Document:

EXHIBIT
10.2

 

PURCHASE AND SALE AGREEMENT

 

 

3D HEADQUARTERS

ROCK HILL, SOUTH CAROLINA

 

 

BETWEEN

 

KDC-CAROLINA INVESTMENTS 3, LP

AS SELLER

 

 

AND

 

3D SYSTEMS CORPORATION

AS PURCHASER

 

 

December 18, 2006

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  1.

  	
  THE PROPERTY.

  	
  1

  
	
   

  	
  1.1.

  	
  Description

  	
  1

  
	
   

  	
  1.2.

  	
  “As-Is”
  Purchase

  	
  2

  
	
  2.

  	
  PRICE AND PAYMENT.

  	
  3

  
	
   

  	
  2.1.

  	
  Purchase
  Price

  	
  3

  
	
   

  	
  2.2.

  	
  Payment

  	
  4

  
	
   

  	
  2.3.

  	
  Closing

  	
  4

  
	
  3.

  	
  INSPECTIONS AND
  APPROVALS.

  	
  5

  
	
   

  	
  3.1.

  	
  Inspections.

  	
  5

  
	
   

  	
  3.2.

  	
  Title and
  Survey

  	
  7

  
	
   

  	
  3.3.

  	
  Contracts

  	
  7

  
	
   

  	
  3.4.

  	
  Permitted
  Encumbrances

  	
  8

  
	
   

  	
  3.5.

  	
  Delivery of
  Title Policy at Closing

  	
  8

  
	
  4.

  	
  CONDITIONS
  PRECEDENT TO PURCHASER’S OBLIGATIONS

  	
  8

  
	
   

  	
  4.1.

  	
  Marketability
  of Property

  	
  8

  
	
   

  	
  4.2.

  	
  Seller
  Agreements

  	
  8

  
	
   

  	
  4.3.

  	
  Notice of
  Eminent Domain

  	
  9

  
	
   

  	
  4.4.

  	
  Seller’s
  Authority

  	
  9

  
	
   

  	
  4.5.

  	
  Purchaser’s
  Authorizations

  	
  9

  
	
   

  	
  4.6.

  	
  Environmental
  Matters

  	
  9

  
	
  5.

  	
  SELLER’S COVENANTS
  FOR PERIOD PRIOR TO CLOSING.

  	
  10

  
	
   

  	
  5.1.

  	
  Insurance

  	
  10

  
	
   

  	
  5.2.

  	
  Operation

  	
  10

  
	
   

  	
  5.3.

  	
  New
  Contracts

  	
  10

  
	
   

  	
  5.4.

  	
  New Leases

  	
  10

  
	
   

  	
  5.5.

  	
  Listing and
  Other Offers

  	
  10

  
	
  6.

  	
  REPRESENTATIONS AND
  WARRANTIES.

  	
  10

  
	
   

  	
  6.1.

  	
  By Seller

  	
  10

  
	
   

  	
  6.2.

  	
  By Purchaser

  	
  11

  
	
   

  	
  6.3.

  	
  Mutual

  	
  12

  
	
  7.

  	
  COSTS AND
  PRORATIONS.

  	
  12

  
	
   

  	
  7.1.

  	
  Closing
  Costs

  	
  12

  
	
   

  	
  7.2.

  	
  Seller’s
  Costs

  	
  12

  
	
   

  	
  7.3.

  	
  Prorations

  	
  13

  
	
   

  	
  7.4.

  	
  Taxes

  	
  13

  
	
   

  	
  7.5.

  	
  Incentives
  Payments

  	
  13

  
	
   

  	
  7.6.

  	
  In General

  	
  13

  
	
   

  	
  7.7.

  	
  Purpose and
  Intent

  	
  13

  
	
  8.

  	
  DAMAGE, DESTRUCTION
  OR CONDEMNATION.

  	
  13

  
	
   

  	
  8.1.

  	
  Material
  Event

  	
  14

  
	
   

  	
  8.2.

  	
  Immaterial
  Event

  	
  14

  
	
   

  	
  8.3.

  	
  Termination
  and Return of Deposit

  	
  14

  
	
  9.

  	
  NOTICES.

  	
  14

  
	
  10.

  	
  CLOSING AND ESCROW.

  	
  15

  
	
   

  	
  10.1.

  	
  Escrow
  Instructions

  	
  15

  
	
   

  	
  10.2.

  	
  Seller’s
  Deliveries

  	
  16

  
	
   

  	
  10.3.

  	
  Purchaser’s
  Deliveries

  	
  17

  
	
   

  	
  10.4.

  	
  Possession

  	
  17

  
	
   

  	
  10.5.

  	
  Insurance

  	
  17

  

 

i

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  11.

  	
  DEFAULT; FAILURE OF
  CONDITION.

  	
  17

  
	
   

  	
  11.1.

  	
  Purchaser
  Default

  	
  17

  
	
   

  	
  11.2.

  	
  Seller
  Default

  	
  17

  
	
   

  	
  11.3.

  	
  Failure of
  Condition

  	
  18

  
	
  12.

  	
  MISCELLANEOUS.

  	
  18

  
	
   

  	
  12.1.

  	
  Entire
  Agreement

  	
  18

  
	
   

  	
  12.2.

  	
  Severability

  	
  19

  
	
   

  	
  12.3.

  	
  Applicable
  Law

  	
  19

  
	
   

  	
  12.4.

  	
  Assignability

  	
  19

  
	
   

  	
  12.5.

  	
  Successors
  Bound

  	
  19

  
	
   

  	
  12.6.

  	
  Breach

  	
  19

  
	
   

  	
  12.7.

  	
  No Public
  Disclosure

  	
  19

  
	
   

  	
  12.8.

  	
  Captions

  	
  20

  
	
   

  	
  12.9.

  	
  Attorneys’
  Fees

  	
  20

  
	
   

  	
  12.10.

  	
  No
  Partnership

  	
  20

  
	
   

  	
  12.11.

  	
  Time of
  Essence

  	
  20

  
	
   

  	
  12.12.

  	
  Counterparts

  	
  20

  
	
   

  	
  12.13.

  	
  Recordation

  	
  20

  
	
   

  	
  12.14.

  	
  Proper
  Execution

  	
  20

  
	
   

  	
  12.15.

  	
  Tax Protest

  	
  20

  
	
   

  	
  12.16.

  	
  Survival and
  Limitation of Representations and Warranties

  	
  20

  
	
   

  	
  12.17.

  	
  Time to
  Execute and Deliver

  	
  21

  
	
   

  	
  12.18.

  	
  Calculation
  of Time Periods

  	
  21

  
	
   

  	
  12.19.

  	
  Limitation
  of Liability

  	
  21

  
	
   

  	
  12.20.

  	
  Jury Waiver

  	
  21

  

 

ii

 

LIST OF
EXHIBITS

 

	
  Exhibit
  1.1.1

  	
  Legal Description

  
	
   

  	
   

  
	
  Exhibit
  1.1.3

  	
  Inventory of
  Personal Property

  
	
   

  	
   

  
	
  Exhibit 2.1

  	
  Computation
  of Purchase Price

  
	
   

  	
   

  
	
  Exhibit
  3.1.2

  	
  Property
  Reports

  
	
   

  	
   

  
	
  Exhibit
  3.3.1

  	
  Schedule of
  Service Contracts

  
	
   

  	
   

  
	
  Exhibit
  3.3.2

  	
  Schedule of
  Warranties

  
	
   

  	
   

  
	
  Exhibit
  10.2.1

  	
  Form of
  Special Warranty Deed

  
	
   

  	
   

  
	
  Exhibit
  10.2.2

  	
  Affidavit of
  Value

  
	
   

  	
   

  
	
  Exhibit
  10.2.3

  	
  Form of Bill
  of Sale

  
	
   

  	
   

  
	
  Exhibit
  10.2.4

  	
  Form of
  Assignment and Assumption of Contracts

  
	
   

  	
   

  
	
  Exhibit
  10.2.6

  	
  Form of
  FIRPTA Affidavit

  
	
   

  	
   

  
	
  Exhibit
  10.2.10

  	
  Form of
  Seller’s Affidavit, South Carolina Withholding

  
	
   

  	
   

  
	
  Exhibit
  10.2.11

  	
  Form of
  Termination of Lease

  
	
   

  	
   

  
	
  Exhibit
  12.21

  	
  Incentives
  Agreement and Fee-in-Lieu-of-Taxation Agreement

  

 

iii

 

3D Systems Corporation Headquarters Building

Rock Hill, South Carolina

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of the 18th day
of December, 2006 (the “Effective Date”),
is made by and between KDC-CAROLINA INVESTMENTS 3, LP, a Delaware limited
partnership (“Seller”), and
3D SYSTEMS CORPORATION, a Delaware corporation (“Purchaser”).

 

R E C I T A L S:

 

Seller, as landlord, and Purchaser, as
tenant, have entered into that certain Lease Agreement dated February 8, 2006,
by and between Seller and Purchaser with respect to the lease by Seller of the
Premises described therein to Purchaser, as amended by that certain First
Amendment to Lease Agreement dated August 7, 2006, but effective as of June 15,
2006, that certain Second Amendment to Lease Agreement entered into effective
as of October 6, 2006 (the “Second
Amendment”) and that certain Third Amendment to Lease Agreement
entered into simultaneously with the date hereof (the “Third Amendment”) (collectively, the “Lease”).

 

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

 

1.             THE PROPERTY.

 

1.1.          Description. Subject to the terms and
conditions of this Agreement, and for the consideration herein set forth,
Seller agrees to sell and transfer, and Purchaser agrees to purchase and
acquire, all of Seller’s right, title and interest in the real property and
personalty constituting the Premises as defined in the Lease, including without
limitation the following (collectively, the “Property”):

 

1.1.1.       Certain land (the “Land”) located on the western side of
Overview Drive in Waterford Business Park, City of Rock Hill, York County,
South, and more specifically described in Exhibit 1.1.1 attached
hereto, which Land specifically includes the Expansion Land (as defined in the
Lease);

 

1.1.2.       The buildings, parking
areas, improvements, and fixtures now situated or being constructed on the Land
pursuant to the Lease (the “Improvements”);

 

1.1.3.       All furniture, personal
property, machinery, apparatus, and equipment owned by Seller and currently
used in the operation, repair and maintenance of the Land and Improvements and
situated thereon (collectively, the “Personal
Property”), and generally described on Exhibit 1.1.3
attached hereto. The Personal Property to be conveyed is subject to depletions,
replacements and additions in the ordinary course of Seller’s business;

 

1.1.4.       All easements,
hereditaments, and appurtenances belonging to or inuring to the benefit of
Seller and pertaining to the Land, if any;

 

1

 

1.1.5.       Any street or road abutting
the Land;

 

1.1.6.       Subject to Section 3.3.1,
all contracts and agreements relating to the operation or maintenance of the
Land, Improvements or Personal Property the terms of which extend beyond
midnight of the day preceding the Closing Date (as hereinafter defined); and

 

1.1.7.       Subject to Section 3.3.2,
all engineer’s, designer’s, manufacturer’s and builder’s guaranties and
warranties relating to the Land, Improvements or Personal Property.

 

1.2.          “As-Is” Purchase. Seller warrants the
Improvements including, without limitation, the foundations, slab, structural
frame, roof deck, and exterior walls of the Improvements against defective
design, workmanship, and materials, latent or otherwise, for a period of one
year from the date of Substantial Completion (the “Warranty Period”). Seller shall repair or replace at its sole
cost and expense any defective item of Improvements occasioned by defective
design, workmanship, or materials that Purchaser discovers during the Warranty
Period. Upon the expiration of the Warranty Period, Seller shall cause the
material and labor warranties for the general contractor, the roof on the
Improvements, the window glazing and the mechanical, including HVAC, electric
and plumbing systems to be assigned to Purchaser. In addition, Seller shall
deliver to Purchaser all other continuing assignable guaranties and warranties
received by Seller in connection with the construction of the Improvements and
shall perform (or cause the performance of) for the benefit of Purchaser but at
Purchaser’s expense any continuing, non-assignable guaranties and warranties.
Notwithstanding the foregoing, Seller has no obligation to assign any warranty
or guaranty to Purchaser if Purchaser is obligated to but has not maintained an
item covered by the warranty or guaranty in good condition and repair. The
obligations Seller undertakes under the terms of this subsection shall survive
the Closing hereof and shall not merge into the Deed. “Substantial Completion” or “Substantially Complete” means that (i) the
Improvements are substantially completed in accordance with the Final Plans and
Specifications (as defined in the Lease) except for minor details of
construction, decoration or mechanical adjustments which do not interfere in
any material respect with Purchaser’s access to or use or enjoyment of the
Improvements and (ii) a temporary or conditional certificate of occupancy or
its equivalent permitting fixturing and occupancy of the Improvements has been
obtained. Notwithstanding anything in this Agreement to the contrary, a
certificate of occupancy from the applicable governmental authority and a
certificate from Seller’s architect that the Improvements have been completed
in substantial compliance with the Final Plans and Specifications shall confirm
that Substantial Completion of the Improvements has occurred, absent manifest
error.

 

Except as set forth above in this Section
1.2, the Property is being sold in an “AS IS, WHERE IS” condition and “WITH
ALL FAULTS” as of the date of this Agreement and as of Closing. Except as
expressly set forth in this Agreement, including but not limited to the
limitations set forth in the next paragraph of this Section 1.2, no
representations or warranties have been made or are made and no responsibility
has been or is assumed by Seller or by any partner, officer, person, firm,
agent, attorney or representative acting or purporting to act on behalf of
Seller as to (i) the condition or state of repair of the Property;
(ii) the compliance or non-compliance of the Property with any applicable
laws, regulations or ordinances (including, without limitation, any applicable
zoning, building or development codes); (iii) the value, expense of
operation, or income potential of the Property; (iv) any other fact or
condition which has or might affect the Property or the condition, state of
repair, compliance, value, expense of 

 

2

 

operation or income potential of the Property or any portion thereof;
or (v) whether the Property contains asbestos or harmful or toxic
substances (“Substances”) or
pertaining to the extent, location or nature of Substances. The parties agree
that all understandings and agreements heretofore made between them or their
respective agents or representatives are merged in this Agreement and the
Exhibits hereto annexed, which alone fully and completely express their
agreement, and that this Agreement has been entered into after full
investigation, or with the parties satisfied with the opportunity afforded for
full investigation, neither party relying upon any statement or representation
by the other unless such statement or representation is specifically embodied
in this Agreement or the Exhibits annexed hereto.

 

Purchaser waives its right to recover from,
and forever releases and discharges Seller, Seller’s affiliates, Seller’s
investment advisor and manager, the partners, trustees, shareholders,
directors, officers, attorneys, employees and agents of each of them, and their
respective heirs, successors, personal representatives and assigns
(collectively, the “Releasees”)
from any and all demands, claims (including, without limitation, causes of
action in tort), legal or administrative proceedings, losses, liabilities,
damages, penalties, fines, liens, judgments, costs or expenses whatsoever
(including, without limitation, attorneys’ fees and costs), whether direct or
indirect, known or unknown, foreseen or unforeseen (collectively, “Claims”), that may arise on account of
or in any way be connected with the Property, the physical condition thereof,
or any law or regulation applicable thereto (including, without limitation,
claims under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 6901, et  seq.),
the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et
seq.), the Clean Water Act (33 U.S.C. Section 1251, et  seq.),
the Safe Drinking Water Act (49 U.S.C. Section 1801, et  seq.),
the Hazardous Transportation Act (42 U.S.C. Section 6901, et  seq.),
and the Toxic Substance Control Act (15 U.S.C. Section 2601, et  seq.)
(collectively, the “Statutes and Laws”),
except, however, any claims arising under the Statutes and Laws for violations
thereof caused by Seller or Seller’s agents or conditions created by Seller or
Seller’s agents in the construction of the Project which were not disclosed by
Seller to Purchaser through reasonably diligent efforts in conducting its
investigations. Except with regard to the foregoing limitation in the preceding
sentence, but without otherwise limiting the foregoing, Purchaser, upon
Closing, shall be deemed to have waived, relinquished and released Seller and
all other Releasees from any and all Claims, matters arising out of latent or
patent defects or physical conditions, violations of applicable laws
(including, without limitation, the Statutes and Laws) and any and all other
acts, omissions, events, circumstances or matters affecting the Property.
Purchaser agrees that should any cleanup, remediation or removal of hazardous
substances or other environmental conditions on or about the Property be
required after the date of Closing, such clean-up, removal or remediation shall
not be the responsibility of Seller unless Seller’s actions have caused such
contamination of the Property.

 

1.2.1.       Agreement to Convey.
Seller agrees to convey, and Purchaser agrees to accept, title to the Land and
Improvements by Special Warranty Deed (the “Deed”)  in the condition described in Section
3.4 and title to the Personal Property by Bill of Sale without warranty as
to the title or the physical condition of such personalty.

 

2.             PRICE AND PAYMENT.

 

2.1.          Purchase Price. The purchase price for
the Property (the “Purchase Price”)
is the sum of (a) TEN MILLION FORTY-EIGHT THOUSAND AND NO/100 DOLLARS 

 

3

 

($10,048,000) U.S, to be adjusted pursuant to Section 7.5 below.
For purposes of making the adjustments provided in such Section, attached as Exhibit
2.1 is a computation of the Purchase Price.

 

2.2.          Payment. Payment of the Purchase Price
is to be made in cash as follows:

 

2.2.1.       On or before December 19,
2006, Purchaser shall make an earnest money deposit with the Title Company of
THREE HUNDRED ONE THOUSAND FOUR HUNDRED FORTY AND NO/100 DOLLARS ($301,440.00)
(the “Initial Deposit”). On
or before January 2, 2007, Purchaser shall make an additional earnest money
deposit with the Title Company of SEVEN HUNDRED THREE THOUSAND THREE HUNDRED
SIXTY AND NO/100 DOLLARS ($703,360.00) (the “Subsequent Deposit”). If Purchaser fails to deposit either
the Initial Deposit or Subsequent Deposit (collectively, the “Deposit”) on or before such dates, Seller may terminate this Agreement by
written notice to Purchaser. The Deposit will be placed with and held in escrow
by Chicago Title Insurance Company (“Title
Company”), as an agent for Purchaser and Seller, at 2001 Bryan
St., Ste. 1700, Dallas, TX 75201, Attention: Joycelyn Armstrong, in immediately
available funds (to the extent the Deposit is in cash) in an interest-bearing
account at a mutually acceptable financial institution. Any interest earned by
the Deposit shall be considered as part of the Deposit. Except as otherwise
provided in this Agreement, the Deposit will be applied to the Purchase Price
at Closing.

 

2.2.2.       Unless Purchaser has
theretofore terminated this Contract pursuant to the provisions of Section
3.1 hereof, on January 2, 2007 (the “Deposit
Release Date”) the
Deposit shall be deemed fully earned by Seller and be non-refundable to
Purchaser, and the Title Company shall release same to Seller.

 

2.2.3.       At Closing, Purchaser shall
pay Seller the balance of the Purchase Price, subject to adjustment for the
prorations as provided herein and the adjustments pursuant to Section 7.5
below to the Title Company for disbursement to Seller via wire transfer in
immediately available funds.

 

2.3.          Closing. Payment of the Purchase Price
and the closing hereunder (the “Closing”)
will take place pursuant to an escrow closing on or before January 31, 2007
(the “Closing Date”) unless Purchaser desires to hold the
Closing on an earlier date. The Closing will take place at the offices of the
Title Company at 10:00 a.m. local Rock Hill, South Carolina time or at such
other time and place as may be agreed upon in writing by Seller and Purchaser.
Closing shall occur through an escrow with the Title Company. Funds shall be
deposited into and held by the Title Company in a closing escrow account with a
bank satisfactory to Purchaser and Seller. Upon satisfaction or completion of
all closing conditions and deliveries, the parties shall direct the Title
Company to immediately record and deliver the closing documents to the
appropriate parties and make disbursements according to the closing statements
executed by Seller and Purchaser. As a condition precedent to the Closing,
Purchaser shall not at such time be in default under the Lease and shall have
paid all sums required under the Lease through such date to Seller including,
but not limited to, the amount of any excess in (i) the Amended Project Costs,
which must be approved by Purchaser, over (ii) the total Project Costs set
forth in the Development Budget attached to the Lease, as provided in Exhibit F
to the Lease. The Lease shall remain in effect until the Closing, but except as
set 

 

4

 

forth in Section 41 of the Lease (which Section of the Lease shall
explicitly survive the Closing), the Lease shall terminate and be of no further
force and effect after the Closing.

 

3.             INSPECTIONS AND APPROVALS.

 

3.1.          Inspections.

 

3.1.1.       From the Effective Date
until the Closing, Purchaser, Purchaser’s authorized agents and employees, as
well as others authorized by Purchaser (“Purchaser’s
Agents”), shall have full and complete access to the Property
upon reasonable notice to Seller and shall be entitled upon reasonable notice
to Seller to enter upon the Property to conduct and complete such
investigations, inspections, evaluations, studies, tests and measurements
(collectively, the “Investigations”)
as Purchaser, in Purchaser’s sole discretion, deems necessary or advisable
(including the removal of trees, shrubs, and other natural growth and features
reasonably necessary in connection with such Investigations); provided,
however, none of the Investigations so conducted will result in any material
adverse change to the physical characteristics of the Property. If Purchaser is
not satisfied with the Investigations or for any other reason, or no reason,
determines that Purchaser does not want to close the acquisition of the
Property pursuant to this Agreement, Purchaser shall, on or before 5:00 PM Rock
Hill, South Carolina time on January 2, 2007 (the period from the Effective
Date until such date being the “Inspection
Period”), provide written notice of termination of this
Agreement to Seller and the Title Company, in which event the Deposit shall be
returned to Purchaser and thereafter neither Purchaser nor Seller shall have
any further rights or obligations hereunder, other than those that expressly
survive the termination of this Agreement.

 

3.1.2.       Seller has heretofore
delivered to Purchaser the items related to the Property as set forth on Exhibit
3.1.2 (the “Property Reports”).

 

3.1.3.       Purchaser agrees that, in
making any non-intrusive physical or environmental inspections of the Property,
Purchaser and all of Purchaser’s Agents entering onto the Property shall carry
not less than Two Million Dollars ($2,000,000) comprehensive general liability
insurance insuring all activity and conduct of Purchaser and such
representatives while exercising such right of access and naming Seller as an
additional insured. Purchaser represents and warrants that it carries not less
than Two Million Dollars ($2,000,000) commercial general liability insurance
with contractual liability endorsement which insures Purchaser’s indemnity
obligations hereunder, and will provide Seller with written evidence of same
prior to entry on the Property.

 

3.1.4.       Purchaser agrees that in
exercising its right of access hereunder, Purchaser will use and will cause
Purchaser’s Agents to use all reasonable efforts not to interfere with the
activity of any persons performing construction activities at the Property.
Purchaser agrees to cooperate with any reasonable request by Seller in connection
with any such inspection. Purchaser agrees (which agreement shall survive
Closing or termination of this Agreement) to provide Seller with a copy of any
and all information, materials and data that Purchaser and/or Purchaser’s
Agents discover, obtain or generate in connection with or resulting from its
inspection of the Property under Section 3.1 hereof.

 

5

 

3.1.5.       Purchaser shall, at its
sole cost and expense, promptly restore any physical damage or alteration of
the physical condition of the Property which results from any inspections
conducted by or on behalf of Purchaser. All inspections shall be conducted at
Purchaser’s sole cost and expense and in strict accordance with all
requirements of applicable law.

 

3.1.6.       PURCHASER AGREES (WHICH
AGREEMENT SHALL SURVIVE CLOSING OR TERMINATION OF THIS AGREEMENT) TO INDEMNIFY,
DEFEND, AND HOLD SELLER FREE AND HARMLESS FROM ANY LOSS, INJURY, DAMAGE, CLAIM,
LIEN, COST OR EXPENSE, INCLUDING ATTORNEYS’ FEES AND COSTS, ARISING OUT OF A
BREACH OF THE FOREGOING AGREEMENTS BY PURCHASER IN CONNECTION WITH THE
INSPECTION OF THE PROPERTY, OR OTHERWISE FROM THE EXERCISE BY PURCHASER OR
PURCHASER’S AGENTS OF THE RIGHT OF ACCESS ONTO THE PROPERTY (COLLECTIVELY, “PURCHASER’S INDEMNITY OBLIGATIONS”).
THIS SECTION 3.1.6 SHALL SURVIVE CLOSING OR THE TERMINATION OF THIS
AGREEMENT. PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT IN THE EVENT THAT
PRIOR TO THE EFFECTIVE DATE, PURCHASER, OR ANY OF ITS EMPLOYEES, AGENTS,
CONTRACTORS, CONSULTANTS, OR OTHER REPRESENTATIVES, HAVE ENTERED ONTO THE
PROPERTY TO INSPECT, TEST, SURVEY OR OTHERWISE EXAMINE THE PROPERTY, AND THE
RECORDS RELATING THERETO, THE INDEMNITY SET FORTH IN THIS SECTION 3.1.6
OF THE AGREEMENT SHALL APPLY RETROACTIVELY TO THE DATE OF SUCH INSPECTIONS,
TESTING, SURVEYING AND EXAMINATION.

 

3.1.7.       Except as specifically set
forth herein, and the Seller’s representations and warranties regarding the
Property and specifically the Plans and Specifications for the Improvements as
set forth under Section 3(h) of the Lease, Seller makes no representations or
warranties as to the truth, accuracy, completeness, methodology of preparation
or otherwise concerning any engineering or environmental reports or any other
materials, data or other information supplied to Purchaser in connection with
Purchaser’s inspection of the Property (e.g., that such materials are complete,
accurate or the final version thereof, or that such materials are all of such
materials as are in Seller’s possession). It is the parties’ express
understanding and agreement that any materials which Purchaser is allowed to
review are provided only for Purchaser’s convenience in making its own
examination of the Property, and, in doing so, Purchaser shall rely exclusively
on its own independent investigation and evaluation of every aspect of the
Property and not on any materials supplied by Seller. Purchaser expressly
disclaims any intent to rely on any such materials provided to it by Seller in
connection with its inspection and agrees that it shall rely solely on its own
independently developed or verified information.

 

3.1.8.       Purchaser shall keep the
Property free from any liens arising out of any work performed, materials
furnished or obligations incurred by or on behalf of Purchaser or Purchaser’s
Agents with respect to any inspection or testing of the Property. If any such
lien at any time shall be filed, Purchaser shall cause the same to be
discharged of record within ten (10) days thereafter by satisfying the same or,
if Purchaser, in its discretion and in good faith determines that such lien
should be contested, by recording a bond. Failure by Purchaser to discharge or
provide for the discharge of such lien shall be a material breach of this
Agreement.

 

6

 

3.1.9.       Attached hereto as Exhibit
3.1.9 is an architect generated punch list (the “Punch List”) of remaining construction items with respect to
the Improvements. On or before December 8, 2006, Purchaser shall provide to
Seller in writing any additions to the Punch List desired by Purchaser (the “Purchaser Additions”), which shall be
deemed to be the final, complete list of Purchaser’s required items to complete
the Improvements under the Lease and this Agreement (and the provisions of this
sentence shall survive the termination of this Agreement). By December 11, 2006
Seller shall notify Purchaser as to the which Purchaser Additions are
acceptable and shall present Purchaser with a revised Punch List based on the
Purchaser Additions that are acceptable to Seller (as so amended, the “Revised Punch List”). If Purchaser deems
that any Seller deletions from the Purchaser Additions are not acceptable to
Purchaser, or determines that the Revised Punch List Items are not on or before
December 15, 2006 completed by Seller to the satisfaction of Purchaser, then
Purchaser may terminate this Agreement as set forth in Section 3.1.1
above.

 

3.2.          Title and Survey. Within five (5)
business days after the full execution of this Agreement, Seller shall cause to
be delivered to Purchaser a commitment for title insurance on the Land,
together with copies of all items shown as exceptions to title therein, issued
by the Title Company, and a current as-built survey of the Land showing all the
Improvements and the Permitted Encumbrances thereon (the “Survey”). Within seven (7) days after
Purchaser receives the last of the Title Commitment and the Survey, Purchaser
shall deliver to Seller a letter (the “Title/Survey
Objection Letter”) outlining any objections that Purchaser has to
any matters contained in the Title Commitment or Survey. Within four (4) days
after Seller receives the Title/Survey Objection Letter, Seller shall then
respond to the Title/Survey Objection Letter by providing Purchaser a letter
(the “Title/Survey Response Letter”)
stating those matters in the Title/Survey Objection Letter that Seller is
willing to cure prior to Closing (the “Seller
Cure Items”). Purchaser shall then three (3) business days in which
to inform Seller that Purchaser is either (a) accepting the Seller Cure Items
as the only items in the Title/Survey Objection Letter that will be cured, and
waiving all other matters set forth in the Title/Survey Objection, or (b)
terminating this Agreement, and in the event of such termination (i) neither
Purchaser nor Seller shall have any further rights or obligations hereunder
other than those rights and obligations that expressly survive such termination
and (ii) the Lease shall remain in full force and effect. All of those items shown
in the Title Commitment and Survey, other than the Seller Cure Items, shall be
deemed to be approved by Purchaser and are “Permitted Encumbrances” as provided in Section 3.4
hereof.

 

3.3.          Contracts. Seller has heretofore
furnished to Purchaser:

 

3.3.1.       All contracts and
agreements relating to the operation or maintenance of the Property executed by
Seller the terms of which extend beyond midnight of the day preceding the
Closing Date which are identified on Exhibit 3.3.1 attached hereto
(collectively, the “Service Contracts”).
On or before the Closing Date, Purchaser shall notify Seller in writing if
Purchaser elects not to assume at Closing any of the service, maintenance,
supply or other contracts relating to the operation of the. Seller shall give notice
of termination of such disapproved contract(s).

 

3.3.2.       All engineer’s, designer’s,
manufacturer’s and builder’s guaranties and warranties relating to the Land,
Improvements or Personal Property which are identified on Exhibit 3.3.2
(the “Warranties). To the
extent that any of the Warranties are not transferable to 

 

7

 

Purchaser, and at no cost or expense to
Seller and at Purchaser’s cost and expense, Seller covenants to assist
Purchaser in the enforcement of all such Warranties, which shall survive the
Closing as a Surviving Obligation defined in Section 12.16 below .

 

3.4.          Permitted Encumbrances. Purchaser
shall be deemed to have approved and to have agreed to purchase the Property
subject to the following:

 

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

 

3.4.2.       All contracts which
Purchaser has approved or is deemed to have approved pursuant to Sections
3.3 and 5.3 hereof; and

 

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

 

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

 

3.5.          Delivery of Title Policy at Closing. As
a condition to Purchaser’s obligation to close, the Title Company shall deliver
to Purchaser at Closing an ALTA Owner’s Policy of Title Insurance (the “Title Policy”) issued by the Title
Company as of the date and time of the recording of the Deed, in the amount of
the Purchase Price, insuring Purchaser as owner of indefeasible fee simple
title to the Property, and subject only to the Permitted Encumbrances. Seller
shall execute at Closing Seller’s standard owner’s affidavit to facilitate the
issuance of the Title Policy (but not additional matters required for any
endorsements required by Purchaser). The Title Policy may be delivered after
the Closing if at the Closing the Title Company issues a currently effective,
duly-executed “marked-up” Title Commitment and irrevocably commits in writing
to issue the Title Policy in the form of the “marked-up” Title Commitment
promptly after the Closing Date. Purchaser may elect to obtain additional
coverage or endorsements to the Title Policy at Purchaser’s sole cost and
expense but obtaining such additional coverage or endorsements shall not be a
condition precedent to Purchaser’s Closing obligations under this Agreement.

 

4.             CONDITIONS PRECEDENT TO PURCHASER’S
OBLIGATIONS. In addition to any other conditions precedent to the
performance of Purchaser’s obligations under this Agreement, the obligations
and liabilities of Purchaser hereunder shall in all respects be conditioned
upon satisfaction of each of the following conditions precedent (the conditions
precedent set forth in this Section 4 being collectively referred to as the “Conditions Precedent”) as of Closing (any
of which may be waived by written notice from Purchaser to Seller):

 

4.1.          Marketability of Property. Seller
shall own indefeasible fee simple and insurable title to the Property, subject
only to the Permitted Encumbrances.

 

4.2.          Seller Agreements. Seller shall have
entered into no agreement, oral or written, not referred to herein, with
reference to the Property that will survive Closing other than the Service
Contracts, and neither Seller nor the Property shall be subject to any judgment
or decree of a court of competent jurisdiction, or to any litigation or
administrative proceeding 

 

8

 

which would in any way affect the Property or which would in any way be
binding upon Purchaser, or Purchaser’s assigns, or affect or limit Purchaser’s
or Purchaser’s assigns’ full use and enjoyment of the Property or which would
limit or restrict in any way Seller’s right or ability to enter into this
Agreement and consummate the transactions contemplated hereby. In addition, no
further action shall be required as a prerequisite to the enforceability of
this Agreement against Seller, in accordance with its terms.

 

4.3.          Notice of Eminent Domain. Neither
Seller nor any agent of Seller shall have received any notices from any city,
county or other governmental authority of any taking of the Property, or any
portion thereof, by eminent domain or similar proceeding, and no such taking or
other condemnation of the Property, or any portion thereof, shall be threatened
or contemplated by any such governmental authority.

 

4.4.          Charges and Assessments. Seller shall
be responsible for all charges and assessments (other than ad valorem property
taxes for the year of Closing, which shall be prorated on a calendar year basis
to the date of Closing) for sewer, water, streets, sidewalks and similar
improvements by any governmental authority affecting the Property through and
including November 21, 2006, and all such charges and assessments, whether or
not due and payable prior to Closing, shall have been paid in full.

 

4.5.          Seller’s Authority. Seller shall have
presented evidence satisfactory to Purchaser, Purchaser’s attorney and the
Title Company with respect to the right, power and authority of designated
representative(s) of Seller to execute the closing documents and consummate the
sale of the Property.

 

4.6.          Purchaser’s Authorizations. Purchaser
shall have received by the date of Closing all necessary and appropriate
licenses, permits, approvals and authorizations (collectively, the “Authorizations”) from all governmental
agencies, authorities, boards, commissions, departments and bodies
(collectively, the “Agencies”)
having or claiming to have jurisdiction over the Property and/or Purchaser in
order to allow Purchaser to develop and use the Property as contemplated and in
accordance with the Intended Use (as defined in the Lease). Seller agrees to
fully cooperate with Purchaser in obtaining all necessary or appropriate
Authorizations from the Agencies.

 

4.7.          Environmental Matters. There shall
have been no adverse changes, and no notice shall have been served on or
delivered to Seller from any entity, governmental body or individual claiming
any violation of any Statutes and Laws or demanding payment or contribution for
environmental cleanup costs, environmental damage, harm to endangered species,
or injury to natural resources, or asserting liability with respect to same, first
arising from and after the end of the Inspection Period.

 

Seller agrees to use its good faith, diligent
efforts to cause each Condition Precedent that is Seller’s responsibility to
attempt to satisfy under this Agreement to be satisfied as soon as reasonably
possible after the Effective Date and to continue such efforts thereafter (if
and as necessary to achieve such satisfaction). Purchaser agrees to use its
good faith, diligent efforts to cause each Condition Precedent that is
Purchaser’s responsibility to attempt to satisfy under this Agreement to be
satisfied as soon as reasonably possible after the Effective Date and to
continue such efforts thereafter (if and as necessary to achieve such
satisfaction). In the event 

 

9

 

Purchaser is not satisfied concerning the
Conditions Precedent (or any of them), in Purchaser’s sole discretion,
Purchaser shall so notify Seller in writing as to each Condition Precedent that
is not then satisfied, and such written notice shall provide reasonable
guidance as to what must be completed for each such Condition Precedent to be
satisfied. If any such Condition Precedent that Purchaser notifies Seller in
writing is not satisfied as of the Closing Date after reasonable, good faith
effort on the part of Seller and Purchaser (as applicable) and if Purchaser
does not waive any such unsatisfied Condition(s) Precedent, Purchaser may
terminate this Agreement and the entire Deposit shall be returned to Purchaser;
and the parties hereto, unless otherwise provided herein, shall thereafter have
no further rights, obligations or liabilities hereunder.

 

5.             SELLER’S COVENANTS FOR PERIOD PRIOR TO
CLOSING.

 

Until Closing, Seller or Seller’s agent
shall:

 

5.1.          Insurance. Keep the Property insured
under its current or comparable policies against fire and other hazards covered
by extended coverage endorsement and commercial general liability insurance
against claims for bodily injury, death and property damage occurring in, on or
about the Property.

 

5.2.          Operation. Operate and maintain the
Property substantially in accordance with Seller’s past practices with respect
to the Property, normal wear and tear excepted, provided that in the event of
any loss or damage to the Property as described in Section 7, Seller
shall have an obligation to Purchaser to repair the Property in accordance with
the parties’ obligations under the Lease.

 

5.3.          New Contracts. Enter into only those
third-party contracts which are necessary to carry out its obligations under Section
5.2 and which shall be cancelable on thirty (30) days written notice. If
Seller enters into any such contract, it shall promptly provide written notice
thereof to Purchaser and unless Purchaser, within three (3) days thereafter,
notifies Seller in writing of its intention to not assume such contract, it
shall be treated as a contract approved by Purchaser under Section 3.3.1
hereof.

 

5.4.          New Leases. Seller will not execute
new leases of the Property without the prior consent of Purchaser.

 

5.5.          Listing and Other Offers. From the
date hereof until the termination of this Agreement, Seller will not list the
Property with any broker or otherwise solicit or make or accept any offers to
sell the Property or enter into any contracts or agreements regarding any
disposition of the Property.

 

6.             REPRESENTATIONS AND WARRANTIES.

 

6.1.          By Seller. Seller represents and
warrants to Purchaser as follows:

 

6.1.1.       Seller is a limited
partnership duly organized and validly existing under the laws of the State of
Delaware, is authorized to do business in the State of South Carolina, has duly
authorized the execution and performance of this Agreement, and such execution
and performance will not violate any material term of its articles of
incorporation or bylaws.

 

10

 

6.1.2.       To the best of Seller’s
knowledge, performance of this Agreement will not result in any breach of, or
constitute any default under, or result in the imposition of any lien or
encumbrance upon the Property under, any agreement to which Seller is a party.

 

6.1.3.       To the best of Seller’s
knowledge, the list of Service Contracts to be delivered to Purchaser pursuant
to this Agreement will be true, correct and complete as of the date of
delivery.

 

6.1.4.       Seller is not a “foreign
person” within the meaning of Sections 1445 and 7701 the Internal Revenue Code
of 1986, as amended (hereinafter, the “Code”).

 

6.2.          By Purchaser. Purchaser represents and
warrants to Seller as follows:

 

6.2.1.       Purchaser is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware, is authorized to do business in the State of South Carolina,
has duly authorized the execution and performance of this Agreement, and such
execution and performance will not violate any material term of its
organizational documents.

 

6.2.2.       Purchaser is acting as
principal in this transaction with authority to close the transaction.

 

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

 

6.2.4.       Purchaser acknowledges
that, by the Closing Date, Purchaser will have had sufficient opportunity to
inspect the Property fully and completely at its expense in order to ascertain
to its satisfaction the extent to which the Property complies with applicable
zoning, building, environmental, health and safety and all other laws, codes
and regulations.

 

6.2.5.       Prior to Closing, Purchaser
will have had sufficient opportunity to review the contracts, expenses and
other matters relating to the Property in order to determine, based upon its
own investigations, inspections, tests and studies, whether to purchase the
Property and to assume Seller’s obligations under the contracts and otherwise
with respect to the Property.

 

6.2.6.       Neither Purchaser nor any
affiliate of or principal in Purchaser is other than a citizen of, or
partnership, corporation or other form of legal person domesticated in, the
United States of America.

 

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

 

11

 

6.3.          Mutual. Each of Seller and Purchaser
represents to the other that it has had no dealings, negotiations, or
consultations with any broker, representative, employee, agent or other
intermediary in connection with the Agreement or the sale of the Property.
Seller and Purchaser agree that each will indemnify, defend and hold the other
free and harmless from the claims of any broker(s), representative(s),
employee(s), agent(s) or other intermediary(ies) claiming to have represented
Seller or Purchaser, respectively, or otherwise to be entitled to compensation
in connection with this Agreement or in connection with the sale of the
Property. The terms and provisions of this paragraph shall survive Closing
hereunder.

 

7.             COSTS AND PRORATIONS.

 

7.1.          Closing Costs. Purchaser shall pay the
following costs of closing this transaction:

 

7.1.1.       The fees and disbursements
of its counsel, inspecting architect and engineer and any other consultants
engaged by Purchaser, if any;

 

7.1.2.       Fifty percent (50%) of any
and all real estate transfer, stamp or documentary tax(es), including but not
limited to the South Carolina Deed Recording Fee;

 

7.1.3.       Fifty percent (50%) of any
and all sales or use taxes relating to the transfer of personal property to
Purchaser;

 

7.1.4.       Fifty percent (50%) of the
cost of any owner’s title insurance policy in the amount of the Purchase Price,
and one hundred percent (100%) of any premium charges, extended coverage or
special endorsements required by Purchaser, including, any additional premium
charge(s) for endorsements and/or deletion(s) of exception items;

 

7.1.5.       Fifty percent (50%) of any
and all recording fees;

 

7.1.6.       Fifty percent (50%) of any
and all escrow fees; and

 

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

 

7.2.          Seller’s Costs. Seller shall pay the
following costs of closing this transaction:

 

7.2.1.       The fees and disbursements
of Seller’s counsel;

 

7.2.2.       Fifty percent (50%) of any
and all real estate transfer, stamp or documentary tax(es), including but nor
limited to the South Carolina Deed Recording Fee;

 

7.2.3.       Fifty percent (50%) of any
and all sales or use taxes relating to the transfer of personal property to
Purchaser;

 

7.2.4.       Fifty percent (50%) of the
cost of any owner’s title insurance policy in the amount of the Purchase Price;

 

7.2.5.       Fifty percent (50%) of any
and all recording fees;

 

12

 

7.2.6.       Fifty percent (50%) of any
and all escrow fees; and

 

7.2.7.       Any other expense(s)
incurred by Seller or its representative(s) in closing this transaction.

 

7.3.          Prorations. The following shall be
prorated as of the Closing Date and be adjusted against the Purchase Price due
at Closing: (a) rents and other charges due from Purchaser to Seller (as
landlord) under the Lease as of the Closing Date, including but not limited to
the Carry Cost Amounts (as defined in the Third Amendment);
(b) installment payments of special assessment liens actually billed or
paid as of the Closing Date; and (c) amounts owed by Seller or paid under
the contracts described in Section 3.3.1 hereof as of the Closing Date.
Within 150 days after the Closing, Purchaser and Seller will make a further
adjustment for such rents, taxes or charges which may have accrued or been
incurred prior to the Closing Date, but not billed or paid at that date. All
prorations shall be made on a 365-day calendar year basis, based on the actual
number of days in the applicable month.

 

7.4.          Taxes. General real estate taxes and
special assessments relating to the Property payable during the year in which
Closing occurs shall be prorated as of the Closing Date. If Closing shall occur
before the actual taxes and special assessments payable during such year are
known, the apportionment of taxes shall be upon the basis of taxes for the Property
payable during the immediately preceding year, provided that, if the taxes and
special assessments payable during the year in which Closing occurs are
thereafter determined to be more or less than the taxes payable during the
preceding year (after any appeal of the assessed valuation thereof is
concluded), Seller and Purchaser promptly (but no later than March 31,
2007, except in the case of an ongoing tax protest) shall adjust the proration
of such taxes and special assessments, and Seller or Purchaser, as the case may
be, shall pay to the other any amount required as a result of such adjustment
and this covenant shall not merge with the Deed delivered hereunder but shall
survive the Closing.

 

7.5.          Incentives Payments. Any payments of
Incentives (as defined in Section 41 of the Lease) received by Seller or
its contractor or any affiliate of Seller on or before Closing that are not
reflected in the Purchase Price as computed in Exhibit 2.1 shall be
deducted from the Purchase Price as a credit to Purchaser. Further, should
Seller receive any such payment regarding Incentives after Closing, Seller
shall promptly deliver same to Purchaser.

 

7.6.          In General. Any other costs or charges
of closing this transaction not specifically mentioned in this Agreement shall
be paid and adjusted in accordance with local custom in Rock Hill, South
Carolina.

 

7.7.          Purpose and Intent. Except as
expressly provided herein, the purpose and intent as to the provisions of
prorations and apportionments set forth in this Section 7 and elsewhere
in this Agreement is that Seller shall bear all expenses of ownership and
operation of the Property and shall receive all income therefrom accruing
through midnight at the end of the day preceding the Closing Date and Purchaser
shall bear all such expenses and receive all such income accruing thereafter.

 

8.             DAMAGE, DESTRUCTION OR CONDEMNATION.

 

13

 

8.1.          Material Event. If, prior to Closing,
the number of parking spaces on the Property are reduced by fifteen percent
(15%) or more, the buildings are damaged and the cost of repair exceeds
$500,000.00 (as reasonably determined by Seller and its contractors in
consultation with Purchaser) or all access to the Property is rendered
completely unusable, or is destroyed or taken under power of eminent domain and
the cost or repair exceeds $500,000 (as reasonably determined by Seller and its
contractors in consultation with Purchaser) (a “Material Event”), Purchaser may elect to terminate this
Agreement by giving written notice of its election to Seller within seven (7)
days after receiving notice of such destruction or taking, and the entire
Deposit shall thereupon be refunded to Purchaser. If Purchaser does not give
such written notice within such seven (7) day period, this transaction shall be
consummated on the date and at the Purchase Price provided for in Section 2,
and Seller will assign to Purchaser the physical damage proceeds of any
insurance policy(ies) payable to Seller, or Seller’s portion of any
condemnation award, in both cases, up to the amount of the Purchase Price, and,
if an insured casualty, pay to Purchaser the amount of any deductible but not
to exceed the amount of the loss.

 

8.2.          Immaterial Event. If, prior to
Closing, the Property is subject to a casualty or a condemnation event that is
not a Material Event, Purchaser shall close this transaction on the date and at
the Purchase Price agreed upon in Section 2, and Seller will assign to
Purchaser the physical damage proceeds of any insurance policies payable to
Seller, or Seller’s rights to any portion of any condemnation award, in both
cases, up to the amount of the Purchase Price and, if an insured casualty, pay
to Purchaser the amount of any deductible but not to exceed the amount of the
loss.

 

8.3.          Termination and Return of Deposit. If
Purchaser elects to terminate this Agreement pursuant to this Section 7,
and if Purchaser is not, on the date of such election, in default under the
Agreement beyond any applicable cure period, the entire Deposit shall promptly
be returned to Purchaser, and neither party shall have any further liability
hereunder except for the Surviving Obligations.

 

9.             NOTICES.

 

Any notice required or permitted to be given
hereunder shall be deemed to be given when hand delivered or one (1) business
day after pickup by DHL, Emery Air Freight, Airborne, Federal Express, or
similar overnight express service, or by facsimile (only as provided below) in
either case addressed to the parties at their respective addresses referenced
below:

 

	
  If to
  Seller:

  	
  Koll Development Company

  8115 Preston Road

  Suite 700

  Dallas, Texas 75225

  Attention:  Scott Ozymy

  Telephone:  214-696-7825

  FAX:  214-696-7825

  

 

14

 

	
  With a copy
  to:

  	
  Munsch Hardt
  Kopf & Harr PC

  3800 Lincoln Plaza, 500 North Akard

  Dallas, Texas 75201

  Attention:  Robert H. Voelker

  Telephone:  214-855-7594

  FAX:  214-978-4379

  
	
   

  	
   

  
	
  If to Title
  Company: 

  	
  Chicago
  Title Insurance Company

  2001 Bryan
  St., Ste. 1700

  Dallas, TX 75201

  Attention:
  Jocelyn Armstrong

  Telephone:
  214-965-1668

  FAX:
  214-965-1625

  
	
   

  	
   

  
	
  If to
  Purchaser:

  	
  3D Systems
  Corporation

  333 Three D Systems Circle

  Rock Hill, South Carolina 29730

  Attention:  Robert
  M. Grace, Jr.,

  Vice
  President, General Counsel and Secretary

  Telephone:   803-326-3989

  FAX:  ____________________

  
	
   

  	
   

  
	
  With a copy
  to:

  	
  Kennedy
  Covington Lobdell & Hickman, L.L.P.

  City Plaza Building, Suite 220

  140 East Main Street

  Rock Hill South Carolina 29730

  Attention:  Stephen R. McCrae,
  Jr.

  Telephone:  803-329-7602

  FAX:  803-980-7882

  

 

or in each case to such other address as
either party may from time to time designate by giving notice in writing to the
other party. Except for facsimile notices between 9:00 a.m. and 5:00 p.m. Rock
Hill, South Carolina time on a business day that are followed up by an
overnight courier delivery, telephone and facsimile numbers are for
informational purposes only. Effective notice will be deemed given only as
provided above.

 

10.           CLOSING AND ESCROW.

 

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

 

15

 

Agreement and any supplementary escrow instructions, the terms of the
Agreement shall prevail.

 

10.2.        Seller’s Deliveries. Seller shall
deliver at the Closing the following original documents, each executed and, if required,
acknowledged:

 

10.2.1.     The Deed to the Property, in
the form attached hereto as Exhibit 10.2.1, conveying to Purchaser a
good, indefeasible fee simple and insurable title to the Property, said title
to be insurable both as to fee and marketability thereof at regular rates of
the Title Company without exception except as to the Permitted Encumbrances,
those items arising out actions of Purchaser and other matters subsequently
approved by Purchaser or Purchaser’s counsel.

 

10.2.2.     An Affidavit of Value
attached to the Deed pursuant to S. C. Code Section 12-24-10 et seq. and
SC Revenue Ruling #04-6 in the form attached hereto as Exhibit 10.2.2.

 

10.2.3.     A Bill of Sale in the form
attached hereto as Exhibit 10.2.3 conveying the Personal Property.

 

10.2.4.     (i) Copies of all
Service Contracts relating to the Property which Purchaser has elected to
assume or which are not terminable by Seller on or before the Closing Date; and
(ii) an assignment and assumption of Service Contracts and Warranties to
Purchaser by way of an Assignment and Assumption of Contracts agreement, in the
form attached hereto as Exhibit 10.2.4.

 

10.2.5.     The Final Plans and
Specifications.

 

10.2.6.     An affidavit pursuant to the
Foreign Investment and Real Property Tax Act in the form attached hereto as Exhibit
10.2.6.

 

10.2.7.     An executed owner’s affidavit
or other document(s) required by the Title Company as a condition to the
issuance of a final title insurance policy in favor of Purchaser with
affirmative coverage against the possible lien claims of mechanics, laborers
and materialmen and the rights of tenants (other than Purchaser). Additionally,
Seller shall discharge in full any and all such indebtedness at or before the
Closing.

 

10.2.8.     Written direction to the
Title Company for delivery of the original Letter of Credit.

 

10.2.9.     Evidence reasonably
satisfactory to Purchaser, Purchaser’s attorneys and the Title Company with
respect to the right, power and authority of Seller’s designated
representative(s) to execute and deliver the closing documents and consummate
the sale of the Property, such evidence to include, without limitation, (i) an
incumbency certificate and company member certificate signed and dated by the
corporate secretary of Seller as of the date of Closing certifying as to the
names (and company titles, as applicable) of officers, directors and members of
Seller as of the date of Closing and (ii) company resolutions of Seller
authorizing Seller to enter into this Agreement and to perform all of Seller’s
obligations hereunder, acting through designated corporate officers of Seller.

 

16

 

10.2.10.   A Seller’s Affidavit, South
Carolina Withholding Tax, pursuant to SC Code Section 12-8-580 and SC Revenue
Advisory Bulletin #02-6 in the form attached hereto as Exhibit 10.2.10.

 

10.2.11.   The Termination of Lease in the
form attached hereto as Exhibit 10.2.11, to be recorded in the public
records after Closing.

 

10.2.12.   Subject to the provisions of Section
12.16 hereof, an agreement in form and substance acceptable to Purchaser
reaffirming all of Seller’s representations and warranties contained in this
Agreement as of the date of Closing.

 

10.3.        Purchaser’s Deliveries. At the Closing,
Purchaser shall (i) pay Seller the remaining balance of the Purchase
Price; and (ii) execute the agreement referred to in Section 10.2.2.

 

10.4.        Possession. Purchaser shall be entitled
to exclusive possession of the Property, subject only to the Permitted
Encumbrances, upon conclusion of the Closing.

 

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

 

11.           DEFAULT; FAILURE OF CONDITION.

 

11.1.        Purchaser Default. If Purchaser shall
become in breach of or default under this Agreement and the breach or default
continues beyond the expiration of the cure period, if any, provided in Section
12.6 hereof, or if Purchaser fails to make the payments of the Carry Cost
Amounts (as defined and provided in the Third Amendment), Seller may elect as
its sole and exclusive remedy hereunder to either (a) retain the Deposit
(including the cash portion and drawing on the Letter of Credit portion of the
Deposit, as applicable) as liquidated damages, in which case both parties shall
be relieved of and released from any further liability hereunder except for the
Surviving Obligations, or (b) enforce Purchaser’s obligations to purchase the
Property by delivering written notice to Purchaser within thirty (30) days
after the scheduled Closing which describes such default and states Seller’s
election to enforce specific performance and actually filing suit within such
60-day period. Seller and Purchaser agree that the Deposit is a fair and
reasonable amount to be retained by Seller as agreed and liquidated damages in
light of Seller’s removal of the Property from the market and the costs
incurred by Seller and shall not constitute a penalty or a forfeiture. Upon
Seller making the election under (a) of this Section 11.1 above,
Purchaser shall have no further right to purchase the Property under this
Agreement and paragraphs 4 and 5 of the Third Amendment shall be deemed to be
deleted and have no further force or effect. In any event, after Purchaser’s
uncured default under this Agreement, the Lease shall remain in full force and
effect in the absence of a default thereunder.

 

11.2.        Seller Default. If Seller shall refuse
or fail to convey the Property as herein provided for any reason other than
(a) a default by Purchaser and the expiration of the cure period, if any,
provided under Section 12.6 hereof; (b) the existence of a Pending
Default (as defined in and contemplated by Section 12.6); or
(c) any other provision of this Agreement which permits Seller to terminate
this Agreement or otherwise relieves Seller of the obligation to 

 

17

 

convey the Property, Purchaser shall elect as
its sole and exclusive remedy hereunder either to (i) terminate the
Agreement and recover the entire Deposit, or (ii) enforce Seller’s
obligations to convey the Property by delivering written notice to Seller
within thirty (30) days after the scheduled Closing which describes such
default and states Purchaser’s election to enforce specific performance and
actually filing suit within such 60-day period, provided that no such action in
specific performance shall seek to require Seller to do any of the
following:  (1) change the condition
of the Property or restore the same after any fire or other casualty;
(2) subject to Section 11.3, below, expend money or post a bond to
remove a title encumbrance or defect or correct any matter shown on a survey of
the Property except for a title encumbrance that is not a Permitted Encumbrance
or one arising after the effective date of the Title Commitment; or
(3) secure any permit, approval or consent with respect to the Property or
Seller’s conveyance of the Property. Purchaser waives any right to receive
damages as a result of Seller’s default. In any event, as a result of Seller’s
uncured default, Purchaser shall be entitled to extend its Closing Date for a
period of time equal to the number of days from Purchaser’s notice to Seller of
Seller’s default until the date Seller has cured such default.

 

11.3.        Failure of Condition. If, prior to
Closing, Seller discloses to Purchaser or Purchaser discovers that
(i) title to the Property is subject to defects, limitations or
encumbrances other than Permitted Encumbrances; or (ii) any representation
or warranty of Seller contained in this Agreement is or, as of the Closing
Date, will be untrue in any material respect, or (iii) there is a failure of
any of the conditions set forth in Section 4 above, then Purchaser shall
promptly give Seller written notice of its objection thereto. In such event,
Seller may elect to postpone the Closing for thirty (30) days and attempt to
cure such objection, provided that Purchaser may not object to the state of
title of the Property on the basis of matters set out in Section 3.4
above. The parties acknowledge and agree that Seller shall have no obligation
to cure any objection within (i) or (ii) above unless it is a defect caused by
Seller. If Purchaser fails to waive any such objection within ten (10) days
after notice from Seller that Seller will not cure the objection, Purchaser
shall be entitled to elect to either (i) close under this Agreement, with a
deduction of the amount reasonably necessary to cure such defect from the
amount of the Purchase Price due Seller at Closing, either placed in escrow or
allowed as a credit to Purchaser, or (ii) terminate this Agreement with a
return of the entire Deposit to Purchaser, and neither party shall have any
liability to the other except for the Surviving Obligations, and in such event
the Lease shall remain in full force and effect except that paragraphs 3, 4 and
5 of the Third Amendment shall be deemed to be deleted and have no further
force or effect. For the purposes of this Agreement, any title defect,
limitation or encumbrance other than a Permitted Encumbrance shall be deemed
cured if the Title Company will agree to issue an ALTA owner’s title insurance policy to Purchaser for
the Purchase Price, which policy takes no exception for such defect, limitation
or encumbrance and is issued for no additional premium or for an additional
premium if Seller agrees to pay such additional premium upon Closing, and the
Title Company agrees to continue to so insure future purchasers of the property
without exception for such defect, limitation or encumbrance for no additional
premium.

 

12.           MISCELLANEOUS.

 

12.1.        Entire Agreement. This Agreement,
together with the Exhibits attached hereto, all of which are incorporated by
reference, is the entire agreement between the parties with respect to the
subject matter hereof, and no alteration, modification or interpretation hereof
shall be binding unless in writing and signed by both parties.

 

18

 

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

 

12.3.        Applicable Law. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF SOUTH
CAROLINA.

 

12.4.        Assignability. Except for an assignment
to a wholly owned subsidiary of Purchaser with seven days prior written notice
to Seller, Purchaser may not assign this Agreement without first obtaining
Seller’s written consent, which shall not be unreasonably withheld, conditioned
or delayed. Any assignment in contravention of this provision shall be void. No
assignment shall release the Purchaser herein named from any obligation or
liability under this Agreement. Any assignee shall be deemed to have made any
and all representations and warranties made by Purchaser hereunder, as if the
assignee were the original signatory hereto. If Purchaser requests Seller’s
written consent to any assignment, Purchaser shall (1) notify Seller in
writing of the proposed assignment; (2) provide Seller with the name and
address of the proposed assignee; (3) provide Seller with financial
information including financial statements of the proposed assignee; and
(4) provide Seller with a copy of the proposed assignment.

 

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

 

12.6.        Breach. Should either party be in breach
of or default under or otherwise fail to comply with any of the terms of this
Agreement, except as otherwise provided in this Agreement, or should Purchaser
fail to pay the Carry Cost Amounts as provided in the Third Amendment, the
complying party shall have the option to cancel this Agreement upon ten (10)
days written notice to the other party of the alleged breach, default or
failure by such other party if such other party fails to cure such breach
within such ten (10) day period. The non-defaulting party shall promptly notify
the defaulting party in writing of any such alleged breach, default or failure
upon obtaining knowledge thereof. The Closing Date shall be extended to the
extent necessary to afford the defaulting party the full ten (10) day period
within which to cure such breach, default or failure; provided, however, that
the failure or refusal by a party to perform on the scheduled Closing Date
(except in respect of a Pending Default by the other party) shall be deemed to
be an immediate default without the necessity of notice; and provided further,
that if the Closing Date shall have been once extended as a result of default
by a party, such party shall be not be entitled to any further notice or cure
rights with respect to that or any other default. For purposes of this Section
12.6, a “Pending Default”
shall be a default for which (i) written notice was given by the non-defaulting
party, and (ii) the cure period extends beyond the scheduled Closing Date.

 

12.7.        No Public Disclosure. Except for filings
required by law, including, without limitation, filings with the Securities
Exchange Commission, Purchaser and Seller shall make no public disclosure of
the terms of this transaction, either before or after Closing, without the
prior written consent of Seller and Purchaser, except that Purchaser and Seller
may also discuss the 

 

19

 

transaction in confidence with proposed joint
venturers or prospective mortgagees and Purchaser may disclose same to its
auditors and outside counsel, securities regulators and other governmental
agencies.

 

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

 

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

 

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

 

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

 

12.12.      Counterparts. This Agreement may be
executed and delivered in any number of counterparts, each of which so executed
and delivered shall be deemed to be an original and all of which shall
constitute one and the same instrument.

 

12.13.      Recordation. Purchaser and Seller agree
not to record this Agreement or any memorandum hereof.

 

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

 

12.15.      Tax Protest. If, as a result of any tax
protest or otherwise, any refund is paid or reduction of any real property or
other tax or assessment is made available relating to the Property with respect
to any period for which, under the terms of this Agreement, Seller is
responsible, Seller shall be entitled to receive or retain such refund or the
benefit of such reduction, less the equitable prorated costs of collection.

 

12.16.      Survival and Limitation of Representations and
Warranties. The representations and warranties set forth in this Agreement,
including but not limited to those set forth in Section 1.2, Section
3.3.2 and Section 5.1 above (collectively the “Surviving Obligations”), are made as of
the date of this Agreement and are remade as of the Closing Date and shall
survive the Closing but written notification of any claim arising therefrom
must be received by Seller within one (1) year of the Closing Date or such
claim shall be forever barred and Seller shall have no liability with respect
thereto. In addition, upon Seller’s receipt of written notification of any such
claim, Seller shall first be afforded at least sixty (60) days to cure any
breach of Seller’s 

 

20

 

representations and warranties prior to
Purchaser’s filing any claim in connection therewith. The aggregate liability
of Seller for breach of any representations and warranties shall not exceed
$100,000; and recovery of actual damages up to that amount is Purchaser’s sole
and exclusive remedy for any such breach; provided, however, Seller shall have
no liability to Purchaser for matters disclosed by Seller or discovered by
Purchaser prior to Closing. For matters disclosed or discovered prior to
Closing, Purchaser’s sole rights and remedies shall be as set forth in Section
11.2. Whenever a representation or warranty is made in this Agreement on
the basis of the knowledge of Seller, such representation or warranty is made
with the exclusion of any facts otherwise known or disclosed to Purchaser, and
is made solely on the base of the actual knowledge without inquiry or
investigation of Scott Ozymy and Larry Wilson.

 

12.17.      Time to Execute and Deliver. This
Agreement shall be void if one fully executed original is not received by
Seller on or before 5:00 p.m. C.D.T. date five (5) business days after Seller
has delivered its executed copy of this Agreement to Purchaser.

 

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

 

12.19.      Limitation of Liability. Purchaser hereby
acknowledges and agrees that in no event shall any limited partner of Seller
ever be liable to Purchaser as a result of a breach of this Agreement, and
Purchaser agrees to look solely to Seller or the general partner of Seller for
satisfaction of any claim, loss or damage, even if Seller is hereinafter
dissolved.

 

12.20.      Jury Waiver. PURCHASER AND SELLER DO
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, OR UNDER OR
IN CONNECTION WITH THIS AGREEMENT, THE DOCUMENTS DELIVERED BY PURCHASER AT
CLOSING OR SELLER AT CLOSING, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING
OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING
WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT AND ANY
CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR SELLER TO
ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS DELIVERED BY PURCHASER
AT CLOSING AND SHALL SURVIVE THE CLOSING OF TERMINATION OF THIS AGREEMENT.

 

12.21.      Fee Agreement and Incentives Agreement. Purchaser
and Seller have agreed on the form of the Fee-in-Lieu-of-Taxation Agreement and
Incentives Agreement attached hereto as Exhibit 12.21. Purchaser and
Seller agree to reasonably cooperate with each other to finalize and execute
such agreements, whether before or after Closing, provided that such 

 

21

 

agreement by Seller shall be at no cost or
expense to Seller. The provisions of this Section 12.21 shall survive
the Closing.

 

[Remainder of page intentionally left blank]

 

22

 

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

 

	
   

  	
  SELLER:

  	
  KDC-CAROLINA
  INVESTMENTS 3, LP,

  
	
   

  	
   

  	
  a Delaware
  limited partnership

  
	
   

  	
   

  	
  By:

  	
  KDC-Carolina
  Investments 3 GP, LLC,

  
	
   

  	
   

  	
   

  	
  a Delaware
  limited liability company,

  
	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Koll
  Development Company I, LP,

  
	
   

  	
   

  	
   

  	
   

  	
  a Delaware
  limited partnership,

  
	
   

  	
   

  	
   

  	
   

  	
  its Sole Member

  
	
   

  	
  Date: December
  18, 2006

  	
   

  	
  By:

  	
  SWV, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  a Delaware limited
  liability company,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Tobin C. Grove

  
	
   

  	
   

  	
   

  	
   

  	
   Tobin C. Grove,
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  [CORPORATE
  SEAL]

  
	
   

  	
   

  
	
   

  	
  PURCHASER:

  	
  3D SYSTEMS
  CORPORATION,

  
	
   

  	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
  December 18, 2006

  	
  By:

  	
  /s/ Robert
  M. Grace, Jr.

  	
  ,

  
	
   

  	
  [CORPORATE SEAL]

  	
   

  	
    Printed
  Name: 

  	
  Robert M. Grace, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
    Title: 

  	
  Vice
  President, General Counsel & Secretary

  
											

 

An original, fully executed copy of this
Agreement, together with the Deposit, has been received by the Title Company
this ___ day of ________________________, 2006, and by execution hereof the
Title Company hereby covenants and agrees to be bound by the terms of this
Agreement.

 

	
   

  	
  Chicago Title Insurance Company

  
	
   

  	
  By: York Title Agency, Inc., its agent

  
	
   

  	
   

  	
  By: Spencer & Spencer, PA, its agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

23

 

EXHIBIT 1.1.1

LEGAL DESCRIPTION

 

All that certain piece, parcel or tract of
land lying and being situated in the City of Rock Hill, York County, South
Carolina and being more fully described as follows:

 

Beginning at a corner on the northern right
of way of S.C. Highway No. 161, also being on the south end of a sight triangle
with Overview Road, thence along the right of way of S.C. Highway No. 161, N
52°07’00”W, 525.10 feet to a #4 Rebar Found, thence leaving said right of way
along a common line with The Links at Waterford LLC property N 01°25’36” E,
573.51 feet to a #4 Rebar Found, thence N 18°08’27” W, 381.33 feet to a #4
Rebar Found, thence N 12°51’15 E, 62.13 feet to a #4 Rebar Found, thence N
58°12’58” E, 480.00 feet to a #4 Rebar Found, thence S 43°42’44” E, 594.87 feet
to a #4 Rebar Set, thence S 58°07’31” E, 440.71 feet to a #4 Rebar Found,
thence S 34°12’26” W, 169.41 feet to a #4 Rebar Found on the right of way of
Overview Drive, thence with said right of way S 33°52’56” W, 370.64 feet to a
Nail in Concrete Found, thence S 85°48’52” W, 44.85 feet to a #4 Rebar Found,
thence S  34°36’37” W, 66.05 feet to a #4
Rebar Found, thence S 05°52’44” E, 46.10 feet to a #4 Rebar Found, thence S
34°35’19” W, 62.10’ feet to a Nail in Concrete Found, thence S 37°28’42” W,
200.00 feet to a Nail in Concrete Found, thence S 34°37’49” W, 174.91 feet to a
#4 Rebar Found at the beginning of a sight triangle with S.C. Highway No. 161,
thence with the sight triangle S 85°53’07” W, 52.64 feet to the Point of
Beginning.

 

Said Tract containing 1,074,111 Square Feet,
24.66 Acres.

 

1

 

EXHIBIT 1.1.3

INVENTORY OF PERSONAL PROPERTY

 

None

 

 

EXHIBIT
2.1

 

	
  INITIAL PURCHASE PRICE

  	
   

  	
  $10,048,000  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PURCHASE
  PRICE

  COMPONENTS

  	
   

  	
   

  	
   

  	
   

  
	
  PHASE ONE LAND AND IMPROVEMENTS

  	
   

  	
  $9,709,000  

  	
   

  	
  (NOTE 1)

  
	
  EXPANSION

  LAND

  	
   

  	
  $339,000  

  	
   

  	
   

  
	
   

  	
   

  	
  $10,048,000  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INCENTIVE PAYMENTS

  	
   

  	
   

  	
   

  	
   

  
	
  RECEIVED TO DATE BY

  SELLER

  	
   

  	
  ($262,248.0

  	
  0)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REVISED PURCHASE PRICE

  	
   

  	
  $9,785,752.0 

  	
  0

  	
  AS OF 12/04/2006

  
							

 

 

	
  NOTE 1: 
  A PORTION OF THIS AMOUNT MAY COME FROM INCENTIVE

  PAYMENTS FROM LOCAL JURISDICTIONS. THAT PORTION INCLUDED

  WAS $565,000 AND TO DATE SELLER HAS ONLY RECEIVED $262,248.

  THEREFORE THE PURCHASE PRICE IS REDUCED BY THE $262,248 AND

  ANY INCENTIVES RECEIVED BY SELLER AFTER CLOSING WILL BE

  REFUNDED TO PURCHASER PER THE PURCHASE AGREEMENT.

  	
   

  

 

 

EXHIBIT 3.1.2

PROPERTY REPORTS

 

Mactec Project
6234-05-3348 Report of Phase I Environmental Site Assessment of Waterford Business
Park dated January 5, 2006.

 

Mactec Project
6234-05-3348 Results of the U.S. and Wetland Determination of 25-Acre Waterford
Site dated December 29, 2005.

 

Mactec Project
6234-05-3348 Report of Geotechnical Exploration 24.6 Acre Site of Waterford Business
Park dated January 4, 2006.

 

 

EXHIBIT 3.3.1

SCHEDULE OF SERVICE CONTRACTS

See Operation and Maintenance Provider List
attached

 

 

EXHIBIT 3.3.2

SCHEDULE OF WARRANTIES

 

[SEE ATTACHED]

 

 

EXHIBIT 10.2.1

SPECIAL WARRANTY DEED

 

	
  STATE OF SOUTH CAROLINA

  	
  §

  	
   

  
	
   

  	
  §

  	
  KNOW ALL MEN BY THESE PRESENTS THAT:

  
	
  COUNTY OF
  YORK

  	
  §

  	
   

  

 

                                     , a                                                                                                         (hereinafter
called “Grantor”), whose
address is _________________________________, Attention:__________________, for
and in consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration (see Affidavit of Value attached hereto) paid to Grantor by                                                                                                                                                             ,
a                                                                                                            (hereinafter
called “Grantee”), whose
address is _________________________________, the receipt and sufficiency of
which are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and
DELIVER to Grantee the real property described in Exhibit A
attached hereto and made a part hereof, together with all buildings and other
improvements situated thereon, all fixtures and other property affixed thereto
and all right, title and interest of Grantor in and to adjacent streets, alleys
and rights-of-way, subject to the encumbrances described in Exhibit B
attached hereto and made a part hereof (hereinafter called the “Permitted Encumbrances”).

 

TO HAVE AND TO HOLD the herein described
property, together with all and singular the rights and appurtenances thereto
in anywise belonging unto Grantee, its successors and assigns, forever, and
Grantor does hereby bind itself and its successors and assigns to warrant and
forever defend all and singular the said premises unto Grantee, its successors
and assigns against every person whomsoever lawfully claiming, or to claim the
same, or any part thereof, by, through, or under Grantor, but not otherwise,
subject however, to the Permitted Encumbrances.

 

Grantee hereby assumes the payment of ______
ad valorem taxes on the herein described property.

 

IN WITNESS WHEREOF, this Deed is executed by
Grantor on this                          day of                                                     ,
______, to be effective as of                                  ,
______.

 

	
   

  	
                                                                                                    ,

  
	
  WITNESSES:

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
  STATE OF

  	
   

  	
                   §

  	
   

  	
   

  
	
   

  	
   

  	
                   §

  	
   

  	
   

  
	
  COUNTY OF

  	
   

  	
                   §

  	
   

  	
   

  
											

 

This instrument was acknowledged before me on                                         ,
______ by                                                                                                                          ,                                                                                               of                                                                                                                                            ,
a                                                                            ,                                                               of                                                                            

 

 

                                                                                                                ,
a                                                                                             on
behalf of said                                                                 and                                                                         .

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public, State of 

  	
   

  	
   

  
	
   

  	
   

  
	
  My Commission Expires:

  	
  Print Name of Notary

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  The address of Grantee is:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

 

EXHIBIT A

To Special Warranty Deed

 

PROPERTY DESCRIPTION

 

All that certain piece, parcel or tract of
land lying and being situated in the City of Rock Hill, York County, South
Carolina and being more fully described as follows:

 

Beginning at a corner on the northern right
of way of S.C. Highway No. 161, also being on the south end of a sight triangle
with Overview Road, thence along the right of way of S.C. Highway No. 161, N
52°07’00”W, 525.10 feet to a #4 Rebar Found, thence leaving said right of way
along a common line with The Links at Waterford LLC property N 01°25’36” E,
573.51 feet to a #4 Rebar Found, thence N 18°08’27” W, 381.33 feet to a #4
Rebar Found, thence N 12°51’15 E, 62.13 feet to a #4 Rebar Found, thence N
58°12’58” E, 480.00 feet to a #4 Rebar Found, thence S 43°42’44” E, 594.87 feet
to a #4 Rebar Set, thence S 58°07’31” E, 440.71 feet to a #4 Rebar Found,
thence S 34°12’26” W, 169.41 feet to a #4 Rebar Found on the right of way of
Overview Drive, thence with said right of way S 33°52’56” W, 370.64 feet to a
Nail in Concrete Found, thence S 85°48’52” W, 44.85 feet to a #4 Rebar Found,
thence S  34°36’37” W, 66.05 feet to a #4
Rebar Found, thence S 05°52’44” E, 46.10 feet to a #4 Rebar Found, thence S
34°35’19” W, 62.10’ feet to a Nail in Concrete Found, thence S 37°28’42” W,
200.00 feet to a Nail in Concrete Found, thence S 34°37’49” W, 174.91 feet to a
#4 Rebar Found at the beginning of a sight triangle with S.C. Highway No. 161,
thence with the sight triangle S 85°53’07” W, 52.64 feet to the Point of
Beginning, all as shown on plat recorded in Plat Book ___, Page ____, Office of
the Clerk of Court for York County, South Carolina, to which plat reference is
hereby made.

 

Said Tract containing 1,074,111 Square Feet,
24.66 Acres.

 

[Include title derivation clause.]

 

 

EXHIBIT B

To Special Warranty Deed

 

PERMITTED
ENCUMBRANCES

 

 

EXHIBIT 10.2.2

AFFIDAVIT OF VALUE

 

	
  STATE OF                                     )

  	
   

  	
   

  
	
  COUNTY OF                                 )

  	
  AFFIDAVIT

  	
   

  

 

PERSONALLY
appeared before me the undersigned, who being duly sworn, deposes and says:

 

1.                                  I
have read the information on this affidavit and I understand such information.

 

2.                                  The
property being transferred consists of an approximately _____ acre tract near
_____________ in __________ [City of; Township; etc.], _______ County, bearing
______________ County Tax Map Number _______________ and was transferred by
_____________ to ________________ on ______________, 2006.

 

3.                                  Check
one of the following:  The deed is

 

	
  (a)

  	
  ______

  	
  subject to the deed
  recording fee as a transfer for consideration paid or to be paid in money or
  money’s worth.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  ______

  	
  subject to the deed
  recording fee as a transfer between a corporation, a partnership, or other
  entity and a stockholder, partner, or owner of the entity, or is a transfer
  to a trust or as a distribution to a trust beneficiary.

  
	
   

  	
   

  	
   

  
	
  (c)

  	
  ______

  	
  exempt from the deed
  recording fee because (See Information Section of affidavit):                              
  (If exempt, please skip items 4-7, and go to item 8 of this affidavit.)

  

 

If exempt
under exemption #14 as described in the Information section of this affidavit,
did the agent and principal relationship exist at the time of the original sale
and was the purpose of this relationship to purchase the realty?  Check Yes _____ or No _____

 

4.                                  Check
one of the following if either item 3(a) or item 3(b) above has been checked
(See Information section of this affidavit):

 

	
  (a)

  	
  ______

  	
  The fee is computed on the
  consideration paid or to be paid in money or money’s worth in the amount of _________________.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  ______

  	
  The fee is computed on the
  fair market value of the realty which is .

  
	
   

  	
   

  	
   

  
	
  (c)

  	
  ______

  	
  The fee is computed on the
  fair market value of the realty as established for property tax purposes
  which is _______________

  

 

5.                                  Check
Yes      or No        to the following:  A lien or encumbrance existed on the land,
tenement, or realty before the transfer and remained on the land, tenement, or
realty after the transfer. If “Yes,” the amount of the outstanding balance of
this lien or encumbrance is: _____________________.

 

6.                                  The
deed recording fee is computed as follows:

 

 

	
   

  	
  (a)

  	
  Place the amount listed in
  item 4 above here:_________________________

  
	
   

  	
  (b)

  	
  Place
  the amount listed in item 5 above here: _________________________

  
	
   

  	
   

  	
  (If no amount is listed,
  place zero here.)

  
	
   

  	
  (c)

  	
  Subtract        Line      
   6(b)         from        Line       6(a)          and        place

  result here

  

 

7.                                  The deed recording
fee due is based on the amount listed on Line 6(c) above and the deed recording
fee due is:                                            .

 

8.                                  As required by Code
Section 12-24-70, I state that I am a responsible person who was connected with
the transaction as:                                                                               .

 

9.                                  I understand that a
person required to furnish this affidavit who willfully furnishes a false or
fraudulent affidavit is guilty of a misdemeanor and, upon conviction, must be
fined not more than one thousand dollars or imprisoned not more than one year,
or both.

 

	
   

  	
   

  
	
   

  	
  Responsible Person Connected
  with the Transaction

  
			

 

	
  SWORN to before me this

  	
   

  	
   

  	
   

  	
   

  
	
  day of

  	
   

  	
  , 2006

  	
  Print or type Name Here

  
	
   

  	
   

  
	
                                                                      

  	
   

  
	
  Notary Public for

  	
   

  	
   

  	
   

  
	
  My Commission Expires:

  	
   

  	
   

  	
   

  
											

 

INFORMATION

 

Except as provided in this paragraph, the
term “value” means “the consideration paid or to be paid in money or money’s
worth for the realty.”  Consideration
paid or to be paid in money’s worth includes, but is not limited to, other
realty, personal property, stocks, bonds, partnership interest and other
intangible property, the forgiveness or cancellation of a debt, the assumption
of a debt, and the surrendering of any right. The fair market value of the
consideration must be used in calculating the consideration paid in money’s
worth. Taxpayers may elect to use the fair market value of the realty being
transferred in determining fair market value of the consideration. In the case
of realty transferred between a corporation, a partnership, or other entity and
a stockholder, partner, or owner of the entity, and in the case of realty
transferred to a trust or as a distribution to a trust beneficiary, “value”
means the realty’s fair market value. A deduction from value is allowed for the
amount of any lien or distribution to a trust beneficiary, “value” means the
realty’s fair market value. A deduction from value is allowed for the amount of
any lien or encumbrance existing on the land, tenement, or realty before the
transfer and remaining on the land, tenement, or realty after the transfer. Taxpayers
may elect to use the fair market value for property tax purposes in determining
fair market value under the provisions of the law.

 

Exempted from
the fee are deeds:

 

(1)           transferring realty in
which the value of the realty, as defined in Code Section 12-24-30, is equal to
or less than one hundred dollars;

 

(2)           transferring realty to
the federal government or to a state, its agencies and departments, and its
political subdivisions, including school districts;

 

 

(3)           that are otherwise exempted under the laws
and Constitution of this State or of the United States;

 

(4)           transferring realty in which no gain or loss
is recognized by reason of Section 1041 of the Internal Revenue Code as defined
in Section 12-6-40(A);

 

(5)           transferring realty in order to partition
realty as long as no consideration is paid for the transfer other than the
interests in the realty that are being exchanged in order to partition the
realty;

 

(6)           transferring an individual grave space at a
cemetery owned by a cemetery company licensed under Chapter 55 of Title 39;

 

(7)           that constitute a contract for the sale of
timber to be cut;

 

(8)           transferring realty to a corporation, a
partnership, or a trust in order to become, or as, a stockholder, partner, or
trust beneficiary of the entity provided no consideration is paid for the
transfer other than stock in the corporation, interest in the partnership,
beneficiary interest in the trust, or the increase in value in such stock or
interest held by the grantor. However, the transfer of realty from a
corporation, a partnership, or a trust to a stockholder, partner, or trust
beneficiary of the entity is subject to the fee even if the realty is
transferred to another corporation, a partnership, or trust;

 

(9)           transferring realty from a family
partnership to a partner or from a family trust to a beneficiary, provided no
consideration is paid for the transfer other than a reduction in the grantee’s
interest in the partnership or trust. A “family partnership” is a partnership
whose partners are all members of the same family. A “family trust” is a trust,
in which the beneficiaries are all members of the same family. The
beneficiaries of a family trust may also include charitable entities. “Family”
means the grantor and the grantor’s spouse, parents, grandparents, sisters,
brothers, children, stepchildren, grandchildren, and the spouses and lineal
descendants of any the above. A “charitable entity” means an entity which may
receive deductible contributions under Section 170 of the Internal Revenue Code
as defined in Section 12-6-40(A);

 

(10)         transferring realty in a statutory merger or
consolidation from a constituent corporation to the continuing or new
corporation;

 

(11)         transferring realty in a merger or
consolidation from a constituent partnership to the continuing or new
partnership;

 

(12)         that constitute a corrective deed or a quitclaim
deed used to confirm title already vested in the grantee, provided that no
consideration of any kind is paid or is to be paid under the corrective or
quitclaim deed;

 

(13)         transferring realty subject to a mortgage to
the mortgagee whether by a deed in lieu of foreclosure executed by the
mortgagor or deed executed pursuant to foreclosure proceedings;

 

(14)         transferring realty from an agent to the agent’s
principal in which the realty was purchased with funds of the principal,
provided that a notarized document is also filed with the deed that establishes
the fact that the agent and principal relationship existed at the time of the
original purchase as well as for the purpose of purchasing the realty; and

 

 

(15)         transferring title to facilities for transmitting
electricity that is transferred, sold, or exchanged by electrical utilities,
municipalities, electric cooperatives, or political subdivisions to a limited
liability company which is subject to regulation under the Federal Power Act
(16 U.S.C. Section 791(a)) and which is formed to operate or take functional
control of electric transmission assets as defined in the Federal Power Act.

 

 

EXHIBIT 10.2.3

FORM OF BILL OF SALE

 

For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,                                                                                                                                                                ,
a                                                                                                            (the
“Seller”), hereby conveys
to                                                                                                                                                            ,
a                                                                                                            (the
“Purchaser”), all of Seller’s
right, title and interest in and to those certain items of personal property
described on Exhibit A attached hereto and made a part hereof (the “Personal Property”) relating to certain real property known as                                                                                                                        ,                                                               ,                                                               .

 

Seller
warrants and represents it has good title to the Personal Property. However,
Seller has not made and does not make any express or implied warranty or
representation regarding the Personal Property’s fitness for any particular
purpose; the design or condition of the Personal Property; the quality or
capacity of the Personal Property; workmanship or compliance of the Personal
Property with the requirements of any law, rule, specification or contract
pertaining thereto; patent infringement or latent defects. Purchaser accepts
the Personal Property on an “AS IS, WHERE IS” basis, and “WITH ALL FAULTS.”

 

IN WITNESS
WHEREOF, Seller has caused this instrument to be executed and delivered as of
the _________ day of                 , 2006.

 

	
   

  	
                                                                                                    ,

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
									

 

 

EXHIBIT 10.2.4

FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS

 

In consideration of One Dollar and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged,                                                                                                                                                                                     ,
a                                                                                            (“Assignor”), hereby assigns and
delegates to                                                                                                                                                                                             ,
a                                                                                            (the
“Assignee”), with an office
and place of business at                                                                                                                                                                                                     ,
                                                                ,                                                               ,
and Assignee hereby assumes and accepts the assignment and delegation of all of
Assignor’s right, title and interest in and to the service contracts described
on Exhibit A attached hereto (the “Service Contracts”) and the
warranties described on Exhibit B (the “Warranties”) attached hereto
relating to certain real property known as                                                                                                                                         and
located at                                                                                                                                                       ,                                                               ,                                                               ,
and Assignee hereby accepts such assignment.

 

Assignee hereby agrees to hold Assignor
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys’ fees, originating on or after the
date hereof and arising out of the Assignee’s obligations under the Service
Contracts described in Exhibit A.

 

If any litigation between Assignor and
Assignee arises out of the obligations of the parties under this Assignment or
concerning the meaning or interpretation of any provision contained herein, the
losing party shall pay the prevailing party’s costs and expenses of such
litigation including, without limitation, reasonable attorneys’ fees.

 

This Agreement may be executed and delivered
in any number of counterparts, each of which so executed and delivered shall be
deemed to be an original and all of which shall constitute one and the same
instrument.

 

IN WITNESS WHEREOF, Assignor and Assignee
have executed this Assignment effective as of the _______ day of                                , ______.

 

	
   

  	
  ASSIGN:

  
	
   

  	
   

  
	
   

  	
                                                                                                    ,

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
  its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
									

 

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
                                                                                                    ,

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
									

 

 

EXHIBIT 10.2.6

AFFIDAVIT PURSUANT TO FOREIGN INVESTMENT

AND REAL PROPERTY TAX ACT FORM OF FIRPTA AFFIDAVIT

 

[SEE ATTACHED]

 

The undersigned hereby certifies that the
name, address and United States taxpayer identification number of the
transferor of the real property described in Exhibit A attached
hereto and incorporated herein by reference is as follows:

 

	
   

  	
  Name and Address

  	
   

  	
  Tax I.D. Number

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

In addition, the undersigned hereby certifies
that the transferor is not a “disregarded entity” as defined in Treasury
Regulations, Section 1.1445-2(b)(2)(iii).

 

There is no other person or entity who has an
ownership interest in the property. The transferor is                                                                                                                  ,
a                                                                                            organized
and existing under the laws of the State of                                            ,
and, as such, is not a foreign corporation, foreign partnership, foreign trust
or foreign estate (as those terms are defined in the Internal Revenue Code and
Treasury Regulations).

 

The undersigned understands that the
purchaser of the property intends to rely on the foregoing representations in
connection with the United States Foreign Investment and Real Property Act.

 

	
   

  	
                                                                                                    ,

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Date:

  	
                                                                    ,         

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
											

 

 

EXHIBIT 10.2.10

FORM OF SELLER’S AFFIDAVIT, SOUTH CAROLINA WITHHOLDING

 

SELLER’S Affidavit

South Carolina Withholding Tax

SC Code Section 12-8-580

 

THIS IS AN AFFIDAVIT OF FACTS. WHETHER OR NOT
THIS AFFIDAVIT IS SUFFICIENT TO RELIEVE THE BUYER OF THE RESPONSIBILITY TO
WITHHOLD IS GOVERNED BY SC REVENUE RULING 02-6. PLEASE READ THIS AFFIDAVIT
CAREFULLY IN CONJUNCTION WITH ADVISORY OPINION.

 

The undersigned on oath, being first duly
sworn, hereby certifies as follows:

 

1.             This affidavit is
being given in connection with a sale of real estate pursuant to SC Revenue
Ruling #02-6.

 

2.             I have attached to
this affidavit a description of the real property and any tangible personal
property being sold as part of this sale. The real property is located in the
County of                     
and its tax map number(s) is                                                          .

 

3.             The undersigned is the
Seller of the property described in the attached description.

 

4.             The closing date of
this sale is                                                                          .

 

5.             The Seller’s name is                                                                                                             .

 

6.             The Seller’s address
is                                                                                                                        

	
   

  	
  (number, street or rural route)

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
  (city, state and zip code)

  	
   

  

 

7.             The Seller’s social
security number or taxpayer identification number is                   .

 

8.             The undersigned
acknowledges his obligation to file a South Carolina income tax return for the
year of sale.

 

9.             p            Resident.
The Seller is a resident of South Carolina, as that term is defined in the
South Carolina income tax laws (S.C. Code Section 12-2-20 et seq.).

 

10.           p            Deemed
Resident. Pursuant to Code Section 12-8-580(C) and SC Revenue
Advisory Bulletin #02-6, the Seller is deemed to be a resident of South
Carolina because:

 

a.             The Seller is a
corporation incorporated outside South Carolina, has its principal place of
business in South Carolina, and does no business in its state of incorporation,
or

 

 

b.             The Seller (i) has
been in business in South Carolina during the last two taxable years, including
the year of sale, (ii) will continue substantially the same business in South
Carolina after the sale, (iii) is not delinquent with respect to filing any
South Carolina income tax returns, (iv) has filed at least one South Carolina
income tax return, and (v) has a certificate of authority to do business in
South Carolina or is registered to do business in South Carolina and

 

11.           The
Seller agrees to report the sale on a timely filed South Carolina income tax
return.

 

12.           p            Tax-Exempt
Organizations. The Seller is an organization exempt from income
taxes under Internal Revenue Code Section 501(a) or is an insurance company
exempt from South Carolina taxes on income.

 

13.           p            Gain Amount.
The Seller affirms pursuant to Code Section 12-8-580(B) that the amount of gain
required to be recognized on this transaction and on which buyer is to make the
requisite withholding will not exceed $ ___________________.

 

14.           p            Withholding
Amount Equals Entire Net Proceeds. If the withholding amount is
limited to the entire net proceeds, any lien, mortgage or credit line advance
which was made within one year prior to the closing was not made in
contemplation of the sale. See Question and Answer 15 in SC Revenue Ruling
#02-6 for a discussion of loans made in contemplation of the sale.

 

15.           Installment Sale.

 

p            The Seller will report
this sale on the installment method for South Carolina income tax purposes, and
has attached an amortization schedule correctly designating the principal and
interest portions of the payments. If withholding is to be limited to the gain,
Seller has entered the gain amount in item 12.

 

p            The Seller elects out
of the installment sale method for South Carolina purposes and will report the
entire withholding in one payment. If withholding is to be limited to the gain,
the Seller has entered the gain amount in item 12.

 

16.           p            Principal
Residence or Involuntary Conversion – Nonrecognition of Gain.. The
sale of the property will not be subject to taxes because of Internal Revenue
Code Section 121 (sale of a principal residence) or Internal Revenue Section
1033 (involuntary conversions). If the Seller fails to comply with Section
1033, the Seller acknowledges an obligation to file an amended South Carolina
income tax return for the year of the sale.

 

17.           Like Kind Exchange.

 

p            In a simultaneous
exchange, the entire gain is deferred under Internal Revenue Code Section 1031.

 

p            A gain will be
partially recognized. Enter the gain amount in item 12.

 

p            The gain is intended
to be deferred under Internal Revenue Code Section 1031 using a qualified
intermediary and the steps required by SC Revenue Advisory Bulletin #20-6 have
been completed.

 

 

18.           p            Employee
Relocation. The transaction involves the sale of an employee’s
property which is being sold by an employer or relocation company in connection
with the employee’s transfer. For income tax purposes the sale is treated as a
sale by the employer or relocation company.

 

The
undersigned understands that this affidavit may be disclosed to the Department
and that any false statement contained herein could be punished by fine,
imprisonment, or both.

 

	
   

  	
   

  
	
  (Signature)

  

 

 

	
   

  	
   

  
	
  (Name-Please Print)

  

 

	
  If the person making the affidavit is not
  the Seller, complete the following:

  

 

 

	
   

  	
   

  
	
  (Affiant’s Social Security Number of
  Taxpayer Identification Number)

  

 

	
   

  	
   

  
	
  (Affiant’s Street Address)

  

 

	
   

  	
   

  
	
  (Affiant’s City, State and Zip Code)

  

 

SUBSCRIBED AND SWORN to

 

 

 

	
  Before me this

  	
   

  	
  day of

  	
   

  
	
   

  	
  , year of           

  	
   

  
					

 

 

	
   

  	
   

  
	
  (Notary Public)

  	
   

  

 

	
  My commission expires:

  	
   

  	
   

  

 

 

EXHIBIT 10.2.11

FORM OF TERMINATION OF LEASE

 

	
  STATE OF SOUTH CAROLINA

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  COUNTY OF YORK

  	
  )

  	
   

  

 

TERMINATION
OF LEASE AND MEMORANDUM OF LEASE, PURCHASE

OPTION,
LIMITED PURCHASE OPTION OF EXPANSION LAND, AND

RIGHT OF
FIRST OFFER

 

KNOW ALL MEN
BY THIS PRESENTS that the undersigned have terminated that certain Lease
Agreement between KDC-Carolina Investments
3, LP, as “Landlord,” and 3D Systems Corporation., as “Tenant,”
dated February 8, 2006, as amended by First Amendment to Lease Agreement dated
August 7, 2006, Second Amendment to Lease Agreement dated October 6, 2006, and
Third Amendment to Lease Agreement dated December __, 2006 (collectively, the
“Lease”), as evidenced by Memorandum of Lease, Purchase Option, Limited
Purchase Option of Expansion Land, and Right of First Offer, dated February 8,
2006, recorded February 9, 2006, in Record Book 7788, Page 21, Office of the
Clerk of Court for York County, South Carolina (the “Memorandum of Lease”), and
the undersigned do further aver that all provisions of the Lease and Memorandum
of Lease will have no further force and effect except certain surviving
obligations of Landlord under Section 3(h) of the Lease and of both parties
under Section 41 of the Lease, as well as the pertinent provisions regarding
the parties’ Default and Remedies applicable thereto.

 

 

IN WITNESS WHEREOF, Landlord and Tenant have
caused this Termination of Lease and Memorandum of Lease, Purchase Option,
Limited Purchase Option of Expansion Land, and Right of First Offer to be duly
executed on this _____ day of ______________, 200__.

 

	
  WITNESSES:                                                     LANDLORD:

  	
   

  
	
   

  	
   

  
	
   

  	
  KDC-CAROLINA INVESTMENTS 3,
  LP,

  
	
   

  	
  a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  
	
  [Signature of Witness #1]

  	
  By:

  	
  KDC-Carolina Investments GP,
  LLC,

  
	
   

  	
   

  	
  a Delaware limited liability
  company,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Koll Development Company I,
  LP,

  
	
  [Signature of Witness #2]

  	
   

  	
   

  	
  a Delaware
  limited partnership,

  
	
   

  	
   

  	
   

  	
  Its Sole
  Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SWV, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a Delaware limited liability
  company,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  d/b/a SWV GP, LLC in Texas,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tobin C. Grove, President

  

 

	
  WITNESSES:

  	
  TENANT:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3D SYSTEMS CORPORATION,

  	
   

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Signature of Witness #1]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Grace, Jr.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title: Vice President,
  General Counsel and Secretary

  
	
  [Signature of Witness #2]

  	
   

  	
   

  	
   

  	
   

  
									

 

 

	
  STATE
  OF

  	
   

  	
   

  
	
   

  
	
  COUNTY
  OF

  	
   

  	
   

  
				

 

This ____ day of __________________, 200_,
personally came before me Tobin C. Grove, who, being by me duly sworn, says
that he is President of SWC, LLC, a Delaware limited liability company, the
General Partner of Koll Development Company I, LP, the sole member of
KDC-Carolina Investments GP, LLC, a Delaware limited liability company, the
General Partner of KDC-Carolina Investments 3, LP, a Delaware limited
partnership, that the foregoing Termination of Lease and Memorandum of Lease,
Purchase Option, Limited Purchase Option of Expansion Land and Right of First
Offer was signed by him, on behalf of said limited partnership, by its
authority duly given. And the said ________________ acknowledged the said
writing to be the act and deed of said partnership.

 

	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC FOR___________

  

 

[NOTARIAL SEAL]

 

 

	
  STATE
  OF

  	
   

  	
   

  
	
   

  
	
  COUNTY
  OF

  	
   

  	
   

  
				

 

This ____ day of ________________, 200_,
personally came before me Robert M. Grace, Jr., who, being by me duly sworn,
says that he is Vice President, General Counsel and Secretary of 3D Systems
Corporation, a Delaware corporation, and that said Termination of Lease and
Memorandum of Lease, Purchase Option, Limited Purchase Option of Expansion Land
and Right of First Offer was signed by him, on behalf of said Corporation, by
its authority duly given. And the said Vice President, General Counsel and
Secretary acknowledged the said writing to be the act and deed of said
Corporation.

 

	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC FOR___________

  

 

 

[NOTARIAL SEAL]

 

	
  My Commission Expires:

  
	
   

  
	
   

  	
   

  

 

 

Exhibit A

 

[Insert legal description of
Land]

 

 

EXHIBIT 12.21

 

FEE-IN-LIEU-OF-TAXATION AGREEMENT AND
INCENTIVES AGREEMENTExhibit 10.5

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”),
dated as of November 9, 2006 (the “Effective Date”), between ACA CAPITAL
HOLDINGS, INC., a Delaware corporation (“Holdings”), ACA FINANCIAL
GUARANTY CORPORATION, a Maryland corporation (“Financial,” and, together
with Holdings, the “Company”) and ALAN S. ROSEMAN (the “Executive”).

The Company and the Executive are parties to that
certain Amended and Restated Employment Agreement, dated as of September 30,
2004 (the “Former Employment Agreement”).

Financial desires to continue to employ the Executive
and the Executive desires to continue such employment.

Accordingly, in consideration of the premises and
mutual covenants contained herein and for other good and valuable consideration,
the receipt and adequacy of which are mutually acknowledged, the Company and
the Executive agree as follows:

1.                                       Definitions.  For purposes of this Agreement, the following
terms shall have the following meanings:

(a)                                  “Affiliate”
of a Person means a Person that directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with, the
Person specified.

(b)                                 “Base
Salary” means the salary provided for in Section 4 or any increased salary
granted to the Executive pursuant to Section 4.

(c)                                  “Board”
means the Board of Directors of Holdings, as constituted from time to time.

(d)                                 “Cause”
means the Executive:

(i)                                     is
convicted of, or pleads nolo contendere (or similar plea) to, a felony;

(ii)                                  performs
an action or fails to take an action that constitutes willful misconduct (which
is materially and demonstrably injurious to the Company or any Subsidiary
thereof) or fraud by the Executive in the performance of the Executive’s duties
to the Company;

(iii)                               engages
in independently verified (determined by a qualified medical or mental health
professional), continuing and unremedied for a period of at least six (6)
months, substance abuse involving drugs or alcohol;

(iv)                              willfully
and repeatedly fails, after thirty (30) business days notice, to materially
follow the lawful instructions of the Board; or

 

(v)                                 materially
breaches any written policy, rule or regulation adopted by the Company or any
of its Subsidiaries relating to compliance with securities laws and such breach
is not cured by the Executive or waived in writing by the Company within thirty
(30) days after written notice of such breach to the Executive.

No act, or failure to act, on Executive’s part shall
be considered “willful” unless done, or omitted to be done, without good faith
and without reasonable belief that the action or omission was in the best
interest of the Company.

(e)                                  “Change
of Control” means the occurrence of any of the following events after the
Effective Date:

(i)                                     any
Person (other than any Person that is a stockholder of Holdings as of the
Effective Date, or other than a trustee or other fiduciary holding securities
under an employee benefit plan of Holdings, or a corporation owned directly or
indirectly by the stockholders of Holdings in substantially the same
proportions as their ownerships of stock of Holdings) becomes the beneficial
owner, directly or indirectly (in one transaction or a series of related
transactions), of securities of Holdings representing more than fifty percent
(50%) of the combined voting power of Holdings’ then outstanding voting
securities; or

(ii)                                  during
any period of two (2) consecutive years (not including any period prior to the
Effective Date), individuals who at the beginning of such period constitute the
Board (and any new director, whose election by Holdings’ stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was so approved), cease for any reason to
constitute a majority thereof; or

(iii)                               any
Person (other than any Person that is a stockholder of Holdings as of the
Effective Date, or other than a trustee or other fiduciary holding securities
under an employee benefit plan of Holdings, or a corporation owned directly or
indirectly by the stockholders of Holdings in substantially the same
proportions as their ownerships of stock of Holdings) is or becomes able to, or
acquires the power to, elect a majority of the members of the Board; or

(iv)                              a
closing or completion, as applicable, of: (i) a plan or proposal of complete
liquidation or dissolution of Holdings; (ii) an agreement for the sale or
disposition of all or substantially all of Holdings’ assets; or (iii) a merger,
consolidation, or reorganization of Holdings with or involving any other
corporation or entity, other than a merger, consolidation, or reorganization
that would result in the voting securities of Holdings outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the voting securities of Holdings
(or such surviving entity) outstanding immediately after such merger,
consolidation, or reorganization.

However, in no event shall a “Change of Control” be
deemed to have occurred, with respect to the Executive, if Executive is part of
a purchasing group that consummates the Change-of-Control transaction.  Executive shall be deemed “part of a
purchasing group” for purposes of the

 2
 

 

preceding sentence if the Executive is an equity
participant in the purchasing company or group (except for: (i) passive
ownership of less than ten percent (10%) of the stock or equity interests of
the purchasing company; or (ii) ownership of an equity interest in the
purchasing company or group that is otherwise not significant, as determined
prior to the Change of Control by a majority of the non-employee continuing
directors of Holdings).

(f)                                    “Claim”
means any claim, demand, request, investigation, dispute, controversy, threat,
discovery request, or request for testimony or information.

(g)                                 “Code”
means the Internal Revenue Code of 1986, as amended.  Any reference to a particular section of the
Code shall include any provision that modifies, replaces, or supersedes such
section.

(h)                                 “Common
Stock” means Common Stock, par value $0.01 per share, of Holdings.

(i)                                     Unless
the context otherwise requires, the term “control” (including the terms “controlling,”
“controlled by” and “under common control with”) means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities,
by contract, or otherwise.

(j)                                     “Constructive
Termination” means a termination by the Executive of his employment with
the Company on written notice given to the Company within sixty (60) days
following the date on which he learns of the occurrence, without his prior
written consent, of any of the following events, if the Company shall have
failed to cure such event within thirty (30) days following receipt of written
notice from the Executive:

(i)                                     a
reduction in his then current Base Salary or in his target Annual Incentive
Award pursuant to Section 5 (other than for Cause);

(ii)                                  the
termination of, or a reduction in, any material employee benefit or perquisite
enjoyed by him (other than for Cause);

(iii)                               the
failure to elect or reelect him to the position described in Section 3 or the
removal of him from such position (other than for Cause), excluding for this
purpose the hiring of a Chief Operating Officer by the Company;

(iv)                              a
material change in the Executive’s positions, titles or responsibilities with
the Company (other than as a result of a promotion) as set forth in Section 3
of this Agreement or any action by the Company which results in a material
diminution in the authority of Executive (other than for Cause), excluding for
this purpose the hiring of a Chief Operating Officer by the Company;

(v)                                 the
relocation of the Executive’s principal office to a location outside of
Manhattan, New York without his consent;

 3
 

 

(vi)                              the
consummation of a Change of Control or, at the Executive’s sole election, Company’s
failure to obtain an assumption of this Agreement and the obligations hereunder
by any successor to Holdings or Financial in accordance with Section 12 herein;
or

(vii)                           the
Company’s material breach of this Agreement.

(k)                                  “Disability”
means the Executive’s inability, due to physical or mental incapacity, to
substantially perform his duties and responsibilities under this Agreement for
a period of 180 consecutive days as determined by an approved medical
doctor.  For this purpose, an “approved
medical doctor” means a medical doctor mutually selected by the Executive and
the Company.  If the Executive and the
Company cannot agree on a medical doctor, each Party shall select a medical
doctor and the two doctors shall select a third who shall be the approved
medical doctor for this purpose.

(l)                                     “Parties”
means the Company and the Executive.

(m)                               “Person”
means any individual, corporation, partnership, limited liability company,
joint venture, trust, estate, board, committee, agency, body, employee benefit plan,
other person or entity or group (within the meaning of Section 13(d) (3) or
14(d) (2) of the Securities Exchange Act of 1934, as amended).

(n)                                 “Proceeding”
means any threatened or actual action, suit, or proceeding, whether civil,
criminal, administrative, investigative, appellate, or other.

(o)                                 “Pro-Rata
Annual Incentive Award” means an amount equal to the product obtained by
multiplying (i) the Executive’s target Annual Incentive Award set forth in
Section 5 for the calendar year during which his employment hereunder
terminates (with such award deemed to be no less than the greater of (x) the
target Annual Incentive Award for such year pursuant to Section 5 or (y) the
actual Annual Incentive Award of the Executive in the prior year of employment
hereunder) times (ii) a fraction, the numerator of which is the number of days
on which the Executive was employed by the Company during such year and the
denominator of which is 365.

(p)                                 “Severance
Period” shall mean the greater of (i) one year following the Termination
Date and (ii) the period from the Termination Date and ending on the date the
then existing Term of Employment would have expired pursuant to Section 2 had
the Termination Date not occurred, assuming that each Party would have given
notice of non-renewal on the earliest time after such date that it could give
such notice.

(q)                                 “Subsidiary”
of any company means any corporation of which such company beneficially owns,
directly or indirectly, more than 50% of the Voting Stock, measured either by
number of shares and other voting securities or by number of votes entitled to
be cast.

(r)                                    “Term
of Employment” means the period specified in Section 2.

(s)                                  “Termination
Date” means the date on which the Executive’s employment hereunder
terminates in accordance with this Agreement.

 4
 

 

(t)                                    “Voting
Stock” means issued and outstanding capital stock or other securities or
interests of any class or classes having general voting power, under ordinary
circumstances in the absence of contingencies, to elect, in the case of a
corporation, the directors of such corporation and, in the case of any other
entity, the corresponding governing Person(s).

2.                                       Term
of Employment.  The Company agrees to
employ the Executive under this Agreement, and the Executive accepts such employment,
for the Term of Employment.  The Term of
Employment shall commence on the Effective Date and shall end on
September 30, 2009, and on every successive one-year anniversary
thereafter, the Term of Employment shall automatically be renewed for one year
unless either Party provided the other Party with three months’ advance written
notice of that Party’s desire that the Term of Employment should
terminate.  For the avoidance of doubt,
in no event shall such non-renewal by the Company of the Term of Employment be
deemed a termination by the Company of the Executive’s employment
hereunder.  Notwithstanding the
foregoing, the Term of Employment may be earlier terminated, but only in strict
accordance with the provisions of Section 9.

3.                                       Positions,
Duties, and Responsibilities.  (a)
During the Term of Employment, the Executive shall be employed as the
President, Chief Executive Officer and Chief Operating Officer of each of
Holdings and Financial, and shall perform such duties and exercise such powers
as are incident to such offices and as may be assigned (consistent with the
Executive’s position with the Company) from time to time by the Board.  The Executive, in carrying out his executive
duties under this Agreement, shall report to the Board.  It is the intention of the Parties that the
Executive shall be elected to and serve as a member of the Board, and Holdings
shall use its best efforts to cause its principal stockholders to cause the
election of the Executive to the Board. 
In addition, Executive shall serve as the Deputy Chair of the Board, and
the Chairman of the Board of Directors for Financial.

(b)                                 Notwithstanding
anything herein to the contrary, nothing shall preclude the Executive from (i)
serving on the boards of directors of a reasonable number of other corporations
or the boards of a reasonable number of trade associations and/or charitable
organizations (provided that in each such case the Executive shall give the
Board at least 10 business days’ advance written notice of the Executive’s
intention to serve on any such board and, if the Board reasonably objects
thereto, the Executive agrees not to serve on such board), (ii) engaging in
charitable activities and community affairs, including political activities,
and (iii) managing his personal investments and affairs, provided that
such activities do not materially interfere with the proper performance of his
duties and responsibilities as the Company’s President, Chief Executive Officer
and Chief Operating Officer.

4.                                       Base
Salary.  The Executive shall be paid
an annual Base Salary of $650,000.  Such
Base Salary shall be payable at intervals in accordance with the regular
payroll practices of the Company applicable to senior executives but no less
frequently than monthly.  The Base Salary
shall be reviewed no less frequently than annually during the Term of
Employment for increases.

5.                                       Annual
Incentive Awards.  The Executive
shall be eligible for an annual incentive award (“Annual Incentive Award”)
from the Company for each fiscal year during the Term of Employment based on a
range which shall be between 70% and 500% of his annualized Base

 5
 

 

Salary that is in effect at the end of such fiscal
year, and his actual Annual Incentive Award amount for each such year shall be
determined based on criteria established by the Board’s Compensation Committee
(the “Compensation Committee”). 
The Executive shall receive his Annual Incentive Award in respect of any
fiscal year no later than the March 1st immediately following the fiscal year to which
the Annual Incentive Award relates.

6.                                       Restricted
Stock.  Prior to the Effective Date,
the Company had granted to Executive 55,869 restricted shares of the Company’s
Series B Senior Convertible Preferred Stock, par value $0.10 (the “Restricted
Stock”).  Two-thirds of the Restricted
Stock has vested and the remaining 33.34% of the Restricted Stock will vest on
September 30, 2007, provided that Executive is then employed by the Company or
a Subsidiary, except as provided in Sections 9 and 10 herein.

7.                                       Other
Benefits.  (a) Employee Benefits.  During the Term of Employment, the Executive
shall participate in all employee benefit plans, programs, and arrangements
made available generally to the Company’s senior executives or to its
employees, including, without limitation, profit-sharing, savings (qualified
and non-qualified) and other defined contribution retirement plans or programs,
medical, dental, hospitalization, vision, short-term and long-term disability
and life insurance plans or programs, accidental death and dismemberment
protection, travel accident insurance, and any other employee welfare benefit
plans or programs that may be sponsored by the Company from time to time,
including any plans or programs that supplement the above-listed types of plans
or programs, whether funded or unfunded; provided, however, that
nothing in this Agreement shall be construed to require the Company to
establish or maintain any such plans, programs, or arrangements, except for
family medical, dental, and hospitalization insurance providing coverage, at no
cost to the Executive, which shall be required benefit plans for the Executive.

(b)                                 Perquisites.  During the Term of Employment, the Executive
shall participate in all fringe benefits and perquisites generally available to
senior executives of the Company at levels, and on terms and conditions, that
are commensurate with his positions and responsibilities at the Company; provided
that the Company shall provide the Executive with an expense account in an
amount not to exceed $20,000 per annum which shall be used by the Executive for
certain executive benefits and the promotion the business of the Company and
its Subsidiaries.  The Executive shall
also receive such additional fringe benefits and perquisites as the
Compensation Committee may, in its discretion, from time-to-time provide.

(c)                                  Vacation.  During the Term of Employment, the Executive
shall be entitled to vacation in accordance with the reasonable practices of
the Company.

8.                                       Reimbursement
of Business and Other Expenses.  (a)
The Executive is authorized to incur reasonable expenses in carrying out his
duties and responsibilities under this Agreement, and the Company shall
promptly reimburse him for all such expenses, subject to documentation in
accordance with reasonable policies of the Company.

(b)                                 The
Company shall promptly reimburse the Executive for any and all reasonable
expenses (including, without limitation, attorneys’ fees and other charges of
counsel)

 6
 

 

incurred by
him in connection with the negotiation and documentation of this Agreement and
the Executive’s other employment arrangements with the Company.

9.                                       Termination
of Employment.  The parties
acknowledge that Executive’s employment with the Company may be terminated
prior to the expiration of the Term of Employment in accordance with this
Section 9 and that upon such termination Executive shall be entitled to no
further compensation or benefits except as set forth in this Section.

(a)                                  Termination
Due to Death.  The Executive’s
employment hereunder shall be terminated as of the date of his death.  In the event that the Executive’s employment
hereunder is terminated due to his death, his estate or his beneficiaries (as
the case may be) shall be entitled to the following:

(i)                                     Base
Salary through the date of his death and for an additional 90 days thereafter;

(ii)                                  a
Pro-Rata Annual Incentive Award for the calendar year in which his death
occurs, payable in a lump sum promptly after his death;

(iii)                               immediate
vesting of all restricted stock held by the Executive;

(iv)                              a
lump-sum payment in respect of all accrued but unused vacation days at his Base
Salary rate in effect on the Termination Date, payment of any other amounts
earned, accrued or owing to the Executive but not yet paid, including, but not
limited to, any Annual Incentive Award(s) earned or awarded but not yet paid,
and receipt of other benefits in accordance with applicable plans and programs
of the Company (the “Standard Benefit”); and

(v)                                 payment
of COBRA premiums for the entire period of eligibility for the Executive’s eligible
dependents and continued participation for one year for each of the Executive’s
dependents in all other employee welfare benefit plans, programs, and
arrangements in which such dependent was participating as of the date of the
Executive’s death, on terns and conditions no less favorable than those
applying on such date.

(b)                                 Termination
Due to Disability.  The Executive’s
employment hereunder shall terminate due to Disability, as of the date fifteen
(15) days after the Party terminating his employment gives written notice of
such termination to the other Party.  In
the event that the Executive’s employment hereunder is terminated due to
Disability, he shall be entitled to the following:

(i)                                     continuation
of Base Salary until commencement of long-term disability payments;

(ii)                                  a
Pro-Rata Annual Incentive Award for the calendar year in which his employment
terminates, payable in a lump sum promptly following the Termination Date;

(iii)                               immediate
vesting of all restricted stock held by the Executive;

(iv)                              the
Standard Benefit; and

 7
 

 

(v)                                 payment
of COBRA premiums for the entire period of eligibility for the Executive and
eligible dependents and participation for one year for the Executive and each
of his dependents in all Company life insurance coverage and in all other
Company employee welfare benefit plans, programs, and arrangements.

(c)                                  Termination
by the Company for Cause.

(i)                                     No
termination of the Executive’s employment hereunder by the Company for Cause
shall be effective unless the provisions of this Section 9(c)(i) shall have
been fully complied with.  Prior to any
termination by the Company for Cause, the Executive shall be given written
notice by the Board of the intention to terminate him, such notice (A) to describe
the particular circumstances that constitute the grounds on which the proposed
termination for Cause is based and (B) to be given no later than 60 days after
the Board first learns of such circumstances. 
The Executive shall have 30 days after receiving such notice in which to
cure such grounds, to the extent such cure is possible.  If, after the 30 day notice period, a
majority of the Board determines, in good faith, at a meeting of the Board
called and held for such purposes (after reasonable, but in no event, less than
10 days’ notice to the Executive and an opportunity for the Executive, together
with his counsel, to be heard before the Board) that Cause for Executive’s
termination exists and no cure has been made or was possible, the Board shall
provide notice to Executive of his termination for Cause, which shall be
effective as of the date of the notice of termination for Cause.  In the event any court of law shall determine
that Cause did not exist for the termination of the Executive’s employment, his
employment shall be deemed to have been terminated without Cause for purposes
of determining his rights under this Agreement and any other applicable
agreements, but he shall in no event be entitled to reinstatement of his
employment.

(ii)                                  In
the event that the Executive’s employment hereunder is terminated by the
Company for Cause in accordance with Section 9(c)(i), he shall be entitled to
the following:

(A)                              Payment
of Base Salary through the Termination Date; and

(B)                                the
Standard Benefit.

(d)                                 Termination
Without Cause; Constructive Termination by the Executive.  The Company may terminate Executive’s
employment hereunder without Cause at any time for any reason.  In the event that the Executive’s employment
hereunder is terminated by the Company, other than due to Disability in accordance
with Section 9(b) or for Cause in accordance with Section 9(c)(i), or in the
event of the Executive’s termination of his employment as a result of a
Constructive Termination, the Executive shall be entitled to:

(i)                                     payment
of Base Salary through the Termination Date;

(ii)                                  the
Standard Benefit; and

(iii)                               upon
execution of a release of all claims that he may have against the Company in a
form mutually acceptable to the Company and the Executive:

 8
 

 

(1)                                  a
Pro-Rata Annual Incentive Award for the calendar year in which the Executive
was terminated, which shall be calculated based on the last full year Annual
Incentive Award paid by the Company to Executive, payable in a lump sum
promptly following the Termination Date;

(2)                                  a
prompt lump-sum severance payment equal to two times the Executive’s annual
Base Salary as of the Termination Date;

(3)                                  (i)
immediate vesting of all restricted stock and options to purchase Common Stock
of the Company (“Stock Options”) held by the Executive and (ii) exercise Stock
Options awarded to the Executive on or after the Effective Date under any
incentive stock option agreement, non-qualified stock option agreement or
similar such agreement for one year following the Termination Date; and

(4)                                  payment
of COBRA premiums for the entire period of eligibility for the Executive and
eligible dependents and continued participation for the Executive and each of
his dependents in all Company life insurance coverage and all other Company
welfare benefit plans, programs, and arrangements until the earlier of (x) one
year from the Termination Date or (y) the date the Executive receives
equivalent coverage and benefits from a subsequent employer.

(e)                                  Voluntary
Termination.  In the event that the
Executive terminates his employment with the Company on his own initiative,
other than by death, for Disability or by a Constructive Termination, he shall
have the same entitlements hereunder as provided in Section 9(c)(ii) in the
case of a termination by the Company for Cause. 
A voluntary termination under this Section 9(e) shall be effective upon
written notice to the Company and shall not be deemed a breach of this
Agreement.

(f)                                    Benefit
Plans.  In the event that the
Executive, or any of his dependents, is precluded from continuing full
participation in any employee benefit plan, program, or arrangement as provided
in Sections 9(a)(v), 9(b)(v), or 9(d)(v), the Executive shall be provided with
the after-tax economic equivalent of any benefit or coverage foregone.  For this purpose, the economic equivalent of any
benefit or coverage foregone shall be deemed to be the total cost to the
Executive or any of his dependents of obtaining such benefit or coverage by
himself on an individual basis.  Payment
of such after-tax economic equivalent shall be made quarterly in advance,
without discount.

(g)                                 No
Mitigation; Offset.  In the event of
any termination of the Executive’s employment with the Company, the Executive
shall be under no obligation to seek other employment or otherwise mitigate the
obligations of the Company under this Agreement.  The Company may offset against amounts due
the Executive under this Agreement for any amounts (i) borrowed by or advanced
to the Executive from the Company or any of its Subsidiaries or (ii) owed by
Executive to the Company or any of its Subsidiaries pursuant to any order,
judgment, ruling, injunction, assessment, award, decree or writ of any
government or political subdivision, whether federal, state, local, provincial
or foreign, or any agency or instrumentality of any such government or
political subdivision, or any federal, state, local or foreign court or
arbitrator, in each case that has not yet then been repaid to the Company or
such Subsidiary by the Executive.

 9
 

 

10.                                 Change
of Control, Excise Tax Gross-Up and Tag Along Rights.

(a)                                  Change
of Control.  In the event that a
Change of Control occurs during the Term of Employment, then all of Executive’s
restricted stock and Stock Options shall thereupon become fully vested and
nonforfeitable.

(b)                                 Excise
Tax Gross-Up.  In the event that any
payment or benefit made or provided to or for the benefit of the Executive in
connection with this Agreement and/or his employment with the Company or the
termination thereof (a “Payment” is determined to be subject to any
excise tax (“Excise Tax”) imposed by Section 4999 of the Code (or any
successor to such Section), the Company shall pay to the Executive, prior to
the time any Excise Tax is payable with respect to such Payment (through
withholding or otherwise), an additional amount (a “Gross-Up Payment”)
which, after the imposition of all income, employment, excise and other taxes,
penalties and interest thereon, is equal to the sum of (i) the Excise Tax on
such Payment plus (ii) any penalty and interest assessments associated with
such Excise Tax.  The determination of
whether any Payment is subject to an Excise Tax and, if so, the amount and time
of any Gross-Up Payment pursuant to this Section 10(b) shall be made by an
independent auditor (the “Auditor”) jointly selected by the Parties and
paid by the Company.  Unless the
Executive agrees otherwise in writing, the Auditor shall be a nationally
recognized United States public accounting firm that has not, during the two
years preceding the date of its selection, acted in any way on behalf of the
Company or any of its Affiliates.  If the
Parties cannot agree on the accounting firm to serve as the Auditor, then the
Parties shall each select one accounting firm and those two accounting firms
shall jointly select the accounting firm to serve as the Auditor.  The Parties shall cooperate with each other
in connection with any Proceeding or Claim relating to the existence or amount
of any liability for Excise Tax.  All
expenses relating to any such Proceeding or Claim (including attorneys’ fees
and charges and all other expenses incurred by the Executive in connection
therewith) shall be borne and paid by the Company.  Any payments payable under this Section 10(b)
shall be subject to a Gross-Up Payment in the event that the Executive is
subject to Excise Tax on such payment. 
This Section 10(b) shall apply irrespective of whether a Change of
Control has occurred.

11.                                 Indemnification.  (a) The Company agrees that (i) if the
Executive is made a party, or is threatened to be made a party, to any
Proceeding by reason of the fact that he is or was a director, officer,
employee, agent, manager, consultant, or representative of the Company or is or
was serving at the request of the Company or any of its Affiliates as a
director, officer, member, employee, agent, manager, consultant, or
representative of another Person or (ii) if any Claim is made, or threatened to
be made, that arises out of or relates to the Executive’s service in any of the
foregoing capacities, then the Executive shall promptly be indemnified and held
harmless by the Company to the fullest extent permitted by applicable law
against any and all costs, expenses, liabilities, and losses (including,
without limitation, attorney’s fees, judgments, interest, expenses of
investigation, penalties, fines, ERISA excise taxes or penalties, and amounts
paid or to be paid in settlement) incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if he has ceased to be a director, member, employee, agent,
manager, consultant or representative of the Company or other Person and shall
inure to the benefit of the Executive’s heirs, executors, and
administrators.  Promptly following the
Effective Date, the Company hereby agrees that it will amend its memorandum of
association, articles of association, articles of incorporation and by-laws to
the extent necessary

 10
 

 

to provide the Executive with the broadest indemnity
permitted by applicable law and to provide the Executive with copies of such
corporate documents as the Executive may request from time to time.  The Company shall advance to the Executive
all costs and expenses incurred by him in connection with any such Proceeding
or Claim within 15 days after receiving written notice requesting such an advance.  Such notice shall include, to the extent
required by applicable law, an undertaking by the Executive to repay the amount
advanced if he is ultimately determined not to be entitled to indemnification
against such costs and expenses.

(b)                                 Neither
the failure of the Company (including the Board, independent legal counsel, or
stockholders) to have made a determination in connection with any request for
indemnification or advancement under Section 12(a) that the Executive has
satisfied any applicable standard of conduct nor a determination by the Company
(including the Board, independent legal counsel, or stockholders) that the
Executive has not met any applicable standard of conduct, shall create a
presumption that the Executive has not met an applicable standard of conduct.

(c)                                  During
the Term of Employment and for a period of six years thereafter, the Company
shall keep in place a directors and officers’ liability insurance policy (or
policies) providing comprehensive coverage to the Executive (or legal
representative or other successor) equal to at least the greater of (i)
$5,000,000 per year and (ii) the coverage that the Company provides for any
other present or former senior executive or director of the Company.

12.                                 Assignability;
Binding Nature.  (a) This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs (in the case of the Executive), and assigns.

(b)                                 No
rights or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or a sale or liquidation of all or
substantially all of the assets and business of the Company; provided,
that the assignee or transferee is the successor to all or substantially all of
the assets and business of the Company and such assignee or transferee assumes
the liabilities, obligations, and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law.  In the event of any sale of assets and
business or liquidation as described in the preceding sentence, the Company
shall use its best efforts to cause such assignee or transferee to expressly assume
the liabilities, obligations and duties of the Company hereunder and shall
cause such assignee or transferee to deliver a legal, valid, and enforceable
written instrument in form and substance satisfactory to the Executive and his
counsel to such effect.

(c)                                  No
rights or obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than his rights to compensation and
benefits, which may be transferred only by will or operation of law, except as
provided in Section 17(f).

13.                                 Representations.  The Company represents and warrants
that:  (a) it is fully authorized by
action of the Board of the Company (and of any other Person or body whose
action is required) to enter into this Agreement and to perform its obligations
hereunder and upon the execution and delivery of this Agreement by the Parties,
this Agreement shall be the

 11
 

 

valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.

(b)                                 Holdings
and Financial are corporations, each duly organized, validly existing, and in
good standing under the laws of Bermuda and the States of Delaware and
Maryland, respectively, and each having full corporate power and authority to
conduct its business as such businesses are presently conducted.

(c)                                  The
execution and delivery by each of Holdings and Financial of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
violation of any law, statute, rule, regulation, order, writ, injunction, judgment,
or decree of any court or governmental authority to or by which Holdings or
Financial is bound, or of any provision of the Certificate of Incorporation (as
amended) or By-Laws (as amended) of Holdings or Financial, and will not
conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute (with due notice or lapse of time or both) a
default under, any agreement, instrument, or document to which Holdings or
Financial is a party or by which it is bound or to which any of its properties
or assets is subject, nor result in the creation or imposition of any lien upon
any of the properties or assets of Holdings or Financial.

14.                                 Covenant
Not to Compete; Confidentiality; Intellectual Property, Inventions and Patents;
Executive’s Cooperation.

(a)                                  Covenant
Not to Compete.

(i)                                     In
further consideration of the compensation to be paid to the Executive
hereunder, the Executive acknowledges that during the course of his employment
with the Company he has and shall become familiar with the Company’s and its
Subsidiaries’ trade secrets and with other Confidential Information concerning
the Company and its Subsidiaries and that his services shall be of special,
unique and extraordinary value to the Company, and therefore, the Executive
agrees that during the Term of Employment and for a period of (1) in the case
of a termination by the Company without Cause or by Executive as a result of a
Constructive Termination, 12 months or (2) in the case of a termination of
employment for any other reason, 18 months, so long as the Company is not in
default of a material payment obligation under this Agreement or in default of
any material obligation under Section 11 (the “Noncompete Period”), the
Executive shall not directly or indirectly (whether as an employee, consultant,
investor, independent contractor, or director, but other than as a holder of a
passive investment of not in excess of 5% of the outstanding voting shares of
any publicly traded company), engage, enter into or attempt to enter into, or
manage, control, participate in, consult with, render services for, or be
employed by, a Restricted Business (as defined below) in the United States or
other jurisdictions in which the Company or any of its Subsidiaries conducts
business; provided, that this covenant (a) shall not apply following the
expiration of the Term of Employment due to service of notice by either party
in accordance with Section 2 hereof; and

(ii)                                  The
Executive agrees that during the Noncompete Period, the Executive shall not
directly or indirectly (whether as an employee, consultant, investor,
independent contractor, or director, but other than as a holder of a passive
investment of not in excess of 5% of the outstanding voting shares of any
publicly traded company):

 12
 

 

(A)                              induce
or attempt to persuade any then-current employee, agent, manager, consultant,
director, customer, counterparty or other business relationship of the Company
or any of its Subsidiaries to terminate such employment or other relationship
(including, without limitation, by making any negative or disparaging
statements or communications regarding the Company or any of its Subsidiaries);

(B)                                solicit
or induce any then-current customer or previously identified prospective
customers of the Company or any of its Subsidiaries of which the Executive was
aware on the Termination Date (i) to do business with any Restricted Business
in competition with the Company or (ii) to reduce its business with the
Company; or

(C)                                hire
any Person who was an employee of the Company or any of its Subsidiaries within
the 12 month period prior to the Termination Date.

(iii)                               For
the purposes of this Section 14, a “Restricted Business” shall mean a
financial guaranty insurance, specialized surety, credit derivative and/or
structured finance business, whether existing or to be formed and without
regard to its claims-paying ability, or any other business which the Company or
any of its Subsidiaries conducts during the Term of Employment or on the
Termination Date.

(iv)                              The
covenants of the Executive set forth in this Section 14(a) shall be null and
void and without any force or effect upon the effective date of any liquidation
or dissolution of the Company, it being understood that a merger or
consolidation of the Company shall not be deemed to constitute a liquidation or
dissolution of the Company.

(v)                                 The
covenants set forth above in this Section 14(a) shall be construed as a series
of separate covenants, one for each county in each of the states of the United
States or country outside the United States to which such restriction applies,
subject, however, to the applicable laws of such jurisdictions.

(vi)                              If,
at the time of enforcement of this Section 14, any court of competent
jurisdiction shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the Parties agree
that the maximum duration, scope or area reasonable under such circumstances
shall be substituted for the stated duration, scope or area and that such arbitrator
or court shall be authorized to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by applicable law.  The Executive acknowledges that the
restrictions contained in this Section 14 are reasonable and necessary to the
protection of legitimate Company interests.

(vii)                           In
the event of the breach or a threatened breach by the Executive of any of the
provisions of this Section 14, the Executive acknowledges and agrees that the
Company would suffer irreparable harm, and thus, in addition and supplementary
to other rights and remedies existing in its favor, the Company shall be
entitled to seek and obtain specific performance and/or injunctive or other
equitable relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).  In addition, in the event of a breach or
violation by Executive of this Section 14, the Noncompete Period shall be

 13
 

 

automatically
extended by the amount of time between the initial occurrence of the breach or
violation and when such breach or violation has been duly cured.

(b)                                 Confidentiality.

(i)                                     The
Executive acknowledges that he has and will develop and be exposed to
information that is or will be proprietary to the Company and its Subsidiaries,
including, but not limited to, customer lists, marketing plans, pricing data,
product development plans, and other intangible information, and that the
information and data (including trade secrets) obtained by him while employed
by the Company concerning the business or affairs of the Company and its
Subsidiaries (“Confidential Information”) are the property of the
Company and/or one or more of its Subsidiaries. 
The Executive agrees to use such information only in connection with the
performances of his duties hereunder, to forever maintain such information in
confidence and not to disclose to any Person or use for his own purposes any
Confidential Information or any confidential or proprietary information of
other Persons in the possession of the Company (“Third Party Information”)
without the prior written consent of the Board, unless and to the extent that
the Confidential Information or Third Party Information is or becomes generally
known to and available for use by the public or in the Company’s industry other
than, in each case, as a result of the Executive’s breach of this Section; provided,
however, that the Executive may disclose such information when required
to by law or subpoena from a court, government agency or legislative body; provided
further, however, that the Executive shall immediately notify the
Company of his receipt of any request or demand (whether through legal process
or otherwise) that he provide such disclosure, and thereafter the Executive
shall cooperate fully with any Company efforts to resist, restrict or modify
any such request or demand.  The
Executive shall deliver to the Company at the Termination Date, or at any other
time the Company may request, all memoranda, notes, plans, records, reports,
computer files, disks and tapes, printouts and software and other documents and
data (and all copies thereof) embodying or relating to Third Party Information,
Confidential Information, Work Product (as defined below) or the business of
the Company or any of its Subsidiaries which he may then possess or have under
his control.

(ii)                                  The
Executive shall be prohibited in the course performing his duties for the
Company from using or disclosing any confidential information or trade secrets
that the Executive may have learned through any prior employment.

(c)                                  Intellectual
Property, Inventions and Patents. 
The Executive acknowledges that (as applicable) all discoveries,
concepts, ideas, inventions, innovations, improvements, developments, methods,
analyses, reports, patent applications and copyrightable work (whether or not
including any confidential information) and all registrations or applications
related thereto, all other proprietary information and all similar or related
information (whether or not patentable) which directly relate to the Company’s
or any of its Subsidiaries’ actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by the Executive (whether alone or jointly with others) while
employed by the Company, whether before or after the date of this Agreement (“Work
Product”), belong to the Company and/or one or more of its
Subsidiaries.  Upon the request of the
Board from time to time, the Executive shall promptly disclose such Work Product
to the Board and, at the Company’s expense, perform all actions reasonably
requested by the Board

 14
 

 

(whether
during or after the Term of Employment) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).  The Executive
acknowledges that all Work Product shall be deemed to constitute “works made
for hire” under the U.S. Copyright Act of 1976, as amended.

(d)                                 Executive’s
Cooperation.  During the Term of
Employment and thereafter, the Executive shall cooperate with the Company in
any internal investigation, any administrative, regulatory or judicial
proceeding or any dispute with a third party as reasonably requested by the
Company (including, without limitation, the Executive being available to the
Company upon reasonable notice for interviews and factual investigations,
appearing at the Company’s request to give testimony without requiring service
of a subpoena or other legal process, volunteering to the Company all pertinent
information and turning over to the Company all relevant documents which are or
may come into the Executive’s possession, all at times and on schedules that
are reasonably consistent with Executive’s other permitted activities and
commitments).  In the event the Company
requires the Executive’s cooperation in accordance with this Section 14(d), the
Company shall reimburse the Executive solely for reasonable travel expenses
(including lodging and meals) upon submission of receipts and shall compensate
the Executive for such cooperation at $250 per hour; provided, however,
that such compensation shall only be paid for Executive’s time following the
Term of Employment and, if the Executive has received a payment under Section
9(d)(iii)(2) following the Severance Period. 
Notwithstanding anything to the contrary contained herein, upon
termination of the Term of Employment hereunder, the Executive shall
automatically be deemed to have resigned as a director of the Board and of any
board of directors (or similar governing body) of any Subsidiary of the
Company.

15.                                 Notices.  Any notice, consent, demand, request, or
other communication given to a Person in connection with this Agreement shall
be in writing and shall be deemed to have been given to such Person (a) when
delivered personally to such Person, or (b), provided that a written
acknowledgment of receipt is obtained, two days after being sent by prepaid
certified or registered mail, or by a nationally recognized overnight courier,
to the address specified below for such Person (or to such other address as
such Person shall have specified by 10 days’ advance notice given in accordance
with this Section 15), or (c) in the case of the Company only, on the first
business day after it is sent by facsimile to the facsimile number set forth
for the Company (or to such other facsimile number as the Company shall have
specified by 10 days’ advance notice given in accordance with this Section 15),
with a confirmatory copy sent by certified or registered mail or by overnight
courier to the Company in accordance with this Section 15.

If to the Company, to:

ACA Financial
Guaranty Corporation

140 Broadway

New York, NY 10005

Attention:  General Counsel

Telephone: (212) 375-2000

Facsimile: (212) 375-2100

 15
 

 

If to the
Executive, to:

The Executive’s principal residence as shown in the
records of the Company

with a copy to:

The Executive at the Company’s address

and

A. Richard Susko

Cleary Gottlieb

One Liberty Plaza

New York New York 10006

Telephone:  (212) 225 2410

Facsimile: (212) 225 3999

The address most recently specified by the Executive
or beneficiary through notice given in accordance with this Section 15.

16.                                 Guarantee
of Obligations.  Holdings is a
beneficiary of the services provided by Executive and hereby irrevocably and
unconditionally guarantee the performance of all obligations of Financial
hereunder.

17.                                 Insurance.  The Company may, at its discretion, apply for
and procure in its own name and for its own benefit life and/or disability
insurance on the Executive in any amount or amounts considered advisable.  The Executive agrees to cooperate in any
medical or other examination, supply any information and execute and deliver
any applications or other instruments in writing as may be reasonably necessary
to obtain and constitute such insurance.

18.                                 Miscellaneous.

(a)                                  Entire
Agreement.  This Agreement contains
the entire understanding and agreement between the Parties concerning the
subject matter hereof and, as of the Effective Date, supersedes all prior
agreements, understandings, discussions, negotiations, and undertakings,
whether written or oral, between the Parties with respect thereto, including,
but not limited to, the Former Employment Agreement.

(b)                                 Specific
Performance.  The parties hereto
recognize that it is to the benefit of the Company and the Executive that this
Agreement be carried out; and for those and other reasons, the Executive and
the Company would be irreparably damaged if this Agreement is not specifically
enforced in the event of a breach hereof. 
If this Agreement is breached by the Company or the Executive, the
parties hereto hereby agree that remedies at law might be inadequate and that,
therefore, such rights and obligations, and this Agreement shall be enforceable
by specific performance on the part of the Company or the Executive, as
applicable.  The remedy of specific
performance shall not be an exclusive remedy, but shall be cumulative of all
other rights and remedies of the parties hereto at law, in equity, or under
this Agreement.

 16
 

 

(c)                                  Severability.  In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law so as to achieve the purposes of this Agreement.

(d)                                 Amendment
or Waiver.  No provision in this
Agreement may be amended unless such amendment is set forth in a writing signed
by the Parties.  No waiver by either
Party of any breach of any condition or provision contained in this Agreement
shall be deemed a waiver of any similar or dissimilar condition or provision at
the same or any prior or subsequent time. 
To be effective, any waiver must be set forth in a writing signed by the
waiving Party.

(e)                                  Headings.  The headings of the Sections contained in
this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.

(f)                                    Beneficiaries/References.  The Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit hereunder following the
Executive’s death by giving the Company written notice thereof.  In the event of the Executive’s death or a
judicial determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate, or other legal representative.

(g)                                 Survivorship.  It is the express intention and agreement of
the parties hereto that the provisions of Sections 1, 6(c), 9, 10(c), 11, 12,
14, 15, 16, 18(b), 18(c), 18(f), 18(h), and this Section 18(g) shall survive
the termination of employment of the Executive.

(h)                                 Governing
Law/Jurisdiction.  This Agreement
shall be governed, construed, performed, and enforced in accordance with the
laws of the State of New York, without reference to principles of conflicts of
laws.

(i)                                     Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.

[The remainder of this page
intentionally left blank.]

 17
 

 

IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.

	
   

  	
  ACA CAPITAL HOLDINGS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Nora J. Dahlman

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Nora J.
  Dahlman

  	
   

  
	
   

  	
   

  	
  Title: General Counsel and Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACA FINANCIAL GUARANTY

  	
   

  
	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Nora J. Dahlman

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Nora J.
  Dahlman

  	
   

  
	
   

  	
   

  	
  Title: General Counsel and Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Alan S.
  Roseman

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ALAN S. ROSEMAN

  	
   

  
									

 

 18

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