**Exhibit 10.472**

 

**AGREEMENT TO ADMIT PARTNER**

 

 

**Dated as of November 5, 2004**

 

**Between**

 

**C&S Southlake Capital Partners I, L.P.,**

a Texas limited partnership,

**the Partnership**

 

**Cooper & Stebbins, L.P.,** a Texas limited partnership,**CS Southlake, LLC,** a Texas limited liability company,**collectively, the Existing Partners**

 

**and**

 

**Inland Real Estate Acquisitions, Inc.**an Illinois corporation,**as AdmittingPartner**

 

 

**With Respect to**

 

 

**a portion ofSouthlake Town Square**

 

----

 

**AGREEMENTTO ADMIT PARTNER**

 

This AgreementTo Admit Partner (“Agreement”) is made and entered into as of this 5thday of November, 2004 (the “Effective Date”), by and betweenINLAND REAL ESTATE ACQUISITIONS, INC., an Illinois corporation or its designeeor designees (“Admitting Partner”, or “Inland”), and COOPER &STEBBINS, L.P., a Texas limited partnership (“C&S”), CS SOUTHLAKE,LLC, a Texas limited liability company (“CS LLC”) (C&S and CSLLC arecollectively referred to herein as the “Existing Partners”), and C&SSOUTHLAKE CAPITAL PARTNERS I, L.P., a Texas limited partnership (“Capital I”).

 

**Introductory Provisions:**

 

The followingprovisions form the basis for and are a part of this Agreement:

 

A.            CapitalI will own certain real property described on Exhibit A (the “Property”)on the Closing Date.

 

B.            C&Sand CSLLC are, or will be immediately prior to Closing, the sole partners inCapital I.

 

C.            CapitalI and the Existing Partners desire to admit Inland as a partner of Capital Iand Inland desires to become a partner in Capital I on the terms and subject tothe conditions and other provisions set forth in this Agreement.

 

NOW,THEREFORE, in consideration of the mutual covenants and agreements set forth inthis Agreement, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto hereby agreeas follows:

 

**ARTICLE IDEFINITIONS**

 

Thecapitalized terms used herein will have the following meanings.

 

“AccruedExpenses” shall have the meaning set forth in Section 2.7 hereof.

 

“AdmittingPartner” shall have the meaning ascribed to it in the opening paragraph.

 

“Affiliate”shall mean any Person that directly, or indirectly through one or moreintermediaries, controls, is controlled by, or is under common control with thePerson.

 

“Agreement”shall mean this Agreement To Admit Partner, together with the exhibits attached hereto and theDisclosure Schedule.

 

“Amendedand Restated Real Property Contract” shall have the meaning set forth in Section2.6(b)(vi) hereof.

 

1

----

 

“Amendedand Restated Partnership Agreement” shall mean the amended and restatedpartnership agreement for Capital I substantially in the form attached hereinas Exhibit B, which will be entered into at Closing as provided herein.

 

“ApprovedTitle Matters” shall have the meaning set forth in Section 6.2(a)hereof.

 

“BeneficialInterests” shall mean one hundred percent (100%) of the general and limitedpartnership interests in Capital I.

 

“Capital I”shall have the meaning ascribed to it in the opening paragraph.

 

“Capital I Financial Statements” shallhave the meaning set forth in Section 3.1(h) hereof.

 

“Capital I’sKnowledge” and “Existing Partners’ Knowledge” shall mean the currentactual knowledge of Brian R. Stebbins, Frank L. Bliss, Dave Laddusaw andPatricia S. Pickard without any duty of inquiry or investigation.

 

“Capital I’sNotice” shall have the meaning set forth in Section 6.2(b) hereof.

 

“Capital IProperty” shall mean the Capital I Real Property and the Capital I PersonalProperty.

 

“Capital IPersonal Property” shall mean all fixtures, equipment, machinery,furniture, carpet, drapes and other personal property, if any, owned by CapitalI, located on and used in connection with the Capital I Real Property, butspecifically excluding any items of personal property owned or leased byCapital I’s property manager or tenants at the Capital I Real Property andfurther excluding any items of personal property owned by third parties andleased to Capital I.  All intangibleproperty, if any, owned by Capital I and pertaining to the Capital I RealProperty including, without limitation, transferable utility contracts,transferable telephone exchange numbers, plans and specifications, engineeringplans and studies, floor plans, landscape plans, logos, designs, trade names,trademarks, servicemarks, copyrights and other intellectual property, andspecifically the non-exclusive use of the names “Southlake Town Square” and “TownSquare” and any other name or names by which the Property is commonly known(collectively, the “Town Square Trademarks”), provided that the grant of theright to use the Town Square Trademarks shall be limited to purposes associatedwith the Property.  The term “Capital IPersonal Property” as used hereunder does not, however, include the ExcludedRights.

 

“Capital IReal Property” shall mean (a) that certain real property legally describedon Exhibit A attached hereto, consisting of approximately 0.76 acres ofland, and approximately 67,937 square feet of net rentable square feet, andlocated at 1400 Civic Place, Southlake, Texas and commonly known as “Building3C” together with all of the following, if any: rights, privileges,hereditaments, appurtenances, and easements related thereto, including allrights, rights-of-way, roadways, roadbeds, reversions, strips, gores, and anyinterests in any alleys, streets, or roads abutting or adjacent thereto,together with all rights of Capital I in and to any other land or out parcelscontiguous to or adjoining such real property, (b) all improvements locatedupon the Capital I Real Property, but expressly excluding any improvementsowned by any tenant or other third party, (c) all right, title and interest ofCapital I, if any, in and to all

 

2

----

 

shrubs, trees, plants and otherlandscaping located upon the Capital I Real Property, and (d) all right, titleand interest of Capital I, if any, in and to all casements, rights of way, andother rights appurtenant to the Capital I Real Property.  The term “Capital I Real Property” as usedhereunder does not, however, include the Excluded Rights.

 

“Closing”shall mean the closing of the transaction contemplated by this Agreement asprovided in Section 2.6 hereof.

 

“Closing Date” shallmean the same date as the “Closing Date” under the Real Estate Contract,subject to any extension of the Closing Date as provided for thereunder.

 

“Code” shall mean theInternal Revenue Code of 1986, as amended.

 

“Contract” shall meanany written agreement, license, sublicense, promissory note, evidence ofindebtedness, guaranty (directly or indirectly) of indebtedness, guarantees andwarranties, all construction, architectural, maintenance, operating and servicecontracts, all equipment leases, or other contract or commitment relating tothe ownership, maintenance and/or operation of the Capital I Property.

 

“Contributed Capital”shall have the meaning set forth in Section 2.3 hereof.

 

“C&S” shall havethe meaning ascribed to it in the opening paragraph.

 

“CSLLC” shall havethe meaning ascribed to it in the opening paragraph.

 

“Disclosure Schedule”shall mean the disclosure schedule dated the date hereof furnished by Capital Ito Inland and containing all lists, descriptions exceptions, and otherinformation and materials as are required to be included therein pursuant tothis Agreement.

 

“Due DiligenceTermination Notice” shall have the meaning set forth in Section 2.5 (c)hereof.

 

“Earnest Money” shallhave the meaning set forth in Section 2.4 (a)hereof.

 

“Environmental Laws”shall mean without limitation (a) the Resource Conservation and Recovery Act,as amended by the Hazardous and Solid Waste Amendments of 1984, as now orhereafter amended (“RCRA”) (42 U.S.C. § 6901 etseq.), theComprehensive Environmental Response, Compensation and Liability Act of 1980,as amended by the Superfund Amendments and Reauthorization Act of 1986, as nowor hereafter amended (“CERCLA”) (42 U.S.C. § 9601 etseq.),the Clean Water Act, as now or hereafter amended (“CWA”) (33 U.S.C. §1251 et seq.), the Toxic Substances Control Act, as now or hereafter amended (“TSCA”)(15 U.S.C. § 2601 etseq.), the Clean Air Act, as now orhereafter amended (“CAA”) (42 U.S.C. § 7401 et seq.), all regulationspromulgated under any of the foregoing, any local, state or foreign law,statute, regulation or ordinance analogous to any of the foregoing, and anyother federal, slate, local, or foreign law (including any common law),statute, regulation, or ordinance regulating, prohibiting, or otherwiserestricting the placement, discharge, release, threatened release, generation,treatment, or disposal upon or into any environmental media of any HazardousMaterials.

 

3

----

 

“ExcludedRights” shall mean any and all of interests of Capital I in and toBrownstones at Town Square, L.P., or any property owned by such limitedpartnership.

 

“ExistingPartners” shall mean, collectively, C&S and CSLLC.

 

“GovernmentalAuthority” shall mean any and all applicable courts, boards, agencies,commissions, offices, or authorities of any nature whatsoever for anygovernmental unit (federal, state, county, district, municipal, city,departmental or otherwise) whether now or hereafter in existence.

 

“HazardousMaterials” shall mean any substance, product matter, material, waste,solid, liquid, gas, or pollutant, the generation, storage, disposal, handling,recycling, release (or threatened release), treatment, discharge, or emissionof which is regulated, prohibited, or limited under any Environmental Law andshall also include, without limitation, (a) gasoline, diesel fuel, fuel oil,motor oil, waste oil, and any other petroleum hydrocarbons, including anyadditives or other by-products associated therewith, (b) asbestos andasbestos-containing materials in any form, (c) polychlorinated biphenyls, (d)any substance the presence of which on the Capital I Property (i) requiresreporting or remediation under any Environmental Law; (ii) causes or threatensto cause a nuisance on the Capital I Property or poses or threatens to pose ahazard to the health or safety of persons on the Capital I Property; or (iii)which, if it emanated or migrated from the Capital I Property, could constitutea trespass, nuisance or health or safety hazard to persons on adjacentproperty, (e) radon, (f) urea formaldehyde foam insulation, and (g) undergroundstorage tanks, whether empty, filled or partially filled with any substance.

 

“Inland”shall have the meaning ascribed to it in the opening paragraph.

 

“InlandTitle Objections” shall have the meaning set forth in Section 6.2(a)hereof.

 

“InspectionPeriod” shall have the meaning set forth in Section 2.5(c) hereof.

 

“IRS”shall mean the United States Internal Revenue Service.

 

“Law”shall mean all laws, statutes, ordinances, rules, decrees and regulations ofthe United States of America or any state, commonwealth, city, county,municipality or department thereof, including without limitation the Americanswith Disabilities Act.

 

“Leases”shall mean all leases, subleases, licenses or other agreements for the use oroccupancy of all or any part of Capital I Real Property.

 

“Lien”shall mean any mortgage, pledge, assessment, security interest, Lease, lien,adverse claim, levy, charge, or other encumbrance of any kind, or anyconditional sale contract, title retention contract, or other contract to giveor to refrain from giving any of the foregoing other than Permitted Exceptions.

 

“ManagementAgreement” shall have the meaning set forth in Section 2.11 hereof.

 

“Manager”shall have the meaning set forth in Section 2.11 hereof.

 

4

----

 

“MaterialAdverse Effect” shall mean any effect that is materially adverse to thevalidity or enforceability of this Agreement, the ability of either or both ofCapital I or Inland, as the case may be, to perform its obligations under thisAgreement or the business or condition of Capital I or the Capital I Property,or with respect to the condition, operation or value of the Capital I Propertyor the Leases and the cash flow emanating therefrom.

 

“MonetaryLiens” shall have the meaning set forth in Section 6.2(b) hereof.

 

“NNNCharges” shall have the meaning set forth in Section 2.7 hereof.

 

“ParkingLicense” shall have the meaning set forth in Section 2.6(c)(xx)hereof.

 

“Partnership”shall mean C&S Southlake Capital Partners I, L.P., which upon admittingInland as a partner pursuant to the terms of this Agreement, shall amend andrestate its partnership agreement pursuant to the Amended and Restated PartnershipAgreement.

 

“Permits”shall mean all permits, consents, licenses, certificates, approvals,registrations, and authorizations which are required by any Law for operationof the Capital I Property.

 

“PermittedExceptions” shall mean the Permitted Liens, together with (i) all of theApproved Title Matters, and (ii) each and all of Inland’s Title Objectionsother than Monetary Liens or those items Capital I has agreed to eliminate ormodify pursuant hereto but that Inland has elected to waive its objection withrespect thereto.

 

“PermittedLiens” shall mean with respect to the Capital I Property any lien for realproperty Taxes, assessments, and other governmental charges that are not dueand payable.

 

“Person”shall mean any natural person, corporation, general partnership, limitedpartnership, proprietorship, trust, union, association, court, tribunal,agency, government department, commission, self-regulatory organization,arbitrator, board, bureau, instrumentality, or other entity, enterprise, authority,or business organization.

 

“PropertyInformation” shall have the meaning set forth in Section 2.5(a) hereof.

 

“RealProperty Contract” shall mean that certain Purchase Agreement dated as ofNovember 5, 2004 made by and between Southlake Venture East, L.P., a Texaslimited partnership, Southlake Venture West, L.P., a Texas limited partnership,SL Venture West II, L.P., a Texas limited partnership, Southlake CentralVenture, a Texas general partnership, and SL Central Venture II, L.P., a Texaslimited partnership (collectively as the sellers thereunder, each of which isan Affiliate of Capital I) and Inland (as the purchaser thereunder), withrespect to the purchase and sale of Southlake Town Square.

 

“Release”shall mean releasing, spilling, leaking, pumping, pouring, emitting, emptying,discharging, ejecting, escaping, leaching, disposing, seeping, infiltrating,draining, or dumping of any Hazardous Material.  This term shall be interpreted to include boththe present and past tense, as appropriate.

 

“SettlementStatement” shall have the meaning set forth in Section 2.6(c)(xi)hereof.

 

5

----

 

“Survey”shall have the meaning set forth in Section 6.I(b) hereof.

 

“SurvivalPeriod” shall have the meaning set forth in Section 3.1(k) hereof.

 

“Taxes”shall mean all taxes, charges, fees, levies, guaranty fund assessments or othersimilar assessments or liabilities, including without limitation income, grossreceipts, ad valorem, premium, excise, real property, personal property,windfall profit, sales, use, transfer, licensing, withholding, employment,payroll, and franchise taxes imposed by the United States of America or anystate, local, or foreign government, or any subdivision, agency, or othersimilar Person of the United States or any such government; and such term shallinclude any interest, fines, penalties, assessments, or additions to taxresulting from, attributable to, or incurred in connection with any such tax orany contest or dispute thereof.

 

“Tax Returns”shall mean any report, return, or other information required by Law to be filedby Capital I.

 

“TitleApproval Period” shall have the meaning set forth in Section 6.2(a)hereof.

 

“TitleCommitment” shall have the meaning set forth in Section 6.1(a) hereof.

 

“TitleInformation” shall mean those matters set forth in Section 3.1(I) ofthe Disclosure Schedule.

 

Unless thecontext of this Agreement otherwise requires, (a) words of any gender aredeemed to include each other gender; (b) words using the singular or pluralnumber also include the plural or singular number, respectively; (c) the terms “hereof,”“herein,” “hereby,” “hereto,” and derivative or similar words refer to thisentire Agreement; (d) the terms “ARTICLE” or “Section” refer to the specified ARTICLEor Section of this Agreement; (e) the term “party” means, on the one hand,Inland and, on the other hand, Capital I; (f) the phrase “in the ordinarycourse of business and consistent with past practice” refers to the business,operations, affairs, and practice of Capital I which operations and practiceare consistent with the prudent operations and practices of Persons engaged inthe ownership and operation of real properties similar to the Properties; and(g) all references to “dollars” or “$” refer to currency of the United Statesof America.

 

**ARTICLE II**

**ADMITTING OF PARTNER; PROPERTY VALUE; CAPITALCONTRIBUTION;**

**EARNEST MONEY; DUE DILIGENCE AND CLOSING**

 

2.1           Admittingof Partner.  Subject to the terms andconditions, and in reliance upon the representations and warranties set forthin this Agreement, Capital I agrees to admit Inland to the Partnership (lessthe Excluded Rights) and Inland agrees to become a Partner in the Partnership(less the Excluded Rights) at the Closing.

 

2.2           Capital I Property Value. Inland and the Existing Partners herebyagree that the fair market value of the Capital I Property is Eighteen MillionTwo Hundred Sixty Nine Thousand Nine Hundred Sixty Four and No/100 Dollars($18,269,964.00) (the “Property Value”).

 

6

----

 

2.3           CapitalContribution.  Subject to the termsand conditions, and in reliance upon the representations and warranties setforth in this Agreement, Inland agrees to contribute capital of $17,356,465 toCapital I as consideration for admission to the Partnership as a generalpartner and a limited partner (the “Contributed Capital”) on the termsand provisions provided for in the Amended and Restated Partnership Agreement.

 

2.4           RefundableEarnest Money.

 

(a)           Depositand Investment.  Inland shall depositwith Chicago Title Insurance Company (“Escrow Agent”), 171 N. ClarkStreet, Chicago, Illinois, Attention: Nancy Castro, the sum of Two HundredThousand and No/100 Dollars ($200,000.00) to be held by Escrow Agent in governmentinsured interest-bearing accounts at a national bank in Dallas County, Texas (togetherwith all interest thereon, the “Earnest Money”) simultaneously with theexecution of this Agreement.  Suchaccount shall have no penalty for early withdrawal.  The Escrow Agent shall be authorized, atInland’s option, to invest the Earnest Money in such manner as Inland maydirect; provided, however, that the Escrow Agent shall invest the Earnest Moneyonly in such manner as will allow the Escrow Agent to disburse the EarnestMoney upon seven (7) days notice.  Inlandmay elect in its discretion to have $200,000 out of the “Earnest Money” held byEscrow Agent pursuant to the Real Property Contract designated as the EarnestMoney hereunder by delivering written instructions to Escrow Agent (with acontemporaneous copy to Capital I) regarding same.

 

(b)           Form;Failure to Deposit.  The EarnestMoney shall be in the form of a certified or cashier’s check or the wiretransfer to Escrow Agent of immediately available U.S. federal funds.  If Inland fails to timely deposit any portionof the Earnest Money within the time periods required, Capital I may terminatethis Agreement by written notice to Inland, and thereafter the parties heretoshall have no further rights or obligations hereunder, except for rights andobligations which, by their terms, survive the termination hereof.

 

2.5           DueDiligence.

 

(a)           Due DiligenceMaterials.  To the extent not alreadydelivered to Inland pursuant to the Real Property Contract, Capital I shall deliverto Inland the information listed on Exhibit C attached hereto and made apart hereof (the “Property Information”) within five business daysfollowing the Effective Date.

 

(b)           Physical Due Diligence.  Commencing on the Effective Date and continuinguntil the expiration of the Inspection Period (defined below), Inland shallhave reasonable access to the Capital I Property at all reasonable times duringnormal business hours, upon appropriate notice to tenants as permitted or requiredunder the Leases, for the purpose of conducting reasonably necessary tests, includingsurveys and architectural, engineering, geotechnical and environmentalinspections and tests, provided that (a) Inland must give Capital I one fullbusiness days’ prior telephone or written notice of any such inspection or test,and with respect to any intrusive inspection or test (i.e., core sampling) must

 

7

----

 

obtain Capital I’s prior written consent (which consent may be given,withheld or conditioned in Capital I’s sole discretion), and (b) prior toperforming any inspection or test, Inland must deliver a certificate ofinsurance to Capital I evidencing that Inland and its contractors, agents andrepresentatives have in place reasonable amounts of commercial generalliability insurance and workers compensation insurance for its activities onthe Capital I Property in terms and amounts reasonably satisfactory to CapitalI covering any accident arising in connection with the presence of Inland, itscontractors, agents and representatives on the Capital I Property, whichinsurance shall name Capital I as additional insureds thereunder.  Inland or Inland’s representatives may meetwith any tenant if and only if accompanied by a representative of Capital I;provided, further, that Inland shall not discuss the transaction contemplatedby this Agreement with such tenants and Inland must contact Capital I at leastone full business day in advance by telephone to inform Capital I of Inland’sintended meeting.  Inland or Inland’srepresentatives may meet with any governmental authority for the sole purposeof gathering information in connection with the transaction contemplated bythis Agreement; provided, however, Inland must contact Capital I at least onefull business days in advance by telephone to inform Capital I of Inland’sintended meeting and to allow Capital I the opportunity to attend such meetingif Capital I desires.  Inland or itscounsel is permitted to make written requests to the municipal authorities forthe purpose of verifying the compliance of the Capital I Property withapplicable zoning requirements and ordinances, compliance with building codesand compliance with parking requirements, and to respond, make verbal commentsor inquiries related thereto, including but not limited to inquiries todetermine the appropriate officials to direct written inquiries to.

 

(c)           DueDiligence/Termination Right.  Inlandshall have until 5:00 p.m., Dallas, Texas time on Friday, November 19, 2004(the “Inspection Period”) in which to (a) examine, inspect, andinvestigate the Property Information and the Capital I Property and, in Inland’ssole and absolute judgment and discretion, determine whether the Capital IProperty is acceptable to Inland, (b) obtain all necessary internal approvals,and (c) satisfy all other contingencies of Inland.  If, for any reason whatsoever, or no reason atall, Inland, in its sole and absolute discretion, is not satisfied with any ofthe foregoing at any time on or before the expiration of the Inspection Period(hereinafter defined), then Inland may elect at its option, to terminate thisAgreement by delivering notice of termination to Capital I (the “DueDiligence Termination Notice”) prior to the expiration of the InspectionPeriod, in which event the Earnest Money shall be distributed pursuant to andsubject to Section 2.4(c) of the Real Property Contract (unless such terminationof this Agreement is made in connection with the acquisition by Inland of feetitle to the Capital I Property under the Real Property Contract), and thereafterneither Capital I nor Inland shall have any further obligations or rights underthis Agreement except those that specifically survive a termination as providedin this Agreement.

 

(d)           No Representation orWarranty by Capital I.  Inlandacknowledges that, except as expressly set forth in this Agreement, Capital Ihas not made and does

 

8

----

 

not make any warranty or representation regarding the truth, accuracyor completeness of the Property Information or the source(s) thereof.  Inland further acknowledges that some if notall of the Property Information was prepared by third parties other thanCapital I.  Capital I expressly disclaimsany and all liability for representations or warranties, express or implied,statements of fact and other matters contained in such information, or foromissions from the Property Information, or in any other written or oralcommunications transmitted or made available to Inland.  Inland shall rely solely upon the expressrepresentations and warranties set forth herein and its own investigation withrespect to the Capital I Property, including, without limitation, the Capital IProperty’s physical, environmental or economic condition, compliance or lack ofcompliance with any ordinance, order, permit or regulation or any otherattribute or matter relating thereto.  CapitalI has not undertaken any independent investigation as to the truth, accuracy orcompleteness of the Property Information and is providing the PropertyInformation solely as an accommodation to Inland.

 

(e)           Inland’s Agreementto Indemnify.  Inland hereby agreesto indemnify, defend and hold Capital I and the Existing Partners harmless fromand against any and all liens, claims, causes of action, damages, liabilitiesand expenses (including reasonable attorneys’ fees) arising out of (i) Inland’sinspections or tests permitted under this Agreement or (ii) Inland’s failure tocomply with the provisions of Section 2.5(b); provided, however, theindemnity shall not extend to protect the Partnerships or Capital I from anypre-existing liabilities for matters merely discovered by Inland (i.e., latentenvironmental contamination) so long as Inland’s actions do not aggravate anypreexisting liability of Capital I and the Existing Partners and then only tothe extent of such aggravation.  Inland’sobligations under this Section 2.5(e) shall survive the termination ofthis Agreement and shall survive the Closing for a period of one year.

 

2.6           Closing.

 

(a)           The Closing will takeplace at the offices of Escrow Agent at 10:00 a.m., local time on the ClosingDate.

 

(b)           At the Closing, Inland will:

 

(i)                                     depositthe Contributed Capital plus or minus prorations with Escrow Agent in cash bywire transfer of immediately available funds;

 

(ii)                                  deliverto Escrow Agent an Escrow Agreement (defined below);

 

(iii)                               deliverto Escrow Agent Settlement Statement (defined below);

 

(iv)                              deliverto Escrow Agent the Management Agreement (defined below);

 

9

----

 

(v)                                 deliverto Escrow Agent the Amended and Restated Partnership Agreement of thePartnership;

 

(vi)                              deliverto Escrow Agent either an amended and restated version of the Real PropertyContract or an amendment to the Real Property Contract, in form and substancemutually acceptable to both Inland and Capital I in their sole discretion,removing the Capital I Property from the Real Property Contract (the “Amendedand Restated Real Property Contract”);

 

(vii)                           deliverto Escrow Agent Inland’s duly executed counterpart the Declaration of Trust ofThe C&S Southlake Capital Protective Trust and the related LetterAgreement, both of which are dated on or about the date hereof; and

 

(viii)                        deliverto Escrow Agent all other documents reasonably determined by Inland, Capital Iand Title Company to be necessary to be delivered by Inland under the terms ofthis Agreement.

 

(c)           At the Closing, CapitalI will:

 

(i)                                               deliverto Escrow Agent (A) the Amended and Restated Partnership Agreement; (B) theAmended and Restated Real Property Contract; and (C) the Special Warranty Deed(in substantially the form attached hereto as Exhibit F), the Assignmentand Assumption of Leases (in substantially the form attached hereto as ExhibitG) and the Bill of Sale, Assignment and Assumption of Contracts (insubstantially the form attached hereto as Exhibit H) each from SOUTHLAKEVENTURE WEST, L.P., a Texas limited partnership, to a wholly owned subsidiaryof Capital I (which entity will be the holder of title to the Capital IProperty) as provided for in the Amended and Restated Partnership Agreement(the “Subsidiary of Capital I”; the legal name of the Subsidiary ofCapital I is, as of the date hereof, anticipated to be “Town Square VenturesII, L.P.”);

 

(ii)                                            deliverto Escrow Agent an Escrow Agreement;

 

(iii)                                         deliverto Escrow Agent certificates of the Existing Partners certifying that all ofthe representations and warranties of the Existing Partners made hereunder aretrue and correct in all material respects as of the Closing Date;

 

(iv)                                        deliverto Escrow Agent a Certified Rent Roll;

 

(v)                                           deliverto Escrow Agent a copy of the Certificate of Limited Partnership for Capital Icertified as of a date no earlier than five (5)

 

10

----

 

business days prior to the Closing Date bythe Secretary of State (or equivalent official) of its state of organization;

 

(vi)                                        deliverto Escrow Agent the Audit Letter attached hereto as Exhibit D;

 

(vii)                                     causea TLTA Owner’s Policy of Title Insurance to be issued by Title Company namingthe Subsidiary of Capital I as insured, in the amount of the Property Value,Insuring that the Subsidiary of Capital I owns good and indefeasible fee simpletitle to the Capital I Real Property providing for full extended coverage andcontaining the Special Title Endorsements (the “Title Policy”) subjectonly to the Permitted Encumbrances;

 

(viii)                                  deliverto Escrow Agent a duly executed affidavit of the transferor of the Capital IProperty to the Subsidiary of Capital I certifying that such transferor and anyof its partners are not a “foreign person,” as defined in Section 1445 of theInternal Revenue Code of 1986, as amended, and in any applicable state laws forthe state in which the Capital I Property is located;

 

(ix)                                          deliverto Escrow Agent such conveyancing or transfer tax forms or returns, if any, asare required to be delivered or signed by Capital I by applicable state andlocal law in connection herewith, including any certifications required inconnection therewith;

 

(x)                                             deliverto Escrow Agent the original of all Leases and Contracts in Capital I’spossession;

 

(xi)                                          deliverto Escrow Agent four (4) copies of a closing settlement statement betweenCapital I and Inland, duly executed by Capital I, setting forth the prorationsand adjustments to the Contributed Capital in accordance with this Agreement;it being agreed that such settlement shall be mutually approved by Capital Iand Inland at least 48 hours prior to Closing (the “Settlement Statement”);

 

(xii)                                       deliverto Escrow Agent REA Estoppel letters in form and substance reasonablysatisfactory to Inland with respect to any reciprocal easement and operatingagreement;

 

(xiii)                                    deliverto Escrow Agent all other documents reasonably determined by Inland, Capital Iand Title Company to be necessary to be delivered by Capital I under the termsof this Agreement;

 

(xiv)                                   deliverto Escrow Agent copies of notices terminating and canceling any and allContracts not accepted by Inland at Closing, including in particular anymanagement contracts and/or brokerage listing and leasing agreements;

 

11

----

 

(xv)                                      causeall records and files (or certified copies thereof) relating to the operationand maintenance of the Capital I Property to be delivered to the possession ofCapital I;

 

(xvi)                                   cause,to the extent in Capital I’s possession or control, plans and specifications,engineering plans and studies, and other similar documents relating to theCapital I Property to be delivered to the possession of Capital I.

 

(xvii)                                causeall keys to the Capital I Property in Capital I’s possession, subject to anyrights of Capital I’s occupancy that survive the Closing, to be delivered tothe possession of Capital I;

 

(xviii)                             deliverto Escrow Agent the Management Agreement;

 

(xix)                                     causethe Excluded Rights to be transferred or conveyed out of ownership by Capital Iin such manner as Capital I or the Existing Partners so elect;

 

(xx)                                        deliverto Escrow Agent an Irrevocable Parking, Management and Use Agreement with theCity of Southlake, Texas in substantially final form (but not executed)reasonably acceptable to Inland and acceptable to the City of Southlake, Texasin its sole discretion for the operation and management of those certainparking facilities to be constructed and located on or adjacent to the CapitalI Real Property (the “Parking License”);

 

(xxi)                                     deliverto Inland documentary evidence reasonably satisfactory to Inland that Capital Iand the Existing Partners are authorized to execute and deliver all documentsrequired to be delivered in connection herewith, including, but not limited to,the Amended and Restated Partnership Agreement;

 

(xxii)                                  deliverto Inland, to the extent issued by the applicable state, Certificates of GoodStanding with respect to Capital I and the Existing Partners dated no earlierthan five (5) business days prior to the Closing Date;

 

(xxiii)                               deliverto Inland UCC lien, judgment and litigation searches with respect to Capital Idated no earlier than five (5) business days prior to the Closing Date showingno judgments, liens or litigation other than as set forth on the DisclosureSchedule; and

 

(xxiv)                              deliverto Escrow Agent the Existing Partner’s duly executed counterpart of theDeclaration of Trust of The C&S Southlake Capital Protective Trust and therelated Letter Agreement, both of which are dated on or about the date hereof.

 

12

----

 

2.7           Adjustments as ofthe Closing Date.  Accrued rentalincome and all other accrued income relating to the Capital I Property, realand personal property ad valorem taxes, insurance premiums (if and to theextent that policies are continued for periods subsequent to the Closing Date),utility charges, common area maintenance charges and operating charges pursuantto any reciprocal easement agreements or similar agreements, and otheroperating expenses of the Capital I Property, shall be prorated to the ClosingDate, based upon actual days involved. Except as set forth in Section 2.8hereof, the Existing Partners shall be entitled to receive all cash in theaccounts of the Partnership on the Closing Date.  Existing Partners shall be responsible for allreal and personal property taxes payable by Capital I for any period prior toand including the Closing Date.  CapitalI and Inland acknowledge that tenants have made estimated payments for suchtenants’ proportionate share of taxes, insurance, common area maintenance andother charges (“NNN Charges”) that are reimbursable to the landlordunder such tenant leases.  Inland andManager (as defined in Section 2.11 hereof) shall make a finalreconciliation of 2004 NNN Charges on or before April 30, 2005.  The Existing Partners shall be entitled to anyamounts collected from tenants in 2005 and attributable to periods on or beforethe Closing Date, and shall be liable for any amounts due to tenants andattributable to periods on or before the Closing Date.  Inland shall be entitled to any amountscollected from tenants in 2005 and attributable to periods after the ClosingDate, and shall be liable for any amounts due to tenants and attributable toperiods after the Closing Date.  Allaccrued charges pursuant to Contracts and utility charges (whether or not serviceis continued by Inland) for periods prior to and including the Closing Dateshall be determined as of the Closing Date and paid by the Existing Partners (“AccruedExpenses”).  Any of such AccruedExpenses for periods prior to and including the Closing Date which have notbeen paid and are not reflected on the closing statement prepared by Capital Iand Inland as of the Closing Date shall be paid by Capital I prior todelinquency (subject to Capital I’s right to contest same).  Inland shall make a good-faith attempt tocollect delinquent rents for Capital I’s benefit after the Closing and afterfirst applying any such rental payments so received to rents and late chargesand the costs of collection thereof in each case accruing after the ClosingDate, the remainder of such collections, if any, shall be remitted to Capital Ipromptly upon receipt by Inland or Capital I after Closing (up to the amount ofsuch delinquent rents); provided, however, that nothing contained herein shallbe construed to require Inland to institute any suit or collection procedure tocollect such delinquent rents.  Inlandneed not attempt to collect rents that are more than ninety days delinquent andthe foregoing obligation of Inland to remit any amounts in respect thereof to CapitalI shall also terminate ninety days after the Closing Date, except as torecovery of 2004 NNN Charges, which shall terminate on December 31, 2005.  To the extent that the actual amount of allsuch charges, expenses and income referred to in this section are unavailableon the Closing Date, the foregoing prorations shall be based on estimates usingthe most recently available statement for each such item to be prorated(provided that, if the actual amount of real and personal property ad valoremtaxes and special assessments for the present tax year are not available, theproration shall be based upon the taxes for the previous tax year) and, ifafter the Closing Date the actual amount of any such closing proration that wasbased on an estimate is determined to be more or less than the amount adjustedfor at Closing, the parties shall promptly (but no later than the date which isthe first anniversary of the Closing Date) adjust such proration.

 

2.8           Security Deposits. All security deposits and any prepaymentof rental or other sums attributable to any period beyond the Closing Date,collected (and, except to the extent

 

13

----

 

previously returned to tenantswhether presently held) by Capital I under the terms of any Leases shall beretained by the Partnership at Closing and not delivered to the ExistingPartners.

 

2.9           Title and SurveyCosts.  The Existing Partners shallpay and incur the costs for the Survey and the premium for the Owner’s Policy(exclusive of endorsements), all transfer taxes, and their own attorneys’ fees.  Inland shall pay the premium for allendorsements to the Title Policy and its own attorneys’ fees, provided thatCapital I shall pay the premium for any endorsements which the Existing Partnerselect, in their sole discretion, to provide in order to satisfy any of Inland’sTitle Objections pursuant to Section 6.2(b) hereof.  At Inland’s election, and at Inland’s soleexpense, if the Survey is acceptable to the title company for such purposes, thestandard exception pertaining to “discrepancies, conflicts, or shortages inarea or boundary lines, or any encroachments, or any overlapping ofimprovements,” may be deleted except for “shortages in area”.

 

2.10         Mortgage Liens.  At Closing, the Existing Partners shall causeCapital I to cause the Mortgage Liens to be released at or prior to Closing,with Capital I having the right to apply the Contributed Capital or a portionthereof for such purpose.

 

2.11         Management Agreement. Contemporaneously with Closing, (a)Inland shall enter into a new sub-management agreement for the on-site propertymanagement of the Capital I Property with Cooper & Stebbins, L.P. (the “Manager”)in form reasonably acceptable to Inland and Manager (the “ManagementAgreement”), on the following terms and conditions: (1) the term shallexpire not earlier than October 31, 2007, (2) Manager will provide customaryon-site management functions and staff, (3) Inland shall reimburse Manager forall expenses incurred in providing such management functions, provided suchexpenses are incurred in accordance with a budget approved by the Partnership,(4) Inland will provide all accounting services to the Partnership and willcollect all management fee income on behalf of the Inland, and (5) Manager’sduties shall be progressively transitioned over to Inland beginning on October31, 2006.  The terms of this Section 2.13shall survive the Closing.  Notwithstandingthe foregoing, Manager shall be required to agree to subordinate the sub-managementagreement to the loan documents of any lender and agree that such lender mayterminate the sub-management agreement in the event of a default under suchlender’s loan.

 

**ARTICLE III**

**REPRESENTATIONS AND WARRANTIES**

 

3.1           Representations andWarranties from the Existing Partners.

 

3.1.1        Representations andWarranties from the Existing Partners Regarding Capital I: The ExistingPartners, individually and collectively as set forth below, represent andwarrant to Inland as of the date of this Agreement and as of the Closing Datethat:

 

(a)           Organizationof Capital I.  The Existing Partnersrepresent and warrant that Capital I is duly organized and validly existingunder the laws of the State of Texas and has the requisite organizational powerand authority to carry out its business as presently conducted.  The Existing Partners represent and warrantthat the principal place of business of Capital I is in Southlake, Texas.

 

14

----

 

(b)           Authorityof Existing Partners and Capital I. Each of the Existing Partners representsand warrants that the execution and delivery of this Agreement by such ExistingPartners and Capital I and each other agreement, instrument, certificate and documentto be executed by such Existing Partners and Capital I hereunder and the performanceby such Existing Partners and Capital I of its obligations under this Agreementhave been duly and validly authorized by all necessary action on the part of suchExisting Partners and Capital I.  Each ofthe Existing Partners and Capital I represents and warrants that this Agreementconstitutes a legal, valid, and binding obligation of such Existing Partnersand Capital I and is enforceable against such Existing Partners and Capital Iin accordance with its terms, except to the extent that (j) enforcement may belimited by or subject to any bankruptcy, insolvency, reorganization, moratorium,or similar Laws now or hereafter in effect relating to or limiting creditors’ rightsgenerally and (ii) the remedy of specific performance and injunctive and other formsof equitable relief are subject to certain equitable defenses and to thediscretion of the court or other similar person or entity before which anyproceeding therefore may be brought.

 

(c)           BeneficialInterests.

 

(i)            TheExisting Partners represent and warrant that the combined Beneficial Interestsof each of the Existing Partners will, immediately prior to the admission ofInland as a partner in Capital I as of the Closing Date, constitute 100% of theBeneficial Interests of Capital I and such Beneficial Interests are ownedlegally and beneficially by the Existing Partners.

 

(ii)           TheExisting Partners represent and warrant that the respective BeneficialInterests owned by the Existing Partners are free and clear of all Liens, andthe Beneficial Interests owned by the Existing Partners are not the subject ofany Contract (other than this Agreement) under which any such Lien might arise. Each of the Existing Partners representsand warrants that there are no outstanding securities, rights, subscriptions,warrants, options, or Contracts (except for this Agreement) that give anyPerson the right to purchase or otherwise receive or be issued any interest inthat the Existing Partners’ Beneficial Interests or any rights to participatein the equity or income of the Existing Partners (except for this Agreement).

 

(d)           PartnershipAgreement.  The Existing Partnersrepresent and warrant that attached in Section 3.1 (d) of the DisclosureSchedule is an accurate copy of the Capital I partnership agreement, and noamendments or modifications have been made to the Capital I partnershipagreement, except for those contemplated herein or attached as a part of theDisclosure Schedule.

 

(e)           NoConflicts or Violations.  Each of theExisting Partners hereby represents and warrants that the execution anddelivery of this Agreement by each of the Existing Partners and Capital I doesnot, and the performance by each of the Existing Partners and Capital I of suchExisting Partners’ and Capital I’s obligations, respectively, under thisAgreement and the consummation of the transactions contemplated hereby will

 

15

----

 

not: (i) violate any term or provision of any Law or any writ,judgment, decree, or injunction applicable to such Existing Partners andCapital I, except such violations that do not have a Material Adverse Effect onsuch Existing Partners and Capital I; (ii) conflict with or result in aviolation or breach of any of the provisions of the governing documents of suchExisting Partners and Capital I, except such conflicts, violations, or breachesthat do not have a Material Adverse Effect on such Existing Partners andCapital I; or (iii) conflict with or result in a violation or breach of anyContract to which such Existing Partners and Capital I are a party, except suchconflicts, violations, or breaches that do not have a Material Adverse Effecton such Existing Partners and Capital I.

 

(f)            Taxes.  The Existing Partners represent and warrantthat, except as disclosed in Section 3.1(f) of the Disclosure Schedule,all Federal, state and other applicable Tax Returns required to be filed by orwith respect to the Partnership have been filed and all Taxes that are due andpayable by the Partnership have been paid.  Except as shown on Section 3.1(f) ofthe Disclosure Schedule, no deficiencies for Federal, state or other applicableTaxes have been claimed, assessed or, to the Existing Partners’ Knowledge,proposed against the Partnership by any Governmental Authority.  To the Existing Partners’ Knowledge, except asset forth in Section 3.1(f) of the Disclosure Schedule, there are nopending or threatened audits, investigations or claims for or relating to anyliability in respect of Federal, state or other applicable Taxes, and there areno matters under discussion with any Governmental Authorities with respect to Federal,state or other applicable Taxes that could result in an assessment of Federal,state or other applicable Taxes against the Partnership.  Audits of Federal, state or other applicableTax Returns by the relevant taxing authorities have been completed for each periodshown on Section 3.1(f) of the Disclosure Schedule, and, except as shownon Section 3.1 (f) of the Disclosure Schedule, the Existing Partnershave not been notified that any taxing authority intends to audit a Federal,state or other applicable Tax Return for any other period for the Partnership.  Complete copies of all Federal income tax schedulesand reports relating to the operation of the Partnership and all reportsreceived by the Partnership from the IRS relating to examinations thereof havebeen made available for Inland’s review.  From the date of its formation, thePartnership has qualified to be treated as a partnership for federal income taxpurposes.  No taxing authority has takena position inconsistent with such treatment. Neither the Existing Partners norany other party has taken any action, or failed to take any action, that would causethe Partnership to be treated as an association taxable as a corporation forincome tax purposes.

 

(g)           ComplianceWith Law.  The Existing Partnersrepresent and warrant that except as shown on Section 3.1(g) of the Disclosure Schedule, thePartnership is not in violation of any Law or any writ, judgment, decree,injunction, or similar order applicable to such Partnership, which violationhas or may reasonably be expected to have a Material Adverse Effect.

 

(h)           FinancialStatements.  Section 3.1 (h)of the Disclosure Schedule sets forth the Partnership’s balance sheets andstatements of income and partners’ capital accounts for the fiscal year endedDecember 31, 2003 for the Partnership which includes all assets

 

16

----

 

and liabilities of the Partnership, as of the date thereof (the “CapitalI Financial Statements”).  TheCapital I Financial Statements (including the notes thereto) have been preparedin accordance with income tax based accounting and present fairly the financialcondition of the Partnership for such periods (including all liabilities orobligations of any kind (whether accrued, absolute, fixed or contingent) of thePartnership for such period and no other material liabilities have beenincurred for the period commencing January 1, 2004 and ending on the ClosingDate other than as set forth on the Disclosure Schedule and there has been nochange in the financial condition as reflected therein since the dates of suchCapital I Financial Statements that would have a Material Adverse Effect.

 

(i)            IntercompanyLiabilities.  The Existing Partnersrepresent and warrant that except as reflected in the Financial Statements, orexcept as shown on Section 3.1(i) of the Disclosure Schedule, there areno Liabilities between the Partnership or any Existing Partners or Affiliatesof Existing Partners, and all such intercompany Liabilities will be satisfiedin full on or prior to the Closing.  Neitherthe Existing Partners nor any Affiliates of the Existing Partners provide orcauses to be provided to the Partnership any products, services, equipment,facilities, or similar items other than property and asset management services.

 

(j)            Nota Foreign Person.  Each of theExisting Partners and Capital I represents and warrants that it is not a “foreignperson” but is a “United States person” as such terms are defined in theForeign Investment in Real Property Tax Act of 1980 and §§ 1445 and 7701 of theCode; that is to say, each such Existing Partners represents that it is acitizen or a resident of the United States, a domestic partnership, a domesticcorporation, or an estate or trust which is not a foreign estate or foreigntrust within the meaning of § 7701(a)(31) of the Code.

 

(k)           NoCondemnation.  The Existing Partnersrepresent and warrant that to the Existing Partners’ Knowledge, there is nopending condemnation proceeding affecting the Capital I Property.

 

(l)            NoLitigation.  The Existing Partnersrepresent and warrant that except as shown on Section 3.1(l) to theDisclosure Schedule there is no action, suit, proceeding, arbitration,unsatisfied order or judgment, governmental investigation or claim pending orthreatened (and to the Existing Partners’ Knowledge there are no claims,situations or facts or circumstances which could be reasonably believed to giverise to any of the foregoing) against or affecting the Capital I Property, orrelating to or arising out of the ownership, operation, use or occupancy of theCapital I Property, pending or being prosecuted before or by any GovernmentalAuthority or otherwise of which Existing Partners have received notice nor, toExisting Partners’ Knowledge, is any such action, suit, proceeding,arbitration, unsatisfied order or judgment, governmental investigation or claimthreatened or being asserted.

 

(m)          NoOther Contracts.  The ExistingPartners represent and warrant that except for the Permitted Exceptions and asshown on Section 31(m) of the Disclosure Schedule, there are noContracts relating to the Capital I Property.

 

17

----

 

(n)           NoBankruptcy or Insolvency Proceedings.  The Existing Partners represent and warrantthat there are no attachments, executions, assignments for the benefit ofcreditors, receiverships, conservatorship or voluntary or involuntaryproceedings in bankruptcy or pursuant to any other debtor relief laws filed bysuch Existing Partners or Capital I, or pending against such Existing Partnersor Capital I.

 

(o)           Brokers. The Existing Partners represent andwarrant that all negotiations relative to this Agreement and the transactionscontemplated hereby have been carried out by Existing Partners directly withInland, without the intervention of any Person on behalf of Existing Partnersin such manner as to give rise to any valid claim by any Person against Inlandfor a finder’s fee, brokerage commission, or similar payment, except forHoliday Fenoglio Fowler, L.P.

 

(p)           Consents. The Existing Partners represent andwarrant that no consent, license, approval, order, permit or authorization ofany Governmental Agency is required to be obtained or made and no consent ofany other third party, is required to be obtained by Existing Partners andCapital I in connection with the execution, delivery and performance of thisAgreement and any of the transactions contemplated hereby.

 

(q)           Survival. The representations and warranties ofthe Existing Partners set forth in this Section 3.1.1, the indemnityobligations under Section 3.1.1(r) and the obligations of the Guarantorunder Section 3.1.1(s), shall survive the Closing until, and shallterminate on, the date that is 90 days following the expiration of theapplicable statute of limitations period for Inland and its Affiliates inconnection with same.  As a conditionprecedent to Inland’s obligation to contribute capital to the Partnership ascontemplated in this Agreement, the Existing Partners’ representations andwarranties contained herein must remain and be true and correct in all materialrespects as of the Closing Date.

 

(r)            Indemnification. “Notwithstanding any provision in thisAgreement to the contrary, the Existing Partners hereby covenant and agree toindemnify and hold harmless Inland and its Affiliates from and against any andall (i) expenses (including reasonable attorneys’ fees), losses, damages,liabilities, charges and claims of any kind or nature whatsoever (collectively **“Indemnified****Losses”**)*(e.g.,*income tax deficiencies,penalties, interest and additions to tax) of Inland and/or its Affiliates as aresult of reporting the transactions contemplated by this Agreement withrespect to the admission of Inland to the Partnership in the manner to bereflected in the calendar 2004 income tax returns of the Partnership (and, forthe avoidance of doubt, this shall not include any Indemnified Losses from theoperation of the Partnership by Inland after the Effective Date), (ii)Indemnified Losses of Inland and/or its Affiliates that may result from thebreach by any of the Existing Partners of any of the representations andwarranties under this Section 3.1.1 and (iii) Indemnified Losses ofInland and/or its Affiliates as a result of liabilities of the Partnershipother than those solely and directly related to the Capital I Property.

 

(s)           Byits execution of a joinder to this Agreement, Peter C. Cooper, and individual(the **“Guarantor”**), hereby guaranties for the benefitof Inland and its

 

18

----

 

Affiliates (i) the full, complete and timely payment of anyindemnification obligation of the Existing Partners under the provisions ofthis 3.1.1 of this Agreement and (ii) the full and complete payment of anyIndemnified Losses that may occur to Inland and/or its Affiliates arising outof a breach by the Existing Partners of their representations and warrantiesunder this Agreement.  This guaranty is adirect and primary obligation of the Guarantor and is an unconditional guarantyof payment and performance and not a guaranty of collection.  The obligations of the Guarantor under this Section3.1.1(s) are absolute and unconditional, and are not subject to anycounterclaim, set-off, recoupment, deduction or defense based upon any claimthat the Guarantor may have against the Existing Partners and shall remain infull force and effect without regard to, and shall not be released, dischargedor terminated or in any other way affected by, any circumstance or condition.

 

3.1.2        Representations andWarranties of the Existing Partners with Respect to the Capital I Property. Each of the Existing Partners herebyrepresents and warrants to Inland as of the date of this Agreement and as ofthe Closing Date that:

 

(a)           TheCapital I Real Property consists of approximately 0.7600 acres of land, andapproximately 71,305 square feet of net rentable square feet, and located at1400 Civic Place, Southlake, Texas and commonly known as Building 3C, andCapital I will have good and indefeasible title to the Capital I Real Property,as of the date of closing, subject to all easements, restrictions, reservationsand covenants now of record and further subject to all matters that a current,accurate survey would show, together with the Permitted Encumbrances;

 

(b)           TheCapital I Real Property and the Capital I Personal Property, will on theClosing Date, represent all of the assets of the Subsidiary of Capital I.

 

(c)           Section3.1.1(c) of the Disclosure Schedule sets forth all of the existing warrantiesapplicable to the Capital I Property.

 

(d)           NeitherCapital I, nor the Existing Partners have been served with process or other writtennotice of any litigation or proceeding pending or, to Capital I’s Knowledge orthe Existing Partners’ Knowledge, threatened against the Capital I Property,including but not limited to condemnation or eminent domain.

 

(e)           Allincome and expense statements delivered to Inland with respect to the Capital IProperty are true, correct and complete in all material respects.

 

(f)            NeitherCapital I nor the Existing Partners have received written notice of violationsat or by the Capital I Property of zoning, building, subdivision, fire, air pollution,business occupancy or Environmental Requirements, rules or regulations relatingto the Capital I Property or of other governmental action affecting the CapitalI Property that have not been cured except as set forth in Section 3.1.1(f)of the Disclosure Schedule.

 

19

----

 

(g)           NeitherCapital I nor the Existing Partners have received written notice from anyfederal, state, county or municipal authority as to the existence of anyHazardous Materials at the Capital I Property.

 

(h)           Therent roll attached hereto as Section 3.1.1(h) of the Disclosure Schedulecontains a complete list of all Leases affecting the Capital I Property and thecopies of such Leases provided to Inland are complete and correct in allmaterial respects.  Except as otherwisedisclosed to Inland in the Property Information, in any tenant estoppelcertificate, the rent roll attached to the Disclosure Schedule, the Leases arein full force and effect and to Capital I’s Knowledge there is no monetarydefault (other than with respect to the payment of basic rent not more than 20days past due) nor any material non-monetary default under any of the Leases.

 

(i)            Thereare no other Contracts other than the Contracts affecting the Capital IProperty or the operation thereof as set forth in Section 3.1(n) of theDisclosure Schedule attached hereto, and the copies of such Contracts providedto Inland are complete and correct and to Capital I’s knowledge, Capital I isnot in default thereunder.

 

(j)            TheSubsidiary of Capital I owns as of the Closing Date all of the landlords’interest in the Leases and the property owners’ interest in the Contracts andthe Capital I Personal Property.  Theinterest of the Subsidiary of Capital I in the Contracts, Leases, and theCapital I Personal Property is free and clear of all encumbrances, and has notbeen assigned to any other person, except for collateral assignments to lenderswhich will be released at Closing.

 

(k)           Therepresentations and warranties of the Existing Partners set forth in thisAgreement shall survive the Closing for a period of one (1) year (the “SurvivalPeriod”).  As a condition precedentto Inland’s obligation to contribute capital to the Partnership as contemplatedin this Agreement, the Existing Partners’ representations and warrantiescontained herein must remain and be true and correct in all material respectsas of the Closing Date.  Inland shallhave the right to bring an action against the Existing Partners on the breachof a representation or warranty hereunder, but only upon the condition thatInland first learns of the breach after Closing and gives written notice ofsuch breach to the Existing Partners before the end of the Survival Period andfiles such action on or before the first day following the second anniversaryof the Closing Date.  The ExistingPartners shall have no liability after Closing for the breach of a representationor warranty under this Section 3.1.2 of which Inland had knowledge as ofClosing.  Notwithstanding any otherprovision of this Agreement, any agreement contemplated by this Agreement, orany rights which Inland might otherwise have at law, equity, or by statute,whether based on contract or some other claim, as of the Closing Date, Inlandagrees that any liability of the Existing Partners to Inland will be limited to$600,000. The provisions of this Section 3.1.2(k) shall survive theClosing.

 

3.2           Inland’sRepresentations and Warranties.  Inlandhereby represents and warrants to Capital I as of the date hereof and as of theClosing Date as follows:

 

20

----

 

(a)           Organization.Inland is a corporation duly organized, validly existing, and in good standingunder the Laws of the State of Illinois and has the requisite corporate powerand authority to enter into this Agreement and to perform its obligations underthis Agreement.

 

(b)           Authority.  The execution and delivery of this Agreementby Inland and the performance by Inland of its obligations under this Agreementhave been duly and validly authorized by all requisite corporate action on thepart of Inland. This Agreement constitutes a legal, valid, and bindingobligation of Inland and is enforceable against Inland in accordance with itsterms, except to the extent that (i) enforcement may be limited by or subjectto any bankruptcy, insolvency, reorganization, moratorium, or similar Laws nowor hereafter in effect relating to or limiting creditors, rights generally and(ii) the remedy of specific performance and injunctive and other forms ofequitable relief are subject to certain equitable defenses and to thediscretion of the court or other similar person or entity before which anyproceeding therefor may be brought.

 

(c)           NoConflicts or Violations. The execution and delivery of this Agreement byInland do not, and the performance by Inland of Inland’s obligations under thisAgreement will not:

 

(i)            violateany term or provision of any applicable Law or any writ, judgment, decree, orinjunction applicable to Inland, except such violations that do not have aMaterial Adverse Effect;

 

(ii)           conflictwith or result in a violation or breach of any of the provisions of thearticles or certificate of incorporation or bylaws of Inland, except suchconflicts, violations, or breaches that do not have a Material Adverse Effect;or

 

(iii)          conflictwith or result in a violation or breach of any Contract to which Inland is aparty, except such conflicts, violations, or breaches that do not have a MaterialAdverse Effect.

 

(d)           Litigation.  There is no action, suit, or proceedingpending, or (to the knowledge of Inland) threatened, against Inland, at Law orin equity, in, before, or by any person or entity that, if adverselydetermined, would have a Material Adverse Effect.

 

(e)           Heldfor Investment.  The Partner interestwill be held by Inland or its assignee for its own account for the purpose ofinvestment and not for the purpose or with the intent of a distribution orother sale and disposition thereof.  Inlandshall not transfer or otherwise dispose of any of its partnership interest, orany interest therein, in such manner as to violate any provisions of theSecurities Act of 1933, as amended, or of any securities Laws of any state orother jurisdiction regulating the disposition thereof.  This Section 3.2(c) shall survive theClosing.

 

(f)            Brokers. All negotiations relative to thisAgreement and the transactions contemplated hereby have been carried out byInland directly with Capital I and its Affiliates, without the intervention ofany Person on behalf of Inland in such manner as to

 

21

----

 

give rise to any valid claim by any Person against Capital I or itsAffiliates for a finder’s fee, brokerage commission, or similar payment, exceptfor Holliday Fenoglio Fowler, L.P., whose commission shall be paid by Capital Ipursuant to a separate written agreement.

 

(g)           NoThird-Party Financing.  Inland willnot rely on third-party equity to be raised or any third-party financing.  Capital I will not provide, and Inland willnot require, any documentation in the form of subordination, non-disturbanceand attornment agreements running to the benefit of any third-party lender.

 

3.3           Disclaimer; Release;Indemnity.

 

(a)           DisclaimersBy Capital I and the Existing Partners.  Except as expressly set forth in thisAgreement, it is understood and agreed that Capital I, the Existing Partnersand their respective agents or employees have not at any time made and are notnow making, and they specifically disclaim, any warranties, representations orguaranties of any kind or character, express or implied, with respect to theCapital I Property, including, but not limited to, warranties, representationsor guaranties as to (a) matters of title, (b) environmental matters relating tothe Capital I Property or any portions thereof, including, without limitation,the presence of Hazardous Materials in, on, under or in the vicinity of theCapital I Property, (c) geological conditions, including, without limitation,subsidence, subsurface conditions, water table, underground water reservoirs,limitations regarding the withdrawal of water, and geologic faults and theresulting damage of past and/or future faulting, (d) whether, and to the extentto which the Capital I Property or any portions thereof are affected by anystream (surface or underground), body of water, wetlands, flood prone area,flood plain, floodway or special flood hazard, (e) drainage, (f) soilconditions, including the existence of instability, past soil repairs, soiladditions or conditions of soil fill, or susceptibility to landslides, or thesufficiency of any undershoring, (g) the presence of endangered species or anyenvironmentally sensitive or protected areas, (h) zoning or buildingentitlements to which the Capital I Property or any portions thereof may besubject, (i) the availability of any utilities to the Capital I Property or anyportions thereof including, without limitation, water, sewage, gas andelectric, (j) usages of adjoining property, (k) access to the Capital IProperty or any portions thereof, (l) the value, compliance with the plans andspecifications, size, location, age, use, design, quality, description,suitability, structural integrity, operation, title to, or physical orfinancial condition of the Capital I Property or any portion thereof, or anyincome, expenses, charges, liens, encumbrances, rights or claims on oraffecting or pertaining to the Capital I Property or any parts thereof, (m) thecondition or use of the Capital I Property or compliance of the Capital IProperty with any or all past, present or future federal, state or local Laws,(n) the existence or non-existence of underground storage tanks, surfaceimpoundments, or landfills, (o) any other matter affecting the stability andintegrity of the Capital I Property, (p) the potential for further developmentof the Capital I Property, (q) the merchantability of the Capital I Property orfitness of the Capital I Property for any particular purpose, (r) the truth,accuracy or completeness of the Property Information, (s) tax consequences, or(t) any other matter or thing with respect to the Capital I Property.

 

22

----

 

(b)           “AsIs, Where Is”.  Subject to the termsand provisions hereof and except as otherwise provided herein, Inlandacknowledges and agrees that upon Closing, Inland shall accept the propertyheld by the Partnership (including, without limitation, the Capital I Propertyowned by the Subsidiary of Capital I) “**AS IS, WHERE IS, WITH ALL FAULTS,**” except to the extent expresslyprovided otherwise in this Agreement and any document executed by Capital I anddelivered to Inland at Closing.  Exceptas expressly set forth in this Agreement, Inland has not relied and will notrely on, and neither Capital I nor the Existing Partners have made and are notliable for or bound by, any express or implied warranties, guarantees,statements, representations or information pertaining to the Capital I Propertyor relating thereto (including specifically, without limitation, PropertyInformation packages distributed with respect to the Capital I Property) madeor furnished by Capital I, the Existing Partners, or any property manager, realestate broker, agent or third party representing or purporting to representCapital I or the Existing Partners, to whomever made or given, directly orindirectly, orally or in writing.  Inlandrepresents that it is a knowledgeable, experienced and sophisticated investorof real estate and that, except as expressly set forth in this Agreement, it isrelying solely on its own expertise and that of Inland’s consultants and shallmake an independent verification of the accuracy of any documents andinformation provided by Capital I and/or the Existing Partners.  Inland will conduct such inspections andinvestigations of the Capital I Property as Inland deems necessary, including,but not limited to, the physical and environmental conditions thereof, andshall rely upon same.  By failing toterminate this Agreement prior to the expiration of the Inspection Period,Inland acknowledges that Capital I and the Existing Partners have affordedInland a full opportunity to conduct such investigations of the Capital IProperty as Inland deemed necessary to satisfy itself as to the condition ofthe Capital I Property and the existence or non-existence or curative action tobe taken with respect to any Hazardous Materials on or discharged from theCapital I Property, and will rely solely upon same and not upon any informationprovided by or on behalf of Capital I, the Existing Partners or their agents oremployees with respect thereto, other than such representations, warranties andcovenants of Capital I or the Existing Partners as are expressly set forth inthis Agreement.  Upon Closing, Inlandshall assume the risk that adverse matters, including, but not limited to,adverse physical or construction defects or adverse environmental, health orsafety conditions, may not have been revealed by Inland’s inspections andinvestigations.  Inland hereby representsand warrants to Capital I and the Existing Partners that: (a) Inland isrepresented by legal counsel in connection with the transaction contemplated bythis Agreement; and (b) Inland is investing in the Partnership for business,commercial, investment or other similar purpose and not for use as Inland’sresidence.  Inland waives any and allrights or remedies it may have or be entitled to, deriving from disparity insize or from any significant disparate bargaining position in relation toCapital I or the Existing Partners.

 

(c)           CapitalI and Existing Partners Released from Liability.  Inland acknowledges that it will have theopportunity to inspect the Capital I Property during the Inspection Period, andduring such period, observe the physical characteristics and existingconditions and the opportunity to conduct such investigation and study on andof the Capital I Property and adjacent areas as Inland deems necessary, andexcept as otherwise provided herein Inland hereby FOREVER RELEASES ANDDISCHARGES

 

23

----

 

Capital I and the Existing Partners from all responsibility andliability, including without limitation, liabilities under any Environmental Laws,regarding the condition, valuation, salability or utility of the Capital IProperty, or their suitability for any purpose whatsoever (including, but notlimited to, with respect to the presence in the soil, air, structures andsurface and subsurface waters, of Hazardous Materials or other materials orsubstances that have been or may in the future be determined to be toxic,hazardous, undesirable or subject to regulation and that may need to bespecially treated, handled and/or removed from the Capital I Property, currentor future federal, state and local laws, regulations or guidelines, and anystructural and geologic conditions, subsurface soil and water conditions andsolid and hazardous waste and Hazardous Materials on, under, adjacent to orotherwise affecting the Capital I Property).  Inland further hereby WAIVES (and by Closingthis transaction will be deemed to have WAIVED) any and all objections andcomplaints (including, but not limited to, federal, state and local statutoryand common law based actions, and any private right of action under anyfederal, state or local laws, regulations or guidelines to which the Capital IProperty is or may be subject, including, but not limited to, any EnvironmentalLaws) concerning the physical characteristics and any existing conditions ofthe Capital I Property.  Inland furtherhereby assumes the risk of changes in applicable Laws relating to past, presentand future environmental conditions on the Capital I Property and the risk thatadverse physical characteristics and conditions, including, without limitation,the presence of Hazardous Materials or other contaminants, may not have beenrevealed by its investigation.

 

(d)           Survival. The terms and conditions of this Section3.3 shall expressly survive the Closing and not merge with the provisionsof any Closing documents.  Inlandacknowledges and agrees that the disclaimers and other agreements set forthherein are an integral part of this Agreement and that Capital I and theExisting Partners would not have agreed to consummate this transaction for theContributed Capital without the disclaimers and other agreements set forthabove.

 

**ARTICLE IV**

**CONDITIONS TO OBLIGATIONS OF INLAND**

 

The obligations of Inland hereunder are subject to the fulfillment, ator before the Closing, of each of the following conditions (all or any of whichmay be waived in whole or in part by Inland):

 

4.1           Representations andWarranties.  The representations andwarranties made by Capital I and/or the Existing Partners in this Agreement andthe disclosures of Capital I and/or the Existing Partners in the DisclosureSchedule and all other schedules and exhibits attached hereto shall be true inall material respects as of the date hereof and shall be true in all material respectson and as of the Closing Date as though such representations, warranties anddisclosures were made on and as of the Closing Date.

 

4.2           Performance.  Capital I and the Existing Partners shallhave respectively performed and complied in all material respects with allagreements, covenants, obligations, and conditions required by this Agreementto be so performed or complied with by Capital I at or before the Closing Date.

 

24

----

 

4.3           No Injunction.  There shall not be in effect on the ClosingDate any writ, judgment, injunction, decree, or similar order of any court orGovernmental Authority, or otherwise, restraining, enjoining, or otherwise preventingconsummation of any of the transactions contemplated by this Agreement.

 

4.4           No Proceeding orLitigation.  There shall not beinstituted, pending, or (to the Knowledge of Inland or Capital I) threatened,any action, suit, investigation, or other proceeding in, before, or by anycourt or Governmental Authority to restrain, enjoin, or otherwise prevent consummationof any of the transactions contemplated by this Agreement.

 

4.5           Capital I’s ClosingDeliveries.  Capital I (or theExisting Partners, as applicable) shall have delivered to Inland (or the EscrowAgent, as applicable) on or before the Closing all of the deliveries requiredunder this Agreement.

 

4.6           Tenant EstoppelCertificates.  Capital I shall havedelivered tenant estoppel certificates substantially in the form of ExhibitE hereto (or, if a tenant’s Lease specifies or contemplates another form oftenant estoppel certificate, then such other specified or contemplated form)executed by 75% of the retail tenants and 75% of the office tenants occupyingimprovements located on the Capital I Property and the properties that are thesubject matter of the Real Property Contract, which estoppels must includeestoppels from 75% of the tenants (the “Major Tenants”) listed on ExhibitG-l attached to the Real Property Contract, with the balance thereofdelivered within sixty (60) days of closing.  Capital I shall not be obligated to expend anyfunds in connection with obtaining any such tenant estoppel certificates, andthe failure of Capital I to obtain any such tenant estoppel certificates shallnot be a breach or default hereunder.  Ifthe tenant estoppel certificates referred to in this Section 4.6 are nottimely delivered, then Inland’s sole remedies and recourses shall be limited toeither (a) waiving the requirement for the tenant estoppel certificate(s) inquestion and proceeding to Closing without reduction of the Contributed Capitalor (b) terminating this Agreement by immediate notification to Capital I andreceiving the immediate return of all of the Earnest Money including, but not limitedto, any portion that may have been designated as the Breakup Fee under the RealProperty Contract (as such term is defined thereunder).

 

4.7           TitlePolicy.  The title company shall beprepared to issue the Owner’s Policy.

 

4.8           Closing of the RealProperty Contract.  The transactionscontemplated under the Real Property Contract shall have closedcontemporaneously with the closing of the transactions contemplated hereunder.

 

4.9           Ground Leases.  Simultaneously with the Closing, Inland andSLTS Grand Avenue, L.P. shall have executed ground leases with respect tocertain parcels of land described under the Real Property Agreement upon termsset forth in the Real Property Contract.

 

4.10         Parking License.  Inland shall have approved the Parking Licensepursuant to the terms set forth in the Real Property Agreement.

 

In the event that any of the foregoing conditions precedent are not metor fulfilled on the Closing Date and so long as Inland is not in defaulthereunder, Inland may (a) terminate this Agreement and receive the immediatereturn of all of the Earnest Money including, but not

 

25

----

 

limited to, any portion thatmay have been designated as the Breakup Fee, or (b) elect to closenotwithstanding the non-satisfaction of such condition, in which event Inlandshall be deemed to have waived any such condition.  In the event Inland elects to close,notwithstanding the non-satisfaction of such condition, Inland shall be deemedto have waived said condition, and there shall be no liability on the part ofCapital I or the Existing Partners therefor.

 

**ARTICLE V**

**CONDITIONS TO OBLIGATIONS OF CAPITAL I**

 

The obligations of Capital I and the Existing Partners hereunder aresubject to the fulfillment, at or before the Closing, of each of the followingconditions (all or any of which may be waived in whole or in part by Capital Iand the Existing Partners):

 

5.1           Representations andWarranties.  The representations andwarranties made by Inland in this Agreement shall be true in all materialrespects as of the date hereof and shall be true in all material respects onand as of the Closing Date as though such representations and warranties weremade on and as of the Closing Date.

 

5.2           Performance.  Inland shall have performed and complied inall material respects with all agreements, covenants, obligations, andconditions required by this Agreement to be so performed or complied with byInland at or before the Closing Date.

 

5.3           No Injunction.  There shall not be in effect on the ClosingDate any writ, judgment, injunction, decree, or similar order of any court orGovernmental Authority, or otherwise, restraining, enjoining, or otherwise preventingconsummation of any of the transactions contemplated by this Agreement.

 

5.4           No Proceeding orLitigation.  There shall not beinstituted, pending, or (to the Knowledge of Inland or Capital I) threatened,any action, suit, investigation, or other proceeding in, before, or by anycourt or Governmental Authority to restrain, enjoin, or otherwise prevent consummationof any of the transactions contemplated by this Agreement.

 

5.5           Closing of the RealProperty Contract.  The transactionscontemplated under the Real Property Contract shall have closedcontemporaneously with the closing of the transactions contemplated hereunder.

 

5.6           Inland’s ClosingDeliveries.  Inland shall havedelivered to Capital I (or to Escrow Agent, as applicable) on or before Closingall of the deliveries required under this Agreement.

 

In the event that any of the foregoing conditions precedent are not metor fulfilled on the Closing Date and so long as Capital I and the ExistingPartners are not in default hereunder, Capital I may (a) terminate thisAgreement and receive the immediate delivery of all of the Earnest Moneyincluding, but not limited to, any portion that may have been designated as theBreakup Fee, or (b) elect to close notwithstanding the non-satisfaction of suchcondition, in which event Capital I shall be deemed to have waived any suchcondition. In the event Capital I elects to close, notwithstanding thenon-satisfaction of such condition, Capital I shall be deemed to have waivedsaid condition, and there shall be no liability on the part of Inland therefor.

 

26

----

 

**ARTICLE VI**

**TITLE AND SURVEY**

 

6.1           Delivery of TitleCommitment and Survey.  Within five(5) days of the Effective Date, Capital I shall deliver to Inland the followingitems, to the extent not already delivered to Inland pursuant to the RealProperty Agreement:

 

(a)          TitleCommitment.  The Title Commitment (ashereinafter defined), together with legible copies of any and all titleexception documents referenced therein.  The“Title Commitment” shall mean a commitment or commitments for one ormore TLTA Owner’s Title Insurance Policy (Form B) for the Capital I RealProperty issued by the Chicago Title Insurance Company in the full amount ofthe Property Value, covering title to the Capital I Real Property on or afterthe date hereof, showing the Partnership as owner of the Capital I Real Propertyin fee simple, and providing for full extended coverage over all general titleexceptions contained in such policies and containing the following specialendorsements to the extent available (collectively, the “Special Title Endorsements”),owner’s comprehensive, access, survey (legal description equivalency), contiguity(if applicable), encroachment (if applicable), non-imputation, and deletion of thearbitration provision and creditors’ rights provision.  The Owner’s Policy described herein togetherwith the Special Endorsements is referred to herein as the Title Policy.

 

(b)          Survey.  An ALTA ACSM Title Survey of the Capital IReal Property prepared in accordance with the Minimum Standard Detail Requirementsfor ALTA/ACSM Land Title Surveys jointly established by the American Land TitleAssociation and the American Congress on Surveying and Mapping in 1999, thatmeets the accuracy requirements of an Urban Survey, as defined therein, andincludes items 1, 3, 4, 6, 7 (a, b and c), 8-11 and 13-16 of Table A thereof(the “Survey”).

 

6.2           Title and SurveyObjections.

 

(a)          Inthe event (i) the Survey shows any easement, right-of-way, encroachment,conflict, protrusion or other matter affecting the Capital I Real Property thatis unacceptable to Inland, or (ii) any exceptions appear in the TitleCommitment that are unacceptable to Inland, Inland shall notify Capital I inwriting of such facts (“Inland’s Title Objections”) not later than 5:00p.m.  Central Time upon the date which isthe later of October 29, 2004 or five (5) business days after the date Inlandhas received delivery of both the Survey and Title Commitment (the “TitleApproval Period”) but in no event later than the expiration of theInspection Period.  Upon the expirationof the Title Approval Period, except for Inland’s Title Objections, MonetaryLiens (as hereafter defined), and any other matters arising subsequent to thedate of the Survey and Title Commitment, Inland shall be deemed to haveaccepted the Survey, the Title Commitment and all matters shown or addressedtherein, including, without limitation, any easement, right of way,encroachment, conflict, discrepancy, overlapping of improvements, protrusion,lien, encumbrance, restriction, condition, covenant, exception or other matterwith respect thereto (collectively, the “Approved Title Matters”).

 

27

----

 

(b)          Notwithstandinganything to the contrary contained herein, except for any Monetary Liens andany matters created by Capital I after the date of the Title Commitment,Capital I shall have no obligation to take any steps or bring any action orproceeding or otherwise to incur any effort or expense whatsoever to eliminateor modify any of Inland’s Title Objections; provided, however, Capital I, atits sole option, may attempt to eliminate or modify all or a portion of Inland’sTitle Objections to Inland’s reasonable satisfaction prior to the Closing Date. In the event Capital I is unable orunwilling to attempt to eliminate or modify all of Inland’s Title Objections tothe reasonable satisfaction of Inland, Capital I shall provide written noticethereof to Inland within five (5) business days of its receipt of Inland’sTitle Objections (“Capital I’s Notice”). Inland may thereafter elect toclose notwithstanding Inland’s Title Objections (in which case Capital I shallhave no liability to eliminate or modify, and Inland shall take the Capital IProperty subject to Inland’s Title Objections) or Inland may (as its sole andexclusive remedy) terminate this Agreement by delivering notice thereof inwriting to Capital I, in which event neither party shall have any obligationhereunder other than the Surviving Obligations and Inland shall be entitled toreturn all of the Earnest Money, including any portion thereof that may havebeen designated as the Breakup Fee.  CapitalI shall cause all mortgages, deeds of trust and monetary liens (including liensfor delinquent taxes, mechanics’ liens and judgment liens) affecting theCapital I Property and all indebtedness secured thereby (the “Monetary Liens”)to be satisfied, released and discharged of record on or prior to the ClosingDate.

 

**ARTICLE VII**

**MISCELLANEOUS**

 

7.1           Notices.  Any notice or othercommunication given pursuant to this Agreement must be in writing and (a) delivered personally, (b) sent bytelefacsimile or other similar facsimiletransmission, (c) delivered by overnight express or (d) e-mail as follows:

 

(a)            If to Purchaser:

 

Inland Real Estate Acquisitions, Inc.

1700 Alma Road

Plano, Texas 75075

Attn: Matthew Tice

Telephone: (972) 442-6770

Facsimile: (972) 429-9017

E-Mail: tice@inlandgroup.com

 

The InlandReal Estate Group, Inc

2901Butterfield Road

Oak Brook, Illinois 60523

Attn: DennisK. Holland, Esq.

Telephone:(630) 218-8000

Facsimile:(630) 218-4900

E-Mail: dholland@inlandgroup.com

 

28

----

 

(b)                                 Ifto Capital I:

 

Cooper & Stebbins, L.P.

1256 Main Street, Suite 240

Southlake, Texas 76092

Attention: Frank S. Bliss

Telephone: (817) 329-8400

Facsimile: (817)  251-8717

E-Mail: fbliss@southlaketownsquare.com

 

with a copy to:

Winstead Sechrest & Minick P.C.

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

Attention: John Nolan, Esq.

Telephone: (214) 745-5251

Facsimile: (214) 745-5390

E-mail: jnolan@winstead.com

 

All notices and other communications required or permitted under thisAgreement that are addressed as provided in this Section 7.1 will (A) ifdelivered personally be deemed given when delivered or if by overnight express,be deemed given the day after deposited with an overnight carrier; (B) ifdelivered by telefacsimile or similar facsimile transmission, be deemed givenwhen electronically confirmed; and (C) if sent by e-mail when sent.  Any party from time to time may change itsaddress for the purpose of notices to that party by giving a similar noticespecifying a new address, but no such notice will be deemed to have been givenuntil it is actually received by the party sought to be charged with thecontents thereof.

 

7.2                                 EntireAgreement.  Except for documentsexecuted by Capital I and Inland pursuant hereto, this Agreement supersedes allprior discussions and agreements between the parties with respect to thesubject matter of this Agreement, and this Agreement contains the sole andentire agreement between the parties hereto with respect to the subject matterhereof.

 

7.3                                 Expenses.  Except as otherwise expressly provided inthis Agreement, each of Capital I and Inland will payits own costs and expenses in connection with this Agreement and the transactionscontemplated hereby.

 

7.4                                 PublicAnnouncement.  Neither party heretoshall make any public announcement or disclosure of any information related tothis Agreement to outside brokers or third parties, before or after theClosing, without the prior written specific consent of the other party;however, either party may disclose the terms and conditions of this Agreementif required by Law or court order, and to its attorneys, accountants, employeesand existing or prospective financial partners provided same are advised bysuch party of the confidential nature of such terms and conditions and agree tomaintain the confidentiality thereof (in each case, prior to disclosure).  The consent by either party to any disclosuresshall not be deemed to be a waiver on the part of such party of

 

29

----

 

any prohibition against any futuredisclosure.  Notwithstanding theforegoing, Inland may make any and all SEC filings deemed appropriate byInland.

 

7.5                                 FurtherAssurance.  Capital I and Inlandagree that, from time to time after the Closing, upon the reasonable request ofthe other, they will cooperate and will cause their respective Affiliates tocooperate with each other to effect the orderly transition of the business, operations,and affairs of Capital I.  Withoutlimiting the generality of the foregoing, (a) Capital I will provide, and willcause its respective Affiliates to provide, representatives of Inland reasonableaccess to all books and records of Capital I and their Affiliates reasonablyrequested by Inland in the preparation of any post-Closing financialstatements, reports, Tax Returns, or Tax filings of Capital I; (b) Inland willprovide, representatives of the Existing Partners reasonable access to allpre-Closing books and records of Capital I reasonably requested by Capital I inthe preparation of any post-Closing financial statements, reports, Tax Returns,or Tax filings of Capital I; and (c) each party hereto will execute suchdocuments and instruments as the other party hereto may reasonably requestcontaining terms and conditions mutually satisfactory to each party hereto tofurther effectuate the terms hereof.

 

7.6                                 Waiver. Any term or condition of this Agreementmay be waived at any time by the party that is entitled to the benefitthereof.  Such waiver must be in writingand must be executed by an executive officer of such party.  A waiver on one occasion will not be deemed tobe a waiver of the same or any other breach or nonfulfillment on a futureoccasion.  All remedies, either underthis Agreement, or by Law or otherwise afforded, will be cumulative and notalternative.

 

7.7                                 Amendment.  This Agreement may be modified or amendedonly by a writing duly executed by or on behalf of Capital I and Inland.

 

7.8                                 Counterparts. This Agreement may be executedsimultaneously in any number of counterparts, each of which will be deemed anoriginal, but all of which will constitute one and the same instrument.

 

7.9                                 NoThird Party Beneficiary.  Except asotherwise set forth herein, the terms and provisions of this Agreement areintended solely for the benefit of Capital I, the Existing Partners, Inland,and their respective successors and permitted assigns, and it is not theintention of the parties to confer third-party beneficiary rights upon anyother person or entity.

 

7.10                           GoverningLaw.  This Agreement will be governedby and construed and enforced in accordance with the Laws of the State of Texas(without regard to the principles of conflicts of Law) applicable to a Contractexecuted and performable in such state.

 

7.11                           BindingEffect.  This Agreement is bindingupon and will inure to the benefit of the parties and their respectivesuccessors and permitted assigns.

 

7.12                           LimitedAssignment.  Neither this Agreementnor any right or obligation hereunder or part hereof may be assigned by anyparty hereto without the prior written consent of the other party hereto (andany attempt to do so will be void), except as otherwise specifically providedherein.  Notwithstanding the foregoing,Inland shall have the right to assign this Agreement on or before the fifth dayprior to the Closing Date to an Affiliate of Inland, any

 

30

----

 

Affiliate of The Inland Real Estate Group, Inc., or any Affiliate ofInland Western Retail Real Estate Trust, Inc.; provided, however, that Inlandshall remain liable for all obligations of Inland under this Agreement.  Inland may assign this Agreement and itsrights hereunder to any affiliate,

 

7.13                           Provisions.  If any provision of this Agreement is held tobe illegal, invalid, or unenforceable under any present or future Law, and ifthe rights or obligations under this Agreement of Capital I, the ExistingPartners and Inland will not be materially and adversely affected thereby, (a)such provision will be fully severable; (b) this Agreement will be construed andenforced as if such illegal, invalid, or unenforceable provision had nevercomprised a part hereof; (c) the remaining provisions of this Agreement willremain in full force and effect and will not be affected by the illegal,invalid, or unenforceable provision or by its severance herefrom; and (d) inlieu of such illegal, invalid, or unenforceable provision, there shall be addedautomatically as part of this Agreement a legal, valid, and enforceableprovision as similar in terms to such illegal, invalid, or unenforceableprovision as may then be legal, valid and enforceable under applicable Law.

 

7.14                           Confidentiality. Affiliates of Capital I and Inland haveentered into the Confidentiality Agreement dated September 22, 2004, attachedhereto and incorporated herein, and such Confidentiality Agreements shall bebinding upon the parties herein.

 

7.15                           Condemnation.  If, prior to the Closing, action is initiatedto take any of the Capital I Property by eminent domain proceedings or by deedin lieu thereof, Inland may either at or prior to Closing (a) terminate thisAgreement and receive a full refund of all of the Earnest Money, including anyamount designated as a Breakup Fee, or (b) consummate the Closing, in whichlatter event all of Capital I’s assignable right, title and interest in and tothe award of the condemning authority shall be assigned to Inland at theClosing and there shall be no reduction in the Contributed Capital.

 

7.16                           Casualty.  Except as otherwise provided in thisAgreement, Capital I assume all risks and liability for damage to or injuryoccurring to the Capital I Property by fire, storm, accident, or any othercasualty or cause until the Closing has been consummated.  If the Capital I Property, or any partthereof, suffers any damage in excess of $2,000,000.00 or in any amount thatwould allow any of the Major Tenants to abate rent or terminate their leaseprior to the Closing from fire or other casualty which Capital I, at their soleoption, does not elect to repair, Inland may either at or prior to Closing (a)terminate this Agreement and receive a full refund of the Earnest Money, or (b)consummate the Closing, in which latter event all of Capital I’s right, titleand interest in and to the proceeds of any insurance covering such damage tothe extent the amount of such insurance does not exceed the ContributedCapital, shall be assigned to Inland at the Closing and Inland shall receive acredit for the deductible.  If theCapital I Property, or any part thereof, suffers any damage equal to or lessthan $2,000,000.00 prior to the Closing, Inland agrees that it will consummatethe Closing and accept the assignment of the proceeds of any insurance coveringsuch damage plus an amount equal to Capital I’s deductible under its insurancepolicy and there shall be no reduction in the Contributed Capital.

 

7.17                           Maintenanceand Contracts.  From the EffectiveDate of this Agreement until the Closing or earlier termination of thisAgreement:

 

31

----

 

(a)                                   CapitalI shall cause the Subsidiary of Capital I to operate and maintain the Capital IProperty in the ordinary course of business consistent with the manner in whichit has heretofore been operated and maintained. Capital I shall maintain property and casualty insurance on the Capital IProperty in the same amounts and for the same coverage as it has heretoforemaintained for the Capital I Property.

 

(b)                                  CapitalI will cause the Subsidiary of Capital I to perform all of Capital I’s respectivematerial obligations under the Contracts.  Capital I will not, without the prior writtenconsent of Inland (which consent will not be unreasonably withheld or delayed),modify, enter into, or renew any Contract.

 

7.18                           Leasing. From the Effective Date of thisAgreement through the expiration of the Inspection Period, Capital I will causethe Subsidiary of Capital I to not, without the prior written consent of Inland(which consent will not be unreasonably withheld or delayed), modify, enterinto, or renew any Leases.  Inland’sfailure to respond in writing within four (4) business days of Capital I’srequest for consent shall be deemed an approval of Capital I’s request,provided that at the time of any request for approval, if there remain lessthan four (4) business days prior to the expiration of the Inspection Period,the Inspection Period shall be extended to give Inland at least four (4)business days to respond.  Subsequent tothe expiration of the Inspection Period, Capital I shall not modify, enterinto, or renew any leases except upon the express written consent of Inlandwhich may be granted or withheld in Inland’s sole and absolute discretion.

 

[THE REMAINDER OF THIS PAGE LEFTINTENTIONALLY BLANK]

 

SIGNATURE PAGES FOLLOW

 

32

----

 

IN WITNESS WHEREOF, this Agreement has been duly executed and deliveredas of this 5th day of November, 2004, by the dulyauthorized representatives of Capital I, the Existing Partners and Inland.

 

**CAPITAL I:**

 
| C&S SOUTHLAKE CAPITAL PARTNERS I, L.P.  a Texas limited partnership, |                                                                       |                  |   |
|--------------------------------------------------------------------------|----------------------------------------------------------------------------|-----------------------|--------|
|                                                                     |                                                                       |                  |   |
| By:                                                                      | CS SOUTHLAKE, L.L.C.,  a Texas limited liability company,  General Partner |                  |   |   |
|                                                                     |                                                                       |                  |   |   |
|                                                                     | By:                                                                        | /s/ Brian R. Stebbins |   |   |   |   |
|                                                                     |                                                                       | Brian R. Stebbins,    |   |   |   |
|                                                                     |                                                                       | Managing Member       |   |   |   |
|                                                                     |                                                                       |                  |   |   |   |
| Date of Signature:                                                       | As of  11.5.04                                                             |                  |   |   |   |
|                                                                          |                                                                            |                       |        |  |  |  |  |  |

 
| **C&S** |   |   |   |
|-------------|--------|--------|--------|

 
| COOPER & STEBBINS, L.P.,  a Texas limited partnership, |                  |   |     |
|------------------------------------------------------------|-----------------------|--------|----------|
|                                                       |                  |   |     |
| By:                                                        | CS TOWN CENTRES, LLC, |   |     |   |
| a Texas limited liability company  General Partner         |                  |   |     |
|                                                       |                  |   |     |   |
|                                                       |                  |   |     |   |
| By:                                                        | /s/ Brian R. Stebbins |   |     |   |   |
|                                                       | Brian R. Stebbins,    |   |     |   |
|                                                       | Managing Member       |   |     |   |
|                                                       |                  |   |     |
| Date of Signature:                                    | As of  11.5.04        |   | * * |   |   |
|                                                            |                       |        |          |  |  |  |

 
| **CSLLC:** |   |   |   |
|------------|--------|--------|--------|

 
| CS SOUTHLAKE, LLC  a Texas limited liability company |               |                  |   |
|------------------------------------------------------|--------------------|-----------------------|--------|
|                                                 |               |                  |   |
|                                                 |               |                  |   |
| By:                                                  |               | /s/ Brian R. Stebbins |   |   |   |   |
|                                                 | Brian R. Stebbins, |                  |   |   |   |
|                                                 | Managing Member    |                  |   |   |   |
|                                                 |               |                  |   |
| Date of Signature:                                   | As of 11.5.04      |                  |   |   |   |
|                                                      |                    |                       |        |  |  |  |  |  |

 

1

----

 
|   |   |   | **INLAND****:**                                                          |
|--------|--------|--------|--------------------------------------------------------------------------|
|   |   |   | **INLAND REAL ESTATE ACQUISITIONS,  INC.,** an Illinois corporation |
|   |   |   |                                                                     |
|   |   |   |                                                                     |
|   |   |   | By:                                                                      | /s/ G. Joseph Cosenza |
|   |   |   |                                                                     | Name: | G. Joseph Cosenza |
|   |   |   |                                                                     | Title: | President |

 

ExhibitA – Description of the Capital I Real Property

ExhibitB – Form of Amended and Restated Partnership Agreement for Capital I

ExhibitC – List of Property Information

ExhibitD – Form of Audit Response Letter

ExhibitE – Form of Tenant Estoppel Certificate

ExhibitF – Form of Special Warranty Deed

ExhibitG – Form of Assignment and Assumption of Leases

ExhibitH – Form of Bill of Sale, Assignment and Assumption of Contracts

DisclosureSchedule

 

2

----

 

**JOINDER OF SECTION 3.1.1 (s) GUARANTOR****:**

The following individual hereby joins in the execution of thisAgreement to Admit Partner for the sole purpose of evidencing such individual’sagreement to be bound by the terms of Section 3.1.1(s) of this Agreementfor the time period stated in Section 3.1 and for no other purpose.

 

 
| /s/  Peter C. Cooper            |   |
|---------------------------------|--------|
| Peter  C. Cooper, an individual |   |
|                            |   |
| Date  of Signature:             |   |   |
|                                 |        |  |  |

 

3

----