Document:

Exhibit
10.9

 

OPTION AGREEMENT

by and among

BEHRINGER HARVARD ALEXAN VOSS, LLC

and

GC 129 VOSS JM LLC

September
22, 2006

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I. PURCHASE OF THE VOSS MEMBERSHIP INTEREST

  	
   

  	
  2

  
	
  1.1

  	
   

  	
  Exercise of Purchase Option or Put Option

  	
   

  	
  2

  
	
  1.2

  	
   

  	
  Purchase Price

  	
   

  	
  3

  
	
  1.3

  	
   

  	
  Closing Prorations and Purchase Price
  Adjustments

  	
   

  	
  3

  
	
  1.4

  	
   

  	
  Conditions to the Closing

  	
   

  	
  4

  
	
  1.5

  	
   

  	
  Closing Deliveries of Seller

  	
   

  	
  5

  
	
  1.6

  	
   

  	
  Closing Deliveries of Purchaser

  	
   

  	
  7

  
	
  1.7

  	
   

  	
  Actions of the Parties Pending Closing

  	
   

  	
  7

  
	
  1.8

  	
   

  	
  Termination Prior to Closing

  	
   

  	
  10

  
	
  1.9

  	
   

  	
  Casualty

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  	
  12

  
	
  2.1

  	
   

  	
  Existence; Good Standing

  	
   

  	
  12

  
	
  2.2

  	
   

  	
  Title to Membership Interest

  	
   

  	
  12

  
	
  2.3

  	
   

  	
  Power and Authority

  	
   

  	
  13

  
	
  2.4

  	
   

  	
  No Violation

  	
   

  	
  13

  
	
  2.5

  	
   

  	
  Capitalization

  	
   

  	
  13

  
	
  2.6

  	
   

  	
  Consents

  	
   

  	
  14

  
	
  2.7

  	
   

  	
  Subsidiaries

  	
   

  	
  14

  
	
  2.8

  	
   

  	
  Legal Proceedings

  	
   

  	
  14

  
	
  2.9

  	
   

  	
  Brokers and Finders Fees

  	
   

  	
  14

  
	
  2.10

  	
   

  	
  Tax Representations

  	
   

  	
  14

  
	
  2.11

  	
   

  	
  Liabilities and Obligations

  	
   

  	
  16

  
	
  2.12

  	
   

  	
  Licenses and Permits

  	
   

  	
  16

  
	
  2.13

  	
   

  	
  Property

  	
   

  	
  16

  
	
  2.14

  	
   

  	
  Employees; Benefit Plans

  	
   

  	
  17

  
	
  2.15

  	
   

  	
  Conduct of Business

  	
   

  	
  17

  
	
  2.16

  	
   

  	
  Books and Records

  	
   

  	
  18

  
	
  2.17

  	
   

  	
  Compliance with Laws

  	
   

  	
  18

  
	
  2.18

  	
   

  	
  Environmental Matters

  	
   

  	
  19

  
	
  2.19

  	
   

  	
  No Bankruptcy

  	
   

  	
  19

  
	
  2.20

  	
   

  	
  Bank Accounts

  	
   

  	
  20

  
	
  2.21

  	
   

  	
  Terrorism

  	
   

  	
  20

  
	
  2.22

  	
   

  	
  Brokers and Finders Fees

  	
   

  	
  20

  
	
  2.23

  	
   

  	
  Full Disclosure

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
   

  	
  21

  
	
  3.1

  	
   

  	
  Existence

  	
   

  	
  21

  
	
  3.2

  	
   

  	
  Power and Authority

  	
   

  	
  21

  
	
  3.3

  	
   

  	
  No Violation

  	
   

  	
  22

  
	
  3.4

  	
   

  	
  Brokers and Finders Fees

  	
   

  	
  22

  
	
  3.5

  	
   

  	
  Investment Representations

  	
   

  	
  22

  
	
  3.6

  	
   

  	
  Consents

  	
   

  	
  22

  

 

 ii
 

 

 

	
  3.7

  	
   

  	
  Terrorism

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV. POST-CLOSING AGREEMENTS

  	
   

  	
  23

  
	
  4.1

  	
   

  	
  Further Action

  	
   

  	
  23

  
	
  4.2

  	
   

  	
  Receipt of Payments and Correspondence

  	
   

  	
  23

  
	
  4.3

  	
   

  	
  Inspection of Records

  	
   

  	
  23

  
	
  4.4

  	
   

  	
  Transfer Taxes

  	
   

  	
  23

  
	
  4.5

  	
   

  	
  Tax Covenants

  	
   

  	
  23

  
	
  4.8

  	
   

  	
  Audit

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. REMEDIES

  	
   

  	
  26

  
	
  5.1

  	
   

  	
  Purchaser’s Remedies

  	
   

  	
  26

  
	
  5.2

  	
   

  	
  Seller’s Remedies

  	
   

  	
  27

  
	
  5.3

  	
   

  	
  Indemnity Limits

  	
   

  	
  27

  
	
  5.4

  	
   

  	
  Arbitration

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. GENERAL

  	
   

  	
  28

  
	
  6.1

  	
   

  	
  Entirety and Modification

  	
   

  	
  28

  
	
  6.2

  	
   

  	
  Assignment; Successors and Assigns

  	
   

  	
  28

  
	
  6.3

  	
   

  	
  Expenses

  	
   

  	
  29

  
	
  6.4

  	
   

  	
  Notices

  	
   

  	
  29

  
	
  6.5

  	
   

  	
  Severability; Reformation

  	
   

  	
  30

  
	
  6.6

  	
   

  	
  No Waiver

  	
   

  	
  30

  
	
  6.7

  	
   

  	
  Headings

  	
   

  	
  30

  
	
  6.8

  	
   

  	
  Counterparts; Facsimiles

  	
   

  	
  30

  
	
  6.9

  	
   

  	
  Governing Law

  	
   

  	
  30

  
	
  6.10

  	
   

  	
  Deceptive Trade Practices

  	
   

  	
  30

  

 

 iii
 

 

Exhibits

	
  Exhibit A

  	
  –

  	
  Defined Terms

  
	
  Exhibit B

  	
  –

  	
  Land

  
	
  Exhibit C

  	
  –

  	
  Plans

  
	
  Exhibit D

  	
  –

  	
  Permitted Exceptions

  
	
  Exhibit E

  	
  –

  	
  Project Budget

  
	
  Exhibit F

  	
  –

  	
  List of Service and Maintenance Contracts

  
	
  Exhibit G

  	
  –

  	
  Form of Limited Guaranty

  

 

 iv

 

OPTION
AGREEMENT

This OPTION AGREEMENT (this “Agreement”) is
entered into as of September 22, 2006, by and among (i) BEHRINGER
HARVARD ALEXAN VOSS, LLC, a Delaware limited liability company (“Purchaser”), and (ii)
GC 129 VOSS JM LLC, a Delaware limited
liability company (“129Voss” or the “Seller”).

RECITALS:

WHEREAS, GC 128Voss SM LLC, a Delaware limited liability
company (“128Voss”), owns, directly, 100% of the
membership interest (the “127 Membership
Interest”) of GC 127 Voss Holdings LLC, a Delaware limited
liability company (the “Project
Owner”), which 127 Membership Interest constitutes all of the
issued and outstanding equity interests in the Project Owner; and

WHEREAS, 129Voss owns, directly, 100% of the
membership interest (the “128 Membership Interest”)
of 128Voss, which 128 Membership Interest constitutes all of the issued and
outstanding equity interests in 128Voss (the 127 Membership Interest and the
128 Membership Interest are sometimes collectively referenced as the “Voss Membership Interest”); and

WHEREAS, Purchaser has made a loan to 128Voss in the
amount of Six Million Eight Hundred Fifty Thousand and NO/100 Dollars
($6,850,000.00) secured, in part, by the 127 Membership Interest (“Senior Mezzanine Loan”); and

WHEREAS, Purchaser has made a loan to 129Voss in the
amount of Six Million One Hundred Fifty-Three Thousand Six Hundred Eighty-Nine
and No/100 Dollars ($6,153,689) secured, in part, by 100% of the 128 Membership
Interest (“Junior Mezzanine Loan”); and

WHEREAS, the Project Owner owns the Initial Tract; and

WHEREAS, the Project Owner has entered into the Hart
Contract whereby the Project Owner has, subject to the terms thereof, the
contractual right to acquire the Hart Tract; and

WHEREAS, prior to the Closing Date, the Project Owner
will construct and own the Project to be located on the Land; and

WHEREAS, in connection with the construction of the
Project, Project Owner has entered into a Construction Loan Agreement with Bank
of America, N.A. (the “Senior Lender”),
providing for a loan in the amount of Thirty Nine Million Six Hundred Eleven
Thousand Sixty-Six and No/100 Dollars ($39,611,066) secured, in part, by a
first lien deed of trust on the Project ( such loan and the documents
evidencing and securing such loan being collectively referenced as the “Construction Loan”); and

WHEREAS, Seller wishes to grant to Purchaser the
option to purchase the Voss Membership Interest from Seller (the “Purchase Option”) and
Purchaser wishes to grant to Seller the option to sell the Voss Membership
Interest to Purchaser (the “Put Option”) upon the terms and conditions, and for the
consideration, hereinafter set forth; and

 1
 

 

WHEREAS, on or about the date of this Agreement, the
Limited Guarantors have delivered the Limited Guaranty; and

WHEREAS, the capitalized terms used in these Recitals
and the other Sections in this Agreement are defined in Exhibit A.

NOW, THEREFORE, in consideration of the foregoing and
Purchaser’s extension of the Mezzanine Loans, the parties hereto agree as
follows:

ARTICLE I.

PURCHASE OF THE VOSS MEMBERSHIP INTEREST

1.1                               Exercise of Purchase Option or
Put Option.

(a)                                  Completion Notice. 
Promptly following the Completion Date, Seller shall deliver to
Purchaser a written notice (the “Completion
Notice”) certifying (1) the Completion Date has occurred; and
(2) the amount of the Project Costs as of the Completion Date.

(b)                                 Project
Cost.  From the time of delivery of
the Completion Notice until the Closing, Seller shall make available (and cause
the Project Owner to make available) to Purchaser and its employees, agents and
contract parties (collectively, “Representatives”)
during normal business hours, the invoices, draw requests, books, records and
other information relating to the Project, 128Voss or the Project Owner in
order that Purchaser and its Representatives may audit Seller’s calculation of
Project Cost.

(c)                                  Exercise of Purchase Option. 
Purchaser at its sole option, may elect to exercise the Purchase Option
and to purchase the Voss Membership Interest pursuant to the terms of this
Agreement by delivering a written notice (the “Purchase Notice”) to Seller within 90 calendar days after
the date of delivery of the Completion Notice. 
The Purchase Option will expire if the Purchase Notice is not timely
delivered or if a Waiver Notice is delivered. 
If the Purchaser timely delivers the Purchase Notice, then the closing
of the sale of the Voss Membership Interest (the “Closing”) shall take place within 60 calendar days
after delivery of the Purchase Notice. 
Purchaser at its sole option, may elect to deliver a written notice (the
“Waiver Notice”) to
Seller prior to the date which is 90 calendar days following delivery of
the Completion Notice indicating that Purchaser waives its right to exercise
the Purchase Option.

(d)                                 Exercise of Put Option.  If
Purchaser does not timely exercise the Purchase Option as provided above, then
Seller at its sole option, may elect to exercise the Put Option and to cause
Purchaser to purchase the Voss Membership Interest pursuant to the terms of
this Agreement by delivering a written notice (the “Put Notice”) to Purchaser within 120 calendar days after
the earlier of the date of delivery of the Waiver Notice or the expiration of
the Purchase Option.  If the Seller
exercises the Put Option, then the Closing shall take place within 60 calendar
days after delivery of the Put Notice. 
The Put Option will expire if the Put Notice is not timely delivered to
Purchaser.

(e)                                  Business
Day.  Notwithstanding the foregoing Sections 1.1(c)
and 1.1(d), if the Closing Date would occur on a day which is not a
Business Day, then the Closing Date shall be delayed until the second Business
Day thereafter.

 2
 

 

(f)                                    Closing.  Based upon the representations, warranties
and covenants, and subject to the terms, provisions and conditions contained in
this Agreement, at the Closing, Seller shall, and shall cause 128Voss to, sell
and assign to Purchaser the Voss Membership Interest, and Purchaser shall
purchase the Voss Membership Interest from Seller and 128Voss, free and clear
of all Liens for the consideration hereinafter set forth.  At the Closing, the Project Owner and 128Voss
shall hold only those assets, and shall be subject to only those liabilities
and obligations specified in Section 1.7(d) below.  The above-described purchase and sale of the
Voss Membership Interest is referred to in this Agreement as the “Membership Interest Purchase.”

The
Closing shall take place at the offices of Haynes and Boone, LLP, counsel to
Purchaser, 2505 N. Plano Road, Suite 4000, Richardson, Texas 75082, on a date
specified by Purchaser in accordance with Section 1.1(c) or 1.1(d)
(as modified by Section 1.1(e)), at 10:00 a.m. local time, or at such
other date, time and place as Seller and Purchaser may agree.  Purchaser shall give Seller not less than
five (5) Business Days written notice of the Closing Date.  Notwithstanding the foregoing, if a mechanics
lien(s) is filed against the Property, and Project Owner is actively contesting
such mechanics lien(s), the Closing Date may be extended by either Purchaser or
Seller for up to 60 additional calendar days to permit Project Owner to remove
such mechanics lien(s) as a lien against the Property.

1.2                               Purchase Price.  Subject to the terms and
conditions of this Agreement, the total purchase price Purchaser shall pay to
Seller for the Voss Membership Interest (the “Purchase Price”) shall be:

(a)                                  Purchase Option.  In the case of Purchaser’s exercise of the
Purchase Option, an amount equal to the sum of (1) the lower of (A) the Project
Cost plus Interest Charges or (B) the Maximum Project Cost plus Interest
Charges, plus (2) $8,750 per apartment unit contained in the Project.

(b)                                 Put Option.  In the case of Seller’s exercise of the Put
Option, an amount equal to the lower of (A) Project Cost plus Interest Charges
or (B) the Maximum Project Cost plus Interest Charges.

Subject to the credits and
adjustments provided in this Agreement, Purchaser shall pay the Purchase Price
to Seller at the Closing by wire transfer of immediately available
funds
to an account Seller designates.

1.3                               Closing
Prorations and Purchase Price Adjustments.

(a)                                  At
the Closing, the Purchaser shall receive a credit against the Purchase Price in
an amount equal to the outstanding balance of the Mezzanine Loans (including
all accrued but unpaid Interest Charges) and the Mezzanine Loans shall be
considered “paid in full” at the completion of the Closing.

(b)                                 All
rents and other income from the Property, real estate and personal property ad
valorem taxes and other operating expenses of the Property shall be prorated on
the basis of actual days elapsed as of 11:59 p.m. on the day immediately
preceding the Closing Date.  Income and
expenses for which actual bills are available at Closing shall be prorated
based on such actual bills.  Those items
for which actual bills are not available at Closing shall be prorated based
upon good

 3
 

 

faith estimates, in the case of ad valorem taxes, using the most recent
tax rate and assessed value.  Preliminary
estimated Closing prorations shall be agreed between Purchaser and Seller for
purposes of making the preliminary proration adjustment at Closing subject to
the final cash settlement provided for above. 
No prorations will be made in relation to insurance premiums, and
Project Owner’s insurance coverage will be canceled and released at
Closing.  All utilities shall remain in
the name of the Project Owner and Seller shall at Closing be credited an amount
equal to any cash utility deposit.

(c)                                  Purchaser
shall receive a credit at Closing in an amount equal to the sum of all
unapplied refundable deposits or fees, paid to Project Owner under the Tenant
Leases and all rent paid in advance (to the extent not prorated as set forth
above).

(d)                                 All
leasing commissions, referral fees and locator fees applicable to any Tenant
Leases where the tenant has taken occupancy prior to Closing shall be paid in
full prior to Closing or, to the extent not paid on or prior to Closing, shall
be credited to Purchaser at Closing.

(e)                                  To
the extent possible, Seller shall pay and fully discharge any and all state
income or franchise taxes which are due and payable by the Project Owner or
128Voss.  With regard to any and all any
and all state income or franchise taxes attributable to the year of Closing,
such taxes shall be prorated as of the Closing Date once the amount of such
taxes is known and Seller shall pay to Purchaser the amount of such taxes attributable
to the period prior to Closing.

(f)                                    Except
as provided in Section 1.3(g) with regard to application fees, Purchaser
shall receive a credit at Closing in an amount equal to 50% of all
non-refundable deposits and fees (including pet fees) paid to Project Owner
under the Tenant Leases.

(g)                                 Purchaser
shall not be entitled to any credit at Closing for application fees paid by
potential tenants of the Project when Project Owner has obtained the credit
check of such potential tenant; any application fee for a potential tenant of
the Project where Project Owner has not obtained the credit check for such
potential tenant shall be fully credited to Purchaser at Closing.

(h)                                 At
or prior to the Closing, Seller shall cause the Construction Loan to be paid in
full and obtain a release of any Liens securing the Construction Loan.

(i)                                     The
provisions of this Section 1.3 shall survive Closing.

1.4                               Conditions to the Closing.

(a)                                  Joint Condition.  The
obligations of each party to consummate the transactions provided for in this
Agreement are subject to the condition that on the Closing Date there shall be
no action, suit or proceeding (other than such an action, suit or proceeding
directly or indirectly instituted by a party to this Agreement) shall be
threatened or pending, and no injunction, order, decree or ruling shall be in
effect, seeking to restrain or prohibit, or to obtain damages or other relief
in connection with, the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement.

 4
 

 

(b)                                 Purchaser’s
Conditions to Closing.  The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:

(1)                                  Seller’s Representations True. 
Seller’s representations and warranties made in this Agreement shall be
true and correct in all material respects as of the Closing Date, except as
affected by the transactions contemplated hereby, and Seller shall have
delivered to Purchaser a closing certificate to that effect.

(2)                                  Seller’s Compliance with Agreement. 
Seller, in all material respects, shall have performed each agreement,
and shall have complied with each covenant, to be performed or complied with by
it on or prior to the Closing Date under this Agreement, and Seller shall have
delivered to Purchaser a closing certificate to that effect.

The closing certificates to
be delivered by Seller referred to in Sections 1.4(b)(1) and (2)
are referred to herein collectively as the “Seller Closing Certificate.”  The Seller Closing Certificate may include
limitations on survival set forth in Section 5.1(a).

(c)                                  Seller’s Conditions to Closing.  The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:

(1)                                  Purchaser’s Representations True. 
Purchaser’s representations and warranties made in this Agreement shall
be true and correct in all material respects as of the Closing Date, except as
affected by the transactions contemplated hereby, and Purchaser shall have
delivered to Seller a closing certificate to that effect.

(2)                                  Purchaser’s Compliance with Agreement. 
Purchaser, in all material respects, shall have performed each
agreement, and complied with each covenant to be performed or complied with by
it on or prior to the Closing Date under this Agreement, and Purchaser shall
have delivered to Seller a closing certificate to that effect.

The closing certificates to be delivered by
Purchaser referred to in Sections 1.4(c)(1) and (2) are
referred to herein collectively as the “Purchaser
Closing Certificate.”  The
Purchaser Closing Certificate shall contain an acknowledgment that the Voss
Membership Interests are being conveyed subject to the provisions and
limitations contained in the last paragraph of Article II.

1.5                               Closing
Deliveries of Seller.  At the
Closing, Seller shall deliver to Purchaser the following, all of which shall be
in a form reasonably satisfactory to Purchaser:

(a)                                  The Seller Closing Certificate.

(b)                                 A certificate of the Secretary of Seller
certifying true and correct copies of (i) the required resolutions of the of
Seller duly authorizing the execution, delivery and performance of this Agreement
and all related documents and agreements, such resolutions being in full force
and effect as of the Closing Date, (ii) the Certificate of Formation of the
Project Owner, as amended and in effect as of the Closing Date, certified by
the Secretary of State of the State of Delaware within ten (10) days of the
Closing Date, (iii) the Operating Agreement of the Project Owner, as amended

 5
 

 

and
in effect as of the Closing Date, (iv) the Certificate of Formation of the
128Voss, as amended and in effect as of the Closing Date, certified by the
Secretary of State of the State of Delaware within ten (10) days of the Closing
Date, (v) the Operating Agreement of 128Voss, as amended and in effect as of
the Closing Date, and (vi) any other Organizational Documents of the Project
Owner or 128Voss.

(c)                                  An instrument of assignment of the 127
Membership Interest executed by 128Voss.

(d)                                 An instrument of assignment of the 128
Membership Interest executed by 129Voss.

(e)                                  A certificate dated within ten (10) days of
the Closing Date, of the Secretary of the State of the State of Delaware
establishing that the Project Owner is in existence and is in good standing to
transact business in such state.

(f)                                    A certificate dated within ten (10) days of
the Closing Date, of the Secretary of the State of the State of Texas
establishing that the Project Owner is authorized to transact business in the
State of Texas.

(g)                                 A certificate dated within ten (10) days of
the Closing Date, of the Secretary of the State of the State of Delaware
establishing that 128Voss is in existence and is in good standing to transact
business in such state.

(h)                                 A certified statement stating: (A) the amount
of security deposits under the Tenant Leases which are held by the Project
Owner and not applied in accordance with the terms of the applicable Tenant
Leases; and (B) a delinquency report with regard to the Tenant Leases.

(i)                                     A non-foreign affidavit as required by
Section 1445 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder from Seller and 128Voss.

(j)                                     Certificates from the taxing authorities of
the State of Delaware, dated within ten (10) days prior to the Closing Date,
evidencing that the Project Owner has paid all franchise, sales and other state
taxes due and owing in such state.

(k)                                  Certificates from the taxing authorities of
the State of Delaware, dated within ten (10) days prior to the Closing Date,
evidencing that 128Voss has paid all franchise, sales and other state taxes due
and owing in such state.

(l)                                     Certificates
from the taxing authorities of
the State of Texas and from Harris County, Texas, or other evidence dated
within ten (10) days prior to the Closing Date, evidencing that Project Owner
has paid all property and other state and local taxes due and owing.

(m)                               Letters
of resignation and a waiver of, and covenant not to sue for, any and all
present or future claims against such company, for indemnity or otherwise,
signed by each officer and manager of the Project Owner, to be effective as of
the Closing Date.

 6

 

(n)                                 Letters
of resignation and a waiver of, and covenant not to sue for, any and all
present or future claims against such company, for indemnity or otherwise,
signed by each officer and manager of 128Voss, to be effective as of the
Closing Date.

(o)                                 At
the request and option of Purchaser, evidence of the termination of any
property management agreements affecting the Property.

(p)                                 UCC-3
termination statements with respect to any recorded Liens with respect to the
Voss Membership Interest and any of the assets of the Project Owner or 128Voss.

(q)                                 A
certificate executed by Seller listing the Contracts.

(r)                                    Such
other instruments and documents as are reasonably requested by Purchaser to
carry out and effect the purpose and intent of this Agreement.

1.6                               Closing Deliveries of Purchaser. 
In addition to the Purchase Price, at the Closing, Purchaser shall
deliver to Seller the following, which shall be in a form reasonably
satisfactory to Seller:

(a)                                  The
Purchaser Closing Certificate.

(b)                                 Such
other instruments and documents as are reasonably requested by Seller to carry
out and effect the purpose and intent of this Agreement.

1.7                               Actions of the Parties
Pending Closing.

(a)                                  Reasonable Best Efforts.  Each
of the parties will use their reasonable best efforts to obtain all necessary
consents and approvals and to cause the conditions to the obligations of the
parties hereunder to be satisfied and, upon exercise of the Purchase Option or
the Put Option, to cause the Closing to be consummated as promptly as
practicable, and will cooperate with one another in connection with the
foregoing.

(b)                                 Conduct of Business.  The
Seller shall, at its expense (taking into account the use by the Project Owner
of the proceeds of the Construction Loan to fund such construction), cause the
Project Owner to construct the Project on the Land, in substantial accordance
with the Plans and in accordance with the requirements of the Mezzanine
Loans.  From the execution of this
Agreement until the Closing, Seller will cause the Project Owner and 128 Voss
to operate in the ordinary course of business consistent with the prudent
construction and operation of the Project and in accordance the requirements of
the Mezzanine Loans. Without limitation, neither the Project Owner nor 128Voss
shall take any action, or fail to take any action, as a result of which any of
the changes or events listed in Section 2.15(a) (Changes)
would occur.  Seller shall maintain and
preserve the Project Owner and 128Voss and their respective business,
franchises and authorizations, and use commercially reasonable efforts to
maintain and preserve their respective prospects, goodwill and advantageous
business relationships.  Seller will
cause Project Owner to (i) maintain and operate the Property in accordance with
Trammell Crow Residential’s customary manner, reasonable wear and tear and
damage from casualty excepted, (ii) continue all insurance policies relative to
the Property (or if such insurance is canceled or expires, comparable insurance
consistent with similar projects in the Houston metropolitan area) in full
force and effect, (iii) after the Completion Date not remove

 7
 

 

any
item of Personal Property from the Land or Improvements unless replaced by a
comparable item of Personal Property, (iv) maintain all permits, licenses and
occupancy certificates, including, without limitation, all development,
building and use permits and certificates of occupancy and (v) perform, when
due, all material obligations under any and all material agreements relating to
the Property and otherwise in accordance with applicable laws, ordinances,
rules, and regulations; and (vi) promptly forward to Purchaser any material
notices of violations Governmental Requirements or Restrictions which Seller
receives or becomes aware.  Seller will
not permit either Project Owner or 128Voss to have any employees.  In addition, Seller will not permit 128Voss
to engage in any trade or business activity other than the ownership of the 127
Membership Interest and ancillary activities. 
In addition, Seller will cause 128Voss and 129Voss to comply with all
terms and provisions of the Mezzanine Loans.

(c)                                  Acquisition of Hart Tract. 
Seller shall cause the Project Owner to use commercially reasonable
efforts to acquire the Hart Tract prior to the Hart Outside Acquisition Date in
accordance with the terms and provisions of the Hart Contract.  Prior to the Hart Outside Acquisition Date,
Seller will not permit Project Owner to amend or revise the Hart Contract
(other than extensions of closing (but not beyond the Hart Outside Acquisition
Date)) without the prior written consent of Purchaser, which consent shall not
be unreasonably withheld or delayed.  If
the Project Owner has been unable to acquire the Hart Tract on or before the Hart
Outside Acquisition Date, Seller shall cause the Hart Contract to be assigned
or terminated such that the Hart Contract will not create any liabilities on
the Project Owner or 128Voss.

(d)                                 Assets and Obligations.

(1)                                  Seller
covenants that:

(i)                                     Upon
transfer of the Voss Membership Interest to Purchaser at the Closing, (A) the
Project Owner shall hold only the Property; (B) 128Voss shall hold only the 127
Membership Interest; and (C) the Project Owner and 128Voss shall hold no other
assets of any nature whatsoever.

(ii)                                  Upon
transfer of the Voss Membership Interest to Purchaser at the Closing, (A) the
Project Owner shall have no liabilities, obligations or commitments of any
nature, whether absolute, accrued, unaccrued, express or implied, unmatured,
known or unknown, contingent or otherwise, or any unsatisfied judgments, except
the Permitted Obligations, and (B) 128Voss shall have no liabilities,
obligations or commitments of any nature, whether absolute, accrued, unaccrued,
express or implied, unmatured, known or unknown, contingent or otherwise, or
any unsatisfied judgments except the Permitted Obligations. 

(iii)                               Upon
transfer of the Voss Membership Interest to Purchaser at the Closing, Seller
shall and hereby does (effective as of the Closing Date) waive, and covenant
not to sue for, any and all present or future claims or liabilities against the
Project Owner or 128Voss whether (i) pursuant to this Agreement,
(ii) for indemnity, or (iii) otherwise.

 8
 

 

(2)                                  Prior
to Closing, Seller may cause the Project Owner and 128Voss to transfer to
Seller or to any other person designated by Seller or, if Seller prefers, to
terminate, release or abandon any property, rights, title, interest, contract
or claim held by the Project Owner or 128Voss that are not part of the
Property, including specifically (a) all right, title and interest, if any, of
the Project Owner or 128Voss in respect of the name “Alexan” or any other
names, trademarks, trade names, trade dress or logos of 128Voss, the Project
Owner or Seller or any of their respective affiliates (even if used in
connection with the Property), as well as all goodwill associated with any of
such names, trademarks, trade names, trade dress or logos, (b) subject to Section
1.3, all cash balances of the Project Owner or 128Voss and (c) any claim of
the Project Owner or 128Voss against Seller or any of its affiliates, except
claims against the General Contractor if it is an affiliate of Seller.

(e)                                  Access.  During the term of this Agreement, Purchaser
and its agents, consultants and designees shall have reasonable access to the
Project for purposes of observing, testing and inspecting the work.  No such observation, test or inspection or
failure to do so shall relieve Seller from its obligations under this
Agreement.  In exercising its access
rights, Purchaser shall exercise and shall cause its designees to exercise due
care to not materially increase the cost of the General Contractor’s
performance or to delay to any material extent the work on the Construction
Contract.  Purchaser shall indemnify,
defend and hold harmless Seller and Project Owner from and against all
liability, loss, cost or expense (including reasonable attorneys’ fees and
expenses of litigation) arising from any wrongful acts committed by Purchaser
or its designees, agents or consultants while on the Land.

(f)                                    Rent
Ready Condition.  If any apartment
unit is vacated seven (7) days or more prior to Closing, then, prior to
Closing, Seller shall use commercially reasonable diligence to cause the
Project Owner to return such unit to rentable condition in accordance with
Trammel Crow Residential’s customary cleaning, painting, and repair standards
for vacant units (the condition of such an apartment unit after cleaning,
painting and repairing is referred to herein as a “Rent Ready Condition”). 
To the extent any such units are not in a Rent Ready Condition, the
Purchase Price shall be credited in an amount equal to $750 for each unit that
is not in a Rent Ready Condition.

(g)                                 Ownership
of the Project.  Until such time as the Purchase Option has
expired Seller’s shall not permit Project Owner to sell or dispose of the
Project or any portion thereof except for Permitted Dispositions.  Following the expiration of the Purchase
Option, Project Owner will be permitted to sell the Project (in whole but not
in part) to an arms length purchaser who is not an Affiliate of Seller or
Trammel Crow Residential.  Until such
time as the Purchase Option has expired and the Put Option has expired, Seller
will not permit any Liens, encumbrances or other title exceptions (other than
the Permitted Exceptions and normal utility easements, solely for benefit of
the Project, incident to the development and operation of the Project) to
encumber the Land or the Project.

(h)                                 Service
Contracts.  Seller will not permit
Project Owner to enter into any Service Contracts other than those described on
Exhibit F unless either (i) such Service Contract is terminable on not
more than 30 days notice without the payment of any termination fee or
penalty or (ii) such Service Contract has been approved in writing by
Purchaser.

 9
 

 

(i)                                     Utility Contracts. 
Seller will not permit Project Owner to enter into any agreement with
any utility company (public or private) to provide utility services to the
Project unless either (i) such utility contract is terminable on
not more than 30 days notice without the payment of any termination fee or
penalty or (ii) such utility contract has been approved in writing by
Purchaser.

1.8                               Termination Prior to
Closing.

(a)                                  Reasons for Termination.  This
Agreement may be terminated before the Closing, notwithstanding any exercise of
the Purchase Option or the Put Option:

(1)                                  By Mutual Consent.  By
the mutual consent of Purchaser and Seller.

(2)                                  By Purchaser.  By
Purchaser after compliance with the procedure set forth in this Section, if (i)
any of Seller’s representations or warranties contained in this Agreement is or
becomes untrue in any material respect, (ii) Seller fails to perform any of its
covenants or agreements contained in this Agreement in any material respect, or
(iii) any of Purchaser’s conditions to the consummation of the transactions
provided for in this Agreement shall have become impossible to satisfy.

(3)                                  By Seller.  By Seller after compliance
with the procedure set forth in this Section, if (i) any of Purchaser’s
representations or warranties contained in this Agreement is or becomes untrue,
in any material respect, (ii) Purchaser fails to perform its covenants or
agreements contained in this Agreement in any material respect, or (iii) any of
Seller’s conditions to the consummation of the transactions provided for in
this Agreement shall become impossible to satisfy.

(4)                                  Outside Date.  By
Purchaser if the Completion Date shall not have occurred on or before September
30, 2009.

(5)                                  Mezzanine Loans.  By
Purchaser if there is any default by 128Voss or 129Voss pursuant to the
documents evidencing or securing the Mezzanine Loans; provided Purchaser shall
still be entitled to pursue any rights and remedies pursuant to the Mezzanine
Loans.

(b)                                 Notice of Problems; Termination. 
Purchaser or Seller (the “Notifying
Party”) will promptly give written notice to the other (the “Receiving Party”) if it
becomes aware of the occurrence or failure to occur, or the impending or
threatened occurrence or failure to occur, of any fact or event that would
cause or constitute, or would be likely to cause or constitute (i) any of its
representations or warranties contained in this Agreement being or becoming
untrue in any material respect, (ii) its failure to perform in any material
respect any covenants or agreements contained in this Agreement, or (iii) any
condition to the obligations of the Receiving Party to consummate the
transactions provided for in this Agreement being or becoming impossible to
satisfy.  No such notice shall affect the
representations, warranties, covenants, agreements or conditions of the parties
hereunder, or prevent any party from relying on the representations and
warranties contained herein.

The
Notifying Party shall have 20 days from the date of said notice to cure any
matter referred to in Sections 1.8(b)(i) or (ii); provided,
however, if such a matter is not susceptible to cure

 10
 

 

within such 20 day period
and the Notifying Party has promptly commenced, and is diligently and
continuously pursuing, such cure then the 20 day period specified above shall
be extended on a day-by-day basis as needed to effect such cure, but not beyond
120 days from the original date of said notice. 
Upon receipt of a notice referred to in Section 1.8(b)(iii), or
the failure of the Notifying Party so to cure a matter referred to in Sections
1.8(b) (i) or (ii), the Receiving Party may terminate this Agreement
by written notice to the Notifying Party.

(c)                                  Effect of Termination.  Upon
termination of this Agreement pursuant to this Article, no party shall have any
continuing obligation to the other party arising out of this Agreement, or out
of actions taken in connection with this Agreement; provided, however, that (i)
no such termination shall relieve a party of liability for breach of, or misrepresentation
under, or nonperformance of this Agreement prior to such termination (ii) no
such termination shall affect the rights and obligations under the Mezzanine
Loans, and (iii) Article V and Article VI of this Agreement and
the indemnification obligations under this Agreement shall survive termination
of this Agreement.

1.9                               Casualty.

(a)                                  Seller
shall give Purchaser prompt notice of any fire or other casualty affecting the
Property.  Purchaser or its designated
agents may enter upon the Property from time to time during normal business
hours and upon advance notice to Seller in accordance with this Agreement for
the purpose of inspecting any such casualty.

(b)                                 If
prior to the applicable Closing there occurs damage to the Property caused by
fire or other insured casualty, then in any such event, Purchaser will have no
right to terminate this Agreement, but Seller shall work with Purchaser to
assist in the realization by Project Owner of any casualty insurance proceeds
which may be payable to Project Owner, as the owner of the Property, on account
of any such occurrence (excluding amounts attributable to any damage that has
been repaired prior to Closing), specifically including the proceeds of any
business interruption or loss of rental insurance attributable to the period
after Closing.  In addition, Seller shall
credit the Purchase Price with the amount of any deductible under any of
Project Owner’s insurance policy(ies).

(c)                                  If
prior to the Closing there occurs damage to the Property caused by fire or
other casualty and such damage is either uninsured or under insured, as
reasonably determined by Purchaser, and Seller elects not to pay to repair such
damage, then in any such event, Purchaser may, at its option elect to terminate
this Agreement, by written notice to Seller within 30 days after the date of
Seller’s notice to Purchaser of the uninsured or under insured casualty.  If Purchaser fails terminate this Agreement,
then the Closing will take place as provided herein without reduction of the
Purchase Price, and, in the case of an under insured casualty, Seller shall
work with Purchaser to assist in the realization by Project Owner of any
casualty insurance proceeds which may be payable to Project Owner, as the owner
of the Property, on account of any such occurrence (excluding amounts
attributable to any damage that has been repaired prior to Closing),
specifically including the proceeds of any business interruption or loss of
rental insurance attributable to the period after Closing.  In addition, Seller shall credit the Purchase
Price with the amount of any deductible under any of Project Owner’s insurance
policy(ies) (excluding amounts attributable to any damage that has been
repaired prior to Closing).  Damage shall
be deemed to be under insured if the insurance

 11
 

 

proceeds are
not sufficient to fully repair or restore the damage to substantially the same
condition that existed immediately prior to such fire or other casualty or if
the insurance proceeds (after taking into account any deductible provided for
in such insurance policy(ies)) are not made available to the Seller or the
Project Owner (for example, if the Senior Lender requires such proceeds to be
applied against the outstanding balance of the Construction Loan).

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Purchaser,
except as set forth on the schedules Seller has delivered herewith referencing
a particular section of this Article II (collectively, the “Disclosure Schedules”), as set forth
below.

2.1                               Existence; Good Standing.

(a)                                  128Voss
is a Delaware limited liability company duly organized, validly existing and in
good standing under the laws of its state of organization, and has the
requisite power and authority to carry on its business as conducted since the
date of its formation.

(b)                                 129Voss
is a Delaware limited liability company duly organized, validly existing and in
good standing under the laws of its state of organization, and has the
requisite power and authority to carry on its business as conducted since the
date of its formation.

(c)                                  Project
Owner is a Delaware limited liability company duly organized, validly existing
and in good standing under the laws of its state of organization, and has the
requisite power and authority to carry on its business as conducted since the
date of its formation.  The Project Owner
is duly qualified to do business as a foreign entity and is in good standing in
the State of Texas, the only jurisdiction in which it is required to be so
qualified or otherwise conducts operations.

2.2                               Title to Membership Interest.

(a)                                  128Voss
(i) is the record and beneficial owner and (ii) has good and valid title to the
127 Membership Interest, free and clear of any and all Liens.  The Project Owner has complied with all
applicable laws in connection with the issuance of the 127 Membership
Interest.  The 127 Membership Interest
was not issued in violation of any contract or agreement binding upon Seller,
128Voss or the Project Owner.

(b)                                 129Voss
(i) is the record and beneficial owner and (ii) has good and valid title to the
128 Membership Interest, free and clear of any and all Liens.  Voss128 has complied with all applicable laws
in connection with the issuance of the 128 Membership Interest.  The 128 Membership Interest was not issued in
violation of any contract or agreement binding upon Seller or 128Voss.

(c)                                  The
consummation of the transactions contemplated hereby will transfer to Purchaser
good and valid title to the Voss Membership Interest, free and clear of any and
all Liens.

 12
 

 

2.3                               Power and Authority.

(a)                                  Seller has the full legal right, power and
authority to enter into this Agreement and all agreements and other documents
executed and delivered by it pursuant to this Agreement and to consummate the
Membership Interest Purchase and the other transactions contemplated hereby or
thereby.

(b)                                 Seller has duly and properly taken all action
required by law and by its Certificate of Formation and Operating Agreement or
comparable organizational documents (“Organizational
Documents”) to authorize the execution, delivery and performance
of this Agreement and any related documents and the consummation of the
Membership Interest Purchase and the other transactions contemplated hereby and
thereby.

(c)                                  This Agreement and all agreements and
documents executed by Seller and delivered to Purchaser in connection herewith
have been duly executed and delivered by Seller and constitute the legal, valid
and binding obligations of Seller, enforceable against Seller in accordance
with their respective terms.

2.4                               No Violation.  The execution and delivery of this Agreement,
and the agreements executed and delivered by Seller in connection herewith, do
not, and the consummation of the actions contemplated hereby or thereby will
not, (a) violate, contravene or conflict with any provision of the
Organizational Documents of the Project Owner, 128Voss or Seller, (b) violate,
contravene or conflict with any provisions of, result in the acceleration of
any obligation under, constitute a default or breach under, or give any right
of termination or cancellation under, any mortgage, Lien, lease, agreement,
note, instrument, debenture, license, order, arbitration award, judgment or
decree to which any of the Project Owner, 128Voss or Seller is a party or by
which any of the Project Owner, 128Voss or Seller is bound, (c) violate,
contravene or conflict with any law, rule or regulation applicable to any of
the Project Owner, 128Voss or Seller, or (d) result in any Lien, other than
pursuant to the Construction Loan or Mezzanine Loans, on any of the Project
Owner’s, 128Voss’ or Seller’s assets.

2.5                               Capitalization.

(a)                                  Project
Owner’s authorized equity securities consist of the 127 Membership Interest,
which is issued and outstanding.  The 127
Membership Interest has been duly authorized and validly issued, is fully paid
and nonassessable and is owned beneficially and of record by 128Voss.  The 127 Membership Interest constitutes all
of the issued and outstanding equity securities of the Project Owner.  There are no authorized or outstanding
preemptive, conversion or exchange rights, subscriptions, options, warrants,
rights, contracts, calls, puts or other arrangements, agreements or commitments
obligating the Project Owner or Seller to issue, transfer, dispose of or
acquire all or any portion of the 127 Membership Interest or any other
securities or equity interest in the Project Owner, and there are no member
agreements, voting agreements or other agreements, written or oral, relating to
the 127 Membership Interest, except as detailed in its Organizational
Documents.

(b)                                 128Voss’s
authorized equity securities consist of the 128 Membership Interest, which is
issued and outstanding.  The 128
Membership Interest has been duly authorized

 13
 

 

and validly issued, is fully paid and nonassessable and is owned
beneficially and of record by 129Voss. 
The 128 Membership Interest constitutes all of the issued and
outstanding equity securities of 128Voss. 
There are no authorized or outstanding preemptive, conversion or
exchange rights, subscriptions, options, warrants, rights, contracts, calls,
puts or other arrangements, agreements or commitments obligating the 128Voss or
Seller to issue, transfer, dispose of or acquire all or any portion of the 128
Membership Interest or any other securities or equity interest in the Project
Owner, and there are no member agreements, voting agreements or other
agreements, written or oral, relating to the 128 Membership Interest.

2.6                               Consents.  No consent, authorization, permit, license or
filing with any governmental authority, lender, lessor, landlord, manufacturer,
supplier or other person or entity is required to authorize, or is required in
connection with, the execution and delivery by Seller of this Agreement and the
agreements and documents contemplated hereunder to be entered into by the
Seller or the transfer of the Voss Membership Interest.

2.7                               Subsidiaries.

(a)                                  The
Project Owner has no subsidiaries and owns no equity interest in any entity.

(b)                                 128Voss
has no subsidiaries and owns no equity interest in any entity other than the
Project Owner.

2.8                               Legal Proceedings.  None of the Project Owner, nor any of its
assets, 128Voss nor any of its assets, or the Voss Membership Interest are
subject to any pending, nor do Seller, 128Voss or the Project Owner have
knowledge of any threatened, action, suit, litigation, governmental
investigation, condemnation or other proceeding against or relating to or
affecting the Project Owner or 128Voss or any of their respective assets, or
the Voss Membership Interest or the transactions contemplated by this Agreement
(excluding immaterial tort litigation which is fully insured by Project Owner’s
liability insurance and routine litigation regarding enforcement of Tenant
Leases).  No basis for any such action,
suit, litigation, governmental investigation, condemnation or other proceeding
exists.

2.9                               Brokers and Finders Fees.  No person is entitled to any fee from either
the Project Owner or Seller as a broker or finder in connection with the sale
and purchase of the Voss Membership Interest.

2.10                        Tax Representations.

(a)                                  As
used herein, the term “Taxes”
means all federal, state, local, foreign and other governmental net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, unemployment, excise, severance, stamp, escheat, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments
or charges in the nature of taxes, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto, and the
term “Tax” means any
one of the foregoing Taxes; the term “Tax
Returns” means all returns, information returns, declarations,
reports, statements and other documents required to be filed in respect of
Taxes; the term “Code”
means the Internal Revenue Code of 1986, as amended (all citations to the

 14
 

 

Code, or to the Treasury Regulations promulgated thereunder, shall
include any amendments or any substitute or successor provisions thereto); the
term “Governmental
Entities” means any
court, tribunal, governmental or regulatory authority, agency, department,
commission, instrumentality, body or other governmental entity of the United
States of America or any state or political subdivision thereof or any court or
arbitrator, and the term “Governmental
Entity” means
any one of the foregoing Governmental Entities.

(b)                                 All
Tax Returns required to be filed prior to the Closing Date by or on behalf of
the Project Owner or 128Voss, including, but not limited to all Tax Returns
filed by Seller or any Affiliate of Seller on behalf of the Project Owner or
128Voss, have been duly and timely filed in accordance with applicable laws,
and are true, correct and complete in all material respects.  Both the Project Owner and 128Voss have
timely paid in full all Taxes reflected on their respective Tax Returns or
otherwise required to have been paid, as applicable, by Project Owner or 128Voss,
or all such Taxes have been paid on Project Owner’s or 128Voss’s behalf.  Neither the Project Owner nor 128Voss is the
beneficiary of any extension of time within which to file any Tax Returns that
remain outstanding.  Neither the Project
Owner nor 128Voss has ever had any Tax deficiency proposed or assessed against
it nor has the Project Owner or 128Voss ever executed any waiver of any statute
of limitations on the assessment or collection of any Tax.  In the case of Taxes for the current period
not yet due, both Project Owner and 128Voss have made adequate provision under Section
1.3 for the payment of all Taxes for which the Project Owner or 128Voss, as
applicable, is or may become liable for payment.  Both the Project Owner
and 128Voss have withheld and paid over to appropriate governmental entities
any Taxes due with respect to amounts paid or owing to employees (which neither
Project Owner nor 128Voss is permitted to have pursuant to the terms of this
Agreement), independent contractors, creditors, members or other third parties
in accordance with applicable law.

(c)                                  (i)
No federal, state, local or foreign audits or other administrative proceedings
or court proceedings are presently pending with regard to any Taxes or Tax
Returns of the Project Owner or 128Voss, and none of the Project Owner, 128Voss
or Seller with respect to the Project Owner, 128Voss or the Project has
received any written notice of any pending or proposed claims, audits or
proceedings with respect to Taxes, (ii) none of the Project Owner, 128Voss or
Seller with respect to the Project Owner, 128Voss or the Project has received
any notice of deficiency or assessment from any Governmental Entity for any
amount of Tax that has not been fully settled or satisfied, and no such
deficiency or assessment is proposed, (iii) the Project Owner and 128Voss have
disclosed on their Tax Returns all positions taken therein that could give rise
to a substantial understatement of Taxes within the meaning of Code Section
6662 or any similar statute or regulation under state, local and foreign law,
and (iv) none of the Project Owner, 128Voss or Seller with respect to the
Project Owner, 128Voss or the Project has executed any waiver of any statute of
limitations on the assessment or collection of any Tax.

(d)                                 There
are no Tax Liens upon any assets or property of the Project Owner or 128Voss
except for statutory liens for current Taxes not yet due and payable.

(e)                                  The
Project Owner and 128Voss are and always have been treated as disregarded
entities for federal income tax purposes.

(f)                                    Neither
the Project Owner nor 128Voss is, nor has either one ever been, a party to any
tax-sharing agreement with any person.

 15
 

 

2.11                        Liabilities and Obligations.  Except for Permitted Obligations, neither the
Project Owner nor 128 Voss has any liabilities, obligations or commitments of
any nature, whether absolute, accrued, unaccrued, express or implied,
unmatured, known or unknown, contingent or otherwise, or any unsatisfied
judgments.

2.12                        Licenses and Permits.  The Project Owner possesses all discretionary
approvals from Governmental Entities to permit development of the Project and
will, as part of the development of the Project, obtain all additional
Governmental Authorizations necessary or appropriate for the development and
construction of the Project.  The Project
Owner is not in default, nor has it received any written notice of, nor is
there, to the knowledge of Seller or the Project Owner, any threat to revoke or
challenge any such Governmental Authorizations. 
None of the Project Owner, 128Voss, or the Seller with respect to the
Project Owner, 128Voss or the Project has been notified by any person or
authority that such person or authority has rescinded, restricted, or not
renewed, or intends to rescind, restrict or not renew, any Governmental
Authorizations or that penalties or other disciplinary action has been, is
threatened to, or will be assessed or taken against the Project Owner, 128Voss
or the Property.

2.13                        Property.

(a)                                  Parties in Possession. 
There are no parties in possession of any portion of the Property except
Project Owner and tenants under the Tenant Leases.

(b)                                 Service
Contracts.  The Service Contracts
delivered to Purchaser are true, correct and complete copies of all material
contracts and agreements relating to the ownership, operation or leasing of the
Property entered into by Project Owner (except Tenant Leases, the documents
evidencing the Construction Loan, the documents or agreements described or
listed on the Permitted Exceptions).

(c)                                  Rollback
Taxes.  No part of the Land has been
assessed for real estate taxes during the preceding five (5) years (i) by using
“agricultural use” value within the meaning of TEX. Const.art. XIII, 1-d to
value the Land or any part thereof, or (ii) by treating the Land or any part
thereof as “open space land devoted to timber production on the basis of its
productive capacity” or “open space land devoted to farm or ranch purposes on
the basis of its productive capacity” within the meaning of TEX. Const. art.
XIII, 1-d-1, or (iii) by treating the Land or any part thereof as “land designated
for agricultural use” within the meaning of TEX. TAX CODE ANN. 23.41-23.46
(Vernon 1982, as amended); or, (iv) by treating the Land or any part thereof as
“qualified open space land” within the meaning of TEX. TAX CODE ANN.
23.51-23.57 (Vernon 1982, as amended); or, (v) by treating the Land or any
portion thereof as “Qualified Timber Land” within the meaning of TEX. TAX CODE
ANN. 23.71-23.79 (Vernon 1982, as amended).

(d)                                 Utilities.  All utilities required for the construction
and operation Project, including, without limitation, storm sewer, sanitary
sewer, natural gas, water, electricity and telephone are available in adequate
capacity to the Land.

(e)                                  Equipment.  Except as set forth on Schedule
2.13(d), all machinery, equipment, computer hardware and software, vehicles
or other Personal Property owned by the Project Owner for the conduct of the
businesses of the Project Owner (i) have been maintained by 

 16

 

Seller
or the Project Owner in accordance with maintenance practices that are standard
for Trammell Crow Residential and (ii) are in good condition and repair.

(f)                                    Contracts.  On the Closing Date, the only
written agreements, contracts, notes, bonds, debentures, indentures, mortgages,
promises and understandings to which the Project Owner or 128Voss is a party or
assignee (the “Contracts”)
will be only of the type that are Permitted Obligations.  The Project Owner is not in breach or default
of any material provision of any Contract, nor has Seller, the Project Owner or
128Voss received any notice or other communication alleging such a breach or
default.  None of the Seller, the Project
Owner nor 128Voss has received any notice of termination or other indication
that any party to any Contract will terminate, fail to renew, fail to recognize
the validity of, any material Contract.  
All rights of the Project Owner under the Contracts will be enforceable
by the Project Owner after the Closing without the consent or agreement of any
other party.

2.14                        Employees; Benefit Plans.  Neither the Project Owner nor 128Voss has any
employees, and neither entity has ever had any employees.  Neither the Project Owner nor 128Voss has
ever maintained, sponsored, participated in or contributed to, or been required
to contribute to, nor will the Project Owner or 128Voss be subject to any
obligation, responsibility or liability with respect to, any Employee Benefit
Plan or Seller/ERISA Affiliate Benefit Plan (as defined below). “Employee
Benefit Plans” means
collectively any “employee benefit plan” as defined by Section 3(3) of ERISA, “multiemployer
plan,” as defined in Section 4001 of ERISA, “employee pension benefit plan” (as
defined in Section 3(2) of ERISA) that is subject to Title IV of ERISA or
Section 412 of the Code, specified fringe benefit plan as defined in Section
6039D of the Code, or other bonus, incentive compensation, deferred
compensation, profit sharing, stock option, stock appreciation right, stock
bonus, stock purchase, employee stock ownership, savings, severance,
supplemental unemployment, layoff, salary continuation, retirement, pension,
health, life insurance, dental, disability, accident, group insurance,
vacation, holiday, sick leave, fringe benefit or welfare plan, and any other
employee compensation or benefit plan (whether qualified or nonqualified,
currently effective or terminated, written or unwritten), or any trust, escrow
or other agreement related thereto. “Seller/ERISA Affiliate Benefit Plan” means any Employee
Benefit Plan which any trade or business (whether or not incorporated) which is
or at any time within the six (6) year period preceding the date of this
Agreement would have been treated as a “single employer” with the Project Owner
under Section 414(b), (c), (m), or (o) of the Code (“ERISA Affiliate”) maintains, sponsors, participates in,
contributes to, or is required to contribute to, or with respect to which the
Project Owner, 128Voss or any ERISA Affiliate has any obligation or liability (contingent
or otherwise).

2.15                        Conduct of Business.

(a)                                  Changes.  Since their date of formation
neither of the Project Owner nor 128Voss has (i) authorized or issued any
equity securities; granted any option or right to purchase any equity
securities; issued any security convertible into equity securities; granted any
registration rights; or purchased, redeemed, retired, or otherwise acquired any
equity securities; (ii) amended its organizational documents other than to
change its name; (iii) sold or transferred any assets except in the
ordinary course of business consistent with the construction and operation of
the Project; (iv) mortgaged or pledged any assets or been subjected to any
Lien or other encumbrance other than pursuant to the Construction Loan, the
Mezzanine Loans and the Permitted Exceptions; (v) incurred

 17
 

 

or
become subject to any debt, liability or lease obligation, other than pursuant
to the Construction Loan or the Mezzanine Loans, or, with respect to the
Project Owner, the Permitted Obligations; (vi) incurred obligations or
entered into contracts other than the Construction Loan, the Mezzanine Loans or
the Permitted Obligations or construction contracts for the Project;
(vii) suffered any damage, destruction or loss of any assets;
(viii) waived or relinquished any material rights or canceled or
compromised any material debt or claim owing to it, in either case, without
adequate consideration or not in the ordinary course of business consistent
with the construction and operation of the Project; or (ix) agreed to do
any of the foregoing.

(b)                                 No Adverse Change. 
Since the date of formation of the Project Owner, the Project Owner has
conducted its business only in the ordinary course for the acquisition of the
Land and the construction and operation of the Project consistent with
prevailing industry practices.  Since the
date of formation of 128Voss, 128Voss has conducted its business only in the
ordinary course.

2.16                        Books and Records.  The Project Owner’s and 128Voss’s books and
records, including without limitation all financial records, business records,
minute books and equity transfer records, (a) are complete and correct in
all material respects and all transactions to which the Project Owner is or has
been a party are accurately reflected therein, (b) have been maintained in
accordance with customary and sound business practices in the Project Owner’s
industry, and (c) accurately reflect the assets, liabilities, financial
position and results of operations of the Project Owner in all material
respects.  All computer-generated
reports and other computer data included in such books and records are complete
and correct in all material respects and were prepared in accordance with sound
business practices based upon authentic data.

2.17                        Compliance with Laws.  None of the Project Owner, 128Voss, or the
Seller with respect to the Project Owner, 128Voss or the Project has violated
any judgment, writ, decree, order, law, statute, rule or regulation to which it
is subject or a party, or by which the businesses or assets of the Project
Owner are bound or affected (collectively, “Legal Requirements”), other than any Legal Requirement
the violation of which would not have a materially adverse effect on the
Project Owner.  None of the Project
Owner, 128Voss, or the Seller with respect to the Project Owner, 128Voss or the
Project has received notice of any actual, alleged or potential violation of a
Legal Requirement by the Project Owner, 128Voss or the Seller with respect to
the Project Owner, 128Voss or the Project other than violations that have been
corrected and for which no legal action is pending or threatened.  None of the Project Owner, 128Voss, or the
Seller with respect to the Project Owner, 128Voss or the Project, nor any of
their former or current officers, directors, employees (which neither Project
Owner nor 128Voss is permitted to have pursuant to the terms of this
Agreement), agents or representatives (acting on behalf of the Project, the
Project Owner or 128Voss) has made or agreed to make, directly or indirectly,
any (i) bribes or kickbacks, illegal political contributions, payments
from funds not recorded on books and records, or funds to governmental
officials (or any such official’s family members or affiliates) for the purpose
of affecting their action or the action of the government they represent, to
obtain favorable treatment in securing business or licenses or to obtain
special concessions, (ii) illegal payments from corporate funds to obtain
or retain business or (iii) payments from corporate funds to governmental
officials for the purpose of affecting their action or the action of the
government they represent, to obtain favorable treatment in securing business
or licenses or to obtain special concessions.

 18
 

 

2.18                        Environmental Matters.

(a)                                  128Voss, the Project Owner and the Project
are, and since their formation or commencement, as applicable, have been in
compliance with all applicable Environmental Laws (defined below).  None of 128Voss, the Project Owner, nor the
Seller with respect to the 128Voss, the Project or the Project Owner, has
received notice of any obligation, liability, order, settlement, judgment,
injunction or decree relating to or arising under Environmental Laws which has
not been resolved to the satisfaction of the appropriate Governmental
Entities.  No facts, circumstances or
conditions exist with respect to the Project Owner or the Project that could
give rise to Environmental Liabilities applicable to the Project or the Voss
Membership Interest.

(b)                                 The 128Voss’s and the Project Owner’s use,
handling, manufacture, treatment, processing, storage, generation, Release,
discharge and disposal of Hazardous Materials in connection with past and
current operations complied and complies with applicable Environmental Laws
then in effect.

(c)                                  For purposes of this Agreement:

(1)                                  “Environmental Laws” collectively shall mean all present and future laws (whether
common law, statute, rule, order, regulation or otherwise), permits, and other
requirements or guidelines of governmental authorities applicable to the
Property and relating to the environment and environmental conditions or to any
Hazardous Materials or Hazardous Materials Activity (including the
Comprehensive Environmental Response Compensation, and Liability Act of 1980, 42
U.S.C. §§ 9601 et seq., the Federal Resource Conservation and
Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. §§ 6901 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., the Clean
Air Act, 33 U.S.C. §§ 7401 et seq., the Clean Air Act, 42 U.S.C.
§§ 7401 et seq., the Toxic Substances Control Act, 15 U.S.C.
§§ 2601-2629, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j,
the Emergency Planning and Community Right-To-Know Act, 42 U.S.C.
§§ 1101 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq.
and any so-called “Super Fund” or “Super Lien” law, environmental laws
administered by the Environmental Protection Agency, or any similar state and
local laws and regulations, as well as all amendments thereto and all
regulations, orders, decisions, and decrees now or hereafter promulgated
thereunder).

(2)                                  “Environmental Liabilities” means, all liabilities, obligations,
responsibilities, remedial actions, losses, damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand
by any other person arising under any Environmental Law.

(3)                                  “Release” means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposing or migrating into or through
the environment or any natural or man-made structure.

2.19                        No
Bankruptcy.  No bankruptcy,
insolvency, rearrangement or similar action involving the Project Owner or
128Voss, whether voluntary or involuntary, is pending or threatened,

 19
 

 

and neither the Project Owner nor 128Voss has ever:
(i) filed a voluntary petition in bankruptcy; (ii) been adjudicated a bankrupt
or insolvent or filed a petition or action seeking any reorganization,
arrangement, recapitalization, readjustment, liquidation, dissolution or
similar relief under any federal bankruptcy act or any other laws; (iii) sought
or acquiesced in the appointment of any trustee, receiver or liquidator of all
or any substantial part of its properties, the Property or any portion thereof;
or (iv) made an assignment for the benefit of creditors or admitted in writing
its or his inability to pay its or his debts generally as the same become due.

2.20                        Bank
Accounts.  Except as disclosed in
writing to Purchaser, neither Project Owner nor 128Voss has any account or safe
deposit box at any bank or financial institution.

2.21                        Terrorism.  None of Seller, Project Owner or 128Voss, nor
any of their respective partners, members, shareholders or other equity owners,
and none of their respective employees, officers, directors, representatives or
agents, (i) is a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of the Office of Foreign Asset
Control (“OFAC”)
of the Department of the Treasury (including those named on OFAC’s Specially
Designated and Blocked Persons List) or under any statute, executive order
(including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism), or other governmental action relating to terrorist
activities or money laundering and (ii) is engaged in any dealings or
transactions or be otherwise associated with such persons or entities.

2.22                        Brokers and Finders Fees.  No person is entitled to any fee from Seller
or Project Owner as a broker or finder as a result of the sale of the Voss
Membership Interest.

2.23                        Full Disclosure.  The representations and warranties of the
Seller contained in this Agreement and the instruments, documents, certificates
and schedules delivered herewith contain no untrue statement of a material fact
and, when taken together as a whole, do not omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.

Conditions Disclaimers.  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
IN THIS ARTICLE II, SELLER SPECIFICALLY DISCLAIMS ALL WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE (INCLUDING WARRANTIES OF HABITABILITY, MERCHANTABILITY, WORKMANLIKE
CONSTRUCTION AND FITNESS FOR USE OR ACCEPTABILITY FOR THE PURPOSE INTENDED BY
PURCHASER) WITH RESPECT TO THE PROPERTY OR ITS CONDITION.  THE DISCLAIMERS IN THIS PARAGRAPH
SPECIFICALLY EXTEND TO (1) MATTERS RELATING TO HAZARDOUS MATERIALS AND COMPLIANCE
WITH ENVIRONMENTAL LAWS, (2) GEOLOGICAL CONDITIONS, INCLUDING SUBSIDENCE,
SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND STREAMS AND RESERVOIRS AND
OTHER UNDERGROUND WATER CONDITIONS, LIMITATIONS REGARDING THE WITHDRAWAL OF
WATER, EARTHQUAKE FAULTS, AND MATTERS RELATING TO FLOOD PRONE AREAS, FLOOD
PLAIN, FLOODWAY OR SPECIAL FLOOD HAZARDS, (3) DRAINAGE, (4) SOIL CONDITIONS,
INCLUDING THE EXISTENCE OF UNSTABLE SOILS, CONDITIONS OF SOIL FILL,
SUSCEPTIBILITY TO LANDSLIDES, AND THE SUFFICIENCY OF ANY UNDERSHORING, (5) THE
VALUE AND PROFIT POTENTIAL OF THE PROPERTY, (6) DESIGN, QUALITY, SUITABILITY,
STRUCTURAL INTEGRITY

 20
 

 

AND PHYSICAL CONDITION OF THE PROPERTY AND (7)
COMPLIANCE OF THE PROPERTY WITH ANY LAWS (INCLUDING BUILDING CODES AND SIMILAR
LAWS, THE AMERICANS WITH DISABILITIES ACT OF 1990 AND THE FAIR HOUSING
AMENDMENTS ACT OF 1988).  EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE II OF THIS
AGREEMENT, PURCHASER IS ACQUIRING THE VOSS MEMBERSHIP INTERESTS WITH THE
UNDERSTANDING THAT THE PROPERTY IS “AS IS” AND “WHERE IS” AND SUBJECT TO ALL
FAULTS, DEFECTS OR OTHER ADVERSE MATTERS. 
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, UPON CLOSING PURCHASER
WILL ASSUME ALL RISKS OF THE PROPERTY, INCLUDING ADVERSE STRUCTURAL, PHYSICAL,
ECONOMIC OR ENVIRONMENTAL CONDITIONS OF THE PROPERTY THAT MAY THEN EXIST,
WHETHER OR NOT REVEALED BY THE INSPECTIONS AND INVESTIGATIONS CONDUCTED BY
PURCHASER.  THIS PARAGRAPH SHALL NOT BE
CONSTRUED TO LIMIT ANY RIGHTS OR CLAIMS THE PROJECT OWNER MAY HAVE AGAINST THE
GENERAL CONTRACTOR PURSUANT TO THE CONSTRUCTION CONTRACT OR ANY CLAIMS AGAINST
ANY SUBCONTRACTOR OR SUPPLIER RELATIVE TO THE DEVELOPMENT AND CONSTRUCTION OF
THE PROJECT.  Purchaser acknowledges and
agrees that the disclaimers, waivers, releases and other provisions set forth
in this paragraph are an integral part of this Agreement and that Seller would
not have agreed to complete the transaction on the terms provided in this
Agreement without the disclaimers, waivers, releases and other provisions set
forth in this paragraph.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby
represents and warrants to Seller as follows:

3.1                               Existence.  Purchaser is a Delaware limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has the requisite power and authority to own its
assets and to carry on its business as it is now being conducted.

3.2                               Power and Authority.

(a)                                  Purchaser has the full legal right, power and
authority to enter into this Agreement and all agreements and other documents
executed and delivered by it pursuant to this Agreement and to consummate the
purchase of the Voss Membership Interest and the other transactions
contemplated hereby or thereby;

(b)                                 Purchaser has duly and properly taken all action
required by law and its Organizational Documents to authorize the execution,
delivery and performance of this Agreement and any related documents and the
consummation of the Membership Interest Purchase; and

(c)                                  This Agreement and all agreements and documents
executed by Purchaser and delivered to Seller in connection herewith have been
duly executed and delivered by Purchaser and constitute the legal, valid and
binding obligations of Purchaser enforceable against Purchaser in accordance
with their respective terms.

 21
 

 

3.3                               No Violation.  The execution and delivery of this Agreement
and the agreements executed and delivered by Purchaser pursuant to this
Agreement, do not, and the consummation of the actions contemplated hereby or
thereby will not, (i) violate, contravene or conflict with any provision of the
Organizational Documents of Purchaser, (ii) violate, contravene or conflict
with any provisions of, result in the acceleration of any obligation under,
constitute a default or breach under, or give any right of termination or
cancellation under, any material mortgage, Lien, lease, agreement, rent,
contract, note, instrument, debenture, license, order, arbitration award,
judgment or decree to which Purchaser is a party or by which Purchaser is
bound, or (iii) violate, contravene or conflict with any law, rule or
regulation to which Purchaser is subject.

3.4                               Brokers and Finders Fees.  No person is entitled to any fee from
Purchaser as a broker or finder as a result of the purchase of the Voss
Membership Interest.

3.5                               Investment Representations.

(a)                                  Suitability as a Purchaser of the Voss
Membership Interest.  Purchaser (i) is an “accredited investor,” as
that term is defined in Regulation D under the Securities Act and has such
knowledge, skill and experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Voss
Membership Interest and the suitability thereof as an investment for it,
(ii) understands that an investment in the Voss Membership Interest
involves a risk of financial loss, and (iii) understands that the Voss
Membership Interest have not been registered under the Securities Act or any
state securities laws and that the Voss Membership Interest may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act and comparable state securities laws or an exemption therefrom.

(b)                                 Investment.  Purchaser has not entered into
any agreement to exchange the Voss Membership Interest with any other
party.  Purchaser is acquiring the Voss
Membership Interest for investment for its own account and not with a view to,
or for resale in connection with, any distribution thereof in violation of
federal and state securities laws.

3.6                               Consents.  No consent, authorization, permit, license or
filing with any governmental authority, lender, lessor, landlord, manufacturer,
supplier or other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance by Purchaser of this
Agreement and the agreements and documents contemplated hereunder to be entered
into by the Purchaser or the transfer of the Voss Membership Interest.

3.7                               Terrorism.  None of Purchaser, nor any of its respective
members or other equity owners, and none of its respective employees, officers,
directors, representatives or agents, (i) is a person or entity with whom U.S.
persons or entities are restricted from doing business under regulations of the
OFAC (including those named on OFAC’s Specially Designated and Blocked Persons
List) or under any statute, executive order (including the September 24, 2001,
Executive Order Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism), or other governmental action
relating to terrorist activities or money laundering and (ii) is engaged in any
dealings or transactions or be otherwise associated with such persons or
entities.

 22
 

 

ARTICLE IV.

POST-CLOSING AGREEMENTS

4.1                               Further Action.  From
and after the Closing, each party hereto shall perform such further acts and
execute such documents, and otherwise cooperate with the other parties hereto,
as may be reasonably required to effectuate the Membership Interest Purchase
and the other transactions contemplated hereby.

4.2                               Receipt of Payments and
Correspondence.  From and
after the Closing:

(a)                                  If either party at any time comes into
possession of any assets that are the property of the other party, the
receiving party shall deliver such assets over to the other party within three
(3) business days.

(b)                                 If after Closing Seller shall receive any
communications or correspondence pertaining to 128Voss, the Project Owner or
their businesses, Seller shall promptly forward such communication or
correspondence to Purchaser.  Without
limiting the generality of the foregoing, in the event that, after the Closing,
Seller receives any telephonic or electronic communications (including without
limitation electronic mail) of 128Voss or the Project Owner, Seller shall
immediately (and, with regard to written communications, within three days)
direct such communications or inquiries to a telephone number, address or
electronic mail address, as applicable, provided by Purchaser.

4.3                               Inspection of Records.  From and after the Closing, each party shall
retain and make its books and records (including work papers in the possession
of its accountants) available for inspection and copying by the other party and
its Representatives, for reasonable business purposes related to 128Voss, the
Project Owner and the Membership Interest Purchase upon reasonable notice and
at all reasonable times during normal business hours, for a three year period
after the date hereof.  Each party also
shall make such books and records available for inspection and copying by the
other party and its Representatives, in the manner described above, for a seven
year period, to the extent required in connection with any litigation or Tax
audit or inquiry relating thereto.  In
the event of any litigation or threatened litigation between the parties
relating to this Agreement or the transactions contemplated hereby, the
covenants contained in this Section 4.3 shall not be considered a waiver
by any party of any right to assert the attorney-client or other privilege.

4.4                               Transfer Taxes.  Seller shall be responsible for,
and pay and discharge in full, any sales, transfer or similar Taxes resulting
from the consummation of the transactions contemplated by this Agreement.

4.5                               Tax
Covenants.

(a)                                  Seller
shall be responsible for all Taxes (including without limitation, for this
purpose, Taxes that are due with respect to Tax Returns that are required to be
filed by 128Voss or the Project Owner for the taxable period ended on or before
the Closing Date) of 128Voss or the Project Owner with respect to any and all
periods, or portions thereof,
ending on or before the Closing Date (the “Pre-Closing Date Period”) and for all claims,
losses, liabilities, obligations, damages, impositions, assessments, demands,
judgments, settlements, costs and expenses with respect to such Taxes.  Without limiting the generality of the
foregoing, Seller shall be responsible

 23
 

 

for and shall promptly pay and reimburse the Purchaser for any and all
Taxes arising or resulting from 128Voss’ or the Project Owner’s qualification
or failure thereof to transact business as a foreign entity in any state for
all Pre-Closing Date Periods.  Purchaser shall be liable for
Taxes of 128Voss or the Project Owner with respect to any and all periods, or
portions thereof, beginning after the Closing Date (the “Post-Closing Date Periods”)
and for any and all claims, losses, liabilities, obligations, damages,
impositions, assessments, demands, judgments, settlements, costs and expenses
with respect to such Taxes.  Any and all
transactions and the events contemplated by this Agreement that occur at or
prior to the Closing Date shall be deemed to have occurred in the Pre-Closing
Date Periods.  Any and all transactions
or events that occur on the Closing Date but after the Closing shall be deemed
to have occurred in the Post-Closing Date Period.

(b)                                 In
the case of any Taxes that are attributable to a taxable period that begins
before the Closing Date and ends after the Closing Date, the amount of Taxes
attributable to the Pre-Closing Date Period shall be determined as follows:

(1)                                  In
the case of property (ad valorem), franchise or similar Taxes imposed on
128Voss or the Project Owner based on capital (including net worth or long-term
debt) or number of shares of stock authorized, issued or outstanding, the
portion attributable to the Pre-Closing Date Period shall be the amount of such
Taxes for the entire taxable period multiplied by a fraction, the numerator of
which is the number of days in the Pre-Closing Date Period and the denominator
of which is the number of days in the entire taxable period; provided, however,
the amount of tax attributable to the Pre-Closing Date Period shall not exceed
the amount of tax 128Voss or the Project Owner, as applicable, would have paid
if its taxable period ended on the Closing Date.

(2)                                  In
the case of all other Taxes, the portion attributable to the Pre-Closing Date
Period shall be determined on the basis of an interim closing of the books of
128Voss or the Project Owner as of the Closing Date, and the determination of
the hypothetical Tax for such Pre-Closing Date Period shall be determined on
the basis of such interim closing of the books, without annualization.  The hypothetical Tax for any period shall in
no case be less than zero ($0).  Taxes
attributable to the Pre-Closing Date Period shall be determined under the same
method of accounting used by 128Voss or the Project Owner during that period.

(c)                                  Seller
shall prepare and timely file, or cause to be timely filed, for the Project
Owner and 128Voss, with reasonable assistance of Project Owner and 128Voss, Tax
Returns that are required by law to be filed for the taxable period ended on or
before the Closing Date.  Seller shall,
at least twenty (20) days prior to filing such Tax Returns, provide a copy of
such Tax Returns to Purchaser.  Purchaser
shall, within ten (10) days of receiving such Tax Returns, advise Seller
regarding any matters in such Tax Returns that it considers detrimental to
Purchaser, 128 Voss or the Project Owner, and with which it disagrees.  In such case, Seller and Purchaser shall use
reasonable best efforts to reach a timely and mutually satisfactory solution to
the disputed matters.  Seller shall
provide to Purchaser a copy of all such Tax Returns together with the work
papers and schedules utilized in their preparation.  Purchaser, 128Voss, the Project Owner and
Seller shall cooperate fully, as and to the extent reasonably requested, in
connection with the filing of Tax Returns and any audit, litigation or other
proceeding with respect to Taxes and Tax Returns (which Seller shall control
and remain responsible for with respect to the Pre-Closing Date Periods).  Such cooperation shall include

 24
 

 

the retention, and (upon the other party’s request) the provision, of
records and information that are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder; provided that the party requesting assistance
shall pay the reasonable out-or-pocket expenses incurred by the party providing
such assistance; and provided further that no party shall be required to
provide assistance at times or in amounts that would interfere unreasonably
with the business and operations of such party. 
Purchaser agrees to retain all books and records, with respect to tax
matters pertinent to Project Owner and 128Voss relating to any Pre-Closing Date
Periods, and to any tax periods beginning before the Closing Date and ending after
the Closing Date, until the expiration of any applicable statute of limitations
or extensions thereof.

(d)                                 At
least ten (10) days prior to the Closing Date, Purchaser shall submit a written
schedule that sets forth Purchaser’s proposed allocation of the Purchase Price,
in relative percentages for each type of asset being acquired, which schedule
shall be delivered to Seller for Seller’s consent thereto, which consent shall
not be unreasonably withheld.  If Seller
objects to Purchaser’s written schedule, Purchaser and Seller shall use
reasonable efforts to create a written schedule in a form mutually agreeable to
both parties.  Prior to the Closing Date,
Purchaser shall prepare Internal Revenue Service
Form 8594, Asset Acquisition Statement Under Section 1060 (“Form 8594”),
in conformity with the written schedule as determined in accordance with this
Section.  Purchaser and Seller shall
attach such Form 8594 to their respective tax returns for the applicable tax
year, and to the extent that the Purchase Price is adjusted, consistently
revise and amend the allocation schedule and Form 8594 as necessary.  The allocation derived pursuant to this
Section shall be binding on Purchaser and Seller for all tax reporting purposes
and neither Purchaser nor Seller (or any
of their respective affiliates) shall take any position (whether in tax
returns, tax audits, or other administrative or court proceedings with
respect to taxes) that is inconsistent with such allocation unless required to
do so by applicable law.

4.8                               Audit.  Purchaser has advised Seller that Purchaser
must cause to be prepared up to three (3) years of audited financial statements
in respect of the Property in compliance with the policies of Purchaser and
certain laws and regulations, including, without limitation, Securities and
Exchange Commission Regulation S-X. Seller agrees to use reasonable efforts to
cooperate with Purchaser’s auditors in the preparation of such audited
financial statements (it being understood and agreed that the foregoing covenant
shall survive the Closing). Without limiting the generality of the preceding
sentence (i) Seller shall, during normal business hours, allow Purchaser’s
auditors reasonable access to such books and records maintained by Seller (and
Seller’s manager of the Property) in respect of the Property as necessary to
prepare such audited financial statements; (ii) Seller shall use reasonable
efforts to provide to Purchaser such financial information and supporting
documentation in the possession of Seller or as are necessary for Purchaser’s
auditors to prepare audited financial statements; (iii) if Purchaser or its
auditors require any information that is in the possession of the party from
which Seller purchased the Property, Seller shall contact such prior owner of
the Property and use commercially reasonable efforts to obtain from such party
the information requested by Purchaser; (iv) Seller will make available for
interview by Purchaser and Purchaser’s auditors the agents or representatives
of Seller responsible for the day-to-day operation of the Property and the
keeping of the books and records in respect of the operation of the Property;
and (v) if Seller has audited financial statements with respect to the
Property, Seller shall promptly provide Purchaser’s auditors with a copy of
such audited financial statements. If after the Closing Date Seller obtains an
audited financial statement in respect of the Property for a fiscal period
prior 

 25

 

to the Closing Date that
was not completed as of the Closing Date, then Seller shall promptly provide
Purchaser with a copy of such audited financial statement, and the foregoing
covenant shall survive Closing.  It shall
be a condition precedent to the obligations of Purchaser under this Agreement
that Seller shall have materially complied with the covenants set forth in this
Section 4.8 as of the Closing Date.

ARTICLE V.

REMEDIES

5.1                               Purchaser’s
Remedies.

(a)                                  Survival of Representations and Warranties.   All representations and warranties
of Seller (i) under Article II of this Agreement and (ii) set forth in
the Seller Closing Certificate shall survive the Closing for twelve months
following the Closing, at which date such representations and warranties shall
terminate, except that liability arising from or related to the representations
and warranties in Section 2.1, Section 2.2, Section 2.3, Section
2.4(a), Section 2.5, Section 2.9, Section 2.10, Section
2.11 and Section 2.14 (and the corresponding provisions of the
Seller Closing Certificate) shall survive indefinitely.  Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Section 5.1 shall survive the time at which it would otherwise
terminate pursuant to the foregoing provisions of this Section 5.1, if
notice of the inaccuracy or breach thereof giving rise to such right to
indemnity shall have been given to the Seller by Purchaser prior to such
time.  The consummation of the Closing
shall not affect the other covenants and obligations of the parties hereto.

(b)                                 Indemnification of Purchaser.  Seller shall indemnify,
defend and hold harmless Purchaser, 128Voss and the Project Owner from and
against and in respect of, and promptly reimburse such entities for the amount
of, any and all losses, costs, fines, liabilities, deficiencies, obligations,
claims, penalties, damages, settlements, awards and expenses (including without
limitation reasonable expenses of investigation and defense, and reasonable
legal fees and expenses) (collectively “Losses”) resulting from, in connection with
or arising out of, directly or indirectly:

(1)                                  subject
to Section 5.1(a), any breach of any representation or warranty of
Seller in this Agreement, including any certificate or document delivered by
Seller in connection with the transactions contemplated hereby;

(2)                                  any
breach of any covenant or obligation made by Seller in this Agreement,
including any certificate or document delivered by Seller in connection with
the transactions contemplated hereby;

(3)                                  subject
to Section 5.3, if the Closing occurs,
(i) any activity or event involving the Property and occurring before Closing,
other than as a consequence of acts, or when under a duty to act, omissions of
Purchaser or any of its affiliates or any of their respective representatives,
consultants or contractors, (ii) failure of the Project Owner to perform any
obligation under any Contract prior to Closing, (iii) misapplication of
deposits prior to Closing, or (iv) any liability or obligation of the Project
Owner or 128Voss existing as of Closing other than Permitted Obligations; and

 26
 

 

(4)                                  any
action, suit or proceeding relating to any of the foregoing.

(c)                                  Specific Performance.  It
is understood that Seller’s breach of this Agreement may materially and
irreparably harm Purchaser, and that money damages may accordingly not be an
adequate remedy for any breach of this Agreement, and that Purchaser, in its
sole discretion and in addition to any other remedies it may have at law or in
equity may apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance or other
injunctive relief in order to enforce or prevent any violations of this
Agreement.

5.2                               Seller’s
Remedies.

(a)                                  Indemnification
of Seller.  Purchaser shall
indemnify, defend and hold harmless Seller from and against and in respect of,
and promptly reimburse Seller for the amount of, any and all Losses resulting
from, in connection with or arising out of, directly or indirectly:

(1)                                  subject
to Section 5.3, if the Closing occurs
(i) any activity or event involving the Property and occurring after Closing,
(ii) failure of the Project Owner to perform any obligation under any Contract
following Closing, (iii) failure to properly apply deposits for which Purchaser
receives a credit hereunder, or (iv) performance or nonperformance of the
Permitted Obligations after the Closing; and

(2)                                  any
action, suit or proceeding relating to any of the foregoing.

(b)                                 Nonperformance
by Purchaser.  Except with regard to
Purchaser’s indemnity obligations detailed in this Agreement, Seller’s sole and
exclusive remedy for any Purchaser breach of, misrepresentation under, or
nonperformance of this Agreement, or any other act or omission of Purchaser or
its affiliates related to this Agreement or the transactions contemplated
hereby including, without limitation, the failure of Purchaser to consummate
the transactions contemplated hereby, shall be to terminate the Purchase Option
and the Put Option, and Seller shall have no other remedy at law or equity
pursuant to this Agreement or otherwise against any person or entity, any such
other remedy being expressly waived. Purchaser’s breach of, misrepresentation
under, or nonperformance of this Agreement, or any other act or omission of
Purchaser or its affiliates related to this Agreement or the transactions
contemplated hereby, shall not affect the rights and obligations under the
Mezzanine Loans.  Notwithstanding the
foregoing, if upon application to the outstanding balance of the Mezzanine
Loans of the proceeds from the sale of the Property as permitted by Section
1.7(g), the Mezzanine Loans are not paid in full, Purchaser shall cause to
be discharged the remaining balance of the Mezzanine Loans.

5.3                               Indemnity
Limits.

Neither
Purchaser nor Sellers will be liable under Section 5.1(b)(3)
or 5.2(a)(1) in respect of (i) Hazardous Materials existing on the
Property (including in ground water, soil or soil vapor or in the ambient air
over the Property) as of the Closing, or (ii) defects in the Improvements that
exist as of Closing or non-compliance of the Improvements with applicable laws
that exist as of the Closing (but without limiting any rights that the Project
Owner may have under the Construction Contract).  The limitations of this Section 5.3
do not extend to personal injury, loss of property (other than the Property) or
death that results from Hazardous Materials, defects in the Improvements or
noncompliance of the Improvements with

 27
 

 

applicable laws, responsibility for which will be apportioned between
Seller and Purchaser in accordance with Section 5.1(b)(3) or 5.2(a)(1)
based on the time that the injury, loss or death occurs.

..

5.4                               Arbitration.  Except with respect to any action
by Purchaser for specific performance of this Agreement or any other
action for injunctive relief, which actions shall be commenced and resolved in
a court of competent jurisdiction, and except as otherwise expressly provided
herein, any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by binding arbitration in Dallas,
Texas, by a single arbitrator reasonably satisfactory to Purchaser and
Seller (provided, however, that if Purchaser and Seller are unable to agree
upon a mutually satisfactory arbitrator, then the arbitrator shall be selected
in accordance with the applicable rules of the American Arbitration
Association), in accordance with the rules of the American Arbitration Association
governing large, complex commercial disputes then in effect.  Purchaser
and Seller will share equally the total expense charged by the American
Arbitration Association and the arbitrator related to such arbitration as those
expenses become due; but each party shall bear its own legal, accounting and
all of its other fees and expenses related to the arbitration.  Such arbitration and determination shall be
final and binding on Purchaser and Seller, judgment may be entered upon such
determination and award in any court having jurisdiction thereof, and Purchaser
and Seller agree that no appeals shall be taken therefrom except as set forth
in 9 U.S.C. §10.  Notice of a demand for
arbitration of any dispute subject to arbitration by one party shall be made in
writing and simultaneously served on the other parties and filed with the
American Arbitration Association.  The
parties agree that after any such notice has been filed, they shall, before the
hearing thereof, make discovery and disclosure of all matters relevant to such
dispute, to the extent and in the manner provided by the applicable rules of
the American Arbitration Association. 
The arbitrator’s determination with respect to discovery shall be final
and conclusive.  Discovery and disclosure
shall be completed no later than ninety (90) days after filing of such notice
of arbitration unless extended by the arbitrator upon a showing of good cause
by a party to the arbitration.  The
arbitrator may consider any evidence which is relevant to the subject matter of
such dispute even if such evidence might also be relevant to issue or issues
not subject to arbitration hereunder.

ARTICLE VI.

GENERAL

6.1                               Entirety and Modification.  This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all prior agreements and understandings, whether oral or
written, between the parties hereto relating to such subject matter.  No modification, alteration, amendment,
waiver or supplement to this Agreement shall be valid or effective unless the
same is in writing and signed by all parties hereto.

6.2                               Assignment; Successors and
Assigns.  Except as
specifically provided otherwise in this Agreement, neither this Agreement nor
any interest herein shall be assignable (voluntarily, involuntarily, by
judicial process, operation of law or otherwise), in whole or in part, by any
party without the prior written consent of the other parties hereto, and any
such attempted assignment shall be null and void.  Notwithstanding the foregoing, Purchaser may,
without the consent of any other party assign its rights and obligations under
this Agreement to an Affiliate of Purchaser; provided, however, no such
assignment shall affect the rights and obligations of Purchaser to Seller under
this

 28
 

 

Agreement.  This Agreement shall
be binding upon and inure to the benefit of the respective parties hereto and
their successors and permitted assigns.

6.3                               Expenses.  Except as otherwise provided herein,
Purchaser and Seller shall each pay their own respective fees and expenses
incurred in connection with the negotiation, execution, delivery and
performance of this Agreement.

6.4                               Notices.  Any and all notices and other
communications hereunder shall be in writing addressed to the parties at the
addresses specified below or such other addresses as a party may direct by
notice given in accordance with this Section, and shall be delivered in one of
the following manners (a) by personal delivery, in which case notice shall be
deemed to have been duly given when delivered; or (b) by reputable delivery
service (including, by way of example and not limitation, Federal Express, UPS
and DHL) which makes a record of the date and time of delivery, in which case
notice shall be deemed to have been duly given on the date indicated on the
delivery service’s record of delivery:

If
to Seller, to:

GC 129 Voss JM LLC

2001 Bryan Street, Suite 3700

Dallas, Texas 75201
Attention:  Timothy J. Hogan

with a copy to:

Jones Day

325 John H. McConnell Blvd., Suite 600,

Columbus, Ohio 43215

Attention:  Michael K. Ording

If
to Purchaser, to:

BEHRINGER HARVARD ALEXAN VOSS,
LLC

c/o Behringer Harvard
Funds

15601 Dallas Parkway, Suite 600

Addison, Texas 72001

Attention:  Mark T. Alfieri

with a copy to:

Behringer Harvard Funds

15601 Dallas Parkway, Suite 600

Addison, Texas 72001

Attention:  Chief Legal Officer

 29
 

 

with an additional copy to:

Haynes and Boone, LLP

2505 North Plano Road, Suite 4000

Richardson, Texas 75082

Attention: Richard K. Martin

6.5                               Severability; Reformation. 
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, such provision shall be reformed to best effectuate the intent
of the parties and permit enforcement thereof, and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.  If such provision is
not capable of reformation, it shall be severed from this Agreement and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

6.6                               No Waiver. 
A party’s failure to enforce any provision or provisions of this
Agreement shall not in any way be construed as a waiver of any such provision
or provisions, nor prevent that party thereafter from enforcing each and every
other provision of this Agreement.  The
rights granted all parties herein are cumulative and shall not constitute a
waiver of a party’s right to assert all other legal remedies available to it
under the circumstances.

6.7                               Headings. 
The headings of this Agreement are inserted for convenience and
identification only, and are in no way intended to describe, interpret, define
or limit the scope, extent or intent hereof.

6.8                               Counterparts; Facsimiles. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.  This
Agreement and any other document or agreement executed in connection herewith
(other than any document for which an originally-executed signature page is
required by law) may be executed by delivery of a facsimile copy of an executed
signature page with the same force and effect as the delivery of an
originally-executed signature page.

6.9                               Governing Law.  This Agreement shall be governed in all respects
by, construed, interpreted and applied in accordance with the internal laws of
the State of Texas, without regard to principles of conflicts of laws that
would refer the matter to the laws of another jurisdiction.

6.10                        Deceptive
Trade Practices.  Purchaser hereby
waives its rights, if any, under the Deceptive Trade Practices-Consumer
Protection Act, Section 17.41 et seq., Texas Business & Commerce Code, a
law that gives consumers special rights and protections.  After consultation with an attorney of its
own selection, Purchaser consents to this waiver.

[Remainder
of Page Intentionally Blank]

 30

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.

	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD ALEXAN VOSS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GC 129
  VOSS JM LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GC 123 Voss Limited Partnership, a Delaware limited partnership, its
  sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GC 112 Development 2006 GP LLC, a Delaware limited liability company,
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  
								

 1

 

EXHIBIT A

DEFINITIONS

For purposes of the
Agreement to which this is an exhibit, the terms underlined in the paragraphs
of this exhibit shall have the meaning set forth next to the underlined term.

127 Membership Interest.  Defined in the Recitals.

128 Membership Interest.  Defined in the Recitals.

128Voss.  Defined in the Recitals of this
Agreement.

129Voss.  Defined in the preamble of this
Agreement.

Affiliate.  As to any person or entity, any corporation,
limited liability company or other business organization or person who or which
directly or indirectly through one or more intermediaries (a) is owned or
controlled by such person or entity, (b) owns or controls such person or entity
or (c) is under substantially common control with such person or entity.

Agreement.  This Option Agreement, its Exhibits and any
written amendments to this Option Agreement (including an amendment changing Exhibits)
that may be executed from time to time by Seller and Purchaser.

Architect.  Meeks & Partners.

Business Days.  Monday through Friday of each calendar week,
exclusive of federal holidays.

Closing.  Defined in Section 1.1(c).

Closing Date.  The date of the Closing.

Code.  Defined in Section 2.10.

Completion Date.   The date of satisfaction of the following:
(a)  the issuance of the final
certificate of occupancy for the Project, (b) the issuance of a certificate of
substantial completion from the Architect for the Project, (c) receipt of a
contractor’s release and the receipt of lien waivers or similar evidence of
payment from the General Contractor and all major subcontractors (i.e.,
subcontractors whose contract amount exceeds $100,000) for the Property to
Purchaser’s reasonable satisfaction.  If
Senior Lender shall deem the Project substantially complete, then the date of
such determination by the Senior Lender shall be the Completion Date.

Completion Notice.  Defined in Section 1.1(a).

Construction Contract.  The Owner-Contractor Construction Agreement
dated September 19, 2006, by and between the Project Owner, as owner, and
the General Contractor, as contractor (including exhibits), regarding
construction of the Project.

 A-1
 

 

Construction Loan.  Defined in the Recitals.

Disclosure Schedules.
Defined in Article II.

Employee Benefit Plans.  Defined in Section 2.14.

Environmental Laws.  Defined in Section 2.18(c).

Environmental Liability.  Defined in Section 2.18(c).

ERISA.  Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated from time to time under that
statute.

ERISA Affiliate.  Defined in Section 2.14.

Form 8594.  Defined in Section 4.5(d).

General Contractor.  GC 124 Voss Construction Limited Partnership,
a Delaware limited partnership.  The
General Contractor is an affiliate of Seller.

Governmental Authorities.  Any and all federal, state, county, city,
town, other municipal corporation, governmental or quasi-governmental board,
agency, authority, department or body having jurisdiction over the Land or the
Project.

Governmental
Authorizations.  The
permits, variances, approvals and other actions which under Governmental
Requirements applicable to the Project have been or must be issued, granted, or
taken by Governmental Authorities in connection with the Project.

Governmental Entities.  Defined in Section 2.10.

Governmental Entity.  Defined in Section 2.10.

Governmental
Requirement(s). 
Building, zoning, subdivision, traffic, parking, land use, Environmental
Laws, occupancy, health, accessibility for disabled and other applicable laws,
statutes, codes, ordinances, rules, regulations, requirements, and decrees, of
any Governmental Authorizations pertaining (a) to the Improvements,
Project or Land or (b) to the use and operation of the Property for its
intended purpose.  This term shall
include the conditions or requirements of Governmental Authorizations.

Guaranteed Obligations.  The obligations of Seller to Purchaser
pursuant to Section 1.7(d) and Section 5.1(b).

Hart Contract.  The existing contract dated April 13, 2006,
by and between Hart Resource Center, L.P., as seller, and TCR GC Development,
Inc., as purchaser, to acquire the Hart Tract, as may be amended in accordance
with Section 1.7(c).  The
rights of the purchaser under the Hart Contract have been assigned to Project
Owner.

Hart Outside Acquisition
Date.  December 31,
2006.

 A-2
 

 

Hart Tract.  The parcel of real property containing 2.609
acres located in the City of Houston, Harris County, Texas, and being Tract I as
more particularly described on Exhibit B attached hereto and made a part
hereof for all purposes.

Hazardous Materials.  At any time, (i) asbestos and asbestos
containing material, (ii) any substance that is then defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a “hazardous
substance”, “hazardous material”, “hazardous waste”, “infectious waste”, “toxic
substance”, “toxic pollutant” or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, or “EP toxicity”, or (iii) any petroleum and drilling fluids,
produced waters, and other wastes associated with the exploration, development
or production of crude oil, natural gas, or geothermal resources or (iv)
petroleum products, polychlorinated biphenyls, urea formaldehyde, radon gas,
radioactive matter and medical waste.

Hazardous Materials
Activity.  Any actual
use, packaging, labeling, treatment, leaching, spill, cleanup, storage,
holding, existence, release, threatened release, emission, discharge,
generation, processing, treatment, abatement, removal, disposition, handling or
transportation of any Hazardous Materials from, under, into or on the Property.

Improvements.  The following as described in the Plans
(provided, if the Hart Tract is not acquired by the Project Owner in accordance
with the terms of this Agreement on or prior to the Hart Outside Acquisition
Date, the Improvements to have been constructed on the Hart Tract shall be
excluded from the Plans): 
(a) buildings constituting the apartment project, including club
house and amenities; (b) surface parking lots and any structured parking;
(c) associated driveways and loading areas; (d) landscaping; and
(e) associated water, storm drainage, sewage, electrical, communications
and other utilities facilities all as depicted in and defined by the Plans.

Initial Tract.  The parcel of real property containing 3.234
acres located in the City of Houston, Harris County, Texas and being Tract II
as more particularly described on Exhibit B attached hereto and made a
part hereof for all purposes.

Interest Charges.  Interest
paid or accrued on the Mezzanine Loans through the Closing Date.

Junior Mezzanine Loan.  Defined in the Recitals.

Land.  The Initial Tract.  If the Project Owner acquires the Hart Tract
in accordance with the terms of this Agreement prior to the Hart Outside
Acquisition Date, the Hart Tract will also become a part of the Land.

Legal Requirements.  As defined in Section 2.17.

Liens.  Any claims, liens, mortgages, pledges,
security interests, charges, covenants, options, claims, voting arrangements,
restrictions on transfer, or other restrictions or encumbrances of any nature
whatsoever.

Limited Guarantors.  CFP Residential LP, a Texas limited
partnership, Kenneth Valach, an individual, J. Ronald Terwilliger, an
individual and Brian Austin, an individual.

 A-3
 

 

Limited Guaranty.  The Limited Guaranty of even date herewith
executed by the Limited Guarantors in substantially the form attached hereto as
Exhibit G attached hereto.

Losses.  Defined in Section 5.1(b).

Maximum Project Cost.  Either (a) $52,814,755 if the Hart Tract is
acquired by the Project Owner on or before the Hart Outside Acquisition Date or
(b) $31,045,217 if the Hart Tract is not acquired by the Project Owner by the
Hart Outside Acquisition Date.

Membership Interest
Purchase.  Defined in Section 1.1(f).

Mezzanine Loan Documents.  The documents evidencing or securing the
Mezzanine Loans.

Mezzanine Loans.  The Senior Mezzanine Loan and the Junior
Mezzanine Loan.

Money Liens.  Mortgages, statutory liens and any and all
other liens or charges on the Property.

Notifying Party.  Defined in Section 1.8(b).

Off-Site Improvements.  Any and all off-site improvements required in
connection with Governmental Authorizations or otherwise required or agreed to
in connection with the development of the Improvements.

Organizational Documents.  Defined in Section 2.3(b).

Permitted Dispositions:  Any of the following:  (i) a Tenant Lease of an individual dwelling
unit for a term of two years or less not containing an option to purchase; (ii)
the sale of obsolete, worn out or damaged property or fixtures that is
contemporaneously replaced by items of equal or better function and quality,
which are free of liens, encumbrances and security interests other than
Permitted Exceptions; (iii) any sale that results from theft, condemnation or
other involuntary conversion; (iv) the sale (including through consumption) of
personal property in the ordinary course of business that is contemporaneously
replaced by items of equal or better function and quality; (v) the grant of an
easement if, before the grant, Purchaser determines (which determination must
be made reasonably) that the easement will not materially affect the operation
or value of the Project; and (vi) the creation of (1) a lien for taxes,
assessments or other governmental charges or levies that are not then due or
that are being contested in good faith and in accordance with applicable
statutory procedures or (2) a mechanic’s, lien against the Project which is
bonded off, released of record or otherwise remedied to Purchaser’s reasonable
satisfaction within 30 days of the date of creation.

Permitted Exceptions.  All of (a) those matters of title and survey
which affect the Property and are described on Exhibit D, (b) liens for taxes, assessments or other governmental charges,
impositions or levies that are not then due, (c) liens for taxes, assessments
or other governmental impositions or levies that are being contested in good
faith and, at Closing, Seller has provided security reasonably acceptable to
Purchaser necessary to discharge such liens, (d) mechanics’, materialmen’s, or
judgment liens against the Property which are being contested in good faith
and, at Closing, Seller has provided security reasonably acceptable to
Purchaser necessary to discharge such liens, (e) Leases entered into on the
terms allowed by this Agreement, (f) other matters approved by

 A-4
 

 

Purchaser, and (g) matters created by Purchaser or any
of its Affiliates or any of their respective representatives, consultants or
contractors.

Permitted Obligations.  Liabilities or obligations of the Project
Owner in connection with (a) Service Contracts, (b) Permitted Exceptions, (c)
Tenant Leases, (d) liabilities allocable to Purchaser based on proration credit
to Purchaser, and (e) Governmental Authorizations; provided, however,
liabilities or obligations arising from any breach of, or default under, the
foregoing prior to the Closing shall not be Permitted Obligations.

Personal Property.  All of Project Owner’s right, title and
interest in and to (a) Plans; (b) Governmental Authorizations issued,
granted or pending with respect to the Project; (c) studies, reports, surveys
and other informational materials relating to the Land or the Project,
including any “as-built” plans and CAD drawings; (d) all equipment, fixtures,
appliances, inventory, computers, computer hardware, computer software, and
other personal property of whatever kind or character owned by Project Owner
and attached to or installed or located on or in the Land or the Improvements,
including, without limitation, furniture, furnishings, drapes and floor
coverings, office equipment and supplies, heating, lighting, refrigeration,
plumbing, ventilating, incinerating, cooking, laundry, communication,
electrical, dishwashing, and air conditioning equipment, disposals, window
screens, storm windows, recreational equipment, pool equipment, patio
furniture, sprinklers, hoses, tools and lawn equipment; and (e) all of Project
Owner’s right, title, and interest in and to (i) all permits, licenses
(excluding software licenses), approvals, utility rights, development rights
and similar rights related to the Property, or any portion thereof, whether
granted by Governmental Entities or private persons, (ii) all telephone numbers
and exchanges serving the Property, or any portion thereof, (iii) all business
and goodwill of Seller related to the Property, or any portion thereof, (iv)
all site plans, surveys, soil and substrata studies, architectural drawings,
plans and specifications, engineering plans and studies, floor plans, landscape
plans and other plans or studies of any kind that relate to the Property, or
any portion thereof, (v) all leasing materials and brochures (excluding any
such materials that bear proprietary trademarks, trade names, logos or symbols
including the name “Alexan” or variants thereof), ledger cards, leasing records,
leasing applications, tenant credit reports and maintenance and operating
records related to the operation of Property, or any portion thereof, (vi) all
warranties and guaranties (express or implied) issued in connection with, or
arising out of (A) the purchase and repair of all furniture, fixtures,
equipment, inventory, and other tangible personal property owned by Project
Owner and attached to and located in or used in connection with the Property;
or (B) the construction of any of the improvements located on the Property, or
any portion thereof, and expressly including any warranty or guaranty from the
General Contractor.

Plans.  The plans and specifications described in Exhibit
C; provided, however, if the Hart Tract is not acquired by the Project Owner
pursuant to the terms of the Hart Contract on or prior to the Hart Outside
Acquisition Date, the plans and specifications applicable to only the Hart
Tract and the Improvements contemplated to be constructed on the Hart Tract
shall be disregarded.

Post-Closing Date Periods.  Defined in Section 4.5(a).

Pre-Closing Date Periods.  Defined in Section 4.5(a).

Project.  A collective reference to (a) the
Improvements and (b) the Off-Site Improvements.

 A-5

 

Project Budget.  The budget for development of the Property
attached to this Agreement as Exhibit E.

Project Costs.  Costs incurred by Project Owner for the
acquisition of the Land and the development and construction of Project and for
lease-up and operation of the Project to and through the Completion Date,
including the costs within the categories listed in the Budget or the
illustrative categories set forth in the subparts of this definition.  If a Project Cost may fall within one or more
categories listed in this definition, the intent of this definition is that it
be considered only once in the computation of Project Costs.  Illustrative categories of Project Costs are
in the following subparts:

(a)             Sums paid or incurred to acquire
the Land, including the Project Owner’s share of third party closing costs and
prorations.

(b)           Sums paid or incurred under the
Construction Contract or any other contract for work, equipment, labor,
materials or supplies in connection with the Project.

(c)           Amounts paid or incurred for fees and
reimbursable expenses under contracts with the Architect and all other
professionals for development of the Plans or for survey, engineering,
inspection, environmental, geotechnical and other design, construction and
engineering studies and services.

(d)           Costs paid or incurred in applying
for, pursuing, obtaining and satisfying Governmental Authorizations.

(e)           Premiums paid or incurred for title
insurance and title insurance endorsements to the Title Policy.

(f)            Premiums paid or incurred by the
Project Owner for casualty, liability and builders risk insurance with regard
to the Property.

(g)           Interest payments on the Construction
Loan, other payments (excluding repayment of principal) under the Construction
Loan, and any payments on the Mezzanine Loan (excluding any payments of
principal or interest).

(h)           Pursuant to the terms of the
Mezzanine Loans, Project Owner, Voss128 or Seller is obligated to reimburse to
Purchaser legal fees incurred by counsel to Purchaser or any of its Affiliates,
in connection with the Mezzanine Loans, the development of the Project, the
negotiation of this Agreement, and the Construction Loan.  All reimbursements described in the
immediately preceding sentence shall be considered a Project Cost.

(i)            Legal fees for services rendered by
counsel to the Project Owner, Seller or any of their Affiliates in connection
with the acquisition of the Land, the development of the Project, the
negotiation and closing of the Construction Loan and the Mezzanine Loans and
the negotiation of this Agreement.

Project Owner.  Defined in the preamble of this Agreement.

 A-6
 

 

Property.  The Land, the Improvements, the Personal
Property, the Tenant Leases and the Service Contracts.

Purchase Notice.  Defined in Section 1.1(c).

Purchase Option.  Defined in the Recitals.

Purchase Price.  Defined in Section 1.2.

Purchaser.  Defined in the preamble of this Agreement.

Purchaser Closing
Certificate.  Defined
in Section 1.4(c).

Put Notice.  Defined in Section 1.1(d).

Put Option.  Defined in the Recitals.

Receiving Party.  Defined in Section 1.8(b).

Release.  Defined in Section 2.18(c).

Rent Ready Condition.  Defined in Section 1.7(f).

Representatives.  Defined in Section 1.1(b).

Restrictions.  Any and all restrictions, easements,
conditions, covenants and other agreements recorded against the Land or
Improvements.

Seller.  Defined in the preamble of this Agreement.

Seller Closing
Certificate.  Defined
in Section 1.4(b).

Seller/ERISA Affiliate
Benefit Plans.  Defined
in Section 2.14.

Senior Lender.  Defined in the Recitals.

Senior Mezzanine Loan.  Defined in the Recitals.

Service Contracts.  All service and maintenance contracts which
relate to or affect the Project or the operation thereof.  A list of the existing Service Contracts is
attached as Exhibit F.

Tax.  Defined in Section 2.10.

Tax Returns.  Defined in Section 2.10.

Taxes.  Defined in Section 2.10.

Tenant Leases.  All tenant leases which relate to or affect
the Project or the operation thereof.

 A-7
 

 

Title Company.  Lawyers Title Insurance Company, acting
through its agent, Charter Title Company.

Title Policy.  The owner title policy issued by the Title
Company with regard to the Project, concurrently with the Construction Loan.

Voss Membership
Interest.  Defined in
the Recitals.

 A-8

 

EXHIBIT B

LAND

TRACT I (“Hart Tract”)

FIELD NOTE DESCRIPTION OF 2.609 ACRES (113,647 SQUARE
FEET) OF LAND IN THE JOHN D. TAYLOR SURVEY, ABSTRACT No. 72, AND BEING THAT
SAME TRACT OF LAND CONVEYED TO HART RESOURCE CENTER, L.P., AS RECORDED UNDER
CLERK’S FILE No. T868460 OF THE HARRIS COUNTY OFFICIAL PUBLIC RECORDS OF REAL
PROPERTY, AND BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

BEGINNING at a 1-inch iron pipe with cap found for the
southwest corner of the herein described tract, common with the northwest corner
of a called 1.4675 acre tract conveyed to Private Mini Storage Group 1, Ltd.,
as recorded under Clerk’s File No. S323297, of the Harris County Official
Public Records of Real Property, and being on the east right-of-way line of S.
Voss Road (100-feet wide); from said corner, the northerly most point of a
cutback for the intersection of the east right-of-way of S. Voss Road and the
north right-of-way line of Westheimer Road (also known as Farm-to-Market
Highway 1093; 120-feet wide) bears S 02°28’39” E, a called distance of 1,715.91
feet;

THENCE, N 02°28’36” W, along the east right-of-way of
S. Voss Road, common with the west line of the herein described tract, a
distance of 258.00 feet to a PK Nail found in the sidewalk for the northwest
corner of the herein described tract, said point also being common with the
southwest corner of a called 0.1719 acre tract conveyed to Automated Carwash
Systems, Inc., as recorded under Clerk’s File No. K556204, of the Harris County
Official Public Records of Real Property;

THENCE, N 87°31’24” E, along the north line of the
herein described tract, common with the south line of the called 0.1719 acre
tract, a distance of 440.38 feet to a 5/8-inch iron rod found under a brick
wall slab for the northeast corner of the herein described tract, common with
the southeast corner of the aforementioned 0.1719 acre tract, and being on the
west line of Briarwest Townhouse Condominiums, as recorded in Volume 12, Page
93, of the Harris County Condominium Records;

THENCE, S 02°31’36” E, along the east line of the
herein described tract, common with the west line of the aforementioned
Briarwest

 B-1
 

 

Townhouse Condominiums, a distance of 258.00 feet to a
5/8-inch iron rod with cap set for the southeast corner of the herein described
tract, common with northeast corner of the aforementioned 1.4675 acre tract,
from said point, a found 5/8-inch iron rod bears N 87° 31’ E, a distance of
0.72 feet;

THENCE, S 87°31’24 W, along the south line of the herein
described tract, common with the north line of the aforementioned 1.4675 acre
tract, a distance of 440.61 feet to the POINT OF BEGINNING, and containing
2.609 acres (113, 647 square feet) of land.

TRACT II (“Initial Tract”)

FIELD NOTE DESCRIPTION OF 3.234 ACRES (140,890 SQUARE
FEET) OF LAND IN THE JOHN D. TAYLOR SURVEY, ABSTRACT No. 72, BEING ALL OF
UNRESTRICTED RESERVE “A”, IN THE PLAT OF “WESTHEIMER — VOSS APARTMENTS” AS
RECORDED IN VOLUME 109, PAGE 51, OF THE HARRIS COUNTY MAP RECORDS, ALL BEING
LOCATED IN THE CITY OF HOUSTON, HARRIS COUNTY, TEXAS AND BEING MORE
PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

BEGINNING at a 5/8-inch iron rod with cap set for the
intersection point of the west right-of-way line of South Voss Road (100-feet
wide) and the north right-of-way line of Burgoyne Road (60-feet wide) and being
the southeast corner of both Unrestricted Reserve “A” and the herein described
tract, from said point a found 5/8-inch iron rod bears N 03°27’
W, a distance of 0.39 feet;

THENCE, S 87°31’24”
W, along the north right-of-way line of Burgoyne Road, common with the south
line of both Unrestricted Reserve “A” and the herein described tract, a
distance of 205.00 feet to a PK nail with shiner set for a point for a curve to
the right;

THENCE, along the aforementioned curve to the right,
being the north right-of-way line of Burgoyne Road, common with the south line
of both Unrestricted Reserve “A” and the herein described tract, having a
radius of 300.00 feet, a delta of 33°33’26”,
an arc length of 175.71 feet, a chord bearing N 75°41’53”
W, and a chord distance of 173.20 feet to PK nail with shiner set for a point
for a reverse curve to the left;

THENCE, along the aforementioned reverse curve to the
left, being the north right-of-way line of Burgoyne Road, common with the south
line of both Unrestricted Reserve “A” and the herein described tract, having a
radius of 60.00 feet, a delta of 123°33’26”,
an arc

 B-2
 

 

length of 129.39 feet, a chord bearing S 59°18’07”
W, and a chord distance of 105.74 feet to PK nail with shiner set for the
Southwest corner of both Unrestricted Reserve “A” and the herein described
tract;

THENCE, departing the north right-of-way line of
Burgoyne Road, N 02°28’36” W along the
west line of both Unrestricted Reserve “A” and the herein described tract, a
distance of 319.54 feet to a 5/8-inch iron rod found for the northwest corner
of both Unrestricted Reserve “A” and the herein described tract, said point
being on the south line of the plat of “Hammersmith, Section Two” as recorded
in Volume 122, Page 68, of the Harris County Map Records;

THENCE, N 87°31’24”
E, along the south line of “Hammersmith Section Two”, common with the north
line of both Unrestricted Reserve ‘‘A” and the herein described tract, a
distance of 464.00 feet to a 5/8-inch iron rod with cap set for the northeast
corner of both Unrestricted Reserve “A” and the herein described tract, said
point also being on the west right-of-way line of South Voss Road;

THENCE, S 02°28’36”
E, along the west right-of-way line of South Voss Road, common with the east
line of both Unrestricted Reserve “A” and the herein described tract, a
distance of 319.54 feet to the POINT OF BEGINNING, and containing 3.234 acres
(140,890 square feet) of land.

 B-3

 

EXHIBIT C

PLANS

[insert
description of Plans]

 C-1

 

EXHIBIT D

PERMITTED EXCEPTIONS

 D-1

 

EXHIBIT E

PROJECT BUDGET

 E-1

 

EXHIBIT F

SERVICE AND MAINTENANCE CONTRACTS

 F-1

 

EXHIBIT G

FORM OF LIMITED GUARANTY

 G-1Exhibit
10.(n)

EMPLOYMENT
AGREEMENT

THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is made and entered into as of August 17, 2006, by and between J.L. Halsey
Corporation, a Delaware corporation (together with its successors and assigns
permitted hereunder, the “Company”), and Peter Biro (“Executive”).

RECITALS

WHEREAS, the
Company has offered to Executive, and Executive has agreed to accept, the
position of Vice President of Corporate Development and Planning; and

WHEREAS,
Executive and the Company desire to set forth herein the terms of Executive’s
employment with the Company, which employment shall be effective as of August
17, 2006 (the “Effective Date”).

NOW, THEREFORE,
in consideration of the promises and the mutual covenants and agreements
contained herein, the sufficiency of which is hereby acknowledged, the Company
and Executive agree as follows:

AGREEMENTS:

1.             Employment
Period.  Subject to Section 3 or mutual
written agreement between the Company and Executive, the Company hereby agrees
to employ Executive, and Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the period
commencing as of the Effective Date and ending on the fourth anniversary of the Effective Date (the “Employment Period”).

2.             Terms of Employment.

(a)           Position and Duties.

(i)            During the Employment Period,
Executive shall serve as Vice President of Corporate Development and Planning,
and, in so doing, shall report to the
Chief Executive Officer (“CEO”), the President, or the Board of
Directors (the “Board”). 
Executive agrees to perform whatever duties the CEO, President, or Board may assign to Executive from time to
time, consistent with Executive’s position with the Company.  Executive shall have supervision and control
over, and responsibility for, such management and operational functions of the
Company as are usual and customary for such position, and shall have such other
powers and duties as may from time to time be prescribed by the CEO, President, or Board.

(ii)           During the Employment Period, and
excluding any periods of vacation and sick leave to which Executive is
entitled, Executive agrees to devote all of his business time to the business
and affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive hereunder, to use Executive’s reasonable
best efforts to perform faithfully, effectively and efficiently such
responsibilities.  During the Employment
Period it shall not be a violation of this Agreement for Executive to (A) serve
as an Adjunct Professor at the F.W. Olin Graduate School of Business at Babson
College, Babson

 

Park,
Massachusetts; (B) serve as an
advisor on fundraising and corporate development efforts for Health Through
Friendship, Inc. (d/b/a LiveHealthier, Inc.); (C) serve on corporate, civic or
charitable boards or committees; (D) deliver lectures or fulfill speaking
engagements; and/or (E) manage personal investments, so long as such activities
do not materially interfere with the performance of Executive’s
responsibilities as an employee of the Company in accordance with this
Agreement.

(b)           Compensation.

(i)            Base Salary.  During the Employment Period, Executive shall
receive an annual base salary per calendar year of $190,000 (“Annual Base
Salary”), which shall be paid in accordance with the customary payroll
practices of the Company and shall be prorated for the year ending December 31,
2006, and for any other partial year of service.  The Company may review and adjust Executive’s
Annual Base Salary.  The term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base Salary as so
adjusted.

(ii)           Annual Bonus Payments.  During the Employment Period, Executive shall
receive, in addition to the Annual Base Salary, such annual bonus payments as
the Board may specify (each an “Annual Bonus”); provided, however, that each
such Annual Bonus shall not be less than $15,000 (prorated for the year ending
December 31, 2006, and for any other partial year of service).  Each Annual Bonus shall be paid in a lump sum
on or before January 31 of the calendar year immediately following the calendar
year (or portion thereof) in which Executive earned such Annual Bonus.

(iii)           Incentive, Savings and Retirement
Plans.  During the Employment Period,
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs of the Company applicable
generally to similarly situated executive officers of the Company (“Investment Plans”).

(iv)          Medical, Dental and Vision Benefits.  During the Employment Period, Executive shall
monthly submit to the Company invoice(s) for monthly premiums incurred by
Executive for medical, prescription drug, dental, and or vision insurance for
Executive and/or Executive’s immediate family or dependents.  The Company shall, within a reasonable time
after receipt of such invoice(s), reimburse Executive for such expenses not
exceeding, in the aggregate, $1,200.00 per month (“Health Care Reimbursement”).

(v)           Other Welfare Benefits.  During the Employment Period, Executive
and/or Executive’s family or dependents, as the case may be, shall be eligible
for participation in the Company’s short-term disability, long-term disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans or programs (collectively, the “Other Welfare Plans”) to the extent applicable
generally to similarly situated executive officers of the Company.  

(vi)          Expenses.  During the Employment Period, Executive shall
be entitled to receive prompt reimbursement for all reasonable travel,
entertainment and other business-related expenses incurred by Executive
in accordance with the policies, practices and procedures of the Company.

 2
 

 

(vii)         Vacation
and Holidays.  During the Employment
Period, Executive shall be entitled to four (4) weeks of vacation during each
calendar year (prorated for the year ending December 31, 2006, and any other
partial year of service) and holidays in accordance with the policies of the
Company.

3.             Termination of Employment.

(a)           Death or Disability.  Executive’s employment shall terminate
automatically upon Executive’s death during the Employment Period.  If the Disability of Executive has occurred
during the Employment Period (pursuant to the definition of Disability set
forth below), the Company may give to Executive written notice in accordance
with Section 11(b) of its intention to terminate Executive’s
employment.  In such event, Executive’s
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by Executive (the “Disability
Effective Date”), provided, that,
within thirty (30) days after such receipt, Executive shall not have returned
to full-time performance of Executive’s duties. 
For purposes of this Agreement, “Disability”
shall mean Executive’s inability to perform his duties and obligations
hereunder for a period of ninety (90) consecutive days due to mental or
physical incapacity as determined by a physician selected by the Company or its
insurers and acceptable to Executive or Executive’s legal representative (such
agreement as to acceptability not to be unreasonably delayed, conditioned or
withheld).

(b)           Termination by the Company for
Cause.  The Company may terminate the
Executive’s employment during the Employment Period for Cause.  For purposes of this Agreement, “Cause” shall
mean: (i) the failure of Executive to perform his obligations and duties
hereunder to the satisfaction of the Company, which failure is not remedied
within fifteen (15) days after receipt of written notice from the Company; (ii)
commission by Executive of an act of fraud upon, or willful misconduct toward,
the Company or any of its affiliates; (iii) a material breach by Executive of Section 6,
Section 7 or Section 9, which in either case is not
remedied within fifteen (15) days after receipt of written notice from Board or
the Company; (iv) the conviction of Executive of any felony (or a plea of nolo contendere
thereto) or any crime involving moral turpitude; or (v) the failure of
Executive to carry out, or comply with, in any material respect any directive
of the Board consistent with the terms of this Agreement, which is not remedied
within fifteen (15) days after receipt of written notice from the Board or the
Company.  Any written notice from the
Board or the Company pursuant to this Section 3(b) shall
specifically identify the failure that it deems to constitute Cause.

(c)            Termination by Executive.

(i)            Executive’s
employment may be terminated during the Employment Period by Executive for Good
Reason or without Good Reason.  If Executive believes that an event constituting Good Reason has occurred, Executive must notify the Company of that
belief within thirty (30) days of the occurrence of the event, which
notice must set forth in writing the basis for that belief.  The Company will have thirty (30)
days after receipt of such notice (the “Review Period”) in which to
either rectify such event to Executive’s reasonable satisfaction, determine that an event constituting Good
Reason does not exist, or determine that an event constituting Good Reason
exists.  If the Company does not
take any of such actions within such the Review 

 3
 

 

Period, or the Company determines that Good Reason
exists within the Review Period, Executive may terminate
Executive’s employment for Good
Reason within ten (10) days following the end of the Review Period by
giving written notice to the Company, which termination will be effective
immediately prior to the date the event constituting Good Reason occurred.  If Executive does not terminate Executive’s employment for Good Reason within ten (10) days following the end of
the Review Period by giving written notice to the Company, Executive will waive the ability to terminate employment
for Good Reason with regard to any events constituting or potentially
constituting Good Reason that occurred prior to the end of such ten (10) day
period, but not with respect to any event occurring after such ten (10) day
period that Executive believes to be an event constituting Good Reason.  If the Company determines that Good
Reason does or does not exist, then the Company shall provide written
notice of such determination to Executive by the later of five (5) days
after the Company’s determination or the end of Review Period.  If the Company determines that Good
Reason does not exist, then Executive shall not be entitled to rely on or
assert such event as constituting Good Reason and Executive may submit the matter to arbitration
pursuant to Section 11(j) of this Agreement.  If, pursuant to
arbitration, it is determined that Good Reason does exist then Executive may terminate Executive’s employment for Good Reason within ten
(10) days following such determination by delivery of written notice to
the Company, which termination will be effective as of the date such notice is
received by the Company.  If Executive does not terminate Executive’s employment for Good Reason within ten (10) days following the end of
the arbitrator’s decision that Good Reason exists by giving written notice to
the Company, Executive will waive
the ability to terminate employment for Good Reason with regard to any events
constituting or potentially constituting Good Reason that occurred prior
to the end of such ten (10) day period, but not with respect to any event
occurring after such ten (10) day period that Executive believes to be an event constituting Good
Reason.

(ii)           For
purposes of this Agreement, “Good Reason” shall mean: (w) a material
reduction in the nature or scope of Executive’s responsibilities or authorities
as set forth in Section 2(a)(i) that is not consented to or approved by
Executive; (x) any failure by the Company to comply in any material respect
with Section 2(b) that is not consented to or approved by Executive; (y)
failure by the Company to comply with any other material term or provision
hereof; or (z) the relocation or transfer of Executive’s principal office to a
location more than 50 miles from the city of Boston, Massachusetts.

(d)            Date of Termination.  “Date of Termination”
means (i) if Executive’s employment is terminated for any reason other than
Executive’s death, the termination date set forth in the written notice to that
effect given by Executive to the Company or by the Company to Executive, as the
case may be (taking into account any notice or cure period required hereunder),
and (ii) if Executive’s employment is terminated by reason of death or
Disability, the date of death of Executive or the Disability Effective Date, as
the case may be.

4.             Obligations
of the Company Upon Termination.

(a)            Termination Because of Death or
Disability, Cause, or Other than for Good Reason.  If Executive’s employment is terminated by
reason of Executive’s death, 

 4
 

 

Disability,
Cause, or by Executive other than for Good Reason during the Employment Period,
the Company shall pay to Executive or his legal representatives within twenty
(20) days after the Date of Termination (except as otherwise noted with respect
to paragraphs (iv) and (v) below) (and the Company shall have no further obligations
hereunder with respect to Executive):

(i)            Executive’s Annual Base Salary and
Annual Bonus accrued through the Date of Termination to the extent not
theretofore paid;

(ii)           Any unreimbursed business expenses;

(iii)          Any amount arising from Executive’s
participation in, or benefits under, any Investment Plans (“Accrued
Investments”), which amounts shall be payable in accordance with the terms
and conditions of such Investment Plans; and

(iv)          Any amounts to which Executive is
entitled from Executive’s participation in, or benefits under, the Health Care
Reimbursement (collectively, “Accrued Welfare Benefits”), which amounts
shall be payable in accordance with the terms and conditions with such plans or
arrangements, and any amounts owed as a result of accrued vacation, which
amounts shall be payable in accordance with the policies of the Company.

(b)            Termination for Good Reason;
Without Cause.  If the Company shall
terminate Executive’s employment without Cause or Executive shall terminate his
employment for Good Reason, the Company shall pay to Executive within twenty
(20) days of the Date of Termination (except as otherwise noted with respect to
paragraphs (iv), (v) and (vi) below) (and
the Company shall have no further obligations hereunder with respect to
Executive):

(i)            Executive’s Annual Base Salary and
Annual Bonus accrued through the
Date of Termination to the extent not theretofore paid;

(ii)           Any unreimbursed business expenses;

(iii)          Any Accrued Investments, which amounts
shall be payable in accordance with the terms and conditions of such Investment
Plans;

(iv)          Any Accrued Welfare Benefits, which
amounts shall be payable in accordance with the terms and conditions of the
applicable plan or arrangement, and any amounts owed as a result of accrued vacation,
which amounts shall be payable in accordance with the policies of the Company;
and

(v)           The amount of Executive’s Annual Base
Salary as of the Date of Termination, which amount shall be paid in bi-weekly
payments, in accordance with the customary payroll practices of the Company,
for the period from the Date of Termination through the first anniversary of
the Date of Termination (such period, the “Severance
Period”) in accordance with the customary payroll practices for
executive officers of the Company; provided,
however, that Executive shall be entitled to receive the amount payable pursuant to this Section 4(b)(v) only so long as Executive has not breached the provisions of Section 6, 7 or 9, at
which time the Company’s payment obligations pursuant to this Section 4(b)(v) shall immediately cease; provided further, however, that the amount
payable pursuant to this Section

 5
 

 

4(b)(v) shall be reduced by the amount
of any compensation Executive receives with respect to any other
employment of Executive by another person during the Severance Period.  Executive shall promptly deliver written notice to the
Company of the commencement of any other employment during the Severance
Period.  Upon request from time to time, Executive shall furnish the Company with a true and
complete certificate specifying any such compensation earned or received by Executive during the Severance Period.

5.             Full Settlement.  Neither Executive nor the Company shall be
liable to the other party for any damages in addition to the amounts payable
under Section 4 arising out of the
termination of Executive’s employment prior to the end of the Employment
Period; provided, however,
that the Company shall be entitled to seek damages for any breach of Section 6, Section 7,
or Section 9 or for Executive’s
fraudulent or criminal misconduct.

6.             Confidential Information.

(a)           Executive acknowledges that the
Company and its affiliates have trade, business and financial secrets and other
confidential and proprietary information (collectively, the “Confidential Information”) and that during the
course of Executive’s employment with the Company he has received, shall
receive or shall contribute to the Confidential Information.  Confidential Information includes technical
information, processes and compilations of information, records, specifications
and information concerning assets, and information regarding methods of doing
business.  As defined herein,
Confidential Information shall not include (i) information that is publicly and
generally known to other persons or entities who can obtain economic value from
its disclosure or use; provided, that,
such information has not been made publicly and generally known by Executive in
violation of this Agreement or, to the knowledge of Executive, by others in violation
of comparable agreements, and (ii) information required to be disclosed by
Executive pursuant to a subpoena or court order, or pursuant to a requirement
of a governmental agency or law of the United States of America or a state
thereof or any governmental or political subdivision thereof; provided, however, that Executive shall take all
reasonable steps to prohibit disclosure pursuant to clause (ii) above.

(b)           During and following Executive’s
employment by the Company, Executive agrees (i) to hold such Confidential
Information in confidence and (ii) not to release such information to any
person (other than Company employees and other persons to whom the Company has
authorized Executive to disclose such information and then only to the extent
that such Company employees and other persons authorized by the Company have a
need for such knowledge).  Executive
agrees to use reasonable efforts to give the Company notice of any and all
attempts to compel disclosure of any Confidential Information, in such a manner
so as to provide the Company with written notice at least five (5) days before
disclosure or within one (1) business day after Executive is informed that such
disclosure is being or shall be compelled, whichever is earlier.  Such written notice shall include a
description of the information to be disclosed, the court, government agency,
or other forum through which the disclosure is sought, and the date by which
the information is to be disclosed, and shall contain a copy of the subpoena,
order or other process used to compel disclosure.

(c)           Executive further agrees not to use
any Confidential Information for the benefit of any person or entity other than
the Company.

 6
 

 

7.             Intellectual Property Rights;
Surrender of Materials Upon Termination.

(a)           In consideration of the Company’s
agreement to employ Executive and the receipt by E Executive of the
Confidential Information, Executive hereby assigns to the Company all his
rights, title and interest in all Intellectual Property (as defined below) that
Executive makes or conceives, whether as a sole inventor or author or as a
joint inventor or author, whether made within or outside working hours or upon
the premises of the Company or elsewhere, as work for hire or otherwise, at any
time during his employment with the Company or its affiliates (including prior
to the Effective Date).  “Intellectual
Property” means any information of a technical and/or business nature such
as ideas, discoveries, inventions, trade secrets, know-how, and writings and
other works of authorship that relate in any manner to the actual or
anticipated business or research and development of the Company and its
affiliates.  During and subsequent to
Executive’s employment, upon the request and at the expense of the Company or
its nominee and for no additional personal remuneration, Executive agrees to
execute any instrument that the Company considers necessary to secure or
maintain for the benefit of the Company adequate patent, copyright, trademark
and other property rights in the United States and all foreign countries with
respect to any Intellectual Property. 
Executive also agrees to assist the Company as required to draft said
instruments and to obtain and enforce such rights.  Executive agrees to promptly disclose to the
Company any Intellectual Property when conceived or made by Executive, in whole
or in part, and to make and maintain adequate and current records thereof.

(b)           Executive agrees that all
Confidential Information and other files, documents, materials, records,
customer lists, business proposals, contracts, agreements and other
repositories containing information concerning the Company or the business of
the Company, in whatever form, tangible or intangible (including all copies
thereof), that Executive shall prepare, or use, or be provided with as a result
of his employment with the Company, shall be and remain the sole property of
the Company.  Upon termination of
Executive’s employment hereunder, Executive agrees that all Confidential
Information and other files, documents, materials, records, customer lists,
business proposals, contracts, agreements and other repositories containing
information concerning the Company or the business of the Company (including
all copies thereof) in Executive’s possession, custody or control, whether
prepared by Executive or others, shall remain with or be returned to the
Company promptly (within 24 hours) after the Date of Termination.  The materials required to be returned
pursuant to this Section 7 shall not
include personal correspondence that does not relate to the Company or the
business of the Company.

8.             Successors.

(a)           This Agreement is personal to
Executive and without the prior written consent of the Company shall not be
assignable by Executive. 
Notwithstanding, this Agreement shall become of advantage to the benefit
of, and be enforceable by, Executive’s legal representatives.

(b)           This Agreement shall become of
advantage to the benefit of, and be binding upon, the Company and its
successors and assigns.  Executive agrees
that the Company may assign this Agreement to any directly or indirectly owned
subsidiary or affiliate of the 

 7
 

 

Company,
in which event “Company” as used in this
Agreement shall thereafter mean such subsidiary or affiliate (except where
reference is made to benefit plans that are maintained by the Company, in which
event the Company shall remain obligated with respect thereto under this
Agreement), and in connection with such assignment, such subsidiary shall
expressly assume this Agreement and the Company shall be released therefrom
except to the extent referenced above.

(c)           The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. 
As used in this Agreement, “Company”
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

9.             Non-Competition; Non-Solicitation.

(a)           During his employment by the Company,
including the Employment Period, Executive shall have access to and become
acquainted with Confidential Information of the Company as described in Section 6.  Executive acknowledges and agrees that his
use of Confidential Information in the conduct of business on behalf of a
competitor of the Company would constitute unfair competition with the Company
and would adversely affect the business goodwill of the Company.  Accordingly, as a material inducement to the
Company to enter into this Agreement; to protect the Company’s Confidential
Information that may be disclosed or entrusted to Executive (the disclosure of
which by Executive in violation of this Agreement would adversely affect the
business goodwill of the Company), the business goodwill of the Company that
may be developed in Executive and the business opportunities that may be
disclosed or entrusted by the Company to Executive; in consideration for the
compensation and other benefits payable hereunder to Executive, for the
benefits to Executive of having access to Confidential Information during the
Employment Period (the disclosure of which by Executive in violation of this
Agreement would adversely affect the business goodwill of the Company); and for
other good and valuable consideration, Executive hereby covenants and agrees
that, during the Term of Non-Competition, Executive shall not, directly or
indirectly, individually or as an officer, director, manager, employee,
shareholder, consultant, contractor, partner, member, joint venturer, agent,
equity owner or in any capacity whatsoever:

(i)            own, engage in, manage, operate,
join, control, be employed by, provide Competing Services to, or participate in
the ownership, management, operation or control of or provision of Competing
Services to, a Competing Business operating in the Geographic Area;

(ii)           recruit, hire, assist in hiring,
attempt to hire, or contact or solicit with respect to hiring any person who,
at any time during the twelve (12) month period ending on the Date of
Termination, was an employee of the Company or its affiliates;

(iii)          induce or attempt to induce any
employee of the Company or its affiliates to terminate, or in any way interfere
with, the relationship between such parties and any employee thereof; or

 8
 

 

(iv)          induce or attempt to induce any customer,
client, supplier, service provider, or other business relation of the Company
or its affiliates in the Geographic Area to cease doing business with such
parties, or in any way interfere with the relationship between such parties and
any such person.

Notwithstanding
the foregoing, the Company agrees that Executive may own less than five percent
(5%) of the outstanding voting securities of any publicly traded company that
is a Competing Business so long as Executive does not otherwise participate in
such competing business in any way prohibited by this Section 9.

(b)           Executive acknowledges that the
geographic boundaries, scope of prohibited activities, and time duration of the
preceding paragraphs in this Section 9 (including the defined terms
for “Competing Business,” “Competing Services,” “Geographic
Area,” and “Term of Non-Competition” set forth in Section 9(c))
are reasonable in nature and are no broader than are necessary to maintain the
goodwill of the Company and the confidentiality of its Confidential Information
and to protect the goodwill and other legitimate business interests of the
Company, and also that the enforcement of such covenants would not cause
Executive any undue hardship or unreasonably interfere with Executive’s ability
to earn a livelihood.  If Executive
violates the covenants and restrictions in this Section 9 and the
Company brings legal action for injunctive or other equitable relief, Executive
agrees that the Company shall not be deprived of the benefit of the full period
of the restrictive covenant, as a result of the time involved in obtaining such
relief.  Accordingly, Executive agrees
that the provisions in this Section 9 shall have a duration
determined pursuant to Section 9(a), computed from the date the
legal or equitable relief is granted.

(c)           As used in this Agreement:

(i)            “Competing Business” means
any service or product of any person or organization other than the Company or
its affiliates in existence or then under development, that competes directly
with any service or product of the Company or its affiliates.  Competing Business includes, but is not
limited to, any enterprise engaged, directly or indirectly, in the development
or marketing of web site analytics tools or in the software and services for
e-mail marketing and publishing, e-mail filtering or spam prevention.

(ii)           “Competing Services” means
services that, if provided to a business other than a Competing Business, would
constitute the conduct of a Competing Business.

(iii)          “Geographic Area” means the United States of America and the United
Kingdom of Great Britain and Northern Ireland.

(iv)          “Term of Non-Competition” means
the period of time beginning on the date hereof and continuing until one year
after the Date of Termination.

(d)           If any court or arbitrator determines
that any portion of this Section 9 is invalid or unenforceable, the
remainder of this Section 9 shall not thereby be affected and shall
be given full effect without regard to the invalid or unenforceable
provisions.  If any court or arbitrator
construes any of the provisions of this Section 9 to be invalid or
unenforceable because 

 9
 

 

of
the duration or scope of such provision, such court or arbitrator shall be
required to reduce the duration or scope of such provision, to the minimum
extent necessary so as to be enforceable, and to enforce such provision as so
reduced.

(e)   In order to obtain the benefit of the
non-competition agreement herein, the Company shall pay Executive his salary
hereunder and Executive’s options shall continue to vest for the one year
period of non-competition.  The Company
can decide to waive the non-competition clause and then not pay the
consideration set forth in this subsection (e).

10.           Non-Disparagement.  Executive agrees to refrain from engaging in
any conduct, or making any comments or statements, during the Employment Period
and thereafter, that have the purpose or effect of harming the reputation or
goodwill of the Company or its affiliates.

11.           Miscellaneous.

(a)            Construction.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without reference to principles of conflict of
laws.  The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.  Whenever the terms “hereof”, “hereby”, “herein”,
or words of similar import are used in this Agreement they shall be construed
as referring to this Agreement in its entirety rather than to a particular
section or provision, unless the context specifically indicates to the
contrary.  Any reference to a particular “Section”
or “paragraph” shall be construed as referring to the indicated section or
paragraph of this Agreement unless the context indicates to the contrary.  The use of the term “including” herein shall
be construed as meaning “including without limitation.”  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

(b)            Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 10
 

 

 

	
  If to Executive:

  	
   

  	
  Peter Biro

  131 Overbrook Drive

  Wellesley, MA 02482

  Tel: (781) 235-4141

  Fax: (781) 207-6580

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  J. L. Halsey Corporation

  103 Foulk Road, Suite 205-Q

  Wilmington, Delaware 19803

  Attention: David Burt

  Tel: (978) 689-0333

  Telecopier: (978) 945-5992

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Vinson & Elkins L.L.P.

  3700 Trammell Crow Center

  2001 Ross Avenue

  Dallas, Texas 75201

  Attention: Michael B. Mayes, Esq.

  Tel: (214) 220-7837

  Telecopier: (214) 999-7837

  
	
   

  	
   

  	
   

  

 

or to such other address as
either party shall have furnished to the other in writing in accordance
herewith.  Notice and communications
shall be effective when actually received by the addressee.

(c)            Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable;
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement.  Furthermore, in lieu of such illegal, invalid
or unenforceable provision there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.

(d)            Withholding.  The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

(e)           Nonqualified Deferred Compensation
Rules.  It is intended that any amounts
payable under this Agreement and the Company’s and the Executive’s exercise of
authority or discretion hereunder shall comply with the limitations or
requirements of section 409A of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated 

 11
 

 

thereunder
(the “Nonqualified Deferred Compensation Rules”) so as not to subject
Executive to the payment of interest and tax penalty which may be imposed under
the Nonqualified Deferred Compensation Rules. 
In furtherance of this interest, to the extent that any regulations or
other guidance issued under the Nonqualified Deferred Compensation Rules would
result in the Executive being subject to payment of interest and tax penalty
under Nonqualified Deferred Compensation Rules, the parties agree at the
request of Executive to amend this Agreement in order to bring this Agreement
into compliance with Nonqualified Deferred Compensation Rules.  In the event this Agreement fails to satisfy
the Nonqualified Deferred Compensation Rules, then this Agreement may be
modified by the Board, in its sole discretion exercised in its reasonable
discretion, to the limited extent necessary to satisfy the Nonqualified
Deferred Compensation Rules without the consent of the Executive, including,
but not limited to, the delay of any amount payable hereunder; provided,
however, that neither the Company nor the members of the Board shall be liable
for any act, omission or determination taken or made with respect to this
Agreement and/or the Nonqualified Deferred Compensation Rules including any act
or omission that results in unfavorable tax consequences to the Executive.  No interest will be owed or payable to the
Executive on account of the delay of any amount payable under this Agreement
delayed on account of the Nonqualified Deferred Compensation Rules.

(f)             No Waiver.  Executive’s or the Company’s failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right Executive or the Company may have hereunder,
including, without limitation, the right of Executive to terminate employment
for Good Reason, shall not be deemed to be a waiver of such provision or right
or any other provision or right of this Agreement.

(g)            Equitable and Other Relief.  Executive acknowledges that money damages
would be both incalculable and an insufficient remedy for a breach of Section 6, Section 7,
Section 9 or Section 10
by Executive and that any such breach would cause the Company irreparable
harm.  Accordingly, the Company, in
addition to any other remedies at law or in equity it may have, shall be
entitled, without the requirement of posting of bond or other security, to
equitable relief, including injunctive relief and specific performance, in
connection with a breach of Section 6, Section 7,  Section 9
or Section 10 by Executive.

(h)            Entire Agreement.  The provisions of this Agreement constitute
the complete understanding and agreement between the parties with respect to
the subject matter hereof, and supersede all prior and contemporaneous oral and
written agreements, representations and understandings of the parties, which
are hereby terminated.  Executive and the
Company acknowledge and represent that there are no other promises, terms,
conditions or representations (oral or written) regarding any matter relevant
hereto.

(i)             Counterparts.  This Agreement may be executed in two or more
counterparts.

(j)             Arbitration.

(i)            In the event any dispute or
controversy arises under this Agreement and is not resolved by mutual written
agreement between Executive and the Company within 30 days after notice of the
dispute is first given, then Executive and the 

 12
 

 

Company
will mutually select an arbitrator and submit such dispute or controversy to
arbitration by such arbitrator; provided, however, if the Company
and Executive have not mutually selected an arbitrator within 90 days after
notice of the dispute is first given, or if Executive and the Company decide at
any earlier date not to mutually select an arbitrator, then, upon the written
request of Executive or the Company, such dispute or controversy shall be
submitted to arbitration by an arbitrator to be selected by the American
Arbitration Association (“AAA”).  The arbitration will be conducted in
accordance with the Rules for Resolution of Employment Disputes of the
AAA.  Judgment may be entered thereon and
the results of the arbitration will be binding and conclusive on the parties
hereto.  Any arbitrator’s award or
finding or any judgment or verdict thereon will be final and unappealable.  All parties agree that venue for arbitration
will be in 84 Beacon Street, Boston MA 02108, or such other place as may be
agreed upon in writing at the time by the parties and that any arbitration
commenced in any other venue will be transferred to 84 Beacon Street, Boston MA
02108, upon the written request of any party to this Agreement.  All arbitrations will have one individual
acting as arbitrator.  Any arbitrator
selected will not be affiliated, associated or related to either Executive of
the Company in any matter whatsoever. 
The decision of the arbitrator will be binding on all parties.  The prevailing party in the arbitration (as
determined by the arbitrator) shall be reimbursed, by the other party, its
reasonable attorneys fees, costs and other expenses pertaining to any such
arbitration and enforcement.

(ii)           THE ARBITRATOR SHALL HAVE NO
AUTHORITY TO AWARD PUNITIVE DAMAGES UNDER ANY CIRCUMSTANCES (WHETHER IT BE
EXEMPLARY DAMAGES, TREBLE DAMAGES, OR ANY OTHER PENALTY OR PUNITIVE TYPE OF
DAMAGES).  REGARDLESS OF WHETHER SUCH
DAMAGES MAY BE AVAILABLE UNDER DELAWARE LAW, EMPLOYEE AND THE COMPANY EACH
HEREBY WAIVE THE RIGHT, IF ANY, TO RECOVER PUNITIVE DAMAGES IN CONNECTION WITH
ANY CLAIMS.  EMPLOYEE AND THE COMPANY
ACKNOWLEDGE THAT BY SIGNING THIS AGREEMENT EMPLOYEE AND THE COMPANY ARE WAIVING
ANY RIGHT THAT EMPLOYEE OR THE COMPANY MAY HAVE TO A JURY TRIAL.

(k)            Termination.  A termination
of Executive’s employment shall not terminate any provision of this Agreement.

(l)             Amendments.  This Agreement may not be amended or modified
at any time except by a written instrument executed by the Company and
Executive.

(m)           Executive Acknowledgment.  Executive acknowledges that he has read and
understands this Agreement, is fully aware of its legal effect, has not acted
in reliance upon any representations or promises made by the Company other than
those contained in writing herein, and has entered into this Agreement freely
based on his own judgment.

[SIGNATURE
PAGE FOLLOWS]

 13
 

 

IN WITNESS
WHEREOF, Executive has hereunto set Executive’s hand and the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.

	
  

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Peter Biro

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  J.L. Halsey

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ David R. Burt

  
	
   

  	
  Name:

  	
   

  	
  David R. Burt

  
	
   

  	
  Title:

  	
   

  	
  C.E.O

  

 

 14

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