SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 31, 1997
APPLE RESIDENTIAL INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 333-10635 54-1816010
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
306 East Main Street
Richmond, Virginia 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
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APPLE RESIDENTIAL INCOME TRUST, INC.
FORM 8-K
Index
Item 2. Acquisition or Disposition of Assets
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
a. Independent Auditors' Report
(Polo Run Apartments)*
Historical Statement of Income and
Direct Operating Expenses
(Polo Run Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Polo Run Apartments)*
b. Independent Auditors' Report
(Wildwood Apartments)*
Historical Statement of Income and
Direct Operating Expenses
(Wildwood Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Wildwood Apartments)*
c. Independent Auditors' Report
(Toscana Apartments)*
Historical Statement of Income and
Direct Operating Expenses
(Toscana Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Toscana Apartments)*
d. Pro Forma Statement of Operations for the Three Months ended
March 31, 1997 (unaudited)*
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*To be filed by amendment.
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Pro Forma Balance Sheet as of
March 31, 1997 (unaudited)*
Pro Forma Statement of Operations
for the Year ended December 31, 1996
(unaudited)*
e. Exhibits
10.1 Purchase Contract for Polo Run Apartments
10.2 Purchase Contract for Wildwood Apartments
10.3 Purchase Contract for Toscana Apartments
10.4 Property Management Agreement for Polo Run Apartments
10.5 Property Management Agreement for Wildwood Apartments
10.6 Property Management Agreement for Toscana Apartments
23.1 Consent of Independent Auditors*
23.2 Consent of Independent Auditors*
23.3 Consent of Independent Auditors*
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*To be filed by amendment.
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Item 2. Acquisition or Disposition of Assets
POLO RUN APARTMENTS
Arlington, Texas
On March 31, 1997, effective March 1, 1997, Apple Residential Income
Trust, Inc. (the "Company") purchased the Polo Run Apartments, a 224-unit
apartment complex having an address of 901 Greenway Glen Drive, Arlington, Texas
(the "Property").
The seller was unaffiliated with the Company, the Advisor and their
Affiliates. The purchase price was $6,858,974, which was paid entirely from the
proceeds of the Company's $10 million unsecured line of credit from First Union
National Bank of Virginia (the "Unsecured Line of Credit"). The Company plans to
repay this borrowed amount using proceeds from the future sale of Shares. Title
to the Property was conveyed to the Company by limited warranty deed.
Location. The Property is located off of Road to Six Flags in
Arlington, Texas, which is located between Dallas and Fort Worth. Arlington is
approximately 13 miles east of the Fort Worth Central Business District and
approximately 20 miles west of the Dallas Central Business District.
The Dallas/Fort Worth Consolidated Metropolitan Statistical area is
known locally as "The Metroplex." The Dallas/Fort Worth Metroplex is in the
north-central part of Texas and is composed of nine counties. The 1996
population of the Metroplex was approximately 4,400,000. Dallas is the second
largest city in the state, behind Houston.
The economy of the Dallas/Fort Worth area is complex and diversified.
Key economic factors include a large manufacturing base (including as products
military hardware, electronics, automobiles, industrial equipment, oil-field
parts, food products and chemicals), banking, insurance services,
communications, oil and gas production and air transportation. Major employers
in the area include Texas Instruments, Southwestern Bell, General Motors, J. C.
Penney, NationsBank and Vought Aircraft Company.
The Metroplex is also an established transportation center for the
nation. The Dallas/Fort Worth International Airport occupies approximately
17,800 acres of land between the two cities. It is the largest commercial
airport in the United States in terms of land area, and is the fourth busiest
airport in the world, with 1,700 daily arrivals and departures.
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The area also has a well-established system of interstate highways and
supporting secondary routes. The Metroplex is located at the hub of Interstates
35, 45, 20 and 30. Two outer loops, Interstate 635 in Dallas and Interstate 820
in Fort Worth, surround the respective cities.
The many institutions of higher learning in the area include Southern
Methodist University, the University of Texas at Dallas, the University of Texas
at Arlington, the University of North Texas, and Texas Christian University.
Owing in large part to its location between Dallas and Fort Worth,
Arlington has become a focus of business development in the area. Major
employers include General Motors, National Semiconductor, Johnson & Johnson,
Doskocil Manufacturing Company and Arlington Memorial Hospital. The area is also
the site of several large warehousing and distribution companies whose primary
market is the Metroplex.
The University of Texas at Arlington has an enrollment of approximately
23,000 students. Arlington also serves as a major medical center for its own
population and for residents of outlying communities as well. Arlington Memorial
Hospital has a staff of approximately 1,680 and HCA South Arlington Medical
Center has approximately 640 employees, making both of them among the largest
employers in the city.
The immediate area surrounding the Property consists of other
multi-family housing and residential, commercial and retail development. The
Property is located near restaurants, businesses, schools and churches, and is
readily accessible from Interstates 20 and 30. The Property is an approximately
20- to 25-minute drive from both downtown Dallas and downtown Fort Worth, as
well as the Dallas/Fort Worth International Airport.
Description of the Property. The Property consists of 224 garden-style
apartment units located in 23 two-story buildings on approximately 9.2 acres of
land. The Property was completed in 1984.
The Company believes that the Property has generally been well
maintained and is generally in very good condition. However, the Company has
budgeted approximately $224,000 for repairs and improvements, including
painting, siding repairs, pool renovations and clubhouse renovations.
The Property offers four units types. The unit mix and rents currently
being charged new tenants as of March 1997 are as follows:
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- --------------------------------------- --------------- --------
56 One bedroom, one bathroom w/fireplace 656 $450
16 One bedroom, one bathroom 720 495
w/ fireplace and dining room
88 Two bedrooms, two bathrooms 913 575
w/ fireplace and dining room
64 Two bedrooms, two bathrooms 981 590
w/ fireplace, dining room and vanity
The apartments provide a combined total of approximately 191,000 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example, a two-bedroom, two-bath apartment rented for $485 in 1992, $495 in
1993, $510 in 1994, $530 in 1995, and $560 in 1996. The average effective annual
rental per square foot at the Property for 1992, 1993, 1994, 1995 and 1996 was
$6.42, $6.55, $6.75, $7.01 and $7.41, respectively.
The buildings are wood frame construction with combination brick veneer
and masonite hardboard exteriors on reinforced concrete slab foundations. Roofs
are sloped fiberglass shingled on plywood.
The Property has two outdoor swimming pools and a clubhouse with weight
room, party room (with full bar and kitchen), billiards, steam rooms and a
leasing office. There is ample paved parking for tenants.
Apartment units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up, miniblinds and an individually controlled heating and air conditioning
unit. Each kitchen is equipped with a refrigerator/freezer, electric range and
oven, microwave oven, dishwasher and garbage disposal. Each unit also includes a
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wood-burning fireplace and a washer and dryer. The owner of the Property pays
for cold water, sewer service, gas usage for hot water and trash removal.
Tenants pay for their electricity service, which includes cooking, lighting,
heating and air conditioning.
There are at least six apartment properties which compete with the
Property. All offer similar amenities and generally have rents that are
comparable to those of the Property. Based on a recent telephone survey, the
Advisor estimates that occupancy in nearby competing properties now averages
approximately 93%.
According to information provided by the seller, physical occupancy at
the Property averaged approximately 94% in 1992, 95% in 1993, 93% in 1994, 94%
in 1995 and 96% in 1996. On March 31, 1997, the Property was 92% occupied. The
residents are a mix of white-collar and blue-collar workers, students and
retired persons.
The following table sets forth the 1996 real estate tax information on
the Property:
Jurisdiction Assessed Value Rate Tax
- ------------------- ---------------- -------- ------------
County of Tarrant $5,175,000 $1.90619 $98,645.13
City of Arlington 5,175,000 0.64000 33,120.00
Total 131,765.13
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $4,477,495) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Internal Revenue Code of 1986, as amended ("the Code"). Amounts to be
spent by the Company on repairs and improvements will be treated for tax
purposes as permitted by the Code based on the nature of the expenditures.
The Advisor and the Company believe that the Property is and will
continue to be adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Advisor and the Company to be relevant in evaluating the
Property for acquisition by the Company included the following:
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1. Arlington and The Metroplex generally and the specific area in which
the Property is located were perceived as being characterized by a
diverse, stable and steadily growing economy. Accordingly, it was
believed that such economy and its anticipated growth and development
would support stable occupancy rates and reasonable increases in rents
at the Property.
2. Based upon an engineering report and its own inspections, the Advisor
believes that the Property has been well maintained and is generally in
very good condition, although the Advisor believes that the planned
repairs and improvements will allow an increase in rents at the
Property.
3. The Property is conveniently proximate to many retail centers,
businesses, restaurants and entertainment-related facilities.
Accordingly, the Advisor believes that the Company is and can continue
to be perceived as a desirable location for residents.
Acquisition and Management Services and Fees. In consideration of
services rendered to the Company in connection with the selection and
acquisition of the Property, the Company paid Apple Realty Group, Inc. a
property acquisition fee equal to 2% of the purchase price of the Property, or
$137,179.48. Apple Residential Management Group, Inc. will serve as property
manager for the Property and for its services will be paid by the Company a
monthly management fee equal to 5% of the gross revenues of the Property plus
reimbursement of certain expenses.
WILDWOOD APARTMENTS
Euless, Texas
On March 31, 1997, effective March 1, 1997, the Company purchased the
Wildwood Apartments, a 120-unit apartment complex having an address of 200 West
Bear Creek, Euless, Texas (the "Property").
The seller was unaffiliated with the Company, the Advisor and their
Affiliates. The purchase price was $3,963,519, which was paid entirely using
the Unsecured Line of Credit. The Company plans to repay such borrowing on the
Unsecured Line of Credit using proceeds from the future sale of Shares. Title to
the Property was conveyed to the Company by limited warranty deed.
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Location. The Property is located in Euless, within Tarrant County,
which is a part of "The Metroplex." For information on The Metroplex see "Polo
Run Apartments" herein.
The Property is located in the northern portion of Euless. Euless is
located between Dallas and Fort Worth, approximately 17 miles east of the Fort
Worth central business district and approximately 20 miles west of the Dallas
central business district.
The immediate area surrounding the Property consists of other
multi-family housing and residential, commercial and retail development. The
Property is located near restaurants, businesses, schools and churches.
Description of the Property. The Property consists of 120 garden-style
apartments located in 10 two-story buildings on approximately 10 acres of land.
The Property was built in 1984.
The Company believes that the Property has generally been well
maintained and is generally in very good condition. However, the Company has
budgeted approximately $120,000 for certain repairs and improvements, including
painting, siding repair, pool renovations and clubhouse renovations.
The Property offers eight different unit types. The unit mix and rents
currently being charged new tenants as of March 1997 are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ------------------------------------ ----------------- -------
17 One bedroom, one bathroom 525 $469
7 One bedroom, one bathroom (upgraded) 525 499
13 One bedroom, one bathroom 650 519
11 One bedroom, one bathroom (upgraded) 650 539
16 One bedroom, one bathroom 750 549
16 One bedroom, one bathroom (upgraded) 750 579
16 Two bedrooms, two bathrooms 900 725
24 Two bedrooms, two bathrooms 1,000 750
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The apartments provide a combined total of approximately 90,000 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example a one-bedroom, one-bath apartment rented for $340 in 1992, $340 in 1993,
$355 in 1994, $395 in 1995, and $420 in 1996. The average effective annual
rental per square foot at the Property for 1992, 1993, 1994, 1995 and 1996 was
$6.96, $6.96, $7.27, $8.09 and $8.60, respectively.
The buildings are wood frame construction with a combination of brick
veneer and wood siding on concrete slab foundations. Roofs are pitched and
covered with composition shingles.
The Property has an outdoor swimming pool with a waterfall, a jacuzzi,
covered picnic areas, a playground, a sand volleyball court, basketball courts,
a laundry room and a health club. The Property also has a clubhouse. There is
ample paved parking for tenants, and there are 124 covered parking spaces.
Apartments units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment has a cable television
hook-up, miniblinds and an individually controlled heating and air conditioning
unit. Units also include ceiling fans, intrusion alarms, private balconies and
door-to-door trash and recycling service. Each kitchen is equipped with a
refrigerator-freezer, electric range and oven, dishwasher, microwave oven and
garbage disposal. All but 24 of the units have a fireplace and all of the
two-bedroom units include full-sized washer/dryer connections. The Property also
has valet laundry service with free delivery for tenants without washers and
dryers. The owner of the Property pays for gas usage for hot water and trash
removal. Tenants pay for their electricity service, which includes cooking,
lighting, heating and air conditioning. Historically, the owner of the Property
was responsible for water and sewer charges. However, in February 1997, the
Property was converted to individually-metered water and sewer service. As
leases are renewed or replaced, the tenants will become responsible for these
charges.
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There are at least six apartment properties which compete with the
Property. All offer similar amenities and generally have rents that are
comparable when compared with those of the Property. Based on a recent telephone
survey, the Advisor estimates that occupancy in nearby competing properties now
averages approximately 94%.
According to information provided by the seller, physical occupancy at
the Property averaged approximately 93% in 1992, 94% in 1993, 94% in 1994, 95%
in 1995 and 96% in 1996. On March 24, 1997, the Property was 98% occupied. The
residents are a mix of white-collar and blue-collar workers, students and
retired persons.
The following table sets forth the 1996 real estate tax information on
the Property:
Jurisdiction Assessed Value Rate Tax
- ------------------------- ---------------- ------------ ----------
County of Tarrant $3,150,000 $1.10161 $34,700.59
Grapevine School District 3,150,000 1.53779 48,440.39
Total 83,140.97
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $2,496,144) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Code. Amounts to be spent by the Company on repairs and improvements will
be treated for tax purposes as permitted by the Code based on the nature of the
expenditures.
The Advisor and the Company believe that the Property is and will
continue to be adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Advisor and the Company to be relevant in evaluating the
Property for acquisition by the Company included the following:
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1. The Metroplex generally and the specific area in which the Property is
located were perceived as being characterized by a diverse, stable and
steadily growing economy. Accordingly, it was believed that such
economy and its anticipated growth and development would support stable
occupancy rates and reasonable increases in rents at the Property.
2. Based upon an engineering report and its own inspections, the Advisor
believes that the Property has been well maintained and is generally in
very good condition, although the Advisor believes that the planned
repairs and improvements will allow an increase in rents at the
Property.
3. The Property is conveniently proximate to many retail centers,
businesses, restaurants and entertainment-related facilities.
Accordingly, the Advisor believes that the Company is and can continue
to be perceived as a desirable location for residents.
Acquisition and Management Services and Fees. In consideration of
services rendered to the Company in connection with the selection and
acquisition of the Property, the Company paid Apple Realty Group, Inc. a
property acquisition fee equal to 2% of the purchase price of the Property, or
$79,270.38. Apple Residential Management Group, Inc. will serve as property
manager for the Property and for its services will be paid by the Company a
monthly management fee equal to 5% of the gross revenues of the Property plus
reimbursement of certain expenses.
TOSCANA APARTMENTS
Dallas, Texas
On March 31, 1997, effective March 1, 1997, the Company purchased the
Toscana Apartments, a 192-unit apartment complex having an address of 17910
Kelly Boulevard, Dallas, Texas (the "Property").
The seller was unaffiliated with the Company, the Advisor and their
Affiliates. The purchase price was $5,854,531. The Company paid all but $125,000
in cash using proceeds from the sale of Shares, and the balance was paid using
the Unsecured Line of Credit. Title to the Property was conveyed to the Company
by limited warranty deed.
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Location. The Property is located near the intersection of Kelly and
Frankford in the north section of Dallas, Texas, which is part of "The
Metroplex." For information on The Metroplex, see "Polo Run Apartments," herein.
The area surrounding the Property consists principally of other
multi-family housing and residential, commercial and retail development. The
Property is approximately a 20-minute drive from downtown Dallas and an
approximately 20-minute drive from the Dallas/Fort Worth International Airport.
Description of the Property. The Property consists of 192 garden-style
apartment units in six two-story buildings on approximately four acres of land.
The Property was completed in 1986.
The Company believes that the Property has generally been well
maintained and is generally in good condition. However, the Company has budgeted
approximately $192,000 for repairs and improvements, including painting,
clubhouse renovations, and parking area repair.
The Property offers six different units types. The unit mix and rents
currently being charged new tenants as of March 1997 are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
- --------- ------------------------------------ --------------- ---------
64 Efficiency 500 $434
52 One bedroom, one bathroom 600 495
12 One bedroom, one bathroom 650 505
8 One bedroom, one bathroom 650 505
42 One bedroom, one bathroom 700 540
14 One bedroom, one bathroom (upgraded) 700 565
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The apartments provide a combined total of approximately 115,000 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example, a 650 square-foot apartment rented for $395 in 1992, $395 in 1993, $425
in 1994, $470 in 1995, and $490 in 1996. The average effective annual rental per
square foot at the Property for 1992, 1993, 1994, 1995 and 1996 was $7.68,
$7.68, $8.26, $9.13 and $9.52, respectively.
The buildings are wood frame construction with a combination of brick
veneer, stucco and painted wood siding on concrete slab foundations. Roofs are
sloped fiberglass shingles on plywood.
The Property has an outdoor swimming pool with a fountain, a jacuzzi
and cabana, a volleyball area, an exercise/weights room, a sauna, three tanning
beds, an aerobics room with aerobics classes offered, a billiard room, limited
access gates and covered parking. The Property also includes a clubhouse. There
is ample paved parking for tenants.
Each apartment unit has wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up, miniblinds and an individually controlled heating and air conditioning
unit. Each kitchen is equipped with a refrigerator/freezer with icemaker,
electric range and oven, microwave, dishwasher and garbage disposal. Each unit
also includes a wood burning fireplace, a stacked washer/dryer unit, ceiling
fans, alarm system and vaulted ceilings. The owner of the Property pays for cold
water, sewer service, gas usage for hot water and trash removal. Tenants pay for
their electricity usage, which includes cooking, lighting, heating and air
conditioning.
There are at least four apartment properties which compete with the
Property. All offer similar amenities and generally have rents that are
comparable to those of the Property. Based on a recent telephone survey, the
Advisor estimates that occupancy in nearby competing properties now averages
approximately 95%.
According to information provided by the seller, physical occupancy at
the Property averaged approximately 95% in 1992, 95% in 1993, 94% in 1994, 96%
in 1995 and 96% in 1996. On March 26, 1997, the Property was 98% occupied. The
residents are primarily white-collar workers.
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The following table sets forth the 1996 real estate tax information on
the Property:
Jurisdiction Assessed Value Rate Tax
- ----------------------------------- -------------- ----------- ------------
County of Denton $4,519,210 $0.26690 $12,061.77
City of Dallas 5,030,870 0.67010 33,711.86
Carrollton-Farmers School District 5,030,870 1.46190 73,546.29
Total 119,319.92
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $4,338,270) will be depreciated over
27.5 years on a straight-line basis. The basis of the personal property portion
will be depreciated in accordance with the modified accelerated cost recovery
system of the Code. Amounts to be spent by the Company on repairs and
improvements will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.
The Advisor and the Company believe that the Property is and will
continue to be adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Advisor and the Company to be relevant in evaluating the
Property for acquisition by the Company included the following:
1. Dallas generally and the specific area in which the Property is located
were perceived as being characterized by a diverse, stable and steadily
growing economy. Accordingly, it was believed that such economy and its
anticipated growth and development would support stable occupancy rates
and reasonable increases in rents at the Property.
2. Based upon an engineering report and its own inspections, the Advisor
believes that the Property has been well maintained and is generally in
good condition, although the Advisor believes that the planned repairs
and improvements will allow an increase in rents at the Property.
3. The Property is conveniently proximate to many retail centers,
businesses, restaurants and entertainment-related facilities.
Accordingly, the Advisor believes that the Company is and can continue
to be perceived as a desirable location for residents.
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Acquisition and Management Services and Fees. In consideration of
services rendered to the Company in connection with the selection and
acquisition of the Property, the Company paid Apple Realty Group, Inc. a
property acquisition fee equal to 2% of the purchase price of the Property, or
$117,090.62. Apple Residential Management Group, Inc. will serve as property
manager for the Property and for its services will be paid by the Company a
monthly management fee equal to 5% of the gross revenues of the Property plus
reimbursement of certain expenses.
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ITEM 7.a.*
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* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.b.*
- ------------------------------
* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.c.*
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* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.d.*
- ----------------------------
* To be filed by amendment. It is impracticable to include herein the required
pro forma financial information. The required pro forma financial information
will be filed as an amendment to this report as soon as possible, but in no
event more than 60 days after the date of filing of this report.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Apple Residential Income Trust, Inc.
Date: April 15, 1997 By: /s/ GLADE M. KNIGHT
-------------------
Glade M. Knight
President
of Apple Residential
Income Trust, Inc.
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EXHIBIT INDEX
Apple Residential Income Trust, Inc.
Form 8-K dated March 31, 1997
Exhibit Number Exhibit Page Number
- -------------- ------- -----------
10.1 Purchase Contract for Polo
Run Apartments
10.2 Purchase Contract for
Wildwood Apartments
10.3 Purchase Contract for
Toscana Apartments
10.4 Property Management Agreement
for Polo Run Apartments
10.5 Property Management Agreement
for Wildwood Apartments
10.6 Property Management Agreement
for Toscana Apartments
23.1 Consent of Independent Auditors*
23.2 Consent of Independent Auditors*
23.3 Consent of Independent Auditors*
* To be filed by amendment.
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PURCHASE AND SALE AGREEMENT
between
AV POLO RUN ASSOCIATES, LTD.
and
CORNERSTONE REALTY GROUP, INC. and/or assigns
- ------------------------------------------------------------------------------
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TABLE OF CONTENTS
-----------------
ARTICLE I--GENERAL INFORMATION..........................................1
1.1 Buyer............................................................1
1.2 Buyer Tax ID.....................................................1
1.3 Seller...........................................................1
1.4 Title Company....................................................1
1.5 Effective Date...................................................1
1.6 Real Property....................................................1
1.7 Purchase Price...................................................1
1.8 Earnest Money....................................................1
1.9 Inspection Period................................................2
1.10 Closing Date.....................................................2
1.11 Place of Closing.................................................2
1.12 Broker...........................................................2
1.13 Commission.......................................................2
1.14 Notices, Buyer...................................................2
1.15 Notices, Seller..................................................2
ARTICLE II--DEFINITIONS.................................................2
2.1 "Agreement"......................................................3
2.2 "Closing"........................................................3
2.3 "Contract Consideration".........................................3
2.4 "Current Funds"..................................................3
2.5 "Deed"...........................................................3
2.6 "Earnest Money"..................................................3
2.7 "Effective Date".................................................3
2.8 "Existing Lien"..................................................3
2.9 "Hazardous Materials"............................................3
2.10 "Permitted Exceptions"...........................................3
2.11 "Property".......................................................3
2.12 "Purchase Price".................................................3
2.13 "Survey".........................................................3
2.14 "Title Commitment"...............................................3
2.15 "Title Documents"................................................3
2.16 "Title Policy"...................................................3
2.17 "Updated Survey".................................................4
ARTICLE III--AGREEMENT OF PURCHASE AND SALE.............................4
ARTICLE IV--CONSIDERATION...............................................5
4.1 Earnest Money Deposit............................................5
4.2 Contract Consideration...........................................5
4.3 Payment of Purchase Price........................................5
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ARTICLE V--INTENTIONALLY DELETED........................................5
ARTICLE VI--DELIVERIES AND INSPECTIONS..................................5
6.1 Seller's Obligations.............................................5
6.2 Other Obligations........ .......................................5
6.3 Title and Survey Objections......................................7
6.4 Inspection.......................................................7
6.5 Updated Survey...................................................8
ARTICLE VII--LIMITATION OF REPRESENTATIONS OR WARRANTIES BY
SELLER .................................................................8
7.1 Disclaimer .......................................................8
7.2 Hazardous Materials...............................................9
ARTICLE Vlll--FUTURE OPERATIONS........................................10
8.1 Maintenance, Litigation.........................................10
8.2 Contracts.......................................................10
8.3 Leasing of Space ...............................................10
8.4 Insurance Claims................................................10
8.5 Removal.........................................................10
8.6 Tenant Inquiries, Complaints....................................10
8.7 Terminate Contracts.............................................10
8.8 Maintenance of Insurance........................................10
ARTICLE IX--CLOSING....................................................11
9.1 Date and Place of Closing.......................................11
9.2 Items to be Delivered at Closing................................11
9.3 "Rent Ready"....................................................12
9.4 Possession......................................................13
ARTICLE X--CLOSING COSTS AND PRORATIONS................................13
10.1 Closing Costs..................................................13
10.2 Prorations.....................................................13
ARTICLE XI--DEFAULTS AND REMEDIES......................................14
11.1 Seller's Default: Buyer's Sole Remedies........................14
11.2 Buyer's Default: Seller's Sole Remedies........................14
ARTICLE XII--MISCELLANEOUS PROVISIONS..................................15
12.1 Broker's Commission............................................15
12.2 Condemnation and Casualty......................................15
12.3 Notices........................................................17
12.4 Entire Agreement...............................................17
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12.5 Headings.......................................................17
l2.6 Binding Effect.................................................17
12.7 Time of Essence................................................17
12.8 Unenforceable or Inapplicable Provisions.......................18
12.9 Counterparts...................................................18
12.10 Applicable Law.................................................18
12.11 Attorneys' Fees................................................18
12.12 Authority......................................................18
12.13 Further Assurances.............................................18
12.14 Time Periods...................................................18
12.15 Interpretation.................................................18
12.16 Provisions to Survive Closing..................................19
12.17 Title Company..................................................19
12.18 Assignment.....................................................19
ARTICLE XIII--SELLERS REPRESENTATIONS AND WARRANTIES...................19
13.1 Representations and Warranties Regarding Seller's Authority....19
13.2 Representations and Warranties Pertaining to Real
Estate and Legal Matters.......................................20
13.3 Representations and Warranties Pertaining to Instruments.......21
ARTICLE XIV--BUYER'S WARRANTIES AND REPRESENTATIONS....................21
EXHIBIT "A"--LEGAL DESCRIPTION OF REAL PROPERTY .......................
EXHIBIT "B"--CLOSING MEMORANDUM AND INDEMNIFICATION AGREEMENT..........
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PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT is dated as of the Effective Date
specified in Article I below by and between the Sellers identified in Article I
below ("Seller"), and the Buyer identified in Article I below.
R E C I T A L S
WHEREAS, Seller is the owner of certain real and personal property as
more particularly described below; and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller such real and personal property on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I -- GENERAL INFORMATION
--------------------------------
The following general information is used throughout this Agreement:
1.1 Buyer: Cornerstone Realty Group, Inc. and/or assigns.
1.2 Buyer Tax ID: To be supplied at Closing.
1.3 Seller: AV Polo Run Associates, Ltd., a Texas limited partnership.
1.4 Title Company:
Stewart Title Company
4305 W. Lovers Lane
Dallas, Texas 75209
Attn: Myra Prescott
1.5 Effective Date: December 23, 1996, which is the date the Title Company
acknowledges receipt of a counterpart original of this Agreement executed by
both Buyer and Seller and its receipt of the Earnest Money. The Title Company is
hereby instructed to fill in the appropriate date in this Section 1.5.
1.6 Real Property: The 224 unit apartment complex at 901 Greenway,
Arlington, Texas known as the Polo Run Apartments. The Real Property is more
particularly described in Exhibit "A" attached hereto and made a part hereof.
1.7 Purchase Price: Six Million Eight Hundred Thousand and No/ 100 Dollars
($6,800,000).
1.8 Earnest Money: One Hundred Thousand Dollars ($ 100,000) to be deposited in
escrow with the Title Company within twenty-four (24) hours after the
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end of the Inspection Period. Any interest earned on the Earnest Money shall
belong to Purchaser.
1.9 Inspection Period: From the Effective Date to forty-five (45) days
after the Effective Date.
1.10 Closing Date: At a mutually agreeable date and time, but no later
than thirty (30) days from the first day of the month following the month in
which the Inspection Period expires.
1.11 Place of Closing: The offices of the Title Company in Dallas, Texas
or such other place as may be mutually agreed upon by Buyer and Seller.
1.12 Broker: Grubb & Ellis
Attn: George Deuillet
1.13 Commission: Two percent (2%) of the Purchase Price, to be paid by
Seller.
1.14 Notices, Buyer: Cornerstone Realty Group, Inc.
306 East Main
Richmond, Virginia 23219
Attn: Gus Remppies
Fax: (804) 782-9302
with a copy to: Harry S. Taubenfeld
Zuckerman & Taubenfeld
575 Chestnut Street
P.O. Box 488
Cedarhurst, New York 11516
1.15 Notices, Seller: AV Polo Run Associates, Ltd.
2125 Center Avenue, Suite 202
Ft. Lee, NJ 07024
Attn: Bernard England
Fax: (201) 302-9462
with a copy to: Ira F. Levy, Esq.
Goins, Underkofler, Crawford & Langdon, LLP
1601 Elm Street, Suite 3300
Dallas, TX 75201
Fax: (214) 969-5902
ARTICLE II -- DEFINITIONS
-------------------------
The terms defined in Article I and this Article II, whenever
capitalized, shall have the meanings set forth below and in Article I, whenever
such terms are used in this Agreement and all Exhibits hereto, unless the
context clearly indicates a different meaning:
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2.1 "Agreement". This instrument, together with all exhibits, addenda,
schedules, and proper amendments thereto.
2.2 "Closing". The consummation of the transactions contemplated by this
Agreement, including the transfer of the Property to Buyer and receipt of the
Purchase Price by Seller.
2.3 "Contract Consideration". One hundred dollars ($100) in current
funds, to be non-refundable.
2.4 "Current Funds". Wire transfer of current federal funds in
accordance with wiring instructions to be provided by Seller.
2.5 "Deed". The Special Warranty Deed to be delivered to Buyer at
Closing in a form mutually acceptable to Buyer and Seller.
2.6 "Earnest Money". At any given time, the Earnest Money specified in
Article I above then on deposit and held by Buyer in escrow with the Title
Company, together with all interest accrued thereon.
2.7 "Effective Date". As specified in Article I above.
2.8 "Existing Lien". The existing first lien on the Property which lien
secures payment of a Promissory Note having an outstanding principal balance at
December 1, 1996 of approximately $4,636,000 (the First Lien Note").
2.9 "Hazardous Materials". Shall have the meaning set forth in Section
7.2 hereof.
2.10 "Permitted Exceptions". Those matters subject to which the Property
shall be conveyed to Buyer in accordance with Section 6.3 hereof.
2.11 "Property". Collectively, the items of real and personal property
to be conveyed to Buyer pursuant to this Agreement as set forth in Article III
hereof.
2.12 "Purchase Price". The sum specified in Article I above, payable in
the manner set forth in Sections 4.1 and 4.3 hereof.
2.13 "Survey". An existing "as built survey" of the Property dated
November, 1993 prepared by Gary Fulton to be delivered by Seller in accordance
with 6.1(b).
2.14 "Title Commitment". The proforma commitment for Owner's Title
Insurance Policy to be issued to Buyer in accordance with Section 6.3 hereof.
2.15 Title Documents". The documents listed in the Title Commitment as
exceptions to title to the Real Property and Improvements.
2.16 "Title Policy". TLTA Owner's Policy of Title Insurance, with
standard printed exceptions deleted to the extent allowed by the Title
Company, subject only to (i) current non-delinquent general real
property taxes, (ii) the Permitted Exceptions
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(iii) rights of parties in possession under Leases and (iv) other printed
exceptions, to be issued to Buyer in the full amount of the Purchase Price in
accordance with Section 9.3 hereof. The premium charge for the deletion of
exception to coverage relating to discrepancies, conflicts in boundaries,
shortages in area and encroachments as shown on the Survey, as well as any other
premium charges for a deletion of exception to coverage in the Owner's Title
Policy, shall be at the expense of the Buyer.
2.17 "Updated Survey". An update of the Survey prepared in accordance
with Section 6.5.
ARTICLE III -- AGREEMENT OF PURCHASE AND SALE
---------------------------------------------
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell, transfer and assign to Buyer at Closing, and Buyer agrees to
purchase and accept from Seller, all of Seller's right, title and interest in
and to the following described property (herein collectively called the
"Property"):
(a) Real Property. The Real Property.
(b) Easements. All easements, included in the Permitted Exceptions.
(c) Rights and Appurtenances. All rights and appurtenances, if any,
pertaining to the Real Property including any right, title and interest of
Seller, whether now or hereafter acquired, in and to adjacent streets, alleys or
rights-of-way.
(d) Improvements. All improvements to and structures in and on the
Real Property in their AS IS - WHERE IS condition, with all faults, including
latent and patent defects ("Improvements").
(e) Leases. All tenant apartment leases ("Tenant Lease") and all other
leases or agreements in effect on the Closing Date demising space in or
providing for the use or occupancy of the Improvements or Real Property
("Leases"), and all security deposits under Tenant Leases (the "Security
Deposits"), subject to Seller's rights under Section 10.2.
(f) Tangible Personal Property. All appliances, fixtures, equipment,
water and sewer lines and other utility improvements, machinery, furniture,
carpets, drapes and other personal property, if any, owned by Seller and located
on or about the Real Property and the Improvements or used exclusively in the
operation and maintenance thereof, ("Tangible Personal Property"), specifically
excluding, however, all personal property owned by tenants under the Leases and
Tenant Leases.
(g) Intangible Property. All intangible property ("Intangible
Property"), to the extent Seller has same, pertaining to the Real Property, the
Improvements, or the Tangible Personal Property or the use thereof, including,
without limitation, transferable contracts, transferable telephone exchange
numbers, plans and specifications, engineering plans and studies, floor plane
and landscape plans, sales brochures and material, tenant lists, tenant prospect
lists, guaranty, warranty, repair agreements, licenses, permits any approvals
and certificates issued
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by any governmental authorities or used in or related to the Real Property,
trademarks or tradenames without representation and warranty or any other
similar property or rights, and specifically including any Contracts (as defined
in Section 6.1(d)) which Buyer elects to assume.
ARTICLE IV -- CONSIDERATION
---------------------------
4.1 Earnest Money Deposit. Within twenty-four (24) hours after the
expiration of the Inspection Period, and as a condition precedent to Seller's
obligations under this Agreement, Buyer shall pay the $100,000 Earnest Money to
Title Company in Current Funds. The Earnest Money and any accrued interest
thereon will be applied to the Purchase Price at Closing. The Earnest Money will
be held in an interest bearing account under Buyer's taxpayer identification
number specified in Article I above. In the event the Closing is not
consummated, the party entitled to receive the Earnest Money shall also receive
all interest accrued thereon. In the event of a default by either party the
Earnest Money and all accrued interest, if any, then held by the Title Company,
will be disbursed by Title Company in accordance with Article Xl hereof.
4.2 Contract Consideration. Upon Buyer's execution of this Agreement,
Buyer in addition to the Earnest Money, must deliver the Contract Consideration
to Seller (and not to the Title Company), as independent consideration for the
rights and benefits granted to Buyer in this Agreement. The Contract
Consideration is nonrefundable.
4.3 Payment of Purchase Price. The Purchase Price, subject to
adjustments and prorations as provided herein, shall be paid by Buyer to Seller
in the form of Current Funds at Closing.
ARTICLE V -- INTENTIONALLY DELETED
----------------------------------
ARTICLE VI -- DELIVERIES AND INSPECTIONS
----------------------------------------
6.1 Seller's Obligations. Seller shall deliver to Buyer (at Seller's
expense), within ten (10) business days after the Effective Date, the
following:
(a) Title Commitment. Seller shall cause the Title Commitment issued
by Title Company setting forth the state of title to the Real Property and
Improvements and all exceptions thereto, including easements, restrictions,
rights-of-way, covenants, reservations, and other conditions, if any, affecting
the Real Property and Improvements which would appear in the Title Policy, if
issued. Along with the Title Commitment, the Title Company shall also furnish to
Buyer true, legible copies of all Title Documents and copies of real property
tax certificates.
(b) Survey. The Survey of the Property, dated November 1993 prepared
by Gary Fulton.
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(c) Rent Roll. A rent roll certified to by Seller accurately describing
all of the Tenant Leases as of the date of this Agreement. Said Rent Roll shall
contain the name of the Tenant, unit type leased to each Tenant, the monthly
rental, the term of such Tenant Leases, the apartment number, delinquencies in
rent, Security Deposits and lease discounts, rebates, rental concessions and
other items payable in connection with each lease. Buyer may review Tenant
Leases at Seller's offices with notice and during normal business hours.
(d) Contracts. Written agreements with respect to the Property other
than Tenant Leases.
(e) Reports. Level I Environmental Assessment to the extent in
possession of Seller at no additional cost to Seller and any engineering,
architectural, utility, soils and asbestos reports in the possession of Seller.
(f) Operating Reports. Annual Operating Reports for the fiscal year
ended December 31, 1995 and Monthly Operating Report through November 30, 1996
reflecting the gross rental income, detailed operating expenses and cash flow.
Notwithstanding the foregoing, Seller shall not be obligated to change its
normal financial reporting method to comply with the subparagraph.
(g) Environmental Report. Any Environmental Reports, if any, in the
Seller's possession.
(h) Inventory Schedule. An inventory schedule of all personal property.
(i) Tax Receipts. Copies of the 1995 ad valorem tax receipts, and the
1996 rendition, if available.
(j) Appraisal. A copy of the most current appraisal on the Property, if
available.
(k) Insurance Reports. An insurance loss history report since the date
of Seller's ownership of the Property.
(l) Title Policy. A copy of the current title insurance policy covering
the Property.
(m) Termite Report. A current termite inspection report.
(n) Building Plans. "As built" building plans and specifications, if
available.
6.2 Other Obligations.
(a) Seller will use its reasonable efforts to provide Buyer with
information related to the Property which may be requested in writing by Buyer;
and
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(b) Seller will give Buyer access to all books and records regarding the
Property in Seller's possession.
6.3 Title and Survey Objections. If any exceptions or matters appear in
the Title Commitment, Title Documents or Survey that Buyer determines are
unacceptable to it or that would interfere with Buyer's intended use of the
Property, or that result in title to the Property not being marketable and
insurable, then Buyer must, within the Inspection Period, provide written notice
to Seller and Title Company of such unacceptable exception(s) or matter(s). If
Buyer fails to disapprove an item reflected therein by written notice received
by Seller and Title Company within the Inspection Period, Buyer shall be deemed
to have approved such item. Seller may, at Seller's option, attempt to eliminate
or modify such unacceptable exceptions or matters to the reasonable satisfaction
of Buyer, although Seller shall not be obligated to do so. Seller has no
obligation to endeavor to cure any title or survey objection raised by Buyer,
and Seller shall not be required to expend any effort or funds, or to commence
litigation to cure an unacceptable exception. If Seller elects to attempt to
cure an unacceptable exception, Seller shall notify Buyer of such election
within two (2) days after the expiration of the Inspection Period (the "Election
Period"); provided, however, if Seller is unable to cure an unacceptable
exception within twenty (20) days after Seller's receipt of Buyer's objections
then this Agreement shall automatically terminate, and the Earnest Money shall
be refunded to Buyer. If Seller does not notify Buyer of its election to attempt
to cure an unacceptable exception prior to the expiration of the Election
Period, this Agreement shall automatically terminate at the end of the Election
Period and the Earnest Money shall be returned to Buyer. The standard printed
exceptions in the Title Commitment described in Section 2.15, and all matters
shown on the Title Commitment and Survey which Buyer approves or is deemed to
approve pursuant to this Section 6.3, shall constitute Permitted Exceptions.
6.4 Inspection.
(a) During the Inspection Period, Buyer may inspect: (i) the Property
and (ii) the documents to be provided by Seller pursuant to Sections 6.1 and
6.2. If such inspection reveals any fact or condition unacceptable to Buyer, in
Buyer's sole and absolute discretion, including any matter that would interfere
with Buyer's intended use of the Property, Buyer shall notify Seller and Title
Company in writing prior to the expiration of the Inspection Period of such
unacceptable fact or condition and Buyer may simultaneously terminate this
Agreement by notice in writing to Seller and Title Company and the Earnest Money
shall be refunded to Buyer. If Buyer does not give any such notification of
unacceptable facts or conditions to Seller and Title Company in writing prior to
the expiration of the Inspection Period, the inspection of the Property shall be
deemed satisfactory to Buyer subject to all matters revealed by Buyer's
inspections without any reduction in the Purchase Price. All onsite inspections
of the Property shall be at reasonable times, after notice to Seller and shall
not unreasonably interfere with the Tenants at the Property. Buyer shall, at
Buyer's expense, promptly repair any damage caused to the Property as a result
of any test or investigation conducted by or on behalf of Buyer.
(b) Except as required by any law or court order, including any
subpoena, Buyer shall not disclose any information regarding the
Property provided to
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Buyer by Seller or any information acquired by Buyer in connection with this
Agreement or Buyer's investigation of the Property, including, but not limited
to, information regarding Seller, the Property or any matter pertaining thereto,
to anyone other than Buyer's employees, potential lenders, rating agencies or
investors, or such attorneys, accountants, consultants or contractors as may be
reasonably necessary to complete Buyer's acquisition of the Property, without
the prior written consent of Seller. Buyer shall notify Seller of any court
order or subpoena requiring disclosure of such information and shall cooperate
with Seller's appeal or challenge of any order or subpoena requiring such
disclosure. Buyer shall take reasonable measures to avoid any unintentional or
inadvertent disclosure of any such information to any unauthorized person by any
of its employees, agents, representatives and contractors. Buyer's covenants
under this subsection (b) shall terminate upon the Closing but shall remain in
full force and effect if no Closing shall occur.
(c) Buyer shall be liable for all damage or injury to any person or
property resulting from any such inspection conducted by or through the Buyer,
whether occasioned by the acts of Buyer or any of its employees, agents,
representatives or contractors, and Buyer shall protect, indemnify, defend and
hold harmless Seller from any liability resulting therefrom. This
indemnification by Buyer shall survive the Closing or any termination of this
Agreement for a period of twelve (12) months. Notwithstanding the foregoing,
Buyer shall not be deemed to have indemnified Seller for any damage or injury to
any person or property resulting from the negligence or misconduct by Seller or
any of its employees, agents, representatives or contractors.
6.5 Undated Survey. Immediately after the expiration of the Inspection
Period, the Seller shall cause the Survey to be updated. Upon receipt of the
Updated Survey, Buyer shall have a period of five (5) days to review the Updated
Survey. If the Updated Survey reflects any material changes from the Survey, the
Buyer shall have the right to object to such new matters in accordance with
Section 6.3 hereof.
ARTICLE VII -- LIMITATION OF REPRESENTATIONS OR
WARRANTIES BY SELLER
--------------------
7.1 Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 13.2 HEREOF
AND ELSEWHERE HEREIN, OR IN THE DEED AND OTHER CONVEYANCE DOCUMENTS, SELLER HAS
NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, PAST, PRESENT OR
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO THE PROPERTY, INCLUDING,
WITHOUT LIMITATION, (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROPERTY;
(B) THE WATER, SOIL AND GEOLOGY OF THE PROPERTY, (C) THE INCOME TO BE DERIVED
FROM THE PROPERTY, (D) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, (E) THE COMPLIANCE OF OR BY
THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF
ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (F) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PROPERTY, (G} THE MANNER OR QUALITY OF THE
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CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY, (I) THE
MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY, OR (I) ANY
OTHER MATTER WITH RESPECT TO THE PROPERTY. SELLER HAS NOT MADE, DOES NOT MAKE
AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS REGARDING COMPLIANCE WITH ANY
ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS
OR REQUIREMENTS, INCLUDING THE EXISTENCE IN OR ON THE PROPERTY OF HAZARDOUS
MATERIALS. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT, HAVING BEEN GIVEN THE
OPPORTUNITY TO INSPECT THE PROPERTY, BUYER IS RELYING SOLELY ON ITS OWN
INVESTIGATION OF THE PROPERTY AND ON THE WRITTEN INFORMATION PROVIDED OR TO BE
PROVIDED BY SELLER AND ITS MANAGEMENT COMPANY. BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT CERTAIN INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE
PROPERTY WAS OBTAINED FROM AND PREPARED BY A VARIETY OF SOURCES OTHER THAN
SELLER AND ITS MANAGEMENT COMPANY AND THAT SELLER HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS
AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. SELLER IS NOT LIABLE OR
BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY
ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON OR BY ANY
REPORTS, INVESTIGATIONS OR SURVEYS PREPARED BY PERSONS OTHER THAN SELLER OR ITS
MANAGEMENT COMPANY. BUYER AGREES, AT THE CLOSING, TO ACCEPT THE PROPERTY AND
WAIVE ALL OBJECTIONS OR CLAIMS AGAINST SELLER (INCLUDING, BUT NOT LIMITED TO,
ANY RIGHT OR CLAIM OF CONTRIBUTION, EXCEPT SELLER HEREBY UNCONDITIONALLY AND
IRREVOCABLY ASSIGNS ANY RIGHT, INCLUDING THE RIGHT OF CONTRIBUTION, IT MAY HAVE
TO BUYER) ARISING FROM OR RELATED TO THE PROPERTY OR TO ANY HAZARDOUS MATERIALS
ON THE PROPERTY. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM
EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE
ON AN "AS IS", "WHERE IS" CONDITION AND BASIS "WITH ALL FAULTS". IT IS
UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR
NEGOTIATION TO REFLECT THAT ALL OF THE PROPERTY IS SOLD BY SELLER AND PURCHASED
BY BUYER SUBJECT TO THE FOREGOING. THE PROVISIONS OF THIS SECTION 7.1 SHALL
SURVIVE THE CLOSING.
7.2 Hazardous Materials. "Hazardous Materials" shall mean any substance
which is or contains (i) any "hazardous substance" as now or hereafter defined
in Section 101(14) of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.)
("CERCLA") or any regulations promulgated under CERCLA; (ii) any "hazardous
waste" as now or hereafter defined in the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.) ("RCRA") or regulations promulgated under RCRA;
(iii) any substance regulated by the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.); (iv) gasoline, diesel fuel, or other petroleum
hydrocarbons; (v) asbestos and asbestos containing materials, in any form,
whether friable or non-friable; (vi) polychlorinated biphenyls; (vii) radon gas;
and (viii) any additional substances or materials which are now or hereafter
classified or considered to be hazardous or toxic under any environmental law,
ordinance, rule or
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regulation, now or hereinafter enacted, or the common law, or any other
applicable laws relating to the Property.
ARTICLE VIII -- FUTURE OPERATIONS
---------------------------------
From the date of this Agreement until the Closing or earlier termination
of this Agreement:
8.1 Maintenance, Litigation. Seller will (i) keep and maintain the Real
Property and Improvements in their condition as of the date of this Agreement,
reasonable wear and tear, casualty and condemnation excepted, (ii) promptly
advise Buyer of any litigation, arbitration or administrative hearing concerning
the Property arising or threatened of which Seller has notice and (iii) promptly
advise Buyer of any notices from any governmental authority asserting a
violation of any applicable law. In addition, Seller will keep the property free
and clear of all mechanic's liens and Seller agrees to remove all mechanics
liens or otherwise bond around any such mechanic's liens prior to Closing.
8.2 Contracts. Seller will not enter into any Contracts regarding the
Property other than Tenant Leases, unless said Contracts can be terminated on
thirty (30) days prior written notice.
8.3 Leasing of Space. Seller shall be entitled to continue to lease the
apartments in a manner consistent with the current leasing practices, provided
however, that Seller will not execute any Lease of a term of greater than one
(1) year.
8.4 Insurance Claims. Seller will notify Buyer of any insurance claims
made by Seller after the Effective Date.
8.5 Removal. Seller shall not, without prior written consent of Buyer,
remove any item of monetary value from the Property prior to Closing except for
repair or replacement and any such repair item or replacement item shall be
included in this transaction.
8.6 Tenant Inquiries, Complaints. Seller shall make reasonable attempts
to resolve all reasonable tenant inquiries, complaints and claims or make
arrangements for the resolution for all inquiries or complaints prior to
Closing. Seller will provide Buyer with copies of any Tenant inquiries or
complaints immediately upon receipt.
8.7 Terminate Contracts. Seller shall terminate the existing property
management contract, if any, for the Property as of the Closing Date and
terminate all existing contracts which are terminable by Seller with thirty (30)
days or less notice and without penalty as to which Buyer notifies Seller on or
before the end of the Inspection Period that Buyer wishes to have terminated,
such termination being effective as of the Closing Date.
8.8 Maintenance of Insurance. Seller shall maintain all insurance
policies affecting the Property in full force and effect until the Closing Date.
If Seller violates the terms of this Article VIII and does not cure within a
reasonable time, Buyer may elect to terminate this Agreement and receive a full
refund of the Earnest Money.
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ARTICLE IX--CLOSING
-------------------
9.1 Date and Place of Closing. Subject to the satisfaction or waiver of
all conditions to either party's obligation to consummate the purchase and sale
of the Property, the Closing shall take place on the Closing Date at the Place
of Closing specified in Article I above.
9.2 Items to be Delivered at Closing.
(a) By Seller. At or prior to Closing, Seller (at Seller's cost) shall
deliver or cause to be delivered to Buyer, through escrow or directly to
Buyer, each of the following items:
(i) The Deed, suitable for recording, conveying title to the
Property to Buyer, subject to the Permitted Exceptions;
(ii) Evidence of Seller's authority to consummate this
transaction;
(iii) Any reasonable and customary certificates and affidavits
that may be required in the normal course by Title Company, in form and
substance satisfactory to Seller, duly executed by Seller, including,
but not limited to, an Affidavit of All Bills Paid evidencing that all
work done on the Property has been paid for in full;
(iv) A Non-foreign Certification of Entity Transferor from Seller
or other evidence satisfying the requirements of Section 1445 of the
Internal Revenue Code;
(v) Bill of Sale and Assignment, with special warranty of title,
executed by Seller assigning to Buyer all of Seller's right, title and
interest in the Tangible Personal Property;
(vi) The originals of all of the Tenant Leases and Leases in the
possession or control of Seller, and an Assignment of Leases, Intangible
Property, Contract and Assumption Agreement assigning all of Seller's
rights, title and interest in the foregoing including the Security
Deposits. Buyer shall receive a credit at the Closing for all Security
Deposits shown on the updated Rent Roll. In lieu of delivering the
Tenant Leases, Leases and Contracts as required by this Section, Seller
may elect to make such documents available to Buyer at the Property or
at the offices of Seller at least one week prior to Closing, which shall
satisfy the requirements of this Section;
(vii) The revised Title Commitment confirming that the
underwriter for the Title Company will issue its Title Policy pursuant
to the Title Commitment, subject only to the Permitted Exceptions, in
the full amount of the Purchase Price, dated as of the date of closing.
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<PAGE>
(viii) A rent roll certified by Seller to be true and correct as
of the date of closing showing the name of, and the amount of monthly
rental payable, by each tenant of the Property, the apartment occupied
by the tenant, the date to which rent has been paid, any advance payment
of rent, and the amount of any escrow, or security deposit of tenant.
(ix) An affidavit of Seller that to the best of its information
and belief there are, on the date of closing, no unsatisfied judgments,
creditor's claims other than in the course of business, tax liens, or
pending bankruptcies involving Seller.
(x) Assignments without recourse of all warranties and guarantees
to the extent such are still in effect and provide Buyer with copies of
all such warranties and guarantees without limitation for all
appliances, dishwashers, disposals, refrigerators, heating and air
conditioning units, washers and dryers.
(xi) Seller shall provide a satisfactory and valid written
termination of the management agreement executed by the existing
management and rental agent for the Property, without cost to the Buyer.
(xii) Closing Memorandum and Indemnification Agreement in the
form attached hereto as Exhibit B.
(xiii) Copies of any keys in Seller's possession relating to the
Property; and
(xiv) A Tenant Notice Letter for each of the Tenants, duly
executed by Seller.
(b) By Buyer. At or prior to Closing, Buyer shall deliver or cause to be
delivered to Seller, through escrow, each of the following items:
(i) The cash portion of the Purchase Price in Current Funds;
(ii) The Assignment of Leases, Intangible Property, Contracts and
Assumption Agreement duly executed by Buyer;
(iii) A Tenant Notice Letter for each of the Tenants, duly
executed by Buyer; and
(iv) Such other documents as is normally required by the Title
Company.
9.3 "Rent Ready". During the Inspection Period, both Seller and Buyer
will inspect an apartment unit at the Property and mutually agree that said
apartment unit shall be representative of a "rent ready" unit by which all other
units shall be judged for "rent ready" condition at Closing. At the Closing, all
vacant apartment units, except those vacated during the fourteen (14) day period
prior to the Closing Date, are to be in a "rent ready" condition (as defined
above).
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9.4 Possession. Seller shall deliver possession of the Property on the
Closing Date, subject to the rights of tenants in possession under the Tenant
Leases, Leases and Permitted Exceptions.
ARTICLE X-CLOSING COSTS AND PRORATIONS
--------------------------------------
10.1 Closing Costs. Seller and Buyer shall each pay their respective
attorneys' fees (except as provided in Section 12.11 of this Agreement). Seller
shall pay any and all recording fees charged on all documents required to be
recorded in connection with the conveyance of the Property to Buyer. Seller
shall pay for the Title Policy, Buyer shall pay for the cost of any deletions
from the Title Policy. All costs associated with the prepayment of the First
Lien Note and Existing Lien shall be paid by Buyer up to $69,000.
10.2 Prorations.
(a) All rents, prepaid rents, income, and all other operating
expenses with respect to the Property for the month in which the Closing occurs,
and real estate and personal property taxes and other assessments with respect
to the Property for the year in which the Closing occurs, shall be prorated as
of 11:59 p.m. of the day immediately preceding the Closing Date. To the extent
that amounts of the items to be adjusted are not reasonably ascertainable on the
Closing Date, such items shall be prorated by the Buyer and Seller based on
their best efforts. Thereafter, such proration items shall be adjusted as
promptly after the Closing, but in no event later than one hundred twenty (120)
days after the Closing Date, as the amounts thereof are ascertained, and any
errors or omissions in computing the prorations at the Closing shall be promptly
corrected and this obligation shall survive the Closing hereunder for a period
of six (6) months from the Closing. Any payments due one party from the other
party as a result of said connections shall be payable within ten (10) days
notice from the party seeking reimbursement. Seller shall pay to Buyer in a lump
sum at Closing all future monetary concessions which Seller has given to Tenants
under Tenant Leases.
(b) If the Closing shall occur before rents and all other amounts
payable by the tenants under the Tenant Leases and Leases and all other income
from the Property have actually been paid for the month in which the Closing
occurs, the apportionment of such rents and other amounts and other income shall
be upon the basis of such rents and other amounts and other income actually
received by Seller. Subsequent to the Closing, if any such rents and other
amounts and other income are actually received by Buyer, all such amounts shall
first be applied to post-closing rents due to Buyer which are past due and the
balance shall be immediately paid by Buyer to Seller. Buyer shall make a good
faith effort and attempt to collect any such rents and other amounts and other
income not apportioned at the Closing for the benefit of Seller, however, Buyer
shall not be required to expend any funds or institute any litigation in its
collection efforts and Seller agrees not to sue to collect any delinquent rents.
(c) If the Closing shall occur before the tax rate or the assessed
valuation of the Property is fixed for the then current year, the apportionment
of taxes
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shall be upon the basis of the tax rate for the preceding year applied to the
latest assessed valuation, provided that, if the taxes shall occur before the
actual taxes payable during the year of Closing are determined to be more or
less than the taxes payable during the prior year, Seller and Buyer shall
promptly adjust the proration of taxes and Seller and Buyer, as the case may be,
shall pay to the other any amount required as a result of such adjustment. Any
payments due one party from the other party as a result of such adjustment shall
be payable within ten (10) days notice from the party seeking reimbursement.
(d) To the extent possible, Buyer shall be responsible for arranging
all utility service in its own name commencing as of 12:01 a.m. on the Closing
Date. Seller shall be responsible for all utility charges accrued prior to the
Closing Date and Seller shall receive a refund of all utility deposits. If a
change in utility service cannot be effected on the Closing Date, utility
charges will be estimated and prorated as provided in Section 10.2(a).
ARTICLE XI -- DEFAULTS AND REMEDIES
-----------------------------------
11.1 Seller's Default: Buyer's Sole Remedies. If Seller fails to perform
its obligation under this Agreement or fails to consummate this Agreement in
accordance with its terms (other than by reason of (i) Buyer's breach of any of
its representations or warranties contained in this Agreement; (ii) Buyer's
continuing default of any of its covenants hereunder after ten (10) days' prior
written notice of such default; (iii) a failure of any condition to Seller's
obligation to sell the Property to be satisfied; (iv) a termination of this
Agreement by Seller or Buyer pursuant to a right to do so expressly provided for
in this Agreement, except by reason of a default by either party; or (v) failure
by Buyer to deliver the items required under Section 9.2(b)), Buyer may, as
Buyer's sole and exclusive remedies, either a) terminate this Agreement by
written notice to Seller, in which event the Earnest Money shall be refunded to
Buyer, or, b) enforce specific performance of Seller's obligations to convey the
Property.
11.2 Buyer's Default: Seller's Sole Remedies. If Buyer fails to
consummate this Agreement in accordance with its terms (other than by reason of
(i) Seller's breach of any of its representations or warranties contained in
this Agreement; (ii) Seller's continuing default of any of its covenants after
ten (10) days' prior written notice of such default; (iii) a failure of any
condition to Buyer's obligation to purchase the Property to be satisfied; (iv) a
termination of this Agreement by Seller or Buyer pursuant to a right to do so
expressly provided for in this Agreement; or (v) failure by Seller to deliver
the items required under Section 9.2(a)), Seller may, as Seller's sole and
exclusive remedies, terminate this Agreement and receive all of the Earnest
Money as liquidated damages (and not as a penalty) for breach of this Agreement.
Such amount and terms are agreed upon by and between Seller and Buyer as
liquidated damages, due to the difficulty and inconvenience of ascertaining and
measuring actual damages, and the uncertainty thereof, and the payment of the
Earnest Money and the terms provided herein shall constitute full satisfaction
of Buyer's obligations under this Agreement. Such amount is agreed upon by and
between Seller and Buyer as a reasonable estimate of just compensation for the
harm caused by Buyer's default.
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ARTICLE XII--MISCELLANEOUS PROVISIONS
-------------------------------------
12.1 Broker's Commission. Seller agrees to pay to Broker subject to the
Closing of the transaction contemplated hereby, and not otherwise, the
Commission specified in Article I, to be payable out of the Purchase Price. Said
commission shall in no event be payable unless and until the transaction
contemplated hereby is actually closed in accordance with the terms of this
Agreement. If such transaction is not closed for any reason, including, without
limitation, failure of title or default by Seller or Buyer or termination of
this Agreement pursuant to the terms hereof, then such Commission will not be
deemed to have been earned and shall not be due or payable. Buyer represents to
Seller that, except for Broker, Buyer has not authorized any broker or finder to
act on Buyer's behalf in connection with the sale and purchase hereunder and
that Buyer has not dealt with any broker or finder purporting to act on behalf
of any other party. Buyer agrees to indemnify and hold harmless Seller from and
against any and all claims, losses, damages, costs or expenses of any kind or
character arising out of or resulting from any agreement, arrangement or
understanding (except as set forth above with respect to Broker) alleged to have
been made by Buyer or on Buyer's behalf with any broker or finder in connection
with this Agreement or the transaction contemplated hereby. Seller represents to
Buyer that, except for Broker, Seller has not authorized any broker or finder to
act on Seller's behalf in connection with the sale and purchase hereunder and
that Seller has not dealt with any broker or finder purporting to act on behalf
of any other party. Seller agrees to indemnify and hold harmless Buyer from and
against any and all claims, losses, damages, costs or expenses of any kind or
character arising out of or resulting from any agreement, arrangement or
understanding alleged to have been made by Seller or on Seller's behalf with any
broker or finder in connection with this Agreement or the transaction
contemplated hereby. Broker agrees to indemnify and hold harmless Seller and
Buyer from and against any and all claims, losses, damages, costs or expenses of
any kind or character arising out of or resulting from any agreement,
arrangement or understanding alleged to have been made by Broker or on Broker's
behalf with any broker or finder in connection with this Agreement or the
transaction contemplated hereby. Buyer hereby acknowledges that at the time of
the execution of this Agreement, the Broker advised Buyer by this writing that
Buyer should have an abstract covering the Real Property which is the subject of
this Agreement examined by an attorney of Buyer's own selection, or that Buyer
should be furnished with or obtain an Owner's Policy of Title Insurance. Broker
is executing this Agreement to evidence their agreement to the matters contained
in this Section 12.1 and is not otherwise a party to this Agreement.
12.2 Condemnation and Casualty.
(a) Condemnation. In the event that all or any "substantial portion"
of the Property shall be taken in condemnation or by conveyance in lieu thereof
or under the right of eminent domain after the Effective Date and before the
Closing Date, Buyer may, at its option, terminate this Agreement by written
notice thereof to the other party within ten (10) days after Seller notifies
Buyer of the condemnation, in which event Buyer shall receive an immediate
refund of the Earnest Money. In the event Buyer fails to timely deliver written
notice of termination as described above, it shall be deemed to have elected to
proceed to close the transaction contemplated herein pursuant to the terms
hereof, in which event Seller shall deliver to Buyer at
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<PAGE>
the Closing any proceeds actually received by Seller attributable to the
Property from such condemnation or eminent domain proceeding or conveyance in
lieu thereof or assign to Buyer Seller's rights to such proceeds and there shall
be no reduction in the Purchase Price. If the taking does not involve a
"substantial portion" of the Property, as herein defined, then Buyer shall be
obligated to close the transaction contemplated herein according to the terms
hereof, notwithstanding such taking, and Seller shall deliver to Buyer at
Closing any and all awards or consideration attributable to such taking, and
there shall be no reduction in the Purchase Price. Seller has not, as of the
Effective Date, received any notice of any condemnation action against the
Property.
(b) Casualty. In the event that all or any "substantial portion" of the
Property shall be damaged or destroyed by fire or other casualty after the
Effective Date and before the Closing Date, Buyer may, at its option, terminate
this Agreement by written notice thereof to Seller within ten (10) days after
Seller notifies Buyer of the casualty and the availability and amount of
insurance proceeds, in which event Buyer shall receive an immediate refund of
the Earnest Money. In the event Buyer does not terminate this Agreement as
described above, it shall be deemed to have elected to proceed to close the
transaction contemplated herein pursuant to the terms hereof, in which event
Seller shall deliver to Buyer at the Closing any insurance proceeds actually
received by Seller attributable to the Property from such casualty, including,
to the extent available, all rental interruption insurance attributable to the
period after the Closing, or assign to Buyer all of Seller's right, title and
interest in any claim (or in the proceeds thereof if such assignment of such
claim is not permitted) under any applicable insurance policies in respect of
such casualty (including, to the extent available, all rental interruption
insurance attributable to the period after the Closing), together with an amount
equal to the deductible(s), if any, applicable to such loss under the
insurance policy(ies), and there shall be no reduction in the Purchase Price.
If the casualty loss does not involve a "substantial portion" of the Property,
as defined herein, then Buyer shall be obligated to close the transaction
contemplated herein according to the terms hereof, notwithstanding such casualty
loss, and Seller shall, at Seller's election, either (i) repair the damages
caused by such casualty loss prior to Closing, at Seller's expense or
(ii) subject to the provisions of the Deed of Trust, deliver to Buyer at the
Closing any insurance proceeds actually received by Seller attributable to the
Property from such casualty, or (iii) assign to Buyer all of Seller's right,
title, and interest in any claim (or in the proceeds thereof if such assignment
of such claim is not permitted). Notwithstanding anything contained herein to
the contrary, in the event such repair or damages cannot be accomplished under
any applicable insurance policies in respect of such casualty, together with an
amount equal to the deductible(s), if any, applicable to such loss under the
insurance policy(ies), Buyer shall have the right and option to (a) terminate
this Agreement, in which event, the Earnest Money will be returned to Buyer or
(b) waive the right to terminate and take an assignment of whatever rights
Seller may have, in which event, this transaction shall be consummated and there
shall be no reduction in the Purchase Price.
(c) Substantial Portion Defined. For the purposes of this Section 12.2,
a taking of or casualty loss to a "substantial portion" of the Property shall be
deemed to include any taking or casualty loss which is equal to or greater than
(a) 5% of the value of the Property as established by the Purchase Price, (b) 5%
of the parking
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<PAGE>
area or (c) 5% of the aggregate gross number of square feet contained in the
buildings that are situated on the Real Property, or any taking of a portion of
the Property which has a material adverse effect on Buyer's use of the remainder
of the Property and shall not include any taking or casualty loss of less than
such amount.
(d) Risk of Loss. Subject to the foregoing provisions of this Section
12.2, risk of loss until Closing shall otherwise be borne by Seller.
(e) Emergency Repairs. In the event the Property is damaged prior to
Closing and such damage creates any emergency requiring immediate repair in
order to prevent further damage to the Property, Seller shall be entitled to
immediately commence such repairs, and the contractor and method of repair to be
used shall be determined by Seller. Both parties agree to cooperate to
accomplish such repair in a timely manner. Casualty proceeds, if any, paid as a
result of damage requiring immediate repair shall be used in paying the cost of
such repairs. Seller shall give Buyer notice of any emergency repairs.
12.3 Notices. Any notice, approval, waiver, objection or other
communication (for convenience, referred herein as a "notice") required or
permitted to be given hereunder or given in regard to this Agreement by one
party to the other shall be in writing and the same shall be given and be deemed
to have been delivered, served and given (a) if delivered in person, via
courier, or by facsimile when received by the person to whom notice is given, or
(b) if sent by overnight delivery service, (except where actual receipt is
specified in this Agreement) two (2) days after deposited in a receptacle
provided by such overnight service or pickup by such overnight service in time
for delivery the following day, addressed to the party at the address specified
in Article I, Sections 1.14 and 1.15, above. Any party may change its address
for notices by notice theretofore given in accordance with this Section 12.3 and
shall be deemed effective only when actually received by the other party.
12.4 Entire Agreement. This Agreement and, the Exhibits attached hereto
constitute the entire agreement between Seller and Buyer, and there are no other
covenants, agreements, promises, terms, provisions, conditions, undertakings,
understandings, or representations and/or warranties, either oral, written or
implied, between them concerning the Property other than those herein set forth.
No subsequent alteration, amendment, change, deletion or addition to this
Agreement shall be binding upon Seller or Buyer unless in writing and signed by
both Seller and Buyer.
12.5 Headings. The headings, captions, numbering system, etc. are
inserted only as a matter of convenience and may under no circumstances by
considered in interpreting the provisions of this Agreement.
12.6 Binding Effect. All of the provisions of this Agreement are hereby
made binding upon the successors and, if permitted, assigns of both parties
hereto.
12.7 Time of Essence. Time is of the essence in each and every provision
of this Agreement.
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12.8 Unenforceable or Inapplicable Provisions. If any provision hereof
is for any reason unenforceable or inapplicable, the other provisions hereof
will remain in full force and effect in the same manner as if such unenforceable
or inapplicable provision had never been contained herein, unless such
unenforceable provision materially affects any material covenants set forth
herein.
12.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will for all purposes be deemed to be an original,
and all of which are identical.
12.10 Applicable Law. This Agreement shall be construed under and in
accordance with the laws of the State of Texas without regard to
principles of conflicts of laws.
12.11 Attorney's Fees. In the event any legal action or other proceeding
is brought for the enforcement of this Agreement (including an action for
specific performance), or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover and the
court is specifically empowered to award reasonable attorneys' fees, sales and
use taxes, court costs and all expenses even if not taxable as court costs
(including, without limitation, all such fees, taxes, costs and expenses
incident to appellate, bankruptcy and post-judgment proceedings), incurred in
that action or proceeding, in addition to any other relief to which such party
or parties may be entitled. Attorneys' fees shall include, without limitation,
paralegal fees, investigative fees, administrative costs, sales and use taxes
and all other charges billed by the attorney to the prevailing party.
12.12 Authority. Each person executing this Agreement, by his execution
hereof, represents and warrants that he is fully authorized to do so, however,
the parties will cooperate in providing appropriate proof to the other party of
the authority of the signing person to bind the party.
12.13 Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed at the Closing, Seller and Buyer agree
to perform such other acts, and to execute and deliver such other instruments
and documents as either Seller or Buyer, or their respective counsel, may
reasonably require in order to effect the intents and purposes of this
Agreement. Further, Seller and Buyer each agree to deliver to the Title Company
such affidavits and other documents in a form reasonably acceptable to the
Seller and Buyer and as may reasonably be necessary or required to enable the
Title Company to issue the Title Policy as contemplated in this Agreement.
12.14 Time Periods. Unless otherwise expressly provided herein, all
periods for delivery or review and the like shall be determined on a "calendar"
day basis. If any date for performance, approval, delivery or Closing falls on a
Saturday, Sunday or legal holiday (state or federal) in the State of Texas, the
time therefor shall be extended to the next business day.
12.15 Interpretation. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the rule of
construction to the
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effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or in any amendments or
exhibits thereto.
12.16 Provisions to Survive Closing. The provisions of Articles VII, X,
XI, XIII and XIV hereof, shall survive the Closing and the delivery of the Deed
to Buyer for a period of twelve (12) months from the date of the Deed.
12.17 Title Company. The parties acknowledge and agree that in the event
of any dispute concerning the Earnest Money, Title Company shall have the right
to interplead with the District Court in and for the County all or any portion
of the Earnest Money received by it pursuant to this Agreement.
12.18 Assignment. Buyer may not assign this Agreement without Seller's
written consent, except to an entity in which Buyer (or its affiliates) has a
substantial ownership interest or to Apple Residential Income Trust.
ARTICLE XIII--SELLER'S REPRESENTATIONS AND WARRANTIES
-----------------------------------------------------
Seller makes no representations and/or warranties with respect to the
Property other than the following representations and warranties of Seller which
shall also be true and correct as of the Closing Date with no material adverse
changes from the date hereof (and the truth and accuracy of which shall
constitute a condition to the Closing Date), and shall survive the Closing Date
for a period of twelve (12) months after which said representation and
warranties shall terminate, except with respect to a specific claim asserted by
Buyer prior to expiration of the twelve (12) month period.
13.1 Representations and Warranties Regarding Seller's Authority.
13.1.1 Seller has the legal power, right and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
13.1.2 As of the date hereof, all requisite action (corporate,
partnership or otherwise) has been taken by Seller in connection with the
entering into this Agreement and the consummation of the transactions
contemplated hereby.
13.1.3 The individuals executing this Agreement on behalf of Seller
have the legal power, right, and actual authority to bind Seller to the terms
and conditions of this Agreement.
13.1.4 This Agreement and all documents required hereby to be
executed by Seller are and shall be valid, legally binding obligations of and
enforceable against Seller in accordance with their terms.
13.1.5 Neither the execution and delivery of this Agreement and the
documents referenced herein, nor incurring of the obligations set forth herein,
nor the consummation of the transactions herein contemplated, nor compliance
with the terms of this Agreement and the documents referenced herein, will
conflict with or result in a material breach of any of the terms, conditions or
provisions of, or constitute a default under, any bond, note, or other evidence
of indebtedness or any
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contract, indenture, mortgage, deed of trust, loan, agreement, lease or other
agreements or instruments to which Seller is a party or by which any of the
Seller's properties may be bound.
13.2 Representations and Warranties Pertaining to Real Estate and Legal
Matters.
13.2.1 The information contained in the Rent Roll is or shall be
complete, accurate, true and correct in all material respects upon delivery
thereof to the Buyer.
13.2.2 To the best of Seller's knowledge there are no pending or
contemplated material actions, administrative inquiries or proceedings, suits,
arbitrations, claims or proceedings, at law or in equity, commenced by any
person or governmental entity against Seller (collectively, "Actions") affecting
all or any portion of the Property or in which Seller is or will be a party by
reason of Seller's ownership of the Property, including, but not limited to,
judicial, municipal or administrative proceedings in eminent domain, alleged
building code, health and safety or zoning violations.
13.2.3 No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or threatened against Seller nor are any of such
proceedings contemplated by Seller.
13.2.4 No notices of violation of governmental regulations relating
to the Property or Seller have been received by Seller and Seller has no
knowledge of any threatened claims.
13.2.5 Seller has not received any notice issued by any
governmental authority regarding any pending improvement liens to be made by
such governmental authority which would affect the Property.
13.2.6 Seller has not received any notices from any insurance
company or board of underwriters of any defects or inadequacies in the Property
or any part thereof which would adversely affect the insurability of the
Property or increase the premiums for the insurance on the Property.
13.2.7 Seller has received no written notification that the present
use of the Property as an apartment project does not fully comply with all
relevant zoning laws and ordinances affecting the Property; and the present
maintenance, operation and use of the Improvements violates any environmental,
zoning, subdivision, building or similar law, ordinance, code, order or
regulation presently in existence or any certificate of occupancy for the
Improvements.
13.2.8 Prior to the Closing Date no significant work has been
performed or is in progress at, and no significant amount of materials have been
furnished to, the Property which, though not presently the subject of, might
give rise to, mechanics', materialmen's or other liens against the Property or
any portion thereof.
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If any lien for such work is filed before or after Closing hereunder, Seller
shall promptly discharge the same.
13.2.9 There are no adverse or other parties in possession of the
Property, or any part thereof, except Seller and tenants under the Tenant Leases
and certain third party vendors under the Leases, nor has any party been granted
any license, lease, or other right relating to the use or possession of the
Property, or any part thereof, except for the Permitted Exceptions.
13.2.10 To the best of Seller's knowledge, all written financial
information, and other written information prepared by Seller and furnished by
Seller to Buyer relative to the Property will be true and correct in all
material respects and can be relied upon by Buyer, it being understood that the
financial statements have not been audited or prepared in accordance with
generally accepted accounting principles and, therefore, may need adjustments or
corrections which an audit would discovery.
13.3 Representations and Warranties Pertaining to Instruments.
13.3.1 Except for the Tenant Leases and Leases, there are no oral
or written leases, subleases, occupancies, or tenancies in effect pertaining to
the Property.
13.3.2 Neither Seller's interest in the Leases, nor any of the
rentals due or to become due under the Leases, will be assigned, encumbered or
subject to any liens at the Closing Date.
13.3.3 No leasing or brokerage fees or commissions of any nature
whatsoever shall be or become due or owing to any person, firm, corporation, or
entity whomsoever after the Closing Date with respect to the Leases.
ARTICLE XIV -- BUYER'S WARRANTIES AND REPRESENTATIONS
-----------------------------------------------------
Buyer hereby represents and warrants to Seller that:
14.1 Buyer and any entity to which Buyer may assign this Agreement
has, and as of the Closing Date shall have, full power and lawful authority to
enter into and carry out the terms and conditions of this Agreement and to
execute and deliver all documents which are contemplated by this Agreement.
14.2 All actions necessary to confer such power and authority upon
the persons executing this Agreement and all documents which are contemplated by
this Agreement to be executed on behalf of Buyer or its assignee have been
taken.
14.3 Buyer will make its own independent inspection of the
Property, as well as its own independent environmental inspection of the
Property and will inspect the representations and warranties of the Seller made
herein prior to the Closing.
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DATED as of the Effective Date specified in Article I.
SELLER:
AV POLO RUN ASSOCIATES, LTD.
By: AV Properties,
its General Partner
12/26/96 By: /s/ Bernard Englard
- ---------------------- -------------------------
Date Signed by Seller Bernard Englard, G.P.
BUYER:
CORNERSTONE REALTY GROUP, INC.
and/or its assigns
12/23/96 By: /s/ S. J. OLANDER
- -------------------- ---------------------------
Date Signed by Buyer Name: S. J. OLANDER
---------------------------
Title: Senior Vice President
---------------------------
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<PAGE>
JOINDER OF TITLE COMPANY
------------------------
Title Company executes this Agreement for the sole purpose of
acknowledging receipt of the Earnest Money, subject to clearance, and to agree
to serve as escrow agent with respect to the Earnest Money and Closing in
accordance with this Agreement.
STEWART TITLE COMPANY
____________________________ By:__________________________
Date Signed by Title Company Name:________________________
Title:______________________
<PAGE>
EXHIBIT "A"
BEING all of Lot 30, J. M. HENDERSON ADDITION to the City of Arlington, Tarrant
County, Texas as recorded in Volume 388-159, Page 37, Tarrant County Plat
Records and being more particularly described by metes and bounds as follows:
BEGINNING at a nail at the southwest corner of said Lot 30 and the southeast
corner of Lot 28, said J. M. HENDERSON ADDITION, said point being in the north
line of Road to Six Flags West (a 70-foot R.O.W.);
THENCE North 00 degrees 05 minutes 09 seconds East, along the common line of
said Lots 28 and 30, a distance of 638.37 feet to a 1/2 inch iron in the south
R.0.W. line of Interstate Highway No. 30, said point being the northeast corner
of said Lot 28 and the northwest corner of said Lot 30;
THENCE North 89 degrees 57 minutes 00 seconds East along the south line of
Interstate Highway No. 30, a distance of 623.00 feet to a 5/8 inch iron at the
northeast corner of said Lot 30 and the northwest corner of Lot 7-A1, J.M.
HENDERSON ADDITION as recorded in Volume 388-149, Page 86, Tarrant County Plat
Records;
THENCE South 00 degrees 05 minutes 09 seconds West, along the common line of
said Lots 30 and 7-A1, a distance of 641.79 feet to a 1/2 inch iron at the
southeast corner of said Lot 30, said point being in the north line of said Road
to Six Flags West;
THENCE North 89 degrees 44 minutes 09 seconds West, along the north line of said
Road to Six Flags West, a distance of 623.00 feet to the POINT OF BEGINNING and
CONTAINING 9.155 acres (398,769 square feet) of land.
<PAGE>
EXHIBIT "B"
CLOSING MEMORANDUM AND INDEMNIFICATION AGREEMENT
------------------------------------------------
THE STATE OF TEXAS (section)
(section) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS (section)
THIS CLOSING MEMORANDUM AND INDEMNIFICATION AGREEMENT (the "Agreement")
is entered into effective as of ____________, 1996 (the "Closing Date") by and
between _______________, a __________ ("Seller") and _________________, a
___________________("Purchaser").
In connection with and in consideration of the closing ("Closing") of
the transaction contemplated under that certain Earnest Money Contract (the
"Contract") dated ______________, 1996, by and between Seller and Purchaser,
covering that certain property more particularly described in the Contract (the
"Property"), Seller and Purchaser hereby agree as follows:
1. Proration Date. All prorations have been made as of the Closing Date.
2. Operating Expenses. Except as otherwise provided in the Contract or
herein, any and all costs and expenses relating to the operation, management,
leasing or ownership of the Property for the period prior to the Closing Date,
including, but not limited to, accounts and payments under service contracts,
utility charges and other costs required to be paid by the landlord under,
and/or with respect to, any leases for all or any portion of the Property and
commission agreements relating thereto are the responsibility of Seller and will
be paid by Seller promptly upon receipt of billing therefor, and Seller hereby
agrees to reimburse Purchaser for any loss, cost or expense relating to same.
Any and all costs and expenses relating to the operation, management, leasing or
ownership of the Property for the period from and after the Closing Date,
including, but not limited to, accounts and payments under service contracts,
utility charges and other costs required to be paid by the landlord under,
and/or with respect to, any leases for all or any portion of the Property are
the responsibility of Purchaser and will be paid by Purchaser promptly upon
receipt of billing therefor, and Purchaser agrees to reimburse Seller for, any
loss, cost or expense relating to same. To the extent not reflected in the
closing statements (the "Closing Statements") evidencing the transaction
contemplated under the contract, Purchaser and Seller agree to adjust between
themselves outside of Closing any amounts which are the responsibility of the
other pursuant to this paragraph.
Page 1 of 3
<PAGE>
3. Earnest Money. Seller and Purchaser acknowledge the application of
the Earnest Money Deposit (as defined in the Contract) previously
deposited with the Title Company (as defined in the Contract) against
the purchase price of the Property as reflected in the Closing
Statements.
4. Real Estate Taxes. All ad valorem and similar taxes and assessments
(the "taxes") relating to the Property for the current year were prorated
between Seller and Purchaser as reflected in the Closing Statements based upon
the best available estimates of the amount of taxes that will be due and payable
on the Property during the current year. At such time as the actual amount of
taxes against the Property for the current year is known, Seller and Purchaser
shall, if required, readjust the amount of taxes to be paid by each party
pursuant to this paragraph so that Seller shall pay for those taxes attributable
to the period of time occurring prior to the Closing Date, and Purchaser shall
pay for those taxes attributable to the period of time occurring from and after
the Closing Date.
5. Rents. All rents have been prorated as of the Closing Date to the
extent same have actually been collected by Seller. Seller shall pay to
Purchaser, Purchaser's a pro rata share of any delinquent or unpaid rents
attributable to the Property which are paid to Seller after Closing and which
relate to the period after the Closing Date, and Purchaser shall pay to Seller,
Seller's pro rata share of said delinquent or unpaid rents attributable to the
Property relating to the period up to the Closing Date, which are paid by
tenants after Closing when received by Purchaser, once Purchaser has received
and been credited with all rents owed or owing to Purchaser. Seller and
Purchaser agree that all rent attributable to the Property received after
Closing shall be applied first to current rentals and then to delinquent rentals
(in inverse order of maturity).
6. Brokerage Commissions. Except as set forth in Section of
the Contract, Seller and Purchaser each hereby agree to reimburse the other for
any and all loss, cost or expense (including, without limitation, reasonable
attorneys' fees and costs) resulting from any claim for any fee, commission or
similar payment by any broker, agent, finder or realtor as a result of any
action of Seller or Purchaser, respectively, related to the origination,
negotiation, or consummation of the transactions contemplated by the contract.
7. Errors or Omissions. Seller and Purchaser agree to adjust between
themselves after Closing any errors or omissions in the prorations or
adjustments set forth in the Closing Statements.
Page 2 of 3
<PAGE>
8. Survival. This Agreement and the agreements and the provisions
contained herein shall survive Closing and the execution and delivery of any
documents in connection therewith subject, however, to the limitations set forth
in Article VII of the Contract, all of which are hereby incorporated into this
Agreement by this reference as if restated in their entirety. This instrument
may be executed in multiple counterparts, each of which shall be deemed an
original but together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by Seller and
Purchaser as of (but not necessarily on) the day and year first above written.
SELLER:
------
By:
By:_________________________
Name:_______________________
Title:______________________
PURCHASER:
---------
_______________________________
By:________________________
Name:______________________
Title:_____________________
Page 3 of 3
PURCHASE AND SALE AGREEMENT
AND
ESCROW INSTRUCTIONS
(Wildwood Apartments)
This Purchase and Sale Agreement ("Agreement") and Escrow Instructions
("Escrow Instructions") are made and entered into by and between Western Rim
Investors 1991-4, L.P., a California Limited Partnership, dba Wildwood
Apartments ("Seller") and Cornerstone Realty Group, Inc., a Virginia corporation
("Buyer").
BACKGROUND
A. Seller owns certain real property, with improvements thereon and
personal property used in connection therewith, located in Tarrant County, Texas
and commonly known as the Wildwood Apartments (containing 120 apartment units)
and more particularly defined as the "Property" below.
B. Seller's affiliate, Western Rim Investors 1992-5, L.P., a California
Limited Partnership, dba Arbors on Forest Ridge ("Forest Ridge Seller") owns and
operates certain real property located in Tarrant County, Texas, with
improvements thereon and personal property used in connection therewith,
commonly known as the Arbors on Forest Ridge Apartments (containing 210
apartment units) ("Forest Ridge Property").
C. Seller's affiliate, Western Rim Investors 1993-2, L.P., a California
Limited Partnership, dba Toscana Apartments ("Toscana Seller") owns and operates
certain real property located in Denton County, Texas, with improvements thereon
and personal property used in connection therewith, known as the Toscana
Apartments (containing 192 apartment units) ("Toscana Property").
D. Buyer desires to purchase the Property together with all improvements
and all related rights and appurtenances, including without limitation, Seller's
interest in adjacent streets, alleys, rights-of-way, strips, gores and access
easements, and any improvements on the Property.
E. Seller desires to sell the Property to Buyer on the condition that
Buyer also purchase the Forest Ridge Property and the Toscana Property
simultaneously therewith as a "package" purchase and sale.
1. AGREEMENT.
This agreement of Purchase and Sale and Escrow Instructions dated
January 21, 1997, Escrow No. TC96-81550, is between Seller and Buyer with Safeco
Land Title of Tarrant, a Texas corporation, as escrow agent ("Escrow Agent).
This Agreement and Escrow Instructions shall constitute the agreement on the
part of the Seller to sell and on the part of the Buyer to purchase the Property
described and defined hereinbelow. In the event of any conflict or any
<PAGE>
inconsistency between the terms and provisions of any other Escrow Instructions
and the terms and provisions of this Agreement, the terms and provisions of this
Agreement shall control.
2. PROPERTY.
The property which is the subject of this Agreement is defined to mean
the following: (i) the real property located in Tarrant County, Texas as more
particularly described by legal description on Exhibit A attached hereto and
made a part thereof, together with (ii) all improvements and fixtures located
thereon ("Improvements"), (iii) the personal property owned by Seller and used
in connection therewith as described on Exhibit B attached hereto ("Personal
Property"), (iv) all rights of Seller in and to any and all leases for space in
and to the Property ("Leases") by tenants ("Tenants") thereunder, (v) all
existing warranties, including manufacturer's warranties ("Warranties") relating
to the Improvements or Personal Property, but only to the extent assignable,
(vi) all right, title and interest of Seller, if any, in and to the use of the
name by which the Property is commonly known, "Wildwood Apartments,"
("Tradename"), (vii) the existing phone numbers ("Phone Numbers") used in
connection with the operation of the Property, but only to the extent assignable
and (viii) all rights, privileges, easements and appurtenances thereto, if any
(collectively, the "Property").
3. OPENING OF ESCROW; CLOSING; PACKAGE SALE; INDEPENDENT CONSIDERATION.
a. For purposes of this Agreement, the Opening of Escrow (the "Opening
of Escrow") shall be deemed to be the date set forth below on which the Earnest
Money Deposit (as hereinafter defined) and three (3) fully executed copies of
this Agreement and the Other Agreements (as hereinafter defined) are delivered
to and accepted by Escrow Agent. The consummation of the transaction
contemplated by this Agreement (the "Closing") shall occur at 10:00 a.m., Texas
time, on the date which is seven days after the expiration of the Feasibility
Termination Date (as hereinafter defined) (the "Closing Date"); provided,
however, if Buyer in good faith needs additional time to prepare for the Closing
of the transaction and the funding of the Purchase Price, then Buyer may extend
the Closing Date by up to seven (7) days by sending written notice of such
extension to Seller on or before the originally scheduled Closing Date; and
provided further that any such extension shall constitute an extension for the
same period of time of the Closing Date under the Other Agreements so that in
any case the closing of the sale and conveyance of the Property, the Forest
Ridge Property and the Toscana Property shall occur simultaneously. The Closing
shall occur at the offices of Escrow Agent or at such other place as Seller and
Buyer may agree in writing. Closing shall be deemed to have occurred when (i)
all Closing documents contemplated by this Agreement have been delivered to,
received by, and executed by the appropriate parties; (ii) all conditions to
such Closing contemplated by this Agreement have been satisfied or waived in
writing (including, without limitation the simultaneous closing of the sale and
purchase from Seller to Buyer of the Forest Ridge Property and the Toscana
Property as hereinafter discussed); (iii) the deed required pursuant to
paragraph 8 has been recorded; and (iv) the funds required to be paid under this
Agreement have been properly delivered to Escrow Agent and are available for
distribution by Escrow Agent.
2
<PAGE>
b. The parties acknowledge and agree that (i) the sale of the Property
is a part of a "package sale" of the Property, the Forest Ridge Property and the
Toscana Property, (ii) as of even date herewith, Buyer is entering into separate
Purchase and Sale Agreements ("Other Agreements") with Forest Ridge Seller and
Toscana Seller to purchase the Forest Ridge Property and Toscana Property,
respectively, (iii) Buyer shall have no right to close the purchase the Property
unless Buyer simultaneously closes the purchase of both the Forest Ridge
Property and Toscana Property in accordance with the terms of the Other
Agreements, (iv) Seller's obligations hereunder shall be conditioned on Buyer's
performing all of its obligations under the Other Agreements and, simultaneously
with the Closing hereunder, closing the purchase of the Forest Ridge Property
and Toscana Property in accordance with the terms of the Other Agreements, (v)
any termination by Buyer of either of the Other Agreements pursuant to an
express right to terminate thereunder shall be deemed to also constitute a
termination of this Agreement by Buyer pursuant to the corresponding provision
hereof and (vi) any default by Buyer under either of the Other Agreements shall
be deemed to also constitute a default by Buyer under this Agreement. The
provisions of this subsection shall control in the event of any conflicting
provisions contained herein or in the Other Agreements.
c. Contemporaneously with the execution of this Agreement, Buyer shall
deliver to Seller a check in the amount of Fifty and No/100 Dollars ($50.00)
("Independent Consideration"), which amount the parties bargained for and agreed
to as consideration for Seller's execution, delivery and performance of this
Agreement. This Independent Consideration is in addition to and independent of
any other consideration or payment provided for in this Agreement, is
nonrefundable, and shall be retained by Seller notwithstanding any other
provision of this Agreement.
4. INFORMATION SUPPLIED BY SELLER/PRE-CLOSING MATTERS.
As soon as reasonably possible after the Opening of Escrow, Seller shall
either deliver or make available to Buyer the following:
a. Current rent roll schedules ("Rent Rolls") certified as being true
and correct by Seller (as of the last day of the month immediately preceding the
month in which such schedule is furnished to Buyer) and showing for each
apartment unit within the Property (i) its vacancy or occupancy, (ii) the
monthly rental amount therefore; (iii) if the space is occupied, the
commencement and termination date of the Lease covering that space and the
name(s) of the Tenant(s) thereunder; and (iv) the amount of any rent or other
charges, if any, in arrears or prepaid thereunder.
b. Letter in form substantially the same as that attached hereto as
Exhibit C addressed to Buyer's accountants, L.P. Martin & Company, P.C.,
concerning certain financial certifications as provided therein, executed by
Seller.
c. A current Termite Inspection Report or Reports for the Property
indicating that there is no evidence of termites on the Property or, if there is
evidence that termites are present, that termites have been killed or treated.
3
<PAGE>
d. Sufficient books and records for the operation of the Property for at
least 12 months of operation so that Buyer can generate a report in compliance
with accounting regulation S-X of the Securities and Exchange Commission.
5. REVIEW, APPROVAL AND FINANCING CONTINGENCIES.
Buyer and Seller acknowledge that, until the Feasibility Termination
Date (as hereinafter defined), Buyer's obligations hereunder shall be
conditioned on Buyer's satisfaction with all aspects of the Property and the
transaction hereunder and its review of the same, including but not limited to,
(i) Buyer's investigation of the economic feasibility of purchasing the
Property; (ii) Buyer's inspection of the Property, and its review of any
engineering reports, architectural reports, soils and environmental analyses,
research of relevant codes, ordinances, or regulations; (iii) Buyer's approval
of the forms of various documents to be executed at Closing; (iv) Buyer's
obtaining financing; (v) Buyer's review of the Title Commitment and Survey (as
hereinafter defined) and any other title matters which may affect the Property;
(vi) Buyer's review of the books and records kept in connection with the
operation of the Property; (vii) Buyer's review of the Leases; and (vi) Buyer's
review of any other matter which Buyer may deem to affect the desirability of
the Property. Accordingly, notwithstanding anything to the contrary contained in
this Agreement, at any time on or before 5:00 p.m. on the date which is
twenty-one (21) days after the Opening of Escrow (the "Feasibility Termination
Date"), Buyer shall have the right, at its sole discretion, to terminate this
Agreement for any reason whatsoever by delivering written notice of termination
to Escrow Agent and Seller on or before the Feasibility Termination Date. Upon
such termination, this Agreement and Escrow Instructions shall be immediately
canceled, Escrow Agent shall return to Buyer the Earnest Money Deposit and (if
theretofore deposited) the Additional Earnest Money Deposit and interest accrued
thereon, Buyer shall deliver to Seller copies of any nonproprietary studies,
reports or tests pertaining to the Property, and Buyer and Seller shall have no
further obligation or liability to the other in connection with the purchase and
sale of the Property, except such specific indemnification provision as are
provided for in this Agreement. Failure by Buyer to terminate this Agreement on
or before the Feasibility Termination Date shall be deemed to be a waiver of its
right to terminate under this paragraph, whereupon the Earnest Money Deposit (as
defined in paragraph 6), subject to Seller's performance hereunder and except as
otherwise specifically provided herein, shall be deemed to be nonrefundable.
6. PURCHASE PRICE.
a. The parties acknowledge that the sale of the Property is part of a
"package sale of the Property, the Forest Ridge Property and the Toscana
Property as discussed above. The aggregate purchase price ("Purchase Price") for
the Property, Forest Ridge Property and Toscana Property shall be seventeen
million four hundred twenty-five thousand dollars (S17,425,000). Payment of the
Purchase Price and the Earnest Money Deposit and Additional Earnest Money
Deposit as provided below shall constitute payment for all three properties
without allocation among such properties.
4
<PAGE>
i. Upon Opening of escrow, Buyer shall deposit with Escrow Agent
one-hundred fifty thousand dollars ($150,000) (the "Earnest Money Deposit"). The
Earnest Money Deposit is to be disbursed to Seller or Buyer in accordance with
the terms hereof prior to Closing.
ii. Upon the Feasibility Termination Date (if Buyer does not terminate
this Agreement pursuant to paragraph 5 above) and as a condition to Buyer's
continued rights hereunder and under the Other Agreements, Buyer shall deposit
with Escrow Agent an additional sum of one-hundred fifty thousand dollars
($150,000) (the "Additional Earnest Money Deposit"). The Additional Earnest
Money Deposit is to be disbursed to Seller or Buyer in accordance with the terms
hereof prior to Closing.
iii. Upon the Feasibility Termination Date and in the event Buyer has
not terminated this Agreement and the Other Agreements, the entire Earnest Money
Deposit including the Additional Earnest Money Deposit shall be deemed
non-refundable.
iv. On or before the Closing Date, Buyer shall deposit with Escrow Agent
for the account of Seller, Forest Ridge Seller and Toscana Seller in cash or
funds immediately available in Ft. Worth, Texas, the balance of the Purchase
Price increased or reduced by such funds as are required to take into account
the prorations and other adjustments required by this Agreement and the Other
Agreements.
b. All funds deposited in escrow on account of the Purchase Price or
otherwise shall be deposited by Escrow Agent in an interest bearing account in a
federally insured commercial bank reasonably approved by Buyer. Any interest
earned on such funds shall be remitted to Buyer if Buyer is entitled to the
return of the funds pursuant to this Agreement; otherwise, the interest shall be
credited to the Purchase Price in the event Closing shall occur.
7. TITLE REVIEW; SURVEY.
a. Seller will deliver with this agreement a commitment for title
insurance with copies of all recorded Schedule B items set forth therein ("Title
Report") pertaining to the Property. Seller will deliver with this Agreement to
Buyer the existing surveys of the Property, if any (the "Surveys").
b. Buyer shall be entitled to object to any matters disclosed by the
Title Report or Surveys by delivering written notice of such objection to Seller
and Escrow Agent on or before the date which is ten (10) days after the Opening
of Escrow. Said notices of objection shall specify in reasonable detail any
matter to which Buyer objects. If Escrow Agent subsequently issues any amended
commitment for title insurance disclosing any additional Schedule B matters or
if Buyer subsequently receives an amended survey reflecting additional Schedule
B matters, Buyer shall be entitled to reasonably object to any matters not
previously disclosed in the initial Title Report or the initial Surveys by
delivering written notice of such objection to Seller and Escrow Agent on or
before ten (10) days after Escrow Agent has delivered to Buyer the amended title
commitment or ten (10) days after Buyer's receipt of the amended survey, said
5
<PAGE>
notice to specify in reasonable detail any matter to which Buyer objects. Buyer
shall be deemed to have approved the Title Report and Surveys and any amendments
if it fails to notify Seller and Escrow Agent in writing of its objections
within the respective periods provided herein.
c. After receipt of Buyer's objections, if any, Seller shall at its
option, either (i) terminate this Agreement by sending written notice to Buyer
and Escrow Agent (subject to Buyer's right to cancel said termination provided
for below) if it cannot or is unwilling to cure the objections or (ii) attempt
to eliminate the matters to which Buyer has objected within fifteen (15) days
after receipt of Buyer's objections. Notwithstanding the foregoing, Seller shall
not be required to satisfy any pecuniary encumbrances until Closing. If Seller
elects to terminate this Agreement as provided above by sending written notice
to Buyer, this Agreement and the Escrow shall automatically terminate on the
date ten (10) days after Buyer and Escrow Agent receive written notice of such
termination, unless Buyer elects to cancel such termination and waive its
objections to said matters by written notice to Seller and Escrow Agent
delivered within the ten (10) day period. Seller agrees to use reasonable
efforts to give notice to Buyer as to its election of the above options in favor
of Seller; provided, however, if, within fifteen (15) days after receipt by
Seller of Buyer's objections, Seller has not either (i) sent written notice
terminating as provided above or (ii) sent written notice agreeing to cure said
objections or caused the matters to which Buyer has objected to be eliminated,
then in such event Seller shall be deemed to have sent notice to Buyer
terminating this Agreement, with such deemed notice to be deemed to have been
sent and received upon the expiration of said fifteen (15) day period, and in
such event this Agreement and Escrow shall terminate unless Buyer waives its
objections by written notice delivered to Seller and Escrow Agent on or before
two (2) days after the expiration of said fifteen (15) day period. In the event
of any termination pursuant to this paragraph, the Earnest Money Deposit
delivered to Escrow Agent shall be promptly refunded or returned to Buyer, Buyer
shall deliver copies of any nonproprietary studies, reports or tests pertaining
to the Property, and Seller and Buyer shall have no further obligation or
liability to one another regarding the sale or purchase of the Property, except
as to the specific indemnification provisions otherwise provided for in this
Agreement.
8. CLOSING DOCUMENTS AND CLOSING ITEMS.
a. At the Closing, Seller shall deliver to Escrow Agent the following:
(i) a special warranty deed ("Deed") duly executed, acknowledged and in
a form acceptable for recording, substantially in the form of
Exhibit D attached hereto and made a part hereof, subject to the
Permitted Exceptions (as hereinafter defined) and Seller shall
deliver the Property free and clear of all liens;
(ii) Assignment and Assumption of Leases ("Assignment and Assumption of
Leases.), in form and substance substantially the same as that
attached hereto as Exhibit E, and by this reference made a part
hereof, fully executed and acknowledged by Seller, conveying to
Buyer the Leases.
6
<PAGE>
(iii) Bill of Sale and Assignment ("Bill of Sale and Assignment"), in
form and substance substantially the same as that attached hereto
as Exhibit F. and by this reference made a part hereof, fully
executed and acknowledged by Seller, conveying to Buyer the
Personal Property, Warranties, and Trade Name affecting the
Property.
(iv) Affidavit ("Affidavit") that as of the Closing Date there are no
judgements against the Seller or Property or other unrecorded
matters affecting the Property in such form as Escrow Agent may
require to issue the Title Policy discussed below.
(v) A Termination Agreement ("Termination Agreement") executed by the
existing property manager for the Property and terminating,
effective as of the Closing, the existing management agreement for
the Property.
(vi) The Non-Foreign Status Certification (as hereinafter defined)
executed by Seller.
b. Ad valorem and similar taxes and assessments relating to the Property
for the year in which the Closing occurs ("Taxes") shall be prorated between
Seller and Buyer as of the Closing Date, based on the latest rate applied to the
latest assessed valuation for the Property, with Seller to bear the economic
burden of all such Taxes for the period prior to and including the Closing Date
and with Buyer to bear the economic burden of all such Taxes for all periods
after the Closing Date. As soon as the actual amount of Taxes on the Property
for such year is final and known (and after any appeal with respect thereto is
final and the amount of such Taxes is final), Seller and Buyer shall, to the
extent the amount of actual Taxes differs from the amount estimated at Closing
and upon the request of either party, recalculate the proration of such Taxes
between Seller and Buyer in the same manner specified above but based on such
actual final amount of Taxes for such year. Upon such recalculation, Buyer shall
pay to Seller, or Seller shall pay to Buyer, as the case may be, a sufficient
amount of money so that when added to or subtracted from the preliminary
prorated amounts for each party determined at Closing, Seller shall have paid
for those Taxes applicable to the Property prior to and including the Closing
Date and Buyer shall have paid for those Taxes applicable to the Property after
the Closing Date. Subject to the pro-ration obligations under this Section,
Buyer shall assume and pay for all Taxes relating to the Property for the year
1997 and subsequent years, and shall indemnify and hold Seller harmless from and
against the same. The provisions of this subparagraph shall survive the Closing.
c. All prepaid rentals, if any, actually received by Seller for the
month in which the Closing occurs shall be prorated as of the Closing Date, with
Seller to obtain the economic benefit of all such rentals for all periods prior
to and including the Closing Date and with Buyer to obtain the economic benefit
of all such rentals for all periods after the Closing Date. To the extent
actually received by Seller prior to the Closing, Seller shall deliver to Buyer
at the Closing all advance payments or rentals, other than for the month in
which the Closing occurs. Claims for any delinquent rent and other sums which
are owing to Seller by Tenants of the
7
<PAGE>
Property for periods prior to the Closing Date ("Delinquent Rents") shall be
owned and retained by Seller and Seller shall be entitled to collect all of
same. Furthermore, Buyer agrees to pay Delinquent Rents (or Seller's pro rata
share thereof to the extent such Delinquent Rents are applicable to the month
during which the Closing occurred) to Seller if, and when, amounts are collected
from the delinquent Tenant that are required to be applied to Delinquent Rents
as provided in the immediately succeeding sentence. To the extent rentals are
collected by Buyer after Closing from Tenants owing Delinquent Rents, such
collections shall be applied in the following order of priority (i) such
collections shall first be applied to Delinquent Rents which were delinquent 30
days or less as of the Closing Date, (ii) any balance shall then be applied to
rents currently due at the time of the collection of such amounts and (iii) the
balance shall then be applied to Delinquent Rents which were delinquent for more
than 30 days as of the Closing Date. Buyer agrees to use reasonable efforts to
collect Delinquent Rents, but nothing contained herein shall operate to require
Buyer to institute a lawsuit to recover any such Delinquent Rents or to
terminate any Lease.
d. Seller shall deliver into escrow at Closing individual tenant
security deposits under the Leases held by Seller in trust, or provide Buyer
with a credit therefor. At Closing, Escrow Officer shall disburse the security
deposits to Buyer or provide a credit in favor of Buyer on the settlement
statement. At the Closing, Seller and Buyer shall execute and deliver Tenant
Notice Letters ("Tenant Notice Letters") to be sent to each Tenant under the
Leases (i) notifying such Tenants of the change in ownership with respect to the
Property, (ii) instructing such Tenants to perform all future obligations under
the Leases to Buyer and (iii) advising the Tenants of the transfer to Buyer of
applicable prepaid rent, security or cleaning deposits, and acknowledging
Buyer's future responsibility for the same, and otherwise in form complying with
Section 92.105 of the Texas Property Code. Promptly after Closing, Buyer shall
mail, by first class mail, the Tenant Notice Letters (or at Seller's option,
Seller may so deliver the same) to each Tenant under the Leases. Buyer shall
provide Seller with copies of all such Tenant Notice Letters and a certificate
of mailing within ten (10) calendar days following Closing
e. Charges for utilities, if any, serving the Property shall be
determined as of the Closing Date, and Buyer shall be responsible for all
utility charges for the period after the Closing Date. The parties shall
mutually cooperate and execute and deliver such additional documents as may be
reasonably necessary or desirable to insure that all such utilities are switched
over into the name of Buyer as of the Closing Date, or as soon as possible
thereafter.
f. Prepaid cable television contract payments shall be prorated as of
the Closing Date and Buyer shall receive a credit against the Purchase Price for
its pro-rata share.
g. In general, any and all other items of current revenue and expenses
relating to the Property on the Closing Date shall be prorated as of the Closing
Date.
h. At Closing, Seller shall deliver vacated apartment units in the
Property in the following condition: (i) for units which have been vacated for
10 or more days as of the Closing Date, such units shall be delivered in "rent
ready" condition and (ii) for units which have been
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<PAGE>
vacated for less than 10 days as of the Closing Date, such units shall be
delivered in the condition they were in upon move-out by the tenant therein.
i. At the Closing, Seller and Buyer shall execute and deliver multiple
counterparts of a Closing Memorandum and Indemnification Agreement ("Closing
Memorandum") in form substantially the same as that attached hereto as Exhibit G
with respect to the prorations and other adjustments made at Closing.
j. Seller shall pay the premium for the Title Policy as provided and
subject to the limitations contained in paragraph 9 below. All other costs
incurred in the transfer of the Property from Seller to Buyer shall be paid in
accordance with the customs of real estate transactions presently in effect in
Tarrant County, Texas, as solely determined by Escrow Agent.
9. TITLE INSURANCE POLICY.
At the Closing, Seller shall furnish to Buyer a Texas Standard Owner
Policy of Title Insurance (on the form promulgated by the Texas State Board of
Insurance) issued by Chicago Title Insurance Company ("Title Policy"), in the
amount of the Purchase Price, insuring that title to the Property is held by
Buyer subject only to the printed exceptions normally contained in such policy,
the exceptions contained in the Title Report and any amendments to the Title
Report which are deemed to be approved pursuant to paragraph 7 above, and such
other matters as are provided for in this Agreement ("Permitted Exceptions"). If
Seller so requests, the Title Policy shall be issued as a single Title Policy
that covers all of the Property, the Forest Ridge Property and the Toscana
Property, and Buyer shall not have the right to a separate Title Policy for each
such properties. Buyer may elect to obtain from Escrow Agent a modification to
the Title Policy so that the standard printed exception for boundaries and other
survey type matters shall be limited to "shortages in area"; however, Buyer
shall be responsible for (i) obtaining at its sole cost and expense any
additional surveys needed to obtain such modification and (ii) paying any excess
premium required in order to obtain such modification or other additional
coverage.
10. RIGHT OF ENTRY.
Buyer and its engineers and agents shall have access to the Property at
reasonable times after Opening of Escrow for the purpose of conducting
geological, soil, drainage, engineering, building inspection and environmental
tests and other studies and surveys which Buyer, in its reasonable discretion,
deems necessary. Buyer shall immediately thereafter restore the Property to the
condition which existed prior to performing such tests and studies, and Buyer
shall indemnify, protect, hold harmless and defend Seller for, from and against
any loss, expense, including reasonable attorney's fees, claims, actions, suits
and liability resulting from activities by Buyer or its engineers or agents upon
the Property, and shall keep the Property free from Liens arising out of such
activities. Notwithstanding anything contained in this Agreement to the
contrary, this indemnity and obligation to restore and keep the Property free
from liens shall survive any termination of this Agreement.
9
<PAGE>
11. SALE PROPERTY CONDITION.
To best of Seller's knowledge, Seller represents and warrants to Buyer,
as of the date hereof and, except as otherwise set forth herein, as of the
Closing Date, as follows:
a. Seller is (i) a natural person or, if not a natural person, is duly
organized, validly existing and in good standing under the laws of the state in
which Seller was organized, whether as a corporation, partnership, limited
partnership, trust or other legal entity, (ii) has full power, authority and
legal right to carry on its business as now being conducted and to own the
property and assets it now owns, and (iii) is duly qualified or licensed to do
business and is in good standing in the jurisdiction where the property is
located unless Seller has been advised by legal counsel that such qualification
is not required by applicable state law;
b. Seller has full power, authority and legal right to execute, deliver
and perform this Agreement and all other documents and certificates contemplated
hereby, and the execution, delivery and performance thereof have been duly
authorized by Seller;
c. No other action is or was required to be taken by Seller to permit
the execution delivery and performance of its Agreement and all other documents
and certificates contemplated hereby, and the transactions contemplated hereby
and no consent or approval of any third party or governmental authority is or
was required or appropriate in connection with the execution of this Agreement
or to consummate the transactions contemplated hereby;
d. This Agreement constitutes the legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms;
e. Neither the execution or delivery of this Agreement nor the
consummation by Seller of the transactions contemplated hereby is or was in
violation of or in conflict with (i) any provision of any agreement (including,
without limitation, the organization documents under which Seller is organized),
instrument or other restriction of any kind to which Seller is a party, or by
which Seller or the Property is bound or (ii) in any material or adverse way,
statute, law, decree, regulation or order of any governmental authority, or
resulted or will result in a default under any agreement, or caused or will
cause the acceleration of any obligation or loan to which Seller is a party or
by which Seller or the Property is bound;
f. There are no actions, suits, proceedings, orders or investigations
pending or, to the best of Seller's actual knowledge, threatened against or
affecting Seller or 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, which might materially
adversely affect Sellers performance under this Agreement or the consummation of
the transactions contemplated hereby or the use or operation of the Property;
provided, however, Seller discloses that Seller and/or Forest Ridge Seller
and/or Toscana Seller has filed and is prosecuting a lawsuit against certain
former cable television service providers serving the Property and/or the Forest
Ridge Property and/or the Toscana Property, and Buyer agrees that
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<PAGE>
Seller may continue to prosecute such lawsuit after the Closing and that Buyer
shall have no claim to any portion of any recovery in connection therewith; and
g. Seller is not in default under any agreement, deed of trust,
mortgage, security agreement published ordinance, resolution, or decree, bond,
note, indenture, order or judgment to which it is a party or by which the
Property or assets owned by it or used in the conduct of its business thereon is
affected.
h. To the best of Seller's actual knowledge, all leases, rent rolls or
income statements furnished by Seller are materially accurate.
i. There are no outstanding rent concessions of any kind with respect to
the Leases, and if any such concessions are found to exist Seller shall
reimburse Buyer therefor.
j. The mechanical components of the Property shall be in working order
at the time of Closing, normal wear and tear excepted (and taking into
consideration the age of such items).
k. Seller has no knowledge of any default under any of the Leases except
as specified in the Rent Roll or otherwise disclosed to Buyer in writing prior
to the Feasibility Termination Date.
l. Seller has not received any notice of any violation of any ordinance,
regulation, law or statute of any governmental agency pertaining to the Property
or any portion thereof.
m. At all times from the date hereof until Closing, Seller shall
materially maintain, operate and lease the Property in a manner and standard
consistent with Seller's historical operation of the Property.
These representations and warranties shall survive close of escrow for a
period of twelve (12) months. SELLER MAKES NO OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER.
Except as otherwise expressly set forth in this Agreement, Buyer
acknowledges, represents, warrants and agrees that: (i) Buyer is purchasing the
Property, any improvements now or hereafter made thereto at Closing in "as is"
and "where is" condition, with all faults without any warranty expressed or
implied whatsoever; (ii) Buyer has made or shall make prior to Closing its own
examination, inspection and investigation of the Property, all improvements, if
any, located thereon, the subsurface of the Property and all soil, engineering,
environmental other conditions and requirements for the Property and any
personal property; (iii) Buyer has or shall investigate all zoning, building and
governmental regulatory matters pertaining to the Property prior to Closing;
(iv) Buyer is entering into this Agreement and is purchasing the Property and,
based upon such inspections and investigations and not in reliance on any
statements, representations, inducements or agreements of Seller and/or Broker
in connection with the Property, its zoning, its fitness or merchantability for
any particular use or purpose, availability of water
11
<PAGE>
or utilities, soil or environmental conditions, encroachments which would be
disclosed by either an inspection of the Property or a survey, flooding and such
other matters as might be disclosed or determined by an examination of the
Property and independent inquiry with respect thereto; (v) any engineering data,
environmental audit, soils reports, surveys or other information that Seller or
any other party may have delivered to Buyer pertaining to the Property is
furnished without any representation or warranty whatsoever; and (vi) Seller
and/or Broker shall have no responsibility, liability or obligation respecting
the Property subsequent to Closing. Buyer shall make its own investigation
regarding the presence of any toxic waste or hazardous materials on the
Property.
12. BROKERAGE
a. Seller shall pay to Western Rim Property Services, Inc. ("Broker"),
an affiliate of Seller, a real estate broker's commission for the sale of the
Property by Seller to Buyer equal to five percent (5%) of the Purchase Price, in
cash at Closing, provided that such commission shall be payable only if, as and
when Closing shall occur hereunder. If Closing does not occur for any reason
whatsoever, Broker shall not be entitled to any commission whatsoever or any
portion of the Earnest Money Deposit forfeited to Seller. Buyer and Seller each
represent to the other that it has not dealt with any real estate broker or any
other party entitled to a commission, broker's fee or other compensation in
connection with the sale of the Property by Seller to Buyer except Broker. Buyer
and Seller each agree to indemnity, protect, defend and hold the other harmless
for, from and against any expense, including without limitation, attorneys' and
accountants' fees, claims, actions, suits or demands for payment of any
commission, finder's fee or other sum initiated by any broker, commission agent
or other person which such party or its representatives has engaged or retained
or with which it has had discussions concerning the transaction contemplated by
this Agreement except Broker. Notwithstanding anything in this Agreement to the
contrary, the representation and indemnity set forth in this paragraph shall
survive any termination of this Agreement. Furthermore, notwithstanding anything
to the contrary in this Agreement, Western Rim Property Services, Inc.,
represents Seller only and does not represent Buyer in any manner whatsoever.
b. Buyer acknowledges that it has retained or may retain Pinnacle Realty
or an affiliate thereof ("Pinnacle") in connection with Buyer's due diligence
review of the transaction. Buyer represents and warrants that Pinnacle is not
acting in a broker capacity in this regard and in any case any and all amounts
owed to Pinnacle or claimed to be owed by Pinnacle shall be the sole
responsibility of Buyer, and Seller shall have no responsibility therefor.
13. CHANGES IN THE PROPERTY.
Prior to Closing, risk of loss with regard to the Property shall be
borne by Seller. If, prior to Closing, the Property or any portion thereof is
destroyed or damaged, or becomes subject to a taking by virtue of eminent
domain, to any extent whatsoever, Buyer may, in Buyer's sole discretion, either
(i) terminate this Agreement and receive back Buyer's Earnest Money Deposit and
Additional Earnest Money Deposit, and neither party hereto shall have any
further rights or obligations hereunder, or (ii) proceed with the Closing of the
transaction, in
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<PAGE>
which event Seller shall assign to Buyer all insurance or condemnation proceeds
available as a result of such destruction or taking (including proceeds from
loss of rents coverage), and in which event Buyer shall also receive a credit
against the Purchase Price for any deductible amounts from such insurance
proceeds.
14. POSSESSION.
Possession of the Property shall be delivered to Buyer upon Closing,
subject to the matters set forth in the Deed.
15. NOTICES.
Unless otherwise required by law, all notices required to be given
hereunder shall be in writing and shall be conveyed by (i) personal delivery
(including by any messenger service, courier service, overnight delivery or
facsimile with confirmation of receipt) to the address listed below for such
party or (ii) the United States Postal Service by certified or registered mail,
postage prepaid, with return receipt requested, to the address listed below for
such party or (iii) telecopied by facsimile transmission to such party at the
telecopy number listed below, provided that such transmission is confirmed by
telephone on the date of such transmission. The addresses and telecopy numbers
for the parties are as follows:
if to Seller: Western Rim Investment Advisors, Inc.
2400 North Highway 121
(Overnight) Euless, TX 76039
Attn: Marcus D. Hiles,, President
Facsimile: (817) 355-2505
Phone: (817) 355-2500
(U.S.Mail) P. O. Box 426
Colleyville, TX 76034
with a copy of any Kelly, Hart and Hallman
notice to Seller to: 201 Main Street, Suite 2500
Fort Worth, TX 76102
Attn: David Mellina, Esq.
Facsimile: (817) 878-9280
Phone: (817) 878-3538
if to Escrow Agent: Safeco Land Title of Tarrant
777 Main Street
Concourse, #10
Fort Worth, Texas 76102
Attn: Jeff Davis, President
Facsimile: (214) 445-5047
Phone: (817) 877-1481
13
<PAGE>
if to Buyer: Cornerstone Realty Income Trust, Inc.
306 E. Main Street
Richmond, Virginia 23219
Attn: Gus Remppies
Facsimile: (804) 782-9302
Phone: (804) 643-1761
with copies of any Zuckerbrod & Taubenfeld
notice to Buyer to: 575 Chestnut Street
P.O. Box 488
Cedarhurst, New York 11516
Attn: Harry S. Taubenfeld
Facsimile: (516) 374-3490
Phone: (516) 374-3133
and to:
Brown McCarrol & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201-6929
Attn: Robert Morrison
Facsimile: (214) 999-6170
Phone: (214) 999-6103
Notice given by personal delivery shall be deemed to have been given
upon delivery to the appropriate address against receipt therefor (or upon
refusal of acceptance), and notice given by U.S. mail shall be deemed to have
been given two days after deposit in the U.S. mail, and notice by facsimile
transmission shall be deemed to have been given on the date of such transmission
provided that such transmission is confirmed by telephone on the date of such
transmission. Each party may designate from time to time, another address in
place of the address hereinabove set forth by notifying the other parties in the
same manner as provided in this paragraph.
16. DEFAULT BY BUYER.
Except as provided below in this paragraph, if on or prior to Closing,
Buyer shall default in performing or fulfilling any of the covenants or
obligations to be performed by it under this Agreement or the Other Agreements,
including without limitation, Buyer's failure to complete the purchase of the
Property, Forest Ridge Property and Toscana Property, Seller shall, as its sole
remedy, obtain the Earnest Money Deposit (including all additions thereto) and
any other sums theretofore deposited in Escrow or paid to Seller to such time,
as liquidated damages to Seller for such breach by Buyer, Buyer and Seller
agreeing that the amount of damages for such breach by Buyer is difficult to
determine at this time and that the aforesaid sum is a reasonable estimation of
the amount of liquidated damages of such breach under the circumstances existing
at the time this Agreement is entered into. Upon giving notice by Seller to
Buyer and Escrow
14
<PAGE>
Agent of such default, if such default is not cured within five (5) business
days after such notice, Escrow Agent shall deliver to Seller the Earnest Money
Deposit (including all interest earned thereon); whereupon, this Agreement and
the Other Agreements shall be deemed terminated, and Buyer and Seller shall have
no further obligation or liability to the other regarding the purchase and sale
of the Property, except such specific indemnification provisions as are provided
for in this Agreement. Notwithstanding the foregoing, Seller may pursue all
rights and remedies available at law or in equity against Buyer in the event of
a Breach or default by Buyer under the specific indemnification provisions
provided for in this Agreement as an additional remedy and not in lieu of the
foregoing liquidated damages remedy.
17. DEFAULT BY SELLER.
In the event that Seller defaults under this Agreement, Buyer shall have
as its sole remedies the right (i) to require specific performance by Seller
hereunder or (ii) to terminate this Agreement and to be repaid the Earnest Money
Deposit and Additional Earnest Money Deposit, together with any interest which
may have been earned thereon, plus a reimbursement of all reasonable actual
out-of-pocket expenses incurred by Buyer in connection with its inspection of
the Property, including engineering fees, legal fees and accounting fees. Buyer
hereby specifically waives any and all other rights and remedies in equity or at
law, subject, however, to its rights to recoup its attorneys fees as provided in
paragraph 19 below. Buyer acknowledges that Seller's inability or unwillingness
to deliver title to the Property in a condition required by Buyer shall not be
deemed to be a default by Seller hereunder and Buyer's sole remedy in such event
shall be to terminate the Agreement and to be repaid the Earnest Money Deposit
together with any interest earned thereon.
18. REPRESENTATIONS AND WARRANTIES AT CLOSING.
All of Buyer's representations and warranties contained in this
Agreement shall be true and correct at Closing as though made at and as of
Closing. All of Seller's representations and warranties contained in this
Agreement shall be true and correct at Closing as though made at and as of
Closing.
19. ATTORNEYS' FEES.
If either party to this Agreement shall breach its representations or
warranties hereunder or shall fail to fulfill or perform any of its covenants or
obligations in this Agreement, that party shall pay all costs, including,
without limitation, reasonable attorneys' fees and expert witness fees that may
be incurred to enforce the terms, covenants, conditions and provisions of this
Agreement or that may be incurred as a result of the default under or breach of
this Agreement in the event legal action is commenced.
20. ENTIRE AGREEMENT; AMENDMENT.
All exhibits attached to this Agreement are incorporated into this
Agreement by reference and made a part hereof. This Agreement, including all
exhibits hereto, is the entire Agreement
15
<PAGE>
between parties pertaining to all matters agreed upon or understood in
connection with the sale and purchase of the Property. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof or in effect
between the parties. No change or addition may be made to this Agreement except
by a written agreement executed by the parties.
21. TIME OF ESSENCE.
Time is of the essence with respect to the performance of all terms,
covenants, conditions and provisions of this Agreement. No provision of the
Escrow Instructions shall extend the Closing Date by more than five (5) business
days or provide either party hereto with any grace period not provided in this
Agreement.
22. FURTHER ASSURANCES.
The parties hereto shall execute, acknowledge and deliver such other
instruments and documents as may be necessary or appropriate to carry out the
full intent and purpose of this Agreement.
23. APPLICABLE LAW.
This Agreement and the rights of the parties hereto shall be
interpreted, governed and construed in accordance with the laws of the State of
Texas.
24. SECTION HEADINGS.
The section headings in this Agreement are inserted only for convenience
and reference and the parties intend that they shall be disregarded in
interpreting the terms, covenants, conditions and provisions of this Agreement.
25. SEVERABILITY.
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be valid under applicable law, but if any provision shall
be invalid or prohibited hereunder, such provision shall be ineffective to the
extent of such prohibition or invalidation but shall not invalidate the
remainder of such provision or the remaining provisions.
26. WAIVER.
Either of the parties shall have the right to excuse or waive
performance by the other party of any obligation under this Agreement by a
writing signed by the party so excusing or waiving. No delay in exercising any
right or remedy shall constitute a waiver thereof, and no waiver by Seller or
Buyer of the breach of any covenant of this Agreement shall be construed as a
waiver of any preceding or succeeding breach of the same or any other covenant
or condition of this Agreement.
16
<PAGE>
27. ASSIGNMENT; BINDING EFFECT.
Buyer may only assign this Agreement and all of its rights, privileges
and benefits hereunder, or designate a nominee to take title for Buyer, without
Seller's prior written consent so long as its to a wholly owned subsidiary or
affiliate of Buyer. Seller hereby acknowledges and consents that Buyer may
assign its rights hereunder to Apple Residential Income Trust, Inc., a Virginia
corporation ("Apple"); provided, however, Buyer hereby represents and warrants
to Seller that Apple shall be a wholly owned subsidiary or affiliate of Buyer.
Any assignee consented to hereunder shall be required to assume and agree in
writing to perform all Buyer's obligations hereunder, and Buyer shall provide
Seller with a copy of the assignment and assumption agreement between Buyer and
such assignee. Upon any assignment hereunder, Buyer hereunder shall not be
released from any of its obligations or liabilities under this Agreement, nor
shall the Earnest Money Deposit be released to Buyer upon any assumption. Seller
may not assign and transfer any right, title and interest hereunder. Except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns. Seller shall not unreasonably withhold
its consent to any assignment of this Agreement by Buyer to an entity which
Buyer owns at least a 50% interest.
28. CONSTRUCTION.
As used in this Agreement, the masculine, feminine or neuter gender and
the singular or plural numbers shall each be deemed to include the other
whenever the context so requires. This Agreement shall be construed as a whole
and in accordance with its fair meaning and without regard to any presumption or
other rule requiring construction against the party causing this Agreement or
any part of this Agreement to be drafted. The parties acknowledge that each
party has reviewed this Agreement and has had the opportunity to have it
reviewed by legal counsel. If any words or phrases in this Agreement are
stricken or otherwise eliminated whether or not other words or phrases have been
added, this Agreement shall be construed as if the words or phrases stricken or
otherwise eliminated were never included in this Agreement, and no implication
or inference will be drawn from the fact that the words or phrases were stricken
or otherwise eliminated.
29. DEFAULT INTEREST.
If any monies become payable by one party to the other person pursuant
to this Agreement and are not paid when due, then all sums unpaid shall bear
interest at the rate of twelve percent (12%) per annum, from the date when due
until paid; provided, however, the provisions of this paragraph shall not apply
with respect to the Additional Earnest Money Deposit.
30. NO PARTNERSHIP, THIRD PERSON.
It is not intended by this Agreement to, and nothing contained in this
Agreement shall, create any partnership, joint venture or other arrangement
between Seller and Buyer except as
17
<PAGE>
specifically provided herein. No term or provision of this Agreement is
intended to benefit of any person, partnership, corporation or other entity not
a party hereto (including without limitation, any broker), and no such other
person, partnership, corporation or entity shall have any right or cause of
action hereunder.
31. TIME OF PERFORMANCE.
If the date for performance of any obligation hereunder or the last day
of any time period provided for herein shall fall on a Saturday, Sunday or legal
holiday, then said date for performance or time period shall expire on the first
day thereafter which is not a Saturday, Sunday or legal holiday. Except as may
otherwise be set forth herein, any performance provided for herein shall be
timely made and completed if made and completed no later than 5:00 P.M. (Texas
time) on the day for performance.
32. SURVIVAL.
Except as otherwise provided herein, all covenants, agreements,
representations and warranties set forth in this Agreement or in any certificate
or instrument executed or delivered pursuant to this Agreement shall survive the
Closing and shall not merge into any deed, assignment or other instrument
executed or delivered pursuant hereto.
33. RECORDING.
This Agreement shall not be filed or recorded in any public office in
the State of Texas.
34. CLOSING FUNDS.
The funds which will be required from Buyer and all other acts required
of Buyer in order to consummate the transaction contemplated by this Agreement
shall be deposited with Escrow Agent and performed no later than 10:00 A.M.
(Texas time) on the Closing Date. The Closing funds shall be available for
immediate distribution to Seller at Closing after payment of all liens including
mortgages, mechanic liens, etc. The net proceeds of sale that are to be
distributed to Seller at Closing shall be remitted by Escrow Agent in accordance
with Seller's instructions given at or prior to Closing.
35. IRS REAL ESTATE SALES REPORTING.
Buyer and Seller hereby appoint Escrow Agent as, and Escrow Agent agrees
to act as, "the person responsible for Closing" the transaction which is the
subject of this Agreement pursuant to Internal Revenue Code of 1986 Section
6045(e). Escrow Agent shall prepare and file the information return (IRS Form
1099-B) required by and otherwise comply with the terms of IRC SS6045(e). Escrow
Agent further agrees to indemnify and hold Buyer, Seller and there respective
attorneys harmless from and against all claims, costs, liabilities, penalties or
expenses resulting from Escrow Agent's failure to file the appropriate reports
and otherwise comply with the terms of the Internal Revenue Code pursuant to
this paragraph.
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<PAGE>
36. NON-FOREIGN ENTITY.
Seller shall execute and deliver to Buyer at Closing an affidavit as
required by Internal Revenue Code Section 1445(b)(2) setting forth Seller's
taxpayer identification number, Seller's address and stating that it is not a
foreign person for purposes of that Section ("Non-Foreign Status
Certification").
37. COUNTERPART EXECUTION.
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed one and the
same Agreement.
38. ACCEPTANCE.
This offer to purchase the Property by the party first executing and the
terms set forth herein shall automatically terminate at 5:00 P.M. (Texas time),
on February 15, 1997, unless accepted by the other party by delivering to the
first executing party at its address referenced above a fully executed
counterpart of this Agreement no later than said date.
39. OTHER OFFERS.
Seller may accept and negotiate back-up offers and contracts should
Buyer default under this Agreement. No other offer or Contract would be in force
or effect if or until Buyer defaults.
40. CONFIDENTIALITY
Buyer agrees to hold this Agreement and its contemplated acquisition
strictly confidential and only disclose the contemplated acquisition to its
attorneys, accountants, professional consultants and advisors, lenders and title
company. In no event, under any circumstances whatsoever, shall this sale prior
to closing be disclosed to any on-site employee of Western Rim Property
Services, Inc. or its vendors, suppliers, contractors, or any resident at any of
the Sellers properties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first set forth above.
BUYER:
Cornerstone Realty Group, Inc., a Virginia
corporation
By: /s/ S. J. OLANDER
-------------------
Name: S. J. OLANDER
------------------
Title: SVP
--------------
SELLER :
Western Rim Investors 1991-4, L.P., a
California Limited Partnership, dba
Wildwood Apartments
By: Western Rim Investment Advisors, Inc.,
its General Partner
By: /s/ Marcus D. Hiles
---------------------
Marcus D. Hiles, President
ESCROW AGENT:
Escrow Agent hereby agrees to be bound by the provisions hereof applicable
to Escrow Agent and to perform its obligations as set forth herein and hereby
declares that Opening of Escrow has occurred this 7th day of February 1997.
Safeco Land Title of Tarrant
By: /s/ Barbara Hutson
------------------------
Name: Barbara Hutson
---------------------
Title: Commercial Operations Mgr.
---------------------------
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EXHIBIT A
Legal Description
LOT 1, in BLOCK 1, WILDWOOD, An Addition to the City of Euless, Tarrant County,
Texas, according to the Revised Plat thereof recorded in Volume 388-166, Page
52, of the Plat Records of Tarrant County, Texas
<PAGE>
EXHIBIT B
Personal Property
[see attached list]
<PAGE>
[WILDWOOD LOGO]
EXHIBIT "B"
---------
Luxury Apartment Homes By Nash Phillips/Copus
Wildwood Personal Property List
1 Leasing Desk
1 Computer Desk
1 Office Desk
7 Old Monitors/Replaced on 3-26-96
7 New Ultrak Monitors (B/W) Model # KM-17
Serial #'s 5122170 5121822 5121816 5121812 5121801
5121819 5122212
2 Filing Cabinets
1 Samton Computer Monitor Model # SC428PT Serial # HMAG100146
1 CTI Keyboard Model # SK-1100CW Serial # C95 0931692
1 Hard Drive Expert Computer Systems *Pentium 100 Intel
1 Mouse Model # 1300 Serial # 512053841
1 Epson Printer Model # P630B Serial #lF8E383254
1 Fax Machine Model # Intellifax 680 Serial # F41593398
1 Xerox Machine Model # 6G7 Serial # 085692
1 Sharp Copier Cabinet
1 Canon Calculator Model # P-20-DX Serial # 90230649
2 Motorola 2 Way Radios Model # Radius SP10
Serial #'s 087FVGD316 087FVGD364
1 Burle Video Switcher Model # TC8108A Serial # 004976
1 Burle Video Cassette Recorder Model # TC3960 Serial # 20101434
1 Key Box W/ Keys to All Units and Mail Boxes
1 Hoover Runabout Vacuum Cleaner Model # U4265-910 Serial # 019300043982
l GE Refrigerator Model # SC2SK Serial # DAL05949
1 Misc. Desk Accessories
1 Brass Desk Clock W/ Pen
2 Silk Plants
2 Silk Ficus Trees
1 Book Shelf End Table
3 AT&T Spirit Phones
1 GE Spacesaver Microwave Model # JVM231WVOOl Serial # LR 9867795
1 Marvel Ice Maker
1 Mr. Coffee Maker
1 Bakers Rack
1 Lenoxx Sound Stereo/Cassette Recorder
4 Trash Cans
2 Wall Clocks
1 Wall Mirror
12 Artificial Vines/Ivy
200 W. Bear Creek Dr. Euless Tx. 76039 Metro (817) 267-7666 Fax (817) 545-9190
<PAGE>
[WILDWOOD LOGO]
Luxury Apartment Homes By Nash Phillips/Copus
2 Desk Plants
1 End Table
1 Coffee Table
1 Sofa
1 Love Seat
1 Big Arm Chair
1 Glass Round Table
1 Lamp
l Large Framed Picture
2 Small Pictures
1 Glass Sofa Table
2 Secretary Chairs
2 Queen Ann Waiting Chairs
l Glass Cookie Plate
1 Glass Candy Dish
1 Globe
1 RCA Home Theatre
1 Texas Instruments Calculator Serial # S3136123
1 Sharp PA 3140 Typewriter Serial # 98342000K
1 Misc. Forms and Office Supplies
1 Misc. Decorative Accessories
200 W. Bear Creek Dr. Euless Tx. 76039 Metro (817) 267-7666 Fax (817) 545-9190
<PAGE>
[WILDWOOD LOGO]
Luxury Apartment Homes By Nash Phillips/Copus
Wildwood Health Club List
2 Life Cycle 5500
1 Quinton Rowing Machine
1 Spirit Stair Climber
1 Pacific Fitness Universal
1 Pacific Fitness Leg Press
1 Stereo W/ 2 Speakers
Wildwood Laundry Facility List
1 Laundry Basket
1 Wall Clock
1 Folding Table
3 Waiting Chairs
1 Window A/C Unit Installed
1 Industrial Size Trash Can
1 Kitchen Size Trash Can
1 Patton Space Saver Heater
1 Holmes Personal Size Heating Unit
1 Eureka Electric Bissel
1 Large Mop W/ Mop Bucket
1 Small Mop W/ Bucket
1 Broom
1 Dust Pan
200 W. Bear Creek Dr. Euless, Tx. 76039 Metro (817) 267-7666 Fax (817) 545-9190
<PAGE>
[WILDWOOD LOGO]
Luxury Apartment Homes By Nash Phillips/Copus
Wildwood Maintenance Shop List
1 Dolly
1 8 ft Ladder
1 6 ft Ladder
1 Extention Ladder
1 Shop Vac (Wet & Dry)
1 Recovery Unit W/ Tank
1 Drill
1 Skill Saw
1 Line Vac
1 Jig Saw
1 Electric Staple Gun
1 Torch Head W/ Tank
1 Electric Cord
1 Tile Cutter
1 Tile Snips
1 Drain Auger
1 Regulator W/ Tank
1 Snap Line
1 Key Machine
1 Texture Hopper
1 Toilet Plunger
1 Caulk Gun
1 Blower (Leaf)
1 Snow Shovel
1 Spade Shovel
1 Rake
3 Brooms
2 Dust Pans
2 Garden Hoses
2 Nozzle Sprayers
1 Heater
1 A/C Window Unit (Installed)
2 Putty Knifes
1 Kwikset Key Kit
200 W. Bear Creek Dr. Euless, Tx. 76039 Metro (817) 267-7666 Fax (817) 545-9190
<PAGE>
[WILDWOOD LOGO]
Luxury Apartment Homes By Nash Phillips/Copus
l Box Fan
1 Leaf Rake
1 Carpet Rake
1 Sander
1 Router
1 Bo Saw
1 Pipe Cutter
1 Paint Roller
2 Paint Brush
1 Grease Gun
1 Pool Vac Head
1 Pool Brush
1 Vac Hose (Pool)
1 Pool Test Kit
2 Life Rings
1 Shepard's Pole
1 Chem Sprayer
1 Leaf Net
1 Wheel Barrow
1 Screen Spline Roller
200 W. Bear Creek Dr. Euless, Tx. 76039 Metro (817) 267-7666 Fax (817) 545-9190.
<PAGE>
EXHIBIT C
, 1997
L. P. Martin & Company, P.C.
4132 Innslake Drive
Glen Allen, VA 23060
In connection with our audit of the statement of income and direct
operating expenses of ________________ Apartments for the twelve month period
ended _______________________, for the purpose of expressing an opinion as to
whether the financial statement presents fairly, in all material respects, the
results of operations of ____________________ Apartments, in conformity with
generally accepted accounting principles, we confirm, to the best of our actual
knowledge and belief, the following representations made to you during your
audit.
1. We are responsible for the fair presentation of the statement of
operations in conformity with generally accepted accounting principles.
2. We have made available to you all financial records and related data and
to our knowledge these records are the only accounting records in
existence for the above noted apartments.
3. There have been no:
a. Irregularities involving management or employees who have
significant roles in the internal control structure.
b. Irregularities involving other employees that could have a
material effect on the financial statements.
c. Communications from regulatory agencies concerning noncompliance
with, or deficiencies in financial reporting practices that
could have a material effect on the financial statements.
4. The following, if applicable, have been properly recorded in the
accounting records and/or disclosed to you.
a. Related party transactions and related accounts receivable or
payable, including sales, purchases, loans, transfers, leasing
arrangements, and guarantees.
b. Arrangements with financial institutions involving compensating
balances or other arrangements involving restrictions on cash
balances and line-of-credit or similar arrangements.
1
<PAGE>
5. There are no:
a. Violations or potential violations of laws or regulations whose
effect should be considered for disclosure in the financial
statements or as a basis for recording a loss contingency.
b. Other material liabilities or gain or loss contingencies that
are required to be accrued or disclosed by Statement of
Financial Accounting Standards No. 5
6. We are not aware of any pending or threatened litigation, claims, or
assessments or unasserted claims or assessments other than tenant
evictions or collections for nonpayment of rent that are required to be
accrued or disclosed in the financial statements in accordance with
Statement of Financial Accounting Standards No. 5, and we have not
consulted a lawyer concerning litigation, claims or assessments against
the Property.
7. There are no material transactions that have not been properly recorded
in the accounting records underlying the financial statements.
8. We have complied with all aspects of contractual agreements that would
have a material effect on the financial statements in the event of
noncompliance.
9. We have identified all accounting estimates that could be material to
the financial statements, including the key factors and significant
assumptions underlying those estimates, and we believe the estimates are
reasonable in the circumstances.
10. No events have occurred subsequent to ________ that would require
adjustment to, or disclosure in, the financial statements.
___________________________ ________________________________
Signature Signature
___________________________ ________________________________
Title Title
2
<PAGE>
EXHIBIT D
When recorded, return to:
_______________________________
_______________________________
_______________________________
SPECIAL WARRANTY DEED
For the consideration of Ten and 00/100 Dollars and other valuable
consideration, ____________________ ("Grantor"), a ___________________
Partnership, does hereby convey to _______________ , a _________________
Corporation ("Grantee"), the following described property situated in Texas:
See Exhibit A attached hereto and made a part hereof.
SUBJECT TO: Current taxes, assessments not yet due and payable,
reservations in patents and all easements, rights-of-way, covenants, conditions
and restrictions as may appear of record, and such matters which an inspection
or current accurate survey would reveal.
Grantor hereby binds itself and its successors to warrant and defend the
title, as against all acts of Grantor herein, and all persons claiming by,
through or under Grantor, and no other, subject to the matters above set forth.
GRANTEE EXPRESSLY ACKNOWLEDGES THAT THE GRANTEE IS PURCHASING AND THE GRANTOR IS
CONVEYING THE PROPERTY SOLELY IN RELIANCE ON GRANTEE'S OWN INVESTIGATIONS AND
"AS IS. WHERE IS" AND "WITH ALL FAULTS AND DEFECTS," LATENT OR OTHERWISE.
GRANTEE EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENT OF
GRANTOR HEREIN AND EXCEPT AS OTHERWISE SPECIFIED HEREIN, GRANTOR MAKES AND HAS
MADE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR ARISING BY OPERATION
OF LAW, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY AS TO CONDITION,
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH
RESPECT TO THE PROPERTY OR ANY MATTER RELATED THERETO.
IN WITNESS WHEREOF, Grantor and Grantee have executed this Special
Warranty Deed this __________________ day of ________________ 1997.
GRANTOR:
By: _____________________________________
Its: ____________________________________
<PAGE>
GRANTEE:
___________________________________
By: _______________________________
Its: ______________________________
STATE OF TEXAS )
) SS.
County of Tarrant )
Acknowledged before me this ____________ day of __________________ 1997, by
____________________________________________________________________________ .
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
My commission expires:
___________________________________
_________________________ Notary Public
STATE OF TEXAS )
) SS.
County of Tarrant )
Acknowledged before me this _________ day of ______________ 1997, by
____________________________ of ___________________________________________,
a __________ corporation, on behalf of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
My commission expires:
_____________________________________
Notary Public
_____________________________
2
<PAGE>
EXHIBIT E
ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES IS MADE and entered into this ___
day of ___________________, 199__, by and between _______________________, a(n)
_____________________ ("Seller"), and ________________________, a(n) ______
("Buyer").
WHEREAS, Seller is conveying to Buyer certain real property ("Real
Property") in ____________, Texas, more particularly described on Exhibit "A"
attached hereto and incorporated herein by reference; and
WHEREAS, Seller desires to assign to Buyer its rights, as landlord, in and
to certain leases relating to the Real Property.
NOW, THEREFORE, Seller, for and in consideration of Ten Dollars ($10.00)
and other good and valuable consideration in hand paid to Seller by Buyer, does
hereby grant, sell, assign, transfer, convey and deliver to Buyer all of
Seller's right, title and interest, as landlord, under those certain tenant
leases and/or other agreements demising space in and to the Real Property
("Leases") described on Exhibit "B" attached hereto and incorporated herein by
reference.
Buyer hereby agrees to assume all of Seller's duties and obligations under
the Leases accruing on and after the date hereof, and to indemnify, protect,
defend and hold Seller harmless from all such duties and obligations. Seller
shall indemnify, protect, defend and hold Buyer harmless from all duties and
obligations under the Leases accruing prior to the date hereof.
This Assignment of Leases is executed by Seller and accepted by Buyer
subject to any and all terms and conditions contained in the Leases and all of
the same exceptions and conditions contained in that certain Special Warranty
Deed of even date herewith from Seller to Buyer relating to the conveyance of
the Real Property.
This is a final and exclusive expression of the agreement of Seller and
Buyer, and no course of dealing or usage of trade or course of performance shall
be relevant to explain or supplement any term expressed in this Assignment and
Assumption of Leases.
To have and to hold all of Seller's right, title and interest as
landlord under the Leases unto Buyer, its legal representatives and assigns
forever.
EXECUTED as of the date first hereinabove written.
<PAGE>
SELLER:
________________________________________
________________________________________
By: ___________________________________
___________________________________
___________________________________
PURCHASER
By: ____________________________________
Name: __________________________________
Title: _________________________________
2
<PAGE>
EXHIBIT F
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT IS MADE and entered into this _______ day
of _______________, 19___, by and between __________________, a(n) _____________
("Seller"), and __________________________, a(n) _________________ ("Buyer").
WHEREAS, Seller is conveying to Buyer certain real property ("Real
Property") in ________________ County, Texas, more particularly described on
Exhibit "A" attached hereto and incorporated herein by reference, together with
all improvements ("Improvements") thereon; and
WHEREAS, Seller desires to assign to Buyer certain rights and interests
relating to the Real Property.
NOW, THEREFORE, Seller, for and in consideration of Ten Dollars ($10.00)
and other good and valuable consideration in hand paid to Seller by Buyer, does
hereby grant, sell, assign, transfer, convey and deliver to Buyer all of
Sellers' right, title and interest in and to the following:
1. The personal property owned by Seller in connection with the Real
Property as described on Exhibit "B" attached hereto and incorporated herein by
reference ("Personal Property");
2. All existing warranties, including manufacturer's warranties
("Warranties") relating to the Improvements or Personal Property, if any, but
only to the extent assignable;
3. All right, title and interest of Seller, if any, in and to the use of
the name by which the Real Property is commonly known, "Wildwood Apartments,"
("Tradename");
4. The existing phone numbers ("Phone Numbers") used in connection with
the operation of the Real Property, but only to the extent assignable;
The herein-described Personal Property, Warranties, Tradename and Phone
Numbers are collectively referred to as the "Property."
This Bill of Sale and Assignment is executed by Seller and accepted by
Buyer subject to any and all terms and conditions contained in the Warranties
and all of the same exceptions and conditions contained in that certain Special
Warranty Deed of even date herewith from Seller to Buyer relating to the
conveyance of the Real Property.
This is a final and exclusive expression of the agreement of Seller and
Buyer, and no course of dealing or usage of trade or course of performance shall
be relevant to explain or supplement any term expressed in this Bill of Sale and
Assignment.
To have and to hold the Property unto Buyer, its legal representatives and
assigns forever, but without warranty of any kind.
EXECUTED as of the date first hereinabove written.
SELLER:
__________________________________,
a(n)______________________________
By: ______________________________
Name:_________________________
Title:________________________
PURCHASER:
__________________________________,
a(n)______________________________
By:_______________________________
Name:__________________________
Title:_________________________
THE STATE OF ___________ SS.
SS.
COUNTY OF_______________ SS.
This instrument was acknowledged before me on the _____ day of ___________,
1997, by _______________________, ___________________ of ______________________
_______, a(n) ___________________, on behalf of said _________________.
__________________________________
Notary Public, State of___________
__________________________________
Notary's Typed or Printed Name
My Commission Expires:____________
2
THE STATE OF __________ SS.
SS.
COUNTY OF _____________ SS.
This instrument was acknowledged before me on the _____ day of ___________,
1993, by _____________________, ___________________ of ______________________
_______, a(n) ___________________, on behalf of said ___________________.
___________________________________
Notary Public, State of____________
___________________________________
Notary's Typed or Printed Name
My Commission Expires:_____________
3
<PAGE>
EXHIBIT G
CLOSING MEMORANDUM AND
INDEMNIFICATION AGREEMENT
THE STATE OF TEXAS SS.
SS. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS SS.
THIS CLOSING MEMORANDUM AND INDEMNIFICATION AGREEMENT (the "Agreement")
is entered into effective as of ______________, 1997 (the "Closing Date") by
and between ___________________________, a ___________________ ("Seller"),
and ________________________________, a ____________________ ("Buyer").
In connection with and in consideration of the closing ("Closing") of
the transaction contemplated under that certain Purchase and Sale Agreement (the
"Agreement") dated _________________, 1997, by and between Seller and Buyer,
covering that certain property more particularly described in the Agreement (the
"Property"), Seller and Buyer hereby agree as follows:
1. Proration Date. All prorations have been made as of the Closing Date.
2. Operating Expenses. Except as otherwise provided in the Agreement or
herein, any and all costs and expenses relating to the operation, management,
leasing or ownership of the Property for the period prior to the Closing Date,
including, but not limited to, accounts and payments under service contracts,
utility charges and other costs required to be paid by the landlord under,
and/or with respect to, any leases for all or any portion of the Property and
commission agreements relating thereto are the responsibility of Seller and will
be paid by Seller promptly upon receipt of billing therefor, and Seller hereby
agrees to reimburse Buyer for any loss, cost or expense relating to same. Any
and all costs and expenses relating to the operation, management, leasing or
ownership of the Property for the period from and after the Closing Date,
including, but not limited to, accounts and payments under service contracts,
utility charges and other costs required to be paid by the landlord under,
and/or with respect to, any leases for all or any portion of the Property are
the responsibility of Buyer and will be paid by Buyer promptly upon receipt of
billing therefor, and Buyer agrees to reimburse Seller for, any loss, cost or
expense relating to same. To the extent not reflected in the closing statements
(the "Closing Statements") evidencing the transaction contemplated under the
Agreement, Buyer and Seller agree to adjust between themselves outside of
Closing any amounts which are the responsibility of the other pursuant to this
paragraph.
3. Earnest Money. Seller and Buyer acknowledge the application of the
Earnest Money Deposit (as defined in the Agreement) previously deposited with
the Title Company (as defined in the Agreement) against the purchase price of
the Property as reflected in the Closing Statements.
4
<PAGE>
4. Real Estate Taxes. All ad valorem and similar taxes and assessments
(the "Taxes") relating to the Property for the current year were prorated
between Seller and Buyer as reflected in the Closing Statements as provided in
the Agreement. At such time as the actual amount of Taxes against the Property
for the current year is known (after any appeal by Buyer is final and the amount
is final), Seller and Buyer shall, if required, readjust the amount of Taxes to
be paid by each party pursuant to this paragraph so that Seller shall pay for
those Taxes attributable to the period of time occurring prior to the Closing
Date, and Buyer shall pay for those Taxes attributable to the period of time
occurring from and after the Closing Date.
5. Rents. All rents have been prorated as of the Closing Date to the
extent same have actually been collected by Seller as provided in the Agreement.
Claims for any delinquent rent and other sums which are owing to Seller by
Tenants of the Property for periods prior to the Closing Date ("Delinquent
Rents") shall be owned and retained by Seller and Seller shall be entitled to
collect all of same. Furthermore, Buyer agrees to pay Delinquent Rents (or
Seller's pro rata share thereof to the extent such Delinquent Rents are
applicable to the month during which the Closing occurred) to Seller if, and
when, amounts are collected from the delinquent Tenant that are required to be
applied to Delinquent Rents as provided in the immediately succeeding sentence.
To the extent rentals are collected by Buyer after Closing from Tenants owing
Delinquent Rents, such collections shall be applied in the following order of
priority (i) such collections shall first be applied to Delinquent Rents which
were delinquent 30 days or less as of the Closing Date, (ii) any balance shall
then be applied to rents currently due at the time of the collection of such
amounts and (iii) the balance shall then be applied to Delinquent Rents which
were delinquent for more than 30 days as of the Closing Date. Buyer agrees to
use reasonable efforts to collect Delinquent Rents, but nothing contained herein
shall operate to require Buyer to institute a lawsuit to recover any such
Delinquent Rents or to terminate any Lease.
6. Brokerage Commissions. Except as set forth in Section ____ of the
Agreement, Seller and Buyer each hereby agree to reimburse the other for any and
all loss, cost or expense (including, without limitation, reasonable attorneys'
fees and costs) resulting from any claim for any fee, commission or similar
payment by any broker, agent, finder or realtor as a result of any action of
Seller or Buyer, respectively, related to the origination, negotiation, or
consummation of the transaction contemplated by the Agreement, Any fee owed to
Pinnacle Realty or its affiliates will be paid by Buyer.
7. Errors or Omissions. Seller and Buyer agree to adjust between
themselves after Closing any errors or omissions in the prorations or
adjustments set forth in the Closing Statements.
8. Survival. This Agreement and the agreements and the provisions
contained herein shall survive Closing and the execution and delivery of any
documents in connection therewith subject, however, to the limitations set forth
in paragraph of the Agreement, all of which are hereby incorporated into this
Agreement by this reference as if restated in their entirety. This instrument
may be executed in multiple counterparts, each of which shall be deemed an
original, but together shall constitute one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by Seller and Buyer
as of (but not necessarily on) the day and year first above written.
SELLER:
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
PURCHASER:
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
6
PURCHASE AND SALE
AGREEMENT
AND
ESCROW INSTRUCTIONS
(Toscana Apartments)
This Purchase and Sale Agreement ("Agreement") and Escrow Instructions
("Escrow Instructions") are made and entered into by and between Western Rim
Investors 1993-2, L.P., a California Limited Partnership, dba Toscana Apartments
("Seller") and Cornerstone Realty Group, Inc., a Virginia corporation ("Buyer").
BACKGROUND
A. Seller owns certain real property, with improvements thereon and
personal property used in connection therewith, located in Denton County, Texas
and commonly known as the Toscana Apartments (containing 192 apartment units)
and more particularly defined as the "Property" below.
B. Seller's affiliate, Western Rim Investors 1991-4, L.P., a California
Limited Partnership, dba Wildwood Apartments ("Wildwood Seller") owns and
operates certain real property located in Tarrant County, Texas, with
improvements thereon and personal property used in connection therewith,
commonly known as the Wildwood Apartments (containing 120 apartment units)
("Wildwood Property").
C. Seller's affiliate, Western Rim Investors 1992-5, L.P., a California
Limited Partnership, dba Arbors on Forest Ridge ("Forest Ridge Seller") owns and
operates certain real property located in Tarrant County, Texas, with
improvements thereon and personal property used in connection therewith, known
as the Arbors on Forest Ridge Apartments (containing 210 apartment units)
("Forest Ridge Property").
D. Buyer desires to purchase the Property together with all
improvements and all related rights and appurtenances, including without
limitation, Seller's interest in adjacent streets, alleys, rights-of-way,
strips, gores and access easements, and any improvements on the Property.
E. Seller desires to sell the Property to Buyer on the condition that
Buyer also purchase the Wildwood Property and the Forest Ridge Property
simultaneously therewith as a "package" purchase and sale.
1. AGREEMENT.
This agreement of Purchase and Sale and Escrow Instructions dated
January 21, 1997, Escrow No. TC96-81550, is between Seller and Buyer with Safeco
Land Title of Tarrant, a Texas corporation, as escrow agent ("Escrow Agent").
This Agreement and Escrow Instructions shall constitute the agreement on the
part of the Seller to sell and on the part of the Buyer to purchase the Property
described and defined hereinbelow. In the event of any conflict or any
<PAGE>
inconsistency between the terms and provisions of any other Escrow Instructions
and the terms and provisions of this Agreement, the terms and provisions of this
Agreement shall control.
2. PROPERTY.
The property which is the subject of this Agreement is defined to mean
the following: (i) the real property located in Denton County, Texas as more
particularly described by legal description on Exhibit A attached hereto and
made a part thereof, together with (ii) all improvements and fixtures located
thereon ("Improvements"), (iii) the personal property owned by Seller and used
in connection therewith as described on Exhibit B attached hereto ("Personal
Property"), (iv) all rights of Seller in and to any and all leases for space in
and to the Property ("Leases") by tenants ("Tenants") thereunder, (v) all
existing warranties, including manufacturer's warranties ("Warranties") relating
to the Improvements or Personal Property, but only to the extent assignable,
(vi) all right, title and interest of Seller, if any, in and to the use of the
name by which the Property is commonly known, "Toscana Apartments,"
("Tradename"), (vii) the existing phone numbers ("Phone Numbers") used in
connection with the operation of the Property, but only to the extent assignable
and (viii) all rights, privileges, easements and appurtenances thereto, if any
(collectively, the "Property").
3. OPENING OF ESCROW; CLOSING; PACKAGE SALE; INDEPENDENT CONSIDERATION.
a. For purposes of this Agreement, the Opening of Escrow (the "Opening
of Escrow") shall be deemed to be the date set forth below on which the Earnest
Money Deposit (as hereinafter defined) and three (3) fully executed copies of
this Agreement and the Other Agreements (as hereinafter defined) are delivered
to and accepted by Escrow Agent. The consummation of the transaction
contemplated by this Agreement (the "Closing") shall occur at 10:00 a.m., Texas
time, on the date which is seven days after the expiration of the Feasibility
Termination Date (as hereinafter defined) (the "Closing Date"); provided,
however, if Buyer in good faith needs additional time to prepare for the Closing
of the transaction and the funding of the Purchase Price, then Buyer may extend
the Closing Date by up to seven (7) days by sending written notice of such
extension to Seller on or before the originally scheduled Closing Date; and
provided further that any such extension shall constitute an extension for the
same period of time of the Closing Date under the Other Agreements so that in
any case the closing of the sale and conveyance of the Property, the Wildwood
Property and the Forest Ridge Property shall occur simultaneously. The Closing
shall occur at the offices of Escrow Agent or at such other place as Seller and
Buyer may agree in writing. Closing shall be deemed to have occurred when (i)
all Closing documents contemplated by this Agreement have been delivered to,
received by, and executed by the appropriate parties; (ii) all conditions to
such Closing contemplated by this Agreement have been satisfied or waived in
writing (including, without limitation the simultaneous closing of the sale and
purchase from Seller to Buyer of the Wildwood Property and the Forest Ridge
Property as hereinafter discussed); (iii) the deed required pursuant to
paragraph 8 has been recorded; and (iv) the funds required to be paid under this
Agreement have been properly delivered to Escrow Agent and are available for
distribution by Escrow Agent.
2
<PAGE>
b. The parties acknowledge and agree that (i) the sale of the Property
is a part of a "package sales" of the Property, the Wildwood Property and the
Forest Ridge Property, (ii) as of even date herewith, Buyer is entering into
separate Purchase and Sale Agreements ("Other Agreements") with Wildwood Seller
and Forest Ridge Seller to purchase the Wildwood Property and Forest Ridge
Property, respectively, (iii) Buyer shall have no right to close the purchase
the Property unless Buyer simultaneously closes the purchase of both the
Wildwood Property and Forest Ridge Property in accordance with the terms of the
Other Agreements, (iv) Seller's obligations hereunder shall be conditioned on
Buyer's performing all of its obligations under the Other Agreements and,
simultaneously with the Closing hereunder, closing the purchase of the Wildwood
Property and Forest Ridge Property in accordance with the terms of the Other
Agreements, (v) any termination by Buyer of either of the Other Agreements
pursuant to an express right to terminate thereunder shall be deemed to also
constitute a termination of this Agreement by Buyer pursuant to the
corresponding provision hereof and (vi) any default by Buyer under either of the
Other Agreements shall be deemed to also constitute a default by Buyer under
this Agreement. The provisions of this subsection shall control in the event of
any conflicting provisions contained herein or in the Other Agreements.
c. Contemporaneously with the execution of this Agreement, Buyer shall
deliver to Seller a check in the amount of Fifty and No/100 Dollars ($50.00)
("Independent Consideration"), which amount the parties bargained for and agreed
to as consideration for Seller's execution, delivery and performance of this
Agreement. This Independent Consideration is in addition to and independent of
any other consideration or payment provided for in this Agreement, is
nonrefundable, and shall be retained by Seller notwithstanding any other
provision of this Agreement.
4. INFORMATION SUPPLIED BY SELLER/PRE-CLOSING MATTERS.
As soon as reasonably possible after the Opening of Escrow, Seller shall
either deliver or make available to Buyer the following:
a. Current rent roll schedules ("Rent Rolls") certified as being true
and correct by Seller (as of the last day of the month immediately preceding the
month in which such schedule is furnished to Buyer) and showing for each
apartment unit within the Property (i) its vacancy or occupancy, (ii) the
monthly rental amount therefore; (iii) if the space is occupied, the
commencement and termination date of the Lease covering that space and the
name(s) of the Tenant(s) thereunder; and (iv) the amount of any rent or other
charges, if any, in arrears or prepaid thereunder.
b. Letter in form substantially the same as that attached hereto as
Exhibit C addressed to Buyer's accountants, L.P. Martin & Company, P.C.,
concerning certain financial certifications as provided therein, executed by
Seller.
c. A current Termite Inspection Report or Reports for the Property
indicating that there is no evidence of termites on the Property or, if there is
evidence that termites are present, that termites have been killed or treated.
3
<PAGE>
d. Sufficient books and records for the operation of the Property for at
least 12 months of operation so that Buyer can generate a report in compliance
with accounting regulation S-X of the Securities and Exchange Commission.
5. REVIEW, APPROVAL AND FINANCING CONTINGENCIES.
Buyer and Seller acknowledge that, until the Feasibility Termination
Date (as hereinafter defined), Buyer's obligations hereunder shall be
conditioned on Buyer's satisfaction with all aspects of the Property and the
transaction hereunder and its review of the same, including but not limited to,
(i) Buyer's investigation of the economic feasibility of purchasing the
Property; (ii) Buyer's inspection of the Property, and its review of any
engineering reports, architectural reports, soils and environmental analyses,
research of relevant codes, ordinances, or regulations; (iii) Buyer's approval
of the forms of various documents to be executed at Closing; (iv) Buyer's
obtaining financing; (v) Buyer's review of the Title Commitment and Survey (as
hereinafter defined) and any other title matters which may affect the Property;
(vi) Buyer's review of the books and records kept in connection with the
operation of the Property; (vii) Buyer's review of the Leases; and (vi) Buyer's
review of any other matter which Buyer may deem to affect the desirability of
the Property. Accordingly, notwithstanding anything to the contrary contained in
this Agreement, at any time on or before 5:00 p.m. on the date which is
twenty-one (21) days after the Opening of Escrow (the "Feasibility Termination
Date"), Buyer shall have the right, at its sole discretion, to terminate this
Agreement for any reason whatsoever by delivering written notice of termination
to Escrow Agent and Seller on or before the Feasibility Termination Date. Upon
such termination, this Agreement and Escrow Instructions shall be immediately
canceled, Escrow Agent shall return to Buyer the Earnest Money Deposit and (if
theretofore deposited) the Additional Earnest Money Deposit and interest accrued
thereon, Buyer shall deliver to Seller copies of any nonproprietary studies,
reports or tests pertaining to the Property, and Buyer and Seller shall have no
further obligation or liability to the other in connection with the purchase and
sale of the Property, except such specific indemnification provision as are
provided for in this Agreement. Failure by Buyer to terminate this Agreement on
or before the Feasibility Termination Date shall be deemed to be a waiver of its
right to terminate under this paragraph, whereupon the Earnest Money Deposit (as
defined in paragraph 6), subject to Seller's performance hereunder and except as
otherwise specifically provided herein, shall be deemed to be nonrefundable.
6. PURCHASE PRICE.
a. The parties acknowledge that the sale of the Property is part of a
"package sale" of the Property, the Wildwood Property and the Forest Ridge
Property as discussed above. The aggregate purchase price ("Purchase Price")
for the Property, Wildwood Property and Forest Ridge Property shall be seventeen
million four hundred twenty-five thousand dollars ($17,425,000). Payment of the
Purchase Price and the Earnest Money Deposit and Additional Earnest Money
Deposit as provided below shall constitute payment for all three properties
without allocation among such properties.
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i. Upon Opening of escrow, Buyer shall deposit with Escrow Agent one-
hundred fifty thousand dollars ($150,000) (the "Earnest Money Deposit"). The
Earnest Money Deposit is to be disbursed to Seller or Buyer in accordance with
the terms hereof prior to Closing.
ii. Upon the Feasibility Termination Date (if Buyer does not terminate
this Agreement pursuant to paragraph 5 above) and as a condition to Buyer's
continued rights hereunder and under the Other Agreements, Buyer shall deposit
with Escrow Agent an additional sum of one-hundred fifty thousand dollars
($150,000) (the "Additional Earnest Money Deposit"). The Additional Earnest
Money Deposit is to be disbursed to Seller or Buyer in accordance with the terms
hereof prior to Closing.
iii. Upon the Feasibility Termination Date and in the event Buyer has
not terminated this Agreement and the Other Agreements, the entire Earnest Money
Deposit including the Additional Earnest Money Deposit shall be deemed
non-refundable.
iv. On or before the Closing Date, Buyer shall deposit with Escrow Agent
for the account of Seller, Wildwood Seller and Forest Ridge Seller in cash or
funds immediately available in Ft. Worth, Texas, the balance of the Purchase
Price increased or reduced by such funds as are required to take into account
the prorations and other adjustments required by this Agreement and the Other
Agreements.
b. All funds deposited in escrow on account of the Purchase Price or
otherwise shall be deposited by Escrow Agent in an interest bearing account in a
federally insured commercial bank reasonably approved by Buyer. Any interest
earned on such funds shall be remitted to Buyer if Buyer is entitled to the
return of the funds pursuant to this Agreement; otherwise, the interest shall be
credited to the Purchase Price in the event Closing shall occur.
7. TITLE REVIEW; SURVEY.
a. Seller will deliver with this agreement a commitment for title
insurance with copies of all recorded Schedule B items set forth therein ("Title
Report") pertaining to the Property. Seller will deliver with this Agreement to
Buyer the existing surveys of the Property, if any (the "Surveys").
b. Buyer shall be entitled to object to any matters disclosed by the
Title Report or Surveys by delivering written notice of such objection to Seller
and Escrow Agent on or before the date which is ten (10) days after the Opening
of Escrow. Said notices of objection shall specify in reasonable detail any
matter to which Buyer objects. If Escrow Agent subsequently issues any amended
commitment for title insurance disclosing any additional Schedule B matters or
if Buyer subsequently receives an amended survey reflecting additional Schedule
B matters, Buyer shall be entitled to reasonably object to any matters not
previously disclosed in the initial Title Report or the initial Surveys by
delivering written notice of such objection to Seller and Escrow Agent on or
before ten (10) days after Escrow Agent has delivered to Buyer the amended title
commitment or ten (10) days after Buyer's receipt of the amended survey, said
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notice to specify in reasonable detail any matter to which Buyer objects. Buyer
shall be deemed to have approved the Title Report and Surveys and any amendments
if it fails to notify Seller and Escrow Agent in writing of its objections
within the respective periods provided herein.
c. After receipt of Buyer's objections, if any, Seller shall at its
option, either (i) terminate this Agreement by sending written notice to Buyer
and Escrow Agent (subject to Buyer's right to cancel said termination provided
for below) if it cannot or is unwilling to cure the objections or (ii) attempt
to eliminate the matters to which Buyer has objected within fifteen (15) days
after receipt of Buyer's objections. Notwithstanding the foregoing, Seller shall
not be required to satisfy any pecuniary encumbrances until Closing. If Seller
elects to terminate this Agreement as provided above by sending written notice
to Buyer, this Agreement and the Escrow shall automatically terminate on the
date ten (10) days after Buyer and Escrow Agent receive written notice of such
termination, unless Buyer elects to cancel such termination and waive its
objections to said matters by written notice to Seller and Escrow Agent
delivered within the ten (10) day period. Seller agrees to use reasonable
efforts to give notice to Buyer as to its election of the above options in favor
of Seller; provided, however, if, within fifteen (15) days after receipt by
Seller of Buyer's objections, Seller has not either (i) sent written notice
terminating as provided above or (ii) sent written notice agreeing to cure said
objections or caused the matters to which Buyer has objected to be eliminated,
then in such event Seller shall be deemed to have sent notice to Buyer
terminating this Agreement, with such deemed notice to be deemed to have been
sent and received upon the expiration of said fifteen (15) day period, and in
such event this Agreement and Escrow shall terminate unless Buyer waives its
objections by written notice delivered to Seller and Escrow Agent on or before
two (2) days after the expiration of said fifteen (15) day period. In the event
of any termination pursuant to this paragraph, the Earnest Money Deposit
delivered to Escrow Agent shall be promptly refunded or returned to Buyer, Buyer
shall deliver copies of any nonproprietary studies, reports or tests pertaining
to the Property, and Seller and Buyer shall have no further obligation or
liability to one another regarding the sale or purchase of the Property, except
as to the specific indemnification provisions otherwise provided for in this
Agreement.
8. CLOSING DOCUMENTS AND CLOSING ITEMS.
a. At the Closing, Seller shall deliver to Escrow Agent the
following:
(i) a special warranty deed ("Deed") duly executed,
acknowledged and in a form acceptable for recording,
substantially in the form of Exhibit D attached hereto and
made a part hereof, subject to the Permitted Exceptions (as
hereinafter defined) and Seller shall deliver the Property
free and clear of all liens;
(ii) Assignment and Assumption of Leases ("Assignment and
Assumption of Leases"), in form and substance substantially
the same as that attached hereto as Exhibit E, and by this
reference made a part hereof, fully executed and
acknowledged by Seller, conveying to Buyer the Leases.
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(iii) Bill of Sale and Assignment ("Bill of Sale and
Assignment"), in form and substance substantially the same
as that attached hereto as Exhibit F, and by this reference
made a part hereof, fully executed and acknowledged by
Seller, conveying to Buyer the Personal Property,
Warranties, and Trade Name affecting the Property.
(iv) Affidavit ("Affidavit") that as of the Closing Date there
are no judgements against the Seller or Property or other
unrecorded matters affecting the Property in such form as
Escrow Agent may require to issue the Title Policy
discussed below.
(v) A Termination Agreement ("Termination Agreement") executed
by the existing property manager for the Property and
terminating, effective as of the Closing, the existing
management agreement for the Property.
(vi) The Non-Foreign Status Certification (as hereinafter
defined) executed by Seller.
b. Ad valorem and similar taxes and assessments relating to the Property
for the year in which the Closing occurs ("Taxes") shall be prorated between
Seller and Buyer as of the Closing Date, based on the latest rate applied to the
latest assessed valuation for the Property, with Seller to bear the economic
burden of all such Taxes for the period prior to and including the Closing Date
and with Buyer to bear the economic burden of all such Taxes for all periods
after the Closing Date. As soon as the actual amount of Taxes on the Property
for such year is final and known (and after any appeal with respect thereto is
final and the amount of such Taxes is final), Seller and Buyer shall, to the
extent the amount of actual Taxes differs from the amount estimated at Closing
and upon the request of either party, recalculate the proration of such Taxes
between Seller and Buyer in the same manner specified above but based on such
actual final amount of Taxes for such year. Upon such recalculation, Buyer shall
pay to Seller, or Seller shall pay to Buyer, as the case may be, a sufficient
amount of money so that when added to or subtracted from the preliminary
prorated amounts for each party determined at Closing, Seller shall have paid
for those Taxes applicable to the Property prior to and including the Closing
Date and Buyer shall have paid for those Taxes applicable to the Property after
the Closing Date. Subject to the pro-ration obligations under this Section,
Buyer shall assume and pay for all Taxes relating to the Property for the year
1997 and subsequent years, and shall indemnify and hold Seller harmless from and
against the same. The provisions of this subparagraph shall survive the Closing.
c. All prepaid rentals, if any, actually received by Seller for the
month in which the Closing occurs shall be prorated as of the Closing Date, with
Seller to obtain the economic benefit of all such rentals for all periods prior
to and including the Closing Date and with Buyer to obtain the economic benefit
of all such rentals for all periods after the Closing Date. To the extent
actually received by Seller prior to the Closing, Seller shall deliver to Buyer
at the Closing all advance payments or rentals, other than for the month in
which the Closing occurs. Claims for any delinquent rent and other sums which
are owing to Seller by Tenants of the
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Property for periods prior to the Closing Date ("Delinquent Rents") shall be
owned and retained by Seller and Seller shall be entitled to collect all of
same. Furthermore, Buyer agrees to pay Delinquent Rents (or Seller's pro rata
share thereof to the extent such Delinquent Rents are applicable to the month
during which the Closing occurred) to Seller if, and when, amounts are collected
from the delinquent Tenant that are required to be applied to Delinquent Rents
as provided in the immediately succeeding sentence. To the extent rentals are
collected by Buyer after Closing from Tenants owing Delinquent Rents, such
collections shall be applied in the following order of priority (i) such
collections shall first be applied to Delinquent Rents which were delinquent 30
days or less as of the Closing Date, (ii) any balance shall then be applied to
rents currently due at the time of the collection of such amounts and (iii) the
balance shall then be applied to Delinquent Rents which were delinquent for more
than 30 days as of the Closing Date. Buyer agrees to use reasonable efforts to
collect Delinquent Rents, but nothing contained herein shall operate to require
Buyer to institute a lawsuit to recover any such Delinquent Rents or to
terminate any Lease.
d. Seller shall deliver into escrow at Closing individual tenant
security deposits under the Leases held by Seller in trust, or provide Buyer
with a credit therefor. At Closing, Escrow Officer shall disburse the security
deposits to Buyer or provide a credit in favor of Buyer on the settlement
statement. At the Closing, Seller and Buyer shall execute and deliver Tenant
Notice Letters ("Tenant Notice Letters") to be sent to each Tenant under the
Leases (i) notifying such Tenants of the change in ownership with respect to the
Property, (ii) instructing such Tenants to perform all future obligations under
the Leases to Buyer and (iii) advising the Tenants of the transfer to Buyer of
applicable prepaid rent, security or cleaning deposits, and acknowledging
Buyer's future responsibility for the same, and otherwise in form complying with
Section 92.105 of the Texas Property Code. Promptly after Closing, Buyer shall
mail, by first class mail, the Tenant Notice Letters (or at Seller's option,
Seller may so deliver the same) to each Tenant under the Leases. Buyer shall
provide Seller with copies of all such Tenant Notice Letters and a certificate
of mailing within ten (10) calendar days following Closing
e. Charges for utilities, if any, serving the Property shall be
determined as of the Closing Date, and Buyer shall be responsible for all
utility charges for the period after the Closing Date. The parties shall
mutually cooperate and execute and deliver such additional documents as may be
reasonably necessary or desirable to insure that all such utilities are switched
over into the name of Buyer as of the Closing Date, or as soon as possible
thereafter.
f. Prepaid cable television contract payments shall be prorated as of
the Closing Date and Buyer shall receive a credit against the Purchase Price for
its pro-rata share.
g. In general, any and all other items of current revenue and expenses
relating to the Property on the Closing Date shall be prorated as of the Closing
Date.
h. At Closing, Seller shall deliver vacated apartment units in the
Property in the following condition: (i) for units which have been vacated for
10 or more days as of the Closing Date, such units shall be delivered in "rent
ready" condition and (ii) for units which have been
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vacated for less than 10 days as of the Closing Date, such units shall be
delivered in the condition they were in upon move-out by the tenant therein.
i. At the Closing, Seller and Buyer shall execute and deliver multiple
counterparts of a Closing Memorandum and Indemnification Agreement ("Closing
Memorandum") in form substantially the same as that attached hereto as Exhibit G
with respect to the prorations and other adjustments made at Closing.
j. Seller shall pay the premium for the Title Policy as provided and
subject to the limitations contained in paragraph 9 below. All other costs
incurred in the transfer of the Property from Seller to Buyer shall be paid in
accordance with the customs of real estate transactions presently in effect in
Tarrant County, Texas, as solely determined by Escrow Agent.
9. TITLE INSURANCE POLICY.
At the Closing, Seller shall furnish to Buyer a Texas Standard Owner
Policy of Title Insurance (on the form promulgated by the Texas State Board of
Insurance) issued by Chicago Title Insurance Company ("Title Policy"), in the
amount of the Purchase Price, insuring that title to the Property is held by
Buyer subject only to the printed exceptions normally contained in such policy,
the exceptions contained in the Title Report and any amendments to the Title
Report which are deemed to be approved pursuant to paragraph 7 above, and such
other matters as are provided for in this Agreement ("Permitted Exceptions"). If
Seller so requests, the Title Policy shall be issued as a single Title Policy
that covers all of the Property, the Wildwood Property and the Forest Ridge
Property, and Buyer shall not have the right to a separate Title Policy for each
such properties. Buyer may elect to obtain from Escrow Agent a modification to
the Title Policy so that the standard printed exception for boundaries and other
survey type matters shall be limited to "shortages in area"; however, Buyer
shall be responsible for (i) obtaining at its sole cost and expense any
additional surveys needed to obtain such modification and (ii) paying any excess
premium required in order to obtain such modification or other additional
coverage.
10. RIGHT OF ENTRY.
Buyer and its engineers and agents shall have access to the Property at
reasonable times after Opening of Escrow for the purpose of conducting
geological, soil, drainage, engineering, building inspection and environmental
tests and other studies and surveys which Buyer, in its reasonable discretion,
deems necessary. Buyer shall immediately thereafter restore the Property to the
condition which existed prior to performing such tests and studies, and Buyer
shall indemnify, protect, hold harmless and defend Seller for, from and against
any loss, expense, including reasonable attorney's fees, claims, actions, suits
and liability resulting from activities by Buyer or its engineers or agents upon
the Property, and shall keep the Property free from Liens arising out of such
activities. Notwithstanding anything contained in this Agreement to the
contrary, this indemnity and obligation to restore and keep the Property free
from liens shall survive any termination of this Agreement.
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11. SALE PROPERTY CONDITION.
To best of Seller's knowledge, Seller represents and warrants to Buyer,
as of the date hereof and, except as otherwise set forth herein, as of the
Closing Date, as follows:
a. Seller is (i) a natural person or, if not a natural person, is duly
organized, validly existing and in good standing under the laws of the state in
which Seller was organized, whether as a corporation, partnership, limited
partnership, trust or other legal entity, (ii) has full power, authority and
legal right to carry on its business as now being conducted and to own the
property and assets it now owns, and (iii) is duly qualified or licensed to do
business and is in good standing in the jurisdiction where the property is
located unless Seller has been advised by legal counsel that such qualification
is not required by applicable state law;
b. Seller has full power, authority and legal right to execute, deliver
and perform this Agreement and all other documents and certificates contemplated
hereby, and the execution, delivery and performance thereof have been duly
authorized by Seller;
c. No other action is or was required to be taken by Seller to permit
the execution delivery and performance of its Agreement and all other documents
and certificates contemplated hereby, and the transactions contemplated hereby
and no consent or approval of any third party or governmental authority is or
was required or appropriate in connection with the execution of this Agreement
or to consummate the transactions contemplated hereby;
d. This Agreement constitutes the legal, valid add binding obligation of
Seller, enforceable against Seller in accordance with its terms;
e. Neither the execution or delivery of this Agreement nor the
consummation by Seller of the transactions contemplated hereby is or was in
violation of or in conflict with (i) any provision of any agreement (including,
without limitation, the organization documents under which Seller is organized),
instrument or other restriction of any kind to which Seller is a party, or by
which Seller or the Property is bound or (ii) in any material or adverse way,
statute, law, decree, regulation or order of any governmental authority, or
resulted or will result in a default under any agreement, or caused or will
cause the acceleration of any obligation or loan to which Seller is a party or
by which Seller or the Property is bound;
f. There are no actions, suits, proceedings, orders or investigations
pending or, to the best of Seller's actual knowledge, threatened against or
affecting Seller or 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, which might materially
adversely affect Sellers performance under this Agreement or the consummation of
the transactions contemplated hereby or the use or operation of the Property;
provided, however, Seller discloses that Seller and/or Wildwood Seller and/or
Forest Ridge Seller has filed and is prosecuting a lawsuit against certain
former cable television service providers serving the Property and/or the
Wildwood Property and/or the Forest Ridge Property, and Buyer agrees that
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Seller may continue to prosecute such lawsuit after the Closing and that Buyer
shall have no claim to any portion of any recovery in connection therewith; and
g. Seller is not in default under any agreement, deed of trust,
mortgage, security agreement published ordinance, resolution, or decree, bond,
note, indenture, order or judgment to which it is a party or by which the
Property or assets owned by it or used in the conduct of its business thereon is
affected.
h. To the best of Seller's actual knowledge, all leases, rent rolls or
income statements furnished by Seller are materially accurate.
i. There are no outstanding rent concessions of any kind with respect to
the Leases, and if any such concessions are found to exist Seller shall
reimburse Buyer therefor.
j. The mechanical components of the Property shall be in working order
at the time of Closing, normal wear and tear excepted (and taking into
consideration the age of such items).
k. Seller has no knowledge of any default under any of the Leases except
as specified in the Rent Roll or otherwise disclosed to Buyer in writing prior
to the Feasibility Termination Date.
l. Seller has not received any notice of any violation of any ordinance,
regulation, law or statute of any governmental agency pertaining to the Property
or any portion thereof.
m. At all times from the date hereof until Closing, Seller shall
materially maintain, operate and lease the Property in a manner and standard
consistent with Seller's historical operation of the Property.
These representations and warranties shall survive close of escrow for a
period of twelve (12) months. SELLER MAKES NO OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER.
Except as otherwise expressly set forth in this Agreement, Buyer
acknowledges, represents, warrants and agrees that: (i) Buyer is purchasing the
Property, any improvements now or hereafter made thereto at Closing in "as is"
and "where is" condition, with all faults without any warranty expressed or
implied whatsoever; (ii) Buyer has made or shall make prior to Closing its own
examination, inspection and investigation of the Property, all improvements, if
any, located thereon, the subsurface of the Property and all soil, engineering,
environmental other conditions and requirements for the Property and any
personal property; (iii) Buyer has or shall investigate all zoning, building and
governmental regulatory matters pertaining to the Property prior to Closing;
(iv) Buyer is entering into this Agreement and is purchasing the Property and,
based upon such inspections and investigations and not in reliance on any
statements, representations, inducements or agreements of Seller and/or Broker
in connection with the Property, its zoning, its fitness or merchantability for
any particular use or purpose, availability of water
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or utilities, soil or environmental conditions, encroachments which would be
disclosed by either an inspection of the Property or a survey, flooding and such
other matters as might be disclosed or determined by an examination of the
Property and independent inquiry with respect thereto; (v) any engineering data,
environmental audit, soils reports, surveys or other information that Seller or
any other party may have delivered to Buyer pertaining to the Property is
furnished without any representation or warranty whatsoever; and (vi) Seller
and/or Broker shall have no responsibility, liability or obligation respecting
the Property subsequent to Closing. Buyer shall make its own investigation
regarding the presence of any toxic waste or hazardous materials on the
Property.
12. BROKERAGE.
a. Seller shall pay to Western Rim Property Services, Inc. ("Broker"),
an affiliate of Seller, a real estate broker's commission for the sale of the
Property by Seller to Buyer equal to five percent (5%) of the Purchase Price,
in cash at Closing, provided that such commission shall be payable only if, as
and when Closing shall occur hereunder. If Closing does not occur for any reason
whatsoever, Broker shall not be entitled to any commission whatsoever or any
portion of the Earnest Money Deposit forfeited to Seller. Buyer and Seller each
represent to the other that it has not dealt with any real estate broker or any
other party entitled to a commission, broker's fee or other compensation in
connection with the sale of the Property by Seller to Buyer except Broker. Buyer
and Seller each agree to indemnity, protect, defend and hold the other harmless
for, from and against any expense, including without limitation, attorneys' and
accountants' fees, claims, actions, suits or demands for payment of any
commission, finder's fee or other sum initiated by any broker, commission agent
or other person which such party or its representatives has engaged or retained
or with which it has had discussions concerning the transaction contemplated by
this Agreement except Broker. Notwithstanding anything in this Agreement to the
contrary, the representation and indemnity set forth in this paragraph shall
survive any termination of this Agreement. Furthermore, notwithstanding anything
to the contrary in this Agreement, Western Rim Property Services, Inc.,
represents Seller only and does not represent Buyer in any manner whatsoever.
b. Buyer acknowledges that it has retained or may retain Pinnacle Realty
or an affiliate thereof ("Pinnacle") in connection with Buyer's due diligence
review of the transaction. Buyer represents and warrants that Pinnacle is not
acting in a broker capacity in this regard and in any case any and all amounts
owed to Pinnacle or claimed to be owed by Pinnacle shall be the sole
responsibility of Buyer, and Seller shall have no responsibility therefor.
13. CHANGES IN THE PROPERTY.
Prior to Closing, risk of loss with regard to the Property shall be
borne by Seller. If, prior to Closing, the Property or any portion thereof is
destroyed or damaged, or becomes subject to a taking by virtue of eminent
domain, to any extent whatsoever, Buyer may, in Buyer's sole discretion, either
(i) terminate this Agreement and receive back Buyer's Earnest Money Deposit and
Additional Earnest Money Deposit, and neither party hereto shall have any
further rights or obligations hereunder, or (ii) proceed with the Closing of the
transaction, in
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which event Seller shall assign to Buyer all insurance or condemnation proceeds
available as a result of such destruction or taking (including proceeds from
loss of rents coverage), and in which event Buyer shall also receive a credit
against the Purchase Price for any deductible amounts from such insurance
proceeds.
14. POSSESSION.
Possession of the Property shall be delivered to Buyer upon Closing,
subject to the matters set forth in the Deed.
15. NOTICES.
Unless otherwise required by law, all notices required to be given
hereunder shall be in writing and shall be conveyed by (i) personal delivery
(including by any messenger service, courier service, overnight delivery or
facsimile with confirmation of receipt) to the address listed below for such
party or (ii) the United States Postal Service by certified or registered mail,
postage prepaid, with return receipt requested, to the address listed below for
such party or (iii) telecopied by facsimile transmission to such party at the
telecopy number listed below, provided that such transmission is confirmed by
telephone on the date of such transmission. The addresses and telecopy numbers
for the parties are as follows:
if to Seller: Western Rim Investment Advisors, Inc.
(Overnight) 2400 North Highway 121
Euless, TX 76039
Attn: Marcus D. Hiles, President
Facsimile: (817) 355-2505
Phone: (817) 355-2500
(U.S. Mail) P.O. Box 426
Colleyville, TX 76034
with a copy of any Kelly, Hart and Hallman
notice to Seller to: 201 Main Street, Suite 2500
Fort Worth, TX 76102
Attn: David Mellina, Esq.
Facsimile: (817) 878-9280
Phone: (817) 878-3538
if to Escrow Agent: Safeco Land Title of Tarrant
777 Main Street
Concourse, #10
Fort Worth, Texas 76102
Attn: Jeff Davis, President
Facsimile: (214) 445-5047
Phone: (817) 877-1481
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if to Buyer: Cornerstone Realty Income Trust, Inc.
306 E. Main Street
Richmond, Virginia 23219
Attn: Gus Remppies
Facsimile: (804) 782-9302
Phone: (804) 643-1761
with copies of any Zuckerbrod & Taubenfeld
notice to Buyer to: 575 Chestnut Street
P.O. Box 488
Cedarhurst, New York 11516
Attn: Harry S. Taubenfeld
Facsimile: (516) 374-3490
Phone: (516) 374-3133
and to:
Brown McCarrol & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201-6929
Attn: Robert Morrison
Facsimile: (214) 999-6170
Phone: (214) 999-6103
Notice given by personal delivery shall be deemed to have been given
upon delivery to the appropriate address against receipt therefor (or upon
refusal of acceptance), and notice given by U.S. mail shall be deemed to have
been given two days after deposit in the U.S. mail, and notice by facsimile
transmission shall be deemed to have been given on the date of such transmission
provided that such transmission is confirmed by telephone on the date of such
transmission. Each party may designate from time to time, another address in
place of the address hereinabove set forth by notifying the other parties in the
same manner as provided in this paragraph.
16. DEFAULT BY BUYER.
Except as provided below in this paragraph, if on or prior to Closing,
Buyer shall default in performing or fulfilling any of the covenants or
obligations to be performed by it under this Agreement or the Other Agreements,
including without limitation, Buyer's failure to complete the purchase of the
Property, Wildwood Property and Forest Ridge Property, Seller shall, as its sole
remedy, obtain the Earnest Money Deposit (including all additions thereto) and
any other sums theretofore deposited in Escrow or paid to Seller to such time,
as liquidated damages to Seller for such breach by Buyer, Buyer and Seller
agreeing that the amount of damages for such breach by Buyer is difficult to
determine at this time and that the aforesaid sum is a reasonable estimation of
the amount of liquidated damages of such breach under the circumstances existing
at the time this Agreement is entered into. Upon giving notice by Seller to
Buyer and Escrow
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Agent of such default, if such default is not cured within five (5) business
days after such notice, Escrow Agent shall deliver to Seller the Earnest Money
Deposit (including all interest earned thereon); whereupon, this Agreement and
the Other Agreements shall be deemed terminated, and Buyer and Seller shall have
no further obligation or liability to the other regarding the purchase and sale
of the Property, except such specific indemnification provisions as are provided
for in this Agreement. Notwithstanding the foregoing, Seller may pursue all
rights and remedies available at law or in equity against Buyer in the event of
a Breach or default by Buyer under the specific indemnification provisions
provided for in this Agreement as an additional remedy and not in lieu of the
foregoing liquidated damages remedy.
17. DEFAULT BY SELLER.
In the event that Seller defaults under this Agreement, Buyer shall have
as its sole remedies the right (i) to require specific performance by Seller
hereunder or (ii) to terminate this Agreement and to be repaid the Earnest Money
Deposit and Additional Earnest Money Deposit, together with any interest which
may have been earned thereon, plus a reimbursement of all reasonable actual
out-of-pocket expenses incurred by Buyer in connection with its inspection of
the Property, including engineering fees, legal fees and accounting fees. Buyer
hereby specifically waives any and all other rights and remedies in equity or at
law, subject, however, to its rights to recoup its attorneys fees as provided in
paragraph 19 below. Buyer acknowledges that Seller's inability or unwillingness
to deliver title to the Property in a condition required by Buyer shall not be
deemed to be a default by Seller hereunder and Buyer's sole remedy in such event
shall be to terminate the Agreement and to be repaid the Earnest Money Deposit
together with any interest earned thereon.
18. REPRESENTATIONS AND WARRANTIES AT CLOSING.
All of Buyer's representations and warranties contained in this
Agreement shall be true and correct at Closing as though made at and as of
Closing. All of Seller's representations and warranties contained in this
Agreement shall be true and correct at Closing as though made at and as of
Closing.
19. ATTORNEYS' FEES.
If either party to this Agreement shall breach its representations or
warranties hereunder or shall fail to fulfill or perform any of its covenants or
obligations in this Agreement,, that party shall pay all costs, including,
without limitation, reasonable attorneys' fees and expert witness fees that may
be incurred to enforce the terms, covenants, conditions and provisions of this
Agreement or that may be incurred as a result of the default under or breach of
this Agreement in the event legal action is commenced.
20. ENTIRE AGREEMENT; AMENDMENT.
All exhibits attached to this Agreement are incorporated into this
Agreement by reference and made a part hereof. This Agreement, including all
exhibits hereto, is the entire Agreement
15
<PAGE>
between parties pertaining to all matters agreed upon or understood in
connection with the sale and purchase of the Property. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof or in effect
between the parties. No change or addition may be made to this Agreement except
by a written agreement executed by the parties.
21. TIME OF ESSENCE.
Time is of the essence with respect to the performance of all terms,
covenants, conditions and provisions of this Agreement. No provision of the
Escrow Instructions shall extend the Closing Date by more than five (5) business
days or provide either party hereto with any grace period not provided in this
Agreement.
22. FURTHER ASSURANCES.
The parties hereto shall execute, acknowledge and deliver such other
instruments and documents as may be necessary or appropriate to carry out the
full intent and purpose of this Agreement.
23. APPLICABLE LAW.
This Agreement and the rights of the parties hereto shall be
interpreted, governed and construed in accordance with the laws of the State of
Texas.
24. SECTION HEADINGS.
The section headings in this Agreement are inserted only for convenience
and reference and the parties intend that they shall be disregarded in
interpreting the terms, covenants, conditions and provisions of this Agreement.
25. SEVERABILITY.
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be valid under applicable law, but if any provision shall
be invalid or prohibited hereunder, such provision shall be ineffective to the
extent of such prohibition or invalidation but shall not invalidate the
remainder of such provision or the remaining provisions.
26. WAIVER.
Either of the parties shall have the right to excuse or waive
performance by the other party of any obligation under this Agreement by a
writing signed by the party so excusing or waiving. No delay in exercising any
right or remedy shall constitute a waiver thereof, and no waiver by Seller or
Buyer of the breach of any covenant of this Agreement shall be construed as a
waiver of any preceding or succeeding breach of the same or any other covenant
or condition of this Agreement.
16
<PAGE>
27. ASSIGNMENT; BINDING EFFECT.
Buyer may only assign this Agreement and all of its rights, privileges
and benefits hereunder, or designate a nominee to take title for Buyer, without
Seller's prior written consent so long as its to a wholly owned subsidiary or
affiliate of Buyer. Seller hereby acknowledges and consents that Buyer may
assign its rights hereunder to Apple Residential Income Trust, Inc., a Virginia
corporation ("Apple"); provided, however, Buyer hereby represents and warrants
to Seller that Apple shall be a wholly owned subsidiary or affiliate of Buyer.
Any assignee consented to hereunder shall be required to assume and agree in
writing to perform all Buyer's obligations hereunder, and Buyer shall provide
Seller with a copy of the assignment and assumption agreement between Buyer and
such assignee. Upon any assignment hereunder, Buyer hereunder shall not be
released from any of its obligations or liabilities under this Agreement, nor
shall the Earnest Money Deposit be released to Buyer upon any assumption. Seller
may not assign and transfer any right, title and interest hereunder. Except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns. Seller shall not unreasonably withhold
its consent to any assignment of this Agreement by Buyer to an entity which
Buyer owns at least a 50% interest.
28. CONSTRUCTION.
As used in this Agreement, the masculine, feminine or neuter gender and
the singular or plural numbers shall each be deemed to include the other
whenever the context so requires. This Agreement shall be construed as a whole
and in accordance with its fair meaning and without regard to any presumption or
other rule requiring construction against the party causing this Agreement or
any part of this Agreement to be drafted. The parties acknowledge that each
party has reviewed this Agreement and has had the opportunity to have it
reviewed by legal counsel. If any words or phrases in this Agreement are
stricken or otherwise eliminated whether or not other words or phrases have
been added, this Agreement shall be construed as if the words or phrases
stricken or otherwise eliminated were never included in this Agreement, and no
implication or inference will be drawn from the fact that the words or phrases
were stricken or otherwise eliminated.
29. DEFAULT INTEREST.
If any monies become payable by one party to the other person pursuant
to this Agreement and are not paid when due, then all sums unpaid shall bear
interest at the rate of twelve percent (12%) per annum, from the date when due
until paid; provided, however, the provisions of this paragraph shall not apply
with respect to the Additional Earnest Money Deposit.
30. NO PARTNERSHIP, THIRD PERSON.
It is not intended by this Agreement to, and nothing contained in this
Agreement shall, create any partnership, joint venture or other arrangement
between Seller and Buyer except as
17
<PAGE>
specifically provided herein. No term or provision of this Agreement is intended
to benefit of any person, partnership, corporation or other entity not a party
hereto (including without limitation, any broker), and no such other person,
partnership, corporation or entity shall have any right or cause of action
hereunder.
31. TIME OF PERFORMANCE.
If the date for performance of any obligation hereunder or the last day
of any time period provided for herein shall fall on a Saturday, Sunday or legal
holiday, then said date for performance or time period shall expire on the first
day thereafter which is not a Saturday, Sunday or legal holiday. Except as may
otherwise be set forth herein, any performance provided for herein shall be
timely made and completed if made and completed no later than 5:00 P.M. (Texas
time) on the day for performance.
32. SURVIVAL.
Except as otherwise provided herein, all covenants, agreements,
representations and warranties set forth in this Agreement or in any certificate
or instrument executed or delivered pursuant to this Agreement shall survive
the Closing and shall not merge into any deed, assignment or other instrument
executed or delivered pursuant hereto.
33. RECORDING.
This Agreement shall not be filed or recorded in any public office in
the State of Texas.
34. CLOSING FUNDS.
The funds which will be required from Buyer and all other acts required
of Buyer in order to consummate the transaction contemplated by this Agreement
shall be deposited with Escrow Agent and performed no later than 10:00 A.M.
(Texas time) on the Closing Date. The Closing funds shall be available for
immediate distribution to Seller at Closing after payment of all liens including
mortgages, mechanic liens, etc. The net proceeds of sale that are to be
distributed to Seller at Closing shall be remitted by Escrow Agent in accordance
with Seller's instructions given at or prior to Closing.
35. IRS REAL ESTATE SALES REPORTING.
Buyer and Seller hereby appoint Escrow Agent as, and Escrow Agent agrees
to act as, "the person responsible for Closing" the transaction which is the
subject of this Agreement pursuant to Internal Revenue Code of 1986 Section
6045(e). Escrow Agent shall prepare and file the information return (IRS Form
1099-B) required by and otherwise comply with the terms of IRC SS6045(e). Escrow
Agent further agrees to indemnify and hold Buyer, Seller and there respective
attorneys harmless from and against all claims, costs, liabilities, penalties or
expenses resulting from Escrow Agent's failure to file the appropriate reports
and otherwise comply with the terms of the Internal Revenue Code pursuant to
this paragraph.
18
<PAGE>
36. NON-FOREIGN ENTITY.
Seller shall execute and deliver to Buyer at Closing an affidavit as
required by Internal Revenue Code Section 1445(b)(2) setting forth Seller's
taxpayer identification number, Seller's address and stating that it is not a
foreign person for purposes of that Section ("Non-Foreign Status
Certification").
37. COUNTERPART EXECUTION.
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed one and the
same Agreement.
38. ACCEPTANCE.
This offer to purchase the Property by the party first executing and the
terms set forth herein shall automatically terminate at 5:00 P.M. (Texas time),
on February 15, 1997, unless accepted by the other party by delivering to the
first executing party at its address referenced above a fully executed
counterpart of this Agreement no later than said date.
39. OTHER OFFERS.
Seller may accept and negotiate back-up offers and contracts should
Buyer default under this Agreement. No other offer or Contract would be in force
or effect if or until Buyer defaults.
40. CONFIDENTIALITY.
Buyer agrees to hold this Agreement and its contemplated acquisition
strictly confidential and only disclose the contemplated acquisition to its
attorneys, accountants, professional consultants and advisors, lenders and title
company. In no event, under any circumstances whatsoever, shall this sale prior
to closing be disclosed to any on-site employee of Western Rim Property
Services, Inc. or its vendors, suppliers, contractors, or any resident at any of
the Sellers properties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first set forth above.
BUYER:
Cornerstone Realty Group, Inc.,
a Virginia corporation
/s/ S. J. Olander
By:_______________________________
/s/ S. J. Olander
Name:_____________________________
S.V.P.
Title:____________________________
SELLER:
Western Rim Investors 1993-2, L.P.,
a California Limited Partnership,
dba Toscana Apartments
By: Western Rim Investment Advisors,
Inc., its General Partner
/s/ Marcus D. Hiles
By:__________________________
Marcus D. Hiles, President
ESCROW AGENT:
Escrow Agent hereby agrees to be bound by the provisions hereof
applicable to Escrow Agent and to perform its obligations as set forth herein
and hereby declares that Opening of Escrow has occurred this 7th day of
February 1997.
Safeco Land Title of Tarrant
/s/ Barbara Hutson
By:_______________________________
/s/ Barbara Hutson
Name:_____________________________
Commercial Operations Mgr.
Title:____________________________
20
EXHIBIT A
Legal Descriptions
LOT 20C, in BLOCK M/8752, OF THE DALLAS APARTMENTS/HOMES, an Addition to the
City of Dallas, Denton County, Texas, according to the Plat thereof recorded in
Cabinet I, Page 327, Plat Records, Denton County, Texas
<PAGE>
EXHIBIT B
Personal Property
[see attached list]
<PAGE>
EXHIBIT "B"
7-16-94 [ TOSCANA LOGO]
APARTMENT HOMES
17910 Kelly Blvd. o Dallas, Texas 75287
214/307-0545
#278 Corporate Unit Inventory
-----------------------------
Kitchen:
- -------
1-Dishtowel
1-Mitten(hand)
1-hand can opener
1-Wood paper towel holder
1-set of 4 pots/pans
1-4/cup Mr. Coffee maker
1-toaster
1-kitchen rug(Beige)
1 sety 4 Silverware
1 set 4 Dishware 4-bowls 4-large plate 4-salad plate 4-mugs
1 set salt pepper shakers
2-placematts/2-knapkins with holders rings
1- 11 gallon kitchen trash can(beige)
1-wooden cutting board
1-set of 4 Tall glasses 1 set of 4 small glasses
1-silverware tray
2-tupperware storing containers and 1 tupperware drink jug.
l-clear knapkin holder for paper knapkins
1-large knife/fork
1-small hand wine opener and(assorted kitchen gadgets) spat/spoons/measure cups
etc.
1-outside door matt
Bathroom:
- --------
1-Toilet Lid
1-Large area rug(peach)
1-Aqua trash can
1-Aqua kleenex holder and one Aqua soap dish holer
1-Sea shell designed shower curtain with rods and liner
4-large body towels (Assort colors)
2-wash clothes
1-hand towel
Bedroom:
- -------
Full size comfortor (Multi colors) with matching sheets and two pillows
1-cream color dust ruffle
1-silk flower arrangement in a brass pot
1-pot pourr in a clear bowl
1-candle on a brass candle holder
1-biege radio clock
1-iron and board
Misc Items:
- ----------
1 20inch Sanyo Color T.V. 1 large ficus tree (pot is Mine!)
2-Southwest design pictures 1-above fireplace and one abovecouch
<PAGE>
EXHIBIT "B"
[ Northview LOGO]
17910 Kelly Blvd. o Dallas, Texas 75287
214/307-0545
11-18-1993
Office/Clubroom Inventory
- -------------------------
6 Pictures
1 Typewriter GX-8500
1 Computer with Printer
1 Desk for Computer
2 Office Desks
1 Glasstop Entry Desk
3 Office chairs(2-Black 1 Grey tweed,)
4 Wooden chairs with purple tweed seats.
3 Phones
1 Toshiba Copier BD-4121
1 Calculator-Texas Instru.
1 Microwave GE
4 Tables spray flecked in black
4 Highback modern black chairs
1 Large 46inch sony T.V. with 2 floor standing speakers.
1 Sony VCR
1 Proctor/Silex Coffee Pot
1 GE Refrigerator
2 Large Silk ficus
2 Smaller silk plants
2 Tall Black File Cabinets
1 3-hole puncher
1 2-hole puncher
2 Staplers
2 Tape Dispensers
1 Round wall clock
5 Framed Floorplans
2 Desk file holders
1 Desk Calendar
2-Hibiscas Plants in black Ceramic Pots.
1 Framed Property Map.
Weightroom
- ----------
1 Stair Stepper 1 Climber
1 Tredmill 2 Lifecycles
1 Incline 1 Multi-Station Gym
3 Tanning Beds 1 Cardio glider
I included the weightroom information just in case you needed it!
Ruth Murphy
Aerobic Room
- ------------
10 Step Boxes 9 stretch tone bands
6 Exercise matts
5 5 lBS weights
1 8 lB weights
<PAGE>
[ Northview LOGO]
17910 Kelly Blvd. o Dallas, Texas 75287
214/307-0545
SHOP INVENTORY
(1) General Sewer machine
(1) Closet Auger
(1) 027 Manual key machine
(1) Homelite blower
(1) Square nose shovel
(1) Garden hoe
(1) Weblock keying kit
(1) App. Dolly
(1) 8' Aluminum step ladder
(1) 18' Aluminum extension ladder
(1) 330 M KARCHER power washer
(1) Wagner Airless paint sprayer - (Home Depot)
(1) BBQ Grill
(1) A/C Recovery Unit
<PAGE>
EXHIBIT C
______________, 1997
L. P. Martin & Company, P.C.
4132 Innslake Drive
Glen Allen, VA 23060
In connection with our audit of the statement of income and direct
operating expenses of Apartments for the twelve month
period ended , for the purpose of expressing an opinion as to
whether the financial statement presents fairly, in all material respects, the
results of operations of Apartments, in conformity with
generally accepted accounting principles, we confirm, to the best of our actual
knowledge and belief, the following representations made to you during your
audit.
1. We are responsible for the fair presentation of the statement of operations
in conformity with generally accepted accounting principles.
2. We have made available to you all financial records and related data and to
our knowledge these records are the only accounting records in existence for
the above noted apartments.
3. There have been no:
a. Irregularities involving management or employees who have significant
roles in the internal control structure.
b. Irregularities involving other employees that could have a material
effect on the financial statements.
c. Communications from regulatory agencies concerning noncompliance with, or
deficiencies in financial reporting practices that could have a material
effect on the financial statements.
4. The following, if applicable, have been properly recorded in the accounting
records and/or disclosed to you.
a. Related party transactions and related accounts receivable or payable,
including sales, purchases, loans, transfers, leasing arrangements, and
guarantees.
b. Arrangements with financial institutions involving compensating balances
or other arrangements involving restrictions on cash balances and
line-of-credit or similar arrangements.
1
<PAGE>
5. There are no:
a. Violations or potential violations of laws or regulations whose effect
should be considered for disclosure in the financial statements or as a
basis for recording a loss contingency.
b. Other material liabilities or gain or loss contingencies that are
required to be accrued or disclosed by Statement of Financial Accounting
Standards No. 5
6. We are not aware of any pending or threatened litigation, claims, or
assessments or unasserted claims or assessments other than tenant evictions
or collections for nonpayment of rent that are required to be accrued or
disclosed in the financial statements in accordance with Statement of
Financial Accounting Standards No. 5, and we have not consulted a lawyer
concerning litigation, claims or assessments against the Property.
7. There are no material transactions that have not been properly recorded in
the accounting records underlying the financial statements.
8. We have complied with all aspects of contractual agreements that would have
a material effect on the financial statements in the event of noncompliance.
9. We have identified all accounting estimates that could be material to the
financial statements, including the key factors and significant assumptions
underlying those estimates, and we believe the estimates are reasonable in
the circumstances.
10. No events have occurred subsequent to that would require adjustment
to, or disclosure in, the financial statements.
- ------------------------------------- ---------------------------------
Signature Signature
- ------------------------------------- ---------------------------------
Title Title
2
<PAGE>
EXHIBIT D
When recorded, return to:
- ---------------------------
- ---------------------------
- ---------------------------
SPECIAL WARRANTY DEED
For the consideration of Ten and 00/100 Dollars and other valuable
consideration, ("Grantor"), a
Partnership, does hereby convey to , a
Corporation ("Grantee"), the following described property situated in Texas:
See Exhibit A attached hereto and made a part hereof.
SUBJECT TO: Current taxes, assessments not yet due and payable,
reservations in patents and all easements, rights-of-way, covenants, conditions
and restrictions as may appear of record, and such matters which an inspection
or current accurate survey would reveal.
Grantor hereby binds itself and its successors to warrant and defend the
title, as against all acts of Grantor herein, and all persons claiming by,
through or under Grantor, and no other, subject to the matters above set forth.
GRANTEE EXPRESSLY ACKNOWLEDGES THAT THE GRANTEE IS PURCHASING AND THE GRANTOR IS
CONVEYING THE PROPERTY SOLELY IN RELIANCE ON GRANTEE'S OWN INVESTIGATIONS AND
"AS IS, WHERE IS" AND "WITH ALL FAULTS AND DEFECTS," LATENT OR OTHERWISE.
GRANTEE EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENT OF
GRANTOR HEREIN AND EXCEPT AS OTHERWISE SPECIFIED HEREIN, GRANTOR MAKES AND HAS
MADE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR ARISING BY OPERATION
OF LAW, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY AS TO CONDITION,
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH
RESPECT TO THE PROPERTY OR ANY MATTER RELATED THERETO.
IN WITNESS WHEREOF, Grantor and Grantee have executed this Special
Warranty Deed this day of 1997.
GRANTOR:
By: _____________________________
Its:_____________________________
<PAGE>
GRANTEE:
_________________________________
By: _____________________________
Its:_____________________________
STATE OF TEXAS )
) SS.
County of Tarrant )
Acknowledged before me this day of 1997, by
.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
My commission expires:
- ----------------------- ------------------------------
Notary Public
STATE OF TEXAS )
) SS.
County of Tarrant )
Acknowledged before me this day of 1997, by
of ,
a corporation, on behalf of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
My commission expires:
- ----------------------- ------------------------------
Notary Public
2
<PAGE>
EXHIBIT E
ASSIGNMENT AND ASSUMPTION OF
LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES IS MADE and entered into this
_____ day of ____________, 199___, by and between ______________________, a(n)
________________ ("Seller"), and ________________________, a(n) ______________
_________________ ("Buyer").
WHEREAS, Seller is conveying to Buyer certain real property ("Real
Property") in _________________, Texas, more particularly described on Exhibit
"A" attached hereto and incorporated herein by reference; and
WHEREAS, Seller desires to assign to Buyer its rights, as landlord, in
and to certain leases relating to the Real Property.
NOW, THEREFORE, Seller, for and in consideration of Ten Dollars ($10.00)
and other good and valuable consideration in hand paid to Seller by Buyer, does
hereby grant, sell, assign, transfer, convey and deliver to Buyer all of
Seller's right, title and interest, as landlord, under those certain tenant
leases and/or other agreements demising space in and to the Real Property
("Leases") described on Exhibit "B" attached hereto and incorporated herein by
reference.
Buyer hereby agrees to assume all of Seller's duties and obligations
under the Leases accruing on and after the date hereof, and to indemnify,
protect, defend and hold Seller harmless from all such duties and obligations.
Seller shall indemnify, protect, defend and hold Buyer harmless from all duties
and obligations under the Leases accruing prior to the date hereof.
This Assignment of Leases is executed by Seller and accepted by Buyer
subject to any and all terms and conditions contained in the Leases and all of
the same exceptions and conditions contained in that certain Special Warranty
Deed of even date herewith from Seller to Buyer relating to the conveyance of
the Real Property.
This is a final and exclusive expression of the agreement of Seller and
Buyer, and no course of dealing or usage of trade or course of performance shall
be relevant to explain or supplement any term expressed in this Assignment and
Assumption of Leases.
To have and to hold all of Seller's right, title and interest as
landlord under the Leases unto Buyer, its legal representatives and assigns
forever.
EXECUTED as of the date first hereinabove written.
<PAGE>
SELLER:
________________________________
________________________________
By: ____________________________
____________________________
____________________________
PURCHASER
By: ____________________________
Name:___________________________
Title:__________________________
2
<PAGE>
EXHIBIT F
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT IS MADE and entered into this _____ day
of ______________, 19___, by and between ______________________, a(n) __________
_____________ ("Seller"), and ____________________, a(n) ____________ ("Buyer").
WHEREAS, Seller is conveying to Buyer certain real property ("Real
Property") in _________________ County, Texas, more particularly described on
Exhibit "A" attached hereto and incorporated herein by reference, together with
all improvements ("Improvements") thereon; and
WHEREAS, Seller desires to assign to Buyer certain rights and interests
relating to the Real Property.
NOW, THEREFORE, Seller, for and in consideration of Ten Dollars ($10.00)
and other good and valuable consideration in hand paid to Seller by Buyer, does
hereby grant, sell, assign, transfer, convey and deliver to Buyer all of
Sellers' right, title and interest in and to the following:
1. The personal property owned by Seller in connection with the Real
Property as described on Exhibit "B" attached hereto and incorporated herein by
reference ("Personal Property");
2. All existing warranties, including manufacturer's warranties
("Warranties") relating to the Improvements or Personal Property, if any, but
only to the extent assignable;
3. All right, title and interest of Seller, if any, in and to the use of
the name by which the Real Property is commonly known, "Toscana Apartments,"
("Tradename");
4. The existing phone numbers ("Phone Numbers") used in connection with
the operation of the Real Property, but only to the extent assignable;
The herein-described Personal Property, Warranties, Tradename and Phone
Numbers are collectively referred to as the "Property."
This Bill of Sale and Assignment is executed by Seller and accepted by
Buyer subject to any and all terms and conditions contained in the Warranties
and all of the same exceptions and conditions contained in that certain Special
Warranty Deed of even date herewith from Seller to Buyer relating to the
conveyance of the Real Property.
<PAGE>
This is a final and exclusive expression of the agreement of Seller and
Buyer, and no course of dealing or usage of trade or course of performance shall
be relevant to explain or supplement any term expressed in this Bill of Sale and
Assignment.
To have and to hold the Property unto Buyer, its legal representatives
and assigns forever, but without warranty of any kind.
EXECUTED as of the date first hereinabove written.
SELLER:
_________________________________
a(n)_____________________________
By: _____________________________
Name:________________________
Title:_______________________
PURCHASER:
_________________________________
a(n)_____________________________
By: _____________________________
Name:________________________
Title:_______________________
THE STATE OF__________ SS.
SS.
COUNTY OF_____________ SS.
This instrument was acknowledged before me on the _____ day
of _____________, 1997, by ________________________, __________________ of
________________, a(n) ________________________, on behalf of said ___________.
____________________________________
Notary Public, State of ____________
____________________________________
Notary's Typed or Printed Name
My Commission Expires: _____________
2
<PAGE>
THE STATE OF____________ SS.
SS.
COUNTY OF_______________ SS.
This instrument was acknowledged before me on the _____ day
of ________________, 1993, by _________________________, of __________________
______, a(n) ________________________, on behalf of said ___________________.
____________________________________
Notary Public, State of_____________
____________________________________
Notary's Typed or Printed Name
My Commission Expires: _____________
3
<PAGE>
EXHIBIT G
CLOSING MEMORANDUM AND
INDEMNIFICATION AGREEMENT
THE STATE OF TEXAS SS.
SS. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS SS.
THIS CLOSING MEMORANDUM AND INDEMNIFICATION AGREEMENT (the "Agreement")
is entered into effective as of ______________, 1997 (the "Closing Date") by
and between _____________________, a _________________________ ("Seller"), and
______________________, a __________________________ ("Buyer").
In connection with and in consideration of the closing ("Closing") of
the transaction contemplated under that certain Purchase and Sale Agreement (the
"Agreement") dated ________________, 1997, by and between Seller and Buyer,
covering that certain property more particularly described in the Agreement (the
"Property"), Seller and Buyer hereby agree as follows:
1. Proration Date. All prorations have been made as of the Closing Date.
2. Operating Expenses. Except as otherwise provided in the Agreement or
herein, any and all costs and expenses relating to the operation, management,
leasing or ownership of the Property for the period prior to the Closing Date,
including, but not limited to, accounts and payments under service contracts,
utility charges and other costs required to be paid by the landlord under,
and/or with respect to, any leases for all or any portion of the Property and
commission agreements relating thereto are the responsibility of Seller and will
be paid by Seller promptly upon receipt of billing therefor, and Seller hereby
agrees to reimburse Buyer for any loss, cost or expense relating to same. Any
and all costs and expenses relating to the operation, management, leasing or
ownership of the Property for the period from and after the Closing Date,
including, but not limited to, accounts and payments under service contracts,
utility charges and other costs required to be paid by the landlord under,
and/or with respect to, any leases for all or any portion of the Property are
the responsibility of Buyer and will be paid by Buyer promptly upon receipt of
billing therefor, and Buyer agrees to reimburse Seller for, any loss, cost or
expense relating to same. To the extent not reflected in the closing statements
(the "Closing Statements") evidencing the transaction contemplated under the
Agreement, Buyer and Seller agree to adjust between themselves outside of
Closing any amounts which are the responsibility of the other pursuant to this
paragraph.
3. Earnest Money. Seller and Buyer acknowledge the application of the
Earnest Money Deposit (as defined in the Agreement) previously deposited with
the Title Company (as defined in the Agreement) against the purchase price of
the Property as reflected in the Closing Statements.
4
<PAGE>
4. Real Estate Taxes. All ad valorem and similar taxes and assessments
(the "Taxes") relating to the Property for the current year were prorated
between Seller and Buyer as reflected in the Closing Statements as provided in
the Agreement. At such time as the actual amount of Taxes against the Property
for the current year is known (after any appeal by Buyer is final and the amount
is final), Seller and Buyer shall, if required, readjust the amount of Taxes to
be paid by each party pursuant to this paragraph so that Seller shall pay for
those Taxes attributable to the period of time occurring prior to the Closing
Date, and Buyer shall pay for those Taxes attributable to the period of time
occurring from and after the Closing Date.
5. Rents. All rents have been prorated as of the Closing Date to the
extent same have actually been collected by Seller as provided in the Agreement.
Claims for any delinquent rent and other sums which are owing to Seller by
Tenants of the Property for periods prior to the Closing Date ("Delinquent
Rents") shall be owned and retained by Seller and Seller shall be entitled to
collect all of same. Furthermore, Buyer agrees to pay Delinquent Rents (or
Seller's pro rata share thereof to the extent such Delinquent Rents are
applicable to the month during which the Closing occurred) to Seller if, and
when, amounts are collected from the delinquent Tenant that are required to be
applied to Delinquent Rents as provided in the immediately succeeding sentence.
To the extent rentals are collected by Buyer after Closing from Tenants owing
Delinquent Rents, such collections shall be applied in the following order of
priority (i) such collections shall first be applied to Delinquent Rents which
were delinquent 30 days or less as of the Closing Date, (ii) any balance shall
then be applied to rents currently due at the time of the collection of such
amounts and (iii) the balance shall then be applied to Delinquent Rents which
were delinquent for more than 30 days as of the Closing Date. Buyer agrees to
use reasonable efforts to collect Delinquent Rents, but nothing contained herein
shall operate to require Buyer to institute a lawsuit to recover any such
Delinquent Rents or to terminate any Lease.
6. Brokerage Commissions. Except as set forth in Section ____ of the
Agreement, Seller and Buyer each hereby agree to reimburse the other for any and
all loss, cost or expense (including, without limitation, reasonable attorneys'
fees and costs) resulting from any claim for any fee, commission or similar
payment by any broker, agent, finder or realtor as a result of any action of
Seller or Buyer, respectively, related to the origination, negotiation, or
consummation of the transaction contemplated by the Agreement, Any fee owed to
Pinnacle Realty or its affiliates will be paid by Buyer.
7. Errors or Omissions. Seller and Buyer agree to adjust between
themselves after Closing any errors or omissions in the prorations or
adjustments set forth in the Closing Statements.
8. Survival. This Agreement and the agreements and the provisions
contained herein shall survive Closing and the execution and delivery of any
documents in connection therewith subject, however, to the limitations set forth
in paragraph of the Agreement, all of which are hereby incorporated into this
Agreement by this reference as if restated in their entirety. This instrument
may be executed in multiple counterparts, each of which shall be deemed an
original, but together shall constitute one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by Seller and Buyer
as of (but not necessarily on) the day and year first above written.
SELLER:
__________________________________
By: ______________________________
Name:_____________________________
Title:____________________________
PURCHASER:
__________________________________
By: ______________________________
Name:_____________________________
Title:____________________________
6
PROPERTY MANAGEMENT AGREEMENT
-----------------------------
THIS AGREEMENT is made and entered into as of the 1st day of March,
1997, by and between Apple Residential Income Trust, Inc., a Virginia
corporation (hereinafter referred to as "Owner"), and Apple Residential
Management Group, Inc., a Virginia corporation (hereinafter referred to as
"Manager").
W I T N E S S E T H :
WHEREAS, Owner is the owner of Polo Run Apartments (hereinafter referred
to as the "Property"); and
WHEREAS, Owner and Manager desire to enter into this Agreement for the
purposes herein contained.
NOW, THEREFORE, in consideration of the promises herein contained, and
for other valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Designation of Manager as Manager for the Property. Owner hereby
engages Manager as sole and exclusive manager to rent, manage and operate the
Property, upon the conditions and for the term and compensation herein set
forth. All or a portion of the services being performed by Manager may be
contracted or subcontracted to another property management company, provided
that such company agrees to be bound by the terms of this Agreement.
2. Term of Agreement; Renewal. This Agreement shall be valid for an
initial term of two (2) years. In the event Owner sells its interest in the
Property, this Agreement will terminate upon the date of such sale. Unless
either party by written notice sent to the other party at least sixty (60) days
before the end of any two year term hereof elects not to renew this Agreement,
this Agreement shall renew automatically for successive terms of two (2) years
on the same terms as contained herein.
3. Acceptance of Engagement. Manager hereby accepts its engagement as
the manager of the Property and agrees to perform all services necessary for the
care, protection, maintenance and operation of the Property, including the
following:
a. The collection of all rents and other income from the Property,
provided that nothing herein contained shall constitute a guarantee by Manager
of the payment of rent by tenants;
b. The purchase, at the expense of Owner, of all equipment, tools,
appliances, materials, supplies and uniforms necessary for the maintenance or
operation of the Property;
<PAGE>
c. The contracting on behalf of Owner for water, gas, electricity and
other services necessary for the operation and maintenance of the Property;
d. The advertising for the rental of space in the Property, the cost of
which shall be paid or by Owner;
e. The use of all reasonable efforts to keep the Property rented by
procuring tenants for the Property and negotiating and executing on behalf of
Owner all leases for space in the Property;
f. The employment, discharge and payment of all employees or contractors
necessary to be employed in the management and operation of the Property. Owner
agrees that all wages (and federal and state unemployment insurance and other
required charges) of such employees, and all compensation of such employees and
contractors, shall be paid from Owner's funds;
g. The preparation and filing of all returns and other documents (other
than promissory notes, mortgages, deeds of trust or other documents or
instruments which would encumber the Property) required under the Federal
Insurance Contributions Act and the Federal Unemployment Tax Act, or any similar
federal or state legislation. Manager shall also file returns and reports, and
pay from Owner's funds, all sums as may from time to time be required by the
state or locality in which the Property is located;
h. The maintenance of full books of account with correct entries of all
receipts and expenditures, which books of account shall be the property of Owner
and shall at all times be open to the inspection of Owner or any of its
employees or duly authorized agents;
i. The furnishing to Owner of all lenders' annual property inspection
letters regarding repairs necessary to avoid mortgage loan defaults. The
furnishing monthly of a detailed statement of all receipts and disbursements for
that month, such statement to be furnished on or before the 20th day of each
month for the preceding month. Such statement shall show the status of
collections and shall be supported by canceled checks, vouchers, duplicate
invoices and similar documentation covering all items of income and expense,
which shall be kept in Manager's office and shall be available for inspection by
Owner's representatives at all times. Manager shall also furnish a monthly
operating statement showing the income and expense for the month, and year to
date, and for the same month of the preceding year. The cost of performing the
accounting functions outlined in paragraphs h
2
<PAGE>
and i shall be paid for by Owner pursuant to the terms of this Agreement;
j. The furnishing of annual reports to Owner which shall contain a
composite financial report of the monthly statements provided in accordance with
paragraph i, plus a statement by Manager as to the operations of the Property
during the previous year and recommendations, if any, as to necessary policy
changes or improvements which should be implemented in the forthcoming year,
which recommendations shall be accompanied by an estimated budget for such
items;
k. The furnishing from time to time, at least semiannually, of a
tentative budget of expenses;
1. The furnishing from time to time, at least annually, of the following
schedules: (1) forecast of rental and occupancy changes; (2) review of lease
negotiations; (3) annual analysis of leases; and (4) schedule of capital
improvements and method of financing such improvements;
m. The furnishing, on a regular basis, of all forms necessary to operate
and lease the Property and manage the personnel including, but not limited to,
form leases, contracts and management policies; and
n. During the initial term of this Agreement, supervising the transition
from former ownership of the Property and implementing new management systems
with respect to operation of the Property.
4. Deposits of Rent and Other Income. All sums received from rents, tenant
security deposits or other deposits on space in the Property, deposits on keys
and other income from the Property, shall be deposited from time to time as
collected by Manager to the credit of Owner in such bank or banks as may from
time to time be designated by Owner. Such funds shall be disbursed only in
accordance with the terms of each individual lease and in accordance with any
applicable federal, state or local laws, regulations or ordinances.
5. Insurance. Owner shall place all insurance policies with respect to the
Property and its operation. Manager shall be included as an insured in the
policies covering general liability, public liability and workers' compensation
insurance. In the event Manager is authorized by Owner to place insurance
policies, the companies, the general agents, the amounts of coverage and the
risks insured shall be subject to the approval of Owner.
3
<PAGE>
6. Indemnification. Owner hereby agrees to indemnify and hold harmless
Manager against and in respect of any loss, cost or expense (including
reasonable investigative expenses and attorneys' fees), judgment, award, amount
paid in settlement, fine, penalty and liability of any and every kind incurred
by or asserted against Manager by reason of or in connection with the employment
of Manager hereunder, the performance by Manager of the services described
herein or the occurrence or existence of any event or circumstance which results
or is alleged to have resulted in death or injury to any person or destruction
of or damage to any property and any suit, action or proceeding (whether
threatened, initiated or completed) by reason of the foregoing; provided,
however, that no such indemnification of Manager shall be made, and Manager
shall indemnify and hold Owner harmless against, and to the extent of, any loss
that a court of competent jurisdiction shall, by final adjudication, determine
to have resulted from willful misconduct, gross negligence or fraud by or on the
part of Manager.
7. Compensation of Manager for Managing the Property. Owner shall pay to
Manager a "Property Management Fee" for management of the Property pursuant to
this Agreement in an amount equal to five percent (5%) of the monthly gross
revenues from the Property. The Property Management Fee shall be paid to Manager
on or before the 10th day of each month and shall be based upon the income
received by Owner (for such month) which has been obtained by such date. If
additional gross revenues are received by Owner after the day Manager is paid,
the sum due to Manager on account of such additional income shall be paid to
Manager when Manager is paid its fees for the next succeeding month.
8. Reimbursement of Expenses. Owner shall reimburse Manager for
Manager's expenses, including salaries and related overhead expenses, associated
with bookkeeping, accounting and financial reporting services pertaining to the
Property.
9. Reserves for Capital Items. Owner acknowledges that the budget
prepared by Manager, pursuant to paragraph 3(k), will contain a category labeled
"Reserve for Capital Items." Owner agrees to place rents and other income in a
bank account, or to permit Manager to transfer Owner's funds to such account, in
sufficient amounts to meet the needs reflected in such budget. Such funds shall
be placed in the account on a monthly basis as reflected in the budget.
10. Cash Flow. Owner acknowledges that the budget prepared by Manager,
pursuant to paragraph 3(k), will contain a category labeled "Cash Flow." Owner
agrees, in the event that the budgeted cash flow for the Property is "negative"
in any month
4
<PAGE>
covered by the budget, to place sufficient funds in a bank account, or to permit
Manager to transfer Owner's funds to such account, to make up the budgeted
operating deficit. These funds must be placed in such account at least
forty-five (45) days before the budgeted deficit is to occur.
11. Power of Attorney. Owner hereby makes, constitutes and appoints
Manager its true and lawful attorney-in-fact, for it and in its name, place and
stead and for its use and benefit to sign, acknowledge and file all documents
and agreements (other than promissory notes, mortgages, deeds of trust or other
documents or instruments which would encumber the Property) necessary to perform
or effect the duties and obligations of Manager under the terms of this
Agreement. The foregoing power of attorney is a special power of attorney
coupled with an interest. It may only be terminated by canceling this Agreement
as provided herein.
12. Relationship of Parties. The parties agree and acknowledge that
Manager is and shall operate as an independent contractor in performing its
duties under this Agreement, and shall not be deemed an employee or agent of
Owner.
13. Entire Agreement. This Agreement represents the entire understanding
between the parties hereto with regard to the transactions described herein and
may only be amended by a written instrument signed by the party against whom
enforcement is sought.
14. Governing Law. This Agreement shall be construed in accordance with
and be governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OWNER:
APPLE RESIDENTIAL INCOME TRUST, INC.
a Virginia corporation
By:______________________________
Title:___________________________
5
<PAGE>
MANAGER:
APPLE RESIDENTIAL MANAGEMENT GROUP, INC.
By:__________________________________
Title:_______________________________
6
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of March,
1997, by and between Apple Residential Income Trust, Inc., a Virginia
corporation (hereinafter referred to as "Owner"), and Apple Residential
Management Group, Inc., a Virginia corporation (hereinafter referred to as
"Manager").
W I T N E S S E T H :
WHEREAS, Owner is the owner of Wildwood Apartments (hereinafter referred
to as the "Property"); and
WHEREAS, Owner and Manager desire to enter into this Agreement for the
purposes herein contained.
NOW, THEREFORE, in consideration of the promises herein contained, and
for other valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Designation of Manager as Manager for the Property. Owner hereby
engages Manager as sole and exclusive manager to rent, manage and operate the
Property, upon the conditions and for the term and compensation herein set
forth. All or a portion of the services being performed by Manager may be
contracted or subcontracted to another property management company, provided
that such company agrees to be bound by the terms of this Agreement.
2. Term of Agreement: Renewal. This Agreement shall be valid for an
initial term of two (2) years. In the event Owner sells its interest in the
Property, this Agreement will terminate upon the date of such sale. Unless
either party by written notice sent to the other party at least sixty (60) days
before the end of any two year term hereof elects not to renew this Agreement,
this Agreement shall renew automatically for successive terms of two (2) years
on the same terms as contained herein.
3. Acceptance of Engagement. Manager hereby accepts its engagement as
the manager of the Property and agrees to perform all services necessary for the
care, protection, maintenance and operation of the Property, including the
following:
a. The collection of all rents and other income from the Property,
provided that nothing herein contained shall constitute a guarantee by Manager
of the payment of rent by tenants;
b. The purchase, at the expense of Owner, of all equipment, tools,
appliances, materials, supplies and uniforms necessary for the maintenance or
operation of the Property;
<PAGE>
c. The contracting on behalf of Owner for water, gas, electricity and
other services necessary for the operation and maintenance of the Property;
d. The advertising for the rental of space in the Property, the cost of
which shall be paid or by Owner;
e. The use of all reasonable efforts to keep the Property rented by
procuring tenants for the Property and negotiating and executing on behalf of
Owner all leases for space in the Property;
f. The employment, discharge and payment of all employees or contractors
necessary to be employed in the management and operation of the Property. Owner
agrees that all wages (and federal and state unemployment insurance and other
required charges) of such employees, and all compensation of such employees and
contractors, shall be paid from Owner's funds;
g. The preparation and filing of all returns and other documents (other
than promissory notes, mortgages, deeds of trust or other documents or
instruments which would encumber the Property) required under the Federal
Insurance Contributions Act and the Federal Unemployment Tax Act, or any similar
federal or state legislation. Manager shall also file returns and reports, and
pay from Owner's funds, all sums as may from time to time be required by the
state or locality in which the Property is located;
h. The maintenance of full books of account with correct entries of all
receipts and expenditures, which books of account shall be the property of Owner
and shall at all times be open to the inspection of Owner or any of its
employees or duly authorized agents;
i. The furnishing to Owner of all lenders' annual property inspection
letters regarding repairs necessary to avoid mortgage loan defaults. The
furnishing monthly of a detailed statement of all receipts and disbursements for
that month, such statement to be furnished on or before the 20th day of each
month for the preceding month. Such statement shall show the status of
collections and shall be supported by canceled checks, vouchers, duplicate
invoices and similar documentation covering all items of income and expense,
which shall be kept in Manager's office and shall be available for inspection
by Owner's representatives at all times. Manager shall also furnish a monthly
operating statement showing the income and expense for the month, and year to
to date, and for the same month of the preceding year. The cost of performing
the accounting functions outlined in paragraphs h
2
<PAGE>
and i shall be paid for by Owner pursuant to the terms of this Agreement;
j. The furnishing of annual reports to Owner which shall contain a
composite financial report of the monthly statements provided in accordance with
paragraph i, plus a statement by Manager as to the operations of the Property
during the previous year and recommendations, if any, as to necessary policy
changes or improvements which should be implemented in the forthcoming year,
which recommendations shall be accompanied by an estimated budget for such
items;
k. The furnishing from time to time, at least semi-annually, of a
tentative budget of expenses;
l. The furnishing from time to time, at least annually, of the following
schedules: (1) forecast of rental and occupancy changes; (2) review of lease
negotiations; (3) annual analysis of leases; and (4) schedule of capital
improvements and method of financing such improvements;
m. The furnishing, on a regular basis, of all forms necessary to operate
and lease the Property and manage the personnel including, but not limited to,
form leases, contracts and management policies; and
n. During the initial term of this Agreement, supervising the transition
from former ownership of the Property and implementing new management systems
with respect to operation of the Property.
4. Deposits of Rent and Other Income. All sums received from rents,
tenant security deposits or other deposits on space in the Property, deposits on
keys and other income from the Property, shall be deposited from time to time as
collected by Manager to the credit of Owner in such bank or banks as may from
time to time be designated by Owner. Such funds shall be disbursed only in
accordance with the terms of each individual lease and in accordance with any
applicable federal, state or local laws, regulations or ordinances.
5. Insurance. Owner shall place all insurance policies with respect to
the Property and its operation. Manager shall be included as an insured in the
policies covering general liability, public liability and workers' compensation
insurance. In the event Manager is authorized by Owner to place insurance
policies, the companies, the general agents, the amounts of coverage and the
risks insured shall be subject to the approval of Owner.
3
<PAGE>
6. Indemnification. Owner hereby agrees to indemnify and hold harmless
Manager against and in respect of any loss, cost or expense (including
reasonable investigative expenses and attorneys' fees), judgment, award, amount
paid in settlement, fine, penalty and liability of any and every kind incurred
by or asserted against Manager by reason of or in connection with the employment
of Manager hereunder, the performance by Manager of the services described
herein or the occurrence or existence of any event or circumstance which results
or is alleged to have resulted in death or injury to any person or destruction
of or damage to any property and any suit, action or proceeding (whether
threatened, initiated or completed) by reason of the foregoing; provided,
however, that no such indemnification of Manager shall be made, and Manager
shall indemnify and hold Owner harmless against, and to the extent of, any loss
that a court of competent jurisdiction shall, by final adjudication, determine
to have resulted from willful misconduct, gross negligence or fraud by or on the
part of Manager.
7. Compensation of Manager for Managing the Property. Owner shall pay to
Manager a "Property Management Fee" for management of the Property pursuant to
this Agreement in an amount equal to five percent (5%) of the monthly gross
revenues from the Property. The Property Management Fee shall be paid to Manager
on or before the 10th day of each month and shall be based upon the income
received by Owner (for such month) which has been obtained by such date. If
additional gross revenues are received by Owner after the day Manager is paid,
the sum due to Manager on account of such additional income shall be paid to
Manager when Manager is paid its fees for the next succeeding month.
8. Reimbursement of Expenses. Owner shall reimburse Manager for
Manager's expenses, including salaries and related overhead expenses, associated
with bookkeeping, accounting and financial reporting services pertaining to the
Property.
9. Reserves for Capital Items. Owner acknowledges that the budget
prepared by Manager, pursuant to paragraph 3(k), will contain a category labeled
"Reserve for Capital Items." Owner agrees to place rents and other income in a
bank account, or to permit Manager to transfer Owner's funds to such account, in
sufficient amounts to meet the needs reflected in such budget. Such funds shall
be placed in the account on a monthly basis as reflected in the budget.
10. Cash Flow. Owner acknowledges that the budget prepared by Manager,
pursuant to paragraph 3(k), will contain a category labeled "Cash Flow." Owner
agrees, in the event that the budgeted cash flow for the Property is "negative"
in any month
4
<PAGE>
covered by the budget, to place sufficient funds in a bank account, or to permit
Manager to transfer Owner's funds to such account, to make up the budgeted
operating deficit. These funds must be placed in such account at least
forty-five (45) days before the budgeted deficit is to occur.
11. Power of Attorney. Owner hereby makes, constitutes and appoints
Manager its true and lawful attorney-in-fact, for it and in its name, place and
stead and for its use and benefit to sign, acknowledge and file all documents
and agreements (other than promissory notes, mortgages, deeds of trust or other
documents or instruments which would encumber the Property) necessary to perform
or effect the duties and obligations of Manager under the terms of this
Agreement. The foregoing power of attorney is a special power of attorney
coupled with an interest. It may only be terminated by canceling this Agreement
as provided herein.
12. Relationship of Parties. The parties agree and acknowledge that
Manager is and shall operate as an independent contractor in performing its
duties under this Agreement, and shall not be deemed an employee or agent of
Owner.
13. Entire Agreement. This Agreement represents the entire understanding
between the parties hereto with regard to the transactions described herein and
may only be amended by a written instrument signed by the party against whom
enforcement is sought.
14. Governing Law. This Agreement shall be construed in accordance with
and be governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OWNER:
APPLE RESIDENTIAL INCOME TRUST, INC.,
a Virginia corporation
By:______________________________
Title:___________________________
5
<PAGE>
MANAGER:
APPLE RESIDENTIAL MANAGEMENT GROUP, INC.
By:______________________________
Title:___________________________
6
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of March,
1997, by and between Apple Residential Income Trust, Inc., a Virginia
corporation (hereinafter referred to as "Owner"), and Apple Residential
Management Group, Inc., a Virginia corporation (hereinafter referred to as
"Manager").
W I T N E S S E T H :
WHEREAS, Owner is the owner of Toscana Apartments (hereinafter referred
to as the "Property"); and
WHEREAS, Owner and Manager desire to enter into this Agreement for the
purposes herein contained.
NOW, THEREFORE, in consideration of the promises herein contained, and
for other valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Designation of Manager as Manager for the Property. Owner hereby
engages Manager as sole and exclusive manager to rent, manage and operate the
Property, upon the conditions and for the term and compensation herein set
forth. All or a portion of the services being performed by Manager may be
contracted or subcontracted to another property management company, provided
that such company agrees to be bound by the terms of this Agreement.
2. Term of Agreement: Renewal. This Agreement shall be valid for an
initial term of two (2) years. In the event Owner sells its interest in the
Property, this Agreement will terminate upon the date of such sale. Unless
either party by written notice sent to the other party at least sixty (60) days
before the end of any two-year term hereof elects not to renew this Agreement,
this Agreement shall renew automatically for successive terms of two (2) years
on the same terms as contained herein.
3. Acceptance of Engagement. Manager hereby accepts its engagement as
the manager of the Property and agrees to perform all services necessary for the
care, protection, maintenance and operation of the Property, including the
following:
a. The collection of all rents and other income from the Property,
provided that nothing herein contained shall constitute a guarantee by Manager
of the payment of rent by tenants;
b. The purchase, at the expense of Owner, of all equipment, tools,
appliances, materials, supplies and uniforms necessary for the maintenance or
operation of the Property;
<PAGE>
c. The contracting on behalf of Owner for water, gas, electricity and
other services necessary for the operation and maintenance of the Property;
d. The advertising for the rental of space in the Property, the cost
of which shall be paid or by Owner;
e. The use of all reasonable efforts to keep the Property rented by
procuring tenants for the Property and negotiating and executing on behalf of
Owner all leases for space in the Property;
f. The employment, discharge and payment of all employees or
contractors necessary to be employed in the management and operation of the
Property. Owner agrees that all wages (and federal and state unemployment
insurance and other required charges) of such employees, and all compensation of
such employees and contractors, shall be paid from Owner's funds;
g. The preparation and filing of all returns and other documents
(other than promissory notes, mortgages, deeds of trust or other documents or
instruments which would encumber the Property) required under the Federal
Insurance Contributions Act and the Federal Unemployment Tax Act, or any similar
federal or state legislation. Manager shall also file returns and reports, and
pay from Owner's funds, all sums as may from time to time be required by the
state or locality in which the Property is located;
h. The maintenance of full books of account with correct entries of
all receipts and expenditures, which books of account shall be the property of
Owner and shall at all times be open to the inspection of Owner or any of its
employees or duly authorized agents;
i. The furnishing to Owner of all lenders' annual property inspection
letters regarding repairs necessary to avoid mortgage loan defaults. The
furnishing monthly of a detailed statement of all receipts and disbursements for
that month, such statement to be furnished on or before the 20th day of each
month for the preceding month. Such statement shall show the status of
collections and shall be supported by canceled checks, vouchers, duplicate
invoices and similar documentation covering all items of income and expense,
which shall be kept in Manager's office and shall be available for inspection by
Owner's representatives at all times. Manager shall also furnish a monthly
operating statement showing the income and expense for the month, and year to
date, and for the same month of the preceding year. The cost of performing the
accounting functions outlined in paragraphs h
2
<PAGE>
and i shall be paid for by Owner pursuant to the terms of this Agreement;
j. The furnishing of annual reports to Owner which shall contain a
composite financial report of the monthly statements provided in accordance with
paragraph i, plus a statement by Manager as to the operations of the Property
during the previous year and recommendations, if any, as to necessary policy
changes or improvements which should be implemented in the forthcoming year,
which recommendations shall be accompanied by an estimated budget for such
items;
k. The furnishing from time to time, at least semiannually, of a
tentative budget of expenses;
l. The furnishing from time to time, at least annually, of the following
schedules: (1) forecast of rental and occupancy changes; (2) review of lease
negotiations; (3) annual analysis of leases; and (4) schedule of capital
improvements and method of financing such improvements;
m. The furnishing, on a regular basis, of all forms necessary to operate
and lease the Property and manage the personnel including, but not limited to,
form leases, contracts and management policies; and
n. During the initial term of this Agreement, supervising the transition
from former ownership of the Property and implementing new management systems
with respect to operation of the Property.
4. Deposits of Rent and Other Income. All sums received from rents,
tenant security deposits or other deposits on space in the Property, deposits on
keys and other income from the Property, shall be deposited from time to time as
collected by Manager to the credit of Owner in such bank or banks as may from
time to time be designated by Owner. Such funds shall be disbursed only in
accordance with the terms of each individual lease and in accordance with any
applicable federal, state or local laws, regulations or ordinances.
5. Insurance. Owner shall place all insurance policies with respect to
the Property and its operation. Manager shall be included as an insured in the
policies covering general liability, public liability and workers' compensation
insurance. In the event Manager is authorized by Owner to place insurance
policies, the companies, the general agents, the amounts of coverage and the
risks insured shall be subject to the approval of Owner.
3
<PAGE>
6. Indemnification. Owner hereby agrees to indemnify and hold harmless
Manager against and in respect of any loss, cost or expense (including
reasonable investigative expenses and attorneys' fees), judgment, award, amount
paid in settlement, fine, penalty and liability of any and every kind incurred
by or asserted against Manager by reason of or in connection with the employment
of Manager hereunder, the performance by Manager of the services described
herein or the occurrence or existence of any event or circumstance which results
or is alleged to have resulted in death or injury to any person or destruction
of or damage to any property and any suit, action or proceeding (whether
threatened, initiated or completed) by reason of the foregoing; provided,
however, that no such indemnification of Manager shall be made, and Manager
shall indemnify and hold Owner harmless against, and to the extent of, any loss
that a court of competent jurisdiction shall, by final adjudication, determine
to have resulted from willful misconduct, gross negligence or fraud by or on the
part of Manager.
7. Compensation of Manager for Managing the Property. Owner shall pay to
Manager a "Property Management Fee" for management of the Property pursuant to
this Agreement in an amount equal to five percent (5%) of the monthly gross
revenues from the Property. The Property Management Fee shall be paid to Manager
on or before the 10th day of each month and shall be based upon the income
received by Owner (for such month) which has been obtained by such date. If
additional gross revenues are received by Owner after the day Manager is paid,
the sum due to Manager on account of such additional income shall be paid to
Manager when Manager is paid its fees for the next succeeding month.
8. Reimbursement of Expenses. Owner shall reimburse Manager for
Manager's expenses, including salaries and related overhead expenses, associated
with bookkeeping, accounting and financial reporting services pertaining to the
Property.
9. Reserves for Capital Items. Owner acknowledges that the budget
prepared by Manager, pursuant to paragraph 3(k), will contain a category labeled
"Reserve for Capital Items." Owner agrees to place rents and other income in a
bank account, or to permit Manager to transfer Owner's funds to such account, in
sufficient amounts to meet the needs reflected in such budget. Such funds shall
be placed in the account on a monthly basis as reflected in the budget.
10. Cash Flow. Owner acknowledges that the budget prepared by Manager,
pursuant to paragraph 3(k), will contain a category labeled "Cash Flow." Owner
agrees, in the event that the budgeted cash flow for the Property is "negative"
in any month
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covered by the budget, to place sufficient funds in a bank account, or to permit
Manager to transfer Owner's funds to such account, to make up the budgeted
operating deficit. These funds must be placed in such account at least
forty-five (45) days before the budgeted deficit is to occur.
11. Power of Attorney. Owner hereby makes, constitutes and appoints
Manager its true and lawful attorney-in-fact, for it and in its name, place and
stead and for its use and benefit to sign, acknowledge and file all documents
and agreements (other than promissory notes, mortgages, deeds of trust or other
documents or instruments which would encumber the Property) necessary to perform
or effect the duties and obligations of Manager under the terms of this
Agreement. The foregoing power of attorney is a special power of attorney
coupled with an interest. It may only be terminated by canceling this Agreement
as provided herein.
12. Relationship of Parties. The parties agree and acknowledge that
Manager is and shall operate as an independent contractor in performing its
duties under this Agreement, and shall not be deemed an employee or agent of
Owner.
13. Entire Agreement. This Agreement represents the entire understanding
between the parties hereto with regard to the transactions described herein and
may only be amended by a written instrument signed by the party against whom
enforcement is sought.
14. Governing Law. This Agreement shall be construed in accordance with
and be governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OWNER:
APPLE RESIDENTIAL INCOME TRUST, INC.,
a Virginia corporation
By:_______________________________
Title:____________________________
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MANAGER:
APPLE RESIDENTIAL MANAGEMENT GROUP, INC.
By:_______________________________
Title:____________________________
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