Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

 

between

 

BR CARROLL PHILLIPS CREEK RANCH, LLC, as Seller

 

and

 

CARTER-HASTON HOLDINGS, L.L.C., as Purchaser

Dated as of June 17, 2019

 

Topaz Portfolio – Sorrel Phillips Creek Ranch

 

  

 

 

TABLE OF CONTENTS

 

  Page     Article 1 DEFINITIONS 4       SECTION 1.1 Defined Terms 4      
Article 2 SALE, PURCHASE PRICE AND CLOSING 13       SECTION 2.1 Sale of
Property. 13 SECTION 2.2 Purchase Price. 15 SECTION 2.3 Closing Procedure. 16  
    Article 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER 17      
SECTION 3.1 Seller Representations and Warranties 17 SECTION 3.2 Amendments to
Schedules, Limitations on and Breaches of Representations and Warranties of
Seller. 20 SECTION 3.3 Covenants of Seller Prior to Closing. 22       Article 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER 26       SECTION 4.1
Representations and Warranties of Purchaser 26 SECTION 4.2 Covenants of
Purchaser 27       Article 5 CONDITIONS PRECEDENT TO CLOSING 27       SECTION
5.1 Conditions Precedent to Seller’s Obligations 27 SECTION 5.2 Conditions
Precedent to Purchaser’s Obligations 27 SECTION 5.3 Waiver of Conditions
Precedent 28 SECTION 5.4 Failure of Conditions Precedent 28       Article 6
CLOSING DELIVERIES 29       SECTION 6.1 Purchaser’s Closing Deliveries 29
SECTION 6.2 Seller’s Closing Deliveries 29       Article 7 INSPECTIONS; DUE
DILIGENCE; RELEASE 31       SECTION 7.1 Inspections 31 SECTION 7.2 Seller’s
Deliveries 34 SECTION 7.3 Purchaser’s Termination Right. 35 SECTION 7.4 Seller’s
Disclaimer 35 SECTION 7.5 Examination; No Contingencies. 36 SECTION 7.6 RELEASE
39 SECTION 7.7 Effect of Purchaser Waiver of Lead-Based Paint Inspections 41    
  Article 8 TITLE AND PERMITTED EXCEPTIONS 41       SECTION 8.1 Title Insurance
and Survey. 41 SECTION 8.2 Intentionally Deleted. 43 SECTION 8.3 Certain
Exceptions to Title; Inability to Convey. 43 SECTION 8.4 Purchaser’s Right to
Accept Title. 44

 

  

 

 

Article 9 TRANSACTION COSTS; RISK OF LOSS 44       SECTION 9.1 Transaction
Costs. 44 SECTION 9.2 Risk of Loss. 45       Article 10 ADJUSTMENTS 47      
SECTION 10.1 Rents. 47 SECTION 10.2 Taxes and Assessments 48 SECTION 10.3
Intentionally Deleted. 48 SECTION 10.4 Utility Charges 48 SECTION 10.5
Miscellaneous Revenues 48 SECTION 10.6 Assumed Contracts 49 SECTION 10.7
Association Fees 49 SECTION 10.8 Security Deposits 49 SECTION 10.9 Other
Adjustments 49 SECTION 10.10 Re-Adjustment 49       Article 11 INDEMNIFICATION
50       SECTION 11.1 Indemnification by Seller 50 SECTION 11.2 Indemnification
by Purchaser 50 SECTION 11.3 Limitations on Indemnification 50 SECTION 11.4
Survival 50 SECTION 11.5 Notification 51 SECTION 11.6 Indemnification as Sole
Remedy 51 SECTION 11.7 Limits on Indemnification 51       Article 12 TAX APPEALS
52       SECTION 12.1 Prosecution and Settlement of Proceedings 52 SECTION 12.2
Application of Refunds or Savings 52 SECTION 12.3 Survival 52       Article 13
DEFAULT 52       SECTION 13.1 Purchaser’s Default.. 52 SECTION 13.2 Seller’s
Default.. 53 SECTION 13.3 Certain Limitations.. 53 SECTION 13.4 Cross Defaults
under Affiliated Purchase Agreements. 53       Article 14 MISCELLANEOUS 54      
SECTION 14.1 Exculpation. 54 SECTION 14.2 Broker. 54 SECTION 14.3
Confidentiality; Publicity; IRS Reporting Requirements. 55 SECTION 14.4 Escrow
Provisions. 56 SECTION 14.5 Successors and Assigns; No Third-Party Beneficiaries
58 SECTION 14.6 Assignment 58 SECTION 14.7 Further Assurances 59 SECTION 14.8
Notices 59 SECTION 14.9 Entire Agreement 61

 

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SECTION 14.10 Amendments 61 SECTION 14.11 No Waiver 61 SECTION 14.12 Governing
Law 61 SECTION 14.13 Submission to Jurisdiction 61 SECTION 14.14 Severability 62
SECTION 14.15 Headings 62 SECTION 14.16 Counterparts 62 SECTION 14.17 Acceptance
of Deed 62 SECTION 14.18 Construction 62 SECTION 14.19 Recordation 62 SECTION
14.20 Time is of the Essence 62 SECTION 14.21 Business Days; Calculation of Time
Periods 62 SECTION 14.22 Survival. 63 SECTION 14.23 Legal Costs 63 SECTION 14.24
DTPA Waiver 63 SECTION 14.25 Exchange 64 SECTION 14.26 Effect of Affiliated
Purchase Agreements 64 SECTION 14.27 Special Provisions Regarding Partial
Termination. 64

 

Schedules           Schedule A - Legal Description of Land Schedule B - List of
Seller’s Deliveries Schedule C-1 - Inventory of Personal Property Schedule C-2 -
Excluded Personal Property Schedule 3.1 - List of Seller’s Core Deliveries
Schedule 3.1(h) - Litigation Schedule 3.1(i) - Notices of Violation Schedule
3.1(j) - Contracts Schedule 3.1(k) - Rent Roll Schedule 3.1(q) - Insurance
Certificate       Exhibits           Exhibit A - Form of Bill of Sale and
Assignments Exhibit B - Form of Tenant Notice Exhibit C - Form of Condominium
Conversion Prohibition Agreement Exhibit D - Form of Deed Exhibit E - Form of
Seller’s Title Affidavit Exhibit F - Form of Seller’s Closing Certificate

 

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PURCHASE AND SALE AGREEMENT

 

Topaz Portfolio – Sorrel Phillips Creek Ranch Sale

 

THIS PURCHASE AND SALE AGREEMENT, dated effective as of June 17, 2019 (the
“Effective Date”), is made by and between BR CARROLL PHILLIPS CREEK RANCH, LLC,
a Delaware limited liability company (“Seller”), and CARTER-HASTON HOLDINGS,
L.L.C., a Delaware limited liability company (“Purchaser”).

 

RECITALS

 

A.           Seller is the owner in fee simple of the improved real property
commonly known as Sorrel Phillips Creek Ranch Apartments, located at 5050 FM423,
Frisco, Denton County, Texas 75036 (the “Property”), which consists of (i) the
land more particularly described on Schedule A annexed hereto (the “Land”),
together with (ii) the Related Property (as defined below).

 

B.            Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Land and Seller’s right, title and interest in the
Related Property on the terms and conditions hereinafter set forth.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

Article 1
DEFINITIONS

 

SECTION 1.1 Defined Terms. The capitalized terms used herein will have the
following meanings.

 

“Access Agreement” shall mean the Access and Due Diligence Agreement between
each member of the Seller Group and Purchaser, dated as of April 29, 2019.

 

“Additional Title Disapproval Matters” shall have the meaning assigned thereto
in Section 8.1(e).

 

“Additional Title Disapproval Notice” shall have the meaning assigned thereto in
Section 8.1(e).

 

“Additional Title Disapproval Response” shall have the meaning assigned thereto
in Section 8.1(e).

 

“Additional Title Matters” shall have the meaning assigned thereto in Section
8.1(e).

 

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“Additional Title Response Period” shall have the meaning assigned thereto in
Section 8.1(e).

 

“Adjustment Point” shall have the meaning assigned thereto in Article 10.

 

“Affiliate” shall mean any Person (as defined below) that directly or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with another Person. The term “control” shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and shall in any event include the
ownership or power to vote fifty percent (50%) or more of the outstanding equity
or voting interests, respectively, of such other Person.

 

“Affiliated Purchase Agreements” shall mean the ARIUM Palms Purchase Agreement,
the Landings at Four Corners Purchase Agreement, and the Three Property Purchase
Agreement, collectively.

 

“Affiliated Sellers” shall mean the ARIUM Palms Seller, Landings at Four Corners
Seller, Sovereign Seller, Leigh House Seller, and Preston View Seller,
collectively.

 

“Agreement” shall mean this Purchase and Sale Agreement, together with the
exhibits and schedules attached hereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Anti-Bribery, Anti-Money Laundering and Anti-Terrorism Laws” shall have the
meaning assigned thereto in Section 3.1(g)(i).

 

“Applicable Law” shall mean all statutes, laws, common law, rules, regulations,
ordinances, codes or other legal requirements of any Governmental Authority,
board of fire underwriters and similar quasi-governmental agencies or entities,
and any judgment, injunction, order, directive, decree or other judicial or
regulatory requirement of any Governmental Authority of competent jurisdiction
affecting or relating to the Person or property in question.

 

“ARIUM Palms Property” shall mean that certain improved real property located in
Orlando, Florida and commonly known as ARIUM Palms at World Gateway Apartments,
as further described in the ARIUM Palms Purchase Agreement.

 

“ARIUM Palms Purchase Agreement” shall mean that certain Purchase and Sale
Agreement dated as of even date herewith by and between ARIUM Palms Seller and
Purchaser, regarding the purchase and sale of the ARIUM Palms Property, as such
agreement may be amended and/or assigned from time to time.

 

“ARIUM Palms Seller” shall mean BR World Gateway, LLC, a Delaware limited
liability company.

 

“Assumed Contracts” shall have the meaning assigned thereto in Section 3.4(c).

 

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“Basket Limitation” shall mean an amount equal to $25,000.00.

 

“Bill of Sale and Assignment” shall have the meaning assigned thereto in Section
6.1(a)(i).

 

“Broker” shall have the meaning assigned thereto in Section 14.2(a).

 

“BSA” shall have the meaning assigned thereto in Section 3.1(g)(ii).

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on
which banks are authorized or required by law to be closed in the City of New
York, New York or by United States federal laws.

 

“Cap Limitation” shall mean an amount equal to one and one half percent (1.5%)
of the Purchase Price.

 

“Changed Condition” shall have the meaning assigned thereto in Section 3.2(d).

 

“Changed Condition Notice” shall have the meaning assigned thereto in Section
3.2(d).

 

“Changed Condition Threshold” shall have the meaning assigned thereto in Section
3.2(c)(ii).

 

“CGL” shall have the meaning assigned thereto in Section 7.1(b)(viii).

 

“Claims” shall have the meaning assigned thereto in Section 7.6(a).

 

“Closing” shall have the meaning assigned thereto in Section 2.3(a).

 

“Closing Date” shall mean July 15, 2019, or such earlier date as is mutually
agreed to between the Seller and Purchaser.

 

“Closing Documents” shall mean any conveyance document, certificate, instrument
or other document delivered pursuant to this Agreement at Closing, including,
without limitation, each of the documents to be delivered by Seller pursuant to
Section 6.2 and by Purchaser pursuant to Section 6.1.

 

“Closing Funds” shall have the meaning assigned thereto in Section 2.2(a)(iii).

 

“Closing Statement” shall mean the closing statement for the purchase and sale
of the Property, to be prepared by the Escrow Agent setting forth the prorations
and adjustments to the Purchase Price required by this Agreement.

 

“Condition of the Property” shall have the meaning assigned thereto in Section
7.5(b).

 

“Condominium Conversion Prohibition Agreement” shall have the meaning assigned
thereto in Section 6.1(a)(iii).

 

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“Contracts” shall mean, collectively, all written agreements or contracts of
Seller, or entered into on behalf of Seller or its Property Manager, relating to
the ownership or operation of the Property, but excluding the Leases and the
Existing Management Agreement, as more particularly described on Schedule 3.1(j)
attached hereto

 

“Deed” shall have the meaning assigned thereto in Section 6.2(a).

 

“Deemed Purchaser Knowledge” shall mean that Purchaser shall be deemed to have
knowledge of the matters set forth in Seller’s Core Deliveries and in the
Permitted Exceptions.

 

“Disapproved Title Matter” shall have the meaning assigned thereto in Section
8.1(c).

 

“Due Diligence Period” shall mean the period of time from April 29, 2019 until
5:00 p.m. Eastern Time on June 17, 2019.

 

“Earnest Money” shall have the meaning assigned thereto in Section 2.2(a)(i).

 

“Earnest Money Escrow Account” shall mean a federally-insured interest-bearing
bank account of Escrow Agent to be reasonably acceptable to Seller and
Purchaser.

 

“Effective Date” shall have the meaning assigned thereto in the Preamble to this
Agreement.

 

“Environmental Laws” shall mean any of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. §9601 et seq., the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. §1801 et seq., the
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. §6901 et
seq., Section 311 of the Clean Water Act, 33 U.S.C. §1251 et seq., the Clean Air
Act, 42 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601
et seq., the Texas Solid Waste Disposal Act (Texas Health And Safety Code §
361.001 et seq., as amended (Vernon 2001)) and any similar laws of the State of
North Carolina, and the regulations and publications issued under any such laws,
any state or local statutes, regulations and ordinances pertaining to Hazardous
Materials or to the protection of human health and the environment.

 

“Escrow Agent” shall mean First American Title Insurance Company, Six Concourse
Parkway, Suite 2000, Atlanta, Georgia 30328 (attention: Barbara H. Morgan).

 

“Estoppel” and “Estoppels” shall have the meanings assigned thereto in Section
3.3(a)(xiv).

 

“Exchange” shall have the meaning assigned thereto in Section 14.25.

 

“Excluded Assets” shall have the meaning assigned thereto in Section 2.1(c).

 

“Executive Order” and “Executive Orders” shall have the meanings assigned
thereto in Section 3.1(g)(i).

 

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“Existing Management Agreement” shall mean the existing property management
agreement between Seller and its Property Manager with respect to management of
the Property, as the same may be amended, modified or supplemented from time to
time.

 

“Forbidden Entity” shall have the meaning assigned thereto in Section 3.1(g)(i).

 

“Government List” shall mean any of (i) the two lists maintained by the United
States Department of Commerce (Denied Persons and Entities), (ii) the list
maintained by the United States Department of Treasury (Specially Designated
Nationals and Blocked Persons), and (iii) the two lists maintained by the United
States Department of State (Terrorist Organizations and Debarred Parties).

 

“Governmental Authority” shall mean any federal, state or local government or
other political subdivision thereof, including, without limitation, any agency
or entity exercising executive, legislative, judicial, regulatory or
administrative governmental powers or functions, in each case to the extent the
same has jurisdiction over the Person or property in question.

 

“Hazardous Materials” shall mean (i) those substances included within the
definitions of any one or more of the terms “Hazardous Substances,” “Toxic
Pollutants,” “Hazardous Materials,” “Toxic Substances,” and “Hazardous Waste”
under Environmental Laws, (ii) petroleum, radon gas, lead-based paint, asbestos
or asbestos-containing material and polychlorinated biphenyls, and (iii) mold or
water conditions which may exist at the Real Property or other substances,
wastes or materials listed or defined under Environmental Laws.

 

“Improvements” shall have the meaning assigned thereto in Section 2.1(b)(i).

 

“Indemnification Claim” shall have the meaning assigned thereto in Section 11.5.

 

“Indemnified Party” shall have the meaning assigned thereto in Section 11.5.

 

“Indemnifying Party” shall have the meaning assigned thereto in Section 11.5.

 

“Independent Contract Consideration” shall have the meaning assigned thereto in
Section 2.2(c).

 

“IRS” shall mean the Internal Revenue Service.

 

“IRS Reporting Requirements” shall have the meaning assigned thereto in Section
14.3(c).

 

“ISO” shall have the meaning assigned thereto in Section 7.1(b)(viii).

 

“Landings at Four Corners Property” shall mean that certain improved real
property located in Davenport, Florida and commonly known as Landings at Four
Corners Apartments, as further described in the Landings at Four Corners
Purchase Agreement.

 

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“Landings at Four Corners Purchase Agreement” shall mean that certain Purchase
and Sale Agreement dated as of even date herewith by and between Landings at
Four Corners Seller and Purchaser, regarding the purchase and sale of the
Landings at Four Corners Property, as such agreement may be amended and/or
assigned from time to time.

 

“Landings at Four Corners Seller” shall mean BR Four Corners Orlando, DST, a
Delaware statutory trust.

 

“Leases” shall mean any leases with residential tenants of the Real Property,
including each amendment or supplement thereto.

 

“Lists” shall have the meaning assigned thereto in Section 3.1(g)(i).

 

“Loan Pay-Off Wire Deadline” shall have the meaning assigned thereto in Section
2.3(a).

 

“Losses” shall have the meaning assigned thereto in Section 11.1.

 

“Material Casualty” shall have the meaning assigned thereto in Section 9.2(c).

 

“Material Condemnation” shall have the meaning assigned thereto in Section
9.2(d).

 

“Monetary Encumbrance” shall have the meaning assigned thereto in Section
8.3(a).

 

“Objectionable Contracts” shall have the meaning assigned thereto in Section
3.4(c).

 

“OFAC” shall have the meaning assigned thereto in Section 3.1(g)(i).

 

“Owner’s Policy” shall mean an ALTA Owner’s Policy of Title Insurance for the
Property in an amount equal to the Purchase Price for the Property insuring fee
simple title to the Property and the Improvements located thereon, which shall
except from coverage only the Permitted Exceptions and shall specifically
exclude all “preprinted” or “standard” title exceptions, to the extent that same
can be removed by Seller’s execution and delivery of a title affidavit in the
form attached to this Agreement.

 

“Patriot Act” shall have the meaning assigned thereto in Section 3.1(g)(ii).

 

“Permitted Exceptions” shall mean all of the following: (i) the matters set
forth in the Title Commitment or the Updated Survey or any matters newly
disclosed on any subsequent updates to the Title Commitment or to the Updated
Survey, in each case which are approved or deemed approved by Purchaser pursuant
to Article 8 of this Agreement, (ii) the rights of tenants, as tenants only
without options to purchase or rights of first refusal, under the Leases
existing as of the Effective Date and any other Lease entered into after the
Effective Date in accordance with the terms of this Agreement, (iii) liens for
current real estate taxes and special assessments which are not yet due and
payable as of the Closing Date, (iv) the Condominium Conversion Prohibition
Agreement, (v) standard pre-printed jacket exceptions contained in the Owner’s
Policy, (vi) any exceptions caused by Purchaser or its Affiliates, agents,
representatives, consultants or employees, and (vii) local, state and federal
laws, ordinances or governmental regulations, including but not limited to,
building, zoning and land use laws, ordinances and regulations, now or hereafter
in effect relating to the Property.

 

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“Person” shall mean a natural person, partnership, limited partnership, limited
liability company, corporation, trust, estate, association, unincorporated
association or other legal entity.

 

“Personal Property” shall have the meaning assigned thereto in Section
2.1(b)(3).

 

“Property” shall have the meaning assigned thereto in Recitals Paragraph A.

 

“Property Group” shall mean, collectively, the following improved real
properties:

 

(i)            The Property;

 

(ii)           The Landings at Four Corners Property;

 

(iii)          The improved real property currently owned by Sovereign Seller
and commonly known as The Sovereign Apartments, located at 5301 North Tarrant
Parkway, Fort Worth, Tarrant County, Texas 76244, and further described in the
Three Property Purchase Agreement (the “Sovereign Property”);

 

(iv)          The improved real property currently owned by Leigh House Seller
and commonly known as Leigh House Apartments, located at 2421 Landmark Drive,
Raleigh, Wake County, North Carolina 27607, and further described in the Three
Property Purchase Agreement (the “Leigh House Property”);

 

(v)           The improved real property currently owned by Preston View Seller
and commonly known as Preston View Apartments, located at 1000 Stony Court,
Morrisville, Wake County, North Carolina 27560, and further described in the
Three Property Purchase Agreement (the “Preston View Property”); and

 

(vi)          The ARIUM Palms Property.

 

“Property Manager” shall mean Seller’s existing property manager.

 

“Purchase Price” shall have the meaning assigned thereto in Section 2.2(a).

 

“Purchaser” shall have the meaning assigned thereto in the Preamble to this
Agreement.

 

“Purchaser Investigation” and “Purchaser Investigations” shall have the meanings
assigned thereto in Section 7.1(a).

 

“Purchaser Representatives” shall have the meaning assigned thereto in Section
7.1(a).

 

“Purchaser Waived Breach” shall have the meaning assigned thereto in Section
11.3.

 

“Purchaser-Related Entities” shall have the meaning assigned thereto in Section
11.3.

 

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“Real Property” shall mean the Land and the Improvements.

 

“Refundable Security Deposits” shall mean all Security Deposits that are
refundable to tenants pursuant to Leases and have not been applied by Seller
prior to the Closing Date.

 

“Related Property” shall have the meaning assigned thereto in Section 2.1(b).

 

“Released Parties” shall have the meaning assigned thereto in Section 7.6(a).

 

“Remaining Properties” shall have the meaning assigned thereto in Section
14.27(a)(i).

 

“Rent Roll” shall have the meaning assigned thereto in Section 3.1(k).

 

“Rents” shall have the meaning assigned thereto in Section 10.1(a).

 

“Reporting Person” shall have the meaning assigned thereto in Section 14.3(c).

 

“Representation Conditions” shall have the meaning assigned thereto in Section
3.2(c)(i).

 

“Required Cure Items” shall have the meaning assigned thereto in Section 8.1(d).

 

“RUBS” shall have the meaning assigned thereto in Section 10.4(b).

 

“Security Deposits” shall mean all security and escrow deposits received by
Seller in connection with the Leases.

 

“Seller” shall have the meaning assigned thereto in the Preamble.

 

“Seller Group” shall mean, collectively:

 

(i)            Seller;

 

(ii)           Landings at Four Corners Seller;

 

(iii)          BR Carroll Keller Crossing, LLC, a Delaware limited liability
company (“Sovereign Seller”);

 

(iv)          BR-TBR Lake Boone NC Owner, LLC, a Delaware limited liability
company, together with, if applicable, such entity’s permitted assignees under
the Three Property Purchase Agreement (“Leigh House Seller”);

 

(v)           BR Preston View, LLC, a Delaware limited liability company
(“Preston View Seller”); and

 

(vi)          ARIUM Palms Seller.

 

“Seller Indemnified Parties” shall have the meaning assigned thereto in Section
7.1(c).

 

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“Seller Representations” shall have the meaning assigned thereto in Section
11.1.

 

“Seller Waived Breach” shall have the meaning assigned thereto in Section 11.7.

 

“Seller-Related Entities” shall have the meaning assigned thereto in Section
11.2.

 

“Seller’s Closing Certificate” shall have the meaning assigned thereto in
Section 6.2(h).

 

“Seller’s Core Deliveries” shall have the meaning assigned thereto in Section
3.1.

 

“Seller’s Deliveries” shall have the meaning assigned thereto in Section 7.2(a).

 

“Seller’s Knowledge” shall mean the actual knowledge of Seller based upon the
actual knowledge of Ryan MacDonald, who is a principal of Seller, or the actual
knowledge of Sarah Girand, who is a Senior Vice President Asset Management for
the Property, in each case with respect to the Property, without any duty on the
part of either such Person to conduct any independent investigation or make any
inquiry of any Person, and shall not be construed, by imputation or otherwise,
to refer to the knowledge of any property manager or broker, or to any other
officer, agent, manager, representative or employee of Seller or any Affiliate
of Seller. In no event shall Purchaser have any personal claim against either
such Person as a result of the reference thereto in this Agreement,
and Purchaser waives and releases all such claims which Purchaser now has or may
later acquire against such Persons in connection with the transactions
contemplated in this Agreement.

 

“Surviving Covenants” shall have the meaning assigned thereto in Section 11.1.

 

“Terminated Property” shall have the meaning assigned thereto in Section
14.27(a)(i).

 

“Three Property Purchase Agreement” shall mean that certain Purchase and Sale
Agreement dated as of even date herewith, by and between each of Sovereign
Seller, Leigh House Seller, and Preston View Seller, as sellers, and Purchaser,
as purchaser, with respect to the purchase and sale of each of the Sovereign
Property, the Leigh House Property, and the Preston View Property.

 

“Title Affidavit” shall mean the affidavit and related title documentation
described in Section 6.2(f) hereof.

 

“Title Commitment” shall have the meaning assigned thereto in Section 8.1(a).

 

“Title Company” shall mean First American Title Insurance Company.

 

“Title Cure Period” shall have the meaning assigned thereto in Section 8.1(d).

 

“Title Objection Notice” shall have the meaning assigned thereto in Section
8.1(c).

 

“Title Response Notice” shall have the meaning assigned thereto in Section
8.1(c).

 

“Title Review Period” shall have the meaning assigned thereto in Section 8.1(c).

 

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“Updated Survey” shall have the meaning assigned thereto in Section 8.1(b).

 

Article 2
SALE, PURCHASE PRICE AND CLOSING

 

SECTION 2.1 Sale of Property.

 

(a)          On the Closing Date and pursuant to the terms and subject to the
conditions set forth in this Agreement, Seller shall sell to Purchaser, and
Purchaser shall purchase from Seller, the Property.

 

(b)          The transfer of the Property to Purchaser shall include the
transfer of all Related Property. For purposes of this Agreement, “Related
Property” shall mean all of Seller’s right, title and interest in and to the
following:

 

(i)           all of the buildings, structures, fixtures, parking facilities,
and other improvements located on the Land (the “Improvements”);

 

(ii)          all easements, licenses, covenants, privileges and other rights
appurtenant to the Land or the Improvements and all right, title and interest of
Seller, if any, in and to all development rights, and any land lying in the bed
of any street, road, avenue or alley, open or closed, in front of or adjoining
the Land;

 

(iii)         all furniture, furnishings, appliances, signs, carts, tools,
supplies, fixtures, equipment and other personal property which are now, or may
hereafter prior to the Closing Date be, placed in or attached to the Land or the
Improvements and which are used solely in connection with the operation of the
Real Property, including all of the items of personal property listed on
Schedule C-1 attached hereto (but not including items owned or leased by tenants
or the Property Manager, or which are leased by Seller, or any Excluded Assets)
(collectively, the “Personal Property”);

 

(iv)         to the extent they may be freely transferred by Seller under
Applicable Law without third-party consent (unless any such consent is obtained
by Purchaser at Purchaser’s sole cost and expense), all licenses, certificates
of occupancy, permits, approvals and authorizations presently issued in
connection with the operation of all or any part of the Real Property as it is
presently being operated;

 

(v)          to the extent freely assignable by Seller without any third party’s
consent (unless any such consent is obtained by Purchaser at Purchaser’s sole
cost and expense), all guaranties and warranties, if any, in favor of Seller by
any manufacturer or contractor in connection with construction or installation
of equipment or any component of the Improvements;

 

(vi)        all Leases, together with all Refundable Security Deposits;

 

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(vii)        all other intangible property relating to the Real Property or the
Personal Property and not otherwise described or excluded herein, including, but
not limited to, assignable telephone exchanges, trade names and trademarks used
by Seller in connection with the operation of the Property, including Seller’s
right, title and interest in (i) the name “Sorrel Phillips Creek Ranch
Apartments”, (ii) all variations of such name used or owned by Seller, and (iii)
all other names utilized or owned by Seller with respect to the Real Property or
the Improvements; domain names and websites used exclusively in the operation of
the apartment complex located on the Real Property commonly known as “Sorrel
Phillips Creek Ranch Apartments,” including, without limitation,
www.sorrelpcr.com; architectural drawings, plans and specifications, as-built
drawings, and advertising materials (in each case, solely to the extent
delivered to Purchaser prior to the Effective Date or located on-site as of the
Closing Date); and assignable development rights;

 

(viii)       all Assumed Contracts pertaining to the Property, other than those
terminated on or prior to the Closing Date pursuant to Section 3.4(c); and

 

(ix)          resident and tenant files for current residents as of the Closing
Date and other non-confidential and non-proprietary records owned by Seller and
used in connection with the Real Property and located on-site as of the Closing
Date.

 

(c)          Notwithstanding anything to the contrary contained in this
Agreement, it is expressly agreed by the parties hereto that the following items
are expressly excluded from the Property to be sold to Purchaser (collectively,
the “Excluded Assets”):

 

(i)           all Security Deposits that do not constitute Refundable Security
Deposits (including, without limitation, non-refundable pet deposits if any);

 

(ii)          all right, title and interest in any purchase agreement or other
closing document entered into in connection with Seller’s acquisition of the
Real Property, except to the extent that the rights or obligations under any
such closing document “run with the land” and so benefit or burden any of the
Real Property;

 

(iii)         any fixtures, personal property, equipment, trademarks or other
intellectual property or other assets which are owned by (A) the supplier or
vendor under any Contract, (B) the tenant under any Lease or (C) Property
Manager;

 

(iv)         any insurance claims or proceeds arising out of or relating to
events that occur prior to the Closing subject to the terms of Section 9.2(a);

 

(v)          any proprietary or confidential materials (including any materials
relating to the background or financial condition of a present or prior direct
or indirect partner or member of Seller), but the Seller’s Deliveries shall not
be deemed to be proprietary or confidential, the internal books and records of
Seller relating to contributions and distributions prior to Closing, any
software owned or licensed by Seller, the name “Bluerock” and any derivations
thereof (including “BR”) and any trademarks, trade names, brand marks, brand
names, trade dress or logos relating thereto, the names “Carroll,” “ARIUM” or
any derivations thereof, and any trademarks, trade names, brand marks, brand
names, trade dress or logos relating thereto, any development bonds, letters of
credit or other collateral held by or posted with any Governmental Authority or
other third party with respect to any improvement, subdivision or development
obligations concerning any of the Real Property or any other real property, any
items listed on Schedule C-2 attached hereto and made a part hereof, and any
other intangible property that is not used exclusively in connection with any of
the Real Property;

 

 14 

 

 

(vi)        the Existing Management Agreement;

 

(vii)       any Objectionable Contracts terminated effective as of or prior to
the Closing Date pursuant to Section 3.4(c);

 

(viii)      any items leased to Seller;

 

(ix)          computer software and computer files; and

 

(x)          cash and cash equivalents (except to the extent prorated at
Closing), and any reserves or other deposits funded or made in connection with
any financing encumbering the Property or Seller’s interests therein.

 

SECTION 2.2 Purchase Price.

 

(a)          The consideration to be paid by Purchaser to Seller for the
purchase of the Property shall be an amount equal to FIFTY SEVEN MILLION NINE
HUNDRED FOUR THOUSAND AND NO/100 DOLLARS ($57,904,000.00) (the “Purchase
Price”). The Purchase Price shall be paid by Purchaser to Seller on the Closing
Date as follows:

 

(i)           Within three (3) Business Days after the Effective Date, Purchaser
shall deliver to Escrow Agent cash in an amount equal to TWO MILLION TWO HUNDRED
TWENTY SEVEN THOUSAND SEVENTY SEVEN AND NO/100 DOLLARS ($2,227,077.00) (together
with all accrued interest thereon, the “Earnest Money”) in immediately available
funds by wire transfer to the Earnest Money Escrow Account. If the Earnest Money
is not deposited by Purchaser as and when due and payable hereunder, Seller
shall have the right in its sole and absolute discretion to terminate this
Agreement by written notice to Purchaser and Escrow Agent, whereupon no party
shall have any further rights or obligations hereunder except for those that
expressly survive the termination of this Agreement.

 

(ii)          Purchaser agrees and acknowledges that the entire Earnest Money
shall be non-refundable to Purchaser from and after the Effective Date except as
otherwise specifically provided in this Agreement.

 

(iii)         Prior to the Loan Pay-Off Wire Deadline on the Closing Date, or
prior to the Closing Date, Purchaser shall deposit with the Escrow Agent, by
wire transfer of immediately available funds (through the escrow described in
Section 2.3), the Purchase Price, as adjusted by the application of the Earnest
Money, and by the adjustments, prorations and credits provided herein. The
amount to be paid under this Section 2.2(a)(iii) is referred to herein as the
“Closing Funds.”

 

 15 

 

 

(b)          Upon delivery by Purchaser to Escrow Agent, the Earnest Money will
be deposited by Escrow Agent in the Earnest Money Escrow Account, and shall be
held in escrow in accordance with the provisions of Section 14.4. All interest
earned on the Earnest Money while held by Escrow Agent shall be paid to the
party to whom the Earnest Money is paid, except that if Closing occurs,
Purchaser shall receive a credit against the Purchase Price for such interest in
accordance with the terms of this Agreement.

 

(c)          Notwithstanding any other provision of this Agreement to the
contrary, in the event this Agreement is terminated by either Seller or
Purchaser prior to the Closing (as hereinafter defined) pursuant to any right to
do so in this Agreement, ONE HUNDRED DOLLARS ($100.00) of the Earnest Money (the
“Independent Contract Consideration”) shall be paid to Seller, which amount the
parties bargained for and agreed to as consideration for Purchaser’s right to
inspect and purchase the Real Property pursuant to this Agreement and for
Seller’s execution, delivery and performance of this Agreement. The Independent
Contract Consideration, if paid, shall be in addition to and independent of any
other consideration or payment provided in this Agreement and it is deemed to
have been fully earned as of the Effective Date.

 

(d)          No adjustment shall be made to the Purchase Price except as
explicitly set forth in this Agreement.

 

SECTION 2.3 Closing Procedure.

 

(a)          Closing. The closing of the sale and purchase of the Property (the
“Closing”) shall be held on the Closing Date, not later than 3:00 p.m. (Eastern
Time) (the “Loan Pay-Off Wire Deadline”) by mutually acceptable escrow
arrangements with Escrow Agent. There shall be no requirement that Seller and
Purchaser physically attend the Closing, and all funds and documents to be
delivered at the Closing shall be delivered to the Escrow Agent unless the
parties hereto mutually agree otherwise. Purchaser and Seller hereby authorize
their respective attorneys to execute and deliver to the Escrow Agent any
additional or supplementary instructions as may be necessary or convenient to
implement the terms of this Agreement and to facilitate Closing; provided,
however, that such instructions shall be consistent with and merely supplement
this Agreement and shall not in any way modify, amend or supersede this
Agreement.

 

(b)          Closing Deliveries. Purchaser shall be required to deposit the
Closing Funds with Escrow Agent on or prior to the Closing Date, and in no event
later than the Loan Pay-Off Wire Deadline. The parties shall endeavor to
“pre-close” the transaction by making commercially reasonable efforts to deliver
to Escrow Agent, no later than the date which is one (1) Business Day prior to
the Closing Date, their respective Closing Documents pursuant to the terms of
Article 6.

 

(c)          Payments to Seller. All amounts payable to Seller under this
Agreement, including the Earnest Money and the Purchase Price, shall be paid at
the Closing to Seller in accordance with its written instructions.

 

 16 

 

 

Article 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER

 

SECTION 3.1 Seller Representations and Warranties. Subject to the information
disclosed on those Seller’s Deliveries identified on Schedule 3.1 attached
hereto and made a part hereof (collectively, the “Seller’s Core Deliveries”),
and further subject to the Permitted Exceptions, Seller hereby represents and
warrants to Purchaser as follows with respect to itself or the Property, as
applicable:

 

(a)          Formation; Existence. Seller is a statutory trust duly formed,
validly existing and in good standing under the laws of the State of Delaware,
and is duly qualified to transact business and is in good standing in the State
of Texas.

 

(b)          Power and Authority. Seller has all requisite power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, the sale of the Property and the consummation of
the transactions provided for in this Agreement have been duly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Seller and constitutes Seller’s legal, valid and binding
obligation, enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights and by general principles
of equity (whether applied in a proceeding at law or in equity).

 

(c)          No Consents. Seller has obtained all consents and permissions (if
any) related to the transactions herein contemplated and required under any
organizational or governing documents of Seller or under covenant, agreement,
encumbrance, law or regulation by which Seller is bound.

 

(d)          No Conflicts. Seller’s execution, delivery and compliance with, and
performance of the terms and provisions of, this Agreement, and the sale of the
Property, will not conflict with or result in any violation of Seller’s
organizational or governing documents.

 

(e)          Foreign Person. Seller is not a “foreign person” as defined in
Internal Revenue Code Section 1445 and the regulations issued thereunder.

 

(f)          Bankruptcy. Seller has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by Seller’s creditors, (iii)
suffered the appointment of a receiver to take possession of all, or
substantially all, of Seller’s assets, which remains pending or (iv) suffered
the attachment or other judicial seizure of all, or substantially all of
Seller’s assets, which remains pending.

 

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(g)          Anti-Terrorism Laws.

 

(i)           OFAC Compliance. Seller is in compliance with the requirements of
Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) (the “Executive
Order”) and other similar requirements contained in the rules and regulations of
the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in
any enabling legislation or other Executive Orders or regulations in respect
thereof (the Executive Order and such other rules, regulations, legislation, or
orders are collectively called the “Executive Orders”). Neither (a) Seller, any
Affiliate of Seller nor any Person controlled by Seller; nor (b) to the best of
Seller’s Knowledge, after making due inquiry, any Person who owns a controlling
interest in or otherwise controls Seller; nor (c) to the best of Seller’s
Knowledge, after making due inquiry, if Seller is a privately held entity, any
Person otherwise having a direct or indirect beneficial interest (other than
with respect to an interest in a publicly traded entity) in Seller; nor (d) any
Person for whom Seller is acting as agent or nominee in connection with this
investment, is a country, territory, Person, organization, or entity named the
Specially Designated Nationals and Blocked Persons List maintained by OFAC
pursuant to the Order and/or on any other list of terrorists or terrorist
organizations maintained pursuant to any of the rules and regulations of OFAC or
pursuant to any other applicable Orders (the “Lists”), nor is a prohibited
country, territory, Person, organization, or entity under any economic sanctions
program administered or maintained by OFAC (a “Forbidden Entity”). For purposes
of this paragraph, “Affiliate” means, with respect to a particular Person, any
other Person who is Controlled by, under common Control with, or in Control of,
such particular Person; “Control” 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 or other beneficial
interests, by contract or otherwise; and “Person” means any individual, company,
trust or other legal entity of any kind whatsoever, or other organization,
whether or not a legal entity.

 

(ii)          Patriot Act. Seller is in compliance with all applicable
anti-money laundering and anti-terrorist laws, regulations, rules, executive
orders and government guidance, including the reporting, record keeping and
compliance requirements of the Bank Secrecy Act (“BSA”), as amended by The
International Money Laundering Abatement and Financial Anti-Terrorism Act of
2001, Title III of the USA PATRIOT Act (the “Patriot Act”), and other
authorizing statutes, executive orders and regulations administered by OFAC, and
related Securities and Exchange Commission, SRO or other agency rules and
regulations (collectively, the “Anti-Bribery, Anti-Money Laundering and
Anti-Terrorism Laws”), and has policies, procedures, internal controls and
systems that are reasonably designed to ensure such compliance.

 

(iii)         Senior Foreign Political Figure. Seller is not a Senior Foreign
Political Figure, or an Immediate Family Member or a Close Associate of a Senior
Foreign Political Figure, Seller is not controlled by a Senior Foreign Political
Figure, or an Immediate Family Member or a Close Associate of a Senior Foreign
Political Figure, and, to the best of Seller’s Knowledge, after making due
inquiry, none of the direct or indirect owners of ten percent (10%) or more of
Seller (other than any owner(s) of any interest(s) in a publicly-traded entity)
is a Senior Foreign Political Figure, or an Immediate Family Member or a Close
Associate of a Senior Foreign Political Figure. For purposes of this paragraph,
“Senior Foreign Political Figure” means a senior official in the executive,
legislative, administrative, military or judicial branches of a foreign
government (whether elected or not), a senior official of a major foreign
political party, or a senior executive of a foreign government-owned
corporation, and includes any corporation, business or other entity that has
been formed by, or for the benefit of, such senior official or executive;
“Immediate Family Member” of a Senior Foreign Political Figure typically
includes the Senior Foreign Political Figure’s parents, siblings, spouse,
children and in-laws; and “Close Associate” of a Senior Foreign Political Figure
means a person who is widely and publicly known to maintain an unusually close
relationship with Senior Foreign Political Figure, and includes a person who is
in a position to conduct substantial domestic and international financial
transactions on behalf of the Senior Foreign Political Figure.

 

 18 

 

 

(h)          No Litigation. Except as set forth on Schedule 3.1(h) attached
hereto, Seller has not received written notice of and has no Knowledge of any
pending or threatened (in writing) action, suit, arbitration, administrative or
judicial proceeding, or unsatisfied order or judgment against Seller which
pertains to the Property or the transaction contemplated by this Agreement,
which in either case, if adversely determined, would have an effect on the use,
operation, or value of the Property or on Seller’s ability to consummate the
transaction contemplated herein; provided, however, this Section 3.1(h) shall
not apply as to any pending or future dispossessory or similar actions as to
Property tenants.

 

(i)            No Violations of Law. Except as set forth on Schedule 3.1(i)
attached hereto, Seller has not received written notice from any Governmental
Authority of any violation of or non-compliance with, any Applicable Law
affecting the Property or any portion thereof, which remains unresolved.

 

(j)            Contracts. To Seller’s Knowledge, except for the Contracts listed
on the attached Schedule 3.1(j), there are no other Contracts with respect to
the Property. Seller is not in default under any Contracts, subject to the
running of any applicable notice and cure periods under such Contracts. As of
the Closing Date there shall be no earned but unpaid management fees owed by
Seller to any third parties with respect to the Property.

 

(k)           Rent Roll. The rent roll for the Property attached hereto as
Schedule 3.1(k) (the “Rent Roll”) is a copy of the Rent Roll that Seller relies
upon and uses in the ordinary course of its business. In respect of each of the
Leases, to Seller’s Knowledge, except as otherwise set forth in the Rent Roll or
delinquency report for the Property, Seller has not received written notice of
any material default by Seller under any of the Leases. Notwithstanding anything
in this Agreement to the contrary, Seller does not covenant or represent that
tenants under Leases will not be in default under their respective Leases, and
the existence of any default by any tenant under its Lease shall not affect the
obligations of Purchaser hereunder. No security deposits have been paid by any
tenants under the Leases which have not heretofore been returned, except as
listed on the Rent Roll.

 

(l)            Environmental Laws. Seller has not received written notice from
any Governmental Authority that it has violated or is potentially liable under
any Environmental Laws.

 

(m)          No Brokers. There are no broker’s or listing agreements or any
broker’s or finder’s fees or commissions (whether in connection with the Leases
or otherwise) for which Purchaser shall be responsible after Closing. All
leasing and brokerage commissions with respect to the Leases (including
renewals, extensions or expansions thereof whether pursuant to the express
provisions of the Leases or otherwise) have been paid in full, or will be paid
by Closing.

 

 19 

 

 

(n)          Contractors. All contractors, subcontractors, suppliers,
architects, engineers, and others who have performed services, labor, or
supplied material in connection with Seller’s ownership, operation, maintenance,
repair and management of the Property have been or at the Closing will be paid
in full and all liens arising therefrom (or claims which with the passage of
time or notice or both, could mature into liens) have been satisfied and
released, or shall be satisfied and released by the Closing Date.

 

(o)          Operating Statements. The operating statements for the Property
that are provided as a part of Seller’s Core Deliveries are copies of such
documents that Seller uses and relies upon in the ordinary course of its
business.

 

(p)          Licenses and Permits. To Seller’s Knowledge, the operation of the
Property as currently utilized does not violate any zoning, subdivision,
building or similar law, ordinance, order or regulation or any certificate of
occupancy issued with respect to the Property. To Seller’s Knowledge, no portion
of the Property and no provision in any of the Leases is in violation of any
law, ordinance, order, regulation of any Governmental Authority or requirement
or the requirements of any local board of fire underwriters (or other body
exercising similar functions).

 

(q)          Insurance. Seller now has in full force and effect casualty,
liability and business interruption insurance coverages in the amounts and types
reflected in the insurance certificate or certificates attached hereto as
Schedule 3.1(q).

 

(r)          Tenants. To Seller’s Knowledge, no tenant or any third party has
any right or option to purchase the Property or any portion thereof.

 

(s)          Employees. Seller has no employees.

 

(t)          No Condemnation. There is no pending or, to Seller’s Knowledge,
threatened (in writing) condemnation or similar proceeding relating to or
affecting the Property or any portion thereof, including, without limitation,
Seller’s title to the Property or any rights and interest in Seller’s Property,
nor does Seller have any Knowledge that any such action(s) is presently
contemplated. Seller agrees to give Purchaser prompt notice of any actual or
threatened (in writing) condemnation or similar proceeding between the Effective
Date and the Closing.

 

(u)          Bonds and Letters of Credit. There are no development bonds,
letters of credit or other collateral held by or posted with any Governmental
Authority or other third party with respect to any improvement, subdivision or
development obligations concerning any of the Real Property.

 

SECTION 3.2 Amendments to Schedules, Limitations on and Breaches of
Representations and Warranties of Seller.

 

(a)          Seller shall have the right to amend and supplement the schedules
to this Agreement from time to time prior to the Closing by providing a written
copy of such amendment or supplement to Purchaser; provided, however, that any
amendment or supplement to the schedules to this Agreement shall have no effect
for the purposes of determining whether a Seller breach has occurred, but shall
only establish such amendments and supplements as a Purchaser Waived Breach in
the event Purchaser proceeds to Closing following receipt of such information
and shall therefore apply only as a defense to limit the indemnification
obligations of Seller in Article 11 of this Agreement for the inaccuracy or
untruth of the representation or warranty qualified by such amendment or
supplement following Closing. Seller hereby acknowledges and agrees that
Purchaser expressly reserves and may freely exercise all rights and remedies
available to it under Section 13.2 of this Agreement following Seller’s
amendment or supplement of the schedules and exhibits to this Agreement.

 

 20 

 

 

(b)          Notwithstanding anything in this Agreement to the contrary, if the
representations and warranties relating to the Rent Roll as set forth in Section
3.1(k) and the status of the tenants thereunder were true and correct in all
material respects as of the Effective Date, no change in circumstances or status
of such tenants (e.g., defaults, bankruptcies, below market status or other
adverse matters relating to such tenants or a tenant’s exercise following the
Effective Date of any Lease termination rights not caused by the acts or
omissions of Seller) occurring after the Effective Date shall permit Purchaser
to terminate this Agreement or constitute grounds for Purchaser’s failure to
close or otherwise constitute a breach of any representation or warranty by
Seller.

 

(c)          For purposes of this Section 3.2:

 

(i)           “Representation Conditions” shall mean that all representations or
warranties of Seller were true, correct and complete in all material respects
when made.

 

(ii)          “Changed Condition Threshold” shall mean a Changed Condition (as
hereinafter defined) whose cost of cure will exceed $500,000.00 for the Property
individually or for the Property Group collectively, as determined by a third
party that is mutually acceptable to the parties in their commercially
reasonable discretion.

 

(d)          If, after the Effective Date and prior to the Closing Date,
Seller’s representations or warranties become untrue, inaccurate or incorrect (a
“Changed Condition”), Seller shall give Purchaser written notice thereof within
five (5) Business Days (but, in any event, prior to Closing) of Seller’s
Knowledge of the Changed Condition (a “Changed Condition Notice”).

 

(e)          If the Representation Conditions have been satisfied, but the
Changed Condition does not meet the Changed Condition Threshold, Seller shall
use commercially reasonable efforts to cause the Changed Condition to be cured
at or prior to Closing. In the event that, despite commercially reasonable
efforts, Seller is unable to cure the Changed Condition by Closing, Seller shall
not be in default hereunder, but Purchaser shall be entitled to a credit against
the Purchase Price at Closing equal to the estimated remaining cost to cure the
Changed Condition, which shall be determined by a third party that is mutually
acceptable to the parties in their commercially reasonable discretion.

 

 21 

 

 

(f)          If the Representation Conditions have been satisfied and the
Changed Condition meets or exceeds the Changed Condition Threshold, within five
(5) Business Days after the delivery of the Changed Condition Notice, Seller
shall notify Purchaser in writing of whether Seller (i) elects to cure the
Changed Condition by Closing, or (ii) declines to cure the Changed Condition. If
Seller elects to cure the Changed Condition by Closing pursuant to this Section
3.2(f), then the Purchaser shall be obligated to close on the Property pursuant
to the terms of this Agreement and Seller shall be obligated to cure the Changed
Condition at or prior to Closing. If Seller does not timely make an election
under this subsection (f), Seller shall be deemed to have declined to cure the
Changed Condition. If Seller declines to cure the Changed Condition, or is
deemed to have declined to do so, then Purchaser shall have five (5) Business
Days thereafter, to elect, as its sole and exclusive remedy (and the Closing
shall be automatically extended to account for such five (5) Business Day
period, if necessary), in its sole and absolute discretion, by written notice to
the Seller within said five (5) Business Day period, (x) to continue with the
purchase of the Property without adjustment of the Purchase Price, or (y)
to terminate this Agreement by providing written notice thereof to the Seller.
If Purchaser elects to terminate this Agreement pursuant to this Section 3.2(f),
the Earnest Money shall be immediately returned to Purchaser and thereafter the
parties shall be released from further liability or obligation hereunder, except
for those matters which specifically survive the termination hereof. If
Purchaser fails to notify the Seller and Escrow Agent of its election to
terminate this Agreement within said five (5) Business Day time period provided
above, Purchaser shall be deemed to have accepted the Changed Condition and to
have elected to purchase the Property without adjustment to the Purchase Price.
If Seller elects to cure the Changed Condition by Closing, but thereafter fails
to do so, Seller shall be in material default under this Agreement and all
remedies set forth in Section 13.2 shall be available to Purchaser due to such
default.

 

(g)          For the avoidance of doubt, in the event a representation or
warranty of Seller is untrue, incorrect or incomplete in any material respect
when made, or becomes untrue, incorrect or incomplete in any material respect on
or after the Effective Date due to a breach of any of the Seller’s obligations
or covenants under this Agreement, then Seller shall be in default under this
Agreement (subject to any applicable notice and cure rights), and all remedies
set forth in Section 13.2 shall be available to Purchaser.

 

SECTION 3.3 Covenants of Seller Prior to Closing.

 

(a)          From the Effective Date until the Closing or earlier termination of
this Agreement (or such earlier date as set forth below), Seller or Seller’s
agents shall:

 

(i)           Operation. Operate and maintain the Property in a manner generally
consistent with Seller’s past practices with respect to the Property (including
entering into new Leases), except that Seller shall not be required to make any
capital improvements to the Real Property.

 

(ii)          Notices. Notify Purchaser promptly upon receipt of written notices
of (i) violation, litigation, arbitration proceeding or administrative hearing
(including condemnation) before any Governmental Authority which affects Seller
or the Property, and is instituted after the Effective Date; (ii) default with
respect to any Contract; (iii) litigation commenced or threatened in writing
against Seller or Seller’s Property; (iv) litigation commenced or threatened in
writing by Seller (other than residential tenant eviction proceedings); and (v)
any other material written notice or communication received by Seller which
could have a material effect on the operation of Seller’s Property or on the
transactions contemplated under this Agreement.

 

 22 

 

 

(iii)         Insurance. Keep the Property insured against fire and other
hazards in such amounts and under such terms as are consistent with Seller’s
existing insurance program, provided that Seller may make adjustments in its
insurance coverage for the Property which are consistent with Seller’s
Affiliates’ general insurance program for apartment properties as in effect from
time to time.

 

(iv)         Performance Under Leases. Perform, or cause its agents to perform,
in all material respects, all material obligations of landlord or lessor under
the Leases.

 

(v)          Leasing Activity. Except for Leases or amendments to Leases entered
into pursuant to renewal notices mailed prior to the Effective Date, unless
Purchaser agrees otherwise in writing, any new leases or renewals of existing
leases for apartment units entered into by Seller after the Effective Date until
the Closing or earlier termination of this Agreement shall be on Seller’s
standard apartment lease form for the Property, and shall be for terms of no
less than six (6) months and no more than thirteen (13) months. In all cases,
Seller shall retain the discretion to set rent rates, concessions and other
terms of occupancy consistent with then-extant market conditions for the
Property. After the expiration of the Due Diligence Period, Purchaser shall have
the right to participate in a weekly call with Seller and its property manager
to discuss operation of the Property, which shall be scheduled by Seller at the
request of Purchaser, and which for the avoidance of doubt shall be a separate
call from Seller’s operation calls with its property manager.

 

(vi)          Contracts. Comply with all obligations of Seller under the
Contracts, and, unless Purchaser agrees otherwise in writing, not enter into any
service or other new Contract (or renew any existing Contract) that will be
binding on Purchaser or the Property after Closing, other than Contracts
necessary for emergency purposes in Seller’s commercially reasonable discretion.

 

(vii)        Conveyances or Encumbrances of Property. Seller shall not sell,
further pledge, encumber or otherwise transfer or dispose of all or any part of
the Property (except for (i) such items of fixtures and tangible personal
property as become obsolete or are disposed of in the ordinary course, and only
if replaced by an item of like quality and functionality (unless the same is no
longer necessary for the operation of such Property, as determined by Seller in
its commercially reasonable discretion), and (ii) such other transfers and
conveyances as are specifically permitted under this Agreement).

 

(viii)       Updated Rent Roll. From time to time, upon written request by
Purchaser (but in no event more often than once per week), Seller shall provide
to Purchaser an updated Rent Roll with respect to the Property, which shall be
in substantially the same format as the Rent Roll attached hereto as a portion
of Schedule 3.1(k).

 

(ix)         Property Changes. Not request or consent to any change, variance or
other modification to the zoning, permits, entitlements or development
incentives applicable to the Property, without Purchaser’s prior written consent
which shall not be unreasonably withheld.

 

 23 

 

 

(x)          Condition of Vacant Units. Make rent-ready all apartment units at
the Property which become vacant five (5) or more Business Days prior to the
Closing, or to credit Purchaser at Closing in the amount of $750.00 for each
apartment unit at the Property which is vacant on the Closing Date, which was
vacant five (5) or more Business Days prior to the Closing Date, and which has
not been made rent-ready. For purposes of this paragraph, “rent-ready condition”
shall mean the condition in which Seller currently delivers vacant units to new
tenants at the Property in Seller’s ordinary course of business and operations,
freshly painted and cleaned, with all appliances, fixtures, and equipment
therein in good working order.

 

(xi)         Intentionally omitted.

 

(xii)        Legal Compliance. Not use or occupy, or knowingly allow the use or
occupancy of, the Property in any manner which violates any governmental
requirements or which constitutes waste or a public or private nuisance or which
makes void, voidable or cancelable, or increases the premium of, any insurance
then in force with respect thereto. Seller shall maintain, or cause to be
maintained, in full force and effect all permits and licenses required to
operate the Property and to execute Leases for the Property and collect rent
thereunder.

 

(xiii)       Intentionally omitted.

 

(xiv)       Estoppels. Use commercially reasonable efforts to obtain and deliver
to Purchaser any estoppels Purchaser may reasonably require in connection with
the Permitted Exceptions (each individually an “Estoppel,” and collectively the
“Estoppels”); provided, however, Seller shall not be obligated to incur any non
de-minimis expense or fee to so obtain Estoppels other than may be required by
the terms of the Permitted Exception or to obtain any Estoppels from residential
tenants at the Property.

 

(xv)        Alterations. After the expiration of the Due Diligence Period, not
perform, nor permit the performance of, any material alterations, renovations or
improvements to the Property without Purchaser’s prior written consent, which
consent may be granted or withheld in Purchaser’s sole discretion, except for
(A) alterations or improvements required to ensure the safety of the Property,
and (B) the roofing repair work ongoing at the Property as of the Effective
Date, to the extent that such work continues after the expiration of the Due
Diligence Period.

 

(xvi)       Transition. Cooperate with Purchaser in transitioning ownership and
management of the Property to Purchaser or Purchaser’s designee, including,
without limitation, ensuring that all rents from and after the Closing Date
received by Seller are paid over to Purchaser or its designee.

 

(b)          Existing Agreements. Seller shall terminate (or cause to be
terminated) the Existing Management Agreement at or prior to Closing.

 

 24 

 

 

(c)          Assumed Contracts. If Purchaser delivers a written notice of
objection to any Contract prior to the expiration of the Due Diligence Period,
then, to the extent a termination right in favor of Seller is provided for in
such Contract, or if such Contract does not prohibit termination, the Seller
shall cause its Property Manager to provide a notice of termination within two
(2) Business Days of the expiration of the Due Diligence Period to the vendor
thereunder with respect to each such Contract to which Purchaser has timely
objected (collectively, the “Objectionable Contracts”); provided, however, that
(i) Purchaser may not object to any of the Contracts marked as “must assume” on
Schedule 3.1(j) and shall assume the same at Closing pursuant to the Bill of
Sale and Assignment; (ii) Seller shall have no obligation to terminate any
Contract which by its terms is not terminable or which cannot be terminated
without payment of an express termination fee or penalty, unless Purchaser
agrees in writing to pay such termination fee or penalty; (iii) if the
termination of any Objectionable Contract cannot be made effective upon the
Closing Date (it being agreed and acknowledged that Seller shall not be
obligated to pay any money to accomplish such termination), then such
Objectionable Contract shall be assumed by Purchaser at Closing pursuant to the
Bill of Sale and Assignment (together with all Assumed Contracts with respect to
the Property that do not constitute Objectionable Contracts) for the remaining
period of such Contract until its effective date of termination; and (iv)
Purchaser shall be responsible for any termination fees payable with respect to
the termination of any Objectionable Contracts. Notwithstanding the foregoing,
Purchaser shall not be required or entitled to assume: (x) any Contract that, by
its terms, may not be assigned to and assumed by Purchaser without the consent
of a third party, unless such third party’s written consent is actually obtained
at or before Closing; or (y) any Contract that is not reflected on Schedule
3.1(j). All Contracts that Purchaser is required to assume or elects to assume
hereunder are collectively referred to herein as the “Assumed Contracts.”

 

(d)          Anti-Terrorism Law. Seller shall take any actions that may be
required to comply with the terms of the Anti-Bribery, Anti-Money Laundering and
Anti-Terrorism Laws, as amended, any regulations promulgated under the foregoing
Applicable Laws, any sanctions program administered by the U.S. Department of
Treasury’s Office of Foreign Property Control or Financial Crimes Enforcement
Network, or any other Applicable Laws designed to combat corruption, bribery,
terrorism, drug-trafficking or money laundering.

 

(e)          Exclusivity. From the Effective Date until the Closing or earlier
termination of this Agreement, neither Seller, nor any of its brokers,
affiliates or agents, shall engage in discussions directly or through its
brokers, agents or representatives or otherwise negotiate with any Person or
party, other than with Purchaser, in connection with the sale of the Property or
any joint venture or similar transaction relating to the Property.

 

(f)          Intentionally omitted.

 

(g)          Excluded Assets. Nothing in this Section 3.3 shall restrict
Seller’s rights with respect to any Excluded Assets or give Purchaser any
approval, consent or other rights with respect thereto.

 

 25 

 

   

Article 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER

 

SECTION 4.1 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as follows:

 

(a)          Formation; Existence. Purchaser is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware.

 

(b)          Power; Authority. Purchaser has all requisite power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, the purchase of the Property and the consummation
of the transactions provided for herein have been duly authorized by all
necessary action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights and by
general principles of equity (whether applied in a proceeding at law or in
equity).

 

(c)          No Consents. No consent, license, approval, order, permit or
authorization of, or registration, filing or declaration with, any court,
administrative agency or commission or other Governmental Authority, is required
to be obtained or made in connection with the execution, delivery and
performance of this Agreement by Purchaser or any of Purchaser’s obligations in
connection with the transactions required or contemplated hereby.

 

(d)          No Conflicts. Purchaser’s execution, delivery and compliance with,
and performance of the terms and provisions of, this Agreement, and the purchase
of the Property, will not (i) conflict with or result in any violation of its
organizational documents, (ii) conflict with or result in any violation of any
provision of any bond, note or other instrument of indebtedness, contract,
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which Purchaser is a party in its individual capacity, or (iii)
violate any Applicable Law relating to Purchaser or its assets or properties,
except, in each case, for any conflict or violation which will not materially
adversely affect Purchaser’s ability to consummate the transactions contemplated
by this Agreement.

 

(e)          Bankruptcy. Purchaser has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by Purchaser’s creditors, (iii)
suffered the appointment of a receiver to take possession of all, or
substantially all, of Purchaser’s assets, which remains pending, or (iv)
suffered the attachment or other judicial seizure of all, or substantially all
of Purchaser’s assets, which remains pending.

 

(f)          Anti-Terrorism Laws. Neither Purchaser nor to Purchaser’s knowledge
any beneficial owner of Purchaser: (i) is listed in the Executive Order and/or
on any other list of terrorists or terrorist organizations maintained pursuant
to any of the rules and regulations of OFAC or pursuant to any other applicable
Orders; (ii) is a person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Executive Orders;
(iii) to Purchaser’s knowledge, is owned or controlled by, or acts for or on
behalf of, any person or entity on the Lists or any other person or entity who
has been determined by competent authority to be subject to the prohibitions
contained in the Executive Order, or (iv) is or has engaged in any dealings or
transactions, or is otherwise associated, with any Forbidden Entity. The
foregoing does not apply to any person or entity to the extent that such
person’s interest in Purchaser is through a US publicly traded entity.

 

 26 

 

 

SECTION 4.2 Covenants of Purchaser. From the Effective Date until the Closing or
earlier termination of this Agreement, Purchaser or Purchaser’s agents shall
take any actions that may be required to comply with the terms of the
Anti-Bribery, Anti-Money Laundering and Anti-Terrorism Laws, as amended, any
regulations promulgated under the foregoing Applicable Laws, any sanctions
program administered by the U.S. Department of Treasury’s Office of Foreign
Property Control or Financial Crimes Enforcement Network, or any other
Applicable Laws designed to combat corruption, bribery, terrorism, drug
trafficking or money laundering.

 

Article 5
CONDITIONS PRECEDENT TO CLOSING

 

SECTION 5.1 Conditions Precedent to Seller’s Obligations. Seller’s obligation to
consummate the transfer of the Property to Purchaser on the Closing Date is
subject to the satisfaction (or waiver by Seller in writing) as of Closing of
the following conditions; provided, however, if the failure of any such
condition is due to a default by Purchaser, Seller shall have the rights and
remedies provided in Section 13.1:

 

(a)          Each of the representations and warranties made by Purchaser in
this Agreement shall be true and correct in all material respects when made and
on and as of the Closing Date as though such representations and warranties were
made on and as of the Closing Date (unless such representation or warranty is
made on and as of a specific date, in which case it shall be true and correct in
all material respects as of such date).

 

(b)          Purchaser shall have performed or complied in all material respects
with each obligation and covenant required by this Agreement to be performed or
complied with by Purchaser for Closing.

 

(c)          Seller or Escrow Agent shall have received all of the documents
required to be delivered by Purchaser under Section 6.1.

 

(d)          Seller or Escrow Agent shall have received the Purchase Price in
accordance with Section 2.2 and all other amounts due to Seller hereunder.

 

(e)          Subject to Section 14.27 hereof, Section 14.27 of the Three
Property Purchase Agreement, and Section 14.27 of the Landings at Four Corners
Purchase Agreement, the transactions contemplated by the Three Property Purchase
Agreement and the Landings at Four Corners Purchase Agreement shall be
consummated in accordance with the terms and conditions thereof on the Closing
Date simultaneously with the Closing contemplated herein.

 

SECTION 5.2 Conditions Precedent to Purchaser’s Obligations. Purchaser’s
obligation to purchase and pay for the Property on the Closing Date is subject
to the satisfaction (or waiver by Purchaser in writing) as of Closing of the
following conditions; provided, however, if the failure of any such condition is
due to a default by Seller, Purchaser shall have the right and remedies provided
in Section 13.2:

 

 27 

 

 

(a)          Each of the representations and warranties made by Seller in this
Agreement shall be true and correct in all material respects when made and on
and as of the Closing Date as though such representations and warranties were
made on and as of the Closing Date (unless such representation or warranty is
made on and as of a specific date, in which case it shall be true and correct in
all material respects as of such date), subject, in all respects, to the rights
and obligations of the parties set forth in Section 3.2 of this Agreement.

 

(b)          Seller shall have performed or complied in all material respects
with each obligation and covenant required by this Agreement to be performed or
complied with by Seller for Closing.

 

(c)          Subject to Section 14.27 hereof, Section 14.27 of the Landings at
Four Corners Purchase Agreement, and Section 14.27 of the Third Property
Purchase Agreement, the transactions contemplated by the Three Property Purchase
Agreement and the Landings at Four Corners Purchase Agreement shall be
consummated in accordance with the terms and conditions thereof on the Closing
Date simultaneously with the Closing contemplated herein.

 

(d)          The Title Company shall be prepared and irrevocably committed to
issue an Owner’s Policy for the Property in the full amount of the Purchase
Price, subject only to the Permitted Exceptions; provided, however, if the Title
Company is unable or unwilling to issue the Owner’s Policy, before Purchaser
shall have the right to terminate this Agreement under this subsection 9(d), the
parties shall first make commercially reasonable efforts to secure the Owner’s
Policy from another title insurer satisfactory to Purchaser, and if necessary
the Closing Date shall be extended by a period of up to five (5) Business Days
to attempt to arrange such replacement coverage.

 

SECTION 5.3 Waiver of Conditions Precedent. The occurrence of the Closing shall
constitute conclusive evidence that Seller and Purchaser have respectively
waived any conditions which are not satisfied as of the Closing.

 

SECTION 5.4 Failure of Conditions Precedent. In the event that any condition
precedent to Closing has not been timely satisfied, then the party whose
condition to Closing has not been satisfied shall have the right to terminate
this Agreement by written notice delivered to the other party at Closing. In
connection with any such termination, Purchaser shall be entitled to a return of
the Earnest Money (less the Independent Contract Consideration), and Seller and
Purchaser shall be released from further obligation or liability hereunder
(except for those obligations and liabilities which expressly survive
termination); provided, however, nothing herein shall be deemed to constitute a
waiver of any right or remedy which the parties may have under Article 13.

 

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Article 6
CLOSING DELIVERIES

 

SECTION 6.1 Purchaser’s Closing Deliveries. Purchaser shall deliver the
following to the Escrow Agent for Closing, in compliance with Section 2.3
hereof:

 

(a)          With respect to the Property:

 

(i)           Purchaser’s duly executed counterpart to a Bill of Sale and
Assignment of Leases, Contracts and General Intangibles (the “Bill of Sale and
Assignment”) for the Property, in substantially the form of Exhibit A attached
hereto;

 

(ii)          Intentionally Deleted;

 

(iii)         Purchaser’ duly executed counterpart to a Prohibition Against
Condominium Conversion Agreement for the Property (the “Condominium Conversion
Prohibition Agreement”), in substantially the form of Exhibit C attached hereto;

 

(iv)         Purchaser’s duly executed counterpart to the Closing Statement; and

 

(v)         Intentionally Deleted.

 

(b)          With respect to the transactions contemplated hereunder:

 

(i)           The Purchase Price as specified in Section 2.2, as adjusted by the
application of the Earnest Money, and by the adjustments, prorations and credits
provided herein;

 

(ii)           to the extent that same are required to be executed by Purchaser
under Applicable Law, all transfer tax returns or forms required for the
conveyance of the Property, in each case, as prepared by Seller in coordination
with and reasonably acceptable to Purchaser and duly executed by Purchaser;

 

(iii)         such evidence as the Title Company may reasonably require as to
the authority of the Person or Persons executing documents on behalf of
Purchaser, and as to the legal existence and good standing of Purchaser;

 

(iv)         a certificate dated as of the Closing Date and duly executed by
Purchaser, stating that the representations and warranties of Purchaser
contained in Article 4 of this Agreement are true and correct in all material
respects as of the Closing Date; and

 

(v)         such additional documents as shall be reasonably requested by the
Escrow Agent or the Title Company to consummate the transaction contemplated by
this Agreement; provided, however, that in no event shall Purchaser be required
to indemnify the Title Company, the Escrow Agent, Seller, or any other party
pursuant to any such documents, or undertake any other material liability not
expressly contemplated in this Agreement, unless Purchaser elects to do so in
its sole discretion.

 

SECTION 6.2 Seller’s Closing Deliveries. Seller shall deliver the following to
the Escrow Agent for Closing, in compliance with Section 2.3 hereof:

 

(a)          Deed. A Texas special warranty deed in substantially the form of
Exhibit D attached hereto duly executed by Seller for the Real Property,
together with, as applicable, a quitclaim deed for the Real Property in
accordance with Section 8.1(b) hereof;

 

 29 

 

 

(b)          Condominium Conversion Prohibition Agreement. The Condominium
Conversion Prohibition Agreement, as duly executed by Seller.

 

(c)          Bill of Sale and Assignment. The Bill of Sale and Assignment, as
duly executed by Seller;

 

(d)          Tenant Notice. A duly executed notice letter to the tenants at the
Property (the “Tenant Notice”), in substantially the form of Exhibit B attached
hereto. Purchaser shall promptly deliver the same to all tenants following the
Closing;

 

(e)          Vendor Notices. To the extent not already provided to Purchaser,
letters to the vendors under Assumed Contracts for the Property, duly executed
by Seller;

 

(f)          Title Affidavit. A Texas Owner’s Affidavit in substantially the
form of Exhibit E attached hereto, duly executed by Seller (the “Title
Affidavit”);

 

(g)          FIRPTA Affidavit. A duly executed and notarized affidavit from
Seller that Seller is not a “foreign person” within the meaning of the Foreign
Investment in Real Property Tax Act of 1980, as amended;

 

(h)          Seller’s Closing Certificate. A duly executed certificate in the
form attached hereto as Exhibit F (the “Seller’s Closing Certificate”) from
Seller dated as of the Closing Date, stating that the representations and
warranties of Seller contained in Article 3 of this Agreement are true and
correct in all material respects as of the Closing Date;

 

(i)          Intentionally Deleted.

 

(j)          Closing Statement. Seller’s duly executed counterpart to the
Closing Statement;

 

(k)          Rent Roll. An updated Rent Roll for the Property, dated no earlier
than the date that is five (5) Business Days prior to the Closing Date (which
Seller’s Property Manager may provide), for purposes of preparing the Closing
Statement and attaching as an exhibit to the Seller’s Closing Certificate and to
the Title Affidavit;

 

(l)          Transfer Tax Forms. All transfer tax returns or forms required for
the conveyance of the Property, in each case as prepared by Seller in
coordination with Purchaser and, to the extent required under Applicable Law,
duly executed Seller;

 

(m)          Leases. To the extent in Seller’s possession or reasonable control,
originals (or copies if the Property maintains the Leases solely through an
electronic database) of the Leases, which requirement may be satisfied by
delivery at the on-site property management office for the Property, rather than
by delivery to the Escrow Agent;

 

(n)          Seller Authority Documents. Such evidence as the Title Company may
reasonably require as to the authority of the Person or Persons executing
documents on behalf of Seller, and as to the legal existence and good standing
of Seller;

 

 30 

 

 

(o)          Broker Documents. If required by the Title Company for the
Property, a broker’s lien waiver or affidavit regarding the Property from the
Broker, and/or an affidavit regarding commercial real estate brokers from the
Seller, in form and substance reasonably acceptable to the Title Company;

 

(p)          Possession. Possession of the Property subject only to the
Permitted Exceptions; and

 

(q)          Miscellaneous. Such additional documents as shall be reasonably
requested by the Escrow Agent or the Title Company to consummate the transaction
contemplated by this Agreement; provided, however, that in no event shall Seller
be required to indemnify the Title Company, the Escrow Agent, Purchaser, or any
other party pursuant to any such documents, or undertake any other material
liability not expressly contemplated in this Agreement, unless Seller elects to
do so in its sole discretion.

 

Article 7
INSPECTIONS; DUE DILIGENCE; RELEASE

 

SECTION 7.1 Inspections.

 

(a)          Purchaser Investigations. During the Due Diligence Period and until
Closing or the earlier termination of this Agreement, Purchaser and Purchaser’s
partners, agents, employees, lenders, investors, property managers,
representatives, attorneys, accountants, engineers, contractors, consultants and
licensees (collectively, “Purchaser’s Representatives”) shall have the right to
enter upon the Property and make such nondestructive on-site investigations,
inspections, audits, analyses, appraisals, studies and tests, including, without
limitation, surveys and engineering studies and reviewing Seller’s Deliveries
(individually, a “Purchaser Investigation” and collectively, the “Purchaser
Investigations”), as Purchaser deems necessary or advisable; provided, however,
that Purchaser shall not be permitted to conduct (i) any physically invasive
inspection, sampling or test, or (ii) testing or sampling required for a Phase
II environmental site assessment at the Property without Seller’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed to the
extent any Phase I environmental assessment identifies a recognized
environmental condition (meeting the ASTM E1527-13 standard) and recommends
further testing, but may otherwise be withheld in Seller’s sole discretion.

 

(b)          Procedures. Purchaser and Purchaser’s Representatives shall conduct
all Purchaser Investigations strictly in accordance with the following
procedures:

 

(i)           All Purchaser Investigations at the Property shall be conducted
during the normal business hours of the Property on Business Days, unless Seller
otherwise approves in writing and upon appropriate notice to tenants as required
under any Leases.

 

 31 

 

 

(ii)          Purchaser shall deliver to Seller a written notice of Purchaser’s
intent to perform any Purchaser Inspection at the Property, in each case at
least one (1) Business Day prior to the intended date of entry (notice to Brian
Rideout by electronic mail at brideout@bluerockmi.com shall satisfy this notice
requirement). Each such notice shall specify the Property and shall provide (A)
the intended date of entry and the portion of the Property to be entered, (B) a
description of the proposed Purchaser Investigations, including, without
limitation, a list of contractors who will be performing the proposed Purchaser
Investigations, and (C) in the instance of a physically invasive test otherwise
permitted hereunder, a copy of Purchaser’s testing plan outlining the tests that
Purchaser intends to perform, and such other information reasonably requested by
Seller in connection with such physically invasive testing. Neither Purchaser
nor any Purchaser’s Representative shall enter any portion of any Property until
Seller has given written approval of both the request and any testing plan,
which approval may be given by electronic mail to Jamie Shanks at
jshanks@carterhaston.com.

 

(iii)          A representative of Seller shall have the right, but not the
obligation, to be present during any Purchaser Investigation.

 

(iv)          Neither Purchaser nor any Purchaser’s Representative shall
interfere unreasonably with the use, occupancy or enjoyment rights of any
tenants, occupants, invitees, employees or contractors of Seller at the Property
or of any such tenants’ or occupants’ employees, contractors, customers or
guests.

 

(v)          Purchaser shall have no right to make inquiries of tenants,
occupants, invitees, employees or contractors of Seller without Seller’s prior
written consent, which may be conditioned upon an agent or representative of
Seller accompanying Purchaser or Purchaser’s Representatives during such
inquiries.

 

(vi)         Purchaser shall have the right to make customary inquiries to
confirm existing factual matters or to request publicly available information,
in either case, with regard to the Property, arising in connection with (i) a
Phase I environmental site assessment, (ii) a third-party zoning compliance
report, (iii) a zoning compliance letter from applicable governmental
authorities, (iv) a request for copies of permits and licenses, including
certificates of occupancy, (v) a request to the applicable Governmental
Authorities as to the status of the existing development rights or entitlements
with respect to the Property, or (vi) taxes attributable to the Property.
Notwithstanding the foregoing, neither Purchaser nor any Purchaser
Representative shall affirmatively request any governmental or
quasi-governmental agency to undertake any action which would or could lead to a
hearing before any governmental or quasi-governmental agency, or which would or
could lead to a note or notice of violation of law or municipal ordinance, order
or requirement imposed by such an agency, at the Property, or any change in
zoning, licenses, permits or other entitlements or any investigation or
restriction on the use of the Property or any part thereof by such an agency,
except to the extent that Seller provides prior written consent to such
inquiries in Seller’s sole discretion.

 

(vii)        Following each entry by Purchaser or any Purchaser’s Representative
with respect to any Purchaser Investigation, Purchaser shall promptly restore,
or cause to be restored, the Property to substantially the same condition as
existed immediately prior to the Purchaser Investigation. Except in connection
with radon testing, Purchaser shall not have the right to submit any samples or
other materials to any testing laboratory or similar facility without obtaining
the prior written consent of Seller in Seller’s sole discretion. The restoration
provisions of this subsection shall survive the termination or expiration of
this Agreement.

 

 32 

 

 

(viii)       Prior to entering onto the Property to conduct any Purchaser
Investigation, Purchaser shall obtain (or shall cause Purchaser’s
Representatives to obtain), and during the period of all Purchaser
Investigations shall maintain or cause to be maintained, at the sole expense of
Purchaser or Purchaser’s Representatives, with respect to the Property: (A)
commercial general liability (“CGL”) insurance, issued on a form at least as
broad as Insurance Services Office (“ISO”) Commercial General Liability Coverage
“occurrence” form CG 00 01 10 01 or another “occurrence” form providing
equivalent coverage, including contractual liability coverage with respect to
Purchaser’s obligations under this Agreement and personal injury liability
coverage, with limits of not less than Two Million Dollars ($2,000,000) for any
one occurrence and Five Million Dollars ($5,000,000) in the aggregate; (B)
comprehensive automobile liability insurance (covering any automobiles owned or
operated by Purchaser or Purchaser’s Representatives) issued on a form at least
as broad as ISO Business Auto Coverage form CA 00 01 07 97 or other form
providing equivalent coverage; (C) worker’s compensation insurance, and (D)
employer’s liability insurance. Such automobile liability insurance shall be in
an amount not less than One Million Dollars ($1,000,000) for each accident. Such
worker’s compensation insurance shall carry minimum limits as defined by the law
of the jurisdiction in which the applicable Property is located (as the same may
be amended from time to time). Such employer’s liability insurance shall be in
an amount not less than Two Million Dollars ($2,000,000) for each accident, Two
Million Dollars ($2,000,000) disease-policy limit, and Two Million Dollars
($2,000,000) disease-each employee. Seller (and, upon Seller’s request, the
Property Manager and Property mortgagee(s)) shall be named as additional
insureds on the CGL and automobile liability insurance policies with respect to
liability arising out of the named insured’s acts or omissions relating to the
Property. Each such insurance policy shall be subject to Seller’s prior written
approval, not to be unreasonably withheld or delayed (for avoidance of doubt,
such written approval shall be deemed given by Seller allowing Purchaser and
Purchaser’s Representatives on the Property to the extent the insurance policy
otherwise satisfies the coverage types and amounts set forth in this Section
7.1(b)(viii)). Prior to making any entry upon the Property, Purchaser or
Purchaser’s Representatives shall furnish to Seller a certificate of insurance
evidencing the foregoing coverages for the Property, which certificate of
insurance shall be in form and substance reasonably satisfactory to Seller.

 

(ix)          Purchaser agrees (A) to promptly pay when due all costs associated
with the Purchaser Investigations and (B) not to cause, permit or suffer any
lien or encumbrance to be asserted against the Property related to the Purchaser
Investigations. The provisions of this subsection shall survive the termination
or expiration of this Agreement.

 

(x)          Purchaser shall comply with all Applicable Law which might in any
way relate to the Purchaser Investigations.

 

(xi)          Neither Purchaser nor any Purchaser’s Representative shall damage
any part of the Property or any personal property owned or held by any tenant,
occupant or third party.

 

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(c)          Indemnification. Purchaser shall indemnify, hold harmless and
defend Seller, and its members, officers, managers, employees and shareholders
(collectively, the “Seller Indemnified Parties”) from and against any and all
Claims actually incurred by Seller or any other indemnified party and caused by
and arising out of (i) any Purchaser Investigation (i.e., without regard to the
phrase “nondestructive” included in the definition of Purchaser Investigation)
conducted by or at the behest of Purchaser and/or any Purchaser’s
Representative, or (ii) any breach by Purchaser and/or any Purchaser’s
Representative of the terms of this Section 7.1. Notwithstanding the foregoing,
Purchaser shall have no liability for (and no obligation to indemnify, defend
and/or hold any of the Seller Indemnified Parties harmless from) Claims arising
from (a) pre-existing conditions merely discovered by Purchaser Investigations
and not exacerbated by Purchaser or Purchaser’s Representatives (and in any
event, only to the extent of such exacerbation), (b) the gross negligence or
intentional wrongdoing of Seller, the Seller Indemnified Parties, or any
Property’s tenants, occupants and invitees (other than Purchaser and Purchaser’s
Representatives), or (c) any consequential, punitive, special or other similar
damages. For the avoidance of doubt, Purchaser acknowledges that this Section
7.1(c) also applies to Claims arising during the portion of the Due Diligence
Period that preceded the Effective Date of this Agreement. This Section 7.1(c)
shall survive Closing or any termination of this Agreement.

 

(d)          WAIVER AND RELEASE. PURCHASER, FOR ITSELF AND ALL OF PURCHASER’S
REPRESENTATIVES, HEREBY WAIVES AND RELEASES EACH OF SELLER AND ITS MEMBERS,
OFFICERS, MANAGERS, EMPLOYEES AND SHAREHOLDERS FROM ALL CLAIMS RESULTING
DIRECTLY OR INDIRECTLY FROM ACCESS TO, ENTRANCE UPON, OR INSPECTION OF THE
PROPERTY BY PURCHASER OR ANY OF PURCHASER’S REPRESENTATIVES FROM AND AFTER THE
COMMENCEMENT OF THE DUE DILIGENCE PERIOD, UNLESS ARISING FROM THE WRONGFUL
MISCONDUCT OR GROSS NEGLIGENCE OF SELLER. THE PROVISIONS OF THIS SECTION 7.1(D)
SHALL SURVIVE CLOSING OR ANY TERMINATION OF THIS AGREEMENT. FOR THE AVOIDANCE OF
DOUBT, PURCHASER ACKNOWLEDGES THAT THIS SECTION 7.1(D) ALSO APPLIES TO ALL
CLAIMS ARISING DURING THE PORTION OF THE DUE DILIGENCE PERIOD THAT PRECEDED THE
EFFECTIVE DATE OF THIS AGREEMENT.

 

SECTION 7.2 Seller’s Deliveries.

 

(a)          To the extent that it has not already done so under the Access
Agreement, Seller will make available to Purchaser and Purchaser’s
Representatives for their review, in an online data room and/or at the Property,
items and information pertaining to the Property set forth on Schedule B
attached hereto (collectively referred to as the “Seller’s Deliveries”). Except
as otherwise set forth in this Agreement, the Seller’s Deliveries are made
available to Purchaser without representation or warranty by, or recourse
against, Seller, it being agreed that Purchaser shall not rely on such documents
and shall independently verify the truth, accuracy and completeness of said
information and/or items contained therein.

 

(b)          If this Agreement is terminated prior to Closing, within seven (7)
days from the date of Seller’s request, Purchaser shall return or cause to be
returned to Seller or destroy or cause to be destroyed all of the Seller’s
Deliveries (and provide written confirmation of such destruction to Seller).
This Section 7.2(b) shall survive the termination of this Agreement.

 

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SECTION 7.3 Purchaser’s Termination Right.

 

(a)          On or before the expiration of the Due Diligence Period, Purchaser
shall deliver written notice (the “Diligence Notice”) to Seller stating either
(i) that Purchaser elects to terminate this Agreement, in which event the Escrow
Agent shall return the Earnest Money to Purchaser without the consent of Seller
or any other Person and no party shall have any further rights or obligations
under this Agreement (except for provisions hereof that are expressly stated to
survive a termination of this Agreement), or (ii) that Purchaser elects not to
terminate this Agreement, in which event (A) Purchaser shall thereupon be deemed
to have waived any right to terminate this Agreement pursuant to the provisions
of this Section 7.3(a) and this Agreement shall continue in full force and
effect in accordance with its terms and (B) the Earnest Money shall thereupon
become nonrefundable, except as expressly specified in this Agreement.
Purchaser’s failure to timely deliver the Diligence Notice to Seller shall be
deemed to constitute Purchaser’s election not to terminate this Agreement (i.e.
to elect clause (ii) above). For the avoidance of doubt, Purchaser’s right to
terminate this Agreement pursuant to clause (i) above shall be made at the sole
discretion of Purchaser and can be made for any reason or no reason.

 

(b)          Purchaser hereby agrees that in the event Purchaser delivers (or is
deemed to have delivered) a Diligence Notice electing not to terminate this
Agreement, the same shall constitute Purchaser’s acknowledgment that Purchaser
has had adequate opportunity to consider, inspect and review to its satisfaction
the physical, environmental, economic and legal condition of the Property and
all files and information in Seller’s possession that Purchaser deems material
to the purchase of the Property.

 

SECTION 7.4 Seller’s Disclaimer. Purchaser acknowledges the following:

 

ANY INFORMATION PROVIDED OR TO BE PROVIDED BY OR ON BEHALF OF SELLER WITH
RESPECT TO THE PROPERTY IS PROVIDED SOLELY FOR PURCHASER’S CONVENIENCE. SUCH
INFORMATION WAS OR WILL BE OBTAINED FROM A VARIETY OF SOURCES, INCLUDING FROM
SELLER’S PROPERTY MANAGER. SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND MAKES NO (AND EXPRESSLY DISCLAIMS ALL)
REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION, EXCEPT
AS SET FORTH IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS TO BE DELIVERED BY
SELLER. EXCEPT AS OTHERWISE PROVIDED HEREIN OR IN SELLER’S CLOSING DOCUMENTS,
SELLER SHALL NOT BE LIABLE FOR ANY MISTAKES, OR OMISSIONS, OR FOR ANY PARTY’S
FAILURE TO INVESTIGATE THE PROPERTY, NOR SHALL SELLER BE BOUND IN ANY MANNER BY
ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, APPRAISALS, ENVIRONMENTAL
SITE ASSESSMENTS OR OTHER INFORMATION PERTAINING TO THE PROPERTY OR THE
OPERATION THEREOF, FURNISHED BY SELLER, SELLER’S PROPERTY MANAGER, SELLER’S
REPRESENTATIVES OR ANY OTHER PERSON ACTING ON BEHALF OF SELLER, EXCEPT AS SET
FORTH IN THIS AGREEMENT OR IN SELLER’S CLOSING DOCUMENTS.

 

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SECTION 7.5 Examination; No Contingencies.

 

(a)          IN ENTERING INTO THIS AGREEMENT, PURCHASER HAS NOT BEEN INDUCED BY
AND HAS NOT RELIED UPON ANY WRITTEN OR ORAL REPRESENTATIONS, WARRANTIES OR
STATEMENTS, WHETHER EXPRESS OR IMPLIED, MADE BY SELLER, OR ANY AFFILIATE, AGENT,
EMPLOYEE, OR OTHER REPRESENTATIVE OF SELLER, OR BY ANY BROKER OR ANY OTHER
PERSON REPRESENTING OR PURPORTING TO REPRESENT SELLER WITH RESPECT TO THE
PROPERTY, THE CONDITION OF THE PROPERTY OR ANY OTHER MATTER AFFECTING OR
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN THOSE EXPRESSLY SET
FORTH IN THIS AGREEMENT OR IN THE SELLER’S CLOSING DOCUMENTS. PURCHASER’S
OBLIGATIONS UNDER THIS AGREEMENT SHALL NOT BE SUBJECT TO ANY CONTINGENCIES,
DILIGENCE OR CONDITIONS EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. DURING
ITS DUE DILIGENCE PERIOD AND PURSUANT TO THE TERMS OF THIS AGREEMENT, PURCHASER
IS ENCOURAGED TO CONDUCT AN INDEPENDENT INVESTIGATION AND INSPECTION OF THE
PROPERTY, UTILIZING SUCH EXPERTS AS PURCHASER DEEMS TO BE NECESSARY FOR AN
INDEPENDENT ASSESSMENT OF THE IMPROVEMENTS AND EQUIPMENT USED IN THE OPERATION
OF THE PROPERTY, AND COMPLIANCE OF THE PROPERTY (INCLUDING SPECIFICALLY THE
IMPROVEMENTS) WITH APPLICABLE LAWS, INCLUDING THE FEDERAL AMERICANS WITH
DISABILITIES ACT, THE TEXAS ARCHITECTURAL BARRIERS ACT, AND/OR APPLICABLE
ENVIRONMENTAL LAWS. PURCHASER AGREES THAT THE PROPERTY WILL BE SOLD AND CONVEYED
TO (AND ACCEPTED BY) PURCHASER AT CLOSING IN THE THEN-EXISTING CONDITION OF THE
PROPERTY, AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR VERBAL
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR ARISING
BY OPERATION OF LAW, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN
SELLER’S CLOSING DOCUMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
EXCEPT AS SET FORTH IN THIS AGREEMENT OR IN SELLER’S CLOSING DOCUMENTS, THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE WITHOUT STATUTORY, EXPRESS OR
IMPLIED WARRANTY, REPRESENTATION, AGREEMENT, STATEMENT OR EXPRESSION OF OPINION
OF OR WITH RESPECT TO THE CONDITION OF THE PROPERTY OR ANY ASPECT THEREOF,
INCLUDING, WITHOUT LIMITATION, (I) ANY AND ALL STATUTORY, EXPRESS OR IMPLIED
REPRESENTATIONS OR WARRANTIES RELATED TO THE SUITABILITY FOR HABITATION,
MERCHANTABILITY, WORKMANLIKE CONSTRUCTION OR FITNESS FOR USE OR ACCEPTABILITY
FOR THE PURPOSE INTENDED BY PURCHASER OR ANY WARRANTIES OR COVENANTS REFERRED TO
IN SECTION 5.023 OF THE TEXAS PROPERTY CODE (OR ITS SUCCESSORS) WITH RESPECT TO
ANY OF THE REAL PROPERTY OR ITS CONDITION OR THE CONSTRUCTION, PROSPECTS,
OPERATIONS OR RESULTS OF OPERATIONS OF THE PROPERTY, (II) ANY STATUTORY, EXPRESS
OR IMPLIED REPRESENTATIONS OR WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR
PROMISE, BY ANY DESCRIPTION OF THE PROPERTY OR BY OPERATION OF LAW, AND (III)
ALL OTHER STATUTORY, EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES BY SELLER
OF ANY TYPE WHATSOEVER. PURCHASER ACKNOWLEDGES THAT PURCHASER HAS KNOWLEDGE AND
EXPERTISE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE PURCHASER TO EVALUATE
THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

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(b)          FOR PURPOSES OF THIS AGREEMENT, THE TERM “CONDITION OF THE
PROPERTY” MEANS THE FOLLOWING MATTERS:

 

(i)           PHYSICAL CONDITION OF THE REAL PROPERTY. THE QUALITY, NATURE AND
ADEQUACY OF THE PHYSICAL CONDITION OF THE REAL PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE QUALITY OF THE DESIGN, LABOR AND MATERIALS USED TO CONSTRUCT THE
IMPROVEMENTS INCLUDED IN THE REAL PROPERTY; THE CONDITION OF STRUCTURAL
ELEMENTS, FOUNDATIONS, ROOFS, GLASS, MECHANICAL, PLUMBING, ELECTRICAL, HVAC,
SEWAGE, AND UTILITY COMPONENTS AND SYSTEMS; THE CAPACITY OR AVAILABILITY OF
SEWER, WATER, OR OTHER UTILITIES; THE GEOLOGY, FLORA, FAUNA, SOILS, SUBSURFACE
CONDITIONS, GROUNDWATER, LANDSCAPING, AND IRRIGATION OF OR WITH RESPECT TO THE
REAL PROPERTY, THE LOCATION OF THE REAL PROPERTY IN OR NEAR ANY SPECIAL TAXING
DISTRICT, FLOOD HAZARD ZONE, WETLANDS AREA, PROTECTED HABITAT, GEOLOGICAL FAULT
OR SUBSIDENCE ZONE, HAZARDOUS WASTE DISPOSAL OR CLEAN-UP SITE, OR OTHER SPECIAL
AREA, THE EXISTENCE, LOCATION, OR CONDITION OF INGRESS, EGRESS, ACCESS, AND
PARKING; THE CONDITION OF THE PERSONAL PROPERTY AND ANY FIXTURES; AND THE
PRESENCE OF ANY ASBESTOS OR OTHER HAZARDOUS MATERIALS, DANGEROUS, OR TOXIC
SUBSTANCE, MATERIAL OR WASTE IN, ON, UNDER OR ABOUT THE REAL PROPERTY AND THE
IMPROVEMENTS LOCATED THEREON.

 

(ii)         ADEQUACY OF THE PROPERTY. THE ECONOMIC FEASIBILITY, CASH FLOW AND
EXPENSES OF THE PROPERTY, AND HABITABILITY, MERCHANTABILITY, FITNESS,
SUITABILITY AND ADEQUACY OF THE REAL PROPERTY FOR ANY PARTICULAR USE OR PURPOSE.

 

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(iii)        LEGAL COMPLIANCE OF THE PROPERTY. THE COMPLIANCE OR NON-COMPLIANCE
OF SELLER OR THE OPERATION OF THE PROPERTY OR ANY PART THEREOF IN ACCORDANCE
WITH, AND THE CONTENTS OF, (A) ALL CODES, LAWS, ORDINANCES, REGULATIONS,
AGREEMENTS, LICENSES, PERMITS, APPROVALS AND APPLICATIONS OF OR WITH ANY
GOVERNMENTAL AUTHORITIES ASSERTING JURISDICTION OVER THE PROPERTY, INCLUDING,
WITHOUT LIMITATION, THOSE RELATING TO ZONING, BUILDING, PUBLIC WORKS, PARKING,
FIRE AND POLICE ACCESS, HANDICAP ACCESS, LIFE SAFETY, SUBDIVISION AND
SUBDIVISION SALES, AND HAZARDOUS MATERIALS, DANGEROUS, AND TOXIC SUBSTANCES,
MATERIALS, CONDITIONS OR WASTE, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF
HAZARDOUS MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY THAT WOULD CAUSE STATE
OR FEDERAL AGENCIES TO REQUIRE CLEANUP OR MITIGATION WORK AT THE PROPERTY UNDER
ANY APPLICABLE LEGAL REQUIREMENTS AND (B) ALL AGREEMENTS, COVENANTS, CONDITIONS,
RESTRICTIONS (PUBLIC OR PRIVATE), CONDOMINIUM PLANS, DEVELOPMENT AGREEMENTS,
SITE PLANS, BUILDING PERMITS, BUILDING RULES, AND OTHER INSTRUMENTS AND
DOCUMENTS GOVERNING OR AFFECTING THE USE, MANAGEMENT, AND OPERATION OF THE
PROPERTY.

 

(iv)         SELLER’S CORE DELIVERIES. THE MATTERS DISCLOSED IN THE SELLER’S
CORE DELIVERIES.

 

(v)          INSURANCE. THE AVAILABILITY, COST, TERMS AND COVERAGE OF LIABILITY,
HAZARD, COMPREHENSIVE AND ANY OTHER INSURANCE OF OR WITH RESPECT TO THE
PROPERTY.

 

(vi)         CONDITION OF TITLE. SUBJECT TO SECTION 8.3, THE CONDITION OF TITLE
TO THE REAL PROPERTY, INCLUDING, WITHOUT LIMITATION, VESTING, LEGAL DESCRIPTION,
MATTERS AFFECTING TITLE, TITLE DEFECTS, LIENS, ENCUMBRANCES, BOUNDARIES,
ENCROACHMENTS, MINERAL RIGHTS, OPTIONS, EASEMENTS, AND ACCESS; VIOLATIONS OF
RESTRICTIVE COVENANTS, ZONING ORDINANCES, SETBACK LINES, OR DEVELOPMENT
AGREEMENTS; THE AVAILABILITY, COST, AND COVERAGE OF TITLE INSURANCE; LEASES,
RENTAL AGREEMENTS, OCCUPANCY AGREEMENTS, RIGHTS OF PARTIES IN POSSESSION OF,
USING, OR OCCUPYING THE REAL PROPERTY; AND STANDBY FEES, TAXES, BONDS AND
ASSESSMENTS.

 

 38 

 

 

SECTION 7.6 RELEASE.

 

(a)          SUBJECT TO THE TERMS OF THIS AGREEMENT AND THE CLOSING DOCUMENTS,
PURCHASER HEREBY AGREES THAT EFFECTIVE AS OF THE CLOSING DATE, SELLER, AND EACH
OF SELLER’S PARTNERS, MEMBERS, TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, PROPERTY MANAGERS, ASSET MANAGERS, AGENTS, ATTORNEYS,
AFFILIATES AND RELATED ENTITIES, HEIRS, SUCCESSORS, AND ASSIGNS (COLLECTIVELY,
THE “RELEASED PARTIES”) SHALL BE, AND ARE HEREBY, FULLY AND FOREVER RELEASED AND
DISCHARGED FROM ANY AND ALL LIABILITIES, LOSSES, CLAIMS (INCLUDING THIRD PARTY
CLAIMS), DEMANDS, DAMAGES (OF ANY NATURE WHATSOEVER), CAUSES OF ACTION, COSTS,
PENALTIES, FINES, JUDGMENTS, REASONABLE ATTORNEYS’ FEES, CONSULTANTS’ FEES AND
COSTS AND EXPERTS’ FEES (COLLECTIVELY, “CLAIMS”) WITH RESPECT TO ANY AND ALL
CLAIMS, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN,
THAT MAY ARISE ON ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE PROPERTY
INCLUDING, WITHOUT LIMITATION, THE PHYSICAL, ENVIRONMENTAL AND STRUCTURAL
CONDITION OF THE PROPERTY OR THE REAL PROPERTY OR ANY LAW OR REGULATION
APPLICABLE THERETO, INCLUDING, WITHOUT LIMITATION, ANY CLAIM OR MATTER
(REGARDLESS OF WHEN IT FIRST APPEARED) RELATING TO OR ARISING FROM (A) THE
PRESENCE OF ANY ENVIRONMENTAL PROBLEMS, OR THE USE, PRESENCE, STORAGE, RELEASE,
DISCHARGE, OR MIGRATION OF HAZARDOUS MATERIALS ON, IN, UNDER OR AROUND THE REAL
PROPERTY REGARDLESS OF WHEN SUCH HAZARDOUS MATERIALS WERE FIRST INTRODUCED IN,
ON OR ABOUT THE REAL PROPERTY, (B) ANY PATENT OR LATENT DEFECTS OR DEFICIENCIES
WITH RESPECT TO THE PROPERTY, (C) ANY AND ALL MATTERS RELATED TO THE PROPERTY OR
ANY PORTION THEREOF, INCLUDING WITHOUT LIMITATION, THE CONDITION AND/OR
OPERATION OF THE PROPERTY AND EACH PART THEREOF, (D) ANY AND ALL MATTERS RELATED
TO THE CURRENT OR FUTURE ZONING OR USE OF THE REAL PROPERTY, AND (E) THE
PRESENCE, RELEASE AND/OR REMEDIATION OF ASBESTOS AND ASBESTOS-CONTAINING
MATERIALS IN, ON OR ABOUT THE REAL PROPERTY REGARDLESS OF WHEN SUCH ASBESTOS AND
ASBESTOS CONTAINING MATERIALS WERE FIRST INTRODUCED IN, ON OR ABOUT THE REAL
PROPERTY; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL RELEASED PARTIES BE RELEASED
FROM ANY CLAIMS ARISING PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR SELLER’S
OBLIGATIONS, IF ANY, UNDER THE CLOSING DOCUMENTS. EFFECTIVE AS OF THE CLOSING
DATE, PURCHASER HEREBY WAIVES AND AGREES NOT TO COMMENCE ANY ACTION, LEGAL
PROCEEDING, CAUSE OF ACTION OR SUITS IN LAW OR EQUITY, OF WHATEVER KIND OR
NATURE, INCLUDING, BUT NOT LIMITED TO, ANY CAUSE OF ACTION OR SUIT UNDER
ENVIRONMENTAL LAWS, AGAINST THE RELEASED PARTIES OR THEIR AGENTS IN CONNECTION
WITH THE RELEASED CLAIMS DESCRIBED ABOVE.

 

 39 

 

 

(b)          TO THE GREATEST EXTENT PERMITTED BY LAW SUBJECT TO THE TERMS OF
THIS AGREEMENT AND THE CLOSING DOCUMENTS, PURCHASER HEREBY ACKNOWLEDGES AND
AGREES THAT FACTUAL MATTERS NOT KNOWN TO IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE
RISE TO CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGE, COSTS,
LOSSES AND EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED.
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THE WAIVERS AND RELEASES HEREIN
HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT THE FOREGOING SENTENCE AND THAT,
EFFECTIVE AS OF THE CLOSING DATE, SUBJECT TO THE TERMS OF THIS AGREEMENT AND THE
CLOSING DOCUMENTS, PURCHASER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE
AND ACQUIT SELLER FROM ANY SUCH UNKNOWN CLAIMS, DEBTS, AND CONTROVERSIES WHICH
MIGHT IN ANY WAY BE INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION GIVEN TO
SELLER BY PURCHASER IN EXCHANGE FOR THE SELLER’S PERFORMANCE HEREUNDER.

 

(c)          THIS RELEASE SHALL BE GIVEN FULL FORCE AND EFFECT ACCORDING TO EACH
OF ITS EXPRESSED TERMS AND PROVISIONS, INCLUDING THOSE RELATING TO UNKNOWN AND
UNSUSPECTED CLAIMS, DAMAGES AND CAUSES OF ACTION.

 

(d)          SELLER HAS GIVEN PURCHASER MATERIAL CONCESSIONS REGARDING THIS
TRANSACTION IN EXCHANGE FOR PURCHASER’S AGREEING TO THE PROVISIONS OF THIS
SECTION 7.6. THE PROVISIONS OF THIS SECTION 7.6 SHALL SURVIVE CLOSING WITHOUT
LIMITATION AND SHALL NOT BE DEEMED MERGED INTO ANY INSTRUMENT OR CONVEYANCE
DELIVERED AT CLOSING.

 

(e)          NOTHING IN THIS AGREEMENT SHALL BE INTERPRETED AS WAIVING ANY CLAIM
OF PURCHASER WITH RESPECT TO (A) ANY BREACH BY SELLER OF ANY EXPRESS
REPRESENTATIONS, WARRANTIES OR COVENANTS MADE BY SELLER IN THIS AGREEMENT OR THE
CLOSING DOCUMENTS, OR (B) ANY THIRD PARTY (INCLUDING GOVERNMENTAL) CLAIM,
DEMAND, OR ACTION AGAINST PURCHASER REGARDING THE PROPERTY THAT RESULTS FROM THE
ACTS OR OMISSIONS OF A RELEASED PARTY OR OTHER EVENTS OCCURRING DURING SELLER’S
PERIOD OF OWNERSHIP OF THE PROPERTY. FURTHER, NOTWITHSTANDING ANYTHING IN IN
THIS AGREEMENT TO THE CONTRARY: (I) PURCHASER SHALL HAVE THE RIGHT TO DEFEND
GOVERNMENT AND THIRD-PARTY CLAIMS BY ALLEGING THAT SELLER, A RELEASED PARTY OR
SOMEONE ACTING ON SELLER’S BEHALF, NOT PURCHASER, IS LIABLE FOR SUCH CLAIMS AND
PURCHASER HAS NO OBLIGATION TO INDEMNIFY A RELEASED PARTY FOR GOVERNMENTAL OR
THIRD PARTY CLAIMS ASSERTED BEFORE OR AFTER THE CLOSING AS A RESULT OF ANY ACT
OR OMISSION TAKEN OR FAILED TO BE TAKEN BY OR ON A RELEASED PARTY’S BEHALF PRIOR
TO THE CLOSING; AND (II) THE ACKNOWLEDGMENTS, WAIVERS AND RELEASES SET FORTH BY
PURCHASER IN THIS AGREEMENT SHALL NOT APPLY TO THIRD-PARTY TORT CLAIMS RELATING
TO THE PROPERTY AND OCCURRING DURING SELLER’S OWNERSHIP OF THE PROPERTY.
ADDITIONALLY, SELLER AND PURCHASER HEREBY ACKNOWLEDGE AND AGREE THAT THE WAIVERS
AND RELEASES SET FORTH BY PURCHASER IN THIS AGREEMENT ARE NOT INTENDED TO BE AND
SHALL NOT BE CONSTRUED AS A WAIVER OF SIMILAR CLAIMS AGAINST ANY OF SELLER’S
PREDECESSORS-IN-TITLE WITH RESPECT TO THE PROPERTY (“PREDECESSORS”), OR ANY SUCH
PREDECESSOR’S OFFICERS, MEMBERS, MANAGERS, DIRECTORS, PARTNERS, EMPLOYEES,
AGENTS OR CONTRACTORS, OR ANY OTHER PERSON ACTING ON BEHALF OF ANY SUCH
PREDECESSORS.

 

 40 

 

 

(f)          ADDITIONALLY, NOTWITHSTANDING ANY PROVISION HEREOF TO THE CONTRARY,
THE ACKNOWLEDGMENTS, WAIVERS AND RELEASES SET FORTH IN THIS AGREEMENT BY
PURCHASER AND THE SURVIVAL PERIOD (AS SET FORTH IN SECTION 11.4 OF THIS
AGREEMENT) SHALL NOT APPLY TO ANY CLAIM WITH RESPECT TO ANY FRAUDULENT
MISREPRESENTATION BY SELLER; PROVIDED, HOWEVER, IN THE EVENT THAT PURCHASER
BRINGS AN ACTION AGAINST SELLER ALLEGING FRAUD AND PURCHASER THEREAFTER FAILS TO
OBTAIN A FINAL, UNAPPEALABLE JUDGMENT AGAINST SELLER ON THE BASIS OF FRAUD, THEN
PURCHASER SHALL PROMPTLY PAY TO SELLER AS LIQUIDATED DAMAGES, AND NOT AS A
PENALTY, THE AMOUNT OF TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000.00). PURCHASER AND SELLER AGREE THAT SELLER’S DAMAGES RESULTING FROM
AN ALLEGATION OF FRAUD ARE DIFFICULT, IF NOT IMPOSSIBLE, TO DETERMINE, AND THAT
THE AMOUNT SET FORTH IN THIS SECTION 7.6(f) IS A FAIR ESTIMATE OF THOSE DAMAGES
WHICH HAS BEEN AGREED TO IN AN EFFORT TO CAUSE THE AMOUNT OF SUCH DAMAGES TO BE
CERTAIN.

 

SECTION 7.7 Effect of Purchaser Waiver of Lead-Based Paint Inspections.
Purchaser acknowledges that it has had or will have the opportunity to undertake
studies, inspections or investigations of the Real Property as Purchaser deemed
or deems necessary to evaluate the presence of lead-based paint and/or
lead-based paint hazards on the Real Property. To the extent that Purchaser has
waived or otherwise declined the opportunity to undertake such inspections and
investigations as a condition to the completion of the transaction under the
terms of the Agreement, Purchaser has knowingly and voluntarily done so.
Purchaser understands and acknowledges that certain of the Improvements or
portions thereof may have been built prior to 1978, and that lead-based paint
and/or lead-based paint hazards may be present on the Real Property. Except as
otherwise set forth in this Agreement or the Closing Documents, Seller shall
have no responsibility or liability with respect to any such presence of
lead-based paint at the Property.

 

Article 8
TITLE AND PERMITTED EXCEPTIONS

 

SECTION 8.1 Title Insurance and Survey.

 

(a)          Title Commitment. Seller has delivered to Purchaser a title
commitment for an ALTA Owner’s Title Insurance Policy (the “Title Commitment”)
issued by the Title Company covering the Real Property providing for the
issuance at the Closing to Purchaser of the Owner’s Policy. Upon issuance, the
Owner’s Policy will except from coverage only those exceptions which become
Permitted Exceptions pursuant TO this Agreement. Except as permitted under this
Agreement, no additional encumbrances may be created on the Property by Seller
from and after the date of the Title Commitment without the prior written
consent of Purchaser.

 

 41 

 

 

(b)          Updated Survey. Seller has provided a copy of Seller’s most recent
survey of the Real Property to Purchaser as part of Seller’s Deliveries. Seller
has also delivered to Purchaser a new ALTA/NSPS survey for the Real Property
(the “Updated Survey”). If the legal description for the Land on the Updated
Survey differs from the legal description attached to this Agreement for the
Land, upon Purchaser’s request, Seller shall execute and deliver to Purchaser at
Closing a quitclaim deed, without representation or warranty, that uses the
legal description set forth on the Updated Survey.

 

(c)          Title Objection Notice. Purchaser notified Seller in writing (the
“Title Objection Notice”) on May 31, 2019 (the expiration date of Purchaser’s
“Title Review Period”) as to which matters within the Title Commitment and which
survey matters disclosed on the Updated Survey are not acceptable to Purchaser
(individually, a “Disapproved Title Matter”). Any matter within the Title
Commitment and the Updated Survey that Purchaser failed to so disapprove in the
Title Objection Notice shall be conclusively deemed to have been approved by
Purchaser and shall constitute a “Permitted Exception.” Seller notified
Purchaser in writing on June 7, 2019, as supplemented by written notice to
Purchaser on June 14, 2019 (collectively, the “Title Response Notice”) regarding
whether Seller either (i) agreed to remove each such Disapproved Title Matter
from title to the Real Property on or before the Closing, or (ii) declined to
remove such Disapproved Title Matter from title to the Real Property. If Seller
failed to timely deliver a Title Response Notice as to a particular Disapproved
Title Matter, then Seller shall be deemed to have made the election in clause
(ii) above as to such Disapproved Title Matter.

 

(d)          Regarding the Disapproved Title Matters in Purchaser’s Title
Objection Notice as to which Seller has elected (or is deemed to have elected)
not to remove such matters from title (i.e. Seller has made the election in
clause (c)(ii) above), Purchaser acknowledges that it has elected to accept the
condition of title to the Real Property subject to such Disapproved Title
Matters, and that such uncured Disapproved Title Matters shall hereafter
constitute “Permitted Exceptions.”

 

(e)          Required Cure Items Notwithstanding anything contained herein to
the contrary, Seller shall be obligated, at Closing, to cause Title Company to
remove (i) deeds of trust, mortgages, security deeds or other security liens
encumbering the Property; (ii) judgment liens encumbering the Property; (iii)
mechanic’s or materialmen’s liens encumbering the Property; (iv) any instrument
or other matter of record evidencing a lien or monetary encumbrance against the
Property, or that may be discharged or satisfied through the payment of money;
(v) matters created or appearing of record after the date of the Title
Commitments and caused by the act or omission of Seller without the prior
written consent of Purchaser; and (vi) any outstanding water bills, sewer bills,
gas bills, electric bills or other utility bills due and owing (items i, ii,
iii, iv, v and vi above are collectively referred to as the “Required Cure
Items”). Seller shall be entitled to cure any Required Cure Items by compliance
with a statutory bonding procedure that has the legal effect of removing the
Required Cure Item as a lien on the Real Property, provided that such bonding
procedure also causes the subject item to be removed as an exception in the
Owner’s Policy. If Seller agrees in writing to cure a Disapproved Title Matter
prior to Closing but thereafter subsequently fails to do so, Seller shall be in
material default hereunder and Purchaser shall be permitted to pursue the
remedies provided in Section 13.2 hereof, subject to any notice and cure
provisions relating thereto.

 

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(f)          Written approval by Purchaser of any additional materially adverse
title exceptions, defects, encumbrances or other title matters not shown on the
Title Commitment or Updated Survey disclosed in writing to Purchaser after the
expiration of the Title Review Period or new exceptions, defects, encumbrances
or other title matters not shown on the Title Commitment solely due to an error
by the Title Company in omitting the same and for which Purchaser had no prior
knowledge (collectively, “Additional Title Matters”) shall be a condition
precedent to Purchaser’s obligations to purchase the Property. Unless Purchaser
gives written notice (an “Additional Title Disapproval Notice”) that it
disapproves any Additional Title Matters, stating the Additional Title Matters
so disapproved (the “Additional Title Disapproval Matters”), before the sooner
to occur of the Closing or five (5) Business Days after receipt of written
notice of such Additional Title Matters, Purchaser shall be deemed to have
approved such Additional Title Matters and any such Additional Title Matters
shall thereafter constitute “Permitted Exceptions.” The Seller shall have until
three (3) Business Days after receipt of any Additional Title Disapproval Notice
(the “Additional Title Response Period”) to notify Purchaser in writing (an
“Additional Title Disapproval Response”) of the Additional Title Disapproval
Matters, if any, which Seller will cure prior to Closing. Seller’s failure to
timely provide such Additional Title Disapproval Response shall be deemed to
constitute Seller’s election not to cure any Additional Title Disapproval
Matters. If Seller does not agree to cure all Additional Disapproved Matters,
then Purchaser may, at its option, terminate this Agreement upon written notice
to the Seller, but only if given prior to the sooner to occur of Closing or five
(5) Business Days after Purchaser receives the Additional Title Disapproval
Response, or if Seller does not provide the Additional Title Disapproval
Response, five (5) Business Days after the end of the Additional Title Response
Period, in which case this Agreement shall immediately terminate, Purchaser
shall be entitled to a return of the Earnest Money, and Seller and Purchaser
shall have no further rights or obligations hereunder, except for the provisions
hereof that expressly survive termination of this Agreement. If Purchaser fails
to give such termination notice by such date, Purchaser shall be deemed to have
waived its objection to, and to have approved, the matters set forth in Seller’s
notice, and any such uncured Additional Title Disapproval Matters shall become
“Permitted Exceptions.” Notwithstanding the foregoing, in the event that any
such matter not set forth on the original Title Commitment or original Updated
Survey, as applicable, constitutes a breach of Seller’s obligations under this
Agreement, then Seller shall be in default under this Agreement, and Purchaser
shall be permitted to pursue the remedies provided in Section 13.2 hereof,
subject to any notice and cure provisions relating thereto.

 

SECTION 8.2 Intentionally Deleted.

 

SECTION 8.3 Certain Exceptions to Title; Inability to Convey.

 

(a)          Seller’s interest in the Real Property shall be conveyed by Seller,
and Purchaser agrees to acquire Seller’s interest in the Real Property, subject
only to the Permitted Exceptions. Notwithstanding anything in this Agreement to
the contrary, Seller shall be obligated at or prior to the Closing to cause the
release or discharge, at Seller’s sole cost and expense, of any Required Cure
Items. The parties acknowledge and agree that Seller shall have the right to
apply or cause the Escrow Agent to apply all or any portion of the Purchase
Price to cause the release or discharge of any Required Cure Items when escrow
is broken at Closing.

 

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(b)          Notwithstanding anything herein to the contrary, if Seller notifies
Purchaser in writing that it will cure a title objection of the Purchaser but
subsequently fails to cure such objection at or prior to Closing, Seller shall
be in default under this Agreement and all remedies set forth in Section 13.2
shall be available to Purchaser.

 

(c)          Except as expressly set forth in Section 8.1 or in Section 8.3(a),
nothing contained in this Agreement shall be deemed to require Seller to take or
bring any action or proceeding or any other steps to remove any title exception
or to expend any moneys therefor, and except in connection with a Seller default
under this Agreement, Purchaser shall not have any right of action against
Seller, at law or in equity, for Seller’s inability to convey its interest in
the Real Property subject only to the Permitted Exceptions.

 

SECTION 8.4 Purchaser’s Right to Accept Title.

 

(a)          Notwithstanding the foregoing provisions of this Article 8,
Purchaser may, by written notice given to Seller at any time prior to the
earlier of (x) the Closing Date and (y) the termination of this Agreement, elect
to accept such title as Seller can convey, notwithstanding the existence of any
title or survey exceptions that are not Permitted Exceptions and which Seller is
not required to remove or cure pursuant to this Agreement. In such event, this
Agreement shall remain in effect and the parties shall proceed to Closing, but
Purchaser shall not be entitled to any abatement of the Purchase Price, any
credit or allowance of any kind or any claim or right of action against Seller
for damages or otherwise by reason of the existence of any title exceptions
which are not Permitted Exceptions and which Seller is not required to remove or
cure pursuant to this Agreement.

 

(b)          Purchaser shall be entitled to request that the Title Company
provide such endorsements (or amendments) to the Owner’s Policy as Purchaser may
reasonably require, provided that (i) such endorsements (or amendments), other
than any curative endorsements that Seller may elect to obtain pursuant to
Section 8.1 or Section 8.3(a), shall be at no cost to, and shall impose no
additional liability on, Seller, (ii) Purchaser’s obligations under this
Agreement shall not be conditioned upon Purchaser’s ability to obtain such
endorsements (other than any curative endorsements that Seller may elect to
obtain pursuant to Section 8.1 or Section 8.3(a)), and, if Purchaser is unable
to obtain such endorsements, Purchaser shall nevertheless be obligated to
proceed to close the transactions contemplated by this Agreement without
reduction of or setoff against the Purchase Price, and (iii) the Closing shall
not be delayed as a result of Purchaser’s request hereunder.

 

Article 9
TRANSACTION COSTS; RISK OF LOSS

 

SECTION 9.1 Transaction Costs.

 

(a)          Purchaser and Seller agree to comply with all real estate transfer
tax laws applicable to the sale of the Property.

 

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(b)          At Closing, Seller shall pay or cause to be paid the following: (i)
any title search and exam fees and the base Owner’s Policy premium (Purchaser
specifically agreeing and acknowledging that Seller shall also be entitled to
any rebate or discount associated with such title premium); (ii) any costs in
connection with discharging any encumbrances that Seller specifically agrees to
or is obligated to pay, discharge, remove or cure pursuant to the terms of this
Agreement; (iii) any state or local transfer tax, excise tax or documentary
stamps payable on the conveyance of the Property to Purchaser; (iv) Broker’s
commissions; and (v) one-half (1/2) of all escrow or closing charges of the
Escrow Agent.

 

(c)          At Closing, Purchaser shall pay or cause to be paid the following:
(i) except to the extent that any such costs are to be paid by Seller under
Section 9.1(b) hereof, all other costs for the Owner’s Policy and any lender’s
title policy or policies on the Property, including premiums for any extended
coverage, endorsements, update charges and other title charges; (ii) Purchaser’s
cost to obtain the Updated Survey, (iii) all other fees, costs or expenses in
connection with Purchaser’s due diligence reviews and analyses hereunder; (iv)
document recording fees for the Deed, the Condominium Conversion Prohibition
Agreement, and any other recordable conveyance documents for the Property; (v)
all costs associated with Purchaser’s acquisition financing, if any, including
any state or local documentary stamps, intangibles tax or mortgage tax and
recording fees for any recordable loan documents; and (vi) one-half (1/2) of all
escrow or closing charges of the Escrow Agent (not to exceed $750.00). Except as
otherwise expressly provided in this Agreement, each party shall pay the fees of
its own attorneys, accountants and other professionals.

 

(d)          Each of Purchaser, on the one hand, and Seller, on the other hand,
shall indemnify the other and their respective successors and assigns from and
against any and all loss, damage, cost, charge, liability or expense (including
court costs and reasonable attorneys’ fees actually incurred) which such other
party may sustain or incur as a result of the failure of either such party to
timely pay any of the aforementioned fees or other charges for which it has
assumed responsibility under this Section 9.1. The provisions of this Section
9.1 shall survive the Closing or the termination of this Agreement.

 

SECTION 9.2 Risk of Loss.

 

(a)          Prior to the Closing, the risk of loss shall remain with Seller.
If, on or before the Closing Date, the Real Property or any portion thereof
shall be (i) damaged or destroyed by fire or other casualty or (ii) taken or
threatened in writing to be taken as a result of any condemnation or eminent
domain proceeding, Seller shall promptly notify Purchaser and, at Closing,
Seller will credit against the Purchase Price payable by Purchaser an amount
equal to the net proceeds (other than on account of business or rental
interruption relating to the period prior to Closing), if any, received by
Seller as a result of such casualty or condemnation, together with a credit for
any deductible under such insurance, less any amounts spent by Seller to remedy
unsafe conditions at the Real Property prior to Closing. If as of the Closing
Date, Seller has not received any such insurance or condemnation proceeds, then
the parties shall nevertheless consummate the conveyance of the Property on such
date (without any credit for such insurance or condemnation proceeds except for
a credit for any deductible under such insurance, less any amounts spent by
Seller to remedy unsafe conditions at the Real Property prior to Closing), and
at Closing Seller will assign to Purchaser all rights of Seller, if any, to the
insurance or condemnation proceeds (other than on account of business or rental
interruption relating to the period prior to Closing) and to all other rights or
claims arising out of or in connection with such casualty or condemnation.
Notwithstanding anything herein to the contrary, after the expiration of the Due
Diligence Period, Seller shall not settle any insurance claim in connection with
damage or destruction to the Real Property or any portion thereof by fire or
other casualty or settle any condemnation or eminent domain action brought
against the Real Property or any portion thereof without Purchaser’s prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed; provided, however, that in the event of a Material Casualty or Material
Condemnation, Purchaser’s consent will only be required after Purchaser’s waiver
of its right to terminate this Agreement pursuant to this Section 9.2 (and
provided further that Purchaser shall not be required to waive its termination
right until a casualty is determined to be a Material Casualty and a
condemnation is determined to be a Material Condemnation).

 

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(b)          Notwithstanding the provisions of Section 9.2(a), if, on or before
the Closing Date, the Real Property or any portion thereof shall be (i) damaged
or destroyed by a Material Casualty or (ii) taken or threatened in writing to be
taken as a result of a Material Condemnation, Purchaser shall have the right,
exercised by written notice to Seller no more than five (5) Business Days after
Purchaser has received written notice of such Material Casualty or Material
Condemnation from Seller, to terminate this Agreement, in which event the
Earnest Money shall be refunded to Purchaser and no party shall have any further
rights or obligations hereunder other than those which expressly survive the
termination of this Agreement. If Purchaser fails to timely terminate this
Agreement in accordance with this Section 9.2(b), the provisions of Section
9.2(a) shall apply.

 

(c)          A “Material Casualty” shall mean any damage to the Real Property or
any portion thereof occurring at any time on or after the Effective Date by fire
or other casualty that is expected to cost in excess of one and one half percent
(1.5%) of the Purchase Price to repair (as determined by the independent
insurance adjuster designated by Seller’s insurance company).

 

(d)          A “Material Condemnation” shall mean any condemnation or conveyance
in lieu of condemnation for the Real Property which: (i) permanently and
materially impairs the current use or value of the Real Property; (ii)
permanently and materially impairs access to the Real Property from public
roads; (iii) reduces the number or utility of parking spaces; or (iv) prohibits,
as a matter of applicable law, the rebuilding or repair of any Improvements as
they currently exist.

 

(e)          Seller and Purchaser hereby agree that the Uniform Vendor and
Purchaser Risk Act, Section 5.007 of the Texas Property Code, shall not be
applicable to this Agreement or the transaction contemplated hereby.

 

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Article 10
ADJUSTMENTS

 

Unless otherwise provided below, the following are to be adjusted and prorated
between Seller and Purchaser as of 11:59 pm Eastern Time on the day preceding
the Closing the “Adjustment Point”), based upon a 365-day year, with Purchaser
being deemed to be the owner of the Property during the entire day of the
Closing Date and being entitled to receive all operating income of the Property,
and being obligated to pay all operating expenses of the Property, with respect
to the Closing Date, and the net amount thereof under this Article 10 shall be
added to (if such net amount is in Seller’s favor) or deducted from (if such net
amount is in Purchaser’s favor) the Purchase Price payable at Closing. Escrow
Agent shall prepare the Closing Statement of the prorations and adjustments
required by this Agreement and shall submit the same to Purchaser and Seller for
review and approval at least three (3) Business Days prior to the Closing Date.

 

SECTION 10.1 Rents.

 

(a)          All Rents (as hereinafter defined) paid by tenants under the Leases
in connection with their occupancy of the Real Property shall be adjusted and
prorated as of the Adjustment Point. Delinquent Rents shall not be prorated.
Seller shall be entitled to all Rents under Leases attributable to the period
prior to the Adjustment Point, and Purchaser shall be entitled to all Rents
under Leases attributable to the period from and after the Adjustment Point. All
prepaid Rents for periods of occupancy after the Adjustment Point shall be
credited to Purchaser at Closing. Any Rents collected by Purchaser or Seller
after Closing from any tenant who owes Rents for periods prior to Closing shall
be applied (i) first, in payment of current Rents at the time of receipt, (ii)
second, to delinquent Rents, if any, which became due after the Closing, and
(iii) third, to delinquent Rents, if any, which became due and payable prior to
the Closing or otherwise attributable to the period prior to Closing. “Rents”
for purposes of this Agreement shall mean (whether paid in advance of the date
when such payment is due or otherwise) all fixed rents and other charges or
amounts payable by tenants under the Leases or in connection with their use or
occupancy of the Real Property or any service or amenity relating thereto,
including water, electricity, gas, sewage or other utilities charges or other
pass-through fees and charges.

 

(b)          For a period of one hundred twenty (120) days following Closing,
Purchaser shall bill tenants who owe Rents for periods prior to the Closing and
use commercially reasonable efforts to pursue collection of such past due Rents
to the full extent that Purchaser would endeavor to collect delinquent Rents
owed to Purchaser, but shall not be obligated to engage a collection agency or
take legal action or other enforcement action under the applicable Lease to
collect such amount. Purchaser shall pay to Seller, no later than seven (7) days
after collection, any collected amount that is owed to Seller, it being
understood that any Rent and other sums collected by Purchaser under any Lease
subsequent to the Closing shall first be applied to Rent and income obligations
owing to Purchaser for its period of ownership. For a period of one hundred
twenty (120) days following Closing, Purchaser may not waive any delinquent (or
unpaid) Rents or modify a Lease so as to reduce or otherwise affect amounts owed
thereunder for any period in which Seller is entitled to receive a share of
charges or amounts without first obtaining Seller’s written consent. From and
after Closing, Seller shall take no action with regards to obtaining delinquent
Rent or other sums from existing tenants at the Property. With respect to
delinquent or other uncollected Rents and any other amounts or other rights of
any kind respecting tenants who are no longer tenants of the Property as of the
Closing Date, Seller shall retain all of the rights relating thereto.
Notwithstanding anything contained herein to the contrary, Seller acknowledges
and agrees that Purchaser is under no obligation to collect delinquent Rents on
Seller’s behalf.

 

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SECTION 10.2 Taxes and Assessments. All non-delinquent real estate, ad valorem
real property and personal property taxes and assessments with respect to the
Property for the tax year in which Closing occurs shall be prorated between
Seller and Purchaser as of the Adjustment Point (on the basis of the most recent
available tax bill if the current bill is not then available and on the basis of
the actual number of days elapsed over the applicable tax year). Seller shall be
responsible for the payment of any such real estate and personal property taxes
for years prior to the local tax year in which Closing occurs. In no event shall
Seller be charged with or be responsible for any increase in the taxes on the
Property resulting from (a) any change in use of the Property on or after the
Closing Date, or (b) any improvements made or leases entered into on or after
the Closing Date. If any taxes or assessments on the Property are payable in
installments, then the installment allocable to the current period shall be
prorated (with Purchaser being allocated the obligation to pay any installments
due on or after the Closing Date).

 

SECTION 10.3 Intentionally Deleted.

 

SECTION 10.4 Utility Charges.

 

(a)          Water, sewer, gas, steam, electricity and other public utility
charges will be paid by Seller to the utility company on or prior to the Closing
Date. Seller shall arrange for a final reading of all utility meters (covering
gas, water, steam and electricity) as of the Closing. To the extent necessary,
Seller and Purchaser shall execute a letter to each such utility company
advising it of the termination of Seller’s responsibility for utilities
furnished to the Real Property as of the Closing Date and commencement of
Purchaser’s responsibilities therefor from and after such date. If a bill is
obtained from any such utility company as of Closing, Seller shall pay such bill
on or before the Closing Date. Any utilities not read or billed as of the
Closing Date will be prorated as of the Adjustment Point based on estimates at
Closing, and adjusted after Closing once the final amounts are known.
Additionally, Seller shall receive credits at Closing for the amount of any
utility deposits with respect to the Real Property paid by Seller, to the extent
Purchaser receives a credit from the applicable utility company on account of
such deposit.

 

(b)          Notwithstanding the foregoing, if Seller pays any utility bills
and, directly or through a billing service, bills the tenants for such
utilities, then at Closing, Seller shall receive a credit for the estimated
amount of utility charges incurred by Seller and reimbursable to Seller from
tenants under the Leases for periods prior to Closing (“RUBS”). The credit shall
be for sixty (60) days of RUBS calculated based on the average RUBS payable by
the tenants for the twelve (12) month period preceding the Closing Date. Such
credit shall be final and shall not be subject to reproration pursuant to
Section 10.10.

 

SECTION 10.5 Miscellaneous Revenues. Periodic revenues, if any, arising out of
telephone booths, vending machines, laundry machines or other income-producing
agreements shall be adjusted and prorated between Purchaser and Seller as of the
Adjustment Point (provided that one-time inducement fees, “door fees” or similar
non-recurring payments under Assumed Contracts shall not be prorated as of the
Closing Date).

 

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SECTION 10.6 Assumed Contracts. Amounts due under the Assumed Contracts shall be
adjusted and prorated between Purchaser, on the one hand, and Seller, on the
other hand, as of the Adjustment Point, with Purchaser to receive a credit at
Closing for any amounts unpaid and attributable for the period prior to the
Closing and Seller to receive a credit at Closing for any amounts previously
paid and attributable to the period on and following the Closing.

 

SECTION 10.7 Association Fees. If applicable, all owners’ association fees or
similar fees and assessments due and payable with respect to the Real Property
with respect to the applicable association’s fiscal year in which the Closing
occurs shall be adjusted and prorated based on the periods of ownership by
Seller and Purchaser during each such association’s fiscal year.

 

SECTION 10.8 Security Deposits. The actual amounts of the Refundable Security
Deposits held by Seller as landlord under the Leases shall be credited to
Purchaser against the balance of the Purchase Price at Closing. Any such
Refundable Security Deposits in forms other than cash (including letters of
credit) shall be transferred to Purchaser on the Closing Date by way of
appropriate instruments of transfer or assignment.

 

SECTION 10.9 Other Adjustments. If applicable, the Purchase Price shall be
adjusted at Closing to reflect the adjustment of any other item which, under the
explicit terms of this Agreement, is to be apportioned at Closing. Any other
items of operating income or operating expense that are customarily apportioned
between the parties in real estate closings of comparable commercial properties
in the metropolitan area where the Property is located shall be prorated as
applicable; however, there will be no prorations for debt service, insurance
premiums or payroll, because Purchaser is not acquiring or assuming Seller’s
financing, insurance or employees.

 

SECTION 10.10 Re-Adjustment. In the event any prorations or apportionments made
under this Article 10 shall prove to be incorrect for any reason, then any party
shall be entitled to an adjustment to correct the same. Any item that cannot be
finally prorated because of the unavailability of information shall be
tentatively prorated on the basis of the best data then available and reprorated
when the information is available. Notwithstanding anything to the contrary set
forth herein, all re-prorations contemplated by this Agreement shall be
completed within three (3) months after the Closing Date (subject to extension
solely as necessary due to the unavailability of final information but in no
event to exceed four (4) months after the Closing Date); provided, however, the
final date with respect to real estate, ad valorem real property and property
taxes and assessments shall be thirty (30) days after the issuance of final
bills or other final resolutions of any contest relating thereto. The
obligations of Seller and Purchaser under this Article 10 shall survive Closing
for the time periods set forth in this Section 10.10.

 

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Article 11
INDEMNIFICATION

 

SECTION 11.1 Indemnification by Seller. Following Closing and subject to
Sections 11.3, 11.4 and 11.5, Seller shall indemnify and hold Purchaser and each
of its respective Affiliates, members, partners, shareholders, officers and
directors (collectively, the “Purchaser-Related Entities”) harmless from and
against any and all costs, fees, expenses, damages, deficiencies, interest and
penalties (including, without limitation, reasonable attorneys’ fees and
disbursements actually incurred) suffered or incurred by Purchaser in connection
with any and all losses, liabilities, claims, damages and expenses (“Losses”),
arising out of, or resulting from, (a) any breach of any representation or
warranty of Seller contained in Section 3.1 of this Agreement or in any Closing
Document executed by Seller (collectively, the “Seller Representations”), and
(b) any breach of any covenant of Seller contained in this Agreement or in any
Closing Document that expressly survives the Closing (collectively, the
“Surviving Covenants”).

 

SECTION 11.2 Indemnification by Purchaser. From and after the Closing and
subject to Sections 11.4, 11.5 and 11.7, Purchaser shall indemnify and hold
Seller and each of its Affiliates, members, partners, shareholders, officers and
directors (collectively, the “Seller-Related Entities”) harmless from any and
all Losses arising out of, or in any way resulting from, (a) any breach of any
representation or warranty by Purchaser contained in Section 4.1 of this
Agreement or in any Closing Document executed by Purchaser, and (b) any breach
of any covenant of Purchaser contained in this Agreement or in any Closing
Document that expressly survives the Closing.

 

SECTION 11.3 Limitations on Indemnification by Seller. Notwithstanding the
foregoing provisions of Section 11.1, (a) Seller shall not be required to
indemnify Purchaser unless the amount for which an indemnity would otherwise be
payable by Seller under Section 11.1 exceeds the Basket Limitation and, in such
event, Seller shall be responsible for all such amounts from the first dollar of
loss up to the Cap Limitation (provided that Seller’s obligations under Article
10 with respect to prorations and adjustments and Seller’s obligations under
Section 14.2 with respect to brokers shall not be subject to the Basket
Limitation or the Cap Limitation), (b) in no event shall the liability of Seller
with respect to the indemnification provided for in Section 11.1 exceed the Cap
Limitation (provided that Seller’s obligations under Article 10 with respect to
prorations and adjustments and Seller’s obligations under Section 14.2 with
respect to brokers shall not be subject to the Basket Limitation or the Cap
Limitation), and (c) in the event Purchaser has actual knowledge or any Deemed
Purchaser Knowledge of any inaccuracy or breach of any representation, warranty,
or covenant of Seller contained in this Agreement (a “Purchaser Waived Breach”)
after the Effective Date but prior to Closing, and nonetheless proceeds with and
consummates Closing, then Purchaser shall be deemed to have waived and forever
renounced any right to assert a claim for indemnification under this Article 11
for, or any other claim or cause of action under this Agreement, whether at law
or in equity, on account of any such Purchaser Waived Breach. In no event shall
Purchaser be entitled to seek or obtain consequential, speculative, special,
punitive or exemplary damages against Seller.

 

SECTION 11.4 Survival. Seller Representations and Surviving Covenants shall
survive for a period of one hundred eighty (180) days after the Closing Date
(the “Survival Period”), unless a longer or shorter survival period is expressly
provided for in this Agreement. Seller and Purchaser shall each have the right
to bring an action or proceeding against the other for the breach of any such
Seller Representations and Surviving Covenants, but only if the party bringing
the action for breach (i) first learns of the breach after Closing, (ii) gives
written notice of such breach to the other party within the Survival Period
(unless a longer or shorter survival period is expressly provided for in this
Agreement), and (iii) files such action for such breach no later than thirty
(30) days after the written notice of the breach, unless a longer or shorter
survival period is expressly provided for in this Agreement; provided, however,
with respect to any actions brought by a party hereunder during the Survival
Period but remaining unresolved as of the expiration of such period, the
Survival Period shall extend solely as to such claims until the final
adjudication (including appeals) or settlement of such claims.

 

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SECTION 11.5 Notification. In the event that any indemnified party (“Indemnified
Party”) becomes aware of any claim or demand for which an indemnifying party (an
“Indemnifying Party”) may have liability to such Indemnified Party hereunder (an
“Indemnification Claim”), such Indemnified Party shall promptly, but in no event
more than thirty (30) days following such Indemnified Party’s having become
actually aware of such Indemnification Claim, notify the Indemnifying Party in
writing of such Indemnification Claim, the amount or the estimated amount of
damages sought thereunder to the extent then ascertainable (which estimate shall
not be conclusive of the final amount of such Indemnification Claim), any other
remedy sought thereunder, any relevant time constraints relating thereto and, to
the extent practicable, any other material details pertaining thereto; provided,
that no delay on the part of the Indemnified Party in giving any such notice of
a Indemnification Claim shall relieve the Indemnifying Party of any
indemnification obligations hereunder except to the extent that the Indemnifying
Party is prejudiced by such delay.

 

SECTION 11.6 Indemnification as Sole Remedy. If Closing has occurred, the sole
and exclusive remedy available to a party in the event of a breach by the other
party to this Agreement of any representation, warranty, covenant or other
provision of this Agreement or any Closing Document which expressly survives the
Closing shall be the indemnifications provided for under this Article 11, except
as it relates to re-proration obligations under Article 10 and the
indemnification obligations under Section 7.1 and Section 14.2.

 

SECTION 11.7 Limits on Indemnification by Purchaser. Notwithstanding the
foregoing provisions of Section 11.2, (a) Purchaser shall not be required to
indemnify Seller or any Seller-Related Entities under Section 11.2 unless the
amount for which an indemnity would otherwise be payable by Purchaser under
Section 11.2 exceeds the Basket Limitation and, in such event, Purchaser shall
be responsible for all such amounts, (b) in no event shall the liability of
Purchaser with respect to the indemnification provided for in Section 11.2
exceed the Cap Limitation (provided that Purchaser’s obligations under Article
10 with respect to re-prorations and adjustments shall not be subject to the
Basket Limitation or the Cap Limitation), and (c) in the event that Seller
obtains Knowledge of any inaccuracy or breach of any representation, warranty,
or covenant of Purchaser contained in this Agreement (a “Seller Waived Breach”)
after the Effective Date but prior to the Closing, and Seller nonetheless
proceeds with and consummates the Closing, then Seller and any Seller-Related
Entities shall be deemed to have waived and forever renounced any right to
assert a claim for indemnification under this Article 11 for, or any other claim
or cause of action under this Agreement, whether at law or in equity on account
of any such Seller Waived Breach. In no event shall Seller be entitled to seek
or obtain consequential, speculative, special, punitive or exemplary damages
against Purchaser.

 

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Article 12
TAX APPEALS

 

SECTION 12.1 Prosecution and Settlement of Proceedings. If any tax reduction
proceedings in respect of the Real Property, relating to any tax years ending
prior to the tax year in which the Closing occurs are pending at the time of
Closing, Seller reserves and shall have the right to continue to prosecute
and/or settle the same. Prior to Closing, Seller reserves and shall have the
right to initiate and continue any tax reduction proceedings in respect of any
of the Real Property relating to the tax year in which Closing occurs; provided,
however, that Seller shall not settle any such proceeding without Purchaser’s
prior written consent, which consent shall not be unreasonably withheld or
delayed. From and after Closing, Purchaser shall have the right to initiate or
assume tax reduction proceedings in respect of the Real Property relating to the
tax year in which Closing occurs and shall have the right to continue to
prosecute and/or settle the same. Seller and Purchaser shall, from time to time,
each keep the other reasonably informed of the status of any such tax reduction
proceedings.

 

SECTION 12.2 Application of Refunds or Savings. Any refunds or savings in the
payment of taxes resulting from such tax reduction proceedings applicable to
taxes payable with respect to the period prior to the Closing Date shall belong
to and be the property of Seller and any refunds or savings in the payment of
taxes applicable to taxes with respect to the period on or after the Closing
Date shall belong to and be the property of Purchaser. All reasonable attorneys’
fees and other expenses incurred in obtaining such refunds or savings shall be
apportioned between Seller, on the one hand, and Purchaser, on the other hand,
in proportion to the gross amount of such refunds or savings payable to Seller
and Purchaser, respectively; provided, however, that neither Seller nor
Purchaser shall have any liability for any such fees or expenses in excess of
the refund or savings paid to such party unless such party initiated such
proceeding.

 

SECTION 12.3 Survival. The provisions of this Article 12 shall survive Closing
until the final resolution of any such tax appeals, notwithstanding any earlier
“true-up” deadline to the contrary.

 

Article 13
DEFAULT

 

SECTION 13.1 Purchaser’s Default. If Purchaser fails to consummate the purchase
of the Property pursuant to this Agreement or otherwise defaults on its
obligations hereunder at or prior to Closing for any reason except failure by
Seller to perform hereunder, or if prior to Closing any one or more of
Purchaser’s representations or warranties are breached in any material respect,
and such default or breach is not cured by the earlier of the third (3rd)
Business Day after written notice thereof from Seller or the Closing Date
(provided that no notice or cure period shall apply if Purchaser fails to timely
deposit any portion of the Earnest Money, or if Purchaser fails to timely
consummate the purchase of the Property or the timely payment of the Purchase
Price), Seller shall be entitled, as its sole remedy, to terminate this
Agreement by giving Purchaser written notice of such election prior to or at
Closing and recover the Earnest Money as liquidated damages and not as penalty,
in full satisfaction of claims against Purchaser hereunder. Seller and Purchaser
agree that Seller’s damages resulting from Purchaser’s default are difficult, if
not impossible, to determine, and that the Earnest Money is a fair estimate of
those damages which has been agreed to in an effort to cause the amount of such
damages to be certain.

 

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SECTION 13.2 Seller’s Default. If Seller fails to consummate the sale of the
Property pursuant to this Agreement or otherwise defaults on its obligations
hereunder at or prior to Closing for any reason except failure by Purchaser to
perform hereunder, or if prior to Closing any one or more of Seller’s
representations or warranties are breached in any material respect (i.e., in
accordance with Section 3.2(g)), and such default or breach is not cured by the
earlier of the fifth (5th) Business Day after written notice thereof from
Purchaser or the Closing Date (provided that no notice or cure period shall
apply if Seller fails to timely consummate the sale of the Property hereunder),
Purchaser shall elect, as its sole remedy, either (i) to terminate this
Agreement by giving Seller timely written notice of such election prior to or at
Closing, and recover the Earnest Money and reimbursement of Purchaser’s actual
out-of-pocket third-party expenses incurred in connection with this Agreement,
up to a maximum reimbursement of $250,000.00, (ii) to enforce specific
performance to consummate the sale of the Property hereunder; provided, however,
that if Seller willfully conveys the Property to a third party or third parties,
such that the remedy of specific performance is unavailable to Purchaser,
Purchaser shall have the right to seek its actual damages against Seller in an
amount not to exceed $1,200,000.00, or (iii) to waive said failure or breach and
proceed to Closing without any reduction in the Purchase Price. In no event
shall Seller be liable for consequential, speculative, remote or punitive
damages, or any other damages except as specifically provided herein, and
Purchaser hereby waives and releases any right to seek or collect any such
consequential, speculative, remote or punitive damages, or any damages.
Notwithstanding anything herein to the contrary, Purchaser shall be deemed to
have elected option (i) above if Purchaser fails to deliver to Seller written
notice of its intent to file a claim or assert a cause of action for specific
performance or actual damages against Seller on or before the date that is ten
(10) Business Days following the scheduled Closing Date or, having given such
notice, fails to file a lawsuit asserting such claim or cause of action for
specific performance or damages in the county in which the Earnest Money is
deposited within forty five (45) days following the scheduled Closing Date.

 

SECTION 13.3 Certain Limitations. Notwithstanding Sections 13.1 and 13.2 hereof,
in no event shall the provisions of Sections 13.1 and 13.2 limit (a) either
Purchaser’s or Seller’s obligation to indemnify the other party, or the damages
recoverable by an indemnified party against the indemnifying party due to, a
party’s express obligation to indemnify another party in accordance with this
Agreement, (b) Purchaser’s or Seller’s respective obligation to pay Closing
costs under Section 9.1 hereof, or the damages recoverable by any party against
another party due to a party’s failure to pay such costs, or (c) either
Purchaser’s or Seller’s obligations to pay another party’s legal costs under
Section 14.23 hereof.

 

SECTION 13.4 Cross Defaults under Affiliated Purchase Agreements.

 

(a)          By Affiliated Sellers. Seller shall be in default under this
Agreement immediately upon the default of any of the Affiliated Sellers under
any of the Affiliated Purchase Agreements, and in such event, Purchaser may
immediately exercise all rights and remedies set forth in Section 13.2 as to
this Agreement.

 

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(b)          By Purchaser. Purchaser shall be in default under this Agreement
immediately upon the default of Purchaser under any of the Affiliated Purchase
Agreements, and in such event, Seller may immediately exercise all rights and
remedies set forth in Section 13.1 as to this Agreement.

 

Article 14
MISCELLANEOUS

 

SECTION 14.1 Exculpation.

 

(a)          Seller. Notwithstanding anything to the contrary contained herein
(with the sole exception of the terms of the Parent Joinder attached to this
Agreement), Seller’s shareholders, partners, members, and managers, the
partners, members or managers of such partners, members or managers, the
shareholders of such partners, members or managers, and the trustees, officers,
directors, employees, agents and security holders of Seller and its partners,
members or managers assume no personal liability for any obligations entered
into on behalf of Seller, and their individual assets shall not be subject to
any claims of any Person relating to such obligations. The foregoing shall
govern any direct and indirect obligations of Seller under this Agreement.

 

(b)          Purchaser. Notwithstanding anything to the contrary contained
herein, Purchaser’s shareholders, partners, members, managers or the partners,
members or managers of such partners members or managers, the shareholders of
such partners, members or managers, and the trustees, officers, directors,
employees, agents and security holders of Purchaser and its partners, members or
managers assume no personal liability for any obligations entered into on behalf
of Purchaser, and their individual assets shall not be subject to any claims of
any Person relating to such obligations. The foregoing shall govern any direct
and indirect obligations of Purchaser under this Agreement.

 

SECTION 14.2 Broker.

 

(a)          Broker’s Commission. The parties acknowledge that CB Richard Ellis,
Inc. (the “Broker”) has been retained by and represents Seller as broker in
connection with the sale of the Property to Purchaser, and is to be compensated
for its services by Seller, pursuant to a separate written agreement between the
Seller Group and the Broker.

 

(b)          Representation and Indemnity. Each of Seller, on the one hand, and
Purchaser, on the other hand, hereby represents and warrants to the other that
it has not disclosed this Agreement or the subject matter hereof to, and has not
otherwise dealt with, any real estate broker, agent or salesman (other than the
Broker) so as to create any legal right or claim in any such broker, agent or
salesman (other than the Broker) for a real estate commission or similar fee or
compensation with respect to the negotiation and/or consummation of this
Agreement or the conveyance of the Property by Seller to Purchaser. Each of
Seller, on the one hand, and Purchaser, on the other hand, shall indemnify, hold
harmless and defend each other from and against any and claims and demands for a
real estate brokerage commission or similar fee or compensation arising out of
any claimed dealings with the indemnifying party and relating to this Agreement
or the purchase and sale of the Property (including reasonable attorneys’ fees
and expenses and court costs actually incurred in defending any such claim or in
enforcing this indemnity), except for the Broker, whose fee, if any, shall be
paid by Seller.

 

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(c)          Texas Disclosure. The Texas Real Estate License Act requires a real
estate agent to advise Purchaser that Purchaser should have an attorney examine
an abstract of title to the Real Property being purchased; or a title insurance
policy should be obtained.

 

(d)          Survival. The indemnification provisions of this Section 14.2 shall
survive the rescission, cancellation, termination or consummation of this
Agreement.

 

SECTION 14.3 Confidentiality; Publicity; IRS Reporting Requirements.

 

(a)          Confidentiality.

 

(i)          Purchaser and Seller, and each of their respective Affiliates,
shall hold as confidential all information disclosed in connection with the
transaction contemplated hereby and concerning each other, the Property, this
Agreement and the transactions contemplated hereby that is not generally known
to or discoverable by the public, including without limitation the Seller’s
Deliveries (collectively, the “Confidential Information”). The Confidential
Information obtained by or disclosed to Purchaser and Purchaser’s
Representatives shall be used by Purchaser and Purchaser’s Representatives
solely for the purpose of Purchaser’s evaluation of the Property and for other
uses related to the transaction contemplated by this Agreement. Neither
Purchaser nor Seller shall release any Confidential Information to third parties
without the prior written consent of the other party hereto, except (A) any
information which was previously or is hereafter publicly disclosed (other than
in violation of this Agreement, the Access Agreement, or other confidentiality
agreements to which Affiliates of Purchaser or Seller are parties), (B) to such
parties’ respective partners, agents, employees, consultants, attorneys,
engineers, accountants, licensees, investors, advisors and lenders
(collectively, “Permitted Outside Parties”) of any of the foregoing, provided
that they are advised as to the confidential nature of such information, are
instructed to maintain such confidentiality, and upon request of any other
party, enter into confidentiality agreements with respect to the Confidential
Information, and (C) as required by law, court order or other legal process.

 

(ii)          Notwithstanding anything to the contrary herein, Confidential
Information shall not include information which (A) is or becomes generally
available to the public other than as a result of a disclosure by a party or the
Permitted Outside Parties, (B) was available to a party or the Permitted Outside
Parties on a non-confidential basis prior to its disclosure by any party or its
representatives, (C) becomes available to a party or the Permitted Outside
Parties on a non-confidential basis from a Person, other than Seller, Purchaser,
or their respective representatives, who is not otherwise bound by a
confidentiality agreement with such party not to transmit the information to the
receiving party or the Permitted Outside Parties, or (D) is independently
developed by any employee or agent of Seller, Purchaser or the Permitted Outside
Parties who did not have access to the Confidential Information.

 

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(iii)         This Section 14.3(a) shall survive the termination of this
Agreement, but shall not survive the Closing.

 

(b)          Publicity; SEC filings. Until Closing, neither Seller nor Purchaser
shall issue any advertisement, press release or other publicity concerning this
transaction without the review and approval of the other party. Upon Closing,
Seller or Purchaser may issue a press release or other publicity with respect to
this Agreement and the transactions contemplated hereby, provided that the
content of any such press release shall be subject to the prior written consent
of Purchaser or Seller, as applicable, and in no event shall any such publicity
disclose the identity of Purchaser’s or Seller’s direct or indirect beneficial
owners by name, or the consideration paid for the Property. The foregoing
notwithstanding, neither Seller nor any of its constituent parties shall be
obligated to make prior disclosure to, or seek the approval of, Purchaser in
connection with disclosures made to its or their attorneys, agents, and lenders,
or any securities filings and associated press releases required in connection
with the sale of the Property, including disclosures to investors or the filing
of any Form 8-K or any related filings with the U.S. Securities and Exchange
Commission. This Section 14.3(b) shall survive Closing or the termination of
this Agreement.

 

(c)          IRS Reporting Requirements. For the purpose of complying with any
information reporting requirements or other rules and regulations of the IRS
that are or may become applicable as a result of or in connection with the
transaction contemplated by this Agreement, including, but not limited to, any
requirements set forth in proposed Income Tax Regulation Section 1.6045-4 and
any final or successor version thereof (collectively, the “IRS Reporting
Requirements”), Seller and Purchaser hereby designate and appoint the Escrow
Agent to act as the “Reporting Person” (as that term is defined in the IRS
Reporting Requirements) to be responsible for complying with any IRS Reporting
Requirements. The Escrow Agent hereby acknowledges and accepts such designation
and appointment and agrees to fully comply with any IRS Reporting Requirements
that are or may become applicable as a result of or in connection with the
transaction contemplated by this Agreement. Without limiting the responsibility
and obligations of the Escrow Agent as the Reporting Person, Seller and
Purchaser hereby agree to comply with any provisions of the IRS Reporting
Requirements that are not identified therein as the responsibility of the
Reporting Person, including, but not limited to, the requirement that Seller and
Purchaser each retain an executed counterpart of this Agreement for at least
four (4) years following the calendar year of Closing. This Section 14.3(c)
shall survive Closing for four (4) years following the calendar year of Closing.

 

SECTION 14.4 Escrow Provisions.

 

(a)          Investment of Earnest Money. Escrow Agent shall invest the Earnest
Money held by Escrow Agent pursuant to Purchaser’s direction in an interest
bearing account at a commercial bank whose deposits are insured by the Federal
Deposit Insurance Corporation. The Escrow Agent shall notify Seller, no later
than one (1) Business Day after receipt thereof, that the Escrow Agent has
received any portion of the Earnest Money in immediately available funds, and is
holding the same in accordance with the terms of this Agreement. The Escrow
Agent shall invest the Earnest Money only in such accounts as will allow the
Escrow Agent to disburse the Earnest Money or any portion thereof upon no more
than one (1) Business Day’s notice.

 

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(b)          Payment on Demand. Prior to the expiration of the Due Diligence
Period, upon receipt of any written certification from Purchaser claiming the
Earnest Money pursuant to the provisions of this Agreement, Escrow Agent shall
promptly disburse the Earnest Money to Purchaser and shall thereupon be released
and discharged from any further duty or obligation hereunder. Upon receipt of
any written certification from Seller (at any time during the term of this
Agreement) or Purchaser (following the expiration of the Due Diligence Period)
claiming the Earnest Money pursuant to the provisions of this Agreement, Escrow
Agent shall promptly forward a copy thereof to the other such party (i.e.,
Purchaser or Seller, whichever did not claim the Earnest Money pursuant to such
notice) and, unless such other party within ten (10) days thereafter notifies
the Escrow Agent of any objection to such requested disbursement of the Earnest
Money (in which case the Escrow Agent shall retain the Earnest Money subject to
Section 10.4 below), the Escrow Agent shall disburse the Earnest Money to the
party demanding the same and shall thereupon be released and discharged from any
further duty or obligation hereunder.

 

(c)          Exculpation of Escrow Agent. It is agreed that the duties of the
Escrow Agent are herein specifically provided and are purely ministerial in
nature, and that the Escrow Agent shall incur no liability whatsoever except for
its misconduct or negligence, so long as the Escrow Agent is acting in good
faith. Except in the event of the Escrow Agent’s willful misconduct or gross
negligence, each of Seller and Purchaser does hereby release the Escrow Agent
from any liability for any error of judgment or for any act done or omitted to
be done by the Escrow Agent in the good faith performance of its duties
hereunder and do each hereby indemnify the Escrow Agent against, and agree to
hold, save, and defend the Escrow Agent harmless from, any costs, liabilities,
and expenses incurred by the Escrow Agent in serving as the Escrow Agent
hereunder and in faithfully discharging its duties and obligations hereunder.
Seller and Purchaser are aware that Federal Deposit Insurance Corporation
coverages apply to a maximum amount of $250,000.00 per depositor (as may be
modified from time to time). Further, Seller and Purchaser do not and will not
hold the Escrow Agent liable for any loss occurring which arises from bank
failure or error, insolvency or suspension, or a situation or event which falls
under the above coverages.

 

(d)          Stakeholder. It is acknowledged that the Escrow Agent is acting as
a stakeholder only with respect to the Earnest Money. If there is any dispute as
to whether the Escrow Agent is obligated to deliver the Earnest Money or as to
whom the Earnest Money is to be delivered following the expiration of the Due
Diligence Period, the Escrow Agent may refuse to make any delivery and may
continue to hold the Earnest Money until receipt by the Escrow Agent of an
authorization in writing, signed by Seller and Purchaser, directing the
disposition of the Earnest Money, or, in the absence of such written
authorization, until final determination of the rights of the parties in an
appropriate judicial proceeding. If such written authorization is not given, or
a proceeding for such determination is not begun, within thirty (30) days of
notice to the Escrow Agent of such dispute, the Escrow Agent may bring an
appropriate action or proceeding for leave to deposit the Earnest Money in a
court of competent jurisdiction located in the City of New York, State of New
York pending such determination. The Escrow Agent shall be reimbursed for all
costs and expenses of such action or proceeding, including, without limitation,
reasonable attorneys’ fees and disbursements, by the party determined not to be
entitled to the Earnest Money. Upon making delivery of the Earnest Money in any
of the manners herein provided, Escrow Agent shall have no further liability or
obligation hereunder.

 

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(e)          Interest; Taxpayer Identification Number. All interest and other
income earned on the Earnest Money deposited with the Escrow Agent hereunder
shall be reported for income tax purposes as earnings of Purchaser. Purchaser’s
taxpayer identification number shall be delivered to the Escrow Agent prior to
Closing. Escrow Agent shall have no liability for any levies on the Earnest
Money made by taxing authorities based upon the taxpayer identification number
or numbers associated with the Earnest Money.

 

(f)          Execution by Escrow Agent. Escrow Agent has executed this Agreement
solely for the purpose of acknowledging and agreeing to the provisions of this
Section 14.4. Escrow Agent’s consent to any modification or amendment of this
Agreement, other than to a modification or amendment of this Section 14.4, shall
not be required.

 

SECTION 14.5 Successors and Assigns; No Third-Party Beneficiaries. The
stipulations, terms, covenants and agreements contained in this Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective permitted successors and assigns (including any successor entity
after a public offering of stock, merger, consolidation, purchase or other
similar transaction involving a party hereto) and nothing herein expressed or
implied shall give or be construed to give to any Person, other than the parties
hereto and such permitted assigns, any legal or equitable rights hereunder.

 

SECTION 14.6 Assignment.

 

(a)          Assignments by Seller. Notwithstanding any provision of this
Agreement to the contrary, Seller may assign or transfer its rights under this
Agreement to a qualified intermediary as may be required for an Exchange under
Section 14.25 hereof, without Purchaser’s prior written consent, provided that
Seller shall not be relieved of any obligations or liabilities under this
Agreement as a result of such transfer.

 

(b)          Intentionally Deleted.

 

(c)          Assignments by Purchaser. This Agreement may not be assigned by
Purchaser in whole or in part without the prior written consent of Seller. Any
transfer of a majority of the direct or indirect interests in Purchaser shall be
deemed to be an assignment of this Agreement by Purchaser. Notwithstanding the
foregoing, however, Purchaser may assign its rights under this Agreement prior
to Closing without prior written approval of Seller to: (i) any entity that is
controlled by, controlling or under common control with Purchaser, or (ii) to
any entity that is controlled by, controlling or under common control with KRE
Topaz Portfolio Investor LLC; provided that (x) the Purchaser originally named
in this Agreement will continue to remain liable under this Agreement
notwithstanding any such assignment, (y) Purchaser shall deliver written notice
to Seller of any such assignment at least five (5) Business Days prior to the
Closing Date (which notice shall include the name, entity type, state of
formation and signature block of the assignee), and (z) Purchaser and
Purchaser’s assignee shall execute and deliver an assignment and assumption
agreement in form reasonably satisfactory to Seller prior to Closing.

 

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SECTION 14.7 Further Assurances. From time to time, as and when requested by any
party hereto, the other party shall execute and deliver, or cause to be executed
and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other party may reasonably deem
necessary or desirable to consummate the transactions contemplated by this
Agreement.

 

SECTION 14.8 Notices. Any notice, request or other communication required or
permitted to be given hereunder shall be in writing and, except as otherwise
specifically provided herein, shall be delivered by hand or overnight courier
(such as United Parcel Service or Federal Express), or by e-mail provided that a
hard copy of such notice is also transmitted by one of the foregoing methods on
the same Business Day. Any such notice shall be considered given on the date of
such notice (provided that, with respect to e-mail notices, the e-mail is sent
prior to 5:00 pm Eastern Time and a hard copy is also transmitted in compliance
with this Section 14.8). Rejection or other refusal to accept or inability to
deliver because of changed address of which no notice was given shall be deemed
to be receipt of the notice. By giving at least five (5) days’ prior written
notice thereof, any party may from time to time and at any time change its
notice address hereunder. Any notice may be given by a party’s counsel on such
party’s behalf.

 

The parties’ respective addresses for notice purposes are as follows. Telephone
numbers are provided for reference purposes only, and notice by telephone shall
not be valid.

 

Notices to Seller:

 

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue

9th Floor

New York, NY 10019

Attention: Ryan MacDonald

Telephone: (646) 278-4238
E-mail: rmacdonald@bluerockre.com

 

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

 

Bluerock Real Estate, L.L.C.

712 Fifth Avenue

9th Floor

New York, NY 10019

Attention: Michael L. Konig

Telephone: (908) 415-8869
E-mail: mkonig@bluerockre.com

 

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And to:

 

Nelson Mullins Riley & Scarborough LLP

Atlantic Station
201 17th Street NW, Suite 1700
Atlanta, GA 30363

Attention: Eric R. Wilensky, Esq.

Telephone: (404) 322-6469

E-mail: eric.wilensky@nelsonmullins.com

 

Notices to Purchaser:

 

Carter-Haston Holdings, L.L.C.

1230 Peachtree Street NE, Suite 1909

Atlanta, GA 30309

Attention: James A. Shanks

Telephone: (615) 577-4648

E-mail: jshanks@carterhaston.com

 

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

 

KRE Topaz Portfolio Investor LLC

c/o Kohlberg Kravis Roberts & Co.

600 Travis Street, Suite 7200

Houston, TX 77002

Attention: Paul S. Wasserman

Telephone: (713) 332-8322

E-mail: paul.wasserman@kkr.com

 

And to:

 

KRE Topaz Portfolio Investor LLC

c/o Kohlberg Kravis Roberts & Co.

9 West 57th Street, Suite 4200

New York, NY 10019

Attention: Michael Friedland

E-mail: michael.friedland@kkr.com

 

And to:

 

Waller Lansden Dortch & Davis, LLP

511 Union Street, Suite 2700

Nashville, TN 37219

Attention: Philip F. Head, Esq.

Telephone: (615) 850-8152

E-mail: philip.head@wallerlaw.com

 

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Notices to the Title Company/Escrow Agent:

 

First American Title Insurance Company

Six Concourse Parkway, Suite 2000

Atlanta, GA 30328

Attention: Barbara H. Morgan

Telephone: (770) 390-6524

E-mail: bmorgan@firstam.com

 

SECTION 14.9 Entire Agreement. This Agreement, along with the Exhibits and
Schedules hereto, contains all of the terms agreed upon between the parties
hereto with respect to the subject matter hereof, and all understandings and
agreements heretofore had or made among the parties hereto are merged in this
Agreement which alone fully and completely expresses the agreement of the
parties hereto.

 

SECTION 14.10 Amendments. This Agreement may not be amended, modified,
supplemented or terminated, nor may any of the obligations of Seller or
Purchaser hereunder be waived, except by written agreement executed by the party
or parties to be charged. The Escrow Agent’s consent to any modification or
amendment of this Agreement, other than to Section 14.4 hereof, shall not be
required. Further, the consent of Parent to any modification or amendment of
this Agreement, other than to the Parent Joinder attached hereto, shall not be
required.

 

SECTION 14.11 No Waiver. No waiver by any party of any failure or refusal by any
other party to comply with its obligations hereunder shall be deemed a waiver of
any other or subsequent failure or refusal to so comply.

 

SECTION 14.12 Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with, the laws of the State of
New York.

 

SECTION 14.13 Submission to Jurisdiction; Waiver of Jury Trial. To the fullest
extent permissible by Applicable Law, Seller and Purchaser irrevocably submit to
the jurisdiction of the federal and state courts having jurisdiction in the City
of New York, New York for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Seller and
Purchaser further agree that service of any process, summons, notice or document
by U.S. registered mail to such party’s or parties’ respective address set forth
above shall be effective service of process for any action, suit or proceeding
in the State of New York with respect to any matters to which it has submitted
to jurisdiction as set forth in the immediately preceding sentence. To the
fullest extent permissible by Applicable Law, each of Seller and Purchaser also
irrevocably and unconditionally waives trial by jury and any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the federal and state courts having
jurisdiction in the City of New York, New York. To the fullest extent
permissible by Applicable Law, each of Seller and Purchaser also irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

 

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SECTION 14.14 Severability. If any term or provision of this Agreement or the
application thereof to any Person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.

 

SECTION 14.15 Headings. The headings of the various Articles and Sections of
this Agreement have been inserted only for purposes of convenience, are not part
of this Agreement and shall not be deemed in any manner to modify, explain,
expand or restrict any of the provisions of this Agreement.

 

SECTION 14.16 Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile or electronic (e.g., pdf) signatures, which taken
together still constitute collectively one agreement. In making proof of this
Agreement it shall not be necessary to produce or account for more than one such
counterpart with each party’s counterpart, facsimile or electronic signature.

 

SECTION 14.17 Acceptance of Deed. The acceptance of the Deed by Purchaser shall
be deemed full compliance by Seller of all of Seller’s obligations under this
Agreement, except for those obligations of Seller which are specifically stated
to survive the delivery of the Deed or Closing hereunder pursuant to the terms
of this Agreement.

 

SECTION 14.18 Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement, and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
of any exhibits, schedules or amendments hereto.

 

SECTION 14.19 Recordation. Neither this Agreement nor any memorandum or notice
of this Agreement may be recorded by any party hereto without the prior written
consent of the other parties hereto; provided, however, Purchaser’s recordation
of a notice of lis pendens shall be permitted if Purchaser is seeking an action
for specific performance. In furtherance of the foregoing, Purchaser hereby
indemnifies Seller from and against any and all Losses arising out of a breach
of this Section 14.19. The provisions of this Section 14.19 shall survive the
Closing or any prior termination of this Agreement.

 

SECTION 14.20 Time is of the Essence. Seller and Purchaser agree that time is of
the essence with respect to the parties’ obligations under this Agreement.

 

SECTION 14.21 Business Days; Calculation of Time Periods. Seller and Purchaser
agree that if any notice or action required or permitted by this Agreement falls
on a date which is not a Business Day, then such date shall be extended to the
next Business Day. The final day of any time period under this Agreement or any
deadline under this Agreement shall include the period of time through and
including such final day or deadline. The final day of any specified time period
or deadline shall be deemed to end at 5:00 p.m. Eastern Time unless otherwise
specifically indicated herein.

 

 62 

 

 

SECTION 14.22 Survival.

 

(a)          Any obligations or liabilities of Seller or Purchaser hereunder
shall survive Closing or earlier termination of this Agreement solely to the
extent expressly provided herein.

 

(b)          Unless expressly stated otherwise, all terms and provisions
contained in this Agreement shall not survive Closing.

 

SECTION 14.23 Legal Costs. The parties hereto agree that they shall pay directly
any and all legal costs which they have incurred on their own behalf in the
preparation of this Agreement, and all deeds and other agreements pertaining to
this transaction, and that such legal costs shall not be part of the Closing
costs. In addition, if either Purchaser or Seller brings any suit or other
proceeding with respect to the subject matter or the enforcement of this
Agreement, the prevailing party (as determined by the court, agency or other
authority before which such suit or proceeding is commenced), in addition to
such other relief as may be awarded, shall be entitled to recover reasonable
attorneys’ fees, expenses and costs of investigation actually incurred. The
foregoing includes reasonable attorneys’ fees, expenses and costs of
investigation (including those incurred in appellate proceedings), costs
incurred in establishing the right to indemnification, or in any action or
participation in, or in connection with, any case or proceeding under Chapter 7,
11 or 13 of the Bankruptcy Code (11 United States Code Sections 101 et seq.), or
any successor statutes. The provisions of this Section 14.23 shall survive
Closing or any termination of this Agreement without limitation.

 

SECTION 14.24 DTPA Waiver. PURCHASER IS A SOPHISTICATED REAL ESTATE INVESTOR AND
HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO
EVALUATE THE MERITS AND RISKS OF THIS TRANSACTION. PURCHASER HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHTS, REMEDIES AND BENEFITS UNDER THE
TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT (SECTIONS 17.41 AND
FOLLOWING OF THE TEXAS BUSINESS AND COMMERCE CODE) (THE “DTPA”) AND ANY OTHER
SIMILAR CONSUMER PROTECTION LAW, WHETHER FEDERAL, STATE OR LOCAL. PURCHASER
COVENANTS NOT TO SUE THE SELLERS UNDER THE DTPA OR ANY SUCH SIMILAR CONSUMER
PROTECTION LAW IN THE STATES WHERE THE PROPERTIES ARE LOCATED. THE PROVISIONS OF
THIS SECTION 14.24 SHALL SURVIVE CLOSING OR ANY TERMINATION OF THIS AGREEMENT.

 

 63 

 

 

SECTION 14.25 Exchange. Seller or Purchaser may desire to effectuate a
tax-deferred “1031” exchange, including but not limited to a “reverse like kind
exchange” (an “Exchange”) in connection with the purchase and sale of any or all
of the Real Property. Purchaser and Seller hereby agree to reasonably cooperate
with each other in connection with an Exchange, provided that: (a) all documents
executed by any party in connection with an Exchange shall be subject to the
prior reasonable approval of the other party, and all such Exchange documents
shall acknowledge that the other party is acting solely as an accommodating
party to such Exchange, the other party shall have no liability with respect
thereto, the other party is making no representation or warranty that the
transactions qualify as a tax-deferred exchange under Section 1031 of the
Internal Revenue Code or any applicable state or local laws, and the other party
shall have no liability whatsoever if any such transactions fail to so qualify;
(b) no Exchange shall result in the non-exchanging party or parties incurring
any additional costs or liabilities, and each party shall indemnify, defend and
hold the other harmless against any such additional claims, causes of action,
costs and liabilities; (c) no Exchange shall result in any increased risks or
any adverse tax consequences to the non-exchanging party or parties; (d) in no
event shall the non-exchanging party or parties be obligated to acquire any
property or otherwise be obligated to take title, or appear in the records of
title, to any property in connection with an Exchange; and (e) in no event shall
an exchanging party’s consummation of such Exchange constitute a condition
precedent to its obligations under this Agreement, and an exchanging party’s
failure or inability to consummate such Exchange for any reason or for no reason
at all shall not be deemed to excuse or release such party from its obligations
under this Agreement. Any party pursuing an Exchange shall indemnify and hold
the other parties harmless from and against all claims, demands, actions,
proceedings, damages, losses, liabilities, costs and expenses resulting from
such party’s Exchange. The indemnification provisions of this Section 14.25
shall survive Closing or any termination of this Agreement.

 

SECTION 14.26 Effect of Affiliated Purchase Agreements

 

(a)          Contemporaneously herewith, (i) each of Sovereign Seller, Leigh
House Seller, and Preston View Seller, as sellers, and Purchaser, as purchaser,
have entered into the Three Property Purchase Agreement with respect to the
purchase and sale of each of the Sovereign Property, the Leigh House Property,
and the Preston View Property, (ii) ARIUM Palms Seller and Purchaser have
entered into the ARIUM Palms Purchase Agreement with respect to the ARIUM Palms
Property, and (iii) Landings at Four Corners Seller and Purchaser have entered
into the Landings at Four Corners Purchase Agreement with respect to the
Landings at Four Corners Property.

 

(b)          Seller and Purchaser specifically agree and acknowledge that,
except as otherwise specifically provided in Section 14.27 hereof, in Section
14.27 of the Three Property Purchase Agreement, in Section 14.27 of the Landings
at Four Corners Purchase Agreement, or in Section 14.27 of the ARIUM Palms
Purchase Agreement, (i) a termination of this Agreement shall also automatically
terminate the Affiliated Purchase Agreements, and (ii) a termination of any of
the Affiliated Purchase Agreements shall also automatically terminate this
Agreement.

 

SECTION 14.27 Special Provisions Regarding Partial Termination.

 

(a)          Purchaser’s Partial Termination Rights upon Special Casualty or
Special Condemnation.

 

(i)          As used in this Section 14.27(a):

 

(A)         A “Special Casualty” shall mean any damage to the Real Property or
any portion thereof by fire or other casualty that is expected to cost in excess
of ten percent (10%) of the Purchase Price to repair (as determined by the
independent insurance adjuster designated by Seller’s insurance company).

 

 64 

 

 

(B)          A “Special Condemnation” shall mean any condemnation or conveyance
in lieu of condemnation for the Real Property which meets the standards for a
“Material Condemnation” under Section 9.2(d), and for which either (i) the cost
of restoration is expected to exceed ten percent (10%) of the Purchase Price (as
determined by a general contractor selected by Purchaser that is reasonably
acceptable to Seller) or (ii) results in a diminution in value of the Property
by more than ten percent (10%) of the Purchase Price (as determined by an MAI
certified appraiser selected by Purchaser that is reasonably acceptable to
Seller).

 

(C)          A “Terminated Property” shall mean the Property, if the Property is
affected by a Special Casualty or Special Condemnation, and if Purchaser
therefore elects to terminate this Agreement pursuant to this Section 14.27(a).

 

(D)         The “Remaining Properties” shall mean the remainder of the Property
Group, if Purchaser has a right to terminate, and does terminate, this Agreement
pursuant to this Section 14.27(a).

 

(ii)          In the event of a Special Casualty or Special Condemnation at the
Property, Purchaser may elect to terminate this Agreement by written notice to
Seller, whereupon the Property shall thereafter constitute a Terminated
Property, the remainder of the Property Group shall constitute Remaining
Properties, and Purchaser shall proceed to close on the Remaining Properties
under the Affiliated Purchase Agreements pursuant to the terms of such
agreements, in which event: (A) the Earnest Money under this Agreement shall, at
Purchaser’s election, either be applied to the payment of the purchase price for
the Remaining Properties or returned to Purchaser, and (C) both parties shall be
relieved from all obligations and liabilities arising hereunder related to the
Property, except for any provisions hereof that expressly survive the
termination of this Agreement (and then only to the extent such provisions apply
to the Property). For the avoidance of doubt, if Purchaser exercises its rights
as contemplated in this Section 14.27(a)(ii), the Affiliated Purchase Agreements
shall remain in full force and effect notwithstanding anything herein or in the
Affiliated Purchase Agreements to the contrary. If Purchaser elects to close
over a Special Casualty or Special Condemnation, the terms of Section 9.2 shall
apply.

 

(b)          Purchaser’s Partial Termination Rights as to Affiliated Purchase
Agreements.

 

(i)          If Purchaser has a right to terminate, and does terminate, the
Three Property Purchase Agreement pursuant to Section 14.27 thereof, then,
notwithstanding anything in this Agreement to the contrary, such termination
shall apply solely to the property terminated thereby, and in such event, this
Agreement, the Three Property Purchase Agreement (as to the non-terminated
properties) and the other Affiliated Purchase Agreements shall remain in full
force and effect.

 

(ii)          If Purchaser has a right to terminate, and does terminate, the
Landings at Four Corners Purchase Agreement pursuant to Section 14.27 thereof,
then, notwithstanding anything in this Agreement to the contrary, such
termination shall apply solely to the Landings at Four Corners Purchase
Agreement, and in such event, this Agreement and the remaining Affiliated
Purchase Agreements shall remain in full force and effect.

 

 65 

 

 

(iii)        If Purchaser has a right to terminate, and does terminate, the
ARIUM Palms Purchase Agreement pursuant to Section 14.27 thereof, then,
notwithstanding anything in this Agreement to the contrary, such termination
shall apply solely to the ARIUM Palms Purchase Agreement, and in such event,
this Agreement and the remaining Affiliated Purchase Agreements shall remain in
full force and effect.

 

(c)          In the event of a conflict between the terms of this Section 14.27
and any other provision of this Agreement, the terms of this Section 14.27 shall
control.

 

[REMAINDER OF PAGE LEFT BLANK;
SIGNATURES BEGIN ON NEXT PAGE]

 

 66 

 

 

 

IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement, to be
effective as of the Effective Date.

 

  SELLER:       BR CARROLL PHILLIPS CREEK RANCH, LLC, a Delaware limited
liability company

 

  By: /s/ Jordan B. Ruddy   Name: Jordan B. Ruddy   Title: Authorized Signatory

 

[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

[SIGNATURES CONTINUE ON THE FOLLOWING PAGES]

 

 67 

 

 

  PURCHASER:       CARTER-HASTON HOLDINGS, L.L.C.,   a Delaware limited
liability company

 

  By: /s/ James A. Shanks   Name:James A. Shanks   Title: Authorized Member

 

[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

[SIGNATURES CONTINUE ON THE FOLLOWING PAGES]

 

 68 

 

 

JOINDER OF ESCROW AGENT

 

Escrow Agent has executed this Agreement for the limited purposes set forth
herein.

 

  ESCROW AGENT:       FIRST AMERICAN TITLE INSURANCE COMPANY

 

  By: /s/ Myra A. Kellner     Name:  Myra A. Kellner `   Title:    Escrow
Officer

 

[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

 

 69 

 

 

Parent JOINDER

 

This joinder (this “Parent Joinder”) is attached to and made a part of the
foregoing Agreement and all terms capitalized but not defined herein shall have
the respective meanings given to them in the Agreement. The undersigned,
BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation (“Parent”), for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby duly executes with proper authority, joins in the execution
of this Agreement, and agrees that it is a party to the Agreement and is jointly
and severally liable, as a principal and not as a surety, solely for Seller’s
obligations under Section 10.10 and for any indemnity obligations of Seller
arising under Section 11.1 hereof; provided, however, that any claim brought
hereunder must be brought within one hundred eighty (180) days following the
Closing Date, failing which, Purchaser shall be deemed to have waived and
forever renounced any right to assert a claim pursuant to this Parent Joinder
under Sections 10.10 and 11.1 for any claim or cause of action under the
Agreement, whether at law or in equity. Purchaser shall have the right to
proceed directly against Parent without first making written demand to Seller
(and without any obligation to bring suit against Seller) for the satisfaction
of any such obligations.

 

Parent represents and warrants that its Tangible Net Worth (as hereinafter
defined) exceeds the Cap Limitation. Until the expiration of the Survival Period
(or if Purchaser makes a claim against any Seller during the Survival Period,
until the final adjudication (including appeals) or settlement of such claim),
Parent shall at all times: (i) remain an entity in good standing and not legally
dissolve; (ii) maintain a Tangible Net Worth, measured on a consolidated basis,
in an amount not less than the Cap Limitation, and (iii) not sell, dispose or
make distributions of assets of Parent that would cause a breach of the
foregoing financial covenants. “Tangible Net Worth” means the excess of total
assets over total liabilities, in each case as determined in accordance with
generally accepted accounting principles consistently applied (“GAAP”),
excluding, however, from the determination of total assets all assets which
would be classified as intangible assets under GAAP including goodwill,
licenses, patents, trademarks, trade names, copyrights, and franchises.

 

Parent is an indirect owner of Seller, will derive substantial benefits from the
transactions described in the Agreement and acknowledges that the execution of
this Parent Joinder is a material inducement and condition to Purchaser’s
execution of the Agreement. Parent represents and warrants that it has the legal
right, power, authority and capacity to execute this Parent Joinder, that such
execution does not violate the organizational documents of, or any other
agreement or instrument by which Parent is bound, and that this Parent Joinder
is binding and enforceable against Parent. Parent acknowledges and agrees that
this Parent Joinder may not be assigned to any other Person without Purchaser’s
prior written consent (which may be withheld in Purchaser’s sole discretion) and
shall be binding upon Parent’s successors and assigns.

 

Parent unconditionally waives any guarantor or suretyship defenses that might
otherwise be available to it with respect to its obligations under this Parent
Joinder. The terms of this Joinder shall survive Closing until the expiration of
the Survival Period (as the same may be extended pursuant to Section 11.4).

 

  

 

 

The provisions set forth in Section 14.1, Section 14.3, and Section 14.5 through
Section 14.27, inclusive, of the Agreement are hereby incorporated by reference
into this Parent Joinder as if fully set forth herein, provided that the
undersigned shall be the “Seller” under such Sections.

 

[REMAINDER OF PAGE LEFT BLANK;
SIGNATURES BEGIN ON NEXT PAGE]

 

 2 

 

 

  PARENT:       BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation

 

  By: /s/ Michael Konig     Name: Michael Konig     Title: Authorized Signatory

 

[SIGNATURE PAGE TO PARENT JOINDER TO

PURCHASE AND SALE AGREEMENT]

[END OF SIGNATURES]

 

 3 

 

 

Schedule A

 

Legal description of Land

 

TRACT 1:

 

BEING ALL OF LOT 1, BLOCK A OF FINAL PLAT OF AVENUES OF PHILLIPS CREEK RANCH, AN
ADDITION TO THE CITY OF FRISCO, DENTON COUNTY, TEXAS, ACCORDING TO THE PLAT
THEREOF RECORDED IN DOCUMENT NUMBER 2014-379, REAL PROPERTY RECORDS, DENTON
COUNTY, TEXAS.

 

TRACT 2: EASEMENT ESTATE

 

AN EASEMENT AND RIGHT TO CONSTRUCT, RECONSTRUCT, OPERATE, REPAIR, RE-BUILD,
REPLACE, RELOCATE, ALTER, REMOVE AND PERPETUALLY MAINTAIN DRAINAGE FACILITIES
GRANTED BY PCR LAND COMPANY LLC TO VILLAS PHILLIPS CREEK PARTNERS, LLC, BY
INSTRUMENT DATED 05/09/2012, FILED 05/09/2012, CC# 2012-48976, REAL PROPERTY
RECORDS OF DENTON COUNTY, TEXAS, UPON AND ACROSS CERTAIN REAL PROPERTY OWNED BY
GRANTOR AND LOCATED IN THE CITY OF FRISCO, DENTON COUNTY, TEXAS, AS DESCRIBED
THEREIN AND INCORPORATED HEREIN BY REFERENCE.

 

 4 

 

 

Schedule B

 

list of seller’s deliveries

 

LEGAL

1Existing Tile Policy with underlying documents

2Existing ALTA As-Built Survey

3Legal description of the property

4City development agreements and impact fees

5Restrictive covenants, casements, and common area agreements, including any
invoices for prior 2 years associated therewith

6Summary of all pending or threatened litigation, or written statement that none
exists

7Loss run from completion of the property

8Ground Leases, Master Lenses

9Insurance certificates currently in place

 

OPERATIONS / PROPERTY MANAGEMENT 

10Inventory of Personal Property

11All resident lease agreements and any amendments

12Tenant demographic profile

13Rent roll indicating unit number, square feet, lease beginning/ending dates,
and market rents (in Excel)

14Prospect traffic report

15History of concessions, including a concession schedule reflecting all
up-front concessions for lesses in place

16Accounts Receivable Report for the training 12 months

17List of security / pet deposits current in place

18Parking and garage income / assignments by unit

19Capital Expenditure Schedule for the past 12 months, with dollar amounts

21Operating statements for the previous fiscal year as well as year-to-date
statement (in Excel)

General Ledger (redacted for balance sheet / equity accounts)

 

24Utility bills for the Property for the previous 12 months

25Real estate tax bills and assessments for the Property for the previous year,
including any appeal information

26Any leasing and management reports and comparable property market surveys

27Standard Lease Form

28Prospective Tenant Lease Application Form Credit Report Form and detailed
credit approval criteria

29List of all employees involved in the operation of the Property with date of
hire, salary, rent concessions and bonus schedule

30List and copies of service contracts, equipment leases, maintenance agreements

31All licenses, permits (including construction), Certificates of Occupancy for
the Property

 

 5 

 

 

PHYSICAL ASSESSMENT 

33Floor plans (.jpeg or .eps format)

34Complete construction drawings, including civil, architectural, MEP,
landscaping and a structural (digital format)

35As-built drawings and engineering calculations, including recent
mechanical/electrical changes

38Existing Environmental Reports, including any reports related to radon

39Existing Soils / Geotech Reports if available

*40Any other physical reports of the Property in Seller’s possession or
obtainable by Seller, including asbestos and mechanical

*41List of Hazardous Material in use at the Property as well as any air quality
inspections / surveys

42Compliance letters (ADA, file, building codes, etc.)

43Most recent life safety inspection report and an invoice from vendor
associated therewith

44Any warranties and guaranties for building construction or systems, including
from any general or sub-contractors if available

45Temtite Report/ Bond and evidence of current payment

46Zoning compliance letter of governmental authorities or similar evidence of
zoning compliance.

Green Certifications (GreenPoint Rated New Home Multifamily, GreenPoint Rated
Whole Building Existing Multifamily, Enterprise Green Communities Criteria,
Green Globes Multifamily for Existing Buildings, Green Gobes Multifamily for New
Construction, NGBS Green Home Remodeling Project Certification, NGBS Multifamily
Certification, ILFI Zero Energy Certification, Passive House Institute Passive
House Standard, PHIUS+, EarthCraft, ENERGY STAR® Certified Homes, ENERGY STAR®
for Existing Multifamily Building, ENERGY STAR® Qualified Multifamily
High-Rise-Prescriptive and Performance Path, LEED Building

47Design and Construction, LEED for Homes, LEED Operations Maintenance if
available

 

GENERAL

48Aerial Photograph Indicating Site

49Site Plans, Leasing Brochures, Maps, & Photographs (in .jpeg or .eps format)

 

Strictly Confidential

*both in Phase I

 

 6 

 

 

Schedule C-1

 

INVENTORY OF PERSONAL PROPERTY

 

Please see attached.

 

  

 

 

Schedule C-2

 

EXCLUDED PERSONAL PROPERTY

 

Please see attached.

 

  

 

 

Schedule 3.1

 

SELLER’S CORE DELIVERIES

 

Any and all information contained on that certain website with a domain name of:
______________________________. f[NTD: At execution, download/delete privileges
will be revoked and an email of the images of the site will be sent to both
parties. A new site will be created for any incremental requests/documents.]

 

  

 

 

Schedule 3.1(h)

 

litigation

 

Please see attached.

 

  

 

 

Schedule 3.1(i)

 

NOTICES OF VIOLATION

 

Please see attached.

 

 2 

 

 

Schedule 3.1(j)

 

contracts

 

Please see attached.

 

 3 

 

 

Schedule 3.1(k)

 

RENT ROLL

 

Please see attached.

 

 4 

 

 

Schedule 3.1(q)

 

INSURANCE CERTIFICATE

 

Please see attached.

 

  

 

 

Exhibit A

 

FORM OF BILL OF SALE AND ASSIGNMENT

 

_____________________________________________________________________________

 

BILL OF SALE AND ASSIGNMENT AND ASSUMPTION OF

LEASES, CONTRACTS AND GENERAL INTANGIBLES

 

This Bill of Sale and Assignment and Assumption of Leases, Contracts and General
Intangibles (this “Agreement”) is made and entered into this ____ day of _____,
2019, by and between BR CARROLL PHILLIPS CREEK RANCH, LLC, a Delaware limited
liability company (“Seller”), and ___________________, a ___________
(“Purchaser”).

 

WITNESSETH:

 

WHEREAS, Seller and [Purchaser] have previously entered into that certain
Purchase and Sale Agreement, dated as of June ____, 2019 [DESCRIBE AMENDMENTS,
IF APPLICABLE] (the “Purchase Agreement”);

 

WHEREAS, concurrently with the execution and delivery of this Agreement and
pursuant to the Purchase Agreement, Seller is conveying to Purchaser, by Special
Warranty Deed, (i) that certain tracts or parcels of real property located in
Denton County, Texas, and more particularly described on Exhibit A, attached
hereto and made a part hereof (the “Land”), (ii) the rights, easements and
appurtenances pertaining to the Land (the “Related Rights”), and (iii) the
buildings, structures, fixtures and other improvements on and within the Land
(the “Improvements”; and the Land, the Related Rights and the Improvements being
sometimes collectively referred to as the “Real Property”);

 

WHEREAS, Seller has agreed to convey to Purchaser certain personal property and
assign to Purchaser certain leases, service contracts, and intangible rights as
hereinafter set forth;

 

NOW, THEREFORE, in consideration of the receipt of Ten Dollars ($10.00), the
assumptions by Purchaser hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser agree as follows:

 

1.           Bill of Sale.

 

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser,
without representation or warranty, all of Seller’s right, title and interest
in, to and under the Personal Property and the Intangible Property.

 

(b)          “Personal Property” shall have the meaning ascribed to such term in
the Purchase Agreement.

 

 2 

 

 

(c)          “Intangible Property” shall have the meaning ascribed to such term
in the Purchase Agreement.

 

(d)          Seller hereby binds itself, its legal representatives, successors
and assigns, to WARRANT, and FOREVER DEFEND title to the Personal Property and
Intangible Property unto Purchaser, its legal representatives, successors and
assigns, against every Person claiming by, through or under Seller, but against
no other.

 

2.           Assignment and Assumption of Leases.

 

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser
all of Seller’s right, title and interest as landlord in, to and those Leases
(as defined in the Purchase Agreement) which are described in Exhibit B attached
to this Agreement, together with any and all unapplied Refundable Security
Deposits (as defined in the Purchase Agreement). The Refundable Security
Deposits are set forth on Exhibit B. The assignment of the Refundable Security
Deposits has been made by means of a credit or payment on the closing statement
executed by Seller and Purchaser pursuant to the Purchase Agreement.

 

(b)          Purchaser hereby assumes all of the covenants, agreements,
conditions and other terms and provisions stated in the Leases which, under the
terms of the Leases, are to be performed, observed, and complied with by the
landlord from and after the date of this Agreement. Purchaser acknowledges that
Purchaser shall become solely responsible and liable as landlord under the
Leases for obligations arising or accruing from and after the date hereof. It is
specifically agreed between Seller and Purchaser that Seller shall remain liable
for the performance of the obligations to be performed by Seller under the
described in Exhibit B which were required to be performed prior to (but not
from and after) the date hereof.

 

(c)          Purchaser shall indemnify, hold harmless and defend Seller from and
against any and all claims, demands, causes of action, liabilities, losses,
costs, damages and expenses (including reasonable attorneys’ fees and expenses
and court costs incurred in defending any such claim or in enforcing this
indemnity) that may be incurred by Seller by reason of the failure of Purchaser
to perform, observe and comply with the landlord’s obligations under any of the
Leases arising or accruing during the period from and after the date hereof,
including without limitation, claims made by tenants with respect to the
Refundable Security Deposits (to the extent paid or assigned to Purchaser or for
which Purchaser has received a credit or payment at Closing). Seller shall
indemnify, hold harmless and defend Purchaser from and against any and all
claims, demands, causes of action, liabilities, losses, costs, damages and
expenses (including reasonable attorneys’ fees and expenses and court costs
incurred in defending any such claim or in enforcing this indemnity) that may be
incurred by Purchaser by reason of the failure of Seller to perform, observe and
comply with the landlord’s obligations under any of the Leases arising or
accruing during the period prior to the date hereof, including without
limitation, claims made by tenants with respect to the Refundable Security
Deposits arising before the date hereof (to the extent such Refundable Security
Deposits were not paid or assigned to Purchaser or for which Purchaser did not
receive a credit or payment at Closing).

 

 3 

 

 

(d)          For purposes of this Paragraph 2, the word “landlord” means the
landlord, lessor or other equivalent party under any of the Leases, and the word
“tenant” means the tenant, lessee or other equivalent party under any of the
Leases.

 

3.           Assignment and Assumption of Contracts.

 

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser
all of Seller’s right, title and interest in, to and under those service, supply
and similar agreements set forth on Exhibit C, attached hereto and made a part
hereof (the “Contracts”).

 

(b)          Purchaser hereby assumes all of the covenants, agreements,
conditions and other terms and provisions stated in the Contracts which, under
the terms of the Contracts, are to be performed, observed, and complied with by
the property owner from and after the date of this Agreement. Purchaser
acknowledges that Purchaser shall become solely responsible and liable under the
Contracts for obligations arising or accruing from and after the date hereof,
including with respect to any and all payments coming due under the Contracts
for which Purchaser has received a credit or payment on the closing statement
executed by Purchaser and Seller (the “Credited Payments”). It is specifically
agreed between Seller and Purchaser that Seller shall remain liable for the
performance of the obligations to be performed by Seller under the Contracts
which were required to be performed prior to (but not from and after) the date
hereof.

 

(c)          Purchaser shall indemnify, hold harmless and defend Seller from and
against any and all claims, demands, causes of action, liabilities, losses,
costs, damages and expenses (including reasonable attorneys’ fees and expenses
and court costs incurred in defending any such claim or in enforcing this
indemnity) that may be incurred by Seller by reason of the failure of Purchaser
to perform, observe and comply with its obligations under any of the Contracts
arising or accruing during the period from and after the date hereof, including
without limitation, claims made by any other contract party with respect to the
Credited Payments (to the extent paid or assigned to Purchaser or for which
Purchaser received a credit or payment at Closing). Seller shall indemnify, hold
harmless and defend Purchaser from and against any and all claims, demands,
causes of action, liabilities, losses, costs, damages and expenses (including
reasonable attorneys’ fees and expenses and court costs incurred in defending
any such claim or in enforcing this indemnity) that may be incurred by Purchaser
by reason of the failure of Seller to perform, observe and comply with its
obligations under any of the Contracts arising or accruing during the period
prior to the date hereof, including without limitation, claims made by any other
contract party with respect to the Credited Payments, arising before the date
hereof (to the extent such Credited Payments were not paid or assigned to
Purchaser or for which Purchaser did not receive a credit or payment at
Closing).

 

4.           Qualifications. This Agreement is subject to those provisions of
the Purchase Agreement limiting Seller’s liability to Purchaser, including but
not limited to Article 11 of the Purchase Agreement.

 

5.           Counterparts. This Agreement may be executed in two or more
identical counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or partially
executed counterpart shall be deemed an original, but all of such counterparts
taken together shall constitute one and the same instrument.

 

6.           Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the successors, executors, administrators, legal
representatives and assigns of the parties hereto.

 

7.           Governing Law. This Agreement shall be construed under and enforced
in accordance with the laws of the State of New York.

 

 4 

 

 

EXECUTED effective as of the date first above written.

 

 

SELLER: PURCHASER: _____________________________, ___________________________, a
____________________________ a ________________________    

 

By:          ___________________________, By:   a ____________________________
Name:   Title:

 

By:  ___________________________   Name: __________________________  
Title:__________________________      

 

Exhibits to Bill of Sale and Assignment

 

A - Legal Description of Land

 

B - List of Assumed Contracts

 

 5 

 

 

Exhibit B

 

FORM OF TENANT NOTICE

 

NOTICE TO TENANT

 

__________________ ____, 2019

 

To:Tenants of Sorrel Phillips Creek Ranch Apartments

 

Re:Sale by BR CARROLL PHILLIPS CREEK RANCH, LLC, a Delaware limited liability
company (the “Landlord”), to ____________________________, a ________________
(the “New Landlord”), of the property known as “Sorrel Phillips Creek Ranch
Apartments” located at 5050 FM423, Frisco, Denton County, Texas 75036 (the
“Property”)

 

Dear Tenant:

 

Please be advised that the Property has been sold and your lease (the “Lease”)
has been assigned by Landlord to New Landlord. New Landlord has assumed all of
the obligations under your Lease accruing from and after this day, including any
obligations to return your security deposit, if any, in accordance with the
terms of your Lease.

 

Until further notice, all correspondence and notices shall be directed, and all
rents, additional rents and other charges under the Lease shall be paid, to New
Landlord at the following address:
_________________________________________________________.

 

Please make all rent checks payable to _________________________________.

 

Your security deposit, if any, under the Lease has been transferred to New
Landlord.

 

Thank you for your assistance and cooperation during this transition.

 

[Signatures commence on the following page]

 

  

 

 

LANDLORD:

 

BR CARROLL PHILLIPS CREEK RANCH,   LLC, a Delaware limited liability company  

 

 

By:    

Name: Jordan B. Ruddy   Title: Authorized Signatory  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 1 

 

 

Exhibit C

 

FORM OF CONDOMINIUM CONVERSION PROHIBITION AGREEMENT

 

Return after recording to:                                        

 

SPACE ABOVE THIS LINE FOR RECORDER’S USE

 

[____________________]

 

PROHIBITION AGAINST

CONDOMINIUM CONVERSION AGREEMENT

 

THIS PROHIBITION AGAINST CONDOMINIUM CONVERSION AGREEMENT (the “Condominium
Agreement”) is made and entered into as of [__________________], 2019, by and
between _____________________ (“Purchaser”), and [____________________________],
a [_______________________] (“Seller”).

 

WITNESSETH:

 

WHEREAS, Seller and Purchaser, together with certain other parties, have entered
into that certain Purchase and Sale Agreement dated as of June ____, 2019 (the
“Sale Agreement”) relating to, among other things, the sale by Seller to
Purchaser of that parcel of real property located in [_________________] County,
[_____________], and more particularly described on Exhibit “A” attached hereto
(the “Land”), together with certain apartment buildings and related personal
property and other rights located thereon and relating thereto (the
“Improvements”; and the Land and the Improvements collectively referred to
herein as the “Property”).

 

WHEREAS, as a condition to Seller conveying the Property to Purchaser and in
consideration of Seller accepting the purchase price and conveying the Property
as set forth in the Sale Agreement to Purchaser, Purchaser has agreed with
Seller to execute and record this Condominium Agreement providing for certain
restrictions relating to the future use of the Property for a period of time
after the date of this Condominium Agreement as more fully set forth herein.

 

 2 

 

 

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

 

Section 1. Definitions and Interpretation. The following terms shall have the
respective meanings assigned to them in this Section I unless the context in
which they are used clearly requires otherwise:

 

“Condominium Conversion” - Shall mean the filing or recording of any document
providing for the conversion of the Property to a form of condominium ownership
under any state or local statute or ordinance.

 

“County” - The county in which the Land is located.

 

“Deed” - Special Warranty Deed.

 

“Event of Default” - As defined in Section 11 hereof.

 

“First Mortgage” – As defined in Section 20(a) hereof.

 

“First Mortgagee” – As defined in Section 20(a) hereof.

 

“Hazardous Materials” or “Hazardous Substances” - Shall mean (i) hazardous
wastes, hazardous materials, hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including but
not limited to substances defined as “hazardous wastes,” “hazardous materials,”
“hazardous substances,” “toxic substances,” “pollutants,” “contaminants,”
“radioactive materials”, “toxic pollutants”, or other similar designations in,
or otherwise subject to regulation under, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), 42
U.S.C. § 9601 et seq.; the Toxic Substance Control Act (“TSCA”), 15 U.S.C. §
2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1802; the
Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 9601, et seq.; the
Clean Water Act (“CWA”), 33 U.S.C. § 1251 et seq.; the Safe Drinking Water Act,
42 U.S.C. § 300f et seq.; the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq.;
any Regional Water Quality Control Board; and in any permits, licenses,
approvals, plans, rules, regulations or ordinances adopted, or other criteria
and guidelines promulgated pursuant to the preceding laws or other similar
federal, state or local laws, regulations, rules or ordinance now or hereafter
in effect relating to environmental matters; and (ii) any other substances,
constituents or wastes subject to any applicable federal, state or local law,
regulation or ordinance, including any environmental law, now or hereafter in
effect, including but not limited to (A) petroleum, (B) refined petroleum
products, (C) waste oil, (D) waste aviation or motor vehicle fuel and their
byproducts, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H)
Polychlorinated Biphenyls (PCB’s), (I) ureaformaldehyde, (J) volatile organic
compounds (VOC), (K) total petroleum hydrocarbons (TPH), (L) benzene derivative
(BTEX), (M) petroleum byproducts and (N) methane gas or any of its derivatives.

 

“Improvements” - As defined in the Recitals hereof.

 

 3 

 

 

“Indemnified Parties” - As defined in Section 3 hereof.

 

“Land” - As defined in the Recitals hereof.

 

“Property” - As defined in the Recitals hereof.

 

“Property Conditions” - As defined in Section 3 hereof.

 

“Related Parties” – Bluerock Real Estate, L.L.C., a Delaware limited liability
company, and its successors and assigns.

 

“Residential Rental Property” - Shall mean property used for the rental of
apartments to the general public under leases providing for residential use by
any occupant of any apartment.

 

“Purchaser” - As defined in the Preamble hereof. In the event more than one
person and/or entity executes this Condominium Agreement as Purchaser, each such
person and/or entity which comprises Purchaser under this Condominium Agreement
shall be jointly and severally liable for all of the obligations, covenants,
liabilities and indemnifications of the Purchaser under this Condominium
Agreement.

 

“Seller” - As defined in the Preamble hereof.

 

“Term” - As defined in Section 7 herein.

 

“Units” - Shall mean any portion of the Property created in connection with any
Condominium Conversion.

 

Section 2. No Condominium Conversion.

 

(a)          During the Term of this Condominium Agreement:

 

(i)          The Property shall not be subject to any Condominium Conversion and
no portion of the Property shall be converted to Units for sale in connection
with a Condominium Conversion, nor shall the title to any such Units be
transferred to any party.

 

(ii)         No part of the Property will at any time be owned or used as a
cooperative housing corporation, community apartment property or stock
corporation.

 

 4 

 

 

Section 3. Indemnification. In the event any of the provisions of Section 2
hereof are breached, the then current owner of the Property (“Indemnitor”)
agrees to indemnify, defend and hold harmless the Seller, and each of its
members, partners, officers, directors, trustees, affiliates (including, but not
limited to, Bluerock Real Estate, L.L.C. and Bluerock Residential Growth REIT,
Inc.)1, parents, subsidiaries, shareholders, managers, beneficiaries, employees
and agents (collectively, the “Indemnified Parties”) from any and all demands,
claims, including claims for personal injury, property damage or death, legal or
administrative proceedings, losses, liabilities, damages, penalties, fines,
liens, judgments, costs or expenses whatsoever, whether in tort, contract or
otherwise (including without limitation, court costs and reasonable attorneys’
fees and disbursements) arising out of, or in any way relating to: (a) claims
made or brought by any party or parties who acquire or contract to acquire any
Units in the Property (or any cooperative housing corporation, community
apartment property or stock corporation interests in the Property) following the
date hereof, their agents, employees and successors and assigns in connection
with or related to (i) the physical condition of the Property, including,
without limitation, latent or patent defects, and claims relating to the
existence of asbestos, any other construction defects, claims relating to mold,
all structural and seismic elements, all mechanical, electrical, plumbing,
sewage, heating, ventilating, air conditioning and other systems, the
environmental condition of the Property and the presence of Hazardous Materials
or Hazardous Substances on, under or about the Property, and (ii) any law or
regulation applicable to the Property, including, without limitation, any
environmental law and any other federal, state or local law (the matters
described in (i) and (ii) hereof collectively the “Property Conditions”); and
(b) a breach of any of the covenants, terms and conditions of this Condominium
Agreement by Indemnitor. Indemnitor consents to the right of Indemnified Parties
to approve and appoint defense counsel and to participate in or assume the
defense of any claim. Until any determination is made in any appropriate legal
proceeding challenging the obligation of Indemnitor herein, Indemnitor’s
obligations under all the terms and provisions of this Section shall remain in
full force and effect. Indemnitor acknowledges that it is a sophisticated and
experienced purchaser of real estate and has reviewed with its counsel the full
meaning and affect of the foregoing indemnity.

 

Section 4. Consideration. In consideration of the Seller’s acceptance of the
purchase price for the Property from Purchaser, Purchaser has entered into this
Condominium Agreement and has agreed to restrict the uses to which the Property
can be put on the terms and conditions set forth herein.

 

Section 5. Intentionally deleted.

 

Section 6. Intentionally deleted.

 

Section 7. Term. This Condominium Agreement shall become effective upon its
execution and delivery and shall remain in full force and effect until the date
which is ten (10) years from the date hereof (the “Term”). Upon the expiration
of the Term, the parties hereto agree to execute, deliver and record appropriate
instruments of release and discharge of the terms hereof; provided, however,
that the execution and delivery of such instruments shall not be necessary or a
prerequisite to the termination of this Condominium Agreement in accordance with
its terms.

 

 

1 OPEN—Sellers to verify.

 

 5 

 

 

Section 8. Covenants to Run With the Land. The Purchaser and Seller hereby
subject the Property to the covenants, reservations and restrictions set forth
in this Condominium Agreement. The Purchaser and the Seller hereby declare their
express intent that the covenants, reservations and restrictions set forth
herein shall be deemed covenants running with the land and shall pass to and be
binding upon the Purchaser’s successors in title to the Property; provided,
however, that on the termination of this Condominium Agreement said covenants,
reservations and restrictions shall expire. Each and every contract, deed or
other instrument hereafter executed covering or conveying the Property or any
portion thereof shall conclusively be held to have been executed, delivered and
accepted subject to such covenants, reservations and restrictions, regardless of
whether such covenants, reservations and restrictions are set forth in such
contract, deed or other instrument.

 

Section 9. Burden and Benefit. The Purchaser and Seller hereby declare their
understanding and intent that the burden of the covenants set forth herein touch
and concern the Land in that the Purchaser’s legal interest in the Property is
rendered less valuable thereby. The Purchaser and Seller hereby further declare
their understanding and intent that the benefit of such covenants touch and
concern the Land by enhancing and increasing the enjoyment and use of the
Property by persons entitled to rent the apartments contained therein.

 

Section 10. Uniformity: Common Plan. The covenants, reservations and
restrictions hereof shall apply uniformly to the entire Property in order to
establish and carry out a common plan for the use of the Property.

 

Section 11. Enforcement. If the Purchaser or any of its successors or assigns
defaults in the performance or observance of any covenant, agreement or
obligation of the Purchaser and its successors or assigns set forth in this
Condominium Agreement, then the Seller or any of the Indemnified Parties may
declare an “Event of Default” to have occurred hereunder, and, at any of said
Parties option, it may take any one or more of the following steps: (a) by
mandamus or other suit, action or proceeding at law or in equity, to require the
Purchaser and its successors and assigns to perform its obligations and
covenants hereunder, or enjoin any acts or things which may be unlawful or in
violation of the rights of the Seller hereunder; or (b) take such other action
at law or in equity as may appear reasonably necessary to enforce the
obligations, covenants and agreements of the Purchaser hereunder. All rights and
remedies as set forth herein shall be cumulative and non-exclusive to the extent
permitted by law.

 

Section 12. Recording and Filing. The Seller shall cause this Condominium
Agreement and all amendments and supplements hereto and thereto, to be recorded
and filed in the real property records of the County. The Seller shall pay all
fees and charges incurred in connection with any such recording.

 

Section 13. Attorneys’ Fees. In the event that a party to this Condominium
Agreement brings an action against any other party to this Condominium Agreement
by reason of the breach of any condition or covenant, representation or warranty
in this Condominium Agreement, or otherwise arising out of this Condominium
Agreement, the prevailing party in such action shall be entitled to recover from
the other reasonable attorneys’ fees to be fixed by the court which shall render
a judgment, as well as the costs of suit.

 

Section 14. Governing Law. This Condominium Agreement shall be governed by the
laws of the State of Texas.

 

 6 

 

 

Section 15. Amendments. This Condominium Agreement shall be amended only with
the express written consent of the Seller, or by any one (1) of the Related
Parties for or on behalf of the Seller, by a written instrument executed by the
parties hereto or their successors in title, and duly recorded in the real
property records of the County.

 

Section 16. Execution of Termination. Any one (1) of the Related Parties is
authorized and empowered to execute a termination of this Condominium Agreement
with the full force and effect as though it had been executed by the Seller.

 

Section 17. Notice. Any notice required to be given hereunder shall be made in
writing and shall be given by personal delivery, overnight courier, or certified
or registered mail, postage prepaid, return receipt requested, at the addresses
specified below, or at such other addresses as may be specified in writing by
the parties hereto:

 

TO SELLER:

 

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue

9th Floor

New York, NY 10019

Attention: Ryan MacDonald

 

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

 

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue

9th Floor

New York, NY 10019

Attention: Michael L. Konig

 

And to:

 

Nelson Mullins Riley & Scarborough LLP

Atlantic Station
201 17th Street NW, Suite 1700
Atlanta, GA 30363

Attention: Eric R. Wilensky, Esq.

 

TO PURCHASER:

 

c/o Carter-Haston Holdings, L.L.C.

1230 Peachtree St. NE, Suite 1909

Atlanta, GA 30309

Attention: James A. Shanks

 

 7 

 

 

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

 

KRE Topaz Portfolio Investor LLC

c/o Kohlberg Kravis Roberts & Co.

600 Travis Street, Suite 7200

Houston, Texas 77002

Attention: Paul S. Wasserman

Telephone: (713) 332-8322

E-mail: paul.wasserman@kkr.com

 

And to:

 

KRE Topaz Portfolio Investor LLC

c/o Kohlberg Kravis Roberts & Co.

9 West 57th Street, Suite 4200

New York, New York 10019

Attention: Michael Friedland

Telephone: ___________________

E-mail: michael.friedland@kkr.com

 

And to:

 

Waller Lansden Dortch & Davis, LLP

511 Union Street, Suite 2700

Nashville, Tennessee 37219

Attention: Philip F. Head, Esq.

 

Notice shall be deemed given three (3) Business Days after the date of mailing,
by certified mail, postage prepaid, return receipt requested, or, if personally
delivered or delivered by overnight courier, when received.

 

Section 18. Severability. If any provision of this Condominium Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining portions hereof shall not in any way be affected or impaired
thereby.

 

Section 19. Multiple Counterparts. This Condominium Agreement may be
simultaneously executed in multiple counterparts, all of which shall constitute
one and the same instrument, and each of which shall be deemed to be an
original.

 

Section 20. Mortgagee’s Rights.

 

(a)          Definitions. For purposes of this Section 20, the following terms
shall have the following meanings:

 

 8 

 

 

“First Mortgage” shall mean any bona-fide unpaid and outstanding mortgage or
deed of trust on the Property or other instrument creating a security interest
against the Property having priority of record over all other recorded liens
except those governmental liens and statutory liens which are made superior by
statute.

 

“First Mortgagee” shall mean the holder of any First Mortgage.

 

(b)          Transfer of Property to or from First Mortgagee. Notwithstanding
anything contained herein to the contrary, in the event of a sale, transfer, or
other disposition of the Property including, but not limited to, a conveyance
pursuant to a deed-in-lieu of foreclosure or the sale of the Property at a
foreclosure to (i) a First Mortgagee, (ii) an affiliate of a First Mortgagee,
(iii) a purchaser at a foreclosure sale, and (iv) any transferee of a First
Mortgagee or affiliate of a First Mortgagee (collectively a “Foreclosure
Purchaser”), shall have no obligation to indemnify, defend and hold harmless
Seller or the Related Parties with respect to any Condominium Conversion
occurring (x) prior to the date such Foreclosure Purchaser acquires title to the
Property (regardless of whether such Foreclosure Purchaser consented to such
Condominium Conversion prior to its acquisition of the Property), or
(y) following the conveyance of the Property by such Foreclosure Purchaser to a
third party purchaser, provided that such Foreclosure Purchaser did not commit a
Condominium Conversion during such Foreclosure Purchaser’s period of ownership
of the Property. In the event that Foreclosure Purchaser did commit a
Condominium Conversion during such Foreclosure Purchaser’s period of ownership
of the Property, then Foreclosure Purchaser shall have the obligation to
indemnify, defend and hold harmless Seller and the Related Parties with respect
to any Condominium Conversion during such Foreclosure Purchaser’s period of
ownership. Any third party transferee of a Foreclosure Purchaser shall have the
obligation to indemnify, defend and hold harmless Seller and the Related Parties
with respect to any Condominium Conversion after such transferee’s acquisition
of the Property. In the event of litigation arising out of such
indemnifications, covenants or conditions, the prevailing party shall be
entitled to recover its reasonable attorneys’ fees and costs of court from the
non-prevailing party. Seller acknowledges that Foreclosure Purchaser’s liability
under this Condominium Agreement shall be limited to Foreclosure Purchaser’s
interest in the Property.

 

(c)          No Amendments. No amendment of this Condominium Agreement shall be
effective without the written consent and approval of any First Mortgagee, which
shall not be unreasonably withheld, conditioned and/or delayed.

 

Section 21. Joint and Several Liability of Purchaser. In the event more than one
person and/or entity executes this Condominium Agreement as Purchaser, each such
person and/or entity which comprises Purchaser under this Condominium Agreement
shall be jointly and severally liable for all of the obligations, covenants,
liabilities and indemnifications of the Purchaser under this Condominium
Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed the Condominium Agreement
as of the day and year first written above.

 

 9 

 

 

  SELLER:

 

  [_____________________________],   a [___________________________]

 

  By:     Name: _______________________________________     Title:
________________________________________

 

[ADAPT TO ADD JURISDICTION-SPECIFIC ACKNOWLEDGMENT AND TO
SATISFY ANY OTHER RECORDING REQUIREMENTS]

 

 10 

 

 

  PURCHASER:

 

  [_______________________,   a _________________________]

 

  By:   Name:   Title:

 

[ADAPT TO ADD JURISDICTION-SPECIFIC ACKNOWLEDGMENT AND TO
SATISFY ANY OTHER RECORDING REQUIREMENTS]

 

Exhibits to Condominium Agreement

 

Exhibit A – Legal Description of Property

 

 11 

 

 

Exhibit D

 

FORM OF SPECIAL WARRANTY DEED

 

SPECIAL WARRANTY DEED

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS
FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR
DRIVER’S LICENSE NUMBER.

 

STATE OF TEXAS § § COUNTY OF _____________ §

 

KNOW ALL PERSONS BY THESE PRESENTS:

 

That __________________, a ____________________ (“Grantor”), for and in
consideration of the sum of Ten and No/100 Dollars ($10.00), paid to Grantor,
has GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents does hereby
GRANT, BARGAIN, SELL and CONVEY unto ________________, a _____________________
(“Grantee”), its successors and assigns, in fee simple, that certain tract of
land in _________________ County, Texas, being more particularly described on
Exhibit A attached hereto and incorporated herein by reference for all purposes
(the “Land”), together with all of Grantor’s right, title and interest in and to
all buildings, structures, fixtures, parking facilities, and other improvements
located on the above described Land (collectively, the “Improvements”), together
with all of Grantor’s right, title and interest in and to all easements,
licenses, covenants, privileges and other rights appurtenant to the Land or the
Improvements, and any land lying in the bed of any street, road, avenue or
alley, open or closed, in front of or adjoining the Land (collectively,
“Appurtenances”; with the Land and Improvements, collectively, the “Property”).

 

The conveyance is made subject only to the matters described in Exhibit B
attached hereto and incorporated herein by this reference, but only to the
extent the same are currently valid and enforceable against the Property
(collectively, the “Permitted Exceptions”).

 

TO HAVE AND TO HOLD the Property, together with all and singular the rights and
appurtenances thereto in anywise belonging, subject to the Permitted Exceptions,
unto Grantee and Grantee’s successors and assigns, forever; and Grantor does
hereby bind itself, its successors and assigns, TO WARRANT AND FOREVER DEFEND
all and singular the Property unto Grantee, Grantee’s successors and assigns
forever against every person whomsoever lawfully claiming or to claim the same
or any part thereof by, through or under Grantor but not otherwise, and subject
only to the Permitted Exceptions.

 

Grantee’s address is: ___________________________.

 

[SIGNATURE PAGE FOLLOWS]

 

 12 

 

 

Executed AND EFFECTIVE as of the ____ day of _______, 2019.

 

GRANTOR:  

 

________________,   a ___________________  

 

By: ____________________   Name: ____________________   Its:
____________________  

 

STATE OF _________ §     §   COUNTY OF ________ §  

 

This instrument was acknowledged before me on the ___ day of ________, 2019, by
____________, the __________ of __________________, on behalf of said
________________________.

 

(SEAL)     Notary Public in and for the State of ___________

 

AFTER RECORDING, RETURN TO:

 

__________________   __________________   __________________  
__________________  

 

Exhibits to Special Warranty Deed:

 

Exhibit A – Legal Description of Land

Exhibit B – Permitted Exceptions

 

 13 

 

 

Exhibit E

 

FORM OF SELLER’S TITLE AFFIDAVIT

 

AFFIDAVIT AS TO DEBTS AND LIENS AND PARTIES IN POSSESSION

(ENTITY OWNER)

 

GF: _____________________

 

SUBJECT PROPERTY: Being a tract of land in _________________ County, Texas, and
being more fully described in the title commitment for the referenced GF#.

 

OWNER: _________________________

SALE TO: ____________________

 

STATE OF _______________

COUNTY OF _____________

 

BEFORE ME, the undersigned authority, on this day personally appeared the
undersigned Affiant, personally known to me to be the person whose name is
subscribed hereto and upon oath deposes and says that:

 

1.To the best knowledge and belief of Affiant:

 

a.The charges for all labor and materials that may have been furnished to the
property or to the improvements thereon have been fully paid.

b.All contracts for the furnishing of labor or materials to the property or for
improvements thereon have been completed and fully paid.

c.There are no security agreements or leases affecting any goods or chattels
that have become attached, or that will at any later date become attached, to
the property or improvements thereon as fixtures that have not been fully
performed and satisfied, which are not shown on the referenced title commitment.

d.There are no loans of any kind on the property, which are not shown on the
referenced title commitment.

e.There are no brokers that have a signed commission agreement with Owner under
which a commission is claimed or earned and has not been paid, which are not
shown on the settlement statements.

 

2.Affiant has no knowledge of a notice of change of use nor has Owner received
written notice of change of use by the appraisal district.

 

3.The property is currently being used for the following purposes, and to the
best knowledge and belief of Affiant, the improvements, if any, and such use
does not violate any restrictive covenants affecting the property: Multifamily
apartment community.

 

4.Affiant has no knowledge of any proceedings involving Owner, nor has Owner
received written notice of, any proceedings, by any agency or authority, public
or private, that levies taxes or assessments, which may result in taxes or
assessments affecting the property and which are not shown by the referenced
title commitment.

 

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5.Affiant has no knowledge of any Judgments, Federal Tax Liens, or State Tax
Liens against Owner and/or the property, nor has Owner received written notice
of any of the foregoing; and, to Affiant’s knowledge, neither Owner nor the
Property is subject to a claim under the Medicaid Estate Recovery Program, nor
has Owner received written notice of any such claim.

 

6.(a) All ad valorem and personal property taxes (if any), all “use” type
business taxes (if any), including but not limited to hotel use and occupancy
taxes, and all association/ maintenance type taxes or assessments (if any) that
are currently due and payable have been paid or will be paid at closing and are
shown on the settlement statements. (b) Any of the above referenced taxes which
are the obligation of Owner and which have been prorated on the settlement
statements are based on information approved by Owner.

 

7.Owner is the only occupant of the property, except (list any leases):

 

Rights of tenants, as tenants only, without purchase option or right of first
refusal, under leases described on the rent roll attached hereto as Exhibit A.

 

8.Owner has not entered into any, and to Affiant’s knowledge there are no,
unrecorded contracts (other than service contracts pertaining to property
operations); deeds; mortgages; mechanic’s liens; options of any kind, including
but not limited to options to purchase or lease; rights of first refusal or
requirements of prior approval of a future purchaser or occupant; rights of
reentry; rights of reverter; or rights of forfeiture affecting the property or
improvements thereon, which are not shown on the referenced title commitment,
other than _______________________ [describe PSA for property sale].

 

9.No proceedings in bankruptcy or receivership have ever been instituted by or
against Owner, and Owner has never made an assignment for the benefit of
creditors.

 

10.The property has curb cuts and driveways providing actual vehicular and
pedestrian access to ________________________, which are open and in use.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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THIS affidavit is made to First American Title Insurance Company, as an
inducement to them to complete the above referenced transaction, and Affiant
realizes that First American Title Insurance Company, is relying upon the
representations contained herein; and Affiant does hereby swear under the
penalties of perjury that the foregoing information is true and correct in all
respects, to the best knowledge and belief of Affiant, and that Affiant is
authorized to make this affidavit on behalf of Owner.

 

EXECUTED effective as of _____________________, 2019.

 

By: __________________________________

___________________ of Owner

 

STATE OF ________________

 

COUNTY OF _____________

 

SWORN TO AND SUBSCRIBED BEFORE ME on ____________________, 2019, by
_____________________________.

 

    Notary Public, State of     __________________ Notary’s printed
name:____________________     My commission expires:___________________

 

Exhibits to Affidavit as to Liens and Parties in Possession:

 

Exhibit A – Rent Roll

 

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Exhibit F

 

FORM OF SELLER’S CLOSING CERTIFICATE

 

_____________________________________________________________________________

 

SELLER’S CLOSING CERTIFICATE

 

THIS SELLER’S CLOSING CERTIFICATE is made as of ______________, 2019 by BR
CARROLL PHILLIPS CREEK RANCH, LLC, a Delaware limited liability company
(“Seller”), in favor of _______________________, a __________ (“Purchaser”).

 

Seller hereby certifies to Purchaser that the representations and warranties of
Seller set forth in Section 3.1 of that certain Purchase and Sale Agreement
between Seller and _________________________ [if applicable: as
amended/assigned] (the “Agreement”) dated as of June _____, 2019, are true and
correct in all material respects as of the date hereof, except as to:

 

(a)The Rent Roll for the Property attached hereto as Exhibit A replaces the Rent
Roll for the Property attached to the Agreement as Schedule 3.1(k)[; and]

 

(b)[If applicable: The items disclosed on Exhibit B attached hereto replace
Seller’s disclosures attached to the Agreement as Schedule(s) ___________ ].

 

The representations and warranties of Seller set forth in Section 3.1 of the
Agreement, and as updated by this Seller’s Closing Certificate, will survive
only for a period of one hundred eighty (180) days from the date hereof.

 

This Seller’s Closing Certificate is delivered pursuant to Section 6.2(i) of the
Agreement, and Seller’s liability hereunder is subject to Article 11 of the
Agreement, including the Cap Limitation as defined therein.

 

 17 

 

 

  SELLER:       BR CARROLL PHILLIPS CREEK RANCH, LLC, a Delaware limited
liability company

 

  By:

 

  Name: Jordan B. Ruddy   Title: Authorized Signatory

 

Exhibits to Seller’s Closing Certificate

 

Exhibit A —     Updated Rent Roll

 

Exhibit B —     Additional Disclosure Items [if applicable]

 

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