Exhibit 10.1
ASSET PURCHASE AGREEMENT
     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of August 27, 2010, by and among MR PROPERTY MANAGEMENT, LLC, a Delaware
limited liability company (“Buyer”), MISSION RESIDENTIAL MANAGEMENT, LLC, a
Virginia limited liability company (“Seller”), MR HOLDINGS, LLC, a Virginia
limited liability company (“MR Holdings”), for purposes of Article IX only,
FORWARD CAPITAL, LLC, a Delaware limited liability company (the “Parent”), and
for purposes of Article V only, CHRISTOPHER C. FINLAY, an individual resident of
the Commonwealth of Virginia (“Principal”). Buyer, Seller, MR Holdings, Parent
and Principal are sometimes collectively referred to herein as the “Parties” and
individually referred to herein as a “Party.”
RECITALS:
     A. Seller is engaged in the business of providing property management and
related services (the “Services”) for multi-unit residential real estate
properties owned or leased by affiliates of Seller (the “Business”).
     B. Subject to the terms and conditions set forth in this Agreement, Seller
desires to sell, assign, transfer, convey and deliver to Buyer, and Buyer
desires to purchase and acquire from Seller, substantially all of the assets,
properties and rights of Seller used in, arising out of or otherwise related to
the Business, and to assume certain specified liabilities of Seller.
     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound hereby, agree as
follows.
ARTICLE I
DEFINITIONS
     Section 1.01 Definitions. For purposes of this Agreement (including the
Schedules), the following terms shall have the meanings set forth below:
     “Accounts Receivable” has the meaning set forth in Section 2.04(b).
     “Accounting Methods” means the accounting principles and practices set
forth on Exhibit A attached hereto.
     “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person as of the date on
which, or at any time during the period for which, the determination of
affiliation is being made. For purposes of this definition, “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.

1

--------------------------------------------------------------------------------

 

     “Agreement” has the meaning set forth in the preamble to this Agreement.
     “Asset Management Agreement” means the Asset Management Agreement to be
entered into on the Closing Date by each of the parties named therein in
substantially the form attached hereto a Exhibit B.
     “Assignment and Assumption Agreement” has the meaning set forth in Section
4.03(a).
     “Assumed Contracts” means: (i) all Contracts listed on Schedule 2.02(b);
(ii) all Contracts entered into by Seller between the date of this Agreement and
the Closing Date that Buyer agrees in writing to assume; and (iii) the Personal
Property Leases; provided, however, that Assumed Contracts shall not include
Excluded Contracts.
     “Assumed Liabilities” has the meaning set forth in Section 2.04.
     “Audit Inquiry Letter” has the meaning set forth in Section 7.14.
     “Bankruptcy Event” means, with respect to any Person, the occurrence of any
of the following:
          (a) a court of competent jurisdiction enters a decree or order for
relief in an involuntary case under applicable bankruptcy, insolvency, or other
similar Law now or hereinafter in effect, or appoints a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or similar official for such Person
or for any substantial part of such Person’s property, or ordering the winding
up or liquidation of its affairs;
          (b) such Person commences a voluntary case under any applicable
bankruptcy, insolvency, or other similar Law now or hereinafter in effect, or
consents to the entry of an order for relief in an involuntary case under any
such Law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official for such Person or for any substantial part of such Person’s property,
or makes any general assignment for the benefit of creditors, or fails generally
to, or admits in writing its inability, to pay debts as they become due; or
          (c) an insolvency case under any applicable bankruptcy, insolvency, or
other similar Law now or hereinafter in effect, is commenced against such Person
or for the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar official for such
Person or for any substantial part of such Person’s property and such proceeding
is not dismissed or stayed within forty-five (45) days of the commencement
thereof.
     “Basket” has the meaning set forth in Section 9.06(a).
     “Benefit Plans” means any “employee benefit plan” as defined in
Section 3(3) of ERISA and any other plans, programs, policies, agreements or
arrangements, etc., that provide compensation or other benefits to any employee
of Seller, whether or not subject to ERISA, currently maintained, sponsored or
contributed or required to be contributed to by Seller or any ERISA Affiliate or
with respect to which Seller or any ERISA Affiliate has any current or potential
liability or obligation.

2

--------------------------------------------------------------------------------

 

     “Bill of Sale” has the meaning set forth in Section 4.03(e).
     “Books and Records” means original or true and complete copies of all of
the books, records, files, data and information of Seller (including customer
and supplier lists, financial and accounting records, purchase orders and
invoices, sales orders, credit and collection records, repair files, studies,
surveys, analyses, strategies, plans, forms, designs, diagrams, drawings,
specifications, technical data, production and quality control records, lists of
and correspondence and miscellaneous records with respect to customers,
suppliers, representatives and all other general correspondence) of Seller;
provided, however, that the term “Books and Records” shall not include any items
of Seller set forth in Section 2.03(f) and Section 2.03(g).
     “Business” has the meaning set forth in the recitals to this Agreement.
     “Business Day” means any day other than a Saturday, a Sunday or other day
on which banking institutions in the Commonwealth of Virginia are authorized or
required by Law or other governmental action to close.
     “Buyer” has the meaning set forth in the preamble to this Agreement.
     “Buyer Guaranty” means the Buyer Guaranty to be entered into on the Closing
Date by Grubb & Ellis Apartment REIT, Inc., in favor of Seller in substantially
the form attached hereto a Exhibit C.
     “Buyer Indemnified Parties” has the meaning set forth in Section 9.02.
     “Buyer Parent” means Grubb & Ellis Apartment REIT, Inc.
     “Buyer Transaction Documents” means this Agreement and all documents,
agreements and certificates to be executed by Buyer in connection with the
transactions contemplated by this Agreement, including the Asset Management
Agreement, Intellectual Property Assignments, the License Agreement, the
Consulting and Transition Services Agreement the Lease Assignment and Assumption
Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the
Management Agreement Amendments, the Management Agreement Letter Agreement, the
Indemnification/Termination Escrow Agreement, the Buyer Guaranty and the
certificates and agreements required to be executed and delivered by Buyer
pursuant to Section 4.04.
     “Cap” has the meaning set forth in Section 9.06.
     “Cash Equivalents” means all cash equivalents and cash items of any kind
whatsoever, money market instruments, marketable securities, other securities,
commercial paper, short term investments or deposits in banks or other financial
institution accounts of any kind, and rights in and to all such accounts (other
than the Managed Properties Security Deposits).
     “Closing” has the meaning set forth in Section 4.01.
     “Closing Date” has the meaning set forth in Section 4.01.
     “Closing Date Calculations” has the meaning set forth in
Section 3.03(b)(ii).

3

--------------------------------------------------------------------------------

 

     “Code” means the Internal Revenue Code of 1986, as amended.
     “Collection Period” has the meaning set forth in Section 3.04(a).
     “Confidential Information” means any information, including trade secrets,
concerning the business of Seller that is not already generally available to the
public.
     “Confidentiality Agreement” means that certain confidentiality agreement,
dated as of April 8, 2010, by and between FBR Capital Markets & Co. and Grubb &
Ellis Apartment REIT, Inc., on behalf of Buyer.
     “Consulting and Transition Services Agreement” means the Consulting and
Transition Services Agreement to be entered into on the Closing Date by and
between Buyer and Middleburg Capital, LLC, a Virginia limited liability company,
in the form attached hereto as Exhibit D.
     “Contracts” means all contracts, agreements, leases of personal property,
leases of real property, the Management Agreements, consulting agreements,
disposition agreements, notes, bonds, indentures, arrangements, consensual
obligations, promises, undertakings, (whether oral and whether express or
implied) or license or sub-license agreements (including but not limited
software licenses and licenses of Intellectual Property), relationships and
commitments and invoices related thereto, in each case, to which Seller or the
Business is a party or is otherwise bound and which is legally binding.
     “Damaged Asset” has the meaning set forth in Section 7.13.
     “Debt” means, when used with reference to any Person, without duplication:
(a) any monetary obligations of such Person created or assumed by such Person,
or any Subsidiary thereof, (i) for borrowed money, (ii) evidenced by a bond,
note, debenture or similar instrument (including a purchase money obligation,
deed of trust or mortgage) given in connection with the acquisition of, or
exchange for, any property or assets (other than inventory or similar property
acquired and consumed in the ordinary course of such Person’s business),
(iii) for the payment of money as lessee under leases that are required to be,
in accordance with GAAP, recorded as capital leases for financial reporting
purposes, (iv) for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction or (v) under interest rate or
currency swap transactions (valued at the termination value thereof); (b) any
liability of others described in the preceding clause (a) guaranteed as to
payment of principal or interest by such Person or in effect guaranteed by such
Person through an agreement, contingent or otherwise, to purchase, repurchase or
pay the related indebtedness or to pledge the security therefor; (c) all
liabilities or obligations secured by a Lien (other than Permitted Liens) upon
property owned by such Person and/or upon which liabilities or obligations such
Person customarily pays interest or principal, whether or not such Person has
assumed or become liable for the payment of such liabilities or obligations; and
(d) any amendment, renewal, extension, revision or refunding of any such
liability or obligation.
     “Deposit Escrow Agreement” has the meaning set forth in Section 3.05.
     “Determination Materials” has the meaning set forth in Section 3.03(c).

4

--------------------------------------------------------------------------------

 

     “Effective Time” means 12:01 a.m. (New York City time) on the Closing Date.
     “Employee Plans” has the meaning set forth in Section 5.19(a).
     “Employees” means all individuals who are employed by Seller as of the
Effective Time, whether actively employed, on approved leave of absence or
layoff or on salary continuation, sickness or accident or disability leave.
     “Environmental Laws” means all laws concerning public or workplace health
and safety or pollution or protection of the environment, flora, fauna or
natural resources, including but not limited to, the Comprehensive Environmental
Response, Compensation & Liability Act, 42 U.S.C. § 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Clean Air
Act, 42 U.S.C. § 7401 et seq., the Federal Water Pollution Control Act, 33
U.S.C. § 1251 et seq., the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.,
the Toxic Substances and Control Act, 15 U.S.C. § 2601 et seq., and the Safe
Drinking Water Act, 42 U.S.C. § 300f et seq.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, including the rules and regulations promulgated thereunder.
     “ERISA Affiliate” means each entity that is a member of a controlled group
or affiliated service group of which Seller is a member or that is treated as a
single employer with Seller under Section 414(b), 414(c), 414(m) or 414(o) of
the Code or ERISA.
     “Escrow Agent” means Wells Fargo Bank, N.A.
     “Escrow Deposit” has the meaning set forth in Section 3.05.
     “Excluded Assets” has the meaning set forth in Section 2.03.
     “Excluded Contracts” has the meaning set forth in Section 2.03(m).
     “Expense Threshold” has the meaning set forth in Section 7.05(b).
     “FBR Fees” has the meaning set forth in Section 4.04(d).
     “Final Resolution Date” has the meaning set forth in Section 3.03(b)(iii).
     “Financial Statements” means, collectively, (a) the unaudited balance sheet
of Seller as of December 31, 2009, together with the related unaudited
statements of income, retained earnings, and cash flows of Seller for the
12-month period ended December 31, 2009 (including the notes thereto and any
other information included therein), and (b) the July 2010 Financial Statements,
each of which described in clauses (a) and (b) above, in each case, attached
hereto as Schedule 1.01.
     “GAAP” means United States generally accepted accounting principles,
consistently applied, as in effect from time to time.

5

--------------------------------------------------------------------------------

 

     “Governing Documents” means the charter, certificate or articles of
incorporation, certificate or articles of organization, bylaws, operating
agreement or other governing instruments of an entity.
     “Governmental Authority” means any domestic, federal, territorial, state or
local governmental authority, or any instrumentality, court, legislative body,
commission, tribunal or organization of any such governmental authority, or any
regulatory, administrative or other agency of any such governmental authority,
or any political or other subdivision, department or branch of any of the
foregoing.
     “Guaranty” means the Guaranty Agreement to be entered into on the Closing
Date by MR Holdings and Mission Residential Holdings, LLC, jointly and
severally, in favor of Buyer, in the form attached hereto as Exhibit E.
     “Hazardous Substances” means any (a) chemical, material or substance
defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous waste”, “acutely hazardous
waste”, “radioactive waste”, “biohazardous waste”, “pollutant”, “toxic
pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”,
“toxic substances” or any other term or expression intended to define, list,
regulate or classify substances by reason of properties harmful to health,
safety or the indoor or outdoor environment (including harmful properties such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, “TCLP toxicity” or “EP toxicity” or words of similar
import) as defined in, the subject of, or that could give rise to liability
under, any Environmental Law, (b) oil, petroleum, petroleum fraction, petroleum
additive (including methyl tertiary butyl ether) or petroleum derived substance,
(c) flammable substances or explosives, (d) radioactive materials, (e) asbestos
or asbestos-containing materials, (f) urea formaldehyde foam insulation, (g)
polychlorinated biphenyls, and (h) lead-based paint, including, in each case,
any mixture or solution thereof.
     “Holdback Amount” means the Indemnity Holdback Amount plus the Termination
Holdback Amount.
     “Hunton Legal Fees” has the meaning set forth in Section 4.04(b).
     “Indebtedness Payoff Amount” has the meaning set forth in Section 2.01(b).
     “Indemnification/Termination Escrow Agreement” has the meaning set in
Section 3.02(a).
     “Indemnified Party” has the meaning set forth in Section 9.04(a).
     “Indemnifying Party” has the meaning set forth in Section 9.04(a).
     “Indemnity Holdback Amount” means One Hundred Thousand Dollars
($100,000.00).
     “Independent Accounting Firm” shall have the meaning set forth in Section
3.03(b)(v).
     “Insurance Policy” has the meaning set forth in Section 5.17.

6

--------------------------------------------------------------------------------

 

     “IRS” means Internal Revenue Service.
     “Intellectual Property” means all patents, trademarks, trade names, service
marks, service names, trade dress, logos, copyrights and domain names, including
but not limited to the phrase “Mission Residential,” and any registrations,
applications and renewals for any of the foregoing, and all other intellectual
property rights in inventions, trade secrets, manufacturing processes, know how,
confidential and proprietary information, ideas, developments, drawings,
specifications, bills of material, supplier lists, marketing information, sales
and promotional information, business plans, computer software, test reports,
component lists, manuals, instructions, catalogs, processes, designs, and
registrations and applications for registration therefor, model numbers,
telephone numbers, web addresses, web sites, electronic records of drawings and
tooling and other electronic engineering tools, and all other proprietary
rights, in each case, owned or licensed by Seller and/or used in the Business,
together with all claims, damages and rights for past, present and future
infringement, misappropriation, unauthorized use or disclosure, or other
violation thereof, and all copies and tangible embodiments thereof (in whatever
form or medium, including electronic), including all patent infringement,
validity, patentability, and other legal opinions or investigations, all file
histories, prior art and prior art searches, all attorney work product, all
patent, trademark, and copyright files and file wrappers, and all other legal
files and materials.
     “Intellectual Property Assignments” means the intellectual property
assignments dated as of the Closing Date and entered into by Buyer and MR
Holdings in the form attached hereto as Exhibit F.
     “Jenner Legal Fees” has the meaning set forth in Section 4.04(c).
     “July 2010 Financial Statements” means the unaudited balance sheet of
Seller as of July 31, 2010 and the related unaudited statement of income of
Seller for the seventh (7) month period then ended.
     “Knowledge of Seller” means the actual knowledge of any one or more of
Christopher C. Finlay, Corey Gibson or Jeff Goldshine, and such knowledge that
any such Person should have had following a reasonable investigation in the
course of such Person’s duties on behalf of Seller.
     “Law” means any law, statute, code, ordinance, rule, regulation, decision,
injunction, ruling, verdict, judgment, order, award, decree or other requirement
enacted, adopted, issued or promulgated by any Governmental Authority, including
common law.
     “Lease Assignment and Assumption Agreement” means the Lease Assignment and
Assumption Agreement to be entered into on the Closing Date by Buyer, White
Granite Drive, LLC, as landlord, and Mission Residential, LLC, in the form
attached hereto as Exhibit G.
     “Lender Consents” has the meaning set forth in Section 8.01(b).
     “License Agreement” means that certain License Agreement to be entered into
on the Closing Date by MR Holdings and Seller, in the form set forth in
Exhibit H attached hereto.

7

--------------------------------------------------------------------------------

 

     “Liens” means any lien, mortgage, security interest, Tax lien, attachment,
levy, charge, claim, restriction, imposition, pledge, easement, covenant,
encroachment, encumbrance, conditional sale or title retention arrangement, or
any other interest in property or assets (or the income or profits therefrom),
in each case, designed to secure the repayment of indebtedness, whether
consensual or nonconsensual and whether arising by agreement or under any Law or
otherwise.
     “Losses” means, collectively, all liabilities, obligations, damages
(including, to the extent permitted by Section 9.08, incidental and
consequential damages), deficiencies, losses, claims, actions, suits,
proceedings, judgments, interest, fines, demands, awards, assessments,
out-of-pocket costs, Taxes, payments, penalties and expenses (including
reasonable attorneys’ fees and, to the extent permitted by Section 9.08, any
diminution in value).
     “Managed Properties” means all multi-unit residential properties with
respect to which Seller provides property management services pursuant to the
Management Agreements.
     “Managed Properties Security Deposits” means all tenant security deposits
held or controlled by Seller in connection with the units at the Managed
Properties.
     “Management Agreements” has the meaning set forth in Section 5.15(a)(xix).
     “Management Agreement Amendments” means the Amendments to the Management
Agreements, in each case, in the form attached hereto as Exhibit I, to be
entered into on the Closing Date by and between the lessee of each Managed
Property and Buyer.
     “Management Agreement Letter Agreement” means the Letter Agreement in the
form attached hereto as Exhibit J, to be entered into on the Closing Date by and
between Buyer, Seller and Mission Residential Holdings, LLC.
     “Material Adverse Effect” means any state of facts, event, change or effect
that has had, has, or could reasonably be expected to have, a material adverse
effect on the assets, liabilities, business, results of operations, financial
condition of Seller or condition of the Purchased Assets, in each case, taken as
a whole, or on the ability of Seller to consummate the transactions contemplated
hereby; provided that the term “Material Adverse Effect” shall not include any
facts, event, change or effect arising from (a) changes in the United States or
foreign economies, interest rates, capital markets in general or the geographic
market in which Seller operates, or changes in Seller’s industry other than
effects of any changes which adversely affect Seller to a materially greater
extent than its competitors in the applicable industries in which Seller
competes, (b) changes in any Law or other requirement of any Governmental
Authority other than effects of any changes which adversely affects Seller to a
materially greater extent than its competitors in the applicable industries in
which Seller competes, (c) any national or international political or social
event or occurrence (including military conflicts and acts of terrorism),
(d) general public awareness of the execution or announcement of this Agreement
or the consummation of the transactions contemplated hereby (including any
changes in relationships between Seller and any of its customers or suppliers
arising therefrom), (e) any action taken or caused by Buyer, (f) any action
taken by Seller with the consent of Buyer, (g) the failure of Seller to meet any
internal projections or forecasts, (h) changes or events that exist or

8

--------------------------------------------------------------------------------

 

have occurred as of the date of this Agreement and have been reflected in this
in this Agreement or the Schedules or (i) the initiation by any Person other
than Seller of proceedings under Chapter 11 of the United States Bankruptcy
Code.
     “Material Contracts” has the meaning set forth in Section 5.15(a).
     “MR Holdings” has the meaning set forth in the preamble to this Agreement.
     “Mutual Release” means that certain release to be entered into between
Mission Residential, LLC and Triple Net Properties, LLC in the form of Exhibit K
attached hereto.
     “Notice of Claim” has the meaning set forth in Section 9.04(a).
     “Oakton Office Lease” means that certain office lease, dated as of the 31st
day of May 2007, by and between 10467 White Granite Drive, LLC, as landlord, and
Mission Residential, LLC, as tenant.
     “Objection Notice” has the meaning set forth in Section 3.03(b)(iii).
     “Ordinary Course of Business” means the ordinary course of business
consistent with past custom and practices of Seller in taking or refraining to
take any particular action (including with respect to the quantity and frequency
thereof).
     “Outside Date” means the date that is ninety (90) days from the execution
of this Agreement.
     “Parent” has the meaning set forth in the preamble to this Agreement.
     “Parties” or “Party” has the meaning set forth in the preamble to this
Agreement.
     “Permits” means all permits, licenses, franchises, privileges, immunities,
approvals, qualifications, registrations, certificates and other authorizations
and similar rights granted by or obtained from any Governmental Authority.
     “Permitted Liens” means all Liens for current Taxes, assessments, fees and
other charges by Governmental Authorities that are not due and payable.
     “Person” means any individual, sole proprietorship, partnership,
corporation, limited liability company, unincorporated society or association,
Governmental Authority, estate, trust or other entity or organization.
     “Personal Property Leases” has the meaning set forth in Section 2.02(h).
     “Post-Closing Tax Period” means any Tax period beginning after the Closing
Date and the portion of the Straddle Tax Period beginning after the Closing Date
and ending at the end of the Straddle Tax Period.
     “Post-Closing Taxes” means all Taxes of Seller with respect to any
Post-Closing Tax Period.

9

--------------------------------------------------------------------------------

 

     “Pre-Closing Tax Period” means the Tax period ending on or before the
Closing Date, and the portion of the Straddle Tax Period beginning before the
Closing Date and ending on the Closing Date.
     “Pre-Closing Taxes” means all Taxes of Seller with respect to any
Pre-Closing Tax Period.
     “Prime Rate” shall mean the prime rate as reported from time to time in The
Wall Street Journal.
     “Principal” has the meaning set forth in the preamble to this Agreement.
     “Purchase Price” means an amount equal to Five Million Five Hundred
Thousand Dollars ($5,500,000.00) less any Reduction for Disposed Properties, and
subject to adjustment as set forth in Section 3.03.
     “Purchase Price Allocation” has the meaning set forth in Section 3.06.
     “Purchased Assets” has the meaning set forth in Section 2.02.
     “Recoverable Proceeds” has the meaning set forth in Section 9.07.
     “Reduction for Disposed Properties” means, with respect to any sale or
agreement to sell any of the properties listed on Exhibit 1.01 occurring or
entered into prior to the Closing Date to any purchaser other than Grubb Ellis
Apartment REIT Holdings, L.P. or one of its Affiliates, the sum of the amounts
listed under the column “Applicable Termination Fee” on Exhibit 1.01, which
relate to such properties.
     “Registrations” has the meaning set forth in Section 5.08.
     “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, releasing,
migrating or disposing into the environment of any Hazardous Substance in
violation of any Environmental Law.
     “Representation Letter” has the meaning set forth in Section 7.14.
     “Restricted Period” has the meaning set forth in Section 7.10(a).
     “Retained A/R” has the meaning set forth in Section 3.04(a).
     “Retained Liabilities” has the meaning set forth in Section 2.05.
     “Schedules” has the meaning set forth in the introductory paragraph to
Article V.
     “SEC” means the United States Securities and Exchange Commission.
     “SEC Filings” has the meaning set forth in Section 7.14.
     “Seller” has the meaning set forth in the preamble to this Agreement.

10

--------------------------------------------------------------------------------

 

     “Seller Indemnified Parties” has the meaning set forth in Section 9.03.
     “Seller Transaction Documents” means this Agreement and all documents,
agreements and certificates to be executed by Seller, MR Holdings, Parent or
Principal, or any of their Affiliates, in connection with this Agreement,
including the Holdback Escrow Agreement, the Assignment and Assumption
Agreement, the Bill of Sale, the Lease Assignment and Assumption Agreement, the
Intellectual Property Assignments, the License Agreement, the Guarantee, the
Consulting and Transition Services Agreement, the Asset Management Agreement,
the Management Agreement Amendments, the Management Agreement Letter Agreement,
the Subcontract Agreement and the certificates and agreements required to be
executed and delivered by Seller, MR Holdings, Parent or Principal pursuant to
Section 4.03.
     “Services” has the meaning set forth in the recitals to this Agreement.
     “Straddle Tax Period” means any Tax period that begins before the Closing
Date and ends after the Closing Date.
     “Subsidiary” means any Person of which (a) a majority of the outstanding
share capital, voting securities or other equity interests are owned, directly
or indirectly, by Seller or (b) Seller is entitled, directly or indirectly, to
appoint a majority of the board of directors, board of managers or comparable
body of such Person.
     “Subcontract Agreement” has the meaning set forth in Section 4.03(g).
     “Tangible Personal Property” shall mean all machinery and other equipment,
tools, vehicles, trailers, trucks, furniture, office equipment, computers,
computer hardware and peripherals, plant, inventory, and all other tangible
personal property owned by Seller that is used or held for use in the Business.
     “Tax” or “Taxes” means all federal, state, local and foreign taxes,
assessments or governmental charges (including net income, gross income,
payroll, ad valorem, excise, franchise, occupancy, real property, personal
property, sales, use and value-added taxes, taxes withheld from employees’
salaries and other withholding taxes and obligations and all deposits required
to be made with respect thereto), levies, assessments, deficiencies, import
duties, licenses and registration fees and charges of any nature whatsoever,
including any interest, penalties, additions to tax or additional amounts with
respect thereto.
     “Tax Returns” means all returns, declarations, reports, claims for refunds,
information returns and other statements or documents relating to Taxes,
including any elections, declarations, informational returns, schedules or
attachments thereto and any amendments thereof.
     “Termination Fees” has the meaning set forth in Section 3.02(a).
     “Termination Holdback Amount” means Six Hundred Fifty Thousand Dollars
($650,000.00).
     “Third Party” has the meaning set forth in Section 9.04(c).

11

--------------------------------------------------------------------------------

 

     “Third Party Claim” has the meaning set forth in Section 9.04(c).
     “Threshold” has the meaning set forth in Section 9.06(a).
     “Transaction Documents” means, collectively, the Buyer Transaction
Documents and Seller Transaction Documents.
     “Transfer Taxes” means all transfer, sales, use, reporting, recording,
filing, conveyance and other similar fees, taxes and charges arising out of or
in connection with the transfer of the Purchased Assets effected pursuant to
this Agreement.
ARTICLE II
PURCHASE AND SALE
     Section 2.01 Certain Actions Taken Prior to Closing.
          (a) At or prior to the Closing, Seller shall have released, removed or
cancelled all of the Liens, if any, set forth on Schedule 2.01(a), which sets
forth all Liens on any Purchased Assets of Seller (other than Permitted Liens)
(the “Liens to be Released Prior to Closing”).
          (b) Not less than two (2) but not more than five (5) Business Days
prior to the Closing Date, Seller shall deliver to Buyer Schedule 2.01(b), which
shall set forth each holder of Debt as of the Closing Date and the aggregate
amount of cash required to pay and discharge in full on the Closing Date all
such Debt, including accrued and unpaid interest, prepayment penalties or fees,
and other unpaid fees and expenses payable in respect of such Debt through the
Closing Date and excluding the Hunton Legal Fees, the Jenner Legal Fees and FBR
Fees (collectively, the “Indebtedness Payoff Amount”) and wire transfer
instructions and a mailing address for each such holder.
          (c) On the date that is three (3) days from the date hereof, the
Seller and Buyer shall cause their respective Affiliates to execute and deliver
a counterpart to the Mutual Release.
     Section 2.02 Purchase and Sale. Upon the terms and subject to all of the
conditions of this Agreement, at the Closing, Seller shall, or cause the
appropriate Person to, sell, transfer, convey, assign and deliver to Buyer on
the Closing Date, and Buyer shall acquire and purchase, free and clear of all
Liens (other than Permitted Liens), all of the right, title and interest in, all
tangible and intangible assets owned, leased or licensed by Seller or used or
held for use by Seller in the Business, but excluding the Excluded Assets (such
assets being conveyed being collectively referred to herein as the “Purchased
Assets”) and excluding the Retained Liabilities. Without limiting the generality
of the foregoing, the Purchased Assets shall include:
          (a) the Tangible Personal Property;
          (b) the Assumed Contracts;

12

--------------------------------------------------------------------------------

 

          (c) the Intellectual Property owned by Seller or an Affiliate and used
in the Business, including the Intellectual Property listed on Schedule 2.02(c);
          (d) the Books and Records;
          (e) all equipment warranties relating to items included in the
Tangible Personal Property to the extent contractually assignable by Seller;
          (f) all toll free telephone numbers used or held for use in the
operation of the Business;
          (g) all such other assets and rights set forth on Schedule 2.02(g)
hereof;
          (h) all rights in, to and under the personal property leases,
including all amendments and modifications thereto, listed on Schedule 2.02(h)
(the “Personal Property Leases”), if any;
          (i) the performance and other bonds, security and other deposits,
advances, advance payments, prepaid credits and deferred charges listed on
Schedule 2.02(i) and any custodial rights to the Security Deposits;
          (j) all rights in, to and under the claims for refunds, rebates or
other discounts due from suppliers or vendors and rights to offset in respect
thereof listed on Schedule 2.02(j);
          (k) subject to Section 3.03, all prepaid expenses, deposits (including
security deposits), ad valorem Taxes and lease and rental payments relating to
the Business existing at the Effective Time;
          (l) all management and other systems (including computers and
peripheral equipment), databases, computer software, computer disks and similar
assets, as and to the extent used in the Business and, to the extent assignable,
all licenses and rights in relation thereto; and
          (m) all goodwill of or relating to the Business.
     Notwithstanding the foregoing, if the provisions of any of the Assumed
Contracts would prohibit any attempted assignment of any interest thereunder or
impose a charge, discount or penalty upon an assignment without the consent of
the other party to such Assumed Contract, even though such assignment would not
become effective until such consent was obtained, then nothing in this Agreement
shall be deemed an assignment of any such Assumed Contract and the interest
shall not be an “Assumed Contract” hereunder unless and until any such consent
is obtained.
     Section 2.03 Excluded Assets. The Purchased Assets shall not include the
assets described in this Section 2.03 (the “Excluded Assets”). The Excluded
Assets shall include:
          (a) cash and Cash Equivalents of Seller;

13

--------------------------------------------------------------------------------

 

          (b) all accounts, notes and other receivables relating to services
provided by Seller prior to the Effective Time (the “Accounts Receivable”);
          (c) all bank accounts of Seller;
          (d) all obligations or debt, including any intercompany or
intracompany receivable cash balances or Debt between or among Seller and any of
its Affiliates or between or among any of their Affiliates;
          (e) all seals, organizational documents, meeting record books or other
records related to the organization of Seller;
          (f) all membership interests, shares of capital stock, promissory
notes, partnership interests and all other equity interests and securities of,
and related documentation held by or in Seller;
          (g) Seller’s corporate or limited liability company records and other
books and records that relate to internal corporate or limited liability company
matters of Seller and do not relate to the Business, Taxes, employee benefits or
any Employee who does not accept Buyer’s offer of employment pursuant to
Section 7.11. Seller’s account books of original entry with respect to the
Business and all original accounts, checks, payment records, Tax Returns and
records and other similar books, records and information of Seller relating to
the Business and Purchased Assets prior to the Effective Time, and duplicate
copies of any records as are reasonably necessary to enable Seller to prepare
and file Tax Returns and reports, financial statements and other documents
reasonably necessary by Seller;
          (h) all notes, bonds and other evidences of Debt from, or other
advances, intercompany accounts, transfers and investments made to or in,
Seller;
          (i) Seller’s Benefit Plans and any related trust agreements,
investment management agreements, administrative agreements or contracts of
insurance;
          (j) all insurance policies and any premium refunds to the extent Buyer
terminates such insurance at the Effective Time;
          (k) subject to Section 3.03, all deposits and advances, rebates and
credits related to any Retained Liability;
          (l) (i) all claims, choses-in-action, rights in action, rights to
tender claims or demands to Seller insurance companies, rights to any insurance
proceeds (and other similar claims), and all claims against officers, directors,
managers, stockholders and members of Seller for their actions as such, (ii) any
and all Contracts or policies of insurance and insurance plans and the assets
thereof, promissory notes, amounts due from employees, bonds, letters of credit
or other similar items and any cash surrender value with respect thereto, and
all rights under any of the foregoing, including any insurance proceeds
receivables and (iii) any and all claims of Seller with respect to transactions
and events occurring prior to the Closing Date and all claims for refunds of
monies paid to any Governmental Authority (including Tax refunds);

14

--------------------------------------------------------------------------------

 

          (m) all Contracts other than the Assumed Contracts, including any and
all employment agreements of Seller (collectively, the “Excluded Contracts”);
          (n) all Tangible Personal Property disposed of or consumed in the
Ordinary Course of Business of Seller, between the date of this Agreement and
the Closing Date, in compliance with the terms and conditions of this Agreement;
          (o) all of Seller’s rights under any Transaction Documents, including
this Agreement and all other agreements, certificates, instruments, documents
and writings delivered by Buyer and/or Seller, MR Holdings, Parent or Principal
in connection with this transaction; and
          (p) the assets listed on Schedule 2.03(p).
          Section 2.04 Assumption of Liabilities. At the Closing, Buyer shall
assume and agree to duly and timely pay, discharge, defend and perform as and
when due, only the following obligations and liabilities of Seller (the “Assumed
Liabilities”):
          (a) any and all obligations and liabilities of Seller under the
Assumed Contracts to the extent that such obligations and liabilities arise or
accrue after the Effective Time;
          (b) all obligations and liabilities of Seller for accrued vacation of
Employees who accept Buyer’s offer of employment pursuant to Section 7.11;
          (c) the Hunton Legal Fees;
          (d) the Jenner Legal Fees;
          (e) the FBR Fees; and
          (f) all other obligations and liabilities relating to the Business or
the Purchased Assets that are incurred following the Effective Time.
     Section 2.05 Retained Liabilities. Except for the Assumed Liabilities,
Buyer shall not assume and shall not be liable or responsible for any
contingencies, liabilities or obligations of Seller or its Affiliates of any
kind whatsoever, whether previously, nor or hereafter existing, due or to become
due, known or unknown, absolute, accrued or contingent, or otherwise (the
“Retained Liabilities”), including:
          (a) any liability attributable to the Excluded Assets;
          (b) any liability or obligation under or with respect to any Assumed
Contract, to the extent such liabilities or obligations arise during or have
accrued in connection with any period of time prior to the Effective Time or any
liability for payments or amounts due under any Assumed Contract, which are
payable for any period prior to the Effective Time;
          (c) any Pre-Closing Taxes;

15

--------------------------------------------------------------------------------

 

          (d) all obligations relating to any failure to comply with any
applicable bulk sales or bulk transfer laws applicable to the transactions
contemplated by this Agreement;
          (e) any liability for or with respect to accounts payable and Debt,
inclusive of interest and fees, including (i) any such liabilities owed to
Affiliates of Seller, and (ii) any liabilities arising from unclaimed or
abandoned property arising from the operation of the Business prior to the
Effective Time;
          (f) any liability arising from accidents, occurrences, misconduct,
negligence, or breach of fiduciary duty immediately prior to the Effective Time,
whether or not covered by workers’ compensation or other forms of insurance;
          (g) any liability arising out of any employment agreement or of
Seller’s Benefit Plans or any Contract of insurance for employee group medical,
dental or life insurance plans;
          (h) other than as set forth in Section 2.04(b), any liability for
making payments of any kind to employees (including bonuses, severance payments
and any payments owed or paid to any employees as a result of this transaction,
the termination of an employee by Seller, or other claims arising out of the
terms of employment with Seller) or with respect to payroll Taxes;
          (i) any liability incurred in connection with Seller’s making or
performance of this Agreement and the transaction contemplated hereby;
          (j) any costs or expenses incurred in connection with shutting down,
uninstalling and removing equipment not included in the Purchased Assets and any
costs or expenses associated with any Contracts that are not Assumed Contracts;
          (k) any liability for expenses and fees incurred by Seller incidental
to the preparation of the Transaction Documents, preparation or delivery of
materials or information requested by Buyer, and the consummation of the
transaction contemplated hereby, including all broker, counsel and accounting
fees (other than the Jenner Legal Fees);
          (l) any liability to any members, directors or officers of Seller;
          (m) any liability arising as a result of any legal or equitable action
or judicial or administrative proceeding initiated at any time, to the extent
related to any action or omission of Seller on or prior to the Effective Time,
including any liability for (i) infringement or misappropriation of any
intellectual property rights or any other rights of any Person (including any
right of privacy or publicity); (ii) defamation, libel or slander;
(iii) violations of any federal, state, local, municipal or other law, statute,
legislation, constitution, principle of common law, resolution, ordinance, code,
order, edict, decree, proclamation, treaty, convention, rule, regulation,
permit, ruling, directive, pronouncement, requirement (licensing or otherwise),
specification, determination, decision, opinion or interpretation that is
issued, enacted, adopted, passed, approved, promulgated, made, implemented or
otherwise put into effect by or under the authority of any Governmental
Authority, including Environmental Laws or (iv) litigation identified on
Schedule 5.09;

16

--------------------------------------------------------------------------------

 

          (n) any liability arising out of (i) the presence or release of any
materials of environmental concern at the real property leased pursuant to the
Oakton Office Lease immediately prior to the Effective Time, or (ii) the failure
of Seller to comply with any requirements of Environmental Laws for any period
prior to the Effective Time;
          (o) any liability relating to any intercompany balances between the
Business and Seller or its members; and
          (p) any liability arising out of the operation of the Business prior
to the Effective Time, except to the extent such liability is included in the
Assumed Liabilities.
ARTICLE III
PURCHASE PRICE
     Section 3.01 Purchase Price.
          (a) Subject to the terms and conditions set forth in this Agreement,
in reliance upon the covenants, agreements, representations and warranties
contained herein, and in consideration of the aforesaid sale, transfer,
conveyance and delivery of the Purchased Assets to Buyer, at the Closing, Buyer
shall assume the Assumed Liabilities from Seller and shall pay to Seller by wire
transfer of immediately available funds to an account specified in writing by
Seller an amount equal to the Purchase Price less the Holdback Amount, the
Escrow Deposit, and the Indebtedness Payoff Amount.
          (b) On behalf of Seller, at the Closing, Buyer shall pay or cause to
be paid to each holder of Debt identified on Schedule 2.01(b), by wire transfer
of immediately available funds to the accounts designated on Schedule 2.01(b),
the portion of the Indebtedness Payment Amount set forth beside such Person’s
name on Schedule 2.01(b).
     Section 3.02 Holdback Escrow.
          (a) At the Closing, Buyer shall deposit the Holdback Amount with the
Escrow Agent. The Indemnity Holdback Amount shall be used to support the
adjustments under Section 3.03 and the indemnification obligations under
Section 9.02. The Termination Holdback Amount shall be used to support the
obligations of the lessees under Section 13 of the Management Agreements, and MR
Holdings or Mission Residential Holdings, LLC under the Guarantee to pay Buyer
certain termination fees in the event of a termination of the Management
Agreements under certain circumstances specified therein (the “Termination
Fees”). At the Closing, Buyer, Seller and Escrow Agent shall execute an escrow
agreement in substantially the form attached hereto as Exhibit 3.02(a) (the
“Indemnification/Termination Escrow Agreement”) to acknowledge the Escrow
Agent’s receipt of the Holdback Amount and its agreement to hold and disburse
the Holdback Amount strictly in accordance with the terms and provisions of the
Indemnification/Termination Escrow Agreement.
          (b) On or prior to the second anniversary of the Closing Date, Buyer
shall cause Escrow Agent to deliver to Seller by wire transfer of immediately
available funds to the

17

--------------------------------------------------------------------------------

 

account designated in writing by Seller, the remaining amounts constituting the
Indemnity Holdback Amount (together with any interest earned thereon) less
(i) any adjustments payable to Buyer under Section 3.03 and (ii) the amount of
all pending claims properly made by Buyer Indemnified Parties pursuant to
Section 9.02, and Section 9.04(b) and the Indemnification/Termination Escrow
Agreement.
          (c) On or prior to the second anniversary of the Closing Date, Buyer
shall cause Escrow Agent to deliver to Seller by wire transfer of immediately
available funds to the account designated in writing by Seller, the remaining
amounts constituting the Termination Holdback Amount less any Termination Fees
due Buyer, which have not been paid by the applicable lessee of a Managed
Property or by MR Holdings or Mission Residential Holdings, LLC pursuant to the
Guarantee.
     Section 3.03 Prorations.
          (a) General Rule. The Seller and Buyer agree to prorate the
obligations and liabilities of the Business, as set forth below. The operation
of the Business and the income and normal operating expenses attributable to
periods prior to the Effective Time shall be for the account of Seller and
thereafter for the account of Buyer and, if any income or expense can be
allocated or credited as provided above, then it shall be allocated, charged or
prorated accordingly. Such prorations shall include (i) income and expenses for
goods or services received both before and after the Effective Time, (ii) any
real estate or property Taxes, (iii) rents and similar prepaid and deferred
items, and (iv) prepaid cash (including prepaid rent and excluding prepaid
deposits). All special assessments and similar charges or Liens imposed against
any of the Purchased Assets in respect of any period of time immediately prior
to the Effective Time, whether payable in installments or otherwise, shall be
the responsibility of Seller and amounts payable with respect to such special
assessments, charges or Liens in respect of any period of time after the
Effective Time shall be the responsibility of Buyer and such charges shall be
adjusted as required hereunder.
          (b) Manner of Determining Adjustments; Adjustment Reports. The
adjustments and prorations pursuant to Section 3.03(a) will be determined in
accordance with the following procedures:
          (i) Seller shall prepare and deliver to Buyer not later than three
(3) Business Days before the Closing Date a preliminary settlement statement,
which shall set forth Seller’s good faith estimate of the adjustments to the
Purchase Price under Section 3.03(a), which good faith estimate shall be made in
accordance with GAAP. The preliminary settlement statement shall contain all
information reasonably necessary to determine the prorations under
Section 3.03(a), to the extent such adjustments can be determined or estimated
as of the date of the preliminary settlement statement, and such other
information as may be reasonably requested by Buyer.
          (ii) Within forty-five (45) days following the Closing Date, Buyer
shall prepare and deliver to Seller a statement setting forth a calculation of
the adjustments to the Purchase Price under Section 3.03(a) (the “Closing Date
Calculations”), which calculations shall be prepared in accordance with GAAP.

18

--------------------------------------------------------------------------------

 

          (iii) Except as set forth below, the Closing Date Calculations shall
be deemed to be and shall be final, binding and conclusive on Seller and Buyer
upon the earlier of (the “Final Resolution Date”): (A) Seller’s delivery of a
written notice to Buyer of its approval of the Closing Date Calculations;
(B) the failure of Seller to notify in writing in accordance with
Section 3.03(b)(iv) of a dispute with the Closing Date Calculations (an
“Objection Notice”) within thirty (30) days after Buyer’s delivery of the
Closing Date Calculations to Seller; and (C) the resolution of all disputes,
pursuant either to Section 3.03(b)(v) or to Section 3.03(c), by the Independent
Accounting Firm.
          (iv) Buyer shall comply with Seller’s requests to review supporting
documentation that is reasonably necessary for the preparation of the Closing
Date Calculations, including providing Seller and its accountants and other
representatives with reasonable access during normal business hours to the
books, records and materials reasonably necessary to prepare the Closing Date
Calculations. If Seller disagrees with the Closing Date Calculations, Seller
may, within thirty (30) days of the delivery by Buyer of the Closing Date
Calculations, deliver an Objection Notice setting forth Seller’s calculation of
the adjustments to the Purchase Price under Section 3.03(a). Any such Objection
Notice shall specify those individual items in the Closing Date Calculations
with which Seller disagrees and the items, facts, amounts, calculations, or
valuations used to determine such items. Seller shall be deemed to have agreed
with all items or amounts contained in the Closing Date Calculations and all
calculations, items, facts, amounts or valuations used in determining any line
item of the Closing Date Calculations unless, and only to the extent, such
items, facts, amounts, calculations or valuations are specifically and timely
objected to in an Objection Notice. If Seller does not deliver an Objection
Notice within such fifteen (15) day period, the Closing Date Calculations
determined by Buyer shall be binding and conclusive on Seller and Buyer.
          (v) If Seller timely delivers an Objection Notice to Buyer in
accordance with Section 3.03(b)(iv), Buyer and Seller shall attempt in good
faith to reconcile their differences, and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on Seller and Buyer. If
Buyer and Seller are unable to reach a resolution within ten (10) days after the
delivery of the Objection Notice, Buyer and Seller shall submit their respective
determinations and calculations and the items remaining in dispute for
resolution to BDO USA LLP (the “Independent Accounting Firm”). While Buyer and
Seller represents that they are not aware of any conflicts as of the date hereof
that could negatively impact the Independent Accounting Firm’s ability to serve
in such capacity or to allow for the possibility of such a conflict of interest
or a refusal by the designated firm to serve as the Independent Accounting Firm,
if the designated accounting firm is not eligible or will not serve as the
Independent Accounting Firm, Seller and Buyer shall mutually agree to another
independent accounting firm of national reputation and the selected firm shall
be the Independent Accounting Firm.
          (c) Seller and Buyer shall use commercially reasonable efforts to
cause the Independent Accounting Firm to resolve all disagreements as soon as
practicable, but in any event within thirty (30) days after the dispute is first
submitted to the Independent Accounting Firm. Seller and Buyer shall each submit
within ten (10) days of the engagement of the

19

--------------------------------------------------------------------------------

 

Independent Accounting Firm its calculation of the unresolved disputed items in
the Objection Notice, together with such work papers, calculations and other
materials that such Party has determined supports such Party’s calculation (the
“Determination Materials”). The Independent Accounting Firm shall base its
determination of the disputed amounts solely on the Determination Materials. The
Independent Accounting Firm shall only consider those items and amounts in the
Closing Date Calculations to which Seller has timely objected pursuant to
Section 3.03(b)(iv) and which Buyer and Seller have been unable to resolve. The
Independent Accounting Firm shall not assign a value to any disputed item
greater than the greatest value or less than the smallest value for such item
assigned to it by Buyer or Seller, as the case may be. The resolution of the
dispute by the Independent Accounting Firm shall be final, binding and
non-appealable on and by Seller and Buyer. If the Independent Accounting Firm
resolves all disputes presented to it entirely in the manner proposed by Seller
or Buyer, as the case may be, the fees and expenses of the Independent
Accounting Firm relating to the resolution of such dispute shall be paid by the
other Party. In all other events, the fees and expenses of the Independent
Accounting Firm shall be shared based on the difference between Seller’s
position, on the one hand, and Buyer’s position, on the other hand, initially
presented to the Independent Accounting Firm (based on the aggregate of all
differences taken as a whole) and the final resolution as determined by the
Independent Accounting Firm in proportion to the total difference between
Seller’s and Buyer’s initial positions.
          (i) Within three (3) Business Days after the final determination of
the Closing Date Calculations pursuant to Section 3.03(b) or Section 3.03(c), as
the case may be, either Buyer or Seller shall pay any amounts required by this
Section 3.03 in immediately available funds to an account designated in writing
by party due the payment, which, in the case of amounts due Buyer, be satisfied,
at Buyer’s discretion, by directing the Escrow Agent to release the appropriate
portion of the Indemnity Holdback Amounts.
          (d) Payments pursuant to Section 3.03(c) shall be deemed adjustments
to the Purchase Price. The payments to be made pursuant to Section 3.03(c) shall
be made, with interest thereon at the Prime Rate on such amounts from the
Closing Date to the date of payment, in immediately available funds to the
account designated in writing by Buyer or Seller, as applicable.
     Section 3.04 Accounts Receivable.
          (a) At the Effective Time, Seller shall designate Buyer as its agent
solely for the purpose of collecting the Accounts Receivable, which relates to
services provided prior to the Effective Time (the “Retained A/R”). Seller shall
deliver to Buyer, on or immediately after the Effective Time, a complete and
detailed statement of the Retained A/R. Buyer shall use commercially reasonable
efforts in the Ordinary Course of Business to collect the Retained A/R during
the period (the “Collection Period”) beginning at the Effective Time and ending
on the one hundred twentieth (120th) day following the Effective Time consistent
with Buyer’s practices for collection of its accounts receivable. Buyer shall
not refer any of the Retained A/R to a collection agency or to an attorney for
collection without Seller’s written consent. Except as otherwise provided
herein, Buyer shall incur no liability to Seller for any collected or
uncollected Retained A/R. During the Collection Period, and provided Buyer is
complying with its

20

--------------------------------------------------------------------------------

 

obligations hereunder, neither Seller nor any of its agents, without the consent
of Buyer, shall make any direct solicitation of any customers owing the Accounts
Receivable for collection purposes.
          (b) Buyer will advise Seller of any counterclaims or set-offs that may
arise subsequent to the Closing Date with respect to any such Retained A/R, and
will not compromise or otherwise agree to a reduction in the face amount of any
such Retained A/R without the prior written consent of Seller. Buyer shall not
take any action (nor shall it omit to take any action) that could reasonably be
expected to adversely impact the payment of any such Retained A/R. Buyer and
Seller further agree that (i) they will not attempt to influence any customer to
allocate payment to invoices other than in accordance with this Section 3.04;
and (ii) there will be no right of setoff as between Buyer and Seller hereunder
with respect to payments required to be made by Buyer to Seller under this
Section 3.04, except for amounts owed under Section 3.04.
          (c) On or before the twentieth (20th) day following the end of each
calendar month in the Collection Period, Buyer shall deposit into an account
identified by Sellers the amounts collected during the preceding month of the
Collection Period with respect to the Retained A/R in immediately available
funds by wire transfer to an account designated by Seller. Buyer shall furnish
Seller with a list of the amounts collected during such calendar month and in
any prior calendar months with respect to the Retained A/R and a schedule of the
amount remaining outstanding under each particular account. At any time during
the Collection Period, Seller shall be entitled to inspect and/or audit the
records maintained by Buyer pursuant to this Section 3.04, upon reasonable
advance notice and during normal business hours.
          (d) Following the expiration of the Collection Period, Buyer shall
have no further obligations under this Section 3.04, except that Buyer shall
immediately pay over to Seller any amounts subsequently paid to it with respect
to any Retained A/R (in accordance with the procedure set forth in the fourth
sentence of Section 3.04(c). Following the Collection Period, at Seller’s
request, Buyer shall assign to Seller and Seller may pursue collections of all
the Retained A/R, and Buyer shall deliver to Sellers all files, records, notes
and any other materials relating to the Retained A/R and shall otherwise
reasonably cooperate with Sellers for the purpose of collecting any outstanding
Retained A/R.
     Section 3.05 Deposits. Buyer shall, within one (1) Business Day of the
execution and delivery of this Agreement, pay to (a) Seller a non-refundable fee
equal to Three Hundred Thousand Dollars ($300,000.00) and (ii) Escrow Agent an
earnest money deposit in the amount of Five Hundred Thousand Dollars
($500,000.00) (the “Escrow Deposit”). The Escrow Deposit shall be held by the
Escrow Agent in an interest bearing account. Simultaneously with the execution
and delivery of this Agreement by Buyer and Seller and payment of the Escrow
Deposit by Buyer to the Escrow Agent, the Escrow Agent shall execute the escrow
agreement in substantially the form attached hereto as Exhibit 3.05 (the
“Deposit Escrow Agreement”) to acknowledge the Escrow Agent’s receipt of the
Escrow Deposit and agreement to hold and disburse the Escrow Deposit strictly in
accordance with the terms and provisions of this Agreement and the Deposit
Escrow Agreement. The Escrow Deposit (together with any interest thereon) shall
be (1) delivered to Seller and applied toward the Purchase Price if the Closing
occurs, (2) delivered to and retained by Seller (as its sole and exclusive
remedy to liquidated damages) if Seller elects to terminate this Agreement
pursuant to Section 8.05(c) due to a failure

21

--------------------------------------------------------------------------------

 

of a condition precedent set forth in Section 8.01 or Section 8.02 if such
failure arises out of a breach by Buyer of any of its representations or
warranties hereunder or a failure of Buyer to perform any of its covenants or
agreements hereunder, or (3) returned to Buyer if this Agreement is terminated
for any reason other than as provided in clause (2) above. Each of the Parties
acknowledge and agree that the agreements contained in this Section 3.05 are an
integral part of the transactions contemplated by this Agreement and that the
payment of the Escrow Deposit to Seller is not a penalty, but rather is
liquidated damages in a reasonable amount that will compensate such party for
the efforts and resources expended and opportunities foregone while negotiating
this Agreement and in reliance on this Agreement and on the expectation of the
consummation of the transactions contemplated hereby, which amount would
otherwise be impossible to calculate with precision. The Parties agree that the
payment of the Escrow Deposit to Seller in accordance with this Section 3.05
shall be the sole and exclusive remedy available to Seller or its Affiliates
with respect to a termination of this Agreement pursuant to Section 8.05(c) due
to a failure of a condition precedent set forth in Section 8.01 or Section 8.02
if such failure arises out of a breach by Buyer of any of its representations or
warranties hereunder or a failure of Buyer to perform any of its covenants or
agreements hereunder, and upon payment of the Escrow Deposit to Seller, Buyer
shall have no further liability to the other parties hereunder.
     Section 3.06 Allocation of the Purchase Price. Within thirty (30) days
following the completion of the process described in Section 3.03, Buyer shall
prepare or cause to be prepared and shall deliver to Seller a draft allocation
of the Purchase Price (together with all other capitalizable items) among the
assets of Seller prepared in accordance with Section 1060 of the Code and the
treasury regulations issued thereunder (and any similar provision of state or
local Law, as appropriate) (the “Purchase Price Allocation”). Within thirty
(30) days after the receipt of such draft Purchase Price Allocation, Seller will
propose to Buyer in writing any objections or proposed changes to such draft
Purchase Price Allocation (and in the event that no such changes are proposed in
writing to Buyer within such time period, Seller will be deemed to have agreed
to, and accepted, the Purchase Price Allocation). Buyer and Seller will attempt
in good faith to resolve any differences between them with respect to the
Purchase Price Allocation, in accordance with requirements of Section 1060 of
the Code, within ten (10) days after Buyer’s receipt of a timely written notice
of objection or proposed changes from Seller. If Buyer and Seller are unable to
resolve such differences within such time period, then Buyer and Seller shall
each use a separate Purchase Price Allocation that each reasonably determines
satisfies the requirements of Section 1060 of the Code. If Buyer and Seller
agree (or are deemed to agree pursuant to provisions of this Section 3.06) to
the Purchase Price Allocation, then Buyer and Seller shall report, act, and file
in all respects and for all Tax purposes (including the filing of Internal
Revenue Service Form 8594) in a manner consistent with such agreed-upon Purchase
Price Allocation, shall take no position for Tax purposes inconsistent therewith
unless required to do so by applicable Law, and shall reasonably cooperate in
the preparation, execution and filing and delivery of all documents, forms and
other information as the other Party may reasonably request to assist in the
preparation of any filings relating to the allocation of the Purchase Price
pursuant to this Section 3.06.

22

--------------------------------------------------------------------------------

 

ARTICLE IV
CLOSING; DELIVERIES AT CLOSING
     Section 4.01 Closing Date and Location. The consummation of the
transactions contemplated by this Agreement, including the payment of the
Purchase Price in accordance with Section 3.01 and the sale of the Purchased
Assets to Buyer in accordance with Section 2.02 and assumption of the Assumed
Liabilities by Buyer (the “Closing”), will take place at the offices of Hunton &
Williams LLP at Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond,
Virginia 23219, commencing at 10:00 a.m. (local time) no later than the 5th
Business Day after the date on which all of the conditions to Closing set forth
in Article VIII have been satisfied or waived, unless Buyer and Seller otherwise
agree. The date on which the Closing occurs is referred to as the “Closing
Date.” Except as described in Section 4.02 hereof, all transactions contemplated
hereby will be deemed to have occurred simultaneously and will become effective
at the Closing, which transfer will be deemed effective for accounting and other
computational purposes as of the Effective Time.
     Section 4.02 Post-Closing Assignments. Except as may otherwise be agreed by
Buyer and Seller, as to the Assumed Contracts for which required third party
consents have not been received as of the Closing, on the second Business Day
following the receipt of such consent, each of Seller and Buyer shall deliver to
the other a duly executed Bill of Sale and Assignment and Assumption Agreement,
each in form and substance reasonably satisfactory to Buyer and Seller, with
respect to the Assumed Contracts for which consent has been received and which
have not previously been transferred to Buyer.
     Section 4.03 Deliveries by Seller. At the Closing, Seller shall deliver or
cause to be delivered to Buyer the following:
          (a) a counterparty to the Assignment and Assumption Agreement, in the
form attached hereto as Exhibit 4.03(a) (the “Assignment and Assumption
Agreement”), duly executed by Seller;
          (b) a counterpart to the Lease Assignment and Assumption Agreement,
duly executed by Mission Residential Holdings, LLC;
          (c) a counterpart to the Asset Management Agreement, duly executed by
each of the applicable lessees, Seller and Mission Residential Holdings, LLC;
          (d) the Guarantee, duly executed by Mission Residential Holdings, LLC;
          (e) the Bill of Sale in the form attached hereto as Exhibit 4.03(e)
(the “Bill of Sale”), duly executed by Buyer, and such other good and sufficient
instruments of conveyance, transfer and assignment (in the form and substance
reasonably acceptable to Buyer) as shall be necessary to vet in Buyer good and
valuable title to the Purchased Assets being sold to Buyer as of the Closing
Date, free and clear of all Liens, other than Permitted Liens;

23

--------------------------------------------------------------------------------

 

          (f) a counterpart to each Management Agreement Amendment with respect
to the Management Agreements being assigned as of the Closing, in each case,
duly executed by the owner of the applicable Managed Property;
          (g) a counterpart to the Management Subcontract Agreement (the
“Subcontract Agreement”) with respect to the Management Agreements, which are
not assigned to Buyer at the Closing in substantially the form attached hereto
as Exhibit 4.03(g);
          (h) a certificate of an officer of each of Seller and MR Holdings
certifying, as complete and accurate as of the Closing, to (i) the attached
copies of the Governing Documents of each of Seller or MR Holdings, as
applicable, (ii) resolutions or actions of the board of managers or other
governing body of Seller or MR Holdings, as applicable, approving the execution
and delivery of this Agreement and the other Seller Transaction Documents to
which it is a party and the consummation of the transactions contemplated under
this Agreement and such other Seller Transaction Documents and (iii) the
incumbency and signatures of the officers or managers, as applicable, of Seller
or MR Holdings executing this Agreement and the other Seller Transaction
Documents to which it is a party;
          (i) certificates as to the good standing of Seller and MR Holdings, in
each case, issued within ten (10) days of the Closing Date, issued by the
appropriate Governmental Authorities within each jurisdiction where Seller and
MR Holdings is organized;
          (j) copies of all approvals, authorizations, waivers, consents,
releases and modifications of agreement of third parties required to be obtained
pursuant to Section 8.03(b), in each case, in form and substance satisfactory to
Buyer;
          (k) from each holder of Debt listed on Schedule 2.01(b) evidence
reasonably satisfactory to Buyer that (i) the Debt has been fully paid and
satisfied (including all accrued interest, prepayment penalties, early
termination fees or other obligations), or otherwise fully discharged and (ii)
(A) all Liens with respect thereto have been released and terminated and (B) all
related UCC financing statements have been terminated or, in any case described
in (A) or (B) above, arrangements reasonably satisfactory to Buyer shall have
been made;
          (l) a certificate of the Chief Executive Officer (or other comparable
title) of Seller and MR Holdings dated as of the Closing Date, certifying that
the conditions set forth in Section 8.01 and 8.03 have been satisfied;
          (m) a non foreign person affidavit that complies with the requirements
of Section 1445 of the Code, in a form reasonably satisfactory to Buyer, duly
executed by Parent;
          (n) a counterpart to the Consulting and Transition Services Agreement,
duly executed by Middleburg Capital, LLC;
          (o) a counterpart to the License Agreement, duly executed by Seller;
          (p) a counterpart to the Intellectual Property Assignments, duly
executed by MR Holdings;

24

--------------------------------------------------------------------------------

 

          (q) a counterpart to the Indemnification/Termination Escrow Agreement,
duly executed by Seller; and
          (r) such other documents and instruments as Buyer shall reasonably
request to consummate or evidence the transactions contemplated hereby.
     Section 4.04 Deliveries by Buyer. At the Closing, Buyer shall deliver or
cause to be delivered to Seller (or on behalf of Seller) the following items:
          (a) the Purchase Price (including the Escrow Deposit), less (x) the
Holdback Amount, and (y) the Indebtedness Payoff Amount payable in cash by wire
transfer of immediately available funds to the account designated by Seller;
          (b) $747,000.00 payable in cash by wire transfer of immediately
available funds to Hunton & Williams LLP in respect of the payment of all
outstanding invoices due and payable by Seller and its Affiliates to Hunton &
Williams LLP for services rendered prior to the Closing Date (the “Hunton Legal
Fees”);
          (c) $50,000.00 payable in cash by wire transfer of immediately
available funds to Jenner & Block LLP in respect of the payment of certain
outstanding invoices due and payable by Seller to Jenner & Block LLP for
services rendered prior to the Closing Date (the “Jenner Legal Fees”);
          (d) the fee payable in cash to FBR Capital Markets & Co. pursuant to
that certain letter agreement, dated as of January 29, 2010, between FBR Capital
Markets & Co. and Parent, as amended to reflect a minimum fee of $500,000 for
all of the transactions referenced therein (the “FBR Fees”), by wire transfer of
immediately available funds to an account designated by FBR Capital Markets &
Co.;
          (e) the Holdback Amount to the Escrow Agent in accordance with
Section 3.05.
          (f) a certificate of the Manager of Buyer certifying, as complete and
accurate as of the Closing, to (i) the attached copies of the Governing
Documents of Buyer, (ii) the resolutions or actions of the board of managers
approving the execution and delivery of this Agreement and the other Buyer
Transaction Documents and the consummation of the transactions contemplated
under this Agreement and the other Buyer Transaction Documents and (iii) the
incumbency and signatures of the officers or managers, as applicable, of Buyer
executing this Agreement and the other Buyer Transaction Documents;
          (g) a certificate as to the good standing of Buyer issued within ten
(10) days of the Closing Date by the appropriate Governmental Authorities within
the jurisdiction where Buyer is organized;
          (h) a certificate of the Chief Executive Officer (or other comparable
title) of Buyer, dated as of the Closing Date, certifying that the conditions
set forth in Section 8.01 and Section 8.02 have been satisfied;

25

--------------------------------------------------------------------------------

 

          (i) a counterpart to each of the Assignment and Assumption Agreement,
the Bill of Sale, the Holdback Escrow Agreement, Intellectual Property
Assignments, the Consulting and Transition Services Agreement, the Asset
Management Agreement, the Lease Assignment and Assumption Agreement, the
Guarantee, the Management Agreement Amendments, the Management Agreement Letter
Agreement, the Subcontract Agreement, the License Agreement, and the Buyer
Guaranty each duly executed by Buyer; and
          (j) such other documents and instruments as Seller shall reasonably
request to consummate or evidence the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER,
MR HOLDINGS, AND PRINCIPAL
     Each of Seller and MR Holdings, jointly and severally, and Principal,
individually, represent and warrant to Buyer that the statements contained in
this Article V are correct and complete as of the date hereof except as
otherwise set forth in the schedules attached to this Agreement (the
“Schedules”), which Schedules are incorporated by reference herein.
Notwithstanding the foregoing or anything to the contrary in this Agreement,
Principal’s representations and warranties are an accommodation to Buyer, and
the remedies set forth in Article IX shall be the sole and exclusive remedy for
a breach of the representations and warranties contained in this Article V. The
Schedules shall be arranged in Sections corresponding to the numbered and
lettered Sections of this Article V. The disclosures of any Section of the
Schedules shall provide information regarding, and qualify only, the
corresponding numbered and lettered Section of this Article V, unless and to the
extent that (a) cross references to other Sections are set forth in the
Schedules or (b) it is reasonably apparent due to the nature of the disclosure
that such disclosure qualifies one or more of the numbered or lettered Sections
of this Article V. Seller shall not be, nor shall it be deemed to be, in breach
of any such representations and warranties (and no claim for indemnification by
any Buyer Indemnified Party may be made pursuant to Section 9.02(a) hereof in
respect thereof) in connection with any such matter so disclosed in the
Schedules. Inclusion of information in the Schedules shall not be construed as
an admission that such information is material to the business, operations or
condition (financial or otherwise) of Seller, taken in part or as a whole, or as
an admission of liability or obligation of MR Holdings, Seller or Principal to
any third party.
     Section 5.01 Organization, Qualification and Power.
          (a) Each of Seller, Parent and MR Holdings is a limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its formation. Seller is duly qualified or registered to conduct
business as a foreign limited liability company and in good standing under the
Laws of each jurisdiction where the ownership or use of the properties or assets
owned or used by it or the activities conducted by it require such qualification
or registration, except where the failure to be so qualified as a foreign
limited liability company could not result in a Material Adverse Effect. The
jurisdictions in which Seller is qualified or registered to do business as a
foreign limited liability company are set forth on Schedule 5.01(a).

26

--------------------------------------------------------------------------------

 

          (b) Seller has no Subsidiaries and has never had any Subsidiaries.
Seller does not own, directly or indirectly, any equity interest in any other
Person and has never owned, directly or indirectly, any equity interest in any
other Person.
          (c) Correct and complete copies of the organizational documents of
Seller have been delivered or made available to Buyer.
     Section 5.02 Authorization. Seller has all requisite legal capacity, power
and authority (including the requisite limited liability company power and
authority) to own, operate or hold under lease its assets and properties as
currently owned or operated by it. Each of Seller, MR Holdings, Parent and
Principal has all requisite legal capacity, power and authority (including, if
applicable, the requisite limited liability company power and authority) (a) to
execute, deliver and perform this Agreement and the other Seller Transaction
Documents to which it is a party and (b) to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. Each of Seller, MR Holdings and Parent has duly and validly authorized
the execution, delivery and performance of this Agreement and the other Seller
Transaction Documents to which it is a party. This Agreement constitutes, and
when executed and delivered by Seller, MR Holdings, Parent, and Principal, as
the case may be, the other Seller Transaction Documents will constitute, the
valid and legally binding obligation of Seller, MR Holdings, Parent, and
Principal, which is a party thereto, enforceable against Seller, MR Holdings,
Parent and Principal, as applicable, in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar Laws affecting creditors’ rights generally and general
principles of equity (whether considered in equity or at law).
     Section 5.03 Non-Contravention. Except as set forth in Schedule 5.03, the
execution, delivery and performance of this Agreement and the other Seller
Transaction Documents by Seller, MR Holdings, Parent, or Principal, as
applicable, and the consummation by Seller, MR Holdings, Parent, or Principal,
as applicable, of the transactions contemplated hereby or thereby, and
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof by Seller, MR Holdings, Parent, or Principal, as applicable, do not and
will not conflict with, or result in any violation of, or any default (with or
without notice or lapse of time, or both) under, any Law applicable to, or any
provision of the Governance Documents of Seller, MR Holdings, or Parent,
conflict with, result in any material violation or breach of, result in any
material default (with or without notice or lapse of time, or both) under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice or consent under, any Assumed
Contract, or any other Contract to which any of the Purchased Assets are
subject, result in the creation or imposition of any Lien (other than Permitted
Liens) upon any of the Purchased Assets or result in a material breach of or
material default (with or without notice or lapse of time, or both) under, or
the cancellation, forfeiture, revocation, suspension or adverse modification of,
any material Permit owned or held by Seller.
     Section 5.04 Debt. Schedule 5.04 sets forth all outstanding Debt of Seller
in excess of One Thousand Dollars ($1,000.00) and all Liens (other than
Permitted Liens) on the assets of Seller as of the date of the date hereof.

27

--------------------------------------------------------------------------------

 

     Section 5.05 No Brokers or Finders Fees. Except as set forth on Schedule
5.05, no agent, broker, investment banker, financial advisor or other Person is
or will be entitled to any brokers’ or finder’s fee or any other commission or
similar fee from Seller or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
     Section 5.06 Consents and Approvals; Permits.
          (a) Except as set forth on Schedule 5.06(a), no authorization,
consent, approval or other action by, or notice to or filing with, any Person is
required for the execution, delivery, performance or consummation of the
transactions contemplated by this Agreement or any other Seller Transaction
Documents to which it is a party by Seller, MR Holdings, Parent or Principal.
          (b) Set forth on Schedule 5.06(b) is a list of all material Permits
which are necessary for the ownership or lease of the Purchased Assets and the
operation of the Business by Seller as presently conducted. All such Permits are
in full force and effect and to the Knowledge of Seller, have been duly and
lawfully secured or made. There is no proceeding pending or, to the Knowledge of
Seller, threatened, to revoke, suspend, withdraw or terminate any such Permit.
Seller is in compliance in all material respects with all such Permit. Seller
has fulfilled and performed its material obligations under each such Permits and
there is no breach or default under any such Permit.
     Section 5.07 Title; Location of Purchased Assets; Sufficiency.
          (a) Seller holds good and marketable title to, or a valid leasehold
interest or license in, the Purchased Assets, free and clear of all Liens (other
than Permitted Liens).
          (b) All Tangible Personal Property is located at the real property
leased by Mission Residential, LLC pursuant to the Oakton Office Lease.
Following the Closing, the Purchased Assets, and rights related thereto
(together with any cash that is needed to operate the Business), will be
sufficient to carry on the Business in all material respects in the manner in
which its is conducted as of the date hereof and as of the Closing Date.
     Section 5.08 Intellectual Property. Schedule 5.08 contains (a) a complete
and correct list of all patents, trademarks, trade names, service marks, service
names, trade dress, logos, copyrights and domain names owned or licensed by
Seller or used in the Business (collectively, “Registrations”) and (b) a
complete and correct list of all licenses, sublicenses and other agreements
relating thereto to which Seller is a party. Seller either has a legally
enforceable right to use, or owns the entire right, title and interest, free and
clear of any Lien (other than Permitted Liens), in and to the Intellectual
Property. The Intellectual Property constitutes all of the intellectual or
proprietary property reasonably necessary for conduct of the Business or used by
Seller as of the date hereof and as of the Closing Date. None of the
Intellectual Property is subject to any pending or, to the Knowledge of Seller,
threatened challenge, and none of Seller, MR Holdings, Parent or Principal has
received any written notice that any Intellectual Property is invalid or that
any Intellectual Property or any products or services made, sold or used in
connection with the Business conflict with or infringe the rights of others. To
the Knowledge of Seller, no third party has infringed or misappropriated, or is
infringing or misappropriating any

28

--------------------------------------------------------------------------------

 

of the Intellectual Property. Except as set forth in Schedule 5.08, none of
Seller, MR Holdings, Parent or Principal has granted a license or assignment of
any rights in and to the Intellectual Property.
     Section 5.09 Compliance with Laws; Litigation.
          (a) Seller is in compliance in all material respects with all material
Laws applicable to Seller or to the Business or to the use of the Purchased
Assets. Seller has not, and to the Knowledge of Seller, none of its Affiliates,
have received any written notice asserting any non-compliance with any Laws. To
the Knowledge of Seller, Seller, has not received any oral notice asserting any
non-compliance with any Laws.
          (b) There is no action, lawsuit, proceeding, claim, or legal,
administrative, arbitration or governmental investigation pending or, to the
Knowledge of Seller, threatened, against Seller or otherwise with respect to the
Business, the Purchased Assets, this Agreement or the transactions contemplated
hereby, including any such action which questions the validity or legality of,
or is otherwise related to, the transactions contemplated hereby. To the
Knowledge of Seller, no event has occurred or circumstances exist that could
give rise to or serve as a valid basis for the commencement of any such action.
          (c) Except as set forth on Schedule 5.09, there has not during the
past three (3) years been any material action, lawsuit, proceeding, claim, or
legal, administrative, arbitration or governmental investigation pending or, to
the Knowledge of Seller, threatened, against Seller or otherwise with respect to
the Business or the Purchased Assets.
          (d) Except as set forth on Schedule 5.09, there is no, and there has
not been, any judgment, order, writ, injunction, decree or other similar award
outstanding (whether rendered by a court, administrative agency or other
Governmental Authority, or by arbitration) against Seller or any of its
Affiliates or by which Seller or any of its Affiliates is bound, in each case,
which relates to the Business, the Purchased Assets, this Agreement or the
transactions contemplated hereby, and Seller and its Affiliates are not in
breach of any such judgment, order, writ, injunction, decree or similar award.
     Section 5.10 Financial Statements. The Financial Statements (a) were
derived from the books and records of Seller, (b) fairly present in all material
respects the financial condition and results of operations of Seller as of and
at the dates and as of and for the periods indicated therein and (c) have been
prepared in accordance with GAAP as modified by the Accounting Methods.
     Section 5.11 [RESERVED]
     Section 5.12 Absence of Changes. Except as set forth on Schedule 5.12,
since December 31, 2009, Seller has conducted the Business only in the Ordinary
Course of Business and Seller has not:
          (a) mortgaged, pledged, charged or subjected to any Lien (other than
Permitted Liens) any of the Purchased Assets;

29

--------------------------------------------------------------------------------

 

          (b) other than in the Ordinary Course of Business, prepaid or
cancelled any rights, debts or claims of Seller that relate to the Purchased
Assets;
          (c) sold, licensed or assigned, granted or otherwise transferred or
disposed of rights under any of the Intellectual Property, or abandoned,
canceled or otherwise failed to maintain any such rights;
          (d) changed the accounting methods or Tax elections used by Seller;
          (e) adopted a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
with respect to Seller;
          (f) suffered material damage to, or destruction or loss (whether or
not covered by insurance) of, any Purchased Asset or failed to maintain any
Purchased Asset in the Ordinary Course of Business (ordinary wear and tear
accepted);
          (g) revalued any of the Purchased Assets other than as reflected on
the Financial Statements;
          (h) (i) made any increase in the amount of any bonuses, salaries or
other compensation to or with respect to any Employee or any manager of officer
of Seller (except in the Ordinary Course of Business), (ii) entered into or
adopted any Employee Plan, including any employment, severance or similar
Contract or (iii) made any increase in the amount of or institution of any fees,
bonuses, commissions or incentives to or with respect to any Person providing
services to Seller or entered into any new Contract for such services outside
the Ordinary Course of Business;
          (i) entered into, terminated or modified any collective bargaining
agreement;
          (j) failed to perform any material obligations of Seller under any
Assumed Contract or material Permit;
          (k) adopted or increased the payments or benefits payable under any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other Employee Plan;
          (l) failed to maintain relations and preserve substantially intact
business relationships with suppliers and creditors of Seller;
          (m) modified or waived in any material respect any provision of any
Assumed Contract pursuant to which Seller is entitled to a fee, payment or other
benefit outside of the Ordinary Course of Business;
          (n) failed to renew or maintain any insurance coverage with respect to
the Purchased Assets; or
          (o) agreed or committed, orally or in writing, to do any of the
foregoing.

30

--------------------------------------------------------------------------------

 

     Section 5.13 Books and Records. The Books and Records of Seller, all of
which have been made available to Buyer, are complete and correct, in all
material respects, and have been maintained in accordance with sound business
practices and applicable Laws.
     Section 5.14 Real Property; Security Deposits.
          (a) Seller does not own or lease any real property. Seller currently
occupies a portion of the real property leased by Mission Residential, LLC
pursuant to the Oakton Office Lease.
          (b) The security deposit accounts pertaining to the Managed Properties
have been at all times and currently are maintained, in all material respects,
in accordance with all applicable Laws.
     Section 5.15 Material Contracts; Management Agreements.
          (a) Schedule 5.15 is a list of all Contracts meeting the following
descriptions (“Material Contracts”), true and complete copies of which
(including all amendments, modifications, extensions, renewals, and other
agreements with respect thereto) have been provided or made available to Buyer:
          (i) each Contract whereby Seller has an obligation to make an
investment in or loan to any Person;
          (ii) each Contract that constitutes a lease of any personal property
with (A) aggregate rental payments in excess of $15,000.00 or (B) the remaining
term in excess of one year and which is non-cancelable without penalty and
aggregate annual rental payment in excess of $5,000.00 or (C) the loss of which
would be material to the operation of business of Seller;
          (iii) each Contract that involves performance of services, delivery of
goods or materials or payments by Seller of an amount or value in excess of
$10,000.00;
          (iv) each Contract that was not entered into in the Ordinary Course of
Business;
          (v) each Contract affecting the ownership of, leasing of, title to,
use of, or any leasehold or other interest in, any real or personal property,
(except personal property leases having a value per item or aggregate payments
of less than $15,000.00);
          (vi) each Contract with respect to Intellectual Property, including
Contracts with current employees, consultants, or contractors regarding the
ownership, use or non-disclosure of any of the Intellectual Property;
          (vii) each Contract that constitutes an agreement to purchase or sell
a capital asset for a price in excess of $20,000.00;

31

--------------------------------------------------------------------------------

 

          (viii) each Contract that constitutes or amends any employment,
consulting, management, severance, change in control or indemnification
arrangement, agreement or understanding between Seller, on the one hand, and any
directors, officers, or other Employees on the other hand that make in excess of
$10,000.00 per year;
          (ix) each Contract pursuant to which Seller has granted a power of
attorney or other similar grant of agency;
          (x) each Contract with any labor union or association representing any
Employee of any of Seller;
          (xi) each Contract that constitutes a bonus, pension, profit sharing,
retirement or other form of deferred compensation plan;
          (xii) each Contract that prohibits Seller from freely engaging in
business anywhere in the world or concerning confidentiality (except Contracts
concerning confidentiality entered into in the Ordinary Course of Business);
          (xiii) each Contract, including any joint venture, partnership, or
limited liability company agreement, involving a sharing of profits, losses,
costs, Taxes, or other liabilities by Seller with any other Person;
          (xiv) each Contract under which Seller has created, incurred, assumed
or guaranteed Debt obligations in excess of $15,000.00;
          (xv) each Contract relating to a sales broker, sales agency,
advertising agency or finder’s relationship with Seller;
          (xvi) each Contract that is a settlement, conciliation or similar
agreement with any Governmental Authority or pursuant to which Seller will be
required to pay in excess of $10,000.00 after the date of this Agreement;
          (xvii) each Contract pursuant to which Seller has obligations to
indemnify another Person (other than Contracts entered into in the Ordinary
Course of Business);
          (xviii) each Contract relating to any surety bond or letter of credit;
and
          (xix) each Contract pursuant to which Seller provides the Services to
the Managed Properties (collectively, the “Management Agreements”).
          (b) All of the Assumed Contracts are valid, binding and enforceable as
to Seller and, to the Knowledge of Seller, the other parties thereto, in
accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium and similar
laws, both state and federal, affecting the enforcement of creditors’ rights or
remedies generally as from time to time in effect or (ii) principles of equity,
whether considered at law or in equity. No event has occurred or circumstances
exist that could, with the passage of time or compliance with any applicable
notice requirements or both,

32

--------------------------------------------------------------------------------

 

constitute a default of, result in a violation or breach of, or give any right
to accelerate, modify, cancel or terminate any Assumed Contract by Seller or, to
the Knowledge of Seller, any other party under any such Assumed Contract. Seller
is not, and to the Knowledge of Seller, no other party thereto, is in material
breach or material default under any Assumed Contract, and no right of
acceleration, modification, cancellation or termination is currently in favor of
Seller, or to the Knowledge of Seller, any other party to such Assumed Contract.
Seller has not received written notice that any party to any Assumed Contract
intends to cancel or terminate any such Assumed Contract or to not exercise any
option to renew thereunder, and to the Knowledge of Seller, no party to any
Assumed Contract otherwise intends to exercise any right of cancellation,
termination or to not exercise any option to renew thereunder. Seller has not
made any prior assignment of any Assumed Contract or any of its rights or
obligations thereunder.
     Section 5.16 [RESERVED]
     Section 5.17 Insurance. Schedule 5.17 sets forth a true and complete list
of each insurance policy currently maintained by or on behalf of or for the
benefit of Seller (specifying the insurer, amount of coverage and type of
insurance) with respect to the Purchased Assets (each, an “Insurance Policy”).
Seller has made available to Buyer copies of each such Insurance Policy. Except
as set forth on Schedule 5.17, all such insurance coverage is occurrence-based.
With respect to each Insurance Policy, to the Knowledge of Seller, (a) the
policy is legal, valid, binding, enforceable and in full force and effect
without any lapse, (b) no party to the policy is in material breach or material
default (including with respect to the payment of premiums or the giving of
notices), and (c) no event has occurred that, with notice or the lapse of time,
or both, would constitute a material breach or material default, or permit
termination, modification or acceleration under such policy; and no party to the
policy has repudiated any provision of such policy.
     Section 5.18 Employees.
          (a) Schedule 5.18(a) sets forth the name, date of hire, job title,
current compensation paid or payable, including annual vacation accrued and
status (e.g., leave of absence, disability, layoff, active, temporary) and
location, of each Employee. Seller has paid in full or accrued in the Financial
Statements, as applicable, in a timely manner, all wages, salaries, commissions,
incentives, bonuses and other compensation due to any Employee or otherwise
arising under any Employee Plan or Law prior to the Closing. No employee of
Seller has provided written notice to Seller to cancel or terminate such
Person’s relationship with Seller.
          (b) To the Knowledge of Seller, Seller:
          (i) is in compliance with all applicable Laws, respecting labor,
employment, employment practices, terms and conditions of employment, wages and
hours, termination of employees, classification of employees, and immigration,
and is not engaged in any unfair labor practice, including any such Laws
respecting employment discrimination and occupational safety and health
requirements,

33

--------------------------------------------------------------------------------

 

          (ii) has complied in all material respects with the withholding and
reporting requirements with respect to wages, salaries and other payments to
employees of Seller, and
          (iii) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any Governmental Authority with
respect to unemployment compensation benefits, social security or other benefits
or obligations for employees of Seller (other than routine payments to be made
in the normal course of business and consistent with past practice).
          (c) Seller is not delinquent in any payments to any of its employees
for any wages, salaries, commissions, bonuses, severance, termination pay or
other compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees.
          (d) There are no actions by any Employee or former employee pending
or, to the Knowledge of Seller, threatened in writing against Seller.
          (e) There is no litigation, grievance, arbitration proceeding,
administrative proceeding, governmental investigation, citation, consent decree,
conciliation agreement, audit or action of any kind pending or, to the Knowledge
of Seller, threatened relating to employment, employment practices, labor
relations and employee benefits, terms and conditions of employment or wages and
hours.
          (f) Seller is not a party to any collective bargaining agreement or
other labor union agreement nor, to the Knowledge of Seller, are there pending
any union organizational activities or proceedings.
          (g) There is no unfair labor practice complaint against Seller pending
or, to the Knowledge of Seller, threatened to commence any unfair labor
practices complaint before the National Labor Relations Board or any other
Governmental Authority. There is no labor strike, dispute, walkout, lockout,
slowdown or stoppage pending or, to the Knowledge of Seller, threatened against
Seller.
          (h) There are no representation petitions or other similar petitions
or requests for representation pending, or to the Knowledge of Seller, or
proposed or threatened, before the National Labor Relations Board or any other
federal, provincial, state or local agency in any jurisdiction or Governmental
Entity in connection with any Persons employed by Seller.
          (i) The consummation of the transactions contemplated hereby shall not
entitle any employee of Seller to (i) terminate his or her employment or receive
additional compensation in connection with such termination or (ii) alter in any
way their terms or conditions of employment.
          (j) Seller has complied in all material respects with the requirements
of the Immigration Reform and Control Act of 1986, as amended, and all related
regulations and all executive orders in effect regarding the employment in the
U.S. of persons who are not citizens of the U.S. Schedule 5.18(j) of the
Disclosure Schedules (i) contains a list of each employee of

34

--------------------------------------------------------------------------------

 

Seller working in the U.S. who is not a U.S. citizen and (ii) describes for each
the authorization under which the employee is permitted to work in the U.S.
          (k) Seller has not implemented any plant closing or mass layoff of
employees that could implicate (i) the Worker Adjustment and Retraining
Notification Act of 1988, as amended, or any similar Law (including without
limitation similar state and local laws), or (ii) any labor notice, bargaining
obligation or consultation requirement of any Law or labor agreement.
     Section 5.19 Employee Benefits.
          (a) Schedule 5.19(a) sets forth a complete list of (i) all “employee
benefit plans,” as defined in Section 3(3) of ERISA, (ii) all other severance
pay, salary continuation, bonus, incentive, stock option, or other equity,
retirement, pension, profit sharing, welfare, fringe benefit or deferred
compensation plans, contracts, programs, funds, or arrangements of any kind, and
(iii) all other employee benefit plans, contracts, programs, funds, or
arrangements (whether written or oral, qualified or nonqualified, funded or
unfunded, foreign or domestic, currently effective or terminated) and any trust,
escrow, or similar agreement related thereto, in respect of any Employees or
former employees, directors, officers, shareholders, members, managers,
consultants, or independent contractors of Seller has made or is required to
make payments, transfers, or contributions, or has any liability (all of the
above being hereinafter individually or collectively referred to as “Employee
Plan” or “Employee Plans,” respectively). Seller has no liability with respect
to any plan, arrangement or practice of the type described in the preceding
sentence other than the Employee Plans, and neither Buyer nor any affiliate of
Buyer shall have any liability or obligation with respect to any of the Employee
Plans as a result of this transaction.
          (b) True and complete copies of the following materials have been
delivered or made available to Buyer: (i) the plan documents for each Employee
Plan and all amendments thereto, (ii) all determination letters from the IRS
with respect to each Employee Plan intended to be qualified under Section 401(a)
of the Code, (iii) all current and prior summary plan descriptions, summaries of
material modifications, annual reports, summary annual reports, and any other
documents used to communicate the Employee Plans to employees, (iv) all trust
agreements, insurance contracts, and other documents relating to the funding or
payment of benefits under any Assumed Plan, (v) all documents, including without
limitations, Form 5500, relating to any Employee Plan required to have been
filed prior to the date hereof with respect to each Employee Plan, (vi) any
communication, opinion, ruling or determination from any Governmental Authority,
including the IRS, Department of Labor, or Pension Benefit Guaranty Corporation
with respect to any Employee Plan, (vii) financial statements and actuarial
reports, if any, for each Employee Plan for the three most recently completed
plan years, and (viii) any other documents, forms or other instruments relating
to any Employee Plan reasonably requested by Buyer.
          (c) Each Employee Plan has, in all material respects, been maintained,
operated, and administered in compliance with its terms and any related
documents or agreements and in compliance with all applicable Laws.

35

--------------------------------------------------------------------------------

 

          (d) Each Employee Plan intended to be qualified under Section 401(a)
of the Code is so qualified and has received a favorable determination letter
from the IRS as to the qualification and the tax exempt status of each trust
thereunder, and such determination letter remains in effect and has not been
revoked. Nothing has occurred that could reasonably be expected to result in the
loss of the qualification of any such Employee Plan or trust under Section
401(a) or 501(a) of the Code.
          (e) Neither Seller nor any ERISA Affiliate currently has and at no
time in the past has had an obligation to contribute to a “defined benefit plan”
as defined in Section 3(35) of ERISA, a pension plan subject to the funding
standards of Section 302 of ERISA or Section 412 or 426 of the Code, a
“multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of
the Code, or a “multiple employer plan” within the meaning of Section 210(a) of
ERISA or Section 413(c) of the Code.
          (f) With respect to each Employee Plan that is a group health plan
benefitting any current or former employee of Seller or any ERISA Affiliate that
is subject to Section 4980B of the Code, or was subject to Section 162(k) of the
Code, Seller and each ERISA Affiliate has complied, in all material respects,
with (i) the continuation coverage requirements of Section 4980B of the Code and
Section 162(k) of the Code, as applicable, and Part 6 of Subtitle B of Title I
of ERISA and (ii) the Health Insurance Portability and Accountability Act of
1996, as amended.
          (g) No Employee Plan provides benefits, including death or medical
benefits, beyond termination of service or retirement other than retirement
benefits under a pension plan, or continuation healthcare coverage mandated by
Law.
          (h) The Seller nor any Affiliates has any obligation to reimburse, pay
or make whole any Person for adverse tax consequences or any related costs
(including interest, penalties or additional excise taxes), including
consequences or costs arising under Section 409A, Section 280G or Section 4999
of the Code relating to any payment made, provision of, omission from or
operation of any Employee Plan.
          (i) Each Employee Plan that is subject to Section 409A of the Code
materially complies in form and in operation with paragraphs (2), (3) and (4) of
Code Section 409A.
          (j) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereunder, will, either alone or
together with some other event, (i) result in any material payment (including
severance, unemployment compensation, golden parachute or otherwise) becoming
due to any director, officer or any employee under any Employee Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Employee Plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
     Section 5.20 Environmental Matters.
          (a) Seller is, and for the past five (5) years, has been in material
compliance with all applicable Environmental Laws.

36

--------------------------------------------------------------------------------

 

          (b) Seller has not received written notice of any alleged, actual or
potential responsibility for, or any inquiry or investigation regarding, and to
the Knowledge of Seller there has not been, (i) any Release or threatened
Release of any Hazardous Substance at or affecting any real property occupied or
managed by Seller or (ii) any alleged violation of or non-compliance with any
Environmental Law by Seller or the conditions of any Permit of Seller required
under any Environmental Law for any property occupied or managed by Seller.
Seller is not subject to any order of a Governmental Authority related to any
real property occupied or managed by Seller nor has Seller received written
notice of any claim or action by any Person against Seller alleging injury or
damage to any Person, property, natural resource or the environment arising from
or relating to any Release or threatened Release of any Hazardous Substances
from any real property occupied or managed by Seller.
          (c) There are no (i) reports submitted by Seller or, to the Knowledge
of Seller, any of its respective Affiliates, to any Governmental Authority with
respect to any Hazardous Substance contamination or Release (or clean-up
thereof) at any real property occupied or managed by Seller, and except as set
forth in Schedule 5.20(c), (ii) reports resulting from any environmental or
safety inspection or assessment at any real property occupied or managed by
Seller, that have been performed by (A) Seller or, to the Knowledge of Seller,
any of its respective Affiliates or (B) any other Person and provided to Seller
or, to the Knowledge of Seller, any of its respective Affiliates.
     Section 5.21 Absence of Certain Commercial Practices. Except in compliance
with applicable Law, Seller has made all payments to any non-U.S. Person by
check mailed to such non-U.S. Person’s principal place of business or by wire
transfer to a bank located in the same jurisdiction as such non-U.S. Person’s
principal place of business.
     Section 5.22 Taxes.
          (a) All material Tax Returns with respect to Seller and its assets
that are required to been filed in any jurisdiction have been timely filed and
accurately prepared, and all Taxes shown to have been due and payable on such
Tax Returns have been paid or set aside in accounts for payment, or accrued or
reserved in cash for such payments on its books and records of Seller, and
Seller is not presently under audit by any Governmental Authority with respect
to any such Taxes.
          (b) (i) Accurate and complete copies of all of the Tax Returns of
Seller for all periods for which the applicable statute of limitations remains
open have been made available to Buyer, except for those periods for which
returns are not yet due, and (ii) Seller has not received any written notice of
any Tax deficiency outstanding, proposed or assessed against or allocable to it,
and has not executed any waiver of any statute of limitations on the assessment
or collection of any Tax or executed or filed with any Governmental Authority
any contract now in effect extending the period for assessment or collection of
any Taxes against it.
          (c) (i) There are no Liens for Taxes upon, pending against or, to the
Knowledge of Seller, threatened against, any of the Purchased Assets, except for
Permitted Liens, and (ii) Seller is not subject to any Tax allocation or sharing
contract.

37

--------------------------------------------------------------------------------

 

          (d) (i) Seller has, since the date of its formation, been treated as a
disregarded entity for federal income tax purposes, (ii) MR Holdings has, since
the date of its formation, been treated as a disregarded entity for federal
income tax purposes, (iii) Parent has, since the date of its formation, been
treated as a partnership for federal income tax purposes, and (iv) none of MR
Holdings, Seller, Parent or any Governmental Authority has taken a contrary
position.
          (e) Seller is a United States person not subject to withholding under
Section 1446 of the Code.
          (f) Seller (A) has not been a member of an affiliated group filing a
consolidated Tax Return or (B) has no liability for Taxes of any person under
Treas. Reg. Section 1.1502-6 (or similar provision of state, local or non-US
law) as a transferee or successor by contract or otherwise.
          (g) Neither MR Holdings nor Seller has been a party to any “listed
transaction” or “transaction of interest” as defined in Code
Section 6706(A)(c)(2) and the regulations promulgated thereunder.
     Section 5.23 Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement, (a) the amount of the Fair Value of the assets
of Seller will, as of such date, exceed the amount of all liabilities of Seller,
contingent or otherwise, as of such date, (b) Seller’s Liabilities will not be
beyond its ability to pay as such debts mature, and (c) Seller will not have, as
of such dates, an unreasonably small amount of capital with which to conduct its
business or an unreasonably small amount of assets in relation to its future
business. For purposes of this Section 5.23, “Fair Value” means the amount for
which the assets of Seller might be expected to be sold to a willing buyer by a
willing seller, neither being under compulsion, each having reasonable knowledge
of all relevant facts, with equity to both, with no definite time period
required to consummate the sale, and with buyer and seller contemplating the
retention of the facilities at their present location for continuation of
current operations; “Liabilities” means “liability on a claim,” and “claim”
means (i) any right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured and (ii) any right
to an equitable remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, secured or
unsecured.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
     Buyer hereby represents and warrants to Seller as follows:
     Section 6.01 Organization. Buyer is a limited liability company duly
formed, validly existing and in good standing under the laws of the Commonwealth
of Virginia.
     Section 6.02 Authorization. Buyer has all requisite limited liability power
and authority (a) to make, execute, deliver and perform this Agreement and the
other Buyer

38

--------------------------------------------------------------------------------

 

Transaction Documents and (b) to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the other Buyer
Transaction Documents have been duly and validly authorized by all necessary
corporate action on the part of Buyer. This Agreement constitutes, and when
executed and delivered the other Buyer Transaction Documents will constitute,
the valid and legally binding obligation of Buyer, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar Laws affecting creditors’ rights
generally and general principles of equity (whether considered in equity or at
law).
     Section 6.03 Non-Contravention. Neither the execution or delivery of this
Agreement or any of the other Buyer Transaction Documents by Buyer, and
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof by Buyer, will (a) result in a violation of, in any material respect,
any applicable Law, (b) conflict with, or result in any violation of, or any
default (with or without notice or lapse of time, or both) under, any provision
of its Governing Documents or (c) except as set forth in Schedule 6.03, conflict
with, result in any violation or breach of, result in any default (with or
without notice or lapse of time, or both) under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice or consent under, any material Contract to which Buyer, is a
party or by which it is bound.
     Section 6.04 No Consents. No authorization, consent, approval or other
action by, or notice to or filing with, any Person is required for the
execution, delivery, performance or consummation of the transactions
contemplated by this Agreement or any other Buyer Transaction Documents by
Buyer.
     Section 6.05 No Brokers. Except as disclosed on Schedule 6.05, no agent,
broker, investment banker, financial advisor or other Person is or will be
entitled to any brokers’ or finder’s fee or any other commission or similar fee
from Buyer or any Subsidiary in connection with the transactions contemplated by
this Agreement.
     Section 6.06 Litigation. There is no action, lawsuit, proceeding, claim, or
legal, administrative, arbitration or governmental investigation pending or, to
the knowledge of Buyer, threatened, against Buyer or otherwise with respect to
this Agreement or the transactions contemplated hereby, including any such
action which questions the validity or legality of, or is otherwise related to,
the transactions contemplated hereby.
     Section 6.07 Projections; Investigation.
          (a) In connection with Buyer’s investigation of Seller, Buyer has
received from or on behalf of Seller and its Affiliates certain projections and
business plan information. Buyer acknowledges that (i) there are uncertainties
inherent in attempting to make such estimates, projections and other forecasts
and plans and, accordingly, is not relying on them, (ii) Buyer is familiar with
such uncertainties, (iii) Buyer is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates, projections and other
forecasts and plans so furnished to it (including the reasonableness of the
assumptions underlying such estimates, projections and forecasts) and (iv) Buyer
shall have no claim against Seller with

39

--------------------------------------------------------------------------------

 

respect thereto. Accordingly, Buyer acknowledges that neither Seller nor any
Affiliate of Seller has made any representation or warranty with respect to such
estimates, projections and other forecasts and plans (including the
reasonableness of the assumptions underlying such estimates, projections and
other forecasts and plans).
          (b) Buyer has been given the opportunity to ask questions of, and
receive answers from, Seller and its Affiliates concerning Seller and the
Business, the transactions contemplated by this Agreement, the Purchased Assets,
the Assumed Liabilities and other related matters. To the knowledge of Buyer,
Seller and its Affiliates have made available to Buyer, its agents and/or
representatives the documents and information requested by or on behalf of Buyer
relating to the Purchased Assets and Assumed Liabilities, and Buyer has made its
own inquiry and investigation into the Purchased Assets and Assumed Liabilities,
and based thereon, has formed an independent judgment concerning the Purchased
Assets.
ARTICLE VII
COVENANTS
     Section 7.01 Access to Information. Subject to any confidentiality
obligations in existence on the date of this Agreement, prior to the earlier to
occur of the Closing and the termination of this Agreement, Buyer may make such
reasonable investigation of the Purchased Assets, the Business, and the Managed
Properties as Buyer may reasonably request. Seller shall give to Buyer and its
key employees, counsel, financial advisors, accountants and other
representatives reasonable access, on reasonable notice during normal business
hours throughout the period prior to the Closing to the offices of Seller and
the Managed Properties and to the Books and Records of Seller, as Buyer may
reasonably request. Buyer shall hold, and cause its employees and
representatives to hold, all information and documents received pursuant to this
Section 7.01 confidential and, if the transactions contemplated by this
Agreement are not consummated for any reason, shall return to Seller or destroy
all such information and documents and any copies as soon as practicable
(including any information held electronically; provided, however, nothing
contained in this Section 7.01 shall obligate Buyer to remove any such
information or documents held on Buyer’s computer hard drives solely as archival
backups). Between the date hereof and the Closing, Buyer and its representatives
shall not contact or communicate with any employees, investors, lenders and
customers of Seller in connection with the transactions contemplated hereby
without the prior consent of Seller, which consent may be withheld, conditioned
or delayed in Seller’s reasonable discretion.
     Section 7.02 Conduct of Business Pending the Closing Date. From and after
the date hereof, until the earlier of the Closing and the termination of this
Agreement, except as otherwise expressly permitted by this Agreement or
consented to by Buyer in writing, Seller shall, and to the extent applicable to
the Purchased Assets or the Business, cause its Affiliates to:
          (a) operate the business and affairs of Seller in the Ordinary Course
of Business and maintain the Purchased Assets in compliance in all material
respects with all applicable Laws;
          (b) keep full, complete and accurate Books and Records;

40

--------------------------------------------------------------------------------

 

          (c) maintain its existence and maintain Seller’s good standing in its
jurisdiction of organization;
          (d) maintain the general character of the Purchased Assets in the
ordinary and usual manner;
          (e) maintain all material Permits required to be held by Seller and
timely file all reports, statements, renewal applications and other filings, and
timely pay all fees and charges in connection therewith that are required to
keep such Permits in full force and effect;
          (f) maintain in full force and effect substantially the same Insurance
Policies now in effect with respect to the Purchased Assets, and, if applicable,
renew or replace such Insurance Policies with coverage no less favorable to
Seller;
          (g) comply in all material respects with all Environmental Laws
applicable to the operation of Seller, the Business or the operation of the
Purchased Assets, the leasing of the Oakton Office Lease and the management of
the Managed Properties;
          (h) ensure that all obligations of Seller and its Affiliates required
to be performed under the Oakton Office Lease Assumed Contracts are satisfied in
all material respects;
          (i) notify Buyer in writing (as promptly as practicable) in the event
that it becomes aware of any material change with respect to any Purchased
Asset, Assumed Liability or Managed Property;
          (j) duly and timely file or cause to be filed Tax Returns and all
other material reports and returns required to be filed with any Governmental
Authority and promptly pay or cause to be paid when due all Taxes and other
material assessments and governmental charges, including interest and penalties
levied or assessed, unless contested in good faith by appropriate proceedings;
and
          (k) take no action which materially adversely affects the ability of
any party to (i) obtain the consents required pursuant to Section 8.03(b), or
(ii) perform its covenants and agreements under this Agreement; and
          (l) continue to pay accounts payable utilizing normal procedures and
without discounting or accelerating payment of such accounts (unless such
discount is consented to by the applicable counter party).
     Section 7.03 Prohibited Actions Pending the Closing Date. Unless
(i) otherwise expressly provided for herein, (ii) necessary to effect the
transactions contemplated herein or (iii) approved by Buyer in writing from the
date of this Agreement until the earlier of the Closing or the termination of
this Agreement, Seller shall not, and where applicable, cause its Affiliates to
not:
          (a) interfere with or disrupt Seller’s relationship with any owner or
lessee of any of the Managed Properties or the lessor under the Oakton Office
Lease;

41

--------------------------------------------------------------------------------

 

          (b) remove any Tangible Personal Property included in the Purchased
Assets from the leased premises under the Oakton Office Lease or any Managed
Property;
          (c) renew, extend, terminate, modify or waive, in each case, in any
material respect, any term or condition of any Assumed Contract, or enter into
any new real property lease or Assumed Contract;
          (d) make any capital improvements to any at the leased premises under
the Oakton Office Lease;
          (e) make any capital improvements to any Managed Property in excess of
$10,000.00 without prior written notice to Buyer;
          (f) release any funds constituting some or all of the Managed
Properties Security Deposits, except to the extent released to a tenant or
former tenant of a unit at the Managed Properties and only to the extent
required by the terms of such tenant’s lease;
          (g) make any commitments or representations to any applicable
Governmental Authority that would in any manner be binding upon Buyer or the
Purchased Assets;
          (h) sell, transfer, assign, pledge, ground lease or otherwise dispose
of, or agree to sell, transfer, assign, pledge, ground lease or dispose of any
Purchased Asset;
          (i) solicit, pursue, negotiate, work or consult with any other party
with respect to (x) any possible sale, lease or transfer of any of the Purchased
Assets, (y) any possible sale or other transfer of any direct or indirect
ownership interests in Seller, or (z) any financing secured by any of the
Purchased Assets; and
          (ii) execute any agreements relating to or enter into any transaction
described in clause (i) above;
          (i) take any action prior to the Closing outside of the Ordinary
Course of Business;
          (j) permit any of the Purchased Assets to become encumbered by any
additional indebtedness for borrowed money;
          (k) create, permit or grant any new Liens on any Purchased Asset or
Managed Property (other than Permitted Liens);
          (l) modify, amend or supplement, in each case, in any material
respect, the terms or conditions of, or terminate, any of the Assumed Contracts;
          (m) issue, deliver, transfer, license, pledge, encumber, sell, dispose
of, or grant any option or other right in respect of, any ownership interest in
any Purchased Asset;
          (n) dispose of or permit to lapse any right to the use of any material
patent, trademark, trade name, service mark, license or copyright of any Seller
(including any of the

42

--------------------------------------------------------------------------------

 

Intellectual Property), or dispose of or disclose to any Person (other than
customers, licensors and suppliers in the Ordinary Course of Business that are
contractually bound to maintain the confidentiality thereof), any trade secret,
formula, process, technology or know-how of Seller not heretofore a matter of
public knowledge;
          (o) increase in any manner the base compensation of, or enter into any
new bonus, incentive or other compensation agreement or arrangement with, any of
its employees, officers, directors, third party contractors or consultants;
          (p) other than vesting eligibility requirements that change or come
into effect with the passage of time pursuant to the terms of existing Employee
Plans, pay or agree to pay any additional pension, retirement allowance or other
employee benefit under any Employee Plan to any of its Employees, except as may
be required by the terms of any applicable plan or agreement in effect prior to
the Effective Date or except as required by applicable Law;
          (q) adopt, amend or terminate any Benefit Plan, which results in
additional payments or benefits provided by Seller or materially increase the
benefits provided under any Benefit Plan applicable to and having a material
effect on Seller, or promise or commit to undertake any of the foregoing in the
future;
          (r) amend or terminate any existing employment agreement or enter into
any new employment agreement, except as required by the terms of any such
agreement in effect prior to the date hereof or as otherwise contemplated
herein;
          (s) modify or amend any Governance Document of Seller;
          (t) initiate or settle any lawsuit or other similar proceeding before
any Governmental Authority or any arbitration panel involving the Purchased
Assets without the prior written consent of Buyer;
          (u) liquidate or terminate its existence;
          (v) create any Subsidiary to acquire any capital stock or other equity
securities of any corporation or acquire any equity or ownership interest in any
business or entity;
          (w) directly or indirectly, solicit, encourage, or induce, or attempt
to solicit, encourage, or induce (i) any employee of Seller to leave the employ
of Seller or (ii) any independent contractor of Seller to cease performing
services for the benefit of Seller;
          (x) make or change any Tax election, change any annual accounting
period, adopt or change any accounting method, file an amended Tax Return, enter
into any closing agreement, waive or extend any statute of limitations with
respect to Taxes, settle or compromise any Tax liability, claim or assessment,
or take any other similar action relating to the filing of any Tax Return or the
payment of any Tax affecting Seller; or
          (y) take any action that would materially and adversely affect the
ability of the parties to consummate the transactions contemplated hereunder.

43

--------------------------------------------------------------------------------

 

Nothing contained in this Agreement shall give Buyer, directly or indirectly,
rights to control or direct Seller’s operations prior to the Closing Date.
     Section 7.04 Insurance Policies. Seller shall, at its expense, keep in full
force and effect through the Closing, coverage under the Insurance Policies that
insure the Purchased Assets on the terms existing as at the date hereof, other
than changes in the premiums on any such Insurance Policies that arise in the
Ordinary Course of Business in connection with any renewal or replacement of any
such Insurance Policy.
     Section 7.05 Consents.
          (a) The Parties hereto shall use their respective commercially
reasonable efforts, and shall cooperate with each other, to promptly make all
filings with, provide notices to, obtain all consents, waivers, approvals,
authorizations and permits that is required or reasonably appropriate in
connection with the consummation of the transactions contemplated hereby,
including, without limitation, (i) those to be made with, provided to or
obtained from any Governmental Authority and (ii) those to be made with,
provided to or obtained from any party to any Assumed Contract.
          (b) Buyer shall use its commercially reasonable efforts to cause the
conditions set forth in Sections 8.01 and 8.03 to be satisfied and to consummate
the transactions contemplated herein, provided that, except as expressly set
forth herein, Buyer shall not be required to expend any funds to obtain any
third party consents, waivers, permits, registrations, authorizations and
approvals of Governmental Authority. Notwithstanding the forgoing, the costs and
expenses requested by lender to be paid in connection with obtaining the Lender
Consents shall be borne by Buyer up to One Hundred Thousand Dollars
($100,000.00), in the aggregate, for all such costs and expenses (the “Expense
Threshold”); provided that any refusal of Buyer to pay any such costs and
expenses in excess of the Expense Threshold plus 100% of such amount, will not
be a breach of this Agreement.
     Section 7.06 Notice. Each of Seller and MR Holdings, on the one hand, and
Buyer, on the other hand, will give prompt written notice to the other of any
material adverse development causing a breach of any of its own representations
and warranties contained in this Agreement. No disclosure by Seller or MR
Holdings pursuant to this Section 7.06 shall be deemed to amend or supplement
the Schedules; provided, however, if the adverse development relates to new
actions, occurrences, or events, first arising after the date of this Agreement,
and prior to the Closing, subject to Buyer’s rights under Section 8.05(b), the
updated or amended Schedules shall cure or remedy any misrepresentation, breach
of warranty, for purposes of the provisions of Article V, solely to the extent
of such update or amendment.
     Section 7.07 Other Action. Each of the MR Holdings, Seller and Buyer shall,
at the earliest practicable date, use its commercially reasonable efforts to
take or cause to be taken all things necessary, under applicable Laws and to
cause the fulfillment of all of the conditions to its obligations to consummate
the transactions contemplated by this Agreement, including preparing and filing
all forms, registrations, requests and notices required to obtain any requisite
consent by any third party or Governmental Authority.

44

--------------------------------------------------------------------------------

 

     Section 7.08 Further Assurances. Following the Closing, Buyer and Seller
shall, from time to time, at the request of any other Party hereto and without
further cost or expense to the requesting Party, do and perform, or cause to be
done and performed, all further acts and things and shall execute and deliver
all further agreements, certificates, instruments and documents as any other
Party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement or any of the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby.
     Section 7.09 Publicity; Disclosure. Except as may be required by Law, or by
the rules of any applicable securities exchange, neither MR Holdings, Parent,
Principal or Seller on the one hand, or Buyer on the other hand, may issue any
press release or other public announcement relating to the subject matter of
this Agreement or any of the other Transaction Documents without the prior
written approval of the other.
     Section 7.10 Non-Solicitation and Confidentiality.
          (a) In furtherance of the consideration being paid by Buyer to Seller
hereunder, Seller agrees, on behalf of itself and its Affiliates, that, during
the period beginning on the Closing Date and ending on the third (3rd)
anniversary of the Closing Date (such period, the “Restricted Period”), neither
Seller nor any of its Affiliates shall, directly or indirectly, during the
Restricted Period do any of the following: (i) solicit the employment of or hire
any current employee of Seller (or any employee who was employed by Seller for
any type of employment within the eighteen (18) month period prior to the
Closing Date) without the prior written consent of Buyer; provided, however,
that nothing herein shall prohibit Seller or any of its Affiliates from
(A) making general solicitation advertisements that are not targeted at such
employees, (B) hiring any such employee who contacts Seller or any of its
Affiliates on his or her own accord or (C) soliciting or hiring any such
employee whose employment with Buyer is terminated or who does not accept
Buyer’s offer of employment pursuant to Section 7.11; (ii) call on, solicit, or
service any supplier, prospective supplier, licensee, licensor, or other
business relation of Seller with respect to products or services currently
provided by the Business in order to influence or induce or attempt to influence
or induce such Person to decrease or cease doing business with Seller;
(iii) make any statement or do any act intended to cause existing customers of
Seller to make use of the services or purchase the services or products of any
competitive business; or (iv) induce or attempt to induce any employee of Seller
to leave his or her employ or in any way interfere with the relationship between
any Seller and its employees; provided, however, that nothing herein shall
prohibit Seller or any of its Affiliates from (x) making general solicitation
advertisements that are not targeted at such employees, (y) hiring any such
employee who contacts Seller or any of its Affiliates on his or her own accord
or (z) soliciting or hiring any such employee whose employment with Buyer is
terminated or who does not accept Buyer’s offer of employment pursuant to
Section 7.11.
          (b) Seller, on behalf of itself and its Affiliates, acknowledges and
agrees that the length of the non-solicitation period is reasonable and narrowly
drawn to impose no greater restraint than is necessary to protect the goodwill
of Seller and to protect Buyer’s legitimate ownership interest in Seller.
Seller, on behalf of itself and its Affiliates, considers the provisions of this
Section 7.10(b) to be fair and reasonable in order to protect the legitimate
business interests of Buyer.

45

--------------------------------------------------------------------------------

 

          (c) If Seller or any Affiliate of Seller breaches or threaten to
commit a breach of any of the restrictive covenants set forth in this
Section 7.10, then Buyer shall have the following rights and remedies against
Seller or such Affiliate, as applicable, which are in addition to, and not in
lieu of, any other rights and remedies otherwise available to Buyer at Law or in
equity for Seller’s, or such Affiliate’s, as applicable, actions:
          (i) the right and remedy to have the restrictive covenants in this
Section 7.10 specifically enforced against Seller or its Affiliates, including
temporary restraining orders and injunctions by any court of competent
jurisdiction, it being agreed by Seller, on behalf of itself and its Affiliates
that any breach or threatened breach by Seller or any of its Affiliates of this
Section 7.10 would cause irreparable injury to Buyer and that money damages
would not provide an adequate remedy to Buyer;
          (ii) the right and remedy to require Seller or its Affiliates to
account for and pay over to Buyer any monies and benefits derived or received
directly or indirectly by it, from any transaction constituting a breach of this
Section 7.10; and
          (iii) the right and remedy to collect from Seller any reasonable
out-of-pocket costs and fees of Seller and/or its Affiliates incurred in
enforcing this Section 7.10, including reasonable attorneys’ fees.
          (d) Seller agrees that in the event a court of competent jurisdiction
declares that there has been a breach by Seller of this Section 7.10, the term
of any such covenant so breached shall be automatically extended for the period
of time of the violation from the date on which such breach ceases or from the
date of the entry by a court of competent jurisdiction of a final non-appealable
order enforcing such covenant, whichever is later.
          (e) Seller shall be responsible for any breach of this Section 7.10 by
any of its Affiliates.
          (f) For a period of ten (10) years after the Closing Date, Seller
shall not disclose to any third parties any Confidential Information relating to
the Purchased Assets; provided that Seller may disclose Confidential Information
(i) that becomes publicly available through no fault of Seller or its
Affiliates, (ii) to the extent that the furnishing or use thereof is required by
legal proceedings; provided, however, that Seller shall promptly notify Buyer to
permit Buyer to seek a protective order or take other appropriate action, or
(iii) to such Seller’s legal, financial and Tax advisors.
          (g) It is the desired intent of Buyer and Seller that the foregoing
provisions of this Section 7.10 shall be enforced to the fullest extent
permissible in each jurisdiction in which enforcement is sought. Accordingly,
Buyer and Seller agree that if the covenants set forth in this Section 7.10 are
deemed by any court or arbitrator to be invalid or unenforceable in any
jurisdiction, the court or arbitrator may reduce the scope thereof or otherwise
amend or reform the portion thus adjudicated to be invalid or unenforceable,
such reduction, amendment or reformation to apply only with respect to the
particular jurisdiction in which such adjudication is made. Seller and Parent
acknowledge that Buyer has no adequate remedy at law for any breach or any
threatened or attempted breach by Seller of the covenants and agreements set
forth in this

46

--------------------------------------------------------------------------------

 

Section 7.10 and, accordingly, Seller agrees that Buyer shall, in addition to
the other remedies that may be available to it hereunder or at Law, be entitled
to commence proceedings in equity and obtain an injunction temporarily or
permanently enjoining Seller from breaching or threatening or attempting any
such breach of such covenants and agreements and to require compliance by Seller
with such covenants and agreements. For purposes of any such proceeding in
equity, it shall be presumed that the remedies at Law available to Buyer would
be inadequate, and that Buyer would suffer irreparable harm as a result of the
violation of any provision of this Section 7.10.
     Section 7.11 Employee Matters.
          (a) Effective as of the Closing Date, Seller will terminate the
employment of all of its Employees. Buyer shall make offers of employment to
each Employee, except where any such offer would violate applicable Laws,
including U.S. immigration Laws. The terms of Buyer’s offers of employment to
Employees pursuant to Section 7.11 shall include compensation and employee
benefits as Buyer may determine in its sole discretion; provided that: (i) Buyer
shall not terminate the employment of any Employee who accepts Buyer’s offer of
employment (other than for cause, which shall be determined in Buyer’s sole
discretion) prior to the six-month anniversary of the Closing Date; and (ii) the
initial base salary of Employees who accept Buyer’s offer of employment shall be
the same as in effect immediately prior to the Closing, and employee benefits
for Employees who accept Buyer’s offer of employment shall, in the aggregate,
have a value comparable to the aggregate value of the employee benefits in
effect for such Employees immediately prior to the Closing. Additionally, Buyer
agrees that it shall provide each Employee who accepts Buyer’s offer of
employment with service credit for the full amount of such Employee’s
uninterrupted service with Seller prior to the Closing Date for purposes of:
(i) eligibility and vesting (but not benefit accrual) under Buyer’s employee
benefit plans, and (ii) rights to paid vacation time under Buyer’s vacation
policy. Except as expressly set forth herein, nothing in this Section 7.11 or
otherwise in this Agreement shall obligate the Buyer to continue any term or
condition of employment or any employee benefit plan, program or arrangement for
any period of time or to employ any Employee for any period of time. Buyer shall
make reasonable efforts to cause the health insurance carrier for its employee
group health plan to (i) waive any pre-existing condition limitation under any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) maintained
by the Buyer in which any Employee who accepts Buyer’s offer of employment and
their eligible dependents participate and (ii) provide each such employee and
their eligible dependents with credit for any co-payments and deductibles paid
by any of them during the relevant portion of the plan year prior to the Closing
Date in order to satisfy any applicable deductible or out-of-pocket requirements
under any employee welfare benefit plans in which any such employee and their
eligible dependents participate after the Closing Date. Seller will upon
reasonable request by Buyer provide to Buyer all information regarding each
Employee as may be necessary for Buyer to satisfy the requirements of this
Section 7.11.
          (b) This Section 7.11(a) is solely for the purpose of defining the
obligations between Buyer and Seller concerning the employees of Seller, and
will in no way (i) be construed as creating any employment contract or right to
employment for any specified time, (ii) create any third-party beneficiary or
other rights in any employee or former employee (including any beneficiary or
dependent thereof) of Seller, its Affiliates or any other Person other

47

--------------------------------------------------------------------------------

 

than the parties hereto and their respective successors and permitted assigns,
or (iii) constitute or be deemed to constitute an amendment to any employee
benefit plan sponsored or maintained by Seller, Buyer, or any of their
Affiliates.
     Section 7.12 Tax Matters. The following provisions will govern the
allocation of responsibility as between MR Holdings and Buyer for certain Tax
matters following the Closing Date:
          (a) Property Taxes. All property Taxes imposed on or with respect to
the Purchased Assets (including, without limitation, property Taxes payable by
the tenant or lessee under any lease) will be pro-rated as of the Closing Date
and that, notwithstanding any other provision of this Agreement, the economic
burden of any such property Tax will be borne by Seller for the Pre-Closing
Period and by Buyer for the Post-Closing Period. Accordingly, notwithstanding
any other provision of this Agreement, (i) if Seller pays any such property Tax
with respect to a Post-Closing Period, Buyer will reimburse Seller upon demand
for the amount of such property Tax; and (ii) if Buyer pays any such property
Tax with respect to a Pre-Closing Period, Seller will reimburse Buyer upon
demand for the amount of such property Tax.
          (b) Refunds and Tax Benefits; Amended Tax Returns. Any Tax refunds
that are received by Buyer or Seller, and any amounts to which Buyer or Seller
become entitled that are credited against Tax, that relate to Tax periods or
portions thereof ending on or before the Closing Date (including any Pre-Closing
Tax Period) will be for the account of Seller, and Buyer will pay over to Seller
any such refund or the amount of any such credit within fifteen (15) days after
receipt or entitlement thereto. Without limiting the generality of the
foregoing, this Section 7.12(b) will apply to any sales Tax rebates and refunds,
property Tax exemptions, and credits or reductions in property Taxes
attributable to a retroactive reduction in assessment rate or assessment base.
          (c) Cooperation on Tax Matters. Buyer and Seller will reasonably
cooperate as and to the extent reasonably requested by the other, in connection
with any audit, litigation or other proceeding with respect to Taxes in respect
of the Business or the Purchased Assets. Such cooperation will include retaining
and (upon such other Party’s request) providing records and information that are
reasonably relevant to any such audit, litigation or other proceeding, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Buyer and Seller
shall (to the extent such books and records are within their possession)
(i) retain all books and records with respect to Tax matters pertinent to Seller
or the Purchased Assets relating to any Tax period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the respective Tax
periods, and abide by all record retention agreements entered into with any
taxing authority, and (ii) give each other reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other Party so requests, allow the other Party to take possession of such books
and records.
          (d) Transfer Taxes and Fees. All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other such fees and charges (including penalties and interest)
incurred in connection with consummation of the transactions contemplated by
this Agreement shall be paid by Seller when due, and Seller will, at

48

--------------------------------------------------------------------------------

 

its own expense, file all necessary Tax Returns and other documentation with
respect to all such Taxes, fees and charges, and if required by applicable Law,
Buyer will join in the execution of such returns and other documentation.
     Section 7.13 Risk of Loss. Seller shall bear the risk of any casualty loss
or damage to any of the Purchased Assets prior to the Effective Time. Seller
shall be responsible for repairing or replacing (as appropriate under the
circumstances) any lost or damaged Purchased Asset with a value of $2,000.00 or
more (the “Damaged Asset”) unless such Damaged Asset was obsolete or unnecessary
for the continued operation of the Business consistent with Sellers’ past
practice. If Seller is unable to, or does not, repair or replace a Damaged Asset
by the date on which the Closing would otherwise occur under this Agreement,
then, at the option of Seller, (a) Seller shall reimburse Buyer by an amount
equal to the deficiency or (b) the proceeds of any insurance covering such
Damaged Asset shall be assigned to Buyer at Closing, and to the extent such
proceeds are not sufficient to cover the reasonable out-of-pocket costs incurred
by Buyer in repairing or replacing the Damaged Asset after the Closing, Seller
shall reimburse Buyer by an amount equal to the deficiency.
     Section 7.14 SEC Compliance. Seller and MR Holdings each acknowledges that
Buyer is a subsidiary of Buyer Parent, a publicly registered company that is
required to disclose the existence of this Agreement upon full execution and to
make certain filings with the SEC or other state securities regulators (the “SEC
Filings”) that may include audited and unaudited financial statements with
respect to the Purchased Assets. To assist Buyer Parent in preparing the SEC
Filings and any required audited financial statements, Seller and MR Holdings
agree to (a) within thirty (30) days after the date of this Agreement, and at
Buyer’s request, any time thereafter until the first anniversary of the Closing
Date, deliver an audit inquiry letter regarding pending litigation and other
matters in the form attached hereto as Exhibit 7.14(a) (the “Audit Inquiry
Letter”) to Seller’s and MR Holdings’ counsel prior to Closing and deliver to
Buyer an executed letter from such counsel in response to the Audit Inquiry
Letter as soon as reasonably practicable thereafter, (b) at Buyer’s request at
any time until the first anniversary of the Closing Date, deliver a
representation letter in the form requested by Buyer’s auditors (the
“Representation Letter”) to Buyer, and (c) provide Buyer Parent, within thirty
(30) days after the date of this Agreement, such financial and other data and
information relating to the Business and the Purchased Assets as Buyer and its
registered independent accounting firm may reasonably require in order to enable
Buyer and its registered independent accounting firm to prepare such audited and
unaudited financial statements with respect to the Business and Purchased Assets
as Buyer Parent deems necessary to include in its SEC Filings, including but not
limited to an executed assurance or representation letter from Seller to Buyer
Parent’s registered independent accounting firm in a form acceptable to Buyer
Parent (provided that in no event shall MR Holdings or Seller have any liability
to Buyer, Buyer Parent or such registered independent accounting firm for the
assurances or representations made therein, but MR Holdings and Seller shall
reasonably cooperate, at no cost or expense to MR Holdings and Seller, in
connection with such audit, including, if required by Buyer Parent’s registered
independent accounting firm, answering a standard SAS 99 questionnaire from such
registered independent accounting firm). The provisions of this Section 7.14
shall survive the Closing for a period of 365 days. Buyer shall reimburse Seller
for its actual and documented out-of-pocket expenses in connection with
compliance with this Section 7.14.

49

--------------------------------------------------------------------------------

 

ARTICLE VIII
CONDITIONS PRECEDENT
     Section 8.01 Conditions Precedent To Buyer and Seller. The performance of
the obligations Buyer and Seller at the Closing is subject to the conditions
that, prior to or simultaneously with the Closing:
          (a) all of the Transaction Documents shall have been executed and
delivered by the parties thereto and such parties shall have performed all
obligations required to be performed by this Agreement on or prior to the
Closing;
          (b) the Parties hereto shall have received any and all regulatory and
Governmental Authority consents required or necessary to effect the transactions
contemplated in this Agreement and the other Transaction Documents; and
          (c) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect issued by any court of competent jurisdiction
preventing consummation of any of the transactions contemplated by this
Agreement and there shall not be pending or threatened by any Governmental
Authority any action, suit or proceeding (and there shall not be pending by any
other Person any action, suit or proceeding, which has a reasonable likelihood
of success) challenging or seeking to restrain or prohibit consummation of the
transactions contemplated to occur at the Closing. There shall not have been any
change in any Law that would reasonably be expected to prevent the consummation
of the transactions contemplated by this Agreement.
     Section 8.02 Conditions Precedent To Seller’s Obligations. The performance
of the obligations of Seller at the Closing is subject to the conditions that,
prior to or simultaneously with the Closing:
          (a) the representations and warranties made by Buyer in this Agreement
shall be true in all material respects on and as of the Closing Date with the
same effect as though they were made on and as of the Closing Date (except to
the extent that any such item expressly relates to an earlier date, in which
case such item shall be true and correct on and as of such earlier date); and
          (b) Buyer shall have performed and complied in all material respects
with all covenants, agreements and conditions contained in this Agreement that
are required to be performed or complied with by Buyer prior to or at the
Closing Date; provided that all covenants, agreements and conditions that are
qualified by materiality shall have been performed and complied with in all
respects.
     Section 8.03 Conditions Precedent To Buyer’s Obligations. The performance
of the obligations of Buyer at the Closing is subject to the conditions that,
prior to or simultaneously with the Closing:
          (a) the representations and warranties made by Seller, MR Holdings and
Principal in this Agreement (i) that are qualified by materiality or Material
Adverse Effect shall be true and correct in all respects and (ii) that are not
so qualified shall be true in all material

50

--------------------------------------------------------------------------------

 

respects, in each case, on and as of the Closing Date with the same effect as
though they were made on and as of the Closing Date (except to the extent that
any such item expressly relates to an earlier date, in which case such item
shall be true and correct on and as of such earlier date);
          (b) the Parties shall have received each of the consents listed on
Schedule 8.03(b) and any and all other third-party consents and approvals (other
than Lender Consents) required or necessary to effect the transactions
contemplated in this Agreement and the other Transaction Documents, which are
material to the continuation of the Business in substantially the form and
substance as of the date hereof, in each case, which consent shall not require
or result in the increase of the amount or rate of any obligation under any of
the Assumed Contracts;
          (c) the Parties hereto shall have received 35 of the 41 third party
lender consents described on Schedule 8.01(b) (the “Lender Consents”);
          (d) Seller and its Affiliates shall have performed and complied in all
material respects with all covenants, agreements and conditions contained in
this Agreement that are required to be performed or complied with by them prior
to or at the Closing Date; and
          (e) no fire, explosion, earthquake, disaster, accident, flood,
drought, embargo, riot, civil disturbance, uprising, activity of the armed
forces or act of God or public enemy or any other event or circumstance shall
have occurred or been threatened that, individually or in the aggregate with
others, has resulted in or would reasonably be expected to result in a Material
Adverse Effect.
     Section 8.04 Frustration of Closing Conditions. Neither Buyer nor Seller
may rely on the failure of any condition set forth in Article VIII to be
satisfied if such failure was caused by its or its Affiliates’ failure to act in
good faith or to cooperate and use all commercially reasonable efforts to cause
the Closing to occur as required by this Agreement.
     Section 8.05 Termination. Buyer and Seller may terminate this Agreement as
provided below:
          (a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
          (b) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing if the Closing has not occurred on or
prior to the Outside Date, by reason of the failure of any condition set forth
in Section 8.01 or Section 8.03 to have been satisfied; provided that the right
of Buyer to terminate this Agreement under this Section 8.05(b) shall not be
available if Buyer has breached in any material respect any of its obligations
under this Agreement in a manner that has contributed to the failure to
consummate the Closing at or prior to such time; and
          (c) Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing if the Closing has not occurred on or
prior to the Outside Date, by reason of the failure of any condition set forth
in Section 8.01 or Section 8.02 to have been satisfied; provided that the right
of Seller to terminate this Agreement under this Section 8.05(c)

51

--------------------------------------------------------------------------------

 

shall not be available if Seller has breached in any material respect its
obligations under this Agreement in a manner that has contributed to the failure
to consummate the Closing at or prior to such time.
     Section 8.06 Effect of Termination. If Buyer or Seller terminates this
Agreement pursuant to Section 8.05, except as set forth in Section 3.05, all
obligations and liabilities of the Parties under this Agreement shall terminate
and become void; provided that (a) nothing herein shall relieve any Party from
liability for any breach of any representation, warranty, covenant or agreement
in this Agreement prior to the date of termination and (b) the Confidentiality
Agreement, Section 3.05, Section 8.05, Section 8.06 and Article X shall remain
in full force and effect and survive any termination of this Agreement.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
     Section 9.01 Survival. The representations, warranties, covenants and
agreements contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing, and thereafter (a) the
representations and warranties contained in Sections 5.01, 5.02, 5.05, 5.07(a),
6.01, 6.02, and 6.05, shall not expire, (b) the representations and warranties
contained in Sections 5.19, 5.20, 5.21 and 5.22 shall survive for the statute of
limitations period applicable to the subject matter of such representations and
warranties (including any extensions, tolling or waivers thereof) plus 60 days,
(c) the balance of the representations and warranties contained in Article V
shall survive for a period of eighteen (18) months after the Closing Date. The
covenants and agreements shall not expire except that those covenants and
agreements that by their terms are to be performed or complied with for a
shorter period of time shall survive only until the expiration of such shorter
time period. Any claim that has been asserted in accordance with Section 9.04
and that is pending on the date of the expiration of the applicable survival
period set forth in the immediately preceding sentence may continue to be
asserted and shall be indemnified against until fully and finally resolved.
     Section 9.02 Indemnification of Buyer. Seller and Parent shall, jointly and
severally, indemnify, defend and hold Buyer and its Affiliates and each of their
respective directors, officers, employees, agents, shareholders, members,
managers equity holders, partners, attorneys and agents (collectively, the
“Buyer Indemnified Parties”), harmless from and against (a) any and all Losses
incurred by any Buyer Indemnified Party arising out of, resulting from or
relating to any breach or inaccuracy of any of the representations and
warranties made by Seller, MR Holdings or Principal in this Agreement; (b) any
failure of Seller or its Affiliates to carry out, perform, satisfy and discharge
any of their respective covenants, agreements, undertakings, liabilities or
obligations under this Agreement or any of the agreements or instruments
delivered by Seller or any of its Affiliates pursuant to this Agreement (other
than the Management Agreement Amendments); (c) any Losses incurred by Buyer as a
result of Seller, Parent or Principal experiencing a Bankruptcy Event, including
but not limited to, Losses incurred as a result of a rejection of this Agreement
by any court of competent jurisdiction as a result of a Bankruptcy Event or any
third party claims alleging this Agreement constitutes a fraudulent conveyance
under applicable Laws; (d) any and all Losses incurred by any Buyer Indemnified
Party arising out of, resulting from or relating to any Retained Liabilities;
and (e) any-Pre-

52

--------------------------------------------------------------------------------

 

Closing Taxes. Notwithstanding anything in this Agreement to the contrary,
Principal shall have no obligation to indemnify any Buyer Indemnified Party
pursuant to this Section 9.02 or otherwise unless Principal is found to have
committed fraud.
     Section 9.03 Indemnification of Seller. Buyer shall indemnify, defend and
hold Seller, its Affiliates and each of their respective directors, officers,
employees, agents, shareholders, members, managers equity holders, partners,
attorneys and agents (collectively, the “Seller Indemnified Parties”) harmless
from and against (a) any and all Losses incurred by any Seller Indemnified Party
arising out of, resulting from or relating to any breach or non-fulfillment of
any covenant or agreement made by Buyer under this Agreement; (b) any breach or
inaccuracy in the representations and warranties of Buyer contained in this
Agreement; (c) any Post-Closing Taxes; and (d) the ownership of the Purchased
Assets from and after the Closing.
     Section 9.04 Procedure.
          (a) A Person seeking indemnification hereunder (an “Indemnified
Party”) shall give a written notice (a “Notice of Claim”) specifying the facts
constituting the basis for its claim and, the applicable provision(s) of this
Agreement upon which the Indemnified Party relies for its demand and a good
faith estimate of the amount of the claim, to the Person(s) from whom
indemnification is sought hereunder (an “Indemnifying Party”) prior to the
expiration of the applicable survival period set forth in Section 9.01.
          (b) If the claim is not a Third Party Claim, the Indemnifying Party
shall have thirty (30) calendar days after receipt of the Notice of Claim to
notify the Indemnified Party in writing that it disputes such claim. If no such
dispute is received by the Indemnified Party within thirty (30) calendar days
after receipt of the Notice of Claim, the claim shall be deemed to be allowed.
          (c) If an Indemnified Party is seeking indemnification because of a
claim asserted by any claimant other than an Indemnified Party (a “Third
Party”), the Indemnified Party shall deliver a Notice of Claim to the
Indemnifying Party promptly after receiving notice from such third party (and in
any event within fifteen (15) days after receiving notice from a Third Party);
provided, however, that the right of a Person to be indemnified hereunder in
respect of claims made or alleged by a Third Party (a “Third Party Claim”) shall
not be adversely affected by a failure to give such notice unless that, the
Indemnifying Party is prejudiced thereby. All notices given with respect to a
Third Party Claim shall describe with reasonable specificity the Third Party
Claim, the basis of the Third Party’s claim for indemnification and the amount
of Losses (or a reasonable estimate thereof). The Indemnifying Party shall have
the right, upon written notice to the Indemnified Party, to assume and conduct
the defense of the Third Party Claim with counsel reasonably acceptable to the
Indemnified Party; provided that (i) the Third Party Claim solely seeks (and
continues to solely seek) monetary damages (unless such Third Party Claims seeks
equitable relief against any Person other than a Buyer Indemnified Party), and
(ii) no conflict of interest arises that, under applicable principles of legal
ethics, in the reasonable judgment of counsel to the Indemnified Party, would
prohibit a single counsel from representing both the Indemnifying Party and the
Indemnified Party in connection with the defense of such Third Party Claim. The
Indemnified Party may thereafter participate in (but not control) the defense of
any such Third Party Claim with its own counsel at its own expense;

53

--------------------------------------------------------------------------------

 

provided, however, that if (A) any of the conditions described in clauses
(i)-(ii) above fails to occur or ceases to be satisfied, or (B) the Indemnifying
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim in the reasonable judgment of the Indemnified Party, then the
Indemnified Party may assume its own defense, and the Indemnifying Party will be
liable for all reasonable costs or expenses paid or incurred by the Indemnified
Party in connection with such defense. If the Indemnifying Party elects not to
defend the Indemnified Party with respect to such Third Party Claim, or fails to
notify the Indemnified Party of such election within a reasonable period of time
based on the particular circumstances of the Third Party Claim (which in any
event, shall not exceed ten (10) calendar days after receipt of the Notice of
Claim), the Indemnified Party shall have the right, at its option, to assume and
control defense of the matter at the expense of the Indemnifying Party, in such
manner as it may deem reasonably appropriate. The Indemnifying Party, if it has
assumed the defense of any Third Party Claim as provided in this
Section 9.04(c), may not, without the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld or delayed), consent to
a settlement of, or the entry of any judgment arising from, any such Third Party
Claim that (1) does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a complete release
from all liability in respect of such Third Party Claim, (2) grants any
injunctive or equitable relief or (3) may reasonably be expected to have a
material adverse effect on the Indemnified Party or any business thereof. The
Indemnified Party may not settle any Third Party Claim, the defense of which has
not been assumed by the Indemnifying Party or which is otherwise being defended
by the Indemnified Party in accordance with the terms of this Section 9.04(c),
without the prior written consent of the Indemnifying Party (which consent shall
not be unreasonably withheld or delayed). Subject to attorney-client privilege
and other confidentiality obligations, each of the Parties shall and shall cause
their Affiliates (and their respective officers, directors, employees,
consultants and agents) to, make available to the other(s) all relevant
information in his or its possession relating to any such Third Party Claim
which is being defended by the other Party and shall otherwise reasonably
cooperate in the defense thereof. The Indemnifying Party shall be subrogated to
the rights and claims of the Indemnified Party, if any, with respect to any
Losses paid by the Indemnifying Party under this Article IX.
          (d) For purposes of determining whether there has been an inaccuracy
in, misrepresentation of or breach of, any representation or warranty contained
in this Agreement, and for purposes of calculating any Losses resulting
therefrom, the terms “material,” “materiality,” “material adverse effect” or
similar qualifications contained in such representations and warranties shall be
disregarded.
     Section 9.05 Payment. A claim for indemnification under this Article IX
shall be deemed finally determined upon the occurrence of any of the following:
(a) it is deemed allowed under Section 9.04(a); (b) entry of any final judgment
or award rendered by a court of competent jurisdiction; (c) full execution of a
settlement of a Third Party Claim executed by both the Indemnified Party and the
Indemnifying Party or (d) the execution by the Indemnifying Party and
Indemnified Party of a mutually binding settlement agreement with respect to a
claim. Subject to the limitations on indemnification set forth in this
Article IX, the Indemnifying Party shall be required to pay all of the sums so
owing in respect of such finally determined claim to the Indemnified Party by
wire transfer of immediately available funds to an account designated by the
Indemnified Party within ten (10) Business Days after such final determination;
provided,

54

--------------------------------------------------------------------------------

 

however, that, on or prior to the second anniversary of the Closing Date, the
Indemnity Holdback Amount shall be reduced by the amount of such claim in
accordance with Section 3.02(b), and if the Indemnity Holdback Amount does not
satisfy the full amount of such claim, Seller shall pay such difference to the
applicable Buyer Indemnified Party.
     Section 9.06 Limitations on Indemnification.
          (a) Neither Seller, MR Holdings nor Parent shall be required to
provide indemnification for claims made solely under Section 9.02(a) unless the
Indemnified Party’s Losses for all such claim(s) shall exceed Twenty Five
Thousand Dollars ($25,000.00) in the aggregate (the “Basket”) (at which point
Seller, MR Holdings and Parent will be obligated to indemnify the Indemnified
Party’s Losses from the first dollar; provided, however, that neither Seller, MR
Holdings nor Parent will have an obligation to indemnify the Indemnified Party
for Losses with respect to individual Losses of less than Five Thousand Dollars
($5,000.00) (the “Threshold”) unless more than one Indemnified Party’s Losses,
each less than the Threshold, arises from the same or similar facts or
circumstances and such Indemnified Party’s Losses collectively exceed the
Threshold, in which case, all such Indemnified Party’s Losses shall be
indemnified by Seller, MR Holdings and Parent pursuant to the terms herein. In
no event shall Seller’s, MR Holdings’ and Parent’s aggregate liability with
respect to all claims of indemnification made solely under Section 9.02(a)
exceed Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000.00) in the
aggregate (the “Cap”). Notwithstanding the foregoing, the Parties hereto
acknowledge and agree that any Losses arising out of, resulting from or relating
to any inaccuracy in, misrepresentation of, or breach of the representations and
warranties contained in Sections 5.01, 5.02, 5.03, 5.05, 5.07(a), 5.14(b), and
5.22 shall not be subject to the limitations set forth in this Section 9.06.
Notwithstanding anything in this Agreement to the contrary, the limitations set
forth herein shall not apply in the event that Seller, MR Holdings, Parent or
Principal is found to have committed fraud or intentional misrepresentation.
Notwithstanding anything to the contrary contained in this Agreement, no Party
shall have any right to indemnification under this Article IX with respect to
any Losses or alleged Losses if such matter was determined as part of the
proration adjustment procedures set forth in Section 3.03.
          (b) Buyer shall not be required to provide indemnification for claims
made solely under Section 9.03(b) unless the Indemnified Party’s Losses for all
such claim(s) shall exceed in the aggregate the Basket (at which point Buyer
will be obligated to indemnify the Indemnified Party’s Losses from the first
dollar; provided, however, that Buyer will not have an obligation to indemnify
the Indemnified Party for Losses with respect to individual Losses of less than
the Threshold unless more than one Indemnified Party’s Losses, each less than
the Threshold, arises from the same or similar facts or circumstances and such
Indemnified Party’s Losses collectively exceed the Threshold, in which case, all
such Indemnified Party’s Losses shall be indemnified by Buyer pursuant to the
terms herein. In no event shall Buyer’s aggregate liability with respect to all
claims of indemnification made solely under Section 9.03(b) exceed the Cap.
Notwithstanding the foregoing, the Parties hereto acknowledge and agree that any
Losses arising out of, resulting from or relating to any inaccuracy in,
misrepresentation of, or breach of the representations and warranties contained
in Sections 6.01, 6.02, 6.04 and 6.05 shall not be subject to the limitations
set forth in this Section 9.06. Notwithstanding anything in this

55

--------------------------------------------------------------------------------

 

Agreement to the contrary, the limitations set forth herein shall not apply in
the event that Buyer is found to have committed fraud or intentional
misrepresentation.
     Section 9.07 Reductions for Insurance Proceeds and Other Recoveries. The
amount of Losses that any Indemnifying Party is or may be required to pay to any
Indemnified Party pursuant to this Article IX shall be reduced by any
(a) insurance proceeds or other amounts actually recovered from third parties by
or on behalf of such Indemnified Party, in respect of the related Losses, less
any reasonable expenses incurred by the Indemnified Party to obtain such
insurance or other proceeds and less any increase in premiums for insurance
related to such Loss and (b) Tax benefits actually received by any Indemnified
Party arising from the deductibility of any such Losses net of any Tax costs
actually suffered by such party as a result of the receipt of any payments
pursuant to this Article IX (collectively, “Recoverable Proceeds”). The
existence of a claim by an Indemnified Party for monies from an insurer or
against a third party in respect of any Losses shall not, however, delay any
payment pursuant to the indemnification provisions contained herein and
otherwise determined to be due and owing by an Indemnifying Party. Rather, the
Indemnifying Party shall make payment in full of the amount determined to be due
and owing by it against an assignment by the Indemnified Party to the
Indemnifying Party of the entire claim of the Indemnified Party for the
insurance proceeds or against such third party, and thereafter, the Indemnified
Party shall refund all Recoverable Proceeds to the Indemnifying Party promptly
upon receipt. Notwithstanding any other provisions of this Agreement, it is the
intention of the Parties that no insurer or any other third party shall be
(a) entitled to a benefit it would not be entitled to receive in the absence of
the foregoing indemnification provisions, or (b) relieved of the responsibility
to pay any claims for which it is obligated. If an Indemnified Party has
received the payment required by this Agreement from an Indemnifying Party in
respect of any Losses and later receives insurance proceeds or other amounts in
respect of such Losses, then such Indemnified Party shall hold such insurance
proceeds or other amounts in trust for the benefit of the Indemnifying Party and
shall pay to the Indemnifying Party, as promptly as practicable after receipt, a
sum equal to the amount of such insurance proceeds or other amounts received, up
to the aggregate amount of any payments received from the Indemnifying Party
pursuant to this Agreement in respect of such Losses (or, if there is more than
one Indemnifying Party, the Indemnified Party shall pay each Indemnifying Party,
its proportionate share (based on payments received from the Indemnifying
Parties of such insurance proceeds)).
     Section 9.08 Limits on Punitive Damages. Notwithstanding any other terms in
this Agreement, except in the case of a Third Party Claim or claims for fraud or
intentional misrepresentation or knowing and intentional breach of this
Agreement; provided, however, that any negligent breach, inadvertent breach or
immaterial breach hereunder shall not deemed to be a knowing and intentional
breach for purposes of this Section 9.08. Losses shall not include special,
incidental, indirect, consequential, punitive or exemplary damages or claims for
diminution of value, including consequential damages resulting from business
interruption, lost Tax or income Tax benefits, increased insurance premiums or
lost profits or other Losses based upon any multiplier of Seller’s earnings,
including earnings before interest, depreciation or amortization or any other
metric.
     Section 9.09 Sole and Exclusive Remedy. The remedies provided in this
Article IX shall be the sole and exclusive remedies of the Parties for any and
all Losses arising out of, relating to, or resulting from, any breach of any of
the representations, warranties, covenants and

56

--------------------------------------------------------------------------------

 

agreements contained in this Agreement, any other Transaction Document, or
otherwise relating to the transactions contemplated by this Agreement or the
other Transaction Documents; provided, however, that nothing herein is intended
to waive or otherwise limit any claims for Losses arising out of, relating to,
or resulting from fraud or intentional misrepresentation.
ARTICLE X
MISCELLANEOUS
     Section 10.01 Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement shall take all such reasonable necessary
action to (a) execute and deliver to each other such other documents and (b) do
such other acts and things as a party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in this
Agreement.
     Section 10.02 Expenses. Each of the Parties shall bear its expenses
incurred or to be incurred in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents.
     Section 10.03 No Assignment; Successors and Assigns. The rights and
obligations of the Parties under this Agreement may not be assigned without the
prior written consent of the other Parties to this Agreement; provided that
Buyer may assign its rights under this Agreement to a wholly-owned Subsidiary of
Buyer, but such assignment shall not relieve Buyer of its obligations or
liabilities under this Agreement. Subject to the preceding sentence and, except
as otherwise expressly provided herein, this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.
     Section 10.04 Headings. The headings contained in this Agreement are
included for purposes of convenience only, and will not affect the meaning or
interpretation of this Agreement.
     Section 10.05 Entire Agreement, Integration, Modification and Waiver. This
Agreement (including all Exhibits and Schedules attached hereto which are hereby
incorporated herein and made a part of this Agreement as if set forth in full
herein), together with the other Transaction Documents and the certificates or
other instruments delivered hereunder or thereunder, constitutes the entire
agreement among the Parties with respect to the subject matter hereof and
supersedes all prior understandings of the Parties with respect to the subject
matter hereof. No supplement, modification or amendment of this Agreement will
be binding unless executed in writing by the Parties. No waiver of any of the
provisions of this Agreement will be deemed to be or shall constitute a
continuing waiver. No waiver will be binding unless executed in writing by the
Party making the waiver.
     Section 10.06 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement must be construed as
if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any

57

--------------------------------------------------------------------------------

 

of the provisions of this Agreement. Any reference to any federal, state, local
or foreign statute or Law will be deemed also to refer to all rules and
regulations promulgated under such Law, unless the context requires otherwise.
Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation,” whether or not they are in fact followed by those words or words of
like import. Terms defined in the singular shall include the plural and vice
versa. The words “hereof,” “herein” and “hereunder” and words of like import
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to Articles, Sections,
Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this
Agreement unless otherwise specified.
     Section 10.07 Severability. If any provision of this Agreement or the
application of any provision of this Agreement to any Party or circumstance is,
to any extent, adjudged invalid or unenforceable, the application of the
remainder of such provision to such Party or circumstance, the application of
such provision to other parties or circumstances, and the application of the
remainder of this Agreement will not be affected thereby.
     Section 10.08 No Third Party Beneficiaries. This Agreement will not confer
any rights or remedies upon any Person (including employees or contractors of
Seller) other than the Parties, their respective successors and permitted
assigns, each of the Buyer Indemnified Parties under Section 9.02 and Seller
Indemnified Parties under Section 9.03.
     Section 10.09 Notices. All notices and other communications required or
permitted under this Agreement must be in writing and will be deemed to have
been duly given when delivered in person, one (1) Business Day after having been
dispatched by a nationally recognized overnight courier service or three
(3) Business Days after having been deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail, or
nationally-recognized overnight courier, to the appropriate Party at the address
or facsimile number specified below:
     If to MR Holdings, Seller, Parent, Principal to:
c/o Forward Capital, LLC
10467 White Granite Drive, Suite 300
Oakton, VA 22124
Attention: Christopher Finlay
with a copy (which shall not constitute notice) to:
Jenner & Block LLP
353 N. Clark Street
Chicago, IL 60654
Attention: Edward G. Quinlisk and Steven R. Meier

58

--------------------------------------------------------------------------------

 

     If to Buyer, to:
c/o Grubb & Ellis Realty Investors, LLC
1606 Santa Rosa Rd., Suite 109, Richmond, VA 23229
Attention: Jeffrey A. Gregor, Esq.
     with a copy to:
Hunton & Williams LLP
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-8219
Attention: Daniel M. LeBey, Esq.
     Any Party may change its address for the purposes of this Section 10.09 by
giving notice as provided in this Agreement.
     Section 10.10 Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the Laws of the Commonwealth of
Virginia without regard to principles of conflicts of Law.
     Section 10.11 Forum Selection; Consent to Service of Process; Waiver of
Jury Trial. Each Party hereby irrevocably (a) submits to the exclusive
jurisdiction of any state court sitting in Alexandria, Virginia or any federal
court sitting in the Eastern District of Virginia in any Action arising out of
or relating to this Agreement, (b) agrees that all claims in respect of such
Action may be heard and determined only in any such court, (c) hereby waives any
claim of inconvenient forum or other challenge to venue in such court and
(d) agrees not to bring any Action arising out of or relating to this Agreement
in any other court. Seller agrees to cause Seller Indemnified Parties, and Buyer
agrees to cause Buyer Indemnified Parties, to comply with the foregoing as
though such Indemnified Party was a Party to this Agreement. EACH OF THE PARTIES
HEREBY IRREVOCABLY WAIVES, AND SHALL CAUSE ITS INDEMNIFIED PARTIES TO
IRREVOCABLY WAIVE, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS AND/OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
     Section 10.12 Maintenance of and Access to Records. Buyer and Seller agree
that they shall preserve the records held by each of them relating to the
Business for a period of seven (7) years commencing on the Closing Date. Buyer
and Seller agree that each shall make such records and personnel available to
the other as may be reasonably required in connection with, among other things,
any insurance claims by, legal proceedings against (other than legal proceedings
by MR Holdings against Buyer or Seller or vice versa) or governmental
investigations involving any Party or in order to enable any Party to comply
with their respective obligations under this Agreement and the other Transaction
Documents; provided that to the extent that disclosing any such information
would reasonably be expected to constitute a waiver of attorney-client, work
product or other privilege with respect thereto, the Parties shall take all
commercially reasonable action to prevent a waiver of any such privilege,
including entering into an appropriate joint defense agreement in connection
with affording access to such information.

59

--------------------------------------------------------------------------------

 

The access provided pursuant to this Section 10.12 shall be subject to such
additional confidentiality provisions as the disclosing Party may reasonably
deem necessary. If any Party wishes to destroy (or permit to be destroyed) such
records prior to the end of the seven-year period described above, such Party
shall first give 90 days prior written notice to the other and such other Party
will have the right at its option and expense, upon prior written notice given
to such Party within that 90 day period, to take possession of the records
within 180 days after the date of such notice.
     Section 10.13 Counterparts and Electronic Signatures. This Agreement may be
executed in one or more counterparts, and counterparts may be exchanged by
electronic transmission, each of which will be deemed an original, but all of
which together constitute one and the same instrument.
     Section 10.14 Specific Performance. Seller, Parent and MR Holdings, on the
one hand, and Buyer, on the other hand, acknowledge and agree that a breach of
this Agreement would cause irreparable damage to the other Parties hereto and
that the other Parties hereto will not have an adequate remedy at Law.
Therefore, the obligations of the Parties under this Agreement, including
Seller’s obligation to sell the Purchased Assets to Buyer, shall be enforceable
by a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any Party may
have under this Agreement or otherwise.
[Signatures on the following page.]

60

--------------------------------------------------------------------------------

 

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

            BUYER:

MR PROPERTY MANAGEMENT, LLC
      By: Grubb & Ellis Apartment REIT Holdings, L.P., its sole member    

            By: Grubb & Ellis Apartment REIT, Inc., its general partner    

            By:  /s/ Stanley J. Olander, Jr.     Name:   Stanley J. Olander,
Jr.      Title:   Chief Executive Officer     

            PARENT(solely for purposes of Article IX):

FORWARD CAPITAL, LLC
      By:   /s/ Christopher C. Finlay     Name:   Christopher C. Finlay    
Title:   Manager       MR HOLDINGS:

MR HOLDINGS, LLC
      By:   /s/ Christopher C. Finlay     Name:   Christopher C. Finlay    
Title:   Manager       SELLER:

MISSION RESIDENTIAL MANAGEMENT, LLC
      By:   /s/ Christopher C. Finlay     Name:   Christopher C. Finlay    
Title:   Manager       PRINCIPAL (solely for purposes Article V):
      /s/ Christopher C. Finlay     Christopher C. Finlay             

[Asset Purchase Agreement]

61