Document:

Exhibit

Exhibit 4.1

AVISTA CORPORATION
TO
CITIBANK, N.A.
As Successor Trustee under
Mortgage and Deed of Trust,
dated as of June 1, 1939
________________________
Fifty-ninth Supplemental Indenture
Providing among other things for a series of bonds designated  
“First Mortgage Bonds, 3.54% Series due 2051” 
Due December 1, 2051
________________________
Dated as of December 1, 2016

FIFTY-NINTH SUPPLEMENTAL INDENTURE
THIS INDENTURE, dated as of the 1st day of December, 2016, between AVISTA CORPORATION (formerly known as The Washington Water Power Company), a corporation of the State of Washington, whose post office address is 1411 East Mission Avenue, Spokane, Washington 99202 (the “Company”), and CITIBANK, N.A., formerly First National City Bank (successor by merger to First National City Trust Company, formerly City Bank Farmers Trust Company), a national banking association incorporated and existing under the laws of the United States of America, whose post office address is 388 Greenwich Street, 14th Floor, New York, New York  10013 (the “Trustee”), as Trustee under the Mortgage and Deed of Trust, dated as of June 1, 1939 (the “Original Mortgage”), executed and delivered by the Company to secure the payment of bonds issued or to be issued under and in accordance with the provisions thereof, this indenture (the “Fifty-ninth Supplemental Indenture”) being supplemental to the Original Mortgage, as heretofore supplemented and amended.
WHEREAS pursuant to a written request of the Company made in accordance with Section 103 of the Original Mortgage, Francis M. Pitt (then Individual Trustee under the Original Mortgage, as theretofore supplemented and amended) ceased to be a trustee thereunder on July 23, 1969, and all of his powers as Individual Trustee have devolved upon the Trustee and its successors alone; and
WHEREAS by the Original Mortgage the Company covenanted that it would execute and deliver such further instruments and do such further acts as might be necessary or proper to carry out more effectually the purposes of the Original Mortgage and to make subject to the lien of the Original Mortgage any property thereafter acquired intended to be subject to the lien thereof; and
WHEREAS the Company has heretofore executed and delivered, in addition to the Original Mortgage, the indentures supplemental thereto and amendatory thereof, and has issued the series of bonds, set forth in Exhibit A hereto (the Original Mortgage, as supplemented and amended by the First through Fifty-eighth Supplemental Indentures and, if the context shall so require, as to be supplemented by this Fifty-ninth Supplemental Indenture, being herein sometimes called the “Mortgage”); and
WHEREAS the Original Mortgage and the First through Fifty-seventh Supplemental Indentures have been appropriately filed or recorded in various official records in the States of Washington, Idaho, Montana and Oregon, as set forth in the First through Fifty-eighth Supplemental Indentures and the Instrument of Further Assurance, dated December 15, 2001, hereinafter referred to; and
WHEREAS the Fifty-eighth Supplemental Indenture, dated as of December 1, 2015, has been appropriately filed or recorded in the various official records in the States of Washington, Idaho, Montana and Oregon, as set forth in Exhibit B hereto; and

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WHEREAS for the purpose of confirming or perfecting the lien of the Mortgage on certain of its properties, the Company has heretofore executed and delivered a Short Form Mortgage and Security Agreement, in multiple counterparts dated as of various dates in 1992, and such instrument has been appropriately filed or recorded in the various official records in the States of Montana and Oregon; and
WHEREAS for the purpose of confirming or perfecting the lien of the Mortgage on certain of its properties, the Company has heretofore executed and delivered an Instrument of Further Assurance dated as of December 15, 2001, and such instrument has been appropriately filed or recorded in the various official records in the States of Washington, Idaho, Montana and Oregon; and
WHEREAS in addition to the property described in the Mortgage the Company has acquired certain other property, rights and interests in property; and
WHEREAS Section 120 of the Original Mortgage, as heretofore amended, provides that, without the consent of any holders of bonds, the Company and the Trustee, at any time and from time to time, may enter into indentures supplemental to the Original Mortgage for various purposes set forth therein, including, without limitation, to cure ambiguities or correct defective or inconsistent provisions or to make other changes therein that shall not adversely affect the interests of the holders of bonds of any series in any material respect or to establish the form or terms of bonds of any series as contemplated by Article II; and
WHEREAS the Company now desires to create a new series of bonds; and
WHEREAS Section 8 of the Original Mortgage, as heretofore amended, provides that the form of each series of bonds (other than the First Series) issued thereunder and of the coupons to be attached to coupon bonds of such series shall be established by Resolution of the Board of Directors of the Company or by Treasurer’s Certificate, or shall be set forth in an indenture supplemental to the Original Mortgage; that the form of such series, as so established, shall specify the descriptive title of the bonds and various other terms thereof; and that such series may also contain such provisions not inconsistent with the provisions of the Mortgage as the Company may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Mortgage; and
WHEREAS the execution and delivery by the Company of this Fifty-ninth Supplemental Indenture and the terms of the Bonds of the Sixtieth Series, hereinafter referred to, have been duly authorized by the Board of Directors of the Company by appropriate Resolutions of said Board of Directors, and all things necessary to make this Fifty-ninth Supplemental Indenture a valid, binding and legal instrument have been performed;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:  That the Company, in consideration of the premises and of other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, hereby confirms the estate, title and rights of the Trustee (including, without limitation, the lien of the Mortgage on

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the property of the Company subjected thereto, whether now owned or hereafter acquired) held as security for the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under the Mortgage according to their tenor and effect and the performance of all the provisions of the Mortgage and of such bonds, and, without limiting the generality of the foregoing, hereby confirms the grant, bargain, sale, release, conveyance, assignment, transfer, mortgage, pledge, setting over and confirmation unto the Trustee, contained in the Mortgage, of all the following described properties of the Company, whether now owned or hereafter acquired, namely:
All of the property, real, personal and mixed, of every character and wheresoever situated (except any hereinafter or in the Mortgage expressly excepted) which the Company now owns or, subject to the provisions of Section 87 of the Original Mortgage, may hereafter acquire prior to the satisfaction and discharge of the Mortgage, as fully and completely as if herein or in the Mortgage specifically described, and including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing or of any general description contained in Mortgage) all lands, real estate, easements, servitudes, rights of way and leasehold and other interests in real estate; all rights to the use or appropriation of water, flowage rights, water storage rights, flooding rights, and other rights in respect of or relating to water; all plants for the generation of electricity, power houses, dams, dam sites, reservoirs, flumes, raceways, diversion works, head works, waterways, water works, water systems, gas plants, steam heat plants, hot water plants, ice or refrigeration plants, stations, substations, offices, buildings and other works and structures and the equipment thereof and all improvements, extensions and additions thereto; all generators, machinery, engines, turbines, boilers, dynamos, transformers, motors, electric machines, switchboards, regulators, meters, electrical and mechanical appliances, conduits, cables, pipes and mains; all lines and systems for the transmission and distribution of electric current, gas, steam heat or water for any purpose; all towers, mains, pipes, poles, pole lines, conduits, cables, wires, switch racks, insulators, compressors, pumps, fittings, valves and connections; all motor vehicles and automobiles; all tools, implements, apparatus, furniture, stores, supplies and equipment; all franchises (except the Company’s franchise to be a corporation), licenses, permits, rights, powers and privileges; and (except as hereinafter or in the Mortgage expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature.
The Company hereby acknowledges that, as of the date of this Fifty-ninth Supplemental Indenture, the real property located in the State of Washington, taken as a whole, that is so conveyed or intended to be so conveyed under the Mortgage is not used principally for agricultural purposes.
The property so conveyed or intended to be so conveyed under the Mortgage shall include, but shall not be limited to, the property set forth in 

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Exhibit C hereto, the particular description of which is intended only to aid in the identification thereof and shall not be construed as limiting the force, effect and scope of the foregoing.
TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Original Mortgage) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof.
THE COMPANY HEREBY CONFIRMS that, subject to the provisions of Section 87 of the Original Mortgage, all the property, rights, and franchises acquired by the Company after the date of the Original Mortgage (except any in the Mortgage expressly excepted) are and shall be as fully embraced within the lien of the Mortgage as if such property, rights and franchises had been owned by the Company at the date of the Original Mortgage and had been specifically described therein.
PROVIDED THAT the following were not and were not intended to be then or now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed under the Mortgage and were, are and shall be expressly excepted from the lien and operation of the Mortgage namely:  (l) cash, shares of stock and obligations (including bonds, notes and other securities) not hereafter specifically pledged, paid, deposited or delivered under the Mortgage or covenanted so to be; (2) merchandise, equipment, materials or supplies held for the purpose of sale in the usual course of business or for consumption in the operation of any properties of the Company; (3) bills, notes and accounts receivable, and all contracts, leases and operating agreements not specifically pledged under the Mortgage or covenanted so to be; (4) electric energy and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business; and (5) any property heretofore released pursuant to any provisions of the Mortgage and not heretofore disposed of by the Company; provided, however, that the property and rights expressly excepted from the lien and operation of the Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event that the Trustee or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XII of the Original Mortgage by reason of the occurrence of a Completed Default as defined in said Article XII.
TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company in the Mortgage as aforesaid, or intended so to be, unto the Trustee, and its successors, heirs and assigns forever.
IN TRUST NEVERTHELESS, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as

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set forth in the Mortgage, this Fifty-ninth Supplemental Indenture being supplemental to the Mortgage.
AND IT IS HEREBY FURTHER CONFIRMED by the Company that all the terms, conditions, provisos, covenants and provisions contained in the Mortgage shall affect and apply to the property in the Mortgage described and conveyed, and to the estates, rights, obligations and duties of the Company and the Trustee and the beneficiaries of the trust with respect to said property, and to the Trustee and its successors in the trust, in the same manner and with the same effect as if the said property had been owned by the Company at the time of the execution of the Original Mortgage, and had been specifically and at length described in and conveyed to said Trustee by the Original Mortgage as a part of the property therein stated to be conveyed.
The Company further covenants and agrees to and with the Trustee and its successor or successors in such trust under the Mortgage, as follows:
ARTICLE I 
 
Sixtieth Series of Bonds
SECTION 1.  (I)    There shall be a series of bonds designated “First Mortgage Bonds, 3.54% Series due 2051” (herein sometimes referred to as the “Bonds of the Sixtieth Series”), each of which shall also bear the descriptive title First Mortgage Bond and the form thereof is set forth on Exhibit D hereto.  The Bonds of the Sixtieth Series shall be issued as fully registered bonds in denominations of One Thousand Dollars and, at the option of the Company, any amount in excess thereof (the exercise of such option to be evidenced by the execution and delivery thereof) and shall be dated as in Section 10 of the Original Mortgage provided.
(II)    The Bonds of the Sixtieth Series shall have the following terms and characteristics:
(a)    the Bonds of the Sixtieth Series shall be limited in aggregate principal amount to $175,000,000 (except for Bonds of such series authenticated and delivered upon transfer of or in exchange for, or in lieu of, other Bonds of such series);
(b)    the principal of Bonds of the Sixtieth Series shall (unless theretofore paid) be payable on the Stated Maturity Date (as hereinafter defined);
(c)    the Bonds of the Sixtieth Series shall bear interest at the rate of three and fifty-four one hundredths percentum (3.54%) per annum; interest on such Bonds shall accrue from and including December 15, 2016, except as otherwise provided in the form of bond attached hereto as Exhibit D; interest on such Bonds shall be payable on each Interest Payment Date and at Maturity (as each of such terms is hereinafter defined); and interest on such Bonds during any period for which payment is made shall be computed on the basis of a 360-day year consisting of twelve 30-days months;

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(d)    the principal of and premium, if any, and interest on each Bond of the Sixtieth Series payable at Maturity shall be payable upon presentation thereof at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency as at the time of payment is legal tender for public and private debts.  The interest on each Bond of the Sixtieth Series (other than interest payable at Maturity) shall be payable by check, in similar coin or currency, mailed to the registered owner thereof as of the close of business on the Record Date (as hereinafter defined) next preceding each Interest Payment Date; provided, however, that if such registered owner shall be a securities depositary, such payment may be made by such other means in lieu of check as shall be agreed upon by the Company, the Trustee and such registered owner; and, provided, further, that, so long as any Bond of the Sixtieth Series shall be held by (i) the original purchaser thereof under the Bond Purchase Agreement (as hereinafter defined) or (ii) any other Institutional Investor (as hereinafter defined) that (A) is the direct or indirect transferee of such Bond from such original purchaser and (B) has made the same agreement relating to such Bond as such original purchaser made in Section 8.2 of the Bond Purchase Agreement, payment of principal of and premium, if any, and interest on such Bond of the Sixtieth Series shall be payable in the manner specified in the Bond Purchase Agreement.
(e)    (i)    Prior to the Par Call Date (as hereinafter defined), the Bonds of the Sixtieth Series shall be redeemable in whole at any time, or in part from time to time, at the option of the Company at a redemption price equal to the greater of
(A)    100% of the principal amount of the Bonds being redeemed, and
(B)    the sum of the present values of the remaining scheduled payments of principal of and interest (not including any portion of any scheduled payment of interest which accrued prior to the redemption date) on the Bonds being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield (as hereinafter defined) plus 50 basis points,
plus, in the case of either (A) or (B) above, whichever is applicable, accrued interest on such Bonds to the date of redemption.
(ii)    On or after the Par Call Date, the Bonds of the Sixtieth Series shall be redeemable in whole at any time, or in part from time to time, at the option of the Company at a redemption price equal to 100% of the principal amount of the Bonds being redeemed plus accrued interest on such Bonds to the date of redemption.
(f)    (i)    “Par Call Date” means June 1, 2051.

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(ii)    “Treasury Yield” means, with respect to any redemption of Bonds of the Sixtieth Series, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price.  The Treasury Yield shall be calculated as of the third business day preceding the earlier of (A) the date notice of redemption is mailed to holders of Bonds of the Sixtieth Series and (B) the date irrevocable arrangements with the Trustee for the mailing of such notice shall have been made, as the case may be (the “Calculation Date”).
(iii)     “Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Bonds of the Sixtieth Series that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Bonds.
(iv)    “Comparable Treasury Price” means (A) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the Calculation Date, as set forth in the H.15 Daily Update of the Federal Reserve Bank of New York or (B) if such release (or any successor release) is not published or does not contain such prices on such business day, the Reference Treasury Dealer Quotation for the Calculation Date.
(v)    “H.15(519)” means the weekly statistical release entitled “Statistical Release H.15 (519)”, or any successor publication, published by the Board of Governors of the Federal Reserve System.
(vi)    “H.15 Daily Update” means the daily update of H.15(519) available through the worldwide website of the Board of Governors of the Federal Reserve System or any successor site or publication.
(vii)    “Independent Investment Banker” means any independent investment banking institution of national standing appointed by the Company and reasonably acceptable to the Trustee.
(viii)    “Reference Treasury Dealer Quotation” means, with respect to the Reference Treasury Dealer, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the Calculation Date).
(ix)    “Reference Treasury Dealer” means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.
(g)    If less than all of the outstanding Bonds of the Sixtieth Series are to be redeemed, the principal amount to be redeemed shall be prorated

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among all of the holders of such Bonds in the proportion that their respective holdings bear to the aggregate principal amount of such Bonds outstanding on the date of selection.  The portion of any Bond to be redeemed shall be in the principal amount of $1,000 or an integral multiple thereof and such rounding allocations as may be requisite for this purpose shall be made by the Trustee in its uncontrolled discretion.  The Trustee shall promptly notify the Company in writing of the distinctive numbers of the Bond and the portions thereof so selected for redemption.
(h)    Except as provided in this subsection (II) of Section 1, the Bonds of the Sixtieth Series shall not be redeemable prior to the Stated Maturity Date.
(III)    (a)    At the option of the registered owner, any Bonds of the Sixtieth Series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, shall be exchangeable for a like aggregate principal amount of Bonds of the same series of other authorized denominations.
The Bonds of the Sixtieth Series shall be transferable, upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York.
Upon any exchange or transfer of Bonds of the Sixtieth Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Original Mortgage, but the Company hereby waives any right to make a charge in addition thereto or any exchange or transfer of Bonds of the Sixtieth Series; provided, however, that the Company shall not be required to make any transfer or exchange of any Bonds of the Sixtieth Series for a period of 10 days next preceding any Interest Payment Date or any selection of such Bonds for redemption, nor shall it be required to make any transfer or exchange of any Bonds of the Sixtieth Series which shall have been selected for redemption in whole or in part.
Unless and until the Company shall have delivered to the Trustee a written order to the contrary, the Bonds of the Sixtieth Series shall bear a legend as to restrictions on transfer substantially as set forth below:
The Bonds evidenced hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered, sold, pledged or otherwise transferred in contravention of the Securities Act.
(IV)    For all purposes of this Fifty-ninth Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires, the terms listed below, when used with respect to the Bonds of the Sixtieth Series, shall have the meanings specified below:

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“Bond Purchase Agreement” means the Bond Purchase Agreement, dated August 23, 2016, between the Company and the purchasers listed on Schedule A thereto.
“Business Day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York are generally authorized or required by law, regulation or executive order to remain closed.
“Institutional Investor” means (a) any original purchaser of a Bond of the Sixtieth Series, (b) any holder of a Bond of the Sixtieth Series holding (together with one or more of its affiliates) more than $1,000,000 in aggregate principal amount of the Bonds of the Sixtieth Series, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.
“Interest Payment Date” means June 1 and December 1 in each year, commencing June 1, 2017.
“Maturity” means the date on which the principal of the Bonds of the Sixtieth Series becomes due and payable, whether at the Stated Maturity Date, upon redemption or acceleration, or otherwise.
“Record Date”, with respect to any Interest Payment Date, means the close of business on the seventh Business Day preceding such Interest Payment Date.
“Stated Maturity Date” means December 1, 2051.
(V)    Notwithstanding the provisions of Section 106 of the Original Mortgage, as amended, the Company shall not cause any Bonds of the Sixtieth Series, or any portion of the principal amount thereof, to be deemed to have been paid as provided in such Section and its obligations in respect thereof to be deemed to be satisfied and discharged prior to the Maturity thereof unless the Company shall deliver to the Trustee either:
(a)    an instrument wherein the Company, notwithstanding the effect of Section 106 of the Original Mortgage, as amended, in respect of such Bonds, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee such additional sums of money, if any, or additional government obligations (meeting the requirements of Section 106), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or government obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Bonds or portions thereof, all in accordance with and subject to the provisions of Section 106; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice

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asserting the deficiency accompanied by an opinion of an independent accountant showing the calculation thereof (which opinion shall be obtained at the expense of the Company); or
(b)    an Opinion of Counsel to the effect that the holders of such Bonds, or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company’s indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.
(VI)    Anything in this Fifty-ninth Supplemental Indenture or the Bonds of the Sixtieth Series to the contrary notwithstanding, any payment of principal of or premium, if any, or interest on any Bond of the Sixtieth Series that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; provided, however, that if the Maturity date of any Bond is a date other than a Business Day, the payment otherwise due at Maturity shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
(VII)    The Bonds of the Sixtieth Series shall have such further terms as are set forth in Exhibit D hereto.  If there shall be a conflict between the terms of the form of bond and the provisions of the Mortgage, the provisions of the Mortgage shall control to the extent permitted by law.
ARTICLE II 
 
Outstanding Bonds
Upon the delivery of this Fifty-ninth Supplemental Indenture, Bonds of the Sixtieth Series in an aggregate principal amount of $175,000,000 are to be issued and will be Outstanding, in addition to $1,846,700,000 aggregate principal amount of bonds of prior series Outstanding at the date of delivery of this Fifty-ninth Supplemental Indenture.

ARTICLE III 
 
Prospective Amendments of Original Mortgage
SECTION 1.  Each initial and subsequent holder of Bonds of the Sixtieth Series, by virtue of its acquisition of an interest therein, shall be deemed, without further act, to have consented to the amendments of the Original Mortgage, as heretofore

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amended, contemplated in Article III of the Fifty-eighth Supplemental Indenture, dated as of December 1, 2015, and set forth in Exhibits E(1), E(2) and E(3) thereto.
ARTICLE IV 
 
Miscellaneous Provisions
SECTION 1.  The terms defined in the Original Mortgage shall, for all purposes of this Fifty-ninth Supplemental Indenture, have the meanings specified in the Original Mortgage.
SECTION 2.      The Trustee hereby confirms its acceptance of the trusts in the Original Mortgage declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions in the Original Mortgage set forth, including the following:
The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Fifty-ninth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.  Each and every term and condition contained in Article XVI of the Original Mortgage shall apply to and form part of this Fifty-ninth Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Fifty-ninth Supplemental Indenture.
SECTION 3.      Whenever in this Fifty-ninth Supplemental Indenture either of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XV and XVI of the Original Mortgage be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Fifty-ninth Supplemental Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee, or either of them, shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not.
SECTION 4.      Nothing in this Fifty-ninth Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto, the holders of the Bonds Outstanding under the Mortgage, any right, remedy or claim under or by reason of this Fifty-ninth Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Fifty-ninth Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the Bonds Outstanding under the Mortgage.
SECTION 5.      This Fifty-ninth Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

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SECTION 6.      The titles of the several Articles of this Fifty-ninth Supplemental Indenture shall not be deemed to be any part thereof.
________________________

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IN WITNESS WHEREOF, on the 15th day of December, 2016, AVISTA CORPORATION has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Corporate Secretary or one of its Assistant Corporate Secretaries for and in its behalf, all in The City of Spokane, Washington, as of the day and year first above written; and on the 15th day of December, 2016, CITIBANK, N.A., has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents or one of its Senior Trust Officers or one of its Trust Officers and its corporate seal to be attested by one of its Vice Presidents or one of its Trust Officers, all in The City of New York, New York, as of the day and year first above written.
	
			
	AVISTA CORPORATION

	 
	 
	 

	By:
	/s/ MARK T. THIES

	 
	Name:
	Mark T. Thies

	 
	Title:
	Senior Vice President and
Chief Financial Officer

Attest:
 
	
		
	/s/ SUSAN Y. FLEMING

	Name:
	Susan Y. Fleming

	Title:
	Assistant Corporate Secretary

Executed, sealed and delivered 
by AVISTA CORPORATION 
in the presence of:
	
		
	/s/ PATRICE K. GORTON

	Name:
	Patrice K. Gorton

	 
	 

	 
	 

	/s/ JASON LANG

	Name:
	Jason Lang

[Signature Page to Supplemental Indenture] 

	
			
	CITIBANK, N.A., AS TRUSTEE

	 
	 
	 

	By:
	/s/ DANNY LEE

	 
	Name:
	Danny Lee

	 
	Title:
	Vice President

Attest:
 
	
		
	/s/ LOUIS PISCITELLI

	Name:
	Louis Piscitelli

	Title:
	Vice President

Executed, sealed and delivered 
by CITIBANK, N.A., 
as trustee, in the presence of:
	
		
	/s/ ANTHONY BAUSA

	Name:
	Anthony Bausa

	 
	 

	 
	 

	/s/ JOHN HANNON

	Name:
	John Hannon

[Signature Page to Supplemental Indenture] 

STATE OF WASHINGTON )
) ss.:
COUNTY OF SPOKANE    )
On the 15th day of December, 2016, before me personally appeared Mark T. Thies, to me known to be a Senior Vice President and the Chief Financial Officer of AVISTA CORPORATION, one of the corporations that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said Corporation for the uses and purposes therein mentioned and on oath stated that he was authorized to execute said instrument and that the seal affixed is the corporate seal of said Corporation.
On the 15th day of December, 2016, before me, a Notary Public in and for the State and County aforesaid, personally appeared Mark T. Thies, known to me to be a Senior Vice President and the Chief Financial Officer of AVISTA CORPORATION, one of the corporations that executed the within and foregoing instrument and acknowledged to me that such Corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.
	
	
	/s/ DEBBIE DEUBEL

	Notary Public

	 

	 

	DEBBIE DEUBEL

	Notary Public

	State of Washington

	Commission Expires May 9, 2017

STATE OF NEW YORK    )
) ss.:
COUNTY OF NEW YORK    )
On the 15th day of December, 2016 before me personally appeared Danny Lee, to me known to be a Vice President of CITIBANK, N.A., one of the corporations that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said Corporation for the uses and purposes therein mentioned and on oath stated that she was authorized to execute said instrument and that the seal affixed is the corporate seal of said Corporation.
On the 15th day of December, 2016, before me, a Notary Public in and for the State and County aforesaid, personally appeared Danny Lee, known to me to be a Vice President of CITIBANK, N.A., one of the corporations that executed the within and foregoing instrument and acknowledged to me that such Corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.
	
	
	/s/ NOREEN SANTOS

	NOREEN SANTOS

	Notary Public, State of New York

	Registration # 01SA6228750

	Qualified in Nassau County

	Certificate filed in New York County

	Commission Expires September 27, 2018

    

EXHIBIT A
MORTGAGE, SUPPLEMENTAL INDENTURES 
AND SERIES OF BONDS
	
							
	MORTGAGE OR SUPPLEMENTAL INDENTURE
	DATED AS OF
	SERIES
	PRINCIPAL AMOUNT ISSUED
	PRINCIPAL AMOUNT OUTSTANDING

	NO.
	DESIGNATION

	Original
	June 1, 1939
	1
	3-1/2% Series due 1964
	$22,000,000
	None

	First
	October 1, 1952
	2
	3-1/2% Series due 1982
(changed to 3-3/4% in Twelfth Supplemental Indenture)
	30,000,000
	None

	Second
	May 1, 1953
	3
	3-7/8% Series due 1983
	10,000,000
	None

	Third
	December 1, 1955
	 
	None
	 
	 

	Fourth
	March 15, 1957
	 
	None
	 
	 

	Fifth
	July 1, 1957
	4
	4-7/8% Series due 1987
	30,000,000
	None

	Sixth
	January 1, 1958
	5
	4-1/8% Series due 1988
	20,000,000
	None

	Seventh
	August 1, 1958
	6
	4-3/8% Series due 1988
	15,000,000
	None

	Eighth
	January 1, 1959
	7
	4-3/4% Series due 1989
	15,000,000
	None

	Ninth
	January 1, 1960
	8
	5-3/8% Series due 1990
	10,000,000
	None

	Tenth
	April 1, 1964
	9
	4-5/8% Series due 1994
	30,000,000
	None

	Eleventh
	March 1, 1965
	10
	4-5/8% Series due 1995
	10,000,000
	None

	Twelfth
	May 1, 1966
	 
	None
	 
	 

	Thirteenth
	August 1, 1966
	11
	6    % Series due 1996
	20,000,000
	None

	Fourteenth
	April 1, 1970
	12
	9-1/4% Series due 2000
	20,000,000
	None

	Fifteenth
	May 1, 1973
	13
	7-7/8% Series due 2003
	20,000,000
	None

	Sixteenth
	February 1, 1975
	14
	9-3/8% Series due 2005
	25,000,000
	None

	Seventeenth
	November 1, 1976
	15
	8-3/4% Series due 2006
	30,000,000
	None

	Eighteenth
	June 1, 1980
	 
	None
	 
	 

	Nineteenth
	January 1, 1981
	16
	14-1/8% Series due 1991
	40,000,000
	None

	Twentieth
	August 1, 1982
	17
	15-3/4% Series due 1990-1992
	60,000,000
	None

A-1

	
							
	MORTGAGE OR SUPPLEMENTAL INDENTURE
	DATED AS OF
	SERIES
	PRINCIPAL AMOUNT ISSUED
	PRINCIPAL AMOUNT OUTSTANDING

	NO.
	DESIGNATION

	Twenty-First
	September 1, 1983
	18
	13-1/2% Series due 2013
	60,000,000
	None

	Twenty-Second
	March 1, 1984
	19
	13-1/4% Series due 1994
	60,000,000
	None

	Twenty-Third
	December 1, 1986
	20
	9-1/4% Series due 2016
	80,000,000
	None

	Twenty-Fourth
	January 1, 1988
	21
	10-3/8% Series due 2018
	50,000,000
	None

	Twenty-Fifth
	October 1, 1989
	22 
 
23
	7-1/8% Series due 2013 
 
7-2/5% Series due 2016
	66,700,000 
 
17,000,000
	None 
 
None

	Twenty-Sixth
	April 1, 1993
	24
	Secured Medium-Term Notes, Series A ($250,000,000 authorized)
	250,000,000
	36,000,000

	Twenty-Seventh
	January 1, 1994
	25
	Secured Medium-Term Notes, Series B ($250,000,000 authorized)
	161,000,000
	None

	Twenty-Eighth
	September 1, 2001
	26
	Collateral Series due 2002
	220,000,000
	None

	Twenty-Ninth
	December 1, 2001
	27
	7.75% Series due 2007
	150,000,000
	None

	Thirtieth
	May 1, 2002
	28
	Collateral Series due 2003
	225,000,000
	None

	Thirty-first
	May 1, 2003
	29
	Collateral Series due 2004
	245,000,000
	None

	Thirty-second
	September 1, 2003
	30
	6.125% Series due 2013
	45,000,000
	None

	Thirty-third
	May 1, 2004
	31
	Collateral Series due 2005
	350,000,000
	None

	Thirty-fourth
	November 1, 2004
	32
	5.45% Series due 2019
	90,000,000
	90,000,000

	Thirty-fifth
	December 1, 2004
	33
	Collateral Series 2004A
	88,850,000
	25,000,000

	Thirty-sixth
	December 1, 2004
	34 
 
35
	Collateral Series 2004B 
 
Collateral Series 2004C
	66,700,000 
 
17,000,000
	None 
 
None

	Thirty-seventh
	December 1, 2004
	36
	Collateral Series 2004D
	350,000,000
	None

	Thirty-eighth
	May 1, 2005
	37
38
	Collateral Series 2005B
Collateral Series 2005C
	66,700,000
17,000,000
	None

	Thirty-ninth
	November 1, 2005
	39
	6.25% Series due 2035
	100,000,000
50,000,000
	100,000,000
50,000,000

A-2

	
							
	MORTGAGE OR SUPPLEMENTAL INDENTURE
	DATED AS OF
	SERIES
	PRINCIPAL AMOUNT ISSUED
	PRINCIPAL AMOUNT OUTSTANDING

	NO.
	DESIGNATION

	Fortieth
	April 1, 2006
	40
	Collateral Series due 2011
	320,000,000
	None

	Forty-first
	December 1, 2006
	41
	5.70% Series due 2037
	150,000,000
	150,000,000

	Forty-second
	April 1, 2008
	42
	5.95% Series due 2018
	250,000,000
	250,000,000

	Forty-third
	November 1, 2008
	43
	Collateral Series 2008A
	200,000,000
	None

	Forty-fourth
	December 1, 2008
	44
	7.25% Series due 2013
	30,000,000
	None

	Forty-fifth
	December 1, 2008
	45
	Collateral Series 2008B
	17,000,000
	None

	Forty-sixth
	September 1, 2009
	46
	5.125% Series due 2022
	250,000,000
	250,000,000

	Forty-seventh
	November 1, 2009
	47
	Collateral Series 2009A
	75,000,000
	None

	Forty-eighth
	December 1, 2010
	48
49
	Collateral Series 2010A
Collateral Series 2010B
	66,700,000
17,000,000
	66,700,000
17,000,000

	Forty-ninth
	December 1, 2010
	50
51
	3.89% Series due 2020
5.55% Series due 2040
	52,000,000
35,000,000
	52,000,000
35,000,000

	Fiftieth
	December 1, 2010
	52
	1.68% Series due 2013
	50,000,000
	None

	Fifty-first
	February 1, 2011
	53
	Collateral Series 2011A
	400,000,000
	None

	Fifty-second
	August 1, 2011
	 
	None
	 
	 

	Fifty-third
	December 1, 2011
	54
	4.45% Series due 2041
	85,000,000
	85,000,000

	Fifty-fourth
	November 1, 2012
	55
	4.23% Series due 2047
	80,000,000
	80,000,000

	Fifty-fifth
	August 1, 2013
	56
	Collateral Series 2013A
	90,000,000
	None

	Fifty-sixth
	April 1, 2014
	57
	Collateral Series 2014A
	400,000,000
	400,000,000

	Fifty-seventh
	December 1, 2014
	58
	4.11% Series due 2044
	$60,000,000
	$60,000,000

	Fifty-eighth
	December 1, 2015
	59
	4.37% Series due 2045
	$100,000,000
	$100,000,000

	TOTAL OUTSTANDING
	$1,846,700,000

A-3

EXHIBIT B
FILING AND RECORDING OF 
FIFTY-EIGHTH SUPPLEMENTAL INDENTURE

	
										
	FILING IN STATE OFFICES

	 

	 
	 
	 
	Financing Statement

	State
	Office of
	Date
	Document Number

	Washington
	Secretary of State
	4/7/16
	2016-098-1444-3

	Idaho
	Secretary of State
	3/25/16
	B 2016-1172176-4

	Montana
	Secretary of State
	3/28/16
	1603281190443

	Oregon
	Secretary of State
	3/29/2016
	90773678

	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	RECORDING IN COUNTY OFFICES

	 
	 
	 

	 
	 
	Real Estate Mortgage Records

	 
	 
	 

	 
	 
	 
	Document
	 
	 

	County
	Office of
	Date
	Number
	Book
	Page

	Washington
	 
	 
	 
	 
	 

	Adams
	Auditor
	3/10/16
	312574
	N/A
	N/A

	Asotin
	Auditor
	3/10/16
	348699
	N/A
	N/A

	Benton
	Auditor
	3/21/16
	2016-007447
	N/A
	N/A

	Douglas
	Auditor
	3/10/16
	3193039
	N/A
	N/A

	Ferry
	Auditor
	3/10/16
	286360
	N/A
	N/A

	Franklin
	Auditor
	3/11/16
	1842360
	N/A
	N/A

	Garfield
	Auditor
	3/10/16
	20160097
	N/A
	N/A

	Grant
	Auditor
	3/10/16
	1359943
	N/A
	N/A

	Klickitat
	Auditor
	3/11/16
	1117404
	N/A
	N/A

	Lewis
	Auditor
	3/10/16
	3444642
	N/A
	N/A

	Lincoln
	Auditor
	3/10/16
	2016 0471909
	110
	1610

	Pend Oreille
	Auditor
	3/10/16
	20160324323
	N/A
	N/A

	Skamania
	Auditor
	3/14/16
	2016000457
	N/A
	N/A

	Spokane
	Auditor
	3/10/16
	6479693
	N/A
	N/A

	Stevens
	Auditor
	3/21/16
	2016 0001702
	N/A
	N/A

	Thurston
	Auditor
	3/25/16
	4493021
	N/A
	N/A

	Whitman
	Auditor
	3/10/16
	734258
	N/A
	N/A

	 
	 
	 
	 
	 
	 

	Idaho
	 
	 
	 
	 
	 

	Benewah
	Recorder
	3/10/16
	273605
	N/A
	N/A

	Bonner
	Recorder
	3/10/16
	886383
	N/A
	N/A

	Boundary
	Recorder
	3/10/16
	266542
	N/A
	N/A

	Clearwater
	Recorder
	3/10/16
	228277
	N/A
	N/A

	Idaho
	Recorder
	3/10/16
	503419
	N/A
	N/A

	Kootenai
	Recorder
	3/9/16
	2536369000
	N/A
	N/A

	Latah
	Recorder
	3/10/16
	577515
	N/A
	N/A

B-1

	
							
	RECORDING IN COUNTY OFFICES

	 
	 
	 

	 
	 
	Real Estate Mortgage Records

	 
	 
	 

	 
	 
	 
	Document
	 
	 

	County
	Office of
	Date
	Number
	Book
	Page

	Idaho (cont.)
	 
	 
	 
	 
	 

	Lewis
	Recorder
	3/10/16
	144287
	N/A
	N/A

	Nez Perce
	Recorder
	3/10/16
	837924
	N/A
	N/A

	Shoshone
	Recorder
	3/10/16
	484265
	N/A
	N/A

	 
	 
	 
	 
	 
	 

	Montana
	 
	 
	 
	 
	 

	Big Horn
	Clerk & Recorder
	 
	3/10/16
	144287
	N/A
	N/A

	Broadwater
	Clerk & Recorder
	 
	3/10/16
	837924
	N/A
	N/A

	Golden Valley
	Clerk & Recorder
	 
	3/10/16
	484265
	N/A
	N/A

	Meagher
	Clerk & Recorder
	 
	3/10/16
	144287
	N/A
	N/A

	Mineral
	Clerk & Recorder
	 
	3/10/16
	837924
	N/A
	N/A

	Rosebud
	Clerk & Recorder
	 
	3/10/16
	484265
	N/A
	N/A

	Sanders
	Clerk & Recorder
	 
	3/10/16
	144287
	N/A
	N/A

	Stillwater
	Clerk & Recorder
	 
	3/10/16
	837924
	N/A
	N/A

	Treasure
	Clerk & Recorder
	 
	3/10/16
	484265
	N/A
	N/A

	Wheatland
	Clerk & Recorder
	 
	3/10/16
	144287
	N/A
	N/A

	Yellowstone
	Clerk & Recorder
	 
	3/10/16
	837924
	N/A
	N/A

	 
	 
	 
	 
	 
	 

	Oregon
	 
	 
	 
	 
	 

	Douglas
	Recorder
	3/11/16
	2016-004873
	N/A
	N/A

	Jackson
	Recorder
	3/14/16
	2016-007781
	N/A
	N/A

	Josephine
	Recorder
	3/11/16
	2016-003388
	N/A
	N/A

	Klamath
	Recorder
	3/14/16
	2016-002694
	N/A
	N/A

	Morrow
	Recorder
	3/11/16
	2016-37826
	N/A
	N/A

	Union
	Recorder
	3/11/16
	20160826
	N/A
	N/A

	Wallowa
	Recorder
	3/11/16
	74283
	N/A
	N/A

B-2

EXHIBIT C
PROPERTY ADDITIONS
First
THE ADDITIONAL ELECTRIC SUBSTATIONS AND SUBSTATION SITES of the Company, in the State of Washington, including all buildings, structures, towers, poles, equipment, appliances and devices for transforming, converting and distributing electric energy, and the lands of the Company on which the same are situated and all of the Company’s real estate and interests therein, machinery, equipment, appliances, devices, appurtenances and supplies, franchises, permits and other rights and other property forming a part of said substations or any of them, or used or enjoyed or capable of being used or enjoyed in connection with any thereof, including, but not limited to, the following situated in the State of Washington, to wit:

		
	(1)
	Spokane County, Washington: “Russell Road Substation”, granted by: Pedro Arrastio – Parcel A:The South half of Tract 41 of plat 2, Hazelwood Irrigated Farms, in Section 25,Township  25 North, Range 41,E.W.M., according to plat recorded in Volume “J” of plats, page 35, in Spokane County, Washington. Parcel B: The North half of Tract 56 of plat 2, Hazelwood Irrigated Farms, in Section 25, Township 25 North, Range 41, E.W.M., According to plat recorded in Volume “J” of  plats, Page 35, in Spokane County, Washington. Evidenced by Deed recorded as Auditor number 6492030 on April 29, 2016.

		
	(2)
	Lincoln County, Washington: “Davenport Substation”, granted by Inland Empire Collection Point, Inc. – That portion of the Northwest Quarter of Section 22, Township 25 North, Range 37 E.W.M., records of Lincoln County Washington. Evidenced by Deed recorded as Auditor number 2016 0472856 on July 14, 2016.

		
	(3)
	Spokane County, Washington: “Beacon Substation”, granted by Laurence C. Knorr and Genevieve R. Knorr and Leonard H. Knorr – That portion of vacated Block 8 of Riverton, as per plat recorded in Volume “B” of plats, page 50; Together with the East half of vacated Dearborn Street lying West and adjacent to said Block 8; and together with the North half of vacated First Avenue lying South of and adjacent to said Block 8; Except the East 200 feet thereof; Situate in the County of Spokane, State of Washington. Evidenced by Deed recorded as Auditor number 6523703 on August 8, 2016.

Second
ADDITIONAL PROTECTION, MITIGATION AND ENHANCEMENT PROPERTY of the Company, real, personal, or mixed, acquired, constructed and/or installed in, on, under and/or proximate to the Company’s hydroelectric generation developments for the purpose of protecting and/or enhancing wildlife (including fish and aquatic life), botanical life and/or wetlands, and/or mitigating any harm or damage thereto, and all other property, real, personal or mixed, used or enjoyed or capable of being used or enjoyed in conjunction therewith, including, but not limited to, the following in the State of Idaho to wit:

C-1

Bonner County, Idaho:  “Ruen Mitigation”, granted by Lowell V. Ruen, Trustee of the Vernon Ruen Marital QTIP Trust:

Parcel 1
Government Lot 2 in Section 19 Township 55 North, Range 3 East, Boise Meridian, Bonner County, Idaho.

Parcel 2
Government Lots 2,3,4 the Southwest Quarter of the Northeast Quarter, the Southwest Quarter of the Northwest Quarter lying North of the County Road, the Southeast Quarter of the Northwest Quarter, the East half of the Southwest Quarter and the West Half of the Southeast Quarter, all in Section 30, Township 55 North, Range 3 East, Boise Meridian, Bonner County, Idaho; Excepting Therefrom the original charter right of way of the Northern Pacific Railway Company right of way; and Also Except County Road right of way; and Also Excepting Therefrom any portion lying within the Burlington Northern Railroad Right of Way. Evidenced by Deed recorded as Auditor number 898923 on December 5, 2016.

The original 400 foot charter right of way located in Govt. Lot 2, Govt. Lot 3, and the NE1/4 NE1/4 SW1/4 NE1/4 of Section 30, Township 55 North, Range No. 3, East, Boise Meridian, County of Bonner, State of Idaho. All lying outside of the current 175 foot operating right of way. Evidenced by Deed recorded as Auditor number 898931 on December 5, 2016.

Third

BUSINESS OFFICE(S) AND/OR MISCELLANEOUS REAL ESTATE, in the State of Washington, to wit:

		
	(1)
	Spokane County, Washington: “Dollar Road Expansion”, granted by Chad W. and Jasmine S. Jones – Tract 191, Orchard Avenue Addition, as per plat recorded in Volume “M” of plats, page 24, Records of Spokane County, Situate in the City of Spokane Valley, County of Spokane, State of Washington. Evidenced by Deed recorded as Auditor number 6476675 on February 25, 2016.

		
	(2)
	Spokane County, Washington: “Ross Park Expansion”, granted by Riverview Lutheran Retirement Community of Spokane, formerly known as Riverview Lutheran Home of Spokane, River Village, and Riverview Lutheran Care Center – Lot 5, Wilkinson Subdivision of part of Block 12 of Ross Park Addition, according to plat recorded in Volume 3 of plats, page 63, in the City of Spokane, Spokane County, Washington. Evidenced by Deed recorded as Auditor number 6501286 on May 26, 2016.

		
	(3)
	Spokane County, Washington: “Ross Park Expansion”, granted by Riverview Lutheran Retirement Community of Spokane, formerly known as Riverview Lutheran Home of Spokane, River Village, and Riverview Lutheran Care Center – Lot 8, Wilkinson Subdivision of part of Block 12 of Ross Park Addition, according to plat recorded in

C-2

Volume 3 of plats, page 63, in the City of Spokane, Spokane County, Washington. Evidenced by Deed recorded as Auditor number 6501285 on May 26, 2016.

		
	(4)
	Spokane County, Washington: “Dollar Road Expansion”, granted by Geoffery and Holly Williams – Tract 192, Orchard Avenue Addition, as per plat recorded in Volume “M” of plats, page 24, Records of Spokane County, Situate in the City of Spokane Valley, County of Spokane, State of Washington. Evidenced by Deed recorded as Auditor number 6533613 on September 12, 2016.

		
	(5)
	Spokane County, Washington: “Post Street Substation”, granted by The City of Spokane – A parcel of land being a portion of the Southwest quarter Section 18, Township 25 North, Range 43 East, W.M., City of Spokane, County of Spokane, State of Washington. Evidenced by Deed recorded as Auditor number 6538342 on September 27, 2016.

Fourth

THE GAS STORAGE FACILITIES of the Company in the State of Washington, including all improvements, storage facility equipment, appliances and devices for storing natural gas and the lands of the Company on which the same are situated and all of the Company’s real estate and interests therein, machinery, equipment, appliances, devices, appurtenances and supplies, franchises, permits, and other rights and other property forming a part of said facilities or any of them, or used or enjoyed or capable of being used or enjoyed in connection with any thereof, including, but not limited to, the following situated in the State of Washington: 

		
	(1)
	Lewis County, Washington:  the Company’s one-third undivided interest in “Jackson Prairie Gas Storage Expansion”, consisting of all additional property acquired from Weyerhauser Columbia Timberlands LLC, recorded as Auditor number 3441561 on December 29, 2015, being the following parcels in each of which the Company has a one-third undivided interest:  

PARCEL A 
The southeast quarter of the southeast quarter of Section 7, Township 12 North, W.M., Lewis County, Washington,  
EXCEPT Zandecki County Road.
PARCEL B 
The north half of Section 17, Township 12 North, Range 1 West, W.M., Lewis County, Washington,  
EXCEPT the northeast quarter of the northeast quarter,  
EXCEPT ALSO the east half of the northwest quarter of the northeast quarter.
PARCEL C 
The northeast quarter of the northeast quarter and the east half of the northwest quarter of the northeast quarter of Section 17, Township 12 North, Range I West, W.M., Lewis County, Washington.
PARCEL D 
The south half of Section 17, Township 12 North, Range 1 West, W.M., Lewis County, Washington,  

C-3

EXCEPT the south half of the southeast quarter,  
ALSO EXCEPT Park County Road.
PARCEL E 
The south half of the southeast quarter of Section 17, Township 12 North, Range 1 West, W.M., Lewis County, Washington,  
EXCEPT Park County Road.
Fifth

THE ADDITIONAL REGULATOR AND ODORIZER STATION SITES of the Company in the States of Washington, Idaho and Oregon, including all improvements, regulator and odorizer station equipment, general equipment, appliances and devices for distributing natural gas and the lands of the Company on which the same are situated and all of the Company’s real estate and interests therein, machinery, equipment, appliances, devices, appurtenances and supplies, franchises, permits, and other rights and other property forming a part of said Stations or any of them, or used or enjoyed or capable of being used or enjoyed in connection with any thereof, including, but not limited to, the following situated in the State of Washington:
		
	(1)
	Spokane County, Washington: “Gas Regulator Station #29 expansion” , granted by The State of Washington Department of Transportation-A Parcel of land being a portion of the Southwest quarter of the Southeast quarter of Section 10, township 26 North, Range 43 East, W.M. in Spokane County, Washington. Evidenced by Deed recorded as Auditor number 6530223 on August 30, 2016.

C-4

EXHIBIT D
(Form of Bond)
PPN: 05379B C#2
AVISTA CORPORATION
First Mortgage Bond, 3.54% Series due 2051
	
		
	REGISTERED
	REGISTERED

	 
	 

	NO. _________________
	$_______________

	 
	 

	 
	 

AVISTA CORPORATION, a corporation of the State of Washington (hereinafter called the Company), for value received, hereby promises to pay to
, or registered assigns, on December 1, 2051 (the “Stated Maturity Date”)
DOLLARS
and to pay the registered owner hereof interest thereon semi-annually in arrears on June 1 and December 1 in each year (each such date, an “Interest Payment Date”), commencing June 1, 2017, and at Maturity (as hereinafter defined), at the rate of three and fifty-four one hundredths percentum (3.54%) per annum computed on the basis of a 360-day year consisting of twelve 30-day months, until the Company’s obligation with respect to the payment of such principal shall have been discharged.  This bond shall bear interest from December 15, 2016 or from the most recent Interest Payment Date on or prior to the date of this bond to which interest on the bonds of this series has been paid.
	
			
	Dated:
	AVISTA CORPORATION

	 
	 
	 

	 
	By:
	 

	 
	Name:
	 

	 
	Title:
	 

	
		
	Attest:
	 

	Name:
	 

	Title:
	 

TRUSTEE’S CERTIFICATE
This bond is one of the bonds of the series herein designated, described or provided for in the within-mentioned Mortgage.
	
		
	CITIBANK, N.A.

	Trustee

	 
	 

	By:
	 

	 
	Authorized Signatory

D-1

The principal of and premium, if any, and interest on this bond payable at Maturity shall be payable upon presentation hereof at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts.  The interest on this bond (other than interest payable at Maturity) shall be paid by check, in the similar coin or currency, mailed to the registered owner hereof as of the close of business on the seventh Business Day preceding each Interest Payment Date (each such date being herein called a “Record Date”); provided, however, that if such registered owner shall be a securities depositary, such payment shall be made by such other means in lieu of check as shall be agreed upon by the Company, the Trustee and such registered owner; and provided further that, so long as this Bond shall be held by (a) the original purchaser hereof under the Bond Purchase Agreement (as defined in the Fifty-ninth Supplemental Indenture referred to below) or (b) any other Institutional Investor (as defined in such Supplemental Indenture) that (i) is the direct or indirect transferee of this bond from such original purchaser and (ii) has made the same agreement relating to this bond as such original purchaser made in Section 8.2 of the Bond Purchase Agreement, payment of principal of and premium, if any, and interest on this Bond shall be payable in the manner specified in the Bond Purchase Agreement.  Interest payable at Maturity shall be paid to the person to whom principal shall be paid.  As used herein, the term “Maturity” shall mean the date on which the principal of this bond becomes due and payable, whether at stated maturity, upon redemption or acceleration, or otherwise.
This bond is one of an issue of bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 3.54% Series due 2051, all bonds of all such series being issued and issuable under and equally secured (except insofar as any sinking or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series) by a Mortgage and Deed of Trust, dated as of June 1, 1939 (the “Original Mortgage”), executed by the Company (formerly known as The Washington Water Power Company) to City Bank Farmers Trust Company and Ralph E. Morton, as Trustees (Citibank, N.A., successor Trustee to both said Trustees).  The Original Mortgage has been amended and supplemented by various supplemental indentures, including the Fifty-ninth Supplemental Indenture, dated as of December 1, 2016 (the “Fifty-ninth Supplemental Indenture”), and, as so amended and supplemented, is herein called the “Mortgage”.  Reference is made to the Mortgage for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustee in respect thereof, the duties and immunities of the Trustee and the terms and conditions upon which the bonds are and are to be secured and the circumstances under which additional bonds may be issued.  If there shall be a conflict between the terms of this bond and the provisions of the Mortgage, the provisions of the Mortgage shall control to the extent permitted by law.  The holder of this bond, by its acceptance hereof, shall be deemed to have consented and agreed to all of the terms and provisions of the Mortgage and, further, in the event that such holder shall not be the sole beneficial owner of this bond, shall be deemed to have agreed to use all commercially reasonable efforts to cause all direct and indirect beneficial owners of this bond to have knowledge of the terms and provisions of the Mortgage and of this bond and to comply therewith, including particularly, but without limitation, any

D-2

provisions or restrictions in the Mortgage regarding the transfer or exchange of such beneficial interests and any legend set forth on this bond.
The Mortgage may be modified or altered by affirmative vote of the holders of at least 60% in principal amount of the bonds outstanding under the Mortgage, considered as one class, or, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected, then such modification or alteration may be effected with the affirmative vote only of 60% in principal amount of the bonds outstanding of the series so to be affected, considered as one class, and, furthermore, for limited purposes, the Mortgage may be modified or altered without any consent or other action of holders of any series of bonds.  No modification or alteration shall, however, permit an extension of the Maturity of the principal of, or interest on, this bond or a reduction in such principal or the rate of interest hereon or any other modification in the terms of payment of such principal or interest or the creation of any lien equal or prior to the lien of the Mortgage or deprive the holder of a lien on the mortgaged and pledged property without the consent of the holder hereof.  Each initial and subsequent holder of bonds of this series, by virtue of its acquisition of an interest therein, shall be deemed, without further act, to have consented to the prospective amendments to the Original Mortgage set forth in the Fifty-ninth Supplemental Indenture.
The principal hereof may be declared or may become due prior to the stated maturity date on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a Completed Default as in the Mortgage provided.
As provided in the Mortgage and subject to certain limitations therein set forth, this bond or any portion of the principal amount hereof will be deemed to have been paid if there has been irrevocably deposited with the Trustee moneys or direct obligations of or obligations guaranteed by the United States of America, the principal of and interest on which when due, and without regard to any reinvestment thereof, will provide moneys which, together with moneys so deposited, will be sufficient to pay when due the principal of and premium, if any, and interest on this bond when due.
The Mortgage contains terms, provisions and conditions relating to the consolidation or merger of the Company with or into, and the conveyance or other transfer, or lease, of assets to, another corporation and to the assumption by such other corporation, in certain circumstances, of all of the obligations of the Company under the Mortgage and on the bonds secured thereby.
In the manner prescribed in the Mortgage, this bond is transferable by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, upon surrender and cancellation of this bond, together with a written instrument of transfer whenever required by the Company duly executed by the registered owner or by its duly authorized attorney, and, thereupon, a new fully registered bond of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage.  The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes.

D-3

In the manner prescribed in the Mortgage, any bonds of this series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, are exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations.
Prior to the Par Call Date (as hereinafter defined), the bonds of this series shall be redeemable in whole at any time or in part from time to time, at the option of the Company, upon notice mailed as provided in Section 52 of the Mortgage, at a redemption price equal to the greater of
(a)    100% of the principal amount of the bonds being redeemed, and
(b)    the sum of the present values of the remaining scheduled payments of principal of and interest (not including any portion of any scheduled payment of interest which accrued prior to the redemption date) on the bonds being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield (as hereinafter defined) plus 50 basis points,
plus, in the case of either (a) or (b) above, whichever is applicable, accrued interest on such bonds to the date of redemption.
On or after the Par Call Date, the bonds of this series shall be redeemable in whole at any time, or in part from time to time, at the option of the Company, upon notice mailed as aforesaid, at a redemption price equal to 100% of the principal amount of the bonds being redeemed plus accrued interest on such bonds to the date of redemption.
“Par Call Date” means June 1, 2051.
“Treasury Yield” means, with respect to any redemption of the bonds of this series, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price.  The Treasury Yield shall be calculated as of the third business day preceding the earlier of (a) the date notice of redemption is mailed to holders of bonds of this series and (b) the date irrevocable arrangements with the Trustee for the mailing of such notice shall have been made, as the case may be, (the “Calculation Date”).
“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the bonds of this series that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the bonds.
“Comparable Treasury Price” means (A) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the Calculation Date, as set forth in the H.15 Daily Update of the

D-4

Federal Reserve Bank of New York or (B) if such release (or any successor release) is not published or does not contain such prices on such business day, the Reference Treasury Dealer Quotation for the Calculation Date.
“H.15(519)” means the weekly statistical release entitled “Statistical Release H.15 (519)”, or any successor publication, published by the Board of Governors of the Federal Reserve System.
“H.15 Daily Update” means the daily update of H.15(519) available through the worldwide website of the Board of Governors of the Federal Reserve System or any successor site or publication.
“Independent Investment Banker” means any independent investment banking institution of national standing appointed by the Company and reasonably acceptable to the Trustee.
“Reference Treasury Dealer Quotation” means, with respect to the Reference Treasury Dealer, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the Calculation Date).
“Reference Treasury Dealer” means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.
Except as provided above, the bonds of this series are not redeemable prior to their stated maturity date.
No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage.
This bond shall not become obligatory until Citibank, N.A., the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of certificate endorsed hereon.

D-5

ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto 
	
	
	 

	[please insert social security or other identifying number of assignee]

	 

	[please print or typewrite name and address of assignee]

	 

the within bond of AVISTA CORPORATION and does hereby irrevocably constitute and appoint _________________ ________________, Attorney, to transfer said bond on the books of the within-mentioned Company, with full power of substitution in the premises. 
Dated: _________________
__________________________ 
[signature of assignor]
Notice: The signature to this assignment must correspond with the name as written upon the face of the bond in every particular without alternation or enlargement or any change whatsoever.

D-6Exhibit

Exhibit 10.1

EXECUTION COPY

PURCHASE AGREEMENT 

between 

MUFG UNION BANK, N.A.,
a national banking association 

and 

400 CALIFORNIA, LLC,
a Delaware limited liability company 

December 14, 2016 

400-430 California Street 
San Francisco, California

	
					
	TABLE OF CONTENTS

	 
	 
	 
	Page
	

	ARTICLE 1 Purchase and Sale
	1
	

	 
	1.1
	The Property
	1
	

	 
	1.2
	Confidentiality
	1
	

	ARTICLE 2 Purchase Price
	2
	

	 
	2.1
	Amount and Payment
	2
	

	ARTICLE 3 Completion of Sale
	2
	

	 
	3.1
	Place and Date
	2
	

	ARTICLE 4 Title and Condition
	2
	

	 
	4.1
	Title to the Property
	2
	

	 
	4.2
	Acceptance of Title
	2
	

	 
	4.3
	“AS IS” Sale
	3
	

	 
	4.4
	Environmental Definitions
	8
	

	ARTICLE 5 Representations and Warranties
	8
	

	 
	5.1
	Seller
	8
	

	 
	5.2
	Buyer
	12
	

	ARTICLE 6 Covenants
	13
	

	 
	6.1
	Seller
	13
	

	 
	6.2
	Buyer
	13
	

	 
	6.3
	Contracts
	13
	

	ARTICLE 7 Intentionally Omitted
	13
	

	ARTICLE 8 Closing
	13
	

	 
	8.1
	Procedure
	13
	

	 
	8.2
	Possession
	14
	

	 
	8.3
	Closing Costs
	14
	

	 
	8.4
	Prorations
	15
	

	 
	8.5
	Commissions
	15
	

	ARTICLE 9 General
	15
	

	 
	9.1
	Notices
	15
	

	 
	9.2
	Attorneys’ Fees
	17
	

	 
	9.3
	Governing Law
	17
	

	 
	9.4
	Construction
	17
	

- i - 

	
					
	 
	9.5
	Terms Generally
	17
	

	 
	9.6
	Partial Invalidity
	17
	

	 
	9.7
	Waivers
	17
	

	 
	9.9
	Miscellaneous
	18
	

	
	
	 
Exhibit A - Personal Property Schedule
Exhibit B - Contract Schedule 
Exhibit C - Grant Deed
Exhibit D - Diligence Documents Index
Exhibit E – Insurance

	 

- ii -

PURCHASE AGREEMENT
THIS AGREEMENT, made effective as of December 14, 2016, by and between MUFG UNION BANK, N.A., a national banking association (“Seller”), and 400 CALIFORNIA, LLC, a Delaware limited liability company (“Buyer”).
W I T N E S S E T H:
In consideration of the covenants in this Agreement, Seller and Buyer agree as follows:
ARTICLE 1
Purchase and Sale
1.1    The Property.  Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, in accordance with this Agreement, the real property in the City and County of San Francisco, State of California, commonly known as 400-430 California Street, described in the title insurance policy (the “Title Insurance Policy”) issued to Buyer on the date hereof by Chicago Title Company (the “Title Company”), together with the improvements on such real property (such real property and improvements are referred to herein as the “Real Property”), the easements and rights appurtenant to such real property, and Seller’s interest in the equipment and personal property listed on the schedule attached hereto as Exhibit A (the “Personal Property”), all construction and service contracts and other agreements, to the extent assigned to Buyer at Closing pursuant to this Agreement (the “Contracts”) relating to such real property, any strips and gores adjacent to any portions of the real property and any land lying in the beds of any street, road or avenue, open or proposed, in front of or adjoining said real property, and, to the extent assignable, any licenses, permits, franchises, approvals and certificate and governmental authorities required or used in or relating to the ownership, use, maintenance, occupying or operation of any part of the real property other than with respect to the operation of Seller’s business (all such real property, improvements, easements, rights, Personal Property, Contracts, strips, gores permits and licenses are collectively the “Property”).  The Contracts are listed in the schedule (the “Contracts Schedule”) attached hereto as Exhibit B.  All MUFG Union Bank and MUFG Union Bank affiliate signage and related rights and entitlements are specifically excluded from the Property.
1.2    Confidentiality Seller and Buyer (and their respective affiliates, partners, members, attorneys, agents, employees and consultants) will each treat the transactions contemplated in this Agreement, the negotiations in connection herewith, and the information disclosed to such party by the other party as confidential and shall disclose the foregoing only to their respective affiliates, partners, members, attorneys, agents, employees and consultants or otherwise as reasonably required in connection herewith (and shall cause such recipients to keep such information confidential), and shall make no use of any such disclosed information not independently known to such party except in connection with the transactions contemplated hereby; provided, that each party may, without the consent of the other, disclose such information (i) to the extent legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose the same, or (ii) to the extent required by any federal, state, local or foreign laws, or by 

- 1 - 

any rules or regulations of the United States Securities and Exchange Commission (or its equivalent in any foreign country) or any domestic or foreign public stock exchange or stock quotation system.   Buyer shall also be permitted to disclose the same to its actual and prospective lenders and investors, and the confidentiality provisions of this Section shall not apply to any information or document which is or becomes generally available to the public other than as a result of a disclosure in violation of this Agreement.  Seller agrees that certain Confidentiality Agreement, dated June 2, 2016 executed by TAK Development, Inc. is superseded by the provisions of this Section and that said agreement is terminated.
ARTICLE 2
Purchase Price
2.1    Amount and Payment.  The total purchase price for the Property shall be One Hundred Thirty Five Million and no/100 Dollars ($135,000,000.00), which shall be subject to adjustment pursuant to Section 8.4 and which shall be payable by Buyer to Seller upon the Closing pursuant to Section 3.1 of this Agreement, by wire transfer of immediate available funds pursuant to the terms of the joint escrow instructions, dated December 13, among Seller, Buyer and the Title Company.
ARTICLE 3
Completion of Sale
3.1    Place and Date.  On the date hereof by execution and delivery of the instruments described in this Agreement, Seller shall sell and convey to Buyer, and Buyer shall acquire from Seller the Property (the “Closing”).  The Seller and Purchaser acknowledge that the Closing shall occur through escrow No. NBU 41954-52 with the Title Company at 725 S. Figueroa Street, Suite 200, Los Angeles, California 90017, Attn: Kris Klask, on December 14, 2016 (the “Closing Date”).
  
ARTICLE 4 
Title and Condition
4.1    Title to the Property.  Seller shall convey to Buyer good and marketable fee title to the Real Property, by a duly executed and acknowledged Grant Deed (the “Grant Deed”) in the form of Exhibit C attached hereto, free and clear of liens, encumbrances, leases, easements, restrictions, rights, covenants and conditions, except only the matters shown as exceptions in the Title Insurance Policy.  Without limiting the foregoing, Buyer acknowledges that the Grant Deed will include the restriction language set forth in Exhibit C.
4.2    Acceptance of Title.  Buyer’s acceptance of the Grant Deed from Seller for the Real Property at the Closing on the Closing Date and the issuance of the Title Insurance Policy to 

- 2 -

Buyer by the Title Company on the Closing Date shall conclusively establish that Seller conveyed the Real Property to Buyer as required by this Agreement and shall discharge in full Seller’s obligations under Section 4.1 hereof with respect to title to the Property.
4.3    “AS IS” Sale
(a)    Buyer represents to Seller that (i) it and/or its direct or indirect owners, are is experienced in the acquisition of real property similar to the Real Property and that Buyer recognizes the risks of acquiring and owning the Property and that an allocation of risk is intended by this Agreement, (ii) Buyer has conducted all such inspections, investigations, tests, analyses, appraisals and evaluations of the Property (including for Hazardous Materials, as defined below) as Buyer considers necessary or appropriate (all of such inspections, investigations and reports being herein collectively called the “Investigations”), and (iii) Buyer has been represented by advisors and consultants (including legal counsel) of its choice in the transaction contemplated by this Agreement.
(b)    Nothing contained in this Agreement shall limit Buyer’s obligations under Section 8 of that certain Access Agreement entered into between Seller, Takenaka Corporation and K-W Properties, dated October 10, 2016.   
(c)    Buyer acknowledges and agrees that Seller has advised it that the portion of the Property comprised of the building located at 400 California Street has been designated as a San Francisco Designated Landmark by the City and County of San Francisco and that said designation may limit Buyer’s ability to renovate, improve or modify such building.  
(d)    THE PROPERTY IS BEING SOLD, AND BUYER IS ACCEPTING POSSESSION OF THE PROPERTY ON THE CLOSING DATE, “AS IS, WHERE IS, WITH ALL FAULTS,” ON THE DATE HEREOF WITH NO RIGHT OF SETOFF OR REDUCTION IN THE PURCHASE PRICE AND SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS SET FORTH IN THIS AGREEMENT THAT EXPRESSLY SURVIVE THE CLOSING AND INSTRUMENTS EXECUTED BY SELLER AT CLOSING (THE “SELLER’S WARRANTIES”).  EXCEPT FOR SELLER’S WARRANTIES, NEITHER SELLER, ITS COUNSEL OR BROKERS, NOR ANY PARTNER, OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF SELLER, ITS COUNSEL OR BROKERS NOR ANY OTHER PARTY RELATED IN ANY WAY TO ANY OF THE FOREGOING (EACH A “SELLER PARTY” AND COLLECTIVELY THE “SELLER PARTIES”) HAVE OR SHALL BE DEEMED TO HAVE MADE ANY VERBAL OR WRITTEN REPRESENTATIONS, WARRANTIES, PROMISES OR GUARANTEES (WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) TO BUYER WITH RESPECT TO THE PROPERTY, ANY MATTER SET FORTH, CONTAINED OR ADDRESSED IN THE DILIGENCE DOCUMENTS (INCLUDING, BUT NOT LIMITED TO, THE ACCURACY AND COMPLETENESS THEREOF) OR THE RESULTS OF THE INVESTIGATIONS. 
(e)    AT CLOSING BUYER SHALL HAVE HAD THE OPPORTUNITY TO CONDUCT TESTING AND INSPECTIONS TO CONFIRM INDEPENDENTLY ALL 

- 3 -

INFORMATION THAT BUYER CONSIDERS MATERIAL TO ITS PURCHASE OF THE PROPERTY OR THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.  EXCEPT FOR SELLER’S WARRANTIES, BUYER IS NOT RELYING ON (AND SELLER AND EACH OF THE SELLER PARTIES DOES HEREBY DISCLAIM AND RENOUNCE) ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER OR THE SELLER PARTIES, AS TO:  (i) THE OPERATION OF THE PROPERTY OR THE INCOME POTENTIAL, USES, OR MERCHANTABILITY OR FITNESS OF ANY PORTION OF THE PROPERTY FOR A PARTICULAR PURPOSE; (ii) THE PHYSICAL CONDITION WHETHER VISIBLE OR NOT, OF THE PROPERTY OR THE CONDITION OR SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS THEREON, INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING, VENTILATING AND AIR CONDITIONING, LIFE SAFETY, BUILDING MANAGEMENT, VERTICAL TRANSPORTATION, AND ELECTRICAL SYSTEMS, ROOFING, FOUNDATIONS, SOILS AND GEOLOGY, INCLUDING HAZARDOUS MATERIALS, LOT SIZE, OR SUITABILITY OF THE PROPERTY OR ANY IMPROVEMENTS THEREON FOR A PARTICULAR PURPOSE; (iii) THE PRESENCE OR ABSENCE, LOCATION OR SCOPE OF ANY HAZARDOUS MATERIALS IN, AT, OR UNDER THE PROPERTY; (iv) WHETHER THE APPLIANCES, IF ANY, PLUMBING OR UTILITIES ARE IN WORKING ORDER; (v) THE HABITABILITY OR SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (vi) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION, OR IN COMPLIANCE WITH APPLICABLE MUNICIPAL, COUNTY, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES; (vii) THE ACCURACY OF ANY STATEMENTS, CALCULATIONS OR CONDITIONS STATED OR SET FORTH IN SELLER’S BOOKS AND RECORDS CONCERNING THE PROPERTY OR SET FORTH IN THE DILIGENCE DOCUMENTS OR ANY OF SELLER’S OFFERING MATERIALS WITH RESPECT TO THE PROPERTY; (viii) THE DIMENSIONS OF THE PROPERTY OR THE ACCURACY OF ANY FLOOR PLANS, SQUARE FOOTAGE, LEASE ABSTRACTS, SKETCHES, REVENUE OR EXPENSE PROJECTIONS RELATED TO THE PROPERTY; (ix) THE OPERATING PERFORMANCE, THE INCOME AND EXPENSES OF THE PROPERTY OR THE ECONOMIC STATUS OF THE PROPERTY; (x) THE ABILITY OF BUYER TO OBTAIN ANY AND ALL NECESSARY GOVERNMENTAL APPROVALS OR PERMITS FOR BUYER’S INTENDED USE AND DEVELOPMENT OF THE PROPERTY; (xi) THE LEASING STATUS OF THE PROPERTY OR THE INTENTIONS OF ANY PARTIES WITH RESPECT TO THE NEGOTIATION AND/OR EXECUTION OF ANY LEASE FOR ANY PORTION OF THE PROPERTY; AND (xii) SELLER’S OWNERSHIP OF ANY PORTION OF THE PROPERTY.
(f)    EXCEPT TO THE EXTENT SET FORTH IN THE SELLER’S WARRANTIES, NEITHER SELLER NOR ANY SELLER PARTY IS UNDER ANY DUTY (AND BUYER HEREBY RENOUNCES ANY DUTY OF SELLER OR ANY SELLER PARTY) TO MAKE ANY AFFIRMATIVE DISCLOSURES OR INQUIRY 

- 4 -

REGARDING ANY MATTER RELATING TO THE PROPERTY THAT MAY OR MAY NOT BE KNOWN TO SELLER OR ANY SELLER PARTY.
(g)    EXCEPT TO THE EXTENT SET FORTH IN THE SELLER’S WARRANTIES AND EXCEPT AS MAY BE PROVIDED IN THE OFFICE LEASE AND THE RETAIL LEASE, BUYER, FOR BUYER AND BUYER’S SUCCESSORS AND ASSIGNS, HEREBY RELEASES SELLER AND SELLER PARTIES, AND THEIR SUCCESSORS AND ASSIGNS FROM, AND WAIVES ALL CLAIMS AND LIABILITY, INCLUDING ENVIRONMENTAL LIABILITY (DEFINED BELOW), AGAINST SELLER AND SELLER PARTIES, AND THEIR SUCCESSORS AND ASSIGNS FOR OR ATTRIBUTABLE TO THE FOLLOWING:
(i)    ANY AND ALL STATEMENTS OR OPINIONS HERETOFORE OR HEREAFTER MADE, OR INFORMATION FURNISHED, BY THEM TO BUYER OR ITS AGENTS OR REPRESENTATIVES RELATING TO THE PROPERTY, EXCEPT FOR SELLER’S WARRANTIES; AND
(ii)    ANY STRUCTURAL, PHYSICAL OR ENVIRONMENTAL CONDITION AT THE PROPERTY, INCLUDING, CLAIMS OR LIABILITIES RELATING TO THE PRESENCE, DISCOVERY OR REMOVAL OF ANY HAZARDOUS MATERIALS IN, AT, ABOUT OR UNDER THE PROPERTY, OR FOR, CONNECTED WITH OR ARISING OUT OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON ENVIRONMENTAL LAW (DEFINED BELOW).
(h)    EXCEPT AS MAY BE PROVIDED IN THE OFFICE LEASE OF THE RETAIL LEASE, AFTER CLOSING, AS BETWEEN BUYER AND SELLER, THE RISK OF LIABILITY OR EXPENSE ASSOCIATED WITH THE PROPERTY (INCLUDING ENVIRONMENTAL LIABILITIES), EVEN IF ARISING FROM EVENTS BEFORE CLOSING, WILL BE THE SOLE RESPONSIBILITY OF BUYER, REGARDLESS OF WHETHER THE LIABILITIES WERE KNOWN OR UNKNOWN AT CLOSING.  ONCE CLOSING HAS OCCURRED, BUYER RELEASES SELLER FROM LIABILITY TO BUYER ASSOCIATED WITH THE PROPERTY, INCLUDING LIABILITY UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT, THE RESOURCE CONSERVATION AND RECOVERY ACT, AND ANY OTHER ENVIRONMENTAL LAWS.  EXCEPT AS MAY BE PROVIDED IN THE OFFICE LEASE OR THE RETAIL LEASE, BUYER RELEASES SELLER FROM ANY LIABILITY TO BUYER ASSOCIATED WITH THE PROPERTY ARISING AS THE RESULT OF SELLER’S OWN NEGLIGENCE OR THE NEGLIGENCE OF SELLER’S REPRESENTATIVES.  EXCEPT AS MAY BE PROVIDED IN THE OFFICE LEASE OF THE RETAIL LEASE, BUYER RELEASES SELLER FROM ANY LIABILITY TO BUYER ASSOCIATED WITH THE PROPERTY ARISING AS THE RESULT OF THEORIES OF PRODUCTS LIABILITY AND STRICT LIABILITY, OR UNDER NEW LAWS OR CHANGES TO EXISTING LAWS ENACTED AFTER THE EFFECTIVE DATE THAT WOULD OTHERWISE IMPOSE ON SELLERS IN THIS TYPE OF 

- 5 -

TRANSACTION NEW LIABILITIES FOR ENVIRONMENTAL LIABILITIES AFFECTING THE PROPERTY.
[Remainder of page intentionally left blank.  Document continues on next page]

- 6 -

(i)    In connection with this Section 4.3, Buyer expressly waives the benefits of Section 1542 of the California Civil Code, which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”  BUYER ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BY LEGAL COUNSEL OF ITS CHOICE IN CONNECTION WITH THIS AGREEMENT, AND THAT SUCH COUNSEL HAS EXPLAINED TO BUYER THE PROVISIONS OF THIS SECTION 4.3.
SELLER’S INITIALS:/s/ LL            BUYER’S INITIALS:/s/ MO
(j)     Nothing in this Section 4.3 shall supersede or impair the rights and obligations of the Seller and Buyer, as tenant and landlord, under the Retail Lease and the Office Lease.  
(k)    This Section 4.3 shall survive the Closing.
[Remainder of page intentionally left blank.  Document continues on following page]

[Signature page to Purchase Agreement]

4.4    Environmental Definitions.  As used herein “Environmental Law” means any international, federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, consent decree or judgment,  in each case in existence as of the Closing Date, relating to or regulating human health or safety, or industrial hygiene or environmental conditions or protection of the environment, or pollution or contamination of the air, soil, surface water or groundwater, and includes the Comprehensive Environmental Response Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, the Oil Pollution Act of 1990 and any state laws implementing the foregoing federal laws.  As used herein “Environmental Liability” means any claim, demand, order, suit, obligation, liability, cost (including, the cost of any investigation, testing, compliance or remedial action), consequential damages, loss or expense (including attorneys’ and consultants’ fees and expenses) arising out of, relating to or resulting from any Environmental Law or environmental, health or safety matter or condition, including natural resources, and related in any way to the Property or to this Agreement or its subject matter, in each case, whether arising or incurred before, on or after the Closing Date.  As used herein “Hazardous Materials” means (i) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls, (ii) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under any Environmental Law or any Mold or Mold Condition.  As used herein “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment, including continuing migration, of Hazardous Materials into or through soil, surface water or groundwater.  As used herein “Mold” means mold, mildew, fungus or other potentially dangerous organisms.  As used herein “Mold Condition” means the presence of Mold or any condition(s) that reasonably can be expected to indicate the presence of Mold, including observed discoloration of walls, ceilings or floors, complaints received within the last six (6) months of respiratory ailment or eye irritation by tenants, employees or any other occupants or invitees in the Property or any notice from a governmental agency of complaints regarding the indoor air quality at the Property.
ARTICLE 5 
Representations and Warranties
5.1    Seller.  The representations and warranties of Seller in this Section 5.1 are a material inducement for Buyer to enter into this Agreement.  Buyer would not purchase the Property from Seller without such representations and warranties of Seller.  Except with respect to the representations set forth in subsections (a) and (b) of this Section 5.1, such representations and warranties shall survive the Closing for only six (6) months after the Closing (the “Survival Period”), at which time such representations and warranties shall terminate, unless prior to the end of the Survival Period Buyer asserts a claim with respect thereto in accordance with the terms of this Agreement.  The representations set forth in subsections (a) and (b) of this Section 5.1 shall survive the Closing for the length of the statute of limitations applicable thereto. As used in this Agreement, “to the current actual knowledge of Seller” shall mean the current actual (not imputed, implied or constructive) knowledge of Larry Lawrence, Tony Padgett and Debra Fisher, who shall have no obligation, express or implied, to investigate the matters covered by 

- 8 - 

the representations and warranties of Seller and no personal liability for such representations and warranties.  Seller represents and warrants to Buyer as of the date of this Agreement as follows:
(a)    Seller is a national banking association duly incorporated and organized and validly existing and in good standing under the laws of the United States of America.  Seller has full corporate power and authority to enter into this Agreement and to perform this Agreement.  The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action on the part of Seller and all required consents or approvals have been duly obtained.  This Agreement is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting the rights of creditors generally.
(b)    The execution and delivery of this Agreement and all related documents (including the Retail Lease and the Office Lease) and the performance of its obligations hereunder and thereunder by it does not conflict with any provision of any law or regulation to which Seller is subject, conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of Seller’s Organizational Documents or of any agreement or instrument to which it is a party or by which Seller is bound or any order or decree applicable to it or result in the creation or imposition of any lien on any of its assets or property, which would reasonably be expected to impair its ability to perform its obligations under this Agreement; and it has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body or any other third party, if any, required for the execution, delivery and performance by it of this Agreement.  As used in this Agreement the term “Organizational Documents” means, with respect to any Person who is not a natural person, the certificate or articles of incorporation, memorandum of association, articles of association, trust agreement, by-laws, partnership agreement, limited partnership agreement, certificate of partnership or limited partnership, limited liability company articles of organization, limited liability company operating agreement or any other organizational document, and all shareholder agreements, voting trusts and similar arrangements with respect to its stock, partnership interests, membership interests or other equity interest.
(c)    The Contracts are accurately described on Exhibit B.  True and complete copies of the Contracts have been provided to Buyer. The Contracts have not been amended or modified except as shown on Exhibit B.  Except as noted in Exhibit B, to the current actual knowledge of Seller, there are no defaults in the performance of any material covenant to be performed by either party under the Contracts.  Except for the Contracts there are no contracts or agreements pertaining to the Real Property, other than contracts and agreements which apply to both the Property and other properties and which such other contracts and agreements are not binding on Buyer.
(d)    Except for the Office Lease and the Retail Lease (each as hereinafter defined) to be entered into contemporaneously with this Agreement upon Closing, no person or entity has the right to occupy space, there are no leases, licenses or rights of 

- 9 -

possession affecting the Property. Notwithstanding the foregoing, Seller has advised Buyer that the Office of the Comptroller of Currency is utilizing space within the premises to be demised to Seller pursuant to the Office Lease and that such use shall be governed by the terms of the Office Lease.
(e)    To the current actual knowledge of Seller, there is no action, suit or proceeding, pending or threatened against or affecting the Property or any portion thereof, at law or in equity or before any federal, state, municipal or governmental department, commission, board, bureau, agency or instrumentality. Seller acknowledges and agrees that, to the extent any such action, suit or proceeding is filed prior to the Closing, Seller shall defend such action, suit or proceeding and shall be liable for all costs and liabilities resulting from such suit, action or proceeding. 
(f)    To the current actual knowledge of Seller, except as disclosed to Buyer in the written instruments, if any, identified on Exhibit D or as disclosed by inclusion in materials made identified on said and available through a “virtual data room” established by CBRE on behalf of Seller), Seller has not received written notice from any governmental agency that a violation of laws, codes, or regulations exists or is alleged with respect to the Property, except such violations as have been corrected. In addition, Exhibit D identifies all reports, studies and assessments commissioned by Seller or in its control with respect to environmental conditions (including asbestos containing materials) at the Real Property and true and complete copies of same have been made available to Buyer.
(g)    To the current actual knowledge of Seller, except as disclosed to Buyer in writing prior to the Effective Date (including by inclusion in materials made available through the above described “virtual data room”), Seller has not received any written notice that the Property or the current use, occupation or condition is in violation of any Environmental Law that remains uncured. 
(h)    Seller has not filed or retained anyone to file notices or protests against any real property taxes or assessments against the Property.  There are no tax reduction proceedings (including, but not limited to, administrative and/or judicial proceedings or appeals) in respect of the Property, pending relating to any tax years ending prior to the tax year in which the Closing occurs or relating to the tax year in which the Closing occurs.  Except as set forth in any real property tax bills for the Property and on the Title Insurance Policy, to the current actual knowledge of Seller, there are no (i) special or other assessments for public improvements or otherwise now affecting any of the Property or (ii) any pending or threatened special assessments affecting the Property.
(i)    Larry Lawrence and Tony Padgett are employees of Seller and Debra Fisher is an employee of Seller’s property manager, CBRE, Inc., and each of them is familiar with the Property and its operation.
(j)    Seller is not a “foreign person” as defined in section 1445 of the Internal Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder.

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(k)    None of (i) Seller; (ii) any agent, advisor, representative, affiliate, employee, director, officer, partner, member, beneficiary, investor, servant, shareholder, trustee or other person or entity (each, a “Person”), controlling or controlled by Seller, directly or indirectly, including but not limited to any Person or Persons owning, in the aggregate, a fifty percent (50%) or greater direct or indirect ownership interest in Seller; (iii) any Person, if Seller is a privately-held entity, having a beneficial interest in Seller; or (iv) any Person for whom Seller is acting as agent or nominee in connection with the Transaction; is: (A) a country, territory, government, individual or entity subject to sanctions under any Executive Order issued by the President of the United States or any regulation administered by Office of Foreign Assets Control (“OFAC”) of the United States Department of the Treasury; (B) a Foreign Terrorist Organization designated by the United States Department of State, or (C) an individual or entity who the Seller knows, or reasonably should know, has engaged in or engages in terrorist activity, or has provided or provides material support for terrorist activities or terrorist organizations, as prohibited by U.S. law, including but not limited to the USA PATRIOT Act, P.L. 107-56.
(l)    Seller has no employees for whom Buyer would be responsible following the Closing.
(m)    That the policies of insurance set forth on Exhibit E hereto attached are currently in force.  Seller has not received any, written notice from any insurance company which has issued a policy with respect to the Property or from any board or fire underwriters (or other body exercising similar functions) (a) claiming any material defects or deficiencies which have not been cured or corrected, (b) requesting, the performance of any material repairs, alterations or other work which have not been performed, or (c) stating, in effect, that any of such policies will not be renewed or will be renewed at a higher premium than is presently payable therefor.
(n)    Except for CBRE, Inc. (“Broker”), Seller has not dealt with any real estate broker or finder in connection with the sale of the Property to Buyer or this Agreement.
Buyer shall not have the right to enforce any claim after Closing with respect to a breach of a representation or warranty of Seller, nor shall Seller be liable in any way to Buyer, for such a breach of a representation or warranty of Seller, if Buyer consummates the transactions herein despite having actual knowledge of the breach or condition, state of facts or other matter that constitutes a breach prior to the Closing.  Furthermore, Seller shall have no liability to Buyer for a breach of any representation or warranty made by Seller under this Section 5.1 (except with respect to the representations set forth in subsections (a) and (b) of this Section 5.1) unless written notice containing a description of the specific nature of such breach has been given by Buyer to Seller and Buyer shall have commenced an action against Seller with respect to such breach prior to the date that is thirty (30) days after the expiration of the Survival Period.  Furthermore, no claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than Two Hundred Fifty Thousand Dollars ($250,000), in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach of 

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one or more of Seller’s representations exceed Nine Million Five Hundred Ninety Thousand Dollars ($9,590,000).
5.2    Buyer.  The representations and warranties of Buyer in this Section 5.2 are a material inducement for Seller to enter into this Agreement.  Seller would not sell the Property to Buyer without such representations and warranties of Buyer.  Except with respect to the representations set forth in subsections (a) and (b) of this Section 5.2, such representations and warranties shall survive the Closing for only the Survival Period, at which time such representations and warranties shall terminate, unless prior to the end of the Survival Period Seller asserts a claim with respect thereto in accordance with the terms of this Agreement. The representations set forth in subsections (a) and (b) of this Section 5.2 shall survive the Closing for the length of the statute of limitations applicable thereto Buyer represents and warrants to Seller as of the date of this Agreement as follows:
(a)    Buyer is a limited liability company duly formed and organized and validly existing and in good standing under the laws of the State of Delaware and qualified to do business and in good standing in the State of California. Buyer has full power and authority to enter into this Agreement and to perform this Agreement.  The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized by all necessary action on the part of Buyer and all required consents or approvals have been duly obtained.  This Agreement is a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting the rights of creditors generally.
(b)    The execution and delivery of this Agreement and all related documents (including the Retail Lease and the Office Lease) and the performance of its obligations hereunder and thereunder by it does not conflict with any provision of any law or regulation to which Buyer is subject, conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of Buyer’s Organizational Documents or of any agreement or instrument to which it is a party or by which Buyer is bound or any order or decree applicable to it or result in the creation or imposition of any lien on any of its assets or property, which would reasonably be expected to impair its ability to perform its obligations under this Agreement; and it has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body or any other third party, if any, required for the execution, delivery and performance by it of this Agreement.  
(c)    The amounts payable by Buyer to Seller hereunder are not and were not, directly or indirectly, derived from activities in contravention of federal, state, or international laws and regulations (including, without limitation, anti-money laundering laws and regulations).  None of (A) Buyer; (B) any Person, as “Person” is defined at Section 5.1(e), controlling or controlled by Buyer, directly or indirectly, including but not limited to any Person or Persons owning, in the aggregate, a fifty percent (50%) or greater direct or indirect ownership interest in Buyer; (C) any Person, if Buyer is a 

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privately-held entity, having a beneficial interest in Buyer; or (D) any Person for whom Buyer is acting as agent or nominee in connection with the Transaction; is: (1) a country, territory, government, individual or entity subject to sanctions under any Executive Order issued by the President of the United States or any regulation administered by OFAC of the United States Department of the Treasury; (2) a Foreign Terrorist Organization designated by the United States Department of State, or (3) an individual or entity who the Buyer knows, or reasonably should know, has engaged in or engages in terrorist activity, or has provided or provides material support for terrorist activities or terrorist organizations, as prohibited by U.S. law, including but not limited to the USA PATRIOT Act, P.L. 107-56.
(d)    Except for Broker, Buyer has not dealt with any real estate broker or finder in connection with the purchase of the Property from Seller or this Agreement. Seller acknowledges that Buyer has advised it that it has used the services of (i) Kennedy Wilson (“KW”) and (ii) James Andrew International (“JAI”) in connection with this transaction. Buyer agrees it is solely responsible for any fees or compensation that KW and JAI may be entitled with respect to such services.
Seller shall not have the right to enforce any claim after Closing with respect to a breach of a representation or warranty of Buyer, nor shall Buyer be liable in any way to Buyer, for such a breach of a representation or warranty of Buyer, if Seller consummates the transactions herein despite having actual knowledge of the breach prior to the Closing.
ARTICLE 6 
Covenants
6.1    Seller.  Seller covenants and agrees with Buyer that Seller shall pay any commission due Broker in accordance with the separate written agreement between Seller and Broker.
6.2    Buyer.  Buyer covenants and agrees with Seller that Buyer shall pay any commission due KW and JAI in accordance with the separate written agreements between Buyer and KW and JAI, respectively.
6.3    Contracts.  Buyer has assumed the obligations arising from and after the Closing Date under certain Contracts pursuant to the terms of Assignment of Contracts of even date herewith.
ARTICLE 7 
Intentionally Omitted
ARTICLE 8 
Closing
8.1    Procedure.  Seller and Buyer have caused the following to occur at the Closing on the Closing Date:

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(a)    The Grant Deed for the Real Property, has been duly executed and acknowledged by Seller and delivered to Buyer (it being understood and agreed that delivery of the Grant Deed and other instruments to be delivered by Seller and Buyer at Closing shall be deemed delivered to the other party if deposited in escrow, and thereafter released from escrow, in accordance with the terms of this Agreement), for recordation in the Official Records of the county in which the Property is located.
(b)    Seller has dated as of the Closing Date, and has executed and delivered to Buyer (i)  a Bill of Sale (the “Bill of Sale”) in a form acceptable to the Seller and Buyer, (ii) an Assignment of Contracts and Permits (the “Assignment of Contracts”) a form acceptable to the Seller and Buyer , (iii) the lease agreement for the building located at 400 California Street (the “Retail Lease”) a form acceptable to the Seller and Buyer, (iv) the lease agreement for the building located at 430 California Street (the “Office Lease”) a form acceptable to the Seller and Buyer; (v) a Certificate of Nonforeign Status in a form acceptable to the Seller and Buyer; (vi) a California Form 593-C; and (vii) all applicable transfer tax affidavits or statements required under applicable law. 
(c)    Seller has executed and delivered to Buyer and the Title Company customary affidavits, certifications and Organizational Documents as are necessary for the Title Company to provide to Buyer a 2006 California Land Title Association Standard Coverage Policy of title insurance without exception for parties in possession or mechanics’ liens.
(d)    Buyer has executed and delivered to Seller (i) the Assignment of Contracts, (ii) the Retail Lease, (iii) the Office Lease, (iv) a Preliminary Change of Ownership Report; and (v) all applicable transfer tax affidavits or statements required under applicable law. 
(e)    Seller and Buyer have delivered the items required under the following provisions of the Office Lease and Retail Lease: certificates of insurance as required by Section 6.3 of each of the Office Lease and the Retail Lease.
(f)    The Title Company has issued to Buyer the Title Insurance Policy.
8.2    Possession.  Subject only to Seller’s rights of possession pursuant to the Retail Lease and the Office Lease, Seller on the Closing Date shall transfer vacant possession of the Property to Buyer.  Seller shall, on the Closing Date deliver to Buyer the model of the building that is located in the basement and any plans and specifications, permits, certificates, licenses and approvals relating to the Property in the possession of Seller, which shall become the property of Buyer on the Closing Date.  Such delivery shall be effected by leaving all such plans and specifications, permits, certificates, licenses and approvals relating to the Property in the building office or, if not now in such office, by promptly delivering it thereto. The provisions of this this Section 8.2 shall survive the Closing and delivery of the Grant Deed.
8.3    Closing Costs.  Seller shall pay the County documentary transfer tax in respect of the Grant Deed and the City conveyance tax in respect of the Grant Deed. Buyer shall pay the 

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cost of the title insurance policy described in Section 8.1(f) hereof and any upgrades, endorsements, co-insurance and reinsurance thereto, the escrow fee charged by the Title Company, and the recording fee for the Grant Deed.  Any other closing costs have been paid in accordance with local custom. The provisions of this this Section 8.3 shall survive the Closing and delivery of the Grant Deed.
8.4    Prorations.  The following costs and expenses have been prorated between the Seller and Buyer: Current installment of real property taxes and assessments levied against the Property, current utilities, income, amounts payable under Contracts (to the extent assumed by Buyer), permits and license fees, and other current operating and maintenance expenses of the Property.  Such pro-rations have been made as of the Closing Date based on the actual number of days in the applicable period, as of the end of the day immediately preceding the Closing Date, with Seller being entitled to income and obligated for expenses attributable to the period prior to the Closing Date, and Buyer being entitled to the income and obligated for expenses attributable on the Closing Date and thereafter. Without limiting the generality of the foregoing provisions, Buyer shall has also been given a credit against the Purchase Price in an amount equal to the rental due under the Retail Lease and Office Lease for the balance of this month in which the Closing occurs.  Buyer and Seller shall undertake, with thirty (30) days following the Closing Date (or, as to the real estate taxes and assessments for the year of Closing, within thirty (30) days after the invoice for the same is received by Buyer), to adjust between themselves, as of the Closing Date, any income or expense of the Property that are not adjusted, are incorrectly adjusted, or are provisionally adjusted on the settlement statement as of the Closing.
8.5    Commissions.  Seller does hereby indemnify and agree to defend and hold Buyer harmless against the payment of any commission to any other person or entity claiming by, through or under Seller other than Broker, JAI and KW.  Buyer does hereby indemnify and agree to defend and hold Seller harmless against the payment of any commission to any other person or entity claiming by, through or under Buyer other than Broker.  Seller shall be responsible for paying any commissions owed to Broker in connection with the transactions contemplated hereby (including the Retail Lease and the Office Lease).  Buyer shall be responsible for paying any sums owed to JAI and KW in connection with the transactions contemplated hereby (including the Retail Lease and the Office Lease). These indemnifications and obligations to defend and hold harmless shall extend to any and all claims, liabilities, costs and expenses (including reasonable attorneys' fees and litigation costs) arising as a result of such claims, and shall survive the Closing.
ARTICLE 9 
General
9.1    Notices.  All notices and other communications under this Agreement shall be properly given only if made in writing and (a) mailed by (certified mail, return receipt requested, postage prepaid, (b) delivered by a nationally recognized overnight courier, prepaid delivery service, receipt required, or (c) electronic mail (e.g., “PDF” or “tif” via email), with a verification copy sent on the same day by any of the methods set forth in clauses (a) or (b), in 

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each case to the party at the address set forth in this Section 9.1 or such other address as such party may designate by notice to the other party. Notices shall be deemed received upon actual delivery or receipt or upon refusal of delivery or receipt, as the case may be.  If any such notice or other communication is not received or cannot be delivered due to a change in the address of the receiving party of which notice was not previously given to the sending party or due to a refusal to accept by the receiving party, such notice or other communication shall be effective on the date delivery is attempted.  Any notice or other communication under this Agreement may be given on behalf of a party by the attorney for such party.
(a)    The address of Seller is:
MUFG Union Bank, N.A.  
350 California Street
Mail Sort: H-1RE
San Francisco, CA 94104
Attn: Larry W. Lawrence
Email: larry.lawrence@unionbank.com 

with a copy to:

MUFG Union Bank, N.A. 
Office of the General Counsel 
400 California Street, 16th Floor 
San Francisco, California 94101

with a copy to:

Pillsbury Winthrop Shaw Pittman LLP
Four Embarcadero Center, 22nd Floor
San Francisco, California 94111
Attn: Glenn Q. Snyder
Email: glenn.snyder@pillsburylaw.com 

(b)    The address of Buyer is:
TAK Realty SF, LLC
c/o Jun Fukada
Takenaka Corporation
70 East 55th Street, 4th Floor
New York, New York 10022-3395
Phone: 212-489-6001
Email: fukada@takd.com

with a copy to:

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Bryan Cave LLP
1290 Avenue of the Americas
New York, New York 10104-3300
Attn: Barry C. Ross
Email: Bcross@Bryancave.com

9.2    Attorneys’ Fees.  If there is any legal action or proceeding between Seller and Buyer arising from or based on this Agreement, the unsuccessful party to such action or proceeding shall pay to the prevailing party all costs and expenses, including reasonable attorneys’ fees, incurred by such prevailing party in such action or proceeding and in any appeal in connection therewith.  If such prevailing party recovers a judgment in any such action, proceeding or appeal, such costs, expenses and attorneys’ fees shall be included in and as a part of such judgment.
9.3    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California.
9.4    Construction.  Seller and Buyer acknowledge that each party and its counsel have reviewed and revised this Agreement and that the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any document executed and delivered by either party in connection with the transactions contemplated by this Agreement.  The captions in this Agreement are for convenience of reference only and shall not be used to interpret this Agreement.
9.5    Terms Generally.  The defined terms in this Agreement shall apply equally to both the singular and the plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The term “person” includes individuals, corporations, partnerships, trusts, other legal entities, organizations and associations, and any government or governmental agency or authority.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The words “approval,” “consent” and “notice” shall be deemed to be preceded by the word “written.”
9.6    Partial Invalidity.  If any provision of this Agreement is determined by a proper court to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement and this Agreement shall remain in full force and effect without such invalid, illegal or unenforceable provision.
9.7    Waivers.  No waiver of any provision of this Agreement or any breach of this Agreement shall be effective unless such waiver is in writing and signed by the waiving party and any such waiver shall not be deemed a waiver of any other provision of this Agreement or any other or subsequent breach of this Agreement.
9.8    Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same original, and the execution of separate 

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counterparts by Buyer and Seller shall bind Buyer and Seller as if they had each executed the same counterpart. Signatures to this Agreement transmitted by “PDF” or “tif” via email shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an executed original counterpart of this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement.
9.9    Miscellaneous. Buyer and Seller agree that the index attached hereto as Exhibit D accurately describes the Diligence Documents that were made available by Seller to Buyer at the Real Property, in a “virtual data room,” or both.  The Exhibits attached to this Agreement are made a part of this Agreement.  The provisions of the foregoing sentence shall survive the Closing for the Survival Period.  Neither Seller nor Buyer shall make any public announcement of this Agreement or the transactions contemplated by this Agreement without the prior written consent of the other, which consent may be withheld in such party’s sole discretion, unless any such announcement is reasonably necessary to comply with applicable law.  This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same Agreement.  This Agreement may not be amended or modified except by a written agreement signed by Seller and Buyer.  This Agreement constitutes the entire and integrated agreement between Seller and Buyer relating to the purchase and sale of the Property and supersedes all prior agreements, understandings, offers and negotiations, oral or written, with respect to the sale of the Property.

[Signature page follows on separate sheet.]

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IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the date first hereinabove written.
SELLER: 

MUFG UNION BANK, N.A., a national banking association

By: /s/ Larry W. Lawrence
Name:  Larry W. Lawrence
Title:    Director

[Signature Page to Purchase Agreement]

BUYER:

400 CALIFORNIA, LLC, a Delaware limited liability company
By:  TAK Realty SF, LLC, its Manager

By:  /s/ Masaatsu Ohga
Name:  Masaatsu Ohga
Title:     Authorized Person

[Signature Page to Purchase Agreement]

EXHIBIT C
FORM OF GRANT DEED
Recorded at Request of:
    
When Recorded Mail to:
 
     
    
Mail Tax Statements to:
 
     
    
THE UNDERSIGNED GRANTOR DECLARES:
Documentary Transfer Tax is $[_____________]
computed on full value of property conveyed.
City and County of San Francisco

GRANT DEED 
WITH DEED RESTRICTION
For valuable consideration, receipt of which is acknowledged MUFG UNION BANK, N.A., a national banking association, f/k/a Union Bank, N.A., the successor by merger to The Bank of California, N.A. (“Grantor”), hereby grants to 400 CALIFORNIA, LLC, a Delaware limited liability company (“Grantee”), the real property in the City and County of San Francisco, State of California, described in Exhibit A attached hereto and made a part hereof (the “Property”).
Grantee acknowledges and agrees by acceptance of this Grant Deed that for the period between the date hereof and December __, 2023  (the “Restriction Period”), Grantee, its successors and assigns is prohibited from doing any of the following (the “Deed Restriction”) with respect to the building (the “Building”) located on the portion of the Property commonly known as 400 California Street and more particularly described on Exhibit B attached hereto: selling, transferring, leasing, assigning, subletting or otherwise conveying the Building to, or allowing the use of the Building  by, any person or entity other than Grantor its affiliates, successors and assigns, that operates or intends to operate a financial and/or banking services business at the Building, which would include, without limitation, a business that engages in 

EXHIBIT C

retail banking, mortgage or stock brokerage, corporate banking and/or wealth management services and/or operation of one or more ATMs or electronic banking machines at the Building (the “Prohibited Use”).  Grantee shall include the Deed Restriction and Prohibited Use restriction in any document executed by Grantee regarding the Building during the Restriction Period.  By acceptance of this Grant Deed, Grantee acknowledges and agrees that (a) any breach of the Deed Restriction and/or the Prohibited Use restriction contained in this Grant Deed would cause the Grantor, its successors and/or assigns irreparable harm and that Grantor’s damages because of any such breach could be difficult or impossible to measure, and that money damages alone could be an inadequate remedy; and (b) Grantor shall have the right to specific performance and injunctive relief (both temporary and permanent) to enforce the Deed Restriction and/or the Prohibited Use restriction.  Grantor shall not be entitled to recover monetary damages due to such breach.  The foregoing provisions shall run with the land and shall be binding on all parties having or acquiring any right, title, or interest in the land described herein or any part thereof, and shall inure to the benefit of the Grantor.
Dated: December ____, 2016.
	
	
	MUFG UNION BANK, N.A., F/K/A UNION BANK, N.A., SUCCESSOR BY MERGER TO THE BANK OF CALIFORNIA, N.A. 

By: __________________________________
Name: ____________________________
Title:    ____________________________

EXHIBIT C

EXHIBIT A
GRANT DEED
All of the real property in the City and County of San Francisco, State of California, described as follows:
TRACT ONE:
Beginning at the point of intersection of the Westerly line of Sansome Street and the Northerly line of California Street; running thence Northerly along the Westerly line of Sansome Street 124 feet and 1 inch to the Southerly line of Halleck Street; thence Westerly along said Southerly line of Halleck Street 87 feet and 6 inches; thence Southerly parallel with the Westerly line of Sansome Street 124 feet and 1 inch to the Northerly line of California Street; thence Easterly along said Northerly line of California Street 87 feet and 6 inches to the point of beginning.
Being a portion of 50 Vara Block No. 53
APN: Lot 003, Block 0239
TRACT TWO:
PARCEL A:
Beginning at a point on the Northerly line of California Street, distant thereon 87 feet and 6 inches Westerly from the Westerly line of Sansome Street; running thence Westerly and along said Northerly line of California Street 45 feet; thence at a right angle Northerly and parallel with said line of Sansome Street 124 feet and 1 inch to the Southerly line of Halleck Street; thence at a right angle Easterly along said Southerly line of Halleck Street 45 feet; thence at a right angle Southerly and parallel with said line of Sansome Street 124 feet and 1 inch to the point of beginning.
Being a portion of 50 Vara Block No. 53
PARCEL B:
Beginning at a point on the Northerly line of California Street, distant thereon 30 feet Easterly from the Easterly line of Leidesdorff Street; running thence Easterly along said line of California Street 30 feet, more or less, to a point distant thereon 132 feet and 6 inches Westerly from the Westerly line of Sansome Street; thence at a right angle Northerly 124 feet to the Southerly line of Halleck Street; thence at a right angle Westerly along said line of Halleck Street 30 feet, more or less, to the intersection of a line drawn Northerly from the Northerly line of California Street, measured at right angles thereto from the point of beginning; thence Southerly along the line so drawn 124 feet to the point of beginning.
Being a portion of 50 Vara Block No. 53
PARCEL C:
Beginning at the point of intersection of the Easterly line of Leidesdorff Street and the Northerly line of California Street; running thence Northerly along said Easterly line of Leidesdorff Street 124 feet to the Southerly line of Halleck Street; thence Easterly along said Southerly line of Halleck Street 30 feet; thence Southerly parallel with  the Easterly line of Leidesdorff Street 124 feet to the Northerly line of California Street; thence Westerly along said Northerly line of California Street 30 feet to the point of beginning.
Being a portion of 50 Vara Block No. 53
APN: Lot 029, Block 0239

EXHIBIT C

EXHIBIT B
GRANT DEED
DEED RESTRICTION PROPERTY
All of the real property in the City and County of San Francisco, State of California, described as follows:
TRACT ONE:
Beginning at the point of intersection of the Westerly line of Sansome Street and the Northerly line of California Street; running thence Northerly along the Westerly line of Sansome Street 124 feet and 1 inch to the Southerly line of Halleck Street; thence Westerly along said Southerly line of Halleck Street 87 feet and 6 inches; thence Southerly parallel with the Westerly line of Sansome Street 124 feet and 1 inch to the Northerly line of California Street; thence Easterly along said Northerly line of California Street 87 feet and 6 inches to the point of beginning.
Being a portion of 50 Vara Block No. 53
APN: Lot 003, Block 0239

EXHIBIT C

	
			
	A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
	 
	 

	STATE OF 
COUNTY OF          
	}ss:
	 

	

On           before me,          , a Notary Public, personally
   (here insert name and title of the officer)
appeared          
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.

Signature    
(This area for notary stamp)

EXHIBIT C

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