PURCHASE AND SALE AGREEMENT BETWEEN FUND II AND FUND III ASSOCIATES, a Georgia general partnership

Exhibit 10.2

PURCHASE AND SALE AGREEMENT

BETWEEN

FUND II AND FUND III ASSOCIATES, a Georgia general partnership,

AS SELLER

AND

BLW INTERESTS, L.P., a Texas limited partnership,

AS PURCHASER

2100 Space Park Drive

Nassau Bay, Harris County, Texas

March ___, 2009

TABLE OF CONTENTS

 

 

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SCHEDULE OF EXHIBITS

 

SCHEDULE OF CLOSING DOCUMENTS

 

PURCHASE AND SALE AGREEMENT

2100 Space Park Drive

Nassau Bay, Harris County, Texas

THIS PURCHASE AND SALE AGREEMENT (the “ Agreement ”), made and entered into as of the ____ day of March, 2009, between FUND II AND FUND III ASSOCIATES, a Georgia general partnership (“ Seller ”), and BLW INTERESTS, L.P., a Texas limited partnership (together with its permitted successors and assigns, “ Purchaser ”).

W I T N E S S E T H :

WHEREAS, Seller desires to sell its fee simple estate in certain improved real property commonly known as 2100 Space Park Drive, located in Nassau Bay, Harris County, Texas, together with certain related personal and intangible property, and Purchaser desires to purchase such real, personal and intangible property; and

WHEREAS, the parties hereto desire to provide for said sale and purchase on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, for and in consideration of the premises, the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt, adequacy, and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby covenant and agree as follows:

ARTICLE 1.

DEFINITIONS

For purposes of this Agreement, each of the following capitalized terms will have the meaning ascribed to such terms as set forth below:

“ Additional Earnest Money ” means the sum of Fifty Thousand and No/100 Dollars ($50,000.00).

“ Assignment and Assumption of Leases ” means the form of assignment and assumption of Leases and Security Deposits and obligations under the Commission Agreements to be executed and delivered by Purchaser and Seller as to the Leases, Security Deposits and Commission Agreements at the Closing in the form attached hereto as S CHEDULE 2 .

“ Assignment and Assumption of Service Contracts ” means the form of assignment and assumption of the Service Contracts to be executed and delivered by Purchaser and Seller as to the Service Contracts at the Closing in the form attached hereto as S CHEDULE 4 .

“ Basket Limitation ” means an amount equal to Fifteen Thousand and No/100 Dollars ($15,000.00 U.S.).

“ Bill of Sale ” means the form of Bill of Sale to the Personal Property to be executed and delivered to Purchaser by Seller at the Closing in the form attached hereto as S CHEDULE 3 .

“ Broker ” means either Seller’s Broker or Purchaser’s Broker or both, as may be indicated by the context.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which banking institutions in the States of Georgia or Texas are authorized by law or executive action to close.

“ Cap Limitation ” means an amount equal to two percent (2%) of the Purchase Price, or $160,000.00.

“ Closing ” means the consummation of the purchase and sale of the Property pursuant to the terms of this Agreement.

“ Closing Date ” has the meaning ascribed thereto in Section 2.6 hereof.

“ Closing Documents ” means any certificate, instrument or other document delivered pursuant to this Agreement.

“ Commission Agreements ” has the meaning ascribed thereto in Section 4.1(f) hereof, and such agreements are more particularly described on E XHIBIT “C” attached hereto and made a part hereof.

“ Due Diligence Material ” has the meaning ascribed thereto in Section 3.7 hereof.

“ Earnest Money ” means the Initial Earnest Money, together with any Additional Earnest Money actually paid by Purchaser to Escrow Agent hereunder, and further together with all interest which accrues thereon as provided in Section 2.3(c) hereof and in the Escrow Agreement.

“ Effective Date ” means the date upon which the Escrow Agent receives a copy of this Agreement (or counterpart signature pages thereto) fully executed by Seller, Purchaser, Seller’s Broker and Purchaser’s Broker.

“ Environmental Law ” means any law, ordinance, rule, regulation, order, judgment, injunction or decree now or hereafter relating to pollution or substances or materials which are considered to be hazardous or toxic, including, without limitation, the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Comprehensive Environmental Response, Compensation and Liability Act (codified in various sections of 26 U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Safe Drinking Water Act (21 U.S.C. § 349, 42 U.S.C. § 201 et seq. and § 300 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2061 et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. § 1100 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Occupational Safety & Health Act (29 U.S.C. § 655 et seq.), and any state and local environmental laws, all amendments and supplements to any of the foregoing and all regulations and publications promulgated or issued pursuant thereto.

“ Escrow Agent ” means the First American Title Insurance Company, at its office at 17225 El Camino Real, Suite 100, Houston, Texas 77058 (Attn: Janet Broussard).

 

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“ Escrow Agreement ” means that certain Escrow Agreement in the form attached hereto as E XHIBIT “D” entered into in conjunction with the execution and delivery of this Agreement by Seller, Purchaser and Escrow Agent with respect to the Earnest Money.

“ Existing Survey ” means that certain survey with respect to the Land and the Improvements, more particularly described on E XHIBIT “E” attached hereto and made a part hereof.

“ FIRPTA Certificate ” means the form of FIRPTA Certificate to be executed and delivered to Purchaser at Closing substantially in the form attached hereto as S CHEDULE 8 .

“ First Title Notice ” has the meaning ascribed thereto in Section 3.4 hereof.

“ General Assignment ” means an assignment by Seller of its interest in intangible property owned by Seller (being Seller’s interest in the Intangible Property) and being conveyed as a part of the Property, to be executed by Seller at Closing, substantially in the form attached hereto as S CHEDULE 5 and made a part hereto, with such changes thereto as may be agreed upon by Seller and Purchaser to convey the Intangible Property.

“ Hazardous Substances ” means any and all pollutants, contaminants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is now or hereafter restricted, prohibited or penalized under any Environmental Law (including, without limitation, lead paint, asbestos, urea formaldehyde foam insulation, petroleum and polychlorinated biphenyls).

“ Improvements ” means all buildings, structures and improvements now or on the Closing Date situated on the Land, including without limitation, all parking areas and facilities, improvements and fixtures located on the Land.

“ Initial Earnest Money ” means the sum of Fifty Thousand and No/100 Dollars ($50,000.00 U.S.).

“ Inspection Period ” means the period expiring at 5:00 P.M. local Houston, Texas (6:00 P.M. Atlanta, Georgia) time on April 15, 2009 , as the same may be extended to 5:00 P.M. local Houston, Texas (6:00 P.M. Atlanta, Georgia) time on April 29, 2009 pursuant to Section 3.6 hereof .

“ Intangible Property ” means all intangible property, if any, owned by Seller and related to the Land and Improvements, including, without limitation, the rights and interests, if any, in and to the following (to the extent assignable): (i) all assignable plans and specifications and other architectural and engineering drawings for the Land and Improvements; (ii) all assignable warranties or guaranties given or made in respect of the Improvements or Personal Property; (iii) all transferable consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau or other entity or instrumentality solely in respect of the Land or Improvements; and (iv) all of

 

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the right, title and interest of Seller in and to all assignable Service Contracts that Purchaser agrees to assume (or is deemed to have agreed to assume).

“ Land ” means that certain tract or parcel of real property located in Harris County, Texas, which is more particularly described on E XHIBIT “A” attached hereto, together with all rights, privileges and easements appurtenant to said real property, and all right, title and interest, if any, of Seller in and to any land lying in the bed of any street, road, alley or right-of-way, open or closed, adjacent to or abutting the Land.

“ Leases ” means the leases identified on E XHIBIT “F” attached hereto.

“ Losses ” has the meaning ascribed thereto in Section 11.1 hereof.

“ Monetary Objection ” or “ Monetary Objections ” means (a) any mortgage, deed to secure debt, deed of trust or similar security instrument encumbering all or any part of the Property, (b) any mechanic’s, materialman’s or similar lien (unless resulting from any act or omission of Purchaser or any of its agents, contractors, representatives or employees or any tenant of the Property), (c) the lien of ad valorem real or personal property taxes, assessments and governmental charges affecting all or any portion of the Property which are delinquent, (d) any judgment of record against Seller in the county or other applicable jurisdiction in which the Property is located, (e) any other lien or other encumbrance affecting title to the Property which can be removed according to its terms by payment of a liquidated sum of money, excluding any such other liens or encumbrances which are identified in clauses (a)-(d) in the definition of “Permitted Exceptions”, and (f) Post Effective Date Encumbrances.

“ Other Notices of Sale ” has the meaning ascribed thereto in Section 5.1(q) hereof.

“ Permitted Exceptions ” means (a) liens for taxes, assessments and governmental charges not yet due and payable or due and payable but not yet delinquent with respect to the Land and Improvements, (b) such state of facts as would be disclosed by a current survey of the Land, (c) the matters set forth on E XHIBIT “G” attached hereto and made part hereof or otherwise disclosed in the Title Commitment issued with respect to the Land and Improvements, and (d) such other easements, restrictions and encumbrances with respect to the Land and Improvements that do not constitute Monetary Objections, and that are approved (or are deemed approved) by Purchaser in accordance with the provisions of Section 3.4 hereof.

“ Personal Property ” means all furniture (including common area furnishings and interior landscaping items), carpeting, draperies, appliances, personal property (excluding any computer software which either is licensed to Seller or which Seller deems proprietary [a listing of such excluded computer software being set forth on E XHIBIT “B-1” attached hereto and made a part hereof]), machinery, apparatus and equipment owned by Seller and currently used exclusively in the operation, repair and maintenance of the Land and Improvements and situated thereon, including, without limitation, those specific items of personal property (if any) more particularly described on E XHIBIT “B” attached hereto and made a part hereof; provided, however, the property described on E XHIBIT “B-1” attached hereto and made a part hereof is expressly excluded from the definition of Personal Property. The Personal Property does not include any property owned by tenants, contractors or licensees, and shall be conveyed to Purchaser subject to depletions, replacements and additions in the ordinary course of Seller’s business.

 

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“ Post Effective Date Encumbrances ” means all encumbrances to title to the Property, other than the matters identified in clauses (a)-(e) of the definition of “Monetary Objections” which first encumber title to the Property by act or omission of Seller or any of Seller-Related Entities, which act or omission was committed or accrued, after the Effective Date and in violation or breach of this Agreement by Seller or any Seller-Related Entity.

“ Property ” means the Land, the Improvements, the Personal Property and the Intangible Property.

“ Purchase Price ” means the amount specified in Section 2.4 hereof.

“ Purchaser-Related Entities ” has the meaning ascribed thereto in Section 11.1 hereof.

“ Purchaser-Waived Breach ” has the meaning ascribed thereto in Section 11.3 hereof.

“ Purchaser’s Broker ” means W. Derrell Curry, of Studley, Inc.

“ Purchaser’s Certificate ” means the form of certificate to be executed and delivered by Purchaser to Seller at the Closing with respect to the truth and accuracy of Purchaser’s representations and warranties contained in this Agreement (modified and updated as the circumstances require), in the form attached hereto as Schedule 9 .

“ Purchaser’s Counsel ” means Boyar & Miller, 4265 San Felipe, Suite 1200, Houston, Texas 77027, Attention: Stephen L. Johnson.

“ Real Estate Transfer Taxes ” means the transfer tax, excise tax, documentary stamp tax or similar tax (however denominated) which may be imposed by the state, county and/or municipality in which the Property is located and be payable in connection with the conveyance of the Property by Seller to Purchaser hereunder.

“ Seller-Related Entities ” has the meaning ascribed thereto in Section 11.2 hereof.

“ Seller’s Affidavit ” has the meaning ascribed thereto in Section 5.1(f) hereof.

“ Seller’s Broker ” means PM Realty Group, L.P.

“ Seller’s Certificate ” means the form of certificate to be executed and delivered by Seller to Purchaser at the Closing with respect to the truth and accuracy of Seller’s warranties and representations contained in Section 4.1 hereof (modified and updated as the circumstances require), in the form attached hereto as S CHEDULE 7 .

“ Seller’s Counsel ” means Troutman Sanders LLP, Bank of America Plaza, Suite 5200, 600 Peachtree Street, N.E., Atlanta, Georgia 30308-2216, Attention: Leslie Fuller Secrest.

“ Service Contracts ” means all those certain contracts and agreements (including all equipment leases) more particularly described as Service Contracts on E XHIBIT “H” attached hereto and made a part hereof relating to the repair, maintenance or operation of the Land, Improvements or Personal Property which will extend beyond the Closing Date.

 

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“ Special Warranty Deed ” has the meaning ascribed thereto in Section 5.1(a) hereof and shall be substantially in the form attached as S CHEDULE 1 hereto.

“ SNDA ” or “ SNDAs ” shall mean the Subordination, Non-Disturbance and Attornment Agreements to be sought from the Tenants in a commercially reasonable form provided by a mortgagee providing financing to Purchaser for the acquisition of the Property.

“ Subsequent Title Notice ” has the meaning ascribed thereto in Section 3.4 hereof.

“ Taxes ” has the meaning ascribed thereto in Section 5.4(a) hereof.

“ Tenant Estoppel Certificate ” or “ Tenant Estoppel Certificates ” means the certificates to be sought from the tenants under the Leases in substantially the form attached hereto as EXHIBIT “I” .

“ Tenant Inducement Costs ” means any out-of-pocket payments required under any lease to be paid by the landlord thereunder to or for the benefit of the tenant thereunder which is in the nature of a tenant inducement, including specifically, but without limitation, abated or free rent, tenant improvement costs, lease buyout payments, and moving, design, refurbishment and club membership allowances and costs.

“ Title Company ” means First American Title Insurance Company.

“ Title Commitment ” has the meaning ascribed thereto in Section 3.4 hereof.

ARTICLE 2.

PURCHASE AND SALE

2.1.      Agreement to Sell and Purchase the Property . Subject to and in accordance with the terms and provisions of this Agreement, Seller agrees to sell and Purchaser agrees to purchase, the Property.

2.2.      Permitted Exceptions . The Property will be conveyed subject to the matters which are, or are deemed to be, Permitted Exceptions.

2.3.      Earnest Money .

(a)      Within three (3) Business Days after the Effective Date, Purchaser shall deliver the Initial Earnest Money to Escrow Agent by federal wire transfer, payable to Escrow Agent, which Initial Earnest Money shall be held and released by Escrow Agent in accordance with the terms of the Escrow Agreement. The parties hereto mutually acknowledge and agree that time is of the essence in respect of Purchaser’s timely deposit of the Initial Earnest Money with Escrow Agent. If Purchaser fails to timely deposit the Initial Earnest Money with Escrow Agent, then, at the option of Seller, exercisable by written notice to Purchaser and Escrow Agent, this Agreement shall terminate, and neither party hereto shall have any further rights or obligations hereunder, except those provisions of this Agreement which by their express terms survive the termination of this Agreement.

 

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(b)      On or before the expiration of the Inspection Period, if Purchaser does not terminate this Agreement in accordance herewith, Purchaser shall deliver the Additional Earnest Money to Escrow Agent by federal wire transfer, which Additional Earnest Money shall be held and released by Escrow Agent in accordance with the terms of the Escrow Agreement. Seller and Purchaser mutually acknowledge and agree that time is of the essence in respect of Purchaser’s timely deposit of the Additional Earnest Money with Escrow Agent. If Purchaser fails to timely deposit the Additional Earnest Money with Escrow Agent, such failure shall be deemed to constitute the termination of the Agreement by Purchaser pursuant to Section 3.6 hereof, and Escrow Agent shall return the Earnest Money actually deposited with Escrow Agent (and any interest earned thereon) to Purchaser, and no party hereto shall have any further rights or obligations hereunder, except those provisions of this Agreement which by their express terms survive the termination of this Agreement.

(c)      The Earnest Money shall be applied to the Purchase Price at the Closing and shall otherwise be held, refunded, or disbursed in accordance with the terms of the Escrow Agreement and this Agreement. Interest and other income from time to time earned on the Earnest Money shall be earned for the account of Purchaser, and shall be a part of the Earnest Money.

2.4.      Purchase Price . Subject to adjustment and credits as otherwise specified in this Section 2.4 and elsewhere in this Agreement, the purchase price (the “ Purchase Price ”) to be paid by Purchaser to Seller for the Property is the sum of EIGHT MILLION AND NO/100 DOLLARS ($8,000,000.00 U.S.). The Purchase Price shall be paid by Purchaser to Seller at the Closing as follows:

(a)      The Earnest Money will be paid by Escrow Agent to Seller at Closing; and

(b)      At Closing, the balance of the Purchase Price, after applying, as partial payment of the Purchase Price the Earnest Money paid by Escrow Agent to Seller, and subject to prorations and other adjustments specified in this Agreement, shall be paid by Purchaser in immediately available funds to the Title Company, for further delivery to an account or accounts designated by Seller.

2.5.      Independent Contract Consideration . In addition to, and not in lieu of, the delivery to Escrow Agent of the Initial Earnest Money, concurrently with Purchaser’s execution and delivery of this Agreement to Seller, Purchaser has paid to Seller Purchaser’s check, payable to the order of Seller, in the amount of One Hundred and No/100 Dollars ($100.00). Seller and Purchaser hereby mutually acknowledge and agree that said sum represents adequate bargained for consideration for Seller’s execution and delivery of this Agreement and Purchaser’s right to inspect the Property pursuant to Article 3 . Said sum is in addition to and independent of any other consideration or payment provided for in this Agreement and is nonrefundable in all events.

2.6.      Closing . The consummation of the sale by Seller and purchase by Purchaser of the Property (the “ Closing ”) will be held on or before the date that is thirty (30) days following the expiration of the Inspection Period. The Closing will take place at an office in the metropolitan Atlanta, Georgia, area, and at such specific place, time and Business Day (the “ Closing Date ”) as may be designated by Purchaser in a written notice to Seller not less than three (3) Business Days prior to Closing. If Purchaser fails to give such notice of the Closing

 

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Date, the Closing will be at the offices of the Escrow Agent, at 10:00 a.m. local Houston, Texas (11:00 a.m. Atlanta, Georgia) time on the date that is thirty (30) days following the expiration of the Inspection Period; i.e., on May 15, 2009 (if Purchaser does not elect to extend the Inspection Period) or on May 29, 2009 (if Purchaser timely elects to extend the Inspection Period pursuant to the terms of this Agreement). It is contemplated that the transaction shall be closed with the concurrent delivery of the documents of title and the payment of the Purchase Price. Notwithstanding the foregoing, there shall be no requirement that Seller and Purchaser physically meet for the Closing, and all documents and funds to be delivered at the Closing will be delivered to the Title Company unless the parties hereto mutually agree otherwise. Seller and Purchaser agree to use reasonable efforts to complete all requirements for the Closing prior to the Closing Date.

ARTICLE 3.

PURCHASER’S INSPECTION AND REVIEW RIGHTS

3.1.     Due Diligence Inspections .

(a)      From and after the Effective Date until the Closing Date or earlier termination of this Agreement, Seller shall permit Purchaser and its authorized representatives to inspect the Property, to perform due diligence and environmental investigations, to examine the records of Seller with respect to the Property, and make copies thereof, at such times during normal business hours as Purchaser or its representatives may request. All such inspections shall be nondestructive in nature, and specifically shall not include any physically intrusive testing. All inspection fees, appraisal fees, engineering fees and all other costs and expenses of any kind incurred by Purchaser relating to the inspection of the Property will be solely Purchaser’s expense. Seller reserves the right to have a representative present at the time of making any such inspection. Purchaser shall notify Seller not less than two (2) Business Days in advance of making any such inspection.

(b)      If the Closing is not consummated hereunder, and if Seller requests copies of any reports, surveys and other information furnished to Purchaser by third parties in connection with such inspections and Seller reimburses Purchaser for its actual out-of-pocket costs for any such requested reports, surveys and other information, Purchaser shall promptly deliver the same to Seller; provided, however, that delivery of such copies and information shall be without warranty or representation whatsoever, express or implied, including, without limitation, any warranty or representation as to ownership, accuracy, adequacy or completeness thereof or otherwise. This Section 3.1(b) shall survive the termination of this Agreement.

(c)      To the extent that Purchaser or any of its representatives, agents or contractors damages or disturbs the Property or any portion thereof, Purchaser shall return the same to substantially the same condition which existed immediately prior to such damage or disturbance. Purchaser hereby agrees to and shall indemnify, defend and hold harmless Seller from and against any and all expense, loss or damage which Seller may incur (including, without limitation, reasonable attorney’s fees actually incurred) as a result of any act or omission of Purchaser or its representatives, agents or contractors. Said indemnification shall not extend to pre-existing conditions merely discovered by Purchaser. Said indemnification agreement shall survive the Closing, or earlier termination of this Agreement, until the expiration of any applicable statute of limitations. Purchaser shall maintain and shall ensure that Purchaser’s

 

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consultants and contractors maintain commercial general liability insurance in an amount not less than $2,000,000, combined single limit, and in form and substance adequate to insure against all liability of Purchaser and its consultants and contractors, respectively, and each of their respective agents, employees and contractors, arising out of inspections and testing of the Property or any part thereof made on Purchaser’s behalf. Purchaser agrees to provide to Seller a certificate of insurance with regard to each applicable liability insurance policy prior to any entry upon the Property by Purchaser or its consultants or contractors, as the case may be, pursuant to this Section 3.1 .

3.2.     Deliveries by Seller to Purchaser; Purchaser’s Access to Property Records of Seller.

(a)      Seller and Purchaser acknowledge that all of the following either have been delivered or shall be made available to Purchaser to the extent the same are in the possession of Seller (and Purchaser further acknowledges that no additional items are required to be delivered by Seller to Purchaser except as may be expressly set forth in other provisions of this Agreement):

 

(i)

Copies of current property tax bills with respect to the Property.

 

(ii)

Copies of operating statements for 2007, 2008 and year to date with respect to the Property.

 

(iii)

Copies of the Leases.

 

(iv)

Copies of the Commission Agreements.

 

(v)

Copies of all Service Contracts.

 

(vi)

A copy of the Existing Survey.

 

(vii)

Copies of certificates of occupancy with respect to the Property which are in Seller’s possession.

 

(viii)

Current rent roll.

(b)      From the Effective Date until the Closing Date, or earlier termination of this Agreement, Seller shall allow Purchaser and Purchaser’s representatives, on reasonable advance notice and during normal business hours, to have access to Seller’s existing non-confidential books, records and files relating to the Property, at the office of Seller at 6200 The Corners Parkway, Suite 250, Norcross, Georgia 30092, which is the office at which such books, records and files are maintained, for the purpose of inspecting and (at Purchaser’s expense) copying the same, including, without limitation, the materials listed below (to the extent any or all of the same are in the possession of Seller), subject, however, to the limitations of any confidentiality or nondisclosure agreement to which Seller may be bound, and provided that Seller shall not be required to deliver or make available to Purchaser any appraisals, property condition reports, environmental reports, strategic plans for the Property, internal analyses, information regarding the marketing for sale of the Property, submissions relating to Seller’s obtaining of corporate or partnership authorization, attorney and accountant work product, attorney-client privileged

 

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documents, or other information in the possession or control of Seller which Seller reasonably deems confidential or proprietary. Purchaser acknowledges and agrees, however, that Seller makes no representation or warranty of any nature whatsoever, express or implied, with respect to the ownership, enforceability, accuracy, adequacy or completeness or otherwise of any of such records, evaluations, data, investigations, reports or other materials. If the Closing contemplated hereunder fails to take place for any reason, Purchaser shall promptly return (or certify as having destroyed) all copies of materials copied from the books, records and files of Seller or furnished by Seller or Seller’s representatives relating to the Property. It is understood and agreed that Seller shall not have any obligation to obtain, commission or prepare any such books, records, files, reports or studies not now in the possession or control of Seller. Subject to the foregoing, Seller agrees to make available to Purchaser for inspection and copying, or Seller shall provide to Purchaser via electronic transmission or other delivery, without limitation, the following books, records and files relating to the Property, all to the extent the same are in the possession of Seller:

 

(i)

Plans . All available construction plans and specifications in the possession of Seller relating to the development, condition, repair and maintenance of the Land, the Improvements and the Personal Property;

 

(ii)

Permits; Licenses . Copies of any permits, licenses, or other similar documents in the possession of Seller relating to the use, occupancy or operation of the Property; and

 

(iii)

Operating Costs and Expenses . All available records of any operating costs and expenses for the Property in the possession of Seller.

3.3.     Condition of the Property .

(a)      Seller recommends that Purchaser employ one or more independent engineering and/or environmental professionals to perform engineering, environmental and physical assessments on Purchaser’s behalf in respect of the Property and the condition thereof. Purchaser and Seller mutually acknowledge and agree that, except for Seller’s representations and warranties contained in this Agreement and in any of the Closing Documents, the Property is being sold in an “AS IS” condition and “WITH ALL FAULTS,” known or unknown, contingent or existing. Purchaser has the sole responsibility to fully inspect the Property, to investigate all matters relevant thereto, including, without limitation, the condition of the Property, and to reach its own, independent evaluation of any risks (environmental or otherwise) or rewards associated with the ownership, leasing, management and operation of the Property. Effective as of the Closing and except as expressly set forth in this Agreement, Purchaser hereby waives and releases Seller and its partners and their respective officers, directors, shareholders, partners, agents, affiliates, employees and successors and assigns from and against any and all claims, obligations and liabilities arising out of or in connection with the Property.

(b)      To the fullest extent permitted by law, Purchaser does hereby unconditionally waive and release Seller and its partners and their respective officers, directors, shareholders, partners, agents, affiliates and employees from any present or future claims and liabilities of any

 

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nature arising from or relating to the presence or alleged presence of Hazardous Substances in, on, at, from, under or about the Property or any adjacent property, including, without limitation, any claims under or on account of any Environmental Law, regardless of whether such Hazardous Substances are located in, on, at, from, under or about the Property or any adjacent property prior to or after the date hereof (collectively, “ Environmental Liabilities ”); provided, however, that the foregoing release as it applies to Seller, its partners and their respective officers, directors, shareholders, partners, agents, affiliates and employees, shall not release Seller from any Environmental Liabilities of Seller relating to any Hazardous Substances which may be placed, located or released on the Property by Seller after the date of Closing. In addition, Purchaser does hereby covenant and agree to defend, indemnify, and hold harmless Seller, and Seller’s partners and their respective officers, directors, shareholders, partners, agents, affiliates and employees from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses of whatever kind or nature, known or unknown, existing and future, including any action or proceeding brought or threatened, or ordered by governmental authorities, relating to any Hazardous Substances which may be placed, located or released on the Property after the date of Closing. The terms and provisions of this Section 3.3 shall survive the Closing hereunder until the expiration of any applicable statute of limitations.

3.4.       Title and Survey . Purchaser shall order a title commitment from the Title Company with respect to the Property ( “ Title Commitment” ), and shall direct the Title Company to send a copy of the Title Commitment and any update thereto to Seller. Seller shall order an update of the Existing Survey promptly upon receipt of the Title Commitment and cause such update to be delivered to Purchaser. Purchaser shall cause a copy of any revisions to such update of the Existing Survey to be delivered to Seller. Seller shall pay any cost for an update of the Existing Survey and revisions thereto ordered through MKAssociates. Purchaser will have until five (5) Business Days prior to the end of the Initial Inspection Period to give written notice (the “ First Title Notice ”) to Seller of such objections as Purchaser may have to any exceptions to title disclosed in the Title Commitment or in the Existing Survey or otherwise in Purchaser’s examination of title. From time to time at any time after the First Title Notice and prior to the Closing Date, Purchaser may give written notice (a “ Subsequent Title Notice ”) to Seller of exceptions to title first appearing of record with respect to the Property after the effective date of the most recent previous Title Commitment or title examination or matters of survey which would not have been disclosed by an accurate updated ALTA survey prior to the Effective Date. Seller will have the right, but not the obligation (except as to Monetary Objections), to attempt to remove, satisfy or otherwise cure any exceptions to title to which the Purchaser so objects. Within five (5) Business Days after receipt of the First Title Notice, Seller shall give written notice to Purchaser informing the Purchaser of the election of Seller with respect to the objections in the First Title Notice. Within five (5) Business Days after receipt of any Subsequent Title Notice, Seller shall give written notice to Purchaser informing the Purchaser of the election of Seller with respect to the objections in such Subsequent Title Notice. If Seller fails to give written notice of election within such five (5) Business Day period, Seller will be deemed to have elected not to attempt to cure the objections (other than Monetary Objections) set forth in the First Title Notice or such Subsequent Title Notice, whichever is applicable. If Seller elects to attempt to cure any objections, Seller will be entitled to one or more reasonable adjournments of the Closing of up to but not beyond the thirtieth (30 ^th ) day following the Closing Date to attempt such cure, but, except for Monetary Objections, Seller will not be obligated to expend any sums, commence any suits or take any other action to effect such cure. Except as to

 

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Monetary Objections, if Seller elects, or is deemed to have elected, not to cure any exceptions to title to which Purchaser has objected or if, after electing to attempt to cure, Seller determines that it is unwilling or unable to remove, satisfy or otherwise cure any such exceptions, Purchaser’s sole remedy hereunder in such event will be either (i) to accept title to the Property subject to such exceptions as if Purchaser had not objected thereto and without reduction of the Purchase Price, or (ii) to terminate this Agreement within three (3) Business Days after receipt of written notice from Seller either of the election of Seller not to attempt to cure any objection or of the determination of Seller, having previously elected to attempt to cure, that Seller is unable or unwilling to do so (or three (3) Business Days after Seller is deemed hereunder to have elected not to attempt to cure such objections), and upon any such termination under this clause (ii) Escrow Agent shall return the Earnest Money to Purchaser. Notwithstanding anything to the contrary contained elsewhere in this Agreement, Seller is obligated to cure or satisfy all Monetary Objections at or prior to Closing, and Seller may use the proceeds of the Purchase Price at Closing for such purpose.

3.5.       Service Contracts . On or before the expiration of the Inspection Period, Purchaser will designate in a written notice to Seller which Service Contracts Purchaser will assume and which Service Contracts will be terminated by Seller at Closing; provided, however, that Seller will not be obligated to terminate, and Purchaser shall assume the obligations of Seller arising from and after Closing under, all Service Contracts which cannot be terminated by Seller upon no more than thirty (30) days prior notice or which can be terminated by Seller only upon payment of a fee, premium, penalty or other form of early termination compensation; provided further, however, Seller will be required to terminate all Service Contracts which are with any Seller-Related Entities. Subject to the foregoing, and taking into account any credits or prorations to be made pursuant to Article 5 hereof for payments coming due after Closing but accruing prior to Closing, Purchaser will assume the obligations arising from and after the Closing Date under those Service Contracts which Purchaser has designated will not be terminated. Subject to the foregoing, Seller, without cost to Purchaser, shall terminate at Closing all Service Contracts that are not so assumed. If Purchaser fails to notify Seller in writing on or prior to the expiration of the Inspection Period, of any Service Contracts that Purchaser does not desire to assume at Closing, Purchaser will be deemed to have elected to assume all such Service Contracts and to have waived its right to require Seller to terminate such Service Contracts at Closing.

3.6.        Termination of Agreement . Purchaser shall have until 5:00 P.M. local Houston, Texas (6:00 P.M. Atlanta, Georgia) time on April 15, 2009 (the “ Initial Inspection Period ”) to determine, in Purchaser’s sole opinion and discretion, the suitability of the Property for acquisition by Purchaser or Purchaser’s permitted assignee; provided , however , that Purchaser shall have the right, upon written notice given to Seller, Seller’s Counsel and Escrow Agent no later than the expiration of the Initial Inspection Period (which notice may be given via e-mail, so long as the same is followed within one Business Day by written notice) to extend the Initial Inspection Period to April 29, 2009 , 5:00 P.M. local Houston, Texas (6:00 P.M. Atlanta, Georgia) time (the Initial Inspection Period, as the same may be so extended by Purchaser, is herein referred to as the “ Inspection Period ”). Purchaser has the right to terminate this Agreement at any time on or before said time and date of expiration of the Inspection Period by giving written notice to Seller and Escrow Agent of such election to terminate. If Purchaser so elects to terminate this Agreement pursuant to this Section 3.6 , Escrow Agent shall pay the

 

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Earnest Money to Purchaser upon receipt of Purchaser’s notice of termination, with no additional notice or consent required from any other party, whereupon, except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement. If Purchaser fails to so terminate this Agreement prior to the expiration of the Inspection Period, Purchaser shall have no further right to terminate this Agreement pursuant to this Section 3.6 . The parties acknowledge that this Agreement shall not be void or voidable for lack of mutuality.

3.7.        Confidentiality . All information acquired by Purchaser or any of its designated representatives (including by way of example, but not in limitation, the officers, directors, shareholders, members and employees of Purchaser, and Purchaser’s engineers, consultants, counsel and potential lenders, and the officers, directors, shareholders, members and employees of each of them) with respect to the Property, whether delivered by Seller or any representatives of Seller or obtained by Purchaser as a result of its inspection and investigation of the Property, examination of the books, records and files of Seller in respect of the Property, or otherwise (collectively, the “ Due Diligence Material ”) shall be used solely for the purpose of determining whether the Property is suitable for Purchaser’s acquisition and ownership thereof and for no other purpose whatsoever. Prior to Closing, the terms and conditions which are contained in this Agreement and all Due Diligence Material which is not published as public knowledge or which is not generally available in the public domain shall be kept in strict confidence by Purchaser and shall not be disclosed to any individual or entity other than to those authorized representatives of Purchaser and Purchaser’s prospective and actual counsel, accountants, professionals, consultants, attorneys and lenders, who need to know the information for the purpose of assisting Purchaser in evaluating the Property for Purchaser’s potential acquisition thereof; provided, however, that Purchaser shall have the right to disclose any such information if required by applicable law or as may be necessary in connection with any court action or proceeding with respect to this Agreement. Purchaser shall and hereby agrees to indemnify and hold Seller harmless from and against any and all loss, liability, cost, damage or expense that Seller may suffer or incur (including, without limitation, reasonable attorneys’ fees actually incurred) as a result of the unpermitted disclosure of any of the Due Diligence Material to any individual or entity other than an appropriate representative of Purchaser and Purchaser’s prospective and actual counsel, accountants, professionals, consultants, attorneys and lenders, and/or the use of any Due Diligence Material for any purpose other than as herein contemplated and permitted. The foregoing indemnity shall not extend to disclosure of any Due Diligence Material (i) as may be required by applicable law to be disclosed, or (ii) that is or becomes public knowledge other than by virtue of a breach of Purchaser’s covenant under this Section 3.7 . If Purchaser or Seller elects to terminate this Agreement pursuant to any provision hereof permitting such termination, or if the Closing contemplated hereunder fails to occur for any reason, Purchaser will promptly return to Seller all Due Diligence Material in the possession of Purchaser and any of its representatives, and destroy all copies, notes or abstracts or extracts thereof, as well as all copies of any analyses, compilations, studies or other documents prepared by Purchaser or for its use (whether in written or electronic form) containing or reflecting any Due Diligence Material. In the event of a breach or threatened breach by Purchaser or any of its representatives of this Section 3.7 , Seller shall be entitled, in addition to other available remedies, to an injunction restraining Purchaser or its representatives from disclosing, in whole or in part, any of the Due Diligence Material and any of the terms and conditions of this Agreement. Nothing contained herein shall be construed as prohibiting or limiting Seller from pursuing any other available

 

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remedy, in law or in equity, for such breach or threatened breach. The provisions of this Section shall survive any termination of this Agreement.

ARTICLE 4.

REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS

4.1.     Representations and Warranties of Seller . Seller hereby makes the following representations and warranties to Purchaser:

(a)       Organization, Authorization and Consents .

 (i)     Generally . Seller is a duly formed and validly e