lender, to the extent such Loan Assumption Processing Fees exceed Buyer's Loan Assumption Processing Fees Cap; provided, however, in no event shall Seller be obligated to pay any Loan Assumption Processing Fees in excess of the sum of Fifty Thousand Dollars ($50,000.00), in the aggregate (“Seller's Loan Assumption Processing Fees Cap”).  In the event the Loan Assumption Processing Fees exceed the aggregate of Buyer's Loan Assumption Processing Fees Cap and Seller's Loan Assumption Processing Fees Cap (“Excess Loan Assumption Processing Fees”), then Seller and Buyer shall each have the right, but not the obligation, to pay all of such Excess Loan Assumption Processing Fees.  In the event neither Seller nor Buyer elect to pay all of such Excess Loan Assumption Processing Fees, then neither Seller 

nor Buyer shall be deemed to be in default of their respective obligations under this Agreement solely as a result thereof and, in such a case, either Seller or Buyer may elect to terminate this Agreement pursuant to the provisions of Section 8.5 hereof.  
On the Closing, (i) Buyer shall assume the outstanding balance of principal owing under the Loan as of the Proration Date (“Loan Principal Balance”) and execute all Loan Assumption Documents to be executed by Buyer, subject to Section 2.3(a)(iv), (ii) Buyer shall pay the Loan Assumption Fee, (iii) all reserves and reserve accounts maintained by Lender on behalf of Seller in connection with the Loan shall be assigned by Seller to Buyer, and Seller shall receive a credit at Closing with respect to the amounts so assigned pursuant to the provisions of Section 11.2(a)(v) hereof (unless and to the extent Lender returns the existing reserves to Seller), and (v) all interest and other sums owing under the Loan as of the Proration Date (excluding principal), shall be prorated between Seller and Buyer pursuant to Section 11.2(a)(iv) hereof.  
In the event Seller fails to satisfy any of its obligations pursuant to this Section 2.3(b), then such failure shall be deemed to constitute a default by Seller of its obligations under this Agreement and the provisions of Section 8.6(a) shall govern.  In the event that Buyer fails to satisfy any of its obligations pursuant to this Section 2.3(b), then such failure shall be deemed to constitute a default by Buyer of its obligations under this Agreement and the provisions of Section 8.6(b) hereof shall govern.  
Each party's obligations to pay Loan Assumption Processing Fees as set forth herein shall survive any termination of this Agreement.
Section 2.4Cash Purchase Price.  The cash purchase price for the Property (“Cash Purchase Price”) shall be an amount equal to the Purchase Price less the Loan Principal Balance, subject to any adjustments and prorations as may be provided for in this Agreement, including, without limitation, Article 11 hereof.
  
a.Initial Deposit.  Within two (2) Business Days following the Effective Date, Buyer shall deposit into Escrow the sum of Five Million Four Hundred Nine Thousand Two Hundred Fifty Dollars ($5,409,250.00), in the form of Cash, which amount shall serve as an earnest money deposit (“Initial Deposit”).  Buyer may direct Escrow Agent to invest the Initial Deposit in one or more interest bearing accounts with a federally insured state or national bank located in Hawaii designated by Buyer and approved by Escrow Agent.  Subject to the applicable termination and default provisions contained in this Agreement: (i) the Initial Deposit shall be applied as a credit towards the payment of the Purchase Price; and (ii) all interest that accrues on the Initial Deposit while in Escrow Agent's control shall belong to Buyer.  Buyer shall complete, execute and deliver to Escrow Agent a W-9 Form, stating Buyer's taxpayer identification number, at the time of delivery of the Initial Deposit.  All references in this Agreement to the “Initial Deposit” shall mean the Initial Deposit and any and all interest that accrues thereon while in Escrow Agent's control.  Escrow Agent shall promptly notify Seller of its receipt of the Initial Deposit. 

b.Independent Consideration.  A portion of the Initial Deposit, in the amount of One Hundred Dollars ($100.00) (the “Independent Consideration”), shall be earned by Seller upon execution and delivery of this Agreement by Seller and Buyer.  The Independent Consideration represents adequate bargained for consideration for Seller's execution and delivery of this Agreement, Buyer's right to conduct its due diligence investigation of the Property and Buyer's right to terminate this Agreement on or before the expiration of the Investigation Period in connection with Buyer's due diligence investigation.  The Independent Consideration is in addition to and independent of any other consideration or payment provided for herein and is non-refundable in all events.  The Independent Consideration shall be released by Escrow Agent to Seller upon Escrow Agent's receipt of the Initial Deposit.  At Closing, Buyer shall be entitled to receive a credit against the Purchase Price in the amount of the Independent Consideration.

c.Closing Deposit.  The Cash Purchase Price, less the Initial Deposit (“Closing Deposit”), shall be paid by Buyer to Escrow Agent in the form of Cash, pursuant to Section 7.1 hereof, and distributed by Escrow Agent to Seller on the Closing, in accordance with the provisions of this Agreement.

Section 2.5Survival.  The provisions of this Article 2 shall survive the Closing.

ARTICLE 3
ESCROW
Within two (2) Business Days following the Effective Date, Buyer and Seller shall open an escrow (“Escrow”) with Escrow Agent by Buyer timely depositing with Escrow Agent the Initial Deposit; which Escrow Agent shall hold in accordance with Article 12 hereof (the “General Provisions”).  The date of such delivery shall constitute the opening of Escrow and upon such delivery, this Agreement shall constitute joint escrow instructions to Escrow Agent, which joint escrow instructions shall supersede all prior escrow instructions related to the Escrow, if any.  Additionally, Seller and Buyer hereby agree to promptly execute and deliver to Escrow Agent any additional or supplementary escrow instructions as may be necessary or convenient to consummate the transactions contemplated by this Agreement provided, however, that such additional or supplemental escrow instructions shall not supersede this Agreement, and in all cases this Agreement shall control, unless such additional or supplemental escrow instructions expressly provide otherwise.
ARTICLE 4
ACKNOWLEDGMENT OF BUYER INVESTIGATIONS; NEW TITLE EXCEPTIONS

Section 4.1Acknowledgment of Buyer Investigations.  Buyer acknowledges and agrees that, prior to the Effective Date and pursuant to that certain Access and Indemnification Agreement dated as of October 31, 2011, by and between Seller and Buyer, as amended, Buyer had the right to conduct and complete an investigation of all matters pertaining to the Property and Buyer's purchase thereof including, without limitation, the matters described in this Section 4.1.  Subject to the terms and conditions set forth in this Agreement, Buyer has accepted the Property and all matters pertaining to the Property and hereby expressly waives any due diligence contingency with respect to Buyer's purchase of the Property.  From and after the Effective Date, Buyer shall have the right to continue to conduct and complete an investigation of all matters pertaining to the Property, subject to the limitations set forth in Section 4.1(d) hereof; provided, however, that, under no circumstance shall Buyer be afforded any additional rights under this Agreement, the Transaction Documents or otherwise as a result of such continuing investigation.

a.Seller's Deliveries.  Buyer acknowledges that prior to the Effective Date Seller: (i) delivered or caused to be delivered to Buyer; and/or (ii) made available to Buyer for Buyer's review on the electronic “war room” created for the Property, copies of: (A) the Ground Lease; (B) the Leases; (C) the Contracts; (D) all Loan Documents, and (E) those documents, agreements and other information relating to the Property in Seller's actual possession or control, as listed on Schedule “1.0,” attached hereto and incorporated herein by reference (collectively, the “Seller's Deliveries”).  Notwithstanding the foregoing, in no event shall the term “Seller's Deliveries” include any appraisals of the Real Property, any financial records or similar information concerning the Property (other than the tenant rent roll set forth on Schedule 4.1(a) (collectively, the “Tenant Lease Financials”)), any tax returns of Seller, or any other confidential or proprietary information concerning the Property, except as otherwise expressly provided herein (collectively, the “Confidential Information”).  Buyer shall have the right to continue to conduct and complete an investigation of all matters pertaining to Seller's Deliveries and all other matters pertaining to the Property and Buyer's acquisition thereof, subject to the limitations set forth in Section 4.1(d) hereof; provided, however, that under 

no circumstance shall Buyer be afforded any additional rights under this Agreement, the Transaction Documents or otherwise as a result of such continuing investigation.  Seller shall endeavor to deliver to Buyer or make available to Buyer on the electronic “war room” created for the Property copies of other items reasonably requested by Buyer after the Effective Date to the extent the same are in Seller's possession or control (but specifically excluding any Confidential Information); provided, however, that in no event shall Seller be deemed to be in default of its obligations under this Section 4.1(a) for failing to provide any such additional items requested by Buyer. 

All of Seller's Deliveries shall be in a form normally maintained by Seller as part of its ownership and operation of the Property.  Seller shall have no obligation to place Seller's Deliveries into a separate or different format.  Buyer acknowledges that to the extent reports included in Seller's Deliveries have been prepared or provided by persons or entities other than Seller (collectively, the “Third Party Reports”), including (to the extent included within Seller's Deliveries) surveys, title reports, property condition reports, soil studies, building plans, site plans, environmental assessments, traffic studies, tenant sales and financial reports (if any), and materials provided by Tenants or prior owners, they may contain information that is outdated, incomplete, or inaccurate.  The fact that a certain type of report is included in the above list of examples does not, however, mean that such type of report is necessarily included within Seller's Deliveries.  Buyer acknowledges and agrees that, except as may be expressly set forth in this Agreement and the Transaction Documents, Seller makes no representation or warranty as to the accuracy or completeness of the information contained in Seller's Deliveries or as to the information contained in any of the Third Party Reports.  Buyer further acknowledges and agrees that Seller's Deliveries constitute only one source of information for Buyer to review as part of its inspection and investigation of the Property, and except with respect to Seller's representations and warranties regarding Seller's Deliveries set forth in this Agreement and the Transaction Documents, if any, Buyer expressly releases and waives any claim against Seller for the contents of Seller's Deliveries.  Finally, Buyer acknowledges that, as of the Effective Date, it was provided with a sufficient opportunity to conduct and complete an investigation and inspection of all matters pertaining to the Property.  
b.Preliminary Title Report and ALTA Survey.  Prior to the Effective Date, Seller caused to be delivered to Buyer a preliminary title report prepared by Title Insurer covering the Real Property (the “Preliminary Title Report”), together with copies of all documents referred to as exceptions therein.  Prior to the Effective Date, Buyer ordered and received an ALTA As-Built survey of the Real Property (the “ALTA Survey”), a copy of which has been delivered by Buyer to Seller. 

The Real Property shall be conveyed by Seller to Buyer subject only to the following exceptions to title (collectively, the “Permitted Title Exceptions”):
i.The Loan and the Loan Documents.

ii.Non-delinquent real and personal property taxes and assessments.

iii.Any lien voluntarily imposed by Buyer.

iv.Any matters set forth on Schedule “4.1(b)(iv)” attached hereto.

v.All New Title Exceptions approved (or deemed approved) by Buyer pursuant to Section 4.1(c) hereof.

vi.The rights and interests of Tenants, as tenants only with no purchase options or rights of first refusal to purchase, pursuant to the Leases.

vii.All other matters caused by Buyer.

c.New Title Exceptions.  In the event that prior to the Closing, Buyer receives written notice from Seller, Escrow Agent, Title Insurer and/or any other Person of the existence of any new title exceptions or material survey matters actually affecting the Real Property, which new title exceptions or survey matters were not otherwise set forth or referred to in the Preliminary Title Report and/or in the ALTA Survey (“New Title Exceptions”), all such New Title Exceptions shall be deemed to constitute Permitted Title Exceptions for purposes of this Agreement, unless Buyer gives Seller written notice of Buyer's disapproval of such New Title Exceptions within five (5) Business Days (but in no event after the Closing) after the date of Buyer's receipt of written notice of the existence of the New Title Exceptions (“Disapproved New Title Exceptions Notice”).  The Disapproved New Title Exceptions Notice shall list each item of dissatisfaction or objection in particular (each, a “Disapproved New Title Exception” and collectively, the “Disapproved New Title Exceptions”).  Except for Monetary Obligations, Seller shall not be required to cause any of the Disapproved New Title Exceptions to be cured on or before the Closing.  Notwithstanding the foregoing, in the event Buyer timely delivers to Seller a Disapproved New Title Exceptions Notice, Seller shall have the right, but not the obligation, in its sole discretion, to agree to endeavor to cure one or more of the Disapproved New Title Exceptions by delivering to Buyer written notice (the “Disapproved New Title Exceptions Cure Notice”) specifying Seller's election to endeavor to cure one or more of the Disapproved New Title Exceptions, as applicable, within five (5) Business Days (but in no event after the Closing) following Seller's receipt of Buyer's Disapproved New Title Exceptions Notice (the “Disapproved New Title Exceptions Cure Election Deadline”).  If Seller fails to timely deliver a Disapproved New Title Exceptions Cure Notice to Buyer, then Seller shall be deemed to have elected not to endeavor to cure any of the Disapproved New Title Exceptions.  In the event: (i) Buyer timely delivers to Seller a Disapproved New Title Exceptions Notice pursuant to this Section 4.1(c); and (ii) Seller elects (or is deemed to have elected) not to endeavor to cure one or more of the Disapproved New Title Exceptions pursuant to this Section 4.1(c), provided such Disapproved New Title Exceptions are not Monetary Obligations which Seller is obligated to cure on or before the Closing pursuant to Section 5.1(d) hereof, then Seller shall not be in default under this Agreement and, in such a case, within three (3) Business Days (but in no event after the Closing) following the Disapproved New Title Exceptions Cure Election Deadline, Buyer may elect either: (A) to continue this Agreement in effect without modification and purchase and acquire the Property in accordance with, and subject to, the terms and conditions of this Agreement, subject to such Disapproved New Title Exceptions (in which case the Disapproved New Title Exceptions which Seller has elected (or is deemed to have elected) not to endeavor to cure shall be deemed to constitute Permitted Title Exceptions); or (B) to terminate this Agreement and the Escrow pursuant to Section 8.5(a) hereof.  In the event Seller elects to endeavor to cure one or more of the Disapproved New Title Exceptions, a Disapproved New Title Exception shall be deemed to have been cured if: (1) Seller causes such item to be removed from record title to the Real Property (or, with respect to survey matters, cause such item to be removed from the Real Property) prior to the Disapproved New Title Exceptions Cure Deadline; (2) if Seller causes Title Insurer to issue the Title Policy without reflecting such item as an exception thereof in a manner reasonably approved by Buyer; or (3) Seller otherwise cures Buyer's objection in a manner reasonably approved by Seller and Buyer.  

Following the timely receipt of a Disapproved New Title Exceptions Notice from Buyer, if Seller timely delivers a Disapproved New Title Exceptions Cure Notice to Buyer, Seller shall have until the Disapproved New Title Exceptions Cure Deadline to cure the applicable Disapproved New Title Exceptions.  In the event Seller cures one or more Disapproved New Title Exceptions that Seller has elected to endeavor to cure on or before the Disapproved New Title Exceptions Cure Deadline, then Seller shall deliver written 

notice to Buyer specifying those Disapproved New Title Exceptions that Seller has cured and those Disapproved New Title Exceptions that Seller has not been able to cure (“Disapproved New Title Exceptions Cure Completion Notice”).  In the event Seller fails to timely cure any Disapproved New Title Exceptions that Seller has elected to endeavor to cure on or before the Disapproved New Title Exceptions Cure Deadline, provided such Disapproved New Title Exceptions are not Monetary Obligations which Seller is obligated to cure on or before the Closing pursuant to Section 5.1(d) hereof, then Seller shall not be in default under this Agreement and, in such a case, Buyer may elect, no later than two (2) Business Days following the Disapproved New Title Exceptions Cure Deadline, to either: (x) continue this Agreement in effect without modification and purchase and acquire the Property in accordance with, and subject to, the terms and conditions of this Agreement, subject to the Disapproved New Title Exceptions which Seller elected to endeavor to cure and failed to timely cure (which Disapproved New Title Exceptions will be deemed to constitute Permitted Title Exceptions); or (y) terminate this Agreement and the Escrow pursuant to the provisions of Section 8.5(a) hereof, unless such Disapproved New Title Exceptions are the result of a breach by Seller of Section 5.1(d) hereof, in which case the provisions of Section 8.6(a) hereof shall govern.  Notwithstanding any provision in this Agreement to the contrary, pursuant to Section 5.1(d) hereof, Seller shall be obligated to cure all Monetary Obligations of record against the Real Property on or before the Closing.
d.Physical Inspection.  Subject to the limitations set forth in this Section 4.1(d), Buyer shall have the right, at all times after the Effective Date, at Buyer's expense, to continue to make inspections of the Property and all matters relating thereto; provided, however, that under no circumstance shall Buyer be afforded any additional rights under this Agreement, the Transaction Documents or otherwise as a result of such continuing investigation.  In connection with the foregoing, subject to Buyer delivering to Seller a minimum of one (1) Business Day's advance notice (which notice may be delivered telephonically or by e-mail to Lawrence J. Taff), Buyer and its agents, contractors and subcontractors shall have the right to enter upon the Real Property, at reasonable times during ordinary business hours to make inspections and tests as Buyer deems reasonably necessary and which may be accomplished without causing any material damage to the Real Property, including, without limitation, inspections of all roofs, electrical, mechanical and structural elements, HVAC systems and other building systems located on or within the Improvements, and conducting interviews with the Tenants.  Buyer shall contact Lawrence J. Taff at (808) 521-7444, in advance to schedule all such on-site inspections.  Buyer shall observe all appropriate safety precautions in conducting any such inspections of the Property.  Notwithstanding the foregoing, in no event shall Buyer, its agents, contractors or subcontractors conduct any environmental or physically invasive testing on the Real Property without Seller's prior written approval, which approval may be granted or withheld in the sole and absolute discretion of Seller.  Buyer agrees that its inspection rights hereunder shall be subject to the rights of tenants occupying the Property and the rights held under easements and other documents recorded against the Property and that Buyer shall not unreasonably interfere with or interrupt any Tenant, occupant or invitee of the Real Property in making such inspections or tests.  Prior to such entry upon the Real Property, Buyer shall deliver to Seller a certificate of insurance evidencing that Buyer, and its agents, contractors and subcontractors, have procured commercial general liability insurance coverage for bodily injury and property damage in an amount of at least One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) in excess umbrella liability insurance coverage, naming Seller as an additional insured under such insurance, all of which shall be in form and substance reasonably satisfactory to Seller.  Buyer shall not permit any liens or encumbrances to be placed against the Real Property in connection with Buyer's investigation and inspection of the Real Property and/or in connection with Buyer's activities on the Real Property, but in the event any such lien is placed against the Real Property, Buyer shall pay and discharge such lien within ten (10) Business Days after Buyer becomes 

aware of the attachment of such lien.  Buyer hereby agrees to and shall indemnify, defend and hold harmless Seller and Seller's members, managers, partners, officers, directors, shareholders, employees, agents, representatives, invitees, Tenants, occupants, successors and assigns (collectively, “Seller's Representatives”), from and against any and all Losses arising out of Buyer's investigation and inspection of the Real Property and/or Buyer's and its contractors' and agents' activities on or about the Real Property conducted prior to and/or after the Effective Date and/or any damage to the Real Property or personal injury resulting from any of the activities which Buyer conducts (or has conducted) on or about the Real Property, except to the extent such Losses arise out of the negligence or willful misconduct of Seller or Seller's Representatives or the mere discovery by Buyer of any pre-existing condition on the Property, except to the extent the negligence or willful misconduct of Buyer or its representatives released or exacerbated such pre-existing condition on the Property prior to such investigations.  Buyer further hereby covenants and agrees to promptly repair any such damage to the Property caused by reason of Buyer's investigation or inspection of the Real Property and/or Buyer's activities on or about the Real Property; provided, however, that the scope and manner of such repair shall be subject to Seller's prior reasonable approval.  

Furthermore, Buyer shall not contact or have any discussions with any Tenants without: (i) first giving Seller prior notice (which notice may be delivered telephonically or by e-mail to Lawrence J. Taff); and (ii) giving Seller a reasonable opportunity to be present, in person or by telephone, during such discussions.  Except in connection with the preparation of a so-called “Phase I” environmental report or a so-called “zoning report” with respect to the Property, Buyer will also not contact the city, county or any other governmental agencies without first giving Seller reasonable prior notice (which notice may be delivered telephonically or by e-mail to Lawrence J. Taff) and a reasonable opportunity to be present during or participate in such discussions.  Buyer shall contact Lawrence J. Taff at (808) 521-7444, to schedule all such meetings and discussions. Buyer acknowledges and agrees that it is being afforded an adequate opportunity to conduct a comprehensive investigation and review of the Property.   
The covenants, agreements and obligations of Buyer set forth in this Section 4.1(d) shall survive the termination of this Agreement and the Closing, as applicable.
Section 4.2Intentionally Deleted.

Section 4.3Return of Seller's Deliveries.  Upon any termination of this Agreement and the Escrow, Buyer shall cause to be returned to Seller, at Seller's request, all items representing Seller's Deliveries that were previously delivered by Seller to Buyer pursuant to this Agreement.  

Section 4.4Confidentiality.  Prior to the Closing, all information provided by Seller to Buyer or obtained by Buyer relating to the Property in the course of Buyer's inspection, including, without limitation, Seller's Deliveries and Buyer's Due Diligence Documentation (collectively, the “Information”), shall be treated as confidential by Buyer.  Prior to the Closing, Buyer agrees not to transmit the Information other than: (a) to such of its attorneys, accountants, officers, directors, members, employees, consultants, representatives, equity investors, lenders, potential lenders, underwriters and potential underwriters who need to know the Information (collectively, the “Representatives”), and Buyer shall advise such Representatives as to the confidentiality of such Information; (b) as may be required by law, (c) to the extent Buyer determines appropriate, after consultation with counsel, in any prospectus, report or other filing made by Buyer or its affiliates with the United States Securities and Exchange Commission or any stock exchange to which Buyer or any affiliate is subject and any press releases related thereto, provided such prospectus, report or other filing or any press release shall not disclose the name of Seller or Ground Lessor and shall be in a format consistent with Buyer's customary past practices; 

(d) in connection with the exercise of its rights under this Agreement; and (e) as contemplated by this Agreement.  Without limiting the generality of the foregoing, Buyer acknowledges and agrees that all leasing information, including Tenants, Lease terms, expiration dates and other terms and conditions shall be deemed confidential Information, and shall not be used by Buyer or its Representatives to solicit tenants to move from the Property.  Without limiting the foregoing, in the event the Closing does not take place for any reason, then Buyer shall maintain the confidentiality of such Information in accordance with the above provisions and upon Seller's request, shall return to Seller any written Information in addition to Seller's Deliveries in the manner provided in Section 4.3 hereof.  As used herein, the term “Information” shall not include any information: (i) disclosed by Buyer under court order or other lawful compulsory process, provided that Seller is given notice thereof as soon as practicable and an opportunity to challenge the basis for such disclosure; (ii) information in the public domain (in other words, available to the general public and not to a particular Party) at the time it is disclosed or becomes publicly available after disclosure other than by breach of this Agreement; and (iii) information independently known and/or lawfully developed by Buyer without reference to the Information.
  
Prior to the Closing, except as provided above, or pursuant to events described above, neither Seller nor Buyer nor any of their respective attorneys, accountants, officers, directors, members, employees, consultants, investors or lenders shall make any press releases or other public communications relating to the transactions contemplated by this Agreement without the prior written approval of the other Party, which approval shall be granted or withheld in such Party's sole and absolute discretion; further except, to the extent Seller determines appropriate, after consultation with counsel, in connection with or relating to any prospectus, report or other filing made by Seller or its affiliates with the United States Securities and Exchange Commission or any stock exchange to which Seller or any affiliate is subject, provided such press release or public communication shall not disclose the name of Buyer except as required by applicable law.  Without limiting the foregoing, except as required by applicable law, neither Party shall disclose the identity of the other Party to any third party (other than Lender and representatives of Seller or Buyer, as applicable, who agree to be bound by the terms of this Section 4.4) without the prior written consent of the other Party, which consent may be withheld in such Party's sole and absolute discretion.  Seller and Buyer each hereby acknowledge that the United States securities laws prohibit any person who has received from the issuer of such securities material, nonpublic information concerning the matters that are the subject of this Agreement from purchasing or selling securities of such issuer or from communicating such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information, and each Party hereby agrees for the benefit of the other Party and its affiliates to be bound by such prohibitions.  Neither Party expresses a view as to whether or not any portion or all of the information regarding this Agreement and the transaction contemplated hereby constitutes, or in the future may constitute, material, nonpublic information with respect to Buyer and its affiliates or with respect to Seller and its affiliates.
Section 4.5    Survival.  The covenants, agreements and obligations of Buyer and Seller set forth in this Article 4 shall survive the Closing or any prior termination of this Agreement.
ARTICLE 5
PRE-CLOSING OBLIGATIONS OF SELLER and BUYER

Section 5.1Seller's Pre-Closing Obligations.  Seller hereby covenants and agrees as follows:

a.Operations.  During the time period commencing upon the Effective Date and terminating upon the Closing or the earlier termination of this Agreement, subject to the provisions of Section 8.3 hereof, Seller shall operate, manage and maintain the Property substantially in accordance with 

Seller's customary past practices.

b.Leases.  During the time period commencing upon the Effective Date and terminating on the Closing or the earlier termination of this Agreement, as applicable, Seller shall not renew, extend, amend or modify any of the Leases or enter into any new lease (each and any such renewal, extension, amendment or modification, or new lease, a “Proposed New Lease”), without the prior written consent of Buyer in each instance, which consent shall not be unreasonably withheld, delayed or conditioned.  In the event Seller desires to enter into a Proposed New Lease, Seller shall deliver to Buyer a copy of the Proposed New Lease for Buyer's review in accordance with the provisions of this Section 5.1(b).  Buyer shall have a period of five (5) Business Days following the receipt of such Proposed New Lease to review and approve or disapprove of the same.  Prior to the expiration of such five (5) Business Day period, Buyer shall deliver written notice to Seller advising Seller of Buyer's approval or disapproval of such Proposed New Lease, and the specific reason(s) for any such disapproval.  In the event Buyer fails to timely deliver such written notice of approval or disapproval within such five (5) Business Day period, then Buyer shall be deemed to have approved such Proposed New Lease.  All Proposed New Leases which are approved (or deemed approved) by Buyer pursuant to the provisions of this Section 5.1(b), and which are subsequently entered into and executed by Seller, shall be deemed to constitute a “New Lease” for purposes of this Agreement.  All references in this Agreement to the “Leases” shall include all New Leases.  Notwithstanding any provision to the contrary in this Agreement, in no event and under no circumstances shall Seller be obligated to provide a Tenant Estoppel Certificate with respect to any New Lease.
  
c.Agreements.  During the time period commencing upon the Effective Date and terminating on the Closing or the earlier termination of this Agreement, as applicable, Seller shall not enter into, terminate, amend or modify any Permitted Title Exceptions or any other agreements with respect to the Property which would encumber or be binding on Buyer or the Property from and after the Closing Date, without in each instance obtaining the prior written consent of Buyer in each instance, which consent shall not be unreasonably withheld or conditioned.  Notwithstanding the foregoing, Seller shall terminate all Contracts, property management agreements and lease brokerage agreements relating to the Property on or before the Closing Date.

d.Monetary Obligations.  Seller shall satisfy all Monetary Obligations of record against the Property on or before the Closing Date.

e.Tenant Estoppel Certificates.  Seller shall forward a tenant estoppel certificate to each Tenant (other than a Tenant under a New Lease entered into in accordance with Section 5.1(b) hereof), in the form attached hereto as Exhibit “H” (each, a “Tenant Estoppel Certificate” and collectively, the “Tenant Estoppel Certificates”), and request that each Tenant execute and deliver such Tenant Estoppel Certificate to Seller prior to the Estoppel Delivery Deadline.  Each Tenant Estoppel Certificate shall be duly executed by the applicable Tenant thereof and each guarantor of the applicable Lease, if any, and shall be dated no earlier than the Effective Date, and, as to each Tenant Estoppel Certificate for a Major Tenant, shall be dated no earlier than thirty (30) days prior to the Closing Date.  In the event Seller is unable to obtain such a Tenant Estoppel Certificate from any Tenant within such time period, then Seller shall not be in default under this Agreement and, except as provided below with respect to the Tenant Estoppel Certificates for Major Tenants, Buyer shall have no right to terminate this Agreement.  If Seller has not timely delivered Tenant Estoppel Certificates for each Major Tenant before the Estoppel Delivery Deadline, then Seller shall not be in default under this Agreement, and in such a case, Buyer may elect, within five (5) Business Days following the Estoppel Delivery Deadline, to terminate this Agreement and the Escrow pursuant to the provisions of Section 8.5(a) hereof.  

i.Approval or Disapproval of Estoppel Certificates.  Buyer shall have the right to review and approve or disapprove the Tenant Estoppel Certificate for each Major Tenant, subject to and in accordance with the provisions of this Section 5.1(e)(i).  Buyer shall neither unreasonably withhold its approval of, nor unreasonably disapprove of, any such Tenant Estoppel Certificate.  In connection with the foregoing: (a) with regard to the form of each Tenant Estoppel Certificate for a Major Tenant, in the event the Tenant Estoppel Certificate is either: (1) in substantially the same form as required pursuant to the provisions of Section 5.1(e) above; or (2) in substantially the same form as required by such Major Tenant's respective Lease, Buyer shall not have the right to disapprove of or object to the form of such Tenant Estoppel Certificate; and (b) with regard to the content contained in a Tenant Estoppel Certificate for a Major Tenant, Buyer shall not have the right to disapprove of or object to the Tenant Estoppel Certificate, unless: (1) the Tenant Estoppel Certificate is not properly executed or dated (or is dated prior to the date specified in Section 5.1(e) hereof); (2) the Tenant Estoppel Certificate provides that there exists an uncured default by landlord or the Major Tenant not listed in Schedule 9.5(a) attached hereto; (3) except as disclosed in said Schedule 9.5(a), there is an inconsistency between any material term or condition of the applicable Lease and the matters reflected in the Tenant Estoppel Certificate, as stated therein; or (4) except as disclosed in said Schedule 9.5(a), there is a greater than five percent (5%) difference between the amount of any monetary item referenced in the Tenant Lease Financials (including, without limitation, the amounts of monthly operating expenses and unpaid tenant improvement allowances) and the corresponding information contained in the Tenant Estoppel Certificate (each, an “Estoppel Objection Matter” and collectively, the “Estoppel Objection Matters”).  Notwithstanding the foregoing provisions of this Section 5.1(e)(i), the inclusion by any Major Tenant of a knowledge qualifier (such as “to tenant's knowledge” or any similar phrase) and/or the deletion by any Major Tenant of paragraph 7 of the form of Tenant Estoppel Certificate attached hereto as Exhibit “H” shall not, of itself, be an Estoppel Objection Matter or give Buyer the right to reject or disapprove of such Tenant Estoppel Certificate.  If Buyer disapproves any Tenant Estoppel Certificate for a Major Tenant based on the existence of one or more Estoppel Objection Matters, then Buyer may deliver to Seller written notice describing in reasonable detail the nature of such Estoppel Objection Matter(s) (“Estoppel Objection Notice”) within five (5) Business Days following Buyer's receipt of the Estoppel Certificate.  Unless Seller receives an Estoppel Objection Notice within such five (5) Business Day period, Buyer shall be deemed to have approved such Tenant Estoppel Certificate.  If Seller timely receives an Estoppel Objection Notice within such five (5) Business Day period, then Seller may, but shall not be obligated to, agree to endeavor to cure some or all of the Estoppel Objection Matters described in such Estoppel Objection Notice by delivering written notice (“Estoppel Cure Notice”) to Buyer of Seller's election to endeavor to cure some or all of the Estoppel Objection Matters within two (2) Business Days following the receipt by Seller of Buyer's Estoppel Objection Notice (the “Estoppel Cure Election Deadline”).  If Seller fails to timely deliver to Buyer Seller's Estoppel Cure Notice prior to the Estoppel Cure Election Deadline, then Seller shall be deemed to have elected not to endeavor to cure any Estoppel Objection Matters.  In the event (A) Buyer timely delivers to Seller a Estoppel Objection Notice pursuant to this Section 5.1(e)(i) hereof, and (B) Seller elects (or is deemed to have elected) not to endeavor to cure one or more of the Estoppel Objection Matters pursuant to this Section 5.1(e)(i) hereof, provided such Estoppel Objection Matters are not Monetary Obligations which Seller is obligated to cure on or before the Closing pursuant to Section 5.1(d) hereof, then Seller shall not be in default under this Agreement and, in such a case, within three (3) Business Days following the Estoppel Cure Election Deadline, Buyer may elect either: (I) to continue this Agreement in effect without modification and purchase and acquire the Property in accordance with the terms and conditions of this Agreement, subject to such Estoppel Objection Matters; or (II) to terminate this Agreement and the Escrow pursuant to Section 8.5(a) hereof.  

ii.If Seller timely elects to endeavor to cure one or more of the Estoppel Objection Matters, then Seller shall have until the Estoppel Cure Deadline to cure such Estoppel Objection Matters that Seller has committed to endeavor to cure in a manner reasonably acceptable to Buyer, and shall pay all 

costs associated with such cure.  If Seller cures one or more Estoppel Objection Matters in a manner reasonably acceptable to Buyer that Seller has elected to endeavor to cure on or before the Estoppel Cure Deadline, then Seller shall deliver written notice to Buyer specifying those Estoppel Objection Matters that Seller has cured and those Estoppel Objection Matters that Seller will no longer endeavor to cure, if any (“Estoppel Cure Completion Notice”).

iii.Estoppel Remedies.  If Seller fails to cure an Estoppel Objection Matter in a manner reasonably acceptable to Buyer that Seller has elected to endeavor to cure by the Estoppel Cure Deadline, then Seller shall not be in default under this Agreement and, in such a case, Buyer may elect, no later than 12:00 p.m. on the date that is three (3) Business Days following the Estoppel Cure Deadline, to either: (1) continue this Agreement in effect without modification and purchase and acquire the Property in accordance with the terms and conditions of this Agreement, subject to such Estoppel Objection Matters; or (2) terminate this Agreement and the Escrow pursuant to the provisions of Section 8.5(a) hereof.

iv.Updated Tenant Estoppel Certificates.  In the event that one or more of the Tenant Estoppel Certificates for a non-Major Tenant delivered to Buyer is dated as of the date that is forty-five (45) Calendar Days prior to the Closing Date or more, upon Buyer's written request to Seller and only as an accommodation to Buyer, Seller shall request that the applicable Tenants with respect to such Tenant Estoppel Certificates deliver updated Tenant Estoppel Certificates prior to Closing; provided, however, that the delivery and review and approval of such updated Tenant Estoppel Certificate shall not be a condition precedent to Buyer's obligation to proceed to Closing, nor shall the failure to deliver one or more of such updated Tenant Estoppel Certificate be deemed to constitute a default by Seller under this Agreement.  

f.Ground Lease.  During the time period commencing upon the Effective Date and terminating on the Closing or the earlier termination of this Agreement, as applicable, Seller shall not amend or modify the Ground Lease without the prior written consent of Buyer in each instance, which consent may be withheld in Buyer's sole and absolute discretion.  No later than ten (10) Business Days prior to the Closing Date (the “Ground Lessor Estoppel Deadline”), Seller shall deliver to Buyer an estoppel certificate from the Ground Lessor: (1) in substantially the same form as required by the Ground Lease or (2) if no such form is required under the Ground Lease, in the form attached hereto as Exhibit “I” (the “Ground Lessor Estoppel Certificate”).  The Ground Lessor Estoppel Certificate shall be duly executed by the Ground Lessor and shall be dated no earlier than thirty (30) Calendar Days prior to the Closing Date.

Buyer shall have the right to review and approve or disapprove the Ground Lessor Estoppel Certificate pursuant to the same procedures set forth in Section 5.1(e) above and subject to, and in accordance with, the provisions of this Section 5.1(f) hereof.  Buyer shall neither unreasonably withhold its approval of, nor unreasonably disapprove of, the Ground Lessor Estoppel Certificate.  In connection with the foregoing: (a) with regard to the form of the Ground Lessor Estoppel Certificate, in the event the Ground Lessor Estoppel Certificate is in the form required pursuant to the provisions of Section 5.1(f)(1) or (2) hereof, as applicable, Buyer shall not have the right to disapprove of or object to the form of the Ground Lessor Estoppel Certificate; and (b) with regard to the content contained in the Ground Lessor Estoppel Certificate, Buyer shall not have the right to disapprove of or object to the Ground Lessor Estoppel Certificate, unless: (1) the Ground Lessor Estoppel Certificate is not properly executed or dated (or is dated prior to the date specified in Section 5.1(f) hereof); (2) the Ground Lessor Estoppel Certificate provides that there exists an uncured default by any party to the Ground Lease; (3) there is an inconsistency between any term or condition of the Ground Lease and the matters reflected in the Ground Lessor Estoppel Certificate, as stated therein; or (4) there is an inconsistency between the information contained in the Ground Lease as included with Seller's Deliveries and the information contained in the Ground Lessor Estoppel Certificate. 

ARTICLE 6
SELLER'S DELIVERIES

Section 6.1Seller's Deliveries at Closing.  On or before the Closing Date, Seller shall deliver to Escrow Agent the items described in this Section 6.1.

a.Assignment and Assumption of Ground Lease.  Three (3) sets of counterpart originals of the Assignment and Assumption of Ground Lease, duly executed by Seller.  

b.Conveyance Tax Certificate.  One (1) original of a conveyance tax certificate to accompany the Assignment and Assumption of Ground Lease (the “Conveyance Tax Certificate”), duly executed by Seller.

c.Bill of Sale.  One (1) original of the Bill of Sale, duly executed by Seller.

d.Certificates of Non-Foreign Status.  One (1) original of each of the Certificates of Non-Foreign Status, duly executed and acknowledged by Seller.

e.Assignment and Assumption of Leases and Security Deposits.  Two (2) counterpart originals of the Assignment and Assumption of Leases, duly executed by Seller.

f.Seller's Certificate.  One (1) original of the Seller's Certificate, duly executed by Seller. 

g.Assignment of Permits, Entitlements and Intangible Property.  Two (2) counterpart originals of the Assignment of Permits, Entitlements and Intangible Property, duly executed by Seller.

h.Loan Assumption Documents.  Three (3) counterpart originals (or as many counterparts as Lender may require) of the Loan Assumption Documents, duly executed and acknowledged, where applicable, by Seller.  

i.Seller's Charges.  All charges to Seller at Closing may, as Seller directs, be paid from Seller's proceeds at Closing. 

j.Evidence of Authority.  To the extent reasonably required by the Title Insurer and/or Escrow Agent, as applicable, evidence that Seller and those acting for Seller have full authority to consummate the transaction contemplated by this Agreement, as modified through the Closing including, without limitation, (i) certified copies of the corporate, limited liability company, partnership or other resolutions authorizing the transaction contemplated by this Agreement, (ii) certified copies of the Operating Agreement and By-Laws of Seller, and (iii) good standing certificates of Seller, issued by the State of Delaware and State of Hawaii.

k.Closing Statement.  Seller's Closing Statement, duly executed by Seller.

l.Title Affidavit and Other Documents. An owner's affidavit and gap indemnity, in the form attached hereto as Exhibit “J”, to be effective only upon Seller's receipt of the Cash Purchase Price (subject to any adjustments and apportionments as may be provided for in this Agreement) in order to, among other things, effect Closing hereunder no more than one (1) Business Day prior to the recording of the Assignment and Assumption of Ground Lease and the other applicable Transaction Documents. 

m.Tenant Notification Letters. A letter addressed to each of the Tenants under the Leases, duly executed by Seller and dated as of the Closing, advising such Tenants of the sale of the Property to Buyer and directing the Tenants to tender all future payments under the Leases to Buyer or as otherwise may be required by the Lender.

n.Additional Documents.  Such additional documents, instructions or other items as may be reasonably necessary or appropriate to comply with the provisions of this Agreement and to effect the transactions contemplated hereby including, without limitation, any state and local tax clearance certificates, and any bulk sales reports required by Hawaii Revised Statutes 237-43).
  
Section 7.1Seller's Deliveries Post Closing.  Within three (3) Calendar Days following the Closing, Seller shall deliver to Buyer the items described in this Section 6.2.

a.Leases, Intangible Property and Permits and Entitlements.  Originals or copies of all of the Leases, Intangible Property, and Permits and Entitlements, including all amendments and guarantees relating thereto, to the extent the same are in Seller's possession and to the extent the same have not previously been delivered to Buyer.

b.Keys.  All keys and security cards, if any, relating to the Real Property, and such additional documents, instructions or other items as may be necessary to operate any security systems on the Real Property, to the extent the same are in Seller's possession and to the extent the same have not previously been delivered to Buyer.

ARTICLE 7
BUYER'S DELIVERIES
On or before the Closing Date, Buyer shall deliver to Escrow Agent the items described in this Article 7.
Section 7.1Closing Deposit and Loan Assumption Fee.  The Closing Deposit for the Property pursuant to Section 2.4(c) hereof, and the Loan Assumption Fee pursuant to Section 2.3(b) hereof.

Section 7.2Assignment and Assumption of Ground Lease.  Three (3) counterpart originals of the Assignment and Assumption of Ground Lease, duly executed by Buyer and by the buyer under the Fee Interest Purchase Agreement, or its permitted assignee, as the successor in interest to the Ground Lessor.

Section 7.3Conveyance Tax Certificate.  One (1) original of the Conveyance Tax Certificate, duly executed by Buyer.

Section 7.4Assignment and Assumption of Leases and Security Deposits.  Two (2) counterpart originals of the Assignment and Assumption of Leases and Security Deposits, duly executed by Buyer.

Section 7.5Intentionally Deleted.

Section 7.6Assignment of Permits, Entitlements and Intangible Property.  Two (2) counterpart originals of the Assignment of Permits, Entitlements and Intangible Property, duly executed by Buyer.

Section 7.7Loan Assumption Documents.  Three (3) counterpart originals (or so many counterparts as Lender may require) of the Loan Assumption Documents, duly executed and acknowledged, where applicable, by Buyer.  

Section 7.8Buyer's Charges.  Funds sufficient to pay all amounts required to be paid by Buyer in accordance with the provisions of Article 11 hereof, in the form of Cash.

Section 7.9Evidence of Authority.  To the extent reasonably required by the Title Insurer, and/or Escrow Agent, as applicable, evidence that Buyer and those acting for Buyer have full authority to consummate the transaction contemplated by this Agreement, as modified through the Closing including, without limitation, (i) certified copies of the corporate, limited liability company, partnership or other resolutions authorizing the transactions contemplated by this Agreement, (ii) certified copies of the charter documents and By-Laws of Buyer; and (iii) good standing certificates issued by the state of formation of Buyer.

Section 7.10Closing Statement.  Buyer's Closing Statement, duly executed by Buyer.

Section 7.11Additional Documents.  Such additional documents, instructions or other items as may be reasonably necessary or appropriate to comply with the provisions of this Agreement and to effect the transactions contemplated hereby including, without limitation, any state and local transfer tax forms.

ARTICLE 8
CONDITIONS TO CLOSING; 
CLOSING; DEFAULT; REMEDIES

Section 8.1Conditions to Obligations of Buyer.  The Closing of the transactions contemplated pursuant to this Agreement and Buyer's obligation to purchase the Property are subject to satisfaction, on or before the Closing Date, of all of the conditions set forth below.  Seller hereby acknowledges and agrees that each of the conditions set forth in this Section 8.1 are for the benefit of Buyer and may only be waived by Buyer.

a.Delivery of Items.  Seller shall have timely delivered (i) to Escrow Agent all of the items to be delivered by Seller pursuant to Section 6.1 hereof, and (ii) to Buyer the Estoppel Certificates in accordance with Section 5.1(e) and the Ground Lessor Estoppel Certificate in accordance with Section 5.1(f), and the Tenant Estoppel Certificates executed by the Major Tenants are dated as of a date that is no earlier than thirty (30) days prior to the Closing Date.

b.Performance of Obligations.  Seller shall have timely performed and satisfied all of the material obligations under this Agreement to be performed by Seller prior to the Closing.

c.Title Policy.  Title Insurer is committed to issue an American Land Title Association Leasehold Owner's Policy of Title Insurance with Extended Coverage (ALTA Form 2006), or its stated equivalent (“Title Policy”), from Title Insurer in the form of the pro forma policy obtained by Buyer prior to the Effective Date (a copy of which shall be delivered to Seller), with liability in the amount of the Purchase Price, insuring that leasehold title to the Real Property is vested in Buyer, subject only to the Permitted Title Exceptions. 

d.Litigation.  No suit, action, claim or other proceeding shall have been instituted against Seller which results, or reasonably might be expected to result, in the transactions contemplated by this Agreement being enjoined or declared unlawful, in any lien attaching to or against the Property and/or in any material liabilities or obligations being imposed upon Buyer or the Property, other than the Permitted 

Title Exceptions.  

e.Damage or Destruction.  There shall have been no Material Loss.

f.Condemnation Proceeding.  No Material Taking shall have been commenced or threatened (in writing) against all or any portion of the Real Property.

g.Loan Assumption Conditions.  All of the Loan Assumption Conditions shall have been satisfied. 

h.Representations and Warranties.  All representations and warranties of Seller made herein shall be true, correct and complete in all material respects on and as of the Closing Date, as if such representations and warranties were first made on the Closing Date.

i.Concurrent Closing.  Ground Lessor shall have performed all obligations required to be performed by Ground Lessor pursuant to the Fee Interest Purchase Agreement in accordance with the terms thereof and the transaction contemplated in the Fee Interest Purchase Agreement will close concurrently with the Closing hereof.  

j.Consents to Assignment of Ground Lease.  Seller shall have delivered to Buyer written evidence of the consent of Lender and Fee Lender to the assignment of the Ground Lease by Seller to Buyer pursuant to the terms and conditions set forth in this Agreement, which consent shall be in form and substance reasonably acceptable to Buyer (collectively, the “Lenders' Consent to Assignment”).  

Buyer may waive any of the conditions set forth in Section 8.1; provided, however, that Buyer shall not be entitled to waive the condition of satisfaction of receipt of Lender's Consent or the condition of concurrent closing under the Fee Interest Purchase Agreement.  Without limiting the foregoing, Escrow Agent shall assume that each of the conditions set forth in Section 8.1(b) hereof shall have been satisfied as of the Closing Date, unless Buyer shall have given written notice to the contrary to Escrow Agent prior to the Closing.
Section 8.2Conditions to Obligations of Seller.  The Closing of the transactions contemplated pursuant to this Agreement and the obligation of Seller to sell, convey, assign, transfer and deliver the Property to Buyer are subject to satisfaction, on or before the Closing Date, of all of the conditions set forth below.  Buyer hereby acknowledges and agrees that each of the conditions set forth in this Section 8.2 are for the benefit of Seller and may only be waived by Seller.

a.Delivery of Items.  Buyer shall have timely delivered to Escrow Agent all of the items to be delivered by Buyer pursuant to Article 7 hereof.

b.Performance of Obligations.  Buyer shall have timely performed and satisfied all of the material obligations of Buyer under this Agreement to be performed by Buyer prior to the Closing.

c.Loan Assumption Conditions.  All of the Loan Assumption Conditions shall have been satisfied.

d.Representations and Warranties.  All representations and warranties of Buyer made herein shall be true, correct and complete in all material respects on and as of the Closing Date, as if such representations and warranties were first made on the Closing Date.

e.Concurrent Closing.  Buyer or Buyer's affiliate shall have performed all obligations required to be performed by Buyer or Buyer's affiliate pursuant to the Fee Interest Purchase Agreement in accordance with the terms thereof and the transaction contemplated in the Fee Interest Purchase Agreement will close concurrently with the Closing hereof.
 
f.Consents to Assignment of Ground Lease.  Seller shall have obtained in writing the Lender's Consent to Assignment. 

Seller may waive any of the conditions precedent set forth in this Sections 8.2; provided, however, that Seller may not waive the condition of receipt of Lender's Consent or the condition of concurrent closing under the Fee Interest Purchase Agreement.  Without limiting the foregoing, Escrow Agent shall assume that each of the conditions set forth in Section 8.2(b) shall have been satisfied as of the Closing Date, unless Seller shall have given written notice to the contrary to Escrow Agent prior to the Closing.
Section 8.3Casualty; Condemnation Proceeding

a.Material Loss; Condemnation Proceeding.  In the event that, prior to the Closing, the Real Property suffers (i) any damage, loss or destruction, or (ii) Seller shall receive written notice of any eminent domain or condemnation proceeding, Seller shall immediately notify Buyer of such damage, loss, destruction or eminent domain or condemnation proceeding. If any such damage, loss or destruction amounts to a Material Loss or any such eminent domain or condemnation amounts to a Material Taking, Buyer shall have the right to (i) terminate this Agreement and the Escrow pursuant to the terms of Section 8.5(a) hereof; or (ii) accept the Property in its then existing condition and purchase and acquire the Property in accordance with, and subject to, the terms and conditions of this Agreement, subject to the terms and conditions described in this Section 8.3.  In the event of a Material Loss, if Buyer exercises its right to purchase and acquire the Property in its present condition, Buyer shall not be entitled to an offset, credit or reduction in the Purchase Price however, Seller shall assign to Buyer on the Closing any and all casualty insurance proceeds previously paid or payable to Seller in connection with such Material Loss and shall pay to Buyer the amount of any applicable deductible.  In the event of a Material Taking, if Buyer exercises its right to purchase and acquire the Property in its present condition, then Seller shall pay or assign to Buyer on the Closing any amount of compensation, awards or other payments or relief previously paid or payable to Seller resulting from such Material Taking. Buyer's termination right or Buyer's acceptance right shall be exercised by written notice to Seller within thirty (30) Calendar Days (but in no event later than the Closing) after Buyer receives written notice from Seller of the occurrence of the Material Loss or Material Taking.

b.Non-Material Loss. In the event that, prior to the Closing, the Real Property shall suffer a Non-Material Loss or an eminent domain or condemnation proceeding not amounting to a Material Taking (a “Minor Taking”), Buyer shall be obligated to purchase the Property (in its then existing condition) in accordance with, and subject to, the terms and conditions of this Agreement, subject to the terms and conditions of this Section 8.3(b).  In the event of a Non-Material Loss, Seller shall assign to Buyer on the Closing any and all casualty insurance proceeds, if any, previously paid or payable to Seller in connection with Non-Material Loss and shall pay to Buyer the amount of any applicable deductible.  In the event of a Minor Taking, Seller shall pay or assign to Buyer on the Closing any amount of compensation, awards or other payments or relief previously paid or payable to Seller resulting from such Minor Taking. 

Section 8.4Closing.  In the event all of the conditions set forth in this Article 8 are timely satisfied (or waived in writing by Buyer or Seller, as applicable), Seller and Buyer shall take such action as may 

be required to cause the purchase and sale of the Property to be consummated (the “Closing”) in accordance with this Agreement on or before the date that is ten (10) Business Days after Seller's and Buyer's receipt of the Lender's Consent (the “Scheduled Closing Date”); provided, however, (i) if the Fee Interest Closing Date is later than the Scheduled Closing Date under this Agreement, the Closing shall take place on the Fee Interest Closing Date, (ii) in no event shall the Closing take place later than June 30, 2012 (“Outside Closing Date”), and (iii) the Closing may take place prior to recordation of the Transaction Documents that are to be recorded, not to exceed, however, more than one (1) Business Day prior to such recordation.  The date on which the Closing shall take place pursuant to this section is referred to herein as the “Closing Date”.  The Closing shall take place through an escrow closing at the offices of Escrow Agent, pursuant to which neither Party has to be physically present, or at such other location or through such other escrow arrangements as may be mutually agreed upon by Seller and Buyer.

Section 8.5Failure of Conditions to Closing; No Default by Seller or Buyer. 

a.Failure of Buyer's Closing Conditions.  In the event one or more of Buyer's conditions to the Closing set forth in Section 8.1 hereof are not satisfied or otherwise waived by Buyer on or before the Closing Date or the Closing Date fails to occur on or before the Outside Closing Date, and the failure of such conditions to be satisfied, or Closing to occur, is not a result of a default by Seller or Buyer addressed in Section 8.6 hereof, then Buyer shall have the right to terminate this Agreement and the Escrow by giving written notice of such termination to Seller prior to the Closing.  Upon any election by Buyer to terminate this Agreement and the Escrow pursuant to this Section 8.5(a), the provisions of Section 8.5(c) shall govern.

b.Failure of Seller's Closing Conditions.  In the event one or more of Seller's conditions to the Closing set forth in Section 8.2 hereof are not satisfied or otherwise waived by Seller on or before the Closing Date or the Closing Date fails to occur on or before the Outside Closing Date, and the failure of such conditions to be satisfied, or Closing to occur, is not a result of a default by Seller or Buyer addressed in Section 8.6 hereof, then Seller shall have the right to terminate this Agreement and the Escrow by giving written notice of termination to Buyer prior to the Closing.  Upon any election by Seller to terminate this Agreement and the Escrow pursuant to this Section 8.5(b), the provisions of Section 8.5(c) hereof shall govern.  
c.Termination Provisions.  In the event either Party elects to terminate this Agreement and the Escrow for the reasons and in accordance with the provisions set forth in this Section 8.5, or in the event the Fee Interest Purchase Agreement is terminated by either party thereto in accordance with Section 8.5 thereof, then: (i) this Agreement shall automatically terminate (other than those provisions which expressly provide that they survive any termination of this Agreement); (ii) Seller and Buyer shall execute such escrow cancellation instructions as may be necessary to effectuate the cancellation of the Escrow; and (iii) the Escrow Agent shall promptly return the Initial Deposit (less the Independent Consideration) to Buyer.  Any escrow cancellation, title cancellation and other cancellation charges shall be borne equally by Seller and Buyer.  

Section 8.6Failure of Conditions to Closing; Default by Seller or Buyer.  In the event either Seller or Buyer shall fail to perform any of the material covenants and agreements contained herein to be performed by such Party prior to Closing, then the non-breaching Party may elect the applicable following remedies set forth in this Section 8.6, which remedies shall constitute the sole and exclusive remedies of the non-breaching Party with respect to a default by the other Party under this Agreement occurring prior to Closing.

a.Remedies of Buyer.  In the event Buyer is the non-breaching Party, as its sole and exclusive remedy, Buyer may elect to (i) terminate this Agreement and the Escrow by giving Seller written 

notice prior to the Closing describing Seller's default and setting forth Buyer's election to immediately terminate this Agreement and the Escrow, in which event this Agreement and the Escrow shall terminate, Escrow Agent shall promptly return the Initial Deposit to Buyer and Seller shall promptly reimburse Buyer for all out-of-pocket costs paid by Buyer to a third-party in connection with its due diligence of the Property including, without limitation, Loan Assumption Processing Fees and attorneys' fees; provided, however, in no event shall Seller be obligated to reimburse more than an aggregate total of Three Hundred Fifty Thousand Dollars ($350,000.00) to Buyer in connection with such expenses pursuant to this Section 8.6(a) hereof and to the buyer thereunder pursuant to Section 8.6(a) of the Fee Interest Purchase Agreement; or (ii) pursue a suit for specific performance; provided, however, if Buyer elects to bring a suit for specific performance but it is not available, then Buyer shall retain its rights under clause (i) above.

b.Remedies of Seller.  In the event Seller is the non-breaching Party, as Seller's sole and exclusive remedy, Seller may elect to terminate this Agreement and the Escrow by giving Buyer written notice prior to the Closing describing Buyer's default and setting forth Seller's election to immediately terminate this Agreement and the Escrow.  In the event Seller elects to terminate this Agreement and the Escrow pursuant to this Section 8.6(b), the sole and exclusive remedy of Seller for Buyer's failure to Close the purchase of the Property shall be to receive the amount specified as liquidated damages pursuant to Section 8.6(c) hereof; provided that nothing herein shall limit the indemnity, repair and other obligations of Buyer pursuant to Section 4.1, Section 4.4 and Article 13 under this Agreement and/or Seller's remedies upon any breach by Buyer of said obligations.  

c.SELLER'S LIQUIDATED DAMAGES.  IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT (OTHER THAN AS A RESULT OF BUYER'S ELECTION TO TERMINATE PURSUANT TO SECTIONS 8.5(a) OR 8.6(a) HEREOF, AND OTHER THAN IN THE CASE OF SELLER'S TERMINATION PURSUANT TO SECTION 8.5(b) HEREOF), BY REASON OF THE DEFAULT OF BUYER, SELLER SHALL BE RELEASED FROM ITS OBLIGATION TO SELL THE PROPERTY TO BUYER.  IN SUCH A CASE, SELLER AND BUYER AGREE THAT IT WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE THE AMOUNT OF DAMAGES OF SELLER AS A RESULT OF ANY SUCH BREACH BY BUYER, AND, ACCORDINGLY, AS SELLER'S SOLE AND EXCLUSIVE REMEDY AT LAW OR IN EQUITY, SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE INITIAL DEPOSIT AS LIQUIDATED DAMAGES IN THE EVENT OF A DEFAULT BY BUYER DUE TO BUYER'S FAILURE TO CLOSE THE PURCHASE OF THE PROPERTY AND THE PAYMENT OF SUCH LIQUIDATED DAMAGES TO SELLER SHALL CONSTITUTE THE EXCLUSIVE REMEDY OF SELLER ON ACCOUNT OF THE DEFAULT BY BUYER.
_____/s/ JRI_____________                _____/s/ DJH_________
SELLER'S INITIALS                BUYER'S INITIALS
AS MATERIAL CONSIDERATION FOR EACH PARTY'S AGREEMENT TO THE PROVISIONS OF THIS SECTION 8.6(c), EACH PARTY HEREBY AGREES TO WAIVE ANY AND ALL RIGHTS WHATSOEVER TO CONTEST THE VALIDITY OF THIS SECTION 8.6(c) FOR ANY REASON WHATSOEVER INCLUDING, WITHOUT LIMITATION, THAT SUCH PROVISION WAS UNREASONABLE UNDER CIRCUMSTANCES EXISTING AT THE TIME THIS AGREEMENT WAS MADE.
THE FOREGOING WILL NOT LIMIT ANY RIGHTS OF SELLER TO BE INDEMNIFIED BY BUYER PURSUANT TO ANY PROVISION OF THIS AGREEMENT EXPRESSLY REFERRING TO BUYER'S DUTY TO INDEMNIFY OR HOLD SELLER HARMLESS, NOR WILL ANYTHING IN THIS 

SECTION LIMIT, QUALIFY OR OTHERWISE AFFECT THE RIGHTS OF SELLER AND THE OBLIGATIONS OF BUYER PURSUANT TO SECTION 4.1, SECTION 4.4 AND SECTION 13 HEREOF AND/OR SELLER'S REMEDIES UPON ANY BREACH BY BUYER OF SAID OBLIGATIONS, OR ANY RIGHT OR REMEDY OF SELLER IN THE EVENT OF A BREACH OF THIS AGREEMENT BY BUYER OCCURRING AFTER CLOSING, OR THE RIGHT OF SELLER TO RECEIVE ATTORNEYS' FEES AND COSTS, AS PROVIDED IN THIS AGREEMENT.
THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY.
d.Termination Provisions.  In the event either Party elects to terminate this Agreement and the Escrow for the reasons and in accordance with the provisions set forth in this Section 8.6, then this Agreement will automatically terminate (other than those provisions which expressly provide that they survive any termination of this Agreement), Seller and Buyer shall execute such escrow cancellation instructions as may be necessary to effectuate the cancellation of the Escrow, and the Initial Deposit shall be paid in accordance with this Agreement.  The breaching Party hereunder shall pay any and all escrow and title cancellation costs incurred in connection therewith.  

e.No Personal Liability.  Notwithstanding any provision in this Agreement to the contrary, there shall be no personal liability to the members, managers, officers, agents, representatives or employees of Seller or Buyer arising out of or in any way relating to the covenants, obligations, representations, warranties and/or agreements of Seller or Buyer, as applicable, as set forth in this Agreement and/or in any of the Transaction Documents.  Seller and Buyer acknowledge and agree that the limits and restrictions set forth in this Section have been specifically negotiated and agreed upon by and between Seller and Buyer and that neither Seller nor Buyer would be willing to enter into this Agreement without each other's agreement to these restrictions and that the same are therefore binding and effective upon Seller and Buyer and their respective successors and assigns.

f.Seller's Post-Closing Default; Buyer's Remedies.  Notwithstanding any provision in this Agreement or in any of the Transaction Documents to the contrary, after the Closing, Seller shall not have any liability for the breach of any covenant, agreement, obligation, representation or warranty of Seller under this Agreement or in any of the Transaction Documents (excluding breaches of Seller's obligations under Article 11 hereof), unless the valid claims for all such breaches are collectively more than Fifty Thousand Dollars ($50,000.00), in the aggregate, in which event Seller shall be liable for all such claims from the first dollar, provided, however, the maximum aggregate liability of Seller as a result of the breach by Seller of any covenants, agreements, obligations, representations and/or warranties of Seller under this Agreement, under the Transaction Documents, and under the Fee Interest Purchase Agreement and the “Transaction Documents” thereunder, shall not exceed the sum of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00), in the aggregate.  Buyer acknowledges and agrees that the limits and restrictions set forth in this Section have been specifically negotiated and agreed upon by and between Seller and Buyer and that Seller would not be willing to enter into this Agreement without Buyer's agreement to these restrictions and that the same are therefore binding and effective upon Buyer and its successors and assigns.  The limits contained in this Section 8.6(f) shall not apply or limit Buyer's right to collect all costs and expenses pursuant to Section 14.8.

g.Post-Closing Remedies of Seller.  If after the Closing, Buyer fails to perform its obligations which expressly survive the Closing pursuant to this Agreement, including Buyer's obligations to indemnify Seller, then Seller may exercise any remedies available to it at law or in equity, in any order it deems appropriate in its sole and absolute discretion.  In such event, the liquidated damages provisions 

contained in Sections 8.6(b) and (c) will not apply to nor limit nor be an offset against Seller's recoverable damages.
h.No Consequential, Incidental or Punitive Damages.  Each Party further hereby agrees, except as provided in the last sentence of this Section, as to any relief it may seek for the other Party's default or breach hereunder, it shall not have the right to seek or claim, and shall not seek, claim, demand, bring suit for or pray for any relief in the nature of consequential, incidental, punitive, exemplary or statutory damages in the event of any breach of this Agreement and/or any of the Transaction Documents by the other Party, whether occurring before or after Closing, which excluded damages include, without limitation, any claim for “lost opportunities,” “changes in markets,” “loss of tax benefits,” or the like.  Nothing in this Section is intended to contradict or bar a Party's right to damages or compensation in accordance with any provision in Sections 8.6(a), (b), (c), (f) or (g) hereof or the right to recover attorneys' fees pursuant to Section 14.8 hereof, whether or not such damages or compensation might otherwise be characterized as “consequential” or “incidental” damages.

i.Cross Default.  This Agreement and the Fee Interest Purchase Agreement are cross-defaulted with respect to any pre-closing default.  Any pre-closing default by the buyer under the Fee Interest Purchase Agreement shall constitute a pre-closing default by Buyer under this Agreement, and any pre-closing default by the seller under the Fee Interest Purchase Agreement shall constitute a pre-closing default by Seller under this Agreement, entitling the non-breaching party to the remedies under this Section 8.6, as applicable, subject to the provisions of this Section 8.6.  If the buyer under the Fee Interest Purchase Agreement terminates the Fee Interest Purchase Agreement pursuant to Section 8.6(a) thereunder due to a default by the seller thereunder, then this Agreement shall automatically terminate in accordance with Section 8.6 hereof, and pursuant to Section 8.6(a) hereof, the Initial Deposit shall be returned to Buyer and Seller shall promptly reimburse Buyer for out-of-pocket costs incurred by Buyer in connection with its due diligence of the Property, as provided in, and subject to, Section 8.6(a) hereof.  If the seller under the Fee Interest Purchase Agreement terminates the Fee Interest Purchase Agreement pursuant to Section 8.6(b) thereunder due to a default by the buyer thereunder, then this Agreement shall automatically terminate in accordance with Section 8.6 hereof, and pursuant to Section 8.6(b) hereof, Seller shall receive the amount specified as liquidated damages pursuant to Section 8.6(c) hereof.

j.Survival.  The provisions of this Article 8 shall survive the Closing or earlier termination of this Agreement.

ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby makes the following representations and warranties as of the Effective Date, each of which is material and being relied upon by Buyer.  The phrase “to Seller's knowledge” or similar language as used herein shall mean information actually known or disclosed to Lawrence J. Taff, the Executive Vice President of Operations in Honolulu, Hawaii, without any requirement of independent investigation having been made or any duty to investigate and shall not be deemed to include any implied, imputed or constructive knowledge of Seller or any other person or entity.  There shall be no personal liability on the part of Lawrence J. Taff and/or any of the members, managers, officers, directors, shareholders, agents, representatives or employees of Seller or any of Seller's affiliates arising out of any representations or warranties made herein. In the event that subsequent to the Effective Date, Seller learns, or has reason to believe, that any of the following representations and warranties may not be true in all material respects as if first made as of the date of such discovery, Seller shall give notice thereof to Buyer.  In such event, or if Buyer otherwise discovers that any of the following representations and warranties is not true in all material respects as if first made as of the date of such discovery, Buyer's sole and exclusive remedy shall be: (i) to terminate this Agreement 

and the Escrow in accordance with the provisions of Section 8.5(a) hereof, unless the matters which cause such representations and warranties not to be true in all material respects is the result of a willful breach by Seller of such representations and warranties, in which case the provisions of Section 8.6(a) hereof shall govern; or (ii) to elect to purchase and acquire the Property upon the terms and conditions set forth in this Agreement, subject to the matters which causes the representations and warranties not to be true in all material respects as if first made as of the date of such discovery and, in such a case, such representations and warranties shall be automatically modified to such extent and Seller shall have no liability for the same.  In the event Buyer elects to terminate this Agreement and the Escrow pursuant to Section 9(i) hereof, Seller shall have no liability or responsibility for such representations and warranties not being true in all material respects except as expressly provided herein.  In the event Buyer elects to purchase and acquire the Property pursuant to Section 9(ii) hereof, Seller shall have no liability or responsibility for, and shall be under no obligation whatsoever to cure or remedy, any of the matters which caused the representations and warranties of Seller not to be true in all material respects.  Seller's failure to provide written notice to Buyer pursuant to this Article 9 shall not constitute a breach or default of Seller or its obligations hereunder.    
Section 9.1Organization, Power and Authority; Enforceability.  Seller is a limited liability company duly organized and validly existing under the laws of the State of Delaware and is qualified to do business in the State of Hawaii.  Seller has all requisite power and authority to own the Property, to execute and deliver this Agreement and the Transaction Documents to which Seller is a party, and to perform its obligations hereunder and thereunder and effect the transactions contemplated hereby and thereby.  All requisite limited liability company or other action has been or will be taken to authorize and approve the execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which Seller is a party and this Agreement and the Transaction Documents shall constitute the valid and binding obligation of Seller, enforceable against Seller in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

Section 9.2No Conflicts.  The execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, will not: (a) violate any provision of the organizational documents of Seller; (b) to Seller's knowledge, violate any order, judgment, injunction, award or decree of any court or arbitration body, or any governmental, administrative or regulatory authority, or any other body, by or to which Seller or the Property are or may be bound or subject; or (c) subject to Seller's receipt of the Lender's Consent and Lender's Consent to Assignment, result in a breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon the Property pursuant to, the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Seller or the Property is bound.

Section 9.3Non-Foreign Status.  Seller is not a “foreign person” as such term is defined in Section 1445 of the Code or a disregarded entity of such a foreign person.

Section 9.4Litigation and Condemnation.  To Seller's knowledge, no claims, actions, suits, arbitrations or proceedings (including condemnation proceedings) by or before any court or arbitration body, any governmental, administrative or regulatory authority, or any other body, against or affecting the Property or the transactions contemplated by this Agreement are pending or threatened. 

Section 9.5Leases.  Other than the Leases, there are no other agreements with respect to the leasing or the occupancy of the Property (or any portion thereof) that will be binding on Buyer after Closing.  Except as to any New Lease pursuant to Section 5.1(b) hereof, (a) the Leases delivered or made available 

to Buyer pursuant to Section 4.1(a) hereof are true, correct and complete copies thereof, (b) such Leases have not been amended or modified, and (c) each Lease constitutes the entire agreement between Seller and the applicable Tenant.  Except as set forth on Schedule “9.5(a)”, to Seller's knowledge (i) each Lease is in full force and effect on the terms set forth therein and there are no facts or circumstances which with the giving of notice, the passage of time or both would constitute a material default by Seller or any Tenant under any Lease; (ii) Tenants whose rental amounts under their respective Leases constitute, in the aggregate, more than five percent (5%) of the total rental income of the Property as shown on the rent roll set forth in Schedule 4.1(a), have not given any written notice terminating their respective Leases, nor been released of material obligations under their respective Leases. 

Section 9.6Intentionally Deleted.  

Section 9.7Ground Lease.  The Ground Lease delivered or made available to Buyer pursuant to Section 4.1(a) hereof is a true and complete copy thereof and the Ground Lease has not been amended or modified.  The Ground Lease is in full force and effect on the terms set forth therein and there are no facts or circumstances which with the giving of notice, the passage of time or both would constitute a default by either party thereunder.

Section 9.8Compliance With Law.  To Seller's knowledge, Seller has not received any written notice alleging that the Property violates any Law.  To Seller's knowledge, the Property does not violate any Law in any material respect.

Section 9.9Intentionally Deleted.

Section 9.10OFAC.  Neither Seller, nor, to Seller's knowledge, any of its affiliates, nor any of their respective members, officers or directors is, nor prior to Closing, or the earlier termination of this Agreement, will become, a person or entity with whom U.S. persons or entities are restricted from doing business under the regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC's Specially Designated Blocked Persons List) or under any U.S. statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism), or other governmental action and is not, and prior to Closing or the earlier termination of this Agreement will not, engage in any dealings or transactions with or be otherwise associated with such persons or entities; provided, however, Seller makes no representation of the foregoing with respect to any of its public shareholders.

Section 9.11Loan.  A true, complete and correct list of all documents executed in connection with the Loan is attached hereto as Schedule “9.11” (collectively, the “Loan Documents”). The copies of the Loan Documents delivered or made available to Buyer pursuant to Section 4.1(a) hereof are true, correct and complete copies thereof and have not been amended or modified.  To Seller's knowledge, the Loan is in full force and effect, and Seller is not in default, nor has any event occurred which, with the giving of notice and/or the passage of time, could reasonably be expected to constitute a default, with respect to any of Seller's material obligations under the Loan Documents, and no Cash Management Period (as defined in the Loan Documents) is in effect. 

Section 9.12Other Agreements.  Except as set forth on Schedule “9.12” and except for the Leases, the Ground Lease, the Loan Documents and the Permitted Title Exceptions, to Seller's knowledge, Seller has not entered into any service contracts, leases, management agreements, brokerage agreements or other agreements or instruments which will be binding upon the Buyer or the Property following the 

Closing, other than those which Buyer has agreed in writing to assume prior to Closing. 

Section 9.13Survival. Except as expressly provided in this Agreement, the representations and warranties of Seller contained in this Article 9 shall be deemed remade by Seller as of the Closing, with the same force and effect as if made at that time.  The representations and warranties of Seller set forth in Sections 9.1, 9.2, 9.3 and 9.10 hereof, as well as the right and ability of Buyer to enforce the same and/or to seek damages for its breach, shall survive the Closing.  All other representations and warranties of Seller set forth in this Article 9, as well as the right and ability of Buyer to enforce the same and/or to seek damages for their breach, shall survive the Closing for a period of nine (9) months and all claims, whether known or unknown, for breach by Seller of such representations and warranties must be asserted in writing by Buyer and delivered to Seller on or before the expiration of such nine (9) month period or otherwise such claims shall be invalid and of no force or effect and Seller shall have no liability with respect thereto.

ARTICLE 10
REPRESENTATIONS, WARRANTIES, 
COVENANTS AND AGREEMENTS OF BUYER

Buyer hereby makes the following representations and warranties, each of which representation and warranty is:  (a) material and being relied upon by Seller; and (b) true, complete and not misleading in all material respects as of the date hereof and as of the Closing.
Section 10.1Organization, Power and Authority.  Buyer is duly organized and validly existing under the laws of its state of formation.  Buyer has all requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which Buyer is a party, and to perform its obligations hereunder and thereunder and to effect the transactions contemplated hereby and thereby.  All requisite corporate or other action has been taken to authorize and approve the execution, delivery and performance by Buyer of this Agreement and the Transaction Documents to which Buyer is a party and the Transaction Documents shall constitute the valid and binding obligation of Buyer, enforceable against Buyer in accordance with their terms, excepts as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

Section 10.2No Conflicts.  The execution, delivery and performance by Buyer of this Agreement and the Transaction Documents to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, will not:  (a) violate any provision of Buyer's organization documents; (b) violate any order, judgment, injunction, award or decree of any court or arbitration body, or any governmental, administrative or regulatory authority, or any other body, by or to which Buyer is or may be bound or subject, or (c) result in a breach of the terms, conditions or provisions of, or conflict with or constitute a default under any agreement or instrument by which Buyer is bound.

Section 10.3Prohibited Persons and Transactions.  Neither Buyer, nor any of its affiliates, nor, to Buyer's knowledge, any of their respective members, officers or directors is, nor prior to Closing, or the earlier termination of this Agreement, will become, a person or entity with whom U.S. persons or entities are restricted from doing business under the regulations of the OFAC of the Department of the Treasury (including those name on OFAC's Specially Designated Blocked Persons List) or under any U.S. statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism), or other governmental action and is not, and prior to Closing or the earlier termination of this Agreement will not, 

engage in any dealings or transactions with or be otherwise associated with such persons or entities; provided, however, Buyer makes no representation of the foregoing with respect to any shareholder of Buyer or any of its affiliates. 

Section 10.4ERISA.  Buyer will not use the assets of an employee benefit plan as defined in Section 3(3) of the Employee Retirement Security Act of 1974 (“ERISA”) and covered under Title I, Part 4 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, in the performance or discharge of its obligations hereunder, including the acquisition of the Property.  Buyer shall not assign its interest hereunder to any person or entity which does not expressly make this covenant and warranty for the benefit of Seller. 

Section 10.5Seller's Environmental Disclosure.  Buyer shall take title to the Property subject to any and all environmental conditions thereat (or the presence of any matter or substance relating to any such environmental condition at the Property), whether known or unknown, disclosed or undisclosed, and any and all claims and/or liabilities relating to (in any manner whatsoever) any hazardous, toxic or dangerous materials or substances located in, at, about or under the Property, or for any and all claims or causes of action (actual or threatened) based upon, in connection with or arising out of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., and the Superfund Amendments and Reauthorization Act, 42 U.S.C. §9601 et seq., or any other law or cause of action (including any federal or state based statutory, regulatory or common law cause of action) related to environmental matters or liability with respect to or affecting the Property (any of the foregoing described in this Section 10.5 being referred to as “Environmental Conditions”).  

Section 10.6NO RELIANCE; AS-IS/WHERE-IS.  EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS, SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF ANY MATERIALS, DATA OR INFORMATION DELIVERED BY SELLER OR SELLER'S AGENTS OR REPRESENTATIVES TO BUYER IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, SELLER'S DELIVERIES.  BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY TRANSACTION DOCUMENT, ALL MATERIALS, DATA AND INFORMATION DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, THE SELLER'S DELIVERIES, ARE PROVIDED TO BUYER AS A CONVENIENCE ONLY AND THAT ANY RELIANCE ON OR USE OF SUCH MATERIALS, DATA OR INFORMATION BY BUYER SHALL BE AT THE SOLE RISK OF BUYER.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS, SELLER SHALL HAVE NO LIABILITY TO BUYER FOR ANY INACCURACY IN OR OMISSION FROM ANY SUCH MATERIALS, DATA AND INFORMATION.  

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
BUYER ACKNOWLEDGES AND AGREES THAT, UPON THE CLOSING, SELLER SHALL 

SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS,” EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS.  BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO MADE OR FURNISHED BY SELLER, OR ANY AGENT OR REPRESENTATIVE REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR THE TRANSACTION DOCUMENTS.  BUYER FURTHER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD “AS IS, WHERE IS, WITH ALL FAULTS” AND THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY TRANSACTION DOCUMENT, SELLER SHALL NOT BE LIABLE FOR ANY CONSTRUCTION, LATENT OR PATENT DEFECTS IN THE PROPERTY.   
BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND/OR THE EXISTENCE OR NONEXISTENCE OF ANY CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS MATERIALS ON OR DISCHARGED FROM THE REAL PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR REPRESENTATIVES WITH RESPECT THERETO EXCEPT TO THE EXTENT SET FORTH IN THIS AGREEMENT OR IN ANY TRANSACTION DOCUMENT.  BUYER FURTHER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN THIS AGREEMENT OR IN ANY TRANSACTION DOCUMENT, SELLER IS UNDER NO DUTY TO MAKE ANY AFFIRMATIVE DISCLOSURES OR INQUIRY REGARDING ANY MATTER WHICH MAY OR MAY NOT BE KNOWN TO SELLER.  UPON CLOSING, BUYER ACKNOWLEDGES THAT, EXCEPT TO THE EXTENT SET FORTH HEREIN OR IN ANY TRANSACTION DOCUMENT, IT WILL BE ACQUIRING THE PROPERTY SUBJECT TO ALL SUCH ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS AND OTHER MATTERS THAT MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS.  
_____/s/ JRI_____________                ____/s/ DJH______________
SELLER'S INITIALS                BUYER'S INITIALS
Section 10.7Buyer's Release of Seller.  Upon Closing, Buyer hereby releases, remises, acquits and forever discharges Seller, and Seller's affiliates, successors and assigns, and their respective members, managers, directors, officers, shareholders, partners, employees, agents, representatives, affiliates, attorneys and their respective affiliates, successors and assigns (collectively, the “Released Parties”), from and against any and all claims, causes of actions, suits, legal or administrative orders or proceedings, demands, damages, punitive damages, losses, costs, liabilities and expenses, whether known or unknown, arising out of or in any way relating to the following: (a) the completeness or accuracy of any and all materials, data and information regarding the Property, including, without limitation, Seller's Deliveries; (b) the physical condition of the Real Property; (c) the existence or presence of any Hazardous Materials on, under or about the Real Property and/or the release or discharge of any Hazardous Materials from the Real Property; (d) the violations of any applicable statutes or laws with regard to the Real Property, including any Environmental Laws; and (e) any and all other matters regarding the Property, 

in each case whether existing prior to or after the Closing.  

The provisions of this Section 10.7 shall not apply to any claims or causes of action (i) that may be asserted by Buyer against Seller based upon an alleged breach of a covenant, representation or warranty by Seller under this Agreement or in any Transaction Document which is not otherwise waived or expired pursuant to the terms and conditions of this Agreement or (ii) caused by Seller after the Closing. 
Section 10.8Survival.  The representations and warranties contained in this Article 10 by Buyer are true, correct and complete and shall be deemed remade by Buyer as of the Closing, with the same force and effect as if made at that time.  Anything contained in the Transaction Documents to the contrary notwithstanding, the representations, warranties and covenants of Buyer set forth in this Article 10, as well as the right and ability of Seller to enforce the same and/or to seek damages for its breach, shall survive the Closing.
ARTICLE 11
COSTS, EXPENSES AND PRORATIONS

Section 11.1Costs and Expenses. 

a.Seller.  Seller shall pay:  (i) all Loan Assumption Processing Fees in excess of Buyer's Loan Assumption Processing Fees Cap, subject to Seller's Loan Assumption Processing Fees Cap; (ii) all recording fees, Hawaii conveyance taxes, deed stamps and similar costs, fees and expenses payable in connection with the recordation of the Assignment and Assumption of Ground Lease; (iii) one-half (1/2) of the costs, expenses, and premiums for the Title Policy, but excluding the ALTA Title Policy Costs and excluding the cost of any binders or endorsements to the Title Policy requested by Buyer; (iv) one-half (1/2) of the cost of the ALTA Survey; (v) one-half (1/2) of Escrow Agent's fees and costs for the Escrow; (vi) Seller's share of prorations; and (vii) Seller's attorneys' fees.

b.Buyer.  Buyer shall pay:  (i) the Loan Assumption Fee; (ii) all Loan Assumption Processing Fees, subject to Buyer's Loan Assumption Processing Fees Cap; (iii) one-half (1/2) of the costs, expenses, and premiums for the Title Policy, together with all of the ALTA Title Policy Costs and the cost of any binders or endorsements to the Title Policy requested by Buyer; (iv) one-half (1/2) of the cost of the ALTA Survey; (v) one-half (1/2) of Escrow Agent's fees and costs for the Escrow; (vi) Buyer's share of prorations; and (vii) Buyer's attorneys' fees. 

c.Survival. The provisions of this Section 11.1 shall survive Closing or the earlier termination of this Agreement.

Section 11.2Prorations, Costs and Expenses.

a.Prorations and Adjustments.  The following adjustments and prorations shall be made as of 12:01 a.m. on the Closing Date (“Proration Date”), as though Buyer held title to the Property throughout the entire day in which the Closing occurs.  Such adjustments and prorations shall be made on the basis of: (i) a 365-day year with respect to Taxes as provided in Section 11.2(a)(iii) hereof; and/or (ii) the number of days in the calendar month in which the Closing occurs with respect to Revenues and Operating Expenses and other items to be prorated as provided in Sections 11.2(a)(i) (ii), (iv) and (vi), respectively, hereof, subject to the following provisions:

i.Revenues and General Excise Tax.  All rentals, receipts, other revenues (including, but not limited to, reimbursements for Property Expenses, common area maintenance, tenant 

operating costs and charges, real and personal property taxes, insurance and other operating expense reimbursements, if applicable), parking charges, gross income and other taxes, if any, and all other charges under the Leases with respect to the Property (collectively, the “Revenues”), received by Seller as of the Closing, but which are properly allocable to the period from and after the Proration Date, shall be credited to Buyer at the Closing.  To the extent there are any Revenues owing to Seller as of the Closing which relate to periods of time prior to the Proration Date, but which have not actually been collected by Seller as of the Closing (“Delinquent Revenues”), Buyer shall not be obligated to pay to Seller (or give Seller a credit for), the amount of such Delinquent Revenues on the Closing.  All Revenues which are received by Seller or Buyer after the Closing shall be applied: first, to Revenues allocable to the month in which the Closing occurs, with Seller and Buyer receiving its share based on the number of days in such month that each Party owned the Property, second, to Revenues due and payable to Buyer for periods after the month in which the Closing occurs, if any, are then owed, and third, to Delinquent Revenues payable to Seller.  Buyer may not waive any Delinquent Revenues, nor modify a Lease so as to reduce any Delinquent Revenues which are owed under such Lease, for any period in which Seller is entitled to receive such charges or amounts, without first obtaining Seller's prior written consent.  Seller and Buyer hereby agree to hold in trust and promptly remit to the other the amount of any Revenues received and owing to each other pursuant to the provisions of this Section 11.2(a)(i).  Notwithstanding the foregoing, if any Tenant or third party paying such Revenues after Closing designates that such Revenues are to be applied to certain periods (or if it is readily ascertainable that such Revenues apply to certain periods), then such Revenues shall be applied to such periods.  Buyer shall use commercially reasonable efforts at no cost to Buyer (other than de minimis administrative costs) to collect Delinquent Revenues (excluding the exercise of any rights or remedies under the Leases or other documents), and, upon receipt of Delinquent Revenues, Buyer shall immediately remit to Seller, in accordance with this Section 11.2(a)(i), the Delinquent Revenues collected.  In no event shall Seller have any right to take any action to collect from Tenants any Delinquent Revenues from and after the Closing Date.
 
ii.Operating Expenses.  Utility costs, all rent and other sums owing under the Ground Lease and payment of the Hawaii General Excise Tax, but excluding Leasing Commissions and Tenant Inducement Costs (collectively, the “Operating Expenses”), shall be prorated between Seller and Buyer at the Closing as of the Proration Date.  

iii.Real and Personal Property Taxes.  (A) All general and special real and personal property taxes and assessments (collectively, the “Taxes”), accruing for the fiscal year in which the Closing occurs, based on the regular tax bill for the current fiscal year (or, if such tax bill has not been issued as of the date of the Closing, the regular tax bill for the fiscal year preceding the current fiscal year), shall be prorated between Seller and Buyer at the Closing as of the Proration Date.  Without limiting the foregoing, any and all accrued and unpaid supplemental or special real property taxes or assessments that relate to any time period prior to the Proration Date shall be the responsibility of Seller and, if not paid prior to or at Closing, shall be credited to Buyer at Closing, and any and all supplemental or special real property taxes or assessments that relate to any time period on or after the Proration Date shall be the responsibility of Buyer and if paid by Seller prior to or at Closing, shall be credited to Seller at Closing.  Without limiting the foregoing, in the event any supplemental or special real property taxes or assessments are levied prior to Closing, but are due and payable in one or more installments subsequent to the Closing, such supplemental or special real property taxes or assessments shall be allocated on a pro rata basis over the applicable payment period in question and prorated between Seller and Buyer as of the Proration Date.  Furthermore, and without limiting the foregoing, Seller shall have no liability or obligation for the payment of any and/or all supplemental or special real property taxes and assessments that relate to any time period on or after the Proration Date.  Notwithstanding any of the terms and conditions to the contrary contained in this Section 11.2(a)(iii), in the event any such Taxes are paid for directly by the Tenants to the applicable taxing authorities, such Taxes shall not be prorated between Seller and Buyer.

iv.Interest and Other Amounts Owing Under the Loan.  All interest and other amounts owing under the Loan (excluding principal, the Loan Assumption Processing Fees and the Loan Assumption Fee) shall be prorated between Seller and Buyer at the Closing as of the Proration Date and Seller acknowledges that interest on the Loan is paid in arrears under the Loan Documents.

v.Reserves.  Seller shall receive a credit at Closing in an amount equal to the amount of the reserves under the Loan assigned by Seller to Buyer pursuant to Section 2.3 hereof, unless and to the extent Lender returns the existing reserves under the Loan to Seller.

vi.Other Items of Income and Expenses.  Except as may otherwise be expressly provided in this Agreement, all other items of income and expense that are customarily prorated in sales transactions involving other properties which are similar to the Property shall be prorated between Seller and Buyer at the Closing.

b.Property Expense Pass-Throughs.  Notwithstanding any provision in this Agreement to the contrary, if the Leases require the Tenants to reimburse Seller for Operating Expenses and/or Taxes (collectively, the “Property Expenses”), in the event such Property Expenses are reconciled under the terms of the Leases at the end of the calendar year in which the Closing takes place to reflect the actual Property Expenses incurred for such calendar year, such calendar year shall be deemed to constitute the “Reconciliation Period,” for purposes of this Agreement and the following provisions shall apply:
 
i.On or before the Closing, Seller shall deliver to Buyer a written statement setting forth: (A) the amount of Property Expenses incurred and actually paid by Seller with respect to such Tenants during the portion of the Reconciliation Period preceding the Closing; and (B) the amount of Property Expenses actually received by Seller from the Tenants under the Leases during the portion of the Reconciliation Period preceding the Closing, in each case together with supporting documentation as may be reasonably requested by Buyer.    

ii.Buyer shall diligently and in good faith compute the actual Property Expenses incurred and paid by Seller and Buyer and the actual Property Expenses reimbursed (or not reimbursed) by the Tenants and/or third parties to Seller and/or Buyer with respect to the Reconciliation Period (“Property Expense Reconciliation”).  Following the completion of the Property Expense Reconciliation, Buyer shall submit the same to the applicable Tenants and simultaneously provide a copy to Seller (together with all such supporting materials used in connection with preparation of the Property Expense Reconciliation, as may be requested by Seller).  To the extent Seller or Buyer receives any such Property Expense reimbursement payments with respect to the Reconciliation Period, such payments shall be applied on a pro rata basis based on the percentage of reimbursement that Seller and Buyer are entitled to under the Property Expense Reconciliation, and to the extent either Seller or Buyer receives a reimbursement following completion of the Property Expense Reconciliation, it shall remit to the other Party such other Party's pro rata share of such reimbursement(s) within ten (10) Business Days of receipt.

iii.Following the completion of the Property Expense Reconciliation, if the Property Expenses incurred and paid by Seller for that portion of the Reconciliation Period in question preceding the Closing exceed the reimbursed Property Expenses actually received by Seller from the Tenants and/or third parties under the Leases with respect to the Reconciliation Period (“Property Expense Reimbursement Shortfall”), Buyer shall pay to Seller an amount equal to such Property Expense Reimbursement Shortfall within ten (10) Business Days after Buyer's receipt of the Property Expense Reimbursement Shortfall amounts from Tenants and/or third parties, subject to the provisions of Section 11.2

(b)(ii) above.  If the reimbursed Property Expenses received by Seller from the Tenants under the Leases with respect to the Reconciliation Period preceding the Closing exceed the Property Expenses incurred and paid by Seller during the Reconciliation Period (“Property Expense Reimbursement Surplus”), then Seller shall pay an amount equal to such Property Expense Reimbursement Surplus to Buyer within ten (10) Business Days after Seller's receipt of the Property Expense Reconciliation, prepared in accordance with the provisions of Section 11.2(b)(ii) above.  Upon Seller's payment to Buyer of any such Property Expense Reimbursement Surplus, Buyer shall be obligated to reimburse or credit the Tenants for such Property Expense Reimbursement Surplus as required under their respective Leases.

iv.Seller and Buyer hereby agree to reasonably cooperate with each other in connection with any disputes or claims by Tenants or Seller concerning the calculation of Property Expenses during the Reconciliation Period.  In computing the Property Expense Reconciliation, Buyer shall use substantially the same methodology as used by Seller in connection with past practices at the Property.

c.Security Deposits; Leasing Commissions and Tenant Inducement Costs.  All unpaid Leasing Commissions, Tenant Inducement Costs (other than Tenant Inducement Costs with respect to New Leases approved (or deemed approved) by Buyer in accordance with Section 5.1(b) hereof or with respect to expansion or extension rights exercised under the Leases after the Effective Date) and Security Deposits under the Leases shall be credited to Buyer at the Closing.  Buyer shall be responsible for the payment of all Leasing Commissions and Tenant Inducement Costs with respect to all New Leases approved by Buyer in accordance with Section 5.1(b) hereof and with respect to expansion or extension rights exercised under the Leases after the Effective Date, as well as for any Tenant Inducement Costs, Leasing Commissions, and Security Deposits to the extent of any credit received by Buyer pursuant to the foregoing sentence.  To the extent that any Tenant has provided Seller with a letter of credit to secure such Tenant's obligations under its Lease then, at the Closing, Seller shall deliver to Buyer the original letter of credit, together with executed counterparts of any applicable transfer forms needed to transfer such letter of credit to the benefit of Buyer, and Buyer shall receive a credit in the amount of any applicable transfer fees.  In addition, Seller shall administer any such letters of credit on behalf of Buyer until such time as new letters of credit shall be issued for Buyer's benefit.  

d.Tax Refunds.  If any refunds of real property taxes or assessments, water rates, and charges or sewer taxes and rents shall be made after the Closing, the same shall be held in trust by Seller or Buyer, as the case may be, and shall first be applied to the unreimbursed costs incurred in obtaining the same, then to any required refunds to the Tenants, and the balance, if any, shall be paid to Seller (to the extent such refunds relate to periods prior to the Closing) and to Buyer (to the extent such refunds relate to periods from and after the Closing).

e.Final Accounting.  Seller and Buyer acknowledge and agree that, on the Closing Date, Seller and Buyer may not have sufficient information to conduct and complete a final proration of all items subject to proration pursuant to this Section 11.2.  Accordingly, Seller and Buyer agree that, as soon as is reasonably practicable after the Closing Date, Seller and Buyer shall make a final accounting of all items relating to the Property to be prorated between Seller and Buyer pursuant to this Section 11.2.  In conjunction with the performance of such final accounting, following a request from Seller, Buyer shall provide Seller with copies of all monthly and other statements sent to the Tenants itemizing amounts owing under the Leases by the Tenants (together with copies of invoices, statements and other supporting documentation evidencing such expenditures and tenant ledgers and related documentation evidencing how Revenues were applied, all as reasonably requested by Seller).  In the event it is determined, pursuant to such final accounting, that any amounts are due and owing by Seller to Buyer, then Seller shall cause such amounts to be paid to Buyer within ten (10) Business Days after such final accounting is completed. In the event it 

is determined, pursuant to such final accounting, that any amounts are due and owing by Buyer to Seller, then Buyer shall cause such amounts to be paid to Seller within ten (10) Business Days after such final accounting is completed.  All unpaid amounts shall accrue interest at the rate of twelve percent (12%) per annum commencing upon the expiration of such ten (10) Business Day period and continuing until such amounts are paid in full.

(f)    Survival.  The provisions of this Section 11.2 shall survive the Closing.  
ARTICLE 12
ESCROW PROVISIONS

Section 12.1Deposit of Funds and Disbursements.  All funds received by Escrow Agent shall be deposited in a separate, interest-bearing money market account acceptable to Buyer in a federally insured financial institution (“Depositories”).  All disbursements shall be made by wire transfer unless otherwise instructed in writing by the party to receive such disbursement.  The Good Funds Law requires that Escrow Agent have confirmation of receipt of funds prior to disbursement. 

Section 12.2Disbursement and Recording.  Prior to recording any documents under this Agreement or the Fee Interest Purchase Agreement, Escrow Agent shall disburse all funds deposited with Escrow Agent by Buyer in accordance with each party's respective Closing Statement.  All disbursements by Escrow Agent shall be by wire transfer to the designated account of the receiving party or shall be by certified or cashier's checks of Escrow Agent, as may be directed by the receiving party.  Immediately following recordation of the closing documents to be recorded under the Fee Interest Purchase Agreement:

a.Escrow Agent shall cause the following documents to be recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii in the order set forth below, and obtain a conformed copy thereof for distribution to Seller and Buyer:

i.The Assignment and Assumption of Ground Lease.
ii.The recordable Loan Assumption Documents.

b.Title Insurer shall issue the Title Policy to Buyer.

c.Escrow Agent shall distribute to Seller:  (i) counterpart originals of each of the non-recordable Transaction Documents; (ii) a conformed copy of each of the recordable Transaction Documents including, without limitation, the Assignment and Assumption of Ground Lease, the conveyance of the Improvements and the recordable Loan Assumption Documents; and (iii) any other documents deposited into Escrow by Buyer for the benefit of Seller.

d.Escrow Agent shall distribute to Buyer: (i) counterpart originals of each of the non-recordable Transaction Documents; (ii) a conformed copy of each of the recordable Transaction Documents including, without limitation, the Assignment and Assumption of Ground Lease, the conveyance of the Improvements, and the recordable Loan Assumption Documents; and (iii) any other documents deposited into Escrow by Seller for the benefit of Buyer.

Section 12.3Disclosure of Possible Benefits to Escrow Agent.  As a result of Escrow Agent maintaining its general escrow accounts with the Depositories, Escrow Agent may receive certain financial benefits such as an array of bank services, accommodations, loans or other business transactions from the Depositories (“Collateral Benefits”).  Notwithstanding the foregoing, the term Collateral Benefits 

shall not include any interest that accrues or is earned on the Initial Deposit and in no event and under no circumstance shall Escrow Agent be entitled to receive and retain any interest that accrues or is earned on the Initial Deposit.  All Collateral Benefits shall accrue to the sole benefit of Escrow Agent and Escrow Agent shall have no obligation to account to the Parties to the Escrow for the value of any such Collateral Benefits.

Section 12.4Miscellaneous Fees.  Escrow Agent may incur certain additional costs on behalf of the parties for services performed by third party providers.  The fees charged by Escrow Agent for such services shall not include a mark up or premium over the direct cost of such services.

Section 12.5Contingency Periods.  Escrow Agent shall not be responsible for monitoring contingency time periods between the Parties.

Section 12.6Reports.  As an accommodation, Escrow Agent may agree to transmit orders for inspection, termite, disclosure and other reports if requested, in writing or orally, by a Party or its agents and approved in writing by the Party that provided such materials to Escrow Agent.  Escrow Agent shall deliver copies of any such reports as directed.  Escrow Agent is not responsible for reviewing such reports or advising the parties of the content of same. 

Section 12.7Recordation of Documents.  Escrow Agent is authorized to obtain, record and deliver the necessary instruments to carry out the terms and conditions of the Escrow and, to the extent that Escrow Agent is also the Title Company, to issue the Title Policy at Closing, subject to and in accordance with this Agreement or pursuant to separate written instructions to Escrow Agent executed by Seller and/or Buyer.

Section 12.8Conflicting Instructions and Disputes.  The Initial Deposit shall be held and disbursed by Escrow Agent in accordance with the provisions of this Agreement.  No notice, demand or change of instructions shall be of any effect in the Escrow unless given in writing by Seller and Buyer and the other party is provided with a copy thereof.  In the event a demand for the Initial Deposit and/or any other amounts in the Escrow is made which is not concurred with by Seller and Buyer (which concurrence shall be deemed provided unless the non-demanding Party objects within five (5) Business Days of such non-demanding Party's receipt of such demand in writing), Escrow Agent, regardless of who made demand therefor, may elect to file a suit in interpleader and obtain an order from the court allowing Escrow Agent to deposit all funds and documents in court and have no further liability with respect thereto.  If an action is brought involving the Escrow and/or Escrow Agent, Seller and Buyer agree to indemnify and hold Escrow Agent harmless against liabilities, damages and costs incurred by Escrow Agent (including reasonable attorney's fees and costs) except to the extent that such liabilities, damages and costs were caused by the negligence, gross negligence or willful misconduct of Escrow Agent.  

Section 12.9Copies of Documents; Authorization to Release.  Escrow Agent is authorized to rely upon copies of documents, which include facsimile, electronic, NCR, or photocopies as if they were an originally executed document.  If requested by Escrow Agent, the originals of such documents shall be delivered to Escrow Agent.  Documents to be recorded MUST contain original signatures. 

Section 12.10Tax Reporting, Withholding and Disclosure.  The parties are advised to seek independent advice concerning the tax consequences of the transactions set forth in this Agreement, including but not limited to, their withholding, reporting and disclosure obligations. Escrow Agent does not provide tax or legal advice and the parties agree to hold Escrow Agent harmless from any loss or 

damage that the parties may incur as a result of their failure to comply with federal and/or state tax laws. 
Section 12.11Taxpayer Identification Number Reporting.  Federal law requires Escrow Agent to report Seller's social security number and/or tax identification number, forwarding address, and the gross sales price to the Internal Revenue Service (“IRS”). Escrow cannot be closed nor any documents recorded until the information is provided and Seller certifies its accuracy to Escrow Agent. 

Section 12.12Survival.   The provisions of this Article 12 shall survive the Closing or earlier termination of this Agreement.

ARTICLE 13
BROKERS

Upon the Closing, and only in the event of the Closing, Seller shall pay to Seller's Broker a commission through Escrow at the Closing pursuant to and in accordance with the separate agreement by and between Seller and Seller's Broker (“Seller's Broker's Commission”).  Except as described in this Article 13, Seller and Buyer hereby represent and warrant to each other that the warranting Party has not entered into nor will such warranting Party enter into any agreement, arrangement or understanding with any other person or entity which will result in the obligation of the other Party to pay any finder's fee, commission or similar payment in connection with the transactions contemplated by this Agreement.  
Seller will indemnify, defend and hold harmless Buyer from and against any and all claims, costs, damages and/or liabilities, including reasonable attorneys' fees, Buyer ever suffers or incurs because of any breach of representations by Seller under this Article 13 or any claim by any agent, salesman, or broker, whether or not meritorious, for any fee, commission or other compensation with regard to this Agreement or the sale and purchase of the Property, and arising out of any acts or agreements of Seller, including any claim asserted by Seller's Broker.  Likewise, Buyer will indemnify, defend and hold harmless Seller from and against any and all claims, costs, damages and/or liabilities, including reasonable attorneys' fees Seller ever suffers or incurs because of any breach of representations by Buyer under this Article 13 or any claim by any agent, salesman, or broker, whether or not meritorious, for any fee, commission or other compensation with respect to this Agreement or the sale and purchase of the Property and arising out of the acts or agreements of Buyer.  
The provisions of this Article 13 shall survive the Closing.  
ARTICLE 14
MISCELLANEOUS

Section 14.1Assignment.  No assignment of this Agreement or a Party's rights or obligations hereunder shall be made by either Party without first having obtained the other Party's approval of any such assignment, which approval may be granted or withheld in the sole and absolute discretion of such non-requesting Party.  Notwithstanding the foregoing, effective as of the Closing, and provided all other conditions precedent set forth in Section 8.2 hereof have been satisfied or otherwise waived in writing by Seller, Buyer may, without the prior written consent of Seller, assign this Agreement to any corporation, partnership, limited liability company or other entity which, directly or indirectly, controls or is controlled by, or is under common control, with Buyer.  For the purposes of this definition, “control” (including “controlling”, “controlled by” and “under common control with”) means the ownership of more than 50% of the voting stock of a corporation, or more than 50% of all the legal and equitable interests in any entity, and the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any entity, whether through the ownership of voting securities, common 

directors or officers, by contract or otherwise.  Notwithstanding any such assignment, Buyer shall remain obligated to perform all of the terms and conditions of this Agreement as set forth herein.  

Section 14.2Notices.  Any tender, delivery, notice, demand or other communication (“Notice”) required or permitted under this Agreement shall be in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, overnight mailed, delivered or sent by telefacsimile machine capable of confirming transmission, and shall be deemed delivered, given and received upon the earlier of:  (a) if personally served, the date of delivery to the person, or rejection by the person, to receive such notice; (b) if given by telefacsimile, when sent, provided the telefacsimile machine confirms transmission; and (c) if sent by registered or certified mail, four (4) Business Days after the date of posting by the United States Postal Service; or (d) if sent by Federal Express or other comparable overnight delivery service, upon delivery, or rejection, as documented by the service's delivery records, all in accordance with the following:

(i)    Seller's Address.  If to Seller, at the following address:
Pacific Office Properties Trust (Ward Avenue) LLC
10188 Telesis Court, Suite 222
San Diego, California 92121
Attn:  Jim Ingebritsen
          Matt Root
          Michael Burer
Telephone: (858) 678-8500
Facsimile: (858) 678-8504

With a copy to:
Scott D. Radovich, Esq.
Schneider Tanaka Radovich Andrew & Tanaka, LLLC
1100 Alakea Street, Suite 2100
Honolulu, Hawaii 96813
Telephone: (808) 792-4203
Facsimile: (808) 664-8946

(ii)    Buyer's Address.  If to Buyer, at the following address:
Senior Housing Properties Trust
Two Newton Place
255 Washington Street, Suite 300
Newton, MA 02458
Attention: David J. Hegarty
Telephone: (617) 796-8350
Facsimile:   (617) 796-8349
    
With a copy to:

Sullivan & Worcester LLP
One Post Office Square
Boston, MA  02109
Attention:  Louis A. Monti, Esq.

Telephone:  (617) 338-2476
Facsimile:  (617) 338-2880
            
Section 14.3Entire Agreement.  This Agreement, including the Exhibits and Schedules referred to herein, constitutes the entire contract between the Parties with respect to the subject matter covered by this Agreement.  This Agreement supersedes all previous representations, arrangements, agreements and understandings by and among the Parties with respect to the subject matter covered by this Agreement including, without limitation, all prior letters of intent, confidentiality agreements and access agreements executed between Buyer and Seller, and any such representations, arrangements, agreements and understandings are hereby canceled and terminated in all respects.  This Agreement may not be amended, changed or modified except by a writing duly executed by both of the Parties hereto.

Section 14.4Severability.  If any provision of this Agreement, or any portion of any such provision, is held to be unenforceable or invalid, the remaining provisions and portions shall nevertheless be carried into effect.

Section 14.5Remedies.  All rights and remedies of the Parties are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to be to the exclusion of or to limit or prejudice any other legal or equitable rights or remedies which the Parties may have, except as otherwise expressly limited herein.  Except as expressly provided in this Agreement, the Parties shall not be deemed to waive any of their rights or remedies thereunder, unless such waiver is in writing and signed by the Party to be bound.  Except as expressly provided in this Agreement, no delay or omission on the part of either Party in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy.  A waiver on any one occasion shall not be construed as a bar or waiver of any right or remedy on any future occasion.

Section 14.6Headings.  The headings contained in this Agreement are for convenience only and are not a part of this Agreement, and do not in any way interpret, limit or amplify the scope, extent or intent of this Agreement, or any of the provisions of this Agreement.

Section 14.7Counterparts.  This Agreement may be executed in counterparts by facsimile or electronic mail, each of which shall constitute an original, but all of which together shall constitute one and the same agreement.

Section 14.8Attorneys' Fees, Costs and Expenses.  Except as may otherwise be provided in this Agreement, in any action, proceeding or dispute resolution process arising from, out of or in connection with this Agreement and the transactions contemplated hereby, the prevailing party therein shall be entitled to recover from the other party hereto the costs, expenses and reasonable attorneys' fees incurred by the prevailing party in connection therewith.  Nothing contained in this Section 14.8 is intended to limit any provision regarding payment of attorneys' fees, costs, expenses and similar matters contained elsewhere in this Agreement or in any document or instrument executed and delivered pursuant to this Agreement.

Section 14.9Governing Law; Jurisdiction and Venue.  This Agreement shall be governed by and interpreted in accordance with the laws (other than that body of law relating to conflicts of law) of the State of Hawaii.  The proper venue for any claims, causes of action or other proceedings concerning this Agreement shall be in the state and federal courts located in the City and County of Honolulu, State of Hawaii.

Section 14.10No Third Party Beneficiary.  This Agreement creates rights and duties only between the Parties, and no third party is or shall be deemed to be or shall have any rights as a third party beneficiary.

Section 14.11Binding Effect.  Subject to Section 14.1 hereof, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors, assigns and legal and personal representatives.

Section 14.12Time of the Essence.  Time is of the essence for the performance of each and every obligation hereunder.   Any reference to any time in this Agreement shall be a reference to the current local time in San Diego, California.

Section 14.13Survivability.  Except as otherwise expressly provided in this Agreement, none of the covenants or obligations of the Parties to this Agreement shall survive the Closing.  Furthermore, without limiting the foregoing, the execution and delivery by Seller of the Assignment and Assumption of Ground Lease and the other applicable Transaction Documents, and the acceptance thereof by Buyer shall effect a merger and shall be deemed the full performance and discharge of each and every obligation on the part of Seller to be performed hereunder, except as otherwise provided herein.  

Section 14.14Seller's 1031 Exchange.  Buyer acknowledges that Seller may engage in a tax deferred exchange (“Seller's Exchange”) pursuant to Section 1031 of the Code.  Without limiting the provisions of Section 14.1 hereof, to effect Seller's Exchange, Seller may assign its rights in, and delegate its duties under this Agreement, as well as transfer the Property, to any exchange accommodator which Seller shall determine.  As an accommodation to Seller, Buyer agrees to cooperate with Seller in connection with Seller's Exchange, including the execution of documents therefor, provided the following terms and conditions are satisfied:

i.Buyer shall have no obligation to take title to any property in connection with Seller's Exchange;

ii.Except as otherwise provided in this Agreement, Buyer shall not be obligated to pay any escrow costs, brokerage commissions, title charges, survey costs, recording costs or other charges incurred with respect to any exchange property, and/or Seller's Exchange;

iii.The Closing shall not be contingent or otherwise subject to the consummation of Seller's Exchange, and the Escrow shall timely close in accordance with the terms of this Agreement notwithstanding any failure, for any reason, of the parties to Seller's Exchange to effect the same;

iv.All representations, warranties, covenants and indemnification obligations of Seller set forth in this Agreement shall not be affected or limited by Seller's use of an exchange accommodator and shall survive Seller's Exchange and shall continue to inure directly from Seller for the benefit of Buyer; 

v.All representations, warranties, covenants and indemnification obligations of Buyer set forth in this Agreement shall not be affected or limited by Seller's use of an exchange accommodator and shall survive Seller's Exchange and shall continue to inure directly from Buyer for the benefit of Seller; and
vi.Seller agrees to indemnify, protect, defend (with counsel reasonably acceptable to Buyer) and hold Buyer harmless from and against any and all causes of action, claims, demands, liabilities, costs and expenses, including actual attorneys' fees and costs, incurred by Buyer in connection with Seller's 

Exchange.

Buyer makes absolutely no representations or warranties of any kind or nature (express or implied) that tax deferred exchange treatment is available to Seller with respect to Seller's Exchange, or that such a transaction will qualify in any respect for such treatment, and Buyer shall incur no liability if Seller's Exchange fails to qualify for the tax deferred treatment intended by Seller.  Seller hereby acknowledges and represents to Buyer that Seller is relying solely and entirely upon the advice of Seller's own consultants with respect to any and all aspects of Seller's Exchange.  In no event shall the obligations of Seller under this Agreement be contingent upon this transaction being included as part of Seller's Exchange.
Section 14.15Buyer's 1031 Exchange.  Seller acknowledges that Buyer may be purchasing the Property as part of a tax deferred exchange (“Buyer's Exchange”) pursuant to Section 1031 of the Code.  Without limiting the provisions of Section 14.1 hereof, in order to effect Buyer's Exchange, Buyer may assign its rights in, and delegate its duties under, this Agreement, as well as transfer the Property, to any exchange accommodator which Buyer shall determine.  As an accommodation to Buyer, Seller agrees to cooperate with Buyer in connection with Buyer's Exchange, including the execution of documents therefor, provided the following terms and conditions are satisfied:

i.Seller shall have no obligation to take title to any property in connection with Buyer's Exchange;

ii.Except as otherwise provided in this Agreement, Seller shall not be obligated to pay any escrow costs, brokerage commissions, title charges, survey costs, recording costs or other charges incurred with respect to any exchange property;

iii.The Closing shall not be contingent or otherwise subject to the consummation of Buyer's Exchange, and the Escrow shall timely close in accordance with the terms of this Agreement notwithstanding any failure, for any reason, of the parties to Buyer's Exchange to effect the same;

iv.All representations, warranties, covenants and indemnification obligations of Seller set forth in this Agreement shall not be affected or limited by Buyer's use of an exchange accommodator and shall survive Buyer's Exchange and shall continue to inure directly from Seller for the benefit of Buyer;

v.All representations, warranties, covenants and indemnification obligations of Seller set forth in this Agreement shall not be affected or limited by Buyer's use of an exchange accommodator and shall survive Buyer's Exchange and shall continue to inure directly from Buyer for the benefit of Seller; and
vi.Buyer agrees to indemnify, protect, defend (with counsel reasonably acceptable to Seller) and hold Seller harmless from and against any and all causes of action, claims, demands, liabilities, costs and expenses, including actual attorneys' fees and costs, incurred by Seller in connection with Buyer's Exchange.

Seller makes absolutely no representations or warranties of any kind or nature (express or implied) that tax deferred exchange treatment is available to Buyer with respect to Buyer's Exchange, or that such a transaction will qualify in any respect for such treatment.  Buyer hereby acknowledges and represents to Seller that Buyer is relying solely and entirely upon the advice of Buyer's own consultants with respect to any and all aspects of Buyer's Exchange.  In no event shall the obligations of Seller under this Agreement be contingent upon this transaction being included as part of Buyer's Exchange.  

Section 14.16Business Days.  If the Closing Date or any other date described in this Agreement by which one Party hereto must give notice to the other Party hereto or perform or fulfill an obligation hereunder is a Calendar Day that is not a Business Day, then the Closing Date or such other date shall be automatically extended to the next succeeding Business Day.

Section 14.17Tender of Agreement not an Offer; Right to Continue Negotiations.  The tendering of this Agreement by either Party to the other shall not constitute, expressly or impliedly, an offer by the Party making such tender, and this Agreement shall not be binding upon a Party until actually executed by that Party or by the authorized agent or representative of such Party.  

Section 14.18Waiver of Trial by Jury.  To the fullest extent permitted by applicable law, the parties hereby absolutely and irrevocably waive any right to trial by jury in any action or proceeding between them related to this Agreement or the consummation of the transactions contemplated hereunder.

Section 14.19Bulk Sales Laws.  Seller shall indemnify, defend and hold harmless Buyer from and against any loss, claim or damage that Buyer may incur as a result of any failure to comply with any so-called “bulk sales laws” or similar laws (if any) which are applicable to the transactions contemplated under this Agreement. 

Section 14.20Further Assurances.  Buyer and Seller shall, whenever and as often as it shall be requested to do so, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be reasonably necessary or proper in order to carry out the intent and purpose of this Agreement.

Section 14.21Financials.  Seller shall provide Buyer with reasonable access to the books and records of Seller with respect to the Property for purposes of preparing audited financial statements for the 2010 and 2011 calendar years (and, to the extent applicable, the 2012 stub period), such financial statements to be prepared at Buyer's sole cost and expense.  Seller shall reasonably cooperate with Buyer and its accountants to provide such certifications and representations, in form and substance reasonably acceptable to Seller, as to such books and records as Buyer or its accountants shall reasonably require in order to enable Buyer or its accountants to prepare such audited financial statements in accordance with the requirements of Regulation S-X, Rule 3-14 of the U.S. Securities and Exchange Commission.  Buyer shall be responsible for all out-of-pocket costs or expenses reasonably incurred by Seller in connection with the preparation of such certifications and representations.  Notwithstanding the foregoing, Buyer acknowledges and agrees that Seller's agreement in this Section 14.21 to make such books and records available for the purposes stated herein is given solely as an accommodation to Buyer and that neither Buyer nor any successor or assign of Buyer shall have any claim, right of action, cause of action or other right or remedy against Seller on any basis referring or relating to, arising from or based on any such documents or information contained therein or obtained or acquired as a result of any actions taken with respect to such documents or information.  Buyer hereby affirmatively, unconditionally, knowingly and irrevocably waives, for itself and for its successors and assigns, any and all such claims, rights of action, causes of action and other rights and remedies that may be based on, arise from or relate in any way to any such document or information or as a result of the disclosures and actions described in this Section 14.21.  Buyer acknowledges that Seller would not agree to this Section 14.21 without the express covenants, agreements and waivers made by Buyer in this Section 14.21, all of which are material to Seller's agreement to the terms of this Section 14.21, shall survive the Closing, and shall remain conditions to Seller's performing any obligation under this Section 14.21.   

Section 14.22Non-Liability of Trustees.  THE AMENDED AND RESTATED 

DECLARATION OF TRUST ESTABLISHING BUYER, DATED SEPTEMBER 20, 1999, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF BUYER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, BUYER.  ALL PERSONS DEALING WITH BUYER IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF BUYER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.  

Section 14.23Parties Not Partners.  Nothing contained in this Agreement or any of the documents or instruments to be executed pursuant hereto shall constitute any one or more of Buyer and its officers, directors, members, trustees, successors and assigns, as partners with, agents for or principals of any one or more of Seller and its officers, directors, members, successors and assigns.

Section 14.24Survival.  The provisions of this Article 14 shall survive the Closing or any earlier termination of this Agreement.

 [Signature page to follow]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
SELLER:

PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability
company

		
	By:
	Pacific Office Properties, L.P., a Delaware limited partnership, its Sole Member

		
	By:
	Pacific Office Properties Trust, Inc., a Maryland corporation, its General Partner

By:  /s/  James R. Ingebritsen
Name: James R. Ingebritsen
Title: Chief Executive Officer

BUYER:

SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust

By:  /s/ David J. Hegarty
Name:  David J. Hegarty
Title:  President

THE UNDERSIGNED HEREBY JOINS IN THIS AGREEMENT AS THE ESCROW AGENT AND ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF ARTICLE 12 OF THIS AGREEMENT.

FIRST AMERICAN TITLE COMPANY, INC.

_/s/ Jill A.P. Kauka____________________________
Name:  Jill A.P. Kauka
Title:  Sr. Escrow Officer

SEPARATE UNDERTAKING
For value received, the undersigned, Pacific Office Properties Trust, Inc., a Maryland real estate investment trust (“POP”), hereby acknowledges and agrees that POP shall be jointly and severally liable with Seller to Buyer for a breach by Seller of any of the covenants, indemnification undertakings, and/or representations and warranties of Seller in the foregoing Agreement and/or in the Transaction Documents (as defined in the foregoing Agreement); provided, however, that all restrictions and limitations of liability set forth in the Agreement shall apply to POP and Seller jointly. 
PACIFIC OFFICE PROPERTIES TRUST, INC.,
a Maryland corporation

By:  /s/ James R. Ingebritsen
Title:  Chief Executive Officer

EXHIBIT “A”
LEGAL DESCRIPTION OF LAND

That certain parcel of land situate at Kulaokahua, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
Lot 3, area 59,512 square feet, more or less, as shown on Map 2 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1772 of Fannie Lee Batten, excepting therefrom the title and interest in all buildings and improvements thereon reserved in favor of Pacific Office Properties Trust (Ward Avenue) LLC under that certain Limited Warranty Deed and Reservation of Rights, recorded in said Office as Land Court Document No. 3369618.
Being the land described in and covered by Transfer Certificate of Title No. 785,061 issued to 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company.

EXHIBIT "B"

	
			
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	Total Pages:              

Tax Map Key No.:  (1) 2-1-42:18

ASSIGNMENT AND ASSUMPTION OF GROUND LEASE
AND CONVEYANCE OF IMPROVEMENTS;
CONSENT OF GROUND LESSOR TO ASSIGNMENT
AND ASSUMPTION OF GROUND LEASE

THIS ASSIGNMENT AND ASSUMPTION OF GROUND LEASE AND CONVEYANCE OF IMPROVEMENTS (this “Assignment”), is made this______ day of ____________, 201__ (the “Effective Date”), by and between PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company, the address of which is 10188 Telesis Court, Suite 222, San Diego, California 92121 (the “Assignor”), and _______________________________, a _______________, the address of which is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 (the “Assignee”). 
W I T N E S S E T H :
That for Ten Dollars ($10.00) and other valuable consideration paid by the Assignee, the receipt of which is hereby acknowledged, and in consideration of the covenants and agreements of the Assignee hereinafter expressed, the Assignor does hereby sell, assign, transfer, set over and deliver unto the Assignee, all of the estate, right, title and interest of the Assignor in and to that certain unrecorded lease including, without limitation, its leasehold interest in the underlying land, more particularly described in Exhibit “A” attached hereto and made a part hereof (the “Ground Lease”), subject to the encumbrances noted in said Exhibit “A”.
TOGETHER WITH all of the estate, right, title and interest of the Assignor in and to the buildings, structures and improvements located on the land demised by the Ground Lease (the “Improvements”), including, without limitation, the Assignor's rights, title and interests in the Improvements reserved under that certain Limited Warranty Deed and Reservation of Rights dated December 20, 2005, recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369618 and noted on Certificate of Title No. 785,061, subject to the encumbrances noted in said Exhibit “A”.

TO HAVE AND TO HOLD the same, together with all rights, easements, privileges and appurtenances enjoyed therewith, unto the Assignee.
SUBJECT, HOWEVER, to the payment of the rents due under the Ground Lease and all of the other covenants, conditions and provisions of the Ground Lease, and to the encumbrances noted in said Exhibit “A”.
The Assignor hereby covenants with the Assignee that the Assignor has good right to sell and assign its aforestated right, title, and interest in the Ground Lease and Improvements, that said right, title and interest is free and clear of and from all encumbrances made or suffered by the Assignor, or anyone claiming by, through or under Assignor, except as set forth herein, including in said Exhibit “A”, and except for the lien of real property taxes not yet required by law to be paid, and will WARRANT and DEFEND the same unto the Assignee against any and all encumbrances made or suffered by the Assignor or anyone claiming by, through or under Assignor, except as set forth herein.  
AND, in consideration of the foregoing, the Assignee does hereby accept the foregoing assignment, assume the obligations of the ground lessee arising or accruing from and after the Effective Date under the Ground Lease, promise, covenant and agree to and with the Assignor and the ground lessor under the Ground Lease (and their respective successors and assigns) that the Assignee will pay the rents thereby reserved arising or accruing from and after the Effective Date as and when the same become due and payable pursuant to the provisions of the Ground Lease, and will also faithfully observe and perform all of the covenants and conditions contained in the Ground Lease which are or ought to be observed and performed by the ground lessee therein named arising or accruing from and after the Effective Date.
The rights and obligations of the Assignor and the Assignee shall be binding upon and inure to the benefit of their respective successors and permitted assigns.  All obligations undertaken by two or more persons shall be deemed to be joint and several unless a contrary intention shall be clearly expressed elsewhere herein.
The terms “Assignor” and “Assignee” as and when used herein, or any pronouns used in place thereof, shall mean and include the masculine or feminine, the singular or plural number, individuals or corporations and their and each of their respective successors and permitted assigns, according to the context thereof.  
This Assignment may be executed in one or more counterparts.  It shall be fully executed when each party whose signature is required has signed at least one counterpart even though no one counterpart contains the signature of all the parties.  Each executed counterpart shall be deemed an original, but all of the counterparts together shall constitute one and the same document.  
 [The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the Assignor and the Assignee have executed this Assignment as of the Effective Date.  

	
		
	PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company

By: Pacific Office Properties, L.P., a Delaware limited partnership, its Sole Member

By: Pacific Office Properties Trust,           Inc., a Maryland corporation, its                            General Partner

By:________________________
Name: _____________________
Title: ______________________

Assignor
	

By
Name: 
Title: 

Assignee

STATE OF_______________ )
     ) SS.
COUNTY OF____________    )

On ___________________, before me personally appeared _______________________________, to me personally known, who, being by me duly sworn or affirmed, did say that such person executed the foregoing instrument as the free act and deed of such person, and if applicable, in the capacities shown, having been duly authorized to execute such instrument in such capacities.  

Further, I certify, as of this date, as follows:

Date of Document: _______________________________        
		
	Number of Pages: 
	_______ (if counterpart signature pages are subsequently attached, the document may have a different number of pages)

Document Description: ____________________________________________________    
    
Jurisdiction/Judicial Circuit Where Signed:_____________________________________     

_________________________________________________    
Type or print name:     ____________________________
Date:     __________________________________________
Notary Public in and for said County and State
My commission expires: _____________________    

COMMONWEALTH OF MASSACHUSETTS
COUNTY OF ______________
On this ____ day of _________, 201_, before me, the undersigned notary public, personally appeared ____________, proved to me through satisfactory evidence of identification, which was personal knowledge, to be the person whose name is signed on the preceding page or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose and in his capacity aforesaid.

__________________________________________________                        
Notary Public Signature and Seal
Print Name:________________________________                      
My commission expires: _____________________             

EXHIBIT A
That certain unrecorded Ground Lease, made as of December 20, 2005, by and between 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, as “Landlord”, and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, as “Tenant”, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619, leasing the following:
That certain parcel of land situate at Kulaokahua, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
Lot 3, area 59,512 square feet, more or less, as shown on Map 2 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1772 of Fannie Lee Batten, excepting therefrom the title and interest in all buildings and improvements thereon reserved in favor of Pacific Office Properties Trust (Ward Avenue) LLC under that certain Limited Warranty Deed and Reservation of Rights, recorded in said Office as Land Court Document No. 3369618.
Being the land described in and covered by Transfer Certificate of Title No. _________ issued to ______________, a _________________.
SUBJECT, HOWEVER, to the following:
[encumbrances to be inserted]

CONSENT OF GROUND LESSOR TO
ASSIGNMENT AND ASSUMPTION OF GROUND LEASE

[Insert name of Buyer under the Fee Interest Purchase Agreement or its permitted assignee], the current ground lessor under that certain unrecorded Ground Lease dated December 20, 2005, made by and between 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619 and noted on Certificate of Title Number _______ issued to _______________________________________ (the “Ground Lease”), hereby consents to the foregoing Assignment and Assumption of Ground Lease and Conveyance of Improvements (the “Assignment”) entered into by Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company (“Assignor”) and [insert name of Assignee], to which this Consent is attached, and hereby releases and discharges Assignor from any and all liabilities incurred, and any and all duties and obligations on the part to be performed by the “ground lessee” thereunder, under the Ground Lease from and after the Effective Date of the Assignment; provided, that, this Consent shall not be deemed a consent to any other or further assignment thereof.

GROUND LESSOR:

[insert name of Buyer under the Fee Interest Purchase Agreement or its permitted assignee]

By:________________________________                        
Name: _____________________________                        
Title: ______________________________                        
    
Dated: ______________________________            

    

COMMONWEALTH OF MASSACHUSETTS
COUNTY OF ______________
On this ____ day of _________, 201_, before me, the undersigned notary public, personally appeared ____________, proved to me through satisfactory evidence of identification, which was personal knowledge, to be the person whose name is signed on the preceding page or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose and in his capacity aforesaid.

__________________________________________                        
Notary Public Signature and Seal
Print Name:  __________________________                    
My commission expires:  ________________            

EXHIBIT “C”

BILL OF SALE
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and pursuant to that certain Purchase and Sale Agreement and Joint Escrow Instructions, dated ____________, 2012 between Grantor and Senior Housing Properties Trust, a Maryland real estate investment trust (as amended and assigned from time to time, the “Purchase Agreement”) PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company (“Grantor”), hereby sells, conveys, quitclaims and transfers to ____________________, a __________________ (“Grantee”), all of Grantor's right, title and interest, if any, in and to the personal property located on the real property described on Exhibit “A” attached hereto and incorporated herein by this reference (the “Property”), including, without limitation, the personal property set forth on Exhibit “B” attached hereto and incorporated herein by this reference (the “Personal Property”), in “AS IS” and “WHERE IS” condition, without representation or warranty of any kind, except that the Personal Property is being conveyed free and clear of all liens and encumbrances.
EXECUTED and to be made effective as of the date of the Closing, as said term is defined in the Purchase Agreement.
GRANTOR:

PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability
company

		
	By:
	Pacific Office Properties, L.P., a Delaware limited partnership, its Sole Member

		
	By:
	Pacific Office Properties Trust, Inc., a Maryland corporation, its General Partner

By:________________________
Name: _____________________
Title: ______________________

EXHIBIT “A”

PROPERTY

ITEM I:
The leasehold estate created by that certain unrecorded Ground Lease, made as of December 20, 2005, by and between 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, as “Landlord”, and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, as “Tenant”, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619, leasing the following:
That certain parcel of land situate at Kulaokahua, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
Lot 3, area 59,512 square feet, more or less, as shown on Map 2 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1772 of Fannie Lee Batten, excepting therefrom the title and interest in all buildings and improvements thereon reserved in favor of Pacific Office Properties Trust (Ward Avenue) LLC under that certain Limited Warranty Deed and Reservation of Rights, recorded in said Office as Land Court Document No. 3369618.
Being the land described in and covered by Transfer Certificate of Title No. _________ issued to ______________, a _________________.

ITEM II:
Grantor's title and interest in the buildings and improvements on said Lot 3, reserved under that certain Limited Warranty Deed and Reservation of Rights recorded in said Office as Land Court Document No. 3369618.

EXHIBIT “B”

PERSONAL PROPERTY
[List of Personal Property to be inserted]

EXHIBIT “D”

CERTIFICATE OF NON-FOREIGN STATUS
The undersigned, being duly sworn, hereby deposes, certifies and states on oath as follows:
That the undersigned, PACIFIC OFFICE PROPERTIES, L.P., a Delaware limited partnership (“Transferor”), is duly authorized to execute this Certificate and Affidavit;
1.That Transferor's principal place of business is 10188 Telesis Court, Suite 222, San Diego, CA 92121;

2.That the Transferor is not a “foreign corporation,” “foreign partnership,” “foreign trust,” or “foreign estate,” as such terms are defined in the United States Internal Revenue Code of 1986, as amended (the “Code”), and Regulations promulgated thereunder, and is not otherwise a “foreign person,” as defined in Section 1445 of the Code;

3.Transferor is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii) of such Regulations;

4.That the Transferor's United States taxpayer identification number is: ____________;

5.That the undersigned is making this Certificate and Affidavit pursuant to the provisions of Section 1445 of the Code in connection with the sale of the real property described on Exhibit “A,” attached hereto and incorporated herein by reference, by the Transferor's affiliate, PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company, to ___________________________________ (“Transferee”), which sale constitutes the disposition by the Transferor of a United States real property interest, for the purposes of establishing that the Transferee is not required to withhold tax pursuant to Section 1445 of the Code in connection with such disposition; and

6.That the undersigned acknowledges that this Certificate and Affidavit may be disclosed to the Internal Revenue Service and other applicable governmental agencies by the Transferee, that this Certificate and Affidavit is made under penalty of perjury, and that any false statement made herein could be punished by fine, imprisonment, or both.

[Signature page to follow]

Under penalty of perjury, I declare that I have examined the foregoing Certificate and Affidavit and I hereby certify that it is true, correct and complete.
TRANSFEROR:

PACIFIC OFFICE PROPERTIES, L.P., a Delaware
limited partnership, its Sole Member

		
	By:
	Pacific Office Properties Trust, Inc., a Maryland corporation, its General Partner

By:________________________
Name: _____________________
Title: ______________________

STATE OF             )
)
COUNTY OF            )
On _____________________, before me, _________________________, Notary Public, personally appeared ____________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of __________ that the foregoing paragraph is true and correct.

_________________________________________
Signature of Notary Public

EXHIBIT “A”

LEGAL DESCRIPTION OF REAL PROPERTY
ITEM I:
The leasehold estate created by that certain unrecorded Ground Lease, made as of December 20, 2005, by and between 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, as “Landlord”, and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, as “Tenant”, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619, leasing the following:
That certain parcel of land situate at Kulaokahua, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
Lot 3, area 59,512 square feet, more or less, as shown on Map 2 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1772 of Fannie Lee Batten, excepting therefrom the title and interest in all buildings and improvements thereon reserved in favor of Pacific Office Properties Trust (Ward Avenue) LLC under that certain Limited Warranty Deed and Reservation of Rights, recorded in said Office as Land Court Document No. 3369618.
Being the land described in and covered by Transfer Certificate of Title No. _________ issued to ______________, a _________________.

ITEM II:
Pacific Office Properties Trust (Ward Avenue) LLC's title and interest in the buildings and improvements on said Lot 3, reserved under that certain Limited Warranty Deed and Reservation of Rights recorded in said Office as Land Court Document No. 3369618.

EXHIBIT “D-1”
[insert HARPTA Form]

EXHIBIT “E”
ASSIGNMENT AND ASSUMPTION OF LEASES 
AND SECURITY DEPOSITS
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS (“Assignment”), is made as of the ____ day of _____________, 2012 (the “Effective Date”), by and between PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company (“Assignor”), and __________________________, a ________________________ (“Assignee”), both of whom may be referred to herein as the “Parties” and each of whom may be referred to herein as a “Party.”
RECITALS
A.Assignor and Assignee (as successor by assignment from Senior Housing Properties Trust) are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions, dated ____________, 2012, as assigned (the “Purchase Agreement”), pursuant to which Assignor, as of the date hereof, has conveyed its right, title and interest in and to the real property more particularly described on Exhibit “A” attached hereto and incorporated herein by reference (the “Property”) to Assignee.  Unless otherwise expressly defined herein, capitalized terms used herein without definition shall have the same meaning ascribed to such terms in the Purchase Agreement. 

B.This Assignment is being made pursuant to the Purchase Agreement for the purpose of memorializing the assignment to Assignee of all of Assignor's right, title and interest in and to: (a) those Leases relating to the Property set forth on Exhibit “B” attached hereto and incorporated herein by reference; and (b) the Security Deposits set forth on Exhibit “C” attached hereto and incorporated herein by reference.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1.    Assignment of Leases.  Assignor hereby assigns, transfers, conveys and delivers to Assignee, and Assignee hereby accepts the assignment of, all of Assignor's right, title and interest in, to and under the Leases and the Security Deposits. 
2.    Assumption of Obligations.  Assignee hereby accepts the foregoing assignment and assumes and agrees to perform and to be bound by all of the terms, covenants, conditions and obligations imposed upon the lessor or landlord under the Leases accruing on or after the Closing.  Without limiting the foregoing, in the event that the Property Expense Reconciliation results in a Property Expense Reimbursement Surplus and Assignor pays to Assignee an amount equal to the Property Expense Reimbursement Surplus pursuant to the Purchase Agreement, Assignee shall be obligated to reimburse or credit the Tenants for such Property Expense Reimbursement Surplus as required by their respective Leases.
3.    Proration.  Nothing contained in this Assignment shall constitute a waiver of or a limitation on any of the rights and obligations of the Parties pursuant to Article 11 of the Purchase Agreement concerning prorations.
4.    Successors and Assigns.  This Assignment shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, heirs and legatees of the respective Parties hereto.

5.    Attorneys' Fees.  In the event of any legal action between Assignor and Assignee arising out of or in connection with this Assignment, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees and costs incurred in such action and any appeal therefrom.
6.    Governing Law; Jurisdiction and Venue.  This Assignment shall be governed by the laws of the State of Hawaii.  The proper venue for any claims, causes of action or other proceedings concerning this Assignment shall be in the state and federal courts located in the City and County of Honolulu, State of Hawaii.
7.    Counterparts.  This Assignment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.
8.    Cooperation.  Assignor hereby agrees to and shall execute and deliver to Assignee any and all documents, agreements and instruments reasonably necessary to consummate the transactions contemplated by this Assignment.

IN WITNESS WHEREOF, the Parties hereto have executed this Assignment as of the Effective Date.
ASSIGNOR:

PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability
company

		
	By:
	Pacific Office Properties, L.P., a Delaware limited partnership, its Sole Member

		
	By:
	Pacific Office Properties Trust, Inc., a Maryland corporation, its General Partner

By:________________________
Name: _____________________
Title: ______________________

ASSIGNEE:

____________________________________

By:_________________________________
Name:______________________________
Title:_______________________________

STATE OF             )
)
COUNTY OF            )
On _____________________, before me, _________________________, Notary Public, personally appeared ____________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of __________ that the foregoing paragraph is true and correct.

_________________________________________
Signature of Notary Public

COMMONWEALTH OF MASSACHUSETTS
COUNTY OF ______________
On this ____ day of _________, 201_, before me, the undersigned notary public, personally appeared ____________, proved to me through satisfactory evidence of identification, which was personal knowledge, to be the person whose name is signed on the preceding page or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose and in his capacity aforesaid.

___________________________________________________                        
Notary Public Signature and Seal
Print Name:  ________________________________                    
My commission expires:  ______________________            

EXHIBIT “A” 

PROPERTY
ITEM I:
The leasehold estate created by that certain unrecorded Ground Lease, made as of December 20, 2005, by and between 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, as “Landlord”, and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, as “Tenant”, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619, leasing the following:
That certain parcel of land situate at Kulaokahua, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
Lot 3, area 59,512 square feet, more or less, as shown on Map 2 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1772 of Fannie Lee Batten, excepting therefrom the title and interest in all buildings and improvements thereon reserved in favor of Pacific Office Properties Trust (Ward Avenue) LLC under that certain Limited Warranty Deed and Reservation of Rights, recorded in said Office as Land Court Document No. 3369618.
Being the land described in and covered by Transfer Certificate of Title No. _________ issued to ______________, a _________________.
ITEM II:
Assignor's title and interest in the buildings and improvements on said Lot 3, reserved under that certain Limited Warranty Deed and Reservation of Rights recorded in said Office as Land Court Document No. 3369618.

EXHIBIT “B” 
LEASES
[List of Leases to be inserted]

EXHIBIT “C”
SECURITY DEPOSITS
[List of Security Deposits to be inserted]

EXHIBIT “F”
SELLER'S CERTIFICATE
THIS SELLER'S CERTIFICATE (this “Certificate”) is made effective as of ____________, 2012 by PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company (the “Seller”), for the benefit of _________________________ (the “Buyer”).

RECITALS:
		
	A.
	Seller and Buyer (as successor by assignment from Senior Housing Properties Trust) are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions, dated as of _____________, 2012, as assigned (as so assigned, the “Purchase Agreement”).  Capitalized terms used in this Certificate without definition shall have the meaning ascribed to such terms in the Purchase Agreement.

		
	B.
	Article 9 of the Agreement contains certain representations and warranties (collectively, the “Representations and Warranties”) made by the Seller to and for the benefit of Buyer.

		
	C.
	The Agreement also provides that the Representations and Warranties of Seller shall be remade as of the Closing as if then made.

NOW, THEREFORE, in consideration of the foregoing, the mutual agreements and covenants made by Seller and Buyer to one another in the Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller hereby: (i) agrees that the recitals set forth above are incorporated herein as an integral part hereof; and (ii) certifies, represents and warrants to and for the benefit of Buyer that, [subject to the modified and updated Exhibits to the Purchase Agreement attached hereto and incorporated herein by reference,] all of the Representations and Warranties made by Seller in the Agreement are true and correct as of the date hereof, provided, that: (a) such Representations and Warranties certified herein remain subject to any applicable knowledge qualifiers set forth in the Agreement; and (b) any liability Seller may have arising under this certificate with respect to the Representations and Warranties made by Seller are subject to all of the limitations on Seller's liability set forth in the Agreement.
[Signature page to follow.]

IN WITNESS WHEREOF, Seller has executed and delivered this Certificate as of the day and year first hereinabove written.
SELLER:

PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability
company

		
	By:
	Pacific Office Properties, L.P., a Delaware limited partnership, its Sole Member

		
	By:
	Pacific Office Properties Trust, Inc., a Maryland corporation, its General Partner

By:________________________
Name: _____________________
Title: ______________________

EXHIBIT “G”
ASSIGNMENT OF PERMITS, ENTITLEMENTS 
AND INTANGIBLE PROPERTY
THIS ASSIGNMENT OF PERMITS, ENTITLEMENTS AND INTANGIBLE PROPERTY (the “Assignment”) is made as of _________, 2012 (the “Effective Date”), and is entered into by PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability company (“Assignor”) in favor of ___________________, a ________________ (“Assignee”), both of which may be referred to herein as the “Parties” and each of which may be referred to herein as a “Party.”

RECITALS

A.    Assignor and Assignee (as successor by assignment from Senior Housing Properties Trust) are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions, dated __________, 2012, as assigned (“Purchase Agreement”), pursuant to which Assignor, as of the date hereof, has conveyed its right, title and interest to the real property more particularly described on Exhibit “A” attached hereto and incorporated herein by reference (the “Property”) to Assignee.  Unless otherwise expressly defined herein, capitalized terms used herein without definition shall have the same meaning ascribed to such terms in the Purchase Agreement. 
B.    This Assignment is made pursuant to the Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1.    Assignment by Assignor.  Assignor hereby transfers and assigns to Assignee all right, title and interest, if any, of Assignor in and to all of the items listed on Exhibit “B” attached hereto and incorporated herein by reference (collectively, the “Assigned Property”).  Assignee hereby acknowledges that Assignor has made no representation or warranty with respect to any of the Assigned Property.
2.    Successors and Assigns.  This Assignment shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, heirs and legatees of the respective Parties hereto.
3.    Attorneys' Fees.  In the event of any legal action between Assignor and Assignee arising out of or in connection with this Assignment, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees and costs incurred in such action and any appeal therefrom.
4.    Governing Law; Jurisdiction and Venue.  This Assignment shall be governed by, interpreted under, and construed and enforceable with, the laws of the State of Hawaii.  The proper venue for any claims, causes of action or other proceedings concerning this Assignment shall be in the state and federal courts located in the County of Honolulu, State of Hawaii.
5.    Counterparts.  This Assignment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.
6.    Cooperation.  Assignor hereby agrees to and shall execute and deliver to Assignee any and 

all documents, agreements and instruments reasonably necessary to consummate the transactions contemplated by this Assignment.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be executed as of the Effective Date.
ASSIGNOR:

PACIFIC OFFICE PROPERTIES TRUST (WARD AVENUE) LLC, a Delaware limited liability
company

		
	By:
	Pacific Office Properties, L.P., a Delaware limited partnership, its Sole Member

		
	By:
	Pacific Office Properties Trust, Inc., a Maryland corporation, its General Partner

By:________________________
Name: _____________________
Title: ______________________

ASSIGNEE:

______________________________________

By:___________________________________
Name:_________________________________
Title:__________________________________

EXHIBIT “A”
PROPERTY
ITEM I:
The leasehold estate created by that certain unrecorded Ground Lease, made as of December 20, 2005, by and between 101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company, as “Landlord”, and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company, as “Tenant”, a memorandum of which is recorded in the Office of the Assistant Registrar of the Land Court of the State of Hawaii as Land Court Document No. 3369619, leasing the following:
That certain parcel of land situate at Kulaokahua, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
Lot 3, area 59,512 square feet, more or less, as shown on Map 2 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1772 of Fannie Lee Batten, excepting therefrom the title and interest in all buildings and improvements thereon reserved in favor of Pacific Office Properties Trust (Ward Avenue) LLC under that certain Limited Warranty Deed and Reservation of Rights, recorded in said Office as Land Court Document No. 3369618.
Being the land described in and covered by Transfer Certificate of Title No. _________ issued to ______________, a _________________.
ITEM II:
Assignor's title and interest in the buildings and improvements on said Lot 3, reserved under that certain Limited Warranty Deed and Reservation of Rights recorded in said Office as Land Court Document No. 3369618.

EXHIBIT “B”
LIST OF ASSIGNED PROPERTY
1.Intangible Property.  To the extent assignable, all of Assignor's right, title and interest, if any, in and to all intangible property arising from or used in connection with the ownership, use, operation, or maintenance of the Real Property or Personal Property, including, without limitation:  (i) warranties, guarantees and bonds from third parties relating to the Real Property or Personal Property; (ii) copyrights, trade names, trademarks, trademark registrations and internet domain names, if any, owned and used by Assignor in connection with the ownership and operation of the Property, together with the goodwill of the business appurtenant thereto; provided, however, in no event shall such trade name or trademarks, if any, to be assigned to Assignee pursuant hereto include the trade name “Pacific Office Properties” or any derivatives thereof, or any of the trademarks related thereto, (iii) all Tenant files, (iv) the Tenant Lease Financials, as included with Seller's Deliveries, and (v) all plans and specifications owned and used by Assignor in connection with the ownership and operation of the Property.

2.Permits and Entitlements.  To the extent assignable, all of Assignor's right, title and interest, if any, in and to all permits, licenses, certificates of occupancy, approvals, authorization s and orders obtained from any governmental authority and relating to the Real Property or the business of owning, maintaining and/or managing the Real Property.

EXHIBIT “H”
FORM OF TENANT'S ESTOPPEL CERTIFICATE

To:    _______________________________
_______________________________
_______________________________

[Lender, if required]

		
	RE:
	That certain lease agreement dated ____________, 201__, as amended by _________________________________________ [if left blank, it shall be deemed to be “None”](as so amended or modified, the “Lease”), whereby ____________________, as tenant therein (“Tenant”), leased from ___________________, as landlord therein (“Landlord”), approximately  _____ net rentable square feet of space located in First Insurance Center, 1100 Ward Avenue (the “Premises”), which is located in the City of Honolulu, State of Hawaii (the “Property”).

Ladies and Gentlemen:
Tenant acknowledges that Senior Housing Properties Trust, or its nominee (“Buyer”) is reviewing the possible purchase of the Property from Landlord. In connection therewith, Tenant hereby certifies, represents and warrants to Buyer, its respective successors and assigns, as follows:
1.The Lease constitutes the entire agreement between Landlord and Tenant with respect to the Premises and the Property and is in full force and effect and has not been amended or modified either orally or in writing, except as provided in the Preamble of this Tenant Estoppel  Certificate.

2.Tenant's net rentable square footage of Tenant's Premises is equal to  _________ square feet.  

3.The term of the Lease commenced on _________, 200___, and will terminate on _________, 200__. Tenant has _________ renewal options of _______ years each.

4.The current monthly amount of base rent payable by the Tenant is equal to $_______.  Base rent has been paid through ___________, 200___.  No rent has been prepaid by more than thirty (30) days.

5.Tenant is responsible for paying its proportionate share of operating expenses, insurance and real estate taxes owed regarding the Property, Tenant's proportionate share of said operating expenses, insurance and taxes is equal to _____ %, calculated by taking Tenant's net rentable square footage of the Premises divided by the total net rentable square footage of the Property.  Current charges for operating expenses, insurance and real estate taxes are $_______ per month.  Additional rent for operating expenses, insurance premiums and real estate taxes has been paid through _________, 201__.  

6.The current amount of security deposit held by Landlord is $________________.

7.Tenant is obligated to pay rent under the Lease without credit, offset or deduction.

8.To Tenant's knowledge and belief, there are no defaults nor state of facts which, with the giving of notice and/or the passage of time would constitute a default, of Landlord or Tenant under the Lease.

9.Tenant has not subleased all or any portion of the Premises or assigned any of its rights under the Lease, nor pledged any interest therein, except _______________________ [if left blank, it shall be deemed to be “None”].

10.If the Lease is guaranteed, the Guaranty is unmodified and in full force and effect.  

11.Tenant does not have any options, rights of first refusal, rights of first offer, expansion rights or similar rights with respect to the Premises, the Property or any portion thereof, except as set forth in Sections ____ of the Lease.

12.Any work and all other improvements to the Premises required to be constructed or otherwise furnished by Landlord pursuant to the terms of the Lease have been completed and any design allowances, construction allowances or other allowances to which Tenant may now or hereafter be entitled under the Lease have been paid in full, except __________________________ [if left blank, it shall be deemed to be “None”]. 

13.Tenant's current address for all notices to be given to it under the Lease is as follows:
            

__________________________
__________________________
__________________________

14.The person(s) whose signature(s) appear(s) below is duly and fully authorized to execute this Certificate and has knowledge of the facts and statements recited herein.

The certifications, representations and warranties herein made shall be binding upon Tenant, its heirs, legal representatives, successors and assigns, and shall inure to Buyer's benefit and the benefit of Buyer's successors, assigns and lenders. Tenant acknowledges that Buyer may rely on this Tenant Estoppel Certificate in conjunction with its purchase and thereafter its ownership and operation of the Property.

IN WITNESS WHEREOF, the Tenant has executed and delivered this Tenant Estoppel Certificate this _______ day of ____________, 20___.
TENANT:

__________________________________

By________________________________
Title______________________________

EXHIBIT “I”
FORM OF GROUND LESSOR ESTOPPEL CERTIFICATE
GROUND LESSOR'S ESTOPPEL CERTIFICATE
THIS GROUND LESSOR'S ESTOPPEL CERTIFICATE (this “Certificate”) is made and given as of _________, 20__ by 101 PARK AVENUE (1100 WARD), LLC, a Delaware limited liability company (“Ground Lessor”), to and for the benefit SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust, or its nominee ( “Buyer”), and each of their respective successors and assigns.
W I T N E S S E T H :
WHEREAS, Ground Lessor is a party to that certain Ground Lease (the “Ground Lease”), dated as of December 20, 2005 between Ground Lessor and Pacific Office Properties Trust (Ward Avenue) LLC, a Delaware limited liability company (“Tenant”), covering that certain parcel of land located at 1100 Ward Avenue, Honolulu, Hawaii (the “Ground Lease Premises”), all as more particularly described in the Ground Lease; and
WHEREAS, Tenant and Buyer are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated January __, 2012, as assigned, pursuant to which Buyer has agreed to purchase from Tenant, inter alia, the building and other improvements located on the Ground Lease Premises (the “Property”);
WHEREAS, in connection with Buyer's acquisition of the Property, Tenant intends to assign to Buyer all of its right, title and interest under the Ground Lease;
NOW, THEREFORE, Ground Lessor hereby certifies to Tenant and Buyer as follows:
(a)    A true, correct and complete copy of the Ground Lease is attached to this Certificate as Exhibit A.  
(b)    The Ground Lease has not been modified, changed, altered, assigned or amended in any respect and has been duly executed and delivered on behalf of Ground Lessor.  The Ground Lease constitutes the entire understanding between Ground Lessor and Tenant with respect to the Ground Lease Premises and there are no other agreements, whether oral or written, between Tenant and Landlord (or their respective predecessors in interest, if any) concerning the Ground Lease Premises.
(c)    The Ground Lease constitutes a legally valid instrument binding and enforceable upon Ground Lessor in accordance with its terms, subject to equitable principles of general application (whether in a proceeding at law or in equity) and applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally, and the exercise of judicial discretion.
(d)    The term of the Ground Lease commenced on December 20, 2005 and is scheduled to expire on November 30, 2080.  
(e)    The Annual Ground Rent is $_________ per year and all such fixed rent has been paid 

through and including __________ __, 20__.  All “additional rent” and other amounts payable by Tenant under the Ground Lease have been paid in a timely fashion.
(f)    Section 26 of the Ground Lease grants Tenant an option to purchase the Ground Lease Premises upon the terms set forth therein.  Such option remains in full force and effect as of the date hereof. 
(g)    The Ground Lease is in full force and effect, and, as of the date hereof, to the best of Ground Lessor's knowledge, there exists no default nor state of facts which with the giving of notice and/or the passage of time could reasonably be expected to constitute a default thereunder on the part of Ground Lessor or on the part of Tenant thereunder.
(h)    Ground Lessor's current address for all notices to be given to it under the Ground Lease is as follows:
_______________________________
_______________________________
_______________________________
(i)    Buyer and its successors, assigns and lenders may rely on this Certificate.

IN WITNESS WHEREOF, Ground Lessor has executed this Certificate under seal as of the date above first written.

101 Park Avenue (1100 Ward), LLC, a Delaware limited liability company

By: Reynolds Partners, a Hawaii limited partnership

By: JC Reynolds, LLC, a Hawaii limited liability                company, its manager

By: ______________
      Name:
      Title:

EXHIBIT “A”

GROUND LEASE

(see attached)

J-1
EXHIBIT “J”
FORM OF TITLE AFFIDAVITinducementincentiveform.htm

    Exhibit 4.3

 

ON ASSIGNMENT, INC.

 

2012 EMPLOYMENT INDUCEMENT INCENTIVE AWARD PLAN

 

ARTICLE 1.

 

PURPOSE

 

The purpose of the On Assignment, Inc. 2012 Employment Inducement Incentive Award Plan (the “Plan”) is to promote the success and enhance the value of On Assignment, Inc. (the “Company”) by linking the individual interests of Eligible Individuals to those of the Company’s stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s stockholders.  The Plan is further intended to provide flexibility to the Company in its ability to attract, and retain the services of Eligible Individuals upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.  Only Eligible Individuals may receive Awards under the Plan.

 

ARTICLE 2.

 

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.  The singular pronoun shall include the plural where the context so indicates.

 

2.1 “Administrator” shall mean the entity that conducts the general administration of the Plan as provided in Article 11 hereof.

 

2.2 “Affiliate” shall mean any Parent or Subsidiary.

 

2.3 “Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.

 

2.4 “Award” shall mean an Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Award, a Dividend Equivalent Award, a Deferred Stock Award, a Stock Payment Award, a Stock Appreciation Right, an Other Incentive Award or a Performance Share Award, which may be awarded or granted under the Plan.

 

2.5 “Award Agreement” shall mean any written notice, agreement, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.

 

2.6 “Board” shall mean the Board of Directors of the Company.

 

2.7 “Change in Control” shall mean the occurrence of any of the following events:.

 

 

  

  

  

(a) A transaction or series of transactions (other than an offering of Shares to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its Parents or Subsidiaries, an employee benefit plan maintained by the Company or any of its Parents or Subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or

 

(b) The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction:

 

(i) Which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

 

(ii) After which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 2.7(b)(ii) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.

 

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award which provides for the deferral of compensation that is subject to Section 409A of the Code, to the extent required to avoid the imposition of additional taxes under Section 409A of the Code, the transaction or event described in subsection (a) or (b), with respect to such Award shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5).

 

Consistent with the terms of this Section 2.7, the Administrator shall have full and final authority to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto.

 

  

2

  

2.8 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder, whether issued prior or subsequent to the grant of any Award.

 

2.9 “Committee” shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board described in Article 11 hereof.

 

2.10 “Common Stock” shall mean the common stock of the Company, par value $.01 per share.

 

2.11 “Company” shall mean On Assignment, Inc., a Delaware corporation.

 

2.12 “Consultant” shall mean any consultant or adviser engaged to provide services to the Company or any Affiliate that qualifies as a consultant under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form S-8 Registration Statement or any successor Form thereto.

 

2.13  “Deferred Stock” shall mean a right to receive Shares awarded under Section 8.4 hereof.

 

2.14 “Director” shall mean a member of the Board, as constituted from time to time.

 

2.15 “Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 8.2 hereof.

 

2.16 “DRO” shall mean a “domestic relations order” as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.

 

2.17 “Effective Date” shall mean the date the Plan is approved by the Board.

 

2.18 “Eligible Individual” shall mean any prospective Employee who has not previously been an Employee or Director of the Company or a Subsidiary, or who is commencing employment with the Company or a Subsidiary following a bona fide period of non-employment by the Company or a Subsidiary, if he or she is granted an Award in connection with his or her commencement of employment with the Company or a Subsidiary and such grant is an inducement material to his or her entering into employment with the Company or a Subsidiary (within the meaning of Nasdaq Stock Market Rule IM-5636-1 or any successor rule, if the Company’s securities are traded on the Nasdaq Stock Market, and/or the applicable requirements of any other established stock exchange on which the Company’s securities are traded, as applicable, as such rules and requirements may be amended from time to time).  The Administrator may in its discretion adopt procedures from time to time to ensure that a prospective Employee is eligible to participate in the Plan prior to the granting of any Awards to such individual under the Plan (including without limitation a requirement that each such prospective Employee certify to the Company prior to the receipt of an Award under the Plan that he or she has not been previously employed by the Company or a Subsidiary, or if previously employed, has had a bona fide period of non-employment, and that the grant of Awards under the Plan is an inducement material to his or her agreement to enter into employment with the Company or a Subsidiary).

 

  

3

  

2.19 “Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code) of the Company or of any Affiliate.

 

2.20 “Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.

 

2.21 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

2.22 “Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:

 

(a) If the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a share of Common Stock as quoted on such exchange or system for such date or, if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(b) If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a share of Common Stock on such date, the high bid and low asked prices for a share of Common Stock on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(c) If the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.

 

2.23  “Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.

 

2.24  “Independent Director” shall mean a Director of the Company who is not an Employee of the Company and who qualifies as “independent” within the meaning of Nasdaq Stock Market Rule 5605(a)(2), or any successor rule, if the Company’s securities are traded on the Nasdaq Stock Market, and/or the applicable requirements of any other established stock exchange on which the Company’s securities are traded, as applicable, as such rules and requirements may be amended from time to time.

 

  

4

  

2.25 “Non-Employee Director” shall mean a Director of the Company who is not an Employee.

 

2.26 “Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option.

 

2.27 “Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 5 hereof.  Any Option granted under the Plan shall be a Non-Qualified Stock Option.

 

2.28 “Other Incentive Award” shall mean an Award denominated in, linked to or derived from Shares or value metrics related to Shares, granted pursuant to Section 8.7 hereof.

 

2.29 “Parent” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities ending with the Company if each of the entities other than the Company beneficially owns, at the time of the determination, securities or interests representing more than fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

 

2.30 “Participant” shall mean a person who has been granted an Award.

 

2.31 “Performance Award” shall mean an Award that is granted under Section 8.1 hereof.

 

2.32  “Performance Share Award” shall mean a contractual right awarded under Section 8.6 hereof to receive a number of Shares or the cash value of such number of Shares based on the attainment of specified Performance Goals or other criteria determined by the Administrator.

 

2.33 “Permitted Transferee” shall mean, with respect to a Participant, any “family member” of the Participant, as defined under the instructions to use of the Form S-8 Registration Statement under the Securities Act, after taking into account any state, federal, local or foreign tax and securities laws applicable to transferable Awards.

 

2.34  “Plan” shall mean this On Assignment, Inc. 2012 Employment Inducement Incentive Award Plan, as it may be amended from time to time.

 

2.35  “Program” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan.

 

2.36 “Restricted Stock” shall mean Common Stock awarded under Article 7 hereof that is subject to certain restrictions and may be subject to risk of forfeiture.

 

  

5

  

2.37 “Restricted Stock Unit” shall mean a contractual right awarded under Section 8.5 hereof to receive in the future a Share or the cash value of a Share.

 

2.38 “Securities Act” shall mean the Securities Act of 1933, as amended.

 

2.39 “Share Limit” shall have the meaning provided in Section 3.1(a) hereof.

 

2.40 “Shares” shall mean shares of Common Stock.

 

2.41 “Stock Appreciation Right” shall mean a stock appreciation right granted under Article 9 hereof.

 

2.42 “Stock Payment” shall mean a payment in the form of Shares awarded under Section 8.3 hereof.

 

2.43 “Subsidiary” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing more than fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

 

2.44 “Substitute Award” shall mean an Award granted under the Plan in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, in any case, upon the assumption of, or in substitution for, an outstanding equity award previously granted by a company or other entity that is a party to such transaction; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.

 

2.45 “Termination of Service” means:

 

(a) As to a Consultant, the time when the engagement of a Participant as a Consultant to the Company and its Affiliates is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or service with the Company or any Affiliate.

 

(b) As to a Non-Employee Director, the time when a Participant who is a Non-Employee Director ceases to be a Director for any reason, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where the Participant simultaneously commences or remains in employment or service with the Company or any Affiliate.

 

(c) As to an Employee, the time when the employee-employer relationship between a Participant and the Company and its Affiliates is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Participant simultaneously commences or remains in employment or service with the Company or any Affiliate.

 

  

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The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations of Service, including, without limitation, the question of whether a Termination of Service has occurred, whether any Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service.  For purposes of the Plan, a Participant’s employee-employer relationship or consultancy relationship shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Participant ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

 

ARTICLE 3.

 

SHARES SUBJECT TO THE PLAN

 

3.1 Number of Shares.

 

(a) Subject to Section 3.1(b) and Section 12.2 hereof, the aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan shall be eight hundred twenty-five thousand three hundred twenty-seven (825,327) (the “Share Limit”).  Notwithstanding the foregoing, to the extent permitted under applicable law and applicable stock exchange rules, Awards that provide for the delivery of Shares subsequent to the applicable grant date may be granted in excess of the Share Limit if such Awards provide for the forfeiture or cash settlement of such Awards to the extent that insufficient Shares remain under the Share Limit at the time that Shares would otherwise be issued in respect of such Award.

 

(b) If any Shares subject to an Award are forfeited or expire or such Award is settled for cash (in whole or in part), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards under the Plan and shall be added back to the Share Limit in the same number of Shares as were debited from the Share Limit in respect of the grant of such Award (as may be adjusted in accordance with Section 13.2 hereof).  Notwithstanding anything to the contrary contained herein, the following Shares shall not be added back to the Share Limit and will not be available for future grants of Awards: (i) Shares tendered by a Participant or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options.  Any Shares repurchased by the Company under Section 7.4 hereof at the same price paid by the Participant so that such shares are returned to the Company will again be available for Awards.  The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan.

 

  

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(c)           Substitute Awards shall not reduce the Shares authorized for grant under the Plan.  Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided, that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.

3.2 Stock Distributed.  Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock or treasury Common Stock.

 

ARTICLE 4.

 

GRANTING OF AWARDS

 

4.1 Participation.  The Administrator may, from time to time, select from among all Eligible Individuals, those to whom one or more Awards shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan.  No Eligible Individual shall have any right to be granted an Award pursuant to the Plan.

 

4.2 Award Agreement. Each Award shall be evidenced by an Award Agreement stating the terms and conditions applicable to such Award, consistent with the requirements of the Plan and any applicable Program.

 

4.3 Limitations Applicable to Section 16 Persons.  Notwithstanding anything contained herein to the contrary, with respect to any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, the Plan, any applicable Program and the applicable Award Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule, and such additional limitations shall be deemed to be incorporated by reference into such Award to the extent permitted by applicable law.

 

4.4 At-Will Service.  Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Participant any right to continue as an Employee, Director or Consultant of the Company or any Affiliate, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Participant and the Company or any Affiliate.

 

  

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4.5 Foreign Participants.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Affiliates operate, or in order to comply with the requirements of any foreign securities exchange, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Affiliates shall be covered by the Plan; (b) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign laws or listing requirements of any such foreign securities exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the Share Limit contained in Section 3.1 hereof; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign securities exchange.  Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Code, the Exchange Act, the Securities Act, any other securities law or governing statute, the rules of the securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other applicable law.

 

4.6 Stand-Alone and Tandem Awards.  Awards granted pursuant to the Plan may, in the sole discretion of the Administrator, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan.  Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

 

ARTICLE 5. 

 

GRANTING OF OPTIONS

 

5.1 Granting of Options to Eligible Individuals.  The Administrator is authorized to grant Options to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine which shall not be inconsistent with the Plan.

 

5.2 Option Exercise Price.  The exercise price per Share subject to each Option shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted.

 

5.3 Option Term.  The term of each Option shall be set by the Administrator in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Option is granted.  The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Participant has the right to exercise the vested Options, which time period may not extend beyond the term of the Option term. Except as limited by the requirements of Section 409A of the Code, the Administrator may extend the term of any outstanding Option, and may extend the time period during which vested Options may be exercised, in connection with any Termination of Service of the Participant, and may amend any other term or condition of such Option relating to such a Termination of Service.

 

  

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5.4 Option Vesting.

 

(a) The terms and conditions pursuant to which an Option vests in the Participant and becomes exercisable shall be determined by the Administrator and set forth in the applicable Award Agreement.  Such vesting may be based on service with the Company or any Affiliate, the attainment of one or more performance criteria established by the Administrator, and/or any other criteria selected by the Administrator.  At any time after grant of an Option, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the period during which an Option vests.

 

(b) No portion of an Option which is unexercisable at a Participant’s Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in a Program, the applicable Award Agreement or by action of the Administrator following the grant of the Option.

 

5.5 Substitute Awards.  Notwithstanding the foregoing provisions of this Article 5 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant, provided, however, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

 

5.6 Substitution of Stock Appreciation Rights.  The Administrator may provide in an applicable Program or the applicable Award Agreement evidencing the grant of an Option that the Administrator, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided,however, that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable, and shall also have the same exercise price and remaining term as the substituted Option.

 

ARTICLE 6. 

 

EXERCISE OF OPTIONS

 

6.1 Partial Exercise.  An exercisable Option may be exercised in whole or in part.  However, an Option shall not be exercisable with respect to fractional shares and the Administrator may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of shares.

 

6.2 Manner of Exercise.  All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

 

  

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(a) A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised.  The notice shall be signed by the Participant or other person then entitled to exercise the Option or such portion of the Option;

 

(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations, the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other applicable law.  The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;

 

(c) In the event that the Option shall be exercised pursuant to Section 10.3 hereof by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Option, as determined in the sole discretion of the Administrator; and

 

(d) Full payment of the exercise price and applicable withholding taxes to the stock administrator of the Company for the shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Sections 10.1 and 10.2 hereof.

 

ARTICLE 7. 

 

RESTRICTED STOCK

 

7.1 Award of Restricted Stock.

 

(a) The Administrator is authorized to grant Restricted Stock to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.

 

(b) The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value of the Shares to be purchased, unless otherwise permitted by applicable law.  In all cases, legal consideration shall be required for each issuance of Restricted Stock to the extent required by applicable law.

 

7.2 Rights as Stockholders.  Subject to Section 7.4 hereof, upon issuance of Restricted Stock, the Participant shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said shares, subject to the restrictions in an applicable Program or in the applicable Award Agreement; provided, however, that, in the sole discretion of the Administrator, any extraordinary distributions with respect to the Shares shall be subject to the restrictions set forth in Section 7.3 hereof; provided, further, that with respect to a share of Restricted Stock with vesting conditions, dividends which are paid by the Company with respect to Shares prior to vesting shall only be paid out to the extent that, and at such time or times as, the vesting conditions are subsequently satisfied and the underlying shares of Restricted Stock vest.

 

  

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7.3 Restrictions.  All shares of Restricted Stock (including any shares received by Participants thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of an applicable Program or in the applicable Award Agreement, be subject to such restrictions and vesting requirements as the Administrator shall provide.  Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Administrator, including, without limitation, criteria based on the Participant’s duration of employment, Company or Affiliate performance, individual performance or other criteria selected by the Administrator.  By action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any or all of the restrictions imposed by the terms of any Program or by the applicable Award Agreement.  Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.

 

7.4 Repurchase or Forfeiture of Restricted Stock.  If no price was paid by the Participant for the Restricted Stock, upon a Termination of Service, the Participant’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration. If a price was paid by the Participant for the Restricted Stock, upon a Termination of Service the Company shall have the right to repurchase from the Participant the unvested Restricted Stock then-subject to restrictions at a cash price per share equal to the price paid by the Participant for such Restricted Stock or such other amount as may be specified in an applicable Program or the applicable Award Agreement.  The Administrator in its sole discretion may provide that, upon certain events, including without limitation a Change in Control, the Participant’s death, retirement or disability, any other specified Termination of Service or any other event, the Participant’s rights in unvested Restricted Stock shall not lapse, such Restricted Stock shall vest and cease to be forfeitable and, if applicable, the Company cease to have a right of repurchase.

 

7.5 Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine.  Certificates or book entries evidencing shares of Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, in its sole discretion, retain physical possession of any stock certificate until such time as all applicable restrictions lapse.

 

7.6 Section 83(b) Election.  If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

 

  

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ARTICLE 8. 

 

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS, RESTRICTED STOCK UNITS; OTHER INCENTIVE AWARDS

 

8.1 Performance Awards.  The Administrator is authorized to grant Performance Awards to any Eligible Individual.  The value of Performance Awards may be linked to any specific criteria determined by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator.

 

8.2 Dividend Equivalents.

 

(a) Subject to Section 8.2(b) hereof, Dividend Equivalents may be granted by the Administrator, either alone or in tandem with another Award, based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date the Dividend Equivalents are granted to a Participant and the date such Dividend Equivalents terminate or expire, as determined by the Administrator.  Such Dividend Equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Administrator.

 

(b) Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights.

 

8.3 Stock Payments.  The Administrator is authorized to make one or more Stock Payments to any Eligible Individual.  The number or value of shares of any Stock Payment shall be determined by the Administrator and may be based upon any specific criteria, including service to the Company or any Affiliate and/or the attainment of any performance goals, determined by the Administrator.  Stock Payments may, but are not required to be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual.

 

8.4 Deferred Stock.  The Administrator is authorized to grant Deferred Stock to any Eligible Individual.  The number of shares of Deferred Stock shall be determined by the Administrator and may be based on any specific criteria, including service to the Company or any Affiliate and/or the attainment of any performance goals, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator.  Shares underlying a Deferred Stock award which is subject to a vesting schedule or other conditions or criteria set by the Administrator will not be issued until those conditions have been satisfied.  Unless otherwise provided by the Administrator, a holder of Deferred Stock shall have no rights as a Company stockholder with respect to such Deferred Stock until such time as the Award has vested and the Shares underlying the Award have been issued to the Participant.

 

8.5 Restricted Stock Units.  The Administrator is authorized to grant Restricted Stock Units to any Eligible Individual.  The number and terms and conditions of Restricted Stock Units shall be determined by the Administrator.  The Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including conditions based on service to the Company or any Affiliate and/or the attainment of performance goals, in each case on a specified date or dates or over any period or periods, as determined by the Administrator.  The Administrator shall specify, or may permit the Participant to elect, the conditions and dates upon which the Shares underlying the Restricted Stock Units which shall be issued, which dates shall not be earlier than the date as of which the Restricted Stock Units vest and become nonforfeitable and which conditions and dates shall be subject to compliance with Section 409A of the Code or an exemption therefrom.  On the distribution dates, the Company shall issue to the Participant one unrestricted, fully transferable Share (or the Fair Market Value of one such Share in cash) for each vested and nonforfeitable Restricted Stock Unit.

 

  

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8.6 Performance Share Awards.  Any Eligible Individual selected by the Administrator may be granted one or more Performance Share Awards which shall be denominated in a number of Shares and the vesting of which may be linked to any specific performance criteria (in each case on a specified date or dates or over any period or periods determined by the Administrator) and/or time-vesting or other criteria, as determined by the Administrator.

 

8.7 Other Incentive Awards.  The Administrator is authorized to grant Other Incentive Awards to any Eligible Individual, which Awards may cover Shares or the right to purchase Shares or have a value derived from the value of, or an exercise or conversion privilege at a price related to, or that are otherwise payable in or based on, Shares, shareholder value or shareholder return, in each case on a specified date or dates or over any period or periods determined by the Administrator. Other Incentive Awards may be linked to any specific performance criteria and/or time-vesting or other criteria, as determined appropriate by the Administrator.

 

8.8 Cash Settlement.  Without limiting the generality of any other provision of the Plan, the Administrator may provide, in an Award Agreement or subsequent to the grant of an Award, in its discretion, that any Award may be settled in cash, Shares or a combination thereof.

 

8.9 Other Terms and Conditions.  All applicable terms and conditions of each Award described in this Article 8, including without limitation, as applicable, the term, vesting and exercise/purchase price applicable to the Award, shall be set by the Administrator in its sole discretion, provided, however, that the value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by applicable law.

 

8.10 Exercise upon Termination of Service. Awards described in this Article 8 are exercisable or distributable, as applicable, only while the Participant is an Employee, Director or Consultant, as applicable.  The Administrator, however, in its sole discretion may provide that such Award may be exercised or distributed subsequent to a Termination of Service as provided under an applicable Program, Award Agreement, payment deferral election and/or in certain events, including a Change in Control, the Participant’s death, retirement or disability or any other specified Termination of Service.

 

  

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ARTICLE 9.

 

STOCK APPRECIATION RIGHTS

 

9.1 Grant of Stock Appreciation Rights.

 

(a) The Administrator is authorized to grant Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine consistent with the Plan.

 

(b) A Stock Appreciation Right shall entitle the Participant (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then-exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose.  Except as described in Section 9.1(c) hereof, the exercise price per Share subject to each Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value on the date the Stock Appreciation Right is granted.

 

(c) Notwithstanding the foregoing provisions of Section 9.1(b) hereof to the contrary, in the case of a Stock Appreciation Right that is a Substitute Award, the price per share of the shares subject to such Stock Appreciation Right may be less than 100% of the Fair Market Value per share on the date of grant; provided, however, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

 

9.2 Stock Appreciation Right Vesting.

 

(a) The period during which the right to exercise, in whole or in part, a Stock Appreciation Right vests in the Participant shall be set by the Administrator and the Administrator may determine that a Stock Appreciation Right may not be exercised in whole or in part for a specified period after it is granted.  Such vesting may be based on service with the Company or any Affiliate, the attainment of performance goals or any other criteria selected by the Administrator.  At any time after grant of a Stock Appreciation Right, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the period during which a Stock Appreciation Right vests.

 

(b) No portion of a Stock Appreciation Right which is unexercisable at Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in an applicable Program or Award Agreement or by action of the Administrator following the grant of the Stock Appreciation Right.

 

  

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9.3 Manner of Exercise.  All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the stock administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

 

(a) A written or electronic notice complying with the applicable rules established by the Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised.  The notice shall be signed by the Participant or other person then-entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right;

 

(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations.  The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance; and

 

(c) In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 9.3 by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Stock Appreciation Right.

 

9.4 Stock Appreciation Right Term.  The term of each Stock Appreciation Right shall be set by the Administrator in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted.  The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Participant has the right to exercise the vested Stock Appreciation Rights, which time period may not extend beyond the expiration date of the Stock Appreciation Right term.  Except as limited by the requirements of Section 409A of the Code, the Administrator may extend the term of any outstanding Stock Appreciation Right, and may extend the time period during which vested Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Participant, and may amend any other term or condition of such Stock Appreciation Right relating to such a Termination of Service.

 

9.5 Payment.  Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 9 shall be in cash, Shares (based on its Fair Market Value as of the date the  Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.

 

ARTICLE 10.

 

ADDITIONAL TERMS OF AWARDS

 

10.1 Payment.  The Administrator shall determine the methods by which payments by any Participant with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Participant has placed a market sell order with a broker with respect to Shares then-issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided, however, that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other form of legal consideration acceptable to the Administrator.  The Administrator shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Participants.  Notwithstanding any other provision of the Plan to the contrary, no Participant who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

 

  

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10.2 Tax Withholding.  The Company and its Affiliates shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company or an Affiliate, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s social security, Medicare and any other employment tax obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of the Plan.  The Administrator may in its sole discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company or an Affiliate withhold Shares otherwise issuable under an Award (or allow the surrender of Shares).  The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.

 

10.3 Transferability of Awards.

 

(a) Except as otherwise provided in Section 10.3(b) or (c) hereof:

 

(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised, or the shares underlying such Award have been issued, and all restrictions applicable to such shares have lapsed;

 

(ii) No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed, and any attempted disposition of an Award prior to the satisfaction of these conditions shall be null and void and of no effect, except to the extent that such disposition is permitted by clause (i) of this provision; and

 

  

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(iii) During the lifetime of the Participant, only the Participant may exercise an Award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Participant, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

 

(b) Notwithstanding Section 10.3(a) hereof, the Administrator, in its sole discretion, may determine to permit a Participant to transfer an Award to any one or more Permitted Transferees, subject to the following terms and conditions:  (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Participant (other than the ability to further transfer the Award); and (iii) the Participant and the Permitted Transferee shall execute any and all documents requested by the Administrator, including without limitation, documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws and (C) evidence the transfer.

 

(c) Notwithstanding Section 10.3(a) hereof, a Participant may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Participant, except to the extent the Plan, the Program and the Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator.  If the Participant is married and resides in a “community property” state, a designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written or electronic consent of the Participant’s spouse.  If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Administrator prior to the Participant’s death.

 

10.4 Conditions to Issuance of Shares.

 

(a) Notwithstanding anything herein to the contrary, neither the Company nor its Affiliates shall be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel, that the issuance of such Shares is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded, and the Shares are covered by an effective registration statement or applicable exemption from registration.  In addition to the terms and conditions provided herein, the Administrator may require that a Participant make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.

 

  

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(b) All Share certificates delivered pursuant to the Plan and all shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state, or foreign securities or other laws, rules and regulations and the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted, or traded.  The Administrator may place legends on any Share certificate or book entry to reference restrictions applicable to the Shares.

 

(c) The Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.

 

(d) No fractional Shares shall be issued and the Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding down.

 

(e) Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company and/or its Affiliates may, in lieu of delivering to any Participant certificates evidencing Shares issued in connection with any Award, record the issuance of Shares in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

 

10.5 Forfeiture Provisions.  Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Administrator shall have the right to provide, in the terms of Awards made under the Plan, or to require a Participant to agree by separate written or electronic instrument, that: (a) any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or exercise of the Award, or upon the receipt or resale of any Shares underlying the Award, must be paid to the Company, and (b) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (i) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (ii) the Participant at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Administrator or (iii) the Participant incurs a Termination of Service for “cause” (as such term is defined in the sole discretion of the Administrator).

 

10.6 Prohibition on Repricing.  Subject to Section 12.2 hereof, the Administrator shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per share, or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares.  Subject to Section 12.2 hereof, the Administrator shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding award to increase the price per share or to cancel and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award.

 

  

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ARTICLE 11.

 

ADMINISTRATION

 

11.1 Administrator.  The Committee (or another committee or a subcommittee of the Board assuming the functions of the Committee under the Plan) shall administer the Plan (except as otherwise permitted herein) and, unless otherwise determined by the Board, shall consist solely of two or more Independent Directors appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as a “non-employee director” as defined by Rule 16b-3 of the Exchange Act and an “independent director” under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, in each case, to the extent required under such provision; provided, however, that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 11.l or otherwise provided in any charter of the Committee.  Except as may otherwise be provided in any charter of the Committee, appointment of Committee members shall be effective upon acceptance of appointment.  Committee members may resign at any time by delivering written or electronic notice to the Board.  Vacancies in the Committee may only be filled by the Board.

 

11.2 Duties and Powers of Administrator.  It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with its provisions.  The Administrator shall have the power to interpret the Plan and all Programs and Award Agreements, and to adopt such rules for the administration, interpretation and application of the Plan and any Program as are not inconsistent with the Plan, to interpret, amend or revoke any such rules and to amend any Program or Award Agreement provided that the rights or obligations of the holder of the Award that is the subject of any such Program or Award Agreement are not affected adversely by such amendment, unless the consent of the Participant is obtained or such amendment is otherwise permitted under Section 12.10 hereof.  Any such grant or award under the Plan need not be the same with respect to each Participant.  In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act, or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee.

 

11.3 Action by the Committee.  Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

 

  

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11.4 Authority of Administrator.  Subject to any specific designation in the Plan, the Administrator has the exclusive power, authority and sole discretion to:

 

(a) Adopt procedures from time to time intended to ensure that an individual is an Eligible Individual prior to the granting of any Awards to such individual under the Plan (including without limitation a requirement, if any, that each such individual certify to the Company prior to the receipt of an Award under the Plan that he or she has not been previously employed by the Company or a Subsidiary, or if previously employed, has had a bona fide period of non-employment, and that the grant of Awards under the Plan is an inducement material to his or her agreement to enter into employment with the Company or a Subsidiary);

 

(b) Designate Eligible Individuals to receive Awards;

 

(c) Determine the type or types of Awards to be granted to each Eligible Individual;

 

(d) Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

 

(e) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any performance criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

 

(f) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

 

(g) Prescribe the form of each Award Agreement, which need not be identical for each Participant;

 

(h) Decide all other matters that must be determined in connection with an Award;

 

(i) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(j) Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement; and

 

  

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(k) Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

 

11.5 Actions Required Upon Grant of Award. Following the issuance of any Award under the Plan, the Company shall, in accordance with the listing requirements of the applicable securities exchange, (a) promptly issue a press release disclosing the material terms of the grant, including the recipient(s) of the grant and the number of shares involved and (b) notify the applicable securities exchange of such grant no later than the earlier to occur of (i) five (5) calendar days after entering into the agreement to issue the Award or (ii) the date of the public announcement of the Award.

 

11.6 Decisions Binding.  The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

 

11.7 Delegation of Authority.  To the extent permitted by applicable law or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, the Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to amend Awards or to take other administrative actions pursuant to this Article 11; provided, however, that in no event shall an officer of the Company be delegated the authority to (a) grant awards or (b) amend awards held by the following individuals: (i) individuals who are subject to Section 16 of the Exchange Act or (ii) officers of the Company (or Directors) to whom authority to amend Awards has been delegated hereunder; provided further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under applicable securities laws or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.  Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under this Section 11.7 shall serve in such capacity at the pleasure of the Board and the Committee.  Notwithstanding anything to the contrary provided herein (x) Awards shall be approved by (i) the Company’s Compensation Committee comprised of a majority of the Company’s Independent Directors or (ii) a majority of the Company’s Independent Directors and (y) the authority to grant Awards shall not be delegated under any circumstances.

 

ARTICLE 12.

 

MISCELLANEOUS PROVISIONS

 

12.1 Amendment, Suspension or Termination of the Plan.  Except as otherwise provided in this Section 12.1, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board.  However, without approval of the Company’s stockholders given within twelve (12) months before or after the action by the Administrator, no action of the Administrator may, except as provided in Section 12.2 hereof, (i) reduce the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award in violation of Section 10.6 hereof.  Except as provided in Section 12.10 hereof, no amendment, suspension or termination of the Plan shall, without the consent of the Participant, impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides.  No Awards may be granted or awarded during any period of suspension or after termination of the Plan.

 

  

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12.2 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

 

(a) In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of the Company’s stock or the share price of the Company’s stock other than an Equity Restructuring, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to (i) the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the Share Limit); (ii) the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and/or (iv) the grant or exercise price per share for any outstanding Awards under the Plan.

 

(b) In the event of any transaction or event described in Section 12.2(a) hereof or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations or accounting principles, the Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

 

(i) To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 12.2, the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested;

 

(ii) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

  

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(iii) To make adjustments in the number and type of securities subject to outstanding Awards and Awards which may be granted in the future and/or in the terms, conditions and criteria included in such Awards (including the grant or exercise price, as applicable);

 

(iv) To provide that such Award shall be exercisable or payable or fully vested with respect to all securities covered thereby, notwithstanding anything to the contrary in the Plan or an applicable Program or Award Agreement; and

 

(v) To provide that the Award cannot vest, be exercised or become payable after such event.

 

(c) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 12.2(a) and 12.2(b) hereof:

 

(i) The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or

 

(ii) The Administrator shall make such equitable adjustments, if any, as the Administrator in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments to the Share Limit and the Individual Award Limits).  The adjustments provided under this Section 12.2(c) shall be nondiscretionary and shall be final and binding on the affected Participant and the Company.

 

(d) Notwithstanding any other provision of the Plan, in the event of a Change in Control, each outstanding Award shall be assumed or an equivalent Award substituted by the successor corporation or a parent or subsidiary of the successor corporation.  For the purposes of this Section 12.2(d), an Award shall be considered assumed or substituted if, following the Change in Control, the assumed or substituted Award confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Change in Control was not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the assumed or substituted Award, for each share of Common Stock subject to such Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

 

  

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(e) In the event that the successor corporation in a Change in Control and its parents and subsidiaries refuse to assume or substitute for any Award in accordance with Section 12.2(d) hereof, each such non-assumed/substituted Award shall become fully vested and, as applicable, exercisable and shall be deemed exercised, immediately prior to the consummation of such transaction, and all forfeiture restrictions on any or all such Awards shall lapse at such time.  If an Award vests and, as applicable, is exercised in lieu of assumption or substitution in connection with a Change in Control, the Administrator shall notify the Participant of such vesting and any applicable exercise , and the Award shall terminate upon the Change in Control.  For the avoidance of doubt, if the value of an Award that is terminated in connection with this Section 12.2(e) is zero or negative at the time of such Change in Control, such Award shall be terminated upon the Change in Control without payment of consideration therefor.

 

(f) The Administrator may, in its sole discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.

 

(g) No adjustment or action described in this Section 12.2 or in any other provision of the Plan shall be authorized with respect to any Award to the extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator determines that the Award is not to comply with such exemptive conditions.

 

(h) The existence of the Plan, the Program, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

(i) No action shall be taken under this Section 12.2 which shall cause an Award to fail to comply with Section 409A of the Code to the extent applicable to such Award, unless the Administrator determines any such adjustments to be appropriate.

 

(j) In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the share price of the Common Stock including any Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of thirty (30) days prior to the consummation of any such transaction.

 

12.3 No Stockholders Rights.  Except as otherwise provided herein or in an Award Agreement, a Participant shall have none of the rights of a stockholder with respect to shares of Common Stock covered by any Award until the Participant becomes the record owner of such shares of Common Stock.

 

  

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12.4 Paperless Administration.  In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.

 

12.5 Effect of Plan upon Other Compensation Plans.  The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate.  Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

 

12.6 Compliance with Laws.  The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal, state, local and foreign laws, rules and regulations (including but not limited to state, federal and foreign securities law and margin requirements), the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements.  To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

 

12.7 Titles and Headings, References to Sections of the Code or Exchange Act.  The titles and headings of the sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

 

12.8 Governing Law.  The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of California without regard to conflicts of laws thereof.

 

12.9 Section 409A.  To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Plan, any applicable Program and the Award Agreement covering such Award shall be interpreted in accordance with Section 409A of the Code.  Notwithstanding any provision of the Plan to the contrary, in the event that, following the Effective Date, the Administrator determines that any Award may be subject to Section 409A of the Code, the Administrator may adopt such amendments to the Plan, any applicable Program and the Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to avoid the imposition of taxes on the Award under Section 409A of the Code, either through compliance with the requirements of Section 409A of the Code or with an available exemption therefrom. Notwithstanding the foregoing, nothing herein shall create any obligation on the part of the Administrator or the Company or its Affiliates to take any action described in this Section 12.9 or give rise to any liability on the part of the Administrator or the Company or its Affiliates for failing to take any such action.

 

  

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12.10 No Rights to Awards.  No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Eligible Individuals or any other persons uniformly.

 

12.11 Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Affiliate.

 

12.12 Indemnification.  To the extent allowable pursuant to applicable law, each member of the Board and any officer or other employee to whom authority to administer any component of the Plan is delegated shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided, however, that he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

12.13 Relationship to other Benefits.  No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

12.14 Expenses.  The expenses of administering the Plan shall be borne by the Company and its Affiliates.

 

  

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ARTICLE 13.

 

STOCKHOLDER APPROVAL

 

13.1 Stockholder Approval Not Required. It is expressly intended that approval of the Company’s stockholders not be required as a condition of the effectiveness of the Plan, and the Plan’s provisions shall be interpreted in a manner consistent with such intent for all purposes.  Specifically, Nasdaq Stock Market Rule 5635(c) generally requires stockholder approval for stock option plans or other equity compensation arrangements adopted by companies whose securities are listed on the Nasdaq Stock Market pursuant to which stock awards or stock may be acquired by officers, directors, employees or consultants of such companies. Nasdaq Stock Market Rule 5635(c)(4) provides an exception to this requirement for issuances of securities to a person not previously an employee or director of the issuer, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the issuer; provided that such issuances are approved by either the issuer’s compensation committee comprised of a majority of independent directors or a majority of the issuer’s independent directors. Notwithstanding anything to the contrary herein, Awards under the Plan may only be made to Employees who have not previously been an Employee or director of the Company or a Subsidiary, or following a bona fide period of non-employment by the Company or a Subsidiary, as an inducement material to the Employee’s entering into employment with the Company or a Subsidiary. Awards under the Plan will be approved by (a) the Company’s Compensation Committee comprised of a majority of the Company’s Independent Directors or (b) a majority of the Company’s Independent Directors. Accordingly, pursuant to Nasdaq Stock Market Rule 5635(c)(4), the issuance of Awards and the shares of Stock issuable upon exercise or vesting of such Awards pursuant to the Plan are not subject to the approval of the Company’s stockholders.

 

 

[signature page follows]

 

|

  

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*  *  *  *  *

 

I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of On Assignment, Inc. on May 14, 2012.

 

	 	Company Name	 
	 	 	 	 
	 	
By: 

	/s/ Tarini Ramaprakash	 
	 	 	Tarini Ramaprakash, Corporate Secretary	 
	 	 	 	 
	 	 	 	 

 

  

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