Document:

Exhibit 10.28

 

***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

StormMQ — Smith Software Licence Agreement

 

SOFTWARE LICENCE AGREEMENT

 

THIS AGREEMENT (“Agreement”) is made on this 31st day of May, 2011, by and between Smith Electric Vehicles US Corp. (“Smith”), a Delaware, USA company with its principal place of business at 12200 N.W. Ambassador Drive, Kansas City, MO 64163 94303, USA, and StormMQ Limited (“StormMQ”), a UK company with its principal place of business at Gateshead International Business Centre, Mulgrave Terrace, Gateshead, NE8 1AN, United Kingdom, WHEREIN:

 

(A)      Smith is a manufacturer of electric commercial vehicles. The Smith market (“Market”) is defined as the sale and operation of vehicles which are:

1)              Wholly powered by electric batteries (eg excluding vehicles powered by internal combustion engines, and excluding hybrid vehicles);

2)              Vehicles with gross vehicle weight (GVW) of between 6000lbs and 33000lbs; and

3)              Sold only into the commercial vehicle market.

 

(B)        StormMQ are a provider of software products and cloud-based services related to message queuing and message delivery service, including those based on the AMQP protocols (which capabilities are collectively or individually a “Messaging Service”).

 

(C)        The “Smith Messaging Purpose” is to utilise a Messaging Service to remotely monitor and control the performance and behaviour of certain complex components built at the point of manufacture into a Smith-manufactured electric commercial vehicle suitable for the Market.

 

1.  Licence.  StormMQ grants, and Smith accepts, a non-transferable, world-wide 16 calendar month licence (“Initial Term”) for Smith to use the Software Solution (as identified in Schedule A to this Agreement).  The licence shall be exclusive for Smith’s world-wide use of the Software Solution for the Smith Messaging Purpose in the commercial areas defined as the Market for the first two (2) years of the Initial Term (“Exclusivity Term”).  Smith has no right to transfer its licence to use the Software Solution to any other person or entity.  Smith may, at its own expense and without any support requirement by StormMQ, modify the Software Solution as necessary for the Smith Business Purpose, defined herein.  The Smith Business Purpose comprises the use of the Software Solution as an interface with Smith’s clients.  Except for the Smith Business Purpose, Smith has no right (and shall not permit any third party) to copy, reverse engineer, adapt, decompile, disassemble, modify or make error corrections to the Software Solution (in whole or in part) except (i) where the rights in Section 10 are triggered or (ii) to the extent that reduction of the software to human readable form is necessary for the purpose of integrating the software with the operation of other software or systems used by Smith.  The licence granted herein to Smith shall not be sub-licensed, assigned or novated to any other party, nor shall Smith permit the licence or any part of the Software Solution to become the subject of any charge or encumbrance.  The Initial Term will commence on the date of this Agreement. In the event that StormMQ develops alternative Messaging Service or software solutions (in addition to those identified in Schedule A) which would suit the Smith Messaging Purpose, the Parties, after an evaluation, may by mutual consent agree to terminate this Agreement and negotiate a new replacement agreement.  At the expiry of the Initial Term or any mutually-agreed extensions of the Initial Term, this Agreement will continue thereafter until terminated on 90 days written notice by either Party or otherwise by reason of breach set out in Section 9 below.

 

2.  Fee; Audit.  In consideration for the grant of the licence and the use of the Software Solution, Smith agrees to pay StormMQ the Fees set forth in Schedule B to this Agreement, commencing on the date of this Agreement and continuing until this Agreement is terminated.  All sums paid shall be inclusive of all taxes, shall be paid in US dollars, shall be wire transferred to an account identified by StormMQ, and shall be payable monthly in advance, net 30 days.  Any overdue payment of Fees will be subject to interest charges at the discretion of StormMQ, such interest to be calculated according to common UK practice and at typical interest rates for defaulting payments.  Smith shall keep complete, accurate and up-to-date records of the number of vehicles in respect of which the Software Solution is being used and in respect of which there are fees due under the licence granted herein and to produce such records on request made by StormMQ from time to time.  Smith shall also provide StormMQ directly with copies of any public data published from time to time relating to the numbers of vehicles in use to which the licence granted herein relates.  StormMQ shall be permitted the right, at reasonable times and on reasonable notice, to have access to and inspect Smith’s premises where the Software Solution is kept, deployed, operated, monitored, controlled or otherwise used in order to ensure compliance with the licence granted herein.

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

3.  Messaging Exclusivity.  During the period of the Exclusivity Term, Smith agrees to use StormMQ’s Messaging Capabilities.

 

4.  Exclusions to Licence Exclusivity.  Throughout the duration of this Agreement, StormMQ will not be excluded from providing parts of the Software Solution as a service or a product to other commercial partners involved in the Market if those partners do not deploy the Software Solution for a purpose similar to the Smith Messaging Purpose.  Examples of purposes that would be permitted include (without limitation)  asset tracking or task/job allocation services.

 

5.  Warranty of Functionality.  StormMQ warrants that the Software Solution shall conform in all material respects with the Software Specifications (as defined in Schedule C to this Agreement), as verified from time to time during Smith’s acceptance testing and quality assurance processes for each implementation and application by Smith of the Software Solution (such processes to be agreed using best endeavours between Smith and StormMQ).  StormMQ also warrants that the functionality of the Software Solution will not be materially decreased during the term of this Agreement.  These warranties shall not apply to the Software Solution if modified by anyone (including by Smith) or if used improperly or in an operating environment or in an application not approved in writing by StormMQ.  In the event of any defect in the functionality of the Software Solution, Smith shall notify StormMQ promptly of such defect and StormMQ shall then take commercially prudent and reasonable action to promptly correct the functionality of the Software Solution.  Smith agrees to cooperate with and assist StormMQ in the replication of such notified defects as necessary, and in the identification, rectification and evaluation of any changes that are necessary to the Software Solution in order to correct any such notified defect.  The revised Software Solution which arises out of such activity will then be treated as conformant with the Software Specification until such time as Smith notifies StormMQ of any further defects.  All other conditions, warranties or other terms which might have effect between the Parties or be implied or incorporated into the agreement, whether by statute, common law or otherwise, are hereby excluded including the implied conditions, warranties or other terms as to satisfactory quality, fitness for purposes or the use of reasonable skill and care.

 

6.  Limitation of Liability.  To the fullest extent permitted by law, StormMQ shall not be liable for any damages suffered by the users of the Software Solution.  Neither Party shall be held liable for any indirect, consequential, or incidental damages with respect to any claim by either Party or any third party on account of or arising from this Agreement or from the use of the Software Solution and/or associated materials, whether based on lost revenues or otherwise, regardless of whether the affected Party was advised of such losses in advance.

 

7.  Intellectual Property Rights.  Smith acknowledges that StormMQ has a proprietary interest in the Software Solution and all intellectual property rights (including, without limitation, copyrights, design rights, trademarks, registered trademarks, URLs, patent applications and patents) in the Software Solution and any modifications to it made by StormMQ shall belong to StormMQ and Smith shall have no right, title or interest in or to StormMQ’s intellectual property or the Software Solution other than the right to use it in accordance with this Agreement.  Smith acknowledges that source code of the Software Solution is confidential information, and Smith agrees to maintain the Software Solution in confidence, and further agrees not to disclose the Software Solution to any other person or entity without the prior written consent of StormMQ (which may be given or withheld at StormMQ’s absolute discretion) and only on such terms and conditions as StormMQ shall prescribe in writing.  Smith further agrees to use all reasonable efforts to prevent unauthorised licensing, copying, or use of the Software Solution.  If Smith becomes aware of any unauthorised licensing, copying, or use of Software Solution, Smith shall promptly notify StormMQ in writing.  StormMQ authorises Smith to make such copies of the Software Solution as are required to create software backups for Smith’s lawful use, so long as Smith undertakes to keep and maintain up-to-date and accurate records of the number and locations of such copies and to take all reasonable steps to prevent unauthorised further copying of them.  Smith expressly agrees to use Software Solution only in the manner and for the specific uses authorised in this Agreement.  StormMQ has no right, title or interest, including any intellectual property rights, in or to any data, source code, or software created by Smith or used by Smith in conjunction with the Software Solution.   StormMQ warrants that it has full right and title to the Software Solution and agrees to indemnify Smith from or concerning any claims of infringement made against Smith concerning the Software Solution or its use.

 

8.  Software Maintenance.  StormMQ agrees to provide software maintenance for the Software Solution, such that its functionality when used in mutually agreed implementations and applications meets the Software Specifications 

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

defined in Schedule C, at no additional cost to Smith.  In the event Smith requires additional or upgraded functionality or software from StormMQ (other than Software Solution) Smith shall provide a request for such work and StormMQ will provide a quote to undertake the work required (according to its sole judgement) to deliver such additional capability.

 

9.  Termination.  Either Party shall have the right to terminate this licence upon 60 days written notice to remedy the material breach of, or non-compliance with, the terms of this Agreement by the other Party, such termination to be voided if such material breach or non-compliance is remedied to the satisfaction of the aggrieved Party within the period of notice.   In the event of such termination by Smith, StormMQ shall provide to Smith:

 

(a)         all relevant configuration information about the StormMQ AMQP [***] message queuing service that Smith might need in order that it can transition to a similar AMQP [***] service; and

 

(b)        technical consulting services to Smith to help facilitate this transition to be invoiced on a [***] basis at a charge-out rate of [***] (GBP) per [***].

 

10.  Escrow of Software.  StormMQ agrees to provide the source code of all versions of the Software Solution that are covered by this Agreement to an escrow agent selected by mutual agreement who will hold in escrow the source code of those software components described in Schedule C as being appropriate for escrow throughout the term of this Agreement.  Schedule C also describes the Non-Escrow Software which will not be supplied for escrow under this Agreement.  In the event that StormMQ, for any reason, is (i) unable to provide Smith with the Software Solution, services and support for the Software Solution, or the use of the Software Solution, (ii) discontinues its business operations, or (iii) becomes insolvent, Smith shall have the immediate right to the Software Solution source code held in escrow and shall have a non-exclusive, world-wide, perpetual licence to use the Software Solution, as identified in Schedule A to this Agreement, for the Smith Business Purpose within the Market.  The costs of the escrow provision, including the services of the escrow agent, will be met by Smith.  The terms of service of the escrow agent and the detailed escrow terms will be agreed separately between the Parties, such agreement to be reasonably reached and discussed in good faith with best endeavours, and with clear reference to the content and intent of this Agreement.

 

11.  Confidentiality.  The existence, content and substance of this Agreement and all matters contemplated by its terms will be treated by all parties as Confidential Information under the existing non-disclosure and/or confidentiality agreements in place and as established from time to time between the parties.

 

12.  Entire Agreement; Amendment of Documents; Severability; Headings.  This is the entire agreement between the parties, covering everything agreed upon or understood in the transaction contemplated by this Agreement.  There are no promises, representations, understandings, interpretations, or terms of any kind as conditions to the execution hereof or in effect between the Parties.  No rights or obligations other than those expressly recited herein are to be implied from this Agreement.  No change or additions may be made to this Agreement, except by written agreement by the parties.  Whenever used in this Agreement, the singular shall include the plural and the plural the singular.  If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.  The headings preceding the various sections of this Agreement are intended solely for the convenience of the parties and shall not be deemed relevant in the construction of this Agreement.

 

13.  Third Parties.  No term of this agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party.

 

14.  Governing Law and Jurisdiction.  The governing law of this Agreement shall be that of England.  The courts of England shall have jurisdiction to settle any dispute between the parties arising in connection with this Agreement and such jurisdiction shall be exclusive.  The parties irrevocably submit to such jurisdiction and waive any objection to it, on the ground of inconvenient forum or otherwise.  No party shall oppose the recognition or enforcement of a judgment, order or decision of those courts in respect of any such claim or dispute by the courts of any state which, under the laws and rules applicable in that state, are competent or able to grant such recognition or enforcement.

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date below.

 

 

	
Smith Electric Vehicles US Corp. (Licensee)
    	
 
    	
StormMQ Ltd. (Licensor)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Robin Mackie
    	
 
    	
By:
    	
/s/   David Cohn
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
Dated:
    	
 
    
							

 

 

Schedule A —Solution Overview

Schedule B — Fees

Schedule C — Software Specifications

Schedule D — Software Maintenance and Defect Resolution

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

Schedule A: Solution Overview

 

StormMQ delivers a suite of ‘best in class’ commercially available Managed Message Queuing Services as a wholesale or retail offering on a monthly subscription basis.  These are delivered to end-users through the cloud (via shared or dedicated server clusters) or directly using on-site facilities.

 

The cloud-based messaging service for Smith is based around the AMQP [***] protocol and comprises the following functional components:

 

1)              Vehicle data is transferred by the AMQP client embedded in the Smith vehicle (detailed in the Software Specification in Schedule C) to the StormMQ cloud-based Managed Message Queuing Services using the AMQP 0-8 protocol.

 

2)              StormMQ’s off-the-shelf Managed Message Queuing Services delivered using the AMQP [***] protocol.  These services are provided by a cluster of dedicated servers based in the StormMQ datacentre, currently located in Sunderland, UK.

 

Taken together, these components constitute the “Software Solution”.

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

Schedule B: Fees

 

The StormMQ service is installed in Smith vehicles and is charged on a [***] basis.  A Smith vehicle requires a licence to use the Software Solution from the moment that it is “ready to ship” from the Smith factory, whether the vehicle is going to ship to an end-customer or to a contractor for further production work.

 

The Fees are:

 

1.               [***]  (USD) per calendar month for an initial [***] licence (increasing to [***] per calendar month from 1st March 2012), and

2.               A licence to cover [***] (USD) [***] per year, purchased upfront in [***] bundles.

 

The Fees are payable monthly, pro rata with these annual commitments.  Licences must be purchased in advance of activation.

 

Smith will supply to StormMQ regular forward estimates of additional vehicle production that will be subject to licence purchases.  Smith will also supply to StormMQ copies of audit reports and other vehicle count statistics that Smith supplies in the course of its ordinary business to various industry regulators, financial assistance bodies, governmental departments and agencies or that Smith otherwise publishes into the public domain.

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

Schedule C: Software Specifications

 

The Software Solution consists of the following component parts:

 

1)              AMQP client:

 

A custom AMQP client, written in C, and installed on the telemetry device. This software was written specifically for this project. This transfer’s data securely using the AMQP [***] protocol via StormMQ’s commercially-available cloud-based AMQP [***] protocol service (item #2 below).

 

The current source code has already been provided by StormMQ to Smith.  The source code of any revisions will be put into escrow according to Section 10 of this Agreement.

 

2)              Commercially available cloud-based AMQP [***] protocol messaging service:

 

This consists of a bespoke software platform built by StormMQ which executes on server hardware specified and commissioned by StormMQ and runs under a server operating system, supported by licensed third-party libraries and binaries using StormMQ configuration.  This software is used to provide a service which securely accepts messages from the remote AMQP client (item #2 above) and provides them securely to the Java application referred to in item #3 above.  The service does this using the AMQP [***] protocol.

 

StormMQ will place into escrow all the source code developed and owned by StormMQ directly relevant to the provision of the AMQP [***] protocol messaging service that is used for the Smith Messaging Purpose. This source code will include the configuration files used to customise the server operating system that is used to provide the service.

 

StormMQ will not place into escrow the following source code (the “Non-Escrow Software”):

 

·                  Any configuration information that is relevant only to StormMQ’s specific implementation or the specific service instantiation of the messaging service (eg IP addresses, cryptographic keys, X.509 certificates and passwords used internally by StormMQ);

 

·                  The source code for the operating system;

 

·                  The source code for executable binaries used by StormMQ which have been provided by third parties;

 

·                  The source code for compiled object libraries used by StormMQ which have been provided by third parties;

 

·                  Third party source code which is linked into the StormMQ source code base;

 

·                  The source code for the software build system, nor the build scripts used within the software build system; and

 

·                  The source code for any debugging, configuration, commissioning or administration tools that StormMQ has developed or acquired in order to manage the server or the instance of the messaging service.

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

Schedule D: Software Maintenance and Defect Resolution

 

The following processes are hereby agreed to provide for software maintenance and defect resolution relating to the Software Solution.

 

1)              Change of Feature Implementation Notices:

 

If maintenance of the service platform requires a change to the manner of implementing a certain feature that is used by Smith, then StormMQ will issue a Change of Feature Implementation Notice to Smith that sets out the planned date of the switchover to the new implementation and the change of implementation required within the Smith technology infrastructure to accommodate the change to the feature implementation.  In reference to the foregoing sentence, the Parties agree that no change to the Software Solution will be made unless both Parties agree in writing to any such change or modification. In the event of a mutual agreement to permit any change to the Software Solution: (i) such changes will implement an equivalent feature in terms of the functionality required by Smith, and (ii) where such changes identify functionality that is no longer required by Smith, and where removal of such functionality would benefit Smith (eg by simplification of Smith’s internal technology architecture, or enhancement to the service robustness), then StormMQ and Smith may agree in writing to remove the appropriate feature through reference to this section of the Agreement.

 

2)              Planned Service Suspension:

 

If maintenance of the service platform requires that the server infrastructure has to go offline for a period, this will be communicated by StormMQ to Smith via a Planned Service Suspension Notice which will indicate the reason for the suspension, the expected duration of the suspension, and the likely start date for the suspension.  Smith acknowledges that such suspensions will be required on occasion in order to facilitate certain forms of maintenance to the service.  Smith also acknowledges that the nature of the AMQP [***] protocol is such that data from the AMQP clients within the Smith vehicles need not be lost during such a suspension, depending on the usage mode of the AMQP protocol.  StormMQ will use its best endeavours to ensure that such suspensions are of the shortest possible duration, that the notice period given to Smith is adequate for Smith to accommodate the suspension, and that they take place at times that are not overly inconvenient to Smith’s business needs.

 

3)              Notice of Possible Defect:

 

If Smith encounters a change in the behaviour in the Software Solution which is incompatible with the aims of the Smith Messaging Purpose or with previous behaviour of the Software Solution, then Smith may issue a Notice of Possible Defect to StormMQ which contains: sufficient detail about the issue to enable StormMQ to begin investigations into the new behaviour; details of any changes within the Smith infrastructure that may have contributed to the change; the point in time where the change became apparent; the material impact of the change on Smith’s business operations; and, the required timeframe for rectification of the change.  These requirements in the notice will be formulated in good faith and with all best endeavours for accuracy.  Upon receipt of a Notice of Possible Defect, StormMQ will make its first response within five working days (according to UK custom), such response containing either a remedy for the change, a request for more information about the change, or a plan of action to obtain more information or to provide a remedy.  StormMQ’s response will be formulated in good faith, and will typically follow a progression through a sequence of problem acknowledge, diagnosis, agreement of a communication channel between StormMQ and Smith to expedite a remedy, determination of the likely effect on the Software Solution of a remedy, and agreement of a scope of work and a deliverable for the remedy with outline timescales.  Smith acknowledges that remedies to changes in behaviour may on occasion take more time to prepare, test and commission than would be otherwise acceptable to Smith’s business operations.  Smith also acknowledges that where a change in behaviour has been precipitated by changes elsewhere in Smith’s technology platform, or by changes to Smith’s mode of use of the Software Solution, or by use of

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

the Software Solution in applications or implementations not previously tested or approved by StormMQ, or where the remedy cannot readily be implemented solely within the server infrastructure of the messaging service, then remedial work by StormMQ would reasonably be considered to lie outside the scope of this Agreement and would be undertaken under an alternative consultancy agreement with its own terms regarding fees, costs, response times and acceptance criteria.

 

4)              Notice of Defect Correction:

 

When the remedy to a previously issued Notice of Possible Defect is agreed by Smith and StormMQ to be adequate (such agreement not to be withheld unreasonably by either party), Smith will issue a Notice of Defect Correction to StormMQ to confirm that the remedy has been accepted.  The programme of activity to reach such a conclusion will be agreed between the parties on a case-by-case basis.  Upon receipt of a Notice of Defect Correction, StormMQ will endeavour to deliver the source code for the remedy into escrow within 30 elapsed days; such delivery may be, at the discretion of StormMQ, in the form of a ‘patch’ documenting the areas of change made instead of a full copy of the now-remedied code.

 

5)              Escalation Procedures:

 

Each party undertakes to respond in good faith and with all best endeavours to any concerns of the other party regarding the process of responding to a change in behaviour of the Software Solution.  In the event that discussion through usual operational channels between the parties, as set forth in the following support protocol, cannot resolve any dispute relating to the process of resolving any problems, then each party undertakes to engage in a dialogue involving the senior management teams from each party, escalating if necessary to a dialogue between the chief executive officers of each party before resorting to external arbitration.  Only in the event that such dialogue fails to reach a satisfactory conclusion may a party invoke legal remedies.  Smith and StormMQ hereby agree that the laws of England will be used to resolve any such disputes.  The Parties agree to the following support protocol:

 

Scope of Support

 

Technical Support covers production issues for StormMQ service, including:

 

Troubleshooting configuration settings

Troubleshooting operational or systemic problems with StormMQ resources

 

Technical Support does not include:

 

Code development

Debugging custom software

System administration tasks (e.g., problems with your machine’s configuration)

 

Named Support Contacts

 

Only Smith’s named support contacts may submit issues/problems (Cases) and interact directly with StormMQ Technical Support. These individuals will be identified by an email from Smith’s CTO.

 

Response Times and how to contact StormMQ

 

First-contact response times are based on the severity level for each Case. StormMQ is committed to providing a response within the timeframes described below.

 

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.  Omitted portions have been filed separately with the Commission.

 

	
Severity Level
    	
 
    	
Response Time
    	
 
    	
Contact Method
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Urgent
    	
 
    	
1 hour
    	
 
    	
telephone
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
High
    	
 
    	
4 hours
    	
 
    	
telephone
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Normal
    	
 
    	
1 business day
    	
 
    	
email
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Low
    	
 
    	
2 business days
    	
 
    	
email
    

 

Resolved Queries

 

Once StormMQ has responded to Smith’s problem (Case), Smith will work with StormMQ to identify and resolve the problem. Cases (problem) are deemed resolved if:

 

The problem is fixed.

The source of the problem lies with third party software.

Smith fails to respond to a query or request from StormMQ for seven (7) consecutive days.

 

For recurring issues, Smith may choose to re-open the case later.

 

10ex10-1.htm

AGREEMENT OF SALE AND PURCHASE

OF IMPROVED REAL ESTATE

 

THIS AGREEMENT OF SALE AND PURCHASE OF IMPROVED REAL ESTATE ("Agreement") in entered into between KENT TEXAS PROPERTIES, LLC, a Texas limited liability company (“Seller”) and ANDREWS-DILLINGHAM PROPERTIES, LTD., a Texas limited partnership ("Purchaser").

ARTICLE I

SALE OF PROPERTY

 

Subject to the terms and conditions hereinafter set forth, Seller shall sell to Purchaser and Purchaser shall purchase from Seller the following described property and assets (hereinafter collectively referred to as the "Property"):

1.1           That certain tract of land located in the City of Dallas, Dallas County, Texas, more particularly described on Exhibit A attached hereto and incorporated herein by this reference, together with all interest of Seller in (a) alleys, strips or gores of land, if any, between said property and adjoining properties whether owned or claimed by deed, limitations or otherwise, and whether located inside or outside said property, and (b) any land lying in or under the bed of any highway, avenue, street, road, alley,
easement, or right-of-way, open or proposed in, on, across, abutting, or adjacent to the property described in Exhibit A and all rights, titles, and interests of Seller, if any, in and to any awards made or to be made in lieu thereof for damage by reason of change and grade of any such highway, avenue, street, road, or alley (collectively, the "Land").  The description of the Land as set forth above is an approximate description of the tract of Land to be conveyed hereunder and is included herein for reasonable identification of the Land.  The parties hereto agree that the metes and bounds description of the Land as set forth in the Survey to be provided to Purchaser pursuant to Section 3.3 hereof shall be incorporated into this Agreement by reference as the correct description of the Land.

 

1.2           All rights, title and interests of Seller in and to any easements, rights of way, rights of ingress and egress or other interests in and to any highway, street or roadway on, across or adjoining the Land;

 

1.3           All rights, title and interest of Seller in and to any buildings, structures, parking areas, landscaping and other improvements placed, constructed or installed on the Land (the "Improvements"), excluding any Improvements owned by tenants;

 

1.4           All equipment, fixtures, appliances, furniture, furnishing and other tangible personal property (the "Personal Property") owned by Seller and located on or about the Land or Improvements or used in connection with the Land or Improvements;

 

1.5           All leases and other assignable rental agreements (written or verbal) now or hereafter in effect, that grant a possessory interest in any space situated in the Improvements or that otherwise confer rights with regard to use of the Land or Improvements (the "Tenant Leases"), and all security deposits and prepaid rents, if any, held by Seller in connection with the Tenant Leases;

  

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1.6           All rights, titles and interests of Seller in and to all transferrable service contracts, warranties, guaranties and bonds relating to the Land, the Improvements, or the Personal Property;

 

1.7           To the extent in Seller’s possession, all site plans, surveys, soil and substrata studies, architectural drawings, plans and specifications, engineering plans and studies, floor plans, landscape plans, and other plans and studies of any kind in Seller's possession that relate to the Land, the Improvements, or the Personal Property; and

 

1.8           All of the rights, titles and interests of Seller in and to good will, if any, related to the Property.

Further the sale does not include, and the definition of “Property” shall explicitly exclude, the following assets of Seller as of the Closing Date:  all cash, cash equivalents (including certificates of deposit), deposits held by third parties (e.g., utility companies), accounts receivable and any right to a refund or other payment relating to a period prior to the Closing, including any real estate tax refund (subject to the prorations hereinafter set forth), bank accounts, claims or other rights against any present or prior partner, member, employee, manager, officer or director of Seller or their direct or indirect partners, members or affiliates, any refund in
connection with termination of Seller’s existing insurance policies, all contracts between Seller and any law firm, accounting firm, property manager, leasing agent, broker, environmental consultant and other consultants and appraisers entered into prior to the Closing, any proprietary or confidential materials (including any materials relating to the background or financial condition of a present or prior partner or member of Seller), computer software, the internal books and records of Seller relating, for example, to contributions and distributions prior to the Closing, any software, any development bonds, letters of credit or other collateral held by or posted with any governmental agency or other third party with respect to improvement, subdivision or development obligations concerning the Property, and any other intangible property that is not used exclusively in connection
with the Property (collectively, “Reserved Seller Assets”).

ARTICLE II

PURCHASE PRICE AND EARNEST MONEY

 

2.1           The purchase price (the "Purchase Price") for the Property is Five Million and No/100 Dollars ($5,000,000.00), payable in cash, by wire transfer, cashier’s or certified check, or other immediately available funds acceptable to the Title Company (hereinafter defined) for immediate disbursement at Closing, subject to pro-rations and other credits provided for in this Agreement.

 

2.2           Earnest money (“Earnest Money”) in the amount of Twenty-Five Thousand and No/100 Dollars ($25,000.00) shall be deposited in escrow with the Title Company (hereinafter defined) by Purchaser within three (3) days following the Effective Date.  Notwithstanding anything herein to the contrary, a portion of the Earnest Money in the amount of One Hundred Dollars ($100.00) (the “Contract Consideration”) shall be non-refundable and shall be distributed to Seller on the Effective Date as full payment and independent consideration for Seller’s
execution and delivery of this Agreement, which Seller acknowledges is adequate consideration for the same.

  

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2.3           All Earnest Money deposited pursuant hereto shall be placed by the Title Company in an interest bearing account pursuant to the written direction of Purchaser, with all interest accruing thereon being for the account of and payable to the party to which the Earnest Money is payable according to the terms of this Agreement.   The Earnest Money and all interest accrued thereon shall be applied at Closing to the Purchase Price or otherwise disbursed to either Seller or Purchaser in accordance with the terms of this Agreement.  If Purchaser terminates this
Agreement prior to the end of the Inspection Period in accordance with the provisions of Article VI below and returns to Seller the Property Documents as required in Article IV below, Seller hereby irrevocably authorizes and instructs the Title Company to deliver the Earnest Money plus all accrued interest thereon to Purchaser without the necessity of any further instruction, authorization, or release from Seller.

ARTICLE III

TITLE AND SURVEY

 

3.1           Within ten (10) days after the Effective Date (hereinafter defined), Seller shall use commercially reasonable efforts to cause to be delivered to Purchaser a Commitment for Title Insurance (the "Title Commitment") dated not earlier than the date of this Agreement, issued by Chicago Title (the "Title Company"), whose address is 14801 Quorum Drive, Suite 110, Dallas, Texas 75254, (Attn: Tim Richards, telephone (972) 419-7151), together with true, correct and legible copies of all items and documents referred to therein, including copies of tax certificates covering all taxes
affecting the Property (collectively, the “Exception Documents”).  The Title Commitment shall describe the Land (which legal description, unless and to the extent modified by the Survey prescribed by Section 3.3 below, shall be deemed incorporated into this Agreement), show the Purchase Price as the policy amount, specify Purchaser as the prospective named insured, and show the status of title of the Land and all exceptions which would appear in an Owner Policy of Title Insurance, if issued.  With regard to the standard printed exceptions and other exceptions commonly included in Title Commitments, Purchaser may, at Purchaser’s sole option, instruct the Title Company that the exception for areas and boundaries shall be endorsed to provide that the exception shall be amended at Closing to except only to “shortages in area” upon receipt
from Seller of a Survey acceptable to the Title Company and the applicable premium; no exception shall be permissible for parties in possession, except for tenants in possession as tenants only pursuant to written  leases; the exception for restrictive covenants shall be deleted or endorsed “none of record except. . . (with an express description by applicable recording data of those restrictive covenants affecting the Land)”; the exception for taxes shall be limited to standby fees and taxes owing for the year in which the Closing occurs and subsequent years and subsequent assessments for prior years due to changes in land use of the property; there shall be no exception for any lien for service, labor or materials heretofore or hereafter provided, imposed by law and not shown by the public records; and there shall be no general exception for visible and apparent
easements or roads and highways or similar items (with any such specific exception to be specifically referenced to, and shown on, the Survey described in Section 3.3 below and also identified by any applicable recording data).

  

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3.2           Reserved.

 

3.3           Within ten (10) days after the Effective Date, Seller shall deliver to Purchaser its existing “as-built” survey of the Land and Improvements (the “Survey”).  Prior to Closing, Purchaser may, at Purchaser’s sole cost and expense, have the Survey re-certified to Purchaser and to the Title Company, in form acceptable to Purchaser.

 

3.4           Purchaser shall have until the end of the Inspection Period (hereinafter defined) in which to review the Title Commitment, Exception Documents, and the Survey.  In the event any matters appear that are unacceptable to Purchaser, Purchaser shall, within said Inspection Period, notify Seller in writing of such fact and specify the reason such matter(s) are not satisfactory, and the curative steps necessary to remove the objections stated.  If Purchaser does not so notify Seller within the Inspection Period, Purchaser shall be deemed to have accepted all
exceptions to title referenced in the Title Commitment and all matters shown on the Survey.   Any exceptions contained in the Title Commitment to which Purchaser does not object shall be included in the term "Permitted Exceptions" as used herein.  In the event that Purchaser does object to any title exceptions or other matters within the Inspection Period, Seller shall have ten (10) days after receipt of such objections to eliminate or modify same to the reasonable satisfaction of Purchaser.    In the event that Seller is unable or unwilling to eliminate or modify such items to the satisfaction of Purchaser on or before the expiration of said time period, Seller shall notify Purchaser in writing of such fact within said such time period.  If Seller fails to provide such written notice, Seller shall be deemed to have elected not to
modify or eliminate such items upon the expiration of such ten (10) day period.  Upon receipt of such notice (or the deemed election not to modify or eliminate), except for any exceptions Seller commits to eliminate or modify (which Seller shall so eliminate or modify on or before the Closing Date), Seller shall have no obligation whatsoever to expend or agree to expend any funds, to undertake or agree to undertake any obligations or otherwise to cure, eliminate, or modify any title objections, and Seller shall not be deemed to have any such obligation unless Seller expressly undertakes such an obligation by written notice.  Within five (5) days of receipt of Seller’s written election (or deemed election) not to eliminate or modify any of Purchaser’s objections, Purchaser may either (i) waive such objections and accept title to the Property subject
to such unacceptable items (which items shall then be deemed to constitute part of the "Permitted Exceptions"), or (ii) terminate this Agreement by written notice to Seller and receive an immediate refund of the Earnest Money less the Contract Consideration, whereupon this Agreement shall automatically be rendered null and void and of no further force and effect, except for the provisions hereof expressly surviving such termination. Notwithstanding the foregoing, Purchaser shall not be required to make any objection to the matters shown on Schedule "C" to the Title Commitment, which matters are hereby deemed to be unacceptable.

  

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ARTICLE IV

 ITEMS TO BE FURNISHED TO PURCHASER

 

Within five (5) days after the Effective Date, Seller shall deliver to Purchaser for its review the following items, to the extent the same are in Seller’s possession (the “Property Documents”):

 

4.1           All service, maintenance and management contracts currently existing with respect to all or any part of the Property and copies of all warranties and guaranties covering any equipment, machinery or other personal property or fixtures situated on the Land, and all warranties and guaranties relating to any construction, repairs, and/or renovations of the Improvements. Purchaser understands that the current electric service provider contract for the Property will not be terminated and must be assumed by Purchaser at Closing.

 

4.2           Copies of the tax statements and utility bills for Seller’s period of ownership.

 

4.3           A current rent roll for the Project certified by Seller to be, to Seller’s knowledge, true and correct and containing such information as is routinely provided by Seller’s management company.

 

4.4           All existing Tenant Leases affecting the Property.

 

4.5           Copies of all certificates of occupancy and other governmental licenses or approvals relating to any portion of the Property, including building permits and special permits or licenses required in connection with the Improvements.

 

4.6           A set of the "as-built" plans and specifications for the Improvements on the Land.

 

4.7           Monthly and year-end operating statements and financial statements for the Property for Seller’s period of ownership.

 

4.8           Maintenance and service reports covering all systems and structures in the Property, including without limitation, elevators, if any, HVAC, plumbing, electricity, exterior roof and wall repair, foundation repair and other similar maintenance and repair items.

 

4.9           Environmental reports regarding the Property.

 

4.10           Reports in Seller's possession or available to Seller relating to the Property's compliance with Titles III and IV of the Americans with Disabilities Act of 1990, Public Law 101-336, as amplified by the final rule promulgated by the Department of Justice in Section 28 of the Code of Federal Regulations, Part 36 (the “ADA”)).

4.11           Copies of all notices received from any governmental authority or other party relating to the compliance or non-compliance of the Property with Applicable Laws.

  

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In the event Purchaser terminates this Agreement, Purchaser shall, within two (2) business days of the termination, return to Seller all Property Documents.  The Title Company shall not release the Earnest Money until Seller confirms receipt of the same.  The Property Documents are provided to Purchaser hereunder without representation or warranty of any kind except that to Seller’s knowledge, the Property Documents are true and correct in all material respects.  The obligations of this paragraph shall survive Closing and the termination of this Agreement.

ARTICLE V

FINANCING

[intentionally deleted]

ARTICLE VI

INSPECTION

 

6.1           Seller agrees that Purchaser shall have thirty (30) days from the Effective Date ("Inspection Period") in which to make, at Purchaser's sole expense, all inspections or investigations desired by Purchaser with respect to the Property or any portion thereof.  In that regard Purchaser, personally or through its authorized agents or representatives, shall be entitled to enter upon the Land and the Improvements at all reasonable times upon reasonable prior notice to Seller; provided however, that Seller shall be entitled to require Purchaser’s agents and
representatives to be accompanied by Seller’s representatives during any inspection of the Property.  In no event shall Purchaser nor any agent, representative, or contractor of Purchaser be entitled to enter onto the Property for purposes of making any such inspections until and unless Seller shall have been furnished with an appropriate certificate of insurance in favor of Seller, confirming that Purchaser or such agent, representative or contractor has liability insurance currently in full force and effect, covering the activities of such persons on the Property in an amount which is not less than Two Million and No/100 Dollars ($2,000,000.00) in which Seller is named as a party insured.

 

The Property shall be restored to its present condition after any tests or inspections, at Purchaser’s sole cost and expense.  Purchaser may not conduct any invasive or destructive testing without the prior written approval of Seller, which may be withheld in Seller’s sole discretion.  Purchaser’s inspection activities will be conducted in a manner that will result in the least possible interference with the ongoing operations of the Property and will not violate any of the rights of tenants at the Property or the Tenant Leases.  Purchaser acknowledges that the Federal Bureau of Prisons
(“FBOP”) and/or other government agencies occupy the Property, and for security purposes, access to the Property is limited or restricted.  In that regard, Purchaser agrees that its inspection of the Property will necessarily occur at a time that will be arranged and coordinated by Seller with the FPOB, and a representative of Seller will need to be present at all times during the inspection and will need to escort Purchaser’s representative(s) during their inspection of the Property.  All inspections must be conducted in accordance with the terms of the Tenant Leases, and in the event of a conflict with the rights granted herein and the Tenant Leases, Seller shall only be responsible for allowing access to the Property to the extent permitted in the Tenant Leases.

  

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Purchaser hereby indemnifies and agrees to defend and hold Seller harmless from and against any claims, injuries, accidents, damages, losses, costs and expenses, including reasonable attorney's fees, resulting from Purchaser's entry upon and inspection of the Property and the entry and/or inspection of the Property by Purchaser’s agents.  The obligations of this paragraph shall survive Closing and the termination of this Agreement. 

 

Following the expiration of the Inspection Period, if Purchaser has not terminated this Agreement, Purchaser shall continue to have the right to enter upon the Property on the same terms stated above, notwithstanding the fact that the Inspection Period has expired.

 

6.2           If, within the Inspection Period, Purchaser shall, for any reason in Purchaser's sole discretion and judgment, disapprove or be dissatisfied with any aspect of the Land, the Improvements or any item examined by Purchaser pursuant to Article IV or Section 6.1, then Purchaser shall be entitled to terminate this Agreement by giving written notice thereof to Seller on or before the expiration of the Inspection Period, and subject to Section 6.1 above,
the Earnest Money less the Contract Consideration shall be immediately returned to Purchaser, whereupon this Agreement shall automatically be rendered null and void and thereafter neither Seller nor Purchaser shall have any further obligation or liabilities to the other hereunder other than those provisions hereof expressly surviving.

 

           THE PROPERTY IS BEING SOLD IN AN “AS IS, WHERE IS” CONDITION AND “WITH ALL FAULTS” AS OF THE DATE OF THIS AGREEMENT AND OF CLOSING.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE OR ARE MADE AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED BY SELLER OR BY ANY PARTNER, OFFICER, PERSON, FIRM, AGENT, ATTORNEY OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO (I) THE CONDITION OR STATE OF REPAIR OF THE PROPERTY; (II) THE COMPLIANCE OR NON-COMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES
(INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING OR DEVELOPMENT CODES); (III) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (IV) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (V) WHETHER THE PROPERTY CONTAINS ASBESTOS OR HARMFUL OR TOXIC SUBSTANCES OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME.  THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES ARE MERGED IN THIS AGREEMENT AND THE EXHIBITS HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT, AND THAT THIS AGREEMENT HAS BEEN ENTERED INTO AFTER FULL INVESTIGATION, OR WITH THE PARTIES SATISFIED WITH THE
OPPORTUNITY AFFORDED FOR FULL INVESTIGATION, NEITHER PARTY RELYING UPON ANY STATEMENT OR REPRESENTATION BY THE OTHER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY EMBODIED IN THIS AGREEMENT OR THE EXHIBITS ANNEXED HERETO.  THIS PARAGRAPH SHALL SURVIVE CLOSING.

 

  

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TO THE EXTENT NOW OR HEREAFTER APPLICABLE, PURCHASER HEREBY WAIVES ITS RIGHTS, IF ANY, UNDER THE DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS.  AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, EACH PARTY VOLUNTARILY CONSENTS TO THIS WAIVER.  THIS PARAGRAPH SHALL SURVIVE CLOSING.

 

ARTICLE VII

CLOSING DATE, COSTS AND PRORATIONS

 

7.1           The closing of the transaction contemplated herein shall be held at 10:00 A.M. on the first day following twenty (20) days after the expiration of the Inspection Period, or such other time and date as may be acceptable to both Seller and Purchaser (the "Closing Date" or the "Closing"); provided, however, if such date is a Saturday, Sunday or banking holiday, the Closing shall be the next business day.  The Closing shall be held at the office of the Title Company or at such other location as may be acceptable to both Seller and Purchaser.

 

7.2           At the Closing, Seller shall cause to be delivered to the Title Company (sometimes herein referred to as the "Escrow Agent") the items specified herein and the following documents and instruments duly executed and acknowledged where appropriate:

 

7.2.1           A special warranty deed dated as of the Closing Date, in the form of Exhibit "B" attached hereto.

 

7.2.2           An assignment of the Tenant Leases dated as of the Closing Date, in the form of Exhibit "C" attached hereto and made a part hereof by this reference for all purposes.

 

7.2.3           A blanket conveyance, bill of sale and assign­ment dated as of the Closing Date, in the form of Exhibit "D" attached hereto and made a part hereof by this reference for all purposes.

 

7.2.4           An affidavit regarding debts and liens executed by Seller dated as of the Closing Date, in the form of Exhibit "E" attached hereto and made a part hereof by this reference for all purposes (the form as required by the Title Company).

  

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7.2.5           A letter addressed to each tenant, in the form of Exhibit "F" attached hereto and made a part hereof by this reference for all purposes, in compliance with the notice requirements of the Texas Property Code.

 

7.2.6           A Non-Foreign Affidavit of Seller in the form of Exhibit "G" attached hereto and made a part hereof by this reference for all purposes.

 

7.2.7.           A rent roll for the Project, certified by Seller to its knowledge, to be current, true and correct as of the Closing Date.

 

7.2.8           Evidence reasonably acceptable to Purchaser and Title Company, authorizing the execution and delivery of the closing documents on behalf of Seller.

 

7.2.9           All keys to all locks on the Property in the possession of Seller and electronic accounting files for the operation of the Property.

 

7.2.11           Tax statements for the current year, if available and if not previously furnished.

 

7.2.12           Possession of the Property, subject only to the Tenant Leases and the Permitted Exceptions.

 

7.3           At the Closing, the Purchaser shall cause to be delivered to the Title Company the following documents and instruments:

 

7.3.1           Funds payable to the Title Company by wire transfer repre­senting the cash payment due at Closing less the Earnest Money (not including the Contract Consideration) already delivered.

 

7.3.2           A letter addressed to each tenant, in the form of Exhibit "F" attached hereto, acknowledging that Purchaser has received the tenant's security deposit, if any.

 

7.3.3.           Evidence reasonably acceptable to Seller and Title Company, authorizing the execution and delivery of the closing documents on behalf of Purchaser.

 

7.3.4           Execute, acknowledge, and deliver the special warranty deed in the form of Exhibit “B” to acknowledge the Permitted Exceptions and disclaimer of warranties set forth therein.

  

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7.4           At the Closing, the Seller and Purchaser shall cause to be delivered to the Title Company such other instruments and documents as may be reasonably necessary and appropriate in order to complete the Closing of the transactions contemplated hereunder.

 

7.5           Upon the completion of the deliveries specified in this Article VII, the Title Company, as escrow agent, shall be authorized to cause the appropriate closing documents to be immediately recorded in the appropriate records of Dallas County, Texas, and shall deliver the balance of the proceeds from the sale, after deducting all expenses and prorations chargeable to Seller under this Agreement, to Seller.

 

7.6           At Closing, Seller shall cause the Title Company to furnish to Purchaser a Texas standard form of Owner Policy of Title Insurance in accordance with the Title Commitment in the full amount of the Purchase Price, subject only to the Permitted Exceptions..

 

7.7           Seller shall pay the cost of tax certificates, the cost of the basic Owner Policy of Title Insurance (but not any costs for endorsements, modifications or deletions, which shall be solely the cost and expense of Purchaser), any cost of curing the title objections agreed to be cured by Seller, its proportionate share of the prorations set forth in Section 7.8, and one-half (1⁄2) of the escrow fee charged by Title Company. Purchaser shall pay the cost of any endorsements, modifications, and deletions to
the Commitment, any inspection fees in connection with the Commitment, its proportionate share of the prorations set forth in Section 7.8, and one-half (1⁄2) of the escrow fee charged by the Title Company.  Except as otherwise provided herein, all other escrow and closing costs shall be allocated to and paid by Seller and Purchaser in accordance with the manner in which such costs are customarily borne by such parties in sales of similar property in the County where the Property is located, on the date of Closing; provided, however, each party shall pay its own attorneys' fees.

 

7.8           Rental income, real estate and personal property ad valorem taxes, charges and assessments (special or otherwise), utility charges, and other operating expenses shall be prorated at the Closing, effective as of 12:01 a.m. on the Closing Date, based upon actual days involved.  All maintenance and service contract expenses (whether or not service is continued by Purchaser) and utility charges shall be determined to 12:01 a.m. on the Closing Date and paid by Seller to the greatest extent practicable.  If such charges and expenses are unavailable on the
Closing Date, a readjustment shall be made within ten (10) days following the availability of accurate bills and figures.  In the event that actual figures for the year of Closing are unavailable for proration of real and personal property taxes and assessments, an estimated proration shall be made at Closing based on the prior tax year. At the time such actual taxes and assessments for the current year are available, the Closing proration shall be adjusted in accordance with the terms and provisions hereof.  Purchaser shall receive a credit against the Purchase Price equal to all unapplied security and/or damage deposits, and other sums held by Seller or required under the terms of any Tenant Leases.  Purchaser shall thereafter be responsible for all taxes for the year in which Closing occurs as well as all security and/or damage deposits, and all
other sums delivered to Purchaser in connection with the Tenant Leases.  If Purchaser collects any delinquent rents or expense reimbursements after Closing, Purchaser agrees to immediately pay to Seller any delinquent rents or expense reimbursements attributable to the period prior to the Closing Date after application of such payments to all current rents or expense reimbursements due Purchaser.  Seller has informed Purchaser that the Tenant pays rent in arrears and Seller will process various paperwork with Tenant at Closing to notify Tenant to pay all future rent payments to Purchaser. To the extent Seller receives any rent after Closing that is attributable to periods after Closing, Seller agrees to promptly pay such rent to Purchaser.  Purchaser shall, at Closing, deliver to Seller instructions for the forwarding of such amount.  The
agreements and obligations of the parties under this Section 7.8 shall survive the Closing.

  

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ARTICLE VIII

COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES

 

8.1           Seller hereby covenants and agrees with Purchaser as follows:

 

8.1.1           From the date of this Agreement to the Closing, Seller shall maintain in force casualty and liability insurance with respect to the Property in at least such amounts as are maintained by Seller on the date of this Agreement.

 

8.1.2           From the date of this Agreement to the Closing, Seller shall perform all of the landlord's obligations under the Tenant Leases, including without limitation any maintenance of the Property to be performed under such leases.  Seller shall not enter into any new or renewal leases nor shall Seller amend or modify any Tenant Lease or enter into any new or renewal service, maintenance or manage­ment agreement with respect to any portion of the Property that is not terminable by Closing without Purchaser's prior written approval, which approval shall not be unreasonably withheld.

 

8.1.3           Prior to Closing, Seller shall obtain all written consents and approvals as may be required  to permit Seller to perform  its obligations under this Agreement (e.g., consents of partners or shareholders).

 

8.1.4           Prior to the Closing, Seller shall manage and operate the Property in substantially the same manner as it has been managed and operated as of the date hereof, subject, however, to all relevant provisions of this Agreement.

 

8.1.5           Prior to the Closing, Seller shall maintain the buildings  and other Improvements on the Land in the same condition and repair, except for  normal wear and tear and any casualty or condemnation, and Seller shall not remove any fixtures, equipment, furnishings and other personalty therefrom without  replacing them with substantially similar items.

 

8.1.6           Subject to the prorations set forth in Section 7.8, to the greatest extent practicable, Seller shall cause all trade accounts and costs and expenses of operation and maintenance of the Property incurred prior to the Closing, including without limitation, utility charges, to be paid prior to the Closing.

  

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8.1.7           Seller agrees to give notice to Purchaser promptly upon Seller's receipt of any notice from any Governmental Authority (hereinafter defined) of a violation of any Applicable Laws.

8.1.8            Not later than ten (10) days prior to the expiration of the Closing, Seller shall use its best efforts to deliver to Purchaser tenant estoppel certificates (the "Estoppel Certificates") from each Tenant occupying space in the Property under a Tenant Lease in the form required herein. Seller represents and warrants that to its knowledge, there are no reciprocal easement agreements or similar instruments encumbering the Property other than disclosed on the Title Commitment. The Estoppel Certificates shall be substantially in the form as required under the terms of any Lease.  The delivery of the Estoppel
Certificates to Purchaser shall be a condition precedent to Purchaser's obligation to close under this Agreement.

 

8.2           In addition to the representations contained in the other articles and sections of this Agreement, Seller hereby makes the following representations and warranties to Purchaser, which representations and warranties shall be true and correct in all material respects as of the Closing Date, and the truth of which shall be a condition precedent to Purchaser’s obligations to close the transaction contemplated herein:

 

8.2.1           There are no actions, suits or proceedings pending or, to Seller’s knowledge, threatened or asserted, affecting or which could affect any portion of the Property, at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign.

 

8.2.2           Seller has not received any written notices of any condemnation actions or special assessments.

 

8.2.3           Seller shall not create or voluntarily permit to be created any liens, easements or other conditions affecting any portion of the Property that will continue to affect such property after Closing without the prior written consent of Purchaser.

 

8.2.4           As of the Closing, no portion of the Property shall be subject to the burdens or obligations of any management agreement respecting the Property, so that Purchaser shall be free to enter into a management agreement or arrangement with a manager of its own choice.

 

8.2.5           Seller has all requisite power and authority to enter into this Agreement and consum­mate the transactions herein contemplated, and by proper corporate action has duly authorized the execution and delivery of this Agreement and the consummation of the transaction herein contemplated and no permission, approval, or consent of third parties or governmental authorities is required in order for Seller to consummate this Agreement.

  

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8.2.6           Seller has not received any written notice from any governmental agency that the Land is not properly zoned by applicable laws to permit the existence of the current Improvements on the Land, the current operation of the existing Improvements thereon and the use by the Tenants thereof.

8.2.7           This Agreement is a valid obligation of Seller and is binding upon Seller in accordance with its terms.

8.2.8           To Seller’s knowledge, the existing water, sewer, gas and electricity lines, storm sewer and other utility systems on the Land have been fully installed and are operating, with all installation and connection charges paid in full.

8.2.9           Seller has not received any written notice from any taxing authority or governmental agency asserting that Seller has failed to file or has improperly filed any tax return or report required to be filed by it, or that it has not paid all taxes, charges, or assessments now owing by it (except current taxes and assessments not yet delinquent) which could, in any way, now or hereafter, constitute a lien against the Property or any part thereof; and no action or proceeding is now pending by governmental agency or authority for the assessment or collection of such taxes, charges or assessments against Seller.

8.2.10           With regard to Seller’s schedules (including cash flow reports and financial data, operating expenses, property facts, mortgage information and lease characteristics) relating to the Property which had been or are to be furnished to Purchaser, to Seller’s knowledge, the information shown thereby has not been misrepresented, and there are no materially misleading or inaccurate items or information shown thereby or contained therein.

8.2.11           Seller has not received any written notices from any insurance company of any defects or inadequacies in the Property or any part thereof which would materially and adversely affect the insurability of the Property or the premiums for the insurance thereof.

8.2.12           To Seller’s knowledge, the copies of the Tenant Leases to be made available to Purchaser in accordance with the terms of this Agreement (and to be assigned at Closing) are and shall be true and correct and constitute all of the Leases affecting the Property.  No Tenant Leases shall be further modified or amended without the prior written consent of Purchaser, such consent not to be unreasonably withheld.  No Tenant has given Seller written notice of its intention to vacate its leased premises prior to the end of the primary term (or any current renewal or extended term).  All of the
Tenant Leases are in full force and effect, and to Seller’s knowledge, there is no current default by either Seller or the respective Tenants; there are no pending claims asserted by any Tenants for offsets against rent or any other claims (whether monetary or otherwise) made against Seller as Landlord under the Tenant Leases; and to Seller’s knowledge, there are no fees or commissions payable to any person or entity in regard to the Tenant Leases or the Property except as specifically set forth herein.

  

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8.2.13           Seller has not received any written notice of any violation of any ordinances, regulations, laws and statutes pertaining to the Property or any portion thereof, including any environmental ordinances, regulations, laws and statutes.

8.2.14           No person or entity has any right or option to purchase or acquire the Property from Seller.

 

When reference is made herein to “Seller’s knowledge,” such term shall include only the current actual knowledge of Bryan Healey (who shall have no personal liability with respect to any such matters) and shall not be deemed to imply that Seller or Mr. Healey has conducted any inquiry or investigation with respect to the subject matter of any representation or warranty that is so qualified.

 

 8.3           Purchaser hereby makes the following representations and warranties to Seller, which representations and warranties shall be true and correct in all material respects as of the Closing Date, and the truth of which shall be a condition precedent to Seller’s obligations to close the transaction contemplated herein:

 

8.3.1           Purchaser hereby represents and warrants to Seller that Purchaser is a limited partnership duly authorized and validly existing under the laws of the State of Texas and that Purchaser has the power and authority to enter into this Agreement and execute and deliver the closing documents and consummate the transaction herein contemplated.  No permission, approval, or consent of third parties or governmental authorities is required in order for Seller to consummate this Agreement.

 

8.3.2           Prior to Closing, Purchaser shall obtain all written consents and approvals as may be required to permit Purchaser to perform its obligations under this Agreement.

 

8.3.3           This Agreement is a valid obligation of Purchaser and is binding upon Purchaser in accordance with its terms.

8.3.4           No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors, or petition seeking reorganization or arrangement or other action under federal or state bankruptcy laws is pending against or contemplated by Purchaser.

 

8.3.5           Purchaser acknowledges that, by the Closing Date, Purchaser will have had sufficient opportunity to inspect the Property fully and completely at its expense in order to ascertain to its satisfaction the extent to which the Property complies with applicable zoning, building, environmental, health and safety and all other laws, codes and regulations. Notwithstanding the foregoing, any examination or investigation of the Property or of the related operational information by or on behalf of Purchaser shall not in any way modify, affect, or
diminish the covenants, representations and warranties of Seller expressly contained in this Agreement.

 

  

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8.3.6           Purchaser acknowledges that, by the Closing Date, Purchaser will have had sufficient opportunity to review the Tenant Leases, contracts, expenses and other matters relating to the Property in order to determine, based upon its own investigations, inspec­tions, tests and studies, whether to purchase the Property and to assume Seller’s obligations under the Tenant Leases, contracts and otherwise with respect to the Property. Notwithstanding the foregoing, any examination or investigation of the Property or of the related operational information by or on behalf of Purchaser shall not in any way modify, affect, or
diminish the covenants, representations and warranties of Seller expressly contained in this Agreement.

 

8.3.7           Neither Purchaser, nor any of its underlying beneficial owners have engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other applicable money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. § 1 et seq., as amended), or any foreign asset control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, or (ii) in contravention of Executive Order No. 13,244, 66, Fed. Reg. 49,079 (2001) issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time (“Anti-Terrorism Order”) or on behalf of those persons or entities that are included on any terrorists of terrorist organizations lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, Financial Action Task Force, U.S. Treasury Department’s Office of Foreign Asset Control, U.S. Securities & Exchange Commission, U.S. Federal Bureau
of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, all as may be amended from time to time. Neither Purchaser nor any of its underlying beneficial owners is a person described in section 1 of the Anti-Terrorism Order or whose name appears on the most current list of Specifically Designated Blocked Persons prepared by the U.S. Treasury Department’s Office of Foreign Asset Control.

 

8.4           Purchaser and Seller acknowledge and agree that each has and will rely upon the covenants, agreements, and representations of the other set forth in this Agreement in consummating the transaction contemplated hereby, and that said covenants, agreements and representations are central conditions, but for which the parties hereto would not acquire the Property.  The covenants, agreements, and representations herein contained shall be binding upon the respective parties, their successors, assigns, and legal representatives and shall inure to the benefit of the party to
whom made and its successors, assigns, and legal representatives, and shall survive the Closing for a period of twelve (12) months.

  

Page 15

  

 

ARTICLE IX

COMMISSIONS

 

9.1            Each party hereto represents to the other that it has not authorized any broker or finder to act on its behalf in connection with the sale and purchase hereunder and that it has not dealt with any broker or finder purporting to act for any other party, other than Gordon Smith-Real Estate Services and Century 21-John Lucas (“Agents”).  Seller agrees to pay a real estate commission equal to two percent (2%) of the Purchase Price to Century 21-John Lucas, and acknowledges that such agent has agreed to split the fee equally iwth Gordon Smith Real Estate
Services, which real estate commission shall only be earned, vested, due and payable, if, as and when the transaction contemplated by this Agreement shall actually close and Seller shall receive the Purchase Price. Each party hereto agrees to indemnify and hold harmless the other party from and against any and all liabilities, costs, damages and expenses of any kind or character arising from any claims for brokerage or finder's fees, commissions or other similar fees, other than commissions due to Agents (which are payable by Seller), in connection with the transactions covered by this Agreement insofar as such claims shall be based upon alleged arrangements or agreements made by such party or on its behalf.  This Agreement shall survive Closing.

ARTICLE X

TERMINATION, DEFAULT AND REMEDIES

 

10.1           If this Agreement is terminated by Purchaser because of any authorization to do so specified in this Agreement (hereinafter referred to as a "Permitted Termination"), except as otherwise expressly discussed herein, the Earnest Money less the Contract Consideration shall be immediately returned to Purchaser, whereupon neither party shall have any further rights or obligations hereunder, except for those obligations surviving the termination of this Agreement.

 

10.2           In the event that any of the Seller's representations or warranties contained herein are untrue or if Seller shall have failed to have performed any of the covenants and/or agreements contained herein which are to be performed by Seller, and such untruth or failure continues for a period of ten (10) days after the receipt of written notice from Purchaser of the same, or if Seller fails to close this Agreement when required hereunder, for any reason other than a Permitted Termination or a default of Purchaser hereunder, Purchaser may, at its option, as Purchaser’s sole and
exclusive remedies, either (a) terminate this Agreement by giving written notice of termination to Seller and receive a full and immediate refund of all Earnest Money less the Contract Consideration; or (b) seek to enforce specific performance of this Agreement.  Any such action for specific performance must be instituted, if at all, within one hundred eighty (180) days after the breach or alleged breach by Seller and, if such action is not so instituted within such period of time, then Purchaser shall have been deemed to conclusively to have waived the right to institute such action and to have elected to pursue the other remedies provided herein.  In addition, no action for specific performance may be instituted by Purchaser against Seller with respect to any breach of a representation and warranty or failure of any condition due to any cause not
reasonably within the control of Seller, Purchaser’s remedies in such event being limited to termination or waiver as described above.

  

Page 16

  

If Purchaser closes the purchase of the Property and subsequently discovers that any of the Seller's representations or warranties contained herein are untrue, Purchaser may seek damages for Seller's breach of such representations and warranties.

 

Notwithstanding the foregoing, however, if  Seller is unable or unwilling to consummate this transaction on the Closing Date in accordance with the terms of this Agreement, for any reason other than a Permitted Termination or a breach by Purchaser, and specific performance is not an available remedy due to Seller’s sale, lease, or encumbrance of the Property, and Seller’s failure to close continues for a period of five (5) days after the receipt of written notice from Purchaser of the same, then Purchaser shall have the further option of receiving a full and immediate refund of all Earnest Money less the Contract
Consideration, and obtaining from Seller an amount equal to the actual out of pocket costs and expenses incurred by Purchaser in connection with this transaction. Seller shall pay such amount within thirty (30) days after demand from Purchaser and proof of the incurrence and payment of such amounts and the relation to this Agreement. It is understood and agreed that in the event Purchaser elects this damage remedy, Purchaser shall not be entitled to seek specific performance.

 

10.3           In the event that any of the Purchaser's representations or warranties contained herein are untrue or if Purchaser shall have failed to have performed any of the covenants and/or agreements contained herein which are to be performed by Purchaser, and such untruth or failure continues for a period of ten (10) days after the receipt of written notice from Seller of the same, or if Purchaser fails to close the transaction contemplated hereby for any reason other than a Permitted Termination or a breach by Seller, and Purchaser’s failure to close continues for a period of five (5) days after the receipt of written notice
from Seller of the same, Seller shall be entitled to receive the Earnest Money as liquidated damages as Seller's sole and exclusive remedy for such breach of this Agreement, Seller hereby specifically waiving any and all rights which it may have to damages or specific performance as a result of Purchaser's default under this Agreement, whereupon both parties shall be relieved of and released from any further liability hereunder except for the surviving obligations.  Seller and Purchaser agree that the Earnest Money is a fair and reasonable amount to be retained by Seller as agreed and liquidated damages in light of Seller’s removal of the Property from the market and the costs incurred by Seller and shall not constitute a penalty or a forfeiture.  Nothing herein shall in any way limit Seller’s remedies against Purchaser in the event of a breach of a
surviving obligation or an indemnity obligation of Purchaser hereunder.  The provisions of this Section 10.3 shall survive the Closing or the termination of this Agreement.

 

  

Page 17

  

 

ARTICLE XI

RISK OF LOSS

 

11.1           Risk of all loss, destruction, or damage to the Property, or any portion thereof, from any and all causes whatsoever until consummation of the Closing shall be borne by Seller.  If, prior to Closing, any insured loss to the Improvements occurs and the cost of repair exceeds $350,000.00 (as determined by Seller and its contractors in consultation with Purchaser) or access to the Property is materially impaired, or the Property is destroyed or taken under power of eminent domain and the cost or repair exceeds $350,000.00 (as determined by Seller and its contractors in consultation with Purchaser) (a “Material
Event”), Purchaser may elect to terminate this Agreement by giving written notice of its election to Seller within twenty (20) days after receiving notice of such destruction or taking.  If Purchaser does not give such written notice within such twenty (20) day period, this transaction shall be consummated on the date and at the Purchase Price stated herein, and Seller will assign to Purchaser the proceeds of all insurance policy(ies) payable to Seller, or Seller’s portion of any condemnation award, in both cases, up to the amount of the Purchase Price, and credit to Purchaser at Closing the amount of any deductible under Seller’s insurance policy(ies) but not to exceed the amount of the loss.

 

11.2           If, prior to Closing, the Property is subject to an insured casualty or a condemnation event that is not a Material Event, Purchaser shall close this transaction on the date and at the Purchase Price stated herein, and Seller will assign to Purchaser the physical damage proceeds of all insurance policies payable to Seller, or Seller’s rights to any portion of any condemnation award, in both cases, up to the amount of the Purchase Price and pay to Purchaser the amount of any deductible under Seller’s insurance policy(ies) but not to exceed the amount of the loss.

 

11.3           If, prior to Closing, any uninsured loss to the Property occurs that Seller does not repair to Purchaser’s satisfaction at Seller’s sole cost and expense, Purchaser may either (i) terminate this Agreement by written notice to Seller and receive back the Earnest Money, less the Contract Consideration or (ii) proceed to Closing without any reduction to the Purchase Price or any other compensation for the loss.

 

11.4           If Purchaser elects to terminate this Agreement pursuant to this section, and if Purchaser is not, on the date of such election, in default under the Agreement, Seller shall promptly direct the Title Company to pay the Earnest Money, less the Contract Consideration, to Purchaser, and neither party shall have any further liability hereunder except for the surviving obligations.

ARTICLE XII

NOTICES

 

12.1           Any notice, request, demand, instruction or other communication to be given to either party hereunder, except those required to be delivered at Closing, shall be in writing, and shall be deemed to be delivered, when actually received if hand delivered, upon confirmation of transmission if sent by fax, and, one (1) day following the deposit with a nationally recognized overnight service for overnight delivery, addressed as follows:

  

Page 18

  

	
IF TO PURCHASER:

 

Andrews-Dillingham Properties, Ltd.

1140 Empire Central Dr., Suite 625

Dallas, TX  75247

Attn: Adolphus Andrews, Jr.

Facsimile No. 214-638-1826

 

 

IF TO SELLER:

 

Kent Texas Properties, LLC

7501 Tillman Rd.

Colleyville, Texas 76034

Attn:  Bryan Healey

Facsimile No. 682-626-0003

 

	
With Copy To:

 

Larry D. Salmon, Esq.

Glast, Phillips & Murray, P.C.

14801 Quorum Dr., Suite 500

Dallas, TX 75254

Facsimile No. 972.419.8329

 

 

With Copy to:

 

Whitney A. Bowling

Basinger Leggett Clemons Bowling

5700 Granite Parkway, Suite 950

Plano, TX  75024

Facsimile No. 214.473.8685

 

12.2           The addresses and addressees for the purpose of this article may be changed by either party by giving notice of such change to the other party in the manner provided herein for giving notice.  For the purpose of changing such addresses or addressees only, unless and until such written notice is received, the last address and addressee stated herein shall be deemed to continue in effect for all purposes.

ARTICLE XIII

MISCELLANEOUS

 

13.1           This Agreement and the exhibits attached hereto contain the entire agreement between the parties, and no promise, representation, warranty, or covenant not included in this Agreement or any such referenced agreements has been or is relied upon by either party.  Each party has relied upon its own examination of the full Agreement and the provisions thereof, and the counsel of its own advisors, and the warranties, representations, covenants, and agreements expressly contained in this Agreement.  No modification or amendment of this Agreement shall be of any
force or effect unless made in writing and executed by both Purchaser and Seller.  In the event that any litigation arises hereunder, it is specifically stipulated that this Agreement shall be interpreted and construed according to the laws of the State of Texas.  Venue for any legal action arising out of this Agreement shall be Dallas County, Texas.  Further, the prevailing party in any litigation between the parties shall be entitled to recover, as a part of its judgment, reasonable attorneys' fees and costs of suit.  An award of damages shall not be required in order for a party to be considered to be prevailing.

 

13.2           The article headings contained in this Agreement are for purposes of identification only and shall not be considered in construing this Agreement.  Time is of the essence with respect to the performance of all obligations provided herein and the consummation of all transactions contemplated hereby; provided, however, that in the event the last day of any specified time period referenced in the Agreement shall fall on a Saturday, Sunday or banking holiday, such time period shall be deemed to be extended to the next business day.

  

Page 19

  

 

13.3           This Agreement, and the rights and obligations of Purchaser hereunder, may be assigned by Purchaser at any time prior to Closing to an entity affiliated with Purchaser or to Purchaser’s 1031 qualified intermediary, without Seller's consent being required; provided, however, that Purchaser must deliver to Seller notice of any assignment (other than to Purchaser’s 1031 qualified intermediary) at least ten (10) days prior to Closing, and Purchaser shall not be relieved of any duties or obligations hereunder.  In the event of any such assignment, Seller agrees
to close the transaction contemplated hereunder with the assignee of Purchaser.

 

13.4           Seller and Purchaser shall have the right to effect the purchase and sale of the Property in a manner which will result in a deferred like-kind exchange pursuant to Section 1031 of the Internal Revenue Code of 1986 and the regulations thereunder.  Seller and Purchaser shall reasonably cooperate and assist each other in carrying out the requirements of such exchange to the extent that such cooperation and assistance does not result in additional expense, liability or delay to the other party.

 

13.5           All references in this Agreement to the “Effective Date”, "the date hereof" or similar references shall be deemed to refer to date the Title Company receipts a fully executed Agreement.

 

13.6           In the event it becomes necessary for either party hereto to file suit to enforce this Agreement or any provision contained herein, the party prevailing in such suit shall be entitled to recover in addition to all other remedies or damages reasonable attorney's fees incurred in such suit.  A party need not be awarded damages in order to be considered the prevailing party.

 

13.7           Words of any gender used in this Agreement shall be held and construed to include any other gender, and words of a singular number shall be held to include the plural and vice versa, unless the context requires otherwise.

 

13.8           This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts together shall constitute one and the same instrument.  Electronic and facsimile signatures shall be effective as original signatures.

 

13.9           All exhibits described in this Agreement are by this reference fully incorporated herein and made a part hereof by reference for all purposes.

 

13.10         This Agreement and the terms and provisions hereof shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, successors and assigns whenever the context so requires or admits.

 

13.11          If any provision of this Agreement or application to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances, other than those as to which it is so determined invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

 

  

Page 20

  

           13.12           Purchaser shall make no public disclosure of the terms of this transaction, either before or after Closing, without the prior written consent of Seller.

 

           13.13           Purchaser and Seller agree not to record this Agreement or any memorandum hereof.

 

           13.14           IN ANY LAWSUIT OR OTHER PROCEEDING INITIATED BY PURCHASER OR SELLER UNDER OR WITH RESPECT TO THIS AGREEMENT, PURCHASER AND SELLER EACH WAIVE ANY RIGHT IT MAY HAVE TO TRIAL BY JURY.  IN ADDITION, PURCHASER AND SELLER EACH WAIVE ANY RIGHT TO SEEK RESCISSION OF THE TRANSACTION PROVIDED FOR IN THE AGREEMENT.

 

13.15           No waiver by any party hereto of any right herein shall constitute a waiver of the same or any other right in the future.

SIGNATURE PAGES ATTACHED

 

 

 

 

  

Page 21

  

SIGNATURE PAGE TO

AGREEMENT OF SALE AND PURCHASE

OF IMPROVED REAL ESTATE

EXECUTED by Purchaser the _______ day of March, 2012.

	  	
PURCHASER:

 

ANDREWS-DILLINGHAM PROPERTIES, LTD., a Texas limited partnership

 

By:           A-D Management, Inc.,

a Texas corporation,

its General Partner

 

 

By:                                                                     

      Gary Smith, Authorized Signatory

 

  

Page 22

  

SIGNATURE PAGE TO

AGREEMENT OF SALE AND PURCHASE

OF IMPROVED REAL ESTATE

EXECUTED by Seller the _____ day of March, 2012.

	  	
SELLER:

 

KENT TEXAS PROPERTIES, LLC,

a Texas limited liability company

 

 

By: _________________________________

 

Name: _______________________________

 

Title: ________________________________

 

 

 

 

	  	  

  

Page 23

  

 

The Title Company hereby acknowledges receipt of the Earnest Money provided for in Section 2.2 of the foregoing Agreement, agrees to hold such Earnest Money pursuant to the terms and provisions of the Agreement, accepts the terms and conditions of escrow contained in the Agreement, and agrees to abide by the provisions of this Agreement and perform the obligations of the Title Company set forth in this Agreement.

	  	
Chicago Title of Texas, LLC

	  	  
	  	  
	  	
By:                                                                

	  	  
	  	
Name:                                                           

	  	  
	  	
Title:                                                             

	  	  
	  	  
	  	  
	
 

	
Date of Receipt of executed Agreement:

	  	  
	  	  
	  	
                                    , 2012

 

 

 

 

  

Page 24

  

EXHIBIT "A"

Property Description

BEING a tract of land out of the J.H. Sylvester Survey, Abstract No. 1383, and being all of Lot 1A, Block 9/1616 of the Headwaters Addition, an addition to the City of Dallas, Texas, as recorded in Volume 82206, Page 1148 of the Map Records of Dallas County, Texas, said tract being more particularly described as follows:

BEGINNING at a 1⁄2” iron rod found for corner in the southerly right-of-way line of Wycliff-Douglas Connection (32 feet from its centerline) at its intersection with the southwesterly right-of-way line of Cedar Springs Road (32 feet from its centerline);

THENCE S 47 degrees 49 minutes E, along the above said southwesterly line of Cedar Springs Road, 185.46 feet to a 1⁄2” iron rod found at the beginning of a cut-off with Douglas Street;

THENCE S 1 degrees 28 minutes 41 seconds E, along the above said cut-off line, 9.66 feet to a 1⁄2” iron rod found for corner in the northwesterly right-of-way line of Douglas Street (21 feet from its centerline);

THENCE S 44 degrees 51 minutes 40 seconds W, along the above said northwesterly line of Douglas Street, 136.00 feet to a 1⁄2” iron rod found for a corner in the northeasterly right-of-way line of a 15 foot alley;

THENCE N 47 degrees 49 minutes W, along the above said northeasterly line of a 15 foot alley, 322.00 feet to a 1⁄2” iron rod found for corner;

THENCE N 44 degrees 51 minutes 40 seconds E, 12.25 feet to a 1⁄2” iron rod set for a corner in the above referenced Wycliff-Douglas Connection;

THENCE S 83 degrees 47 minutes 29 seconds E, along the above said Wycliff-Douglas Connection, 11.50 feet to a 1⁄2” iron rod for the beginning of a curve to the left having a radius of 601.57 feet;

THENCE Southwesterly to Northeasterly, continuing along the above said southerly line of Wycliff-Douglas Connection and with the above said circular curve to the left thru a central angle of 16 degrees 54 minutes 43 seconds, an arc distance of 177.56 feet to a POINT OF BEGINNING and containing 36,589 square feet or 0.8400 acres of land.

 

 

  

Page 25

  

EXHIBIT "B"

SPECIAL WARRANTY DEED

	
THE STATE OF TEXAS

	
§

	  
	  	
§

	
KNOW ALL  BY THESE PRESENTS:

	
COUNTY OF DALLAS

	
§

	  

 

THAT, ________________________, a _____________________________(hereinafter referred to as "Grantor"), for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which consideration are hereby acknowledged, has GRANTED, SOLD AND CONVEYED and by these presents does GRANT, SELL AND CONVEY unto ANDREWS-DILLINGHAM PROPERTIES, LTD., a Texas limited partnership, (herein referred to as "Grantee"), the following described property, to-wit:

 

BEING that certain tract of land located in Dallas County, Texas, and being more particularly described by metes and bounds on Exhibit "A" attached hereto and fully made a part hereof by reference for all purposes (the "Land"), together with all improvements located thereon and all rights and appurtenances thereto in anywise belonging to Grantor, including but not limited to, all rights, title and interest of Grantor in (a) strips or gores, if any, between the Land and abutting properties, whether owned or claimed by
deed, limitations or otherwise, and whether or not they are located inside or outside the Land; and (b) easements, rights of way, rights of ingress or egress or other interests in or to any highway, street or roadway on, across or adjoining the Land (all of said property and interest being collectively referred to herein as the "Property").

 

THE PROPERTY IS BEING SOLD IN AN “AS IS, WHERE IS” CONDITION AND “WITH ALL FAULTS.”  EXCEPT AS EXPRESSLY SET FORTH IN THE PURCHASE AND SALE AGREEMENT BETWEEN GRANTOR AND GRANTEE, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE OR ARE MADE AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED BY GRANTOR OR BY ANY PARTNER, OFFICER, PERSON, FIRM, AGENT, ATTORNEY OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF GRANTOR AS TO (I) THE CONDITION OR STATE OF REPAIR OF THE PROPERTY; (II) THE COMPLIANCE OR NON-COMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES (INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING OR
DEVELOPMENT CODES); (III) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (IV) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (V) WHETHER THE PROPERTY CONTAINS ASBESTOS OR HARMFUL OR TOXIC SUBSTANCES OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME.

 

  

Page 26

  

TO HAVE AND TO HOLD the above described Property, together with any and all the rights and appurtenances thereto in anywise belonging to Grantor, unto the said Grantee, its legal representatives, successors and assigns FOREVER, and Grantor does hereby bind itself and its legal representatives, successors and assigns to WARRANT AND FOREVER DEFEND all and singular the Property unto the said Grantee, its successors, legal representatives and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof, by, through or under Grantor, but not otherwise, and subject to the exceptions set forth on
Exhibit “B” attached hereto and fully made a part hereof by reference for all purposes.

EXECUTED the _____ day of _______________, 2012.

	  	
                                                            

	  	  
	  	  
	  	
By:                                                     

	  	  
	  	
Name:                                                

	  	  
	  	
Title:                                                  

	
THE STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

	  	  

This instrument was acknowledged before me on _________________, 2012, by _________________________.

	  	
                                                           

	  	
Notary Public, State of Texas

	
My Commission Expires:

	  
	  	
                                                           

	
                                                  

	
(Printed or Typed Name of Notary)

  

Page 27

  

 

ACKNOWLEDGED:

Andrews-Dillingham Properties, Ltd.,

a Texas limited partnership

By:                                           

Name:                                      

Title:                                        

	
THE STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

This instrument was acknowledged before me on _________________, 2012, by _________________________.

	  	
:                                   

	  	
Notary Public, State of Texas

	
My Commission Expires:

	  
	  	
:                                   

	
                                 _______________

	
(Printed or Typed Name of Notary)

  

Page 28

  

EXHIBIT "C"

ASSIGNMENT OF LEASES

	
THE STATE OF TEXAS

	
§

	  
	  	
§

	
KNOW ALL BY THESE PRESENTS:

	
COUNTY OF DALLAS

	
§

	  

 

THIS ASSIGNMENT is made by and between ________________________________ a __________________________________ (hereinafter referred to as "Assignor"), and ANDREWS-DILLINGHAM PROPERTIES, LTD., a Texas limited partnership (hereinafter referred to as "Assignee").

W I T N E S S E T H :

 

WHEREAS, Assignor has this day conveyed the real property described in Exhibit "A" attached hereto and made a part hereof (such real property being hereinafter called the "Premises") to Assignee; and

 

WHEREAS, Assignor, as lessor, has heretofore entered into the lease agreements with third party tenants covering portions of space in the Premises, which lease agreements are described in Exhibit "B" attached hereto and made a part hereof, and Assignor is the present owner of all right, title and interest of the lessor under the terms of such leases; and

 

WHEREAS, Assignor desires to transfer and assign such leases (and all prepaid rents and security and other deposits for such leases) to Assignee;

 

NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby GRANT, BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, SET OVER and DELIVER unto Assignee, its successors and assigns, all of the said leases, prepaid rents and security deposits and other deposits  including, without limitation, all of the rights, powers, estates and privileges of lessor in, to and under the leases and rent to accrue thereunder, and all rights of reversion and
all of the rights and benefits of every description whatsoever belonging to or accruing to the benefit of the lessor in said leases and to the owner of the Premises.

 

TO HAVE AND TO HOLD the above leases and rights and interests pertaining thereto unto Assignee, its successors and assigns, and Assignor does hereby bind itself and its successors and assigns to WARRANT and FOREVER DEFEND the said leases, rights and interests unto Assignee, its successors and assigns, against every person whomsoever lawfully claiming or attempting to claim the same, or any part thereof.

  

Page 29

  

Assignee covenants and agrees to discharge any and all obligations of the lessor under the leases herein assigned arising on or after the effective date hereof and hereby agrees to indemnify Assignor against and hold Assignor harmless from any and all cost, liability, loss, damage or expense, including, without limitation, reasonable attorneys’ fees, originating or relating to the period on or after the date hereof and arising out of the Assignee’s obligations under such leases.

 

Assignor covenants and agrees to discharge any and all obligations of the lessor under the leases herein assigned arising prior to the effective date hereof and hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all cost, liability, loss, damage or expense, including, without limitation, reasonable attorneys’ fees, originating or relating to the period prior to the date hereof and arising out of the Assignor’s obligations under such leases.

 

If any litigation between Assignor and Assignee arises out of the obligations of the parties under this Assignment or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party’s costs and expenses of such litigation, including, without limitation, reasonable attorneys’ fees.

 

This Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument.

EXECUTED the _____ day of __________, 2012.

ASSIGNOR:

	  	
                                                           

	  	  
	  	
By:                                                     

	  	  
	  	
Name:                                                

	  	  
	  	
Title:                                                  

  

Page 30

  

	
 

	
ASSIGNEE:

	  	  	  
	
 

	
ANDREWS-DILLINGHAM PROPERTIES, LTD.,

	
 

	
a Texas limited partnership

	  	  	  
	
 

	
By:

	
A-D Management, Inc.,

	
 

	  	
a Texas corporation,

	
 

	  	
its General Partner

	  	  	  
	  	  	  
	
 

	  	
By:                                                     

	
 

	  	
       Adolphus Andrews, Jr., President

 

	
THE STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

This instrument was acknowledged before me on _________________, 2012, by _______________________.

	  	
                                                           

	  	
Notary Public, State of Texas

	
My Commission Expires:

	  
	  	
                                                           

	
                                                 

	
(Printed or Typed Name of Notary)

	  	  
	  	  

 

	  	  
	
THE STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

This instrument was acknowledged before me on _________________, 2012, by _______________________.

	  	
                                                           

	  	
Notary Public, State of Texas

	
My Commission Expires:

	  
	  	
                                                           

	
                                                 

	
(Printed or Typed Name of Notary)

  

Page 31

  

EXHIBIT "D"

BLANKET CONVEYANCE, BILL OF SALE AND ASSIGNMENT

	
THE STATE OF TEXAS

	
§

	  
	  	
§

	
KNOW ALL BY THESE PRESENTS:

	
COUNTY OF DALLAS

	
§

	  

 

Concurrently with the execution and delivery hereof, _____________________________ a _____________________________ ("Assignor"), is conveying to ANDREWS-DILLINGHAM PROPERTIES, LTD., a Texas limited partnership ("Assignee"), by Special Warranty Deed that certain tract of land, together with the improvements located thereon (the "Property"), lying and being situated in Dallas County, Texas, being more particularly described on Exhibit "A" attached hereto and made a part hereof for all purposes.

 

It is the desire of Assignor to hereby assign, transfer and convey to Assignee all fixtures, fittings, appliances, apparatus, equipment, machinery, assignable warranties and guaranties, and other items of personal property, affixed or attached to, or placed or situated upon, or used or acquired in any way whatsoever in connection with the use, enjoyment, occupancy or operation of the Property (all of such properties and assets being collectively called the "Assigned Properties").  Notwithstanding the foregoing, “Assigned Properties” shall not include any property of tenants.

 

NOW, THEREFORE, in consideration of the receipt of Ten and No/100 Dollars ($10.00) and other good and valuable consideration in hand paid by Assignee to Assignor, the receipt and sufficiency of which are hereby acknowledged and confessed by Assignor, Assignor does hereby ASSIGN, TRANSFER, SET OVER and DELIVER to Assignee, its successors and assigns, all of the Assigned Properties, including without limitation of the generality of the foregoing, the following:

 

1.           The tangible personal property situated upon or used in connection with the complete and comfortable use, enjoyment, occupancy or operation of the Property, except that owned by tenants of the Property.

 

2.           All raw materials, work and materials in process, stock in trade, inventory and other equipment and other tangible personal property owned by Assignor situated on the Property.

 

3.           All assignable warranties and guaranties (express or implied) issued in connection with or arising out of (a) the purchase and repair of all fixtures, equipment and personal property owned by Assignor and attached to and located in or used in connection with the Property, including but not limited to, (i) all heating, air conditioning, plumbing and lighting fixtures and equipment, and water heaters, and (ii) carpeting, furniture and window draperies, or (b) the construction of any of the improvements located in the Property.

  

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TO HAVE AND TO HOLD the Assigned Properties unto Assignee, its successors and assigns, forever, and Assignor does hereby bind itself and its successors and assigns to WARRANT and FOREVER DEFEND, all and singular, title to the Assigned Properties unto Assignee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof.

Assignor has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Assigned Properties, including, but not limited to: title; merchantability of the Assigned Properties or its fitness for any particular purpose; the design or condition of the Assigned Properties; the quality or capacity of the Assigned Properties; workmanship or compliance of the Assigned Properties with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects.  Purchaser accepts the Assigned Properties on an “AS IS, WHERE IS” basis, and “WITH ALL FAULTS.”

 

EXECUTED the _____ day of _______________, 2012.

	  	
ASSIGNOR:

	  	  
	  	
                                                            

	  	  
	  	  
	  	  
	  	
By:                                                      

	  	  
	  	
Name:                                                

	  	  
	  	
Title:                                                  

	  	  
	  	  
	  	
ASSIGNEE:

	
 

	
ANDREWS-DILLINGHAM PROPERTIES, LTD.,

	
 

	
a Texas limited partnership

	  	  	  
	
 

	
By:

	
A-D Management, Inc.,

	
 

	  	
a Texas corporation,

	
 

	  	
its General Partner

	  	  	  
	  	  	  
	  	  	
By:                                                                 

	  	  	
       Adolphus Andrews, Jr., President

  

Page 33

  

	
THE STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

This instrument was acknowledged before me on _________________, 2012, by _______________________.

	  	
                                                            

	  	
Notary Public, State of Texas

	
My Commission Expires:

	  
	  	
                                                              

	
                                                  

	
(Printed or Typed Name of Notary)

	  	  
	  	  
	  	  
	
THE STATE OF TEXAS

	
§

	  	
§

	
COUNTY OF DALLAS

	
§

	  	  
	
This instrument was acknowledged before me on _________________, 2012, by _______________________.

	  	  
	  	  
	  	
                                                         

	  	
Notary Public, State of Texas

	
My Commission Expires:

	  
	  	
                                                         

	
______________________

	
(Printed or Typed Name of Notary)

 

 

 

  

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EXHIBIT "E"

BILLS PAID AFFIDAVIT

	
THE STATE OF TEXAS

	
§

	  
	  	
§

	
KNOW ALL BY THESE PRESENTS:

	
COUNTY OF DALLAS

	
§

	  

Title Company form to be inserted.

EXECUTED the _____ day of _______________, 2012.

	  	
                                                           

	  	  
	  	
By:                                                     

	  	  
	  	
Name:                                                

	  	  
	  	
Title:                                                  

Subscribed and sworn to before me on _________________, 2012, by ________________________________.

	  	
                                                           

	  	
Notary Public, State of Texas

	  	  
	
My Commission Expires:

	
                                                           

	
                                                  

	
(Printed or Typed Name of Notary)

  

Page 35

  

EXHIBIT "F"

TENANT NOTICE LETTER

_______________, 2012

________________________

________________________

________________________

Re:  Notice of Change of Ownership

Dear __________:

You are hereby notified as follows:

(1)           That, as of the date hereof, __________________________________, a _________________________  (the "Former Owner") has transferred, sold, assigned, and conveyed all of the Former Owner's interest in and to the above property to ANDREWS-DILLINGHAM PROPERTIES, LTD. (the "New Owner").

(2)           The New Owner is, as of the date hereof, responsible for your tenant's security deposit and/or other deposit in the aggregate amount of $_______________ with respect to your leased premises at the Property.

(3)           Future rental payments with respect to your leased premises at the Property should be made to the New Owner as follows:  by mailing a check or money order payable to the order of ANDREWS-DILLINGHAM PROPERTIES, LTD., at 1140 Empire Central, Suite 625, Dallas, Texas 75247.

	  	
Yours very truly,

	  	  
	  	
FORMER OWNER:

	  	  
	  	
                                                            

	  	    
	  	
By:                                                      

	  	  
	  	
Name:                                                 

	  	  
	  	
Title:                                                   

  

Page 36

  

 

	  	
NEW OWNER:

	  	  	  
	  	
ANDREWS-DILLINGHAM PROPERTIES, LTD.,

	  	
a Texas limited partnership

	  	  	  
	  	
By:

	
A-D Management, Inc.,

	
 

	  	
a Texas corporation,

	
 

	  	
its General Partner

	  	  	  
	  	  	  
	  	
By:

	
                                                               

	  	  	
       Adolphus Andrews, Jr., President

  

Page 37

  

EXHIBIT "G"

NON-FOREIGN

CERTIFICATE OF TRANSFEROR

ENTITY TRANSFEROR

Under Section 1445 of the Internal Revenue Code, a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.  To inform the transferee that the withholding of tax is not required upon the disposition of a U.S. real property interest, the undersigned hereby certifies the following on behalf of ______________________________, a __________________________  (the "Entity"):

1.           The Entity is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code of 1986, as amended, and Income Tax Regulations);

2.           The Entity's U.S. employer identification number is _________________; and

3.           The Entity's office address is ______________________________.

Both the undersigned and the Entity understand that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Entity.

EXECUTED the ____ day of __________, 2012.

	  	  
	  	  
	  	
                                                           

	  	  
	  	  
	  	
By:                                                     

	  	  
	  	
Name:                                                

	  	  
	  	
Title:                                                  

	  	  

  

Page 38

  

Subscribed and sworn to before me on _________________, 2012, by ________________________________.

	  	
                                                            

	  	
Notary Public, State of Texas

	  	  
	
My Commission Expires:

	  
	  	
                                                           

	
                                                  

	
(Printed or Typed Name of Notary)

 

 

Page 39

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