Document:

<PAGE>   1

                           SALE AND PURCHASE AGREEMENT

                                 BY AND BETWEEN

                              IPOP MANAGEMENT, INC.

                                    AS SELLER

                                       AND

                  N.L. VENTURES III STAFFORD, L.P. AND ASSIGNS,

                                  AS PURCHASER

              FOR THE PROJECT KNOWN AS THE INPUT/OUTPUT FACILITIES

                          11104 WEST AIRPORT BOULEVARD
                         12300 CHARLES E. SELECMAN DRIVE
                         12400 CHARLES E. SELECMAN DRIVE
                        STAFFORD, FORT BEND COUNTY, TEXAS
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                   <C>
RECITALS......................................................................................           -1-

     ARTICLE 1    DEFINITIONS.................................................................           -1-

     ARTICLE 2    PROPERTY....................................................................           -2-
                  2.1     Realty..............................................................           -2-
                  2.2     Personalty..........................................................           -2-
                  2.3     Incidental Rights...................................................           -2-
                  2.4     Plans and Reports...................................................           -3-
                  2.5     The Project.........................................................           -3-

     ARTICLE 3    EARNEST MONEY AND INDEPENDENT CONTRACT CONSIDERATION........................           -3-
                  3.1     Earnest Money.......................................................           -3-
                  3.2     Independent Contract Consideration..................................           -4-

     ARTICLE 4    PURCHASE PRICE..............................................................           -4-
                  4.      Total Purchase Price................................................           -4-
                  4.2     Deduction from Purchase Price.......................................           -4-

     ARTICLE 5    SURVEY......................................................................           -4-
                  5.1     Survey..............................................................           -4-
                  5.2     Remedies for Failure to Deliver Survey..............................           -5-

     ARTICLE 6    TITLE COMMITMENT AND CONDITION OF TITLE.....................................           -6-
                  6.1     Title Commitment....................................................           -6-
                  6.2     UCC Report..........................................................           -6-
                  6.3     Disclosure of Exceptions by Title Commitment, Survey and UCC Report.           -6-

     ARTICLE 7    ENVIRONMENTAL STUDIES AND REMEDIATION ACTIVITIES............................           -7-
                  7.1     Studies.............................................................           -7-
                  7.2     Remediation.........................................................           -7-

     ARTICLE 8    COVENANTS AND CONDITIONS PRECEDENT..........................................           -8-
                  8.1     Covenants...........................................................           -8-
                  8.3     Purchaser's Rights if Conditions Not Satisfied......................          -11-
</TABLE>

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<TABLE>
<S>                                                                                                 <C>
   ARTICLE 9         REPRESENTATIONS, WARRANTIES, COVENANT AND AGREEMENTS OF SELLER...............  -11-

   ARTICLE 10        REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................  -16-

   ARTICLE 11        CLOSING......................................................................  -17-
                     11.1     Closing Date........................................................  -17-
                     11.2     Items to be Delivered by Seller on Closing Date.....................  -17-
                     11.3     Items Delivered By Purchaser on Closing Date........................  -19-
                     11.4     Closing Costs and Attorneys' Fees...................................  -20-
                     11.5     Prorations..........................................................  -20-

   ARTICLE 12        DESTRUCTION, DAMAGE OR CONDEMNATION..........................................  -21-

   ARTICLE 13        REAL ESTATE COMMISSIONS......................................................  -21-

   ARTICLE 14        NOTICES......................................................................  -22-

   ARTICLE 15        DEFAULTS AND REMEDIES........................................................  -23-
                     15.1     Seller's Remedies on Purchaser's Default............................  -23-
                     15.2     Purchaser's Remedies on Seller's Default............................  -24-

   ARTICLE 16        INDEMNITY
                     Intentionally Deleted........................................................  -24-

   ARTICLE 17        SPECIAL PROVISIONS...........................................................  -24-
                     17.1     Financing...........................................................  -24-
                     17.2     Master Lease........................................................  -25-

   ARTICLE 18        REVIEW PERIOD................................................................  -25-

   ARTICLE 19        MISCELLANEOUS................................................................  -26-
                     19.1     Disclosures.........................................................  -26-
                     19.2     Cooperation; Further Documents......................................  -26-
                     19.3     No Partnership......................................................  -26-
                     19.4     Savings Clause......................................................  -27-
                     19.5     Survival............................................................  -27-
                     19.6     Governing Law.......................................................  -27-
                     19.7     Cumulative Rights...................................................  -27-
                     19.8     No Waiver By Conduct................................................  -27-
                     19.9     Entire Agreement....................................................  -27-
                     19.10    Assignment..........................................................  -28-
                     19.11    Counterparts........................................................  -28-
                     19.12    Binding Effect......................................................  -28-
</TABLE>

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<S>                                                                                                             <C>
                           19.13    Time................................................................                     -28-
                           19.14    Captions............................................................                     -28-
                           19.15    Pronouns............................................................                     -28-
                           19.16    Construction of Agreement...........................................                     -28-
                           19.17    Third Party Beneficiaries...........................................                     -28-
                           19.18    Recordation.........................................................                     -29-
                           19.19    Limitation on Damages...............................................                     -29-
                           19.20    Contingent Offers...................................................                     -29-

         ANNEX A           General Definitional Provisions..............................................                Annex A-1

EXHIBIT A         LAND DESCRIPTION......................................................................              Exhibit A-1

EXHIBIT B         SURVEYOR'S  CERTIFICATE...............................................................              Exhibit B-1

EXHIBIT C         ESTOPPEL CERTIFICATE..................................................................              Exhibit C-1

EXHIBIT D         SPECIAL WARRANTY DEED.................................................................              Exhibit D-1

EXHIBIT E         BILL OF SALE AND ASSIGNMENT...........................................................              Exhibit E-1

SCHEDULE 2.2               Personalty...................................................................           Schedule 2.2-1

SCHEDULE 2.3(a)            Property Agreements..........................................................        Schedule 2.3(a)-1

SCHEDULE 2.3(b)            Permits......................................................................        Schedule 2.3(b)-1
</TABLE>

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<PAGE>   5
                           SALE AND PURCHASE AGREEMENT

         THIS SALE AND PURCHASE AGREEMENT (this "Agreement") is made and entered
into by and between IPOP MANAGEMENT, INC., a Delaware corporation (herein
referred to as "Seller") and N.L. VENTURES III STAFFORD, L.P., a Texas limited
partnership, and assigns (herein referred to as "Purchaser"), to be effective as
of the date a fully executed original counterpart of this Agreement is delivered
to and received by the Title Company (the "Effective Date").

                                    RECITALS

         A. Seller is the owner of certain real property and improvements
located at 11104 West Airport Boulevard, 12300 Charles E. Selecman Drive and
12400 Charles E. Selecman Drive in the City of Stafford, Fort Bend County,
Texas, which are more particularly described in this Agreement as the "Project."

         B. The Project is currently master leased and predominantly occupied by
Input/Output, Inc. ("I/O") pursuant to that certain Master Commercial Lease
Agreement ("I/O Master Lease") dated August 29, 1996, between Seller and I/O;
however, the portion not occupied by I/O is currently subleased by I/O to those
certain tenants (collectively, the "Tenants") pursuant to those certain leases
more particularly described and set forth in Schedule 2.3(c) (collectively, the
"Leases").

         C. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Project, upon and subject to the terms and conditions
hereinafter set forth, including without limitation, the condition that at
Closing Seller and I/O shall terminate the I/O Master Lease and Purchaser and
I/O shall enter into a long term "absolute net" lease of the Project with
Purchaser as landlord and I/O as tenant (the "Master Lease") without termination
of the Leases.

                                   AGREEMENTS

         For and in consideration of the premises, the respective covenants and
agreements herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed, the
parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         For purposes of this Agreement, unless otherwise defined herein or the
context otherwise requires, capitalized terms used in this Agreement shall have
the respective meanings assigned to them in Annex A attached hereto and made a
part hereof for all purposes.
<PAGE>   6
                                    ARTICLE 2
                                    PROPERTY

         Subject to the terms and provisions hereof, and for the consideration
herein set forth, Seller agrees to sell, and Purchaser agrees to purchase, all
of the following:

         2.1 Realty. All those certain tracts, pieces or parcels of land
described in Exhibit A attached hereto and made a part hereof for all purposes
(herein referred to as the "Land"), together with the buildings, structures,
fixtures, including all gas and electric fixtures; appliances and wiring;
engines; boilers; elevators; escalators; incinerators; motors; dynamos; heating,
ventilation and air conditioning equipment (including, but not limited to, all
air handles, compressors, chillers, lines, valves, and ducts serving the
Property); sinks, commodes, urinals, pipes, valves, drains, other plumbing
fixtures and equipment; water closets; basins; pipes; electrical systems;
faucets; fire prevention and extinguishing apparatus; central music and public
address systems; security locks, alarms, systems and equipment; dock levelers;
and all spare parts, materials and supplies for all of the foregoing (except for
I/O's equipment, personal property, furnishings and trade fixtures), paving,
curbing, trees, shrubs, plants, and other improvements and landscaping of every
kind and nature presently situated on, in, or under, or hereafter erected or
installed or used in, on, or about the Land (herein collectively referred to as
the "Improvements"), and all rights and appurtenances pertaining thereto,
including, but not limited to, all right, title and interest, if any, of Seller
in and to the following: (i) any land in the bed of any street, road or avenue
open or proposed in front of or adjoining the Land; (ii) any rights-of-way,
rights of ingress or egress or other interests in, on, or to, any land, highway,
street, road, or avenue, open or proposed, in, on, or across, in front of,
abutting or adjoining the Land, and any awards made, or to be made in lieu
thereof, and in and to any unpaid awards for damage thereto by reason of a
change of grade of any such highway, street, road, or avenue; (iii) any easement
across, adjacent to or benefitting the Land, existing or abandoned; (iv) all
sewage treatment capacity and water capacity and other utility capacity to serve
the Land and Improvements; (v) all oil, gas, and other minerals in, on, or
under, and that may be produced from the Land; (vi) any land adjacent or
contiguous to, or a part of the Land, whether those lands are owned or claimed
by deed, limitations, or otherwise, and whether or not they are located inside
or outside the description given herein, or whether or not they are held under
fence by Seller, or whether or not they are located on the Survey referred to in
Article 5 hereof, but expressly excluding the 17.034 acre tract owned by Seller
and located adjacent to and across Charles E. Selecman Drive from the Land;
(vii) any reversionary rights attributable to the Land; (viii) all water rights
appurtenant to the Land; and (ix) all development rights, zoning classifications
(including, without limitation, variances), rights as to non-conforming uses
and/or structures, vested or "grand-fathered rights" and other entitlements
pertaining to the Land (the Land, Improvements and all of the other properties,
rights and interests mentioned above are herein collectively referred to as the
"Realty");

         2.2 Personalty. None;

         2.3 Incidental Rights. All of Seller's right, title and interest in and
to the following (herein collectively referred to as the "Incidental Rights"):
(i) to the extent assignable, all guaranties warranties or other similar
agreements for the benefit of Seller (but containing no obligations on the

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<PAGE>   7
part of Seller thereunder remaining to be performed) relating to the Realty,(ii)
all contracts or agreements, such as maintenance, service, management, leasing
or utility contracts relating, in any way, to the ownership, use, leasing,
service, management, operation, maintenance and repair of the Realty (herein
collectively referred to as the "Property Agreements"), a list of which is
attached hereto as Schedule 2.3(a) and made a part hereof for all purposes, and
(iii) all governmental permits, approvals, licenses, consents or entitlements
heretofore granted (or granted prior to Closing) with respect to the ownership,
construction, use, occupancy and operation of the Realty, other than those, if
any, issued in the name of I/O or Tenants and with respect to which neither
Seller nor the Project has any liability (collectively, the "Permits"), a list
of which is attached hereto as Schedule 2.3(b) and made a part hereof; provided,
however, that the Incidental Rights shall not include (A) any Property
Agreements that Purchaser requests that Seller terminate in accordance with the
provisions of Section 8.1(5) hereof, or (B) any Permits which are not
transferable under applicable Governmental Requirements;

         2.4 Plans and Reports. Copies of all plans, drawings, specifications,
surveys, engineering, environmental, inspection or similar reports and other
technical descriptions relating to the Realty (herein collectively referred to
as the "Plans"); and

         2.5 The Project. The Realty, the Incidental Rights, the Plans, and all
other property and interests that are subject to this Agreement are sometimes
herein referred to collectively as the "Project".

                                    ARTICLE 3
                                EARNEST MONEY AND
                       INDEPENDENT CONTRACT CONSIDERATION

         3.1 Earnest Money. Purchaser shall deposit, as earnest money, with the
Title Company, to bind this Agreement with Seller, the sum of Fifty Thousand and
No/100 Dollars ($50,000.00) (herein referred to as the "Earnest Money") in the
form of cash, cashier's check or other readily available funds, which deposit is
to be made within three (3) business days from and after receipt by Purchaser of
notice from the Title Company of the Title Company's receipt of a fully executed
copy of this Agreement. The Title Company shall place the Earnest Money in a
fully federally insured interest bearing account, and all interest earned
thereon shall become a part of the Earnest Money as it accrues. If the
transaction contemplated hereby closes, then on the Closing Date (as herein
defined), the Earnest Money shall be paid over to Seller and applied to the
Total Purchase Price; provided, however, that where Purchaser has the option to
terminate this Agreement, in the event of such termination, then the Earnest
Money shall be immediately returned by the Title Company to Purchaser. In the
event the transaction contemplated hereby does not close for any other reason,
the Earnest Money shall be disbursed in accordance with the terms hereof. In the
event that Purchaser fails to deposit the Earnest Money with the Title Company
as provided in this Article 3, then this Agreement shall become null and void
for all purposes, and the parties hereto shall have no further obligations
hereunder except as expressly set forth herein.

         3.2 Independent Contract Consideration. Within three (3) business days
from and after

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<PAGE>   8
receipt by Purchaser of notice from the Title Company of the Title Company's
receipt of a fully executed copy of this Agreement, Purchaser shall deliver the
sum of One Hundred and No/100 Dollars ($100.00) directly to Seller in the form
of cash, cashier's check or other readily available funds as Independent
Contract Consideration, which amount the parties bargained for and agreed to as
consideration for Purchaser's exclusive right to inspect and purchase the
Project pursuant to this Agreement and for Seller's execution, delivery and
performance of this Agreement. The Independent Contract Consideration is in
addition to and independent of any other consideration or payment provided in
this Agreement, is non-refundable, and it is fully earned and shall be retained
by Seller notwithstanding any other provisions of this Agreement and shall be
credited against the Total Purchase Price at Closing.

                                    ARTICLE 4
                                 PURCHASE PRICE

         4.1 Total Purchase Price. The total purchase price (the "Total Purchase
Price") for the sale and purchase of the Project is Twenty-One Million and
No/100 Dollars ($21,000,000.00). At Closing, subject to the provisions of
Section 4.2 hereof, Purchaser shall pay the Total Purchase Price, less proration
credits, in cash, by bank cashier's check or wire transfer, through the account
of the Title Company, to Seller.

         4.2 Deduction from Purchase Price. If Seller is a "foreign person" (as
defined in Internal Revenue Code Section 1445(f)(3) and regulations issued
thereunder) or if Seller fails or refuses to deliver the non-foreign affidavit
required in Section 11.2(12) hereof, or if Purchaser receives notice from any
seller-transferor's agent or purchaser-transferee's agent (each as defined in
Internal Revenue Code Section 1445(d) and the regulations issued thereunder)
that, or Purchaser has actual Knowledge that, such affidavit is false, Purchaser
shall deduct and withhold from the Total Purchase Price a tax equal to ten
percent (10%) thereof, as required by Internal Revenue Code Section 1445. In the
event of any such withholding, Seller's obligation to deliver title hereunder
and to otherwise perform all of its obligations hereunder shall not be excused
or otherwise affected. Purchaser shall remit such withheld amount to and file
the required form with the Internal Revenue Service, and in the event of any
claimed over-withholding, Seller shall be limited solely to an action against
the Internal Revenue Service for refund (under Regulation Section 1.1464-1(a)),
and hereby waives any right of action against Purchaser on account of such
withholding. The provisions of this Section 4.2 shall survive the Closing Date
hereunder without limit as to time.

                                    ARTICLE 5
                                     SURVEY

         5.1 Survey. Within fifteen (15) days from and after the Effective Date,
Seller agrees, at Seller's sole cost and expense, (i) to cause a registered,
licensed state surveyor approved by the Title Company to prepare a new and
updated on the ground survey (the "Survey") of the Realty, and (ii) to deliver
to Purchaser at least three (3) copies, to Purchaser's counsel at least one (1)
copy, and to the Title Company at least one (1) copy of the Survey plat and a
certificate under the seal of the surveyor, which Survey shall: (a) fix all
exterior corners and exterior boundary lines (courses and

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<PAGE>   9
distances) of the Realty with all such corners monumented with iron pipes or
rods; (b) contain a metes and bounds field note description or other appropriate
legal description of the Realty, which shall include a reference to the recorded
plat, if any, of the Realty, and any easements or rights-of-way thereupon; (c)
reflect the actual dimensions of the area within the Realty and all easements,
roads, or rights-of-way thereupon, in terms of total acreage and total net
acreage (rounded to the nearest one one-thousandth [1/1000] of an acre) and
total square footage and total net square footage; (d) reflect all fences,
encumbrances, encroachments, easements, and rights-of-way visible on the ground
or of record in Fort Bend County, Texas, building set-back lines, streets,
public and private roads, alleys (and the location of any access to same),
railroads, ditches, creeks, rivers, or other water courses, and water flood
zones, on or adjacent to the Realty, showing the width and location thereof,
and, where applicable, reference thereto by recording data; (e) reflect the
location of power, telephone, water, sewer and gas facilities serving the Realty
and, to the extent such information is readily available to the surveyor, the
size of such water and sewer lines; (f) reflect any encroachments or overlaps on
the Realty or adjacent to the Realty, the outside boundary lines of all
improvements and any pipelines adjacent to or abutting the Realty; (g) reflect
on the Survey plat all available parking (specifically identifying all
handicapped parking spaces) on the Realty and all structures or improvements
specifying the square footage of the footprint of all such structures and
improvements and certify that no structure or improvement encroaches upon any
adjoining property or easement, or violates any restrictive covenant, set-back
requirement, or zoning or other ordinance or requirement, or specifying any such
encroachment or violation that exists; (h) reflect all other natural monuments,
improvements or other objects on the Realty; (i) reflect that the Realty has
access by way of ingress and egress to one or more publicly dedicated streets
located contiguous to its boundary and indicate the name and width of such
streets; and (j) include the surveyor's registered number and seal, the date of
the Survey (which shall be no earlier than the Effective Date), and a narrative
certificate in the form attached hereto as Exhibit B and made a part hereof for
all purposes.

         In addition, provided the surveyor is willing to do so, the foregoing
certification shall also specify the zoning classification for the Project.

         Without limiting the foregoing, the Survey shall be in form and
substance acceptable to the Title Company as a basis for deleting, to the
maximum extent permitted by applicable title insurance regulations, the standard
printed exceptions relating to survey matters in the Owner Policy of Title
Insurance to be delivered by Seller as hereinafter provided. Without limiting
the foregoing, the Survey shall also be in form and substance acceptable to the
Purchaser's Lender. For purposes of the property description to be included in
the Deed, the field notes prepared by the surveyor shall control any conflicts
or inconsistencies with the description herein.

         5.2 Remedies for Failure to Deliver Survey. In the event Seller does
not deliver the Survey within such fifteen (15) day period, then and thereafter,
Purchaser shall have the option to: (i) cancel this Agreement and have the
Earnest Money returned to it, in which event the parties hereto shall have no
further obligations hereunder except as set forth herein, or (ii) procure the
Survey, and Seller shall reimburse Purchaser immediately upon demand for all
reasonable fees charged by the surveyor for the preparation of same, and in the
event Seller does not so reimburse

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<PAGE>   10
Purchaser, Purchaser may deduct its costs for procuring the Survey from the
Total Purchase Price on the Closing Date, or (iii) waive the Survey requirement
and proceed to close the sale contemplated by this Agreement.

                                    ARTICLE 6
                     TITLE COMMITMENT AND CONDITION OF TITLE

         6.1 Title Commitment. Within three (3) days from and after the
Effective Date, at Seller's sole cost and expense, Seller agrees to cause the
Title Company to furnish Purchaser and its counsel a Commitment for Owner Policy
of Title Insurance (the "Title Commitment") prepared and issued by the Title
Company describing and covering the Realty, listing Purchaser as the prospective
name insured and showing as the policy amount the Total Purchase Price, which
Title Commitment shall constitute the commitment of the Title Company to insure,
by title insurance in the standard form of an Owner Policy of Title Insurance in
use in the State of Texas (including such endorsements as Purchaser may request
in accordance herewith), Purchaser's title to the Realty to be good and
indefeasible, subject only to such exceptions as may be approved by Purchaser as
hereinafter provided (herein referred to as "Permitted Exceptions") and to the
standard printed exceptions contained in the standard form of Owner Policy of
Title Insurance, except that, to the maximum extent permitted by applicable
title insurance regulations and at Purchaser's expense, such standard exceptions
shall be modified as follows: (i) the standard printed form survey exception
shall be amended to read only "shortages in area", (ii) the standard exception
as to the lien for taxes shall be limited to the year of Closing, and shall be
endorsed "Not Yet Due and Payable.", (iii) there shall be no exception for
"visible and apparent easements" or for "public or private roads" or the like,
and (iv) there shall be no exception for "rights of parties in possession,"
except for I/O, as tenant, under the Master Lease.

         6.2 UCC Report. Seller, at its sole cost and expense, has obtained or
shall obtain a report (the "UCC Report") of searches made of the Uniform
Commercial Code Records of Fort Bend County, Texas, the Official Public Records
of Realty of Fort Bend County, Texas, and the Office of the Secretary of State,
State of Texas, indicating whether the Project is subject to any liens or
security interests (other than liens and security interests, if any, which are
to be released at the Closing). An update of the searches (dated no more than
two (2) days prior to the Closing Date, but delivered prior to the Closing Date)
shall be provided by Seller to Purchaser at Seller's sole cost and expense,
unless waived by Purchaser in writing.

         6.3 Disclosure of Exceptions by Title Commitment, Survey and UCC
Report. Purchaser and its counsel shall have twenty (20) business days after the
date of receipt by Purchaser and its counsel of the last to be received of the
Title Commitment (including legible copies of all documents referenced therein
as constituting exceptions to Seller's title), the Survey and the UCC Report
within which to object in writing to any matters set forth therein which, in
Purchaser's sole and absolute discretion, constitute unacceptable exceptions to
the title to the Project. Seller shall have a reasonable time, not to exceed
fifteen (15) days from the date such objections are made known in writing to
Seller, to cure such objections, but Seller shall have no obligation to cure any
such objections. Any curative material shall be filed by Seller, at its sole
cost and expense, within such

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<PAGE>   11
fifteen (15) day period. If Seller does not or cannot cure the objections within
such fifteen (15) day period, Purchaser shall have the option to: (i) cancel
this Agreement, in which event the Title Company shall promptly return the
Earnest Money to Purchaser and the parties shall have no further obligations
hereunder except as set forth herein, (ii) have an additional fifteen (15) days
within which to remove the objections, and any sums reasonably expended by
Purchaser up to $35,000.00 in removing such objections (said $35,000.00 to
include the curing of any Environmental Conditions pursuant to Section 7.2
hereof and any out-of-pocket expenses pursuant to Section 15.2 hereof) shall be
credited against the Total Purchase Price, or (iii) waive the objections in
writing, and proceed to close the transaction contemplated hereby in which event
such objections shall constitute Permitted Exceptions. In the event, however,
that a lien indebtedness against Seller's interest in the Project (including
past due taxes) is disclosed by the Title Commitment or UCC Report obtained by
or for Purchaser, then Seller shall: (i) discharge, bond around or otherwise
obtain the release of such lien indebtedness prior to the Closing, or (ii)
authorize the Title Company to discharge such lien indebtedness at the Closing
out of the Total Purchase Price.

                                    ARTICLE 7
                ENVIRONMENTAL STUDIES AND REMEDIATION ACTIVITIES

         7.1 Studies. Without in any way limiting any other duties of Seller
hereunder to provide information to Purchaser, upon the Effective Date, Seller
shall provide to Purchaser copies of all environmental studies, reports and
information in Seller's possession, including, without limitation,
correspondence from a Governmental Authority, concerning the environmental
condition of the Realty (all of the foregoing being hereinafter referred to as
"Seller's Environmental Information"). In addition, subject to the provisions of
Article 18 hereof, during the Review Period Purchaser and its contractors and
representatives, at Purchaser's expense, shall have the right to conduct any and
all environmental studies and tests of the Realty (including, without
limitation, Phase I and Phase II Environmental Site Assessments and asbestos and
lead paint studies) which Purchaser, in Purchaser's sole discretion, deems
necessary to determine whether the Project is suitable for Purchaser's intended
use. To the extent Purchaser's Lender does not object, promptly following
receipt thereof, Purchaser shall provide copies of all such written reports,
studies and tests promptly following Purchaser's receipt thereof. To the extent
that Purchaser's Lender objects, if at all, Purchaser shall disclose to Seller
orally any items of concern disclosed by such written reports, studies and
tests.

         7.2 Remediation. In the event that either Seller's Environmental
Information or any studies or tests performed or commissioned by Purchaser
indicate the existence of any Environmental Conditions on the Realty, then
Seller shall have a period of fifteen (15) days after notification thereof by
Purchaser in which to remediate or otherwise cure the same in accordance with
all applicable Governmental Requirements (and the Closing Date shall be
extended, if necessary, to afford Seller such fifteen (15) day period), but
Seller shall be under no obligation to Purchaser to remediate or cure such
Environmental Condition. In the event that an Environmental Condition exists or
is discovered on the Realty and Seller fails or refuses to remediate or
otherwise cure such Environmental Condition within the required fifteen (15) day
period, or in the event such Environmental Condition is not capable of being
remediated or otherwise cured within such fifteen

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<PAGE>   12
(15) day period, then Purchaser shall have the following options: (i) cancel
this Agreement by written notice thereof given to Seller prior to the Closing
Date, in which event the Title Company shall promptly return the Earnest Money
to Purchaser and the parties hereto shall have no further obligations hereunder,
(ii) if the Environmental Condition can be remediated or cured for $35,000.00 or
less (said $35,000.00 to include the curing of any objections revealed by the
Survey, the Title Commitment and/or the UCC Report pursuant to Section 6.3 and
any out-of-pocket expenses pursuant to Section 15.2 hereof), to remediate or
cure and deduct the cost thereof from the Total Purchase Price (in which event
Purchaser shall have the right to extend the Closing Date for a period not to
exceed thirty (30) days in order to accomplish such remediation or cure), or
(iii) waive in writing the remediation or cure of such Environmental Condition
and proceed to close the sale contemplated by this Agreement.

                                    ARTICLE 8
                       COVENANTS AND CONDITIONS PRECEDENT

         8.1 Covenants. Without in any way limiting the provisions of Article 18
hereof, Seller covenants and agrees to perform and undertake the following
matters at or within the time periods specified, but in all events prior to the
expiration of the Review Period, and agrees that the liabilities and obligations
of Purchaser hereunder to consummate this transaction contemplated hereby are
subject to the satisfaction of each of the following covenants (any of which may
be waived in whole or in part by Purchaser on or prior to Closing):

                  (1) Seller shall furnish, or cause to be furnished, to
Purchaser, within ten (10) business days following the Effective Date, true,
complete and legible copies of the I/O Master Lease and the Leases, including,
without limitation, all amendments thereto, if any, all guaranties of I/O's or
Tenants' obligations thereunder, all collateral agreements and all tenant
financial statements in the possession of or available to Seller or I/O. In
addition, Seller shall furnish, or cause to be furnished, to Purchaser with a
certified rent roll showing the amounts of all monthly rentals, annual rents,
percentage rentals, rent escalations, prepaid rentals, if any, deposits paid to
Seller or I/O in connection with the I/O Master Lease or Leases and any other
sums paid or to be paid under or in connection with the I/O Master Lease or
Leases, including, but not limited to, common area maintenance charges, if any,
the amount of any unpaid rental discounts, rebates rental concessions, brokerage
commissions and other items payable in connection with the I/O Master Lease or
the Leases, any tenant finish-out allowance per square foot which is provided
for under the I/O Master Lease or the Leases or otherwise and which has not yet
been paid or incurred, all renewal, expansion and similar rights in favor of I/O
or Tenants that are not set forth in the I/O Master Lease or Leases, and the
tenant improvement work, if any, Seller or I/O is obligated to complete..

                  (2) Seller shall furnish, or cause to be furnished, to
Purchaser, within ten (10) business days following the Effective Date, a copy of
all insurance carried on the Project (whether the responsibility of Seller, I/O
or Tenants) setting forth the name of the carrier, the type of policy, the
policy number, the policy term and the annual premium along with copies of all
insurance policies set forth on such schedule.

                                       -8-
<PAGE>   13
                  (3) Seller shall furnish or make available to Purchaser,
within ten (10) business days following the Effective Date, to the extent in
Seller's possession or otherwise available to Seller, copies of all pending or
current contracts for construction on the Project in excess of $5,000.00, or,
where copies of such contracts are not available, such information as Seller may
possess or have access to as to the names and addresses of the contractors who
are or would be performing the work thereunder.

                  (4) Seller shall furnish or make available to Purchaser,
within ten (10) business days following the Effective Date, copies of all
guaranties and warranties relating to the Project in Seller's possession or
reasonably obtainable by Seller, if any, along with copies of all such
guaranties and warranties.

                  (5) Seller shall furnish, or caused to be furnished, to
Purchaser, within ten (10) business days following the Effective Date, copies of
all Property Agreements (including any and all amendments thereto). Upon review
of such Property Agreements, Purchaser may, in its sole discretion, require that
Seller terminate any of the same effective not later than Closing, and if Seller
is unable or unwilling for any reason to do so, Seller must notify Purchaser of
such fact in writing prior to the expiration of the Review Period.

                  (6) Seller shall furnish or make available to Purchaser,
within ten (10) business days following the Effective Date, to the extent in
Seller's possession or reasonably obtainable by Seller, copies of all Permits
(including, without limitation, all licenses, permits or similar documents
authorizing or relating to the use, storage or disposal of Hazardous Materials
on, at or from the Project).

                  (7) Seller shall furnish or make available to Purchaser,
within ten (10) business days following the Effective Date, to the extent in
Seller's possession or reasonably obtainable by Seller, copies of the
certificate(s) of occupancy issued by any appropriate Governmental Authority for
the Improvements (including all completed tenant space).

                  (8) Seller shall furnish to Purchaser, within ten (10)
business days following the Effective Date, copies of all real and personal
property tax statements relating to the Project and receipts evidencing payment
of the taxes for the one (1) tax year immediately prior to the current year.

                  (9) Seller shall furnish to Purchaser, within ten (10)
business days following the Effective Date, a schedule of all capital
improvement work in process or scheduled for the Project, if any, as of the
Effective Date.

                  (10) Not later than ten (10) business days following the
Effective Date, Seller shall use its best efforts to obtain the agreement of I/O
and Tenants, if required by Purchaser's Lender, to each execute not more than
five (5) days prior to Closing an Estoppel Certificate in substantially the form
attached hereto as Exhibit C (such obligation being in addition to Seller's
covenant hereinafter set forth to assist in securing such other and additional
estoppel certificates,

                                       -9-
<PAGE>   14
subordination, non-disturbance and attornment agreements, and other documents
and agreements as Purchaser's Lender may request in connection with the
Financing).

                  (11) Seller shall furnish to Purchaser, within ten (10)
business days following the Effective Date, copies of all termite and other pest
reports on the Project in Seller's possession or reasonably available to Seller.

                  (12) Seller or I/O shall furnish to Purchaser, within ten (10)
business days following the Effective Date, copies of the utility bills for the
Project for the prior twelve (12) months (other than bills for utilities billed
directly to Tenants pursuant to the terms of the Leases).

                  (13) If any Person has issued a valid general contractor's or
other warranty with respect to the Project that is not, on its face,
transferable to Purchaser, Seller shall use its best efforts to cause such
Person to execute an instrument in favor of Purchaser that acknowledges and
consents to the assignment of such warranty to Purchaser.

         8.2 Conditions Precedent. Without in any way limiting the provisions of
Article 18 hereof, Purchaser and Seller agree that the liabilities and
obligations of Purchaser hereunder to consummate this transaction contemplated
hereby are subject to the satisfaction of each of the following conditions (any
of which may be waived in whole or in part by Purchaser on or prior to the
expiration of the Review Period:

                  (1) Purchaser, at Purchaser's sole cost and expense, shall
have received an appraisal ("Appraisal") of the Project satisfactory in all
respects to Purchaser, in Purchaser's sole and absolute discretion.

                  (2) Purchaser, at Purchaser's sole cost and expense, shall
have received confirmation from a licensed professional engineer acceptable to
Purchaser and Purchaser's Lender that the roof, foundation and other structural
elements of the Project have a remaining useful life extending at least ten (10)
years beyond the Closing Date, without the anticipated need during such period
to perform any major repairs or alterations thereto.

                  (3)      Seller shall have obtained the Financing.

         8.3 Purchaser's Rights if Conditions Not Satisfied. Purchaser's
obligations under this Agreement are specifically contingent upon the
satisfaction of each of the covenants and conditions described in Section 8.1
and Section 8.2 hereof and, where appropriate, the receipt, inspection and/or
approval of the Project and the materials and information described herein,
within the time limits herein specified. If any of such conditions are not
satisfied or if Purchaser, in its sole and absolute discretion, finds any of
such material or information unacceptable for whatever reason, then Purchaser
may: (i) terminate the Agreement by giving Seller written notice thereof in
which event the Title Company shall return all Earnest Money to Purchaser and
neither party hereto shall have any further rights, liabilities or obligations
hereunder except as set forth herein; (ii) extend the Closing Date for an
additional period of time deemed reasonable by Purchaser to permit the

                                      -10-
<PAGE>   15
satisfaction of such covenants and/or conditions, such additional period of time
not to exceed thirty (30) days; or (iii) waive in writing its objection to such
material or information, or lack thereof, and consummate the transaction
contemplated hereby. To the extent that any of the covenants or conditions set
forth in Article 8 are satisfied or are waived by Purchaser in writing, such
satisfaction or waiver shall not constitute a waiver or discharge of any of the
representations, warranties, covenants or agreements of Seller set forth
elsewhere in this Agreement or a waiver by Purchaser of any rights it has to
terminate this Agreement pursuant to other provisions of this Agreement.

                                    ARTICLE 9
                     REPRESENTATIONS, WARRANTIES, COVENANTS
                            AND AGREEMENTS OF SELLER

         To induce Purchaser to enter into this Agreement and to purchase the
Project, Seller hereby represents and warrants to, and covenants and agrees with
Purchaser, the following, with the understanding and intention that Purchaser is
relying upon the accuracy of such representations and warranties, and the
agreement of Seller to comply with and perform such covenants and agreements,
which representations, warranties, covenants and agreements shall be deemed to
be made by Seller to Purchaser as of the Effective Date and as of the Closing
Date and thereafter (it being understood that such representations, warranties,
covenants and agreements shall not be merged into the documents to be executed
on the Closing Date but rather shall survive for the period set forth in Section
19.5 of this Agreement), and this Agreement is contingent upon and subject to
the truth and accuracy of such representations and warranties, and the full and
complete satisfaction of such covenants and agreements, and in the event such
representations and warranties are not true and accurate as of Closing and any
such covenants and agreements are not satisfied prior to Closing, Purchaser
shall have the option of terminating this Agreement at any time prior to
Closing, whereupon the Title Company shall promptly return the Earnest Money to
Purchaser and all parties hereto shall be released from any and all liability
hereunder except as set forth herein, or Purchaser may, at its sole option and
discretion, waive in writing Seller's satisfaction of any such representations,
warranties, covenants or agreements and consummate the transaction contemplated
hereby (it being understood and agreed by Seller and Purchaser that Seller shall
remain liable during the survival period provided for in Section 19.5 hereof for
all representations, warranties, covenants and agreements made by Seller in this
Agreement and not expressly waived in writing by Purchaser as hereinabove
provided):

                  (1) Seller has delivered to Purchaser complete, true, and
correct copies of the I/O Master Lease and the Leases and all amendments and
modifications thereto, and there are no other leases, licenses or similar
agreements affecting the Project.

                  (2) With respect to the I/O Master Lease: (i) there are no
other promises, amendments, agreements or commitments between Tenants, I/O,
Seller, a predecessor in title to the Project, or any one acting by or on behalf
of Seller, or any combination thereof, nor are there any commitments binding
upon Seller relating to the Project which are described in the I/O Master Lease
other than as expressly set forth therein; (ii) the I/O Master Lease is in full
force and effect; (iii) there is no uncured breach or default under the I/O
Master Lease, and no offset, defense, abatement, or

                                      -11-
<PAGE>   16
claim is presently available to, or has been asserted by I/O under the I/O
Master Lease, nor does any state of fact exist which would with the passage of
time or the giving of notice, or both, constitute a breach or default under the
I/O Master Lease or would permit a defense, offset, abatement, or claim under
the I/O Master Lease; (iv) I/O has not prepaid any rent other than rent due for
the current month; (v) except as may be expressly otherwise provided in the I/O
Master Lease or the schedule furnished to Purchaser pursuant to Section 8.1
hereof, I/O is not entitled to any rent concession, rent-free occupancy, or
reduction or abatement of rent for any reason whatsoever, including, without
limitation, for any work (not yet performed) or other consideration (not yet
given) in connection with I/O's occupancy pursuant to the I/O Master Lease; (vi)
I/O has accepted possession of all space leased to it under the Master Lease;
(vii) all decorating, installation, alteration and tenant finish work which the
Seller may be obligated to perform on or prior to the Closing Date for I/O will
be performed prior to the Closing Date at the cost of Seller; and (viii) all
commissions due or to come due with respect to the I/O Master Lease, or for any
renewal, substitution, extension, or expansion thereunder shall be paid, assumed
or otherwise satisfied by Seller at or on the Closing Date, and the Project
shall be conveyed to Purchaser free and clear of all commissions and brokerage
fees with respect to the I/O Master Lease, and any renewals, substitutions,
extensions, or expansions thereof, and Seller shall indemnify and agree to
defend and hold Purchaser harmless from and against any loss, cost, expense
(including, without limitation, attorneys' fees and court costs), or claim in
connection with any claim for commissions or like fees in connection with the
I/O Master Lease.

                  (3) From the Effective Date until the Closing, Seller shall
(i) maintain the Project in its present condition, subject to reasonable wear
and tear, damage, casualty and condemnation, (ii) continue to operate the
Project in a good, businesslike manner, (iii) make no change or modification in
the I/O Master Lease, the building rules or any presently existing rental
policies or rental agreements without, in each instance, the prior written
approval of Purchaser, (iv) comply with and fully perform, keep and observe each
and every material term, provision, condition, undertaking, covenant and
obligation under the I/O Master Lease, and agrees not to modify or amend any of
same in any respect without the prior written approval of Purchaser.

                  (4) Seller or I/O has delivered to Purchaser copies of all
insurance policies relating to the Project. Seller or I/O shall maintain all
such insurance policies in full force and effect through the Closing Date, and
neither Seller nor I/O shall cancel nor amend (nor allow the cancellation or
amendment, as applicable) any of the same without Purchaser's prior written
consent.

                  (5) Seller has not received, and has no Knowledge of, any
written notices or written requests from any mortgagee, insurance company or
Board of Fire Underwriters, or any organization exercising functions similar
thereto, requesting the performance of any work or alterations in respect to the
Project, and has not received and has no Knowledge of any such non-written
notices or requests.

                  (6) Except as may be set forth on Schedule 2.3(a) or Schedule
2.3(b), as applicable, all of the Permits and Property Agreements are in full
force and effect and are freely transferable to Purchaser without cost (or, if
there is a cost, it is set forth in on Schedule 2.3(a) or Schedule 2.3(b), as
applicable). Except as set forth on Schedule 2.3(a), there are no Property

                                      -12-
<PAGE>   17
Agreements which are not cancelable by Purchaser on thirty (30) days or less
notice without payment of any cancellation consideration. From the Effective
Date through the Closing Date, Seller shall not enter into, nor allow others to
enter into, any new Permits or Property Agreements without the prior written
consent of Purchaser. The copies of the Permits and Property Agreements
delivered to Purchaser hereunder are true, accurate and complete, and Seller has
received no notice and has no Knowledge of any material, uncured breach or
default by Seller or by any other party under the Permits or Property
Agreements. Prior to the Closing Date, Seller shall comply with each and every
material undertaking, covenant and obligation under the Permits and Property
Agreements and the same shall not be modified, amended, terminated, renewed or
otherwise altered without the prior written consent of Purchaser, and Seller
shall not modify or alter any repair or maintenance programs or policies now in
effect with respect to the Project. At Closing, the Permits and Property
Agreements shall be in full force and effect and Seller's interests therein
shall be transferred to Purchaser free and clear of any liens, claims or
encumbrances.

                  (7) Through the time of Closing, Seller shall fully perform
and observe all material requirements of all other contracts and agreements
affecting the Project, including, without limitation, any deed of trust or
mortgage encumbering the Project or any portion thereof.

                  (8) On the Closing Date, Seller shall have good and
indefeasible title in fee simple to the Project, free and clear of all
restrictions, liens, leases, encumbrances, rights of entry or reverter,
rights-of-way, easements, encroachments, exceptions, and other matters affecting
title, except for the Permitted Exceptions.

                  (9) No Person, other than Purchaser, I/O under the I/O Master
Lease and Tenants under the Leases, has any rights in or right to acquire the
Project or any part thereof, and as long as this Agreement remains in force,
Seller will not, without Purchaser's prior written consent, lease, transfer,
mortgage, pledge, or convey its interest in the Project or any portion thereof
nor any right therein, nor shall Seller enter into, or negotiate for the purpose
of entering into, any agreement or amendment to agreement granting to any Person
any right with respect to the Project or any part thereof.

                  (10) Other than the Permitted Exceptions, the I/O Master Lease
(which shall be terminated at Closing), the Leases, the Property Agreements, and
this Agreement, there are no leases, subleases, tenancy arrangements, service
contracts, management agreements, or other agreements or instruments which will
be in force or effect on the Closing Date that grant to any Person, any right,
title, interest, or benefit in or to all or any part of the Project or any right
relating to the use, operation, management, maintenance, or repair of all or any
part of the Project.

                  (11) There are no parties in possession of any portion of the
Project as lessees, tenants at sufferance, trespassers or otherwise, except for
I/O under the I/O Master Lease and Tenants under the Leases.

                  (12) There are no outstanding mechanic's and materialmen's
liens or claims of creditors against the Project that have not been disclosed to
Purchaser and will not be removed by

                                      -13-
<PAGE>   18
Seller on or before the Closing Date.

                  (13) There are no taxes, assessments or levies of any type
whatsoever that can be imposed upon and collected from the Project arising out
of or in connection with the ownership and operation of the Project, or any
public improvements in the general vicinity of the Project, other than rent
taxes, income taxes, business taxes, franchise taxes, and ad valorem taxes on
the Realty for the calendar year in which the Closing Date occurs payable to the
State of Texas, County of Fort Bend, the school district in which the Project is
situated, and the City of Stafford, and levies and assessments, if any, provided
for in the Permitted Exceptions. Without in any way limiting the foregoing, no
portion of the Project has, during Seller's ownership of the same, been subject
to assessments by any municipal utility district or any other or similar
district authorized to impose taxes, charges, liens or assessments on the
Project, except as set forth in the Permitted Exceptions.

                  (14) All utilities and other services required to be furnished
to the Project, if any, under the I/O Master Lease or the Leases will be
furnished prior to and as of the Closing Date.

                  (15) All utilities, including, without limitation, sanitary
and storm sewer, electrical, gas, telephone, and water lines have been connected
to or installed upon the Project, and enter the Project from adjoining public
rights-of-way or through private easements benefitting the Project, and the
Project has access to a publicly dedicated and accepted thoroughfare.

                  (16) To Seller's Knowledge, the Improvements, including, but
not limited to, the roof, foundation, walls, superstructure, plumbing, air
conditioning and heating equipment, electrical wiring, boilers, and hot water
heaters are structurally sound, in good working order, and in a state of good
repair, and suffer no damage from pest or termite infestation.

                  (17) There is no actual, pending or threatened action, suit,
claim, litigation, or proceeding by any entity, individual or governmental
agency affecting Seller or the Project which would in any way constitute a lien,
claim or obligation of any kind against the Project, and to Seller's Knowledge,
there is no such action, suit, claim, litigation or proceeding contemplated.

                  (18) To Seller's Knowledge, there are no pending or threatened
condemnation or similar proceedings or assessments affecting the Project or any
part thereof, nor to the best Knowledge of Seller, are any such assessments or
proceedings contemplated by any Governmental Authority.

                  (19) To Seller's Knowledge, no restrictive covenant or zoning
(or its equivalent) classification (or, other Governmental Requirements) is
materially violated by the present use and maintenance of the Project and
appurtenant uses (including, without limitation, parking uses associated with
the Project), and, there are no proceedings to change such zoning (or its
equivalent) classification, and Seller shall not itself apply for or acquiesce
in any such change.

                  (20) Seller has not received any notice of any breach of any
Governmental Requirements or restrictive covenant, and is not under any order of
any Governmental Authority,

                                      -14-
<PAGE>   19
with respect to the Project or the Seller's, I/O's or Tenant's present use and
operation of the Project.

                  (21) The execution of this Agreement, the consummation of the
transactions herein contemplated, and the performance and observance of the
obligations of Seller hereunder and under any and all other agreements and
instruments herein mentioned to which Seller is a party will not conflict with
or result in the breach of any Governmental Requirements or of any agreement or
instrument to which Seller is now a party or to which it is subject, or
constitute a default thereunder, and does not require Seller to obtain any
consents or approvals from, or the taking of any other actions with respect to
any third parties.

                  (22) Seller is a corporation, duly organized under the laws of
the State of Delaware, and has all requisite power and authority to carry on
Seller's business as it is now being conducted and to enter into and perform
this Agreement. The execution of this Agreement, the consummation of the
transactions herein contemplated, and the performance or observance of the
obligations of Seller hereunder and under any and all other agreements and
instruments herein mentioned to which Seller is a party have been duly
authorized by all requisite action and are enforceable against Seller in
accordance with their respective terms. The individual executing this Agreement
on behalf of Seller is authorized to act for and on behalf of and to bind Seller
in connection with this Agreement and in so doing to bind Seller to all of the
terms and provisions hereof.

                  (23) The financial statements, reports, and other data
relative to Seller heretofore furnished by Seller to Purchaser are (and all such
statements, reports, information, and other data hereafter furnished by Seller
to Purchaser will be) true and correct in all material respects, and fairly
reflect the financial condition, the financial results or other subject matter
thereof as of the dates thereof.

                  (24) A certificate or certificates of occupancy or the local
equivalent, if any have been obtained for the Improvements and all rentable
space within the Improvements, if required or issued by any governmental
authorities.

                  (25) Seller or I/O pursuant to the I/O Master Lease have
maintained and do presently maintain in full force and effect all Environmental
Permits, if any, necessary or required for the ownership and operation of the
Project, and Seller has provided copies of all such Environmental Permits to
Purchaser for its review.

                  (26) To Seller's Knowledge, there will not as of the Closing
Date exist any Environmental Condition on or at the Realty or any other matter
on or connected with the Project that would cause the imposition on Purchaser of
Environmental Liabilities if such Environmental Condition or other matter were
disclosed to Governmental Authorities.

                  (27) To Seller's Knowledge, as of the Effective Date and as of
the Closing Date neither Seller nor I/O is currently operating nor is required
to be operating the Project under any compliance order, decree or agreement; any
consent decree, order or agreement; and/or any corrective action decree, order
or agreement issued by or entered into with any Governmental

                                      -15-
<PAGE>   20
Authority under any Environmental Law.

                  (28) To Seller's Knowledge, no Hazardous Materials have been
dumped, landfilled, stored, located or disposed of on the Realty in violation of
applicable Environmental Laws during the time Seller has owned the Realty.

                  (29) To Seller's Knowledge, there has not been, in respect to
the Project any emission (other than steam or water vapor) into the atmosphere
or any discharge, direct or indirect, of any pollutants into the waters of the
State of Texas or the United States of America in violation of applicable
Environmental Laws during the time Seller has owned the Realty.

                  (30) From the Effective Date through the Closing Date, Seller
shall promptly notify Purchaser of any material change with respect to the
Project or any information heretofore or hereafter furnished to the Purchaser
with respect to the Project, and of any such change which would make any portion
of this Agreement, including, but not limited to, the representations,
warranties, covenants, and agreements contained in this Article 9 untrue or
materially misleading.

                  (31) To Seller's Knowledge, the Project meets all applicable
zoning, if any, and other similar or equivalent Governmental Requirements (and
that all other governmental and private restrictions such as density, parking
area ratio, floor area ratio, light and air limitations and deed and easement
restrictions have been complied with) so as to permit the operation thereon of
the types of businesses contemplated in the I/O Master Lease and the Leases.

                                   ARTICLE 10
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         Purchaser hereby warrants and represents to Seller as follows:

         10.1 Purchaser is a Texas limited partnership duly organized under the
laws of the State of Texas, and has full power to execute, deliver and perform
this Agreement.

         10.2 The execution of this Agreement, the consummation of the
transactions herein contemplated, and the performance or observance of the
obligations of Purchaser hereunder have been duly authorized by requisite action
and are enforceable against Purchaser in accordance with their respective terms.
The individuals executing this Agreement on behalf of Purchaser are authorized
to act for and on behalf of and to bind Purchaser in connection with this
Agreement.

         10.3 The execution of this Agreement, the consummation of the
transactions herein contemplated, and the performance and observance of the
obligations of Purchaser hereunder and under any and all other agreements and
instruments herein mentioned to which Purchaser is a party will not conflict
with or result in the breach of any Governmental Requirement or of any agreement
or instrument to which Purchaser is now a party or to which it is subject, or
constitute a default

                                      -16-
<PAGE>   21
thereunder, and does not require Purchaser to obtain any consents or approvals
from, or the taking of any other actions with respect to any third parties.

                                   ARTICLE 11
                                     CLOSING

         11.1 Closing Date. Unless extended as provided in this Agreement, and
provided all conditions described in Articles 5, 6, 7, 8, 9 and 17 hereof are
satisfied or waived by Purchaser, Purchaser and Seller shall consummate and
close the transactions contemplated hereby on or before five (5) days following
the expiration of the Review Period, unless Purchaser and Seller agree to an
earlier date (the actual date of Closing hereunder being herein referred to as
the "Closing Date"), during regular business hours in the office of the Title
Company, or such other location as may be mutually agreed to by the parties. For
the purposes of this Agreement, the actual consummation and closing of the
purchase and sale contemplated by this Agreement is herein referred to sometimes
as the "Closing".

         11.2 Items to be Delivered by Seller on Closing Date. On the Closing
Date, Seller shall deliver for the benefit of Purchaser the following (all of
which shall be duly executed, witnessed and notarized where appropriate and,
where appropriate, be in recordable form):

                  (1) Special Warranty Deed (the "Deed") in substantially the
form attached hereto as Exhibit D, duly executed and acknowledged by Seller,
which Deed shall convey to Purchaser good and indefeasible fee simple title to
the Realty, free and clear of all liens, encumbrances, covenants, restrictions
and other matters, except for the Permitted Exceptions.

                  (2) A Bill of Sale and Assignment in substantially the form
attached hereto and incorporated herein as Exhibit E, duly executed and
acknowledged by Seller.

                  (3) To the extent in Seller's possession or reasonably
available to Seller, the Plans, true and correct copies of all licenses and
permits, certificates of occupancy, certificates of compliance, tenant files,
and studies with respect to the functional aspects of the Project, including,
without limitation, soil and compaction tests, flooding studies and
environmental studies; copies of all other books and records relating to the
ownership and operation of the Project; and copies of any construction contracts
for the Improvements and all amendments relating thereto.

                  (4) A "Bills Paid Affidavit" verifying that there are no
unpaid bills or claims for labor performed or materials furnished to the Project
by or at the instance of Seller prior to the Closing Date.

                  (5) Copies of all insurance policies required to be provided
by I/O under the Master Lease and certificates or other proof acceptable to
Purchaser that all insurance required under the Master Lease to be provided to
Purchaser (as landlord under the Master Lease) and Purchaser's Lender (as the
mortgagee of the landlord) has been obtained and that Purchaser and Purchaser's
Lender have been named as additional named insureds on the policies therefor, as
their interests may

                                      -17-
<PAGE>   22
appear.

                  (6) An Owner Policy of Title Insurance in the face amount of
the Total Purchase Price, in the standard form currently in use in the State of
Texas, insuring in Purchaser fee simple, good and indefeasible title to the
Realty, subject only to the Permitted Exceptions, and with, at Purchaser's cost
(i) the standard exception concerning shortages in area or discrepancies or
conflicts in boundary lines, or any encroachments, or any overlapping of
Improvements deleted to the maximum extent permitted by applicable title
insurance regulation; (ii) the exception concerning restrictions endorsed "None
of Record" except as may be included in the Permitted Exceptions; (iii) the
exception as to taxes limited to the year of Closing and subsequent years and
endorsed "Not Yet Due and Payable"; (iv) the exception concerning parties in
possession limited to I/O and Tenants, and (v) the endorsements described in
Section 6.1 hereof, if any.

                  (7) A certificate, executed and sworn to by Seller, confirming
that (i) as of the Closing Date, all of the warranties and representations set
forth in Article 9 hereof are true and correct, and all covenants and agreements
set forth in Article 8 and Article 9 hereof have been satisfied, and (ii) that
no material adverse changes have occurred with respect to any part of the
Project.

                  (8) If Seller is not a "foreign person" (as defined in the
Internal Revenue Code Section 1445 and the regulations issued thereunder), a
non-foreign affidavit containing such information as shall be required by
Internal Revenue Code Section 1445 and regulations issued thereunder.

                  (9) Possession of the Project in substantially the same
condition as it exists on the Effective Date, subject to the rights of I/O under
the Master Lease.

                  (10) Original executed counterparts of the resolutions of
Seller, and any other documents as Purchaser shall reasonably request at least
five (5) days prior to the Closing Date, to evidence and confirm the power and
authority of Seller to close the transaction contemplated herein.

                  (11) If required by Purchaser's Lender, a separate Estoppel
Certificate signed by I/O and/or each Tenant in substantially the form attached
hereto as Exhibit C, signed by I/O and/or each respective Tenant, as applicable,
and dated no earlier than thirty (30) days prior to Closing; provided that
Seller shall be required only to use its reasonable and good faith efforts to
obtain such Estoppel Certificate from the Tenants other than I/O

                  (12) Such other documents, instruments and certificates as are
contemplated herein to effect and complete the Closing including, without
limitation, such ordinary and customary instruments as may be requested by the
Title Company and Purchaser's Lender (including, without limitation, any
subordination, non-disturbance and attornment agreements or similar agreements
that Purchaser's Lender may reasonably require from I/O, in a form and substance
reasonably satisfactory to I/O).

                                      -18-

<PAGE>   23
                  (13) If not already delivered to Purchaser, all other
documentation required under Article 17 hereof to be delivered to Purchaser as a
condition precedent to Closing.

                  (14) The Master Lease executed and acknowledged by I/O.

         11.3 Items Delivered By Purchaser on Closing Date. On the Closing Date,
provided all conditions set forth in Articles 5, 6, 7, 8 and 9 and Article 17
have been fully satisfied and/or complied with, Purchaser shall deliver for the
benefit of Seller the following (all of which shall be duly executed, witnessed,
and notarized, where appropriate, and, where appropriate, be in recordable
form):

                  (1) The Total Purchase Price.

                  (2) Original executed counterparts of the resolutions of
Purchaser and any other documents as Seller shall reasonably request at least
five (5) days prior to the Closing Date, to evidence and confirm the power and
authority of Purchaser to close the transaction contemplated herein.

                  (3) The Master Lease executed and acknowledged by the
Purchaser.

                  (4) A subordination, non-disturbance and attornment agreement
in a form reasonably acceptable to I/O and Purchaser's Lender, executed by
Purchaser's Lender.

                  (5) The Bill of Sale and Assignment in the form attached
hereto as Exhibit E, duly executed and acknowledged by Purchaser.

                  (6) Such other documents, instruments and certificates as are
contemplated herein to effect and complete the Closing including, without
limitation, such ordinary and customary instruments as may be requested by the
Title Company.

         11.4 Closing Costs and Attorneys' Fees. On the Closing Date, and except
as otherwise provided for herein: (i) Purchaser shall pay Purchaser's attorneys'
fees; all mortgage or similar taxes and recording fees associated with the
Financing and the liens securing the same; the costs of recording the Deed and
any other costs incurred by Purchaser and all other costs which Purchaser has
specifically agreed to bear in other parts of this Agreement, and (ii) Seller
shall pay the costs of recording all conveyancing documents other than the Deed;
all fees, expenses and penalties relating to the payoff of any existing notes
secured by the Project or any part thereof, and the release of any deed of trust
liens and other liens associated therewith; the cost of examining and insuring
title to the Project, as provided for herein (including the cost of the premium
of the Owner Policy of Title Insurance, except that Purchaser shall pay the
simultaneous issue premium for any Mortgagee Policy of Title Insurance
(including any endorsements thereto) required by Purchaser's Lender and the
costs of all endorsements and revisions to standard printed exceptions); the
cost of the Survey; Seller's attorneys' fees; any other costs incurred by
Seller; and all other costs which Seller has specifically agreed to bear in
other parts of this Agreement. Seller and Purchaser shall share equally all
escrow

                                      -19-
<PAGE>   24
fees charged by the Title Company. In the event no agreement is contained herein
respecting the payment of a particular cost or expense required to be incurred
by Seller in connection with this Agreement, such cost or expense shall be paid
by Seller. In the event no agreement is contained herein respecting the payment
of a particular cost or expense required to be incurred by Purchaser in
connection with this Agreement, such cost or expense shall be paid by Purchaser.
None of Seller's closing costs and no other costs and expenses of Seller in
complying with its covenants and agreements under this Agreement shall be
deducted from or charged against gross income for the Project.

         11.5 Prorations. Seller shall be responsible for all ad valorem taxes
and assessments on the Project up to the Closing Date including, but not limited
to, all special assessments assessed prior to the Closing Date even if such
assessments are payable in installments that extend beyond the Closing Date, and
all special assessments assessed subsequent to the Closing Date that relate to
periods of time prior to the Closing Date. Seller shall be responsible for the
payment of Project operating expenses for all periods prior to the Closing Date.
Notwithstanding the foregoing, there shall be no prorations, credits or offsets
at Closing for such expenses. Both Seller and Purchaser agree that I/O or
Tenants are responsible for payment of such expenses under the I/O Master Lease,
the Master Lease or the Leases. Nevertheless, to the extent I/O or Tenants fail
to pay such expenses for any reason then Seller and Purchaser shall be
responsible for satisfaction of such expenses as set forth above.

                                   ARTICLE 12
                       DESTRUCTION, DAMAGE OR CONDEMNATION

         Prior to the Closing Date, risk of loss with regard to the Realty and
the construction, ownership, operation, management or maintenance thereof shall
be borne by Seller. If, prior to the Closing Date, all or a part of the Realty
is subjected to a bona fide threat of condemnation by a body having the power of
eminent domain, or included in whole or in part in a governmental plan or
proposal which may result in the taking of all or a part of the Realty, or is
taken by eminent domain or condemnation (or a sale in lieu thereof), or all or a
significant (by which term is meant damage or destruction where the estimated
costs of restoration exceed $25,000.00) part of the Realty is damaged or
destroyed by fire or other casualty, Purchaser may, by written notice to Seller,
given within thirty (30) days after Purchaser's receiving actual notice of such
plan or proposal, threat of condemnation, condemnation, damage, destruction, or
sale, elect to rescind and cancel this Agreement, and upon such rescission and
cancellation, the Title Company shall return the Earnest Money to Purchaser and
none of the parties shall have any rights, obligations or liabilities hereunder,
except those by which their express terms survive the termination hereof. The
Closing Date shall be postponed, if necessary, to grant Purchaser such thirty
(30) day period. If Purchaser does not elect so to rescind, or if less than a
significant part of the Realty is damaged or destroyed by fire or other
casualty, this Agreement shall remain in full force and effect, and the purchase
contemplated herein, less any Realty destroyed by fire or other casualty or
taken by eminent domain or condemnation, or sold in lieu thereof, shall be
effected with no further adjustments, and on the Closing Date, Seller shall
assign, transfer and set over to Purchaser (subject to the rights of I/O under
the I/O Master Lease) all of Seller's right, title and interest in and to any
insurance proceeds paid or to be paid with

                                      -20-
<PAGE>   25
respect to such casualty and any awards or proceeds paid or to be paid, in
connection with such taking or sale, and Purchaser shall receive a credit
against the Total Purchase Price for any insurance deductible amount required to
be paid by Purchaser in connection therewith. At such time as all or part of the
Realty is subject to a bona fide threat of condemnation as hereinabove provided,
Purchaser shall be permitted to participate in the proceedings as if Purchaser
were a party to the action.

                                   ARTICLE 13
                             REAL ESTATE COMMISSIONS

         Seller has agreed to pay a brokerage commission in the amount of four
percent (4%) of the Total Purchase Price to Grubb & Ellis Company, located at
1330 Post Oak Boulevard, Suite 1400, Houston, Texas 77056 at Closing in
connection with the sale and purchase contemplated herein. Grubb & Ellis shall
pay at Closing a referral fee in the amount of one percent (1%) of the Total
Purchase Price to be divided evenly between Dan Boyles of NAI Partners
Commercial and Meredith Hardy of Infincon Advisory Services. In addition, Seller
shall be solely responsible for and does hereby agree to pay any and all other
brokerage fees, commissions, or other remuneration of any kind arising from the
execution of this Agreement or the Closing of the purchase and sale contemplated
hereby which are payable to Seller's brokers or any other Person claiming on the
basis of any arrangement or agreements made or alleged to be made by or on
behalf of Seller in respect to the transactions herein contemplated. Seller
shall forever indemnify and hold harmless Purchaser against and in respect of
any and all claims, losses, liabilities and expenses, including, without
limitation, attorney's fees and court costs, which Purchaser may incur on
account of any claim by any broker or agent or other Person (including, without
limitation, Grubb & Ellis Company, and any individual broker associated
therewith) on the basis of any arrangements or agreements made or alleged to
have been made by or on behalf of Seller in respect to the transactions herein
contemplated. Similarly, Purchaser shall forever indemnify and hold harmless
Seller against and in respect of any and all claims, losses, liabilities and
expenses, including, without limitation, attorney's fees and court costs, which
Seller may incur on account of any claim by any broker or agent or other Person
on the basis of any arrangements or agreements made or alleged to have been made
by or on behalf of Purchaser in respect to the transactions herein contemplated.
The provisions of this Article 13 shall survive the Closing or the termination
of this Agreement.

                                   ARTICLE 14
                                     NOTICES

         All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, transmitted by confirmed facsimile, or
by Federal Express or other recognized delivery service, or mailed first class,
postage prepaid, certified United States mail, return receipt requested, as
follows:

                                      -21-
<PAGE>   26
         If to Seller, to:          IPOP Management, Inc.
                                    c/o Input/Output, Inc.
                                    12300 Charles E. Selecman Drive
                                    Stafford, Texas 77477
                                    Attn: C. Robert Bunch

                                    Telephone:       (281) 879-3614
                                    Facsimile:       (281) 879-3632

         with copy to:              Haynes and Boone, LLP
                                    1000 Louisiana, Suite 4300
                                    Houston, Texas 77002
                                    Attn: Robert S. Ladd, Esq.

                                    Telephone:(713) 547-2023
                                    Facsimile:(713) 236-5534

         If to Purchaser, to:       N.L. Ventures III Stafford, L.P.
                                    301 Congress Ave., Ste. 320
                                    Austin, Texas 78701
                                    Attn: Mr. Paul Robshaw

                                    Telephone:       (512) 476-5009
                                    Facsimile:       (512) 476-7779

         with a copy to:            Heath D. Esterak
                                    Fulbright & Jaworski L.L.P.
                                    300 Convent Street, Suite 2200
                                    San Antonio, Texas 78205

                                    Telephone:        (210) 270-7161
                                    Facsimile:        (210) 270-7205

provided that any party may change its address for notice by giving to the other
party written notice of such change. Any notice request, demand or other
communication given under this Section shall be effective upon the earlier of
(i) personal delivery to the party to receive such notice, request, demand or
communication, (ii) receipt (including, without limitation, by way of a
facsimile transmittal confirmation) at the address for notice as provided for
herein for the party to receive such notice, request, demand or communication,
or (iii) the expiration of seventy-two (72) hours from and after the date such
notice, request, demand or other communication was sent in accordance herewith.
Telephone numbers herein are given for convenience only; no communication made
solely by telephone shall be considered a valid form of communication hereunder.

                                      -22-
<PAGE>   27
                                   ARTICLE 15
                              DEFAULTS AND REMEDIES

         15.1 Seller's Remedies on Purchaser's Default. In the event that
Purchaser shall fail to consummate the purchase of the Project on or before the
Closing Date for any reason other than termination hereof pursuant to a right
granted to Purchaser to do so, failure of any condition set forth herein, or
breach by Seller of its representations, warranties, covenants or agreements
hereunder, then, as its sole and exclusive remedy hereunder, Seller may
terminate this Agreement and receive the Earnest Money from the Title Company,
whereupon neither party shall have any further obligations hereunder except as
set forth herein. Seller agrees to accept such sum as its total liquidated
damages and relief and as its sole remedy, at law or in equity, for Purchaser's
default hereunder, the parties having agreed that in the event of a default
hereunder by Purchaser, the actual harm to Seller will be extremely difficult
and impracticable to determine, and Seller and Purchaser agree that said
liquidated damages are not intended as a penalty.

         15.2 Purchaser's Remedies on Seller's Default. In the event Seller
shall fail or refuse to fully and timely perform any of its obligations
hereunder and such failure continues for five (5) days after written notice
thereof, or shall fail or refuse to consummate the sale of the Project for any
reason not set forth in this Agreement, except where caused solely by
Purchaser's default, then as its sole and exclusive remedies hereunder,
Purchaser may: (i) terminate this Agreement and recover (a) from the Title
Company, the Earnest Money, and (b) from Seller, Purchaser's actual out-of-
pocket expenses incurred in connection with the transaction herein contemplated,
up to a maximum of $35,000.00 (including such amounts as contemplated by
Sections 6.3 and 7.2 hereof), and thereafter neither party shall have any
further obligations hereunder except as set forth herein, or (ii) enforce
specific performance of this Agreement (and should Purchaser be successful in
enforcing specific performance, Seller shall be responsible for all of
Purchaser's court costs and attorneys' fees incurred in connection therewith).
In the event Seller fails or refuses to perform any covenant or agreement herein
undertaken or fails or refuses to furnish any item or thing or permit any
inspection, then Purchaser may, at its election, either waive such compliance or
performance by Seller and proceed to Closing, or extend the Closing Date for
such period of time (not to exceed thirty (30) days) deemed appropriate by
Purchaser in which event the substituted Closing Date shall thereafter be and
constitute the Closing Date hereunder.

                                   ARTICLE 16
                                    INDEMNITY

                              Intentionally Deleted

                                   ARTICLE 17
                               SPECIAL PROVISIONS

         Notwithstanding anything to the contrary herein, satisfaction of all of
the provisions of this Article 17 shall be a further express condition precedent
to the obligations of Purchaser to close the

                                      -23-
<PAGE>   28
transaction contemplated hereby.

         17.1 Financing. Purchaser shall seek to obtain financing (the
"Financing") for the acquisition of the Project from a lender ("Purchaser's
Lender") on terms and conditions satisfactory to Purchaser in its sole
discretion on or before the expiration of the Review Period. If Purchaser is
unable to obtain such financing, then Purchaser shall have the absolute and
unfettered right, at any time prior to expiration of the Review Period, to
terminate this Agreement by sending written notice of such termination to Seller
and the Title Company, whereupon the Title Company shall return the Earnest
Money to Purchaser and the parties hereto shall have no further obligations
under this Agreement, except as may otherwise be provided herein. Seller agrees
to cooperate with Purchaser in seeking to cause I/O and Tenants to execute, such
estoppel certificates, subordination, nondisturbance and attornment agreements,
and other instruments as Purchaser's Lender may reasonably require in connection
with such financing, and Seller further agrees to cooperate with Purchaser's
Lender and to allow such lender and its contractors, appraisers and
representatives reasonable access to the Project to inspect same and to perform
such other due diligence in connection with the loan as they may reasonably deem
necessary; subject, however, to the provisions set forth in Article 18 hereof.
In addition, Seller agrees that Purchaser may share all studies, tests, reports,
financial data and other information regarding the Project provided by Seller to
Purchaser with Purchaser's Lender and prospective lenders.

         17.2 Master Lease. At Closing, I/O and Purchaser shall enter into a
Master Lease to be negotiated by Purchaser and I/O during the Review Period (as
such term is defined below).

                                   ARTICLE 18
                                  REVIEW PERIOD

         For the purposes of this Agreement, the term "Review Period" shall mean
the period of time commencing on the Effective Date and expiring on the sixtieth
(60th) day following the Effective Date. During the Review Period, Purchaser, at
Purchaser's expense, may review all of the documents, items, information and
materials identified in Section 8.1 hereof, and may conduct soil tests,
structural tests, and such other engineering and economic feasibility tests and
studies and such other inspections or investigations with respect to the
Project, as Purchaser may desire or deem appropriate. Seller agrees to
reasonably cooperate with and reasonably assist Purchaser in the physical
inspection of the Project and the inspection of such documents, items,
information and materials, provided that such inspection shall be conducted
during normal business hours or at such other time as is reasonable and
necessary to conduct the inspection, and shall not unreasonably interfere with
the normal business of Seller, I/O or Tenants. If, within the Review Period,
Purchaser shall, for any reason, in Purchaser's sole and absolute discretion, be
dissatisfied with any aspect of the Project, then Purchaser shall have the
absolute and unfettered right to terminate this Agreement by sending written
notice of such termination to Seller at any time prior to the expiration of the
Review Period. In the event that Purchaser terminates this Agreement, as
provided above, the Title Company shall return the Earnest Money to Purchaser
and the parties hereto shall have no further obligations under this Agreement,
except as may otherwise be provided herein. Purchaser agrees to indemnify,
defend and hold harmless Seller from, against and with respect to any and all
losses,

                                      -24-
<PAGE>   29
costs, expenses, claims, demands and causes of action (collectively, "Losses")
caused by Purchaser's or any of its agents', employees' or representatives'
activities at the Property pursuant to this Article 18; provided, however, the
foregoing indemnity shall not extend to any Losses attributable to the acts,
omissions or negligence of Seller or any of its agents, employees or
representatives, or to any defects or dangerous conditions existing at the
Project. Purchaser shall have the right to extend the Review Period for up to
forty-five (45) additional days by delivering written notice of such extension
to Seller not less than three (3) days prior to the expiration of the original
Review Period if Purchaser has identified a proposed lender and Purchaser
reasonably believes that it requires such additional forty-five (45) day period
in order to finalize the financing described in Article 17 hereof.

                                   ARTICLE 19
                                  MISCELLANEOUS

         19.1 Disclosures.

                  (1) Each of the parties to this Agreement shall keep
confidential and shall not without the consent of the other disclose the terms
of, or provide a copy of, this Agreement to any Person prior to the Closing
Date, except that each party may, to the extent reasonably necessary in
connection with the exercise of such party's rights and obligations hereunder or
in connection with any litigation arising in connection herewith, disclose
material terms hereof to the party's accountants, brokers, engineers, attorneys,
lenders and other similar professionals involved in the transaction contemplated
hereby.

                  (2) Each of the parties to this Agreement shall not, without
consulting the other, make any public announcements in respect of this Agreement
or the transactions contemplated herein prior to the Closing Date, except as may
be required to comply with Governmental Requirements in the reasonable judgment
of counsel for the party making any such announcement.

         19.2 Cooperation; Further Documents.

                  (1) Each of the parties hereto agrees to use its reasonable
good faith efforts to take or cause to be taken all action, and to do or cause
to be done all things necessary, proper or advisable under applicable
Governmental Requirements, regulations or otherwise, to consummate and to make
effective the transactions contemplated by this Agreement, including, without
limitation, the timely performance of all actions and things contemplated by
this Agreement to be taken or done by each of the parties hereto.

                  (2) Each party shall cooperate with the other party in such
other party's discharge of the obligations hereunder, which shall include making
reasonably available to the other party (but if after the Closing Date, at the
other party's direct out-of-pocket expense), such of its personnel as have
relevant information with respect thereto.

                  (3) Seller shall from time to time, at the reasonable request
of Purchaser, execute and deliver such instruments of transfer, conveyance and
assignment in addition to those delivered

                                      -25-
<PAGE>   30
contemporaneously herewith and at the Closing, and take such other action as
Purchaser may reasonably require to more effectively transfer, convey and assign
to and vest in Purchaser, and to put Purchaser in possession of, any assets
being transferred, conveyed, assigned and delivered by Seller pursuant to this
Agreement.

         19.3 No Partnership. This Agreement is a contract of purchase and sale
only and is not intended and shall not be construed to create any association,
trust, partnership, joint venture, agency or any other relationship between
Purchaser and Seller.

         19.4 Savings Clause. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of this
Agreement shall not be affected by any such modification or severance, except
that if any severance materially alters the intentions of the parties hereto as
expressed herein (a modification being permitted only if there is no material
alteration), then the parties hereto shall use commercially reasonable efforts
to agree to appropriate equitable amendments to this Agreement in light of such
severance.

         19.5 Survival. Except as may otherwise be expressly set forth herein,
each and every indemnification obligation, warranty, representation, covenant
and agreement of Seller and Purchaser contained herein shall survive the
execution, delivery and Closing (if any) of this Agreement for a period of one
(1) year from and after the Closing Date or, if no Closing shall occur, for a
period of two (2) years from and after the date of termination of this
Agreement, and shall not be merged into the Deed (if any) or any other document
executed and delivered prior to or at the Closing, but shall expressly survive
and be binding thereafter on Seller and Purchaser, respectively. No inspections
or examinations of the Project or the books, records, or information relative
thereto by Purchaser shall diminish or otherwise affect Seller's indemnification
obligations, representations, warranties, covenants and agreements relative
thereto, and Purchaser may continue to rely thereon.

         19.6 Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Texas.

         19.7 Cumulative Rights. Except as may otherwise be set forth herein,
all rights, powers and privileges conferred hereunder upon the parties shall be
cumulative and not restrictive of those given by law.

         19.8 No Waiver By Conduct. The failure of either party to exercise any
power given such party hereunder or to insist upon strict compliance by the
other party with its obligations hereunder shall not, and no custom or practice
of the parties at variance with the terms hereof, shall constitute a waiver of
such parties rights to demand exact compliance with the terms hereof.

                                      -26-
<PAGE>   31
         19.9 Entire Agreement. This Agreement, including the exhibits, annexes
and schedules attached hereto, constitutes the entire agreement and
understanding between the parties hereto relating to the sale and purchase of
the Project, and supersedes all prior and contemporaneous agreements and
undertakings of the parties in connection therewith, including without
limitation that certain Letter of Intent dated March 6, 2001, entered into
between Purchaser and Seller. No statements, agreements, covenants,
understandings, representations, warranties or conditions not expressed in this
Agreement shall be binding upon the parties hereto, or shall be effective to
interpret, change, or restrict provisions of this Agreement, unless such is in
writing, signed by both parties hereto and by reference made a part hereof. This
Agreement may not be modified or amended except by a subsequent agreement in
writing signed by Seller and Purchaser.

         19.10 Assignment. Seller shall not assign, transfer, or mortgage
Seller's interest in this Agreement. Seller expressly agrees that Purchaser
shall have the absolute right to assign and transfer Purchaser's interest in the
Project and in this Agreement to any Affiliate without the need to obtain the
consent of Seller, and in the event of any such assignment, such assignee shall
succeed to all the interests and rights so assigned as though such assignee had
originally executed this Agreement instead of Purchaser, and Purchaser shall
thereafter be relieved of all liabilities and obligations hereunder or related
hereto.

         19.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.

         19.12 Binding Effect. Subject to the restrictions set forth in Section
19.10 hereof, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

         19.13 Time. Time is of the essence with respect to this Agreement, and
the respective time periods set forth herein.

         19.14 Captions. The captions in this Agreement are inserted for
convenience and reference only, and shall in no way affect, define, limit or
describe the scope, intent or construction of any provision hereof.

         19.15 Pronouns. Pronouns, wherever used herein, and of whatever gender,
shall include natural persons and corporations and associations of every kind
and character, and the singular shall include the plural wherever and as often
as may be appropriate.

         19.16 Construction of Agreement. The terms and provisions of this
Agreement represent the results of negotiations between Seller and Purchaser,
each of which has been represented by counsel of its own choosing, and neither
of which has acted under duress or compulsion, whether legal, economic or
otherwise. Accordingly, the terms and provisions of this Agreement shall be
interpreted and construed in accordance with their usual and customary meanings,
and Seller and Purchaser hereby waive the application in connection with the
interpretation and construction of this

                                      -27-
<PAGE>   32
Agreement of any rule of law to the effect that ambiguous or conflicting terms
or provisions contained in this Agreement shall be interpreted or construed
against the party whose attorney prepared the executed draft or any earlier
draft of this Agreement.

         19.17 Third Party Beneficiaries. Except as expressly set forth herein,
nothing in this Agreement is intended or shall operate to create any rights of
any nature in favor of any Person not a party to this Agreement.

         19.18 Recordation. Neither Seller nor Purchaser shall record this
Agreement in the Real Property Records without the prior written consent of the
other party.

         19.19 Limitation on Damages. Notwithstanding any other provision to the
contrary set forth in this Agreement, but without in any way limiting any
party's indemnification obligations hereunder, no party hereto shall be liable
to any other party hereto for any incidental, consequential, special, exemplary
or punitive damages arising out of or in connection with this Agreement,
regardless of whether the breaching or defaulting party knew or should have
known of the possibility of such damages, and without regard to the nature of
the claim or the underlying theory or cause of action, and each party hereby
waives its right to all such remedies and damages.

         19.20 Contingent Offers. Seller shall not accept, review, entertain or
solicit any backup or contingent offers on the Project, or any part thereof,
from any Person during the pendency of this Agreement.

                    [Signatures of the Parties on Next Page]

                                      -28-
<PAGE>   33
         IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective as of the date first set forth on page S-3.

                                       SELLER:

                                       IPOP MANAGEMENT, INC., a Delaware
                                       corporation

                                       By: /s/ C. ROBERT BUNCH
                                          --------------------------------------
                                       Name:   C. Robert Bunch
                                            ------------------------------------
                                       Title:  Vice President
                                             -----------------------------------

                                      S-1-
<PAGE>   34
         IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective as of the date first set forth on page S-3.

                            PURCHASER:

                            N.L. VENTURES III STAFFORD, L.P., a Texas
                            limited partnership

                                     N. L. VENTURES III STAFFORD
                                     MANAGEMENT, L.L.C., a Texas limited
                                     liability corporation, its General Partner

                                     By: /s/ PETER S. CARLSEN
                                        ----------------------------------------
                                     Name:   Peter S. Carlsen
                                     Title:  Manager

                                      S-2-
<PAGE>   35
         Receipt of a fully executed copy of this Agreement is hereby
acknowledged, and the undersigned Title Company agrees to perform the duties of
the Title Company set forth in the foregoing Agreement as and when called upon
to do so.

                        TITLE COMPANY:

                        ALAMO  TITLE COMPANY

                        By:    /s/ TOM HAMILTON
                           ----------------------------------------------------
                        Name:  Office of Tom Hamilton
                             --------------------------------------------------
                        Title:
                              -------------------------------------------------

                        "Effective Date":       6/19/01
                                         --------------------------------------

                                      S-3-
<PAGE>   36
                                     ANNEX A

                         General Definitional Provisions

         (1) All terms defined in this Agreement shall have their defined
meanings when used in each certificate, exhibit, schedule, annex or other
instrument related thereto, unless in any case the context states or implies
otherwise; and when required by the context, each term shall include the plural
as well as the singular, and vice versa.

         (2) Definitions of each Person specifically defined herein, unless
otherwise expressly provided to the contrary, include the successors, assigns,
heirs and legal representatives of each such Person.

         (3) Unless the context otherwise requires or unless otherwise expressly
provided, references to this Agreement shall include all amendments,
modifications, supplements and restatements thereof or thereto, as applicable,
and as in effect from time to time.

                                  Defined Terms

         The terms defined in this Annex A shall, for all purposes of this
Agreement, have the meanings herein specified.

         "Affiliate" shall mean when used with respect to a Person, any Person
(i) which directly or indirectly (through one or more intermediaries) controls,
or is controlled by, or is under common control with, such first mentioned
person or entity, or (ii) which beneficially owns, holds, or controls five
percent (5%) or more of the interest of such first mentioned person or entity.
The term "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a person or entity, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise.

         "Appraisal" shall have the meaning ascribed to such term in Section 8.1
hereof.

         "Closing" shall have the meaning ascribed to such term in Section 11.1
hereof.

         "Closing Date" shall have the meaning ascribed to such term in Section
11.1 hereof.

         "Commencement Date" shall have the meaning ascribed to such term in
Article 18 hereof.

         "Deed" shall have the meaning ascribed to such term in Section 11.2(1)
hereof.

         "Effective Date" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.

                                    Annex A-1
<PAGE>   37
         "Environmental Conditions" means any and all acts, omissions, events,
circumstances, and conditions on or in connection with the Realty or the Project
that constitute a violation of, or require remediation under, any Environmental
Laws, including any pollution, contamination, degradation, damage, or injury
caused by, related to, or arising from or in connection with the generation,
use, handling, treatment, storage, disposal, discharge, emission or release of
Hazardous Materials.

         "Environmental Laws" means all applicable federal, state, local or
municipal laws, rules, regulations, statutes, ordinances or orders of any
Governmental Authority, relating to (a) the control of any potential pollutant,
or protection of health or the air, water or land, (b) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal, discharge, release,
emission or transportation, (c) exposure to hazardous, toxic or other substances
alleged to be harmful, (d) the protection of any endangered or at-risk plant or
animal life, or (e) the emission, control or abatement of noise. "Environmental
Laws" shall include, but not be limited to, all of the following, together with
all amendments thereto and any replacement or successor statutes: the Clean Air
Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251
et seq., the Resource Conservation Recovery Act ("RCRA"), 42 U.S.C. Section 6901
et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Endangered Species Act, 16 U.S.C. Section 1531 et seq., the Safe Drinking Water
Act, 42 U.S.C. Section 300f et seq., the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq.,
including the Superfund Amendments and Reauthorization Act, 42 U.S.C. Section
11001, et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136 et seq., and the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq. The term "Environmental Laws" shall also include all
applicable state, local and municipal laws, rules, regulations, statutes,
ordinances and orders dealing with the subject matter of the above listed
federal statutes or promulgated by any Governmental Authority in order to carry
out the purposes of any federal, state, local or municipal law.

         "Environmental Liabilities" means any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial, removal,
response, abatement, clean-up, investigative and/or monitoring costs and any
other related costs and expenses), other causes of action recognized now or at
any later time, damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorneys' fees and
other legal costs incurred or imposed (a) pursuant to any agreement, order,
notice of responsibility, directive (including directives embodied in
Environmental Laws), injunction, judgment or similar documents (including
settlements) arising out of, in connection with, or under Environmental Laws,
(b) pursuant to any claim by a Governmental Authority or any other Person for
personal injury, property damage, damage to natural resources, remediation, or
payment or reimbursement of response costs incurred or expended by such
Governmental Authority, Person pursuant to common law or statute and related to
the use or release of Hazardous Materials, or (c) as a result of Environmental
Conditions.

         "Environmental Permits" means any permits, licenses, approvals,
consents, registrations, identification numbers or other authorizations with
respect to the Project or the ownership or operation thereof required under any
applicable Environmental Law.

         "Excluded Property" means the property described on Schedule ___
attached hereto.

                                    Annex A-2
<PAGE>   38
         "Governmental Authority" means any and all foreign, federal, state or
local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
divisions or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted or existing.

         "Governmental Requirements" means any and all laws (including, but not
limited to, applicable common law principles), statutes, ordinances, codes,
rules, regulations, interpretations, guidelines, directions, orders, judgments,
writs, injunctions, decrees, decisions or similar items or pronouncements,
promulgated, issued, passed or set forth by any Governmental Authority.

         "Hazardous Materials" means any (a) petroleum or petroleum products,
(b) asbestos or asbestos containing materials, (c) hazardous substances as
defined by Section 101(14) of CERCLA and (d) any other chemical, substance or
waste that is regulated by any Governmental Authority under any Environmental
Law.

         "Incidental Rights" shall have the meaning ascribed to such term in
Section 2.3 hereof.

         "Improvements" shall have the meaning ascribed to such term in Section
2.1 hereof.

         "Knowledge" of shall mean the current actual knowledge of Glenn
Weissinger and Bob Bunch.

         "Land" shall have the meaning ascribed to such term in Section 2.1
hereof.

         "Leases" shall have the meaning ascribed to such term in the recitals
hereof.

         "Permits" shall have the meaning ascribed to such term in Section 2.3
hereof.

         "Permitted Exceptions" shall have the meaning ascribed to such term in
Section 6.1 hereof.

         "Person" shall mean any natural person, Governmental Authority,
corporation, partnership, limited liability company, joint venture, association
or other entity of any kind.

         "Personalty" shall have the meaning ascribed to such term in Section
2.2 hereof.

         "Plans" shall have the meaning ascribed to such term in Section 2.4
hereof.

         "Project" shall have the meaning ascribed to such term in Section 2.6
hereof.

         "Property Agreements" shall have the meaning ascribed to such term in
Section 2.3 hereof.

         "Purchaser's Lender" shall have the meaning ascribed to such term in
Section 17.1 hereof.

                                    Annex A-3
<PAGE>   39
         "Purchaser Liabilities" shall have the meaning ascribed to such term in
Section 16.2 hereof.

         "Realty" shall have the meaning ascribed to such term in Section 2.1
hereof.

         "Review Period" shall have the meaning ascribed to such term in Article
18 hereof.

         "Seller Liabilities" shall have the meaning ascribed to such term in
Section 16.1 hereof.

         "Survey" shall have the meaning ascribed to such term in Section 5.1
hereof.

         "Tenants" shall have the meaning ascribed to such term in the recitals
hereof.

         "Title Commitment" shall have the meaning ascribed to such term in
Section 6.1 hereof.

         "Title Company" shall mean Alamo Title Company located at 5251
Westheimer, Suite 200, Houston, Texas 77056, Attention: Tom Hamilton.

         "Total Purchase Price" shall have the meaning ascribed to such term in
Section 4.1 hereof.

                                    Annex A-4
<PAGE>   40
                                    EXHIBIT A

                                LAND DESCRIPTION

TRACT 1:

All of that certain tract or parcel of land containing 6.2903 acres (274,006
square feet), more or less, being all of Reserve "A-3", of Replat of Reserve "A"
Parc Plaza Business Park, an addition in Fort Bend County, Texas according to
the map or plat thereof recorded under Slide No. 687/B, of the Plat Records of
Fort Bend County, Texas.

TRACT 2:

All of that certain tract or parcel of land containing 4.8017 acres (209,162
square feet), more or less, being all of Reserve "A-1", of Replat of Reserve "A"
Parc Plaza Business Park, an addition in Fort Bend County, Texas according to
the map or plat thereof recorded under Slide No. 687/B, of the Plat Records of
Fort Bend County, Texas.

TRACT 3:

All of that certain tract or parcel of land containing 4.1667 acres (181,500
square feet), more or less, being all of Reserve "A-2", of Replat of Parc Plaza
Business Park, an addition in Fort Bend County, Texas according to the map or
plat thereof recorded under Slide No. 687/B, of the Plat Records of Fort Bend
County, Texas.

                                   Exhibit A-1
<PAGE>   41
                                    EXHIBIT B

                             SURVEYOR'S CERTIFICATE

To: [Name of Purchaser]; Input Output, Inc., Alamo Title Insurance Company; and
[Name of Lender], its successors and assigns

I hereby certify that:

           (a) this survey was prepared by me or under my supervision in
accordance with the minimum detail standards for a Category 1A Condition II
Survey (Texas Minimum Detail Standards), as defined in the Texas Society of
Professional Surveyors' Manual of Practice for Land Surveying in the State of
Texas;

           (b) this survey which was established by a transit-tape (instrument)
field survey actually made on the ground pursuant to the record description is
true, correct and accurate as to the boundaries and areas of the subject
property and the location and number of parking spaces, size, location and type
of buildings and improvements thereon (if any), and as to the other matters
shown hereon, it shows the location of all improvements, rights-of-way,
easements and any other matters affecting the subject property;

           (c) there are no party walls or encroachments on adjoining premises,
streets or alleys by any buildings, structures, or other improvement located on
the property and there are no encroachments on the property by buildings,
structures or other improvements situated on adjoining property, except as shown
on the survey and set forth as a note on the survey;

           (d) adequate ingress to and egress from the subject property is
provided by [name of streets], the same being paved, dedicated public
right(s)-of-way maintained by [name of maintaining authority];

           (e) the subject property does not serve any adjoining property for
drainage, ingress and egress or any other purpose except as shown on the survey
and set forth as a note on the survey;

           (f) all required building setback lines on the subject property are
located as shown hereon;

           (g) I have received and examined a copy of a Commitment for Title
Insurance Commitment No. _______________, issued by ______________________,
Agent for ________ Title Insurance Company, and of each instrument listed
therein; the location of each such easement, right-of-way, servitude and other
matter affecting title, to the extent it can be located, has been shown on the
survey with appropriate recording reference; and all matters that cannot be
located have been listed as a note on the survey; and

                                   Exhibit B-1
<PAGE>   42
           (h) I have consulted the U.S. Department of Housing and Urban
Development, Federal Insurance Administration Flood Hazard Boundary Map,
Community Number __________, Sheet Number __________ revised __________, and
found that the subject property is not located in a special flood hazard area
according to the map [or if it is in a flood hazard area, please describe].

                                                  (Signature of Surveyor)
(Surveyor's Seal)
                                                  Registered Surveyor,
                                                  State of ______________

                                                  Registered No._________

                                   Exhibit B-2
<PAGE>   43
                                    EXHIBIT C

                              ESTOPPEL CERTIFICATE

           THIS ESTOPPEL CERTIFICATE ("Certificate"), dated as of
________________, 2001, is executed by_________________________________, a
___________________ ("Tenant") in favor of ________________________________, a
Texas _______________, and its lenders and assigns ("Purchaser").

                                 R E C I T A L S

           A. Purchaser and _________________________, a ______________________
("Landlord"), have entered into that certain Sale and Purchase Agreement, dated
as of _______________________, ________ (the "Contract"), whereby Purchaser has
agreed to purchase, among other things, the real property more particularly
described in Exhibit A attached hereto and made a part hereof for all purposes
(the "Land"), together with all improvements thereon and all rights and
interests appurtenant thereto, said Land and improvements being located at
__________________________ ,in the City of ____________________________,
___________________ County, _____________, and being commonly known as
"________________________" (the Land, the improvements thereon, and all rights
and interests appurtenant thereto are herein collectively referred to as the
"Property").

           B. Tenant and Landlord have entered into that certain
_________________________ dated _______________________ (the "Lease"), covering
portions of the Property.

           C. Pursuant to the Lease, Tenant has agreed that upon the request of
Landlord, Tenant would execute and deliver an estoppel certificate certifying
the status of the Lease.

           D. In connection with the Contract, Landlord has requested that
Tenant execute this Certificate.

           NOW, THEREFORE, Tenant certifies, warrants, and represents to
Purchaser and Landlord as follows:

                                A G R E E M E N T

           Section 1. Lease. A true, correct and complete copy of the Lease is
attached hereto as Exhibit B.

           Section 2. Leased Premises. Pursuant to the Lease, Tenant leases the
Land and the building(s) thereon containing approximately ____________ square
feet of space (the "Leased Premises"), as more particularly described in the
Lease.

                                   Exhibit C-1
<PAGE>   44
           Section 3. Full Force of Lease. As of the date of this Certificate,
the Lease is in full force and effect, has not been terminated, and is
enforceable in accordance with its terms.

           Section 4. Complete Agreement. The Lease constitutes the complete
agreement between Landlord and Tenant for the Leased Premises and the Property,
and no amendments, modifications or extensions of the Lease, either written or
oral, currently exist, other than the following, copies of which are attached
hereto as part of Exhibit B (if none, please state "None"): ____________________
________________________________________________________________________________

           Section 5. Acceptance of Leased Premises. Tenant has accepted and is
currently occupying the Leased Premises.

           Section 6. Lease Term. The term of the Lease commenced on
___________________, _______, with the first installment of rent payable under
the Lease due on ___________________, _______ , and the term of the Lease ends
on ____________________, 20___. Tenant has no right to renew or extend the term
of the Lease except as follows (if none, please state "None"): _________________
________________________________________________________________________________

           Section 7. Purchase Rights or Similar Rights. Tenant has no option,
right of first refusal, right of first offer, or other right to purchase all or
any portion of the Leased Premises or all or any portion of the Property, except
as follows (if none, please state "None"): _____________________________________
________________________________________________________________________________

           Section 8. Rights of Tenant. Except as expressly stated in this
Certificate or the Lease, Tenant has no right, title, or interest in the Leased
Premises, other than as Tenant under the Lease.

           Section 9.  Rent.

                      (a) The rent under the Lease is current through
           ______________, 20___, and Tenant is not in default in the
           performance of any of its obligations under the Lease.

                      (b) Tenant is currently paying base rent under the Lease
           in the amount of______________________________________________
           Dollars ($___________) per month. Tenant is not receiving and, to its
           knowledge, is not entitled to, any abatement, refunds, rebates,
           concessions or forgiveness of rent or other charges, free rent,
           partial rent, or credits, offsets or reductions in rent, except as
           follows (if none, please state "None"):

                      (c) Tenant's proportionate share of maintenance expenses,
           insurance, real estate taxes, assessments, utilities, and other
           operating, administrative and overhead expenses for the Property
           (exclusive of utilities and other charges billed directly to Tenant
           and for which Tenant is solely responsible) is ______% and is
           currently being paid at the rate of $___________ per
           ____________________. All such expense payments are made by Tenant
           directly to Landlord, except as follows (please describe any
           exceptions):
           ________________________________________________________________.
           Annual

                                   Exhibit C-2
<PAGE>   45
           reconciliations of such expense payments are made on or before
           _______________ of each calendar year. No payments are currently due
           from Tenant to Landlord or from Landlord to Tenant in connection with
           any past reconciliations, including the last such reconciliation,
           made on ____________________, ______, and the next reconciliation is
           to be made on or before _________________________, _______ covering
           the period from _________________, _______ to _____________________,
           _______.

                     (d) To Tenant's knowledge, there are no existing defenses
           or offsets against rent or other payments due or to become due under
           the terms of the Lease, and there has been no default or other
           wrongful act or omission by Landlord under the Lease or otherwise in
           connection with Tenant's occupancy of the Leased Premises, except as
           follows (if none, please state "None"): _____________________________
           _____________________________________________________________________

           Section 10. Security Deposit. The amount of Tenant's security deposit
held by Landlord under the Lease is (if none, please state "None"):
$_________________

           Section 11. Prepaid Rent. The amount of prepaid rent, separate from
the security deposit, is $__________, covering the period from
____________________ to ____________________.

           Section 12. Insurance. All insurance, if any, required to be
maintained by Tenant under the Lease is presently in effect.

           Section 13. Pending Actions. To Tenant's knowledge, there are no
actions, whether voluntary or otherwise, pending against Tenant (or any
guarantor of the Tenant's obligations under the Lease) pursuant to the
bankruptcy or insolvency laws of the United States or any state thereof.

           Section 14. Tenant Improvements. All construction of buildings, site
improvements, interior tenant improvements and other requirements respecting the
initial construction or any repair or remodeling of the Leased Premises that
Landlord was to have performed in accordance with the terms of the Lease have
been performed, completed and paid for in all respects and accepted by Tenant.
All tenant allowances, reimbursements and construction and repair costs and
other, similar sums agreed to be paid by Landlord respecting the Leased Premises
have been paid, except as follows (if there are no further obligations on the
part of Landlord to be paid or performed, please state "None"): ________________
________________________________________________________________________________

           Section 15. Guaranty. Tenant's obligations under the Lease are
guaranteed by _________________________________________ ("Guarantor") (if there
is no guarantor of Tenant's obligations, please state "None"). A true, correct
and complete copy of such guaranty (if any) is attached hereto as Exhibit C and
made a part hereof for all purposes.

           Section 16. Landlord's Obligations. As of the date of this
Certificate, to Tenant's knowledge, (i) Landlord has performed all obligations
required by Landlord pursuant to the Lease

                                   Exhibit C-3
<PAGE>   46
subject to Landlord's maintenance and other obligations under the Lease with
respect to matters arising after the date hereof; (ii) no offsets,
counterclaims, or defenses of Tenant under the Lease exist against Landlord; and
(iii) no events have occurred that, with the passage of time or the giving of
notice, would constitute a basis for offsets, counterclaims, or defenses against
Landlord, except as follows (if none, please state "None"): ____________________
________________________________________________________________________________

Section 17. Assignments by Tenant. Tenant has not sublet or assigned the Leased
Premises or the Lease or any portion thereof to any sublessee or assignee except
as follows (if there are no subleases or assignments, please state "None"): ____
________________________________________________________________________________

The address for notices to be sent to Tenant is as set forth in the Lease.

           Section 18.  Environmental Matters.

                      (a) To Tenant's knowledge, the use maintenance and
           operation of the Leased Premises complies with all applicable
           federal, state, county and local statutes, laws, rules and
           regulations of any governmental authorities relating to
           environmental, health or safety matters (collectively, "Environmental
           Laws").

                      (b) To Tenant's knowledge, Tenant has not used, generated,
           released, discharged, stored or disposed of any Hazardous Materials
           (as hereinafter defined) on, under, in or about the Leased Premises,
           or transported any Hazardous Materials to or from the Leased
           Premises, other than Hazardous Materials used in the ordinary and
           commercially reasonable course of Tenant's business in compliance
           with all Environmental Laws. As used herein the term "Hazardous
           Materials" shall mean (a) any "hazardous substance" as such term is
           presently defined in Section 101(14) of the Comprehensive
           Environmental Response, Compensation, and Liability Act of 1980, as
           amended (42 U.S.C. Section 9601 et seq.) and any regulations
           promulgated thereunder ("CERCLA"), and any additional substances or
           materials which are now defined as "hazardous substances," "hazardous
           waste," "toxic substances" or "toxic waste" under any other
           Environmental law or other law applicable to the Leased Premises or
           under regulations promulgated pursuant thereto.

                      (c) Tenant has not received any written notice, of any
           violation of any Environmental Law or of any allegation which, if
           true, would contradict anything contained herein and there are no
           writs, injunctions, decrees, orders or judgments outstanding, no
           lawsuits, claims, proceedings or investigations pending, relating to
           the use, maintenance or operation of the Leased Premises.

           Tenant makes this Certificate with the knowledge that it will be
relied upon by Purchaser in agreeing to purchase the Property, by Landlord, and
by Purchaser's lender. Further, Tenant acknowledges and agrees that this
Certificate may be relied upon by any person or entity to whom Purchaser assigns
its right, title and interest in and to the Contract.

                                   Exhibit C-4
<PAGE>   47
           Tenant has executed this Certificate as of the date first written
above by the persons named below, who are duly authorized to do so.

           This Estoppel Certificate is being delivered on the express condition
that the only use or purpose of this Estoppel Certificate will be to prevent
Tenant from making any statement or claim contrary to any factual matters set
forth herein. Tenant shall have no obligation to update this Certificate or
advise of changes in circumstances that would make any statement in this
Estoppel Certificate not true or complete after a date subsequent to the date
hereof.

                       [Signature of Tenant on Next Page]

                                   Exhibit C-5
<PAGE>   48
           EXECUTED as of the date first set forth above.

                                      TENANT:

                                                                             , a
                                      ---------------------------------------

                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                   Exhibit C-6
<PAGE>   49
                                    EXHIBIT D

                              SPECIAL WARRANTY DEED

THE STATE OF TEXAS     Section
                       Section                   KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS       Section

           THAT IPOP Management, Inc., a Delaware corporation ( herein called
"Grantor"), for TEN AND NO/100 DOLLARS ($10.00) and other good and valuable
consideration paid to Grantor by _________________________________(herein called
"Grantee"), the receipt and sufficiency of which consideration are hereby
acknowledged and confessed by Grantor, has GRANTED, BARGAINED, SOLD, and
CONVEYED, and by these presents does GRANT, BARGAIN, SELL, and CONVEY, unto
Grantee, the real property described in the attached Exhibit "A" incorporated
herein for all purposes, together with all improvements situated thereon and all
rights and appurtenances belonging or appertaining thereto, including, without
limitation, all of Grantor's right, title and interest, if any, in and to (i)
any land in the bed of any street, road or avenue open or proposed in front of
or adjoining the Such real property; (ii) any rights-of-way, rights of ingress
or egress or other interests in, on, or to, any land, highway, street, road, or
avenue, open or proposed, in, on, or across, in front of, abutting or adjoining
such real property, and any awards made, or to be made in lieu thereof, and in
and to any unpaid awards for damage thereto by reason of a change of grade of
any such highway, street, road, or avenue; (iii) any easement across, adjacent
to or benefitting such real property, existing or abandoned; (iv) all sewage
treatment capacity and water capacity and other utility capacity to serve such
real property; (v) all oil, gas, and other minerals in, on, or under, and that
may be produced from such real property; (vi) any land adjacent or contiguous
to, or a part of such real property, whether those lands are owned or claimed by
deed, limitations, or otherwise, and whether or not they are located inside or
outside the description given herein, or whether or not they are held under
fence by Grantor, but expressly excluding the 17.034 acre tract owned by Grantor
and located adjacent to and across Charles E. Selecman Drive from such real
property; (vii) any reversionary rights attributable to such real property;
(viii) all water rights appurtenant to such real property; and (ix) all
development rights, zoning classifications (including, without limitation,
variances), rights as to non-conforming uses and/or structures, vested or
"grand- fathered rights" and other entitlements pertaining to such real property
(collectively referred to as the "Property").

           This Special Warranty Deed is expressly made subject to the matters
described in the attached Exhibit "B" incorporated herein for all purposes, to
the extent the same are valid and subsisting and affect all or any part of the
Property (collectively herein called the "Permitted Exceptions").

           TO HAVE AND TO HOLD the Property, together with all and singular the
rights and appurtenances thereunto in anywise belonging, unto Grantee and
Grantee's successors and assigns, forever; and Grantor does hereby bind Grantor
and Grantor's successors and assigns to WARRANT and FOREVER DEFEND all and
singular the Property unto Grantee and Grantee's successors and

                                   Exhibit D-1
<PAGE>   50
assigns, against every person whomsoever lawfully claiming or to claim the same
or any part thereof, by, through, or under Grantor, but not otherwise; subject,
however, to the matters set forth herein.

           EXECUTED as of the date set forth in Grantor's acknowledgment below,
to be effective, however, as of ___________________________, 2001.

                                   IPOP MANAGEMENT, INC.
                                   a Delaware Corporation

                                   By:__________________________________________

                                   Name:________________________________________

                                   Title:_______________________________________

STATE OF TEXAS          Section
                        Section
COUNTY OF HARRIS        Section

           I, the undersigned, a notary public in and for said county in said
state, hereby certify that _______________, who is the __________ of IPOP
MANAGEMENT, INC., a Delaware corporation, has signed the foregoing instrument,
and who is known to me, acknowledged before me on this day that, being informed
of the contents of said instrument, he, as and with full authority, executed the
same voluntarily for and as the act of said ________________________.

           Given under my hand and official seal this _____ day of
______________, 2001.

                                  ___________________________________________
                                  Notary Public in and for the State of Texas

                                  ___________________________________________
                                  Printed Name of Notary
                                  My commission expires:_____________________

Grantee's Address:

__________________
c/o AIC Ventures
301 Congress Avenue
Suite 320
Austin, Texas 78701

Prepared By and After Recording,
Return To:

                                   Exhibit D-2
<PAGE>   51
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Attn: Heath Esterak

                                   Exhibit D-3
<PAGE>   52
                                   EXHIBIT "A"

                                   Exhibit D-4
<PAGE>   53
                                   EXHIBIT "B"

                              PERMITTED EXCEPTIONS

1.

                                   Exhibit D-5
<PAGE>   54
                                    EXHIBIT E

                           BILL OF SALE AND ASSIGNMENT

         THIS BILL OF SALE AND ASSIGNMENT is made and entered into by and
between_______________________________, a _________________________
("Assignor"), and _______________________________, a Texas limited partnership
("Assignee").

                                    RECITALS:

         A. Concurrently herewith and pursuant to the terms and provisions of
that certain Sale and Purchase Agreement between Assignor and
_____________________________ dated _________________________ (the "Agreement"),
of which all of _______________________'s rights, titles and interests in and to
and under were subsequently assigned to Assignee by Assignment of Sale and
Purchase Agreement and other Rights dated ____________________________, Assignor
is transferring to Assignee by [Special Warranty Deed] (the "Deed") certain land
situated in ___________ County, __________________, being more particularly
described in Exhibit A attached hereto and made a part hereof for all purposes
(the "Land"), together with all improvements thereon and all appurtenances
thereto (the Land, together with all improvements thereon and all appurtenances
thereto are herein collectively referred to as the "Property"). B. Pursuant to
the terms of the Purchase Agreement, Assignor wishes to assign, transfer and
convey to Assignee certain miscellaneous real property interests, personal
property, contracts, agreements, guaranties, warranties, plans and
specifications, tradename rights, and other properties, rights and interests
related to the Property which Assignor has agreed to convey to Assignee under
the Purchase Agreement.

                                   AGREEMENTS

         NOW THEREFORE, for and in consideration of the foregoing, Ten and
No/100 Dollars ($10.00) and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and confessed, Assignor and
Assignee hereby agree as follows:

         1. The foregoing recitals are incorporated herein for all purposes.
Unless otherwise required by context, capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.

         2. MISCELLANEOUS REAL PROPERTY INTERESTS

         To the extent the same have not been transferred by the Deed, Assignor
hereby GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS, SETS OVER, and
DELIVERS unto Assignee, its successors and assigns forever, all of Assignor's
right, title and interest, if any, in and to the following (herein collectively
referred to as the "Miscellaneous Real Property Interests"): (i) any land in the
bed of any street, road or avenue open or proposed in front of or adjoining the
Land; (ii) any rights-of-way, rights of ingress or egress or other interests in,
on, or to, any land, highway, street, road, or avenue, open or proposed, in, on,
or across, in front of, abutting or adjoining the Land, and any awards made, or
to be made in lieu thereof, and in and to any unpaid awards for damage thereto
by reason of a change of grade of any such highway, street, road, or avenue;
(iii) any easement across or adjacent to the Land, existing or abandoned; (iv)
all sewage treatment capacity and water capacity and other utility capacity to
serve the Land and Improvements; (v) all oil, gas, and other minerals in, on, or
under, and that may be produced from the Land; (vi) any land adjacent

                                   Exhibit E-1
<PAGE>   55
or contiguous to, or a part of the Land, whether those lands are owned or
claimed by deed, limitations, or otherwise, and whether or not they are located
inside or outside the description given herein, or whether or not they are held
under fence by Seller, or whether or not they are located on the Survey referred
to in Article 5 hereof; and (vii) any reversionary rights attributable to the
Land.

         TO HAVE AND TO HOLD all of Assignor's right, title and interest in and
to the Miscellaneous Real Property Interests, together with all and singular the
rights and appurtenances thereto in anywise belonging, unto Assignee, and
Assignee's successors and assigns forever, such that neither Assignor nor any of
its successors or assigns shall have, claim or demand any rights or titles to
the same or any part thereof.

         3. INCIDENTAL RIGHTS

         Assignor hereby TRANSFERS, ASSIGNS and SETS OVER unto Assignee, its
successors and assigns forever, all of Assignor's right, title and interest in
and to and under the following (herein collectively referred to as the
"Incidental Rights"):

         (a) to the extent assignable, all guaranties warranties or other
similar agreements for the benefit of Assignor (but containing no obligations on
the part of Seller thereunder remaining to be performed) relating to the
Realty,(b) all contracts or agreements, such as maintenance, service,
management, leasing or utility contracts relating, in any way, to the ownership,
use, leasing, service, management, operation, maintenance and repair of the
Realty (herein collectively referred to as the "Property Agreements"), a list of
which is attached hereto as Exhibit B and made a part hereof for all purposes,
and (c) all governmental permits, approvals, licenses, consents or entitlements
heretofore granted (or granted prior to Closing) with respect to the ownership,
construction, use, occupancy and operation of the Realty, other than those, if
any, issued in the name of I/O or Tenants and with respect to which neither
Seller nor the Project has any liability (collectively, the "Permits"), a list
of which is attached hereto as Exhibit C and made a part hereof; provided,
however, that the Incidental Rights shall not include (A) any Property
Agreements that Assignee requests that Assignor terminate in accordance with the
provisions of Section 8.1(5) of the Agreement, or (B) any Permits which are not
transferable under applicable Governmental Requirements.

         TO HAVE AND TO HOLD all of Assignor's right, title and interest in and
to the Incidental Rights, together with all and singular the rights and
appurtenances thereto in anywise belonging, unto Assignee, and Assignee's
successors and assigns forever, such that neither Assignor nor any of its
successors or assigns shall have, claim or demand any rights or titles to the
same or any part thereof.

         4. Assignee hereby assumes the obligations and duties of Assignor under
the Property Agreements, Permits and other guaranties, warranties, contracts,
agreements, permits, and licenses hereby transferred from Assignor to Assignee,
arising and accruing from and after the later of the date hereof or the date on
which any required third party approvals to the assignment thereof are obtained.

         5. Assignor hereby agrees to indemnify, defend and hold Assignee and
its partners and their respective officers, directors, managers, shareholders,
agents, employees and representatives harmless from and against all losses,
costs, expenses, damages, and claims (including, without limitation, attorney's
fees and court costs) arising by reason of Assignor's or any of its employees',
agents' or representatives' breach, default, negligence or other malfeasance
under or in connection with any of the Property Agreements or Permits or any
other guaranties, warranties, contracts, agreements, permits or licenses in any
way relating to the Property, whether or not the same are being hereby
transferred from Assignor to Assignee.

                                   Exhibit E-2
<PAGE>   56
         6. Assignee hereby agrees to indemnify, defend and hold Assignor and
its partners and their respective officers, directors, managers, shareholders,
agents, employees and representatives harmless from and against all losses,
costs, expenses, damages, and claims (including, without limitation, attorney's
fees and court costs) arising under all Property Agreements, Permits and other
guaranties, warranties, contracts, agreements, permits and licenses hereby
assigned to and assumed by Assignor, to the extent such losses, costs, expenses,
damages or claims arise and accrue from and after the date of Assignor's
assumption thereof and are not attributable to the breach, default, negligence
or other malfeasance of Assignor or any of its officers, employees, agents or
representatives.

         7. Assignor agrees to perform, execute and/or deliver or cause to be
performed, executed and/or delivered any and all such further acts and
assurances as Assignee may reasonably require to perfect Assignee's interest in
and to the Miscellaneous Real Property Interests and Incidental Rights.

         8. This Bill of Sale and Assignment may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.

               [Signatures of Assignor and Assignee on Next Page]

                                   Exhibit E-3
<PAGE>   57
           EXECUTED on the dates of the acknowledgments set forth below, to be
effective, however, for all purposes as of the date of the Deed.

                           ASSIGNOR:

                                                                           , a
                           -----------------------------------------------------

                           By:
                              --------------------------------------------------

                           Name:
                                ------------------------------------------------
                           Title:
                                 -----------------------------------------------

                           ASSIGNEE:

                                                                           , a
                           -----------------------------------------------------
                           Texas limited partnership

                           By:   ____________________ MANAGEMENT,
                                 L.L.C., a Texas limited liability company, its
                                 General Partner

                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------

INSERT APPROPRIATE FORMS OF ACKNOWLEDGMENT AND CORPORATE SEALS, IF SEALS ARE
REQUIRED UNDER APPLICABLE LAW

                                   Exhibit E-4
<PAGE>   58
                                    EXHIBIT A

                      Attach legal description of the Land

                                   Exhibit E-5
<PAGE>   59
                                    EXHIBIT B

                               Property Agreements

                                   Exhibit E-6
<PAGE>   60
                                    EXHIBIT C

                                     Permits

                                   Exhibit E-7
<PAGE>   61
                                  SCHEDULE 2.2
                                   Personalty

                                      NONE

                                 Schedule 2.2-1
<PAGE>   62
                                 SCHEDULE 2.3(a)
                               Property Agreements

(i)        Guaranties and Warranties

           -    Air conditioning units (11) on Building 1 & 2
                Five year compressor warranty - Lepco

           -    Roof on Building 2 repaired 02/00, carries 2 year
                labor warranty - Brawn Roofing

           -    Floor in Building 3, installed in 1996, carries a 10 year
                warranty - Creteseal Services

(ii)       Contracts & Agreements

           -    Facilities Maintenance Agreement

                -    Lepco

                -    Enron

           -    Janitorial Agreement

                -    Pritchard Industries

           -    Pest Control Agreement

                -    A-Best Choice Pest Control

           -    Lawn and Plant Agreement

                -    Green Pro

                -    Plant Magic

           -    Electronic Security

                -    ESS

           -    Elevator Maintenance Agreement

                -    VTM

                                Schedule 2.3(a)-1
<PAGE>   63
                                 SCHEDULE 2.3(b)
                                     Permits

-          Fort Bend Water Control - Industrial User Permit

-          City of Stafford-- Alarm Permit

-          Boiler Certificate of Operation

-          Elevator Certificate of Compliance

-          Occupancy Permits

                                Schedule 2.3(b)-1<PAGE>   1
                                                                    EXHIBIT 10.1

                              CONSULTING AGREEMENT

        THIS CONSULTING AGREEMENT (this "Agreement") is made and entered into as
of March 1, 2001, between J. LIVINGSTON KOSBERG ("Consultant") and U.S. PHYSICAL
THERAPY, INC., a Nevada corporation (the "Company").

                                    RECITALS

        A.      Consultant recently resigned from his position as Chairman of
the Board of the Company after serving in this capacity for a number of years
but remains a director of the Company and an advisor to management of the
Company.

        B.      The Company wishes to retain the services of the Consultant in
order to have access to Consultant's substantial experience with the Company.

        C.      Consultant has agreed to render consulting services to the
Company on the terms and conditions stated herein.

        NOW THEREFORE, in consideration of the mutual agreements contained in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:

        1.      Engagement and Scope. The Company engages Consultant to perform
consulting services (the "Services"), and Consultant accepts such engagement,
upon the terms and conditions set forth in this Agreement. The Company shall
from time to time request Consultant to render services or accomplish certain
tasks befitting of Consultant's qualifications and past duties. Should the
Company not request services of Consultant, Consultant shall not be obligated to
request or perform any duties. In no event shall Consultant be required to
render services for an aggregate of more than two (2) work days per month during
the five-year term of this Agreement. Consultant also shall perform such
additional services in connection with this engagement as mutually agreed by the
Company and Consultant.

        2.      Term of Agreement. The term of this Agreement shall be for the
five-year period commencing on June 1, 2001 and ending May 31, 2006 or until
earlier terminated as herein provided.

        3.      Service Fees; Expenses. For all services rendered under this
Agreement, the Company shall pay Consultant at the rate of Ninety-Five Thousand
and no/100 Dollars ($95,000.00) per year, payable monthly in arrears on the last
business day of the month or as otherwise agreed between the Company and
Consultant. The Company will also pay or reimburse Consultant for the health
insurance provided in Section 4 and all reasonable out-of-pocket travel,
entertainment and other expenses incurred with the prior written approval of the
Company. Consultant acknowledges and agrees that except as provided in Section 4
of this Agreement, he is not entitled to or eligible to participate in any of
the Company's employee or executive benefit programs, including without
limitation, life, health and dental insurance programs, 401(k) plan, vacation
benefits, pension program, or any other benefits available to employees of the
Company except to the extent he is entitled to receive vested benefits pursuant
to any such plans after retirement from the Company.

<PAGE>   2

        4.      Health Insurance. In addition to the fees and expenses described
in Section 3 of this Agreement, the Company (and its successors) will provide
health insurance coverage for Consultant and his spouse on substantially the
same terms and conditions as it provided health insurance benefits to Consultant
and his spouse while he was an employee of the Company. The Company may make
changes to such insurance coverage and the terms and conditions thereof as long
as the health insurance coverage provided to Consultant hereunder is
substantially identical to or better than the health insurance coverage provided
to the most senior executives of the Company (and its successors) from time to
time. Notwithstanding termination of this Agreement pursuant to Sections 6 or 7
hereof or anything else herein to the contrary in this Agreement, the Company
shall provide the above-described health insurance coverage to Consultant and
his spouse as required by this Section 4 until the earlier of (i) May 31, 2006
or (ii) the date on which there are no longer any persons surviving who are
entitled to such coverage hereunder.

        5.      Taxes. Consultant acknowledges and agrees that, except as
otherwise required by law, the Company will not withhold or deduct any federal,
state, or local income taxes or unemployment insurance or social security taxes
(collectively, "Taxes") from payments made to Consultant hereunder. Consultant
shall report and pay directly all Taxes accruing as a result of payments made to
Consultant under this Agreement. Consultant shall indemnify, defend and hold the
Company and its directors, officers, affiliates, agents, employees, successors
and assigns, (collectively, the "Indemnified Parties") harmless from and against
any and all liabilities, obligations, claims, penalties, fines or losses,
including reasonable attorneys' fees and costs (collectively, "Losses"),
resulting from or in any way related to Consultant's failure to pay any Taxes.

        6.      Termination. In the event of a material default by either party
of its obligations hereunder, the other party may provide notice to the
defaulting party and the defaulting party shall have 30 days to correct such
default (five days if the default is in payment of fees or expenses or in the
provision of health coverage called for under this Agreement). If the defaulting
party fails to correct the default within such 30-day period, the non-defaulting
party may terminate this Agreement upon written notice to the defaulting party.

        7.      Death or Disability. This Agreement shall terminate in the event
of the death of Consultant or the disability of Consultant which continues for a
period of 90 days. In such event, the Company will pay Consultant or his estate
all amounts payable hereunder through the date of death or 90 days after the
date the disability begins, as the case may be, with fees prorated for any
period representing a fraction of a month. In the event of any dispute under
this Section 7 as to whether Consultant has suffered a disability, Consultant
shall submit to a physical examination by a licensed physician selected by the
Company and reasonably acceptable to Consultant. Notwithstanding termination of
this Agreement pursuant to this Section 7, the Company shall continue to provide
health insurance coverage to Consultant's spouse for the period specified and as
required in Section 4 above.

        8.      Authority of Consultant. Consultant shall have no authority to
perform any act in the name or on behalf of the Company except as expressly
authorized by the Company in writing. Consultant shall indemnify, defend and
hold the Indemnified Parties harmless from and against any and all Losses
resulting from or in any way related to any unauthorized or unlawful acts of
Consultant, whether willful or not.

                                       2
<PAGE>   3

        9.      Confidential Information. Because the work for which Consultant
is retained will include knowledge and information of a confidential nature to,
or which is a trade secret of, the Company, and its affiliates ("Confidential
Information"), Consultant possesses and shall hereafter receive Confidential
Information in confidence and shall not, except as required in the conduct of
the Company's business or as authorized in writing by the Company, publish or
disclose Confidential Information, or make any use of Confidential Information
other than for and on behalf of the Company in rendering the Services, or
authorize anyone else to do so, unless and until such information or knowledge
shall become part of the public domain or shall have ceased to be secret or
confidential, in either case through no fault of Consultant.

        10.     Return of the Company Proprietary or Confidential Information.
All documents, written information, notebooks, records and any other information
relating to the Company or its affiliates, and all tangible work product created
by Consultant pursuant to this Agreement, shall be the property of the Company
and shall be delivered by Consultant to the Company on termination of this
Agreement.

        11.     Miscellaneous.

                (a)     Assignment; Binding Effect; Amendment - This Agreement
and the rights of the parties under it may not be assigned (except by operation
of law and except that they may be assigned by the Company to an affiliate of
the Company or any successor of the Company as long as such assignment does not
relieve the assignor from any liability hereunder). Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
parties and their successors and assigns, including specifically but without
limitation, the obligation to provide health insurance coverage to Consultant
and his spouse as provided in Section 4 above. This Agreement constitutes a
valid and binding agreement of the parties enforceable in accordance with its
terms and may be modified or amended only by a written instrument executed by
each party.

                (b)     Entire Agreement - This Agreement is the final, complete
and exclusive statement of the agreement between the parties with relation to
the subject matter of this Agreement, it being understood that there are no oral
representations, understandings or agreements covering the same subject matter
as this Agreement. This Agreement supersedes, and cannot be varied, contradicted
or supplemented by evidence of, any prior or contemporaneous discussions,
correspondence, or oral or written agreements of any kind.

                (c)     Counterparts - This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

                (d)     Notices - All notices or other communications required
or permitted under this Agreement shall be in writing and may be given by
depositing the same in United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, by nationally recognized overnight courier, or by delivering the same
in person to such party, addressed as follows:

                                       3
<PAGE>   4
               If to Consultant, addressed to:

                      J. Livingston Kosberg
                      121 N. Post Oak Lane, #206
                      Houston, TX  77024

               If to the Company, addressed to:

                      U.S. Physical Therapy, Inc.
                      3040 Post Oak Boulevard, Suite 222
                      Houston, TX  77056
                      Attn:  Roy Spradlin, President and Chief Executive Officer

                Notice shall be deemed given and effective the day personally
delivered, the day after being sent by overnight courier, subject to signature
verification, and three business days after the deposit in the U.S. mail of a
writing addressed as above and sent first class mail, registered or certified,
return receipt requested, or when actually received, if earlier. Any party may
change the address for notice by notifying the other party of such change in
accordance with this Agreement.

                (e)     Governing Law - This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas, without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas.

                (f)     Captions - The headings of this Agreement are inserted
for convenience only, and shall not constitute a part of this Agreement or be
used to construe or interpret any of its provisions.

                (g)     Remedies - In the event of breach of any of the terms of
this Agreement by either party hereto, the non-breaching party will be entitled,
where appropriate, to apply for and obtain injunctive relief in any court of
competent jurisdiction without limitation as to any other or future remedies
which may be available.

                (h)     Survival of Obligations - No termination of this
Agreement or of Consultant's work hereunder, for whatever reason, shall relieve
Consultant of or release Consultant from the obligations set forth in Sections
4, 8, 9 and 10 of this Agreement, which shall survive such termination.

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

                                    CONSULTANT:

                                    /s/ J. Livingston Kosberg
                                    -------------------------
                                    J. Livingston Kosberg

                                       4
<PAGE>   5
                                    COMPANY:

                                    U.S. Physical Therapy, Inc.

                                    By:/s/ Roy Spradlin
                                       ----------------
                                         Roy Spradlin
                                         President and Chief Executive Officer

                                       5

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