Document:

ex10-1.htm

Exhibit 10.1

 

Amendment Number 1

to the 

Determine, Inc. 2015 Equity Incentive Plan

 

 

 

WHEREAS, Determine, Inc. (the “Company”) has previously adopted the Selectica, Inc. 2015 Equity Incentive Plan (the “2015 Plan”); and 

 

WHEREAS, pursuant to Section 16 of the 2015 Plan, the Compensation Committee of the Company’s Board of Directors (the “Committee”) has the authority to amend the 2015 Plan, including without limitation amendments subject to stockholder approval to increase the maximum number of shares of the Company’s common stock (the “Shares”) which may be issued under the 2015 Plan (the “Share Reserve”); and

 

WHEREAS, it is appropriate in light of the increase in the Share Reserve, it is appropriate to also increase the overall limit on the number of “Incentive Stock Options” which may be granted under the 2015 Plan; and

 

WHEREAS, in light of the change in the name of the Company, it is appropriate to change all references in the 2015 Plan from “Selectica, Inc.” to “Determine, Inc.”

 

NOW, THEREFORE, BE IT RESOLVED, that, subject to its approval by the stockholders of the Company, the 2015 Plan is hereby amended to increase the current Share Reserve by two million five hundred thousand (2,500,000) Shares. 

 

RESOLVED FURTHER, that in furtherance of the immediately preceding Resolution, Section 4.1 of the 2015 Plan shall, subject to approval by the stockholders of the Company, be amended to read as follows:

 

4.1   Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2, 4.3, and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to Awards shall be equal to four million (4,000,000) (reduced by the number of awards granted under the Predecessor Plan after March 15, 2015 and before the Plan’s Effective Date) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.

 

RESOLVED FURTHER, that subject to approval by the stockholders of the Company of this Amendment, Section 5.3(a)(i) of the 2015 Plan shall be amended to read as follows:

 

(i)     Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to adjustment as provided in Sections 4.2, 4.3, and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed four million seven hundred thousand (4,700,000).

 

RESOLVED FURTHER, that all references in the 2015 Plan to “Selectica, Inc.” shall be changed to “Determine, Inc.”

 

 

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SELECTICA, INC.

 

2015 EQUITY INCENTIVE PLAN

 

 

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SELECTICA, INC.

2015 Equity Incentive Plan

 

 

 

1.     Establishment, Purpose and Term of Plan.

 

1.1     Establishment. The Selectica, Inc. 2015 Equity Incentive Plan (the “Plan”) was approved by the Board on March 10, 2015, and shall be subject to approval by the stockholders of the Company at which time it shall become effective (the “Effective Date”).

 

1.2     Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan seeks to achieve this purpose by providing for Awards in the form of Options, Restricted Stock Purchase Rights, Restricted Stock Bonuses, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards.

 

1.3     Term of Plan. The Plan shall continue in effect until its termination by the Committee; provided, however, that all Awards shall be granted, if at all, on or before ten (10) years from the earlier of the Plan’s Effective Date.

 

2.     Definitions and Construction.

 

2.1     Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:

 

(a)          “Affiliate” means (i) a parent entity, other than a Parent Corporation, that directly, or indirectly through one or more intermediary entities, controls the Company or (ii) a subsidiary entity, other than a Subsidiary Corporation, that is controlled by the Company directly or indirectly through one or more intermediary entities. For this purpose, the terms “parent,” “subsidiary,” “control” and “controlled by” shall have the meanings assigned such terms for the purposes of registration of securities on Form S-8 under the Securities Act.

 

(b)          “Award” means any Option, Restricted Stock Purchase Right, Restricted Stock Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Cash-Based Award, or Other Stock-Based Award granted under the Plan.

 

(c)          “Award Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions applicable to an Award.

 

(d)          “Board” means the Board of Directors of the Company.

 

(e)          “Cash-Based Award” means an Award denominated in cash and granted pursuant to Section 10.

 

 

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(f)          “Cashless Exercise” means a Cashless Exercise as defined in Section 6.3(b)(i).

 

(g)           “Cause” means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between a Participant and a Participating Company applicable to an Award, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment, service, non-disclosure, non-competition, non-solicitation or other similar agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company.

 

(h)          “Change in Control” means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between the Participant and a Participating Company applicable to an Award, the occurrence of any one or a combination of the following:

 

(i)     any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total Fair Market Value or total combined voting power of the Company’s then-outstanding securities entitled to vote generally in the election of Directors; provided, however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial ownership results from any of the following: (A) an acquisition by any person who on the Effective Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition directly from the Company, including, without limitation, pursuant to or in connection with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any acquisition by an entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company; or

 

 

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(ii)     an Ownership Change Event or series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Directors or, in the case of an Ownership Change Event described in Section 2.1(ee) (iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or

 

(iii)     approval by the stockholders of a plan of complete liquidation or dissolution of the Company;

 

provided, however, that a Change in Control shall be deemed not to include a transaction described in subsections (i) or (ii) of this Section 2.1(h) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.

 

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Committee shall determine whether multiple acquisitions of the voting securities of the Company and/or multiple Ownership Change Events are related and to be treated in the aggregate as a single Change in Control, and its determination shall be final, binding and conclusive.

 

(i)          “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations or administrative guidelines promulgated thereunder.

 

(j)          “Committee” means the Compensation Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the Plan and having such powers in each instance as shall be specified by the Board. If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.

 

(k)          “Company” means Selectica, Inc., a Delaware corporation, or any successor corporation thereto.

 

(l)          “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a member of the Board) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on registration on Form S-8 under the Securities Act.

 

(m)          “Covered Employee” means, at any time the Plan is subject to Section 162(m), any Employee who is or may reasonably be expected to become a “covered employee” as defined in Section 162(m), or any successor statute, and who is designated, either as an individual Employee or a member of a class of Employees, by the Committee no later than the earlier of (i) the date that is ninety (90) days after the beginning of the Performance Period, or (ii) the date on which twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.

 

 

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(n)          “Director” means a member of the Board.

 

(o)          “Disability” means the permanent and total disability of the Participant, within the meaning of Section 22(e)(3) of the Code.

 

(p)          “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award held by such Participant.

 

(q)          “Employee” means any person treated as an employee (including an Officer or a member of the Board who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a member of the Board nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion, whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

 

(r)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(s)          “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

 

(i)     Except as otherwise determined by the Committee, if, on such date, the Stock is listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock as quoted on the national or regional securities exchange or quotation system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or quotation system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded or quoted prior to the relevant date, or such other appropriate day as shall be determined by the Committee, in its discretion.

 

 

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(ii)     Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair Market Value of a share of Stock on the basis of the opening, closing, or average of the high and low sale prices of a share of Stock on such date or the preceding trading day, the actual sale price of a share of Stock received by a Participant, any other reasonable basis using actual transactions in the Stock as reported on a national or regional securities exchange or quotation system, or on any other basis consistent with the requirements of Section 409A. The Committee may vary its method of determination of the Fair Market Value as provided in this Section for different purposes under the Plan to the extent consistent with the requirements of Section 409A.

 

(iii)     If, on such date, the Stock is not listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and in a manner consistent with the requirements of Section 409A.

 

(t)     “     Full Value Award” means any Award settled in Stock, other than (i) an Option, or (ii) a Restricted Stock Purchase Right or an Other Stock-Based Award under which the Company will receive monetary consideration equal to the Fair Market Value (determined on the effective date of grant) of the shares subject to such Award.

 

(u)          “Incentive Stock Option” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

 

(v)          “Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).

 

(w)          “Insider” means an Officer, Director or any other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

 

(x)     “Net Exercise” means a Net Exercise as defined in Section 6.3(b)(iii).

 

(y)     “Nonemployee Director” means a Director who is not an Employee.

 

(z)     “Nonemployee Director Award” means any Award granted to a Nonemployee Director.

 

(aa)     “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award Agreement) or which does not qualify as an incentive stock option within the meaning of Section 422(b) of the Code.

 

(bb)     “Officer” means any person designated by the Board as an officer of the Company.

 

(cc)     “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

 

 

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(dd)     “Other Stock-Based Award” means an Award denominated in shares of Stock and granted pursuant to Section 10.

 

(ee)     “Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).

 

(ff)     “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.

 

(gg)     “Participant” means any eligible person who has been granted one or more Awards.

 

(hh)     “Participating Company” means the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.

 

(ii)     “     Participating Company Group” means, at any point in time, the Company and all other entities collectively which are then Participating Companies.

 

(jj)     “Performance Award” means an Award of Performance Shares or Performance Units.

 

(kk)    “Performance Award Formula” means, for any Performance Award, a formula or table established by the Committee pursuant to Section 9.3 which provides the basis for computing the value of a Performance Award at one or more levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

 

(ll)        “Performance-Based Compensation” means compensation under an Award that satisfies the requirements of Section 162(m) for certain performance-based compensation paid to Covered Employees.

 

(mm)     “Performance Goal” means a performance goal established by the Committee pursuant to Section 9.3.

 

(nn)     “Performance Period” means a period established by the Committee pursuant to Section 9.3 at the end of which one or more Performance Goals are to be measured.

 

(oo)     “Performance Share” means a right granted to a Participant pursuant to Section 9 to receive a payment equal to the value of a Performance Share, as determined by the Committee, based upon attainment of applicable Performance Goal(s).

 

 

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(pp)     “Performance Unit” means a right granted to a Participant pursuant to Section 9 to receive a payment equal to the value of a Performance Unit, as determined by the Committee, based upon attainment of applicable Performance Goal(s).

 

(qq)     “Predecessor Plan” means the Selectica, Inc. 1999 Equity Incentive Plan, as amended.

 

(rr)          “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a Restricted Stock Purchase Right.

 

(ss)          “Restricted Stock Bonus” means Stock granted to a Participant pursuant to Section 7.

 

(tt)     “Restricted Stock Purchase Right” means a right to purchase Stock granted to a Participant pursuant to Section 7.

 

(uu)     “Restricted Stock Unit” means a right granted to a Participant pursuant to Section 9 to receive on a future date or event a share of Stock or cash in lieu thereof, as determined by the Committee.

 

(vv)     “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

 

(ww)      “Section 162(m)” means Section 162(m) of the Code.

 

(xx)     “Section 409A” means Section 409A of the Code.

 

(yy)     “Section 409A Deferred Compensation” means compensation provided pursuant to an Award that constitutes nonqualified deferred compensation within the meaning of Section 409A.

 

(zz)     “Securities Act” means the Securities Act of 1933, as amended.

 

(aaa)     “Service” means a Participant’s employment or service with the Participating Company Group, whether as an Employee, a Director or a Consultant. Unless otherwise provided by the Committee, a Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders such Service or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service shall not be deemed to have been interrupted or terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company. However, unless otherwise provided by the Committee, if any such leave taken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) day following the commencement of such leave the Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, an unpaid leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the business entity for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.

 

 

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(bbb)     “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.4.

 

(ccc)     “Stock Tender Exercise” means a Stock Tender Exercise as defined in Section 6.3(b)(ii).

 

(ddd)     “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

 

(eee)     “Ten Percent Owner” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the Code.

 

(fff)     “Trading Compliance Policy” means the written policy of the Company pertaining to the purchase, sale, transfer or other disposition of the Company’s equity securities by Directors, Officers, Employees or other service providers who may possess material, nonpublic information regarding the Company or its securities.

 

(ggg)     “Vesting Conditions” mean those conditions established in accordance with the Plan prior to the satisfaction of which an Award or shares subject to an Award remain subject to forfeiture or a repurchase option in favor of the Company exercisable for the Participant’s monetary purchase price, if any, for such shares upon the Participant’s termination of Service.

 

2.2     Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

3.     Administration.

 

3.1     Administration by the Committee. The Plan shall be administered by the Committee. All questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement or other document employed by the Company in the administration of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein. All expenses incurred in the administration of the Plan shall be paid by the Company.

 

 

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3.2     Authority of Officers. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided that the Officer has apparent authority with respect to such matter, right, obligation, determination or election. The Board or Committee may, in its discretion, delegate to a committee comprised of one or more Officers and/or Directors, the authority to grant one or more Awards, without further approval of the Board or the Committee, to any Employee, other than a person who, at the time of such grant, is an Insider or a Covered Person; provided, however, that (a) no Employee may be granted pursuant to such delegation one or more Awards in any fiscal year of the Company for more than 200,000 shares of Stock, (b) the exercise price per share of each such Award which is an Option shall be not less than the Fair Market Value per share of the Stock on the effective date of grant (or, if the Stock has not traded on such date, on the last day preceding the effective date of grant on which the Stock was traded), (c) each such Award shall be subject to the terms and conditions of the appropriate standard form of Award Agreement approved by the Board or the Committee and shall conform to the provisions of the Plan, and (d) each such Award shall conform to guidelines as shall be established from time to time by resolution of the Board or the Committee. 

 

3.3     Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

 

3.4     Committee Complying with Section 162(m). If the Company is a “publicly held corporation” within the meaning of Section 162(m), the Board may establish a Committee of “outside directors” within the meaning of Section 162(m) to approve the grant of any Award intended to result in the payment of Performance-Based Compensation.

 

3.5     Powers of the Committee. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion:

 

(a)     to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock, units or monetary value to be subject to each Award;

 

(b)     to determine the type of Award granted;

 

(c)     to determine the Fair Market Value of shares of Stock or other property;

 

 

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(d)     to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the Performance Measures, Performance Period, Performance Award Formula and Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the effect of the Participant’s termination of Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;

 

(e)     to determine whether an Award will be settled in shares of Stock, cash, other property or in any combination thereof;

 

(f)     to approve one or more forms of Award Agreement;

 

(g)     to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto;

 

(h)     to accelerate, continue, extend or defer the exercisability or vesting of any Award or any shares acquired pursuant thereto, including with respect to the period following a Participant’s termination of Service;

 

(i)     to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws or regulations of or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose citizens may be granted Awards; and

 

(j)     to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

 

3.6     Option Repricing. Without the affirmative vote of holders of a majority of the shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding shares of Stock is present or represented by proxy, the Committee shall not approve a program providing for either (a) the cancellation of outstanding Options having exercise prices per share greater than the then Fair Market Value of a share of Stock (“Underwater Options”) and the grant in substitution therefore of new Options having a lower exercise price, Full Value Awards, or payments in cash, or (b) the amendment of outstanding Underwater Options to reduce the exercise price thereof. This Section shall not apply to adjustments pursuant to the assumption of or substitution for an Option in a manner that would comply with Section 424(a) or Section 409A of the Code or to an adjustment pursuant to Section 4.4.

 

 

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3.7     Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, to the extent permitted by applicable law, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

4.     Shares Subject to Plan.

 

4.1     Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections  4.2, 4.3 and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to Awards shall be equal to one million five hundred thousand (1,500,000) shares of Stock (reduced by the number of awards granted under the Predecessor Plan after March 10, 2015 and before the Plan’s Effective Date) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.

 

4.2     Adjustment for Unissued Predecessor Plan Shares. The maximum aggregate number of shares of Stock that may be issued under the Plan as set forth in Section 4.1 shall be cumulatively increased from time to time by:

 

(a)     the number of shares of Stock subject to that portion of any option or other award outstanding pusuant to the Predecessor Plan as of the Effective Date which, on or after the Effective Date, expires or is terminated or canceled for any reason without having been exercised or settled in full; and

 

(b)     the number of shares of Stock acquired pursuant to a Predecessor Plan subject to forfeiture or repurchase by the Company at the Participant’s purchase price which, on or after the Effective Date, is so forfeited or repurchased (with such shares of Stock being added on a 1:1 basis);

 

provided, however, that the aggregate number of shares of Stock authorized for issuance under the Predecessor Plans that may become authorized for issuance under the Plan pursuant to this Section 4.2 shall not exceed six hundred eleven thousand (611,000).

 

4.3     Share Counting. 

 

(a)     Each share of Stock subject to an Award shall be counted against the limit set forth in Section 4.1 as one (1) share. 

 

 

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(b)     If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the Participant’s purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be available for issuance under the Plan (and shall be added back to the share reserve set forth in Section 4.1 based on the same ratio set forth in Section 4.3(a) with respect to the type of Award which is terminated, forfeited, or repurchased). Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations shall not again be available for issuance under the Plan. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant, or by means of a Net-Exercise, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the Option is exercised.

 

4.4     Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards, the Award limits set forth in Section 5.3, and in the exercise or purchase price per share under any outstanding Award in order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Awards to provide that such Awards are for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise or purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Committee, in its discretion. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number, and in no event may the exercise or purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The Committee in its discretion, may also make such adjustments in the terms of any Award to reflect, or related to, such changes in the capital structure of the Company or distributions as it deems appropriate, including modification of Performance Goals, Performance Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to this Section shall be final, binding and conclusive.

 

4.5     Assumption or Substitution of Awards. The Committee may, without affecting the number of shares of Stock reserved or available hereunder, authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with Section 409A and any other applicable provisions of the Code.

 

 

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5.     Eligibility, Participation and Award Limitations.

 

5.1     Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and Directors.

 

5.2     Participation in the Plan. Awards are granted solely at the discretion of the Committee. Eligible persons may be granted more than one Award. However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.

 

5.3     Award Limitations.

 

(a)     Incentive Stock Option Limitations.

 

(i)     Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to adjustment as provided in Sections 4.2, 4.3, and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed two million two hundred thousand (2,200,000). 

 

(ii)     Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary Corporation (each being an “ISO-Qualifying Corporation”). Any person who is not an Employee of an ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option.

 

(iii)     Fair Market Value Limitation. To the extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a limitation different from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Upon exercise, shares issued pursuant to each such portion shall be separately identified.

 

 

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(b)     Section 162(m) Award Limits. Subject to adjustment as provided in Section 4.4, no Employee shall be granted within any fiscal year of the Company one or more Awards intended to qualify for treatment as Performance-Based Compensation which in the aggregate are for more than three hundred thousand (300,000) shares of Stock or, if applicable, which could result in such Employee receiving more than three hundred thousand (300,000) shares of Stock for each full fiscal year of the Company contained in the Performance Period for such Award. Notwithstanding the foregoing, with respect to a newly hired Participant, the share limits set forth above shall be five hundred thousand (500,000) shares of Stock. With respect to an Award of Performance Based Compensation payable in cash, the maximum amount shall be $2,500,000 for each fiscal year contained in the Performance Period. 

 

(c)     Nonemployee Director Awards. Notwithstanding any other provision of the Plan to the contrary, the aggregate shares of Stock subject to Awards granted to any Nonemployee Director during any single calendar year shall not exceed sixty thousand (60,000) shares of Stock, provided, however, that with respect to the initial calendar year which a Nonemployee Director is elected or appointed, this limit shall be ninety thousand (90,000) shares of Stock.

 

6.     Stock Options.

 

Options shall be evidenced by Award Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall from time to time establish. Award Agreements evidencing Options may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

6.1     Exercise Price. The exercise price for each Option shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner that would qualify under the provisions of Section 409A or 424(a) of the Code.

 

6.2     Exercisability and Term of Options. Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option and (c) no Option granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable until at least six (6) months following the date of grant of such Option (except in the event of such Employee’s death, disability or retirement, upon a Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless otherwise specified by the Committee in the grant of an Option, each Option shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.

 

 

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6.3     Payment of Exercise Price.

 

(a)     Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Committee and subject to the limitations contained in Section 6.3(b), by means of (1) a Cashless Exercise, (2) a Stock Tender Exercise or (3) a Net Exercise; (iii) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (iv) by any combination thereof. The Committee may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

 

(b)     Limitations on Forms of Consideration.

 

(i)     Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise, including with respect to one or more Participants specified by the Company notwithstanding that such program or procedures may be available to other Participants.

 

(ii)     Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed exercise notice accompanies by a Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock owned by the Participant having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

(iii)     Net Exercise. A “Net Exercise” means the delivery of a properly executed exercise notice followed by a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued.

 

 

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6.4     Effect of Termination of Service.

 

(a)     Option Exercisability. Subject to earlier termination of the Option as otherwise provided by this Plan and unless otherwise provided by the Committee, an Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period determined in accordance with this Section and thereafter shall terminate. Except as otherwise provided in the Award Agreement, or other agreement governing the Option, vested Options shall remain exercisable failing a termination of Service as follows:

 

(i)     Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of one (1) year after the date on which the Participant’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Award Agreement evidencing such Option (the “Option Expiration Date”).

 

(ii)     Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of one (1) year after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within ninety (90) days after the Participant’s termination of Service.

 

(iii)     Termination for Cause. Notwithstanding any other provision of the Plan to the contrary, if the Participant’s Service is terminated for Cause or if, following the Participant’s termination of Service and during any period in which the Option otherwise would remain exercisable, the Participant engages in any act that would constitute Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service or act.

 

(iv)     Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of ninety (90) days after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

 

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(b)     Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of Service for Cause, if the exercise of an Option within the applicable time periods set forth in Section 6.4(a) is prevented by the provisions of Section 13 below, the Option shall remain exercisable until the later of (i) thirty (30) days after the date such exercise first would no longer be prevented by such provisions or (ii) the end of the applicable time period under Section 6.4(a), but in any event no later than the Option Expiration Date.

 

6.5     Transferability of Options. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. An Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option, a Nonstatutory Stock Option may be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8 under the Securities Act. An Incentive Stock Option shall not be assignable or transferable in any manner.

 

7.     Restricted Stock Awards.

 

Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock subject to the Award, in such form as the Committee shall from time to time establish. Award Agreements evidencing Restricted Stock Awards may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

7.1     Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 9.4. If either the grant of or satisfaction of Vesting Conditions applicable to a Restricted Stock Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 9.3 through 9.5(a).

 

7.2     Purchase Price. The purchase price for shares of Stock issuable under each Restricted Stock Purchase Right shall be established by the Committee in its discretion. No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving shares of Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock subject to a Restricted Stock Award.

 

7.3     Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period established by the Committee, which shall in no event exceed thirty (30) days from the effective date of the grant of the Restricted Stock Purchase Right.

 

 

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7.4     Payment of Purchase Price. Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase Right shall be made (a) in cash, by check or in cash equivalent, (b) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (c) by any combination thereof.

 

7.5     Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 9.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 7.8. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to such Restricted Stock Award would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then satisfaction of the Vesting Conditions automatically shall be determined on the next trading day on which the sale of such shares would not violate the Trading Compliance Policy. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

7.6     Voting Rights; Dividends and Distributions. Except as provided in this Section, Section 7.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares; provided, however, that if so determined by the Committee and provided by the Award Agreement, such dividends and distributions shall be subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid, and otherwise shall be paid no later than the end of the calendar year in which such dividends or distributions are paid to stockholders (or, if later, the 15th day of the third month following the date such dividends or distributions are paid to stockholders). In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant is entitled by reason of the Participant’s Restricted Stock Award shall be immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid or adjustments were made.

 

 

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7.7     Effect of Termination of Service. Unless otherwise provided by the Committee in the Award Agreement evidencing a Restricted Stock Award, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then (a) the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service and (b) the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a Restricted Stock Bonus which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.

 

7.8     Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

 

8.     Restricted Stock Unit Awards.

 

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time establish. Award Agreements evidencing Restricted Stock Units may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

8.1     Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 9.4. If either the grant of a Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 9.3 through 9.5(a).

 

8.2     Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Restricted Stock Unit Award.

 

8.3     Vesting. Restricted Stock Unit Awards may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 9.4 as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Unit Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to the Award would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then the satisfaction of the Vesting Conditions automatically shall be determined on the first to occur of (a) the next trading day on which the sale of such shares would not violate the Trading Compliance Policy or (b) the later of (i) last day of the calendar year in which the original vesting date occurred or (ii) the last day of the Company’s taxable year in which the original vesting date occurred.

 

 

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8.4     Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Restricted Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid by crediting the Participant with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearest whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on such date with respect to the number of shares of Stock represented by the Restricted Stock Units previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions as are applicable to the Award.

 

8.5     Effect of Termination of Service. Unless otherwise provided by the Committee and set forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant to the Award which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service.

 

 

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8.6     Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award vest or on such other date determined by the Committee, in its discretion, and set forth in the Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities or other property pursuant to an adjustment described in Section 8.4) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of applicable taxes, if any. If permitted by the Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section, and such deferred issuance date(s) and amount(s) elected by the Participant shall be set forth in the Award Agreement. Notwithstanding the foregoing, the Committee, in its discretion, may provide for settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount equal to the Fair Market Value on the payment date of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section.

 

8.7     Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

 

9.     Performance Awards.

 

Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time establish. Award Agreements evidencing Performance Awards may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

9.1     Types of Performance Awards Authorized. Performance Awards may be granted in the form of either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall specify the number of Performance Shares or Performance Units subject thereto, the Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award.

 

9.2     Initial Value of Performance Shares and Performance Units. Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial monetary value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in Section 4.4, on the effective date of grant of the Performance Share, and each Performance Unit shall have an initial monetary value established by the Committee at the time of grant. The final value payable to the Participant in settlement of a Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.

 

 

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9.3     Establishment of Performance Period, Performance Goals and Performance Award Formula. In granting each Performance Award, the Committee shall establish in writing the applicable Performance Period, Performance Award Formula and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine on the basis of the Performance Award Formula the final value of the Performance Award to be paid to the Participant. Unless otherwise permitted in compliance with the requirements under Section 162(m) with respect to each Performance Award intended to result in the payment of Performance-Based Compensation, the Committee shall establish the Performance Goal(s) and Performance Award Formula applicable to each Performance Award no later than the earlier of (a) the date ninety (90) days after the commencement of the applicable Performance Period or (b) the date on which 25% of the Performance Period has elapsed, and, in any event, at a time when the outcome of the Performance Goals remains substantially uncertain. Once established, the Performance Goals and Performance Award Formula applicable to a Covered Employee shall not be changed during the Performance Period. The Company shall notify each Participant granted a Performance Award of the terms of such Award, including the Performance Period, Performance Goal(s) and Performance Award Formula.

 

9.4     Measurement of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets to be attained (“Performance Targets”) with respect to one or more measures of business or financial performance (each, a “Performance Measure”), subject to the following:

 

(a)     Performance Measures. Performance Measures shall be calculated in accordance with the Company’s financial statements, or, if such terms are not used in the Company’s financial statements, they shall be calculated in accordance with generally accepted accounting principles, a method used generally in the Company’s industry, or in accordance with a methodology established by the Committee prior to the grant of the Performance Award. Performance Measures shall be calculated with respect to the Company and each Subsidiary Corporation consolidated therewith for financial reporting purposes or such division or other business unit as may be selected by the Committee. Unless otherwise determined by the Committee prior to the grant of the Performance Award, the Performance Measures applicable to the Performance Award shall be calculated prior to the accrual of expense for any Performance Award for the same Performance Period and excluding the effect (whether positive or negative) on the Performance Measures of any change in accounting standards or any extraordinary, unusual or nonrecurring item, as determined by the Committee, occurring after the establishment of the Performance Goals applicable to the Performance Award. Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of Performance Measures in order to prevent the dilution or enlargement of the Participant’s rights with respect to a Performance Award. Performance Measures may be one or more of the following, as determined by the Committee:

 

(i)     revenue;

 

(ii)     sales;

 

(iii)     expenses;

 

(iv)     operating income;

 

(v)     gross margin;

 

(vi)     operating margin;

 

 

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(vii)     earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization;

 

(viii)     pre-tax profit;

 

(ix)     net operating income;

 

(x)     net income;

 

(xi)     economic value added;

 

(xii)     free cash flow;

 

(xiii)     operating cash flow;

 

(xiv)     balance of cash, cash equivalents and marketable securities;

 

(xv)     stock price;

 

(xvi)     earnings per share;

 

(xvii)     return on stockholder equity;

 

(xviii)     return on capital;

 

(xix)     return on assets;

 

(xx)     return on investment;

 

(xxi)     total stockholder return;

 

(xxii)     employee satisfaction;

 

(xxiii)     employee retention;

 

(xxiv)     market share;

 

(xxv)     customer satisfaction;

 

(xxvi)     product development;

 

(xxvii)     research and development expenses;

 

(xxviii)     completion of an identified special project; and

 

(xxix)     completion of a joint venture or other corporate transaction.

 

 

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(b)     Performance Targets. Performance Targets may include a minimum, maximum, target level and intermediate levels of performance, with the final value of a Performance Award determined under the applicable Performance Award Formula by the level attained during the applicable Performance Period. A Performance Target may be stated as an absolute value, an increase or decrease in a value, or as a value determined relative to an index, budget or other standard selected by the Committee.

 

9.5     Settlement of Performance Awards.

 

(a)     Determination of Final Value. As soon as practicable following the completion of the Performance Period applicable to a Performance Award, the Committee shall certify in writing the extent to which the applicable Performance Goals have been attained and the resulting final value of the Award earned by the Participant and to be paid upon its settlement in accordance with the applicable Performance Award Formula.

 

(b)     Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either at the time it grants a Performance Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Award Formula applicable to a Performance Award granted to any Participant who is not a Covered Employee to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine. If permitted under a Covered Employee’s Award Agreement, the Committee shall have the discretion, on the basis of such criteria as may be established by the Committee, to reduce some or all of the value of the Performance Award that would otherwise be paid to the Covered Employee upon its settlement notwithstanding the attainment of any Performance Goal and the resulting value of the Performance Award determined in accordance with the Performance Award Formula. No such reduction may result in an increase in the amount payable upon settlement of another Participant’s Performance Award that is intended to result in Performance-Based Compensation.

 

(c)     Effect of Leaves of Absence. Unless otherwise required by law or a Participant’s Award Agreement, payment of the final value, if any, of a Performance Award held by a Participant who has taken in excess of thirty (30) days in unpaid leaves of absence during a Performance Period shall be prorated on the basis of the number of days of the Participant’s Service during the Performance Period during which the Participant was not on an unpaid leave of absence.

 

(d)     Notice to Participants. As soon as practicable following the Committee’s determination and certification in accordance with Sections 9.5(a) and (b), the Company shall notify each Participant of the determination of the Committee.

 

(e)     Payment in Settlement of Performance Awards. As soon as practicable following the Committee’s determination and certification in accordance with Sections 9.5(a) and (b), but in any event within the Short-Term Deferral Period described in Section 14.1 (except as otherwise provided below or consistent with the requirements of Section 409A), payment shall be made to each eligible Participant (or such Participant’s legal representative or other person who acquired the right to receive such payment by reason of the Participant’s death) of the final value of the Participant’s Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the Committee. Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall be made in a lump sum. If permitted by the Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the payment to be made to the Participant pursuant to this Section, and such deferred payment date(s) elected by the Participant shall be set forth in the Award Agreement. If any payment is to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalent Rights or interest.

 

 

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(f)     Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock, the number of such shares shall be determined by dividing the final value of the Performance Award by the Fair Market Value of a share of Stock determined by the method specified in the Award Agreement. Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 7.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement and shall be subject to the provisions of Sections 7.5 through 7.8 above.

 

9.6     Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Performance Share Awards until the date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Performance Share Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date the Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date on which the Performance Shares are settled or the date on which they are forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of additional whole Performance Shares as of the date of payment of such cash dividends on Stock. The number of additional Performance Shares (rounded down to the nearest whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with respect to the number of shares of Stock represented by the Performance Shares previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Dividend Equivalent Rights shall be accumulated and paid to the extent that Performance Shares become nonforfeitable, as determined by the Committee. Settlement of Dividend Equivalent Rights may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance Share as provided in Section 9.5. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s Performance Share Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Performance Goals as are applicable to the Award.

 

 

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9.7     Effect of Termination of Service. Unless otherwise provided by the Committee and set forth in the Award Agreement evidencing a Performance Award or in the Participant’s employment agreement, if any, referencing such Awards, the effect of a Participant’s termination of Service on the Performance Award shall be as follows:

 

(a)     Death or Disability. If the Participant’s Service terminates because of the death or Disability of the Participant before the completion of the Performance Period applicable to the Performance Award, the final value of the Participant’s Performance Award shall be determined by the extent to which the applicable Performance Goals have been attained with respect to the entire Performance Period and shall be prorated based on the number of months of the Participant’s Service during the Performance Period. Payment shall be made following the end of the Performance Period in any manner permitted by Section 9.5.

 

(b)     Other Termination of Service. If the Participant’s Service terminates for any reason except death or Disability before the completion of the Performance Period applicable to the Performance Award, such Award shall be forfeited in its entirety.

 

9.8     Nontransferability of Performance Awards. Prior to settlement in accordance with the provisions of the Plan, no Performance Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Performance Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

 

10.     Cash-Based Awards and Other Stock-Based Awards.

 

Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time establish. Award Agreements evidencing Cash-Based Awards and Other Stock-Based Awards may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

10.1     Grant of Cash-Based Awards. Subject to the provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms and conditions, including the achievement of performance criteria, as the Committee may determine.

 

10.2     Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted securities, stock-equivalent units, stock appreciation units, securities or debentures convertible into common stock or other forms determined by the Committee) in such amounts and subject to such terms and conditions as the Committee shall determine. Other Stock-Based Awards may be made available as a form of payment in the settlement of other Awards or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash or otherwise of amounts based on the value of Stock and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

 

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10.3     Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a monetary payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of shares of Stock or units based on such shares of Stock, as determined by the Committee. The Committee may require the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 9.49.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. If the Committee exercises its discretion to establish performance criteria, the final value of Cash-Based Awards or Other Stock-Based Awards that will be paid to the Participant will depend on the extent to which the performance criteria are met. The establishment of performance criteria with respect to the grant or vesting of any Cash-Based Award or Other Stock-Based Award intended to result in Performance-Based Compensation shall follow procedures substantially equivalent to those applicable to Performance Awards set forth in Section 9.

 

10.4     Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards. Payment or settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, shares of Stock or other securities or any combination thereof as the Committee determines. The determination and certification of the final value with respect to any Cash-Based Award or Other Stock-Based Award intended to result in Performance-Based Compensation shall comply with the requirements applicable to Performance Awards set forth in Section 9. To the extent applicable, payment or settlement with respect to each Cash-Based Award and Other Stock-Based Award shall be made in compliance with the requirements of Section 409A.

 

10.5     Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Other Stock-Based Awards until the date of the issuance of such shares of Stock (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), if any, in settlement of such Award. However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Other Stock-Based Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid in accordance with the provisions set forth in Section8.4. Dividend Equivalent Rights shall not be granted with respect to Cash-Based Awards. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s Other Stock-Based Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of such Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions and performance criteria, if any, as are applicable to the Award.

 

 

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10.6     Effect of Termination of Service. Each Award Agreement evidencing a Cash-Based Award or Other Stock-Based Award shall set forth the extent to which the Participant shall have the right to retain such Award following termination of the Participant’s Service. Such provisions shall be determined in the discretion of the Committee, need not be uniform among all Cash-Based Awards or Other Stock-Based Awards, and may reflect distinctions based on the reasons for termination, subject to the requirements of Section 409A, if applicable.

 

10.7     Nontransferability of Cash-Based Awards and Other Stock-Based Awards. Prior to the payment or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. The Committee may impose such additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and Other Stock-Based Awards as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such shares of Stock are then listed and/or traded, or under any state securities laws or foreign law applicable to such shares of Stock.

 

11.     Standard Forms of Award Agreement.

 

11.1     Award Agreements. Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Committee and as amended from time to time. No Award or purported Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement, which execution may be evidenced by electronic means.

 

11.2     Authority to Vary Terms. The Committee shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.

 

12.     Change in Control.

 

12.1     Effect of Change in Control on Awards. Subject to the requirements and limitations of Section 409A, if applicable, the Committee may provide for any one or more of the following:

 

(a)     Accelerated Vesting. In its discretion, the Committee may provide in the grant of any Award or at any other time may take such action as it deems appropriate to provide for acceleration of the exercisability, vesting and/or settlement in connection with a Change in Control of each or any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions, including termination of the Participant’s Service prior to, upon, or following such Change in Control, and to such extent as the Committee shall determine.

 

 

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(b)     Assumption, Continuation or Substitution. In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, assume or continue the Company’s rights and obligations under each or any Award or portion thereof outstanding immediately prior to the Change in Control or substitute for each or any such outstanding Award or portion thereof a substantially equivalent award with respect to the Acquiror’s stock, as applicable. For purposes of this Section, if so determined by the Committee in its discretion, an Award denominated in shares of Stock shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and the applicable Award Agreement, for each share of Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise or settlement of the Award, for each share of Stock subject to the Award, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. Except as otherwise provided in any Award Agreement, any Award which is not assumed, substituted for or otherwise continued by the Acquiror shall vest in full effective and contingent upon the consummation of the Change in Control. Any Award or portion thereof which is not assumed, substituted for, or otherwise continued by the Acquiror in connection with the Change in Control nor exercised or settled as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.

 

(c)     Cash-Out of Outstanding Stock-Based Awards. The Committee may, in its discretion and without the consent of any Participant, determine that, upon the occurrence of a Change in Control, each or any Award denominated in shares of Stock or portion thereof outstanding immediately prior to the Change in Control and not previously exercised or settled shall be canceled in exchange for a payment with respect to each vested share (and each unvested share, if so determined by the Committee) of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control, reduced (but not below zero) by the exercise or purchase price per share, if any, under such Award. In the event such determination is made by the Committee, an Award having an exercise or purchase price per share equal to or greater than the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control may be canceled without payment of consideration to the holder thereof. Payment pursuant to this Section (reduced by applicable withholding taxes, if any) shall be made to Participants in respect of the vested portions of their canceled Awards as soon as practicable following the date of the Change in Control and in respect of the unvested portions of their canceled Awards in accordance with the vesting schedules applicable to such Awards.

 

 

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12.2     Federal Excise Tax Under Section 4999 of the Code.

 

(a)     Excess Parachute Payment. In the event that any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, the Participant may elect to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization.

 

(b)     Determination by Independent Accountants. To aid the Participant in making any election called for under Section 12.2(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 12.2(a), the Company shall request a determination in writing by independent public accountants selected by the Company (the “Accountants”). As soon as practicable thereafter, the Accountants shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant. For the purposes of such determination, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make their required determination. The Company shall bear all fees and expenses the Accountants charge in connection with their services contemplated by this Section.

 

12.3     Effect of Change in Control on Nonemployee Director Awards. Subject to the requirements and limitations of Section 409A, if applicable, in the event of a Change in Control, each outstanding Nonemployee Director Award shall become immediately exercisable and vested in full and, except to the extent assumed, continued or substituted for pursuant to Section 12.1(b), shall be settled immediately prior to the Change in Control. In addition, subject to the requirements of Section 409A, even if such Non-employee Director Awards are assumed, continued, or substituted for, if a Nonemployee Director incurs a separation service (as defined in Section 409A), then such Awards shall also be settled. 

 

13.     Compliance with Securities Law.

 

The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award, or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

 

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14.     Compliance with Section 409A.

 

14.1     Awards Subject to Section 409A. The Company intends that Awards granted pursuant to the Plan shall either be exempt from or comply with Section 409A, and the Plan shall be so construed. The provisions of this Section 14 shall apply to any Award or portion thereof that constitutes or provides for payment of Section 409A Deferred Compensation. Such Awards may include, without limitation:

 

(a)     A Nonstatutory Stock Option that includes any feature for the deferral of compensation other than the deferral of recognition of income until the later of (i) the exercise or disposition of the Award or (ii) the time the stock acquired pursuant to the exercise of the Award first becomes substantially vested.

 

(b)     Any Restricted Stock Unit Award, Performance Award, Cash-Based Award or Other Stock-Based Award that either (i) provides by its terms for settlement of all or any portion of the Award at a time or upon an event that will or may occur later than the end of the Short-Term Deferral Period (as defined below) or (ii) permits the Participant granted the Award to elect one or more dates or events upon which the Award will be settled after the end of the Short-Term Deferral Period.

 

Subject to the provisions of Section 409A, the term “Short-Term Deferral Period” means the 21⁄2 month period ending on the later of (i) the 15th day of the third month following the end of the Participant’s taxable year in which the right to payment under the applicable portion of the Award is no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month following the end of the Company’s taxable year in which the right to payment under the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the meaning provided by Section 409A.

 

14.2     Prohibition of Acceleration of Payments. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, this Plan does not permit the acceleration of the time or schedule of any payment under an Award providing Section 409A Deferred Compensation, except as permitted by Section 409A.

 

14.3     No Representation Regarding Section 409A Compliance. Notwithstanding any other provision of the Plan, the Company makes no representation that Awards shall be exempt from or comply with Section 409A. No Participating Company shall be liable for any tax, penalty or interest imposed on a Participant by Section 409A.

 

 

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15.     Tax Withholding.

 

15.1     Tax Withholding in General. The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes (including social insurance), if any, required by law to be withheld by any Participating Company with respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.

 

15.2     Withholding in or Directed Sale of Shares. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of any Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates. The Company may require a Participant to direct a broker, upon the vesting, exercise or settlement of an Award, to sell a portion of the shares subject to the Award determined by the Company in its discretion to be sufficient to cover the tax withholding obligations of any Participating Company and to remit an amount equal to such tax withholding obligations to such Participating Company in cash.

 

16.     Amendment, Suspension or Termination of Plan.

 

The Committee may amend, suspend or terminate the Plan at any time. However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.4), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as provided by the next sentence, no amendment, suspension or termination of the Plan may adversely affect any then outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan to the contrary, the Committee may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A.

 

17.     Miscellaneous Provisions.

 

17.1     Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the Committee in its discretion at the time the Award is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

 

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17.2     Forfeiture Events.

 

(a)     The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of Service for Cause or any act by a Participant, whether before or after termination of Service, that would constitute Cause for termination of Service.

 

(b)     If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, any Participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company for (i) the amount of any payment in settlement of an Award received by such Participant during the twelve- (12-) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement, and (ii) any profits realized by such Participant from the sale of securities of the Company during such twelve- (12-) month period.

 

17.3     Provision of Information. Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s common stockholders.

 

17.4     Rights as Employee, Consultant or Director. No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time. To the extent that an Employee of a Participating Company other than the Company receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.

 

17.5     Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.4 or another provision of the Plan.

 

 

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17.6     Delivery of Title to Shares. Subject to any governing rules or regulations, the Company shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall deliver such shares to or for the benefit of the Participant by means of one or more of the following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of Stock for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.

 

17.7      Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.

 

17.8     Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under any Participating Company’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit. In addition, unless a written employment agreement or other service agreement references Awards, a general reference to “benefits” in such agreement shall not be deemed to refer to Awards granted hereunder. 

 

17.9     Beneficiary Designation. Subject to local laws and procedures, each Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the Plan to which the Participant is entitled in the event of such Participant’s death before he or she receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. If a married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation may be subject to the consent of the Participant’s spouse. If a Participant dies without an effective designation of a beneficiary who is living at the time of the Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal representative.

 

17.10     Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

 

17.11     No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or another Participating Company to take any action which such entity deems to be necessary or appropriate.

 

 

35

 

 

17.12     Unfunded Obligation. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Committee or any Participating Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of any Participating Company. The Participants shall have no claim against any Participating Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.

 

17.13     Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without regard to its conflict of law rules.

 

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the Selectica, Inc. 2015 Equity Incentive Plan as duly adopted by the Board on March 10, 2015.

 

	  	  
	  	  
	  	
/s/ Todd Spartz

	  	
Secretary

 

 

36

 

 

TABLE OF CONTENTS

 

Page

 

	1.	
Establishment, Purpose and Term of Plan
	
1

	 	 	 	

	 	
1.1
	
Establishment
	
1

	 	
1.2
	
Purpose
	
1

	 	
1.3
	
Term of Plan
	
1

	 	 	 	

	 	 	 
	2.	
Definitions and Construction
	
1

	 	 	 	

	 	
2.1
	
Definitions
	
1

	 	
2.2
	
Construction
	
9

	 	 	 	

	 	 	 
	3.	
Administration
	
9

	 	 	 	

	 	
3.1
	
Administration by the Committee
	
9

	 	
3.2
	
Authority of Officers
	
10

	 	
3.3
	
Administration with Respect to Insiders
	
10

	 	
3.4
	
Committee Complying with Section 162(m)
	
10

	 	
3.5
	
Powers of the Committee
	
10

	 	
3.6
	
Option Repricing
	
11

	 	
3.7
	
Indemnification
	
12

	 	 	 	

	 	 	 
	4.	
Shares Subject to Plan
	
12

	 	 	 	

	 	
4.1
	
Maximum Number of Shares Issuable
	
12

	 	
4.2
	
Adjustment for Unissued Predecessor Plan Shares
	
12

	 	
4.3
	
Share Counting
	
12

	 	
4.4
	
Adjustments for Changes in Capital Structure
	
13

	 	
4.5
	
Assumption or Substitution of Awards
	
13

	 	 	 	

	 	 	 
	5.	
Eligibility, Participation and Award Limitations
	
14

	 	 	 	

	 	
5.1
	
Persons Eligible for Awards
	
14

	 	
5.2
	
Participation in the Plan
	
14

	 	
5.3
	
Award Limitations
	
14

	 	 	 	

	 	 	 
	6.	
Stock Options
	
15

	 	 	 	

	 	
6.1
	
Exercise Price
	
15

	 	
6.2
	
Exercisability and Term of Options
	
15

	 	
6.3
	
Payment of Exercise Price
	
16

	 	
6.4
	
Effect of Termination of Service
	
17

	 	
6.5
	
Transferability of Options
	
18

	 	 	 	

	 	 	 
	7.	
Restricted Stock Awards
	
18

	 	 	 	

	 	
7.1
	
Types of Restricted Stock Awards Authorized
	
18

	 	
7.2
	
Purchase Price
	
18

 

 

i

 

 

TABLE OF CONTENTS

(Continued)

 

	 	
7.3
	
Purchase Period
	
18

	 	
7.4
	
Payment of Purchase Price
	
19

	 	
7.5
	
Vesting and Restrictions on Transfer
	
19

	 	
7.6
	
Voting Rights; Dividends and Distributions
	
19

	 	
7.7
	
Effect of Termination of Service
	
20

	 	
7.8
	
Nontransferability of Restricted Stock Award Rights
	
20

	 	 	
 

	 	 	
 

	8.	
Restricted Stock Unit Awards
	
20

	 	 	
 

	 	
8.1
	
Grant of Restricted Stock Unit Awards
	
20

	 	
8.2
	
Purchase Price
	
20

	 	
8.3
	
Vesting
	
20

	 	
8.4
	
Voting Rights, Dividend Equivalent Rights and Distributions
	
21

	 	
8.5
	
Effect of Termination of Service
	
21

	 	
8.6
	
Settlement of Restricted Stock Unit Awards
	
22

	 	
8.7
	
Nontransferability of Restricted Stock Unit Awards
	
22

	 	 	
 

	 	 	
 

	9.	
Performance Awards
	
22

	 	 	
 

	 	
9.1
	
Types of Performance Awards Authorized
	
22

	 	
9.2
	
Initial Value of Performance Shares and Performance Units
	
22

	 	
9.3
	
Establishment of Performance Period, Performance Goals and Performance Award Formula
	
23

	 	
9.4
	
Measurement of Performance Goals
	
23

	 	
9.5
	
Settlement of Performance Awards
	
25

	 	
9.6
	
Voting Rights; Dividend Equivalent Rights and Distributions
	
26

	 	
9.7
	
Effect of Termination of Service
	
27

	 	
9.8
	
Nontransferability of Performance Awards
	
27

	 	 	
 

	 	 	
 

	10.	
Cash-Based Awards and Other Stock-Based Awards
	
27

	 	 	
 

	 	
10.1
	
Grant of Cash-Based Awards
	
27

	 	
10.2
	
Grant of Other Stock-Based Awards
	
27

	 	
10.3
	
Value of Cash-Based and Other Stock-Based Awards
	
28

	 	
10.4
	
Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards
	
28

	 	
10.5
	
Voting Rights; Dividend Equivalent Rights and Distributions
	
28

	 	
10.6
	
Effect of Termination of Service
	
29

	 	
10.7
	
Nontransferability of Cash-Based Awards and Other Stock-Based Awards
	
29

	 	 	
 

	 	 	
 

	11.	
Standard Forms of Award Agreement
	
29

	 	 	
 

	 	
11.1
	
Award Agreements
	
29

	 	
11.2
	
Authority to Vary Terms
	
29

	 	 	
 

	 	 	
 

	12.	
Change in Control
	
29

 

 

ii

 

 

TABLE OF CONTENTS

(Continued)

 

	 	
12.1
	
Effect of Change in Control on Awards
	
29

	 	
12.2
	
Federal Excise Tax Under Section 4999 of the Code
	
31

	 	
12.3
	
Effect of Change in Control on Nonemployee Director Awards
	
31

	 	 	 	
 

	13.	
Compliance with Securities Law
	
31

	 	 	
 

	14.	
Compliance with Section 409A
	
32

	 	 	 
	 	
14.1
	
Awards Subject to Section 409A
	
32

	 	
14.2
	
Prohibition of Acceleration of Payments
	
32

	 	
14.3
	
No Representation Regarding Section 409A Compliance
	
32

	 	 	 	 
	 	 	 	 
	15.	
Tax Withholding
	
33

	 	 	 
	 	
15.1
	
Tax Withholding in General
	
33

	 	
15.2
	
Withholding in or Directed Sale of Shares
	
33

	 	 	 	 
	 	 	 	 
	16.	
Amendment, Suspension or Termination of Plan
	
33

	 	 	 
	17.	
Miscellaneous Provisions
	
33

	 	 	 
	 	
17.1
	
Repurchase Rights
	
33

	 	
17.2
	
Forfeiture Events
	
34

	 	
17.3
	
Provision of Information
	
34

	 	
17.4
	
Rights as Employee, Consultant or Director
	
34

	 	
17.5
	
Rights as a Stockholder
	
34

	 	
17.6
	
Delivery of Title to Shares
	
35

	 	
17.7
	
Fractional Shares
	
35

	 	
17.8
	
Retirement and Welfare Plans
	
35

	 	
17.9
	
Beneficiary Designation
	
35

	 	
17.10
	
Severability
	
35

	 	
17.11
	
No Constraint on Corporate Action
	
35

	 	
17.12
	
Unfunded Obligation
	
36

	 	
17.13
	
Choice of Law
	
36

 

 

iiiExhibit

Exhibit 10.5

PURCHASE AND SALE AGREEMENT

SELLER:

RELP TAMPA, LLC, a Delaware limited liability company

PURCHASER:

VEREIT ID RUSKIN FL, LLC, a Delaware limited liability company

PROPERTY:

Approximately 79.529 acres located in the 
South Shore Corporate Park
In the City of Ruskin, Hillsborough County, Florida

February 18, 2016

PURCHASE AND SALE AGREEMENT
Ruskin [Tampa], Florida

TABLE OF CONTENTS

	
			
	1.
	The Property
	2

	1.1
	Description
	2

	1.2
	As-Is Purchase
	2

	1.3
	Agreement to Convey
	4

	2.
	Price and Payment
	4

	2.1
	Purchase Price
	4

	2.2
	Earnest Money and Independent Consideration
	4

	2.3
	Closing
	4

	3.
	Inspections and Approvals
	4

	3.1
	Inspections
	4

	3.2
	Title and Survey
	6

	3.3
	Contracts
	7

	3.4
	Permitted Encumbrances
	8

	3.5
	Miscellaneous Property Information
	8

	3.6
	Purchaser's Right to Terminate
	8

	3.7
	Tenant Estoppel
	9

	4.
	Prior to Closing
	9

	4.1
	Insurance
	9

	4.2
	Operation
	9

	4.3
	New Contracts
	9

	4.4
	New Leases; Consents
	10

	4.5
	Covenants.
	10

	5.
	Representations and Warranties
	11

	5.1
	By Seller
	11

	5.2
	By Purchaser
	15

	5.3
	Broker
	16

	6.
	Costs and Prorations
	17

	6.1
	Seller's Costs
	17

	6.2
	Purchaser's Costs
	17

	6.3
	Prorations
	18

	6.4
	Taxes
	18

	6.5
	In General
	18

	6.6
	Purpose and Intent
	19

	7.
	Damage, Destruction or Condemnation
	19

	7.1
	Material Event
	19

	7.2
	Immaterial Event
	19

	7.3
	Termination and Return of Deposit
	19

	8.
	Notices
	19

	9.
	Closing and Escrow
	20

	9.1
	Conditions Precedent to Closing
	20

i
PURCHASE AND SALE AGREEMENT
Ruskin [Tampa], Florida

	
			
	9.2
	Escrow Instructions
	21

	9.3
	Seller's Deliveries
	21

	9.4
	Purchaser's Deliveries
	22

	9.5
	Insurance
	22

	9.6
	Possession
	22

	9.7
	Post-Closing Collections
	22

	10.
	Default; Failure of Condition
	22

	10.1
	PURCHASER DEFAULT
	22

	10.2
	SELLER DEFAULT
	22

	10.3
	Failure of Title Condition
	22

	10.4
	Limited Liability
	23

	10.5
	Waiver of Trial by Jury
	23

	11.
	Miscellaneous
	23

	11.1
	Entire Agreement
	23

	11.2
	Severability
	23

	11.3
	Applicable Law
	23

	11.4
	Assignability
	23

	11.5
	Successors Bound
	24

	11.6
	Breach
	24

	11.7
	No Public Disclosure
	24

	11.8
	Captions
	24

	11.9
	Attorneys' Fees
	24

	11.10
	No Partnership
	24

	11.11
	Time of Essence
	24

	11.11
	Counterparts
	24

	11.13
	Proper Execution
	25

	11.14
	Right of First Offer; Right of First Refusal
	25

	11.15
	Tax Protest
	25

	11.16
	Intentionally deleted
	25

	11.17
	Effective Date Conditioned Upon Deposit
	26

	11.18
	Time to Execute and Deliver
	26

	11.19
	Term Sheet
	26

	11.20
	1031 Exchange
	26

	11.21
	Calculation of Time Periods
	26

	11.22
	No Recording
	26

	11.23
	No Electronic Transactions
	26

	11.24
	Guaranty
	26

ii
PURCHASE AND SALE AGREEMENT
Ruskin [Tampa], Florida

LIST OF EXHIBITS

	
		
	Exhibit 1.1.1
	Legal Description

	Exhibit 1.1.3
	List of Personal Property as of the Effective Date

	Exhibit 1.1.6
	List of Contracts as of the Effective Date

	Exhibit 3.5
	Miscellaneous Property Information

	Exhibit 3.7
	Form of Tenant Estoppel Certificate

	Exhibit 5.1.1.3
	Seller's Disclosure Statement

	Exhibit 9.3.1
	Form of Deed

	Exhibit 9.3.2
	Form of Bill of Sale

	Exhibit 9.3.3
	Form of Assignment and Assumption of Leases

	Exhibit 9.3.4
	Form of Assignment and Assumption of Contracts

	Exhibit 9.3.5
	Form of Assignment of Warranties and Guarantees

	Exhibit 9.3.6
	Form of FIRPTA Affidavit

	Exhibit 9.3.7
	Form of Incumbency Certificate

	Exhibit 9.3.8
	Form of Tenant Notice Letter

	 
	 

	 
	 

LIST OF EXHIBITS
PURCHASE AND SALE AGREEMENT
Ruskin [Tampa], Florida

TERM SHEET*

	
			
	SELLER:

	 
	RELP TAMPA, LLC, a Delaware limited liability company

	NOTICE ADDRESS:
	Section 8
	c/o USAA Real Estate Company
9830 Colonnade Boulevard, Suite 600
San Antonio, Texas  78230-2239
Attention:  Jason Koehne 
Telephone:    (210) 641-8459
Facsimile:    (210) 641-8425
E-mail:  jason.koehne@usrealco.com
 
With a copies to:

USAA Real Estate Company
9830 Colonnade Boulevard, Suite 600
San Antonio, Texas  78230-2239
Attention:  Toni Fisher
Telephone:    (210) 641-8465
Facsimile:     (210) 641-8425
E-mail:  toni.fisher@usrealco.com

And

Golden Steves Cohen & Gordon LLP
300 Convent Street, Suite 2600
San Antonio, Texas 78205
Attention:  Andrew S. Cohen
Telephone:   (210) 745-3745
Facsimile:    (210) 745-3737
E-Mail: acohen@goldensteves.com

	PURCHASER:

	 
	VEREIT ID Ruskin FL

	NOTICE ADDRESS:
	Section 8
	c/o VEREIT, Inc.
2325 E. Camelback Road, Suite 1100
Phoenix, Arizona 85016
Attn:  Daniel T. Haug, Esq.
Telephone:    (602) 778-6170
Facsimile:     (480) 449-7012
E-mail:  dhaug@vereit.com

	 
	 
	With a copy to:

Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia  30326
Attn:  Marc R. Bulson, Esq.
Telephone:   (404) 504-7783
Facsimile:    (404) 365-9532
E-mail: mbulson@mmmlaw.com

TERM SHEET
PURCHASE AND SALE AGREEMENT
Ruskin [Tampa], Florida

	
			
	PROPERTY:

	Section 1.1
	Approximately 79.529 acres located in the South Shore Corporate Park, in the City of Ruskin, Hillsborough County, Florida

	PURCHASE PRICE:

	Section 2.1
	$103,600,000.00

	EARNEST MONEY:

	Section 2.2.1
	Initial Deposit of $2,000,000.00 to be made within three (3) business days following the Effective Date. Additional Deposit of $2,000,000.00 to be made in two (2) installments of $1,000,000.00 each as more fully provided in Section 2.2.1.

	VOID DATE:

	Section 11.18
	February 19, 2016

	TITLE COMPANY/ESCROW AGENT:

	Section 2.2.2
	Commonwealth Title of Dallas, Inc.
2651 N. Harwood Street, Suite 260 
Dallas, TX  75201
Attention: Bev Griesse
Phone: (214) 855-8436 
Facsimile: (214) 754-9066 
E-mail: bgriesse@cltlt.com

	APPROVAL DATE:

	Section 3.6
	February 19, 2016 

	CLOSING DATE:

	Section 2.3
	June 28, 2016

	BROKER:

	Section 5.3
	Cushman & Wakefield

*To the extent of any conflict between the terms and provisions of this Term Sheet and the Purchase and Sale Agreement, the terms and provisions of the Purchase and Sale Agreement shall govern and control.

TERM SHEET
PURCHASE AND SALE AGREEMENT
Ruskin [Tampa], Florida

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), is made as of the 18th day of February, 2016 (the “Effective Date”), by and between RELP TAMPA, LLC, a Delaware limited liability company (“Seller”), with an office c/o USAA Real Estate Company at 9830 Colonnade Boulevard, Suite 600, San Antonio, Texas 78230-2239, and VEREIT ID RUSKIN FL, LLC, a Delaware limited liability company (“Purchaser”), with an office c/o VERIET, Inc. at 2325 E. Camelback Road, Suite 1100, Phoenix, Arizona 85016. 

R E C I T A L S:

Seller desires to sell Seller’s interest in and to that certain improved real property containing approximately 79.529 acres located in the South Shore Corporate Park, in the City of Ruskin, Hillsborough County, Florida, and legally described on Exhibit 1.1.1 attached hereto (the “Land”), along with certain related improvements and personal and intangible property, and Purchaser desires to purchase Seller’s interest in and to such real, personal and intangible property.

NOW, THEREFORE, in consideration of the foregoing, of the covenants, promises and undertakings set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

PURCHASE AND SALE AGREEMENT    PAGE 1
Ruskin [Tampa], Florida

1.    The Property.

1.1    Description.  Subject to the terms and conditions of this Agreement, and for the consideration herein set forth, Seller agrees to sell and transfer, and Purchaser agrees to purchase and acquire, all of Seller's right, title, and interest in and to the following (collectively, the “Property”):

1.1.1    The Land; 

1.1.2    The buildings, parking areas, improvements, and fixtures now situated on the Land (the “Improvements”), together with all easements, hereditaments, and appurtenances belonging to or inuring to the benefit of Seller and pertaining to the Land, if any (Seller's interest in and to the Land and the Improvements is referred to collectively as the “Real Property”);

1.1.3    All personal property, machinery, apparatus, and equipment currently situated on the Land and used in the operation, repair and maintenance of the Real Property and situated thereon (collectively, the “Personal Property”), such Personal Property being more particularly described on Exhibit 1.1.3 attached hereto.  The Personal Property to be conveyed is subject to depletions, replacements and additions in the ordinary course of business;

1.1.4    [Intentionally Deleted];

1.1.5    That certain Lease Agreement dated October 9, 2013 by and between Seller, as landlord and Amazon.com.dedc, LLC, a Delaware limited liability company, as tenant (“Tenant”), and all guaranties thereof (the “Tenant Lease”), a copy of which lease has been provided to Purchaser, and any new leases entered into pursuant to Section 4.4, which as of the Closing (as hereinafter defined) affect all or any portion of the Real Property, and all guaranties thereof (together with the Tenant Lease, the “Leases”), and any unforfeited security deposits actually held by Seller with respect to any such Leases; 

1.1.6    Subject to Section 3.3, and to the extent assignable, all contracts and agreements relating to the operation or maintenance of the Real Property or Personal Property to which Seller is a party, the terms of which extend beyond midnight of the day preceding the date of Closing, such contracts and agreements listed on Exhibit 1.1.6 attached hereto (the “Contracts”);

1.1.7    [Intentionally Deleted];

1.1.8    Assignable warranties and guaranties issued in connection with the Improvements or Personal Property (excluding any warranties required to be assigned to Tenant under the Lease) (collectively, the “Warranties”); and

1.1.9    All transferable consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau or other entity or instrumentality solely with respect to the Real Property (collectively, the “Approvals”).

1.2    “As-Is” Purchase.  THE PROPERTY IS BEING SOLD IN AN “AS IS, WHERE IS” CONDITION AND “WITH ALL FAULTS” AS OF THE DATE OF THIS AGREEMENT AND OF CLOSING.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE OR ARE MADE AND NO 

PURCHASE AND SALE AGREEMENT    PAGE 2
Ruskin [Tampa], Florida

RESPONSIBILITY HAS BEEN OR IS ASSUMED BY SELLER OR BY ANY PARTNER, OFFICER, PERSON, FIRM, AGENT OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO (I) THE CONDITION OR STATE OF REPAIR OF THE PROPERTY; (II) THE COMPLIANCE OR NON-COMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES (INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING OR DEVELOPMENT CODES); (III) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (IV) THE CREDIT-WORTHINESS OF ANY TENANT, VENDOR OR OTHER PERSON OR ENTITY; (V) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (VI) WHETHER THE PROPERTY CONTAINS ASBESTOS OR HARMFUL OR TOXIC SUBSTANCES OR ANY OTHER HAZARDOUS MATERIALS OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME.  THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES ARE MERGED IN THIS AGREEMENT, THE EXHIBITS HERETO ANNEXED AND THE CLOSING DOCUMENTS, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT, AND THAT THIS AGREEMENT HAS BEEN ENTERED INTO AFTER FULL INVESTIGATION, OR WITH THE PARTIES SATISFIED WITH THE OPPORTUNITY AFFORDED FOR FULL INVESTIGATION, NEITHER PARTY RELYING UPON ANY STATEMENT OR REPRESENTATION BY THE OTHER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY EMBODIED IN THIS AGREEMENT, THE EXHIBITS ANNEXED HERETO AND THE CLOSING DOCUMENTS.  TO THE EXTENT THAT SELLER HAS PROVIDED TO PURCHASER ANY SURVEYS, TITLE COMMITMENTS, INSPECTION, ENGINEERING OR ENVIRONMENTAL REPORTS (INCLUDING REPORTS CONCERNING ASBESTOS OR HARMFUL OR TOXIC SUBSTANCES, OR ANY OTHER MATERIALS, INFORMATION OR DATA IN CONNECTION WITH PURCHASER'S INSPECTION OF THE PROPERTY), SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS, METHODOLOGY OF PREPARATION OR OTHERWISE CONCERNING THE CONTENTS OF SUCH REPORTS, MATERIALS, INFORMATION AND DATA.  PURCHASER ACKNOWLEDGES THAT ANY SUCH REPORTS, MATERIALS, INFORMATION AND DATA MADE AVAILABLE TO PURCHASER ARE MADE AVAILABLE AS A CONVENIENCE AND AN ACCOMMODATION ONLY, AND THAT SELLER HAS REQUESTED PURCHASER TO INSPECT FULLY THE PROPERTY AND INVESTIGATE ALL MATTERS RELEVANT THERETO AND TO RELY SOLELY UPON THE RESULTS OF PURCHASER'S OWN INSPECTIONS OR OTHER INFORMATION OBTAINED OR OTHERWISE AVAILABLE TO PURCHASER, RATHER THAN ANY INFORMATION THAT MAY HAVE BEEN PROVIDED (OR HAVE BEEN MADE AVAILABLE FOR DOWNLOAD ELECTRONICALLY) BY SELLER TO PURCHASER.

EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES SET FORTH IN SUBSECTION 5.1.1 THROUGH 5.1.3, PURCHASER WAIVES AND RELEASES SELLER FROM ANY PRESENT OR FUTURE CLAIMS ARISING FROM OR RELATING TO THE CONDITION, OPERATION OR ECONOMIC PERFORMANCE OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OR ALLEGED PRESENCE OF ASBESTOS OR HARMFUL OR TOXIC SUBSTANCES OR ANY OTHER HAZARDOUS MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY CLAIMS UNDER OR ON ACCOUNT OF (I) THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS THE SAME MAY HAVE BEEN OR MAY BE AMENDED FROM 

PURCHASE AND SALE AGREEMENT    PAGE 3
Ruskin [Tampa], Florida

TIME TO TIME, AND SIMILAR STATE STATUTES, AND ANY REGULATIONS PROMULGATED THEREUNDER; (II) ANY OTHER FEDERAL, STATE OR LOCAL LAW, ORDINANCE, RULE OR REGULATION, NOW OR HEREAFTER IN EFFECT, THAT DEALS WITH OR OTHERWISE IN ANY MANNER RELATES TO, ENVIRONMENTAL MATTERS OF ANY KIND; OR (III) THE COMMON LAW.  

THE TERMS AND PROVISIONS OF THIS SECTION SHALL SURVIVE CLOSING HEREUNDER.
	
					
	/s/ TW
	 
	 
	/s/ JP
	 

	Purchaser's Initials
	 
	 
	Seller's Initials
	 

1.3    Agreement to Convey.  Subject to the terms and conditions of this Agreement, Seller agrees to assign, convey and transfer, and Purchaser agrees to accept title to the Real Property by limited warranty deed, subject only to the Permitted Encumbrances as described in Section 3.4, and title to the Personal Property, by bill of sale, without warranty as to the title or the condition of such personalty, and Seller agrees to assign, and Purchaser agrees to accept, an assignment of Seller’s interest in the Leases pursuant to assignment and assumption of leases and assignment of Seller’s interest in the Contracts pursuant to an assignment and assumption of contracts, and an assignment of Seller’s interest in the Warranties and Approvals pursuant to assignment of warranties and approvals, all as more particularly set forth herein.

2.    Price and Payment.

2.1    Purchase Price.  The total purchase price (the “Purchase Price”) to be paid by Purchaser to Seller for the sale and conveyance of Seller’s interest in the Property shall be payable in full in cash at the Closing, and subject to prorations as herein set forth, is One Hundred Three Million Six Hundred Thousand and NO/100 Dollars ($103,600,000.00).  All references in this Agreement to dollars means United States Dollars.

2.2    Earnest Money and Independent Consideration.  

2.2.1    Within three (3) business days after the Effective Date of this Agreement, Purchaser shall deposit earnest money with the Title Company/Escrow Agent (as hereinafter defined) in the amount of TWO MILLION AND NO /100 DOLLARS ($2,000,000.00) (the “Initial Deposit”).  In the event that Purchaser does not exercise its right to terminate this Agreement pursuant to Section 3.6 hereof on or before the Approval Date, then Purchaser shall,  on April 30, 2016 and May 30, 2016, deposit with the Title Company/Escrow Agent additional earnest money deposits, each in the amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) (collectively, the “Additional Deposit”).  The Initial Deposit and the Additional Deposit are sometimes collectively referred to herein as the “Deposit.”  Upon delivery of the Deposit to the Title Company/Escrow Agent, the Deposit shall be non‐refundable (except as otherwise specified herein).  The Deposit shall be in good funds, either by cashier’s check or by federal wire transfer and shall be delivered to and held by the Title Company/Escrow Agent pursuant to the terms, covenants and conditions of this Agreement.  If Purchaser fails to make the Deposit as and when required herewith, Seller may terminate this Agreement by written notice to Purchaser, in which case the parties shall have no further obligation to each other except for any provisions that expressly survive the termination of this Agreement.

2.2.2    The Deposit will be placed with and held in escrow by Commonwealth Title of Dallas, Inc., 2651 N. Harwood Street, Suite 260, Dallas, TX  75201, Attention: Bev Griesse, Phone: (214) 855-8436, Facsimile: (214) 754-9066, E-mail: bgriesse@cltlt.com (the “Title Company/Escrow Agent”), in immediately available funds in an interest bearing account at a mutually acceptable banking institution.  Any interest earned by the Deposit shall be considered as part of the Deposit.  Except as otherwise provided in this Agreement, the Deposit will be applied to the Purchase Price at Closing.

2.2.3    Upon deposit of the Initial Deposit, Purchaser will be deemed to have irrevocably paid to Seller a portion thereof equal to ONE HUNDRED AND NO/100 DOLLARS ($100.00) (“Independent Contract Consideration”), which amount Seller and Purchaser bargained for and agreed to as consideration for Seller's execution and delivery of this Agreement.  The Independent Contract Consideration is non-refundable from and after said date of delivery, and Seller shall retain the Independent Contract Consideration notwithstanding any other provision of this Agreement to the contrary and all references to a return of the Deposit to Purchaser shall exclude the Independent Contract Consideration.

2.3    Closing.  Payment of the Purchase Price and the closing hereunder (the "Closing") shall be subject to the satisfaction of the conditions precedent set forth in Section 9.1 and shall take place pursuant to an escrow closing on or before June 28, 2016, as may be extended pursuant to the terms of this Agreement (the "Closing Date"), at the offices of the Title Company at a time to be mutually agreed upon by the parties or at such other time and place as may be agreed upon in writing by Seller and Purchaser.

3.    Inspections and Approvals.

3.1    Inspections.

3.1.1    During the term of this Agreement, Seller shall allow Purchaser and Purchaser's engineers, architects, employees, agents and representatives, upon not less than one (1) business days’ notice, reasonable access during normal business hours to the Real Property.  Such access shall be solely for the purposes of (i) reviewing the Leases and any records relating thereto; (ii) reviewing records relating to operating expenses; and (iii) inspecting the physical condition of the Property and conducting non-intrusive physical and environmental tests and inspections of the Real Property.  Notwithstanding anything to the contrary herein, Seller shall not be required to provide, copy or make available to Purchaser any internal memoranda, appraisals, valuation reports and similar information, or any information covered by the attorney-client privilege.  PURCHASER SHALL NOT CONDUCT OR ALLOW ANY PHYSICALLY INTRUSIVE TESTING OF, ON OR UNDER THE REAL PROPERTY WITHOUT FIRST OBTAINING SELLER'S WRITTEN CONSENT AS TO THE TIMING AND SCOPE OF WORK TO BE PERFORMED, WHICH CONSENT MAY BE WITHHELD IN SELLER’S SOLE AND ABSOLUTE DISCRETION.  Notwithstanding anything contained herein to the contrary, all access by Purchaser, Purchaser’s engineers, architects, employees, agents and representatives, shall be subject to and in accordance with access rights afforded to the landlord pursuant to the terms of the Tenant Lease.

3.1.2    Purchaser agrees that, in making any inspections of, or conducting any testing of, on or under, the Property, Purchaser and all representatives of Purchaser entering onto the Property shall each carry (a) not less than $1,000,000 commercial general liability insurance and (b) excess or umbrella liability insurance with limits of not less than $2,000,000, insuring all activity and conduct of Purchaser and such representatives while exercising such right of access.  Purchaser 

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represents and warrants that it carries not less than the coverage set forth in paragraphs (a) and (b) of this Section 3.1.2 with contractual liability endorsement which insures Purchaser's indemnity obligations hereunder, and, upon request of Seller, will provide Seller with written evidence of same.

3.1.3    Purchaser agrees that in exercising its right of access hereunder, Purchaser will use (and cause its representatives to use) its best efforts not to interfere with the activity of tenants or any persons occupying or providing service at the Real Property.  Purchaser shall give Seller reasonable prior notice of its intention to conduct any inspections or tests, so that Seller shall have a reasonable opportunity to have a representative present during any such inspection or test, and Seller expressly reserves the right to have such a representative present.  Failure of Seller to respond within three (3) business days of such notice shall be deemed approval by the Seller of such inspections or tests; provided, Seller’s failure to respond shall not be deemed approval of any physically intrusive testing which shall be governed in all respects by the terms of Section 3.1.1 above. Purchaser agrees to cooperate with any reasonable request by Seller in connection with the timing of any such inspection or test.  Purchaser agrees (which agreement shall survive ninety (90) days after either Closing or the termination of this Agreement, as applicable) to provide Seller with a copy of any written inspection or test report or summary upon Seller's request therefor, provided Seller pays Purchaser 50% of the costs of such inspections or reports.

3.1.4    Unless Seller specifically and expressly otherwise agrees in writing, Purchaser agrees that (a) the results of all inspections, tests, analyses, studies and similar reports relating to the Property prepared by or for Purchaser utilizing any information acquired in whole or in part through the exercise of Purchaser's inspection rights; and (b) all information regarding the Property of whatsoever nature made available to Purchaser by Seller or Seller's agents or representatives (the “Proprietary Information”) is confidential and shall not be disclosed to any other person except those assisting Purchaser with the transaction, or Purchaser's lender, if any, and then only upon Purchaser making such person aware of the confidentiality restriction and procuring such person's agreement to be bound thereby and by the terms of the Existing Confidentiality Agreement (as defined below).  Notwithstanding anything herein to the contrary, Seller shall have the right to redact and/or keep confidential information related to the Property which is proprietary and/or confidential to Seller’s general development program, as opposed to the specific development of this Property.  Purchaser agrees not to use or allow to be used any such information for any purpose other than to determine whether to proceed with the contemplated purchase, or if same is consummated, in connection with the operation of the Property post-Closing.  Further, if the purchase and sale contemplated hereby fails to close for any reason whatsoever, Purchaser agrees to return to Seller, or cause to be returned to Seller, all Proprietary Information. Notwithstanding any other term of this Agreement, the provisions of this Section 3.1.4 shall expire upon the earlier of (i) Closing or (ii) 365 days after the termination of this Agreement.  Notwithstanding the foregoing, but subject to the Existing Confidentiality Agreement, the confidentiality provisions of this Section 3.1.4 shall not apply to any disclosures made by Purchaser as required by law, by court order, or in connection with any subpoena served upon Purchaser, provided that Purchaser provides Seller with prompt written notice of any such requirement or subpoena (other than where prohibited by law) so that Seller may, in its sole discretion, seek a protective order or other appropriate remedy.  Further, the confidentiality obligations of this Section 3.1.4 shall be inoperative as to any portions of the Proprietary Information which is or becomes generally available to the public other than as a result of a disclosure by Purchaser or its representatives in breach of this Agreement. The obligations under this Section 3.1.4 and Section 11.7 hereof are in addition to and not in lieu of the confidentiality obligations contained in that certain Nondisclosure Agreement dated as of September 9, 2015 executed by Purchaser for the benefit of Tenant (the “Existing Confidentiality Agreement”) and the execution of this Agreement 

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shall not supersede or diminish Purchaser’s obligations thereunder and Purchaser acknowledges that the Existing Confidentiality Agreement binds Purchaser and shall continue to bind Purchaser in accordance with its terms notwithstanding the expiration of Purchaser’s obligations under this Section 3.1.4. 

3.1.5    Purchaser shall, at its sole cost and expense, promptly restore any physical damage or alteration of the physical condition of the Property which results from any inspections or testing conducted by or on behalf of Purchaser which obligation shall survive Closing or the termination of this Agreement for a period of twelve (12) months.  All inspections and testing shall be conducted at Purchaser's sole cost and expense and in strict accordance with all requirements of applicable law.

3.1.6    Except as expressly set forth in this Agreement, Seller makes no representations or warranties as to the truth, accuracy or completeness of any materials, data or other information supplied to Purchaser in connection with Purchaser's inspection of the Property (e.g., that such materials are complete, accurate or the final version thereof, or that such materials are all of such materials as are in Seller's possession).  It is the parties' express understanding and agreement that such materials are provided only for Purchaser's convenience in making its own examination and determination prior to the Approval Date as to whether it wishes to purchase the Property, and, in doing so, Purchaser shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller.  Except as expressly set forth in this Agreement, Purchaser expressly disclaims any intent to rely on any such materials provided to it by Seller in connection with its inspection and agrees that it shall rely solely on its own independently developed or verified information.

3.1.7    PURCHASER AGREES (WHICH AGREEMENT SHALL SURVIVE CLOSING OR TERMINATION OF THIS AGREEMENT) TO INDEMNIFY, DEFEND, AND HOLD SELLER FREE AND HARMLESS FROM ANY LOSS, INJURY, DAMAGE, CLAIM, LIEN, COST OR EXPENSE, INCLUDING ATTORNEYS' FEES AND COSTS, ARISING OUT OF PURCHASER'S AND PURCHASER’S REPRESENTATIVES’ ACTIVITIES ON THE PROPERTY IN CONNECTION WITH THEIR INSPECTIONS AND TESTING AND ARISING OUT OF A BREACH OF THE FOREGOING AGREEMENTS BY PURCHASER IN CONNECTION WITH THE INSPECTION AND TESTING OF THE PROPERTY.  THE TERMS AND PROVISIONS OF THIS SECTION 3.1 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT OR CLOSING HEREUNDER.

3.2    Title and Survey.  Seller has delivered to Purchaser an ALTA/ASCM Land Title Survey of the Land (the “Survey”) prepared by Stantec and a title commitment (the “Title Commitment”) issued by the Title Company/Escrow Agent, as Agent for Commonwealth Land Title Insurance Company (“Title Insurer”), for a standard ALTA form of Owner's Title Insurance Policy with respect to Seller's interest in the Real Property, together with copies of all documents and instruments referred to as exceptions to title in the Title Commitment.  Purchaser shall have until the date three (3) business days prior to the Approval Date to provide written notice to Seller of any matters shown by the Title Commitment or Survey which are not satisfactory to Purchaser, which notice (the “Title Notice”) must specify the reason such matter(s) are not satisfactory and the curative steps necessary to remove the basis for Purchaser's disapproval.  Seller shall have two (2) business days to elect to cure or not to cure any title objections to the satisfaction of the Purchaser.  If Seller elects not to cure such objections, Purchaser may terminate this Agreement in its sole discretion and the Title Company shall refund the Deposit to Purchaser.  If the Seller elects to cure such title objections to the satisfaction of the Purchaser, then the parties shall then have until the Approval Date to make such arrangements or take such steps as they shall mutually agree to satisfy Purchaser's objection(s); provided, 

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however, except as otherwise provided herein, Seller shall have no obligation whatsoever to expend or agree to expend any funds, to undertake or agree to undertake any obligations or otherwise to cure or agree to cure any title or survey objections, and Seller shall not be deemed to have any obligation to cure unless Seller expressly undertakes such an obligation by a written notice to or written agreement with Purchaser given or entered into on or prior to the Approval Date and which recites that it is in response to a Title Notice.  Notwithstanding the foregoing, all exceptions to title shown on the Title Commitment or otherwise arising prior to the Closing which evidence (i) mortgages or deeds of trust created, consented to or affirmatively permitted by Seller encumbering Seller’s fee interest in the Real Property; (ii) judgment liens evidencing non-appealable judgments rendered against Seller and encumbering Seller’s fee interest in the Property; or (iii) mechanic’s or materialmen’s liens encumbering Seller’s fee interest in the Property and arising from any work performed or materials furnished for or on behalf of Seller (items i, ii, and iii above collectively referred to as “Lien Exceptions”), shall, in each instance, be deemed objected to without any notice by Purchaser and cured by Seller (which, in the case of a mechanic’s or materialmen’s lien shall include, at Seller’s option, bonding around or insuring-over the mechanic’s or materialmen’s lien) at or prior to Closing. Except as otherwise provided with respect to Lien Exceptions, Purchaser's sole right with respect to any Title Commitment or Survey matter to which it objects in a Title Notice given in a timely manner shall be to elect on or before the Approval Date to terminate this Agreement pursuant to Section 3.6 hereof.  All matters shown on the Title Commitment and/or Survey with respect to which Purchaser fails to give a Title Notice on or before the last date for so doing, or with respect to which a timely Title Notice is given but Seller fails to undertake an express obligation to cure as provided above, shall be deemed to be approved by Purchaser and “Permitted Encumbrances” as provided in Section 3.4 hereof, subject, however, to Purchaser's termination right provided in Section 3.6 hereof.

Purchaser shall have the right to cause a new survey of the Property to be prepared and certified to Purchaser, Seller and the Title Company prior to the Closing (an “Updated Survey”). If, prior to Closing, the Updated Survey reflects, Seller discloses to Purchaser or Purchaser discovers pursuant to an updated title commitment (an “Updated Title Commitment”) or otherwise discovers that title to the Property is subject to defects, limitations or encumbrances other than (i) the Permitted Encumbrances; or (ii) any matter caused by Purchaser or any person or entity claiming by, through or under Purchaser; then Purchaser shall promptly give Seller written notice of its objection thereto.  Such written notice shall additionally notify Seller that the Agreement may be terminated if such title defect is not removed, bonded or insured-over in a commercially reasonable manner prior to the Closing Date. In such event, Seller may elect to postpone the Closing for thirty (30) days and attempt to cure such objection. If Purchaser fails to waive any such objection within ten (10) days after notice from Seller that Seller is unable to or elects not cure the objection, this Agreement will terminate automatically and the Title Company will return the Deposit to Purchaser, provided that Purchaser and Seller shall not be in default hereunder, and neither party shall have any liability to the other except for the surviving obligations of Purchaser and Seller set forth in this Agreement.  For the purposes of this Agreement, any title defect, limitation or encumbrance, other than those enumerated in (i) – (ii) above, shall be deemed cured if the Title Company or another title company reasonably acceptable to Purchaser and authorized to do business in the State in which the Property is located will agree to issue a standard ALTA form of owner's title insurance policy to Purchaser for the Purchase Price, which policy takes no exception for such defect, limitation or encumbrance and is issued for no additional premium or for an additional premium if Seller agrees to pay such additional premium upon Closing.

3.3    Contracts.  On or before the Approval Date, Purchaser shall notify Seller in writing if Purchaser elects not to assume at Closing any of the Contracts.  If Purchaser does not notify Seller prior to the Approval Date, it shall be conclusively presumed that Purchaser rejects all of the Contracts.  If Purchaser exercises its right not to assume one or more Contracts at Closing, Seller shall give notice of termination of such disapproved Contract(s) and make payment of any termination charges.  Notwithstanding the foregoing, 

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Purchaser shall have no right to terminate any Contracts which are identified on Exhibit 1.1.6 attached hereto and Purchaser shall be required to assume the same at Closing.  Provided, further, that the Development Agreement (as defined in the Tenant Lease) (the “Development Agreement”) shall not constitute a Contract for purposes of this Agreement.

3.4    Permitted Encumbrances.  Unless Purchaser terminates this Agreement pursuant to Section 3.6 hereof following its opportunity fully to inspect the Property, the state of title thereto and all other matters relating to the Property, including its feasibility for Purchaser's intended use and its suitability as an investment, Purchaser shall be deemed to have approved and to have agreed to purchase the Property subject to the following:

3.4.1    All exceptions to title shown in the Title Commitment or Updated Title Commitment or matters shown on the Survey and Updated Survey which Purchaser has approved or is deemed to have approved pursuant to Section 3.2 hereof;

3.4.2    All Contracts and Leases which Purchaser has approved pursuant to Sections 3.3, 4.3 and 4.4 hereof;

3.4.3    The lien of non-delinquent real and personal property taxes and assessments;

3.4.4    Rights of parties in possession permitted under the Tenant Lease;

3.4.5    Any state of facts which the Survey or an inspection of the premises would disclose;

3.4.6    Easements or claims of easements shown by the public records;

3.4.7    Any service or maintenance charges due after Closing, and subject to the proration provisions hereof, for sewer, water, electricity, telephone, cable television or gas; and

3.4.8    Rights of vendors and holders of security interests on personal property installed upon the Real Property by tenants and rights of tenants to remove trade fixtures at the expiration of the term of the Leases.

3.4.9    The Leases.

All of the foregoing are referred to herein collectively as “Permitted Encumbrances.”

3.5    Miscellaneous Property Information.  Seller has provided Purchaser with the information listed in Exhibit 3.5 (“Miscellaneous Property Information”), or otherwise made such information available to Purchaser for Purchaser's review, to the extent such information exists and is within the possession or control of Seller.

3.6    Purchaser's Right to Terminate.  Purchaser shall have the right, for any reason or no reason, by giving Seller and Title Company written notice (the “Termination Notice”) on or before 5:00 p.m. Phoenix, Arizona time on February 19, 2016 (the “Approval Date”) to terminate this Agreement.  If the Termination Notice is timely given (or deemed given as set forth below), the Title Company shall return the Deposit to Purchaser and neither party shall have any further liability hereunder except for the obligations of Purchaser and Seller surviving under this Agreement. If Purchaser elects to proceed with this Agreement, Purchaser shall give written notice to Seller on or before 5:00 p.m. Phoenix, Arizona time on the Approval Date.  If 

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Purchaser fails, for any or no reason, to timely deliver written notice to Seller that it elects to proceed with this Agreement, Purchaser will be deemed to have elected to terminate this Agreement under this Section 3.6.

Notwithstanding the fact that the Tenant Lease contains a tenant right of first refusal or right of first offer (either such right, a “ROFR”), Purchaser hereby agrees that its inspections shall commence and run through the Approval Date as set forth in this Section 3, and commencement thereof shall not be tolled pending receipt of a written waiver of such ROFR by Tenant; provided, however, that in return therefor, Seller hereby agrees that, in the event Tenant does give notice of its intent to exercise the ROFR or does actually exercise the ROFR, Seller shall promptly reimburse to Purchaser all reasonable out-of-pocket and third-party property diligence expenses incurred by Purchaser, including, without limitation, reasonable attorneys’ fees and costs, in an amount not in excess of $100,000 in the aggregate.

3.7    Tenant Estoppel.  Seller shall endeavor to secure and deliver to Purchaser, no later than two (2) business days prior to the Closing Date, an estoppel certificate from Tenant in the form of Exhibit 3.7 attached hereto (the “Tenant Estoppel”).  If the Tenant Estoppel shows defaults by the lessor or the lessee under the Tenant Lease or under the Development Agreement that are material and cannot or will not be cured by the Closing Date or illustrate any material and adverse matters that are otherwise inconsistent with the form of the Tenant Estoppel sent to Tenant (a “Material Defect”), then such delivery shall not be deemed delivery of the Tenant Estoppel.  If the Tenant Estoppel is not delivered to Purchaser (or deemed not delivered) on or before the Closing Date, then Seller or Purchaser shall have the right to extend the Closing for up to fifteen (15) days upon written notice to the other party delivered on or before 5:00 p.m. Phoenix, Arizona time on the scheduled Closing Date; provided that the Closing Date shall occur two (2) business days following delivery of the Tenant Estoppel.  If the Tenant Estoppel is not delivered to Purchaser (or deemed not delivered) at least two (2) business days prior to the Closing Date, as may be extended by the terms of the prior sentence, then Purchaser shall, as its sole and exclusive remedy, elect to either: (a) terminate this Agreement upon written notice thereof delivered to Seller at least one (1) business day prior to the Closing Date, or (b) waive such failure by Seller and close the transaction contemplated by this Agreement, with no recourse against Seller based on such failure.  If such termination notice is given (or deemed given as set forth below), the Title Company shall immediately return the Deposit to Purchaser and neither party shall have any further liability hereunder except for the obligations that expressly survive the termination of this Agreement.  If Purchaser fails to timely deliver any such termination notice, Purchaser will be deemed to have elected to terminate this Agreement pursuant to (a) above.  

4.    Prior to Closing.  Until Closing, Seller or Seller's agent shall:

4.1    Insurance.  Maintain any insurance required to be maintained by Seller, as Landlord, under the Leases.

4.2    Operation.  Maintain the Real Property as required of Seller, as Landlord under the Leases.

4.3    New Contracts.  After the Effective Date, Seller or Seller's agent shall, upon the written reasonable approval of Purchaser, enter into only those third-party contracts which are necessary to carry out its obligations under the Leases and Section 4.2 and which shall be cancelable on thirty (30) days' written notice without penalty or termination fee. If Seller enters into any such contract, it shall promptly provide a true, complete and correct copy thereof to Purchaser and unless Purchaser, within seven (7) days thereafter, notifies Seller in writing of its intention to assume such contract, it shall be treated as a contract disapproved by Purchaser under Section 3.3 hereof.

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4.4    New Leases; Consents.  

(a)    After the Approval Date, Seller will not execute any new leases or amend, terminate or accept the surrender of the Leases or waive any landlord rights or tenant obligations under the Leases or approve any subleases without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. Failure of Purchaser to consent or expressly withhold its consent within three (3) business days after receipt of such written request for such consent shall be deemed to constitute disapproval of such lease, sublease, amendment or termination or acceptance of the surrender of any of the Leases or waiver of any landlord rights or tenant obligations under any Leases.  Notwithstanding the foregoing, if Seller proposes any new leases or proposes to amend, terminate or accept the surrender of any of the Leases or waive any landlord rights or tenant obligations under any of the Leases or approve any subleases within three (3) business days prior to the Approval Date, then the parties agree that the Approval Date shall be extended three (3) additional business days with respect to this Section 4.4 only. 

(b)    Notwithstanding the foregoing, Seller shall have the right to grant consents and approvals contemplated under the Lease in response to Tenant’s requests for such consents and approvals without Purchaser’s consent, so long as such consents or approvals would not adversely affect the economics or term of the Lease or otherwise materially and adversely affect the Landlord’s rights or obligations under the Lease, but with not less than three (3) business days prior notice to Purchaser.  Any other consents or approvals required or desired under the Lease shall not be given without Purchaser’s consent, such consent not to be unreasonably withheld, delayed, conditioned or denied.  Failure of Purchaser to consent or expressly withhold its consent within three (3) business days after receipt of such written request for such consent or approval shall be deemed to constitute disapproval of such consent or approval request.  

4.5    Covenants.   Further, Seller hereby covenants to Purchaser from and after the Effective Date and until the Closing Date or earlier termination of this Agreement:

(i)    Subject to the right of first offer and/or right of refusal in favor of Tenant under the Tenant Lease, Seller will not enter into nor execute any agreement, written or oral, under which Seller is or could become obligated to sell the Property, or any portion thereof, to a third party, without Purchaser’s prior written consent;

(ii)    Seller will not, without the prior written consent of Purchaser, take any action before any governmental authority having jurisdiction thereover, the object of which would be to change the present zoning of or other land‐use limitations, upon the Property, or any portion thereof, or its potential use;

(iii)    without Purchaser’s prior written consent, Seller shall not, by voluntary or intentional act or omission to act, further cause or create any easement, encumbrance, or mechanic’s or materialmen’s liens, and/or similar liens or encumbrances to arise or to be imposed upon Seller’s interest in the Property or any portion thereof that effects title thereto; 

(iv)    Seller shall not, without the prior written consent of Purchaser, provide a copy of, nor disclose any of the terms of, this Agreement to any appraiser, and Seller shall instruct Seller’s Broker that it may not provide a copy of nor disclose any of the terms of this Agreement to any appraiser without the prior written consent of Purchaser; 

(v)    should Seller receive notice or knowledge of any information regarding any of the matters set forth in this Section, Seller will promptly notify Purchaser of the same in writing; and

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(vi)    take such actions which Seller may be allowed under the terms of the Leases and in accordance with such terms, to cause tenants to comply in all material respects with the terms, covenants and conditions of the Leases, including, but not limited to, all insurance and maintenance obligations under the Leases.

5.    Representations and Warranties.

5.1    By Seller.  

5.1.1    Seller represents and warrants to Purchaser that: 

5.1.1.1    Seller is a Delaware limited liability company duly organized, validly existing, and is authorized to do business in the State in which the Real Property is located, has duly authorized the execution and performance of this Agreement and the documents to be delivered pursuant to Section 9.3, and such execution and performance will not result in a breach of or default under any document, instrument, order or agreement to which Seller is a party or by which Seller is bound;

5.1.1.2    Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended;  and 

5.1.1.3    Except as otherwise indicated on the Disclosure Statement attached hereto as Exhibit 5.1.1.3:

(i)    Litigation.  There is no current action, suit, litigation or proceeding to which Seller is a party the outcome of which could materially adversely affect the Property pending or being prosecuted in any court or before any federal, state, county or municipal department, commission, bureau, agency or other governmental instrumentality, other than tax contests, if any, and to Seller’s knowledge no such action has been threatened in writing;

(ii)    Tenant Lease.  A true and complete copy of the Tenant Lease (and all amendments and guaranties thereto and thereof) in effect as of the Effective Date has been provided to Purchaser.  As of the Effective Date, no portion of the Property is subject to a lease to which Seller is a party other than the Tenant Lease; 

(iii)    Contracts.  Complete copies of all Contracts to which Seller is a party, in effect as of the Effective Date have been provided to Purchaser;

(iv)    Condemnation.  No condemnation proceedings have been instituted against the Real Property and Seller has not received any written notice and has no knowledge that any such proceedings or suits are contemplated; and

(v)    Proceedings.  There are no suits or claims pending or to Seller’s knowledge, threatened with respect to or in any manner affecting the Property, nor has Seller received any correspondence or other written information to indicate that there is any pending or threatened (a) violation of law, (b) environmental, zoning 

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or other land use regulation proceeding, or (c) tax levy or special assessment proceedings against the Property or any portion thereof;

(vi)    There are no unrecorded leases (other than the Tenant Lease) affecting the Property to which Seller is a party; and Seller does not have any defeasance, lender approval or prepayment obligations with respect to any existing financing which will delay the originally scheduled Closing;

(vii)    To Seller’s knowledge, no notice of violation has been issued with regard to any applicable regulation, ordinance, requirement, covenant, condition or restriction relating to the present use or occupancy of the Property by any person, authority or agency having jurisdiction;

(viii)    To Seller’s knowledge, there are no intended public improvements which will or could result in any charges being assessed against the Property which will result in a lien upon the Property;

(ix)    Seller has not entered into and, to Seller’s knowledge, there is not existing any other agreement, written or oral, under which Seller is or could become obligated to sell the Property (except under the rights of first refusal and first offer pursuant to the Tenant Lease), or any portion thereof, to a third party;

(x)    Seller has not taken any action before any governmental authority having jurisdiction thereover, the object of which would be to change the present zoning of or other land use limitations, upon the Property, or any portion thereof, or its potential use, and, to Seller’s knowledge, there are no pending proceedings, the object of which would be to change the present zoning or other land use limitations;

(xi)    To Seller’s knowledge, no default of Seller exists under the Tenant Lease; Seller has sent no written notice of default to the Tenant and, to Seller’s knowledge, no default of Tenant exists under the Tenant Lease; Seller has not received any notice or correspondence from Tenant or Tenant’s agents indicating Tenant’s desire, willingness or intent to amend, modify or terminate the Tenant Lease;

(xii)    To Seller’s knowledge, Seller has performed its obligations under the Development Agreement required to be performed as of the Effective Date; to Seller’s knowledge, no default of Seller exists under the Development Agreement; and Seller has not received any notice or correspondence from Tenant or Tenant’s agents indicating Tenant’s desire, willingness or intent to amend, modify or terminate the Development Agreement; 

(xiii)    No consent of any third party is required in order for Seller to enter into this Agreement and perform Seller’s obligations hereunder;

(xiv)    Seller has delivered or, if too extensive, made available to Purchaser for review, to the extent in existence and in Seller's possession, true and complete 

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copies of all environmental, asbestos, soil and geotechnical reports regarding the Property;

(xv)    To Seller’s knowledge, Seller has not engaged in any dealings or transactions, directly or indirectly (i) in contravention of any U.S. international or other money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. Section 1 et. seq., as amended), or any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.  Seller represents and warrants to, and covenants with Purchaser that (i) neither Seller nor, to Seller’s knowledge, any of its owners or affiliates currently are, or shall be at any time during the term hereof, in violation of any laws relating to terrorism or money laundering (collectively, the “Anti-Terrorism Laws”), including without limitation Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and regulations of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) related to Specially Designated Nationals and Blocked Persons (SDN’s) (OFAC Regulations), and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)(the “USA Patriot Act”); (ii) neither Seller nor, to Seller’s knowledge, any of its owners, affiliates, investors, officers, directors, employees, vendors, subcontractors or agents is or shall be during the term hereof a “Prohibited Person” which is defined as follows: (1) a person or entity owned or controlled by, affiliated with, or acting for or on behalf of, any person or entity that is identified as an SDN on the then-most current list published by OFAC at its official website, http://www.treas.gov/offices/cotffc/ofac/sdn/t11sdn.pdf or at any replacement website or other replacement official publication of such list, and (2) a person or entity who is identified as or affiliated with a person or entity designated as a terrorist, or associated with terrorism or money laundering pursuant to regulations promulgated in connection with the USA Patriot Act; and (iii) Seller has taken appropriate steps to understand its legal obligations under the Anti-Terrorism Laws and has implemented appropriate procedures to assure its continued compliance with such laws.  

5.1.2    Each of the representations and warranties of Seller contained in Section 5.1.1: (i) is made as of the Effective Date; (ii) will be deemed to be remade by Seller, and to be true in all material respects, as of Closing, subject to other matters expressly permitted in this Agreement or otherwise specifically approved in writing by Purchaser; and (iii) will survive for a period of twelve (12) months after the Closing (“Claims Period”).  Any claim that Purchaser may have at any time against Seller for a breach of any such representation or warranty, whether known or unknown, which is not specifically asserted by a demand notice before the expiration of the Claims Period and with respect to claims specified in a demand notice before the expiration of the Claims Period that are not resolved or made the subject of litigation instituted and served prior the expiration of three (3) months after the Claims Period, will not be valid or effective, and Seller will have no liability with respect thereto.  Additionally, any claim actually known by Purchaser on or prior to Closing shall be deemed waived by Purchaser if Purchaser does not terminate this Agreement on account thereof, but proceeds to Closing despite such breach.  Notwithstanding anything to the contrary 

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contained herein, with respect to any lawsuit filed after Closing but before the end of the Claims Period (1) in no event will Seller have any liability to Purchaser for a breach of any representation or warranty under this Agreement or any Closing documents executed pursuant hereto (the “Closing Documents”) in excess of two and one-half percent (2.5%) of the Purchase Price (“Claims Ceiling”).  The provisions of this Section 5.1.2 shall survive Closing. 

5.1.3    The continued accuracy in all material respects of the aforesaid representations and warranties is a condition precedent to Purchaser’s obligation to close.  If any of said representations and warranties is not correct in all material respects at the time the same is made or as of Closing (or at any time in between), and Seller had no knowledge of such inaccuracy when the representation or warranty was made, or when remade at Closing, or if such warranty or representation becomes inaccurate on or prior to Closing other than by reason of Seller’s action or inaction hereunder, Purchaser may, upon being notified of such occurrence on or prior to Closing and after the expiration of the cure period provided under Section 11.6 hereof, either (a) terminate this Agreement upon notice to Seller and Title Company/Escrow Agent without liability on the part of Seller or Purchaser, subject to the obligations of Seller and Purchaser that survive the termination under this Agreement, and the Deposit will be returned to Purchaser, or (b) waive such matter and proceed to Closing, by notice to Seller given within ten (10) days after the expiration of the cure period in which event Seller shall have no liability with respect to any such inaccuracy.  If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing.  If any of said representations and warranties are not correct in all material respects at the time the same is made or as of Closing, and Seller had actual knowledge of such inaccuracy when the representation or warranty was made, or, by its action or inaction caused the representation or warranty to be inaccurate when remade at Closing, Purchaser may, after the expiration of the cure period, if any, provided under Section 11.6 hereof, either (a) exercise its remedies under Section 10.2, or (b) terminate this Agreement, upon notice to Seller and Title Company/Escrow Agent, subject to the obligations of Seller and Purchaser that survive the termination under this Agreement, and receive a return of the Deposit and reimbursement by Seller of Purchaser’s out-of-pocket costs in an amount not in excess of $100,000, or (c) waive the breach and its rights under clauses (a) and (b) and proceed to Closing, by notice to Seller given within ten (10) days after expiration of the cure period, but in no event later than Closing, in which event Seller shall have no liability with respect to any such inaccuracy.  If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing.   
5.1.4    As used in this Section 5.1 and elsewhere in this Agreement, the phrase “to Seller’s knowledge” or phrases of similar import mean and are limited to the actual current  knowledge of Lange Allen, Executive Director of U.S. Industrial/Logistics Development of an affiliate of Seller, without any independent investigation or inquiry having been made, and not to any constructive or imputed knowledge of the foregoing individuals or of Seller or any investment advisor to Seller, any entity that is a partner in such investment advisor, or any affiliates of any thereof, or to any officer, agent, representative, or employee of Seller or such investment advisor, any such constituent partner, or any such affiliate.  Seller, during the term of this Agreement, agrees to notify Purchaser in writing promptly in the event Seller obtains actual knowledge of any change affecting any such representations or warranties.  Seller represents and warrants that Lange Allen is the Executive Director of U.S. Industrial/Logistics Development, having ongoing responsibility with respect to the development of the Property and this individual possesses the most comprehensive knowledge of the facts set forth in Section 5.1 of anyone in Seller’s organization.

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5.2    By Purchaser.  Purchaser represents and warrants to Seller that:

5.2.1    Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of its organization, is authorized to do business in the State in which the Real Property is located, has duly authorized the execution and performance of this Agreement, and such execution and performance will not violate any material term of its certificate of formation or company agreement; or result in a breach of or default under any document, instrument, order or agreement to which Purchaser is a party or by which Purchaser is bound;

5.2.2    Purchaser is acting as principal in this transaction with authority to close the transaction;

5.2.3    No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors, or petition seeking reorganization or arrangement or other action under federal or state bankruptcy laws is pending against or contemplated by Purchaser;

5.2.4    Unless otherwise disclosed to Seller in writing, neither Purchaser nor any affiliate of Purchaser (excluding any indirect owners of Purchaser) is other than a citizen of, or partnership, corporation or other form of legal person domesticated in, the United States of America;

5.2.5    ERISA

(a)     (i) the Property is not being acquired by or on behalf of an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or a “plan” within the meaning of Section 4975(e)(1) of the Code, which is subject to ERISA or section 4975 of the Code, respectively (hereinafter referred to collectively as the “Plan”); and (ii) the assets being used to acquire the Property or to otherwise discharge Purchaser’s obligations hereunder are not “plan assets” within the meaning of Department of Labor Regulation section 2510.3-101 as amended by Section 3(42) of ERISA; 

(b)    Purchaser and all shareholders, members, partners and investors in Purchaser are neither parties in interest, as described in section 3(14) of ERISA, nor disqualified persons, as described in section 4975(e)(2) of the Code with respect to  any Plan (other than a Plan maintained exclusively for the benefit of the employees of Purchaser or Purchaser’s affiliates), which is an investor in or related to Seller;  

(c)    The transaction described in this Agreement does not constitute a “prohibited transaction” within the meaning of either section 406 of ERISA or section 4975 of the Code, other than a transaction which is exempt from section 406 of ERISA and section 4975 of the Code by virtue of  (i) a statutory or regulatory exemption granted pursuant to section 408 of ERISA or (ii) the fact that the transaction described in this Agreement complies with all conditions for exemptive relief contained in Prohibited Transaction Exemption 84-14 granted by the U.S. Department of Labor (“PTE 84-14”);

(d)    Purchaser shall not assign its interest hereunder to any person or entity which does not expressly make this covenant and warranty for the benefit of Seller; and 

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(e)    Purchaser covenants that in the event it determines that the representations and warranties of Purchaser made in this Section 5.2.5 have ceased to be accurate in any material respect, Purchaser shall notify Seller of such determination as promptly as practicable and in any event within ten (10) days after such determination is made. 

5.2.6    Neither Purchaser, nor any affiliate of Purchaser (excluding any indirect owners of Purchaser), have engaged in any dealings or transactions, directly or indirectly (i) in contravention of any U.S. international or other money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. Section 1 et seq., as amended), or any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto., Purchaser represents and warrants to, and covenants with Seller that (i) neither Purchaser nor any affiliate of Purchaser (excluding any indirect owners of Purchaser), currently are, or shall be at any time during the term hereof, in violation of Anti-Terrorism Laws, including without limitation Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and regulations of the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) related to Specially Designated Nationals and Blocked Persons (SDN’s (OFAC Regulations), and/or the USA Patriot Act; (ii) neither Purchaser, nor any affiliate of Purchaser (excluding any indirect owners of Purchaser), is or shall be during the term hereof (1) a Prohibited Person, and (2) a person or entity who is identified as or affiliated with a person or entity designated as a terrorist, or associated with terrorism or money laundering pursuant to regulations promulgated in connection with the USA Patriot Act; and (iii) Purchaser has taken appropriate steps to understand its legal obligations under the Anti-Terrorism Laws and has implemented appropriate procedures to assure its continued compliance with such laws.  
 

5.2.7    Each of the representations and warranties of Purchaser contained in Section 5.2 above: (i) is made as of the Effective Date; (ii) will be deemed to be remade by Purchaser, and to be true in all material respects, as of Closing, subject to other matters expressly permitted in this Agreement or otherwise specifically approved in writing by Seller; and (iii) will survive only for the Claims Period.  Any claim that Seller may have at any time against Purchaser for a breach of any such representation or warranty, whether known or unknown, which is not specifically asserted by a demand notice before the expiration of the Claims Period and with respect to claims specified in a demand notice before the expiration of the Claims Period that are not resolved or made the subject of litigation instituted and served prior the expiration of three (3) months after the Seller’s Claims Period, will not be valid or effective, and Purchaser will have no liability with respect thereto.  Additionally, any claim actually known by Seller on or prior to Closing shall be deemed waived by Seller if Seller does not terminate this Agreement on account thereof, but proceeds to Closing despite such breach.  Notwithstanding anything to the contrary contained herein, with respect to any lawsuit filed after Closing but before the end of the Claims Period (1) in no event will Purchaser have any liability to Seller for a breach of any representation or warranty under this Agreement or any Closing Documents excess of the Claims Ceiling.  The provisions of this Section 5.2.7 shall survive Closing.

5.3    Broker. Seller and Purchaser each represents to the other that it has had no dealings, negotiations, or consultations with any broker, representative, employee, agent or other intermediary in connection with the Agreement or the sale of the Property except the Broker listed in the Term Sheet (“Broker”).  Seller and Purchaser agree that each will indemnify, defend and hold the other free and harmless from the claims of any broker(s), representative(s), employee(s), agent(s) or other intermediary(ies) claiming 

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to have represented Seller or Purchaser, respectively, or otherwise to be entitled to compensation in connection with this Agreement or in connection with the sale of the Property other than Broker. Broker will be compensated by Seller pursuant to the terms of a separate agreement between Seller and Broker. 

The terms and provisions of this Section 5 shall survive Closing hereunder.

6.    Costs and Prorations.

6.1    Seller's Costs.  Seller will pay the following costs of closing this transaction:

6.1.1    The fees and disbursements of Seller's counsel;  

6.1.2    The costs of releasing all liens, judgments, and other encumbrances that are to be released and of recording such releases; 

6.1.3    One half of the escrow and recording fees (other than fees for recording the Deed) and costs due Title Company for its services;

6.1.4    Transfer taxes associated with the conveyance of the Property; 

6.1.5    The cost of a standard coverage ALTA form of owner's title insurance policy, without endorsement or amendment, in the amount of the Purchase Price, issued in connection with this transaction, whether pursuant to the Title Commitment or otherwise; and

6.1.6    The cost of the Survey.

6.2    Purchaser's Costs.  Purchaser will pay the following costs of closing this transaction: 

6.2.1    The fees and disbursements of its counsel, inspecting architect and engineer, if any;

6.2.2    One half of the escrow and recording fees and costs due Title Company for its services;

6.2.3    The cost of any loan title insurance policy;

6.2.4    All sales or use taxes relating to the transfer of personal property to Purchaser and all state and local recordation taxes payable in connection with the conveyance of the Land and the Improvements (other than the transfer taxes associated with the conveyance of the Property, for which Seller is responsible as set forth in Section 6.1.4);

6.2.5    The cost of any title insurance in excess of the cost of a standard coverage ALTA form of owner's title insurance policy, without endorsement or amendment, in the amount of the Purchase Price, issued in connection with this transaction, whether pursuant to the Title Commitment or otherwise; 

6.2.6    The cost of any updates to the Survey and the cost of any Updated Survey obtained by Purchaser; 

6.2.7    The cost of recordation of the Deed and the Assignment of Lease; and

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6.2.8    Any other expense(s) incurred by Purchaser or its representative(s) in inspecting or evaluating the Property or closing this transaction.

6.3    Prorations.  Rents and any other amounts payable by tenants, and, to the extent not otherwise paid directly by the tenant under the Leases, personal property taxes, installment payments of special assessment liens, vault charges, sewer charges, utility charges and normally prorated operating expenses actually collected, billed or paid as of the date of Closing shall be prorated as of the date of Closing and be adjusted against the Purchase Price due at the Closing, provided that within sixty (60) days after the Closing, Purchaser and Seller will make a further adjustment for such rents, taxes or charges which may have accrued or been incurred prior to the date of Closing, but not collected or paid at that date.  All prorations shall be based upon the actual number of days of ownership of the Property.  

Seller shall be responsible for all leasing commissions and other leasing costs due and payable prior to the Closing Date with respect to the Tenant Lease.  Purchaser shall be responsible for all leasing commissions and other leasing costs attributable to any new leases executed on or after the Closing Date or the renewal, extension or expansion of any existing lease after the Closing Date to the extent Purchaser enters into any leasing agreement in which leasing commissions and other leasing costs are payable in connection with the renewal, extension or expansion of any existing lease after the Closing Date.  Seller represents and warrants that there are no leasing commissions or other leasing costs due and payable now or in the future under any agreement to which Seller or any of its affiliates is a party with respect to the Tenant Lease.  The terms and provisions of this section shall survive Closing hereunder for a period of one (1) year.  

6.4     Taxes. To the extent not otherwise paid directly by tenants under the Leases, general real estate taxes and special assessments relating to the Property payable during the year in which Closing occurs shall be prorated as of the Closing Date.  If Closing shall occur before the actual taxes and special assessments payable during such year are known, the apportionment of taxes shall be upon the basis of taxes for the Property payable during the immediately preceding year, provided that, if the taxes and special assessments payable during the year in which Closing occurs are thereafter determined to be more or less than the taxes payable during the preceding year (after any appeal of the assessed valuation thereof is concluded), Seller and Purchaser promptly (but in no event later than thirty (30) days after the issuance of the tax bill for the year in which Closing occurs, except in the case of an ongoing tax protest) shall adjust the proration of such taxes and special assessments, and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of such adjustment and this covenant shall not merge with the Deed delivered hereunder but shall survive the Closing.

6.5    In General.  Any other expenses, charges and fees of Closing not otherwise specifically allocated herein or incurred by a specific party, shall be borne by the parties in accordance with the general custom and practice in the State and County in which the Property is situated, as applicable, or if no such custom or practice exists they shall be borne equally between the parties. To the extent that the Leases provide for any adjustment of previously paid estimated amounts of real estate tax or operating expense reimbursements on a date subsequent to the Closing Date, Seller shall be entitled to receive, or shall be responsible to pay, as the case may be (when such amounts are actually received or payable by Purchaser), Seller’s pro rata share of any such adjusted amounts that are applicable to periods ending prior to the Closing Date.  After Closing, Seller agrees to reasonably cooperate with Purchaser in providing Purchaser access to Seller’s books and records relating to such adjustments under the Leases so that Purchaser may adequately perform such adjustments.

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6.6    Purpose and Intent.  Except as expressly provided herein, the purpose and intent as to the provisions of prorations and apportionments set forth in this Section 6 and elsewhere in this Agreement is that Seller shall bear all expenses of ownership and operation of the Property and shall receive all income therefrom accruing through 11:59 p.m. at the end of the day preceding the Closing and Purchaser shall bear all such expenses and receive all such income accruing thereafter.

7.    Damage, Destruction or Condemnation.

7.1    Material Event.  If, prior to Closing, any portion of the Property is destroyed or taken under power of eminent domain which event (i) gives Tenant the right to terminate the Tenant Lease or abate rent under the Tenant Lease temporarily or permanently, (ii) results in proceeds from condemnation awards or casualty insurance policies that are insufficient to rebuild the improvements on the Property in the manner which the improvements existed prior to such taking or casualty or (iii) result in a loss in excess of ten percent (10%) of parking at the Property and which would not cause the Property to violate the existing zoning, any matters of record or any parking requirement under any Tenant Leases, Purchaser may elect to terminate this Agreement by giving written notice of its election to Seller within ten (10) days after receiving notice from Seller of such destruction or taking.  If Purchaser does not give such written notice within such ten (10) day period, this transaction shall be consummated on the date and at the Purchase Price provided for in Section 2, and Seller will assign to Purchaser (i) the insurance proceeds of any insurance policy(ies) payable to Seller and pay to Purchaser the amount of any deductible under Seller’s insurance policy, if any, or (ii) Seller’s portion of any condemnation award.

7.2    Immaterial Event.  Except upon the occurrence of a material event as set forth in Section 7.1 above, Purchaser shall close this transaction on the date and at the Purchase Price agreed upon in Section 2, and Seller will assign to Purchaser (i) the insurance proceeds of any insurance policies payable to Seller (with the exception of rent loss insurance applicable to periods prior to Closing) and pay to Purchaser the amount of any deductible under Seller’s insurance policy, if any, or (ii) Seller’s portion of any condemnation award.

7.3    Termination and Return of Deposit.  If Purchaser elects to terminate this Agreement pursuant to this Section 7, and if Purchaser is not, on the date of such election, in default under this Agreement, Seller shall promptly direct the Title Company/Escrow Agent to return the Deposit to Purchaser, and neither party shall have any further liability hereunder except for the obligations of Purchaser that survive the termination of this Agreement.

8.    Notices.

All notices or other communications hereunder shall be in writing and shall be deemed duly given if addressed and delivered to the respective parties' addresses, as set forth in the Term Sheet: (i) in person; (ii) by Federal Express or similar overnight carrier service; (iii) mailed by certified or registered mail, return receipt requested, postage prepaid; or (iv) sent by facsimile with electronic confirmation of receipt thereof and with concurrent notice given by another method permitted hereunder.  Such notices shall be deemed received upon the earlier of receipt or, if mailed by certified or registered mail, three (3) days after such mailing or, upon delivery if sent via facsimile on or before 5:30 p.m. Phoenix, Arizona time on a business day or, if delivered after that time or on a day other than a business day, on the following business day.  Seller and Purchaser may from time to time by written notice to the other designate another address for receipt of future notices.

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Telephone numbers are for informational purposes only.  Effective notice will be deemed given only as provided above.

9.    Closing and Escrow.

9.1    Conditions Precedent to Closing    .

9.1.1    Purchaser's Conditions to Closing.  The obligation of Purchaser to purchase the Property from Seller, and to perform the obligations required to be performed by Purchaser at the Closing, are subject to each of the following conditions:

(i)    Closing Documents.  Seller shall have tendered at Closing (or prior to Closing as applicable) all Closing Documents set forth in Section 9.3 to which Seller is a party.

(ii)    Compliance with Agreement.  Seller shall have performed and complied in all material respects with its covenants and obligations under this Agreement such that any default or failure of performance of Seller as to which Purchaser has delivered written notice to Seller shall be cured in all material respects prior to or at Closing.

(iii)    Title Policy.  The Title Company shall be committed to issue the title policy in accordance with Section 3.2.

(iv)     Board Memberships. Seller shall have obtained approval of the appointment of a representative of Purchaser to and shall have provided the resignation of Seller’s representative from the board of directors or board of supervisors, as applicable, of the South Shore Corporate Park Owner’s Association, Inc. and the South Shore Corporate Industrial Community Development District effective as of Closing. 

(v)    Consent to Assignment of ROFR. Seller shall have obtained the consent of South Shore Corporate Park LLC, a Minnesota limited liability company, to Seller’s assignment of Closing of that certain right of first refusal more particularly described in Memorandum of Right of First Refusal dated October 9, 2013 by and between South Shore Corporate Park LLC and Seller and paragraph 17(n) of that certain Real Estate Contract of Sale (Unimproved Property) dated effective October 9, 2013.

9.1.2    Seller's Conditions to Closing.  The obligation of Seller to sell the Property to Purchaser, and to perform the obligations required to be performed by Seller at the Closing, are subject to each of the following conditions:

(i)    Closing Documents.  Purchaser shall have tendered at Closing all Closing Documents to which Purchaser is a party.

(ii)    Compliance with Agreement.  Purchaser shall have performed and complied in all material respects with its covenants and obligations under this Agreement such that any default or failure of performance of Purchaser as to which Seller has delivered written notice to Purchaser shall be cured in all material respects prior to or at Closing.

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9.1.3    Failure of Condition.  If any of the conditions precedent to Closing have not occurred or been satisfied within the time periods and in accordance with the terms set forth herein, then the party whose conditions to Closing have not been satisfied shall have the right to terminate this Agreement by written notice to the other party, whereupon neither party shall have any further rights or obligations hereunder and the Deposit shall be returned to Purchaser by the Title Company (other than the obligations of either party that expressly survive termination of this Agreement), unless the failure of condition is due to a default by one of the parties, in which the non-defaulting party shall have those rights and remedies set forth in Section 10 hereof.  If the transaction contemplated by this Agreement closes, the parties shall be deemed to have waived any and all unmet or unsatisfied conditions, subject to Section 5.1.2 above.  

9.2    Escrow Instructions.  Upon execution of this Agreement, the parties shall deliver an executed counterpart of this Agreement to the Title Company/Escrow Agent to serve as the instructions to the Title Company/Escrow Agent as the escrow holder for consummation of the transaction contemplated herein.  Seller and Purchaser agree to execute such additional and supplementary escrow instructions as may be appropriate to enable the Title Company/Escrow Agent to comply with the terms of this Agreement; provided, however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of the Agreement shall prevail.

9.3    Seller's Deliveries.  Unless otherwise specified, Seller shall deliver either at the Closing or by making available at the Real Property, as appropriate, the following original documents, each executed and, if required, acknowledged:

9.3.1    a special warranty deed to the Real Property, in the form attached hereto as Exhibit 9.3.1, subject only to the Permitted Encumbrances (the “Deed”);

9.3.2    a bill of sale in the form attached hereto as Exhibit 9.3.2 conveying the Personal Property;

9.3.3    (i) a current listing of any tenant security deposits and prepaid rents held by Seller with respect to the Real Property; and (ii) an assignment and assumption agreement of the Leases in the form attached hereto as Exhibit 9.3.3 (the “Assignment and Assumption of Leases”);

9.3.4    An assignment of contracts assigning Seller’s right, title and interest in, to and under the Contracts (other than those Contracts that Purchaser has rejected or is deemed to have rejected in accordance with the terms of Section 3.3), in the form attached hereto as Exhibit 9.3.4 (the “Assignment and Assumption of Contracts”);

9.3.5    an assignment of all transferable Warranties and Approvals, if any, with respect to the Improvements or any repairs or renovations to such improvements and Personal Property being conveyed hereunder, which assignment is in the form attached hereto as Exhibit 9.3.5 (the “Assignment of Warranties and Approvals”);

9.3.6    an affidavit pursuant to the Foreign Investment and Real Property Tax Act in the form attached hereto as Exhibit 9.3.6;

9.3.7    an incumbency certificate in the form attached hereto as Exhibit 9.3.7;

9.3.8    a tenant notice letter in the form attached hereto as Exhibit 9.3.8;  

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9.3.9    the Tenant Estoppel in accordance with the terms of Section 3.7 (unless waived by Purchaser pursuant to the terms of Section 3.7); 

9.3.10    all books and records at the Real Property held by or for the account of Seller, including, without limitation, plans and specifications, as available; 

9.3.11    originals, or to the extent an originals are not available, copies of the Leases and Contracts; and

9.3.12    such affidavits, indemnities and other deliveries as are reasonably and customarily required by the Title Company to deliver the title policy, executed by Seller.

9.4    Purchaser's Deliveries.  At the Closing, Purchaser shall (i) deposit with the Title Company/Escrow Agent the Purchase Price; and (ii) execute the agreements referred to in Sections 9.3.3 and 9.3.4.

9.5    Insurance.  Seller shall terminate its policies of insurance as of noon on the date of Closing, and Purchaser shall be responsible for obtaining its own insurance thereafter.

9.6    Possession. Purchaser shall be entitled to possession of the Property upon conclusion of the Closing, subject to the Tenant Lease and the Permitted Encumbrances.

9.7    Post-Closing Collections.  Purchaser shall use its best efforts during the six (6) month period immediately following Closing to collect and promptly remit to Seller rents or other amounts due Seller for the period prior to Closing.  Purchaser shall apply such rents or other amounts received, first for the account of Purchaser for amounts currently due to Purchaser; second, for the account of Purchaser for delinquent amounts due to Purchaser, and third, to Seller for any and all amounts due to Seller for periods prior to Closing; and the balance to be retained by Purchaser.  Notwithstanding any other term of this Agreement, the provisions of this Section 9.7 shall survive Closing.

10.    Default; Failure of Condition.

10.1    PURCHASER DEFAULT.  IF PURCHASER SHALL BECOME IN BREACH OF OR DEFAULT UNDER THIS AGREEMENT AND THE BREACH OR DEFAULT CONTINUES BEYOND THE EXPIRATION OF THE CURE PERIOD, IF ANY, PROVIDED IN SECTION 11.6 HEREOF, SELLER SHALL ELECT AS ITS SOLE REMEDY HEREUNDER TO (A) TERMINATE THIS AGREEMENT WHEREIN THE DEPOSIT SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES, AND BOTH PARTIES SHALL BE RELIEVED OF AND RELEASED FROM ANY FURTHER LIABILITY HEREUNDER EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS OF PURCHASER THAT SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE PAYMENT OF LEGAL FEES IN CONNECTION WITH ANY ENFORCEMENT OF SUCH OBLIGATIONS PURSUANT TO SECTION 11.9 HEREOF; OR (B) WAIVE THE DEFAULT, PRIOR TO OR AT THE CLOSING, AND PROCEED TO CLOSE THE TRANSACTION CONTEMPLATED HEREBY IN ACCORDANCE WITH THE REMAINING TERMS HEREOF.  SELLER AND PURCHASER AGREE THAT THE DEPOSIT IS A FAIR AND REASONABLE AMOUNT TO BE RETAINED BY SELLER AS AGREED AND LIQUIDATED DAMAGES IN LIGHT OF SELLER'S REMOVAL OF THE PROPERTY FROM THE MARKET AND THE COSTS INCURRED BY SELLER AND SHALL NOT CONSTITUTE A PENALTY OR A FORFEITURE.  
	
					
	/s/ TW
	 
	 
	/s/ JP
	 

	Purchaser's Initials
	 
	 
	Seller's Initials
	 

10.2    SELLER DEFAULT.  IF SELLER SHALL BECOME IN BREACH OR DEFAULT UNDER THIS AGREEMENT AND THE BREACH OR DEFAULT CONTINUES BEYOND THE EXPIRATION OF THE CURE PERIOD, IF ANY, PROVIDED IN SECTION 11.6 HEREOF, PURCHASER MAY, AS PURCHASER’S SOLE OPTION, ELECT EITHER TO:  (I) BY WRITTEN NOTICE TO SELLER AND THE TITLE COMPANY, CANCEL THIS AGREEMENT WHEREUPON THE DEPOSIT SHALL BE PAID IMMEDIATELY BY THE TITLE COMPANY TO PURCHASER, SELLER SHALL PROMPTLY REIMBURSE TO PURCHASER ITS REASONABLE OUT-OF-POCKET AND THIRD-PARTY PROPERTY DILIGENCE EXPENSES IN AN AMOUNT NOT TO EXCEED $100,000.00 AND, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NEITHER OF THE PARTIES SHALL HAVE ANY FURTHER LIABILITY OR OBLIGATION HEREUNDER; OR, (II) EXTEND THE DATE SCHEDULED FOR CLOSING FOR SUCH REASONABLE PERIOD OF TIME AS MAY BE REQUIRED TO PERMIT SELLER TO CURE OR REMEDY SUCH BREACH IN ACCORDANCE WITH SECTION 11.6; (III) WAIVE, PRIOR TO OR AT THE CLOSING, THE APPLICABLE OBJECTION OR CONDITION AND PROCEED TO CLOSE THE TRANSACTION CONTEMPLATED HEREBY IN ACCORDANCE WITH THE REMAINING TERMS HEREOF; OR (IV) SEEK SPECIFIC PERFORMANCE OF SELLER’S OBLIGATIONS HEREUNDER.  NOTWITHSTANDING THE FOREGOING, IF SPECIFIC PERFORMANCE IS UNAVAILABLE AS A REMEDY TO PURCHASER BECAUSE OF SELLER’S AFFIRMATIVE ACT OR INTENTIONAL OMISSION, PURCHASER SHALL BE ENTITLED TO PURSUE ALL RIGHTS AND REMEDIES AVAILABLE AT LAW OR IN EQUITY; PROVIDED, IN ANY SUIT FOR DAMAGES, SELLER SHALL NOT BE LIABLE TO PURCHASER FOR ANY SPECIAL OR CONSEQUENTIAL DAMAGES.   NOTWITHSTANDING THE FOREGOING, ANY CONFLICT BETWEEN THE PROVISIONS OF THIS SECTION AND SECTION 5.1.2 WITH REGARD TO A BREACH OF SELLER’S REPRESENTATIONS OR WARRANTIES SHALL BE RESOLVED BY THE PROVISIONS OF SECTION 5.1.2.

10.3    Failure of Title Condition.  Notwithstanding anything to the contrary in this Agreement, if, prior to Closing, Seller discloses to Purchaser or Purchaser discovers that title to the Property is subject to defects, limitations or encumbrances other than (i) the Permitted Encumbrances; (ii) any matter caused by Purchaser or any person or entity claiming by, through or under Purchaser; or (iii) any other matter that would not cause the Property to be in violation of the Lease or in violation of applicable law and is not in violation of Seller’s covenant in Section 4.5 hereof, then Purchaser shall promptly give Seller written notice of its objection thereto.  Such written notice shall specify such title defect in reasonable detail and notify Seller that the Agreement may be terminated if such title defect is not removed, bonded or insured-over in a commercially reasonable manner prior to the Closing Date.  In such event, Seller may elect to postpone the Closing for thirty (30) days and attempt to cure such objection.  The parties acknowledge and agree that Seller shall have no obligation to cure any such objection, unless such objection constitutes a Lien Exception as set out in Section 3.2 or a violation of Seller’s covenant under Section 4.5, in which event Seller shall cause such objection to be cured.  Within ten (10) days after notice from Seller (if applicable) that Seller will not cure the objection, Purchaser shall have the right to terminate this Agreement and if so terminated Seller shall promptly direct the Title Company/Escrow Agent to return the Deposit to Purchaser, provided that Purchaser and Seller shall not be in default hereunder, and neither party shall have any liability to the other except for the obligations of Purchaser that survive the termination of this Agreement.  For the purposes of this Agreement, any title defect, limitation or encumbrance, other than those enumerated in (i) – (iii) above, shall be deemed cured if the Title Company/Escrow Agent or another title company reasonably acceptable to Purchaser and authorized to do business in the State in which the Real Property is located will agree to issue the ALTA owner's title insurance policy to Purchaser for the Purchase Price, which policy takes no exception for such defect, limitation or encumbrance and is issued for no additional premium or, if “insuring over” the matter is reasonably acceptable to Purchaser, for an additional premium if Seller agrees to pay such additional premium upon Closing.

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10.4    Limited Liability.  The obligations of Seller are binding only on Seller’s interest in the Property and shall not be personally binding upon, nor shall any resort be had to, any other assets of Seller nor the private properties of any of the partners, officers, directors, shareholders or beneficiaries of Seller, or of any partners, officers, directors, shareholders or beneficiaries of any partners of Seller, or of any of Seller's employees or agents. All documents executed by Seller shall be deemed to contain (even if not expressly stated) the foregoing exculpation.

10.5    Waiver of Trial by Jury.  The respective parties hereto shall and hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Agreement, or for the enforcement of any remedy under any statute, emergency or otherwise.

11.    Miscellaneous.

11.1    Entire Agreement.  This Agreement, together with the Exhibits attached hereto, all of which are incorporated by reference, is the entire agreement between the parties with respect to the subject matter hereof, and all prior negotiations, term sheets, letters of intent, instruments or writings between the parties with respect to the subject matter hereof are of no further force or effect, and no amendment, modification or interpretation hereof shall be binding unless in writing and signed by both parties.  

11.2    Severability.  If any provision of this Agreement or application to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances, other than those as to which it is so determined invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

11.3    Applicable Law.  This Agreement shall be construed and enforced in accordance with the laws of the State in which the Real Property is located.

11.4    Assignability.  Purchaser may not assign this Agreement without first obtaining Seller's written consent, which consent may be withheld in Seller’s sole and absolute discretion.  Any assignment in contravention of this provision shall be void.  If Purchaser requests Seller's written consent to any assignment, Purchaser shall (1) notify Seller in writing of the proposed assignment; (2) provide Seller with the name and address of the proposed assignee; (3) provide Seller with financial information including financial statements of the proposed assignee; and (4) provide Seller with a copy of the proposed assignment.  Notwithstanding any of the foregoing, Purchaser may assign this Agreement without Seller’s consent to an Affiliate (as hereinafter defined).  For the purposes of this paragraph, the term “Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with Purchaser including any investment funds which are sponsored by VEREIT, Inc., and the term “control” means the power to direct the management of such entity through voting rights, ownership or contractual obligations.  If Purchaser assigns this Agreement to an Affiliate, Purchaser shall (i) notify Seller in writing of the assignment; (ii) provide Seller with the name and address of the assignee; and (iii) provide Seller with a copy of the assignment.  No assignment shall release or otherwise relieve Purchaser from any obligations hereunder; provided, however, with respect to any assignment, if Closing occurs the assigning party (but not the assignee) shall be relieved of all its obligations arising under this Agreement before, on and after Closing provided, any such assignee shall be deemed to have made any and all representations and warranties made by Purchaser hereunder, as if the assignee were the original signatory hereto.

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11.5    Successors Bound.  This Agreement shall be binding upon and inure to the benefit of Purchaser and Seller and their respective successors and permitted assigns.

11.6    Breach.  Should either party be in breach of or default under or otherwise fail to comply with any of the terms of this Agreement, the complying party shall have the option to cancel this Agreement upon twenty (20) days written notice to the other party and such other party’s failure to cure such breach within such twenty (20) day period. The date of Closing shall be extended to the extent necessary to afford the defaulting party the full twenty-day period within which to cure such breach, default or failure; provided, however, that the failure or refusal by a party to perform on the scheduled date of Closing (except in respect of a Pending Default by the other party) shall be deemed to be an immediate default without the necessity of notice or opportunity to cure; and provided further, that if the date of Closing shall have been once extended as a result of default by a party, such party shall not be entitled to any further notice or cure rights with respect to that or any other default.  For purposes of this Section 11.6, a “Pending Default” shall be a default for which (i) written notice was given by the non-defaulting party prior to the Closing, and (ii) the cure period extends beyond the scheduled date of Closing. 

11.7    No Public Disclosure.  Neither Seller nor Purchaser will release or cause or permit to be released any press notices, or publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms, conditions or substance of this Agreement without first obtaining the written consent of the other party.  The foregoing shall not preclude either party from discussing the substance or any relevant details of such transactions with any of its attorneys, accountants, professional consultants, lenders, partners, investors, or any prospective lender, partner or investor, as the case may be, or prevent either party hereto from complying with laws, rules, regulations and court orders, including without limitation, governmental regulatory, disclosure, tax and reporting requirements.  Purchaser and Seller may disclose this transaction or any aspect or information related to this transaction or disclosure or other notice as its attorneys deem is reasonably necessary to comply with applicable law.  In addition to any other remedies available to a party, each party shall have the right to seek equitable relief, including without limitation, injunctive relief or specific performance, against the other party in order to enforce the provisions of this Section 11.7.  The provisions of this Section 11.7 shall survive Closing or the termination of this Agreement.

11.8    Captions.  The captions in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement or the scope or content of any of its provisions.

11.9    Attorneys' Fees.  In the event of any litigation arising out of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs.

11.10    No Partnership.  Nothing contained in this Agreement shall be construed to create a partnership or joint venture between the parties or their successors in interest.

11.11    Time of Essence.  Time is of the essence in this Agreement.

11.12    Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  This Agreement may be executed by a party’s signature transmitted by facsimile or e-mail, and copies of this Agreement executed and delivered by means of faxed or e-mailed signatures shall have the same force and effect as copies hereof executed and delivered with original signatures.  All parties hereto may rely upon faxed or e-mailed signatures as if such signatures were originals.  All parties hereto agree that a faxed or e-

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mailed signature page may be introduced into evidence in any proceeding arising out of or related to this Agreement as if it were an original signature page.

11.13    Proper Execution.  The submission by Seller to Purchaser of this Agreement in unsigned form shall be deemed to be a submission solely for Purchaser's consideration and not for acceptance and execution.  Such submission shall have no binding force and effect, shall not constitute an option, and shall not confer any rights upon Purchaser or impose any obligations upon Seller irrespective of any reliance thereon, change of position or partial performance.  The submission to Seller of this Agreement for execution by Purchaser and the actual execution and delivery thereof by Purchaser to Seller shall, together with the Deposit, similarly have no binding force and effect on Seller unless and until Seller shall have executed this Agreement and a fully executed counterpart thereof, together with the Deposit, shall have been delivered to the Title Company/Escrow Agent.

11.14    Right of First Offer; Right of First Refusal. The parties acknowledge that the Property is subject to (i) a right of first offer and (ii) a right of first refusal, in favor of Tenant as more particularly described in the Tenant Lease. Seller gave Tenant a notice of right of first offer on April 14, 2015 received on April 15, 2015 and a notice of right of first refusal on December 24, 2015 received on December 28, 2015. Tenant had until January 12, 2016 to respond to the right of first refusal. It shall be a condition precedent to Seller’s obligation to convey the Property in accordance with this Agreement that Tenant shall have waived such rights or that Seller shall have provided evidence that such rights have been deemed to have been waived by Tenant.  Said waivers or such evidence (the “Waivers”) shall be in a form reasonably acceptable to Seller, Purchaser and the Title Company (such that the Title Company, in accepting the Waiver, is willing to issue the Title Policy not subject to such right of first offer or such right of first refusal in connection with the sale of the Property to Purchaser).  Should Tenant exercise either its right of first offer or its right of first refusal, this Agreement shall terminate, the Deposit shall be returned to Purchaser and Seller shall reimburse Purchaser for its actual, out-of-pocket expenses relating to its investigation of the Property, not to exceed $100,000.00. If Seller has not provided the required Waivers or received an election by Tenant to exercise either such right, on or before two (2) business days prior to the Closing Date, then Seller shall have the right to delay the Closing for up to thirty (30) days upon written notice to Purchaser delivered not less than two (2) business days prior to the scheduled Closing Date; provided that Closing shall occur within three (3) business days following delivery of the final Waivers and the Tenant Estoppel shall not be dated more than 45 days prior to the Closing Date, as extended. If the foregoing requisite Waivers, Tenant Estoppel and/or exercise of rights of first offer or first refusal are not delivered to Purchaser at least two (2) business days prior to the Closing Date, as may have been delayed as provided above, then Purchaser’s sole right with respect thereto shall be to elect to terminate this Agreement and the Deposit returned to Purchaser, and Seller shall reimburse Purchaser for its actual, out-of-pocket expenses relating to its investigation of the Property, not to exceed $100,000.00.

11.15    Tax Protest.  Subject to the rights of tenants under the Leases, if, as a result of any tax protest or otherwise, any refund is paid or reduction of any real property or other tax or assessment is made available relating to the Property with respect to any period for which, under the terms of this Agreement, Seller is responsible, Seller shall be entitled to receive or retain such refund or the benefit of such reduction, less the equitable prorated costs of collection.  Any such refund to which Seller may be entitled under this Section 11.15 (subject to the rights of tenants under the Leases) shall be delivered to Seller within ten (10) days of receipt of such amount by Purchaser.  The terms and provisions of this section shall survive Closing hereunder. 

11.16    Intentionally deleted.  

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11.17    Effective Date Conditioned Upon Deposit.  This Agreement shall become effective only upon, and all time periods not otherwise expressly set forth shall commence to run, from the Effective Date, only if the Deposit has been made.

11.18    Time to Execute and Deliver.  This Agreement shall be void if one fully executed copy is not received by Seller, on or before 5:00 p.m. Phoenix, Arizona time on February 19, 2016.

11.19    Term Sheet.  The Term Sheet attached to this Agreement and incorporated by reference herein sets forth the basic terms of the transaction for the benefit and convenience of the parties.  Notwithstanding the foregoing, to the extent of any conflict between the terms and provisions of this Term Sheet and the Agreement, the terms and provisions of the Agreement shall govern and control.  

11.20    1031 Exchange    . Either party may consummate the purchase and sale of the Property as part of a so-called like kind exchange (the “Exchange”) pursuant to § 1031 of the Internal Revenue Code of 1986, as amended (the “Code”), provided that: (i) the Closing shall not be delayed or affected by reason of the Exchange nor shall the consummation or accomplishment of the Exchange be a condition precedent or condition subsequent to either party’s obligations under this Agreement; (ii) the exchanging party shall effect the Exchange through an assignment of this Agreement, or its rights under this Agreement, to a qualified intermediary; (iii) the non-exchanging party shall not be required to take an assignment of the Agreement for the relinquished property or be required to acquire or hold title to any real property for purposes of consummating the Exchange; and (iv) the exchanging party shall pay any additional costs that would not otherwise have been incurred by Purchaser or Seller had the exchanging party not consummated this transaction through the Exchange. The non-exchanging party shall not, by this Agreement or acquiescence to the Exchange, have its rights under this Agreement affected or diminished in any manner or be responsible for compliance with or have any liability in connection with or be deemed to have warranted that the Exchange in fact complies with § 1031 of the Code.

11.21    Calculation of Time Periods.  Unless otherwise specified, in computing any period of time described herein, the date of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday for national banks in Phoenix, Arizona, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday.  The last day of any period of time described herein shall be deemed to end at 5:00 p.m. Phoenix, Arizona.

11.22    No Recording.  Neither this Agreement nor any memorandum or short form hereof shall be recorded or filed in any public land or other public records of any jurisdiction, by either party and any attempt to do so may be treated by the other party as a breach of this Agreement.

11.23    No Electronic Transactions.  The parties hereby acknowledge and agree this Agreement shall not be entered into, altered, amended or modified by electronic means except as specifically set forth in the “Notices” and “Counterparts” section of this Agreement.

11.24    Guaranty.  USAA REAL ESTATE COMPANY, a Delaware corporation (“Realco”), joins this Agreement only for the purpose of granting the following guaranty:  by execution of this Agreement, Realco, Seller’s affiliate, for good and valuable consideration, the receipt of which is hereby acknowledged, agrees to and does hereby unconditionally and irrevocably guaranty, (i) Seller’s post-closing obligations and liabilities under this Agreement, (ii) Seller’s indemnification obligations set forth in the Assignment and Assumption of Lease, and (iii) Seller’s indemnification obligations set forth in the Assignment and Assumption of Contracts.

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 [SIGNATURES ON FOLLOWING PAGE(S)]

IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement on the date set forth below, effective as of the date set forth above.
	
		
	 
	 

	SELLER:
	RELP TAMPA, LLC,
a Delaware limited liability company

	 
	By:    US REAL ESTATE LIMITED PARTNERSHIP, 
               a Texas limited partnership, 
               its Managing Member

	 
	By:    USAA Real Estate Company, 
               a Delaware corporation, 
               its General Partner

	 
	By :        /s/ John Post            

	 
	Name:        John Post            

	 
	Title:        Deputy CFO                        

	 
	Date:    02/18/2016                    

	
		
	PURCHASER:    
	VEREIT ID RUSKIN FL, LLC,
a Delaware limited liability company

	 
	By:    Cole Corporate Income Advisors II, LLC, 
              a Delaware limited liability company, 
              its Manager

	 
	By :        /s/ Todd J. Weiss            

	 
	Name:        Todd J. Weiss            

	 
	Title:        General Counsel, Real Estate    

	 
	Date:    02/18/2016                    

	
		
	GUARANTOR:    
	USAA REAL ESTATE COMPANY,
a Delaware corporation

	 
	By:        /s/ John Post            

	 
	Name:        John Post            

	 
	Title:        Deputy CFO            

	 
	Date:        02/18/2016                

    
    
A fully executed copy of this Agreement has been received by the Title Company/Escrow Agent's agent this 18  day of February, 2016, and by execution hereof the Title Company/Escrow Agent's agent hereby covenants and agrees to be bound by the terms of this Agreement.  

PURCHASE AND SALE AGREEMENT    PAGE 27
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	TITLE COMPANY/ESCROW AGENT:
	COMMONWEALTH TITLE OF DALLAS, INC.

	 
	By:        /s/ Sharon L. Cooper            

	 
	Name:        Sharon L Cooper            

	 
	Title:        Escrow Officer            

Receipt of the Independent Consideration of $100 acknowledged this  23rd day of February, 2016.

	
		
	 
	 

	TITLE COMPANY/ESCROW AGENT:
	COMMONWEALTH TITLE OF DALLAS, INC.

	 
	By:            /s/ Bev Gresse        

	 
	Name:                Bev Gresse    

	 
	Title:            Vice President               

Receipt of the Initial Deposit of $2,000,000.00 acknowledged this 23rd day of February, 2016.

	
		
	 
	 

	TITLE COMPANY/ESCROW AGENT:
	COMMONWEALTH TITLE OF DALLAS, INC.

	 
	By:            /s/ Bev Gresse        

	 
	Name:                Bev Gresse    

	 
	Title:            Vice President

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