Exhibit
10.78


 


 


AGREEMENT OF PURCHASE AND SALE


 


THIS
AGREEMENT OF PURCHASE AND SALE (this “Agreement”),
dated July 5th, 2006, is entered into by and between VALLEY VIEW ASSOCIATES LIMITED PARTNERSHIP, a North Carolina
limited partnership (“Seller”); and INLAND REAL
ESTATE ACQUISITIONS, INC., an Illinois corporation (“Buyer”).


 


STATEMENT
OF AGREEMENT


 


In consideration of an
earnest money deposit in the amount of $1,000,000.00 (referred to in this
Agreement, together with any other earnest money deposits paid by Buyer, and
together with all interest earned thereon, as the “Deposit”),
which Buyer agrees to pay to Escrow Agent (as defined in Paragraph 19) within
three (3) business days after the date of complete execution and delivery of
this Agreement by Seller and Buyer (the “Effective Date”),
and the mutual terms, covenants, conditions and agreements contained in this
Agreement, the parties agree as follows:


 


1.             Sale of Property. Seller agrees to
sell, convey, assign, transfer and deliver to Buyer, and Buyer agrees to
purchase, acquire and take from Seller, the following property:


 


(a)  Parcels of real property located on Dulles
Technology Drive, Herndon, Fairfax County, Virginia, as more particularly
described in Exhibit A
attached hereto and made a part hereof (the “Land”).


 


(b) All easements and other rights appurtenant to
the Land, including without limitation all rights accruing upon any approval of
the application attached hereto as Exhibit A-1
and made a part hereof (such application, as it may be amended in accordance
with this Agreement, is referenced herein as the “Future
Development Application”, and such easements and other rights
appurtenant to the Land are referenced herein as the “Appurtenances”).


 


(c)  All improvements located on the Land,
including but not limited to two (2) office buildings containing a total of
approximately 379,596 square feet of office space known as “Dulles Executive
Plaza I” and “Dulles Executive Plaza II”, and a structured parking facility
(collectively the “Buildings”),
and all paved areas, utility facilities and drainage facilities, landscaping,
signs, lighting equipment and other site improvements on the Land and belonging
to Seller (collectively, with the Buildings, the “Improvements”).


 


(d) All furniture, fixtures, equipment, appliances
and other items of personal property now located upon the Land which are owned
by Seller, and which are used primarily in connection with and for the
occupancy and operation of the Improvements, if any, including but not limited
to floor coverings and wall coverings, light fixtures, mechanical systems and
equipment, and maintenance equipment (collectively, the “Personal
Property”).


 


(e)  Seller’s right, title and interest in any
surveys, plans, specifications, and operating manuals covering the Improvements
and the Personal Property, together with any and all right, title and interest
of Seller in and to any plans, documents and other predevelopment work product
prepared by or on behalf of Seller in regard to the Future Development
Application (collectively, the “Plans”).


 


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(f)  Seller’s right, title and interest in any
assignable licenses, franchises and permits relating to the operation of the
Improvements in the manner in which they are being operated on the date hereof
(the “Permits”).


 


(g) Seller’s interest in all leases of space in the
Improvements, including, but not limited to, the leases listed on the schedule
(the “Lease Schedule”) attached
hereto as Exhibit B (the “Existing Leases”) and the New Leases, if
any, as defined in (and subject to the terms of) Paragraph 11(a) (collectively
the “Leases”), as well as all cash
security deposits, if any, made by tenants under the Leases (the “Security Deposits”) and any Non-Cash Security Deposits (as defined in the following
sentence). Seller shall take all commercially reasonable actions, and
shall cooperate with Buyer after Closing, to attempt to cause any letters of
credit, bonds, securities or other non-cash security deposits (“Non-Cash Security Deposits”) given by
tenants under their Leases and held by Seller as the landlord under such
Leases, to be transferred or assigned to, endorsed over to, or re-issued in the
name of Buyer as soon as is reasonably possible after Closing, provided that
Buyer shall pay any fees or other costs of any such transfers, assignments,
endorsements or re-issuance. The agreements of Buyer and Seller under this
subparagraph (g) shall survive Closing.


 


(h) Seller’s interest in all service contracts,
maintenance agreements, management agreements, leasing agreements, equipment
leases and other agreements affecting the Improvements to which Seller is a
party, other than any agreement with CB Richard Ellis, Inc. or Trammell Crow
Company, or their affiliates, as set forth on Exhibit C
attached hereto (the “Service Agreements”),
but only to the extent that Buyer elects to assume or is required to assume any
or all of the Service Agreements as provided in Paragraph 11.


 


(i)   Any rights that Seller may have in the
business and trade names “Dulles Executive Plaza I” and “Dulles Executive Plaza
II” (the “Trade
Names”) primarily in connection with the Project, to the extent, if
any, that Seller has rights in the Trade Names (Seller making no representation
or warranty that it has any such rights in or to such Trade Names).


 


The Land, the Appurtenances and the Improvements are
collectively referred to in this Agreement as the “Real
Property.”  The Real Property,
the Personal Property, the Plans, the Permits, the Leases, the Security Deposits,
the Non-Cash Security Deposits, the Service Agreements and the Trade Names are
collectively referred to in this Agreement as the “Project”.


 


2.             Purchase Price. The purchase price
to be paid by Buyer to Seller for the Project (the “Purchase
Price”) shall be the amount equal to (i) $125,000,000.00, minus (ii)
the Purchase Price Adjustment, as defined below. The Purchase Price shall be
paid as follows:


 


(a)  The Deposit shall be paid to Seller at Closing
and applied in reduction of the Purchase Price.


 


(b) The balance of the Purchase Price, adjusted to
reflect the other credits and prorations under this Agreement, shall be paid by
wire transfer at Closing in accordance with wiring instructions provided by
Seller.


 


For purposes of this Agreement, the “Purchase Price Adjustment” means the sum of (i) one-half
(1/2) of the Grantee Tax, as defined below, plus (ii) the projected cost of the
Window Repairs, as defined below (based on the bids obtained by Seller and
provided to Buyer prior to the end of the Inspection Period, as defined below),
plus (iii) the projected cost of the Deck 


 


 


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Repairs, as defined below (based on the bids obtained
by Seller and provided to Buyer prior to the end of the Inspection Period);
provided, however, if the sum of items (i) – (iii) above exceeds $700,000.00
and Buyer does not agree by written notice to Seller to limit the amount of the
Purchase Price Adjustment to $700,000.00 prior to the expiration of the
Inspection Period, then Seller may terminate this Agreement by written notice
to Buyer prior to the Closing Date, as defined below. Upon any such termination
by Seller, Buyer shall receive an immediate return of the Deposit.


 


3.             Future Development Application. If Closing occurs, Buyer shall pay to
Seller at Closing, over and above the other amounts due Seller hereunder,
$17,655.00 to reimburse Seller for the cost of filing the Future Development
Application.


 


Seller shall have no obligation to obtain approval of
the Future Development Application, and approval of the Future Development
Application is not a condition of Closing. Seller shall take no further action
with respect to the Future Development Application without the prior approval
of Buyer. Buyer agrees to fully cooperate with Seller in any and all efforts by
Seller to obtain approval of the Future Development Application, and agrees
that it shall join in such applications, consents, affidavits, disclosure
statements, development plans, development conditions, or proffers as may be
reasonably required by Seller or applicable governmental authorities in
connection with the prosecution of the Future Development Application. If the
Future Development Application is approved, Buyer shall be responsible for any
and all costs of planning or constructing improvements, and all other costs in
complying with the terms of the Future Development Application as approved.
Seller may terminate its efforts to obtain approval of the Future Development
Application at any time by written notice to Buyer. Upon such termination (or
upon the occurrence of Closing) Buyer may continue, at its sole cost, efforts
to obtain approval of the Future Development Application, and Seller agrees to
fully cooperate with Buyer, at Buyer’s sole cost, to obtain approval of the
Future Development Application. Seller shall not materially modify or amend the
Future Development Application without the prior written consent of Buyer,
provided that prior to the expiration of the Investigation Period such consent
shall not be unreasonably withheld or delayed, and after the expiration of the
Investigation Period such consent shall be in Buyer’s sole discretion. Seller
shall keep Buyer informed as to its progress, if any, in obtaining approval of
the Future Development Application. Provisions of this paragraph shall survive
Closing.


 


4.             Investigations by Buyer. Seller
previously has delivered, or shall deliver to Buyer within five (5) business
days after the Effective Date, copies of the following items, to the extent
that such items exist on the Effective Date and are in the possession or
control of Seller (the “Due Diligence Items”):


 


(a)  The Leases, together with any amendments of
the Leases.


 


(b) A title insurance commitment (the “Title Commitment”) for the Real Property issued by Chicago
Title Insurance Company (the “Title Insurer”).


 


(c)  Any environmental site assessments for the
Real Property.


 


(d) A review copy of a survey of the Real Property
by VIKA Incorporated dated June 2006 (the “Survey”).


 


(e)  The Service Agreements.


 


(f)  Operating statements for the Project for the
calendar years 2004, 2005 and the first four (4) months of 2006 (the “Operating Statements”). Seller shall provide to Buyer 


 


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copies of any subsequent
monthly operating statements for the Project that are completed by Seller prior
to Closing as such statements are completed.


 


In addition, at all reasonable times prior to the
Closing Date, Seller shall give Buyer reasonable access to all books and
records of Seller with respect to the operation of the Project, shall permit
Buyer to copy those materials at its expense, and shall furnish Buyer with
other information concerning those materials in Seller’s possession or control
as Buyer may reasonably request. All such information shall be considered part
of the Due Diligence Items.


 


Seller agrees to cooperate with Buyer’s accountants
(at no cost or expense to Seller) relative to the performance by said
accountants of an audit of Seller’s books and records relating to the rental
income and operating expenses for the Property. Buyer acknowledges and agrees
that if, as of the date of either Closing, all of the tenants at the relevant
portion of the Property have been paying rent for less than five (5) months,
then such audit shall not be required. Seller agrees that, from and after
Closing, Seller shall, at the request of Buyer’s auditors, execute a
representation letter relating to matters arising prior to the Closing,
addressed to such auditors. Such representation letter shall be in form
reasonably satisfactory to Buyer and Seller.


 


The Due Diligence Items are being delivered to Buyer
for informational purposes, and Seller makes no representations or warranties
of any kind regarding the Due Diligence Items, except for the representations
and warranties contained in this Agreement. The Due Diligence Items shall be
kept confidential by Buyer; provided, however, that Buyer shall be permitted to
disclose such information to its design professionals, consultants, attorneys,
accountants, agents, advisors, representatives, lender and potential investors
(collectively, “Representatives”), provided such
parties are informed of the foregoing confidentiality obligation. Buyer shall
not have access to information concerning the entities that constitute Seller
and its owners and partners. Buyer shall be permitted to make such additional
disclosures as may be required by the SEC.


 


Prior to the Closing Date, Buyer and its agents and
representatives shall, subject to the rights of tenants, have the right to go
on the Real Property for the purpose of conducting phase I environmental site
assessments, structural and mechanical inspections of the Buildings, and other
reasonable investigations, and undertaking such other reasonable activities as
are appropriate to evaluating its purchase of the Project. The results of any
investigation undertaken by Buyer shall not be disclosed to any third party or
governmental entity without the prior written consent of Seller, unless such
disclosure is required by law; provided, however, that Buyer shall be permitted
to disclose such results to its Representatives, provided such parties are
informed of the foregoing confidentiality obligation. In undertaking such
investigations, Buyer shall avoid interference with the operations of Seller or
its tenants. Notwithstanding anything to the contrary in this Agreement, Buyer
may not undertake any Phase II environmental investigations or other sampling
or invasive investigations of the Project or any portion thereof prior to the
Closing Date without the prior written consent of Seller.


 


Buyer shall indemnify, defend and hold harmless Seller
and Faison & Associates, LLC from and against any and all claims, damages,
liens, losses, costs and liabilities (including reasonable attorneys’ fees),
and shall repair any damage to the Project, resulting from or relating to entry
on the Project pursuant to this Paragraph. These obligations shall survive the
termination of this Agreement or Closing.


 


Prior to entry upon the Project under this Paragraph,
Buyer shall obtain, and shall keep in force during the term of this Agreement,
a policy of commercial general liability insurance issued by an insurance
company licensed to do business in the Commonwealth of Virginia covering any
liability arising out of or in connection with entry upon the Project under
this 


 


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Paragraph, with Seller named as additional insured, and with limits of
liability of not less than $1,000,000.00 for each occurrence (such insurance to
be increased to not less than $5,000,000.00 if Buyer undertakes and Phase II
environmental assessment work or other sampling or invasive investigations on
the Land). Buyer shall furnish a certificate of insurance reasonably satisfactory
to Seller, evidencing the required liability insurance coverage, prior to entry
on the Project under this Paragraph.


 


Any and all third party reports, recommendations,
surveys, title commitments, plans or other information that Buyer receives from
its consultants, engineers, surveyors, appraisers, geologists, agents and
contractors from investigation of the Project, but not including any documents
that constitute attorney work product or that are otherwise protected by a
legal privilege or confidentiality obligations owed to third parties, are
collectively referred to in this Agreement as the “Buyer Due
Diligence Items”. If this Agreement is terminated by either party,
other than as a result of a default by Seller, then Buyer shall, upon request
by Seller: (a) promptly return to Seller all Due Diligence Items, together with
all copies thereof, and (b) promptly deliver to Seller true copies of all Buyer
Due Diligence Items.


 


5.             Inspection Period and Closing.


 


(a)  During the period beginning on the Effective
Date and ending on July 14, 2006 (the “Inspection Period”),
Buyer shall investigate and verify the physical condition of the Project for
its current use, the financial feasibility of acquiring the Project, and the
current net operating income of the Project. Buyer shall be entitled to
terminate this Agreement at any time prior to the expiration of the Inspection
Period, for any reason or no reason, by delivering notice of same to Seller and
Escrow Agent prior to the expiration of the Inspection Period. If Buyer
determines in its sole discretion that it desires to proceed with the
acquisition of the Project pursuant to this Agreement, Buyer shall deliver
written notice of same to Seller at any time prior to the expiration of the
Inspection Period. If Buyer fails to deliver the foregoing notice of its
election to proceed prior to the expiration of the Inspection Period, then upon
the expiration of the Inspection Period, this Agreement shall automatically
terminate without further action on the part of Buyer or Seller. Upon
termination under this Paragraph 5(a), the Deposit shall immediately be
returned to Buyer and thereafter this Agreement shall be null and void, except
for the indemnification obligations of Buyer and Seller under Paragraph 25, and
the indemnification and other obligations of Buyer under Paragraph 4 (the “Surviving Obligations”).


 


NOTWITHSTANDING ANY PROVISION OF THIS
AGREEMENT TO THE CONTRARY, ESCROW AGENT IS HEREBY AUTHORIZED AND DIRECTED TO
RELEASE THE DEPOSIT TO BUYER IMMEDIATELY (WITHOUT FURTHER AUTHORIZATION FROM
SELLER) UPON RECEIPT BY ESCROW AGENT OF BUYER’S NOTICE OF TERMINATION OF THE
AGREEMENT ON OR PRIOR TO 5:00 P.M. (CST) ON JULY 14, 2006.


 


(b) Provided this Agreement is not terminated as
provided in Paragraph 5(a), Buyer shall pay to Escrow Agent, in immediately
available funds, an additional earnest money deposit of $1,000,000.00 within
one (1) business day after the expiration of the Inspection Period, and such
additional earnest money deposit shall supplement and be part of the Deposit (i.e., the total Deposit shall be $2,000,000.00). Provided
this Agreement is not terminated as provided in Paragraph 5(a), the Deposit
shall be non-refundable except (i) upon breach of this Agreement by Seller as
provided in Paragraph 15 below, (ii) upon casualty or condemnation as provided
in Paragraph 16 below, or (iii) as may otherwise be expressly provided herein


 


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(c)  The closing (“Closing”)
of the purchase and sale of the Project shall occur on July 18, 2006, or on an
earlier date selected by Buyer by not less than seven (7) days prior written
notice to Seller (the “Closing Date”).


 


6.             Closing Documents. At the Closing,
Seller shall execute, where necessary, and deliver to Buyer the following, in
the form specified below (or if no form is specified below, in form and
substance reasonably acceptable to Seller and Buyer):


 


(a)  A special warranty deed (the “Deed”) in the form attached hereto as Exhibit D
conveying fee simple title to the Real Property to Buyer, free and clear of all
liens, charges and encumbrances, except for: (i) the lien of ad valorem taxes
not yet delinquent as of the Closing Date, (ii) assessments not yet delinquent
as of the Closing Date, (iii) zoning and subdivision ordinances, building codes
and other legal requirements applicable to the Project, (iv) public
rights-of-way, (v) rights of tenants under the Leases, as tenants only with no
rights of first refusal or options to purchase, (vi) all matters disclosed by
the Title Commitment or Survey, and any update or revision of the Title
Commitment or Survey obtained by Buyer, other than Curable Liens, as defined in
Paragraph 9 below, and (vii) all other matters approved (or deemed approved) by
Buyer, or otherwise permitted, as provided in Paragraph 9, in each case other
than any Buyer objection that Seller agrees to cure in a Seller Response, as
defined in Paragraph 9 below (collectively, the “Permitted
Exceptions”).


 


Seller acknowledges that Buyer has not yet approved
the Permitted Exceptions, and shall be entitled to make objections and/or
terminate this Agreement as provided in Paragraph 9 below. In connection with
Closing, Buyer and Seller shall cooperate to give any and all notices required
under the Permitted Exceptions.


 


(b) A non-warranty bill of sale conveying to Buyer
the Personal Property in the form attached hereto as Exhibit E
(the “Blanket Bill of Sale and Assignment”).


 


(c)  An assignment to Buyer of all assignable
warranties or guaranties that Seller has received from its contractors and/or
suppliers in connection with the Improvements or the Personal Property,
together with Seller’s interest in the Plans, Permits (provided that Buyer pays
any applicable transfer fees) and non-exclusive right to use the Trade Names,
by the Blanket Bill of Sale and Assignment. Without limiting the foregoing,
Seller agrees to use commercially reasonable efforts to cause the roof warranty
for the Improvements to be assigned to Buyer even though such warranty is not
assignable by its terms, provided that Seller shall pay any out-of-pocket costs
incurred by Seller in seeking or effecting such assignment to the maximum sum
of $5,000.00 (Seller and Buyer hereby agree to conduct a conference call with
the roof warranty company prior to the expiration of the due diligence period
for the purpose of determining the assignability of the warranty and the cost
thereof). The agreements of Buyer and Seller under this subparagraph (c) shall
survive Closing.


 


(d) An assignment to Buyer of Seller’s interest in
the Leases and the Service Agreements (to the extent Buyer elects to assume or
is required to assume the Service Agreements) by the Blanket Bill of Sale and
Assignment, pursuant to which Seller assigns to Buyer, and Buyer assumes, the
Leases and such Service Agreements. If any changes are made in the Leases
described on Exhibit B attached hereto
between the Effective Date and the Closing Date (including without limitation
any New Lease) in accordance with the terms of Paragraph 11, Seller shall (as
part of the statement in subparagraph (i) below) deliver to Buyer an updated
Lease Schedule, which shall be deemed substituted as Exhibit B
to this Agreement. Seller shall also deliver to Buyer original signed copies of
the Service 


 


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Agreements that Buyer
assumes and the Leases, to the extent in Seller’s possession or control.


 


(e)  An assignment by the Blanket Bill of Sale and
Assignment of the lease commission agreements referenced in Exhibit G attached hereto, pursuant
to which Seller assigns to Buyer, and Buyer assumes the commission obligations
arising under, such commission agreements (but only to the extent of renewal
periods, extension periods and expansions under options or expansion rights
exercised after the Effective Date, other expansions, extensions, renewals or
amendments to the Leases covered by such commission agreements after the
Effective Date in accordance with this Agreement, and new leases, expansions,
extensions, renewals and amendments to leases with the tenants covered by such
commission agreements after Closing).


 


(f)  An affidavit stating that Seller is not a “foreign person” within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, and information
sufficient for the closing agent to complete an IRS Form 1099.


 


(g) An affidavit to Title Insurer from Seller, in
form reasonably satisfactory to Title Insurer, and reflecting the forms of
affidavits typically provided by sellers in connection with issuance of title
insurance to remove standard exceptions for mechanic liens, the gap period from
the latest update of Buyer’s title insurance commitment and parties in
possession (other than under the Leases).


 


(h) A resolution or other evidence reasonably
satisfactory to Title Insurer of the approval of this transaction by Seller,
and Seller’s authority to execute and deliver the Closing documents.


 


(i)   A statement certifying that the
representations and warranties of Seller contained in Paragraph 12 are true and
correct as of the Closing Date (or making necessary corrections thereto if not
true and correct), which statement shall survive Closing for a period of six
(6) months, as provided in Paragraph 12. Seller’s ability to update the
aforesaid statement shall not impact Buyer’s ability to terminate this
Agreement to the extent permitted under Paragraph 12 due to a change in a
representation or warranty of Seller from the Effective Date to the Closing
Date.


 


(j)   Executed written notices of the sale (the “Notices of Sale”) prepared by Seller addressed and directed
to each tenant of the Project, giving each tenant notice of the sale, directing
each tenant to pay all rent due under the terms of its Lease to such person and
at such place as Buyer shall direct, informing each tenant with a Security
Deposit (if any) that such Security Deposit has been transferred by Seller to
Buyer, and informing each tenant with a Non-Cash Security Deposit that is
transferred, assigned, endorsed or re-issued to Buyer (if any) that such
Non-Cash Security Deposit has been so transferred, assigned, endorsed or
re-issued.


 


(k)  A closing statement reflecting the Purchase
Price and all adjustments, prorations and credits thereto, and such
disbursements as the parties wish to reflect thereon in connection with the
transaction contemplated hereby (the “Closing
Statement”).


 


(l)   An assignment to Buyer of any Appurtenances
and any other rights and obligations of Seller under the Permitted Exceptions
that do not run to Buyer by the terms of the Permitted Exceptions, pursuant to
which Seller assigns to Buyer, and Buyer assumes, all rights and obligations in
connection with such Appurtenances and other Permitted Exceptions, by the
Blanket Bill of Sale and Assignment.


 


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(m) Originals of any Non-Cash Security Deposits
(except to the extent Seller needs the originals to have the Non-Cash Security
Deposits transferred or assigned to, endorsed over to, or re-issued in the name
of Buyer).


 


(n) The original documents assigned to Buyer
pursuant to the Blanket Bill of Sale and Assignment, to the extent in Seller’s
possession or control, as well as complete copies or originals of Seller’s
Project books and records, keys and other items pertaining to the Project that
are located in the management office of the Project as of the Effective Date
(excluding the books, records and property of Seller’s Project manager).


 


At
the Closing, Buyer shall execute, where necessary, and deliver to Seller the
following:


 


(a)           The
Blanket Bill of Sale and Assignment.


 


(b)           A
resolution or other evidence reasonably satisfactory to Seller and the Escrow
Agent of the approval of this transaction by Buyer, and Buyer’s authority to
execute and deliver the Closing documents.


 


(c)           The
Notices of Sale.


 


(d)           The
Closing Statement.


 


The sale of the Project will be closed through an
escrow closing with the Escrow Agent. Any escrow fee charged by the Escrow
Agent shall be divided equally and paid by Buyer and Seller. The Seller and
Buyer shall execute and deliver such escrow instructions and other
escrow-related documents as may reasonably be necessary in connection with
Closing. Seller shall pay the cost of the grantor tax imposed by Virginia Code
Section 58.1-802, and Buyer shall pay fees (other than the grantor tax which is
the Seller’s responsibility as provided above) for recording the Deed and the
cost of recording taxes imposed by Virginia Code Section 58.1-801 and 58.1-814
(collectively the “Grantee Tax”),
provided that Buyer shall not be responsible with any fees connected with the
payment or release of the Curable Liens. The premium for Buyer’s policy of
title insurance and all title examination fees will be paid by Buyer. Buyer
shall have the right to obtain title insurance from a title company or a title
insurance agency other than the title company and agency that issued the Title
Commitment, but if Buyer elects to obtain title insurance from another title
company or agency, it shall pay at or prior to Closing all costs, fees,
penalties and other charges for the Title Commitment (and cancellation
thereof). Seller shall pay the cost of the Survey, provided that Buyer shall
pay the cost of any updates or revisions desired by Buyer. Buyer shall pay the
cost of all other investigations of the Project performed by or on behalf of
Buyer. Each party shall pay its own attorneys’ fees.


 


7.             Taxes. All real estate taxes, assessments and
personal property taxes payable by Seller with respect to the Project for the
calendar or fiscal year, as the case may be, in which the Closing Date occurs
shall be prorated between Seller and Buyer as of 11:59 p.m. on the day
preceding the Closing Date (the “Proration Time”),
and paid by Buyer when due. Any such taxes or assessments that are due and
payable entirely with respect to any period ending prior to the Closing Date
shall be paid by Seller at or prior to Closing. If the current property tax
assessments and tax rates are not available at Closing, then the proration
shall be based on the amounts for the prior tax year, and shall be
re-calculated and adjusted between the parties when the actual amount of taxes
and assessments payable in the year of Closing is known to Buyer and Seller. If
any special assessments exist or are levied on the Real Property prior to the
Closing Date, Seller shall cause such assessments to be paid in full at
Closing; provided, however, that if the assessments may be paid in
installments, only the installments coming due on or before the 


 


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Closing
Date need be paid by Seller, and Buyer shall pay the remaining installments.
The provisions of this Paragraph shall survive the Closing.


 


Notwithstanding the foregoing, to the extent that any
tenant under a Lease is required to pay property taxes directly to the taxing
authority, or to reimburse the landlord for property tax payments at the end of
the year, and such taxes are not delinquent, the parties agree that the
property taxes payable by such tenant(s) shall not be prorated at Closing, but
Buyer shall receive a credit for any amounts collected from such tenant(s) that
have not been used to make any property tax payment.


 


8.             Income and Expenses. All income and
expenses of the Project payable by Seller, other than taxes and assessments
prorated under Paragraph 7 above or Service Contracts not being assumed by
Buyer, shall be prorated on a daily basis between Seller and Buyer as of the
Proration Time. Seller shall be responsible for all such expenses of the
Project, and shall be entitled to all income from the Project, attributable to
the period ending at the Proration Time. Buyer shall be responsible for all
expenses of the Project and shall be entitled to all income from the Project,
attributable to the period from and after the Proration Time. Seller agrees that
all expenses, charges, bills, or trade accounts incurred by Seller or its
agents in connection with its ownership or operation of the Project relating
exclusively to periods ending on or before the Proration Time, including any
unpaid tenant improvement costs and leasing commissions that are the landlord’s
responsibility with respect to Existing Leases for which Seller is responsible
under Paragraph 11, shall be paid in full on the Closing Date; provided,
however, that (i) if any such expenses, charges, bills, or trade accounts have
accrued but have not yet been billed as of the Closing Date, they shall be paid
in full by Seller at the time the bills are received, and (ii) if any tenant
improvement allowances or leasing commissions for which Seller is responsible
as provided herein are not yet due and payable as of the Closing Date, Seller
may fund an escrow account from the sale proceeds with Escrow Agent at Closing
to pay such amounts when they become due and payable rather than paying such
amounts at or prior to Closing. In addition, with respect to any tenant
improvement work under the Existing Leases for which Seller is responsible
under this Agreement that is in progress as of the Closing Date, Buyer shall
cooperate with Seller in allowing Seller to complete such work, including
without limitation by providing access to the Project for such work. If Seller
accesses the Project to conduct any such work after Closing, Seller shall
indemnify, defend and hold harmless Buyer from and against any and all claims,
damages, liens, losses, costs and liabilities (including reasonable attorneys’
fees), and shall repair any damage to the Project, resulting from or relating
to entry on the Project pursuant to this paragraph. These obligations shall
survive Closing. Prior to entry upon the Project under this paragraph, Seller
shall obtain, and shall keep in force during the term of any such access to the
Project, a policy of commercial general liability insurance issued by an
insurance company licensed to do business in the Commonwealth of Virginia
covering any liability arising out of or in connection with entry upon the
Project under this Paragraph, with Buyer named as additional insured, and with
limits of liability of not less than $1,000,000.00 for each occurrence. Seller
shall furnish a certificate of insurance reasonably satisfactory to Buyer
evidencing the required liability insurance coverage, prior to entry on the
Project under this paragraph.


 


Seller shall indemnify Buyer against and shall hold
Buyer harmless from any costs, expenses, penalties or damages, including
reasonable attorneys’ fees, which may result from any failure by Seller to pay
or cause to be paid any of the items described in this Paragraph that are the
responsibility of Seller. Buyer shall indemnify Seller against and shall hold
Seller harmless from any costs, expenses, penalties or damages, including
reasonable attorneys’ fees, which may result from the failure of Buyer to pay
or cause to be paid any of the items described in this Paragraph that are
attributable to the period after the Proration Time.


 


9

















 


Seller shall not receive
a credit from Buyer for any accrued and unreimbursed (whether billed or not)
tenant contributions for any part of common area maintenance, real estate
taxes, special assessments or other Project cost or expense.


 


Without limiting the
generality of the foregoing, the following items shall be adjusted as of the
Proration Time:


 


(a)  Monthly base rent and other monthly charges
(such as common area maintenance contributions, but excluding tax
contributions, which are addressed in Paragraph 7)  scheduled under the terms of the Leases to be
received by Seller for the calendar month in which the Closing Date occurs
(whether or not Seller actually has received all of such scheduled payments as
of the Closing Date).


 


(b) All other receipts from the Project received by
Seller, to the extent they pertain to any period after the Closing Date.


 


(c)  Utility charges, including electricity, municipal
water, and sanitary sewer and storm water assessments, costs and charges,
including without limitation costs and charges under storm water detention
agreements. Notwithstanding the foregoing, to the extent that any tenant under
a Lease is required to pay such charges directly, the parties agree that such
charges shall not be prorated at Closing.


 


(d) Charges under any Service Agreements that Buyer
elects or is required to assume that will remain in effect after the Closing
Date.


 


(e)  Other operating expenses not covered by any of
the above subparagraphs.


 


Seller, at its election, either shall transfer the
aggregate amount of Security Deposits to Buyer by immediately available funds
at Closing, or Buyer shall receive a credit against the Purchase Price in that
amount. All prorations and adjustments under this Paragraph shall be made
against the sum otherwise payable by Buyer pursuant to Paragraph 2 above. In
addition, with respect to amounts received by Buyer after the Closing Date that
pertain to periods before the Proration Time, and otherwise finalizing
prorations hereunder, the following provisions shall apply.


 


Seller and Buyer agree that at Closing, or as soon
thereafter as reasonably practicable and in any event within thirty (30) days
after Closing, Seller and Buyer shall jointly prepare a statement of all common
area charges or other expenses that have been paid by Seller in connection with
the Project for the current calendar year to the Proration Time, and reflecting
the amount of such charges that are payable by each tenant of the Project, in
accordance with the terms of the Leases (the “Reconciliation
Statement”). The Reconciliation Statement shall further reflect, as
to each tenant, the amounts received by Seller prior to the Closing Date in
reimbursement of such expenses. To the extent that the Reconciliation Statement
reflects that Seller has collected any amounts from any tenant prior to Closing
that are in excess of costs incurred by Seller which are reimbursable by such
tenant(s), Seller shall pay such excess to Buyer at the time of delivering the
Reconciliation Statement.


 


Buyer shall use commercially reasonable efforts to
assist Seller in collecting any monthly payments of base rent or other monthly
charges that are outstanding as of the Closing Date. If any tenant in the
Project whose account is delinquent as of the Closing Date makes a payment of
rent or other charges to Buyer after the Closing Date, or if Buyer otherwise
receives any rent, expenses contribution or other payment applicable to the
period prior to the Proration Time, the payment shall, except as provided
below, first be applied by Buyer to accrued rent or other 


 


10

















 


charges due from that tenant from and after the
Closing Date and the excess, if any, shall be paid to Seller and applied to the
amount receivable by Seller. In addition, if Buyer receives reimbursement from
a tenant after the Closing Date for taxes, insurance premiums, common area
expenses, or other similar amounts that were incurred by Seller in the first
instance, and not already prorated between Buyer and Seller as provided above,
then Buyer shall pay to Seller, within thirty (30) days after the receipt of
any amounts due from such tenant, the appropriate portion of said payment
allocable to the portion of the time period to which such charges relate that
the Project was owned by Seller. Seller agrees that no lawsuit of any kind
shall be brought or threatened after the Closing Date to collect any such
accounts receivable without the prior written consent of Buyer which may be
withheld in Buyer’s sole discretion, except that if the account receivable is
for monthly base rent and other monthly charges scheduled under the terms of
the Leases to be received by Seller for the calendar month in which the Closing
Date occurs, Buyer shall permit such lawsuit and cooperate with Seller with
respect thereto (provide that Seller shall pay the cost of any such lawsuit
that Seller may wish to file). In addition, notwithstanding anything to the
contrary in this Paragraph 8, any monthly base rent or other monthly charges
scheduled under the terms of the Leases to be received by Seller for the
calendar month in which the Closing Date occurs that is received by Buyer
(other than as a result of the pro rations under this Paragraph 8) shall be
immediately paid to Buyer and not applied in any other manner.


 


The provisions of this Paragraph shall survive the
Closing.


 


9.             Title. Seller has provided the
Title Commitment to Buyer, and Buyer shall deliver to Seller a written notice
of any title objections (the “Objection Notice”)
on or before July 12, 2006. If Buyer fails to deliver the Objection Notice
prior to such date, then Buyer shall be deemed to have accepted all matters
shown as exceptions in the Title Commitment. Following receipt of an Objection
Notice, Seller may remedy, or agree to remedy prior to Closing, all or any of
the matters noted in the Objection Notice to the commercially reasonable
satisfaction of Buyer by delivering a notice to that effect (the “Seller Response”) prior to the date five (5) days after
Seller’s receipt of Buyer’s Objection Notice. Insurance over an objection by
Title Insurer shall be deemed an acceptable remedy for purposes of this
Agreement, subject to the commercially reasonable approval of Buyer.


 


If Seller does not timely deliver a Seller Response
indicating that it will cure or remedy all of the title objections set forth in
the Objection Notice, or if Seller delivers a Seller Response indicating that
it will not cure or remedy one or more specific title objections raised by
Buyer in the Objection Notice, then Buyer, at its election, shall have the
right (as its sole and exclusive remedy) either to: (a) accept title
subject to the objections that Seller has not agreed to cure or remedy without
reduction of the Purchase Price (and such matters shall be deemed Permitted
Exceptions); or (b) terminate this Agreement and receive an immediate
return of the Deposit. If Buyer does not notify Seller in writing of its
election within five (5) days after delivery of the Seller Response (or, if no
Seller Response is delivered, within five (5) days after the last day the
Seller Response was due as provided above), then Buyer shall be deemed to have
elected (a) above. Notwithstanding the foregoing to the contrary, Seller shall
be required to pay at Closing any mortgages, deeds of trust and other monetary
liens for a sum certain (including liens for delinquent taxes, mechanics’ liens
and judgment liens, but excluding any liens arising by or through tenants or
Buyer) affecting the Project and all indebtedness secured thereby, including
but not limited to the loan secured by the liens in favor of Bank of America,
N.A. referenced in the Title Commitment (collectively, the “Curable Liens”). If a lien arises prior to Closing by or
through a tenant, and such lien is not cured by the tenant or Seller at or
prior to Closing, Buyer, at its election, shall have the right (as its sole and
exclusive remedy) either to: (a) accept title subject to the lien (and
such lien shall be deemed a Permitted Exception, but Seller shall assign 


 


11

















 


to Buyer any rights and remedies Seller may have
against tenant with respect to such lien); or (b) terminate this Agreement
and receive an immediate return of the Deposit. With respect to matters other
than Curable Liens, if Seller delivers a Seller Response but subsequently fails
(despite the exercise of commercially reasonable good faith efforts) to cure or
remedy all of the title objections that it agreed to remedy in the Seller
Response, then Buyer, at its election, shall have the right (as its sole and
exclusive remedy) either to: (a) accept title subject to the objections
that Seller has been unable to cure or remedy (and such matters shall be deemed
Permitted Exceptions), or (b) terminate this Agreement and receive the
immediate return of the Deposit. Buyer must notify Seller of this election
prior to Closing, provided that this sentence shall not limit Buyer’s remedies
as to any Post-Effective Date Encumbrance, as defined below, that is not
permitted herein. Any matters set forth in any update of the Title Commitment
or Survey, and first appearing after the delivery of the Objection Notice,
shall be subject to the express written approval of Buyer.


 


Except for New Leases executed by Seller in accordance
with the terms of Paragraph 11, and any encumbrance provided for under, or
reasonably necessary in connection with, the Future Development Application,
Seller shall not, after the Effective Date, cause or authorize any new easement
or other encumbrance (a “Post-Effective Date
Encumbrance”) to be placed on or granted with respect to the
Project, other than those existing as of the Effective Date, without the prior
written consent of Buyer, provided that Buyer shall not unreasonably withhold
or delay consent to any easement or other encumbrance that is reasonably
necessary for the operation of the Project and does not materially adversely
affect the Project.


 


10.           Survey. Buyer may, at its cost,
obtain any update of, or revisions to, the Survey desired by Buyer, provided
that Buyer shall promptly provide to Seller a copy of any such update or
revisions. Buyer shall have the right to make written objections to title based
upon the Survey as part of its Objection Notice as provided in (and subject to
the timing requirements of) Paragraph 9.


 


11.           Operation Prior to Closing. During
the period between the Effective Date and the Closing Date, the following
provisions shall apply:


 


(a)  Prior to the Closing Date, Seller shall, at no
cost or expense to Buyer, continue its normal course of operations with respect
to seeking new tenants for any space in the Project that is unleased as of the
Effective Date. Any new lease of space in the Buildings by Seller after the
Effective Date and prior to the Closing Date (“New Lease”) shall be subject to the prior written approval of
Buyer, provided that prior to the expiration of the Investigation Period such
consent shall not be unreasonably withheld, conditioned or delayed, and after
the expiration of the Investigation Period such consent shall be in Buyer’s
sole discretion. Buyer shall be solely responsible for the payment of any
leasing commissions, allowances and other inducements with respect to New
Leases executed after the Effective Date and prior to the Closing Date,
provided that they are approved by Buyer as provided above. Notwithstanding
anything to the contrary herein, Buyer shall be solely responsible for the
payment of any leasing commissions and tenant improvement allowances with
respect to any and all extensions, renewals or expansions under Leases that
occur after the Effective Date, this obligation to survive Closing.


 


(b) Seller shall continue in its normal course of
business to use commercially reasonable efforts to avoid having any tenant
delinquent in the payment of rent or otherwise in default under the terms of
its Lease on the Closing Date. Seller shall not permit the acceptance of any
prepayment of rent more than thirty (30) days beyond the Closing Date and shall
not permit the modification, alteration, amendment, extension, renewal,
termination or cancellation of any Lease (except in accordance with the
existing terms of 


 


12

















 


any such Lease), without
the prior written consent of Buyer, provided that prior to the expiration of
the Investigation Period such consent shall not be unreasonably withheld,
conditioned or delayed, and after the expiration of the Investigation Period
such consent shall be in Buyer’s sole discretion.


 


(c)  Seller agrees to enter into no new agreements
or contracts relating to the Project that will survive Closing and be binding
on Buyer or the Project without Buyer’s prior written consent, provided that
prior to the expiration of the Investigation Period such consent shall not be
unreasonably withheld or delayed, and after the expiration of the Investigation
Period such consent shall be in Buyer’s sole discretion. On or before the last
day of the Inspection Period, Buyer shall notify Seller in writing of the
Service Agreements that it elects to assume, provided that if Closing occurs,
Buyer must assume the following Service Agreements that cannot be terminated on
short notice by Seller: See Exhibit C-1
attached hereto. If Buyer fails to notify Seller in writing of the Service
Agreements it elects to assume prior to the date set forth above, Buyer shall
be deemed to have agreed to assume all of the Service Agreements other than any
management and leasing agreements affecting the Project, which management and
leasing agreements shall be terminated by Seller as of Closing.


 


(d) Seller shall maintain the Project in the same
manner as prior hereto pursuant to its normal course of business, ordinary wear
and tear, damage by fire or other casualty, and obligations of tenants
excepted. Notwithstanding the foregoing, or anything else to the contrary in
this Agreement, Buyer acknowledges and agrees that (i) Seller has disclosed to
Buyer that the exterior windows of the office buildings (and the caulking
around the windows) in the Project require replacement and/or repairs (the “Window Repairs”), (ii) Seller has disclosed to Buyer that
the soils under portions of the parking deck in the Project may be improperly
compacted and need to be excavated and replaced, and portions of the parking
deck affected by such soils need to be repaired and/or replaced (the “Deck Repairs”), (iii) upon Closing, Buyer shall be deemed to
assumed responsibility for repair and replacement of the items referenced above
in this subparagraph (d), and (iv) Seller shall have no obligation, before, at
or after Closing, to undertake or pay for such repairs or replacements (except
to provide the Purchase Price Adjustment, subject to the terms and limitations
set forth in Paragraph 2 above). Seller shall not be responsible or liable for
any inaccuracy of or mistake in the information provided by Seller to Buyer
regarding the items referenced above in this subparagraph (d). Without limiting
the foregoing, Buyer shall be responsible for repair the repair and replacement
of items referenced above in this subparagraph (d) even if the cost estimates
and/or scope of repair/replacement work set forth in information provided by
Seller to Buyer regarding such items are not correct, it being the intent of
Buyer and Seller that the sale of the Project to Buyer be “As Is”, as provided
in Paragraph 12 below.


 


(e)  Seller shall maintain its existing insurance
policies for the Project through the Closing Date.


 


12.           Representations and Warranties by Seller.
Seller represents and warrants to Buyer that:


 


(a)  Seller is a limited partnership duly formed
and validly existing under the laws of the State of North Carolina. Seller has
full power and authority to enter into this Agreement, and to convey the
Project to Buyer in accordance with the terms of this Agreement.


 


13

















 


(b) This Agreement and the documents to be
delivered by Seller at Closing have been or will be duly authorized by all
necessary partnership action on the part of Seller, and have been or will be
duly executed and delivered by Seller.


 


(c)  The execution and performance of this
Agreement by Seller, and the Closing contemplated hereunder, will not result in
the breach of any provision of, or constitute a default under, any agreement or
instrument to which Seller is a party or by which Seller is bound.


 


(d) The Lease Schedule attached hereto as Exhibit B is a schedule of Existing
Leases (“Lease Schedule”) for the Project, and
is complete and correct in all material respects to the Knowledge of Seller. To
the Knowledge of Seller, the Existing Leases are in full force and effect, and
true, correct and complete copies of same have been delivered to Seller as part
of the Due Diligence Items. Except as indicated on the Lease Schedule: (a) to
the Knowledge of Seller, Seller has fulfilled in all material respects its
duties and obligations in connection with the Existing Leases due prior to the
date hereof; (b) to the Knowledge of Seller, Seller is not in default in any
material respect under the Existing Leases, and to the Knowledge of Seller no
tenant under the Existing Leases is in default in any material respect under
its Lease, (c) no tenant has provided a notice of default to Seller under its
Lease that has not been cured, and (d) there are no leases, licenses or
occupancy agreements with respect to the Project by or through Seller. All
Security Deposits and Non-Cash Security Deposits held by Seller under Leases as
of the Effective Date are as set forth on the Lease Schedule. No rebates,
rental concessions, free rent periods, credits, setoffs or rent reductions
relating to any period after the Closing Date have been given under any
Existing Lease except as set forth in the copies of the Existing Leases (and
amendments thereto) included in the Due Diligence Items. All brokerage
commissions with respect to Existing Leases that are the landlord’s
responsibility due prior to the Effective Date have been paid, and except as
permitted pursuant to Paragraph 6(e) or 11, there will be no commissions
pursuant to agreements by Seller that are the landlord’s responsibility payable
with respect to renewals, extensions or expansions of or under any Existing
Lease.


 


(e)  To the Knowledge of Seller, Seller has
fulfilled in all material respects its duties and obligations in connection
with the Service Agreements due prior to the date hereof, and Seller is not in
default in any material respect under any of the terms and provisions of the
Service Agreements.


 


(f)  Seller has not received any written notice
that the Project is in violation of applicable zoning or building codes, except
for notices of violation that have been cured or otherwise addressed to the
satisfaction of the issuer.


 


(g) To the Knowledge of Seller, except as may be
reflected in any environmental assessments included in the Due Diligence Items
delivered to Buyer, or undertaken by or on behalf of Buyer, the Real Property
does not contain any Hazardous
Materials (as defined below) in violation of applicable Environmental Laws
(as defined below). As used in this paragraph, the term “Hazardous
Materials” shall mean any hazardous wastes, hazardous substances,
hazardous materials and toxic substances, as those terms are defined in
Environmental Laws, and the term “Environmental Laws”
shall mean the Resource Conservation and Recovery Act (42 U.S.C.A. §§ 6901 et seq.), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C.A. §§ 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C.A. §§ 1801 et seq.), the
Toxic Substances Control Act (15 U.S.C.A. §§ 2601 et seq.),
the 


 


14

















 


Clean Air Act (42
U.S.C.A. §§ 7401 et seq.), and
the Clean Water Act (33 U.S.C.A. §§ 1251 et seq.).


 


(h) Seller has received no notice of condemnation
proceedings pending or threatened against the Project, and to the Knowledge of
Seller there are no condemnation proceedings pending or threatened against the
Project.


 


(i)   No petition in bankruptcy (voluntary or
otherwise), assignment for the benefit of creditors, or petition seeking
reorganization or arrangement or other action under Federal or state bankruptcy
law is pending against by Seller, and Seller has not made an assignment for the
benefit of creditors or admitted in writing its inability to pay its debts as
they mature.


 


(j)   Seller has not received any notice that any
tenant under an Existing Lease has filed a petition in bankruptcy prior to the
date hereof (other than any past bankruptcies that have been fully resolved).


 


(k)  To the Knowledge of Seller, no off-record
recapture, signalization, contribution, development or like-agreements with a
governmental entity burdening Seller (as related to the Project) or the Project
which include performance and/or payment obligations which shall survive the
Closing exist except (i) the Permitted Exceptions and (ii) as contemplated
under the Future Development Application, if approved..


 


For purposes of this Agreement, “the
Knowledge of Seller” and similar phrases means the actual, current
knowledge of Ed Cherry, provided that this definition is intended solely to
establish the scope of facts that shall be considered known by Seller for the
purposes of this Agreement and not to impose on such person any personal
liability.


 


Seller hereby agrees that the truthfulness, in all
material respects, of each of the foregoing representations and warranties, as
of the Effective Date and as of the Closing Date, is a condition precedent to
the performance by Buyer of its obligations under this Agreement. If any of the
foregoing representations and warranties is of a material nature and is not
true in any material respect when made, or when re-certified at Closing, Buyer
may consider such material misrepresentation to be a default under this
Agreement, entitling Buyer to pursue the remedies set forth in Paragraph 15;
provided, however, that with respect to any representation or warranty made to
the Knowledge of Seller, Buyer shall be entitled to exercise default remedies
only if the substance of the representation or warranty is materially untrue,
and if such untruth was known to Seller at the time the representation or
warranty was initially made. If any of the foregoing representations and
warranties is true of the Effective Date, but is not true as of the Closing
Date as a result of a matter, circumstance or event beyond the reasonable
control of Seller, Buyer shall not be entitled to consider the untruth of the
representation or warranty as an event of default under this Agreement, but
instead Buyer may, at its election and as its sole remedy, if material,
terminate this Agreement by delivery of written notice to Seller, and in that
event Buyer shall be entitled to a return of the Deposit from Escrow Agent.


 


In addition and notwithstanding any provision herein
to the contrary, in the event that at or prior to Closing Buyer is actually
aware of the untruthfulness or material inaccuracy of any of the Seller’s
representations and warranties made hereunder or in any Closing document, and
Buyer proceeds with the Closing, Buyer shall be estopped from claiming a breach
of such representation or warranty following Closing. For purposes of this
paragraph, the phrase “Buyer is actually aware”
shall me that G. Joseph Cosenza is actually aware. Seller’s representations and
warranties shall survive Closing for a period of six (6) months from the
Closing Date, at which point Buyer shall have no further remedies unless suit
has been filed in a court of 


 


15

















 


competent jurisdiction prior to the expiration of that period. Under no
circumstances shall Seller, in connection with this Agreement or any Closing
document executed by Seller, be liable for consequential, punitive, special or
exemplary damages.


 


Except for the representations expressly set forth in
this Agreement and the Closing documents identified in Paragraph 6 above, the
Project is being sold and conveyed “as
is” and “with all faults” and Seller has not made, does not make, and
hereby disclaims any and all other representations and warranties, including
without limitation representations and warranties regarding or relating to the
condition, suitability for any particular purpose, susceptibility to flooding,
value, marketability, zoning, use and occupancy restrictions, compliance with
Environmental Laws, presence of Hazardous Materials, and all other legal
requirements. Buyer acknowledges that, except as expressly set forth in this
Agreement, no such representations or warranties have been made. The terms and
covenants of this paragraph shall survive the Closing and the delivery of the
Deed, or any termination of this Agreement.


 


13.           Representations and Warranties by Buyer.
Buyer represents and warrants to Seller that Buyer has all requisite power and
authority to execute this Agreement and the documents to be delivered by Buyer
at Closing, that the execution and delivery of this Agreement by Buyer, and the
performance by Buyer of its obligations hereunder, have been duly authorized by
such action as may be required, and that no further action or approval is
required in order to constitute this Agreement as a binding and enforceable
obligation of Buyer.


 


14.           Estoppel Certificates. Buyer’s
obligation to purchase the Project under this Agreement is expressly
conditioned upon the delivery by Seller to Buyer, on or before the Closing
Date, of the following, each of which shall be dated no earlier than thirty
(30) days prior to the Closing Date (unless the Closing Date is extended, with
the agreement of Seller, in Seller’s sole discretion, at Buyer’s request):


 


(a)  Tenant estoppel certificates from Lockheed
Martin Corporation and from each Project tenant occupying 30,000 square feet or
more of space (the “Anchor Tenants”),
in the form specified by any Lease to each Anchor Tenant, or if no Lease to an
Anchor Tenant specifies a form of estoppel certificate, substantially the form
attached hereto as Exhibit F,
as reasonably modified by tenants and to fit the circumstances, terms and
provisions regarding estoppel certificates in the Anchor Tenant’s Lease; but in
any event reflecting that the Anchor Tenant knows of no material landlord
default or material failure to perform landlord obligations that have accrued
under the Lease.


 


(b) Tenant estoppel certificates from other tenants
of the Buildings under Leases which shall be in effect at Closing such that the
estoppel certificates from such other tenants collectively cover at least
seventy percent (70%) of the area leased by tenants (other than the Anchor
Tenants) under Leases as of the Closing Date, in the form specified by each
Lease, or if a Lease does not specify a form of estoppel certificate, in
substantially the form attached hereto as Exhibit F,
as reasonably modified by tenants and to fit the circumstances, terms and
provisions regarding estoppel certificates in the applicable Lease; but in any
event reflecting that the tenant knows of no material landlord default or
material failure to perform landlord obligations that have accrued under the
Lease.


 


The
failure of Seller to deliver to Buyer the tenant estoppel certificates required
by this Paragraph shall not be a default by Seller under this Agreement, so
long as Seller uses commercially reasonable good faith efforts to obtain
estoppel certificates from tenants sufficient to satisfy this Paragraph prior
to Closing. In the event the condition in this Paragraph is not satisfied by
the Closing Date, Buyer may waive the condition and proceed to Closing or may
terminate this Agreement by written notice to Seller prior to Closing, and upon
any such 


 


16

















 


termination
Escrow Agent shall immediately return the Deposit to Buyer and this Agreement
shall be null and void, except that the Surviving Obligations shall remain in
effect. If Buyer does not waive such condition and proceed to Closing on the
Closing Date or terminate this Agreement prior to the Closing Date, then after
the Closing Date (so long as Closing has not occurred),  Seller may elect to terminate this Agreement
by notice to Buyer, whereupon the Escrow Agent shall immediately return the
Deposit to Buyer.


 


In the
event Seller cannot for any reason obtain an estoppel certificate for a tenant
under subparagraph (b) above and Closing occurs, Seller shall deliver to Buyer
at Closing a seller estoppel for such tenants in the form of Exhibit H attached hereto and
incorporated herein by this reference with respect to the Leases of such
tenants. Seller’s liability under each such Seller’s estoppel shall expire and
be of no further force or effect on the earlier of (A) the date that is
six (6) months following the Closing Date, or (B) the date that Buyer
receives an acceptable estoppel certificate from the applicable tenant.


 


15.           Defaults. Upon the breach by Seller
of any of the representations and warranties contained in Paragraph 12, or the
default by Seller in the performance of any other obligation of Seller set
forth in this Agreement, Buyer may, as its sole and exclusive remedies for such
default, elect: (a) to terminate this Agreement by delivery of written notice
to Seller, in which event Buyer shall be entitled to an immediate return of the
Deposit and to receive from Seller reimbursement of its out of pocket costs and
expenses incurred in connection with this Agreement (not to exceed the sum of
$100,000.00), and neither party shall have any further rights or obligations
regarding this Agreement; or (b) to institute proceedings in any court of
competent jurisdiction to specifically enforce the performance by Seller of the
terms of this Agreement. Except as may be expressly set forth in this
Agreement, upon the failure of any condition to Buyer’s obligation to complete
the Closing set forth in this Agreement that is not waived, or deemed waived or
satisfied under the terms of this Agreement, by Buyer, Buyer may terminate this
Agreement by delivery of written notice to Seller prior to Closing, in which
event Escrow Agent shall immediately return the Deposit to Buyer and this
Agreement shall be null and void, except that the Surviving Obligations shall
remain in effect.


 


If the Closing fails to
occur when and as contemplated in this Agreement because Buyer defaults in its
obligation to Close the acquisition of the Project (as determined in accordance
with the terms of this Agreement), Seller shall be entitled to receive and
retain the Deposit as Seller’s liquidated damages and sole remedy for Buyer’s
default, and neither party shall have any other claim against the other, Seller
hereby waiving any and all other remedies against Buyer at law and in equity
for such failure to Close, except that the Surviving Obligations shall remain
in effect. The parties agree that the foregoing is a fair and reasonable
measure of the damages to be suffered by Seller in the event of such default
and that the exact amount of Seller’s damages is incapable of ascertainment.
Nothing in this paragraph shall limit Seller’s remedies with respect to a
default by Buyer other than a failure to Close.


 


16.           Damage, Destruction and Eminent Domain.


 


(a)  If, prior to the Closing Date, the Real
Property or any part thereof is damaged or destroyed by fire, the elements or
any other destructive force or cause to the extent that repairing such damage
or destruction is reasonably estimated to cost $500,000.00 or more, then Buyer
may elect to terminate this Agreement by delivery of written notice to Seller
within ten (10) days after notice to Buyer of the damage or destruction, in
which case Escrow Agent shall immediately return the Deposit to Buyer and this
Agreement shall be deemed null and void, except that the Surviving Obligations
shall remain in effect. If Buyer elects to consummate the purchase despite the
damage or destruction, or if any lesser damage or destruction has occurred,
there shall be no reduction in or 


 


17

















 


abatement of the Purchase
Price, and Seller shall assign to Buyer all of Seller’s right, title and
interest in and to all insurance proceeds resulting from the damage or
destruction and credit for any deductible. The Closing Date shall be extended
as necessary to allow for the notice period set forth above in this Paragraph.


 


(b) If, prior to the Closing Date, any judicial,
administrative, or other condemnation proceedings are instituted in which a
taking of the Real Property is proposed which (i) exceeds $500,000.00 in value,
(ii) renders the Project a non-conforming use or materially reduces access to
the Project, or permits any tenant to terminate its Lease (unless such
termination right is waived in writing), then within ten (10) days after
written notice to Buyer of the institution of such judicial, administrative, or
other condemnation proceedings involving the Project, Buyer may elect to terminate
this Agreement by delivery of written notice to Seller, in which case Escrow
Agent shall immediately return the Deposit to Buyer and this Agreement shall be
deemed null and void, except that the Surviving Obligations shall remain in
effect. If Buyer elects to consummate the purchase despite the institution of
condemnation proceedings (or has no right to terminate this Agreement), there
shall be no reduction in or abatement of the Purchase Price, and Seller shall
assign to the Buyer all of Seller’s right, title, and interest in and to any
award or settlement made or to be made in the condemnation proceedings, or
provide Buyer with a credit at Closing for any award or settlement Seller
receives on or before Closing. The Closing Date shall be extended as necessary
to allow for the notice period set forth above in this Paragraph.


 


17.           Assignment. Buyer shall have the
right to assign this Agreement, and its rights hereunder, to a single-purpose
entity in which Buyer, or its members or affiliates, owns a majority and
controlling interest, without the necessity of obtaining the prior consent of
Seller. Any other assignment of this Agreement by Buyer, except as provided in
Paragraph 26 below, shall be ineffective without the prior written consent of
Seller. In each instance (whether or not the consent of Seller to the
assignment is required), the assignee shall assume in writing all obligations
of Buyer under this Agreement, and Buyer shall promptly deliver to Seller (in
any event not less than five (5) business days prior to Closing) a copy of the
fully executed assignment and assumption agreement. No assignment shall release
the assignor from its obligations hereunder.


 


18.           Notices. Any notice or other
communication permitted or required by this Agreement shall be in writing, and
shall be given to the addressee at the address set forth below, in the
following manner: (a) personal delivery, (b) national overnight delivery
service, or (c) facsimile transmission (provided documentation of successful
completed transmission is retained). Each such notice shall be deemed to have
been given upon receipt or refusal to accept delivery, or, in the case of
facsimile transmission, as of the date of the facsimile transmission (if sent
on a business day; otherwise as of the next business day). Unless and until
changed as provided below, the addresses for notices given pursuant to this
Agreement shall be as follows:


 


	
  If to Buyer:

  	
  Inland Real Estate Acquisitions, Inc.

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, Illinois
  60523

  
	
   

  	
  Attention: G. Joseph
  Cosenza

  
	
   

  	
  Facsimile:
  630-218-4935

  
	
   

  	
  Email:
  joe@inlandgroup.com

  
	
   

  	
   

  
	
  with a copy to:

  	
  The Inland Real Estate
  Group, Inc.

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, Illinois
  60523

  
	
   

  	
  Attention:  General Counsel

  
	
   

  	
  Facsimile:  630-218-4900

  



 


18

















 


	
   

  	
  AND at the same
  address:

  
	
   

  	
   

  
	
   

  	
  Attention: Charles
  Benvenuto

  
	
   

  	
  Facsimile: 630-571-2360

  
	
   

  	
  Email:
  cbenvenuto@inlandgroup.com

  
	
   

  	
   

  
	
  If to Seller:

  	
  Valley View Associates
  Limited Partnership

  
	
   

  	
  c/o Faison & Associates, LLC

  
	
   

  	
  121 West Trade Street,
  27th Floor

  
	
   

  	
  Charlotte, North
  Carolina 28202

  
	
   

  	
  Attention: Ed Cherry
  and Nancy Farmer

  
	
   

  	
  Fax: 704/972-2680

  
	
   

  	
  Email:
  Ed.Cherry@faison.com

  
	
   

  	
   

  
	
  with a copy to:

  	
  Robinson, Bradshaw
  & Hinson, P.A.

  
	
   

  	
  101 North Tryon Street,
  Suite 1900

  
	
   

  	
  Charlotte, North
  Carolina 28246

  
	
   

  	
  Attention: Chris Loeb

  
	
   

  	
  Fax: 704/373-3943

  
	
   

  	
  Email: cloeb@rbh.com

  
	
   

  	
   

  
	
  If to Escrow Agent:

  	
  Chicago Title Insurance
  Company

  
	
   

  	
  171 North Clark Street

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attention: Nancy Castro

  
	
   

  	
  Phone: (312) 223-2709

  
	
   

  	
  Fax: (312) 223-3409

  
	
   

  	
  Email: castrona@ctt.com

  



 


Each party shall have the
right to designate a different individual, address, facsimile number or email
address for notices under this Agreement by giving a notice in writing to the
other party in the manner provided above at least ten (10) days prior to the
effective date of the change. All notices that are required or permitted to be
given by either party to the other under this Agreement may be given by such
party or its legal counsel, who are hereby authorized to do so on the party’s
behalf.


 


19.           Escrow Agent. The “Escrow Agent” shall be Chicago Title Insurance Company, and
the Deposit shall be held in escrow upon the following terms and conditions:


 


(a)  The Deposit shall be invested in an interest
bearing account maintained by a national bank, so as to provide availability of
funds on no more than a day’s notice. Escrow Agent shall promptly notify Seller
of each payment by Buyer of the Deposit.


 


(b) The interest earned on the Deposit shall be
reinvested for so long as the escrow shall continue, and shall be considered a
part of the Deposit. Interest shall be reported as income to Buyer, which has a
taxpayer identification number of 34-2019608.


 


(c)  In the event of a default by Buyer under the
terms of this Agreement in a circumstance that, by the terms of this Agreement,
entitles Seller to receive the Deposit, Escrow Agent is instructed to deliver
the Deposit to Seller. In the event of a default by 


 


19

















 


Seller under the terms of
this Agreement that results in the termination of this Agreement by Buyer, or
upon other termination of this Agreement in a circumstance that, by the terms
of this Agreement, entitles Buyer to a return of the Deposit, Escrow Agent is
instructed to immediately deliver the Deposit to Buyer. In the event of the
Closing of the sale of the Project, the Deposit shall be paid to Seller and
applied against the Purchase Price.


 


(d) Buyer and Seller agree that Escrow Agent shall
not be liable for any reason except negligence or intentional misconduct, or
breach of this Paragraph 19 by Escrow Agent.


 


(e)  Escrow Agent shall comply with any specific
terms contained in this Agreement with respect to the disbursement of the
Deposit. Any request for disbursement of the Deposit shall be signed by Buyer
and Seller; provided, however, that if prior to the expiration of the
Inspection Period Buyer terminates this Agreement and unilaterally directs
Escrow Agent to return the Deposit to Buyer in accordance with the terms of
Paragraph 5 hereof, then Escrow Agent shall promptly do so irrespective of any
notice to the contrary received from Seller. Other than in the circumstance
described by the immediately preceding sentence, if either of Buyer or Seller
makes a written request for disbursement to Escrow Agent without joinder of the
other, Escrow Agent shall give notice of such request to the non-requesting
party by any means permitted by this Agreement. If Escrow Agent receives a
written objection to the disbursement of the Deposit within ten (10) business
days of giving such notice to the non-requesting party, the Deposit shall be
disbursed only in accordance with the joint written instructions of Buyer and
Seller, or in accordance with the order of judgment of a court of competent
jurisdiction.


 


(f)  In connection with this escrow, Buyer and
Seller agree to execute such agreements as Escrow Agent may reasonably request.
Failing such execution, Escrow Agent may decline to serve in such capacity, and
Buyer and Seller shall select a substitute escrow agent by mutual consent.


 


(g) In the event of any dispute regarding the
application of the Deposit, Escrow Agent shall be authorized to disburse the
Deposit to a court of competent jurisdiction, to be held pending resolution of
that dispute.


 


(h) If Escrow Agent is required to institute or
participate in litigation as a result of this escrow (other than as a result of
the negligence or intentional misconduct of Escrow Agent, or breach of this
Paragraph 19 by Escrow Agent), Buyer and Seller shall be jointly and severally
obligated to reimburse Escrow Agent for any reasonable costs and expenses
(including reasonable attorneys’ fees) actually incurred by Escrow Agent.


 


20.           Time of the Essence. Time shall be
of the essence in the performance of all obligations under this Agreement. If
the time period by which any right, option or election provided under this
Agreement must be exercised, or by which any act required under this Agreement
must be performed, or by which Closing must be held, expires on a Saturday,
Sunday or a holiday, then such time period shall be automatically extended to
the next business day.


 


21.           Captions. The paragraph headings or
captions appearing in this Agreement are for convenience only, are not a part
of this Agreement and are not to be considered in interpreting this Agreement.


 


22.           Entire Agreement, Modification.
This Agreement constitutes the entire and complete agreement between the
parties and supersedes any prior oral or written agreements between the parties
with respect to the Project. It is expressly agreed that there are no verbal 


 


20

















 


understandings or
agreements which in any way change the terms, covenants and conditions set
forth in this Agreement, and that no modification of this Agreement and no
waiver of any of its terms and conditions shall be effective unless it is made
in writing and duly executed by both parties.


 


23.           Binding Effect. All covenants,
agreements, warranties and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns.


 


24.           Controlling Law. This Agreement has
been made and entered into under the laws of the Commonwealth of Virginia, and
those laws shall control the interpretation of this Agreement.


 


25.           Real Estate Commissions. Each of
Buyer and Seller represent and warrant to each other that no brokers’ or real
estate commissions will be due as a result of the sale of the Project from its
actions, except for a commission to be paid by Seller to Trammell Crow
Services, Inc. (the “Broker”)
pursuant to a separate agreement if and only if the sale of the Project occurs.
Seller agrees to indemnify, defend and save harmless Buyer from and against any
cost and expense (including reasonable attorneys’ fees) incurred by Buyer as a
result of the untruth of the foregoing representation by Seller. Buyer agrees
to indemnify, defend and save harmless the Seller from and against any cost and
expense (including reasonable attorneys’ fees) incurred by Seller as a result
of the untruth of the foregoing representation by Buyer. The terms and
covenants of this Paragraph shall survive Closing.


 


26.           Section 1031 Exchange. At Seller’s sole
election, Seller may structure the sale of the Project as a “deferred like-kind
exchange of real property” (a “1031 Exchange”)
as governed by Section 1031 of the Internal Revenue Code of 1986, as amended
(the “Code”). Accordingly, upon request,
Buyer agrees to cooperate with respect to Seller’s desire to structure a 1031
Exchange, at no additional cost or liability to Buyer, so as to effectuate said
tax-deferred exchange, and Buyer agrees to execute any and all documents which
may be reasonably required to effectuate said tax-deferred exchange.


 


At Buyer’s sole election, Buyer may structure the
purchase of the Project as a 1031 Exchange. Accordingly, upon request, Seller
agrees to cooperate with respect to Buyer’s desire to structure a 1031
Exchange, at no additional cost or liability to Seller, so as to effectuate
said tax-deferred exchange, and Seller agrees to execute any and all documents
which may be reasonably required to effectuate said tax-deferred exchange.


 


[Signatures
appear on following page]


 


21

















 


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


 


 


	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  VALLEY
  VIEW ASSOCIATES LIMITED 

  PARTNERSHIP, a North Carolina limited 

  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FCD-Hersch Associates,
  LLC, a North

  Carolina limited liability company, its

  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
  Date executed: July    ,
  2006

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  INLAND
  REAL ESTATE ACQUISITIONS, 

  INC., an Illinois corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
  Date executed: July    ,
  2006

  	
  Title:

  
	
   

  	
   

  
	
  Escrow Agent executes
  this Agreement to confirm its acceptance of its duties under Paragraph 19
  above.

  
	
   

  	
   

  
	
   

  	
  ESCROW AGENT:

  
	
   

  	
   

  
	
   

  	
  CHICAGO TITLE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:  Nancy Castro

  
	
  Date executed: July       ,
  2006

  	
  Title:

  	
  Senior Escrow Officer

  
									



 


22

















 


FIRST
AMENDMENT TO


AGREEMENT
OF PURCHASE AND SALE


 


THIS
FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
(hereinafter referred to as the “Amendment”),
dated as of the        day of July, 2006, is
entered into by and between Valley View Associates
Limited Partnership, a North Carolina limited partnership (“Seller”), and Inland Real Estate
Acquisitions, Inc., an Illinois corporation (“Buyer”).


 


W I T N E
S S E T H:


 


WHEREAS, Seller
and Buyer entered into that certain Agreement of Purchase and Sale dated as of
the 6th day of July, 2006 (the “Agreement”),
with regard to the purchase and sale of the “Project” as defined by the
Agreement; and


 


WHEREAS,
Seller and Buyer have mutually agreed to amend certain provisions of the
Agreement.


 


NOW THEREFORE, in consideration of the foregoing, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:


 


1.     Section 5(a) (Line 1 of the first paragraph
and line 6 of the second paragraph) of the Agreement is hereby modified by
deleting the date “July 14, 2006,” in each line as noted and substituting the
date “July 18, 2006,” in each line as noted.


 


2.     Section 5(c) of the Agreement is modified
by deleting the date “July 18, 2006,” and substituting the date “July 25, 2006”
in its place.


 


3.     The Agreement is hereby amended by deleting
Exhibit C and Exhibit C-1 attached to the Agreement as Exhibits at the time of
Agreement execution by Seller and Buyer and substituting the attached Exhibit
C-Revised and Exhibit C-1-Revised in place thereof.


 


4.     This Amendment may be executed in one or
more counterparts, each of which shall constitute an original and all of which
taken together shall constitute one Amendment. Each person executing this
Amendment represents that such person has full authority and legal power to do
so and bind the party on whose behalf he or she has executed this Amendment.
Any counterpart to this Amendment may be executed by facsimile copy and shall
be binding on the parties.


 


5.     The remaining terms and conditions of the
Agreement remain unmodified and in full force and effect.


 


 


1

















 


	
  BUYER:

  	
   

  
	
   

  	
   

  
	
   

  	
  INLAND
  REAL ESTATE ACQUISITIONS, 

  INC., an Illinois corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  G.
  Joseph Cosenza

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  SELLER:

  	
   

  
	
   

  	
   

  
	
   

  	
  VALLEY
  VIEW ASSOCIATES LIMITED

  PARTNERSHIP, a North Carolina
  limited

  partnership

  
	
   

  	
   

  
	
   

  	
  By:
  FCD-Hersch Associates, LLC, a North Carolina 

  limited liability company

  
	
   

  	
  Its:
   general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  As
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ESCROW AGENT:

  	
   

  
	
   

  	
   

  
	
   

  	
  CHICAGO
  TITLE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Nancy Castro

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Escrow
  Officer

  	
   

  
									



 


 


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