exv10w1



 




Exhibit 10.1




CONTRACT OF SALE 




     THIS CONTRACT OF SALE (this “Contract”) is made and entered as of the Effective Date
(as hereinafter defined) by and between TR HIDDEN LAKE PARTNERS, LTD., a Texas limited partnership
(“Seller”), and TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company
(“Buyer”).



     For and in consideration of the mutual covenants and agreements contained in this Contract and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:




	1.	 	PURCHASE AND SALE. Seller agrees to sell and convey to Buyer, and Buyer agrees to
buy from Seller, the Property (hereinafter defined) for the consideration and upon and subject
to the terms, provisions and conditions hereinafter set forth. The “Property” means:






	 	(a)	 	The land situated at 8910 N. Loop 1604 West, San Antonio, Bexar County, Texas,
more particularly described in Exhibit A to this Contract (the “Land”),
together with (i) the improvements situated on the Land commonly known as Hidden Lake
Apartments and all other structures, fixtures, buildings and improvements situated on
the Land (such buildings, structures, fixtures and improvements being herein called the
“Improvements”), (ii) any and all rights, titles, powers, privileges,
easements, licenses, rights-of-way and interests appurtenant to the Land and the
Improvements, (iii) all rights, titles, powers, privileges, licenses, easements,
rights-of-way and interests, if any, of Seller, either at law or in equity, in
possession or in expectancy, in and to any real estate lying in the streets, highways,
roads, alleys, rights-of-way or sidewalks, open or proposed; in front of, above, over,
under, through or adjoining the Land and in and to any strips or gores of real estate
adjoining the Land, and (iv) all rights, titles, powers, privileges, interests,
licenses, easements and rights-of-way appurtenant or incident to any of the foregoing,
including, without limitation, to the extent owned by Seller, all mineral, oil, gas and
other hydrocarbon substances on and under and that may be produced from the Land, as
well as all development rights, land use entitlements, air rights, water, water rights,
riparian rights, and water stock relating to the Land;
	 
	 	(b)	 	All equipment, fixtures, appliances, inventory, and other personal property of
whatever kind or character owned by Seller and attached to or installed or located on
or in the Land or the Improvements and to the extent assignable, all leasehold interest
of Seller in and to any equipment, fixtures, appliances, inventory, and other personal
property of whatever kind or character leased by Seller and attached to or installed or
located on or in the Land or the Improvements including, but not limited to, any
furniture, furnishings, drapes and floor coverings, office equipment and supplies,
heating, lighting, refrigeration, plumbing, ventilating, incinerating, cooking,
laundry, communication, electrical, dishwashing, and air conditioning equipment,
disposals, window screens, storm windows, recreational equipment, pool equipment, patio
furniture, sprinklers, hoses, tools and lawn equipment, including any personal property
owned or, to the extent assignable, leased by the current property manager (the
“Personal Property”);
	 
	 	(c)	 	All of Seller’s right, title and interest in and to all agreements, leases and
other agreements that relate to or affect the Land, the Improvements, the Personal
Property or the operation thereof, including, without limitation, tenant leases and any
guaranties of tenant leases (collectively, “Tenant Leases”) and all security
deposits actually paid to or received by Seller in connection therewith (and not as of
the Closing Date returned to or





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	 	 	 	forfeited by tenants under Tenant Leases), service and
maintenance contracts (“Service Contracts”), warranties, guaranties, bonds,
licenses and permits, but only to the extent that such Service Contracts, warranties,
guaranties, bonds, licenses and permits are assignable by Seller without any necessary
third party consent, or to the extent that all necessary third party consents to such
assignments have been obtained (provided that Seller shall not be obligated to obtain
such third party consents); and
	 
	 	(d)	 	To the extent assignable at no cost to Seller, all intangible personal
property, if any, owned by Seller and related to the Land and the Improvements,
including, without limitation: the name “Hidden Lake Apartments”.






	2.	 	CONTRACT SALES PRICE. The total purchase price for the Property (the “Sales
Price”) shall be THIRTY TWO MILLION AND NO/100 DOLLARS ($32,000,000.00), payable in cash
at Closing. Payment in cash means payment by wire transfer of immediately available federal
funds (“Immediately Available Funds”).
	 
	3.	 	EARNEST MONEY. Within two (2) Business Days (as hereinafter defined) of the
Effective Date, Buyer shall deliver to LandAmerica Title Company, 8201 Preston Road, Suite
280, Dallas, Texas 75225, Attention: Debbie S. Moore (Phone: (214) 368-3695, the “Title
Company”), as escrow agent, ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00)
(by Immediately Available Funds) as earnest money (the “Initial Earnest Money”), which
funds shall be deposited and held by the Title Company in an interest bearing account, and
Buyer shall provide such information, including its federal identification number, as is
necessary to establish such account. Upon the closing of that certain Contract of Sale dated
as of April ___, 2006, by and between Buyer and TR Walker Ranch Partners, Ltd., a Texas
limited partnership, Buyer shall place into escrow with the Title Company an additional amount
equal to ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) as additional earnest
money (the “Additional Earnest Money”). To the extent delivered by Buyer, the Initial
Earnest Money and the Additional Earnest Money, together with any interest thereon, are
collectively referred to as the “Earnest Money”. If Buyer does not timely deliver the
Initial Earnest Money as provided in this Section 3, this Contract shall be null and
void, and neither party shall have any rights or obligations hereunder. If Buyer has not
otherwise terminated this Contract in accordance with the terms hereof, Buyer’s failure to
timely deliver the Additional Earnest Money shall constitute a default by Buyer. If the
transaction contemplated by this Contract is closed, then the Earnest Money will be applied in
payment of the Sales Price to be paid at Closing. In the event the transaction is not closed,
then the Title Company shall disburse the Earnest Money in accordance with the provisions of
this Contract.
	 
	4.	 	CLOSING.






	 	(a)	 	The closing of the sale of the Property to Buyer (the “Closing”) shall
take place at the Title Company on the date (the “Closing Date”) which is
thirty (30) days after Buyer’s receipt of certificates of occupancy (“New Buildings
CO”) for the four new buildings currently under construction on the Property
(collectively, “New Buildings”) in the approximate locations depicted on
Exhibit H attached hereto; provided, however, the Closing Date shall not be
later than December 31, 2006. If the New Buildings CO has not been obtained by
December 1, 2006, Buyer shall have the option to either (i) waive the requirement of
the New Buildings CO and proceed to Closing with no reduction of the Purchase Price or
(ii) terminate this Contract, whereupon the Earnest Money shall be returned to Buyer
and neither party shall have any further obligations except those which expressly
survive the termination of this Contract. Buyer shall have a one-time right
to






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	 	 	 	extend
the Closing Date to a date not later than sixty (60) days after Buyer’s receipt of the
New Buildings CO, but in no event later than December 31, 2006, by (i) notifying Seller
in writing of such extension at least five (5) days prior to the then-scheduled Closing
Date, and (ii) simultaneously with delivery of the written notice of extension to
Seller, delivering to the Title Company (by Immediately Available Funds) the additional
sum of ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) (the “Extension
Fee”) which funds shall be deposited and held by the Title Company in an interest
bearing account. Except as expressly provided in this Contract, the Extension Fee
shall be non-refundable to Buyer and shall be unconditionally earned by Seller, as
compensation to Seller for granting the extension of the Closing Date; provided,
however, the Extension Fee shall be applied to the Sales Price at Closing. If Buyer
does not deliver the written notice and the Extension Fee in the manner and within the
time period required above, then Buyer shall have waived its right to extend the
Closing Date.
	 
	 	(b)	 	At the Closing, Seller shall deliver or cause to be delivered to Buyer, at
Seller’s sole cost and expense (except as otherwise provided in this Section
4(b)), the following:






	 	(i)	 	A Special Warranty Deed, in the form attached hereto as
Exhibit B, duly executed and acknowledged by Seller, conveying good and
indefeasible title in fee simple to the Land and Improvements, free and clear
of any and all liens, encumbrances, easements and assessments, except for
Permitted Exceptions (hereinafter defined) and any others approved by Buyer in
writing;
	 
	 	(ii)	 	A Bill of Sale, Assignment and Assumption Agreement (the
“Bill of Sale”), in the form attached hereto as Exhibit C, duly
executed and acknowledged by Seller;
	 
	 	(iii)	 	An Assignment of Leases and Assumption Agreement (the
“Assignment and Assumption Agreement”), in the form attached hereto as
Exhibit D, duly executed and acknowledged by Seller;
	 
	 	(iv)	 	An Owner’s Policy of Title Insurance (the “Owner’s Title
Policy”), delivered in due course by the Title Company after Closing, to be
issued by the Title Company on the standard form in use in the State of Texas,
in the full amount of the Sales Price, dated as of the Closing Date, insuring
Buyer’s fee simple title to the Land and Improvements to be good and
indefeasible subject only to Permitted Exceptions and others approved by Buyer
in writing, and the standard printed exceptions, provided, however:






	 	(1)	 	the exception as to area and boundaries may, at
the option and expense of Buyer, be deleted except for “any shortages
in area”;
	 
	 	(2)	 	the standard exception as to restrictive
covenants shall either be deleted or except only for any restrictive
covenants that are Permitted Exceptions;
	 
	 	(3)	 	the exception as to standby fees and taxes
shall be limited to standby fees and taxes for the year of Closing and
subsequent years, and subsequent assessments for prior years due to
changes in land usage or ownership;





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	 	 	 	Any endorsements to the Owner’s Title Policy (except any Seller’s Curative
Endorsements, as hereinafter defined) shall also be at the sole cost and
expense of Buyer.
	 
	 	(v)	 	Possession of the Property, subject only to the Tenant Leases
and the Permitted Exceptions;
	 
	 	(vi)	 	A non-foreign affidavit, in the form attached hereto as
Exhibit E, duly executed and acknowledged by Seller;
	 
	 	(vii)	 	A form of notice to all tenants of the Property (“Tenant
Notice Letter”) duly executed by Seller, in the form attached as
Exhibit F;
	 
	 	(viii)	 	Subject to the limitations of this Contract, a recertification of the
representations and warranties contained in Section 12; 
	 
	 	(ix)	 	The most current Rent Roll (as hereinafter defined) available
to Seller;
	 
	 	(x)	 	Originals, if available, and otherwise copies of the New
Buildings CO;
	 
	 	(xi)	 	Evidence of its capacity and authority for the closing of this transaction; and
	 
	 	(xii)	 	Such other documents as may be reasonably required to close
this transaction, duly executed.






	 	(c)	 	At the Closing, Buyer shall perform and deliver, at Buyer’s sole cost and
expense, the following:






	 	(i)	 	The Sales Price in Immediately Available Funds (reduced by the
amount, if any, of the Earnest Money applied for that purpose);
	 
	 	(ii)	 	The Assignment and Assumption Agreement duly executed and
acknowledged by Buyer;
	 
	 	(iii)	 	The Tenant Notice Letters duly executed by Buyer;
	 
	 	(iv)	 	Evidence of its capacity and authority for the closing of the
transaction contemplated herein; and
	 
	 	(v)	 	Such other documents as may be reasonably required to close
this transaction, duly executed.






	 	(d)	 	Seller shall pay: the premium for the Owner’s Title Policy and the cost of any
Seller’s Curative Endorsements (except the premium of the area and boundary
modification (if any) and the cost of any other endorsements shall be paid entirely by
Buyer), 1/2 of any escrow fee; fees for preparation of the conveyance documentation;
Seller’s attorneys’ fees; any costs of preparing the Existing Survey (as hereinafter
defined) and the New Survey (as hereinafter defined) and other expenses stipulated to
be paid by Seller under other provisions of this Contract. Buyer shall pay: survey
fees (excluding the costs of preparing the Existing Survey or the New Survey but
including any others costs to update or recertify the Existing Survey or the New
Survey), the costs of any endorsements





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	 	 	 	related to the Owner’s Title Policy (except the
cost of any Seller’s Curative Endorsements), including the modification of the survey
exception, the cost of any mortgagee policy of title insurance (including
endorsements), 1/2 of any escrow fee; Buyer’s attorneys’ fees; and other expenses
stipulated to be paid by Buyer under other provisions of this Contract.
	 
	 	(e)	 	Assessments, current taxes, rents and maintenance fees will be prorated as of
the Closing Date; provided, however, no prorations will be made for delinquent rents
existing as of the Closing. Proration of taxes will be made on the basis of (i) the
assessed value of the Land and Improvements for the year of Closing, if known, or the
assessed value of the Land and Improvements for the year before Closing, if such value
is not known, multiplied by (ii) the tax rates for the year of Closing, if known, or
the rates for the year before Closing, if not known, with a subsequent cash adjustment
of such proration to be made between Seller and Buyer, if necessary, within 30 days of
when actual tax figures are available. If any such charges, expenses, and income other
than taxes are unavailable at the Closing Date, then a readjustment of these items
shall be made within 30 days after the Closing. With respect to any delinquent
rentals, Buyer will make a reasonable attempt for 3 months following Closing (but shall
not be obligated) to collect the same for Seller’s benefit after the Closing in the
usual course of the operation of the Property and such collection, if any, will be
remitted to Seller promptly upon receipt by Buyer. Nothing contained herein shall
operate to require Buyer to institute any lawsuit or other collection procedure to
collect such delinquent rentals or to prohibit Seller from any such collection. Any
sums received by Buyer from any tenants owing delinquent rentals will be applied first
to the current portion of such tenant’s rent, then to any delinquent rentals owed with
respect to the period following Closing, and then (and only then) to delinquent rentals
owed with respect to the period before Closing. Buyer additionally agrees to pay or
reimburse all usual and customary finder’s fees, commissions and the like payable with
respect to any Tenant Leases that (1) are executed after the Effective Date and prior
to the Closing Date and (2) pursuant to which the Tenant takes occupancy of its unit on
or after the expiration of the Feasibility Period. At the Closing, Seller will pay to
Buyer in cash the amount of any security deposits actually paid to or received by
Seller under the Tenant Leases (and not as of the Closing Date returned to or forfeited
by tenants under Tenant Leases) and any prepaid rentals actually paid to or received by
Seller for periods subsequent to the Closing; provided, however, non-refundable
payments, deposits, or fees (including pet fees/deposits) collected by Seller shall not
be prorated. In making the prorations required by this Section 4, the economic
burdens and benefits of ownership of the Property for the Closing Date shall be
allocated to Buyer. The provisions of this Section 4(e) shall survive the
Closing.
	 
	 	(f)	 	Utilities and other customarily prorated expenses, including, without
limitation, water, sewer, gas, electricity, trash removal, and fire protection service,
and any contracts or agreements for services to the Property to be transferred to and
assumed by Buyer, to the extent paid for by Seller or required to be paid for by Seller
for a period after Closing, shall be prorated as of the Closing Date. Other expenses
relating to the Property up to the Closing Date and all periods prior thereto including
those required by any contract or agreement for any services to the Property and those
incurred or ordered by Seller or Seller’s agents that are not to be transferred and
assumed by Buyer, including, without limitation, insurance and administrative expenses,
shall be paid for by Seller, and Buyer shall not be liable therefor. Seller shall not
assign to Buyer, and Buyer shall not be entitled to, any deposits held by any utility
company or other company servicing the Property; instead, such deposits shall be
returned to Seller, and Buyer shall arrange and





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	 	 	 	bear all responsibility to arrange with
all utility companies to have accounts styled in Buyer’s name beginning on the Closing
Date. The provisions of this Section 4(f) shall survive the Closing.
	 
	 	(g)	 	At the Closing, Seller shall deliver to Buyer (or make available at the
Property), to the extent in Seller’s possession or control, originals of the Tenant
Leases, copies of the tenant correspondence files, keys, access codes, and originals of
any other items which Seller was required to furnish or make available pursuant to
Section 7, except for Seller’s general ledger and other internal books or
records which shall be retained by Seller.
	 
	 	(h)	 	If any apartment unit is vacated five (5) days or more prior to Closing, then,
prior to Closing, Seller shall use commercially reasonable diligence to return such
unit to rentable condition in accordance with Seller’s customary cleaning, painting,
and repair standards for vacant units, including causing all appliances to be cleaned
and in working order (the condition of such an apartment unit after cleaning is
referred to herein as a “Rent Ready Condition”). Buyer shall receive a credit
for each unit that became vacant on a date that is five or more days prior to Closing
and that is not in Rent Ready Condition at Closing in an amount agreed to by Seller and
Buyer. In the event Seller and Buyer cannot agree upon the amount with respect to any
unit or units which are not in Rent Ready Condition (“Disputed Units”), the sum
of $400.00 as to each Disputed Unit shall be withheld from the Sales Price at Closing
and deposited in an escrow account (“Make Ready Escrow Account”) maintained by
the Title Company under an Escrow Agreement to be agreed upon by Seller and Buyer at
Closing. Buyer shall be entitled to withdraw funds from the Escrow Amount as repairs
are made to the Disputed Units (up to a maximum of $400.00 per Disputed Unit) within
fifteen (15) days from presentation to the Title Company (with a copy to Seller) of a
request for disbursement accompanied by copies of paid third party invoices evidencing
such work (“Request for Disbursement”); provided, however, Seller shall have
the right to dispute such payment by sending written notice of such objection to the
Title Company and Buyer within ten (10) days following receipt of the Request for
Disbursement. The Title Company shall hold such funds in the Make Ready Escrow Account
as to the disputed Request for Disbursement until Seller and Buyer advise the Title
Company in writing as to the agreed disbursement of the disputed funds. The balance of
the Make Ready Escrow Account shall be paid to Seller upon the earlier to occur of (i)
the completion of the repairs to all of the Disputed Units; or (ii) thirty (30) days
from Closing.






	5.	 	FEASIBILITY STUDY AND INSPECTION.






	 	(a)	 	Buyer is granted the right to conduct engineering and/or market and economic
feasibility studies of the Property and a physical inspection of the Property,
including studies or inspections to determine the existence of any environmental
hazards or conditions (collectively, the “Feasibility Study”) during the period
(the “Feasibility Period”) commencing on the Effective Date and ending at 5:00
p.m., Dallas, Texas time on May 5, 2006. With Seller’s permission, after Seller has
received advance notice sufficient to permit it to schedule in an orderly manner
Buyer’s examination of the Property and to provide at least twenty-four (24) hours
advance written notice to any affected tenants, Buyer or its designated agents may
enter upon the Property for purposes of analysis or other tests and inspections deemed
necessary by Buyer for the Feasibility Study; provided, however, Buyer is not permitted
to perform any intrusive testing, including, without limitation, a Phase II
environmental assessment or boring, without (i) submitting to Seller the scope and
inspections for such testing; and (ii) obtaining the prior





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	 	 	 	written consent of Seller
which may be withheld in Seller’s sole and absolute discretion. Buyer shall not alter
the physical condition of the Property without notifying Seller of its requested tests,
and obtaining the written consent of Seller to any physical alteration of the Property.
Buyer will exercise its best efforts to conduct or cause to be conducted all
inspections and tests in a manner and at times which will not unreasonably interfere
with any tenant’s use and occupancy of the Property. If Buyer determines, in its sole
judgment, that the Property is not suitable for any reason for Buyer’s intended use or
purpose, or is not in satisfactory condition, then Buyer may terminate this Contract by
written notice to Seller prior to expiration of the Feasibility Period, in which case
the Earnest Money will be returned to Buyer, and neither party shall have any further
right or obligation hereunder other than as set forth herein with respect to rights or
obligations that survive termination. If the Contract is not terminated in the manner
and within the time provided in this Section 5, the condition provided in this
Section 5(a) and any and all objections with respect to the Feasibility Study
shall be deemed to have been waived by Buyer for all purposes. The Feasibility Study
shall be at Buyer’s sole cost and expense.
	 
	 	(b)	 	Buyer shall promptly restore the Property to its original condition if damaged
or changed due to the tests and inspections performed by Buyer, free of any mechanic’s
or materialman’s liens or other encumbrances arising out of any of the inspections or
tests, and shall provide Seller, at no cost to Seller, with a copy of the results of
any tests and inspections made by Buyer, excluding any market and economic feasibility
studies. Buyer shall keep confidential the results of any tests and inspections made
by Buyer, and shall not disclose said results to any third parties; other than Buyer’s
officers, directors, employees, affiliates, counsel, investment advisors, potential
lenders, partners, investors and participants and their advisors and other
representatives (collectively “Buyer Group”), and the Buyer Group shall be
informed to treat such information confidentially and in accordance with the terms and
conditions of this Contract. Buyer hereby indemnifies and holds Seller harmless from
all claims, liabilities, damages, losses, costs, expenses (including, without
limitation, reasonable attorneys’ fees), actions and causes of action arising out of or
in any way relating to the Feasibility Study performed by Buyer, its agents,
independent contractors, servants and/or employees, including those caused by or in any
way contributed to by the negligence of Seller, its agents, independent contractors,
servants and/or employees; provided such indemnity shall not extend to the gross
negligence or willful misconduct of the Seller, its agents, independent contractors,
servants and/or employees. Buyer further waives and releases any claims, demands,
damages, actions, causes of action or other remedies of any kind whatsoever against
Seller for property damages or bodily and/or personal injuries to Buyer, its agents,
independent contractors, servants and/or employees arising out of the Feasibility Study
or use in any manner of the Property. Buyer shall procure and continue in force from
and after the date Buyer first enters the Property, and continuing throughout the term
of this Contract, Comprehensive General Liability Insurance with a combined single
limit of not less than One Million Dollars ($1,000,000) per occurrence, or Commercial
General Liability Insurance, with limits of not less than One Million Dollars
($1,000,000) per occurrence and Two Million Dollars ($2,000,000) per event. Seller and
Thompson Realty Corporation shall be included as an additional insured(s) under such
comprehensive general liability or commercial general liability coverage. Such
insurance shall include: (i) personal injury liability with employee and contractual
exclusions removed; and (ii) a waiver of subrogation in favor of Seller without
exception for the negligence of any additional insured. Buyer will not be permitted to
come onto the Property unless and until Buyer has provided to Seller a





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	 	 	 	certificate of
insurance evidencing such coverage, the additional insured status of Seller, and such
waiver of subrogation. The provisions of this Section 5(b) shall survive the
Closing or any termination of this Contract and are not subject to any liquidated
damage limitation on remedies, notwithstanding anything to the Contrary in this
Contract.
	 
	 	(c)	 	During the Feasibility Period, Buyer shall review all Service Contracts
provided by Seller. Buyer shall notify Seller prior to the expiration of the
Feasibility Period of those Service Contracts that it disapproves, and Seller shall, at
Seller’s expense, terminate such disapproved Service Contracts effective not later than
the Closing Date. All Service Contracts not disapproved by Buyer during the
Feasibility Period shall be deemed to have been approved by Buyer, and Buyer shall
assume and be liable for any and all obligations under the respective Service Contracts
extending past the Closing Date. Notwithstanding the foregoing, Buyer shall be deemed
to have approved and shall have no right to reject those Service Contracts that, by
their terms, cannot be terminated by Seller without the payment of a penalty,
termination fee, or other charge.






	6.	 	TITLE APPROVAL.






	 	(a)	 	Seller has previously delivered to Buyer and Buyer acknowledges receipt of: (i)
a Commitment for Title Insurance with copies of all recorded instruments affecting the
Property and recited as exceptions in said Commitment for Title Insurance
(collectively, the “Commitment”) and (ii) the most current survey of the
Property in Seller’s possession or control (“Existing Survey”). If Buyer has
an objection to items disclosed in the Commitment or the Existing Survey, then Buyer
will be entitled to give Seller written notice of its objections for a period of ten
(10) Business Days following the receipt of the Commitment and the Existing Survey. If
Buyer gives timely written notice of its objections, then Seller may, but shall not
have any obligation to, cure such objections for a period of five (5) days from the
date Seller receives Buyer’s notice (“Seller’s Cure Period”). Seller shall
utilize reasonable diligence to cure any errors in the Commitment, provided Seller
shall not have any obligation to expend any money, to incur any contractual or other
obligations, or to institute any litigation in pursuing such efforts other than to
remove at Closing financing liens of an ascertainable amount created by, through, or
under Seller; further provided, notwithstanding the foregoing, Seller is required to
cure any objection that may be cured by performance of the following acts: (A)
satisfaction of any mortgages placed upon the Property by Seller or expressly assumed
by Seller as a lien to secure indebtedness; or (B) causing the release of any
mechanic’s liens placed upon the Property by a third party in connection with work
performed or alleged to have been performed on the Property by, or at the request of,
Seller (collectively “Monetary Encumbrances”). At Seller’s option, Seller may
elect to cure an objection made by Buyer by causing the Title Company to issue an
endorsement to “insure over” such objection (“Seller’s Curative Endorsement”).
If any objection is not satisfied during Seller’s Cure Period, then Buyer shall elect
not later then five (5) days after the expiration of Seller’s Cure Period, but in any
event on or before expiration of the Feasibility Period, as its sole and exclusive
remedy to either: (i) terminate this Contract, in which case the Earnest Money shall be
refunded to Buyer, and neither party will have any further rights or obligations
pursuant to this Contract, other than as set forth herein with respect to rights or
obligations that survive termination; or (ii) waive the unsatisfied objection (which
shall thereupon become a Permitted Exception) and proceed to Closing. Any exception to
title not objected to by Buyer in the manner and within the time period specified in
this Section 6(a) shall be deemed accepted by Buyer. At least thirty (30) days
prior to the Closing Date, Seller shall, at Seller’s sole cost and expense, obtain and
cause to be





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	 	 	 	delivered to Buyer an update of the Existing Survey (“New Survey”)
which shall depict the location of New Buildings together with any sidewalks and paving
installed in connection with the New Buildings. If the New Survey shows exceptions not
previously shown on the Existing Survey (individually a “New Exception” and
collectively the “New Exceptions”), Buyer may object to such New Exceptions in
accordance with the mechanism contained in this Section 6(a); provided Buyer
shall have no right to object to any New Exception if the New Exception (i) is a
utility service easement (“Service Easement”) whereby the public utility
provides utility service to any portion of the Improvements (including the New
Buildings) and the Improvements do not encroach into the boundaries of the Service
Easement; or (ii) reflects the addition of paving, sidewalks or landscaping and such
additional of paving, sidewalks or landscaping does not cause the Property to violate
applicable law or applicable restrictions, or (iii) the location of the New Buildings
is the New Buildings are substantially in the locations depicted on Exhibit H
attached hereto and the location does not cause the Property to violate applicable law
or applicable restrictions. The phrase “Permitted Exceptions” means those
exceptions to title set forth in the Commitment or Existing Survey or the New Survey
and that have been accepted or deemed accepted by Buyer. The failure of Seller to
deliver a Commitment or the Existing Survey satisfying the requirements of this
Section 6(a) will not under any circumstances extend the period for review of
the Commitment or Existing Survey beyond the Feasibility Period, and Buyer’s sole and
exclusive remedy for any such failure shall be to terminate this Contract prior to the
expiration of the Feasibility Period in accordance with the provisions of Section
5(a). Buyer shall notify Seller in writing of any failure of the Commitment or
Existing Survey to satisfy the requirements of this Section 6(a) within ten
(10) days after the Commitment and Existing Survey are received by Buyer, and if Buyer
fails to do so, then they shall be deemed to satisfy such requirements.
	 
	 	(b)	 	After the Effective Date, Seller shall not intentionally or deliberately place
on the Property any encumbrance (references to “encumbrance” include any lien,
encumbrance, or other exception to title) other than new Tenant Leases as permitted by
the terms of this Contract. If prior to the Closing Date title to the Property becomes
subject to any encumbrance other than a Permitted Exception, then Seller may (but shall
not be obligated to) attempt to cure such encumbrance; provided Seller shall be
obligated to remove any Monetary Encumbrance. If Seller is unable or unwilling to cure
any such encumbrance, then Buyer may, as its sole and exclusive remedy either: (i)
terminate this Contract by written notice to Seller whereupon the Earnest Money and any
Extension Fee shall be returned to Buyer, and neither party will have any right or
obligation hereunder other than as set forth herein with respect to rights or
obligations that survive termination; or (ii) proceed to Closing without receiving any
credit against or reduction of the Sales Price whereupon Buyer shall be deemed to have
accepted such encumbrance as an exception to title (which shall thereupon become a
Permitted Exception).






	7.	 	SUBMISSION MATTERS.






	 	(a)	 	To the extent that Seller has not already done so, Seller shall within five (5)
business days deliver to Buyer copies of the following (the “Submission
Matters”), to the extent (and only to the extent) that such items are available and
in Seller’s actual possession:






	 	(i)	 	revenue and expense reports, or equivalent, in the form
prepared by the property manager for the most recent twenty-four (24) months
(“Operating Reports”);





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	 	(ii)	 	copies of any Service Contracts which are currently in effect;
	 
	 	(iii)	 	the aged delinquency report(s) for the previous twelve (12)
months, in the form prepared by the property manager;
	 
	 	(iv)	 	Seller’s most current Owner’s Title Policy (with the amount of
the coverage removed);
	 
	 	(v)	 	an inventory of the Personal Property, which inventory shall
identify which items are leased and which items are owned by, as appropriate,
the Seller or Seller’s property manager;
	 
	 	(vi)	 	a rent roll, as of a recent date in the form provided to Seller
by its property manager (“Rent Roll”);
	 
	 	(vii)	 	copies of all tax (real and personal property) bills for the
current year and the immediately preceding year together with the current tax
assessment information;
	 
	 	(viii)	 	copies of all utility bills for the most recent twelve (12) months;
	 
	 	(ix)	 	the Phase I Environmental Site Assessment prepared by
Raba-Kistner Consultants, Inc., Project NO. ASF99-163-00, dated September, 1999
(“Existing Environmental Report”); and
	 
	 	(x)	 	the insurance claim report for any insurance claims made with
regard to the Property in the most recent twelve (12) months.






	 	(b)	 	In addition, Seller has or will cause to be made available to Buyer for
inspection at the Property the following (the “Additional Submission Matters”),
to the extent (and only to the extent) that such items are available and in Seller’s
actual possession or control:






	 	(i)	 	copies of any plans and specifications;
	 
	 	(ii)	 	maintenance records for the Property;
	 
	 	(iii)	 	tenant correspondence files;
	 
	 	(iv)	 	books and records for the Property;
	 
	 	(v)	 	copies of Tenant Leases;
	 
	 	(vi)	 	copies of the plans for the New Buildings (“New Building Plans”)
	 
	 	(vii)	 	copies of any certificates of occupancy; and
	 
	 	(viii)	 	copies of any warranties or guaranties applicable to the Property.






	 	(c)	 	As soon as practicable, Seller shall provide to Buyer a written report dated
within 30 days of the Effective Date by a licensed pest control agent showing no
visible property damage or infestation from termites or other pests (“Termite
Report”). If the Termite Report shows any visible property damage or infestation
from termites or other pests, Seller shall either repair such damage prior to the
Closing or Buyer shall have the option to either: (i)





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	 	 	 	terminate this Contract, in which
case the Earnest Money shall be refunded to Buyer, and neither party will have any
further rights or obligations pursuant to this Contract, other than as set forth herein
with respect to rights or obligations that survive termination; or (ii) waive the
unsatisfied objection and proceed to Closing.
	 
	 	(d)	 	Any failure of Seller to timely deliver any of the Submission Matters or make
available any of the Additional Submission Matters will not extend the Feasibility
Period beyond the period prescribed in Section 5(a) hereof, and Buyer’s sole
and exclusive remedy on account of any such failure will be to terminate this Contract
prior to the expiration of the Feasibility Period in accordance with the provisions of
such Section 5(a). Except as expressly provided in Section 12 hereof,
Seller makes no representation or warranty, express or implied, as to the accuracy or
completeness of the information contained in the Submission Matters or the Additional
Submission Matters.
	 
	 	(e)	 	The non-public Submission Materials, the Additional Submission Matters and the
Termite Report (together with any other information regarding the Property made
available to Buyer) are confidential and shall not be distributed or disclosed by Buyer
to any person or entity, except as may be required by law, provided that Buyer may
disclose the Submission Materials to the Buyer Group provided such parties are made
aware of the confidential nature of such information. If the transaction evidenced
hereby fails to close for any reason whatsoever, Buyer shall return to Seller all
copies of the Submission Materials which Seller or its agents may have delivered to
Buyer (together with any other information regarding the Property made available to
Buyer).






	8.	 	BROKER’S FEE. Buyer and Seller represent and warrant to each other that no real
estate commissions, finders’ fees, or brokers’ fees have been or will be incurred in
connection with the sale of the Property by Seller to Buyer other than William M. Woodall P.C.
(“Broker”). Seller shall pay a commission to Broker pursuant to a separate agreement
between Seller and Broker. Such commissions shall be deemed earned and shall be due and
payable only if, as and when the sale contemplated by this Contract is consummated. Buyer and
Seller shall indemnify, defend and hold each other harmless from any claim, liability,
obligation, cost or expense (including attorneys’ fees and expenses) for fees or commissions
relating to Buyer’s purchase of the Property asserted against either party by any broker or
other person (other than the Broker) claiming by, through or under the indemnifying party or
whose claim is based on the indemnifying party’s acts. The terms and provisions hereof
supersede in their entirety any prior agreements or understandings of any kind or character
between Seller and Broker with respect to the payment of a commission, finder’s fee or other
sum in connection with the sale of the Property. The provision of this Section 8
shall survive the Closing or any termination of this Contract.
	 
	9.	 	LIMITATION OF SELLER’S REPRESENTATIONS AND WARRANTIES.






	 	(a)	 	BUYER ACKNOWLEDGES THAT EXCEPT FOR ANY EXPRESS WARRANTIES AND REPRESENTATIONS
CONTAINED IN THIS CONTRACT OR ANY INSTRUMENT, DOCUMENT, OR AGREEMENT TO BE DELIVERED TO
BUYER AT CLOSING, BUYER IS NOT RELYING ON ANY WRITTEN, ORAL, IMPLIED, OR OTHER
REPRESENTATIONS, STATEMENTS, OR WARRANTIES BY SELLER OR ANY AGENT OF SELLER OR ANY REAL
ESTATE BROKER OR SALESMAN. ALL PREVIOUS WRITTEN, ORAL, IMPLIED, OR OTHER STATEMENTS,
REPRESENTATIONS, WARRANTIES, OR AGREEMENTS, IF ANY, ARE MERGED HEREIN. EXCEPT AS
EXPRESSLY SET FORTH HEREIN, SELLER SHALL NOT HAVE ANY LIABILITY TO BUYER, AND BUYER
SHALL RELEASE SELLER





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	 	 	 	FROM ANY LIABILITY (INCLUDING, WITHOUT LIMITATION, CONTRACTUAL
AND/OR STATUTORY ACTIONS FOR CONTRIBUTION OR INDEMNITY), FOR, CONCERNING, OR REGARDING:
(A) THE NATURE AND CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE
SUITABILITY THEREOF FOR ANY ACTIVITY OR USE; (B) ANY IMPROVEMENTS OR SUBSTANCES LOCATED
THEREON; OR (C) THE COMPLIANCE OF THE PROPERTY WITH ANY LAWS, RULES, ORDINANCES, OR
REGULATIONS OF ANY GOVERNMENT OR OTHER BODY. EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 12, SELLER HAS NOT MADE, DOES NOT MAKE, AND EXPRESSLY DISCLAIMS, ANY
WARRANTIES, REPRESENTATIONS, COVENANTS OR GUARANTEES, EXPRESSED OR IMPLIED, OR ARISING
BY OPERATION OF LAW, AS TO THE MERCHANTABILITY, HABITABILITY, QUANTITY, QUALITY, OR
ENVIRONMENTAL CONDITION OF THE PROPERTY OR ITS SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR USE. BUYER AFFIRMS THAT IT: (I) HAS OR WILL HAVE HAD THE
OPPORTUNITY TO HAVE INVESTIGATED AND INSPECTED THE PROPERTY AND IS FAMILIAR AND
SATISFIED WITH THE PHYSICAL CONDITION OF THE PROPERTY; AND (II) HAS MADE OR WILL HAVE
AN OPPORTUNITY TO MAKE ITS OWN DETERMINATION AS TO THE MERCHANTABILITY, QUANTITY,
QUALITY, AND CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE POSSIBLE
PRESENCE OF TOXIC OR HAZARDOUS SUBSTANCES OR WASTE OR OTHER ENVIRONMENTAL CONTAMINATION
AND THE PROPERTY’S SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE. BUYER
HEREBY ACCEPTS THE PROPERTY IN ITS PRESENT CONDITION (INCLUDING ENVIRONMENTAL
CONDITIONS) ON AN “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” BASIS. BUYER FURTHER
ACKNOWLEDGES THAT WITHOUT THIS ACCEPTANCE, THIS SALE WOULD NOT BE MADE AND THAT EXCEPT
AS EXPRESSLY SET FORTH IN THIS CONTRACT, SELLER WILL NOT UNDER ANY CIRCUMSTANCES HAVE
ANY OBLIGATION WHATSOEVER TO UNDERTAKE ANY REPAIR, ALTERATION, REMEDIATION, OR OTHER
WORK OF ANY KIND WITH RESPECT TO ANY PORTION OF THE PROPERTY. BUYER AND ITS SUCCESSORS
AND ASSIGNS HAVE, AND SHALL BE DEEMED TO HAVE, ASSUMED ALL RISK AND LIABILITY WITH
RESPECT TO THE PRESENCE OF TOXIC OR HAZARDOUS SUBSTANCES OR WASTE OR OTHER
ENVIRONMENTAL CONTAMINATION ON OR WITHIN OR UNDER THE SURFACE OF THE PROPERTY, WHETHER
KNOWN OR UNKNOWN, APPARENT, NON-APPARENT OR LATENT, AND WHETHER EXISTING PRIOR TO, AT,
OR SUBSEQUENT TO, TRANSFER OF THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THIS
CONTRACT, BUYER AND ITS SUCCESSORS AND ASSIGNS HEREBY RELEASE SELLER OF AND FROM ANY
AND ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND CLAIMS, KNOWN OR UNKNOWN,
INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION TO TAKE THE PROPERTY BACK OR REDUCE THE
PRICE, OR ACTIONS FOR CONTRIBUTION OR INDEMNITY, THAT BUYER OR ITS SUCCESSORS AND
ASSIGNS MAY HAVE AGAINST SELLER OR THAT MAY ARISE IN THE FUTURE, BASED IN WHOLE OR IN
PART, UPON THE PRESENCE OF TOXIC OR HAZARDOUS SUBSTANCES OR WASTE OR OTHER
ENVIRONMENTAL CONTAMINATION ON OR WITHIN OR UNDER THE SURFACE OF THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND CLAIMS
THAT MAY ARISE UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND





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	 	 	 	LIABILITY ACT, AS AMENDED 42 U.S.C. § 9601 ET SEQ. BUYER FURTHER ACKNOWLEDGES THAT THE
PROVISIONS OF THIS DISCLAIMER AND RELEASE HAVE BEEN FULLY EXPLAINED TO BUYER AND THAT
BUYER FULLY UNDERSTANDS AND ACCEPTS SAME. THE PROVISIONS OF THIS DISCLAIMER AND
RELEASE SURVIVE CLOSING.
	 
	 	(b)	 	Except as otherwise specifically stated in this Contract, Buyer agrees that
Seller shall not be responsible or liable to Buyer for any construction defects,
errors, omissions, or on account of any other conditions affecting the Property, as
Buyer is purchasing the Property AS IS, WHERE IS, and
WITH ALL FAULTS. Buyer or anyone claiming by, through or under
Buyer, hereby fully releases Seller, its employees, officers, directors,
representatives, attorneys and agents from any claim, cost, loss, liability, damage,
expense, demand, action or cause of action arising from or related to any construction
defects, errors, omissions, or other conditions affecting the Property. Buyer further
acknowledges and agrees that this release shall be given full force and effect
according to each of its expressed terms and provisions, including, without limitation,
those relating to unknown and suspected claims, damages and causes of action. This
covenant releasing Seller shall be a covenant running with the Property and shall be
binding upon Buyer, its successors and assigns. Subject to consummation of this
Contract, Seller hereby assigns to Buyer, without recourse or representation of any
nature, effective upon Closing, any and all claims that Seller may have against any
third party for any such errors, omissions or defects in the Property. As a material
covenant and condition of this Contract, Buyer agrees that in the event of any such
construction defects, errors, omissions or on account of any other conditions affecting
the Property, Buyer shall look solely to Seller’s predecessors in title or to such
contractors and consultants as may have contracted for work in connection with the
Property for any redress or relief. Upon the assignment by Seller of its claims, Buyer
releases Seller of all rights, express or implied, Buyer may have against Seller
arising out of or resulting from any errors, omissions or defects in the Property.
Buyer further understands that some of Seller’s predecessors in title may have filed
petitions under the bankruptcy code and Buyer may have no remedy against such
predecessors, contractors or consultants. This waiver and release of claims shall
survive the Closing.






	10.	 	DEFAULT.






	 	(a)	 	Seller’s Remedies. If Buyer fails to perform its obligations pursuant
to this Contract at or prior to Closing for any reason except failure by Seller to
perform hereunder, or if prior to Closing any one or more of Buyer’s representations or
warranties are breached in any material respect, then Seller shall be entitled, as its
SOLE and EXCLUSIVE remedy (except as provided in Sections 5(b) and 8), to
terminate this Contract and retain the Earnest Money as liquidated damages and not as
penalty, in full satisfaction of claims against Buyer hereunder. Seller and Buyer
agree that Seller’s damages resulting from Buyer’s default are difficult, if not
impossible, to determine, and the Earnest Money is a fair estimate of those damages and
has been agreed to in an effort to cause the amount of such damages to be certain.
Notwithstanding anything in this Section 10(a) to the contrary, in the event of
Buyer’s default or termination of this Contract, Seller shall have all remedies
available at law or in equity if Buyer or any party related to or affiliated with Buyer
is asserting any claims or right to the Property that would otherwise delay or prevent
Seller from having clear, indefeasible and marketable title to the Property.





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	 	(b)	 	Buyer’s Remedies. If Seller fails to perform its obligations pursuant
to this Contract for any reason except failure by Buyer to perform hereunder, or if
prior to Closing any one or more of Seller’s representations or warranties are breached
in any material respect, then Buyer shall elect, as its SOLE and EXCLUSIVE remedy, to
either: (i) terminate this Contract by giving Seller timely written notice of such
election prior to or at Closing and recover the Earnest Money and any Extension Fee,
together with Buyer’s actual, third party, out of pocket costs and expenses incurred in
connection with Buyer’s Feasibility Study, up to a maximum cumulative reimbursement not
to exceed $25,000.00; or (ii) enforce specific performance; provided, however, if —
and only if — the remedy of specific performance is not available to Buyer due to
Seller’s prior sale of the Property to a third party, then Buyer shall have the
additional remedy of terminating the Agreement and recovering from Seller an amount
equal to the sum of Buyer’s documented, out-of-pocket third party costs paid or
incurred in connection with the acquisition of the Property, or (iii) waive said
failure or breach and proceed to Closing. Notwithstanding anything herein to the
contrary, Buyer shall be deemed to have elected to terminate this Contract if Buyer
fails to deliver to Seller written notice of its intent to file a claim or assert a
cause of action for specific performance against Seller on or before fifteen (15)
business days following the scheduled Closing Date or, having given such notice, fails
to file a lawsuit asserting such claim or cause of action in Bexar County, Texas,
within two (2) months following the scheduled Closing Date. In no event or
circumstance shall Buyer be entitled to any consequential or punitive damages. Buyer’s
remedies shall be limited to those described in this Section 10(b).
	 
	 	11.	 	ATTORNEYS’ FEES. Any party to this Contract who is the prevailing party in any legal
proceeding against the other party brought under or with respect to this Contract or
transaction shall be additionally entitled to recover court costs and reasonable attorneys’
fees from the non-prevailing party.
	 
	 	12.	 	REPRESENTATIONS AND WARRANTIES OF SELLER.






	 	(a)	 	Seller hereby represents and warrants to Buyer, which representations and
warranties shall be deemed made by Seller to Buyer as of the Effective Date and also as
of the Closing Date:






	 	(i)	 	To Seller’s knowledge, there are no parties in possession of
any portion of the Property except Seller and tenants under Tenant Leases;
	 
	 	(ii)	 	To Seller’s knowledge, except as provided in the Rent Rolls,
neither Seller nor any tenant is in default of any material obligation pursuant
to the terms of the Tenant Leases;
	 
	 	(iii)	 	Seller has, or on the Closing Date will have, the partnership
power and authority to sell and convey the Property as provided in this
Contract and to carry out Seller’s obligations hereunder, and that all
requisite partnership action necessary to authorize Seller to enter into this
Contract and to carry out Seller’s obligations hereunder has been, or on the
Closing Date will have been, taken;
	 
	 	(iv)	 	To Seller’s knowledge, the Operating Reports are true and
correct in all material respects;





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	 	(v)	 	Seller has received no written notice from any government
agency having jurisdiction over the Land or Improvements that either considers
the construction of the Improvements or the operation or use of the Property to
be in violation of any law, ordinance, regulation or order;
	 
	 	(vi)	 	Without any other investigation or inquiry of any kind, except
as may be lawfully located on the Property and except as disclosed in the
Existing Environmental Report, to Seller’s knowledge, there are no Hazardous
Materials in, attributable to or affecting the Land or Improvements. As used
herein, a “Hazardous Material” means any hazardous, toxic or dangerous
waste, substance or material, pollutant or contaminant, as defined for purposes
of any Environmental Laws or any other federal, state or local law, ordinance,
rule, regulation or other enforcement vehicle applicable to the Property, or
any substance which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous, or any substance
which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs), or radon gas, urea formaldehyde, asbestos or
lead. “Environmental Laws” means all federal, state and local laws,
ordinances, rules and regulations now or hereafter in force, as amended from
time to time, and all federal and state court decisions, consent decrees and
orders interpreting or enforcing any of the foregoing, in any way relating to
or regulating human health or safety, or industrial hygiene or environmental
conditions, or protection of the environment, or pollution or contamination of
the air, soil, surface water or groundwater, and includes the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §
9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et
seq., and the Clean Water Act, 33 U.S.C. § 1251, et seq.;
	 
	 	(vii)	 	There are no actions, suits or proceedings pending for which
Seller has received service of process, before or by any judicial,
administrative or union body, any arbiter or any governmental authority,
against or affecting Seller or the Property. To Seller’s knowledge, Seller has
not received any written notice of a pending or threatened eminent domain or
similar proceeding that would affect the Land or Improvements;
	 
	 	(viii)	 	Seller is not a “foreign person” as defined in Section 1445 of the Internal
Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder;
	 
	 	(ix)	 	Neither Seller, nor any of its affiliates, nor any of their
respective partners, members, shareholders or other equity owners, and none of
their respective employees, officers, directors, representatives or agents, is,
nor will they become, a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of the Office of Foreign Asset
Control (“OFAC”) of the Department of the Treasury (including those
named on OFAC’s Specially Designated and Blocked Persons List) or under any
statute, 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 other governmental action and is
not and will not engage in any dealings or transactions or be otherwise
associated with such persons or entities;





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	 	(x)	 	To Seller’s knowledge, there are no lease brokerage agreements,
leasing commission agreements or other agreements providing for payments of any
amounts for leasing activities or procuring tenants with respect to the
Property other than as disclosed in the Submission Matters or as set forth in
the Tenant Leases;
	 
	 	(xi)	 	To Seller’s knowledge, this Contract does not and the
transaction contemplated in this Contract will not violate any provision of any
agreement or judicial order to which Seller is a party or to which Seller or
the Property is subject; and
	 
	 	(xii)	 	Seller does not currently have any employees.






	 	(b)	 	Whenever the phrases “to Seller’s actual knowledge,” “to Seller’s
knowledge,” or “to the best of Seller’s knowledge” or any similar phrase is
used herein, such phrases shall be deemed to mean the present, actual knowledge (as
opposed to the imputed knowledge), without inquiry or investigation, of such fact or
condition by W. T. Field, (President of Thompson Realty Development Corporation, the
corporate general partner of Seller) (“Seller’s Representative”). The
representations and warranties contained in Section 12(a) are the
representations and warranties of Seller and in no event or circumstances will be
construed as either the individual representations and warranties of Seller’s
Representative or to create any individual liability for Seller’s Representative.
	 
	 	(c)	 	It shall be a condition precedent to Buyer’s obligations hereunder that as of
the date of Closing, all of Seller’s representations and warranties shall be true and
correct in all material respects. If the representations and warranties of Seller
which to Sellers actual knowledge were true and correct when made are not true and
correct in all material respects on the date of Closing, then Buyer may, at its option,
(a) waive such condition and close this transaction in accordance with the terms and
provisions of this Contract or, (b) terminate this Contract by notice in writing to
Seller and receive back the Earnest Money whereupon neither party shall have any
further rights or obligations pursuant to this Contract, other than as set forth herein
with respect to rights or obligations that survive termination.
	 
	 	(d)	 	Subject to the provisions of Section 12(e), the representations and
warranties of Seller made in Section 12(a) shall survive the Closing for a
period of six (6) months (the “Survival Period”). Buyer shall have the right
to bring an action against the Seller on the breach of a representation or warranty
hereunder, but only on the following conditions: (i) the Buyer first learns of the
breach after Closing and files such action within the Survival Period, and (ii) Buyer
shall not have the right to bring a cause of action for a breach of a representation or
warranty unless the damage to such party on account of such breach (individually or
when combined with damages from other breaches) equals or exceeds Twenty-Five Thousand
and No/100 Dollars ($25,000.00). Furthermore, Buyer agrees that the maximum liability
of Seller for the alleged breach of any or all representations or warranties set forth
in this Contract is limited to Two Hundred Thousand and No/100 Dollars ($200,000.00).
The provisions of this Section 12(d) shall survive the Closing.
	 
	 	(e)	 	If any representation or warranty above is known by Buyer prior to Closing to
be untrue and is not remedied by Seller prior to Closing, Buyer may as Buyer’s sole and
exclusive remedy, either (i) terminate this Contract whereupon the Earnest Money and
any Extension Fee shall be refunded to Buyer, and neither party shall have any further
rights





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	 	 	 	or obligations pursuant to this Contract, other than as set forth herein with
respect to rights or obligations that survive termination, or (ii) waive its objections
and close the transaction without any reduction or credit against the Sales Price. The
foregoing representations and warranties shall not survive the Closing.






	13.	 	COVENANTS OF SELLER. From the Effective Date until Closing, Seller shall:






	 	(a)	 	Maintain and operate the Property in its current state and condition,
reasonable wear and tear and damage from casualty excepted.
	 
	 	(b)	 	Continue all insurance policies relative to the Property in full force and
effect.
	 
	 	(c)	 	Not remove any item of Personal Property from the Land or Improvements unless
replaced by a comparable item of Personal Property, except for any dead landscaping,
which Seller shall have no obligation to replace.
	 
	 	(d)	 	Refrain from entering into any contracts, or other agreements (excluding
leases) regarding the Property (other than contracts in the ordinary and usual course
of business and which are cancelable by the owner of the Property within thirty (30)
days after giving notice thereof without penalty).
	 
	 	(e)	 	Use commercially reasonable efforts to cause the New Buildings to be
constructed substantially in accordance with the New Building Plans.
	 
	 	(f)	 	Seller shall conduct its leasing activities in the normal course of business.
All new Tenant Leases shall be on the form of lease currently used by Seller or such
other form as may be approved by Buyer and Seller. All new leases shall be entered
into in conformity with the lease guidelines (“Lease Guidelines”) attached
hereto as Exhibit G, including lease term, rental rates and leasing
concessions, or as otherwise proposed by Seller and approved by Buyer. Seller will not
grant any move-in incentive to tenants greater those provided in the Lease Guidelines.
	 
	 	(g)	 	Perform Seller’s material obligations under the Tenant Leases, in accordance
with Seller’s prior operations.
	 
	 	(h)	 	Provide to Buyer copies of current rent rolls in the same form as the Rent Roll
which will be deemed to supplement the Rent Roll promptly following receipt by Seller.
	 
	 	(i)	 	Provide to Buyer copies of updated operating statements as received by Seller
in accordance with its current course of business.
	 
	 	(j)	 	Apply any security or other deposits except in the ordinary course of Seller’s
business in accordance with Seller’s prior operations.






	14.	 	USE OF PROPERTY. Seller has not claimed the benefit of laws permitting a special use
valuation for the purposes of payment of ad valorem taxes on the Property. If a previous
owner claimed such benefit and, after the purchase is closed, Buyer changes the use of the
Property from its present use and the same results in the assessment of additional taxes, such
additional taxes will be the obligation of the Buyer, notwithstanding that some or all of such
additional taxes may relate back to the period prior to Closing.





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	15.	 	CONDEMNATION. Seller agrees to give Buyer prompt notice of any condemnation action
affecting the Land, the Improvements or the Personal Property between the Effective Date and
the Closing Date. If prior to the Closing Date condemnation proceedings are commenced against
any material portion of the Property, then this Contract shall terminate and the Earnest Money
and any Extension Fee shall be refunded to Buyer. A “material portion of the Property” as
used herein shall mean at least ten percent (10%) of the square footage of the structural
Improvements or parking such that the Property does not comply with applicable law, or loss or
relocation of the primary entrance to the Property, or loss or relocation of the primary
entrance sign for the Property. If prior to the Closing Date condemnation proceedings are
commenced against less than a material portion of the Property, then this Contract shall not
terminate, but at Closing Seller shall assign to Buyer any condemnation award and the Sales
Price shall not be reduced.
	 
	16.	 	DAMAGE TO PROPERTY. Seller agrees to give Buyer prompt notice of any fire or other
casualty affecting the Land, the Improvements or the Personal Property between the Effective
Date and the Closing.






	 	(a)	 	If prior to the Closing either (i) the Property is damaged by an uninsured
casualty costing TWO-HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00) or more to
repair and Seller is unwilling or unable to repair such damage on or prior to the
Closing; or (ii) the Property is damaged by fire or other casualty which is insured
that would cost TWO-HUNDRED FIFTY-THOUSAND AND NO/100 DOLLARS ($250,000.00) or more to
repair, then in any such event, either Buyer or Seller may, at its option, elect to
terminate this Contract by written notice to the other party within twenty (20) days
after the date of Seller’s notice to Buyer of the casualty or at the Closing, whichever
is earlier, in which case the Earnest Money and any Extension Fee shall be refunded to
Buyer, and neither party shall have any further rights or obligations hereunder, other
than as set forth herein with respect to rights and obligations that survive
termination. If neither Buyer nor Seller timely makes its election to terminate this
Contract, then the Closing shall take place as provided herein without reduction of the
Sales Price (except for (i) the amount equal to Seller’s deductible under its insurance
policies and (ii) the amount, be in no event more than TWO-HUNDRED THOUSAND AND NO/100
DOLLARS ($200,000.00) of the estimated cost to repair any uninsured casualty), and
there shall be assigned to Buyer at the Closing all interest of Seller in and to any
casualty insurance proceeds, including, to the extent assignable the proceeds of any
business interruption or loss of rental insurance.
	 
	 	(b)	 	If prior to the Closing there shall occur damage to the Property caused by fire
or other casualty which is insured that would cost less TWO-HUNDRED FIFTY-THOUSAND AND
NO/100 DOLLARS ($250,000.00) to repair, then in any such event, Buyer shall have no
right to terminate this Contract, but there shall be assigned to Buyer at Closing all
interest of Seller in and to any casualty insurance proceeds that may be payable to
Seller on account of any such occurrence, including, to the extent assignable the
proceeds of any business interruption or loss of rental insurance and the Sales Price
shall be reduced by an amount equal to Seller’s deductible under its insurance
policies.
	 
	 	(c)	 	Seller and Buyer both agree to use the Seller’s insurance adjuster’s assessment
to determine the amount of damages.






	17.	 	REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller,
which representations and warranties shall be deemed made by Buyer to Seller as of the
Effective Date and also as of the Closing Date:





Contract of Sale — Hidden Lake Apartments



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	 	(a)	 	Buyer has the full right, power and authority to purchase the Property as
provided in this Contract and to carry out Buyer’s obligations hereunder, and that all
requisite action necessary to authorize Buyer to enter into this Contract and to carry
out Buyer’s obligations hereunder has been taken.
	 
	 	(b)	 	Neither Buyer, nor any of its affiliates, nor any of their respective partners,
members, shareholders or other equity owners, and none of their respective employees,
officers, directors, representatives or agents, is, nor will they become, a person or
entity with whom U.S. persons or entities are restricted from doing business under
regulations of OFAC (including those named on OFAC’s Specially Designated and Blocked
Persons List) or under any statute, 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 other governmental action and is not and
will not engage in any dealings or transactions or be otherwise associated with such
persons or entities.






	 	 	Notwithstanding anything herein to the contrary, any breach by Buyer of any of the foregoing
representations or warranties shall constitute a default by Buyer hereunder, and Seller may
thereupon, at its option, terminate this Contract by giving written notice thereof, in which
event the Earnest Money shall be paid to Seller as liquidated damages, and neither Buyer nor
Seller shall have any further rights or liabilities hereunder, except as otherwise provided
herein.
	 
	18.	 	MISCELLANEOUS.






	 	(a)	 	All notices, demands, and requests and other communications required or
permitted hereunder shall be in writing and shall be deemed to be delivered when
actually received by telecopy or personal delivery or, if earlier and regardless
whether actually received or not, (i) upon deposit with a nationally recognized
overnight courier for next business day delivery, charges prepaid, or (ii) upon three
(3) business days following deposit in a regularly maintained receptacle for the United
States mail, registered or certified, postage prepaid, in either such event to be
addressed to the addressee as follows:




If to Seller:



TR Hidden Lake Partners, Ltd.

c/o Thompson Realty Corporation

2505 N. Plano Road, Ste 3000

Richardson, TX 75082

Attention: W. T. Field (Tom), President

Phone (972) 644-2400

Fax (972) 644-2411



with a copy to:



Thompson Realty Corporation

2505 N. Plano Road, Ste 3000

Richardson, TX 75082

Attention: Kelly P. B. Drablos, Esq.

Vice President and Legal Counsel

Phone (972) 644-2400

Fax (972) 644-2411






Contract of Sale — Hidden Lake Apartments



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with an additional copy to:



Haynes and Boone, L.L.P.

2505 N. Plano Road, Suite 4000

Richardson, Texas 75082

Attention: Richard K. Martin, Esq.

Phone: (972)739-8634

Facsimile: (972)692-9114



If to Buyer:



Triple Net Properties, LLC

c/o ROC Realty Advisors, LLC

1606 Santa Rosa Drive, Suite 109

Richmond, Virginia 23229

Attention: Gus R. Remppies

Phone: (804) 225-1082

Facsimile: (804) 285-1376



with a copy to:



Hirschler Fleischer

701 East Byrd Street, 15th Floor

Richmond, VA 23219

Attention: David F. Belkowitz, Esq.

Phone: (804) 771-9546

Facsimile: (804) 644-0957





	 	(b)	 	This Contract shall be construed under and in accordance with the laws of the
State of Texas, and all obligations of the parties created hereunder are performable in
Bexar County, Texas.
	 
	 	(c)	 	This Contract shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, executors, administrators, legal representatives,
successors, and permitted assigns.
	 
	 	(d)	 	In case any one or more of the provisions contained in this Contract shall for
any reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof, and this Contract shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein. Furthermore, in lieu of any
such invalid, illegal or unenforceable provision, there shall be automatically added to
this Contract a provision as similar to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
	 
	 	(e)	 	This Contract, together with the Inspection Agreement dated as of March 15,
2006, by and between Seller and Purchaser, constitutes the sole and only agreement of
the parties hereto with respect to the subject matter hereof and supersedes any prior
understandings or written or oral agreements between the parties respecting the subject
matter hereof and cannot be changed except by their written consent.





Contract of Sale — Hidden Lake Apartments



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	 	(f)	 	Time is of the essence with this Contract.
	 
	 	(g)	 	Words of any gender used in this Contract shall be held and construed to
include any other gender, and words in the singular number shall be held to include the
plural, and vice versa, unless the context requires otherwise.
	 
	 	(h)	 	In accordance with the requirements of the Texas Real Estate License Act, Buyer
is hereby advised by Broker that (i) Buyer should be furnished with or obtain a policy
of title insurance or have the abstract covering the Property examined by any attorney
of its own selection, and (ii) unless otherwise agreed to in writing by the parties
hereto, Broker is being paid by Seller and is representing Seller in this transaction.
	 
	 	(i)	 	The covenants, indemnification obligations and the waiver and release by Buyer
set forth in Sections 5(b), 9(b) and 10, and the covenants and indemnification
obligations of Buyer and Seller set forth in Sections 4(e), 4(f) and 8, shall
survive consummation of Closing and any termination or cancellation of this Contract,
notwithstanding any contrary provisions hereof.
	 
	 	(j)	 	The parties may execute this Contract in one or more identical counterparts,
all of which when taken together will constitute one and the same instrument.
	 
	 	(k)	 	The parties hereto acknowledge that the parties and their respective counsel
have each reviewed and revised this Contract, and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Contract or any amendments or exhibits
hereto.
	 
	 	(l)	 	“Business Day” shall mean a date which is not a Saturday, Sunday or
holiday observed by federally chartered banks in the State of Texas, whenever any
determination is to be made or action to be taken on a date specified in this Contract
if such date falls upon a date which is not a Business Day, the date for such
determination or action shall be extended to the first Business Day immediately
thereafter.






	19.	 	ASSIGNMENT. Buyer may not assign this Contract without Seller’s prior written
consent, such consent to be given or denied in Seller’s sole and absolute discretion; provided
no consent of Seller shall be required in connection with the assignment of the Contract at
least five (5) Business Days prior to the Closing Date to any entity controlled by or managed
by Triple Net Properties, LLC. In event of any assignment of this Contract, Buyer shall
promptly provide a copy of such assignment to Seller.
	 
	20.	 	NONREFUNDABLE CONSIDERATION. Contemporaneously with the execution and delivery of
this Contract, Buyer has delivered to Seller and Seller hereby acknowledges the receipt of a
check in the amount of One Hundred Dollars ($100.00) (“Independent Contract
Consideration”), which amount the parties bargained for and agreed to as consideration for
Buyer’s exclusive right to inspect and purchase the Property pursuant to this Contract and for
Seller’s execution, delivery and performance of this Contract. The Independent Contract
Consideration is in addition to and independent of any other consideration or payment provided
in this Contract, is nonrefundable, and it is fully earned and shall be retained by Seller
notwithstanding any other provision of this Contract.
	 
	21.	 	WAIVER OF CONSUMER RIGHTS. Buyer, after consultation with an attorney of its own
selection (which counsel was not directly or indirectly identified, suggested or selected by
Seller





Contract of Sale — Hidden Lake Apartments



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	 	 	or any agent of Seller) hereby voluntarily waives its rights under the Deceptive Trade
Practices — Consumer Protection Act (Section 17.41, et seq., Business and Commerce Code), a
law that gives consumers special rights and protections. Buyer hereby acknowledges to Seller
that Buyer and Seller are not in a significantly disparate bargaining position.
	 
	22.	 	AUDIT. If Buyer, subject to the limitations of this Contract, assigns this Contract
to a publicly registered company promoted by Buyer (the “Registered Company”) and the
Registered Company acquires the Property pursuant to this Contract, Seller acknowledges that
the Registered Company is required to make certain filings with the Securities and Exchange
Commission (the “SEC Filings”) that relate to the most recent pre-acquisition fiscal
year (the “Audited Year”) for the Property. To assist the Registered Company in
preparing the SEC Filings, Seller agrees to provide the Registered Company with the following:






	 	(a)	 	Access to bank statements for the Audited Year;
	 
	 	(b)	 	Rent Roll as of the end of the Audited Year;
	 
	 	(c)	 	Operating Statements for the Audited Year;
	 
	 	(d)	 	Access to the general ledger for the Audited Year;
	 
	 	(e)	 	Cash receipts schedule for each month in the Audited Year;
	 
	 	(f)	 	Access to invoice for expenses and capital improvements in the Audited Year;
	 
	 	(g)	 	Copies of all insurance documentation for the Audited Year; and
	 
	 	(h)	 	Copies of accounts receivable aging as of the end of the Audited Year and an
explanation for all accounts over 30 days past due as of the end of the Audited Year.






	 	 	The provisions of this Section 22 shall survive Closing.
	 
	23.	 	BUYER’S CONDITIONS PRECEDENT. If any of the following conditions precedent to
Buyer’s obligations under this Contract is not satisfied, then Buyer may, at its option, waive
such condition and close this transaction, or, as Buyer’s sole and exclusive remedy, terminate
this Contract, in which event the Earnest Money shall be returned to Buyer, and neither party
shall have any further rights or obligations hereunder except other than as set forth herein
with respect to rights or obligations which survive termination:






	 	(a)	 	Each of the representations and warranties made by Seller in Section 12
shall be true and correct in all material respects when made and as of the Closing
Date.
	 
	 	(b)	 	Seller shall have performed or complied in all material respects with each
obligation and covenant required by applicable laws and by this Contract to be
performed or complied with by Seller on or before the Closing.
	 
	 	(c)	 	Seller shall have performed or complied in all material respects with each
material obligation and covenant required to be performed by Seller pursuant to the
Tenant Leases and the Service Contracts; provided that if Seller is in default of any
such obligation, Seller shall be afforded an opportunity to either cure such default or
to escrow at Closing an amount reasonably necessary to effect such cure.





Contract of Sale — Hidden Lake Apartments



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	 	(d)	 	Title to the Property and the other assets to be transferred hereunder shall be
delivered to Buyer in the manner required under Section 6.
	 
	 	(e)	 	From the expiration of the Feasibility Period to the Closing Date, there has
been no unlawful introduction of Hazardous Materials that would materially and
adversely affect the environmental condition of the Property from that which existed at
the expiration of the Feasibility Period.






	 	 	If any of the above described conditions precedent to Buyer’s obligations hereunder is not
satisfied, Buyer may, at its option, (A) waive such condition and close this transaction
with no reduction in the Sales Price, or (B) terminate this Contract by notice in writing to
Seller in which event the Earnest Money and any Extension Fee shall be returned to Buyer,
and neither party shall have any further rights or obligations hereunder except other than
as set forth herein with respect to rights or obligations which survive termination.
	 
	24.	 	EFFECTIVE DATE. The “Effective Date” of this Contract shall be the date an
original of this Contract (or original counterparts of this Contract) are executed by both
Seller and Buyer.





Remainder of Page Intentionally Left Blank.

Signature Pages Follow.






Contract of Sale — Hidden Lake Apartments



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EXECUTED in multiple originals effective as of the Effective Date.




	 	 	 	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	TR HIDDEN LAKE PARTNERS, LTD.,

a Texas limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	TRDC Hidden Lake Partners, Ltd.,
a Texas limited partnership, its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Thompson Realty Development Corporation,

a Texas corporation, its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ W. T. Field	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: W. T. Field	 	 
	 	 	 	 	 	 	Title: President	 	 
	 	 	 	 	 	 	Date signed: /s/ May 4, 2006	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	TRIPLE NET PROPERTIES, LLC, a Virginia

limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Louis Rogers	 	 
	 	 	 	 	 	 	 
	 	 	Name: Louis Rogers	 	 
	 	 	Title: President	 	 
	 	 	Date signed: /s/ May 2, 2006	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	BROKER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	The Broker executes this Contract for the sole
purpose of acknowledging and consenting to
Section 8. The Broker shall not be a
necessary party to any Amendment of this Contract.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	WILLIAM M. WOODALL, P.C.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ William M. Woodall	 	 
	 	 	 	 	 	 	 
	 	 	Name: William M. Woodall	 	 
	 	 	Title: President	 	 
	 	 	Date signed: /s/ April 4, 2006	 	 






Contract of Sale — Hidden Lake Apartments




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	 	 	TITLE COMPANY:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Receipt of $150,000.00 Earnest Money is acknowledged.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	LANDAMERICA TITLE COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Debby Moore	 	 
	 	 	 	 	 	 	 
	 	 	Name: Debby Moore	 	 
	 	 	Title: Escrow Officer	 	 
	 	 	Date signed: /s/ May 8, 2006	 	 






EXHIBITS:




	 	 	 	 	 
	Exhibit A

	 	-
	 	Property Description
	Exhibit B

	 	-
	 	Special Warranty Deed
	Exhibit C

	 	-
	 	Bill of Sale, Assignment and Assumption Agreement
	Exhibit D

	 	-
	 	Assignment of Leases and Assumption Agreement
	Exhibit E

	 	-
	 	Non-Foreign Affidavit
	Exhibit F

	 	-
	 	Tenant Notice Letter
	Exhibit G

	 	-
	 	Lease Guidelines
	Exhibit H

	 	-
	 	Site Plan-New Buildings







Contract of Sale — Hidden Lake Apartments




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