Document:

Exhibit
10.5

 

SECURITIES ESCROW AGREEMENT

 

SECURITIES
ESCROW AGREEMENT, dated as of October 15, 2007 (“Agreement”) by and among Stone
Tan China Acquisition Corp., a Delaware corporation (“Company”), the
undersigned parties listed as Initial Stockholders on the signature page hereto
(collectively, the “Initial Stockholders”) and Continental Stock Transfer &
Trust Company, a New York corporation (“Escrow Agent”).

 

WHEREAS,
the Company has entered into an Underwriting Agreement, dated October 15, 2007
(“Underwriting Agreement”) with Morgan Joseph & Co., Inc. (“Morgan Joseph”),
as representative of the underwriters named therein (collectively, “Underwriters”),
pursuant to which, among other matters, the Underwriters have agreed to
purchase 30,000,000 units (“Units”) of the Company. Each Unit consists of one
share of the Company’s common stock, par value $.0001 per share (“Common Stock”),
and one warrant, each warrant to purchase one share of Common Stock, all as
more fully described in the Company’s definitive Prospectus, dated October 15,
2007 (“Prospectus”) comprising part of the Company’s Registration Statements on
Form S-1 (File Nos. 333-142729 and 333-146772) under the Securities Act of
1933, as amended (collectively, the “Registration Statement”), declared effective
on October 15, 2007 (“Effective Date”); and

 

WHEREAS,
the Initial Stockholders have agreed, as a condition of the Underwriters’
obligation to purchase the Units pursuant to the Underwriting Agreement and to
offer them to the public, to deposit all of their shares of Common Stock as set
forth opposite their respective names in Schedule A attached hereto
(collectively “Escrow Shares”), in escrow as hereinafter provided;

 

WHEREAS,
certain of the Initial Stockholders have agreed to purchase warrants (the “Founders’
Warrants”) in a private placement prior to the consummation of the offering,
and to deposit all of their Founders’ Warrants in escrow in the amounts set
forth opposite their respective names in Schedule B attached hereto the (the “Escrow
Warrants” and together with the Escrow Shares, the “Escrow Securities”); and

 

WHEREAS,
the Company and the Initial Stockholders desire that the Escrow Agent accept
the Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.

 

NOW,
THEREFORE, IT IS AGREED:

 

1.                                       Appointment
of Escrow Agent. The Company
and the Initial Stockholders hereby appoint the Escrow Agent to act in
accordance with and subject to the terms of this Agreement and the Escrow Agent
hereby accepts such appointment and agrees to act in accordance with and
subject to such terms.

 

2.                                       Deposit
of Escrow Securities. With respect to the Escrow Securities, each of the
Initial Stockholders shall deliver on or prior to the Effective Date to the
Escrow Agent certificates representing his or her respective Escrow Securities
that have been

 

 

issued as of such date, to be held and disbursed
subject to the terms and conditions of this Agreement. Each Initial Stockholder
acknowledges and agrees that the certificates representing his or her Escrow
Securities is legended to reflect the deposit of such Escrow Securities under
this Agreement.

 

3.                                       Disbursement
of the Escrow Securities. The Escrow Agent shall hold the Escrow Securities
until, with respect to the Escrow Shares, one year from the closing date of a
Business Combination, and with respect to the Escrow Warrants, 30 days from the
closing date of a Business Combination (as applicable, the “Escrow Period”), on
which dates it shall, upon written instructions from the Chief Executive Officer
of the Company, disburse each of the Initial Stockholders’ applicable Escrow
Securities to such Initial Stockholder; provided, however, that
if the Underwriters
do not exercise their over-allotment option in full, up to 1,125,000 of Escrow
Shares shall be released to the Company upon written instruction from the
Company; provided, further, that if the  Escrow Agent is notified by the Company
pursuant to Section 6.6 hereof that the Company is being liquidated at any time
during the applicable Escrow Period, then the Escrow Agent shall promptly
destroy the certificates representing the Escrow Securities; provided further,
that if, after the Company consummates a Business Combination, it (or the
surviving entity) subsequently consummates a liquidation, merger, stock
exchange or other similar transaction which results in all of its stockholders
of such entity having the right to exchange their shares of Common Stock for
cash, securities or other property, then the Escrow Agent will, upon receipt of
a certificate, executed by the Chairman, Chief Executive Officer or Chief
Financial Officer of the Company, in form reasonably acceptable to the Escrow
Agent, that such transaction is then being consummated, release the Escrow
Securities to the Initial Stockholders upon consummation of such transaction so
that they can similarly participate. Upon written instructions from the Company advising
that a Business Combination has been consummated and that public stockholders
holding in excess of 20% of the shares of Common Stock issued pursuant to the
Registration Statement exercise the right to redeem their shares for cash as
described in the Registration Statement, the Escrow Agent will release and
deliver to the Company for cancellation on a pro rata basis certificates representing
that number of Escrow Shares (up to a maximum of 937,500) which results in the
Initial Stockholders collectively owning no more then 23.81% of the Company’s
outstanding Common Stock immediately prior to the consummation of the Business
Combination after giving effect to the redemption. Such instructions shall be
set forth both the number of shares the Company is redeeming and the number of
Escrow Securities to be delivered to the Company for cancellation. The
Escrow Agent shall have no further duties hereunder after the disbursement or
destruction of the Escrow Securities in accordance with this Section 3.

 

4.                                       Rights
of Initial Stockholders in Escrow Securities.

 

4.1                                 Voting
Rights as a Stockholder. Subject to the terms of the Insider Letter
described in Section 4.4 hereof and except as herein provided, the Initial
Stockholders shall retain all of their rights as stockholders of the Company
with respect to the Escrow Shares during the applicable Escrow Period,
including, without limitation, the right to vote such shares.

 

 

4.2                                 Dividends
and Other Distributions in Respect of the Escrow Shares. During the
applicable Escrow Period, all dividends payable in cash with respect to the
Escrow Shares shall be paid to the Initial Stockholders, but all dividends
payable in stock or other non-cash property (“Non-Cash Dividends”) shall be
delivered to the Escrow Agent to hold in accordance with the terms hereof. As
used herein, the term “Escrow Shares” shall be deemed to include the Non-Cash
Dividends distributed thereon, if any.

 

4.3                                 Restrictions
on Transfer. During the applicable
Escrow Period, no sale, transfer or other disposition may be made of the Escrow
Securities except (i) in transfers resulting from death, (ii) by
operation of law, (iii) for estate planning purposes to persons
immediately related to the transferor by blood, marriage or adoption, or
(iv) to any trust solely for the benefit of such transferor and/or the
persons described in the preceding clause; provided, however,
that such permissive transfers may be implemented only upon the respective
transferee’s written agreement to be bound by the terms and conditions of this
Agreement and of the Insider Letter signed by the Initial Stockholder
transferring the Escrow Securities. During the applicable Escrow Period,
the Initial Stockholders shall not pledge or grant a security interest in the
Escrow Securities or grant a security interest in their rights under this
Agreement.

 

4.4                                 Insider
Letters. Each of the Initial Stockholders has executed a letter agreement
with Morgan Joseph and the Company, dated as indicated on Schedule A
hereto, and which is filed as an exhibit to the Registration Statement (“Insider
Letter”), respecting the rights and obligations of such Initial Stockholder in
certain events, including but not limited to the liquidation of the Company.

 

5.                                       Concerning
the Escrow Agent.

 

5.1                                 Good
Faith Reliance. The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and in the exercise of its own best judgment,
and may rely conclusively and shall be protected in acting upon any order,
notice, demand, certificate, opinion or advice of counsel (including counsel
chosen by the Escrow Agent), statement, instrument, report or other paper or
document (not only as to its due execution and the validity and effectiveness
of its provisions, but also as to the truth and acceptability of any
information therein contained) which is believed by the Escrow Agent to be
genuine and to be signed or presented by the proper person or persons. The
Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties
and, if the duties or rights of the Escrow Agent are affected, unless it shall
have given its prior written consent thereto.

 

5.2                                 Indemnification.
The Escrow Agent shall be indemnified and held harmless by the Company from and
against any expenses, including counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or other
proceeding involving any claim which in any way, directly or indirectly, arises
out of or relates to this Agreement, the services of the Escrow Agent hereunder,
or the

 

 

Escrow Securities
held by it hereunder, other than expenses or losses arising from the gross
negligence or willful misconduct of the Escrow Agent. Promptly after the
receipt by the Escrow Agent of notice of any demand or claim or the commencement
of any action, suit or proceeding, the Escrow Agent shall notify the other
parties hereto in writing. In the event of the receipt of such notice, the
Escrow Agent, in its sole discretion, may commence an action in the nature of
interpleader in an appropriate court to determine ownership or disposition of
the Escrow Securities or it may deposit the Escrow Securities with the clerk of
any appropriate court or it may retain the Escrow Securities pending receipt of
a final, non appealable order of a court having jurisdiction over all of the
parties hereto directing to whom and under what circumstances the Escrow
Securities are to be disbursed and delivered. The provisions of this Section
5.2 shall survive in the event the Escrow Agent resigns or is discharged
pursuant to Sections 5.5 or 5.6 below.

 

5.3                                 Compensation.
The Escrow Agent shall be entitled to reasonable compensation from the Company
for all services rendered by it hereunder, as set forth on Exhibit A hereto.
The Escrow Agent shall also be entitled to reimbursement from the Company for
all expenses paid or incurred by it in the administration of its duties
hereunder including, but not limited to, all counsel, advisors’ and agents’
fees and disbursements and all taxes or other governmental charges. The Escrow
Agent shall bill the Company on a monthly basis for services rendered.

 

5.4                                 Further
Assurances. From time to time on and after the date hereof, the Company and
the Initial Stockholders shall deliver or cause to be delivered to the Escrow
Agent such further documents and instruments and shall do or cause to be done
such further acts as the Escrow Agent shall reasonably request to carry out
more effectively the provisions and purposes of this Agreement, to evidence
compliance herewith or to assure itself that it is protected in acting
hereunder.

 

5.5                                 Resignation.
The Escrow Agent may resign at any time and be discharged from its duties as
escrow agent hereunder by its giving the other parties hereto written notice
and such resignation shall become effective as hereinafter provided. Such
resignation shall become effective at such time that the Escrow Agent shall
turn over to a successor escrow agent appointed by the Company and approved by
Morgan Joseph, the Escrow Securities held hereunder. If no new escrow agent is
so appointed within the 60 day period following the giving of such notice of
resignation, the Escrow Agent may deposit the Escrow Securities with any court
it deems appropriate.

 

5.6                                 Discharge
of Escrow Agent. The Escrow Agent shall resign and be discharged from its
duties as escrow agent hereunder if so requested in writing at any time by the
Company and a majority of the Initial Stockholders, jointly, provided, however,
that such resignation shall become effective only upon acceptance of appointment
by a successor escrow agent as provided in Section 5.5.

 

5.7                                 Liability.
Notwithstanding anything herein to the contrary, the Escrow Agent shall not be
relieved from liability hereunder for its own gross negligence or its own
willful misconduct.

 

 

6.             Miscellaneous.

 

6.1                                 Governing
Law. This Agreement shall for all purposes be deemed to be made under and
shall be construed in accordance with the laws of the State of New York. Each
of the parties hereby agrees that any action, proceeding or claim against it
arising out of or relating in any way to this Agreement shall be brought and
enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York (each, a “New York court”), and
irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. Each of the parties hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.

 

6.2                                 Third-Party
Beneficiaries. Each of the Initial Shareholders hereby acknowledges that
Morgan Joseph is a third-party beneficiary of this Agreement and this Agreement
may not be modified or changed without the prior written consent of Morgan
Joseph.

 

6.3                                 Entire
Agreement. This Agreement contains the entire agreement of the parties
hereto with respect to the subject matter hereof and, except as expressly
provided herein, may not be changed or modified except by an instrument in
writing signed by the party to the charged.

 

6.4                                 Headings.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation thereof.

 

6.5                                 Binding
Effect. This Agreement shall be binding upon and inure to the benefit of
the respective parties hereto and their legal representatives, successors and
assigns.

 

6.6                                 Notices.
Any notice or other communication required or which may be given hereunder
shall be in writing and either be delivered personally or by private national
courier service, or be mailed, certified or registered mail, return receipt
requested, postage prepaid, and shall be deemed given when so delivered
personally or, if sent by private national courier service, on the next
business day after delivery to the courier, or, if mailed, two business days
after the date of mailing, as follows:

 

If to the Company, to:

Stone Tan
China Acquisition Corp.

Suite 1A, 11th Floor, Tower 1

China Hong
Kong City

33 Canton Road

Kowloon, Hong Kong

Attn: Richard Tan, President and Chief Executive Officer

 

If to a Stockholder, to
his address set forth in Exhibit A.

 

 

and if to the Escrow
Agent, to:

 

Continental Stock
Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Felix Orihuela, Vice President and Senior Account Executive

 

A copy of any notice sent
hereunder shall be sent to:

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Attn: Fran Stoller, Esq.

 

and:

 

Morgan Joseph & Co.,
Inc.

600 Fifth Avenue

19th Floor

New York, New York 10020

Attn: Tina Pappas

 

and:

 

DLA Piper LLP

1251 Avenue of the Americas

New York, New York 10020

Attn: Jonathan Klein, Esq.

 

The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the manner provided herein for giving notice.

 

6.7                                 Liquidation
of Company. The Company shall give the Escrow Agent written notification of
the liquidation and dissolution of the Company in the event that the Company
fails to consummate a Business Combination within the time period(s) specified
in the Prospectus.

 

6.8                                 Counterparts. This Agreement
may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.

 

[remainder of page intentionally left blank]

 

 

WITNESS
the execution of this Agreement as of the date first above written.

 

 

	
   

  	
  STONE TAN CHINA ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Tan

  	
   

  
	
   

  	
   

  	
  Richard Tan, President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL STOCK TRANSFER & 

  
	
   

  	
  TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John W. Comer, Jr.

  	
   

  
	
   

  	
  Name:

  	
  John W. Comer, Jr., Vice President

  

 

 

- Signature page of Initial Stockholders
immediately follows -

 

 

WITNESS
the execution of this Agreement as of the date first above written.

 

 

	
   

  	
  INITIAL STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPAC TRUST

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Tan

  	
   

  
	
   

  	
   

  	
  Richard Tan, Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STONE 2007 FAMILY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan Stone

  	
   

  
	
   

  	
   

  	
  Susan Stone, Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Roger W. Stone

  	
   

  
	
   

  	
  Roger W. Stone

  

 

 

SCHEDULE A

 

	
  Name and Address of Initial Stockholder

  	
   

  	
  Number of 

  Common Shares

  	
   

  	
  Number of 

  Warrants

  	
   

  
	
  Roger W.
  Stone 

  c/o Stone Tan China Acquisition Corp. 

  Suite 1A, 11th Floor, Tower 1 

  China Hong Kong City 

  33 Canton Road 

  Kowloon, Hong Kong

  	
   

  	
  450,000

  	
   

  	
  2,480,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stone 2007
  Family Trust 

  c/o Stone Tan China Acquisition Corp. 

  Suite 1A, 11th Floor, Tower 1 

  China Hong Kong City 

  33 Canton Road

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kowloon, Hong Kong

  	
   

  	
  3,000,000

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SPAC Trust 

  c/o Stone Tan China Acquisition Corp. 

  Suite 1A, 11th Floor, Tower 1 

  China Hong Kong City 

  33 Canton Road

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kowloon, Hong Kong

  	
   

  	
  5,175,000

  	
   

  	
  3,720,000

  	
   

  

 

 

EXHIBIT A

 

Escrow Agent Fees

 

 

SCHEDULE B

 

Escrow Warrants

 

	
  Name

  	
   

  	
  Number of Warrants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SPAC Trust

  	
   

  	
  3,720,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Roger W. Stone

  	
   

  	
  2,480,000

  	
   

  

 

11Exhibit 10.24

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is
made as of this 22nd day of October, 2007 (the “Execution Date”), by and
between AXT, Inc., a Delaware corporation (“Seller”), and S B C &
D Co., INC., a California corporation, dba South Bay Development, or its
assignee pursuant to Section 14.1 (“Buyer”).

 

RECITALS:

 

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

 

(1)                                  All
that certain real property, consisting of approximately 4.65 acres, commonly
known as 4311 Solar Way, located in the City of Fremont (the “City”), County of
Alameda, State of California, as legally described in Exhibit “A”
attached hereto, together with all easements, rights and privileges appurtenant
thereto (collectively, the “Land”);  and

 

(2)                                  The
building located on the Land, consisting of approximately 76,500 square feet
(the “Building”), together with all improvements appurtenant thereto and
fixtures and leasehold improvements located therein (the Building and such
fixtures and improvements being hereinafter collectively referred to as the “Improvements”).

 

B.                                     In connection with the Real Property, Seller
is the owner of certain intangible personal property (including, without
limitation, governmental approvals, permits, and development rights) owned by
Seller and used exclusively by Seller in the use and operation of the Real
Property (“Intangible Property”). The Real Property and the Intangible Property
are collectively referred to in this Agreement as the “Property.”

 

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

 

AGREEMENT:

 

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

 

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

 

2.                                      Purchase
Price. The purchase price for the Property (the “Purchase Price”) shall be Five
Million Six Hundred Fifty Thousand and no/100 Dollars ($5,650,000.00), payable
as follows:

 

 

2.1                               Deposit.

 

2.1.1                     On
or prior to the Execution Date, Buyer delivered to First American Title Company
(the “Escrow Agent”) at its office at 1737 N. First Street, Suite 100, San
Jose, California 95112, attention:  Liz
Zankich, to be held in an escrow (the “Escrow”) and delivered in accordance
with this Agreement, a deposit in the amount of Two Hundred Fifty Thousand
Dollars ($250,000) (the “Deposit”). If Buyer delivers its Notice of Approval
(as defined in Section 5.2.1 below) to Seller on or before the expiration
of the Due Diligence Period (defined below), then, after the expiration of the Due
Diligence Period, the Deposit shall be deemed non-refundable to Buyer except as
otherwise provided herein. The Deposit shall be fully refundable to Buyer prior
to the expiration of the Due Diligence Period. In addition, if this Agreement
terminates for any reason other than as a result of a breach or default by
Buyer hereunder prior to the Close of Escrow, then the Deposit shall be
promptly refunded to Buyer.

 

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

 

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

 

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

 

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

 

3.1                               Authority.
Seller is duly organized, validly existing and in good standing under the laws
of the State of California and all documents executed by Seller shall be valid,
legal and binding obligations of Seller at Closing. Seller has the right, power, and authority to enter into and to
perform all of Buyer’s obligations pursuant to this Agreement and to
convey  the Property on the terms and
conditions set forth herein and this
Agreement and Seller’s conveyance of the Property hereunder do not violate any
material terms or provisions of any contract to which Buyer is a party. No consent of any other party is
required in order for Seller to perform any of its obligations hereunder. The
person(s) executing this Agreement on behalf of Seller are authorized to do so
on behalf of Seller;

 

2

 

3.2                               Hazardous
Materials. To Seller’s actual knowledge, except as otherwise disclosed in
the Property Documents (as defined in Section 3.7 below), there are no
Hazardous Materials (as defined in Exhibit “B” attached hereto) on,
in or under the Property in violation of applicable Environmental Laws (as
defined in Exhibit “B” attached hereto);

 

3.3                               Eminent
Domain. Seller has not received any written notice of nor, to Seller’s
actual knowledge, are there any pending or threatened proceedings, in eminent
domain or otherwise, which would affect the Real Property or any portion
thereof;

 

3.4                               Contracts.
Within five (5) days after the Execution Date, Seller shall deliver to
Buyer copies of all construction, equipment leasing, service, equipment,
supply, utilities, maintenance, or concession or other agreements relating to
the ownership, use, maintenance, repair, management or operation of the
Property in Seller’s possession which are currently in force with respect to
the Property (collectively, the “Contracts”). To Seller’s actual knowledge, the
items delivered to Buyer pursuant to this Section 3.4 shall be accurate
and complete copies of all of the Contracts affecting the Property. To Seller’s actual knowledge, there are no
management agreements, Contracts, or other agreements affecting the Property or
the operation or maintenance thereof, except as Seller has otherwise disclosed
to Buyer in writing within five (5) days following the Execution Date;

 

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

 

3.6                               Documents.
Within five (5) days after the Execution Date, Seller shall deliver to
Buyer all documents in its possession regarding the Property, including without
limitation the categories of documents listed in Exhibit “D”,
attached hereto (the “Property Documents”). To Seller’s actual knowledge, the
items delivered to Buyer pursuant to this Section 3.4 shall be accurate
and complete copies of all of the Property Documents affecting the Property. Seller
also shall make available to Buyer, in Seller’s office, all of Seller’s books
and records with respect to the Property.

 

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

 

3.8                               Violations.
Other than with respect to the environmental condition of the Property as
disclosed in the Property Documents, Seller has not received any written notice
that the Property is in violation of any law, zoning, building or other code,
ordinance, rule, regulation, or requirement of any governmental agency, body,
or subdivision affecting or relating to the Property, or any portion thereof,
including, without limitation, the Americans With Disabilities Act and the
regulations promulgated thereunder, and to Seller’s actual knowledge no such violations
currently exist.

 

3

 

3.9                               Knowledge.
When used in this Article, “Seller’s actual knowledge” shall be limited to the
actual knowledge of Seller’s officers and employees (including Seller’s office
manager) as of the date hereof, without any special duty of investigation or
inquiry with respect to the subject matter of the representations and
warranties contain in this Article.

 

The representations and
warranties of Seller set forth in this Agreement shall be true and correct as
of the Execution Date and on and as of the Close of Escrow as if such
representations and warranties were made on and as of such Close of Escrow. The
representations and warranties set forth in this Section 3 shall survive
the Close of Escrow for a period of twelve (12) months.

 

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

 

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

 

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

 

4.3                               Confidentiality.
Until the Closing Date shall occur, Buyer shall keep in confidence and not
disclose any information or documents it receives from Seller or the terms and
conditions of this Agreement to any person, firm or entity without the prior
written authorization of Seller, except that the information may be
disclosed to (i) Buyer’s partners, directors, officers, members, existing
and potential financial sources, potential joint venturers or investors, assignees,
lawyers, accountants, consultants, and representatives, including Buyer’s
Agents (as defined in Section 5.2.1 below) as needed to enable Buyer to
complete its obligations, obtain acquisition financing and/or exercise its
rights hereunder, provided that Buyer requires such entities and persons to
maintain the confidentiality of such information and documents, or (ii) as
required by law or by regulatory or judicial process. The preceding to the
contrary notwithstanding, Buyer shall have no obligation to maintain the
confidentiality of any information or documents it receives from Seller: (i) which
is, at the time of disclosure to Buyer, available to the general public; or (ii) which
becomes, at a later date, available to the general public through no fault of
Buyer, and then only after said date; or (iii) which Buyer can demonstrate
was in its possession before receipt of the same from Seller; or (iv) which
is disclosed to Buyer without restriction on disclosure by a third party who
has the lawful right to disclose such information.

 

4.4                               “AS
IS” Purchase. Other than as expressly set forth in this Agreement, (a) Buyer
acknowledges and agrees that Buyer is acquiring the Property subject to the terms
of this Agreement in its “AS IS” condition, WITH ALL FAULTS, IF ANY, AND
WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, and (b) neither Seller nor any
agents, representatives, or employees of Seller have made any representations
or warranties, direct or

 

4

 

indirect, oral or written, express or implied, to Buyer or Buyer’s
Agents with respect to the condition of the Property, its fitness for any
particular purpose, or its compliance with any laws, and Buyer is not aware of
and does not rely upon any such representation. Buyer acknowledges that the Due
Diligence Period will have afforded Buyer the opportunity to make such
inspections (or have such inspections made by consultants) as it desires of the
Property and all factors relevant to its use, including, without limitation,
the interior, exterior, and structure of any improvements on the Property, the
condition of soils and subsurfaces, and the status of all zoning, permitting
and other entitlements relevant to the use or contemplated use of the Property.
Buyer acknowledges that during the Due Diligence Period Buyer and Buyer’s
Agents will have had the opportunity to independently and with the assistance
of Buyer’s professional advisors and consultants undertake whatever non
invasive studies, tests and investigation Buyer desires to conduct relating to
the Property (including, without limitation, economic reviews, engineering
analyses, environmental analyses and analyses of the records of any
governmental or quasi-governmental entity having jurisdiction over the
Property). Except as otherwise provided herein, Buyer is relying solely on its
own investigation as to the Property and its value and is assuming the risk
that adverse physical, economic or other conditions (including, without
limitation, adverse environmental conditions and the status of compliance with
the requirements of the Americans with Disabilities Act of 1990) may not
have been revealed by such investigation. If escrow closes hereunder, then Buyer
agrees that the Property is being sold to and accepted by Buyer, at Closing, in
the condition it is in at the end of the Due Diligence Period “AS-IS.”

 

4.5                               Release
of Claims.

 

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

 

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

 

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

 

5

 

Buyer’s Initials /s/
MR

 

Notwithstanding
the foregoing, the releases and waivers set forth in this Agreement do not
excuse and shall not apply to any fraud or concealment of material facts
committed by Seller, or, subject to the limitations in Article 3 above,
any representations or warranties by Seller in this Agreement with respect to
the Released Matters. Furthermore, nothing stated herein shall be construed or
interpreted as creating an obligation on Buyer to assume any environmental
obligations or liabilities of Seller or to indemnify, defend or hold harmless
Seller from or against any claims, liabilities, losses, damages, demands,
actions, causes of action, judgments, costs or expenses (including, without
limitation, attorneys’ fees) arising from or related to the environmental or
other condition of the Property.

 

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

 

5.1                               Title
Report. Within three (3) business days after the Execution Date,
Seller shall deliver to Buyer a preliminary title report prepared by First
American Title Company (“Title Company”) with respect to the Property (the “Title
Report”), together with complete copies of all exceptions set forth therein. Buyer
shall have until 5:00 p.m. (Pacific Time) on the date which is ten (10) business
days after the Execution Date (the “Title Review Period”) to notify Seller and
the Escrow Agent, in writing, of Buyer’s disapproval of any exceptions or items
shown thereon and to obtain, at Buyer’s sole cost (subject to Seller’s payment
at Closing pursuant to Section 8.2.2) the commitment of the Title Company
to issue the Title Policy (as defined in Section 5.5 below), including
such endorsements as Buyer may reasonably request. If Buyer does not give
Seller written notice of disapproval of any of the foregoing items within the
prescribed time, the Title Report and the supporting documents shall be deemed
approved (and all exceptions therein shall be deemed “Permitted Exceptions” and
this condition shall be deemed satisfied); provided, however, Buyer may at
any time during the Title Review Period object to any title matters affecting
the Property. Within five (5) days of receipt of Buyer’s notice of
disapproval of any of the foregoing items, Seller shall notify Buyer whether
Seller is willing to remove any such item which Buyer has disapproved. If
Seller does not give Buyer written notice within the prescribed period of time,
Seller shall be deemed to have elected not to remove any such item which Buyer
has disapproved. If there are exceptions which Buyer has disapproved and which
Seller is not willing to remove at Seller’s expense, Buyer shall have until the
end of the Due Diligence Period (or such five (5) day period for Seller’s
response, whichever is later) to notify Seller in writing of Buyer’s election
to either (a) waive its disapproval and approve such exceptions, or (b) terminate
this Agreement and receive a refund of the Deposit. If Buyer elects to waive
its disapproval and approve any such exceptions by providing a Notice of
Approval (as defined in Section 5.2.1 below), such exceptions then shall
be deemed to become Permitted Exceptions at the Closing. Notwithstanding the above, title to the
Property shall be

 

6

 

free of “Monetary Encumbrances” at the Close
of Escrow except for the lien of ad valorem real property taxes and general and
special assessments not yet due and payable. Seller shall satisfy or cause to
be satisfied prior to the Close of Escrow or at the Close of Escrow from the
Purchase Price all Monetary Encumbrances except for prorated ad valorem real
property taxes and assessments. As used in this Agreement, the term “Monetary
Encumbrances” shall mean encumbrances or defects to title which, by their
terms, require the payment of money in installments or at a fixed time,
including, but not limited to, mortgages, deeds of trust, judgment liens and
mechanic’s or materialmens’ liens.

 

5.2                               Due
Diligence Period.

 

5.2.1                     At
all times during the period commencing on the Execution Date until 5:00 p.m.
(Pacific Time) on the day which is thirty (30) days after the Execution Date, or
the next business day if such date falls on a weekend or holiday (the “Due
Diligence Period”), Buyer, its authorized agents, employees, consultants and
representatives (“Buyer’s Agents”) shall have the right to enter the Property
at reasonable times and at reasonable intervals to conduct and carry out any
and all non invasive inspections, tests, and studies as Buyer deems appropriate
or Buyer’s lender requires. Buyer shall not have the right to do any invasive
testing of the Property or the Improvements located thereon without the prior
written consent of Seller, subject to subsection 5.2.2(g) below.
Buyer shall provide notice to Seller of its intent to enter the Property and
provide Seller the right to accompany Buyer on such entry. Buyer shall have the
right to terminate this Agreement at any time prior to the expiration of the
Due Diligence Period at Buyer’s sole and absolute discretion, for any reason
whatsoever or for no reason, by delivering to Seller written notice of Buyer’s
election to terminate this Agreement no later than 5:00 p.m. (Pacific
Time) of the last day of the Due Diligence Period (the “Termination Notice”).
Buyer’s failure to deliver the Termination Notice within the Due Diligence
Period, or Buyer’s failure to deliver written notice of approval of the
Property (“Notice of Approval”) in Buyer’s sole and absolute discretion on or before
the expiration of the Due Diligence Period, shall conclusively be considered
Buyer’s disapproval of all the conditions and documents in Section 5.1 and
this Section 5.2. If Buyer has
given Seller the Termination Notice in accordance with this Section 5.2.,
or if Buyer has failed to deliver its Notice of Approval on or prior the expiration
of the Due Diligence Period, this Agreement shall be deemed canceled and Buyer
shall be entitled to the return of its Deposit (and the interest accrued
thereon).

 

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

 

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

 

7

 

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

 

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

 

(d)                                  Buyer
shall keep the Property free and clear of all liens arising out of the
activities of Buyer or Buyer’s Agents conducted upon the Property; provided,
however, the foregoing shall not apply to any lien arising from or related to
any pre-existing Hazardous Substances located on, in or under the Property,
subject to the provisions of Section 5.2.2(h) below;

 

(e)                                  Buyer
shall indemnify and hold Seller harmless from any lien, loss, claim, liability,
or expense, including attorneys’ fees and costs, arising out of or in
connection with the activities of Buyer or Buyer’s Agents on or about the
Property; provided, however, subject to Section 5.2.2(h) below, the
foregoing indemnity and hold harmless obligations and the provisions of Section 5.2.2(b) above
shall not apply to (i) any loss, liability cost, claim, damage, injury or
expense to the extent arising from or related to the negligence or willful
misconduct of Seller, Seller’s employees, managers, officers, partners,
shareholders and members, as applicable, (ii) any diminution in value in
the Property arising from or relating to matters discovered by Buyer during its
investigation of the Property in accordance with the terms of this Agreement, (iii) any
defects in the Property discovered by Buyer during its investigation of the
Property in accordance with the terms of this Agreement, and (iv) the
existence of any Hazardous Substances which are discovered (but not deposited)
on or under the Property by Buyer;

 

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

 

(g)                                 Prior
to performing any invasive testing, Buyer shall obtain Seller’s written
approval, which approval shall not be unreasonably withheld, conditioned or
delayed, with respect to the scope of work intended to be performed and shall
provide Seller an opportunity to confer, either directly or through Seller’s
consultants, with Buyer’s environmental consultants in order to determine
whether to permit any sampling or testing of surface or subsurface soils,
surface water or ground water or to refine the scope of the work to be
performed. Seller and its consultants shall be entitled to take “split samples”
of any samples obtained by Buyer and its consultants. Seller shall bear all
expenses of its own environmental consultants in reviewing Buyer’s work plan and
analyzing any split samples.

 

8

 

(h)                                 Buyer
shall have no liability to Seller with respect to any pre-existing structural
condition, soil or geological condition, dangerous or defective condition,
Hazardous Materials, or other matter revealed as a result of such tests or
inspections on or under the Property not caused by Buyer or its agents but
discovered during its investigations and inspections, provided that, if as a
result of Buyer’s or its agents’ activities on the Property any such conditions
or defects are exacerbated or aggravated, Buyer shall be liable to Seller
therefor to the extent of any such exacerbation or aggravation.

 

5.2.3                     Prior
to the Closing, all information derived from Buyer’s tests and test results
shall, to the extent permissible under existing law and subject to the terms of
Section 4.3, remain confidential and not be disclosed to any party other
than as is necessary to consummate the transaction contemplated hereby, to
obtain acquisition financing or to exercise Buyer’s rights hereunder including,
without limitation, Buyer’s counsel, prospective lenders, joint venturers
and/or investors and its consultants. Seller shall be entitled to receive,
without representation or warranty by Buyer, copies of all tests and test
results together with the right, as a party of interest, to be able to access
the consultant’s file information and work product in the event the Closing
does not occur, unless the Closing does not occur because of Seller’s default
under this Agreement. Buyer shall obtain all consultants’ consent to the
foregoing as a part of any retention agreement. Seller’s rights shall
survive the termination of this Agreement. Buyer shall bear the costs and expenses
with respect to its feasibility studies hereunder, including, but not limited
to, all environmental matters and investigations.

 

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

 

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

 

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

 

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

 

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

 

9

 

5.8                               Failure
of Conditions. If any of the Contingencies set forth in this Article 5
are not satisfied or waived in writing by Buyer at or prior to the times
prescribed therein, then, Buyer may elect, by written notice to Seller, to
terminate this Agreement, in which event all rights, obligations and
liabilities of Seller and Buyer under and pursuant to this Agreement shall
terminate (except for obligations or liabilities under this Agreement that
expressly survive the termination of this Agreement and rights of the parties
with respect to such surviving obligations and liabilities), the Escrow Agent
shall, without further notice to or from any party, and without liability
therefor, cancel and terminate the Escrow and the Deposit shall be paid to Buyer.
If, however, any of the Contingencies set forth in Section 5.3 or Section 5.7
are not satisfied, or any other condition set forth in this Article 5 is
not satisfied, as a result of a breach or default by Seller, then the
provisions of Section 10.2 below shall apply.

 

5.9                               Copies
of Reports. In the event of termination of this Agreement, Buyer shall
promptly return to Seller all documents delivered by Seller to Buyer and, after
termination of this Agreement for any reason other than as a result of Seller’s
breach or default hereunder, Buyer shall provide copies to Seller, without
representation or warranty, of all reports and studies obtained or developed by
Buyer or Buyer’s consultants, with respect to the physical condition of the Property
at no cost to Seller; provided, however, that Buyer shall not be obligated to
deliver to Seller any internal memoranda or financial projections or
correspondence of Buyer, documents subject to the attorney client privilege and
any appraisals or other valuation information for the Property.

 

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

 

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

 

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

 

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

 

6.4                               Failure
of Conditions. If any conditions precedent to Seller’s obligations
hereunder are not timely satisfied or waived in writing by Seller, as set forth
in this Article 6 and including, but not limited to, timely delivery of
the Deposit or other funds required to be deposited by Buyer into the Escrow, and
such non-satisfaction of such condition(s) precedent

 

10

 

continue for more than five (5) days following Buyer’s receipt of
written notice of such non-satisfaction of such conditions precedent, then
Seller shall have the option, exercisable by written notice to Buyer at or
prior to the Closing, of declining to proceed with the Closing; provided,
however, that the foregoing notice and cure period shall not be applicable to
Buyer’s failure to deposit with Escrow Agent on or before the Closing Date the
balance of the Purchase Price and all other documents and instruments required
for the Closing. In such event, except as expressly set forth herein, all
obligations and liabilities of the parties under this Agreement shall terminate
(except for any obligations or liabilities under this Agreement which
specifically set forth that such obligations or liabilities shall survive the
termination of this Agreement) and (a) all documentation delivered to
Buyer pursuant hereto shall be returned to Seller, (b) all third party
reports obtained by Buyer with respect to the physical condition of the Property
shall be delivered to Seller, without representation or warranty, at no cost to
Seller, if requested by Seller, and (c) the Deposit shall be paid to
Seller to the extent Seller is entitled thereto in accordance with Section 17
of this Agreement.

 

7.                                      Closing;
Deliveries.

 

7.1                               Closing
Date. The closing of the transaction described in this Agreement (the “Closing”)
shall take place on the date which is fifteen (15) days after the expiration of
the Due Diligence Period (or the next business day if such date falls on a
weekend or holiday) (the Closing Date”). Upon either party’s request, the other
party shall confirm in writing the date on which the Due Diligence Period
expires hereunder and/or the Closing Date. The Closing shall be deemed to occur
as of the moment the Deed is recorded and the Purchase Price is disbursed to
Seller.

 

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

 

7.2.1                     Grant
Deed. A grant deed (the “Deed”) for the Real Property in the form attached
hereto as Exhibit “E”, duly executed and acknowledged by Seller and
in proper form for recording, subject only to the Permitted Exceptions.

 

7.2.2                     Assignment
of Intangible Property. Two (2) counterpart originals of an
assignment (“Assignment”) for all of Seller’s right, title and interest in the Intangible
Property in the form attached hereto as Exhibit ”C,” duly
executed by Seller, which shall provide for an assumption by Buyer of all obligations
of assignor thereunder accruing from and after the date of the Closing.

 

7.2.3                     FIRPTA
and Form 593-C. A certification and affidavit as required by the
Foreign Investors Property Tax Act, as amended, and the comparable provisions
of California law.

 

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

 

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

 

11

 

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

 

7.3.2                     Assignment
of Intangible Property. Two (2) counterpart originals of the
Assignment duly executed by Buyer.

 

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

 

8.                                      Apportionments;
Expenses.

 

8.1                               Apportionments.

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

9.                                      Casualty
and Condemnation; Insurance.

 

9.1                               Threshold
Amount for Termination Option. If, at any time prior to the date of
Closing, Improvements having a replacement value of Two Hundred Fifty Thousand
Dollars ($250,000) or more are destroyed or damaged as a result of fire or any
other casualty whatsoever (or damage or destruction of any portion of the
Improvements is not covered by insurance), or as a result of the Property being
condemned or taken by eminent domain proceedings by any public authority, the
Property’s value is reduced by Two Hundred Fifty Thousand Dollars ($250,000) or
more, then, at Buyer’s option, to be exercised by written notice to Seller,
this Agreement shall terminate, and the Deposit shall be returned to Buyer, and
except as expressly set forth herein, neither party shall have any further
liability or obligation to the other hereunder. Buyer shall exercise such
termination right, if at all, within fifteen (15) days after receipt of written
notice from Seller advising Buyer of such damage or taking.

 

9.2                               Allocation
of Compensation. If there is any damage or destruction or condemnation or
taking, as above set forth, and if (a) the resulting reduction in the
value of the Property is less than Two Hundred Fifty Thousand Dollars
($250,000) and is covered by insurance (except for Seller’s deductible
applicable to such damage), or (b) Buyer elects not to terminate this
Agreement as provided above, then Buyer shall pay the Purchase Price in full at
the Closing and the Property shall belong to Buyer, provided that (i) in
the case of a taking, all condemnation proceeds paid or payable to Seller shall
be paid or assigned to Buyer at the Closing; or (ii) in the case of a
casualty, Seller shall assign to Buyer all rights to any insurance proceeds
paid or payable under the applicable insurance policies and Seller shall credit
against the Purchase Price the amount of the Seller’s deductible applicable to
such damage or destruction. In no event shall Seller have any obligation to
restore any damage to the Property caused by or arising from a condemnation or
casualty event, nor shall Buyer have the right to terminate this Agreement as a
result thereof other than as provided in Section 9.1 above.

 

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

 

10.1                        Buyer’s
Default. FOLLOWING EXPIRATION OF THE DUE DILIGENCE PERIOD, IN THE EVENT
BUYER BREACHES OR FAILS TO PERFORM ITS OBLIGATION TO PURCHASE THE PROPERTY
PURSUANT TO THIS AGREEMENT, THEN SELLER SHALL, AS ITS SOLE REMEDY THEREFOR, BE
ENTITLED TO RECEIVE THE DEPOSIT MADE PURSUANT TO SECTION 2 HEREOF,
INCLUDING ALL INTEREST EARNED AND ACCRUED THEREON, AS LIQUIDATED DAMAGES (AND
NOT AS A PENALTY) IN LIEU OF, AND AS FULL COMPENSATION FOR, ALL OTHER RELIEF, RIGHTS
OR CLAIMS OF SELLER AGAINST BUYER, AT LAW OR IN EQUITY, BY REASON OF SUCH
DEFAULT. THEREUPON THIS AGREEMENT SHALL TERMINATE AND THE PARTIES SHALL BE
RELIEVED OF ALL FURTHER OBLIGATIONS AND LIABILITIES HEREUNDER, EXCEPT FOR THOSE
OBLIGATIONS

 

13

 

WHICH EXPRESSLY SURVIVE CLOSING OR TERMINATION OF THIS AGREEMENT. SELLER
HEREBY WAIVES ITS RIGHT TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT IN THE
EVENT OF BUYER’S BREACH OF ITS OBLIGATION TO PURCHASE THE PROPERTY. BUYER AND
SELLER ACKNOWLEDGE THAT THE DAMAGES TO SELLER RESULTING FROM BUYER’S BREACH
WOULD BE DIFFICULT, IF NOT IMPOSSIBLE TO ASCERTAIN WITH ANY ACCURACY, AND THAT
THE LIQUIDATED DAMAGE AMOUNT SET FORTH IN THIS SECTION REPRESENTS BOTH
PARTIES’ EFFORTS TO APPROXIMATE SUCH POTENTIAL DAMAGES. NOTWITHSTANDING THE
FOREGOING, OR ANY OTHER PROVISION TO THE CONTRARY, THIS SECTION 10.1 SHALL
IN NO WAY LIMIT OR RESTRICT SELLER’S RECOVERY UNDER SECTION 5.2 ABOVE
AND/OR SECTION 14.10 BELOW.

 

	
   

  	
  /s/ WC 

  	
  Seller’s Initials

  	
  /s/ MR 

  	
  Buyer’s Initials

  

 

10.2                        Seller
Breach Before Closing. In the event that the Closing does not occur as a
result of Seller’s breach of this Agreement (“Seller’s Breach”)  which is not cured by Seller within five (5) days
after written notice from Buyer to Seller of such Seller’s Breach other than
Seller’s failure to deposit with Escrow Agent on or before the Closing Date all
documents and instruments required for the Closing, which shall not be subject
to the foregoing notice and cure period, Buyer shall be entitled to (a) bring
an action for specific performance if filed and served upon Seller within sixty
(60) days after the occurrence of such alleged breach, or (b) terminate
this Agreement, obtain a refund of the Deposit, if made, and pursue any  remedies at law to which it may be
legally entitled; provided, however, that (i) Seller’s liability for any
such Seller’s Breach shall be limited to claims for which the damages are not
less than Twenty Five Thousand Dollars ($25,000) and shall be subject to an
aggregate maximum sum of Three Hundred Thousand Dollars ($300,000), and (ii) Seller
shall in no event, except for fraud committed by Seller, have any liability for
matters disclosed to Buyer in any documents and information produced for Buyer
pursuant to this Agreement or discovered by Buyer prior to termination of this
Agreement, and (iii) Seller shall have no liability for any such Seller’s
Breach unless such damage claim is expressly asserted by Buyer in an action
filed and served on Seller within one (1) year following the termination
of the Agreement.

 

10.3                        Seller
Breach After Closing. In the event the Closing does occur and Buyer
discovers a Seller’s Breach, (a) Seller’s liability for a Seller’s Breach
shall be limited to claims for which the damages are not less than  Twenty Five Thousand Dollars ($25,000) and
which shall be subject to an aggregate maximum of Three Hundred Thousand
Dollars ($300,000), (b) Seller shall in no event, except for fraud
committed by Seller, have any liability for matters disclosed to Buyer in
documents produced or made available to Buyer by Seller or discovered by Buyer
prior to the Closing if Buyer elects to proceed to close this transaction
notwithstanding the disclosure or discovery of such matters prior to the
Closing, and (c) Seller shall have no liability for any Seller’s Breach
unless such damage claim is asserted by Buyer in an action filed and served on
Seller within one (1) year following the Closing.

 

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

 

14

 

immediately preceding sentence shall not be construed or interpreted as
a limitation or restriction on any right Buyer has under this Agreement to
terminate this Agreement prior to the Closing or to not deliver its Approval
Notice on or prior to the expiration of the Due Diligence Period.

 

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

 

If to Seller:

 

AXT, Inc.

4281 Technology Drive

Fremont, California  94538

Attn:  Wilson Cheung 

Fax:  (510) 438-4793

Phone:  (510) 438-4735

 

With a copy to:

 

DLA Piper US LLP

2000 University Avenue

East Palo Alto, California  94303

Attn:                    Austin
Stewart, Esq.

Fax:                           (650)
833-2001

Phone: (650) 833-2250

 

If to Buyer:

 

South Bay Development Company

1690 Dell Avenue

Campbell, California 
95008

Attn:  Mark
Regoli

Fax:  (408) 379-3229

Phone:  (408) 379-0400

 

With a copy to:

 

Berliner Cohen

10 Almaden Blvd., 11th Floor

San Jose, CA 95113

Attn: Sam Farb, Esq.

Fax:                           (408) 998-5388

Phone:           (408) 286-5800

 

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

 

15

 

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

 

14.                               Miscellaneous.

 

14.1                        Assignability.
Buyer shall have the right to assign
its rights under this Agreement to a corporation, partnership, limited
liability company, tenancy-in-common or other entity (i) in which Buyer or
any of the shareholders of Buyer holds directly or indirectly a controlling
interest (i.e. either a majority ownership interest or the sole right to direct
the management and control of such assignee), or (ii) in which one of the
members or partners of the assignee is an entity (or affiliate of an
entity or which has a constituent member) with whom Buyer has previously
entered into joint venture transactions and the other member or partner of
such assignee is an entity in which one or more of the shareholders
of Buyer holds a direct or indirect interest and such assignment is not
made for any payment or other monetary consideration by such assignee to Buyer.
Except as expressly set forth herein, Buyer may not assign or transfer all
or any portion of its rights or obligations under this Agreement to any
other individual, entity or other person without the consent thereto by Seller,
which may be withheld in Seller’s absolute discretion.

 

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

 

14.3                        Recording.
Neither this Agreement nor any notice or memorandum hereof shall be recorded in
any public record. A violation of this prohibition shall constitute a material
breach of this Agreement.

 

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

 

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

 

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

 

16

 

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

 

14.8                        Survival.
Unless otherwise expressly stated in this Agreement, the warranties,
representations and covenants of Seller and Buyer shall terminate as of the
Closing and shall be deemed to have merged with the Deed. Without limiting the
foregoing, the warranties, representations and covenants of Article 3
(subject to the limitations in Section 3.9 and Article 10), Article 4,
Sections 5.2.2, 5.2.3, 5.9, 9.2, and Articles 10, 11 & 13,
and Sections 14.10 and 14.12 hereof shall survive the Closing or any earlier
termination of this Agreement.

 

14.9                        Entire
Agreement; Amendments. This Agreement and the Exhibits hereto set forth all
of the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as contained herein. This
Agreement may not be changed orally but only by an agreement in writing,
duly executed by or on behalf of the party or parties against whom enforcement
of any waiver, change, modification, consent or discharge is sought.

 

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

 

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

 

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

 

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

 

17

 

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

 

BUYER:

 

S B C & D CO., INC.,

a California corporation,
dba South Bay Development Company

 

 

	
  By:

  	
  /s/ Mark Regoli

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SELLER:

  
	
   

  	
   

  
	
  AXT, INC.,

  
	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Wilson W. Cheung

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  Chief Financial Officer

  	
   

  

 

18

 

ACKNOWLEDGEMENT

 

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

 

 

ESCROW
HOLDER:

 

FIRST
AMERICAN TITLE COMPANY

 

 

	
  By:

  	
  /s/ LIZ ZANKICH

  	
   

  
	
  Name:

  	
  Liz Zankich

  	
   

  
	
  Title:

  	
  Sr. Escrow Officer

  	
   

  
	
  Date:

  	
  10/22/07

  	
   

  

 

19

 

EXHIBIT A

 

LEGAL DESCRIPTION OF THE REAL PROPERTY

 

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

 

Lots 16 and 20 of Tract
4390, filed September 15, 1980, in Map Book 120, at Pages 96 through
98, inclusive, Alameda County Records.

 

APN:  525-1652-012-01

 

A-1

 

EXHIBIT B

 

DEFINITION OF HAZARDOUS MATERIALS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-1

 

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

 

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

 

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

 

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

 

B-2

 

EXHIBIT C

 

ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY

 

This Assignment and Assumption of Intangible Property (“Assignment”)
is entered as of this             
day of                                 ,
200     (“Effective Date”), by and between AXT, Inc.,
a Delaware corporation (“Assignor”), and                                                         
(“Assignee”).

 

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

 

A.                                    Assignor
shall convey contemporaneously herewith to Assignee certain real property and
all improvements thereon (the “Property”) located at 4311 Solar Way, in the
City of Fremont, California, as more particularly described in Exhibit “A”
attached to that certain Purchase and Sale Agreement (the “Contract of Sale”)
dated October       , 2007, by and between
Assignor, as “Seller”, and Assignee (or Assignee’s predecessor in interst), as “Buyer”.

 

B.                                    Assignor
desires (concurrently with its transfer and conveyance of the Property to
Assignee) to assign and transfer to Assignee its right title and interest in
and to the following (collectively, the “Assigned Property”):

 

(i)                                     any and all warranties and guaranties
benefiting the Property, to the extent the same are assignable without the
consent of, or any payment or notice to, the party providing the same (collectively,
“Warranties”);

 

(ii)                                  any and all indemnities, claims, licenses,
plans, specifications, surveys and engineering reports applicable to the
Property described in the Contract of Sale, to the extent the same are
assignable without the consent of, or any payment or notice to, the party
providing the same; and

 

(iii)                               any
Intangible Property, as defined in the Contract of Sale, owned by Seller in
connection with the Property described in the Contract of Sale.

 

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

 

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

 

1.                                      Assignment.
As of the Effective Date, Assignor hereby assigns all of Assignor’s right,
title and interest in and to the Assigned Property to Assignee.

 

2.                                      Assumption.
Assignee accepts the assignment from Assignor and hereby assumes all of the
Assignor’s obligations under the Contracts accruing from and after the close of
escrow under the Contract of Sale.

 

C-1

 

3.                                      Counterparts.
This Assignment may be executed in counterparts, each of which shall be an
original, but all of which shall constitute one instrument.

 

4.                                      Attorney’s Fees. In the event of any action or suit between
the parties in connection with this Assignment, the prevailing party in such
action or suit shall be entitled to have and recover from the other party all
reasonable costs and expenses of suit, including reasonable attorneys’ fees.

 

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

 

 

ASSIGNOR:

 

AXT, INC.

a Delaware corporation

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ASSIGNEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								

 

C-2

 

EXHIBIT D

 

PROPERTY DOCUMENTS

 

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

 

A.            Copies
of past three (3) years real estate tax bills;

 

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

 

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

 

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

 

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

 

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

 

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

 

D-1

 

EXHIBIT E

 

	
  RECORDING
  REQUESTED BY AND

  	
   

  	
   

  
	
  WHEN
  RECORDED MAIL TO:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  c/o South Bay
  Development Company

  	
   

  	
   

  
	
  1690 Dell Avenue

  	
   

  	
   

  
	
  Campbell, CA
  95008

  	
   

  	
   

  
	
  Attn: Mark
  Regoli

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SPACE ABOVE THIS
  LINE FOR RECORDER’S USE

  
	
   

  	
   

  	
   

  
	
  Mail Tax
  Statements to:

  	
   

  	
  The undersigned
  grantor or agent declares:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Documentary
  Transfer Tax is shown on a separate sheet attached to

  
	
  c/o South Bay
  Development Company

  	
   

  	
  this deed and is
  not a part of the public record.

  
	
  1690 Dell Avenue

  	
   

  	
   

  
	
  Campbell, CA
  95008

  	
   

  	
   

  	
   

  
	
  Attn: Lee
  Casentini

  	
   

  	
  (signature of
  grantor or agent above)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A.P.N.
  525-1652-012-01

  	
   

  	
   

  
					

 

GRANT DEED

 

FOR VALUABLE
CONSIDERATION, receipt of which is hereby acknowledged,

 

AXT, Inc., a  Delaware corporation

 

hereby GRANT(S) to                                                                             ,
a                                       
limited liability company

 

that certain real
property in the City of Fremont, County of Alameda, State of California, more
particularly described as follows:

 

See Exhibit “A” attached hereto and incorporated herein by
reference

 

 

	
  Dated:

  	
   

  	
   

  	
  AXT, Inc.,

  
	
   

  	
  a Delaware
  corporation 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

E-1

 

EXHIBIT “A” TO GRANT DEED

 

DESCRIPTION OF REAL PROPERTY

 

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

 

Lots 16 and 20 of Tract
4390, filed September 15, 1980, in Map Book 120, at Pages 96 through
98, inclusive, Alameda County Records.

 

APN:  525-1652-012-01

 

E-2

 

	
  STATE OF CALIFORNIA

   

  COUNTY OF                     

  	
   

  	
  ss.

  

 

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

 

WITNESS
my hand and official seal.

 

E-3

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