Exhibit 10.2

 

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

 

Between

 

AR I BORROWER, LLC

a Delaware limited liability company

 

(“Seller”)

 

and

 

BLUEROCK REAL ESTATE, L.L.C.

a Delaware limited liability company

(as the “Purchaser”)

 

Covering

 

Real property located at 10320 Grobie Way, Charlotte, North Carolina 28216,

known as Ashton Reserve at Northlake Phase I

 

 

 

 

PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS

 

This PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this “Agreement”) is
entered into as of May 12, 2015 (“Agreement Date”), by and between AR I
BORROWER, LLC, a Delaware limited liability company (“Seller”) and BLUEROCK REAL
ESTATE, L.L.C., a Delaware limited liability company (“Purchaser”), and is
joined in as to certain matters by AR OWNER, LLC, a Delaware limited liability
company (“AR Owner”).

 

RECITALS

 

A.           Seller is the fee owner of that certain real property located at
10320 Grobie Way, Charlotte, Mecklenburg County, North Carolina 28216, known as
Ashton Reserve at Northlake Phase I, as more particularly described in Exhibit A
attached hereto (the “Phase I Land”) and made a part hereof, and the
improvements (the “Phase I Improvements”) thereon. The Phase I Land and the
Phase I Improvements are sometimes hereafter referred to collectively as the
“Phase I Real Property.”

 

B.           Seller is also the owner of the personal property more particularly
described in Exhibit B attached hereto and made a part hereof (any therein being
hereinafter collectively referred to as the “Phase I Personal Property”).

 

C.           Seller is also the landlord or lessor in, to and under the
agreements listed on the rent roll attached hereto as Exhibit C and made a part
hereof (the “Phase I Rent Roll”), or any such agreements hereafter executed by
Seller in accordance with the terms of this Agreement, pursuant to which any
portion of the Phase I Land or Phase I Improvements is used or occupied by
anyone other than Seller (the property described in this clause (C) being herein
referred to collectively as the “Phase I Leases”).

 

D.           Seller is also the holder of, or the Phase I Property benefits
from, various intangible rights related to the Phase I Real Property and Phase I
Personal Property, including books, records, tenant files, plans,
specifications, diagrams, building permits, certificates of occupancy,
warranties, guaranties and bonds and licenses and permits relating to the
ownership and operation of the Phase I Real Property and Phase I Personal
Property (collectively, the “Phase I Plans, Licenses and Permits”).

 

D.           Seller is also the obligee under certain service, supply,
maintenance, and like agreements affecting the Phase I Property, which
agreements are listed and described on Exhibit D attached hereto (collectively,
the “Phase I Contracts”) and made a part hereof. The Phase I Real Property, the
Phase I Personal Property, the Phase I Leases, the Phase I Plans, Licenses and
Permits and the Phase I Contracts are sometimes hereafter referred to
collectively as the “Phase I Property.”

 

E.           Seller is a party to a loan with SunLife Assurance Company of
Canada, a Canadian corporation (“Existing Lender”), evidenced by a Promissory
Note dated November 22, 2013 (the “Note”) given by Seller to the order of
Existing Lender, which is secured by that certain Deed of Trust, Security
Agreement and Fixture Filing dated of even date therewith (the “Trust Deed”),
used to finance Seller’s acquisition of the Phase I Property (the “Existing
Loan”).

 

 

 

 

F.           AR Owner, the sole member of Seller, is the purchaser under that
certain Purchase and Sale Agreement dated October 31, 2013, as amended (the
“Phase II Purchase Contract”) with Northlake Investors 288, LLC, an Alabama
limited liability company, as seller (the “Phase II Seller”) pursuant to which
AR Owner has contracted to acquire that certain real property and improvements
constructed thereon located immediately adjacent to the Phase I Property and
known as Ashton Reserve at Northlake Phase II (the “Phase II Property”).

 

G.           Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser, all of the Phase I Property, in accordance with the terms and
conditions of this Agreement. In connection with such sale, AR Owner has also
agreed to assign to Purchaser or Purchaser’s designee AR Owner’s rights under
the Phase II Purchase Contract, on and subject to the terms and conditions of
this Agreement.

 

AGREEMENT

 

Now, therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

 

1.           PURCHASE AND SALE OF PHASE I PROPERTY.

 

Subject to the terms and conditions herein set forth, Seller agrees that it will
sell to Purchaser, and Purchaser agrees that it will acquire from Seller, on the
Closing Date (as defined below), the Phase I Property. The purchase price for
the Phase I Property shall be equal to Forty-Four Million Seven Hundred Fifty
Thousand and 00/100 Dollars ($44,750,000.00), minus the Existing Loan Balance,
in cash (the “Purchase Price”), payable in the manner set forth in Section 2
below.

 

2.           PURCHASE PRICE; DEPOSIT; OPENING OF ESCROW

 

The Purchase Price shall be paid as follows:

 

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2.1           Deposit. No later than three (3) business days after the Agreement
Date, Purchaser shall deposit with Calloway Title & Escrow, L.L.C. (with the
address set forth in Section 14.3); attention: S. Marcus Calloway (“Escrow
Holder”) in cash or other immediately available funds the sum of Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) (the “Initial Deposit”). Not
later than the expiration of the Due Diligence Period (as hereinafter defined),
if Purchaser provides Seller with the Notice to Proceed described in Section
5.3, Purchaser shall deposit with Escrow Holder in cash or other immediately
available funds an additional deposit of Five Hundred Thousand and 00/100
Dollars ($500,000.00) (the “Second Deposit”). Escrow Holder shall place the
Initial Deposit (and the Second Deposit, if made) into a segregated interest
bearing account, and all interest thereon shall accrue for the benefit of the
Purchaser. For purposes of this Agreement, “Deposit” means the Initial Deposit
and, if and when paid, the Second Deposit. Notwithstanding anything to the
contrary in this Agreement, the Initial Deposit shall be refundable to Purchaser
for any reason prior to the expiration of the Due Diligence Period; provided,
however, that after the expiration of the Due Diligence Period, the Deposit
shall only be refundable to Purchaser in the event of (x) the failure of any of
Purchaser’s Conditions Precedent to Closing set forth in Section 8, (y) a
default by Seller or AR Owner hereunder, or (z) in connection with any other
express provision of this Agreement. All interest earned on the Deposit shall
not become part of the Deposit but rather shall be paid to Purchaser as it
directs.

 

2.2           Purchase Price. At Closing the Purchaser shall deposit with Escrow
Holder the full amount of the Purchase Price, as such amount may be increased or
decreased by prorations, credits and other adjustments as herein provided, in
cash, by wire transfer or in other immediately available funds no later than the
Closing Date, and, in consideration of the AR Owner’s delivery of the Phase II
Purchase Contract Assignment, including, without limitation, AR Owner's right,
title and interest in and to the $750,000 earnest money deposit under the Phase
II Contract, Purchaser shall pay to AR Holder by causing Escrow Holder to
release to AR Owner the Purchaser's interest in the Deposit. For avoidance of
doubt, the Deposit shall not be credited in favor of Purchaser against the
Purchase Price at Closing but shall be paid to Seller by Escrow Holder at
Closing (i.e. in addition to the Purchase Price) as contemplated in the manner
above.

 

2.3           Opening of Escrow. Concurrently with the mutual execution of this
Agreement (or as soon thereafter as reasonably possible) an escrow (“Escrow”)
shall be established with Escrow Holder. For purposes of this Agreement, the
“Opening of Escrow” shall mean for all purposes the Agreement Date. A fully
executed copy of this Agreement shall serve as escrow instructions to Escrow
Holder, and Escrow Holder shall be and is hereby authorized and instructed to
deliver pursuant to the terms of this Agreement the documents and monies to be
deposited into the Escrow.

 

3.          EXISTING LENDER APPROVAL OF SALE.

 

3.1           Existing Loan. For purposes of this Agreement, the principal
balance owing Existing Lender pursuant to the Note as of the Closing Date is
hereafter referred to as the “Existing Loan Balance.”

  

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3.2           Existing Loan Approval Contingency.

 

3.2.1       Consent Requirements; Selling Parties Release. Under the terms of
the Trust Deed and the other documents relating to the Existing Loan
(collectively, the “Existing Loan Documents”), Existing Lender’s consent to (i)
the sale of the Phase I Property to Purchaser, and (ii) the assumption of the
Existing Loan by Purchaser (collectively, the “Consent Requirements”) must be
obtained prior to Closing or Seller will be in default under the Trust Deed.
Additionally, in connection with the transaction that will be permitted by the
Consent Requirements, Seller requires that Existing Lender consent to the
release of Seller (and those acting and/or signing on behalf of Seller,
including applicable guarantors) from all liabilities relating to the Existing
Loan arising out of acts or omissions first occurring from and after the Closing
(the “Selling Parties Release”). Obtaining Existing Lender’s approval of the
Consent Requirements and the Selling Parties Release is hereinafter referred to
as the “Existing Loan Approval Contingency.”

 

3.2.2       Existing Loan Document Modifications. Immediately upon the mutual
execution of this Agreement, Purchaser and Seller shall together use diligent
and commercially reasonable efforts to secure Existing Lender’s approval with
respect to the Consent Requirements and the Selling Parties Release; provided,
however, that Seller acknowledges and agrees that Purchaser may require, in
connection with any such Existing Lender approval, modifications of the Trust
Deed and related Existing Loan Documents (the “Existing Loan Document
Modifications”) specifically to permit future intra-party transfers among the
parent entities of Purchaser to allow for, inter alia, compliance with certain
REIT-related requirements. Seller shall have the right to review and approve
Purchaser’s proposed Existing Loan Document Modifications (“Purchaser’s Proposed
Existing Loan Modifications”) as follows:

 

(a) Purchaser shall provide Seller with Purchaser’s Proposed Existing Loan
Document Modifications within five (5) days after the Agreement Date;

 

(b) Seller may, acting in good faith, within five (5) days thereafter reject
such Purchaser’s Proposed Existing Loan Modifications; provided, however, that
Seller shall accept Purchaser’s Proposed Existing Loan Modifications if Seller
has no reasonable belief that such terms will not be accepted by Existing Lender
in all material respects; and

 

(c) if Seller, in good faith, rejects Purchaser’s Proposed Existing Loan
Modifications within such five (5) day period, then either Purchaser or Seller
may terminate this Agreement and the Escrow by written notice to the other
within five (5) days after the preceding five (5) day period, whereupon the
Deposit shall be returned to Purchaser and the parties shall have no further
obligations hereunder other than the “Surviving Obligations” (as hereinafter
defined) and each party shall bear its own costs in connection with the
transactions contemplated by this Agreement.

 

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3.2.3      Approved Existing Loan Document Modifications—Purchaser Termination
Right.

 

(a)          If the Existing Loan Document Modifications, as approved by
Existing Lender (the “Approved Existing Loan Modifications”), are materially
consistent with Purchaser’s Proposed Existing Loan Modifications as actually
submitted by Purchaser to Existing Lender (the “Pro Forma Existing Loan Document
Modifications”) and do not contain any Material Adverse Modifications, then
Purchaser shall approve the Approved Existing Loan Modifications. Purchaser
understands that as part of the Existing Loan Approval Contingency, Existing
Lender will require a creditworthy principal or affiliate of Purchaser to sign a
guaranty of the non-recourse carveouts set forth in the Note, including but not
limited to paragraph 12 of the Note, and possibly of certain environmental
(hazardous materials) indemnity obligations, and Purchaser agrees to cause its
principal or affiliate to sign such documents provided such documents are
commercially reasonable in nature and do not otherwise contain any Material
Adverse Modifications.

 

(b)          If the Approved Existing Loan Modifications contain any Material
Adverse Modifications, or otherwise deviate from the Pro Forma Existing Loan
Document Modifications in such a way as to have a material adverse impact on the
overall transaction contemplated by this Agreement, the Purchaser or the
proposed new guarantors or indemnitors for the Existing Loan, then Purchaser
shall have the right in its reasonable discretion to terminate this Agreement
upon written notice to Seller thereof, whereupon the Deposit shall be returned
to Purchaser and the parties shall thereafter have no further obligations
hereunder other than the Surviving Obligations.

 

(c)          For purposes of this Agreement “Material Adverse Modifications”
shall mean any of the following: (i) an increase in the interest rate currently
stated in the Note, (ii) a requirement to accelerate the pay down of the
principal balance of the Existing Loan other than as currently stated in the
Existing Loan Documents or an adverse adjustment of the maturity date or the
amortization period thereunder, (iii) a requirement that the Purchaser pay or
establish material escrows or expenditures other than as currently stated in the
Existing Loan Documents, and/or (iv) a requirement that the Purchaser’s
non-recourse guarantor agree to recourse provisions other than those currently
stated in the Existing Loan Documents. As used in this Section 3.2.3, “currently
stated in the Existing Loan Documents” shall mean as such loan terms appear in
the Existing Loan Documents, and/or any modified terms as may be agreed by
Seller, Purchaser and Existing Lender prior to the expiration of the Due
Diligence Period to be effective following the assumption of the Existing Loan.

 

3.2.4     Seller Cooperation with Purchaser; Purchaser Negotiations with
Existing Lender. Seller agrees to reasonably assist and cooperate with Purchaser
in connection with the Existing Loan Approval Contingency, including the
execution and delivery of all assumption-related documents to the extent
required by Section 7.2 and to the extent such documents include the Selling
Parties Release; provided, however, nothing herein shall obligate Purchaser to
pay or reimburse Seller for Seller’s legal fees that may be incurred in the
course of such cooperation. Purchaser shall have the right to negotiate directly
with Existing Lender concerning the Existing Loan Approval Contingency and the
terms and conditions of any and all documents associated with or required in
conjunction with the Existing Loan Approval Contingency (collectively, the
“Existing Loan Assumption Documents”), provided that same incorporate the
Selling Parties Release.

 

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3.2.5      Existing Loan Approval Contingency Deadline. If the Existing Loan
Approval Contingency is not satisfied within 75 days after the date of this
Agreement (the “Existing Loan Approval Contingency Deadline”), then either
Purchaser or Seller shall have the right to terminate this Agreement, in which
event the Deposit shall be fully refunded to Purchaser and the parties shall
have no further obligations to each other, except with respect to the Surviving
Obligations.

 

3.2.6.     [Intentionally Deleted].

 

3.2.7      Surviving Obligations. As used in this Agreement, the “Surviving
Obligations” shall mean all indemnity and related obligations under this
Agreement and the provisions of Sections 3.2, 5.2, 6.3, 10.2, 10.4, 10.5, 10.8,
10.10, 11.1 through 11.5 (inclusive), 12.1, 12.3, 13.1 through 13.4 (inclusive),
14.11, 14.13, 14.18, 14.19, 14.20 and 14.21.

 

3.3         Due Diligence for Selling Parties Release. Purchaser agrees to
permit Seller to use Purchaser’s Phase I environmental site assessment for
purposes of obtaining the Selling Parties Release, and shall have, at Seller’s
prior written request, Purchaser's Phase I environmental site assessment
certified to Seller. Purchaser shall cooperate as needed to facilitate same.

 

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4.          TITLE MATTERS.

 

4.1           Title Policy. Purchaser and AR Owner shall instruct Escrow Holder
to expeditiously deliver to Purchaser and Seller (a) a copy of Seller’s existing
title policy (the “Existing Title Policy”) in regard to the Phase I Property;
(b) a dated down title report covering the Phase I Real Property (“Phase I
Prelim”), (c) copies of all exceptions to title reflected by said Existing Title
Policy and Phase I Prelim (“Phase I Title Exceptions”), (d) Seller’s existing
survey of the Phase I Real Property (the “Phase I Survey”, and together with the
Phase I Prelim and the Phase I Title Exceptions, the “Phase I Title Documents”),
(e) a copy of the current title commitment covering the Phase II Property
(“Phase II Commitment”), (f) copies of all exceptions to title reflected by said
Phase II Commitment (“Phase II Title Exceptions”), and (g) AR Owner’s existing
survey of the Phase II Property (the “Phase II Survey”, and together with the
Phase II Commitment and the Phase II Title Exceptions, the “Phase II Title
Documents” and, together with the Phase I Title Documents, the “Title
Documents”). Purchaser acknowledges that (x) title to the Phase I Property is,
and will, subject to the objection rights set forth below, remain subject to all
Phase I Title Exceptions reflected in the Existing Title Policy, including each
item shown in the Phase I Survey, and the Title Company’s standard exceptions
and exclusions (which are, unless constituting a Disapproved Exception,
collectively referred to herein as “Phase I Permitted Exceptions”); provided,
however, that delinquent real property taxes (if any) and other monetary
judgments, liens and encumbrances to title with respect to the Phase I Property
(other than those relating to the Existing Loan) shall be paid by Seller at the
Closing, regardless of whether Purchaser objects to same as a Disapproved
Exception and (y) title to the Phase II Property is, and will, subject to the
objection rights set forth below, remain subject to all Phase II Title
Exceptions reflected in the Phase II Title Commitment, including each item shown
in the Phase II Survey, and the Title Company’s standard exceptions and
exclusions (which are, unless constituting a Disapproved Exception, collectively
referred to herein as “Phase II Permitted Exceptions”). Purchaser shall notify
Seller and AR Owner no later than 5:00 p.m. (Eastern time) on May 15, 2015 (the
“Title Deadline”) in writing of any Title Exceptions identified in the Title
Documents which Purchaser disapproves (collectively, the “Disapproved
Exceptions”). Seller and/or AR Owner, as applicable shall notify Purchaser,
within five (5) days following receipt of Purchaser’s notice of any Disapproved
Exceptions, whether (a) Seller will cure any such Disapproved Exceptions with
respect to the Phase I Property and (b) AR Owner is able to get the Phase II
Seller to agree to cure any Disapproved Exceptions with respect to the Phase II
Property. In the event that Seller or AR Owner does not provide written notice
of such party’s election to cure (or for which no commitment from the Phase II
Seller to cure has been obtained, as applicable) all the Disapproved Exceptions
in such five (5) day period, Purchaser may either elect to (a) accept the Phase
I Property and the Phase II Property subject to the Disapproved Exceptions that
Seller and/or AR Owner has not elected to cure (or obtained the Phase II
Seller’s agreement to cure) and proceed to Closing without any reduction in the
Purchase Price, (b) terminate this Agreement, in which event Purchaser shall be
entitled to the return of the Deposit or (c) if the Disapproved Exceptions
relate to the Phase II Property and, under the Phase II Purchase Contract, the
Phase II Seller has the obligation to cure such Disapproved Exceptions, request
that AR Owner exercise its default rights under the Phase II Purchase Contract,
including, if applicable, to terminate the Phase II Purchase Contract (in which
event the terms of Section 7.4 hereof shall apply). Seller, AR Owner and
Purchaser hereby agree that, with the exception of the Existing Loan Documents
associated with the Existing Loan, the existence of any mortgages, deeds of
trust, liens or monetary encumbrances affecting the Phase I Property, the Phase
II Property or any portion thereof, including, without limitation, judgment
liens and mechanic’s liens not to exceed $100,000.00 in the aggregate (provided,
however, in the event any judgment lien or mechanic's lien arises from the
willful misconduct of Seller or AR Owner, then the aforementioned $100,000.00
limitation shall be inapplicable) (collectively, “Monetary Encumbrances”) shall
be deemed to be Disapproved Exceptions without the necessity of the Purchaser
otherwise expressly objecting thereto, and Seller and/or AR Owner shall be
required to discharge or cause the Phase II Seller to agree to discharge all
Monetary Encumbrances at or prior to the Closing Date; provided, however, that
nothing herein shall require AR Owner to have the Phase II Seller actually cure
any such Disapproved Exceptions at any time earlier than as required under the
Phase II Purchase Contract. Finally, if any new Title Exceptions (including any
matters first appearing on any update of the Phase I Survey (which update will
be ordered by Seller within seven (7) days after the Agreement Date) or the
Phase II Survey) first arise or are first identified to Purchaser following the
Title Deadline (but in all events prior to the Closing of the issuance and sale
of the New AR Owner Interests), Purchaser shall nevertheless have the right to
object to such additional Disapproved Exceptions, in which event the procedure
for Seller’s and/or AR Owner’s responses and Purchaser’s elections set forth
above shall again be applicable as to such Title Exceptions, including
Purchaser’s right to terminate this Agreement and receive the return of the
Deposit.

 

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4.2          Title Policy. At the Closing, the Title Company shall issue a new
title insurance policy (“New Owner Policy”) in the amount of $44,750,000,
showing fee title to the Phase I Real Property as vested in Purchaser, subject
to the Phase I Permitted Exceptions. Title Company shall further issue a date
down/modification endorsement (as required by Existing Lender) with respect to
the existing title policy issued to Existing Lender (“Existing Loan Policy”)
with respect to the Phase I Property; provided, however, if the Title Company is
unable to issue such “date down” endorsement to the Existing Loan Policy, then
Purchaser may, alternatively, select an alternate title company to issue a new
title insurance policy to Existing Lender for the Existing Loan (the “New Loan
Policy” and, together with the New Owner Policy, each a “New Title Policy” and,
collectively, the “New Title Policies”). All New Title Policies may, at
Purchaser’s election, be issued through Madison Title Insurance Agency with a
nationally recognized title firm, and, with regard to the Phase I Property only,
on Chicago Title Insurance Company paper.

 

5.          DELIVERY OF INFORMATION.

 

5.1           Due Diligence Period. During the pendency of Escrow, Purchaser,
upon twenty-four (24) hours’ prior written notice to Seller, shall have the
right during normal business hours: to make physical inspections of the Phase I
Property and, subject to the terms of the Phase II Purchase Contract, the
Phase II Property; to review the books and records of Seller (and those relating
to the ownership and operation of the Phase I Property and the Phase II
Property); and to interview the management and leasing staff, which interviews
will be coordinated by AR Developer, LLC, the managing member of AR Owner (and
representatives of AR Developer, LLC shall have the right to be present at such
interviews).

 

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Seller and AR Owner have made available, or shall, no later than three (3)
business days after the Agreement Date, make available, to Purchaser the
documents listed on Schedule 5.1 attached hereto to the extent they are in such
parties’ possession or control (for purposes hereof, “control” shall mean in the
possession of any asset or of any property management company engaged by Seller
or AR Owner) (collectively, “Due Diligence Documents”). During the pendency of
Escrow, Purchaser shall have the right to review the Due Diligence Documents,
information disclosed by Seller and AR Owner, and any and all other documents
and information as Purchaser shall reasonably require to the extent in the
possession or control of Seller or AR Owner in order to satisfy itself with
respect to the condition of title and the physical and economic condition of the
Phase I Property and the Phase II Property.

 

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5.2           Physical Inspections. Purchaser understands and agrees that any
on-site inspections of the Phase I Property and the Phase II Property (“Physical
Inspections”) shall occur at reasonable times agreed upon by Seller, AR Owner
and Purchaser (and the Phase II Seller for the Phase II Property) upon not less
than twenty-four (24) hours’ prior written notice to such parties and shall be
conducted so as not to interfere unreasonably with the use of the Phase I
Property by Seller (and the Phase II Seller for the Phase II Property). If
Purchaser desires to do any invasive Physical Inspections, including, without
limitation, a Phase II environmental study or testing which would otherwise
damage or disturb any portion of the Phase I Property or the Phase II Property,
Purchaser shall do so only after notifying Seller and/or AR Owner, as applicable
(and the Phase II Seller for the Phase II Property) and obtaining Seller’s
and/or AR Owner’s (and Phase II Seller’s for the Phase II Property) prior
written consent thereto, which consent may be subject to any terms and
conditions imposed by Seller and/or AR Owner, as applicable (or by the Phase II
Seller as and where permitted by the Phase II Purchase Contract) in its sole
discretion, including, without limitation, Seller and/or AR Owner requiring
Purchaser to provide such parties with evidence of insurance in form and
substance reasonably satisfactory to Seller and/or AR Owner and the prompt
restoration of the Phase I Property or the Phase II Property (as applicable) to
its respective condition prior to any such inspections or tests, at Purchaser’s
sole cost and expense. Purchaser agrees, at the request of AR Owner or Seller,
as applicable, to disclose the results of all of its Physical Inspections to
such parties, and, subject to the terms of Section 14.13 and to the right of
Purchaser to disclose all such materials to its representatives in connection
with the due diligence it performs on the Phase I Property and the Phase II
Property, to keep all such information confidential and not disclose the same,
or any part thereof, without the prior written consent of AR Owner and/or
Seller, as applicable. In conjunction with due diligence with respect to the
Phase II Property, AR Owner will use commercially reasonable efforts to provide
assistance to obtain Phase II Seller’s consent to the access by Purchaser to the
Phase II Property (or absent such consent, to perform all applicable due
diligence on the Phase II Property at the request of Purchaser and in all
instances consistent with the terms of the Phase II Purchase Contract). Further,
Purchaser will be entitled to rely upon and use and update, as applicable, any
third-party reports previously obtained by AR Owner for the Phase II Property,
and AR Owner will use commercially reasonable efforts to obtain the consent of
all applicable service providers thereto. Following the expiration of the Due
Diligence Period, AR Owner will enforce all available rights of the purchaser
under the Phase II Purchase Contract in the manner instructed by Purchaser,
including communicating with, or obtaining Purchaser’s right to communicate
with, the Phase II Seller on any specific matters requested by Purchaser, other
than any right to terminate the Phase II Purchase Contract (which shall be
governed by Section 7.4 below). Any inspections in connection with the Phase II
Property performed by AR Owner at the request of Purchaser shall be at
Purchaser’s expense, but Purchaser shall not be responsible for any costs
incurred by AR Owner in excess of the costs that would have been incurred by
Purchaser in connection with any such inspections had Purchaser been able to
perform such inspections directly. In connection with the Physical Inspections,
Purchaser shall maintain and cause its third-party agents to maintain
(a) comprehensive general liability insurance (“CGL”) with coverages of not less
than $1,000,000.00 for injury or death to any one person and $2,000,000.00 for
injury or death to more than one person and $500,000.00 with respect to property
damage, by water or otherwise, and (b) worker’s compensation insurance for all
of their respective employees in accordance with applicable statutory
requirements. Purchaser shall deliver proof of the insurance coverage required
pursuant to this Agreement to Seller, as to the Phase I Property, and AR Owner,
as to the Phase II Property (in the form of a certificate of insurance) prior to
Purchaser’s or its agents’ entry onto the Phase I Property or the Phase II
Property, as applicable (provided that if any agent’s certificate of CGL
insurance does not show worker’s compensation coverage, such agent shall not be
required to provide a separate certificate of insurance for such worker’s
compensation coverage). The provisions of this paragraph shall survive the
termination of this Agreement, and if not so terminated shall survive the
Closing.

 

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With respect to such Physical Inspections, it is agreed as follows:

 

5.2.1      Indemnification. Purchaser shall protect, indemnify, defend and hold
AR Owner, Seller, and the Phase I Property and the Phase II Property harmless
from and against any claim for liabilities, losses, costs, expenses (including
reasonable attorneys’ fees), damages or injuries arising out of or resulting
from the Physical Inspections of the Phase I Property and the Phase II Property
by Purchaser or its agents, employees, representatives or consultants,
(including, without limitation, any materialmen’s or mechanics’ liens) or the
breach of Purchaser’s obligations under this Section 5, and notwithstanding
anything to the contrary in this Agreement, such obligation to indemnify, defend
and hold harmless Seller, AR Owner, the Phase I Property, the Phase II Owner and
the Phase II Property shall survive Closing or any termination of this Agreement
for the period of the applicable statute of limitations. This indemnity shall
not include, and shall specifically exclude, any loss, liability, damage, injury
and claims arising out of or resulting solely from (a) the gross negligence or
willful misconduct of Seller, AR Owner, AR Developer, LLC or their members,
agents, representatives, contractors or employees, or (b) the mere discovery by
Purchaser, or its agents, representatives, contractors or employees, acting
within the scope of investigations permitted under this Agreement, of the
presence of any toxic or hazardous substance in, on or under the Phase I
Property or the Phase II Property, to the extent that Purchaser or its agents do
not materially exacerbate such condition.

 

5.2.2      Compliance With Laws. Purchaser shall comply with all applicable
governmental laws, ordinances and regulations in the conduct of any Physical
Inspections or activities on the Phase I Property or the Phase II Property.

 

5.2.3      Service Contracts. Purchaser shall have the right, on or before the
expiration of the Due Diligence Period (as defined below), to give notice to
Seller of any Phase I Contracts that Purchaser wishes to terminate, in which
case Seller shall terminate such Phase I Contracts, to the extent such Phase I
Contracts are freely terminable by Seller, no later than Closing, failing which
Purchaser may cause Seller to terminate such Phase I Contracts only upon
Purchaser paying any applicable termination fee. The term “Phase I Assumed
Contracts” shall mean collectively the Phase I Contracts, excluding those to be
terminated pursuant to this Section 5.2.3. Purchaser shall assume (or request
the termination of) the service contracts applicable to the Phase II Property as
required under the Phase II Purchase Contract.

 

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5.3           Notice to Proceed. In the event that Purchaser elects to proceed
to the Closing, Purchaser shall give written notice to Seller of Purchaser’s
intention to do so (the “Notice to Proceed”) by no later than 5:00 p.m. (Eastern
time) on May 13, 2015 (the “Due Diligence Period”). Following the issuance of
the Notice to Proceed by Purchaser, the Deposit shall, subject to the terms of
this Agreement, become nonrefundable, and Purchaser shall be deemed to have
elected to proceed with the purchase of the Phase I Property and the assignment
of AR Owner’s rights under the Phase II Purchase Contract and waived its right
to terminate this Agreement pursuant to this Section 5. In the event Purchaser
does not give a Notice to Proceed pursuant to the terms herein for any reason or
no reason, then no party shall have any further rights or obligations hereunder
or in connection with the Phase I Property or the Phase II Property (except for
the Surviving Obligations), the Deposit shall be returned to Purchaser and each
party shall bear its own costs incurred hereunder. For purposes of clarity,
Purchaser shall not be obligated to give a notice of termination prior to the
expiration of the Due Diligence Period. Notwithstanding the foregoing, even if
Purchaser issues a Notice to Proceed, it will continue to reserve its rights to
terminate this Agreement under the Title Exception provisions of this Agreement,
through May 15, 2015.

 

6.           DISCLAIMERS AND WAIVERS.

 

6.1           No Reliance on Documents. Purchaser hereby represents, warrants
and agrees to and with Seller and AR Owner that, as of the Closing,
(a) Purchaser has independently conducted Purchaser’s own evaluation and
inspection of the Phase I Property and the Phase II Property, obtained and
reviewed such information and conducted such inspections as Purchaser has deemed
adequate and appropriate, and (b) except as set forth in Section 10, Purchaser
has not relied upon any investigation or analysis conducted by, advice or
communication from, nor any warranty or representation by, Seller, AR Owner or
any agent or employee of Seller or AR Owner, express or implied, concerning the
condition, financial or otherwise, of the Phase I Property or the Phase II
Property, or any tax or economic benefits of an acquisition of the Phase I
Property and the Phase II Property. Purchaser acknowledges and agrees that all
materials, data and information delivered or given by Seller and AR Owner to
Purchaser in connection with the transaction contemplated hereby, if any
(excluding those relating to the Existing Loan), are provided to Purchaser as a
convenience only and that any reliance on or use of such materials, data or
information by Purchaser shall be at the sole risk of Purchaser (excluding those
relating to the Existing Loan and those with respect to any third-party reports
applicable to the Phase II Property that are assumed by Purchaser in accordance
with the terms of Section 5.2 above).

 

6.2           As-is Sale; Disclaimers. IT IS UNDERSTOOD AND AGREED THAT NEITHER
SELLER NOR AR OWNER IS MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN,
WITH RESPECT TO THE PHASE I PROPERTY OR THE PHASE II PROPERTY EXCEPT TO THE
EXTENT SET FORTH IN SECTION 10 (“SELLING PARTIES REPRESENTATIONS”), INCLUDING,
BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR AS TO THE PHYSICAL,
STRUCTURAL OR ENVIRONMENTAL CONDITION OF THE PHASE I PROPERTY OR THE PHASE II
PROPERTY OR THEIR COMPLIANCE WITH LAWS.

 

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6.3         Survival of Disclaimers. The provisions of this Section 6 shall
survive Closing or any termination of this Agreement.

 

6.4         THE PROVISIONS OF THIS SECTION 6 ARE MATERIAL AND INCLUDED AS A
MATERIAL PORTION OF THE CONSIDERATION GIVEN TO SELLER BY PURCHASER IN EXCHANGE
FOR SELLER’S AND AR OWNER’S PERFORMANCE HEREUNDER. SELLER AND AR OWNER HAVE
GIVEN PURCHASER MATERIAL CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR
PURCHASER AGREEING TO THE PROVISIONS OF THIS SECTION 6.

 

7.          CLOSING.

 

7.1         Closing of Escrow. The purchase and sale of the Phase I Property and
assignment of the Phase II Purchase Contract shall close (“Close of Escrow” or
the “Closing”) on the date (the “Closing Date”) which is the latter to occur of:
(i) thirty (30) days following the expiration of the Due Diligence Period or
(ii) the earlier of (A) twenty (20) days following the satisfaction of the
Existing Loan Approval Contingency or (B) ten (10) business days after the
Existing Loan Approval Contingency Deadline (unless the Agreement is terminated
under Section 3.2.5) (as applicable, the “Outside Closing Date”); provided
however, for the avoidance of doubt, in no event shall Purchaser be obligated to
close on the assignment of the Phase II Contract unless and until it has closed
on the Phase I Property. Possession of the Phase I Property shall be delivered
at Closing, free and clear of all rights of third parties to possession other
than the rights to possession of tenants under the Phase I Leases and other
matters of record approved by Purchaser in accordance with the terms of this
Agreement.

 

7.2         Deliveries by Seller and AR Owner.

 

(a)          Deliveries by Seller. At the Close of Escrow, Seller shall deliver
the following:

 

(i)          to Purchaser, through escrow, a duly executed special warranty deed
in the form attached hereto as Schedule 7.2(a)(i) and by this reference made a
part hereof, conveying the Phase I Real Property to Purchaser subject to the
Phase I Permitted Exceptions (the “Deed”);

 

(ii)         to Purchaser, through escrow, a bill of sale and assignment and
assumption of leases and service contracts, in the form attached hereto as
Schedule 7.2(a)(ii) and by this reference made a part hereof, duly executed by
Seller, pursuant to which (i) Seller shall convey the Phase I Personal Property
and the Phase I Plans, Licenses and Permits, and (ii) Seller shall assign to
Purchaser, and Purchaser shall assume from and after the Closing Date, Seller’s
interest in and to the Phase I Leases and the Phase I Assumed Contracts, as
amended or supplemented pursuant to this Agreement (the “Bill of Sale and
Assignment”);

 

 13 

 

 

(iii)        to Purchaser, through escrow, a notice also to be joined in by
Purchaser (the “Tenant Notice”) in form and content reasonably satisfactory to
Purchaser and Seller, which Purchaser shall send a copy thereof to each tenant
under each of the Phase I Leases informing such tenant of the sale of the
Property and of the assignment to Purchaser of Seller’s interest in, and
obligations under, the Phase I Leases (including, if applicable any security
deposits) and directing that all rent and other sums payable after the Closing
under each such Phase I Lease shall be paid as set forth in the notice;

 

(iv)        to Purchaser, through escrow, a duly executed Certificate of Selling
Parties signed by Seller, such form attached hereto as Schedule 7.2(a)(iv) and
made a part hereof (the “Certificate of Selling Parties”), stating that the
representations and warranties of Seller contained in Section 10.2 and Section
10.4 of this Agreement are true and correct in all material respects as of the
Closing Date (with appropriate modifications to reflect any changes therein or
identifying any representation or warranty which is not, or no longer is true
and correct and explaining the state of facts giving rise to the change. For
avoidance of doubt the inclusion of any such change shall not affect Purchaser's
rights under this Agreement pursuant to Section 10.10 to the extent a
representation was breached when made as of the Agreement Date nor shall the
same affect the condition set forth in Section 8.3);

 

(v)         to Purchaser and the Title Company, such evidence as Purchaser and
the Title Company may reasonably require as to the authority of the person or
persons executing documents on behalf of Seller;

 

(vi)        to Purchaser, through escrow, an affidavit duly executed by Seller
stating that Seller is not a “foreign person” as defined in the Federal Foreign
Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act;

 

(vii)       to the Title Company, a broker’s lien waiver, and a title insurance
affidavit, if required by the Title Company, duly executed by Seller or a
representative of Seller, in the form attached hereto as Schedule 7.2(a)(vii);

 

(viii)      to Purchaser, at the place of Closing or at the Phase I Property,
the Phase I Leases, together with such leasing and property files and records in
connection with the continued operation, leasing and maintenance of the Phase I
Property, as well as all Phase I Assumed Contracts, all to the extent not
previously delivered;

 

(ix)         to Existing Lender, Seller’s (and any existing guarantors, if
needed) counterparts to the Existing Loan Assumption Documents;

 

(x)          to Purchaser, possession and occupancy of the Phase I Property,
subject to the rights of tenants under the Phase I Leases and the Phase I
Permitted Exceptions;

 

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

 

 14 

 

 

(b)         Deliveries by AR Owner. At the Close of Escrow, AR Owner shall
deliver to Purchaser or Purchaser’s designee, through escrow, (a) AR Owner’s
counterpart of an Assignment and Assumption of Phase II Purchase Contract, in
the form attached hereto as Schedule 7.2(b) (the “Phase II Purchase Contract
Assignment”), and (b) AR Owner’s counterpart of the Certificate of Selling
Parties, stating that the representations and warranties of AR Owner contained
in Section 10.5 of this Agreement are true and correct in all material respects
as of the Closing Date (with appropriate modifications to reflect any changes
therein or identifying any representation or warranty which is not, or no longer
is true and correct and explaining the state of facts giving rise to the change.
For avoidance of doubt the inclusion of any such change shall not affect
Purchaser's rights under this Agreement pursuant to Section 10.10 to the extent
a representation was breached when made as of the Agreement Date nor shall the
same affect the condition set forth in Section 8.3);

 

7.3          Purchaser’s Deliveries. At the Close of Escrow, Purchaser shall
deliver the following:

 

(a)          to Seller, through escrow, the cash portion of the Purchase Price;

 

(b)          to Seller, through escrow, Purchaser’s counterparts to the Bill of
Sale and Assignment, the Tenant Notice, and the Closing Statement;

 

(c)          to Seller, through escrow, a certificate of Purchaser, pursuant to
which Purchaser shall (i) reaffirm the provisions of Section 6.2 hereof and
confirm that such provisions remain and will continue in full force and effect
as of and after the Closing, and (ii) state that the representations and
warranties of Purchaser contained in Section 11 of this Agreement are true and
correct in all material respects as of the Closing Date (with appropriate
modifications to reflect any changes therein or identifying any representation
or warranty which is not, or no longer is, true and correct and explaining the
state of facts giving rise to the change);

 

(d)          to the Title Company, such information as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Purchaser;

 

(e)          to Existing Lender, Purchaser’s and any replacement guarantors’ or
indemnitors’ counterparts to the Existing Loan Assumption Documents;

 

(f)          to AR Owner through escrow, Purchaser’s or Purchaser’s designee’s
counterpart to the Phase II Purchase Contract Assignment;

 

(g)           to AR Owner through escrow, Purchaser’s interest in the Deposit;
and

 

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

 

 15 

 

 

7.4           Closing of Phase II Escrow. The parties acknowledge that the
Phase II Property is expected to close after the acquisition by Purchaser of the
Phase I Property. The terms of the acquisition of the Phase II Property by
Purchaser or its designee will be as provided under the existing Phase II
Purchase Contract. Notwithstanding anything else to the contrary in this
Agreement, if under the Phase II Contract a closing on the Phase II Property is
required prior to the Outside Closing Date, the Purchaser shall have the option
to terminate this Agreement by written notice to Seller and AR Owner, whereupon
the Deposit shall be released back to Purchaser and the parties hereto shall
have no further rights or obligations.

 

In the event that at any time there exists a right for AR Owner as purchaser
thereunder to terminate the Phase II Purchase Contract (and seek damages,
recoveries or return of the $750,000.00 earnest money thereunder, whether
occurring before or after the end of the Due Diligence Period (but in all events
prior to Closing, it being understood that following Closing any such
determinations are the sole responsibility of Purchaser)), Purchaser and AR
Owner agree to meet and collaborate, in good faith, to determine whether the
Phase II Purchase Contract should, in the judgment of a reasonable purchaser, be
terminated as a result of the event that creates such termination right. If
Purchaser and AR Owner are not able to agree, notwithstanding such good faith
efforts, on whether the Phase II Purchase Contract should be terminated,
Purchaser shall have the following rights: (a) if such failure to agree occurs
before the end of the Due Diligence Period, Purchaser can either (i) waive the
disagreement and permit AR Owner to terminate or not terminate the Phase II
Purchase Contract, as AR Owner in good faith elects, or (ii) exercise its right
to terminate this Agreement and receive the return of the Deposit, or (b) if
such failure to agree occurs after the end of the Due Diligence Period (but in
all events prior to the Closing, it being understood that following Closing any
such determinations are the sole responsibility of Purchaser), Purchaser can
either (i) waive the disagreement and permit AR Owner to terminate or not
terminate the Phase II Purchase Contract, as AR Owner in good faith elects, or
(ii) terminate this Agreement. In the event that Purchaser elects to terminate
this Agreement pursuant to clause (b)(ii), Purchaser shall only be entitled to
the return of the Deposit if AR Owner (1) has failed to act in good faith in
making the determination of what a reasonable purchaser would do, or (2) if it
is determined that a reasonable person would terminate the Phase II Purchase
Contract and AR Owner fails to communicate that termination to the Phase II
Seller. If AR Owner has refused to terminate the Phase II Purchase Contract
under these circumstances and Purchaser has exercised its right under clause
(b)(ii), Purchaser will not be entitled to the return of its Deposit if AR Owner
in refusing to do so has acted in good faith (measured by what a reasonable
contract purchaser would do in the same circumstances), but Purchaser shall not
be obligated to Close hereunder and Seller and AR Owner shall have no other
claims or rights against Purchaser. Notwithstanding any other provisions of this
Agreement, if the Phase II Purchase Contract is terminated in accordance with
this paragraph, Purchaser shall, unless it has otherwise elected to terminate
this Agreement in its entirety as set forth in this paragraph, be permitted to
enforce the balance of this Agreement (i.e. with respect to the purchase of the
Phase I Property) and, in such case, the Purchase Price and any other
non-applicable terms of this Agreement will be modified and amended to reflect
the fact that the Phase II Property is no longer involved in the transaction.

 

 16 

 

 

8.          CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE.

 

Purchaser’s obligation to purchase the Phase I Property and to close the
transactions contemplated by this Agreement are subject to the satisfaction of
the following conditions being satisfied on or before the Closing Date
(collectively, “Purchaser’s Conditions Precedent to Closing”):

 

8.1           Deliveries. AR Owner and Seller shall have delivered to Escrow
Holder the documents and other items set forth in Section 7.2.

 

8.2           Reserved.

 

8.3           Representations, Warranties and Covenants. The representations and
warranties of AR Owner and Seller set forth in Section 10 shall be true as of
the Closing Date in all material respects and all covenants of AR Owner and
Seller contained in Sections 7.4 and 10 shall have been performed in full.

 

8.4           Consent of Existing Lender. The Existing Loan Approval Contingency
has been satisfied and the Approved Existing Loan Modifications have been
received and approved by Purchaser in accordance with Section 3.2.3 above
(including the delivery by Existing Lender to Seller and Purchaser at least five
(5) business days prior to Closing of execution sets of all documents required
by Existing Lender to be signed in connection with Purchaser’s acquisition of
the Phase I Property and assumption of the Existing Loan).

 

8.5           Phase II Purchase Contract. Except as otherwise provided in
Section 7.4 above, the Phase II Purchase Contract shall remain in full force and
effect as of the Closing Date, and AR Owner shall not have assigned any of its
rights thereunder (including but not limited to in or to the $750,000 earnest
money deposit thereunder), and AR Owner shall confirm, to the best of its
knowledge, that there are no known, imminent or threatened breaches or defaults
thereunder.

 

8.6           Reserved.

 

8.7           Waiver. Purchaser may waive in writing the satisfaction of any of
the conditions set forth in this Section 8 or terminate this Agreement. If
Purchaser waives any such conditions, then said waived conditions shall be
deemed to have been satisfied. If Purchaser terminates this Agreement, then the
Deposit shall be fully refunded to Purchaser, neither party shall have any
further rights or obligations hereunder except for the Surviving Obligations,
and each party shall bear its own costs incurred hereunder. Notwithstanding
anything to the contrary in this Agreement, the occurrence of the Closing shall
be deemed to be Purchaser’s waiver of any unsatisfied condition (other than any
rights Purchaser may have under this Agreement with regard to any breaches of
the Selling Parties Representations to the extent set forth, and subject to the
limitations, in Sections 10.8 and 13.3).

 

 17 

 

 

9.          CONDITIONS TO THE OBLIGATIONS OF SELLING PARTIES TO CLOSE.

 

Seller’s obligations to sell the Phase I Property, AR Owner’s obligation to
assign its rights under the Phase II Purchase Contract, and each such party’s
obligations to close the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions on or before the Close of Escrow
(collectively, “Selling Parties’ Conditions Precedent to Closing”):

 

9.1           Purchaser’s Deliveries. Purchaser shall have delivered to Escrow
the items set forth in Section 7.3.

 

9.2           Consent of Existing Lender. The Existing Loan Approval Contingency
has been satisfied (including the delivery by Existing Lender to Seller and
Purchaser at least five (5) business days prior to Closing of execution sets of
all documents required by Existing Lender to be signed in connection with
Purchaser’s acquisition of the Phase I Property and assumption of the Existing
Loan).

 

9.3           Purchaser’s Representations and Warranties. The representations
and warranties of Purchaser set forth in Section 11 shall be true in all
material respects.

 

9.4           Waiver. Seller may waive in writing the satisfaction of any of the
conditions set forth in this Section 9 or terminate this Agreement. If Seller
waives any such conditions, then said waived conditions shall be deemed to have
been satisfied. If Seller terminates this Agreement, then the Deposit shall, to
the extent such failure otherwise constitutes a default under this Agreement by
Purchaser, be retained by Seller, or, if such failure does not constitute a
default by Purchaser, then the Deposit will be returned to Purchaser, none of
the parties shall have any further rights or obligations hereunder except for
the Surviving Obligations and each party shall bear its own costs incurred
hereunder. Notwithstanding anything to the contrary in this Agreement, the
occurrence of the Closing shall be deemed to be Seller’s waiver of any
unsatisfied condition (other than any rights Seller may have under this
Agreement with regard to any unknown breaches of Purchaser representations and
warranties to the extent set forth, and subject to the limitations, in
Section 13.4).

 

10.         REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND AR OWNER

 

10.1         Reserved.

 

10.2        Representations and Warranties as to Seller. As a material
inducement to Purchaser to execute this Agreement and consummate the Closing,
Seller represents and warrants to Purchaser with respect to Seller, that:

 

(a)          Seller is duly formed as a limited liability company, is validly
existing and is in good standing under the laws of the State of Delaware and is
authorized to exercise all of its limited liability company powers, rights and
privileges.

 

(b)          Seller is qualified to do business in and is in good standing in
the state where the Phase I Property is located.

 

 18 

 

  

(c)          Seller has not had any employees and will not have any employees
from the Agreement Date through the Closing Date.

 

(d)          Seller has not conveyed, transferred, assigned, pledged or
hypothecated any interests in the Phase I Property, in whole or in part, or
granted any rights, options or rights of first refusal or first offer to
purchase any of such interests or any portion thereof (except as may be shown as
a matter of record and for the rights of the Purchaser under this Agreement and
the Existing Loan), nor is it a party to any material agreements other than
those produced pursuant Schedule 3.1(e).

 

(e)          This Agreement and all documents executed by Seller which are to be
delivered to Purchaser at the Closing are, or as of the Closing Date will be,
duly authorized, executed, and delivered by Seller, and are, or as of the
Closing Date will be, legal, valid, and binding obligations of Seller, and do
not, and as of the Closing Date will not, violate any provisions of any
agreement to which Seller is a party or to which it is subject or any law,
judgment or order applicable to Seller. The execution, delivery and performance
by Seller of this Agreement or any such documents will not violate, conflict
with or result in any breach or contravention of any contractual obligation of
Seller (excepting Seller’s obligations under the Existing Loan Documents unless
the Existing Loan Approval Contingency is satisfied).

 

(f)          No proceedings under any bankruptcy or insolvency laws have been
commenced by or against Seller; no general assignment for the benefit of
creditors has been made by Seller; and no trustee or receiver of Seller’s
property has been appointed.

 

(g)          Seller is not acting, directly or to its knowledge indirectly for,
or on behalf of, any person, group, entity or nation named by any Executive
Order (including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism) or the United States Treasury Department as a terrorist, “Specially
Designated National and Blocked Person,” or other banned or blocked person,
entity, or nation pursuant to any Law that is enforced or administered by the
U.S. Office of Foreign Assets Control, and is not engaging in the transactions
described herein, directly or to its knowledge indirectly, on behalf of, or
instigating or facilitating the transactions described herein, directly or to
its knowledge indirectly, on behalf of, any such person, group, entity or
nation.

 

10.3        Reserved.

 

10.4       Representations and Warranties Regarding the Phase I Property. As a
material inducement to Purchaser to execute this Agreement and consummate the
Closing, Seller represents and warrants to Purchaser with respect to the Phase I
Property, that:

 

(a)         The Phase I Rent Roll is the rent roll relied upon by Seller in the
ordinary course of business. Seller has complied in all material respects with
its obligations under each of the Phase I Leases. Except as set forth in the
Phase I Rent Roll, the rents set forth in the Phase I Leases are being collected
on a current basis and no tenant has paid rent more than one (1) month in
advance, and Seller has not received any written notice of any uncured breaches
or defaults by Seller as landlord under the leases from tenants who are still
tenants under current leases.

 

 19 

 

 

(b)         True, correct and complete copies of all Phase I Contracts have been
included in the Due Diligence Materials. Other than the Phase I Contracts
delivered to Purchaser as part of the Due Diligence Materials, there are no
other property or asset management contracts or other arrangements, contracts
and agreements to which Seller is a party affecting the ownership, repair,
maintenance, leasing or operation of the Phase I Property. To Seller’s
knowledge, the Seller is not in default under any Phase I Contract beyond any
applicable notice or cure period.

 

(c)         Except for any litigation described in Schedule 10.2 (j) hereof,
there are no pending or, to Seller’s knowledge, threatened (a) eminent domain
proceedings for the condemnation of any portion of the Phase I Real Property or
(b) litigation against Seller in respect of the Phase I Property which, if
decided adversely, would have a material adverse effect on the Phase I Property.

 

(d)         Seller has not received written notice from any governmental
authority or agency that Seller is not in compliance with all material licenses
or permits necessary to operate the Phase I Property in material compliance with
applicable laws and otherwise as presently operated.

 

(e)         Seller has not received written notice from any governmental
authority or agency with jurisdiction over the Phase I Property alleging that
the Phase I Property or its use is in material violation of any law, including
any environmental law or regulation, that would have a material adverse effect.

 

(f)          To the best of Seller’s knowledge, except as may be disclosed in
the environmental reports made available to Purchaser as a part of the Due
Diligence Materials, Seller has not introduced Hazardous Materials onto the
Phase I Property which introduction would constitute a violation of
Environmental Laws. The term "Environmental Laws" shall mean, to the extent in
existence as of the Agreement Date, the Resource Conservation and Recovery Act
and the Comprehensive Environmental Response, Compensation, and Liability Act
and other federal laws governing the environment as in effect on the date of
this Agreement together with their implementing regulations as of the date of
this Agreement applicable to the Property, and all applicable state, regional,
county, municipal and other local laws, regulations and ordinances that are
equivalent or similar to the federal laws recited above or that purport to
regulate hazardous or toxic substances and materials. The term "Hazardous
Materials" includes petroleum (including crude oil or any fraction thereof) and
any substance, material, waste, pollutant or contaminant listed or defined as
hazardous or toxic under any Environmental Laws, in any case at levels or
concentrations requiring monitoring, reporting, remediation or removal in
accordance with Environmental Laws, but shall exclude mold, radon and other
naturally occurring substances.

 

(g)         Copies of the Due Diligence Materials have been (or will be)
delivered to Purchaser and are true, correct and complete copies.

 

 20 

 

 

(h)          The copies of Existing Loan Documents delivered to Purchaser as
part of the Due Diligence Materials are true, accurate and complete copies of
all of the material documents and instruments in effect with respect to the
Existing Loan, including all amendments, modifications and supplements thereto.
To Seller’s knowledge, no material default or breach exists under any Existing
Loan Document beyond any applicable cure period, nor does there exist any
material default or breach, or any material event or circumstance, which with
the giving of notice or passage of time, or both, would constitute a material
default or breach by Seller or, to Seller’s knowledge, any other party under any
of the Existing Loan Documents.

 

(i)          Seller is the owner of the Phase I Personal Property free and clear
of all encumbrances other than the Phase I Permitted Exceptions, and has not
previously assigned its rights in and to the Phase I Personal Property except
for security interests granted as security for the Existing Loan. Except as set
forth in the Due Diligence Materials, Seller does not lease any equipment or
other personal property in connection with the ownership or operation of the
Phase I Property.

 

(j)          Seller has not received written notice of any uncured violation of
any declaration of covenants, conditions and restrictions, reciprocal easement
agreements or similar instrument governing or affecting the use, operation,
maintenance, management or improvement of all or any portion of the Phase I
Property.

 

10.5       Representations and Warranties regarding the Phase II Property and
the Phase II Purchase Contract. As a material inducement to Purchaser to execute
this Agreement and consummate the Closing, AR Owner represents and warrants to
Purchaser with respect to the Phase II Property and the Phase II Purchase
Contract, that:

 

(a)          The Phase II Purchase Contract is in full force and effect, has not
been modified or amended, and a true and complete copy thereof has been or will
be provided to Purchaser as part of the Due Diligence Materials. AR Owner has
not previously assigned any of its rights or obligations under the Phase II
Purchase Contract. To AR Owner’s knowledge, neither AR Owner nor the Phase II
Seller is in default under the Phase II Purchase Contract.

 

(b)          To AR Owner’s knowledge, none of the representations or warranties
made by the Phase II Seller under the Phase II Purchase Contract are untrue or
inaccurate in any material respect. AR Owner has no knowledge of any condition
or matter involving the Phase II Property or the Phase II Purchase Contract that
gives rise to a termination right by AR Owner thereunder. All reciprocal
easements and similar agreements between the Phase I Property and the Phase II
Property contemplated by the Phase II Purchase Contract have been completed and
no party has issued (and, to AR Owner’s knowledge, no party has the right to
issue) any default notices thereunder.

 

 21 

 

 

(c)          This Agreement and all documents executed by AR Owner which are to
be delivered to Purchaser at the Closing are, or as of the Closing Date will be,
duly authorized, executed, and delivered by AR Owner, and are, or as of the
Closing Date will be, legal, valid, and binding obligations of AR Owner, and do
not, and as of the Closing Date will not, violate any provisions of any
agreement to which Seller is a party or to which it is subject or any law,
judgment or order applicable to AR Owner. The execution, delivery and
performance by AR Owner of this Agreement or any such documents will not
violate, conflict with or result in any breach or contravention of any
contractual obligation of AR Owner.

 

(d)          No proceedings under any bankruptcy or insolvency laws have been
commenced by or against AR Owner; no general assignment for the benefit of
creditors has been made by AR Owner; and no trustee or receiver of AR Owner’s
property has been appointed.

 

(e)          AR Owner is not acting, directly or to its knowledge indirectly
for, or on behalf of, any person, group, entity or nation named by any Executive
Order (including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism) or the United States Treasury Department as a terrorist, “Specially
Designated National and Blocked Person,” or other banned or blocked person,
entity, or nation pursuant to any Law that is enforced or administered by the
U.S. Office of Foreign Assets Control, and is not engaging in the transactions
described herein, directly or to its knowledge indirectly, on behalf of, or
instigating or facilitating the transactions described herein, directly or to
its knowledge indirectly, on behalf of, any such person, group, entity or
nation.

 

10.6        Operation of Phase I Property. From and after the Agreement Date,
and other than the Existing Loan, Seller shall not cause any new mortgage, deed
of trust, lien, easement, restriction, covenant or other matter of title to
affect the Phase I Property or permit the same to affect the Phase I Property,
and shall continue to operate the Phase I Property in the ordinary course of
business consistent with the manner in which the Phase I Property has been
operated by Seller; provided, however, in no event shall Seller be obligated to
make any repairs or replacements of a capital nature.

 

10.7        Contracts and Leases. During the pendency of Escrow, Seller shall
not (i) modify, amend or allow to lapse or expire any of the Phase I Contracts
or any leases representing greater than 3% of the rental revenue being generated
from the Phase I Property as of the Agreement Date, in each case without
Purchaser’s prior consent, (ii) enter into any new leases for space within the
Phase I Property except on such terms (or better terms) as Seller leased units
as of the Agreement Date, or (iii) enter into any service, supply, maintenance
or other contracts pertaining to the Phase I Property or the operation of the
Phase I Property which are not on prevailing market terms and cancelable without
penalty after the Closing, upon thirty (30) days’ prior written notice, without,
in each instance, obtaining the prior written consent of Purchaser, which
consent shall not be unreasonably withheld.

 

10.8        Survival. The representations and warranties made in this Agreement
by Seller and AR Owner shall survive the Closing for the period specified in
Section 13.3.

 

 22 

 

 

10.9        Knowledge. For purposes of this Agreement, references to the
knowledge of Seller or AR Owner shall be deemed to mean the actual (i.e. not
constructive or imputed) knowledge of Robert Meyer (Robert Meyer being
hereinafter referred to as the "Designated Representative"), and shall not be
construed, by imputation or otherwise, to refer to the knowledge of any property
manager or broker, or to any other officer, agent, manager, representative or
employee of Seller or AR Owner or any affiliate of such entities, or to impose
upon such Designated Representative any duty to investigate the matter to which
such actual knowledge, or the absence thereof, pertains. In no event
shall Purchaser have any personal claim against the above-named individuals as a
result of the reference thereto in this Section 10.9 and Purchaser waives and
releases all such claims which Purchaser now has or may later acquire against
them in connection with the transactions contemplated in this Agreement.

 

10.10       Change in Warranties and Representations. Notwithstanding anything
to the contrary contained herein, Purchaser acknowledges that Purchaser shall
not be entitled to rely on any representation made by Seller or AR Owner in this
Agreement (and, therefore, Seller and AR Owner shall have no liability with
respect to such representation) to the extent, prior to or at the Closing,
Purchaser shall have obtained actual knowledge that such representation or
warranty was inaccurate or incomplete in any material respect; provided,
however, if Purchaser determines prior to Closing that there is a material
adverse breach of, or change with respect to, any of the representations and
warranties made by Seller or AR Owner above, then Purchaser may, at its option,
by sending to Seller and AR Owner written notice of its election either to
(i) terminate this Agreement within five (5) days of discovering such breach, or
(ii) waive such breach and proceed to Closing with no adjustment in the Purchase
Price and, in such event, Seller and AR Owner shall have no further liability as
to such matter thereafter. In the event Purchaser terminates this Agreement for
the reasons set forth above, the Deposit shall be immediately refunded to
Purchaser, Seller shall reimburse Purchaser for its Due Diligence Costs (as
hereinafter defined) and none of Purchaser, Seller or AR Owner shall thereafter
have further liability hereunder other than the Surviving Obligations. The
provisions of this Section 10.10 shall survive the Closing. The representations
and warranties made in this Agreement by Seller and AR Owner shall survive the
Closing for the period specified in Section 13.3.

 

11.         REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to Seller and AR Owner as follows:

 

11.1        Due Organization and Status. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware.

 

11.2        Authorization; No Contravention. This Agreement and all documents
executed by Purchaser which are to be delivered to Seller or AR Owner at the
Closing are, or as of the Closing Date will be, duly authorized, executed, and
delivered by Purchaser, and are, or as of the Closing Date will be, legal,
valid, and binding obligations of Purchaser, and do not, and as of the Closing
Date will not, violate any provisions of any agreement to which Purchaser is a
party or to which it is subject or any law, judgment or order applicable to
Purchaser. The execution, delivery and performance by Purchaser of this
Agreement or any such documents will not violate, conflict with or result in any
breach or contravention of any contractual obligation of Purchaser.

 

 23 

 

 

11.3        Bankruptcy. No proceedings under any bankruptcy or insolvency laws
have been commenced by or against Purchaser; no general assignment for the
benefit of creditors has been made by Purchaser; and no trustee or receiver of
Purchaser’s property has been appointed.

 

11.4        Reserved.

 

11.5        Anti-Terrorism. Purchaser is not acting, directly or to its
knowledge indirectly for, or on behalf of, any person, group, entity or nation
named by any Executive Order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism) or the United States Treasury Department as a
terrorist, “Specially Designated National and Blocked Person,” or other banned
or blocked person, entity, or nation pursuant to any Law that is enforced or
administered by the U.S. Office of Foreign Assets Control, and is not engaging
in the transactions described herein, directly or to its knowledge indirectly,
on behalf of, or instigating or facilitating the transactions described herein,
directly or to its knowledge indirectly, on behalf of, any such person, group,
entity or nation.

 

The representations and warranties made in this Agreement by Purchaser shall
survive the Closing for the period specified in Section 13.4.

 

12.         COSTS AND PRORATIONS.

 

12.1        Closing Prorations and Adjustments. A statement of prorations and
other adjustments (the “Closing Statement”) shall be prepared by Escrow Holder
in conformity with the provisions of this Agreement and submitted to Purchaser
and Seller for review and approval not less than three (3) business days prior
to the Closing Date.

 

(a)          The following items are to be prorated or adjusted, as the case may
require, as of the Closing Date:

 

 24 

 

 

(1)         The rents under the Phase I Leases and any other sums owing by
tenants thereunder with respect to the Phase I Property shall be prorated for
the month in which the Closing occurs on a per diem basis. On or before the
Closing, Seller shall deliver to Purchaser a schedule of all rents, charges and
other amounts, if any, payable by tenants of the Phase I Property before the
Closing under the Phase I Leases which are unpaid on the Closing Date (such
amounts are collectively referred to herein as the “Delinquent Amounts”).
Notwithstanding the foregoing or any direction from such tenants to the
contrary, rental and other payments received by Purchaser or Seller from such
tenants shall first be applied toward the actual out-of-pocket costs of
collection, then toward the payment of current rent and other charges owed to
Purchaser or Seller for periods after the Closing, and any excess monies
received shall be applied toward the payment of Delinquent Amounts. With respect
to Delinquent Amounts owed by tenants of the Phase I Property, Purchaser shall
reasonably cooperate (including, without limitation, permitting Seller, through
its counsel, to file claims and institute suits if the parties have reasonably
exhausted all other efforts for collection), at no expense to Purchaser, in
Seller’s collection of such Delinquent Amounts; provided, however, that Seller
shall not be entitled to exercise any right to terminate any leases or to evict
any tenant of the Phase I Property, and all such collection efforts by Seller
must cease by the six (6) month anniversary of the Closing Date. Purchaser and
Seller shall reasonably cooperate in reconciling any operating expenses, taxes
or other assessments reimbursable by the tenants of the Phase I Property under
the Phase I Leases for the periods of their respective ownership (or deemed
ownership).

 

(2)         The full amount of security deposits paid under the Phase I Leases,
if any, and not theretofore applied, together with interest thereon to the
extent any interest is required by law or otherwise to be paid to tenants
thereunder, shall be delivered or credited by Seller to Purchaser on the Closing
Date (and any letters of credit, if any, shall be delivered to, and assigned to,
Purchaser at the Closing at Seller’s expense);

 

(3)         All other items of income and all items of expense related to the
Phase I Property that are customarily prorated, including real estate taxes,
personal property taxes and assessments, funds on hand in operating accounts,
operating expenses, and Phase I Contracts payments (under Phase I Contracts not
terminated by Purchaser pursuant to Section 5.2.3), shall be prorated through
Escrow with all items of income and expense allocated (i) to Seller for the
period up to the Close of Escrow, and (ii) to Purchaser for the period from and
after the Close of Escrow. If Closing occurs before the current year's tax or
assessment bills are available, an estimated proration shall be made based on
the most recent assessed value and the current tax or assessment rates. Within
thirty (30) days after receipt of the current year’s tax or assessment bill,
Purchaser shall deliver a copy to Seller and Purchaser shall refund to Seller
any amount overpaid by Seller, or and Seller shall pay to Purchaser the amount
of any deficiency in the proration. If an estimated proration was made, the
provisions of this subsection 12.1(a)(3) shall survive the Closing for a period
of thirty (30) days following issuance of the current year’s tax or assessment
bill.

 

 25 

 

 

(4)         Interest under the Existing Loan will be prorated between Seller and
Purchaser such that Seller is responsible for all interest due and payable, or
accruing, prior to the Closing Date (including interest accruing through the day
prior to the Closing Date as to interest accruing for the month in which the
Closing Date occurs) and Purchaser shall be responsible for all interest
thereunder from and after the Closing Date.

 

Any proration which must be estimated at the Closing shall be reprorated and
finally adjusted as soon as practicable after the Closing Date with any refunds
payable to Seller or Purchaser to be made as soon as practicable; otherwise all
prorations shall be final. To the extent any prorations are subject to
reimbursement from the tenants of the Phase I Property under their respective
leases, the parties shall adjust such amounts upon receipt and such
reimbursement shall be paid to Seller or Purchaser, as applicable, as soon as
practicable. The terms of this Section 12.1 shall expressly survive Closing.

 

(b)         At Closing, Seller shall assign to Purchaser (if and to the extent
assignable) and receive a credit for the then current balances, if any, held in
escrow for taxes, insurance, replacement reserves, operating deficits and/or
working capital reserves in connection with the Existing Loan (unless such
reserves have been returned to Seller by Existing Lender, in which case no
credit shall be given at Closing).

 

(c)         Amounts on deposit, if any, with utility companies or under any
Phase I Contracts shall be returned to Seller, and Purchaser shall make separate
arrangements with such utility companies or service providers.

 

(d)         Seller shall place, or cause to be placed, any units at the Phase I
Property that are vacated at least five (5) business days prior to Closing in
“rent ready condition,” failing which Purchaser shall receive a credit at
Closing equal to the sum of $750.00 per unit that is not in such rent ready
condition. A representative of Seller and Purchaser shall walk the vacant units
two (2) days before the Close of Escrow to determine which vacant units are not
rent ready, if any. For the purposes of this Section 12.1(d), “rent ready
condition” shall mean: interior carpets have been cleaned or replaced where
necessary, freshly painted interior walls, working kitchen and other appliances
(and water heaters and HVAC to the extent such items serve only the individual
vacant unit(s)), and no material damage to the doors, walls, ceilings, floors or
windows inside such vacant units.

 

 26 

 

 

12.2       Expenses of Closing. The expenses of Closing shall be paid in the
following manner:

 

(a)          Seller shall be responsible for the costs of: (i) to the extent
Purchaser (or the Existing Lender) desires a New Owner Policy (or, as to Lender,
a new title policy for the Existing Loan), in connection with the acquisition of
the Phase I Property, a base (i.e., without any endorsements) ALTA (or other
form policy acceptable to Purchaser or Existing Lender) owner’s or mortgagee
title insurance policy, as the case may be, with extended coverage, for the
Phase I Property or, if Existing Lender agrees that the Existing Loan Policy for
the Phase I Property will suffice, any endorsements to effectuate the
down-dating of, and increase in coverage of, such Existing Loan Policy;
(ii) update to the Phase I Survey; (iii) any applicable transfer taxes
associated with or triggered by the sale of the Phase I Real Property; and
(iv) 50% of Existing Lender’s consent fee in connection with the satisfaction of
the Consent Requirements and 50% of all other costs incurred by the Existing
Lender (e.g. lender legal fees) related to the satisfaction of the Consent
Requirements which Existing Lender requires be paid or reimbursed to it (which
consent fee is projected to be approximately one percent (1%) of the current
principal balance of the Existing Loan at Closing). Purchaser shall be
responsible for the payment of the other 50% of the Existing Lender consent fee,
50% of all other direct costs incurred by the Existing Lender (e.g. lender legal
fees) related to the satisfaction of the Consent Requirements which Existing
Lender requires be paid or reimbursed to it; 100% of the cost of any new
third-party reports required by Existing Lender or Purchaser in connection with
the Phase I Property, and any additional endorsements to the Existing Title
Policy requested by Purchaser that are not described in clause (i) above.

 

(b)          Seller and Purchaser shall split equally all escrow and recording
fees incurred in connection with the Closing. Seller and Purchaser shall pay the
fees and expenses of their respective legal counsel incurred in connection with
the transaction.

 

(c)          The Closing Statement shall be prepared by Escrow Holder at the
Closing and shall set forth the manner of computation of the Closing adjustments
and costs.

 

12.3        Broker’s, Finder’s or Similar Fees. Each party hereto represents and
warrants to the other that it has dealt with no brokers or finders in connection
with this transaction except for JLL Florida (“Broker”). If the sale of the
Phase I Property closes pursuant to the terms of this Agreement (without
modification), Purchaser and Seller agree to split a thirty (30) basis point
commission payable to Broker (based on the $44.75 million purchase price for the
Phase I Property), with the entirety of such commission to be paid to Broker at
the closing of the Phase II Property. All other sales commissions associated
with this transaction will be paid by Seller. Each party hereto agrees that if
any person or entity, other than Broker, makes a claim for brokerage commissions
or finder’s fees related to the sale of the Phase I Property or the Phase II
Property by Seller to Purchaser, and such claim is made by, through or on
account of any acts or alleged acts of said party or its representatives, said
party will protect, indemnify, defend and hold the other party free and harmless
from and against any and all loss, liability, cost, damage and expense
(including reasonable attorneys’ fees) in connection therewith. The provisions
of this Section 12.3 shall survive Closing or any termination of this Agreement.

 

 27 

 

 

13.         DEFAULTS.

 

13.1         Liquidated Damages Upon Default by Purchaser. IF ESCROW FAILS TO
CLOSE DUE TO PURCHASER’S DEFAULT UNDER THIS AGREEMENT, AND SUCH FAILURE IS NOT
CURED WITHIN TEN (10) CALENDAR DAYS AFTER RECEIPT OF WRITTEN NOTICE FROM SELLER
REGARDING SUCH DEFAULT, SELLER WILL BE DAMAGED AND WILL BE ENTITLED TO
COMPENSATION FOR THOSE DAMAGES. SUCH DAMAGES WILL, HOWEVER, BE EXTREMELY
DIFFICULT AND IMPRACTICAL TO ASCERTAIN FOR THE FOLLOWING REASONS: (1) THE
DAMAGES TO WHICH SELLER WOULD BE ENTITLED IN A COURT OF LAW WILL BE BASED IN
PART ON THE DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE PHASE I PROPERTY AND
PURCHASE RIGHTS UNDER THE PHASE II PURCHASE CONTRACT AT THE TIME SET FOR THE
CLOSE OF ESCROW AND THE PURCHASE PRICE FOR THE SUCH PROPERTY AS SET FORTH IN
THIS AGREEMENT; (2) PROOF OF THE AMOUNT OF SUCH DAMAGES WILL BE BASED ON
OPINIONS OF VALUE OF THE PHASE I PROPERTY AND PHASE II PROPERTY, WHICH CAN VARY
IN SIGNIFICANT AMOUNTS; AND (3) IT IS IMPOSSIBLE TO PREDICT AS OF THE DATE ON
WHICH THIS AGREEMENT IS MADE WHETHER THE VALUE OF THE PHASE I PROPERTY AND PHASE
II PROPERTY WILL INCREASE OR DECREASE AS OF THE DATE SET FOR THE CLOSE OF
ESCROW. PURCHASER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH PURCHASER
MIGHT BE LIABLE SHOULD PURCHASER BREACH THIS AGREEMENT. PURCHASER AND SELLER
WISH TO AVOID THE COSTS AND LENGTHY DELAYS WHICH WOULD RESULT IF SELLER FILED A
LAWSUIT TO COLLECT ITS DAMAGES FOR A BREACH OF THIS AGREEMENT.

 

 28 

 

 

THEREFORE, IF ESCROW FAILS TO CLOSE DUE TO PURCHASER’S DEFAULT, THE SUM
REPRESENTED BY THE DEPOSIT SHALL BE DEEMED TO CONSTITUTE A REASONABLE ESTIMATE
OF SELLER’S DAMAGES, AND SELLER’S (AND AR OWNER’S) SOLE AND EXCLUSIVE REMEDY IN
THE EVENT OF THE FAILURE TO CLOSE ESCROW RESULTING FROM PURCHASER’S DEFAULT
SHALL BE LIMITED TO RECOVERING SUCH AMOUNT AS LIQUIDATED DAMAGES, TOGETHER WITH
ANY REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED BY SELLER TO ENFORCE THIS
PROVISION. BY INITIALING THIS PROVISION IN THE SPACES BELOW, SELLER AND
PURCHASER EACH SPECIFICALLY AFFIRM THEIR RESPECTIVE AGREEMENTS CONTAINED IN THIS
SECTION 13.1 AND AGREE THAT THE SUM REPRESENTED BY THE DEPOSIT IS A REASONABLE
SUM CONSIDERING THE FACTS AND CIRCUMSTANCES AS THEY EXIST ON THE DATE OF THIS
AGREEMENT, INCLUDING THE RELATIONSHIP OF SUCH AMOUNT TO THE RANGE OF HARM TO
SELLER THAT COULD BE ANTICIPATED, AND THE ANTICIPATION THAT PROOF OF CAUSATION,
FORESEEABILITY AND ACTUAL DAMAGES WOULD BE COSTLY AND/OR IMPRACTICAL. BY
INITIALING THIS PROVISION BELOW, THE PARTIES SPECIFICALLY CONFIRM THE ACCURACY
OF SUCH FACTS, THE FACT THAT THEY POSSESS APPROXIMATELY EQUAL BARGAINING
STRENGTH AND SOPHISTICATION AND THE FACT THAT EACH OF THEM WAS REPRESENTED BY
COUNSEL WHEN ENTERING INTO THIS AGREEMENT, WHICH COUNSEL EXPLAINED THE
CONSEQUENCES OF THIS SECTION TO THEM AT THE TIME THIS AGREEMENT WAS MADE.
NOTHING SET FORTH IN THIS SECTION SHALL ELIMINATE, ABROGATE OR OTHERWISE AFFECT
SELLER’S OR AR OWNER’S RIGHTS UNDER ANY INDEMNITY GRANTED BY PURCHASER TO SUCH
ENTITIES. THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE
OR PENALTY BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. THE
PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE
LIQUIDATED DAMAGES PROVISIONS CONTAINED IN THIS SECTION.

 

PURCHASER’S INITIALS /s/ MK   SELLER’S INITIALS /s/ RM

 

 29 

 

 

13.2         Default by the Selling Parties. Subject to the limitations set
forth in this Section 13.2, if the conveyance of the Phase I Property and the
assignment of the Phase II Purchase Contract is not consummated by reason of any
default by Seller or AR Owner and such default is not cured within ten (10)
calendar days after receipt of written notice from Purchaser regarding such
default, then Purchaser shall be entitled, as its sole remedy and at its sole
election, to receive either (x) (i) reimbursement from Seller for the
third-party costs and fees (including but not limited to legal fees) actually
and reasonably incurred by Purchaser in connection with this Agreement, its due
diligence on the Phase I Property and the Phase II Property and the assumption
of the Existing Loan, not to exceed $100,000.00 in the aggregate (collectively,
the “Due Diligence Costs”), (ii) the return of the Deposit and (iii) if the
uncured default resulted from an Intentional Act (as hereinafter defined) to
Close on the Phase I Property sale or the assignment of the Phase II Purchase
Contract, liquidated damages equal to three percent (3%) of the Purchase Price
(“Purchaser’s Liquidated Damages”): which payments when made in full shall
operate to terminate this Agreement, or (y) to enforce specific performance of
Seller’s obligations to convey the Phase I Property to Purchaser and AR Owner’s
obligation to assign its rights under the Phase II Purchase Contract to
Purchaser or its designee; provided, however, any claim for specific performance
must be commenced within sixty (60) days from the date of Closing (or the date
on which Closing was to have occurred), failing which, Purchaser shall have no
further right to bring suit for specific performance under this Agreement. Any
claim or right hereunder shall be asserted in writing within sixty (60) calendar
days following the earlier of the date upon which the Closing was to have
occurred or the Outside Closing Date (as such latter date may be further
extended from time to time). In no event shall Seller or AR Owner be liable for
consequential, speculative, remote or punitive damages, or any other damages
other than liquidated damages as stated above, and Purchaser hereby waives and
releases any right to seek or collect any such consequential, speculative,
remote or punitive damages, or any its actual damages as set forth above. As
used herein, "Intentional Act" shall mean any default by Seller or AR Owner
attributable to willful misconduct, with an intent to deny or impair Purchaser
from acquiring the property and interests described in this Agreement,
including, without limitation, conveying the property and interests to be
conveyed to Purchaser under this Agreement to a third party, encumbering or
pledging such property and interests so that they cannot be transferred free and
clear of liens, and/or failing to make the deliveries required pursuant to
Section 7.2; provided, however, for the avoidance of doubt, Seller's or AR
Owner’s non-compliance with the covenants set forth in this Agreement shall not,
absent the showing of willful misconduct with an intent to deny or impair
described above, constitute an Intentional Act.

 

13.3        Indemnification by Seller and AR Owner.

 

(a)          Seller agrees to hold harmless, indemnify and defend Purchaser from
and against (i) any and all obligations, claims, debts, liabilities and damages
resulting from any material inaccuracy in or material breach of any of those
representations and warranties which are set forth in Section 10.2 and
Section 10.4 of the Agreement, and (ii) all costs and expenses, including
reasonable attorneys’ fees, incurred by Purchaser as a result of such claims.
AR Owner further agrees to hold harmless, indemnify and defend Purchaser from
and against (x) any and all obligations, claims, debts, liabilities and damages
resulting from any material inaccuracy in or material breach of any of those
representations and warranties which are set forth in Section 10.5 of the
Agreement, and (y) all costs and expenses, including reasonable attorneys’ fees,
incurred by Purchaser as a result of such claims.

 

 30 

 

 

(b)          Seller’s and AR Owner’s respective obligations pursuant to this
Section 13.3 shall survive for a period of nine (9) months after the Closing
Date, after which time, respectively, all liabilities of such parties shall
cease.

 

(c)          Valid claims under this Section 13.3 shall collectively aggregate
at least $25,000.00 before they are actionable, and in no event shall Seller’s
and AR Owner’s aggregate indemnity obligations hereunder exceed $500,000.00.

 

13.4         Purchaser’s Indemnification. Purchaser shall hold harmless,
indemnify and defend AR Owner and Seller, as applicable, from and against:
(i) any and all obligations, claims, debts, liabilities and damages resulting
from any material inaccuracy in or material breach of representation or warranty
of Purchaser hereunder, (ii) any and all obligations and other matters relative
to any employees of Seller applicable to the period from and after the Closing
where such employees are hired by Purchaser (but not otherwise), and (iii) all
costs and expenses, including reasonable attorneys’ fees, incurred by Seller or
AR Owner as a result of such claims. The provisions of this Section 13.4 shall
survive the Closing, except any claim under this Section 13.4 must be submitted
in writing by AR Owner or Seller to Purchaser within nine (9) months following
the Closing, after which time all liability of Purchaser under this Section 13.4
shall cease. Additionally, valid claims under this Section 13.3 shall
collectively aggregate at least $25,000.00 before they are actionable and in no
event shall Purchaser’s aggregate indemnity obligations hereunder exceed
$500,000.00.

 

14.         MISCELLANEOUS

 

14.1         Successors and Assigns. Subject to the provisions of this
Section 14.1, the terms and provisions of this Agreement are to apply to and
bind the permitted successors and assigns of the parties hereto. Purchaser may
not assign its rights under this Agreement without first obtaining Seller’s
written approval, and any such attempted assignment without Seller’s prior
written approval shall be null and void. Notwithstanding the foregoing,
Purchaser may assign all, but not less than all, of its rights under this
Agreement to any Affiliate (as hereinafter defined) of Purchaser or to any other
entity which is an Affiliate of Bluerock Residential Growth REIT, Inc.
(“Bluerock REIT”). In the event Purchaser intends to assign its rights
hereunder, (a) Purchaser shall send Seller written notice of its request (or
notice if consent is not required) at least one (1) business day prior to the
Closing Date, which notice shall include the legal name and structure of the
proposed assignee, and (b) Purchaser and the proposed assignee shall execute an
assignment and assumption of this Agreement and deliver a copy thereof to
Seller. “Affiliate” means any person or entity that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with Purchaser or Bluerock REIT. For the purposes of this
definition, “control” means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “controlling” and “controlled” have the meanings correlative to
the foregoing. Except as provided in this Section 14.1, no person other than the
parties hereto and their permitted successors and permitted assigns is intended
to be a beneficiary of any of this Agreement.

 

 31 

 

 

14.2        Intentionally Omitted.

 

14.3        Notices. Any notice, consent or approval required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
given upon (i) hand delivery, (ii) one (1) business day after being deposited
with Federal Express or another reliable overnight courier service for next day
deliver, (iii) upon facsimile or e-mail transmission (except that if the date of
such transmission is not a business day, then such notice shall be deemed to be
given on the first business day following such transmission), or (iv) two (2)
business days after being deposited in the United States mail, registered or
certified mail, postage prepaid, return receipt required, and addressed as
follows:

 

If to Seller or AR Owner: c/o Catalyst Development Partners, LLC   880 Glenwood
Avenue SE, Suite H   Atlanta, Georgia 30316   Attn:  Jorge Sardinas and Rob
Meyer   Email: JorgeS@catalystdp.com  and robm@catalystdp.com       With a copy
to: Eric Wilensky, Esq.   Nelson Mullins Riley & Scarborough LLP   Atlantic
Station   201 17th  Street NW, Suite 1700   Atlanta, GA 30363   Facsimile: (404)
322-6050   Email: eric.wilensky@nelsonmullins.com     If to Purchaser: Bluerock
Real Estate, L.L.C.   712 Fifth Avenue, 9th Floor   New York, New York 10019  
Attn: Jordan Ruddy and Michael L. Konig, Esq.   Facsimile: (646) 278-4220  
Email: Jruddy@bluerockre.com; Mkonig@bluerockre.com     With a copy to:
Hirschler Fleischer   2100 E. Cary Street   Richmond, Virginia 23223   Attn: S.
Edward Flanagan, Esq.   Facsimile: (804) 644-0957   Email: eflanagan@hf-law.com

 

 32 

 

 

If to Escrow Holder: Calloway Title & Escrow, LLC   4170 Ashford-Dunwoody Road,
Suite 285   Atlanta, GA 30319   Attn: S. Marcus Calloway   Facsimile: (770)
395-9610   Email:  MarcusC@titlelaw.com

 

14.4        Amendment and Waiver.

 

(a)          No failure or delay on the part of Seller, AR Owner or Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available at law, in equity or
otherwise.

 

(b)          Any amendment, supplement or modification of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure from the terms of any provision of this Agreement, shall be
effective (i) only if it is made or given in writing and signed by Seller,
Purchaser and (to the extent such amendment pertains to the Phase II Property or
the Phase II Purchase Contract) AR Owner, and (ii) only in the specific instance
and for the specific purpose for which made or given.

 

14.5        Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Executed copies of this Agreement transmitted by facsimile shall be fully
binding and effective upon receipt, but each party promptly shall deliver to the
other an execution copy of this Agreement bearing an original signature. Each
person signing this Agreement or any documents required hereunder on behalf of
another party warrants that he or she is duly authorized to execute this
Agreement and all documents required hereunder on behalf of such party.

 

14.6        Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

 

14.7        Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina without regard
to principles of conflict of laws of such state.

 

14.8        Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

 

 33 

 

 

14.9         Entire Agreement. This Agreement (including any Exhibits and
Schedules) is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter. All Exhibits and Schedules which are
attached hereto are incorporated in this Agreement as though fully set forth
herein.

 

14.10      Further Assurances. Each of the parties shall execute such documents
and perform such further acts (including obtaining any consents, exemptions,
authorizations, or other actions by, or giving any notice to, or making any
filings with, any governmental authority or any other person) as may be
reasonably required or desirable to carry out or to perform the provisions of
this Agreement.

 

14.11      Attorneys’ Fees. If either Seller or Purchaser shall obtain legal
counsel and bring an action or proceeding against the other by reason of an
alleged breach of any covenant, provision or condition hereof, or otherwise
arising out of this Agreement, the unsuccessful party shall pay to the
prevailing party reasonable attorneys’ fees and costs, which shall be payable
whether or not any proceeding is prosecuted to judgment or award. The term
“prevailing party” shall include a party (i) who brings an action or proceeding
against the other by reason of the other’s breach or default and obtains
substantially the relief sought by judgment or award or (ii) who successfully
defends an action or proceeding brought by the other party and against whom no
material damages or specific performance are awarded.

 

14.12      Other Parties. Nothing in this Agreement shall be construed as giving
any person, firm, corporation or other entity, other than the parties hereto,
their successors and permitted assigns, any right, remedy or claim under or with
respect to this Agreement or any provision hereof.

 

14.13      Confidentiality. Purchaser understands that all information obtained
by Purchaser in connection with the transactions contemplated by this Agreement
(including, but not limited to, the existence and terms of this Agreement, the
Due Diligence Documents and other information relating to Seller, AR Owner, the
Phase I Property and the Phase II Property) is confidential (“Confidential
Information”) until Closing. Prior to Closing, Seller and Purchaser each agrees
that except (i) as necessary in connection with the Existing Loan Approval
Contingency or obtaining the New Title Policies or (ii) to the extent required
by The Securities Act of 1933, The Securities and Exchange Act of 1934, and the
rules and regulations promulgated thereunder, or other applicable law, neither
shall take any action nor conduct itself in any fashion that would disclose to
third parties (excluding attorneys, accountants and similar professionals
assisting Purchaser with the transactions identified herein) unrelated to
Purchaser, its acquisition of the Phase I Property or the Phase II Property, or
any aspect of the contemplated transaction.

 

 34 

 

 

14.14      Casualty. In the event of the damage or destruction of all or any
part of the Phase I Property prior to Closing, the aggregate cost to repair or
replace of which shall be $750,000.00 or more (as estimated by Seller’s
insurance carrier), Purchaser may, at its option, exercisable by written notice
to Seller, either (i) terminate this Agreement, whereupon neither party will
have any further obligations hereunder other than the Surviving Obligations, and
the Deposit shall be returned to Purchaser or (ii) continue under this
Agreement, whereupon at Closing Seller will assign to Purchaser its respective
interests in and to any insurance policies and proceeds thereof payable to
either of them as a result of such damage or destruction, less such portion
thereof payable as shall first be reimbursed to Seller for the costs of any
restoration work incurred by Seller prior to the Closing, and pay Purchaser the
amount of any deductible or self-insured retention under such policies. Seller
shall notify Purchaser promptly in writing if all or any portion of the Phase I
Property is damaged or destroyed prior to the Closing Date. Seller shall not
settle any insurance claims without the consent of Purchaser, such consent not
to be unreasonably withheld, conditioned or delayed. In the event that prior to
Closing the Phase II Property is the subject of a casualty that would permit the
purchaser under the Phase II Purchase Contract to terminate the Phase II
Purchase Contract, Purchaser shall have the right to instruct AR Owner to
terminate the Phase II Purchase Contract, in which event the terms of
Section 7.4 hereof shall apply.

 

14.15      Condemnation; Zoning. In the event of (a) the taking of all or any
material part of the Phase I Property, or conveyance in lieu thereof, prior to
the Closing (e.g., not including the taking of strips of widths less than ten
(10) feet of the Phase I Real Property running along adjacent roads and highways
unless the same affects parking or access), by eminent domain or condemnation,
or notice to Seller prior to the Closing of the initiation of governmental
proceedings to take such action or an offer to purchase in lieu thereof, or
(b) any change in zoning or other laws governing use of the Phase I Property, or
notice thereof to Seller, prior to the Closing, then in any such event, Seller
shall promptly notify Purchaser thereof in writing, and Purchaser, at its
option, exercisable by written notice to Seller, may either (i) terminate this
Agreement, whereupon neither party will have any further obligation hereunder
other than the Surviving Obligations and the Deposit shall be returned to
Purchaser, or (ii) continue under this Agreement, whereupon Seller shall have no
interest in any award and proceeds thereof payable to Seller as a result of such
taking shall be assigned to Purchaser. Seller shall notify Purchaser promptly in
writing if all or any portion of the Phase I Property is taken by power of
eminent domain or conveyed in lieu thereof, or if such taking or conveyance in
lieu thereof is threatened, prior to the Closing Date. In the event that prior
to Closing the Phase II Property is the subject of a condemnation or eminent
domain proceeding that would permit the purchaser under the Phase II Purchase
Contract to terminate the Phase II Purchase Contract, Purchaser shall have the
right to instruct AR Owner to terminate the Phase II Purchase Contract, in which
event the terms of Section 7.4 hereof shall apply.

 

14.16      Reserved.

 

 35 

 

 

14.17      Computation of Time. Unless otherwise specified, in computing any
period of time described in this Agreement, the day of the act or event after
which the designated period of time begins to run is not to be included and the
last day of the period so computed is to be included, unless such last day is a
Saturday, Sunday or legal holiday under the laws of the State of North Carolina
(all days other than Saturdays, Sundays or North Carolina legal holidays being
deemed “business days” for purposes hereof), in which event the period shall run
until the end of the next day which is neither a Saturday, Sunday nor legal
holiday.

 

14.18      Exhibits and Schedules. The following exhibits and schedules attached
hereto shall be deemed to be an integral part of this Agreement:

 

Exhibit A Legal Description of Phase I Land Exhibit B Inventory of Phase I
Personal Property Exhibit C Phase I Rent Roll Exhibit D Phase I Contracts    
Schedule 5.1 Due Diligence Documents Schedule 7.2(a)(i) Deed Schedule 7.2(a)(ii)
Bill of Sale and Assignment Schedule 7.2(a)(iv) Certificate of Selling Parties
Schedule 7.2(a)(vii) Seller’s Affidavit Schedule 7.2(b) Assignment and
Assumption of Phase II Purchase Contract

 

14.19     Limitation of Selling Parties’ Liability. Except as expressly set
forth in the Parent Joinder attached hereto, Purchaser shall have no recourse
against any of the past, present or future, direct or indirect, shareholders,
partners, members, managers, principals, directors, officers, agents,
incorporators, affiliates or representatives of Seller or AR Owner or of any of
the assets or property of any of the foregoing for the payment or collection of
any amount, judgment, judicial process, arbitral award, fee or cost or for any
other obligation or claim arising out of or based upon this Agreement and
requiring the payment of money by AR Owner. This Section 14.19 shall survive the
Closing.

 

14.20      Limitation of Purchaser’s Liability. Seller shall have no recourse
against any of the past, present or future, direct or indirect, shareholders,
partners, members, managers, principals, directors, officers, agents,
incorporators, affiliates or representatives of Purchaser or of any of the
assets or property of any of the foregoing for the payment or collection of any
amount, judgment, judicial process, arbitral award, fee or cost or for any other
obligation or claim arising out of or based upon this Agreement and requiring
the payment of money by Purchaser. This Section 14.20 shall survive the Closing.

 

14.21      JURY WAIVER. IN ANY LAWSUIT OR OTHER PROCEEDING INITIATED BY SELLER
OR PURCHASER UNDER OR WITH RESPECT TO THIS AGREEMENT, SELLER AND PURCHASER EACH
WAIVE ANY RIGHT IT MAY HAVE TO TRIAL BY JURY. THIS SECTION 14.21 SHALL SURVIVE
THE CLOSING.

 

[Remainder of page intentionally left blank – signature page follows]

 

 36 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first set forth above.

 

  PURCHASER:       BLUEROCK REAL ESTATE, L.L.C.,   a Delaware limited liability
company         By: /s/ Michael L. Konig   Name: Michael L. Konig   Title:
Senior Vice President and General Counsel

 

 37 

 

 

  SELLER:       AR I BORROWER, LLC, a Delaware limited liability
company       By: AR OWNER, LLC, a Delaware limited liability
company, its Sole Member and Sole Manager         By: AR DEVELOPER, LLC, a
Georgia limited
liability company, its Managing Member           By: CATALYST DEVELOPMENT
PARTNERS II, LLC, a Georgia
limited liability company, its Sole
Member and Sole Manager             By: /s/ Robert Meyer           Name: Robert
Meyer           Title: Manager/Officer

 

 38 

 

 

JOINDER OF AR OWNER

 

AR Owner hereby joins in this Agreement as to those matters pertaining to AR
Owner, the Phase II Property, the Phase II Purchase Contract, and the
transactions contemplated herein relating to the foregoing, and for no other
purpose.

 

  AR OWNER:       AR OWNER, LLC, a Delaware   limited liability company      
By: AR DEVELOPER, LLC, a Georgia limited  liability company, its Managing Member
        By: CATALYST DEVELOPMENT
PARTNERS II, LLC, a Georgia limited
liability company, its Sole Member and Sole
Manager                 By: s/ Robert Meyer         Name: Robert Meyer        
Title:  Manager/Officer

  

 39 

 

 

PARENT JOINDER

 

This joinder (this “Parent Joinder”) is attached to and made a part of the
foregoing Agreement and all terms capitalized but not defined herein shall have
the respective meanings given to them in the Agreement. The undersigned, HKCG
Realty Associates, LP, a Florida limited partnership, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby duly executes with proper authority and joins in the execution of this
Agreement, and agrees that it is jointly and severally liable, as a principal
and not as a surety, for the performance of the obligations of Seller and AR
Owner pursuant to Section 13.3 of the Agreement which may arise following the
Closing Date. Purchaser shall have the right to proceed directly against the
undersigned without first making written demand to Seller (and without any
obligation to bring suit against Seller) for the satisfaction of any such
obligations.

 

The undersigned is an indirect owner of Seller, will derive substantial benefits
from the transactions described in the Agreement and acknowledges that the
execution of this Parent Joinder is a material inducement and condition to
Purchaser’s execution of the Agreement. The undersigned represents and warrants
that it has the legal right, power, authority and capacity to execute this
Parent Joinder, that such execution does not violate the organizational
documents of, or any other agreement or instrument by which the undersigned is
bound, and that this Parent Joinder is binding and enforceable against the
undersigned.

 

The undersigned unconditionally waives any guarantor or suretyship defenses that
might otherwise be available to it with respect to its obligations under this
Parent Joinder. The terms of this Joinder shall survive Closing.

 

The provisions set forth in Sections 14.3 though 14.13 of the Agreement are
hereby incorporated by reference into this Parent Joinder as if fully set forth
herein, provided that the undersigned shall be “Seller”, as applicable, under
such Sections.

 

  HKCG Realty Associates, LP, a Florida limited partnership       By: H. Katz
Capital Group, Inc., its general partner         By: /s/ Brian Siegel        
Name: Brian Siegel         Title: Managing Director

 

 40 

 

 

PARENT JOINDER

 

This joinder (this “Parent Joinder”) is attached to and made a part of the
foregoing Agreement and all terms capitalized but not defined herein shall have
the respective meanings given to them in the Agreement. The undersigned,
Catalyst Development Partners II, LLC, a Georgia limited partnership, for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby duly executes with proper authority and joins in the
execution of this Agreement, and agrees that it is jointly and severally liable,
as a principal and not as a surety, for the performance of the obligations of
Seller and AR Owner pursuant to Section 13.3 of the Agreement which may arise
following the Closing Date. Purchaser shall have the right to proceed directly
against the undersigned without first making written demand to Seller (and
without any obligation to bring suit against Seller) for the satisfaction of any
such obligations.

 

The undersigned is an indirect owner of Seller, will derive substantial benefits
from the transactions described in the Agreement and acknowledges that the
execution of this Parent Joinder is a material inducement and condition to
Purchaser’s execution of the Agreement. The undersigned represents and warrants
that it has the legal right, power, authority and capacity to execute this
Parent Joinder, that such execution does not violate the organizational
documents of, or any other agreement or instrument by which the undersigned is
bound, and that this Parent Joinder is binding and enforceable against the
undersigned.

 

The undersigned unconditionally waives any guarantor or suretyship defenses that
might otherwise be available to it with respect to its obligations under this
Parent Joinder. The terms of this Joinder shall survive Closing.

 

The provisions set forth in Sections 14.3 though 14.13 of the Agreement are
hereby incorporated by reference into this Parent Joinder as if fully set forth
herein, provided that the undersigned shall be “Seller”, as applicable, under
such Sections.

 

  Catalyst Development Partners II, LLC, a Georgia
limited liability company         By: /s/ Robert G. Meyer         Name: Robert
G. Meyer         Title: Manager/Officer

 

 41 

 

 

EXHIBIT A

 

Legal Description of Phase I Real Property

 

Lying and being situate in Mecklenburg County, North Carolina, and being more
particularly described as follows:

 

Being all of Parcels 1, 2 and the areas shown as the sixty-six (66) foot public
right-of-way (“Prosser Way”) and the fifty (50) foot public right of way
(“Skinner Lane”), as shown on a plat recorded in Map Book 53, page 886, and
Parcel 3A as shown on a plat recorded in Map Book 55, page 355, Mecklenburg
County Register of Deeds, reference to which is hereby made for a more
particular description.

 

TOGETHER WITH the rights and easements conferred by that Sewer Easement
Agreement recorded in Book 18053, at page 845, Mecklenburg County Register of
Deeds, as amended by First Amendment to Sewer Agreement recorded in Book 20732,
at page 68, and Second Amendment to Sewer Easement Agreement recorded in Book
22541, at page 189.

 

TOGETHER WITH easements contained in that Declaration of Easements, Covenants
and Restrictions recorded in Book 28849 at page 615, Mecklenburg County Register
of Deeds.

 

 42 

 

 

EXHIBIT B

 

Phase I PERSONAL Property

 

Ashton Reserve - Maintenance Shop Inventory

 

3 golf carts with chargers

2 back pack blowers

1 hand truck

2 snow shovels

5 gallon shop vac

2 hand held spreaders

pressure washer

portable a/c unit

portable air tank

cordless drill

cordless skill saw

cordless saw

saw

battery charger

carpet fan blower

hvac recovery machine

key machine

a/c vacuum pump

a/c torch set

30 lb a/c recovery tank

key machine

8 ft ladder

6 ft ladder

24 ft ladder

set of a/c gauges

caulk gun

miter saw

small refrigerator

bench grinder

 

 43 

 

 

POOL

 

Grill with Cover

54 Pool Chairs

28 white drink tables

4 trash cans

1 table with 6 chairs

4 high tables with 4 chairs each

2 end tables

6 Planters

4 lounge chairs with pillows

1 couch

1 chair with ottoman

 

Ashton Reserve - Office Inventory

 

Clubhouse/Media Room Bathrooms 2 couches 4 mirrors 4 lounge chairs 2 pieces of
artwork Lamp Stand 1 Rug 2 Flat Screen Tv 3 trash cans 2 Coffee Table   4 End
tables   Dresser Manager office Manager office Bench Seat 1 computer 6 mirrors
Printer 4 pieces of wall art 2 prospect chairs 2 area rugs 2 computer chairs 5
barstools 1 desk Water Machine 1 calculator 9 pieces of artwork 1 artwork
Microwave phone Stove   Dishwasher   Ice Maker   Keurig Assistant Manager office
Wireless printer computer conference table w/ 6   chairs desk 8 seats phone 1
loveseat calculator 5 lamps 1 piece of artwork Entertainment Center Hanging File
organizer

 

 44 

 

 

Leasing office   2 desks Back Back  Office/File Room 2 desk chairs Computer 4
leasing chairs Desk 2 computers Computer Chair 2 phones Copier Entry stand with
  vases Refridgerator 1 area rug Key Trac 1 wall art Dyscon Vaccuum Cleaner
paper Shredder Helium Tank Phone 4 radios with chargers Laminator 

 

 45 

 

 

EXHIBIT C

 

Phase I RENT ROLL

 

[ATTACHED]

 

 46 

 

  

EXHIBIT D

 

Phase I CONTRACTS

 

1. That certain Advertiser Agreement by and between Catalyst and Network
Communications, Inc. d/b/a Apartment Finder dated May 19, 2014;

 

2. That certain Ad Insertion Agreement by and between For Rent Media Solutions
and Greystar dated February 8, 2012;

 

3. That certain Advertising Agreement by and between Greystar Real Estate
Partners, LLC and Apartment Guide dated January 31, 2015;

 

4. That certain Advertising Agreement by and between Apartment Guide and Ashton
Reserve at Northlake dated March 26, 2013;

 

5. That certain Pest Control Service Agreement by and between Ashton Reserve at
Northlake and Cramer Pest Control dated June 4, 2014;

 

6. That certain Preventative Maintenance Agreement by and between Jasko Fitness
Solutions, Inc. and Ashton Reserve at Northlake;

 

7. That certain Full Maintenance Agreement by and between New River Landscaping
and Ashton Reserve at Northlake dated February 18, 2014;

 

8. That certain Order Form to Master Services Agreement by and between NWP
Services Corporation and Northlake Investors 288, LLC for Ashton Reserve
Northlake dated February 25, 2015;

 

9. That certain PPC Advertising Agreement by and among Standing Dog Interactive,
Greystar and Ashton Reserve dated January 13, 2015;

 

10. That certain Commercial Propane Gas Sales Agreement by and between Suburban
Propane and Ashton Reserve dated November 13, 2013;

 

11. That certain Change Order to Proposal or Contract by and between Suburban
Propane and Ashton I Borrower LLC dated Decmber 5, 2013;

 

12. That certain Guaranteed Maintenance Agreement by and between Systel Business
Equipment Co., Inc. and Ashton Reserve at Northlake dated March 12, 2012;

 

13. That certain Guaranteed Maintenance Agreement by and between Systel Business
Equipment Co., Inc. and Ashton Reserve at Northlake dated September 23, 2013;

 

 47 

 

 

14. That certain Life Safety Agreement by and between Wayne Automatic Fire
Sprinklers, Inc. and Ashton Reserve at Northlake dated October 22, 2012;

 

15. That certain Life Safety Agreement by and between Wayne Automatic Fire
Sprinklers, Inc. and Ashton Reserve at Northlake dated November 22, 2011;

 

16. That certain Service Contract by and between WebListers LLC and Ashton
Reserve at Northlake dated October 3, 2013; and

 

17. That certain Service and Marketing Agreement by and between Time Warner
Enterprises, LLC and Northlake Investors 288, LLC dated November 14, 2013.

 

 48 

 

 

SCHEDULE 5.1

 

Due Diligence Documents

 

_____1. Business License or Permit

 

_____2. Survey or Site Plan

 

_____3. Building Plans and Specifications

 

_____4. Vendor List (with addresses and phone numbers)

 

_____5. Address, telephone number & account numbers for utility companies

 

_____6. Utility Log covering the last twelve month period, including copies of
actual bills

 

_____7. Service Agreements/Contracts including account numbers, if available

 

_____8. List of related entities performing services at the properties
indicating the type of service and amounts paid

 

_____9. Fire Inspection Reports

 

_____10. Critical Shut Off Locations (water, gas & electric)

 

_____11. Tax Bills

 

_____12. Present year Notice of Proposed Property Taxes and whether the proposed
assessment is being appealed and any and all information regarding

 

_____13. Disclosure of all pending insurance claims

 

_____14. Personal Property Inventory

 

_____15. Current Insurance Certificates and premium breakdown of the coverage
provided.

 

_____16. Insurance Loss Runs for the past five years

 

_____17. Current Market Survey

 

_____18. 12 Month Traffic History with marketing sources

 

_____19. Gross Rent Potential Schedule by unit type

 

 49 

 

 

_____20. Leasing Summary by month for last twelve months

 

_____21. Resident demographics information

 

_____22. Occupancy Report

 

_____23. Certificate of Occupancy

 

_____24. Income Statements for the three previous years in twelve-month format,
including capital expenditures (if available)

 

_____25. YTD Income Statement with actuals in twelve-month format, including
capital expenditures

 

_____26. Copy of the Balance Sheets (as of the end of the calendar year for the
last 2 years and current year-to-date)

 

_____27. Current year Operating Budget and next year including capital items (if
applicable or available)

 

_____28. Copy of the Cash Receipts Journals (last three months) and Bank
Statements (last 12 months)

 

_____29. Copy of the Delinquency Report and/or Aged Receivable Report with
prepaid rents (as of the last calendar year and end of the last calendar month)

 

_____30. Copy of the Aged Accounts Payable Schedule (as of the end of the last
calendar year and the end of the last calendar month)

 

_____31. Copy of General Ledger and current Trial Balance

 

_____32. Check Run for last 30 days

 

_____33. Copy of any CPA and/or internal audits, reports or statements

 

_____34. Current Rent Roll - in Excel, if possible

 

_____35. Current Concessions Report

 

_____36. Current Detail Unit Status Report (status of Vacant/On-Notice units)

 

_____37. Current Lease Expiration Summary

 

_____38. Copy of Current Leases and Addenda

 

_____39. Current Security Deposit Report, if not listed on current rent roll

 

 50 

 

 

_____40. Listing of all down units (i.e., not rent ready)

 

_____41. Listing of non-revenue units (model, employee, office, courtesy
officer, etc.)

 

_____42. Listing of amount of employee concessions

 

_____43. List of any charges and fees (application, NSF, month to month, date
rent is due, redecoration, late, water, sewer and trash)

 

_____44. Service Request Log

 

_____45. Pest Control Log

 

_____46. Compensation package information and time on property for existing
staff

 

_____47. Incident Reports

 

_____48. Termite Bond Letter (if available)

 

_____49. Construction plans (site plan)

 

_____50. Resident Ledgers

 

_____51. List of unit types/description and the number of each type unit

 

_____52. Unit List with amenities for each unit

 

_____53. Property Security Code List with descriptions

 

_____54. Mailing List for each individual apartment. Are building numbers
included in the address?

 

_____55. Copies of Notices or Violations regarding Zoning, Building Department,
Fire Safety, Health Department, Municipality, other Governmental Body.

 

 51 

 

 

SCHEDULE 7.2(a)(i)

 

DEED

 

Prepared by: Nelson Mullins (CMR)   4140 Parklake Avenue, Suite 200   Raleigh,
NC 27612     Return after recording to:    Eric Wilensky, Esq.   Nelson Mullins
Riley & Scarborough LLP   201 17th Street NW, Suite 1700   Atlanta, GA 30363

 

Tax Parcel No.:

 

STATE OF NORTH CAROLINA

Excise Tax: $____________

COUNTY OF MECKLENBURG

 

NORTH CAROLINA SPECIAL WARRANTY DEED

 

THIS DEED is made as of the _____ day of ___________________, 2015, by and
between AR I BORROWER, LLC, Grantor, and _________________________, a
___________________________, Grantee, having a mailing address of
_________________________________________; the designation Grantor and Grantee
as used herein shall include said parties, their heirs, successors, and assigns,
and shall include singular, plural, masculine, feminine or neuter as required by
context;

 

WITNESSETH, that the Grantor, for a valuable consideration paid by the Grantee,
the receipt of which is hereby acknowledged, has and by these presents does
grant, transfer and convey unto the Grantee in fee simple all those certain lots
or parcels of land situated in Mecklenburg County, North Carolina, and more
particularly described as follows:

 

See Exhibit A attached hereto and incorporated herein by reference.

 

 

 

 

The property hereinabove described was acquired by Grantor by instrument
recorded in Book 28849 at Page 632 of the Mecklenburg County Public Registry.

 

A map showing the parcels described above is recorded in Map Book 55, Page 355,
of the Mecklenburg County Public Registry.

 

The above described property ¨ does x does not include the primary residence of
the Grantor.

 

TO HAVE AND TO HOLD the aforesaid lots or parcels of land and all privileges and
appurtenances thereto belonging to the Grantee in fee simple forever;

 

AND THE GRANTOR covenants with Grantee that Grantor is seized of the
above-described property in fee simple, has the right to convey the same in fee
simple, and has done nothing to impair such title as Grantor received, and
Grantor will warrant and defend the title against the lawful claims of all
persons claiming by, under or through Grantor, except for the exceptions
hereinafter stated.

 

See Exhibit B attached hereto and incorporated herein by reference.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

IN WITNESS WHEREOF, Grantor has caused this instrument to be signed the day and
year first above written.

 

  AR I BORROWER, LLC, a Delaware limited
liability company         By: AR OWNER, LLC, a Delaware limited
liability company, its Sole Member and Sole
Manager           By: AR DEVELOPER, LLC, a Georgia
limited liability company, its
Managing Member               By: CATALYST DEVELOPMENT PARTNERS II, LLC, a
Georgia limited liability company, its Sole Member and Sole Manager            
        By:             Name:           Title:

 

STATE OF ________________

 

COUNTY OF ________________

 

I certify that the following person personally appeared before me this day,
acknowledging to me that he voluntarily signed the foregoing document for the
purpose stated therein: ____________________________ as the
_____________________ of Catalyst Development Partners II, LLC, the sole member
and sole manager of AR Developer, LLC, the managing member of AR Owner, LLC, the
sole member and sole manager of AR I BORROWER, LLC.

 

Date: ___________________, 2015.

 

      Official Signature of Notary           Notary’s printed or typed name    
  My commission expires:   

(Official Seal)

 

 

 

 

Exhibits to Special Warranty Deed

 

A – Legal Description of Land

 

B – Permitted Exceptions

 

 

 

 

SCHEDULE 7.2(a)(ii)

 

BILL OF SALE AND ASSIGNMENT

 

Bill of Sale and Assignment and Assumption

of Leases and Service Contracts

 

This Bill of Sale and Assignment and Assumption of Leases and Service Contracts
(this “Agreement”) is made and entered into this ____ day of
_____________________, 2015, by and between AR I BORROWER, LLC, a Delaware
limited liability company (“Seller”), and ___________________, a ___________
(“Purchaser”).

 

WITNESSETH:

 

WHEREAS, Seller and Purchaser have previously entered into that certain Purchase
and Sale Agreement and Escrow Instructions, dated _________________, 2015
[DESCRIBE AMENDMENTS, IF APPLICABLE] (the “Contract”), having AR Owner, LLC join
as an additional party for the limited purposes set forth therein;

 

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

 

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

 

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

 

1.           Bill of Sale.

 

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser
all of Seller’s right, title and interest in, to and under the Phase I Personal
Property and the Phase I Plans, Licenses and Permits. Seller warrants to
Purchaser that Seller owns good and marketable title to the Phase I Personal
Property, that the Phase I Personal Property is free and clear of all liens,
charges and encumbrances other than the Phase I Permitted Exceptions (as defined
in the Contract), and that Seller has full right, power and authority to sell
the Phase I Personal Property and to make this Bill of Sale. Seller further
warrants to Purchaser that Seller has not assigned or conveyed to any third
party its right, title and interest, if any, in the Phase I Plans, Licenses and
Permits.

 

 

 

 

(b)          “Phase I Personal Property” shall have the meaning ascribed to such
term in the Contract.

 

(c)          “Phase I Plans, Licenses and Permits” shall have the meaning
ascribed to such term in the Contract.

 

2.           Assignment and Assumption of Phase I Leases.

 

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser
all of Seller’s right, title and interest as landlord in, to and under all
tenant leases identified on Exhibit B attached hereto (collectively, the
“Assigned Leases”), together with all refundable tenant security and other
refundable deposits owing to tenants by the express terms of the Assigned
Leases, minus any documented amounts properly applied by Seller pursuant to the
terms of such Assigned Leases, as of the date of this Agreement, together with
any interest owing thereon pursuant to the terms of the Assigned Leases or
applicable law (collectively, the “Phase I Deposits”). The assignment of the
Phase I Deposits has been made by means of a credit or payment on the closing
statement executed by Seller and Purchaser pursuant to the Contract.

 

(b)          Purchaser hereby assumes all of the covenants, agreements,
conditions and other terms and provisions stated in the Assigned Leases which,
under the terms of the Assigned Leases, are to be performed, observed, and
complied with by the landlord from and after the date of this Agreement.
Purchaser acknowledges that Purchaser shall become solely responsible and liable
as landlord under the Assigned Leases for obligations arising or accruing from
and after the date hereof.

 

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

 

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

 

 

 

 

3.           Assignment and Assumption of Phase I Contracts.

 

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

 

(b)          Purchaser hereby assumes all of the covenants, agreements,
conditions and other terms and provisions stated in the Phase I Contracts which,
under the terms of the Phase I Contracts, are to be performed, observed, and
complied with by the property owner from and after the date of this Agreement.
Purchaser acknowledges that Purchaser shall become solely responsible and liable
under the Phase I Contracts for obligations arising or accruing from and after
the date hereof, including with respect to any and all payments coming due under
the Phase I Contracts for which Purchaser has received a credit or payment on
the closing statement executed by Purchaser and Seller, if any (collectively,
the “Credited Payments”).

 

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

 

4.          Qualifications. This Agreement is subject to the Phase I Permitted
Exceptions (as defined in the Contract). This Agreement is also subject to those
provisions of the Contract limiting Seller's liability to Purchaser.

 

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

 

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

 

 

 

 

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

 

 

 

 

EXECUTED effective as of the date first above written.

 

  SELLER:       AR I BORROWER, LLC,   a Delaware limited liability company      
By: AR OWNER, LLC,     a Delaware limited liability company,     its Sole Member
and Sole Manager             By: AR DEVELOPER, LLC,       a Georgia limited
liability company,       its Managing Member               By: CATALYST
DEVELOPMENT         PARTNERS II, LLC,         a Georgia limited liability
company,         its Sole Member and Sole Manager                     By:      
    Name:           Title:  

 

   PURCHASER:            ,     a                 By:       Name:       Title:  
 

 

 

 

 

Exhibits to Bill of Sale and Assignment

 

A – Legal Description of Land

 

B – List of Assigned Leases

 

C – List of Phase I Contracts

 

 

 

 

SCHEDULE 7.2(a)(iv)

 

CERTIFICATE OF SELLING PARTIES

 

Certificate of Selling Parties

 

THIS CERTIFICATION is made as of ______________, 2015 by each of AR I BORROWER,
LLC, a Delaware limited liability company (“Seller”) and AR OWNER, LLC, a
Delaware limited liability company (“AR Owner”), in favor of
_______________________, a __________ (“Purchaser”).

 

1.          Seller hereby certifies to Purchaser that (a) the representations
and warranties of Seller set forth in Section 10.2 and Section 10.4 of that
certain Purchase and Sale Agreement and Escrow Instructions between Seller and
_________________________ [if applicable: as amended] (the “Agreement”) dated as
of _______________, 2015, are true and correct in all material respects as of
the date hereof, and (b) the Phase I Rent Roll attached hereto as Exhibit A
replaces the Phase I Rent Roll attached to the Agreement as Exhibit C (and such
replacement Phase I Rent Roll shall be the same rent roll relied upon by Seller
in the ordinary course of business and reflects any Phase I Leases where a
tenant has paid rent more than one (1) month in advance, or where a written
notice of any uncured breaches or defaults has been issued by Seller as landlord
under the leases from tenants who are still tenants under current leases).

 

2.          AR Owner hereby certifies to Purchaser that the representations and
warranties of AR Owner set forth in Section 10.5 of the Agreement are true and
correct in all material respects as of the date hereof, and that, to AR Owner's
knowledge, there are no known, imminent or threatened breaches or defaults under
the Phase II Contract.

 

The representations and warranties set forth in Sections 10.2, 10.4 and 10.5 of
the Agreement, as updated by this Certificate of Selling Parties, will survive
only for a period of nine (9) months from the date hereof.

 

This certificate is delivered pursuant to 7.2(a)(iv), 7.2(b) and 8.5 of the
Agreement, and Seller’s and AR Owner’s liability hereunder is subject to Section
13.3 of the Agreement, including the liability cap set forth therein.

 

 

 

 

  SELLER:         AR I BORROWER, LLC,   a Delaware limited liability company    
  By: AR OWNER, LLC,     a Delaware limited liability company,     its Sole
Member and Sole Manager         By: AR DEVELOPER, LLC,       a Georgia limited
liability company,       its Managing Member                 By: CATALYST
DEVELOPMENT         PARTNERS II, LLC,         a Georgia limited liability
company,         its Sole Member and Sole Manager                     By:      
    Name:           Title:  

 

  AR OWNER:       AR OWNER, LLC,   a Delaware limited liability company        
    By: AR DEVELOPER, LLC,     a Georgia limited  liability company,     its
Managing Member               By: CATALYST DEVELOPMENT       PARTNERS II, LLC,  
    a Georgia limited liability company,       its Sole Member and Sole Manager
                By:         Name:         Title:  

 

 

 

 

Exhibits to Certificate of Selling Parties

 

Exhibit A –   Updated Phase I Rent Roll

 

Exhibit B –    Seller Exceptions

 

Exhibit C –    AR Owner Exceptions

 

 

 

 

SCHEDULE 7.2(a)(vii)

 

SELLER’S AFFIDAVIT

 

Seller’s Affidavit

 

[will need title company to verify same satisfactory

To remove all nc standard title exceptions]

 

STATE OF GEORGIA

COUNTY OF ______________________

 

Personally appeared before me the undersigned deponent, who, first being duly
sworn, deposes and says on oath the following:

 

1.          THAT Catalyst Development Partners II, LLC, a Georgia limited
liability company (“Affiant”), is the sole member and sole manager of AR
DEVELOPER, LLC, a Georgia limited liability company, the Managing Member of AR
OWNER, LLC, a Delaware limited liability company, the sole member and sole
manager of AR I BORROWER, LLC, a Delaware limited liability company (“Owner”);
and

 

2.          THAT deponent is the ___________________ of Affiant and is familiar
with the affairs of Owner and is authorized to execute this Affidavit on behalf
of Affiant, and on behalf of Owner; and

 

3.          THAT this Affidavit pertains to those certain tracts or parcels of
land owned by Owner more particularly described on Exhibit “A” attached hereto
and by reference made a part hereof (the “Property”); and

 

4.          THAT Owner has not made improvements or repairs on the Property
during the one hundred twenty (120) days immediately preceding this date, and
there are no outstanding bills incurred by Owner for labor or materials used in
making improvements or repairs on the Property, or for services of architects,
surveyors, engineers, or registered foresters incurred in connection therewith;
and

 

5.          THAT there are no parties in possession claiming by, through or
under Owner except for those parties exercising their rights as set forth on
Exhibit “B” attached hereto and by reference made a part hereof; and

 

6.          THAT Owner has not engaged any broker’s services with regard to the
sale or other conveyance of any interest in the Property, except as set forth in
the final approved closing statement for such sale; and

 

7.          THAT deponent has personal knowledge of the matters herein stated
and makes this Affidavit for the purpose of inducing _____________________ to
issue its policy or policies of title insurance covering the Property; and

 

 

 

 

8.          THAT there are not unpaid or unsatisfied special assessments for
water, sewage or street improvements affecting title to the Property, except as
set forth in said Exhibit “B.”

 

  _______________________________   ______________, not in his personal
capacity, but solely in his capacity as ________________ of CATALYST DEVELOPMENT
PARTNERS II, LLC, the sole member and sole manager of AR DEVELOPER, LLC, a
Georgia limited  liability company, the Managing Member of AR OWNER, LLC, a
Delaware limited liability company, the sole member and sole manager of AR I
BORROWER, LLC, a Delaware limited liability company

 

Sworn to and subscribed before me,

this _____ day of _________________, 2015.

 

(SEAL)           Notary Public       My Commission Expires:           (NOTARIAL
SEAL)  

 

 

 

 

SCHEDULE 7.2(b)

 

ASSIGNMENT AND ASSUMPTION OF PHASE II PURCHASE CONTRACT

 

ASSIGNMENT AND ASSUMPTION OF PURCHASE AND SALE AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION OF PURCHASE AND SALE AGREEMENT (this
“Assignment”) is entered into effective as of ________________ ___, 2015, by and
between AR OWNER, LLC, a Delaware limited liability company ("Assignor”), and
_________________________, a ______________________ (“Assignee”).

 

RECITALS:

 

1.          Assignor is the purchaser under that certain Purchase and Sale
Agreement dated October 31, 2013, as amended (the “Phase II Purchase Contract”)
with Northlake Investors 288, LLC, an Alabama limited liability company, as
seller, pursuant to which Assignor has contracted to acquire that certain real
property and improvements constructed thereon located in Mecklenburg County,
North Carolina known as Ashton Reserve at Northlake Phase II, and more
particularly described in the Phase II Purchase Contract (the “Phase II
Property”).

 

2.          The parties desire to enter into this Assignment to evidence the
transfer and assignment of all of Assignor’s right, title and interest in the
Phase II Purchase Contract to Assignee.

 

NOW THEREFORE, in consideration of the foregoing, the mutual representations,
warranties, covenants and agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

 

1.          Assignment. Assignor hereby assigns, transfers and conveys to
Assignee all of its right, title and interest in, to and under (i) the Phase II
Purchase Contract; (ii) the $750,000 earnest money deposit by Assignor
thereunder; and (iii) all reports, inspections, certifications and other
instruments and documents relating to the Phase II Property and received or
generated by Assignor in connection with the investigation and acquisition of
the Phase II Property pursuant to the Agreement and all representations and
warranties made to Assignor in connection therewith (collectively, together with
the Agreement and the earnest money, the “Transferred Assets”).

 

2.          Acceptance. Assignee hereby: (a) accepts the assignment of the Phase
II Purchase Contract; (b) agrees to be bound by the terms and conditions of the
Phase II Purchase Contract; and (c) assumes all of Assignor’s obligations under
the Phase II Purchase Contract arising from and after the date hereof.

 

 

 

 

3.          Assignor’s Indemnification. Assignor, on demand, shall indemnify and
hold Assignee harmless for, from, and against any and all loss, cost, damage,
claim, liability or expense, including court costs and attorneys’ fees in a
reasonable amount, arising out of (i) any breach of the Phase II Purchase
Contract by Assignor or its agents occurring prior to the date hereof, or
(ii) arising from any breach of this Assignment by Assignor, or (iii) arising
from any claim by any third party challenging the assignment by Assignor of the
Phase II Purchase Contract or asserting a claim for brokerage commissions (or
similar fees) relating to the Phase II Purchase Contract. The foregoing
indemnification shall include loss, cost, damage, claim, liability or expense
from any injury or damage of any kind whatsoever (including death) to persons or
property.

 

4.          Assignee’s Indemnification. Assignee, on demand, shall indemnify and
hold Assignor harmless for, from, and against any and all loss, cost, damage,
claim, liability or expense, including court costs and attorneys’ fees in a
reasonable amount, arising out of any breach of the Phase II Purchase Contract
by Assignee or its agents occurring on or after the date hereof or arising from
any breach of this Assignment by Assignee or otherwise arising out of the Phase
II Purchase Contract (except to the extent such matters relate to Assignor’s
prior breach of the Phase II Purchase Contract regardless of whether such breach
was known on the date hereof). The foregoing indemnification shall include loss,
cost, damage, claim, liability or expense from any injury or damage of any kind
whatsoever (including death) to persons or property.

 

5.          Further Assurances. Assignor represents and warrants that it has
made no prior assignment of its right, title and interest in and to the Phase II
Purchase Contract, that it has delivered a true, correct and complete copy of
the Phase II Purchase Contract (together with all amendments thereto) to
Assignee, and that it has full right, power and authority to assign its rights
in and to the Phase II Purchase Contract and to enter into this Assignment. Each
of the parties hereto agrees to execute such other, further and different
documents and perform such other, further and different acts as may be
reasonably necessary or desirable to carry out the intent and purpose of this
Assignment.

 

6.          Successors and Assigns. This Assignment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.

 

7.          Governing Law. This Assignment shall be governed in all respects,
including validity, interpretation and effect, by and shall be enforceable in
accordance with the internal laws of the State of North Carolina, without regard
to conflicts of laws principles.

 

8.          Counterpart Execution. This Assignment may be executed in multiple
counterparts, each one of which will be deemed an original, but all of which
shall be considered together as one and the same instrument. Further, in making
proof of this Assignment, it shall not be necessary to produce or account for
more than one such counterpart. Execution by a party of a signature page hereto
shall constitute due execution and shall create a valid, binding obligation of
the party so signing, and it shall not be necessary or required that the
signatures of all parties appear on a single signature page hereto.

 

 

 

 

9.          Entire Agreement. This Assignment, together with that certain
Purchase and Sale Agreement and Escrow Instructions dated May __, 2015 (the
“Phase I Contract”), contains the entire agreement between the parties regarding
the subject matter hereof. Any prior agreements, discussions or representations
not expressly contained herein or in the Phase I Contract shall be deemed to be
replaced by the provisions hereof and no party has relied on any such prior
agreements (other than the Phase I Contract), discussions or representations as
an inducement to the execution hereof.

 

[Signatures appear on following page]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed or caused this Assignment
to be executed by their duly authorized representatives as of the date first
above written.

 

  ASSIGNOR:       AR OWNER, LLC,   a Delaware limited liability company      
By: AR DEVELOPER, LLC,     a Georgia limited  liability company,     its
Managing Member           By: CATALYST DEVELOPMENT       PARTNERS II, LLC,      
a Georgia limited liability company,       its Sole Member and Sole Manager    
            By:         Name:         Title:  

 

   ASSIGNEE:            ,     a                 By:       Name:       Title: