Exhibit 10.1

ASSET PURCHASE AND CONTRIBUTION AGREEMENT

by and among

Elco Landmark Residential Management LLC,

Elco Landmark Residential Holdings LLC,

Elco Landmark Residential Holdings II LLC

and

Landmark Apartment Trust of America Holdings, L.P.

Dated as of March 13, 2013

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

     2   

ARTICLE II PURCHASE AND SALE AND CONTRIBUTION

     15   

ARTICLE III PURCHASE AND CONTRIBUTION CONSIDERATION

     20   

ARTICLE IV CLOSING; DELIVERIES AT CLOSING

     24   

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER, ELRH AND ELRH II

     26   

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER

     42   

ARTICLE VII COVENANTS

     43   

ARTICLE VIII CONDITIONS PRECEDENT

     51   

ARTICLE IX SURVIVAL AND INDEMNIFICATION

     53   

ARTICLE X MISCELLANEOUS

     57   

EXHIBITS AND SCHEDULES

 

Exhibit A    Form of Assignment and Assumption Agreement Exhibit B    Form of
Bill of Sale Exhibit C    Form of Sub-Manager Agreement Exhibit D    Form of
Promissory Note Exhibit E    Form of Restricted Units Agreement Exhibit F   
Form of Pipeline Restricted Units Agreement Exhibit G    Form of Pipeline
Promissory Note Exhibit H    Form of License Agreement Exhibit I    Form of
Trademark Assignment Exhibit J    Form of IP Assignment Exhibit K    Form of
Timbercreek Consent Exhibit L    Form of Timbercreek Voting Agreement Exhibit M
   Form of Pipeline Management Agreement Exhibit N    Form of Joinder Agreement
Exhibit O    Form of Jupiter Lease Schedule 1.01    Financial Statements
Schedule 2.02(b)    Assumed Contracts Schedule 2.02(c)    Intellectual Property
Schedule 2.02(g)    Other Assets

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Schedule 2.02(h)    Personal Property Leases Schedule 2.02 (i)    Rights to
Certain Payments Schedule 2.02 (j)    Rights to Refunds, Rebates, etc. Schedule
2.03(q)    Other Excluded Assets Schedule 3.05(a)    ELRH II Properties Schedule
3.05(b)    Construction Management Agreement Schedule 5.01(a)    Organization
Schedule 5.03    Non-Contravention Schedule 5.04    Debt/Liens Schedule 5.06(a)
   Consents Schedule 5.06(b)    Permits Schedule 5.06(c)    Property Owners
Schedule 5.07    Tangible Personal Property; Sufficiency of Assets Schedule 5.08
   Intellectual Property Schedule 5.09    Compliance with Laws; Litigation
Schedule 5.10(a)    Management Fees & Financial Statements Schedule 5.11   
Absence of Changes Schedule 5.13    Real Property Leases/Security Deposit
Accounts Schedule 5.14    Material Contracts Schedule 5.15    Bank Accounts
Schedule 5.16    Insurance Schedule 5.17    Employees Schedule 5.18(a)   
Employee Benefit Plans Schedule 5.24    Related Party Transactions Schedule 6.05
   Buyer’s Brokers Schedule 7.10    Employee Matters Schedule 8.03(b)   
Consents for Closing

 

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ASSET PURCHASE AND CONTRIBUTION AGREEMENT

THIS ASSET PURCHASE AND CONTRIBUTION AGREEMENT (this “Agreement”) is made and
entered into as of March 13, 2013, by and among LANDMARK APARTMENT TRUST OF
AMERICA HOLDINGS, L.P., a Virginia limited partnership (“Buyer”), ELCO LANDMARK
RESIDENTIAL MANAGEMENT LLC, a Delaware limited liability company (“Seller”),
ELCO LANDMARK RESIDENTIAL HOLDINGS LLC a Delaware limited liability company
(“ELRH”) and ELCO LANDMARK RESIDENTIAL HOLDINGS II LLC, a Delaware limited
liability company (“ELRH II”). Buyer, Seller, ELRH and ELRH II are sometimes
collectively referred to herein as the “Parties” and individually referred to
herein as a “Party.”

RECITALS:

A. Seller is engaged in the business of providing property management and
related services (the “Services”) for multi-unit residential real estate
properties, including those that are owned or leased by affiliates of Seller
(the “Business”).

B. Seller is a wholly owned subsidiary of ELRH. ELRH II is an Affiliate of ELRH.
On December 31, 2012, Seller sold all of its assets and liabilities relating to
the Business, except for the Contributed Property Management Agreements and its
Timbercreek Rights, to ELRH II. ELRH, at the same time, sold its Timbercreek
Class A Units and Timbercreek Class B Units to ELRH II. ELRH retained ownership
of its Timbercreek Rights.

C. Subject to the terms and conditions set forth in this Agreement, Seller
desires to contribute the Contributed Property Management Agreements and its
Timbercreek Rights and any remaining assets relating to the Business, subject to
certain liabilities, to Buyer in exchange for limited partnership interests in
Buyer.

D. Subject to the terms and conditions in this Agreement, ELRH II desires to
partially sell and to partially contribute to Buyer all of the assets,
properties and rights of ELRH II used in, arising out of or otherwise related to
the Business, including the Management Agreements related to Non-Contributed
Properties and all other assets it acquired from Seller, subject to specified
liabilities, plus ELRH II’s Pipeline Assets and all of its economic interests in
the Timbercreek Class B Units, with the remaining interests in the Timbercreek
Class B Units to be acquired as set forth in the Timbercreek Consent, in return
for limited partnership interests in Buyer, a Promissory Note and the right, as
and when Pipeline Assets are realized as provided herein, to sell, all or in
part, or contribute, all or in part, the right to manage such Pipeline Assets in
return for limited partnership interests in, or Pipeline Promissory Notes issued
by, Buyer. In addition, ELRH II desires, on or prior to the date that is 18
months after the Closing Date, to sell to Buyer its Timbercreek Class A Units
and Buyer desires to so acquire the Timbercreek Class A Units from ELRH II
(subject to certain voting limitations as described in the Timbercreek Consent),
in return for cash consideration as provided herein.

E. Subject to the terms and conditions of this Agreement, ELRH desires to
contribute to Buyer its Timbercreek Rights, in exchange for limited partnership
units in Buyer.

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound hereby, agree as
follows.

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ARTICLE I

DEFINITIONS

Section 1.01 Definitions. For purposes of this Agreement (including the
Schedules), the following terms shall have the meanings set forth below:

“Accounts Receivable” has the meaning set forth in Section 2.03(p).

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with such Person as of the date on which, or at any time
during the period for which, the determination of affiliation is being made. For
purposes of this definition, “control” (including the terms “controlled by” and
“under common control with”) means the possession, directly or indirectly, 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.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Assignment and Assumption Agreement” has the meaning set forth in
Section 4.03(a).

“Assumed Contracts” means: (i) all Contracts listed on Schedule 2.02(b);
(ii) all Contracts entered into by Seller or ELRH II between the date of this
Agreement and the Closing Date that Buyer agrees in writing to assume; and
(iii) the Personal Property Leases; provided, however, that Assumed Contracts
shall not include Excluded Assets.

“Assumed Employee Liabilities” has the meaning set forth in Section 2.03(h).

“Assumed Liabilities” has the meaning set forth in Section 2.04.

“Bankruptcy Event” means, with respect to any Person, the occurrence of any of
the following:

(a) a court of competent jurisdiction enters a decree or order for relief in an
involuntary case under applicable bankruptcy, insolvency, or other similar Law
now or hereinafter in effect, or appoints a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official for such Person or for any
substantial part of such Person’s property, or ordering the winding up or
liquidation of its affairs;

(b) such Person commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar Law now or hereinafter in effect, or consents to
the entry of an order for relief in an involuntary case under any such Law, or
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar official for such
Person or for any substantial part of such Person’s property, or makes any
general assignment for the benefit of creditors, or fails generally to, or
admits in writing its inability, to pay debts as they become due; or

(c) an insolvency case under any applicable bankruptcy, insolvency, or other
similar Law now or hereinafter in effect, is commenced against such Person or
for the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official for such Person or
for any substantial part of such Person’s property and such proceeding is not
dismissed or stayed within forty-five (45) days of the commencement thereof.

 

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“Benefit Plans” means any “employee benefit plan” as defined in Section 3(3) of
ERISA and any other plans, programs, policies, agreements or arrangements, etc.,
that provide compensation or other benefits to any employee of Seller or ELRH
II, whether or not subject to ERISA, currently maintained, sponsored or
contributed or required to be contributed to by Seller, ELRH II or any ERISA
Affiliate or with respect to which Seller, ELRH II or any ERISA Affiliate has
any current or potential liability or obligation.

“Books and Records” means original or true and complete copies of all of the
books, records, files, data and information of Seller and ELRH II (including
customer and supplier lists, financial and accounting records, purchase orders
and invoices, sales orders, credit and collection records, repair files,
studies, surveys, analyses, strategies, plans, forms, designs, diagrams,
drawings, specifications, technical data, production and quality control
records, lists of and correspondence and miscellaneous records with respect to
customers, suppliers, representatives and all other general correspondence) of
Seller and ELRH II.

“Business” has the meaning set forth in the recitals to this Agreement.

“Business Day” means any day other than a Saturday, a Sunday or other day on
which banking institutions in the Commonwealth of Virginia are authorized or
required by law or other governmental action to close.

“Business Value” means the aggregate value of the Business, inclusive of ELRM’s
Contributed Property Management Agreements, the ELRH II Contributed Assets and
the ELRH II Sale Assets, which value the parties have agreed is Sixteen Million
One Hundred Ninety Four Thousand Five Hundred Thirty-Two Dollars ($16,194,532).

“Buyer” has the meaning set forth in the preamble to this Agreement.

“Buyer Indemnified Parties” has the meaning set forth in Section 9.02.

“Buyer Losses” has the meaning set forth in Section 9.02.

“Buyer Transaction Documents” means this Agreement and all documents, agreements
and certificates to be executed by Buyer in connection with the transactions
contemplated by this Agreement, including the Jupiter Lease, the Tampa Consent,
the IDB Consent, the Timbercreek Consent, the Timbercreek Voting Agreement, the
Promissory Note, the Restricted Units Agreement, the Pipeline Earn-Out
Restricted Units Agreement, and the certificates and agreements required to be
executed and delivered by Buyer hereunder.

“Cash Equivalents” means all cash equivalents and cash items of any kind
whatsoever, money market instruments, marketable securities, other securities,
commercial paper, short term investments or deposits in banks or other financial
institution accounts of any kind, and rights in and to all such accounts (other
than the Managed Properties Security Deposits).

“Closing” has the meaning set forth in Section 4.01.

“Closing Date” has the meaning set forth in Section 4.01.

“Code” means the Internal Revenue Code of 1986, as amended.

 

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“Confidential Information” means any information, including trade secrets,
concerning the Business that is not already generally available to the public.

“Construction Management Agreements” shall mean the various Construction
Management Agreements entered into with the Property Owners and with the Persons
owning the Pipeline Management Agreements existing at Closing including those
identified on Schedule 3.05(b).

“Contracts” means all contracts, agreements, leases of personal property, leases
of real property, the Management Agreements, consulting agreements, disposition
agreements, notes, bonds, indentures, arrangements, consensual obligations,
promises, undertakings, (whether oral and whether express or implied) or license
or sub-license agreements (including but not limited software licenses and
licenses of Intellectual Property), relationships and commitments and invoices
related thereto, in each case, to which Seller, ELRH or ELRH II is a party,
relating to the Business, or to which the Purchased Assets are otherwise bound
and which is legally binding.

“Contributed Property Management Agreements” means a portion of the Purchased
Assets consisting of the nineteen Management Agreements related to Managed
Properties that are owned, directly or indirectly, in whole or in part, by Buyer
and all of Seller’s rights under the Support Services Agreement related thereto.

“Debt” means, when used with reference to any Person, without duplication:
(a) any monetary obligations of such Person created or assumed by such Person,
or any Subsidiary thereof, (i) for borrowed money, (ii) evidenced by a bond,
note, debenture or similar instrument (including a purchase money obligation,
deed of trust or mortgage) given in connection with the acquisition of, or
exchange for, any property or assets (other than inventory or similar property
acquired and consumed in the ordinary course of such Person’s business),
(iii) for the payment of money as lessee under leases that are required to be,
in accordance with GAAP, recorded as capital leases for financial reporting
purposes, (iv) for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction or (v) under interest rate or
currency swap transactions (valued at the termination value thereof); (b) any
liability of others described in the preceding clause (a) guaranteed as to
payment of principal or interest by such Person or in effect guaranteed by such
Person through an agreement, contingent or otherwise, to purchase, repurchase or
pay the related indebtedness or to pledge the security therefor; (c) all
liabilities or obligations secured by a Lien (other than Permitted Liens) upon
property owned by such Person and/or upon which liabilities or obligations such
Person customarily pays interest or principal, whether or not such Person has
assumed or become liable for the payment of such liabilities or obligations; and
(d) any amendment, renewal, extension, revision or refunding of any such
liability or obligation.

“Earn-Out Period” shall mean the period beginning on the Closing Date and ending
on the one-year anniversary of such date.

“Effective Time” means 12:01 a.m. (New York City time) on the Closing Date.

“ELRH” has the meaning set forth in the preamble to this Agreement.

“ELRH Contributed Assets” means a portion of the Purchased Assets consisting of
ELRH’s economic interests in the Timbercreek Operating Agreement.

“ELRH II” has the meaning set forth in the preamble to this Agreement.

 

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“ELRH II Business Value” means the value of the portion of the portion of the
Business consisting of the ELRH II Contributed Assets and the ELRH II Sale
Assets, which aggregate value the parties have agreed is Twelve Million Seventy
Seven Thousand Ninety-Two Dollars ($12,077,092).

“ELRH II Contributed Assets” means a portion of the Purchased Assets consisting
of ELRH II’s economic interests in 100 Timbercreek Class B Units, the
Non-Contributed Property Management Agreements and all of the other assets of
the Business owned by ELRH II, which portion is being conveyed hereunder to
Buyer in exchange for Restricted Units.

“ELRH II Contribution Portion” means the value of the portion of the Business
consisting of the ELRH II Contributed Assets, which value the parties have
agreed is Two Million Seventy Seven Thousand Four Hundred Forty Dollars
($2,077,440).

“ELRH II Properties” means the multi-unit residential properties owned, directly
or indirectly, in whole or in part, by ELRH II as of the Closing Date, as
reflected in Schedule 3.05(a), and as may be acquired, directly or indirectly,
in whole or in part, by ELRH II.

“ELRH II Sale Assets” means a portion of the Purchased Assets consisting of all
of the assets of the Business except the Contributed Property Management
Agreements, the Excluded Assets and the ELRH II Contributed Assets.

“ELRH II Sale Portion” means the value of the portion of the Business consisting
of the ELRH II Sale Assets, which value the parties have agreed is Ten Million
Dollars ($10,000,000).

“ELRM Business Value” means the value of the portion of the Business consisting
of the Contributed Property Management Agreements, which value the parties have
agreed is Four Million One Hundred Seventeen Thousand Ninety-Two Dollars
($4,117,092).

“Employee Plans” has the meaning set forth in Section 5.18(a).

“Employees” means all individuals who are employed in the Business by Seller or
ELRH II as of the Effective Time, whether actively employed, on approved leave
of absence or layoff or on salary continuation, sickness or accident or
disability leave.

“Encumbrances” has the meaning set forth in Section 2.01.

“Entry Date” means, with respect to each Pipeline Management Agreement entered
into after the date hereof but prior to expiration of the Earn-Out Period, the
commencement date of such Pipeline Management Agreement as set forth therein.

“Environmental Laws” means all laws concerning public or workplace health and
safety or pollution or protection of the environment, flora, fauna or natural
resources, including but not limited to, the Comprehensive Environmental
Response, Compensation & Liability Act, 42 U.S.C. § 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Clean Air
Act, 42 U.S.C. § 7401 et seq., the Federal Water Pollution Control Act, 33
U.S.C. § 1251 et seq., the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.,
the Toxic Substances and Control Act, 15 U.S.C. § 2601 et seq., and the Safe
Drinking Water Act, 42 U.S.C. § 300f et seq.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
including the rules and regulations promulgated thereunder.

 

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“ERISA Affiliate” means each entity that is a member of a controlled group or
affiliated service group of which Seller or ELRH II is a member or that is
treated as a single employer with Seller or ELRH II under Section 414(b),
414(c), 414(m) or 414(o) of the Code or ERISA.

“Excluded Assets” has the meaning set forth in Section 2.03.

“Financial Statements” means, collectively, (a) the audited consolidated balance
sheet of ELRH and its Affiliates, including Seller, as of December 31, 2011,
together with the related audited statements of income, retained earnings, and
cash flows of Seller and its consolidated Affiliates for the 12-month period
ended December 31, 2011 (including the notes thereto and any other information
included therein), (b) the September 2012 Financial Statements, (c) the
unaudited statement of operations of Seller for the period of October 1, 2011
through September 30, 2012, and (d) the unaudited balance sheet of Seller as of
November 30, 2012, each of which described in clauses (a), (b), (c) and
(d) above, in each case, attached hereto as Schedule 1.01 and, as to clauses
(a) and (b) above, prepared in accordance with GAAP.

“Final PMA Value” shall mean, with respect to each Pipeline Management
Agreement, the value of such Pipeline Management Agreement determined by
multiplying 2.699 time the actual gross revenue generated from such Pipeline
Management Agreement during the period from the Entry Date to the first
anniversary of the Entry Date.

“GAAP” means United States generally accepted accounting principles,
consistently applied, as in effect from time to time.

“Governmental Body” means any foreign, federal, state, local or other
governmental authority, judicial body or regulatory body.

“Governing Documents” means the charter, certificate or articles of
incorporation, certificate or articles of organization, bylaws, operating
agreement or other governing instruments of an entity.

“Governmental Authority” means any domestic, federal, territorial, state or
local governmental authority, or any instrumentality, court, legislative body,
commission, tribunal or organization of any such governmental authority, or any
regulatory, administrative or other agency of any such governmental authority,
or any political or other subdivision, department or branch of any of the
foregoing.

“Hazardous Substances” means any (a) chemical, material or substance defined as
or included in the definition of “hazardous substances”, “hazardous wastes”,
“hazardous materials”, “extremely hazardous waste”, “acutely hazardous waste”,
“radioactive waste”, “biohazardous waste”, “pollutant”, “toxic pollutant”,
“contaminant”, “restricted hazardous waste”, “infectious waste”, “toxic
substances” or any other term or expression intended to define, list, regulate
or classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, “TCLP toxicity” or “EP toxicity” or words of similar import) as
defined in, the subject of, or that could give rise to liability under, any
Environmental Law, (b) oil, petroleum, petroleum fraction, petroleum additive
(including methyl tertiary butyl ether) or petroleum derived substance,
(c) flammable substances or explosives, (d) radioactive materials, (e) asbestos
or asbestos-containing materials, (f) urea formaldehyde foam insulation,
(g) polychlorinated biphenyls, and (h) lead-based paint, including, in each
case, any mixture or solution thereof.

“IDB Consent” shall mean the consent to the transactions contemplated hereby by
Israel Discount Bank of New York (or its applicable Affiliates) pursuant to the
Loan Documents defined in that certain (i) Amended and Restated Grid Promissory
Note dated March 31, 2011 and (ii) Demand Promissory Note dated June 28, 2012
(collectively, the “IDB Loans”).

 

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“Indemnified Party” has the meaning set forth in Section 9.04(a).

“Indemnifying Party” has the meaning set forth in Section 9.04(a).

“Initial PMA Value” shall mean the projected value of a Pipeline Management
Agreement, which projected value shall be agreed upon by ELRH II and Buyer, and
which shall be supported by reasonable evidence and pro forma evidence by ELRH
II, at the time of execution of a Pipeline Management Agreement and which shall
equal 2.699 times the projected gross receipts, as reasonably determined by
Buyer and ELRH II, that Buyer will earn under such Pipeline Management Agreement
from its Entry Date to the first anniversary thereof.

“Initial Value” shall have the meaning set forth in the definition of Management
Agreement Value.

“Insurance Policy” has the meaning set forth in Section 5.16.

“Intellectual Property” means all patents, trademarks, trade names, service
marks, service names, trade dress, logos, copyrights and domain names, including
but not limited to the phrase “Elco Landmark Residential Management,” and the
phrase Landmark Residential Management and any registrations, applications and
renewals for any of the foregoing, and all other intellectual property rights in
inventions, trade secrets, manufacturing processes, know how, confidential and
proprietary information, ideas, developments, drawings, specifications, bills of
material, supplier lists, marketing information, sales and promotional
information, business plans, computer software, test reports, component lists,
manuals, instructions, catalogs, processes, designs, and registrations and
applications for registration therefor, model numbers, telephone numbers, web
addresses, web sites, electronic records of drawings and tooling and other
electronic engineering tools, and all other proprietary rights, in each case,
owned or licensed by Seller and/or used in the Business, together with all
claims, damages and rights for past, present and future infringement,
misappropriation, unauthorized use or disclosure, or other violation thereof,
and all copies and tangible embodiments thereof (in whatever form or medium,
including electronic), including all patent infringement, validity,
patentability, and other legal opinions or investigations, all file histories,
prior art and prior art searches, all attorney work product, all patent,
trademark, and copyright files and file wrappers, and all other legal files and
materials.

“IP Assignment” shall mean the IP Assignment Agreement to be entered into by
ELRH, ELRH II, Seller and Buyer (or an Affiliate thereof), substantially in the
form attached hereto as Exhibit J.

“IPO” means a public offering of the capital stock of LATA pursuant to a
registration statement filed with the U.S. Securities and Exchange Commission
and related listing of such capital stock on the New York Stock Exchange or The
Nasdaq Stock Market.

“IRS” means Internal Revenue Service.

“Issue Date” shall have the meaning set forth in Section 3.01.

“Joinder Agreement” shall mean the form of Joinder Agreement for each holder of
Restricted Units to execute to become a limited partner of Buyer in accordance
with the terms of its Partnership Agreement, each substantially as set forth as
Exhibit N hereto.

 

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“Jupiter Office Lease” means that certain office lease, to be entered into and
dated as of the Closing Date, by and between Marlu Associates, Ltd. as landlord,
and an affiliate of Buyer to be designated by Buyer at Closing, as tenant.

“JV Consents” has the meaning set forth in Section 5.06(a).

“Knowledge of Seller” means the actual knowledge of any one or more of Joseph G.
Lubeck, James Miller or Elizabeth Truong and such knowledge that any such Person
should have had following a reasonable investigation in the course of such
Person’s duties on behalf of Seller, ELRH, ELRH II and their respective
Affiliates.

“LATA” means Landmark Apartment Trust of America, Inc., a Maryland corporation
that is the sole general partner of Buyer.

“Law” means any law, statute, code, ordinance, rule, regulation, decision,
injunction, ruling, verdict, judgment, order, award, decree or other requirement
enacted, adopted, issued or promulgated by any Governmental Authority, including
common law.

“Legal Requirement” means any domestic or foreign law, constitution, common law
principal, ordinance, code statute, judgment, injunction, decree, order, rule or
governmental regulation, as well as any “fair price,” “moratorium,” “control
share acquisition” or other similar anti-takeover statute or regulation.

“Lender Consents” has the meaning set forth in Section 5.06(a).

“Liabilities” has the meaning set forth in Section 5.22.

“License Agreement” means that certain License Agreement to be entered into on
the Closing Date by ELRH, ELRH II and Seller, in the form set forth in Exhibit H
attached hereto.

“Liens” means any lien, mortgage, security interest, Tax lien, attachment, levy,
charge, claim, restriction, imposition, pledge, easement, covenant,
encroachment, encumbrance, conditional sale or title retention arrangement, or
any other interest in property or assets (or the income or profits therefrom),
in each case, designed to secure the repayment of indebtedness, whether
consensual or nonconsensual and whether arising by agreement or under any Law or
otherwise.

“Limited Partnership Agreement” means the Limited Partnership Agreement of Buyer
entered into by LATA, as the sole general partner of Buyer, and the limited
partners name therein or who have signed joinders thereto, as amended to the
date hereof.

“Losses” means, collectively, all liabilities, obligations, damages,
deficiencies, losses, claims, actions, suits, proceedings, judgments, interest,
fines, demands, awards, assessments, out-of-pocket costs, Taxes, payments,
penalties and expenses.

“Managed Properties” means all multi-unit residential properties in which ELRH
or ELRH II has a direct or indirect ownership interest or with respect to which
Seller or ELRH II, or an Affiliate thereof, provides property management
services as of the Closing Date, excluding any Pipeline Assets and any
properties indirectly owned through ownership of the Timbercreek Class A Units
or Timbercreek Class B Units. As of the Closing Date, certain of the Managed
Properties are owned, directly or indirectly, by Buyer and the Non-Contributed
Properties are owned, directly or indirectly, in whole or in part, by ELRH or
ELRH II.

 

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“Managed Properties Security Deposits” means all tenant security deposits held
or controlled by Affiliates of Seller in connection with the apartment units in
the Managed Properties.

“Management Agreements” has the meaning set forth in Section 5.14(a)(xviii).

“Management Agreement Value” means, with respect to each Management Agreement
related to a Non-Contributed Asset, an amount that, as of the date of
calculation, is equal to the difference between (i) the product of (A) 2.699
multiplied by (B) the gross annual management fees to be paid pursuant to such
Management Agreement as reflected in the third column on the chart set forth in
Schedule 5.06(a) (“Initial Value”), less (ii) one-sixtieth (1/60th) of the
Initial Value for each month such Management Agreement remained in effect from
the Closing Date to the date such Management Agreement is terminated.

“Material Adverse Effect” means any state of facts, event, change or effect that
has had, has, or could reasonably be expected to have, a material adverse effect
on the assets, liabilities, business, results of operations, financial condition
of Seller or condition of the Purchased Assets, in each case, taken as a whole,
or on the ability of Seller to consummate the transactions contemplated hereby;
provided, that the term “Material Adverse Effect” shall not include any facts,
event, change or effect arising from (a) changes in the United States or foreign
economies, interest rates, capital markets in general or the geographic market
in which Seller operates, or changes in Seller’s industry other than effects of
any changes which adversely affect Seller to a materially greater extent than
its competitors in the applicable industries in which Seller competes,
(b) changes in any Law or other requirement of any Governmental Authority other
than effects of any changes which adversely affects Seller to a materially
greater extent than its competitors in the applicable industries in which Seller
competes, (c) any national or international political or social event or
occurrence (including military conflicts and acts of terrorism), (d) general
public awareness of the execution or announcement of this Agreement or the
consummation of the transactions contemplated hereby (including any changes in
relationships between Seller and any of its customers or suppliers arising
therefrom), (e) any action taken or caused by Buyer, (f) any action taken by
Seller with the consent of Buyer, (g) the failure of Seller to meet any internal
projections or forecasts, (h) changes or events that exist or have occurred as
of the date of this Agreement and have been reflected in this in this Agreement
or the Seller Representation Schedules or (i) the initiation by any Person other
than Seller of proceedings under Chapter 11 of the United States Bankruptcy
Code.

“Material Contracts” has the meaning set forth in Section 5.14(a).

“Non-Contributed Properties” means each Managed Property that, as of the Closing
Date, is owned directly or indirectly, in whole or in part, by ELRH or ELRH II.

“Notice of Claim” has the meaning set forth in Section 9.04(a).

“Offering” has the meaning set forth in Section 3.04(a).

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practices of Seller in taking or refraining to take any
particular action (including with respect to the quantity and frequency
thereof).

“Other Consents” has the meaning set forth in Section 5.06(a).

“Outside Date” shall mean March 28, 2013.

“Parties” or “Party” has the meaning set forth in the preamble to this
Agreement.

 

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“Permits” means all permits, licenses, franchises, privileges, immunities,
approvals, qualifications, registrations, certificates and other authorizations
and similar rights granted by or obtained from any Governmental Authority.

“Permitted Liens” means all Liens for current Taxes, assessments, fees and other
charges by Governmental Authorities that are not due and payable, and liens upon
Management Agreements imposed by the loan documents that are Encumbrances on the
Managed Properties as set forth on Schedule 5.06(a).

“Person” means any individual, sole proprietorship, partnership, corporation,
limited liability company, unincorporated society or association, Governmental
Authority, estate, trust or other entity or organization.

“Personal Property Leases” shall mean each lease to which Seller or ELRH II is
bound, as lessee, to lease any personal property, including those set forth in
Schedule 5.14.

“Pipeline Assets” means the multi-unit residential real estate properties that
ELRH II acquired after February 1, 2013, or plans, as of the date hereof, to
acquire, in whole or in part, directly or indirectly, and which the owner
thereof may cause to be managed by an Affiliate of Buyer pursuant to a Pipeline
Management Agreement entered into during the Earn-Out Period.

“Pipeline Consideration” means the Pipeline Restricted Units and Pipeline
Promissory Note that Buyer will issue to ELRH II at Closing, if applicable, and
thereafter in return for ELRH II’s contribution of Pipeline Management
Agreements at Closing, if applicable, and during the Earn-Out Period, as set
forth herein.

“Pipeline Management Agreements” shall mean each property management agreement
entered into by Buyer or its affiliate with the applicable owner of a Pipeline
Asset between February 1, 2013 and the Closing Date, and those entered into
during the Earn-Out Period, each of which shall be substantially similar to the
form of Pipeline Management Agreement attached as Exhibit M hereto.

“Pipeline Promissory Note” shall mean each promissory note substantially in the
form set forth on Exhibit G, providing for interest on the principal amount
thereof at the rate of three percent (3%) per annum, which may be paid or
accrued to maturity at the election of Buyer, with all principal and accrued but
unpaid interest due on the earlier to occur of (i) the fifth anniversary of the
Closing Date or an IPO, providing for the payment of Pipeline Consideration.

“Pipeline Restricted Units” shall mean the Restricted Units issued to ELRH II in
return for the contribution of Pipeline Management Agreements, which Restricted
Units shall be subject to the Pipeline Restricted Units Agreement.

“Pipeline Restricted Units Agreement” shall mean the agreement substantially in
the form set forth on Exhibit F, providing for the grant and cancellation of
Pipeline Restricted Units.

“Post-Closing Tax Period” means any Tax period beginning after the Closing Date
and the portion of the Straddle Tax Period beginning after the Closing Date and
ending at the end of the Straddle Tax Period.

“Post-Closing Taxes” means all Taxes of Seller and ELRH II with respect to any
Post-Closing Tax Period.

 

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“Pre-Closing Tax Period” means the Tax period ending on or before the Closing
Date, and the portion of the Straddle Tax Period beginning before the Closing
Date and ending on the Closing Date.

“Pre-Closing Taxes” means all Taxes of Seller and ELRH II with respect to any
Pre-Closing Tax Period.

“Promissory Note” means the promissory note issued by Buyer to ELRH II at
Closing and the Promissory Note that may be issued by Buyer after Closing
pursuant to Section 3.04(b), providing for interest on the principal amount
thereof at the rate of three percent (3%) per annum, which may be paid or
accrued to maturity at the election of Buyer, with all principal and accrued but
unpaid interest due on the earlier to occur of (i) the fifth anniversary of the
Closing Date or (ii) an IPO, substantially in the form of Exhibit D attached
hereto.

“Property Owner” means the owner of each of the Managed Properties.

“Purchase and Contribution Consideration” means an amount equal to the Business
Value (inclusive of the ELRM Business Value and ELRH II Business Value), the
Pipeline Consideration and the Timbercreek Consideration, subject to adjustment
as set forth in Section 3.02 and Section 3.03.

“Purchased Assets” has the meaning set forth in Section 2.02.

“Recoverable Proceeds” has the meaning set forth in Section 9.07.

“Registrations” has the meaning set forth in Section 5.08.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, releasing, migrating or
disposing into the environment of any Hazardous Substance in violation of any
Environmental Law.

“Remaining Timbercreek Rights” means all rights of Seller, ELRH, ELRH II or
their affiliates, related to the Timbercreek Class A Units, Timbercreek Class B
Units, Timbercreek Holding, Timbergercreek Holding Limited Partnership
Agreement, Timbercreek Limited Partnership Agreement, Timbercreek Operating
Agreement, Timbercreek Partnership and Timbercreek Rights Subcontract.

“Restricted Period” has the meaning set forth in Section 7.09(a).

“Restricted Units” means common units of limited partnership interest in Buyer
as such units are described in the Limited Partnership Agreement, each unit
having, for all purposes under this Agreement, an agreed value of Eight and
15/100 Dollars ($8.15).

“Restricted Units Agreement” means each agreement, substantially in the form of
Exhibit E, providing for the grant and cancellation of Restricted Units
delivered to Seller, ELRH or ELRH II, as applicable, as payment of a portion of
the Purchase and Contribution Consideration.

“Securities Act” has the meaning set forth in Section 5.25(a).

“Securities Laws” means the Securities Act, the Securities Exchange Act of 1934,
as amended, the Investment Advisors Act of 1940, as amended, the Trust Indenture
Act of 1939, as amended, relevant state corporate and securities laws, and the
rules and regulations promulgated thereunder.

“Seller” has the meaning set forth in the preamble to this Agreement.

 

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“Seller Employer Liabilities” shall mean any claims, liabilities, costs,
expenses or compensation that exist, that arise by reason of, or that are in any
way connected with or based on (i) an employee’s employment relationship with
the Seller, ELRH, ELRH II and/or the termination of such relationship, (ii) an
independent contractor’s relationship with the Seller, ELRH, ELRH II and/or the
termination of such relationship, (iii) any Legal Requirement relating to the
employment practices of the Seller, ELRH or ELRH II, Seller’s, ELRH’s or ELRH
II’s employment relationship with any employee, or to the relationship between
the Seller, ELRH, ELRH II and any independent contractor, (iv) breach by the
Seller, ELRH or ELRH II of any contract it may have with any employee of the
Seller, ELRH, ELRH II or with any contractor of the Seller, ELRH or ELRH II,
(v) retaliatory or wrongful discharge by the Seller, ELRH, ELRH II of any
employee or contractor of the Seller, ELRH or ELRH II, (vi) the Seller’s, ELRH’s
or ELRH II’s intentional or negligent infliction of emotional distress or mental
anguish upon employees or contractors of the Seller, ELRH or ELRH II, (vii) the
Seller’s, ELRH’s or ELRH II’s interference with business relationships,
contractual relationships or employment relationships involving employees or
contractors of the Seller, ELRH, or ELRH II and any third party, (viii) breach
of duty, fraud, fraudulent inducement to contract, breach of right of privacy,
libel, slander, or tortious conduct of any kind by the Seller, ELRH or ELRH II
with respect to employees or contractors of the Seller, ELRH or ELRH II,
(ix) violations of Title VII of the Civil Rights Act of 1964 and/or the Civil
Rights Act of 1991 and/or 42 U.S.C. §1981 by the Seller, ELRH or ELRH II with
respect to any employees or contractors of the Seller, ELRH or ELRH II,
(x) violations by the Seller, ELRH or ELRH II of the Age Discrimination in
Employment Act of 1967, the Age Discrimination Claims Assistance Act of 1988
and/or the Older Workers’ Benefit Protection Act with respect to employees or
contractors of the Seller, ELRH or ELRH II, (xi) violations by the Seller, ELRH
or ELRH II of federal or state handicap or disability discrimination laws or
acts, including, but not limited to, the Rehabilitation Act of 1973 and the
Americans with Disabilities Act with respect to employees or contractors of the
Seller, ELRH or ELRH II, (xii) violations by the Seller, ELRH or ELRH II of
ERISA, the Family and Medical Leave Act or the Fair Labor Standards Act with
respect to employees or contractors of the Seller, ELRH or ELRH II,
(xiii) violations by the Seller, ELRH or ELRH II of the workers’ compensation
laws of any state or other jurisdiction, (xiv) violations by the Seller, ELRH or
ELRH II of any other federal, state, county or municipal law or regulation
affecting employees or contractors of the Seller, ELRH or ELRH II in their
status as such, or (xv) violations by the Seller, ELRH or ELRH II of any
immigration laws, including, but not limited to, the Immigration Reform and
Control Act.

“Seller Indemnified Parties” has the meaning set forth in Section 9.03.

“Seller Representation Schedules” has the meaning set forth in the introductory
paragraph to Article V.

“Seller Transaction Documents” means this Agreement and all documents,
agreements and certificates to be executed by Seller, ELRH, ELRH II or any of
their Affiliates, in connection with this Agreement, including the Assignment
and Assumption Agreement, the Promissory Note(s), the Restricted Units
Agreement, the License Agreement, the Jupiter Office Lease, the IDB Consent, the
Timbercreek Consent, the Timbercreek Voting Agreement and the certificates and
agreements required to be executed and delivered by Seller, ELRH, ELRH II, or
their respective affiliates pursuant to this Agreement.

“September 2012 Financial Statements” means the unaudited balance sheet of ELRH
as of September 30, 2012 and the related unaudited statement of income of the
Seller for the nine (9) month period then ended.

“Services” has the meaning set forth in the recitals to this Agreement.

 

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“Straddle Tax Period” means any Tax period that begins before the Closing Date
and ends after the Closing Date.

“Sub-Manager Agreement” shall mean the Sub-Manager Agreement to be entered into
at Closing by ELRH, ELRM, ELRH II (or Affiliates thereof) and Buyer (or an
Affiliate thereof), in the form of Exhibit C attached hereto.

“Subsidiary” means any Person of which (a) a majority of the outstanding share
capital, voting securities or other equity interests are owned, directly or
indirectly, by Seller or (b) Seller is entitled, directly or indirectly, to
appoint a majority of the board of directors, board of managers or comparable
body of such Person.

“Support Services Agreement” means the Support Services Agreement dated as of
August 3, 2012 by and between ATA Property Management, LLC (formerly known as MR
Property Management, LLC) and Seller.

“Tampa Consent” means the consent to the assignment of the Tampa Office Lease.

“Tampa Office Lease” means that certain office lease, dated April 15, 2005
between DRA/CLP Concourse Center Tampa LLC (as successor in interest to Colonial
Realty Limited Partnership) and Elco Landmark Residential Holdings LLC (as
successor in interest to Landmark Residential, LLC), as amended on July 22,
2005, July 28, 2010 and October 18, 2012.

“Tangible Personal Property” shall mean all machinery and other equipment,
tools, vehicles, trailers, trucks, furniture, office equipment, computers,
computer hardware and peripherals, plant, inventory, and all other tangible
personal property owned by Seller or ELRH II that is used or held for use in the
Business, including the items listed in Schedule 5.07.

“Tax” or “Taxes” means all federal, state, local and foreign taxes, assessments
or governmental charges (including net income, gross income, payroll, ad
valorem, excise, franchise, occupancy, real property, personal property, sales,
use and value-added taxes, taxes withheld from employees’ salaries and other
withholding taxes and obligations and all deposits required to be made with
respect thereto), levies, assessments, deficiencies, import duties, licenses and
registration fees and charges of any nature whatsoever, including any interest,
penalties, additions to tax or additional amounts with respect thereto.

“Tax Returns” means all returns, declarations, reports, claims for refunds,
information returns and other statements or documents relating to Taxes,
including any elections, declarations, informational returns, schedules or
attachments thereto and any amendments thereof.

“Third Party” has the meaning set forth in Section 9.04(c).

“Third Party Claim” has the meaning set forth in Section 9.04(c).

“Timbercreek Agreements” has the meaning set forth in Section 5.14(a)(iii).

“Timbercreek Class A Units” means the Class A Units in Timbercreek Holding owned
by ELRH II, as such Class A Units are more fully described in the Timbercreek
Holding Limited Partnership Agreement.

 

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“Timbercreek Class B Units” means the Class B Units in the Timbercreek
Partnership owned by ELRH II, as such Class B Units are more fully described in
the Timbercreek Limited Partnership Agreement.

“Timbercreek Consent” means that certain Consent to and Assignment, Assumption
and Subcontract Agreement to be entered into by and among ELRH, ELRH II, Seller,
Buyer, Timbercreek Partnership, Timbercreek Holding and certain Affiliates
thereof, in the form attached hereto as Exhibit K.

“Timbercreek Consideration” means a maximum of Ten Million Dollars
($10,000,000), payable by delivery of Restricted Units to ELRH, as more fully
provided in Section 3.04 hereof.

“Timbercreek Holding” means Timbercreek U.S. Multi-Residential (U.S.) Holding
L.P., a Delaware limited partnership.

“Timbercreek Holding Limited Partnership Agreement” means that Limited
Partnership Agreement of Timbercreek Holding dated October 25, 2012 by and among
Timbercreek U.S. Multi-Residential (U.S.) Holding GPCO Inc., a Delaware
Corporation and ELRH.

“Timbercreek Limited Partnership Agreement” means that Limited Partnership
Agreement of the Timbercreek Partnership dated October 25, 2012, by and among
Timbercreek U.S. Multi-Residential Operating GPCO Inc., a Delaware corporation,
Timbercreek U.S. Multi-Residential Holding Partnership, an Ontario partnership,
Timbercreek U.S. Multi-Residential (U.S.) Holding L.P., and ELRH.

“Timbercreek Operating Agreement” means that certain Operating Agreement dated
October 25, 2012, by and between Timbercreek Asset Management, Inc. and ELRH, as
amended on December 1, 2012.

“Timbercreek Partnership” means Timbercreek U.S. Multi-Residential Operating
L.P., a Delaware limited partnership.

“Timbercreek Rights” means the rights and obligations of ELRH and Seller
pursuant to the Timbercreek Operating Agreement, Timbercreek Rights Subcontract
and the Timbercreek Property Management Agreements listed on Schedule 5.14.

“Timbercreek Rights Subcontract” means that certain Agreement dated October 26,
2012 by and among ELRH, Seller and Timbercreek Asset Management, Inc., pursuant
to which ELRH subcontracted certain obligations under the Timbercreek Operating
Agreement to ELRM.

“Timbercreek Voting Agreement” means an agreement to be entered into at Closing
by and among, ELRH, ELRH II, Seller and Buyer in substantially the form attached
hereto as Exhibit L.

“Trademark Assignment” shall mean the Trademark Assignment Agreement to be
entered into by ELRH, ELRH II, Seller and Buyer (or an Affiliate thereof),
substantially in the form attached hereto as Exhibit I.

“Transaction Documents” means, collectively, the Buyer Transaction Documents and
Seller Transaction Documents.

“Transfer Taxes” means all transfer, sales, use, reporting, recording, filing,
conveyance and other similar fees, taxes and charges arising out of or in
connection with the transfer of the Purchased Assets effected pursuant to this
Agreement.

 

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ARTICLE II

PURCHASE AND SALE AND CONTRIBUTION

Section 2.01 Conveying Parties. Upon the terms and subject to all of the
conditions of this Agreement, at the Closing, and thereafter, the Purchased
Assets shall be conveyed as follows: (a) Seller hereby contributes, assigns and
transfers to Buyer the Contributed Property Management Agreements and Seller’s
economic interests in the Timbercreek Rights, and Buyer agrees to accept such
contribution, in each case as more fully set forth in the Timbercreek Consent;
(b) ELRH II hereby contributes, assigns and transfers to Buyer the ELRH II
Contributed Assets and Buyer agrees to accept such contribution; (c) ELRH II
hereby sells, conveys and delivers to Buyer the ELRH II Sale Assets and Buyer
agrees to purchase the ELRH II Sale Assets; (d) ELRH II hereby agrees that, if
it acquires a Pipeline Asset between February 1, 2013 and the expiration of the
Earn-Out Period, it shall offer to sell and contribute, each in equal
proportion, a Pipeline Management Agreement with respect to such Pipeline Asset
to Buyer, and Buyer agrees to accept such contributions and sales; (e) ELRH II
agrees on or prior to the date that is 18 months after the Closing Date, which
date shall be determined by Buyer, ELRH II shall sell, convey and assign to
Buyer the Timbercreek Class A Units and Buyer agrees to purchase the Timbercreek
Class A Units, in each case as more fully set forth in the Timbercreek Consent;
(f) ELRH hereby contributes, assigns and transfers to Buyer its economic
interests in the Timbercreek Rights and Buyer agrees to accept such
contribution, in each case as more fully set forth in the Timbercreek Consent;
and (g) each of Seller, ELRH and ELRH II hereby agrees to contribute the
Remaining Timbercreek Rights to Buyer in accordance with the Timbercreek Consent
and the Timbercreek Voting Agreement, in each case free and clear, with respect
to clauses (a) through (g) above, of all Liens (other than Permitted Liens),
adverse interests, preemptive rights, first refusal rights and other
restrictions whatsoever (collectively, “Encumbrances”).

Section 2.02 Purchase and Sale and Contribution. Upon the terms and subject to
all of the conditions of this Agreement, at the Closing, Seller, ELRH and ELRH
II shall, or cause the appropriate Person to, sell, transfer, convey, assign,
contribute and deliver to Buyer, on the Closing Date, and Buyer shall acquire
and purchase, free and clear of all Liens (other than Permitted Liens), all of
the right, title and interest in, all tangible and intangible assets relating to
the Business, which are owned, leased or licensed by Seller, ELRH and ELRH II or
used or held for use by Seller, ELRH and ELRH II in the Business, but excluding
the Excluded Assets (such assets being conveyed being collectively referred to
herein as the “Purchased Assets”) and excluding the Retained Liabilities.
Without limiting the generality of the foregoing, the Purchased Assets shall
include:

(a) the Tangible Personal Property;

(b) the Assumed Contracts;

(c) the Intellectual Property owned by Seller, ELRH II or any of their
respective Affiliates and used in the Business, including the Intellectual
Property listed on Schedule 2.02(c);

(d) the Books and Records;

 

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(e) all equipment warranties relating to items included in the Tangible Personal
Property to the extent contractually assignable by Seller;

(f) toll free telephone numbers used or held for use in the operation of the
Business (as shall be mutually agreed upon by the Parties on or after Closing);

(g) all such other assets and rights set forth on Schedule 2.02(g) hereof;

(h) all rights in, to and under the personal property leases, including all
amendments and modifications thereto, listed on Schedule 2.02(h) (the “Personal
Property Leases”), if any;

(i) the performance and other bonds, security and other deposits, advances,
advance payments, prepaid credits and deferred charges listed on Schedule
2.02(i) and any custodial rights to the Security Deposits;

(j) all rights in, to and under the claims for refunds, rebates or other
discounts due from suppliers or vendors and rights to offset in respect thereof
listed on Schedule 2.02(j);

(k) all prepaid expenses, deposits (including security deposits), ad valorem
Taxes and lease and rental payments relating to the Business existing at the
Effective Time;

(l) all management and other systems (including computers and peripheral
equipment), databases, computer software, computer disks and similar assets, as
and to the extent used in the Business and, to the extent assignable, all
licenses and rights in relation thereto;

(m) all goodwill of or relating to the Business;

(n) the Timbercreek Class A Units (subject to the terms hereof and the
Timbercreek Consent) and ELRH II’s economic interests in the Timbercreek Class B
Units; and

(o) ELRH’s and Seller’s economic interests in the Timbercreek Rights (subject to
the Timbercreek Consent) and the Remaining Timbercreek Rights (subject to the
terms hereof and the Timbercreek Consent).

Notwithstanding the foregoing, if the provisions of any of the Assumed Contracts
would prohibit any attempted assignment of any interest thereunder or impose a
charge, discount or penalty upon an assignment without the consent of the other
party to such Assumed Contract, even though such assignment would not become
effective until such consent was obtained, then nothing in this Agreement shall
be deemed an assignment of any such Assumed Contract and the interest shall not
be an “Assumed Contract” hereunder unless and until any such consent is obtained
and such contract shall be deemed a “Holding Contract” until such assignment.

Section 2.03 Excluded Assets. The Purchased Assets shall not include the assets
described in this Section 2.03 (the “Excluded Assets”). The Excluded Assets
shall include:

(a) cash and Cash Equivalents of Seller, ELRH and ELRH II;

 

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(b) all bank accounts of Seller, ELRH and ELRH II, other than Security Deposit
Accounts held by Seller, if any;

(c) all obligations or Debt, including any intercompany or intracompany
receivable cash balances or Debt between or among Seller, ELRH, ELRH II and any
of their respective Affiliates or between or among any of their Affiliates;

(d) all seals, organizational documents, meeting record books or other records
related to the organization of Seller, ELRH and ELRH II;

(e) all membership interests, shares of capital stock, promissory notes,
partnership interests and all other equity interests and securities of, and
related documentation held by or in Seller, ELRH and ELRH II, except as set
forth in Section 2.02(n);

(f) Seller’s, ELRH’s and ELRH II’s corporate or limited liability company
records and other books and records that relate to internal corporate or limited
liability company matters of Seller or ELRH II and do not relate to the Business
or Taxes. Excluded Assets do not include Seller’s and ELRH II’s account books of
original entry with respect to the Business and all original accounts, checks,
payment records, Tax Returns and records and other similar books, records and
information of Seller and ELRH II relating to the Business and Purchased Assets
prior to the Effective Time, but Buyer shall, at the request of Seller or ELRH
II, make duplicate copies available to Seller and ELRH II of any records as are
reasonably necessary to enable Seller and ELRH II to prepare and file Tax
Returns and reports, financial statements and other documents reasonably
necessary by Seller or ELRH II;

(g) all notes, bonds and other evidences of Debt from, or other advances,
intercompany accounts, transfers and investments made to or in, Seller, ELRH or
ELRH II;

(h) Seller’s, ELRH’s and ELRH II’s Benefit Plans (other than as provided
pursuant to the Client Services Agreement with ADP Total Source, Inc. referenced
in Schedule 5.06(a)), and any related trust agreements, investment management
agreements, administrative agreements, each option agreement or other right to
acquire interests in ELRH, ELRH II or their Affiliates, and Incentive
Compensation Agreement “A”, including without limitation those with each of
Elizabeth Truong and James Miller or contracts of insurance; provided, however,
that Buyer shall assume, from and after the Closing Date, the Client Services
Agreement with ADP Total Source, Inc. referenced in Schedule 5.06(a) and the
accrued employee liabilities related to paid time off reflected in Schedule
5.17(a) (the “Assumed Employee Liabilities”);

(i) all insurance policies and any premium refunds to the extent Buyer
terminates such insurance at the Effective Time;

(j) all deposits and advances, rebates and credits related to any Retained
Liability;

(k) (i) all claims, choses-in-action, rights in action, rights to tender claims
or demands to Seller, ELRH or ELRH II insurance companies, rights to any
insurance proceeds (and other similar claims), and all claims against officers,
directors, managers, stockholders and members of Seller, ELRH or ELRH II for
their actions as such, (ii) any and all Contracts or policies of insurance and
insurance plans and the assets thereof, promissory notes, amounts

 

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due from employees, bonds, letters of credit or other similar items and any cash
surrender value with respect thereto, and all rights under any of the foregoing,
including any insurance proceeds receivables and (iii) any and all claims of
Seller, ELRH or ELRH II with respect to transactions and events occurring prior
to the Closing Date and all claims for refunds of monies paid to any
Governmental Authority (including Tax refunds);

(l) all Contracts other than the Assumed Contracts, including any and all
employment agreements of Seller, ELRH or ELRH II (collectively, the “Excluded
Contracts”);

(m) all Tangible Personal Property disposed of or consumed in the Ordinary
Course of Business of Seller, ELRH or ELRH II, between the date of this
Agreement and the Closing Date, in compliance with the terms and conditions of
this Agreement;

(n) all of Seller’s, ELRH’s and ELRH II’s rights under any Transaction
Documents, including this Agreement and all other agreements, certificates,
instruments, documents and writings delivered by Buyer and/or Seller, ELRH or
ELRH II in connection with this transaction;

(o) the Construction Management Agreements and any rights and obligations
relating to construction management services set forth in any of the Management
Agreements, which rights will be retained by ELRH II as noted in the Sub-Manager
Agreement;

(p) all accounts, notes and other receivables relating to services provided by
Seller, ELRH or ELRH II prior to the Effective Time (the “Accounts Receivable”);
and

(q) the assets listed on Schedule 2.03(q).

Section 2.04 Assumption of Liabilities. At the Closing, Buyer shall assume and
agree to duly and timely pay, discharge, defend and perform as and when due,
only the following obligations and liabilities of Seller, ELRH and ELRH II (the
“Assumed Liabilities”):

(a) any and all obligations and liabilities of Seller, ELRH or ELRH II under the
Assumed Contracts to the extent that such obligations and liabilities arise or
accrue after the Effective Time;

(b) all other obligations and liabilities relating to the Business or the
Purchased Assets that are incurred following the Effective Time; and

(c) the Assumed Employee Liabilities.

Section 2.05 Retained Liabilities. Except for the Assumed Liabilities, Buyer
shall not assume and shall not be liable or responsible for any contingencies,
liabilities or obligations of Seller, ELRH, ELRH II or their respective
Affiliates of any kind whatsoever, whether previously, nor or hereafter
existing, due or to become due, known or unknown, absolute, accrued or
contingent, or otherwise (the “Retained Liabilities”), including:

(a) any liability attributable to the Excluded Assets;

(b) any liability or obligation under or with respect to any Assumed Contract,
to the extent such liabilities or obligations arise during or have accrued in
connection with any period of time prior to the Effective Time or any liability
for payments or amounts due under any Assumed Contract, which are payable for
any period prior to the Effective Time;

 

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(c) any Pre-Closing Taxes;

(d) all obligations relating to any failure to comply with any applicable bulk
sales or bulk transfer laws applicable to the transactions contemplated by this
Agreement;

(e) any liability for or with respect to accounts payable and Debt, inclusive of
interest and fees, including (i) any such liabilities owed to Affiliates of
Seller, ELRH and ELRH II, and (ii) any liabilities arising from unclaimed or
abandoned property arising from the operation of the Business prior to the
Effective Time;

(f) any liability arising from accidents, occurrences, misconduct, negligence,
or breach of fiduciary duty that occurred prior to the Effective Time, whether
or not covered by workers’ compensation or other forms of insurance;

(g) any liability arising under or pertaining to any of the Employee Plans, or
any other liability described in Section 5.18, whether or not such liability or
obligation arises prior to, on or following the Closing Date, except for the
Assumed Employee Liabilities, from and after the Closing Date;

(h) any liability for making payments of any kind to employees of Seller, ELRH,
ELRH II or their respective affiliates (including without limitation bonuses,
severance payments and any payments owed or paid to any employees, including
without limitation as a result of this transaction, the termination of an
employee by Seller, or other claims arising out of the terms of employment with
Seller), including, but not limited to, any liability under the Worker
Adjustment and Retraining Notification Act of 1988, as amended (“WARN”) arising
out of or relating to the termination of Seller’s employees on or before the
Closing Date or otherwise as a result of this Agreement and the transaction
contemplated hereby, or with respect to payroll Taxes, or any amount owed after
the Closing Date that are not set forth on Schedule 5.17;

(i) any liability incurred in connection with Seller’s, ELRH’s or ELRH II’s
making or performance of this Agreement and the transaction contemplated hereby;

(j) any costs or expenses incurred in connection with shutting down,
uninstalling and removing equipment not included in the Purchased Assets and any
costs or expenses associated with any Contracts that are not Assumed Contracts;

(k) any liability for expenses and fees incurred by Seller, ELRH or ELRH II
incidental to the preparation of the Transaction Documents, preparation or
delivery of materials or information requested by Buyer, and the consummation of
the transaction contemplated hereby, including all broker, counsel and
accounting fees;

(l) any liability to any members, directors or officers of Seller, ELRH or ELRH
II;

(m) any liability arising as a result of any legal or equitable action or
judicial or administrative proceeding initiated at any time, to the extent
related to any action or omission of Seller, ELRH or ELRH II on, prior to or
after the Effective Time, including any

 

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liability for (i) infringement or misappropriation of any intellectual property
rights or any other rights of any Person (including any right of privacy or
publicity); (ii) defamation, libel or slander; (iii) violations of any federal,
state, local, municipal or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, order, edict, decree,
proclamation, treaty, convention, rule, regulation, permit, ruling, directive,
pronouncement, requirement (licensing or otherwise), specification,
determination, decision, opinion or interpretation that is issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental Authority, including
Environmental Laws or (iv) litigation identified on Schedule 5.09;

(n) any liability arising out of (i) the presence or release of any materials of
environmental concern at the real property leased pursuant to the Jupiter Office
Lease or the Tampa Office Lease immediately prior to the Effective Time, or
(ii) the failure of Seller, ELRH or ELRH II to comply with any requirements of
Environmental Laws for any period on or prior to the Effective Time;

(o) any liability relating to any intercompany balances between the Business and
Seller, ELRH or ELRH II or their respective members;

(p) any liability arising out of the operation of the Business prior to the
Effective Time, except to the extent such liability is included in the Assumed
Liabilities;

(q) any Seller Employer Liabilities, except the Assumed Employee Liabilities;

(r) any liability arising out of the Construction Management Agreements, any
portion of a Management Agreement requiring construction supervision services in
return for a construction management fee, the obligations to perform services
under the Timbercreek Operating Agreement, Timbercreek Rights Subcontract, and
Timbercreek Property Management Agreements listed on Schedule 5.14, all of which
shall be retained by Seller and ELRH II; and

(s) any liability or obligation to make additional capital, debt or equity
investments pursuant to the Timbercreek Partnership Agreement to the extent such
obligation arises prior to Buyer’s acquisition of the Timbercreek Class A Units
as provided herein.

ARTICLE III

PURCHASE AND CONTRIBUTION CONSIDERATION

Section 3.01 Purchase Price.

Subject to the terms and conditions set forth in this Agreement, in reliance
upon the covenants, agreements, representations and warranties contained herein,
and in consideration of the aforesaid contribution and sale of the Purchased
Assets, at the Closing, Buyer shall pay, and agrees to pay after the Closing,
for the Purchased Assets as follows: (a) Buyer shall, at Closing, pay to Seller,
for the contribution of the Contributed Property Management Agreements and
Seller’s economic interests in the Timbercreek Rights, Restricted Units having a
value equal to the ELRM Business Value; (b) Buyer shall, at Closing, pay to ELRH
II, for the ELRH II Contributed Assets (which include the economic interests in
the Timbercreek Class B Units), Restricted Units having a value equal to the
ELRH II Contribution Portion; (c)

 

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Buyer shall, at Closing, pay to ELRH II, for the sale of the ELRH II Sale
Assets, by delivering to ELRH II a Promissory Note in the principal amount of
the ELRH II Sale Portion; (d) subject to Section 3.03, Buyer shall, at or after
Closing and prior to the expiration of the Earn-Out Period, issue to ELRH II
Pipeline Restricted Units and a Pipeline Promissory Note, in equal amounts, for
each Pipeline Management Agreement contributed to Buyer, having a value equal to
fifty percent (50%) of the Initial PMA Value of each such Pipeline Management
Agreement, and, to the extent such payment is due after Closing, such Restricted
Units and Pipeline Promissory Note shall be issued within 30 days after the end
of the fiscal quarter during which such Pipeline Management Agreement was
entered into by Buyer, provided the Initial PMA Value was agreed to by Buyer and
ELRH II (each, an “Issue Date”) and (2) Buyer shall, with respect to each such
Pipeline Management Agreement, issue to ELRH II, within thirty (30) days after
the first anniversary of the applicable Issue Date of each such Pipeline
Management Agreement, Pipeline Restricted Units and a Pipeline Promissory Note,
in equal amounts, having an aggregate value equal to the Final PMA Value of such
Pipeline Management Agreements, less, in each case, one-half of the amount of
the Initial PMA Value for such Pipeline Management Agreements; (e) Buyer shall,
no later than the date that is 18 months after the Closing Date, pay for the
Timbercreek Class A Units by delivering to ELRH II a Promissory Note in the
principal amount of up to Five Million Dollars ($5,000,000) or, if on the date
Buyer elects to acquire such Class A Units Buyer has completed an IPO, then such
amount shall be payable in cash upon conveyance of the Timbercreek Class A Units
to Buyer, subject to Section 3.04(b); and (f) Buyer shall pay for the
Timbercreek Rights by delivering Restricted Units to ELRH, up to the Timbercreek
Consideration, as provided in, and in accordance with, Section 3.04(a) hereof.

Section 3.02 Business Value Post Closing Adjustments.

(a) To the extent a Management Agreement is terminated after Closing because
Seller or ELRH II, as applicable, does not receive any required Lender Consent
or JV Consent by the first anniversary of the Closing Date, the Buyer may elect
to assign such Management Agreement back to a Person designated by Seller or
ELRH II, as applicable, in which event the Business Value will be reduced by
reducing the ELRM Business Value, if the Management Agreement was a Contributed
Property Management Agreement or by reducing the ELRH II Contribution Portion,
if the Management Agreement was conveyed by ELRH II, in each case by the then
applicable Management Agreement Value of such Management Agreement, and
Restricted Units delivered to Seller or ELRH II at Closing having such value
will be cancelled by Buyer. If there are no Restricted Units that were delivered
at Closing to Seller or ELRH II still outstanding, then the reduction in
Business Value shall be to the ELRH II Sale Portion and the Management Agreement
Value shall be reduced from the then principal balance of the Promissory Note
issued in payment of the ELRH II Sale Portion.

(b) To the extent a Management Agreement related to a Non-Contributed Property
is terminated because the Non-Contributed Property is sold to a party other than
Buyer or its Affiliates during the period commencing on the Closing Date through
the date that is the fifth anniversary of the Closing Date, ELRH or ELRH II,
whichever has an ownership interest in such Non-Contributed Property, shall
notify Buyer in writing and the Business Value will be reduced by (1) reducing
the ELRH II Contribution Portion by the then applicable Management Agreement
Value of the Management Agreement applicable to such Non-Contributed Property,
and Restricted Units delivered to ELRH II at Closing having such value will be
cancelled by Buyer; (2) if there are no Restricted Units that were delivered at
Closing to ELRH II still outstanding, then the reduction in Business Value shall
be to the ELRH II Sale Portion and the Management Agreement Value shall be
reduced from the then principal

 

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balance of the Promissory Note issued in payment of the ELRH II Sale Portion;
and (3) if the Restricted Units issued to ELRH II at Closing are no longer
outstanding and the Promissory Note issued to ELRH II at Closing has been paid
in full, by reducing the ELRM Business Value by the then applicable Management
Agreement Value of the Management Agreement applicable to such Non-Contributed
Property, and Restricted Units that were delivered to Seller at Closing having
such value will be cancelled by Buyer.

Section 3.03 Pipeline Assets; Pipeline Consideration Post Closing Adjustments.

ELRH II covenants, that from February 1, 2013 until the end of the Earn-Out
Period, to the extent it or any of its Affiliates acquires a controlling
interest in the Person that owns a Pipeline Asset, it shall offer to Buyer the
opportunity to enter into a Pipeline Management Agreement for such Pipeline
Asset, subject to reasonably agreeing with Buyer on the Initial PMA Value to be
exchanged for such Pipeline Management Agreement. If a Pipeline Asset is sold by
the owner thereof to any Person other than Buyer or an Affiliate of Buyer prior
to the first anniversary of the Closing Date, with respect to those Pipeline
Management Agreements existing at Closing, or prior to the first anniversary of
the Entry Date, with respect to each other Pipeline Management Agreement, the
Pipeline Consideration shall be reduced by cancelling the Pipeline Restricted
Units and the principal amount of the Pipeline Promissory Note, which if
outstanding shall be pro rata and if not outstanding, shall be solely from the
Restricted Units, issued in payment of the Initial PMA Value of such Pipeline
Management Agreements. In the event that a Pipeline Asset is sold by the owner
thereof to any Person other than Buyer or an Affiliate of Buyer after the Final
PMA Value for the related Pipeline Management Agreement has been delivered and
the related Pipeline Management Agreement is terminated as a result thereof,
prior to the fifth anniversary of the Closing Date, the Pipeline Consideration
for such Pipeline Management Agreement shall be reduced by cancelling Pipeline
Restricted Units and the principal amount of the Pipeline Promissory Note, which
if outstanding shall be pro rata and if not outstanding, shall be solely from
the Restricted Units having a value equal to the Management Agreement Value of
such Pipeline Management Agreement (deeming, for this purpose only, such a
Pipeline Management Agreement to be a Management Agreement and having an Initial
Value based upon the actual gross receipts utilized to determine the Final PMA
Value of such Pipeline Management Agreement).

 

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Section 3.04 Timbercreek Operating Agreement; Timbercreek Consideration;
Timbercreek Class A Units.

(a) ELRH contributes and assigns, and Buyer accepts, the assignment of all of
ELRH’s economic rights in the Timbercreek Rights and Buyer agrees that, from and
after Closing, it shall perform the property management obligations of ELRH or
ELRM thereunder pursuant to and in accordance with the terms of the Timbercreek
Consent and Sub-Manager Agreement. Timbercreek U.S. Multi-Residential
Opportunity Fund #1, an Ontario, Canada limited partnership (the “Fund”), is in
the process of conducting a public offering of its limited partnership units
(the “Offering”). Pursuant to the Timbercreek Operating Agreement and the
Timbercreek Consent, Buyer, or an Affiliate of Buyer, will earn property
management fees for managing the assets acquired, directly or indirectly, from
the proceeds of the Offering (“Gross Subscription Proceeds”) and other debt or
equity financing obtained by the Fund or its affiliates. In consideration for
the contribution of ELRH’s economic rights in the Timbercreek Rights, Buyer
shall deliver to ELRH Restricted Units, if and at the times hereafter set forth
and certified to by Seller, ELRH and ELRH II: (a) at the Closing, if prior to
March 31, 2013, the number of Restricted Units equal to (x) 552,147.24
multiplied by (y) the quotient of (i) the actual Gross Subscription Proceeds the
Fund generated prior to the Closing Date divided by (ii) $50,000,000; (b) if the
Fund generates Gross Subscription Proceeds of at least Fifty Million Dollars
($50,000,000.00) on or prior to March 31, 2013, 552,147.24 Restricted Units,
less the number of Restricted Units delivered pursuant to subsection (a) above
shall be delivered within ten (10) days after written notice to Buyer such
milestone was achieved; (c) if the Fund generates Gross Subscription Proceeds of
at least One Hundred Million Dollars ($100,000,000.00) on or prior to nine
(9) months after the Closing Date, 368,098.16 Restricted Units shall be
delivered within ten (10) days after written notice to Buyer such milestone was
achieved; provided, however, if Gross Subscription Proceeds are less than
$100,000,000 as of the date nine (9) months after the Closing Date, the Buyer
shall deliver to ELRH the number of Restricted Units equal to (x) 368,098.16
multiplied by (y) the quotient of (i) the actual Gross Subscription Proceeds
received by the Fund from April 1, 2013 through such date, divided by
(ii) $50,000,000; and (d) if the Fund generates Gross Subscription Proceeds of
at least One Hundred Fifty Million Dollars ($150,000,000.00) on or prior to the
eighteenth month after the Closing Date, 306,748.47 Restricted Units shall be
delivered within ten (10) days after written notice to Buyer such milestone was
achieved; provided, however, if Gross Subscription Proceeds are less than
$150,000,000 as of the date 18 months after the Closing Date, the Buyer shall
deliver to ELRH the number of Restricted Units equal to (x) 306,748.47
multiplied by (y) the quotient of (i) the actual Gross Subscription Proceeds
received by the Fund from the date nine (9) months after the Closing Date
through the date that is 18 months after the Closing Date, divided by
(ii) $50,000,000.

(b) Timbercreek Equity Purchase. At any time during the period commencing on the
Closing Date and ending on the date 18 months thereafter, Buyer or any of its
Affiliates, shall acquire the Timbercreek Class A Units (subject to the voting
limitation set forth in the Timbercreek Consent), or to the extent not yet
acquired by ELRH II, the right to purchase such units, from ELRH II at a price
of up to $5 million, the actual amount to equal the purchase price paid for such
units by ELRH and ELRH II and/or the price per unit that ELRH II is obligated to
purchase such Timbercreek Class A Units, the consideration for which shall be a
Promissory Note or, if an IPO has occurred, cash, which transaction will be
subject to reasonable representations, warranties and other terms typical for
that type of transaction.

(c) Remaining Timbercreek Rights. At any time after the Closing Date, upon
Buyer’s request and subject to and in accordance with the Timbercreek Consent,
Seller, ELRH and ELRH II shall transfer to Buyer or its assignee the Remaining
Timbercreek Rights.

 

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ARTICLE IV

CLOSING; DELIVERIES AT CLOSING

Section 4.01 Closing Date and Location. Except for those transactions
contemplated by this Agreement to be consummated after the Closing, the
consummation of the transactions contemplated by this Agreement, including the
conveyance of the Purchased Assets in accordance with Article II hereof and the
payment of the Purchase and Contribution Consideration payable at Closing in
accordance with Article III hereof (the “Closing”), will take place, upon
satisfaction or waiver of the conditions set forth in Article VIII hereof, at
the offices of Morris, Manning & Martin, LLP at 1600 Atlanta Financial Center,
3343 Peachtree Road, Atlanta, Georgia 30326, commencing at 10:00 a.m. (local
time) on a date on which Buyer and Seller mutually agree, subject to
Section 8.05. The date on which the Closing occurs is referred to as the
“Closing Date.” Except as otherwise provided, the transactions contemplated
hereby will be deemed to have occurred simultaneously and will become effective
at the Closing, which transfer will be deemed effective for tax, accounting and
other computational purposes as of the Effective Time.

Section 4.02 Post-Closing Assurances. Except as may otherwise be agreed by Buyer
and Seller, ELRH or ELRH II as to any Purchased Assets for which required third
party consents have not been received as of the Closing, Seller, ELRH II and
ELRH shall remain responsible for obtaining such consents and holding Buyer
harmless with respect to any Losses arising therefrom, and Buyer shall
cooperate, without being required to expend any money, to obtain such consents.

Section 4.03 Deliveries by Seller. At the Closing, Seller, ELRH and ELRH II
shall deliver or cause to be delivered to Buyer the following:

(a) a counterpart to the Assignment and Assumption Agreement, in the form
attached hereto as Exhibit A (the “Assignment and Assumption Agreement”), duly
executed by Seller, ELRH and ELRH II;

(b) applicable counterparts to each of the Sub-Manager Agreement, the IDB
Consent, the Timbercreek Consent, the Timbercreek Voting Agreement, and the
Tampa Consent;

(c) the Bill of Sale in the form attached hereto as Exhibit B (the “Bill of
Sale”), duly executed by Seller and ELRH II, and such other good and sufficient
instruments of conveyance, transfer and assignment (in the form and substance
reasonably acceptable to Buyer) as shall be necessary to vest in Buyer good and
valuable title to the Purchased Assets being sold to Buyer as of the Closing
Date, free and clear of all Liens, other than Permitted Liens;

(d) a counterpart to the Promissory Note, duly executed by ELRH II;

 

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(e) a counterpart to the Restricted Units Agreement and the Joinder Agreement,
each duly executed by Seller, ELRH and ELRH II, as applicable;

(f) a certificate of an officer of each of Seller, ELRH and ELRH II certifying,
as complete and accurate as of the Closing, to (i) the attached copies of the
Governing Documents of each of Seller, ELRH or ELRH II, as applicable,
(ii) resolutions or actions of the board of managers or other governing body of
Seller, ELRH or ELRH II, as applicable, approving the execution and delivery of
this Agreement and the other Seller Transaction Documents to which it is a party
and the consummation of the transactions contemplated under this Agreement and
such other Seller Transaction Documents and (iii) the incumbency and signatures
of the officers or managers, as applicable, of Seller, ELRH or ELRH II executing
this Agreement and the other Seller Transaction Documents to which it is a
party;

(g) certificates as to the good standing of Seller, ELRH or ELRH II, in each
case, issued within thirty (30) days of the Closing Date, issued by the
appropriate Governmental Authorities within each jurisdiction where Seller, ELRH
and ELRH II is organized;

(h) copies of all approvals, authorizations, waivers, consents, releases and
modifications of agreement of third parties required to be obtained pursuant to
Section 8.03(b), in each case, in form and substance satisfactory to Buyer,
including without limitation the IDB Consent, the Jupiter Office Lease and the
Timbercreek Consent;

(i) from each holder of Debt listed on Schedule 5.04 evidence reasonably
satisfactory to Buyer that (i) the Debt has been fully paid and satisfied
(including all accrued interest, prepayment penalties, early termination fees or
other obligations), or otherwise fully discharged or (ii) (A) all Liens on the
Purchased Assets delivered at Closing have been released and terminated and
(B) all related UCC financing statements have been terminated or, in any case
described in (A) or (B) above, arrangements reasonably satisfactory to Buyer
shall have been made;

(j) a certificate of the Chief Executive Officer (or other comparable title) of
Seller, ELRH and ELRH II dated as of the Closing Date, certifying that the
conditions set forth in Section 8.01 and 8.03 have been satisfied;

(k) a counterpart to the License Agreement, duly executed by Seller, ELRH and
ELRH II;

(l) a counterpart to the Intellectual Property Assignments, duly executed by
ELRH; and

(m) such other documents and instruments as Buyer shall reasonably request to
consummate or evidence the transactions contemplated hereby.

Section 4.04 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause
to be delivered to Seller, ELRH and ELRH II, as provided herein, the following
items:

(a) The portion of the Purchase and Contribution Consideration due at Closing,
pursuant to a counterpart to each of: (i) the $10,000,000 Promissory Note and
the Restricted Units Agreement relating to the issuance of Restricted Units
having a value of

 

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$6,194,532 comprising the Business Value; (ii) the Pipeline Promissory Note and
the Restricted Units Agreement relating to Pipeline Management Agreements
existing as of the Closing, if any; and (iii) the Restricted Units Agreement
relating to the Timbercreek Consideration payable at Closing pursuant to
Section 3.04(a);

(b) a certificate of the general partner of Buyer certifying, as complete and
accurate as of the Closing, to (i) the attached copies of the Governing
Documents of Buyer, (ii) the resolutions or actions of the board of directors of
the general partner of the Buyer approving the execution and delivery of this
Agreement and the other Buyer Transaction Documents and the consummation of the
transactions contemplated under this Agreement and the other Buyer Transaction
Documents and (iii) the incumbency and signatures of the officers or managers,
as applicable, of Buyer executing this Agreement and the other Buyer Transaction
Documents;

(c) a certificate as to the good standing of Buyer issued within thirty
(60) days of the Closing Date by the appropriate Governmental Authorities within
the jurisdiction where Buyer is organized;

(d) a certificate of the Chief Executive Officer (or other comparable title) of
Buyer, dated as of the Closing Date, certifying that the conditions set forth in
Section 8.01 and Section 8.02 have been satisfied;

(e) a counterpart to each of the Assignment and Assumption Agreement, the Bill
of Sale, Intellectual Property Assignments, the Promissory Note, the Restricted
Units Agreement, the License Agreement, the Sub-Manager Agreement, the IDB
Consent, the Tampa Consent, the Timbercreek Consent, and the Timbercreek Voting
Agreement, each duly executed by Buyer (or Buyer’s Affiliate as applicable); and

(f) such other documents and instruments as Seller, ELRH or ELRH II shall
reasonably request to consummate or evidence the transactions contemplated
hereby.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER, ELRH AND ELRH II

Each of Seller, ELRH and ELRH II, jointly and severally, represent and warrant
to Buyer that the statements contained in this Article V are correct and
complete as of the date hereof except as otherwise set forth in the schedules
attached to this Agreement (the “Seller Representation Schedules”), which Seller
Representation Schedules are incorporated by reference herein. The Seller
Representation Schedules shall be arranged in Sections corresponding to the
numbered and lettered Sections of this Article V. The disclosures of any Section
of the Seller Representation Schedules shall provide information regarding, and
qualify only, the corresponding numbered and lettered Section of this Article V,
unless and to the extent that cross references to other Sections are set forth
in the Seller Representation Schedules. Seller, ELRH and ELRH II each shall not
be, nor shall it be deemed to be, in breach of any such representations and
warranties (and no claim for indemnification by any Buyer Indemnified Party may
be made pursuant to Section 9.02(a) hereof in respect thereof) in connection
with any such matter so disclosed in the Seller Representation Schedules.

 

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Section 5.01 Organization, Qualification and Power.

(a) Each of Seller, ELRH and ELRH II is a limited liability company duly formed,
validly existing and in good standing under the laws of the jurisdiction of its
formation as set forth on Schedule 5.01(a). Seller, ELRH and ELRH II each
is duly qualified or registered to conduct business as a foreign limited
liability company and in good standing under the Laws of each jurisdiction where
the ownership or use of the properties or assets owned or used by it or the
activities conducted by it require such qualification or registration, except,
as relates to Seller, ELRH and ELRH II, where the failure to be so qualified as
a foreign limited liability company could not result in a Material Adverse
Effect. The jurisdictions in which Seller, ELRH and ELRH II each is qualified or
registered to do business as a foreign limited liability company are set forth
on Schedule 5.01(a).

(b) Seller has no Subsidiaries and has never had any Subsidiaries.

(c) Correct and complete copies of the organizational documents of each of
Seller, ELRH and ELRH II have been delivered to Buyer.

(d) Schedule 5.01(a) sets forth a complete, true and accurate list of all the
directors, managers and officers of each of Seller, ELRH and ELRH II.

Section 5.02 Authorization. Seller, ELRH and ELRH II each has all requisite
legal capacity, power and authority (including the requisite limited liability
company power and authority) to own, operate or hold under lease its assets and
properties as currently owned or operated by it. Seller, ELRH and ELRH II each
has all requisite legal capacity, power and authority (including, if applicable,
the requisite limited liability company power and authority) (a) to execute,
deliver and perform this Agreement and the other Seller Transaction Documents to
which it is a party and (b) to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. Seller, ELRH
and ELRH II each has duly and validly authorized the execution, delivery and
performance of this Agreement and the other Seller Transaction Documents to
which it is a party. This Agreement constitutes, and when executed and delivered
by Seller, ELRH and ELRH II, as the case may be, the other Seller Transaction
Documents will constitute, the valid and legally binding obligation of Seller,
ELRH and ELRH II, which is a party thereto, enforceable against Seller, ELRH and
ELRH II, as applicable, in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency and
similar Laws affecting creditors’ rights generally and general principles of
equity (whether considered in equity or at law).

Section 5.03 Non-Contravention. Except as set forth in Schedule 5.03, the
execution, delivery and performance of this Agreement and the other Seller
Transaction Documents by Seller, ELRH and ELRH II, as applicable, and the
consummation by Seller, ELRH and ELRH II, as applicable, of the transactions
contemplated hereby or thereby, and compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof by Seller, ELRH and ELRH II, as
applicable, do not and will not conflict with, or result in any violation of, or
any default (with or without notice or lapse of time, or both) under, any Law
applicable to, or any provision of the Governance Documents of Seller, ELRH or
ELRH II, as applicable, conflict with, result in any material violation or
breach of, result in any material default (with or without notice or lapse of
time, or both) under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice or
consent under, any of the Assumed Contracts, or any other agreement to which any
of the Purchased Assets are subject,

 

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result in the creation or imposition of any Lien (other than Permitted Liens)
upon any of the Purchased Assets or result in a material breach of or material
default (with or without notice or lapse of time, or both) under, or the
cancellation, forfeiture, revocation, suspension or adverse modification of, any
material Permit owned or held by Seller, ELRH or ELRH II.

Section 5.04 Debt; Letters of Credit.

(a) Schedule 5.04 sets forth all outstanding Debt and other liabilities of
Seller, ELRH and ELRH II in excess of One Thousand Dollars ($1,000.00) in the
aggregate (whether absolute, accrued, contingent or otherwise), of a nature
required by GAAP to be reflected on a corporate balance sheet or disclosed in
the notes thereto, except such liabilities that are accrued or reserved for, as
shown in the September 2012 Financial Statements, and all Liens (other than
Permitted Liens) on the assets of Seller as of the date hereof.

(b) Seller, ELRH and ELRH II each has no letters of credit, performance bonds or
similar instruments issued on or for its account and pertaining to the Business
or the assets used in the operations of the Business for the benefit of property
managers or otherwise.

Section 5.05 No Brokers or Finders Fees. No agent, broker, investment banker,
financial advisor or other Person is or will be entitled to any brokers’ or
finder’s fee or any other commission or similar fee from Seller, ELRH, ELRH II
or any of their respective Affiliates in connection with the transactions
contemplated by this Agreement.

Section 5.06 Consents and Approvals; Permits.

(a) Each authorization, consent, approval or other action by, or notice to or
filing with, any Person that is, or may be, required for the execution,
delivery, performance or consummation of the transactions contemplated by this
Agreement, including without limitation, each consent by a lender (“Lender
Consents”), a joint venture partner or entity (“JV Consents”) and other entities
(“Other Consents”) that is, or may be, required to assign the Purchased Assets
to Buyer without causing a default under any such agreement or any other
agreement, including each Management Agreement, and any other Seller Transaction
Documents to which Seller, ELRH or ELRH II is a party, has or will be obtained
by Seller, ELRH or ELRH II, as applicable, and is set forth on Schedule 5.06(a),
opposite the name and address of the applicable Managed Property and setting
forth the lender, joint venture partner or entity or other party from which
consent is or may be required or necessary to avoid a breach or default to such
lender, joint venture partner or entity due to the transactions contemplated
herein.

(b) Set forth on Schedule 5.06(b) is a list of all Permits which are necessary
for the ownership or lease of the Purchased Assets and the operation of the
Business by Seller, ELRH and ELRH II as presently conducted. All such Permits
are in full force and effect and to the Knowledge of Seller, have been duly and
lawfully secured or made. No additional Permit is required from any Governmental
Authority in connection with the operation of the Business or the transfer of
the Business to Buyer. There is no proceeding pending or, to the Knowledge of
Seller, ELRH and ELRH II, threatened, to revoke, suspend, withdraw or terminate
any such Permit. Seller, ELRH and ELRH II each is in compliance in all material
respects with all such Permits. Seller, ELRH and ELRH II each has fulfilled and
performed its material obligations under each such Permit and there is no breach
or default under any such Permit.

(c) Schedule 5.06(c) sets forth the Property Owner of each of the Managed
Properties.

 

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Section 5.07 Title; Location of Assets Used in the Business; Sufficiency.

(a) Seller, ELRH and ELRH II hold good and marketable title to, or a valid
leasehold interest or license in, the Purchased Assets, free and clear of all
Liens (other than Permitted Liens).

(b) All Tangible Personal Property is located at the location set forth in the
Jupiter Office Lease or set forth in the Tampa Office Lease. Other than as
described on Schedule 5.07, following the Closing, the Purchased Assets, and
rights related thereto, other than working capital which must be provided by
Buyer, will be sufficient to carry on the Business in all material respects in
the manner in which it is conducted as of the date hereof and as of the Closing
Date. Schedule 5.07 contains a list of the Tangible Personal Property.

Section 5.08 Intellectual Property. Schedule 5.08 contains (a) a complete and
correct list of all patents, trademarks, trade names, service marks, service
names, trade dress, logos, copyrights and domain names owned or licensed by
Seller, ELRH or ELRH II or used in the Business, whether or not registered with
the United States Patent and Trademark Office or any other Governmental
Authority (collectively, “Registrations”) and (b) a complete and correct list of
all licenses, sublicenses and other agreements relating thereto to which Seller,
or to the extent related to the Business ELRH or ELRH II, is a party. Seller,
ELRH and ELRH II each has the legal enforceable right to use the Intellectual
Property, none of Seller, ELRH nor ELRH II has a registered service mark for the
terms “Landmark” or “Landmark Management”, and is aware that such terms are used
throughout the United States by multiple other users. The Intellectual Property
identified in Schedule 5.08 constitutes all of the intellectual or proprietary
property reasonably necessary for conduct of the Business or used by Seller,
ELRH and ELRH II as of the date hereof and as of the Closing Date. None of the
Intellectual Property is subject to any pending or, to the Knowledge of Seller,
threatened challenge, and none of Seller, ELRH nor ELRH II has received any
written notice that any such Intellectual Property is invalid or that any
Intellectual Property or any products or services made, sold or used in
connection with the Business conflict with or infringe the rights of others. To
the Knowledge of Seller, except as noted herein, no third party has infringed or
misappropriated, or is infringing or misappropriating any of the Intellectual
Property. Except as set forth in Schedule 5.08, neither Seller, ELRH nor ELRH II
has granted a license or assignment of any rights in and to the Intellectual
Property.

Section 5.09 Compliance with Laws; Litigation.

(a) Seller, ELRH and ELRH II each is in compliance in all material respects with
all Laws applicable to Seller, ELRH, ELRH II or to the Business or to the use of
the Purchased Assets. Seller, ELRH and ELRH II each has not, and to the
Knowledge of Seller, none of their respective Affiliates, have received any
written notice asserting any non-compliance with any Laws. To the Knowledge of
Seller, Seller, ELRH and ELRH II each, has not received any oral notice
asserting any non-compliance with any Laws.

 

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(b) There is no action, lawsuit, proceeding, claim, or legal, administrative,
arbitration or governmental investigation pending or, to the Knowledge of
Seller, threatened, against Seller, ELRH or ELRH II or otherwise with respect to
the Business, the Purchased Assets, this Agreement or the transactions
contemplated hereby, including any such action which questions the validity or
legality of, or is otherwise related to, the transactions contemplated hereby.
To the Knowledge of Seller, no event has occurred or circumstances exist that
could give rise to or serve as a valid basis for the commencement of any such
action.

(c) Except as set forth on Schedule 5.09, there has not during the past three
(3) years been any action, lawsuit, proceeding, claim, or legal, administrative,
arbitration or governmental investigation pending or, to the Knowledge of
Seller, threatened, against Seller, ELRH or ELRH II, or otherwise with respect
to the Business or the Purchased Assets.

(d) Except as set forth on Schedule 5.09, there is no, and there has not been,
any judgment, order, writ, injunction, decree or other similar award outstanding
(whether rendered by a court, administrative agency or other Governmental
Authority, or by arbitration) against Seller, ELRH, ELRH II, or any of their
respective Affiliates or by which Seller, ELRH, ELRH II, or any of their
Affiliates is bound, in each case, which relates to the Business, the Purchased
Assets, this Agreement or the transactions contemplated hereby, and Seller,
ELRH, ELRH II, and their respective Affiliates are not in breach of any such
judgment, order, writ, injunction, decree or similar award.

Section 5.10 Financial Statements.

(a) The following financial information has been delivered to Buyer by Seller
(i) a schedule, which is attached hereto as Schedule 5.10(a) (the “Management
Fee Schedule”) of all management fees (A) actually earned by Seller for the
fiscal year ended December 31, 2011 and for the period commencing January 1,
2012 and ending September 30, 2012 and (B) forecasts to be earned for the fiscal
year ending December 31, 2013 which are based on good faith estimates and
assumptions; (ii) federal income tax returns for Seller and ELRH for the year
ended December 31, 2011 as filed with the IRS; and (iii) the Financial
Statements.

(b) The Financial Statements (i) were derived from the books and records of the
Seller and ELRH, (ii) as adjusted, fairly present in all material respects the
financial condition and results of operations of the Business as of and at the
dates and as of and for the periods indicated therein and (iii) have, prior to
adjustment, been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered. The Management Fee Schedule is complete, true
and accurate as to all items described in clause (i)(A) above and based upon
good faith estimates and assumptions as to the forecast described in clause
(i)(B) above.

(c) None of Seller, ELRH nor ELRH II has any audited or unaudited financial
statements for the 2011 and 2012 calendar years, other than the Financial
Statement and the September Financial Statements.

Section 5.11 Absence of Changes. Except as set forth on Schedule 5.11, since
December 31, 2011, Seller, ELRH and ELRH II have conducted the Business only in
the Ordinary Course of Business and the Seller has not:

(a) mortgaged, pledged, charged or subjected to any Lien (other than Permitted
Liens) any of the Purchased Assets;

 

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(b) amended its organizational documents or operating agreement;

(c) other than in the Ordinary Course of Business, prepaid or cancelled any
rights, debts or claims of Seller, ELRH or ELRH II that relate to the Business
or the Purchased Assets;

(d) sold, licensed or assigned, granted or otherwise transferred or disposed of
rights under any of the Intellectual Property, or abandoned, canceled or
otherwise failed to maintain any such rights;

(e) changed the method of management, operation, accounting methods or Tax
elections used by Seller, ELRH or ELRH II;

(f) adopted a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization with
respect to Seller, ELRH or ELRH II;

(g) made, with respect to the Business, any payment, or contracted for the
payment, of any bonus or other compensation or personal expenses for which Buyer
would be liable, other than (i) wages and salaries and business expenses paid or
payable in the Ordinary Course of Business, and (ii) wage and salary adjustments
made in the ordinary course of business for Employees who are not officers or
managers of Seller;

(h) entered into any non-competition agreement involving the Business;

(i) suffered material damage to, or destruction or loss (whether or not covered
by insurance) of, any Purchased Assets or failed to maintain any Purchased
Assets in the Ordinary Course of Business (ordinary wear and tear accepted);

(j) revalued any of the Purchased Assets other than as reflected on the
Financial Statements;

(k) (i) made any increase in the amount of any bonuses, salaries or other
compensation to or with respect to any Employee or any manager or officer of
Seller, ELRH or ELRH II (except in the Ordinary Course of Business),
(ii) entered into or adopted any Employee Plan, including any employment,
severance or similar Contract, (iii) made any increase in the amount of or
institution of any fees, bonuses, commissions or incentives to or with respect
to any Person providing services to Seller, ELRH or ELRH II or entered into any
new Contract for such services outside the Ordinary Course of Business, or
(iv) paid or made a commitment to pay any severance or termination payment to
any Employee or consultant engaged in the Business;

(l) entered into, terminated or modified any collective bargaining agreement;

(m) failed to perform any material obligations of Seller, ELRH or ELRH II under
any Material Contract or material Permit;

 

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(n) adopted or increased the payments or benefits payable under any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other Employee Plan;

(o) failed to maintain relations and preserve substantially intact business
relationships with suppliers and creditors of Seller, ELRH and/or ELRH II;

(p) modified or waived in any material respect any provision of any Assumed
Contract pursuant to which Seller, ELRH or ELRH II is entitled to a fee, payment
or other benefit outside of the Ordinary Course of Business;

(q) failed to renew or maintain any insurance coverage; or

(r) agreed or committed, orally or in writing, to do any of the foregoing.

Section 5.12 Books and Records. The Books and Records of Seller, ELRH and ELRH
II, all of which have been made available to Buyer, are complete and correct, in
all material respects, and have been maintained in accordance with sound
business practices and applicable Laws.

Section 5.13 Real Property; Security Deposits.

(a) Seller, ELRH and ELRH II each does not own or lease, as lessor, any real
property. Seller currently occupies space only in accordance with the Jupiter
Office Lease and the Tampa Office Lease. No Person other than Seller has any
rights to occupy the space at each such lease, other than as set forth on
Schedule 5.13(a).

(b) Schedule 5.13(b) sets forth each account or other location of each of the
Managed Properties Security Deposits. The security deposit accounts (each, a
“Security Deposit Account”) pertaining to the Managed Properties have been at
all times and currently are maintained in accordance with all applicable Laws.

Section 5.14 Material Contracts; Management Agreements.

(a) Schedule 5.14 is a list (corresponding to the applicable subsection below)
of all Contracts relating to the Business or Timbercreek to which any of Seller,
ELRH or ELRH II is a party meeting the following descriptions (“Material
Contracts”), true and complete copies of that (including all amendments,
modifications, extensions, renewals, and other agreements with respect thereto,
and in the case of oral Contracts, a brief description of the contract or
agreement) have been provided or made available to Buyer:

(i) each Contract whereby Seller, ELRH or ELRH II has an obligation to make an
investment in or loan to any Person;

(ii) each Contract that constitutes a Personal Property Lease;

(iii) each Contract that involves performance of services, delivery of goods or
materials or payments by Seller, ELRH or ELRH II of an amount or value in excess
of Twenty Thousand Dollars ($20,000.00); provided, that the aggregate of all
Contracts that do not exceed such threshold shall not be in excess of One
Hundred Thousand Dollars ($100,000) unless such Contract can be terminated by
Seller, ELRH or ELRH II, as applicable, on notice of thirty (30)

 

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days or less and without payment of any damages or penalties, including without
limitation any obligations related to the Timbercreek Limited Partnership
Agreement, the Timbercreek Holding Limited Partnership Agreement, the
Timbercreek Operating Agreement and any agreements related thereto
(collectively, the “Timbercreek Agreements”);

(iv) each Contract that was not entered into in the Ordinary Course of Business;

(v) each Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property;

(vi) each Contract with respect to Intellectual Property, including Contracts
with current employees, consultants, or contractors regarding the ownership, use
or non-disclosure of any of the Intellectual Property, but excluding shrink wrap
licenses and other similar licenses that are included in off the shelf software;

(vii) each Contract that constitutes an agreement to purchase or sell a capital
asset;

(viii) each Contract that constitutes or amends any employment, consulting,
management, severance, change in control or indemnification arrangement,
agreement or understanding between Seller, ELRH and/or ELRH II, on the one hand,
and any directors, officers, or other Employees on the other hand;

(ix) each Contract pursuant to which Seller, ELRH or ELRH II has granted a power
of attorney or other similar grant of agency;

(x) each Contract with any labor union or association representing any Employee
of Seller, ELRH or ELRH II;

(xi) each Contract that constitutes a bonus, pension, profit sharing, retirement
or other form of deferred compensation plan;

(xii) each Contract that prohibits Seller, ELRH or ELRH II from freely engaging
in business anywhere in the world or concerning confidentiality (except
Contracts concerning confidentiality entered into in the Ordinary Course of
Business);

(xiii) each Contract, including any joint venture, partnership, or limited
liability company agreement, involving a sharing of profits, losses, costs,
Taxes, or other liabilities by Seller, or to the extent related to the Business,
ELRH or ELRH II, with any other Person;

(xiv) each Contract under which Seller, ELRH or ELRH II has created, incurred,
assumed or guaranteed Debt obligations;

(xv) each Contract that is a settlement, conciliation or similar agreement with
any Governmental Authority or pursuant to which Seller, ELRH or ELRH II will be
required to make a payment as a result of such a Contract after the date of this
Agreement;

 

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(xvi) each Contract pursuant to which any of Seller, ELRH or ELRH II has
obligations to indemnify (in the absence of a breach) another Person (other than
Contracts entered into in the Ordinary Course of Business);

(xvii) each Contract relating to any surety bond or letter of credit; and

(xviii) each Contract pursuant to which Seller, ELRH or ELRH II provides the
Services to the Managed Properties (collectively, the “Management Agreements”).

Schedule 5.06(a) sets forth each of the annual fees payable to Seller, ELRH or
ELRH II pursuant to each Management Agreement.

(b) All of the Assumed Contracts, including without limitation each Management
Agreement, are valid, binding and enforceable as to Seller, ELRH or ELRH II and,
to the Knowledge of Seller, the other parties thereto, in accordance with their
respective terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium and similar laws, both
state and federal, affecting the enforcement of creditors’ rights or remedies
generally as from time to time in effect or (ii) principles of equity, whether
considered at law or in equity. No event has occurred or circumstances exist
that could, with the passage of time or compliance with any applicable notice
requirements or both, constitute a default of, result in a violation or breach
of, or give any right to accelerate, modify, cancel or terminate any Assumed
Contract by Seller, ELRH or ELRH II, or, to the Knowledge of Seller, any other
party under any such Assumed Contract. Seller, ELRH and ELRH II each is not, and
to the Knowledge of Seller, no other party thereto, is in material breach or
material default under any Assumed Contract, and no right of acceleration,
modification, cancellation or termination is currently in favor of Seller, ELRH
or ELRH II, or to the Knowledge of Seller, any other party to such Assumed
Contract. None of Seller, ELRH or ELRH II has received written notice that any
party to any Assumed Contract intends to cancel or terminate any such Assumed
Contract or to not exercise any option to renew thereunder, and to the Knowledge
of Seller, no party to any Assumed Contract otherwise intends to exercise any
right of cancellation, termination or to not exercise any option to renew
thereunder. To Seller’s Knowledge, all customers, suppliers and property owners
engaged in doing business with Seller, ELRH and/or ELRH II will continue to do
business with the Buyer after the consummation of the transactions contemplated
herein in the same manner and at the same levels as previously conducted with
Seller, ELRH and ELRH II. Except for Permitted Liens, none of Seller, ELRH or
ELRH II has made any prior assignment of any Assumed Contract or any of its
rights or obligations there under. Each Assumed Contract is assignable, subject
only to any consent set forth on Schedule 5.06(a). None of Seller, ELRH or ELRH
II provides services, directly or indirectly, similar to those services provided
in the Business.

(c) No fees have been paid to any party or their Affiliates pursuant to the
Timbercreek Operating Agreement. The parties acknowledge that the annual maximum
amount of manager fees that Timbercreek is obligated to pay ELRH (or its
Affiliates) in any year is equal to 60% of 1% of all gross assets under
management by Timbercreek Asset Management Inc. (the “Maximum Annual Amount”).
To the extent Buyer, during the period commencing at Closing and ending on the
first anniversary (the “Period”) thereof does not receive the Maximum Annual
Amount for such year and ELRH, ELRH II, Seller or any of their Affiliates
received all or a portion of such amount, then ELRH, ELRH II and Seller will
cause all or the applicable portion of the amounts received by any of them to be
remitted to Buyer or its Affiliates such that Buyer receives up to but not in
excess of the Maximum Annual Amount;

 

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provided, that it is further understood that none of Seller, ELRH, ELRH II or
any of their Affiliates is guaranteeing that Buyer or its Affiliates will
receive or otherwise be entitled to receive the Maximum Annual Amount during the
Period. The Gross Subscription Proceeds raised by the Fund as of the date hereof
is $40,500,000.

Section 5.15 Bank Accounts. Schedule 5.15 sets forth a true and complete list of
all banks and other financial institutions with which Seller, ELRH and/or ELRH
II has an account for the Business or maintains a safe deposit box for the
Business, showing the type and account number of each such account and safe
deposit box and the names of the persons authorized as signatories thereon or to
act or deal in connection therewith.

Section 5.16 Insurance. Schedule 5.16 sets forth a true and complete list of
each insurance policy currently maintained by or on behalf of or for the benefit
of Seller or the Business (specifying the insurer, amount of coverage and type
of insurance) (each, an “Insurance Policy”), together with the name of the
insurer, the type of policy or bond, the coverage amount and any applicable
deductible. All premiums due and payable under all such Insurance Policies have
been timely paid. Seller has made available to Buyer copies of each such
Insurance Policy. Except as set forth on Schedule 5.16, all such insurance
coverage is occurrence-based. With respect to each Insurance Policy, to the
Knowledge of Seller, (a) the policy is legal, valid, binding, enforceable and in
full force and effect without any lapse, (b) no party to the policy is in
material breach or material default (including with respect to the payment of
premiums or the giving of notices), (c) no event has occurred that, with notice
or the lapse of time, or both, would constitute a material breach or material
default, or permit termination, modification or acceleration under such policy;
and no party to the policy has repudiated any provision of such policy, and
(d) no event has occurred which could reasonably result in (i) cancellation of
any such insurance coverage; (ii) a retroactive upward adjustment of premiums
under any such insurance coverage; or (iii) any prospective upward adjustment in
such premiums.

Section 5.17 Employment and Labor Matters.

(a) Schedule 5.17(a) sets forth the name, date of hire, job title, current
compensation paid or payable, including annual vacation accrued and status
(e.g., leave of absence, disability, layoff, active, temporary) and location, of
each Employee as of the date set forth on such Schedule, with only such changes
as resulting from ordinary course of business operations since that date. Seller
and/or ELRH II has paid in full or accrued in the Financial Statements (which
accrual shall be specifically identified in Schedule 5.17(a)), as applicable, in
a timely manner, all wages, salaries, commissions, incentives, bonuses and other
compensation due to any Employee or otherwise arising under any Employee Plan or
Law prior to the Closing. No employee of Seller or ELRH II has provided written
notice to Seller or ELRH II to cancel or terminate such Person’s relationship
with Seller, ELRH or ELRH II.

(b) Seller, ELRH and ELRH II each:

(i) is in compliance with all applicable Laws, respecting labor, employment,
employment practices, terms and conditions of employment, wages and hours,
termination of employees, classification of employees, and immigration, and is
not engaged in any unfair labor practice, including any such Laws respecting
employment discrimination and occupational safety and health requirements;

 

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(ii) has complied in all material respects with the withholding and reporting
requirements with respect to wages, salaries and other payments to employees of
Seller, ELRH and ELRH II;

(iii) has not experienced a “plant closing,” “business closing,” or “mass
layoff” (as defined in the WARN Act or any similar state, local or foreign law
or regulation) affecting any site of employment of the Seller or one or more
facilities or operating units within any site of employment or facility of the
Seller, without complying with the WARN Act and any similar state, local or
foreign law or regulation, and, during the 90-day period preceding the date
hereof, none of the employees of the Seller has suffered an “employment loss” as
defined in the WARN Act or any similar state, local or foreign law or
regulation); and

(iv) is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any Governmental Authority with respect to
unemployment compensation benefits, social security or other benefits or
obligations for employees of Seller (other than routine payments to be made in
the normal course of business and consistent with past practice).

(c) Seller, ELRH and ELRH II each is not delinquent in any payments to any of
its employees for any wages, salaries, commissions, bonuses, severance,
termination pay or other compensation for any services performed for it to the
date hereof or amounts required to be reimbursed to such employees.

(d) There are no actions by any Employee or former employee pending or, to the
Knowledge of Seller, threatened in writing against Seller, ELRH or ELRH II.

(e) There is no litigation, grievance, arbitration proceeding, administrative
proceeding, governmental investigation, citation, consent decree, conciliation
agreement, audit or action of any kind pending or, to the Knowledge of Seller,
threatened relating to employment, employment practices, labor relations and
employee benefits, terms and conditions of employment or wages and hours.

(f) Seller, ELRH and ELRH II each is not a party to any collective bargaining
agreement or other labor union agreement nor, to the Knowledge of Seller, are
there pending any union organizational activities or proceedings.

(g) None of the Employees is represented by any union or organization.

(h) There is no unfair labor practice complaint against Seller, ELRH or ELRH II
pending or, to the Knowledge of Seller, threatened to commence any unfair labor
practices complaint before the National Labor Relations Board or any other
Governmental Authority. There is no labor strike, dispute, walkout, lockout,
slowdown or stoppage pending or, to the Knowledge of Seller, threatened against
Seller, ELRH or ELRH II.

(i) There are no representation petitions or other similar petitions or requests
for representation pending, or to the Knowledge of Seller, proposed or
threatened, before the National Labor Relations Board or any other federal,
provincial, state or local agency in any jurisdiction or Governmental Entity in
connection with any Persons employed by Seller, ELRH or ELRH II.

 

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(j) The consummation of the transactions contemplated hereby shall not entitle
any employee of Seller, ELRH or ELRH II to (i) terminate his or her employment
or receive additional compensation in connection with such termination or
(ii) alter in any way their terms or conditions of employment.

(k) Seller, ELRH and ELRH II each has complied in all material respects with the
requirements of the Immigration Reform and Control Act of 1986, as amended, and
all related regulations and all executive orders in effect regarding the
employment in the U.S. of persons who are not citizens of the U.S.
Schedule 5.17(k) of the Disclosure Schedules (i) contains a list of each
employee of Seller working in the U.S. who is not a U.S. citizen and
(ii) describes for each the authorization under which the employee is permitted
to work in the U.S.

(l) None of Seller, ELRH nor ELRH has implemented any plant closing or mass
layoff of employees that could implicate (i) the Worker Adjustment and
Retraining Notification Act of 1988, as amended, or any similar Law (including
without limitation similar state and local laws), or (ii) any labor notice,
bargaining obligation or consultation requirement of any Law or labor agreement.

(m) No Person classified as of the date hereof by Seller, ELRH or ELRH II as an
independent contractor or other non-employee status would be deemed an employee
or common-law employee under any Employee Plan or applicable federal or state
laws. None of Seller, ELRH or ELRH II has received any claim from any Person or
Governmental Authority to the effect that it has improperly classified any
Person as an independent contractor or other non-employee status, and to the
Knowledge of the Seller, there is no basis for any such claim.

Section 5.18 Employees and Employee Benefit Plans.

(a) Schedule 5.18(a) sets forth a complete list of (i) all “employee benefit
plans,” as defined in Section 3(3) of ERISA, (ii) all other severance pay,
salary continuation, bonus, incentive, stock option, or other equity,
retirement, pension, profit sharing, welfare, fringe benefit, accrued paid time
off (listed by employee), or deferred compensation plans, contracts, programs,
funds, or arrangements of any kind, and (iii) all other employee benefit plans,
contracts, programs, funds, or arrangements (whether written or oral, qualified
or nonqualified, funded or unfunded, foreign or domestic, currently effective or
terminated) and any trust, escrow, or similar agreement related thereto,
providing benefits, compensation or other remuneration to any Employees or
former employees, directors, officers, shareholders, members, managers,
consultants, or independent contractors of Seller, ELRH, ELRH II or any ERISA
Affiliate, or any dependent or beneficiary thereof, or to which Seller, ELRH,
ELRH II or any ERISA Affiliate has made or is required to make payments,
transfers, or contributions, or has any liability (all of the above being
hereinafter individually or collectively referred to as “Employee Plan” or
“Employee Plans,” respectively). Seller and ELRH each has no liability with
respect to any plan, arrangement or practice of the type described in the
preceding sentence other than the Employee Plans, and neither Buyer nor any
affiliate of Buyer shall have any liability or obligation with respect to any of
the Employee Plans as a result of this transaction.

(b) Buyer is not adopting, assuming or otherwise becoming responsible for,
either primarily or as a successor employer or otherwise, and shall have no
liability whatsoever with respect to, any Employee Plans and the Seller, ELRH,
ELRH II or an ERISA Affiliate shall remain liable for all such

 

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liabilities, regardless of when and how any such liabilities arose, and
regardless of whether any such liability may result in, or has resulted in, a
claim upon the Purchased Assets. The preceding sentence applies to any liability
with respect to an Employee Plan, regardless of whether such liability involves
employees of the Seller, ELRH, ELRH II or an ERISA Affiliate, and regardless of
when or how such liability arises (whether on, before or after the Closing).
Additionally, Seller, and ELRH II each agrees not to assert that the Buyer is a
successor employer of Seller, ELRH, ELRH II or any ERISA Affiliate. Consistent
with the foregoing, the Buyer shall not assume any liability for any group
health continuation coverage or coverage rights under Section 4980B of the Code
or Part 6 of Title I of ERISA applicable to, or arising with respect to, any
group health plan sponsored and/or maintained by the Seller, ELRH, ELRH II or
any ERISA Affiliate at any time prior to, on or after the Closing. ELRH II or an
ERISA Affiliate shall provide all COBRA continuation coverage and rights
associated therewith to all Persons who are “M&A Qualified Beneficiaries”
(within the meaning of Treas. Reg. §1.4980B-9, Q&A-4) with respect to the
transaction contemplated by this Agreement.

(c) True and complete copies of the following materials have been delivered or
made available to Buyer: (i) the plan documents for each Employee Plan and all
amendments thereto, (ii) all determination letters from the IRS with respect to
each Employee Plan intended to be qualified under Section 401(a) of the Code,
(iii) all current and prior summary plan descriptions, summaries of material
modifications, annual reports, summary annual reports, and any other documents
used to communicate the Employee Plans to employees, (iv) all trust agreements,
insurance contracts, and other documents relating to the funding or payment of
benefits under any Assumed Plan, (v) all documents, including without
limitations, Form 5500, relating to any Employee Plan required to have been
filed prior to the date hereof with respect to each Employee Plan, (vi) any
communication, opinion, ruling or determination from any Governmental Authority,
including the IRS, Department of Labor, or Pension Benefit Guaranty Corporation
with respect to any Employee Plan, (vii) financial statements and actuarial
reports, if any, for each Employee Plan for the three most recently completed
plan years, and (viii) any other documents, forms or other instruments relating
to any Employee Plan reasonably requested by Buyer.

(d) Each Employee Plan has, in all respects, been maintained, operated, and
administered in compliance with its terms and any related documents or
agreements and in compliance with all applicable Laws.

(e) Each Employee Plan intended to be qualified under Section 401(a) of the Code
is so qualified and has received a favorable determination letter from the IRS
as to the qualification and the tax exempt status of each trust thereunder, and
such determination letter remains in effect and has not been revoked. Nothing
has occurred that could reasonably be expected to result in the loss of the
qualification of any such Employee Plan or trust under Section 401(a) or 501(a)
of the Code.

(f) None of Seller, ELRH, ELRH II or any ERISA Affiliate currently has and at no
time in the past has had an obligation to contribute to a “defined benefit plan”
as defined in Section 3(35) of ERISA, a pension plan subject to the funding
standards of Section 302 of ERISA or Section 412 or 426 of the Code, a
“multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of
the Code, or a “multiple employer plan” within the meaning of Section 210(a) of
ERISA or Section 413(c) of the Code.

 

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(g) With respect to each Employee Plan that is a group health plan benefitting
any current or former employee of Seller, ELRH or any ERISA Affiliate that is
subject to Section 4980B of the Code, or was subject to Section 162(k) of the
Code, Seller and each ERISA Affiliate has complied, in all material respects,
with (i) the continuation coverage requirements of Section 4980B of the Code and
Section 162(k) of the Code, as applicable, and Part 6 of Subtitle B of Title I
of ERISA and (ii) the Health Insurance Portability and Accountability Act of
1996, as amended.

(h) No Employee Plan provides benefits, including death or medical benefits,
beyond termination of service or retirement other than retirement benefits under
a pension plan, or continuation healthcare coverage mandated by Law. Neither the
Seller nor any ERISA Affiliate has any liability (and to the Knowledge of
Seller, neither the Seller nor any ERISA Affiliate has been threatened with any
liability) for any excise tax imposed under Chapter 43 of the Code or any fine
under Section 502 of ERISA.

(i) Neither the Seller nor any Affiliates of Seller or ELRH II has any
obligation to reimburse, pay or make whole any Person for adverse tax
consequences or any related costs (including interest, penalties or additional
excise taxes), including consequences or costs arising under Section 409A,
Section 280G or Section 4999 of the Code relating to any payment made, provision
of, omission from or operation of any Employee Plan.

(j) Each Employee Plan that is subject to Section 409A of the Code complies in
form and in operation with paragraphs (2), (3) and (4) of Code Section 409A.

(k) Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereunder, will, either alone or together with
some other event, (i) result in any material payment (including severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director, officer or any employee under any Employee Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Employee Plan,
or (iii) result in any acceleration of the time of payment or vesting of any
such benefits to any material extent.

Section 5.19 Environmental Matters.

(a) Seller, ELRH and ELRH II each is, and for the past five (5) years, has been,
in compliance with all applicable Environmental Laws.

(b) Seller, ELRH and ELRH II each has not received written notice of any
alleged, actual or potential responsibility for, or any inquiry or investigation
regarding, and there has not been, (i) any Release or, to the Knowledge of
Seller, threatened Release of any Hazardous Substance at or affecting any real
property occupied or managed by Seller or ELRH II or (ii) any alleged violation
of or non-compliance with any Environmental Law by Seller or ELRH II or the
conditions of any Permit required under any Environmental Law for any property
occupied or managed by Seller or ELRH II. Seller, ELRH and ELRH II each is not
subject to any order of a Governmental Authority related to any real property
occupied or managed by Seller or ELRH II nor has Seller, ELRH or ELRH II
received written notice of any claim or action by any Person against Seller or
ELRH II alleging injury or damage to any Person, property, natural resource or
the environment arising from or relating to any Release or threatened Release of
any Hazardous Substances from any real property occupied or managed by Seller.

(c) There are no (i) reports submitted by Seller or ELRH II or, to the Knowledge
of Seller, any of their respective Affiliates, to any Governmental Authority
with respect to any Hazardous Substance contamination or Release (or clean-up
thereof) at any real property occupied or managed by Seller, (ii) reports
resulting from any environmental or safety inspection or assessment at any real
property occupied or managed by Seller, that have been performed by (A) Seller,
ELRH or ELRH II or, to the Knowledge of Seller, any of their respective
Affiliates or (B) any other Person and provided to Seller, ELRH or ELRH II or,
to the Knowledge of Seller, any of their respective Affiliates.

 

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Section 5.20 Absence of Certain Commercial Practices. Except in compliance with
applicable Law, Seller and ELRH II each has made all payments to any non-U.S.
Person by check mailed to such non-U.S. Person’s principal place of business or
by wire transfer to a bank located in the same jurisdiction as such non-U.S.
Person’s principal place of business.

Section 5.21 Taxes.

(a) All Tax Returns with respect to Seller, ELRH and ELRH II and their
respective assets that are required to have been filed in any jurisdiction have
been timely filed and accurately prepared, and all Taxes shown to have been due
and payable on such Tax Returns have been paid or set aside in accounts for
payment, or accrued or reserved in cash for such payments on its books and
records of Seller, ELRH or ELRH II, and Seller, ELRH and ELRH II each is not
presently under audit by any Governmental Authority with respect to any such
Taxes.

(b) (i) Accurate and complete copies of all of the Tax Returns of Seller for all
periods for which the applicable statute of limitations remains open have been
made available to Buyer, except for those periods for which returns are not yet
due, and (ii) Seller, ELRH and ELRH II each has not received any written notice
of any Tax deficiency outstanding, proposed or assessed against or allocable to
it, and has not executed any waiver of any statute of limitations on the
assessment or collection of any Tax or executed or filed with any Governmental
Authority any contract now in effect extending the period for assessment or
collection of any Taxes against it.

(c) (i) There are no Liens for Taxes upon, pending against or, to the Knowledge
of Seller, threatened against, any of the Purchased Assets, except for Permitted
Liens, and (ii) Seller and ELRH II each is not subject to any Tax allocation or
sharing contract.

(d) (i) Seller has, since the date of its formation, been treated as a
disregarded entity for federal income tax purposes and (ii) none of Seller, ELRH
II, or any of their respective Affiliates or any Governmental Authority has
taken a contrary position.

(e) Seller (A) has not been a member of an affiliated group filing a
consolidated Tax Return; or (B) has no liability for Taxes of any Person under
Treas. Reg. Section 1.1502-6 (or similar provision of state, local or non-US
law) as a transferee or successor by contract or otherwise.

(f) None of Seller, ELRH or ELRH II has been a party to any “listed transaction”
or “transaction of interest” as defined in Code Section 6706(A)(c)(2) and the
regulations promulgated thereunder.

 

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Section 5.22 Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement, (a) the amount of the Fair Value of the assets
of Seller and ELRH II will, as of such date, exceed the amount of all
liabilities of the Seller and ELRH II, respectively, contingent or otherwise, as
of such date, (b) Seller’s Liabilities and ELRH II’s Liabilities, respectively,
will not be beyond the respective ability to pay as such debts mature, and
(c) Seller and ELRH II will not have, as of such dates, an unreasonably small
amount of capital with which to conduct its respective business or an
unreasonably small amount of assets in relation to its respective future
business. For purposes of this Section 5.22, “Fair Value” means the amount for
which the assets of Seller or ELRH II, as applicable, might be expected to be
sold to a willing buyer by a willing seller, neither being under compulsion,
each having reasonable knowledge of all relevant facts, with equity to both,
with no definite time period required to consummate the sale, and with buyer and
seller contemplating the retention of the facilities at their present location
for continuation of current operations; “Liabilities” means “liability on a
claim,” and “claim” means (i) any right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured and
(ii) any right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, secured or unsecured.

Section 5.23 Information Furnished. Seller has made available to Buyer true and
complete copies of all material corporate records of Seller, ELRH and ELRH II
relevant to the Business and the Purchased Assets and all Assumed Contracts and
other items listed on the Seller Representation Schedules to this Agreement or
referred to in Article V hereof, and neither this Agreement nor the Seller
Representation Schedules hereto, nor any written information, instrument or
document delivered to Buyer pursuant to this Agreement contains any untrue
statement of a material fact or omits any material fact necessary to make the
statements herein or therein, as the case may be, not misleading.

Section 5.24 Affiliated Transactions. Except as set forth on Schedule 5.24, no
officer, manager or owner of Seller, ELRH and/or ELRH II and no Affiliate of any
such Person, and to Seller’s Knowledge no individual related by blood or
marriage to any such Person, is a party to any agreement, contract, arrangement
or commitment with Seller, ELRH or ELRH II or engaged in any transaction with
Seller, ELRH or ELRH II or has any interest in any property used in the
operation of the Business, other than as a result of such Person’s ownership
interests in Seller, ELRH or ELRH II. To Seller’s Knowledge, no officer, manager
or owner of Seller, ELRH or ELRH II, and no Affiliate of any such Person, and no
individual related by blood or marriage to any such Person, has an ownership
interest in any competitor, supplier or customer of Seller, ELRH II or the
Business (other than ownership of securities of a publicly-held corporation of
which such Person owns, or has real or contingent rights to own, less than ten
percent (10%) of any class of outstanding securities) or any property used in
the operation of the Business.

Section 5.25 Investment and Securities Matters.

(a) Seller, ELRH, ELRH II, and their respective Affiliates each acknowledges and
understands that (i) the issuance of the Restricted Units will not be registered
under the Securities Act or any other applicable Securities Laws; (ii) the
issuance of the Restricted Units is intended to be exempt from registration
under the Securities Act and any other applicable Securities Laws by virtue of
certain exemptions thereunder, including Section 4(2) of the Securities Act
promulgated thereunder, and, therefore, except as provided in Section 9.10

 

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hereof, the Restricted Units cannot be resold or otherwise transferred unless
registered under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the “Securities Act”), as amended and any
other applicable Securities Laws or unless an exemption from registration is
available.

(b) Seller, ELRH, ELRH II, and their respective Affiliates each acknowledges
that Buyer and its advisors will rely on the representations and warranties of
Seller, ELRH and ELRH II contained in this Section 5.26 for purposes of
determining whether the issuance of the Restricted Units is exempt from
registration under the Securities Act and any other applicable Securities Laws.

(c) Seller, ELRH, ELRH II and their respective Affiliates each understands that
the Restricted Units will be characterized as “restricted securities” under the
Securities Act. Seller, ELRH and ELRH II each represents that such entity is
familiar with Rule 144 promulgated under the Securities Act.

(d) Except as set forth in Section 9.10, ELRH II is acquiring the Restricted
Units, including those pursuant to Section 3.03, and ELRH is acquiring the
Restricted Units pursuant to Section 3.04, solely for its own account for
investment purposes and not with a view toward any distribution, except as
permitted under applicable Securities Laws.

(e) Seller, ELRH and ELRH II each has reviewed the publicly filed documents of
LATA, of which Buyer is the operating partnership, and has been afforded an
opportunity to ask questions regarding the same.

(f) Seller, ELRH and ELRH II each (i) has the financial ability to bear the
economic risk of the investment in the Restricted Units, (ii) has adequate means
for providing for its current needs and contingencies, (iii) has no need for
liquidity with respect to the investment in the Restricted Units, and (iv) can
afford a complete loss of the investment in the Restricted Units at this time
and in the foreseeable future.

(g) Seller, ELRH, ELRH II, and their respective Affiliates each has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Restricted Units and of
making an informed investment decision with respect thereto.

(h) Seller, ELRH and ELRH II each is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller, ELRH and ELRH II as follows:

Section 6.01 Organization. Buyer is a limited partnership duly formed, validly
existing and in good standing under the laws of the Commonwealth of Virginia.

Section 6.02 Authorization. Buyer has all requisite limited liability power and
authority (a) to make, execute, deliver and perform this Agreement and the other
Buyer Transaction Documents and (b) to perform its obligations hereunder and
there under and to

 

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consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the other Buyer Transaction
Documents have been duly and validly authorized by all necessary corporate
action on the part of Buyer. This Agreement constitutes, and when executed and
delivered the other Buyer Transaction Documents will constitute, the valid and
legally binding obligation of Buyer, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency and similar Laws affecting creditors’ rights generally
and general principles of equity (whether considered in equity or at law).

Section 6.03 Non-Contravention. Neither the execution or delivery of this
Agreement or any of the other Buyer Transaction Documents by Buyer, and
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof by Buyer, will (a) result in a violation of, in any material respect,
any applicable Law, (b) conflict with, or result in any violation of, or any
default (with or without notice or lapse of time, or both) under, any provision
of its Governing Documents or (c) result in any violation or breach of, result
in any default (with or without notice or lapse of time, or both) under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice or consent under, any material Contract
to which Buyer, is a party or by which it is bound.

Section 6.04 No Consents. No authorization, consent, approval or other action
by, or notice to or filing with, any Person is required for the execution,
delivery, performance or consummation of the transactions contemplated by this
Agreement or any other Buyer Transaction Documents by Buyer.

Section 6.05 No Brokers. Except as disclosed on Schedule 6.05, no agent, broker,
investment banker, financial advisor or other Person is or will be entitled to
any brokers’ or finder’s fee or any other commission or similar fee from Buyer
or any Affiliate in connection with the transactions contemplated by this
Agreement.

Section 6.06 Litigation. There is no action, lawsuit, proceeding, claim, or
legal, administrative, arbitration or governmental investigation pending or, to
the knowledge of Buyer, threatened, against Buyer or otherwise with respect to
this Agreement or the transactions contemplated hereby, including any such
action which questions the validity or legality of, or is otherwise related to,
the transactions contemplated hereby.

ARTICLE VII

COVENANTS

Section 7.01 Access to Information. Subject to any confidentiality obligations
in existence on the date of this Agreement, prior to the first anniversary of
this Agreement, Buyer may make such reasonable investigation of Seller and ELRH
II related to the Business, and the Managed Properties as Buyer may reasonably
request. Seller and ELRH II shall give to Buyer and its key employees, counsel,
financial advisors, accountants and other representatives reasonable access, on
reasonable notice during normal business hours throughout such period to the
offices of Seller, ELRH II and the Managed Properties and to the Books and
Records of Seller, as Buyer may reasonably request. Buyer shall hold, and cause
its employees and representatives to hold, all information and documents
received pursuant to this Section 7.01 confidential.

 

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Section 7.02 Conduct of Business Pending the Closing Date. From and after the
date hereof, until the earlier of the Closing and the termination of this
Agreement, except as otherwise expressly permitted by this Agreement or
consented to by Buyer in writing, Seller, ELRH and ELRH II shall, and to the
extent applicable to the Purchased Assets or the Business, cause its Affiliates
to:

(a) operate the business and affairs of Seller, ELRH and ELRH II in the Ordinary
Course of Business and maintain the Purchased Assets in compliance in all
material respects with all applicable Laws;

(b) keep full, complete and accurate Books and Records;

(c) maintain its existence and maintain Seller’s, ELRH’s and ELRH II’s good
standing in its jurisdiction of organization;

(d) maintain the general character of the Purchased Assets in the ordinary and
usual manner;

(e) maintain all material Permits required to be held by Seller, ELRH and ELRH
II and timely file all reports, statements, renewal applications and other
filings, and timely pay all fees and charges in connection therewith that are
required to keep such Permits in full force and effect;

(f) maintain in full force and effect substantially the same Insurance Policies
now in effect with respect to the Purchased Assets, and, if applicable, renew or
replace such Insurance Policies with coverage no less favorable to Seller, ELRH
and ELRH II;

(g) comply in all material respects with all Environmental Laws applicable to
the operation of Seller, ELRH and ELRH II, the Business or the operation of the
Purchased Assets, the leasing of the Jupiter Office Lease and the Tampa Office
Lease and the management of the Managed Properties;

(h) ensure that all obligations of Seller, ELRH and ELRH II and their respective
Affiliates required to be performed under the Jupiter Office Lease, the Tampa
Office Lease and the Assumed Contracts are satisfied in all material respects;

(i) notify Buyer in writing (as promptly as practicable) in the event that it
becomes aware of any material change with respect to any Purchased Asset,
Assumed Liability or Managed Property;

(j) duly and timely file or cause to be filed Tax Returns and all other material
reports and returns required to be filed with any Governmental Authority and
promptly pay or cause to be paid when due all Taxes and other material
assessments and governmental charges, including interest and penalties levied or
assessed, unless contested in good faith by appropriate proceedings; and

(k) take no action which materially adversely affects the ability of any party
to (i) obtain the consents required pursuant to Section 5.06(a), or (ii) perform
its covenants and agreements under this Agreement; and

(l) continue to pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts (unless such discount is
consented to by the applicable counter party).

 

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Section 7.03 Prohibited Actions Pending the Closing Date. Unless (i) otherwise
expressly provided for herein, (ii) necessary to effect the transactions
contemplated herein, or (iii) approved by Buyer in writing from the date of this
Agreement until the earlier of the Closing or the termination of this Agreement,
Seller, ELRH and ELRH II each shall not, and where applicable, cause its
Affiliates to not:

(a) interfere with or disrupt Seller’s, ELRH’s or ELRH II’s relationship with
any owner or lessee of any of the Managed Properties or the lessor under the
Jupiter Office Lease or the Tampa Office Lease;

(b) remove any Tangible Personal Property included in the Purchased Assets from
the leased premises under the Jupiter Office Lease, the Tampa Office Lease or
any Managed Property;

(c) renew, extend, terminate, modify or waive, in each case, in any material
respect, any term or condition of any Assumed Contract, or enter into any new
real property lease or Assumed Contract;

(d) make any capital improvements to the leased premises under the Jupiter
Office Lease and the Tampa Office Lease;

(e) make any commitments or representations to any applicable Governmental
Authority that would in any manner be binding upon Buyer or the Purchased
Assets;

(f) sell, transfer, assign, pledge, ground lease or otherwise dispose of, or
agree to sell, transfer, assign, pledge, ground lease or dispose of any
Purchased Asset;

(g) solicit, pursue, negotiate, work or consult with any other party with
respect to (x) any possible sale, lease or transfer of any of the Purchased
Assets, (y) any possible sale or other transfer of any direct or indirect
ownership interests in Seller, or (z) any financing secured by any of the
Purchased Assets; and

(h) execute any agreements relating to or enter into any transaction described
in clause (g) above;

(i) take any action prior to the Closing outside of the Ordinary Course of
Business;

(j) permit any of the Purchased Assets to become encumbered by any additional
indebtedness for borrowed money;

(k) create, permit or grant any new Liens on any Purchased Asset or Managed
Property (other than Permitted Liens);

(l) modify, amend or supplement, in each case, in any material respect, the
terms or conditions of, or terminate, any of the Assumed Contracts;

 

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(m) issue, deliver, transfer, license, pledge, encumber, sell, dispose of, or
grant any option or other right in respect of, any ownership interest in any
Purchased Asset;

(n) dispose of or permit to lapse any right to the use of any material patent,
trademark, trade name, service mark, license or copyright of Seller, ELRH or
ELRH II (including any of the Intellectual Property), or dispose of or disclose
to any Person (other than customers, licensors and suppliers in the Ordinary
Course of Business that are contractually bound to maintain the confidentiality
thereof), any trade secret, formula, process, technology or know-how of Seller,
ELRH or ELRH II not heretofore a matter of public knowledge;

(o) increase in any manner the base compensation of, or enter into any new
bonus, incentive or other compensation agreement or arrangement with, any of its
employees, officers, directors, third party contractors or consultants, except
modifications to the base compensation of an employee (other than an officer or
director) that are made in the ordinary course of business and consistent with
past practices;

(p) other than vesting eligibility requirements that change or come into effect
with the passage of time pursuant to the terms of existing Employee Plans, pay
or agree to pay any additional pension, retirement allowance or other employee
benefit under any Employee Plan to any of its Employees, except as may be
required by the terms of any applicable plan or agreement in effect prior to the
Effective Date or except as required by applicable Law;

(q) adopt, amend or terminate any Benefit Plan, which results in additional
payments or benefits provided by Seller, ELRH or ELRH II or materially increase
the benefits provided under any Benefit Plan applicable to and having a material
effect on Seller, ELRH or ELRH II, or promise or commit to undertake any of the
foregoing in the future;

(r) amend or terminate any existing employment agreement or enter into any new
employment agreement, except as required by the terms of any such agreement in
effect prior to the date hereof or as otherwise contemplated herein;

(s) modify or amend any Governance Document of Seller, ELRH or ELRH II;

(t) initiate or settle any lawsuit or other similar proceeding before any
Governmental Authority or any arbitration panel involving the Purchased Assets
without the prior written consent of Buyer;

(u) liquidate or terminate its existence;

(v) except for multifamily residential projects, create any Subsidiary to
acquire any capital stock or other equity securities of any corporation or
acquire any equity or ownership interest in any business or entity;

(w) directly or indirectly, solicit, encourage, or induce, or attempt to
solicit, encourage, or induce (i) any employee of Seller, ELRH or ELRH II to
leave the employ of Seller, ELRH or ELRH II or (ii) any independent contractor
of Seller, ELRH or ELRH II to cease performing services for the benefit of
Seller, ELRH or ELRH II;

(x) make or change any Tax election, change any annual accounting period, adopt
or change any accounting method, file an amended Tax Return, enter into any
closing

 

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agreement, waive or extend any statute of limitations with respect to Taxes,
settle or compromise any Tax liability, claim or assessment, or take any other
similar action relating to the filing of any Tax Return or the payment of any
Tax affecting Seller, ELRH or ELRH II; or

(y) take any action that would materially and adversely affect the ability of
the parties to consummate the transactions contemplated hereunder.

Notwithstanding the foregoing, Seller, ELRH and ELRH II may permit the Israel
Discount Bank of New York to place Liens upon their assets, provided such Liens
are removed as liens against the Purchased Assets at or prior to Closing.

Nothing contained in this Agreement shall give Buyer, directly or indirectly,
rights to control or direct Seller’s, ELRH’s or ELRH II’s operations prior to
the Closing Date.

Section 7.04 Insurance Policies. Seller, ELRH and ELRH II each shall, at its
expense, keep in full force and effect through the Closing, coverage under the
Insurance Policies that insure the Purchased Assets on the terms existing as at
the date hereof, other than changes in the premiums on any such Insurance
Policies that arise in the Ordinary Course of Business in connection with any
renewal or replacement of any such Insurance Policy.

Section 7.05 Consents and Post-Closing Obligations.

(a) Seller, ELRH and ELRH II shall use their commercially reasonable efforts and
promptly make all filings with, provide notices to, obtain all consents,
waivers, approvals, authorizations and permits that is required or reasonably
appropriate in connection with the consummation of the transactions contemplated
hereby, including, without limitation, (i) those to be made with, provided to or
obtained from any Governmental Authority and (ii) those to be made with,
provided to or obtained from any party to any Contract as set forth on Schedule
5.06(a); and

(b) Seller, ELRH and ELRH II shall use their commercially reasonable efforts and
shall promptly transfer to Buyer, all assets used in, or necessary for the
operation of the Business.

Section 7.06 Other Action. Each of the Seller, ELRH and ELRH II shall, at the
earliest practicable date, use its commercially reasonable efforts to take or
cause to be taken all things necessary, under applicable Laws and to cause the
fulfillment of all of the conditions to its obligations to consummate the
transactions contemplated by this Agreement, including preparing and filing all
forms, registrations, requests and notices required to obtain any requisite
consent by any third party or Governmental Authority.

Section 7.07 Further Assurances. Following the Closing, Buyer, Seller, ELRH and
ELRH II shall, from time to time, at the request of any other Party hereto and
without further cost or expense to the requesting Party, do and perform, or
cause to be done and performed, all further acts and things and shall execute
and deliver all further agreements, certificates, instruments and documents as
any other Party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement or any of the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby. If any Party hereto receives payments from any Person to which another
Party is entitled, such receiving Party shall remit such amount to the
appropriate Party as promptly as practicable.

 

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Section 7.08 Publicity; Disclosure. Except as may be required by Law or by the
applicable laws of the country of Israel, or by the rules of any applicable
securities law or rule, neither Seller, ELRH, ELRH II, or their respective
Affiliates on the one hand, or Buyer on the other hand, may issue any press
release or other public announcement relating to the subject matter of this
Agreement or any of the other Transaction Documents without the prior written
approval of the other.

Section 7.09 Non-Solicitation and Confidentiality.

(a) In furtherance of the consideration being paid by Buyer to Seller, ELRH and
ELRH II hereunder, Seller, ELRH and ELRH II agree, on behalf of itself and its
Affiliates, that, during the period beginning on the Closing Date and ending on
the third (3rd) anniversary of the Closing Date (such period, the “Restricted
Period”), none of Seller, ELRH or ELRH II, nor any of their respective
Affiliates shall, directly or indirectly, during the Restricted Period do any of
the following: (i) solicit the employment of or hire any employee of Buyer as of
and immediately after the Closing (or any employee who was employed by Buyer for
any type of employment within the eighteen (18) month period prior to the
Closing Date) without the prior written consent of Buyer; provided, however,
that nothing herein shall prohibit Seller, ELRH, ELRH II or any of their
respective Affiliates from (A) making general solicitation advertisements that
are not targeted at such employees, (B) hiring any such employee who contacts
Seller, ELRH, ELRH II or any of their respective Affiliates on his or her own
accord or (C) soliciting or hiring any such employee whose employment with
Seller, ELRH or ELRH II is terminated or who does not accept Buyer’s offer of
employment pursuant to Section 7.10; (ii) call on, solicit, or service any
supplier, prospective supplier, licensee, licensor, or other business relation
of Seller, ELRH or ELRH II with respect to products or services currently
provided by the Business in order to influence or induce or attempt to influence
or induce such Person to decrease or cease doing business with the Seller, ELRH
or ELRH II; (iii) make any statement or do any act intended to cause existing
customers of Seller, ELRH or ELRH II to make use of the services or purchase the
services or products of any competitive business; or (iv) induce or attempt to
induce any employee of Seller, ELRH or ELRH II to leave his or her employ or in
any way interfere with the relationship between Seller, ELRH or ELRH II and
their employees; provided, however, that nothing herein shall prohibit Seller,
ELRH, ELRH II or any of their respective Affiliates from (x) making general
solicitation advertisements that are not targeted at such employees, (y) hiring
any such employee who contacts Seller, ELRH, ELRH II or any of their respective
Affiliates on his or her own accord or (z) soliciting or hiring any such
employee whose employment with Buyer is terminated or who does not accept
Buyer’s offer of employment pursuant to Section 7.10.

(b) Seller, ELRH and ELRH II, on behalf of itself and its Affiliates,
acknowledges and agrees that the length of the non-solicitation period is
reasonable and narrowly drawn to impose no greater restraint than is necessary
to protect the goodwill of Buyer and to protect Buyer’s legitimate ownership
interest in the Business. Seller, ELRH and ELRH II, on behalf of itself and its
Affiliates, considers the provisions of this Section 7.09 to be fair and
reasonable in order to protect the legitimate business interests of Buyer.

(c) If Seller, ELRH, ELRH II or any Affiliate of Seller, ELRH or ELRH II
breaches or threatens to commit a breach of any of the restrictive covenants set
forth in this Section 7.09, then Buyer shall have the following rights and
remedies against Seller, ELRH, ELRH II or such Affiliate, as applicable, which
are in addition to, and not in lieu of, any other rights and remedies otherwise
available to Buyer at Law or in equity for Seller’s, ELRH’s or ELRH II’s, or
such Affiliate’s, as applicable, and notwithstanding anything to the contrary
herein, shall not be limited to the remedies set forth in Article IX, actions:

(i) the right and remedy to have the restrictive covenants in this Section 7.09
specifically enforced against Seller, ELRH, ELRH II or its Affiliates, including
temporary restraining orders and injunctions by any court of competent
jurisdiction, it being agreed by Seller, ELRH and ELRH II, on behalf of itself
and its Affiliates that any breach or threatened breach by Seller, ELRH or ELRH
II or any of their respective Affiliates of this Section 7.09 would cause
irreparable injury to Buyer and that money damages would not provide an adequate
remedy to Buyer;

 

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(ii) the right and remedy to require Seller, ELRH, ELRH II or their respective
Affiliates to account for and pay over to Buyer any monies and benefits derived
or received directly or indirectly by it, from any transaction constituting a
breach of this Section 7.09; and

(iii) the right and remedy to collect from Seller, ELRH and ELRH II any
reasonable out-of-pocket costs and fees of incurred in enforcing this
Section 7.09, including reasonable attorneys’ fees.

(d) Seller, ELRH and ELRH II each shall be responsible for any breach of this
Section 7.09 by any of its Affiliates.

(e) For a period of three (3) years after the Closing Date, Seller, ELRH and
ELRH II shall not disclose to any third parties any Confidential Information
relating to the Purchased Assets; provided, that Seller, ELRH and ELRH II may
disclose Confidential Information (i) that becomes publicly available through no
fault of Seller or its Affiliates, (ii) to the extent that the furnishing or use
thereof is required by legal proceedings; provided, however, that Seller, ELRH
and ELRH II shall promptly notify Buyer to permit Buyer to seek a protective
order or take other appropriate action, or (iii) to such Seller’s legal,
financial and Tax advisors.

(f) It is the desired intent of Buyer, Seller, ELRH and ELRH II that the
foregoing provisions of this Section 7.09 shall be enforced to the fullest
extent permissible in each jurisdiction in which enforcement is sought.
Accordingly, Buyer, Seller, ELRH and ELRH II agree that if the covenants set
forth in this Section 7.09 are deemed by any court or arbitrator to be invalid
or unenforceable in any jurisdiction, the court or arbitrator may reduce the
scope thereof or otherwise amend or reform the portion thus adjudicated to be
invalid or unenforceable, such reduction, amendment or reformation to apply only
with respect to the particular jurisdiction in which such adjudication is made.
Seller, ELRH and ELRH II acknowledge that Buyer has no adequate remedy at law
for any breach or any threatened or attempted breach by Seller, ELRH and ELRH II
of the covenants and agreements set forth in this Section 7.09 and, accordingly,
Seller, ELRH and ELRH II agrees that Buyer shall, in addition to the other
remedies that may be available to it hereunder or at Law, be entitled to
commence proceedings in equity and obtain an injunction temporarily or
permanently enjoining Seller, ELRH and ELRH II from breaching or threatening or
attempting any such breach of such covenants and agreements and to require
compliance by Seller, ELRH and ELRH II with such covenants and agreements. For
purposes of any such proceeding in equity, it shall be presumed that the
remedies at Law available to Buyer would be inadequate, and that Buyer would
suffer irreparable harm as a result of the violation of any provision of this
Section 7.09.

 

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Section 7.10 Employee Matters.

(a) Buyer, upon Closing, shall offer employment to each Employee, except where
any such offer would violate applicable Laws, including U.S. immigration Laws,
subject to the terms of the Sub-Manager Agreement. The terms of Buyer’s offers
of employment to Employees pursuant to Section 7.10 shall include compensation
and employee benefits as set forth on Schedule 7.10; provided, however, that,
except as contemplated by any Assumed Contracts, all employees who will be
executive officers of Buyer or LATA, each of whom shall report to the Chief
Executive Officer of LATA, shall require approval of the Board of Directors of
LATA. Nothing in this Section 7.10 or otherwise in this Agreement shall obligate
the Buyer to cause Buyer to continue any term or condition of employment or any
employee benefit plan, program or arrangement for any period of time or to
employ any Employee for any period of time. Seller, ELRH and ELRH II will upon
reasonable request by Buyer provide to Buyer all information regarding each
Employee as may be necessary for Buyer to satisfy the requirements of this
Section 7.10.

(b) Seller and ELRH II shall be solely responsible, and Buyer shall have no
liability whatsoever, for any compensation or other amounts payable to any
employee of Seller for any period relating to the service with Seller and ELRH
at any time prior to the Closing Date, including, without limitation, hourly
pay, commission, bonus, salary, accrued vacations, fringe, pension or profit
sharing benefits, or severance pay payable to any employee of Seller, other than
the Assumed Employee Liabilities.

(c) Except as contemplated by any Assumed Contract, this Section 7.10(a) is
solely for the purpose of defining the obligations between Buyer and Seller and
ELRH II concerning the employees of Seller and ELRH II, and will in no way
(i) be construed as creating any employment contract or right to employment for
any specified time, (ii) create any third-party beneficiary or other rights in
any employee or former employee (including any beneficiary or dependent thereof)
of Seller or ELRH II, its Affiliates or any other Person other than the parties
hereto and their respective successors and permitted assigns, or
(iii) constitute or be deemed to constitute an amendment to any employee benefit
plan sponsored or maintained by Seller, Buyer, ELRH II or any of their
Affiliates.

Section 7.11 Timbercreek Rights Arrangements. Pursuant to the assignment of the
Timbercreek Rights at Closing, Buyer will be entitled to receive all payments,
including without limitation, all fees (including without limitation Manager
Fees as defined in the Timbercreek Operating Agreement), expense reimbursements
and distributions, from Timbercreek Asset Management Inc. or any of its
affiliates, to which ELRH, ELRH II or Seller may be entitled under the
Timbercreek Operating Agreement, the Timbercreek Rights Subcontract and any
Timbercreek Property Management Agreements, including those listed on Schedule
5.14 or any other existing agreement with an affiliate of Timbercreek
(collectively, the “Timbercreek Management Agreements”). Pursuant, and subject,
to the Sub-Manager Agreement, Buyer (directly or through a wholly-owned
affiliate), will perform all the property management services required under the
Timbercreek Management Agreements in return for such assignment of such payment
rights from Timbercreek Asset Management Inc. and without any additional payment
therefor from ELRH, ELRH II or Seller. To the extent that the Timbercreek
Management Agreements require the performance of services other than property
management services, such as construction services related to capital projects,
acquisition services and asset management services, such services will continue
to be performed after Closing by ELRH II or an affiliate thereof. Seller, ELRH
and ELRH II covenant that Buyer shall

 

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receive the same fees, distributions and other payments hereunder related to the
Timbercreek Agreements, the Timbercreek Class A Units and the Timbercreek Class
B Units pursuant to this Agreements as it would have received if Buyer had
acquired all of the interests and rights of Seller, ELRH and ELRH II related to
the Timbercreek Agreements, the Timbercreek Class A Units and the Timbercreek
Class B Units as of the date hereof. None of Seller, ELRH or ELRH II, nor any of
their affiliates, will be entitled to any fees, distributions, reimbursements or
other payments pursuant to the Timbercreek Agreements, the Timbercreek Class A
Units or the Timbercreek Class B Units after the Closing Date.

ARTICLE VIII

CONDITIONS PRECEDENT

Section 8.01 Conditions Precedent To Buyer, Seller, ELRH and ELRH II. The
performance of the obligations of Buyer, ELRH , ELRH II and Seller at the
Closing is subject to the conditions that, prior to or simultaneously with the
Closing:

(a) all of the Transaction Documents shall have been executed and delivered by
the parties thereto and such parties shall have performed all obligations
required to be performed by this Agreement on or prior to the Closing;

(b) the Parties hereto shall have received any and all regulatory and
Governmental Authority consents required or necessary to effect the transactions
contemplated in this Agreement and the other Transaction Documents; and

(c) there shall not be any injunction, judgment, order, decree, ruling, or
charge in effect issued by any court of competent jurisdiction preventing
consummation of any of the transactions contemplated by this Agreement and there
shall not be pending or threatened by any Governmental Authority any action,
suit or proceeding (and there shall not be pending by any other Person any
action, suit or proceeding, which has a reasonable likelihood of success)
challenging or seeking to restrain or prohibit consummation of the transactions
contemplated to occur at the Closing.

Section 8.02 Conditions Precedent To Seller’s, ELRH’s and ELRH II’s Obligations.
The performance of the obligations of Seller, ELRH and ELRH II at the Closing is
subject to the conditions that, prior to or simultaneously with the Closing:

(a) the representations and warranties made by Buyer in this Agreement shall be
true in all material respects on and as of the Closing Date with the same effect
as though they were made on and as of the Closing Date (except to the extent
that any such item expressly relates to an earlier date, in which case such item
shall be true and correct on and as of such earlier date); and

(b) Buyer shall have performed and complied in all material respects with all
covenants, agreements and conditions contained in this Agreement that are
required to be performed or complied with by Buyer prior to or at the Closing
Date; provided, that all covenants, agreements and conditions that are qualified
by materiality shall have been performed and complied with in all respects.

 

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Section 8.03 Conditions Precedent To Buyer’s Obligations. The performance of the
obligations of Buyer at the Closing is subject to the conditions that, prior to
or simultaneously with the Closing:

(a) the representations and warranties made by Seller, ELRH and ELRH II in this
Agreement (i) that are qualified by materiality or Material Adverse Effect shall
be true and correct in all respects and (ii) that are not so qualified shall be
true in all material respects, in each case, on and as of the Closing Date with
the same effect as though they were made on and as of the Closing Date (except
to the extent that any such item expressly relates to an earlier date, in which
case such item shall be true and correct on and as of such earlier date);

(b) the Parties shall have received each of the consents listed on Schedule
8.03(b), including, without limitation, the IDB Consent and the Timbercreek
Consent;

(c) Seller, ELRH and ELRH II and their respective Affiliates shall have
performed and complied in all material respects with all covenants, agreements
and conditions contained in this Agreement that are required to be performed or
complied with by them prior to or at the Closing Date; provided, that all
covenants, agreements and conditions that are qualified by materiality shall
have been performed and complied with in all respects; and

(d) no fire, explosion, earthquake, disaster, accident, flood, drought, embargo,
riot, civil disturbance, uprising, activity of the armed forces or act of God or
public enemy or any other event or circumstance shall have occurred or been
threatened that, individually or in the aggregate with others, has resulted in
or would reasonably be expected to result in a Material Adverse Effect.

Section 8.04 Frustration of Closing Conditions. None of Buyer, Seller, ELRH or
ELRH II may rely on the failure of any condition set forth in Article VIII to be
satisfied if such failure was caused by its or its Affiliates’ failure to act in
good faith or to cooperate and use all commercially reasonable efforts to cause
the Closing to occur as required by this Agreement.

Section 8.05 Termination. Buyer and Seller may terminate this Agreement as
provided below:

(a) Buyer and Seller may terminate this Agreement by mutual written consent at
any time prior to the Closing;

(b) Buyer may terminate this Agreement by giving written notice to Seller at any
time prior to the Closing if the Closing has not occurred on or prior to the
Outside Date, by reason of the failure of any condition set forth in
Section 8.01 or Section 8.03 to have been satisfied; provided, that the right of
Buyer to terminate this Agreement under this Section 8.05(b) shall not be
available if Buyer has breached in any material respect any of its obligations
under this Agreement in a manner that has contributed to the failure to
consummate the Closing at or prior to such time; and

(c) Seller may terminate this Agreement by giving written notice to Buyer at any
time prior to the Closing if the Closing has not occurred on or prior to the
Outside Date, by reason of the failure of any condition set forth in
Section 8.01 or Section 8.02 to have been satisfied; provided, that the right of
Seller to terminate this Agreement under this Section

 

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8.05(c) shall not be available if Seller has breached in any material respect
its obligations under this Agreement in a manner that has contributed to the
failure to consummate the Closing at or prior to such time.

Section 8.06 Effect of Termination. If Buyer or Seller terminates this Agreement
pursuant to Section 8.05, all obligations and liabilities of the Parties under
this Agreement shall terminate and become void; provided, that (a) nothing
herein shall relieve any Party from liability for any breach of any
representation, warranty, covenant or agreement in this Agreement prior to the
date of termination and (b) Section 8.05, this Section 8.06, Article IX and
Article X shall remain in full force and effect and survive any termination of
this Agreement.

ARTICLE IX

SURVIVAL AND INDEMNIFICATION

Section 9.01 Survival. The representations, warranties, covenants and agreements
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing, and thereafter (a) the
representations and warranties contained in Sections 5.01, 5.02, 5.05, 5.14(c),
6.01, 6.02, and 6.05, shall not expire, (b) the representations and warranties
contained in Sections 5.17(a), 5.19, 5.20 and 5.21 shall survive for the statute
of limitations period applicable to the subject matter of such representations
and warranties (including any extensions, tolling or waivers thereof) plus 60
days, (c) the balance of the representations and warranties contained in
Article V shall survive for a period of eighteen (18) months after the Closing
Date. The covenants and agreements shall not expire except that those covenants
and agreements that by their terms are to be performed or complied with for a
shorter period of time shall survive only until the expiration of such shorter
time period. Any claim that has been asserted in accordance with Section 9.04
and that is pending on the date of the expiration of the applicable survival
period set forth in the immediately preceding sentence may continue to be
asserted and shall be indemnified against until fully and finally resolved.

Section 9.02 Indemnification of Buyer. Seller, ELRH and ELRH II, jointly and
severally, indemnify, defend and hold Buyer and its Affiliates and each of their
respective directors, officers, employees, agents, shareholders, members,
managers equity holders, partners, attorneys and agents (collectively, the
“Buyer Indemnified Parties”), harmless from and against (a) any and all Losses
incurred by any Buyer Indemnified Party arising out of, resulting from or
relating to any breach or inaccuracy of any of the representations and
warranties made by Seller, ELRH or ELRH II in this Agreement; (b) any failure of
Seller, ELRH or ELRH II or their respective Affiliates to carry out, perform,
satisfy and discharge any of their respective covenants, agreements,
undertakings, liabilities or obligations under this Agreement or any of the
agreements or instruments delivered by Seller or any of their respective
Affiliates pursuant to this Agreement; (c) any Losses incurred by any Buyer
(“Buyer Losses”) as a result of Seller, ELRH or ELRH II experiencing a
Bankruptcy Event, including but not limited to, Losses incurred as a result of a
rejection of this Agreement by any court of competent jurisdiction as a result
of a Bankruptcy Event or any third party claims alleging this Agreement
constitutes a fraudulent conveyance under applicable Laws; (d) any-Pre-Closing
Taxes; and (e) any Liabilities of Seller, ELRH, ELRH II or otherwise relate to
the Business that occurred prior to the Closing and any other Retained
Liabilities or otherwise related to any Excluded Assets.

 

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Section 9.03 Indemnification of Seller. Buyer shall indemnify, defend and hold
Seller, ELRH and ELRH II, their respective Affiliates and each of their
respective directors, officers, employees, agents, shareholders, members,
managers equity holders, partners, attorneys and agents (collectively, the
“Seller Indemnified Parties”) harmless from and against (a) any and all Losses
incurred by any Seller Indemnified Party arising out of, resulting from or
relating to any breach or non-fulfillment of any covenant or agreement made by
Buyer under this Agreement; (b) any breach or inaccuracy in the representations
and warranties of Buyer contained in this Agreement; (c) any Post-Closing Taxes;
(d) the Assumed Liabilities; and (e) the ownership of the Purchased Assets from
and after the Closing.

Section 9.04 Procedure.

(a) A Person seeking indemnification hereunder (an “Indemnified Party”) shall
give a written notice (a “Notice of Claim”) specifying the facts constituting
the basis for its claim and, the applicable provision(s) of this Agreement upon
which the Indemnified Party relies for its demand and a good faith estimate of
the amount of the claim, to the Person(s) from whom indemnification is sought
hereunder (an “Indemnifying Party”) prior to the expiration of the applicable
survival period set forth in Section 9.01.

(b) If the claim is not a Third Party Claim, the Indemnifying Party shall have
thirty (30) calendar days after receipt of the Notice of Claim to notify the
Indemnified Party in writing that it disputes such claim. If no such dispute is
received by the Indemnified Party within thirty (30) calendar days after receipt
of the Notice of Claim, the claim shall be deemed to be allowed.

(c) If an Indemnified Party is seeking indemnification because of a claim
asserted by any claimant other than an Indemnified Party (a “Third Party”), the
Indemnified Party shall deliver a Notice of Claim to the Indemnifying Party
promptly after receiving notice from such third party (and in any event within
fifteen (15) days after receiving notice from a Third Party); provided, however,
that the right of a Person to be indemnified hereunder in respect of claims made
or alleged by a Third Party (a “Third Party Claim”) shall not be adversely
affected by a failure to give such notice unless the Indemnifying Party is
prejudiced thereby. All notices given with respect to a Third Party Claim shall
describe with reasonable specificity the Third Party Claim, the basis of the
Third Party’s claim for indemnification and the amount of Losses (or a
reasonable estimate thereof). The Indemnifying Party shall have the right, upon
written notice to the Indemnified Party, to assume and conduct the defense of
the Third Party Claim with counsel reasonably acceptable to the Indemnified
Party; provided, that (i) the Third Party Claim solely seeks (and continues to
solely seek) monetary damages (unless such Third Party Claims seeks equitable
relief against any Person other than a Buyer Indemnified Party), and (ii) no
conflict of interest arises that, under applicable principles of legal ethics,
in the reasonable judgment of counsel to the Indemnified Party, would prohibit a
single counsel from representing both the Indemnifying Party and the Indemnified
Party in connection with the defense of such Third Party Claim. The Indemnified
Party may thereafter participate in (but not control) the defense of any such
Third Party Claim with its own counsel at its own expense; provided, however,
that if (A) any of the conditions described in clauses (i)–(ii) above fails to
occur or ceases to be satisfied, or (B) the Indemnifying Party fails to take
reasonable steps necessary to defend diligently such Third Party Claim in the
reasonable judgment of the Indemnified Party, then the Indemnified Party may
assume its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred by the Indemnified Party in
connection with such defense. If the Indemnifying Party elects not

 

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to defend the Indemnified Party with respect to such Third Party Claim, or fails
to notify the Indemnified Party of such election within a reasonable period of
time based on the particular circumstances of the Third Party Claim (which in
any event, shall not exceed ten (10) calendar days after receipt of the Notice
of Claim), the Indemnified Party shall have the right, at its option, to assume
and control defense of the matter at the expense of the Indemnifying Party, in
such manner as it may deem reasonably appropriate. The Indemnifying Party, if it
has assumed the defense of any Third Party Claim as provided in this
Section 9.04(c), may not, without the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld or delayed), consent to
a settlement of, or the entry of any judgment arising from, any such Third Party
Claim that (1) does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a complete release
from all liability in respect of such Third Party Claim, (2) grants any
injunctive or equitable relief or (3) may reasonably be expected to have a
material adverse effect on the Indemnified Party or any business thereof. The
Indemnified Party may not settle any Third Party Claim, the defense of which has
not been assumed by the Indemnifying Party or which is otherwise being defended
by the Indemnified Party in accordance with the terms of this Section 9.04(c),
without the prior written consent of the Indemnifying Party (which consent shall
not be unreasonably withheld or delayed). Subject to attorney-client privilege
and other confidentiality obligations, each of the Parties shall and shall cause
their Affiliates (and their respective officers, directors, employees,
consultants and agents) to, make available to the other(s) all relevant
information in his or its possession relating to any such Third Party Claim
which is being defended by the other Party and shall otherwise reasonably
cooperate in the defense thereof. The Indemnifying Party shall be subrogated to
the rights and claims of the Indemnified Party, if any, with respect to any
Losses paid by the Indemnifying Party under this Article IX.

(d) For purposes of calculating any Losses resulting from an inaccuracy in,
misrepresentation of or breach of, any representation or warranty contained in
this Agreement, the terms “material,” “materiality,” “material adverse effect”
or similar qualifications contained in such representations and warranties shall
be disregarded.

Section 9.05 Payment. A claim for indemnification under this Article IX shall be
deemed finally determined upon the occurrence of any of the following: (a) it is
deemed allowed under Section 9.04(a); (b) entry of any final judgment or award
rendered by a court of competent jurisdiction; (c) full execution of a
settlement of a Third Party Claim executed by both the Indemnified Party and the
Indemnifying Party or (d) the execution by the Indemnifying Party and
Indemnified Party of a mutually binding settlement agreement with respect to a
claim. To the extent that any of Seller, ELRH or ELRH II has any obligations to
indemnify a Buyer Indemnified Party for Losses, such obligations shall be
satisfied first, by setting off such amount by cancelling Restricted Units
having a value equal to such Losses, second by setting off against any unpaid
principal amount of any Promissory Note delivered hereunder; and, finally, by
collecting the amount of any remaining Losses from any of such parties.
Notwithstanding the foregoing, Losses pursuant to a breach of Section 5.14(c)
shall be satisfied in immediately available funds to a bank account specified by
written notice from Buyer to Seller.

Section 9.06 Limitations on Indemnification.

Notwithstanding anything to the contrary contained in this Agreement, no Party
shall have any right to indemnification under this Article IX with respect to
any Losses or alleged Losses if such matter was determined as part of the
purchase price adjustment procedures set forth in Section 3.02 or Section 3.03.

 

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Section 9.07 Reductions for Insurance Proceeds and Other Recoveries. The amount
of Losses that any Indemnifying Party is or may be required to pay to any
Indemnified Party pursuant to this Article IX shall be reduced by any insurance
proceeds or other amounts actually recovered from third parties by or on behalf
of such Indemnified Party, in respect of the related Losses, less any reasonable
expenses incurred by the Indemnified Party to obtain such insurance or other
proceeds and less any increase in premiums for insurance related to such Loss
(“Recoverable Proceeds”). The existence of a claim by an Indemnified Party for
monies from an insurer or against a third party in respect of any Losses shall
not, however, delay any payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by an Indemnifying
Party. Rather, the Indemnifying Party shall make payment in full of the amount
determined to be due and owing by it against an assignment by the Indemnified
Party to the Indemnifying Party of the entire claim of the Indemnified Party for
the insurance proceeds or against such third party, and thereafter, the
Indemnified Party shall refund all Recoverable Proceeds to the Indemnifying
Party promptly upon receipt. Notwithstanding any other provisions of this
Agreement, it is the intention of the Parties that no insurer or any other third
party shall be (a) entitled to a benefit it would not be entitled to receive in
the absence of the foregoing indemnification provisions, or (b) relieved of the
responsibility to pay any claims for which it is obligated. If an Indemnified
Party has received the payment required by this Agreement from an Indemnifying
Party in respect of any Losses and later receives insurance proceeds or other
amounts in respect of such Losses, then such Indemnified Party shall hold such
insurance proceeds or other amounts in trust for the benefit of the Indemnifying
Party and shall pay to the Indemnifying Party, as promptly as practicable after
receipt, a sum equal to the amount of such insurance proceeds or other amounts
received, up to the aggregate amount of any payments received from the
Indemnifying Party pursuant to this Agreement in respect of such Losses (or, if
there is more than one Indemnifying Party, the Indemnified Party shall pay each
Indemnifying Party, its proportionate share (based on payments received from the
Indemnifying Parties of such insurance proceeds)).

Section 9.08 Limits on Damages. Notwithstanding any other terms in this
Agreement, except in the case of a Third Party Claim or claims for fraud or
intentional misrepresentation or knowing and intentional breach of this
Agreement; provided, however, that any negligent breach, inadvertent breach or
immaterial breach hereunder shall not deemed to be a knowing and intentional
breach for purposes of this Section 9.08, Losses shall not include special,
incidental, indirect, consequential, punitive or exemplary damages or claims for
diminution of value, including consequential damages resulting from business
interruption, lost Tax or income Tax benefits, increased insurance premiums or
lost profits or other Losses based upon any multiplier of Buyer’s earnings,
including earnings before interest, depreciation or amortization or any other
metric, unless such Losses relate to the loss of revenue from a Management
Agreement, in which event Losses shall be multiplied by 2.699. Buyer shall not
be authorized to initiate any claims for indemnification under this Article IX
unless Buyer Indemnified Parties have suffered Losses, in the aggregate, in
excess of Fifty Thousand Dollars ($50,000.00), in which event Buyer Indemnified
Parties may seek recovery of such Losses in full, including the first Fifty
Thousand Dollars ($50,000.00). The maximum amount of damages that Buyer
Indemnified Parties may recover hereunder shall not exceed the Purchase and
Contribution Consideration.

 

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Section 9.09 Sole and Exclusive Remedy. The remedies provided in this Article IX
shall be the sole and exclusive remedies of the Parties for any and all Losses
arising out of, relating to, or resulting from, any breach of any of the
representations, warranties, covenants and agreements contained in this
Agreement, any other Transaction Document, or otherwise relating to the
transactions contemplated by this Agreement or the other Transaction Documents;
provided, however, that nothing herein is intended to waive or otherwise limit
any claims for Losses arising out of, relating to, or resulting from fraud or
intentional misrepresentation.

Section 9.10 Transfer Rights and Indemnification Guaranties.

(a) Seller, ELRH and ELRH II covenant and agree that, from the Closing Date to
the fifteen month anniversary of the Closing Date, neither will transfer the
Restricted Units, except as expressly permitted in this Section 9.10. The
transfer of any Restricted Units as authorized by this Section 9.10 shall not in
any way impair or limit the rights, or priority, of Buyer to cancel and cause
Seller, ELRH, ELRH II or any such permitted transferee to forfeit such
Restricted Units in accordance with this Article IX. Any such transferee shall
agree to be bound by the obligations of Seller, ELRH and/or ELRH II, as
applicable, pursuant to this Article IX and Section 3.02 and 3.03 herein.

(b) Seller, ELRH and ELRH II may (i) transfer the Restricted Units, subject to
the obligations set forth in subsection (a) above, to any direct or indirect
owners of Seller, ELRH and ELRH II, and/or (ii) pledge the Restricted Units and
Promissory Note, subject to the obligations set forth in subsection (a) above,
to the Israel Discount Bank of New York or its Affiliates to secure the IDB
Loans, provided in each event that the transferor provides notice of such
transfer to Buyer and, if reasonably requested by Buyer, provides an opinion of
legal counsel, reasonably satisfactory to Buyer, that such transfer is not in
violation of applicable Securities Laws, and such transfer or pledge shall not
have an adverse effect as to Buyer’s rights pursuant to Article III and Article
IX hereof. Notwithstanding anything to the contrary in this Section 9.10, no
transfer or pledge shall be made if in the reasonable opinion of Buyer or LATA
such transfer or pledge could cause an adverse effect on Buyer or LATA,
including without limitation, due to its tax status as a real estate investment
trust.

ARTICLE X

MISCELLANEOUS

Section 10.01 Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement shall take all such reasonable necessary
action to (a) execute and deliver to each other such other documents and (b) do
such other acts and things as a party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in this
Agreement.

Section 10.02 Expenses. Each of the Parties shall bear its expenses incurred or
to be incurred in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement and the
other Transaction Documents.

 

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Section 10.03 No Assignment; Successors and Assigns. The rights and obligations
of the Parties under this Agreement may not be assigned without the prior
written consent of the other Parties to this Agreement; provided, that Buyer may
assign its rights under this Agreement to a wholly-owned Subsidiary or Affiliate
of Buyer, but such assignment shall not relieve Buyer of its obligations or
liabilities under this Agreement. Subject to the preceding sentence and, except
as otherwise expressly provided herein, this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.

Section 10.04 Headings. The headings contained in this Agreement are included
for purposes of convenience only, and will not affect the meaning or
interpretation of this Agreement.

Section 10.05 Entire Agreement, Integration, Modification and Waiver. This
Agreement (including all Exhibits and Seller Representation Schedules attached
hereto which are hereby incorporated herein and made a part of this Agreement as
if set forth in full herein), together with the other Transaction Documents and
the certificates or other instruments delivered hereunder or thereunder,
constitutes the entire agreement among the Parties with respect to the subject
matter hereof and supersedes all prior understandings of the Parties with
respect to the subject matter hereof. No supplement, modification or amendment
of this Agreement will be binding unless executed in writing by the Parties. No
waiver of any of the provisions of this Agreement will be deemed to be or shall
constitute a continuing waiver. No waiver will be binding unless executed in
writing by the Party making the waiver.

Section 10.06 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement must be construed as
if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or Law will be deemed also to refer to all rules and regulations
promulgated under such Law, unless the context requires otherwise. Whenever the
words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation,” whether or not
they are in fact followed by those words or words of like import. Terms defined
in the singular shall include the plural and vice versa. The words “hereof,”
“herein” and “hereunder” and words of like import used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. References to Articles, Sections, Exhibits, Schedules and Seller
Representation Schedules are to Articles, Sections, Exhibits and Schedules of
this Agreement unless otherwise specified.

Section 10.07 Severability. If any provision of this Agreement or the
application of any provision of this Agreement to any Party or circumstance is,
to any extent, adjudged invalid or unenforceable, the application of the
remainder of such provision to such Party or circumstance, the application of
such provision to other parties or circumstances, and the application of the
remainder of this Agreement will not be affected thereby.

Section 10.08 No Third Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person (including employees or contractors of
Seller) other than the Parties, their respective successors and permitted
assigns, each of the Buyer Indemnified Parties under Section 9.02 and Seller
Indemnified Parties under Section 9.03.

 

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Section 10.09 Notices. All notices and other communications required or
permitted under this Agreement must be in writing and will be deemed to have
been duly given when delivered in person, one (1) Business Day after having been
dispatched by a nationally recognized overnight courier service or three
(3) Business Days after having been deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail, or
nationally-recognized overnight courier, to the appropriate Party at the address
or facsimile number specified below:

If to Seller, ELRH or ELRH II to:

c/o Landmark Residential

825 Parkway Street, Suite 4

Jupiter, Florida 33477

Attention: Joseph G. Lubeck

with a copy (which shall not constitute notice) to:

Greenspoon Marder

Trade Centre South

100 West Cypress Creek Road, Suite 700

Fort Lauderdale, FL 33309

Attention: Michael H. Krul

If to Buyer, to:

c/o Landmark Apartment Trust of America, Inc.

4901 Dickens Road, Suite 101

Richmond, VA 23230

Attention: Stanley J. Olander, Jr.

with a copy (which shall not constitute notice) to:

Morris, Manning & Martin, LLP

1600 Atlanta Financial Center

3343 Peachtree Road, NE

Atlanta, Georgia 30326

Attention: Heath D. Linsky, Esq.

Any Party may change its address for the purposes of this Section 10.09 by
giving notice as provided in this Agreement.

Section 10.10 Governing Law. This Agreement will be governed by and construed
and enforced in accordance with the Laws of the Commonwealth of Virginia without
regard to principles of conflicts of Law.

Section 10.11 Forum Selection; Consent to Service of Process; Waiver of Jury
Trial. Each Party hereby irrevocably (a) submits to the exclusive jurisdiction
of any state court sitting in Alexandria, Virginia or any federal court sitting
in the Eastern District of Virginia in any Action arising out of or relating to
this Agreement, (b) agrees that all claims in respect of such Action may be
heard and determined only in any such court, (c) hereby waives any claim of
inconvenient forum or other challenge to venue in such court and (d) agrees not
to bring any Action arising out of or relating to this Agreement in any other
court. Seller agrees to cause Seller Indemnified Parties, and Buyer agrees to
cause Buyer

 

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Indemnified Parties, to comply with the foregoing as though such Indemnified
Party was a Party to this Agreement. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES, AND SHALL CAUSE ITS INDEMNIFIED PARTIES TO IRREVOCABLY WAIVE, ANY AND
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE ANCILLARY DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY.

Section 10.12 Maintenance of and Access to Records. Buyer, Seller, ELRH and ELRH
II each agree that they shall preserve the records held by each of them relating
to the Business for a period of seven (7) years commencing on the Closing Date.
Buyer, Seller, ELRH and ELRH II each agree that each shall make such records and
personnel available to the other as may be reasonably required in connection
with, among other things, any insurance claims by, legal proceedings against
(other than legal proceedings by Buyer, on the one hand or Seller, ELRH or ELRH
II on the other hand, against the other) or governmental investigations
involving any Party or in order to enable any Party to comply with their
respective obligations under this Agreement and the other Transaction Documents;
provided, that to the extent that disclosing any such information would
reasonably be expected to constitute a waiver of attorney-client, work product
or other privilege with respect thereto, the Parties shall take all commercially
reasonable action to prevent a waiver of any such privilege, including entering
into an appropriate joint defense agreement in connection with affording access
to such information. The access provided pursuant to this Section 10.12 shall be
subject to such additional confidentiality provisions as the disclosing Party
may reasonably deem necessary. If any Party wishes to destroy (or permit to be
destroyed) such records prior to the end of the seven-year period described
above, such Party shall first give 90 days prior written notice to the other and
such other Party will have the right at its option and expense, upon prior
written notice given to such Party within that 90 day period, to take possession
of the records within 180 days after the date of such notice.

Section 10.l3 Counterparts and Electronic Signatures. This Agreement may be
executed in one or more counterparts, and counterparts may be exchanged by
electronic transmission, each of which will be deemed an original, but all of
which together constitute one and the same instrument.

Section 10.14 Specific Performance. Seller, ELRH and ELRH II, on the one hand,
and Buyer, on the other hand, acknowledge and agree that a breach of this
Agreement would cause irreparable damage to the other Parties hereto and that
the other Parties hereto will not have an adequate remedy at Law. Therefore, the
obligations of the Parties under this Agreement, including Seller’s obligation
to sell and contribute the Purchased Assets to Buyer, shall be enforceable by a
decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any Party may have under this
Agreement or otherwise.

[Signatures on the following page.]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year first above written.

 

BUYER: LANDMARK APARTMENT TRUST OF AMERICA HOLDINGS, L.P. By:  

 

Landmark Apartment Trust of America, Inc., its General Partner By:  

/s/ Stanley J. Olander

Name:   Stanley J. Olander Title:   Chief Executive Officer SELLER: ELCO
LANDMARK RESIDENTIAL MANAGEMENT LLC By:  

/s/ Joseph G. Lubeck

Name:   Joseph G. Lubeck Title:   President ELRH: ELCO LANDMARK RESIDENTIAL
HOLDINGS LLC By:  

/s/ Joseph G. Lubeck

Name:   Joseph G. Lubeck Title:   President ELRH II: ELCO LANDMARK RESIDENTIAL
HOLDINGS II LLC By:  

/s/ Joseph G. Lubeck

Name:   Joseph G. Lubeck Title:   President

SIGNATURE PAGE TO ASSET PURCHASE AND CONTRIBUTION AGREEMENT

 

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