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 (Date of earliest event reported): April 20,1995
LNH REIT, INC.
_____________________________________________________
(Exact name of Registrant as specified in its charter)
MARYLAND
_____________________________________________
(State or other jurisdiction of incorporation)
1-8330 75-1732388
_______________ ____________________
(Commission File Number) (IRS Employer Identification No.)
300 One Jackson Place
188 East Capitol Street
P.O. Box 22728
Jackson, Mississippi 39225-2728
____________________ ____________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code : (601) 354-3555
____________________________________________________________
(Former name or former address, if changed since last report)
FORM 8-K
LNH REIT, INC.
Item 2. Acquisition or Disposition of Assets.
(a) On April 20, 1994, LNH REIT, Inc. ("LNH" or the "Company")
sold a 90 acre parcel of land located in Houston, Texas to
Elektra Enterprises, Inc., a party unaffiliated with the Company
or its affiliates. The Company received cash of $ 550,000 and a
mortgage note receivable of $2,200,000. The terms of the note
call for semi-annual principal and interest payments for four
years; these payments will be based on a 20-year amortization,
and the balance of the note will be due after four years.
Interest will accrue on the unpaid balance at the rate of 9.5%
for the first 3 years and at prime plus 1.5% (with a 12%
ceiling) for the fourth year. The Purchaser must also pay
$137,500 to release a certain 14-acre tract from the lien of the
Deed of Trust. This payment, in order to be free from penalty,
must be received by LNH within 45 days or the price of the tract
will increase by $1,000 a day for the next 30 days. If not
received by the 75th day, LNH is no longer obligated to release
the tract. This $137,500 price will accrue interest at the rate
of 9.5% until payment, and it will reduce the outstanding
principal balance of the note when received. For financial
reporting purposes, the Company expects to recognize a gain of
approximately $534,000 ($.24 per share) on the sale.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information
Description Page Herein
Pro Forma Balance Sheet
dated December 31, 1994 4
Pro Forma Statement of Income
dated December 31, 1994 5
Notes to Pro Forma Financial
Statements 6
(c) Exhibit Index
Exhibit Number Description Page Herein
2(a) Purchase and Sale Agreement
dated as of October 7, 1994,
filed herewith. Exhibits and
schedules omitted, but will
be provided upon request. 8
2(b) First Amendment to Purchase
and Sale Agreement dated as
of October 14, 1994, filed
herewith 27
2(c) Second Amendment to Purchase
and Sale Agreement dated as of
January 3, 1995, filed herewith. 29
2(d) Third Amendment to Purchase
and Sale Agreement dated as of
February 7, 1995, filed herewith. 31
2(e) Fourth Amendment to Purchase
and Sale Agreement dated as of
February 24, 1995, filed herewith.
Exhibits and schedules omitted,
but will be provided upon request. 33
2(f) Fifth Amendment to Purchase
and Sale Agreement dated as of
April 12, 1995, filed herewith. 39
2(g) Amended and Restated Fifth
Amendment to Purchase and
Sale Agreement dated as of
April 13, 1995, filed herewith. 41
2(h) Promissory Note dated April 20,
1995, filed herewith. Exhibits and
schedules omitted, but will be
provided upon request. 43
Pro Forma Consolidated Balance Sheets (Unaudited)
December 31, 1994
(In Thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments(a) Pro Forma
----------- -------------- ---------
Assets
<S> <C> <C> <C>
Mortgage loans $ 5,149 2,200 7,349
Mortgage loans subject to
foreclosure proceedings 5,960 - 5,960
Real estate investments:
Earning
Warehouse 4,073 - 4,073
Shopping center 6,867 - 6,867
Accumulated depreciation (427) - (427)
Non-earning land 3,067 (2,025) 1,042
----------- ----------- ----------
24,689 175 24,864
Less allowance for losses (525) - (525)
----------- ---------- ----------
24,164 175 24,339
Marketable equity securities 525 - 525
Cash and cash equivalents 1,660 307 1,967
Accrued interest receivable
and other 285 - 285
----------- ----------- -----------
$ 26,634 482 27,116
=========== =========== ===========
Liabilities and Shareholders' Equity
Liabilities
Minority interest payable $ 1,510 - 1,510
Other liabilities 493 (52) 441
----------- ---------- ----------
2,003 (52) 1,951
Shareholders' Equity
Common stock, $.50 par value,
15,000,000 share authorized,
2,200,000 shares issued and
outstanding 1,100 - 1,100
Paid in capital 27,215 - 27,215
Deficit (4,040) 534 (3,506)
Unrealized gain on marketable
equity securities 356 - 356
----------- ---------- ---------
24,631 534 25,165
----------- ----------- ----------
$ 26,634 482 27,116
=========== =========== ===========
</TABLE>
See notes to pro forma consolidated financial statements
Pro Forma Consolidated Statement of Operations (Unaudited)
For the year ended December 31, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments(a) Pro Forma
Revenues
Interest:
<S> <C> <C> <C>
Mortgage loans $ 574 198 772
Cash equivalents and other 101 13 114
Revenue from real estate
properties 1,249 - 1,249
Other Income 226 - 226
---------- ---------- ----------
2,150 211 2,361
---------- ---------- ----------
Expenses
Management fees 338 6 344
Real estate expenses:
Operating expenses 605 (52) 553
Depreciation 277 - 277
Professional fees 49 - 49
General and administrative 178 - 178
Minority interest expense 54 - 54
Provision for losses 525 - 525
---------- ---------- ----------
2,026 ( 46) 1,980
---------- ---------- ----------
Income from operations 124 257 381
---------- ---------- ----------
Gain (loss) on investments
Real estate and mortgage loans 135 - 135
---------- ---------- ----------
Net Income $ 259 257 516
========== ========== ==========
Net income per share
Income from operations $ .06 .12 .18
Gain on investment .06 - .06
---------- ---------- ----------
Net Income $ .12 .12 .24
========== ========== ==========
Average number of shares
outstanding 2,200 2,200 2,200
========== ========== ==========
</TABLE>
See notes to pro forma consolidated financial statements
Notes to Pro Forma Financial Statements (Unaudited)
(a) On April 20, 1994, LNH REIT, Inc. ("LNH" or the "Company")
sold a 90 acre parcel of land located in Houston, Texas to
Elektra Enterprises, Inc., a party unaffiliated with the Company
or its affiliates. The Company received cash of $ 550,000 and a
mortgage note receivable of $2,200,000. The terms of the note
call for semi-annual principal and interest payments for four
years; these payments will be based on a 20-year amortization,
and the balance of the note will be due after four years.
Interest will accrue on the unpaid balance at the rate of 9.5%
for the first 3 years and at prime plus 1.5% (with a 12%
ceiling) for the fourth year. The Purchaser must also pay
$137,500 to release a certain 14-acre tract from the lien of the
Deed of Trust. This payment, in order to be free from penalty,
must be received by LNH within 45 days or the price of the tract
will increase by $1,000 a day for the next 30 days. If not
received by the 75th day, LNH is no longer obligated to release
the tract. This $137,500 price will accrue interest at the rate
of 9.5% until payment, and it will reduce the outstanding
principal balance of the note when received. The following are
the pro forma adjustments to the December 31, 1994 balance sheet
to reflect the sale assuming the sale took place December 31,
1994 (in thousands):
Increase
(Decrease)
Net Assets
------------
1) Remove real estate assets sold $ (2,025)
2) Cash received from sale, net of
sale expenses 307
3) Note receivable received from sale 2,200
4) Accrued real estate tax for 1994 gain 52
------------
Gain $ 534
============
(b) For purposes of determining the pro forma effect of the
above transactions on the LNH financial statements, the
following pro forma adjustments to the income statements have
been made assuming the sale took place on January 1, 1994 (in
thousands):
Year Ended
December 31, 1994
-------------------
1) Add interest income on note
receivable at 9.5% 198
2) Remove real estate tax
expense of real estate
sold 52
3) Add interest income on short
term cash investment 13
4) Increase in management fees (6)
------------
$ 257
============
FORM 8-K
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.
LNH REIT, Inc.
(Registrant)
Dated: May 4, 1995 By: /s/ N. Keith McKey
----------------------
N. Keith McKey
Senior Vice President
Chief Financial Officer
and Assistant Secretary
/s/ Stephen S. Howell
-----------------------
Stephen S. Howell
Controller
LNH REIT, Inc.
Exhibit 2(a)
PURCHASE AND SALE AGREEMENT
(Baypoint Land)
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of the Effective Date (as set forth below) between LNH
REIT, INC. ("Seller"), and ELEKTRA ENTERPRISES, INC.
("Purchaser").
WITNESSETH:
In consideration of the mutual covenants set forth herein and in
consideration of the earnest money deposit herein called for,
the receipt and sufficiency of which are hereby acknowledged by
Seller, the parties agree as
follows:
1. Sale and Purchase. Seller shall sell, convey, and assign to
Purchaser, and Purchaser shall purchase, assume, and accept from
Seller, for the Purchase Price (hereinafter defined) and on and
subject to the terms and conditions herein set forth:
1.1 Good and marketable fee simple title to the tracts or
parcels of land situated in Harris County, Texas, described in
EXHIBIT A hereto, together with all rights, titles, and
interests of Seller in and to adjacent streets, dedicated
streets or roads, alleys, rights of way, and any adjacent gaps,
strips, or gores of real estate, all of Seller's interest in the
oil, gas, or other minerals thereunder, together with all of
Seller's executive rights, if any, pertaining to all oil, gas,
and other minerals in, on, and thereunder, and together with all
improvements, if any, thereon and all rights and interests
appurtenant thereto (the "Real Property").
1.2 Any and all governmental permits, approvals, utility
commitment letters, and waste water capacity affecting said Real
Property ("Permits and Utility Capacity").
The Real Property, Permits and Utility Capacity are herein
collectively referred to as the "Property".
2. Purchase Price. The price for which Seller shall sell and
convey the Property to Purchaser, and which Purchaser shall pay
to Seller at Closing in the manner hereinafter specified shall
be either Two Million Six Hundred Thousand Dollars
($2,600,000.00) cash at closing, or Three Million Four Hundred
Thousand Dollars ($3,400,000.00) if Seller finances the
purchase, price. Purchaser shall notify Seller in writing prior
to the end of the Inspection Period (as hereinafter defined)
whether Purchaser will close on an all cash basis. If Purchaser
fails to timely notify Seller of its election, the sale shall be
on an all cash basis. Such price is based upon the Property
containing at least 90.73 acres ("Purchase Price"). Such
Purchase Price shall be adjusted upwards or downwards based upon
Twenty Eight Thousand Six Hundred Fifty Six Dollars ($28,656.00)
per acre, if a cash sale, and Thirty Seven Thousand Four Hundred
Seventy Three Dollars ($37,473.00) per acre, if Seller finances
the sale, as determined by the Survey specified in Section 5
hereof, if the net useable acreage is determined to be more or
less than 90.73 acres.
2.1 The Purchase Price, if financed by Seller, shall be paid as
follows:
a. Down Payment. At the time of closing, Purchaser shall pay
Seller the sum of 25 % of the Purchase Price in cash.
b. Note Amount. The balance of the
Purchase Price shall be paid by the delivery at Closing, of
Purchaser's Promissory Note (herein the "Note") in the amount of
the Purchase Price less the 25 % cash down payment. Said note
shall carry no personal or corporate liability. The interest
rate on such Note shall be as follows:
(1) For the first three (3) years, said Note shall bear
interest at the rate of nine and one-half percent (9.5%) per
annum;
(2) For the fourth (4th) and fifth (5th) years of such Note,
such Note shall bear interest at the prime rate charged by Texas
Commerce Bank Houston, plus one and one-half percent (1-1/2%)
with a cap of ten percent (10%). The principal and interest of
such Note shall be paid annually based upon a twenty (20) year
amortization, with the entire balance of said Note, if not
sooner paid, to be due and owing on the fifth (5th) anniversary
thereof. The Purchaser shall have the right to prepay the
outstanding principal balance of the Note in whole or in part at
any time without penalty or premium. Said Note shall be secured
by a first lien Deed of Trust and Security Agreement (herein the
"Deed of Trust") encumbering the Real Property.
c. Partial Releases. Purchaser shall be entitled to save up
installment payments or any other payments of principal and use
said amounts to release any of the tracts as referenced herein
below at any time using the corresponding release prices
referenced herein. Partial releases of the lien of the Deed of
Trust and the vendor's lien (securing the Note) shall be as
follows:
(1) The term "partial release" as used herein shall be deemed
to mean a partial release of the lien of the Deed of Trust
encumbering the portion of the Real Property to be released and
of the vendor's lien retained in the Deed conveying the Real
Property to Purchaser. No partial release granted under the
provisions of this paragraph shall in any way impair the
vendor's lien or the lien of the Deed of Trust, insofar as the
same cover and relate to portions of the Real Property which,
after giving effect to such partial release, remain unreleased
from such liens.
(2) Purchaser shall not be entitled to a partial release of any
portion of a tract if, as of the date such partial release is
requested, Purchaser is in default under the Note or Deed of
Trust, which default has not been cured by Purchaser.
(3) Purchaser shall furnish to the Seller a current survey and
a field notes description of the portion of the Real Property to
be partially released and shall pay all costs and expenses of
furnishing such survey and field notes description.
(4) Purchaser shall be entitled to obtain releases of portions
of the Real Property with each installment and/or, from time to
time, by paying to Seller principal prepayments, or by applying
monies already paid to Seller but not yet applied to a release
tract, to the payment of a release price per acre ("Per Acre
Release Price"), to be determined in accordance with the
provisions below, multiplied by the number of acres to be
released. Purchaser shall have the right to designate the
portion of the Real Property to be released so long as such
determination complies with the provisions set forth below. The
portions of Real Property to be released in accordance with the
provisions set forth below must comply with the following
criteria. For purposes of defining the area to be released, the
Real Property has been divided into Tracts A, B, C, and D, as
depicted in EXHIBIT B attached hereto and made a part hereof by
this reference, the exact net acreage within said tracts will be
determined by the surveyor at the time of a release request.
Purchaser reserves the right to reconfigure the release tracts
at any time prior to or after closing with Sellers approval,
which shall be in Seller's sole discretion.
(a) Releases with respect to Tract "A": The initial parcel
("Tract A Initial Release") within Tract "A" shall be a minimum
of 7.0 acres and shall be located along the easternmost boundary
line of the property and must be bounded on the north by
Magnolia Road and have as eastern and western lines, lines
extended from Magnolia Road due south to the southern boundary
of Tract "A". Releases subsequent to the Tract A Initial
Release shall be a minimum of 5.0 acres and shall have a
previously released parcel in Tract "A" as the eastern boundary,
Magnolia Road as the northern boundary, and have as a western
boundary a line extended from Magnolia Road to the southern
boundary of Tract "A". The Per Acre Release Price in Tract "A"
shall be Fifty Six Thousand Nine Hundred Sixty Three Dollars
($56,936.00) per acre and the Release Price shall be equal to
the Per Acre Release Price multiplied by the number of acres
being released. Notwithstanding the foregoing, if Purchaser
sells a parcel from Tract "A" for a gross sales price of more
than $4.00 per square foot, then twenty-five percent (25%) of
the sales price over $4.00 per square foot, shall be paid to
Seller and applied to the Note. Principal payments made under
this provision shall only apply to partial releases from Tracts
B, C or D.
(b) Releases with respect to Tract "B": The initial parcel
(Tract B Initial Release") within Tract "B" shall be a minimum
of 5.0 acres and shall be located along the eastern most
boundary line of the property and must be bounded on the north
by Tract "A" and have as a western boundary line, a line
extended from Tract "A" due south to the southern boundary of
Tract "B". Releases subsequent to the Initial Release shall be
a minimum of 3.0 acres and shall have a previously released
parcel in Tract "B" as the eastern boundary, Tract "A" as the
northern boundary and have as a western boundary a line
extended from Tract "A" to the southern boundary of Tract "B".
The Per Acre Release Price in Tract "A" shall be Forty Two
Thousand One Hundred Seventy Three Dollars ($42,173.00) per acre
and the Release Price shall be equal to the Per Acre Release
Price multiplied by the number of acres being released.
(c) Releases with respect to Tract "C": Releases with respect
to Tract "C" shall be a minimum of 5.0 acres in size. The
initial parcel ("Tract C Initial Release") to be released in
Tract "C" shall be located along the easternmost boundary line
of the property and must be bounded on the north by Tract "B"
and have as a western boundary line, a line extended from Tract
"B" due south to the southern boundary of Tract "C". Releases
subsequent to the Tract "C" Initial Release shall be a minimum
of 3.0 acres in size and shall have as an eastern boundary, the
western boundary of the previously released parcel in Tract "C",
Tract "B" as the northern boundary and have as a western
boundary a line extended from Tract "B" to the southern boundary
of Tract "C". The Per Acre Release Price in Tract "C" shall be
Thirty Five Thousand One Hundred Forty Four Dollars ($35,144.00)
per acre and the Release Price shall be equal to the Per Acre
Release Price multiplied by the number of acres being released.
(d) Releases with respect to Tract "D": Tract "D" is hereby
created at the Southernmost portion of the property. This Tract
"D" may only be released in its entirety, the per acre release
price in Tract "D" shall be Twenty Seven Thousand Four Hundred
Sixty Two Dollars ($21,500.00) per acre.
(5) Partial releases may be obtained concurrently respecting
Tracts A,B,C, or D.
(6) At the time partial releases are obtained, Purchaser shall
pay to Seller all accrued and unpaid interest on that portion of
the Note being prepaid only up to the date of the payment. The
amounts payable to Seller by Purchaser hereunder for partial
releases shall be paid in cash or by certified or cashier's
check, in immediately available funds, in Jackson, Mississippi.
(7) Notwithstanding anything contained herein to the contrary,
if any uncured default exists as to said Note and Deed of Trust,
Seller shall have the option, in its sole discretion to (a)
refuse to grant any partial release, or (b) grant a partial
release and have all the proceeds of any sale in connection
therewith
applied to the Note.
(8) Any principal prepayments made of any kind whatsoever on
the Note shall be applied to the regular installments of
principal, in the direct order of maturity. All costs incurred
by Seller in connection with the requested partial release
(including costs and expenses) of preparation and recordation of
each such partial release, the costs of each endorsement to the
Mortgagee's Policy of Seller occasioned by the granting of each
such partial release, shall be borne by Purchaser. Failure to
pay such expenses shall constitute a failure of a condition for
the granting of such partial release by Seller or, in the event
the partial release has been given and such expenses have not
been fully paid by Purchaser, such unpaid amounts shall become a
part of the indebtedness secured by the Deed of Trust, and such
failure to pay such amounts shall constitute a default
hereunder.
(9) Purchaser shall prepare and provide to Seller a partial
release instrument for each requested partial release which is
reasonably acceptable to Seller. Upon receipt of the required
partial release payment and survey, Seller shall within ten (10)
days execute that instrument and return it, in recordable form
to Purchaser.
(10) Subordination of Liens. Seller recognizes and
acknowledges that Purchaser intends to develop the Real Property
and, incident thereto, Seller shall subordinate its liens,
without any payment as required for a partial release, to plats,
easements, road dedications, or restrictions that may be
required during the course of development of the Real Property
which are reasonably acceptable to Seller and will not have a
material adverse affect on the value of the Real Property as a
whole, provided that any such subordination shall be at no cost
to Seller. Seller shall promptly, and without unnecessary
delay, join in and consent to the platting of the Real Property,
however, any costs incurred therefor shall be the sole expense
and cost of the Purchaser.
3. Earnest Money. Within five (5) working days after four
fully executed copies of this agreement have been delivered to
Purchaser, Purchaser shall deliver to First Surety Title
Company, Attention: Peggy Randolph, 2040 Loop 336, Suite 200
Conroe, Texas 77304 (the "Title Company"), the amount of Twenty
Five Thousand Dollars ($25,000.00) (the "Earnest Money"). The
Title Company shall immediately deposit the Earnest Money in an
interest bearing account in a federally insured lending
institution. Notwithstanding anything contained herein to the
contrary, all interest earned on the Earnest Money will be paid
to Purchaser by the Title Company upon receipt thereof. At the
Closing, the Earnest Money shall be applied to the Purchase
Price due at Closing; and the interest earned thereon shall be
delivered to Purchaser. If this Agreement shall fail to close
as provided herein, then the Earnest Money shall be dealt with
as otherwise provided below. Failure to timely deposit the
Earnest Money by Purchaser shall result in the automatic
termination of this Agreement, and the parties hereto shall be
released from all liability hereunder.
4. Delivery of Title Information by Seller. Within fifteen
(15) days after the Effective Date, Seller at Seller's sole cost
and expense, shall deliver or cause the following to be
delivered to Purchaser:
4.1 Commitment for Title Insurance (the "Title Commitment")
from the Title Company, setting forth the status of the title of
the Property and showing all liens, claims, encumbrances,
easements, rights of way, encroachments, reservations,
restrictions, and all other matters of record affecting the
Property.
4.2 A true, complete, and legible copy of all documents referred
to in the Title Commitment.
5. Survey. Within fifteen (15) days after the Effective Date,
Purchaser, at Purchaser's expense, shall obtain a Survey
("Survey") consisting of a plat and field notes prepared by a
registered Texas Land Surveyor approved by Purchaser and Title
Company, which Survey shall be addressed to Purchaser, Title
Company and Seller and shall:
(1) Reflect the gross square feet (herein defined as the total
square feet within the boundaries of the Real Property) within
the Real Property; the location of any easements, set-back
lines, encroachments, or overlaps thereof or thereover,
improvements, ditches, waterways, flood plains, reservoirs,
fence locations; and any utilities and roadways upon, over, or
adjacent to the Real Property. The survey shall also reflect
the net useable acreage (herein defined as the total acreage
within the boundaries of the Real Property less any acreage
determined to be in any easements not benefiting the Real
Property).
(2) Identify by recording reference all easements, set-back
lines, and other matters referred to in the Title Commitment
(herein defined).
(3) Include the surveyor's registered number and seal, the date
of the Survey, and a certificate in a form reasonably
satisfactory to Purchaser.
(4) Reflect that there is access to and from the Real'Property
from a publicly dedicated street or road.
(5) Be sufficient to cause the Title Company to delete (except
for shortages in the area) the printed exception for
"discrepancies, conflicts, or shortages in area or boundary
lines; or encroachments; or any overlapping of improvements in
the Owner's Title Policy to be delivered by Seller pursuant to
Section 6,11.2(3) hereof.
(6) Reflect any area within the Real Property that has been
designated by the Federal Insurance Administration, the Army
Corp of Engineers, or any other governmental agency or body as
being subject to special flood hazards.
(7) In general, comply with the requirements of the Texas
Surveyors' Association for a Category IA Condition II Survey.
(8) Contain a field note description of the Real Property,
which shall be the description of the Real Property used in the
Special Warranty Deed (hereinafter defined) from Seller to
Purchaser delivered at the Closing hereof. For purposes of the
property description to be included in the Special Warranty Deed
and calculation of the Purchase Price, the field notes prepared
by the surveyor shall control over any conflicts or
inconsistencies with EXHIBIT A hereto; and such field notes
shall be incorporated herein by this reference upon their
completion. The cost of such updated Survey shall be borne by
Purchaser and reimbursed by Seller at Closing.
6. Title. Within fifteen (15) days after receipt of both the
Title Commitment (accompanied by legible copies of the title
exception documents) and the Survey, but in any event, prior to
the expiration of the contingency period (hereinafter defined),
Purchaser shall give notice in writing to Seller of any matter
shown in the Title Commitment or on the Survey which is not
acceptable to Purchaser and Seller shall, within ten (10) days
after receipt of such notice, elect, by written notice to
Purchaser, to either (i) cure or remedy the defects and
objections so specified, or (ii) decline to remedy or cure the
title defects and objections so asserted by Purchaser. The
failure of Purchaser to timely give notice in writing to Seller
of defects or objections to title, as referred to above, shall
be deemed acceptance by Purchaser of the condition of title to
the Real Property as reflected in the Title Commitment. Any
matters shown in the Title Commitment or on the Survey to which
Purchaser does not object shall be considered accepted by
Purchaser and shall hereinafter be referred to as "Permitted
Exceptions". If Seller elects to decline to remedy or cure such
title defects and objections, then Purchaser may, within ten
(10) days after written receipt of Seller's notice of election,
waive its objections by giving written notice of such waiver to
Seller and if Purchaser fails or declines to so waive its
objections, this Agreement shall terminate upon the expiration
of said ten (10) day period, Purchaser's Earnest Money Deposit,
together with all interest earned thereon, shall be returned to
Purchaser and the parties shall be relieved of their respective
rights and obligations set forth in this Agreement. Should
Seller fail to give Purchaser any notice with respect to
Seller's election to cure or not to cure Purchaser's title
objections, Seller shall be deemed to have elected not to cure
such objections. If Seller timely gives Purchaser written
notice of its election to cure Purchaser's title objections,
then Seller shall be obligated to cure the same on or before the
date of Closing.
7. Right of Inspection; Contingency Period.
7.1 Seller shall afford Purchaser and its representatives a
right to inspect (at reasonable hours) the Real Property and the
books, records, contracts, and other documents or data
pertaining to the ownership or maintenance of the Property which
are located at the Real Property or are in Seller's possession
and to satisfy itself as to the condition of the Real Property.
Purchaser and its representatives shall not damage the Real
Property during the course of its inspections; and Purchaser
shall promptly repair and restore, in a workmanlike manner
satisfactory to Seller, any damage to the Real Property to its
prior condition. Purchaser shall indemnify and hold Seller
harmless from any damage, loss, liability, or expense (including
court costs and attorney fees) arising out of the conduct of
Purchaser's inspections, which indemnity shall survive the
expiration, closing, or termination of this Agreement.
7.2 As soon as possible after the Effective Date hereof, Seller
shall deliver to Purchaser copies of any and all of the
following which Seller may have in its possession:
(1) Studies performed to determine the limits of any
wetlands on the Real Property.
(2) Studies performed to determine the presence of any
hazardous materials on the Real Property.
(3) Previous surveys of the Real Property.
(4) Soil reports concerning the Real Property.
(5) Construction drawings and "as built" drawings of all
water supply plants, sewage treatment plants, water lines,
storm drainage lines, sanitary sewer lines, drainage
channels, and any paving improvements located on
the Real Property, or adjacent to the Real Property.
7.3 If, for any reason whatsoever, Purchaser, in its sole and
absolute discretion, is not satisfied with the Property or its
inspection, as aforesaid, then Purchaser shall have the right to
terminate this Agreement in accordance with Section 13.2 hereof
by delivering to Seller a notice of termination at any time
during the period from the Effective Date until 5:00 p.m. on the
ninetieth (90th) day following the Effective Date hereof (the
"Contingency Period"). In the event Purchaser terminates this
Agreement during the Contingency Period, as herein provided, the
Title Company shall return the Earnest Money to Purchaser.
Unless Purchaser terminates this Agreement before the expiration
of the Contingency Period, Purchaser shall have waived its right
to terminate this Agreement under this Section 7, and the
Earnest Money shall be nonrefundable.
8. Representation and Warranties. Seller hereby represents
and warrants to Purchaser the following:
8.1 Seller has the full right, power, and authority to
execute this Agreement and that this Agreement is a legal and
binding obligation of Seller.
8.2 Neither this Agreement nor any of the documents required
to consummate the transaction contemplated hereby violates any
agreement or instrument to which Seller is a party or by which
Seller is bound.
8.3 No party, except as expressly set forth herein, has or
shall have on the Closing Date any rights in, or to acquire, the
Property.
8.4 Seller has no knowledge of any condemnation proceedings,
actions, suits, claims, assessments, or proceedings pending or,
to the knowledge of Seller, threatened that could materially,
adversely affect the ownership, operation, or maintenance of the
Property of Seller's ability to perform hereunder.
8.5 From the Effective Date hereof until the Closing Date,
Seller shall not:
(1) Commit, or permit to be committed, any waste to the
Property.
(2) Enter into any agreement or instrument (or take any
action that would encumber the Property after Closing,
that would bind Purchaser of Property after Closing, or
that would be outside the normal scope of maintaining and
operating the Property) without the prior written consent of
Purchaser.
8.6 There are currently no service agreements or lease
agreements in effect; and there are no persons or entities that
currently occupy all of any portion of the Property under a
lease, license, occupancy agreement, or other agreement
providing for the use or any portion of the Property.
8.7 Seller has not received any notice (and has no actual
knowledge of any violation) of pending or threatened
investigation or inquiry by any governmental authority or to any
remedial obligations under applicable federal, state, or local
code, ordinance, rule, regulatory requirement, or a violation of
a restrictive covenant affecting the Property, including without
limitation, any applicable laws pertaining to health or the
environment, including without limitation, the Comprehensive
Environmental Response. Compensation and Liability Action of
1980, as amended, 42 U.S.C. 9601, et seq.; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. 1801, et seq.;
the Texas Water Code; and the Texas Solid Waste Disposal Act.
9. "AS IS, WHERE IS". PURCHASER AGREES THAT, EXCEPT FOR A
SPECIAL WARRANTY OF TITLE (OR AS OTHERWISE SPECIFIED IN SECTION
8) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
TYPE WITH RESPECT TO THE PROPERTY, INCLUDING WITHOUT LIMITATION,
THE ENVIRONMENTAL CONDITION OF THE REAL PROPERTY, THE ABSENCE OF
HAZARDOUS SUBSTANCES OR OTHER CONTAMINANTS, THE AVAILABILITY OF
UTILITIES TO THE REAL PROPERTY, OR THE PROFITABILITY,
HABITABILITY, MARKETING ABILITY, OR THE SUITABILITY OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE. PURCHASER ASSUMES FULL
RESPONSIBILITY FOR INSPECTING THE REAL PROPERTY, AND FOR
ASCERTAINING WHETHER IT WISHES TO PROCEED WITH THE TRANSACTION
HEREIN CONTEMPLATED. SELLER HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF ANY 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 FURNISHED BY ANY REAL ESTATE BROKER,
AGENT, EMPLOYEE, OR OTHER PERSON. PURCHASER AGREES THAT THE
PROPERTY IS TO BE SOLD TO AND ACCEPTED BY PURCHASER AT CLOSING
IN ITS THEN PRESENT CONDITION "AS IS, WITH ALL FAULTS (IF ANY),
AND WITHOUT ANY WARRANTY WHATSOEVER, EXPRESS OR IMPLIED " (OTHER
THAN THE SPECIAL WARRANTY OF TITLE TO BE INCLUDED IN THE SPECIAL
WARRANTY DEED).
10. Conditions to Closing. All of Purchaser's obligations
hereunder (including, without limitation, its obligation to
purchase and accept the Property) are expressly conditioned on
the satisfaction at or before the Closing Date or such earlier
date as specified below, of each of the following conditions
(any one or more of which may be waived, in whole or in part, by
Purchaser at Purchaser's option):
10.1 All of the representations and warranties of Seller
contained in this Agreement shall have been true and correct
when made and shall be true and correct on the Closing Date,
with the same effect as if made on and as of such date.
10.2 Seller shall have performed, observed, and complied with
all covenants, agreements, and conditions required by this
Agreement to be performed, observed, and complied with on its
part prior to or as of the Closing hereof.
10.3 As of the Closing, no proceedings shall be pending or
threatened which could or would involve a change in the
ownership of the Property or a redesignation or modification of
any building requirement applicable to the Property or any
portion thereof.
10.4 All instruments required on the part of Seller to be
delivered to Purchaser hereunder shall be in form and substance
reasonably satisfactory to Purchaser and its counsel.
11. Closing. Closing ("Closing") of the sale of the Property
by Seller to Purchaser shall occur on or before thirty (30) days
after the expiration of the Contingency Period, as it may be
extended hereunder (the "Closing Date"). If the Closing Date
falls on a weekend or holiday, Closing shall occur on the
immediately preceding business day. Time is of the essence with
regard to the Closing Date. Closing shall occur in the offices
of the Title Company in Houston, Texas (or at such other place
as is mutually agreeable to the parties) commencing at 10:00
a.m. on the Closing Date. At Closing, the following, which are
mutually concurrent conditions, shall occur:
11.1 Purchaser, at its sole cost and expense, shall deliver or
cause to be delivered to Seller the following:
(1) A cashier's check or other immediately available cash funds
in the amount of the Down Payment, as specified in Section 2
hereof, adjusted in accordance with Section 11.3 hereof.
(2) Evidence reasonably satisfactory to Seller and the Title
Company that the person executing the Closing documents has full
right, power, and authority to do so.
(3) A Note substantially in the form of EXHIBIT C hereto (the
'Note").
(4) A Deed of Trust and Security Agreement substantially in the
form of EXHIBIT D hereto (the "Deed of Trust").
(5) Such other documents which Seller may reasonably request in
order to perfect its first lien mortgage and security interest
in the Real Property.
11.2 Seller, at its sole cost and expense, shall deliver or
cause to be delivered to Purchaser the following:
(1) A Special Warranty Deed conveying the Real Property to
Purchaser, substantially in the form of EXHIBIT E hereto (the
"Special Warranty Deed"), subject only to the Permitted
Exceptions.
(2) An Owner's Policy of Title Insurance in the amount of
the Purchase Price, issued by the Title Company, insuring that
Purchaser is the owner of the Property subject only to the
Permitted Exceptions, and the standard printed exceptions
included in a Texas standard form owner's policy of title
insurance; provided, however, that (i) the standard exception
pertaining to discrepancies, conflicts, or shortages in area
shall be deleted except for the phrase "shortages in area"; (ii)
such policy shall have "None of Record" endorsed regarding
restrictions except for restrictions that are Permitted
Exceptions; and (iii) the standard exception for taxes shall be
limited to the year in which Closing occurs, marked "not yet due
and payable," and subsequent years and subsequent assessments
for prior years due, to change in land usage or ownership.
(3) Evidence reasonably satisfactory to Purchaser and the Title
company that the persons executing and delivering the Closing
documents on behalf of Seller have full right, power, and
authority to do so.
(4) A Certificate meeting the requirements of Section 1445 of
the Internal Revenue Code of 1954, executed and sworn to by
Seller.
(5) An assignment transferring from Seller to Purchaser any
waste water capacity and any other utility capacity or
commitment which Seller owns relating to the Real Property.
Seller hereby agrees to reasonably cooperate with Purchaser in
transferring such capacity and other utilities to Purchaser.
This provision shall survive the Closing.
(6) In the event of an immaterial taking, then Seller shall
assign to Purchaser, at Closing, all of Seller's rights to any
awards for such immaterial taking and the transaction
contemplated by this Agreement shall be consummated in
accordance with the other provisions of this Agreement.
(7) Such other instruments as may be customarily executed in
Harris County, Texas, to effectuate the conveyance of property
similar to the Property, with the effect that after Closing
Purchaser will have succeeded to all of the rights, titles, and
interests of Seller related to the Property; and Seller will no
longer have any rights, titles, or interests in and to the
Property.
(8) Purchaser shall be entitled to a credit equal to the cost of
the survey.
11.3 All normal and customarily proratable items (including,
without limitation, real estate taxes, rents, and profits) will
be prorated as of the Closing Date, Seller being charged and
credited for all of same up to the Closing Date and Purchaser
being charged and credited for all of same on and after the
Closing Date. If the actual amounts to be prorated are not
known as of the Closing Date, the prorations shall be made on
the basis of the best evidence then available; and thereafter
when actual figures are received, a cash settlement will be made
between Seller and Purchaser. This agreement shall survive the
Closing. In addition to bearing the cost and expense of the
Survey and the Owner's Policy of Title Insurance (including the
cost of the boundary deletion), as hereinabove provided, Seller
shall also pay the cost of any tax certificates, Seller's
portion of prorata taxes, Seller's own attorney fees, and for
such other incidental expenses as are usually borne by sellers
of property in Harris County, Texas. Purchaser shall pay for
recording the deed, for Purchaser's own attorney fees, and for
other incidental expenses usually borne by purchasers of
property in Harris County, Texas. Neither Purchaser nor Seller
will pay escrow fees to the tide Company.
11.4 The Title Company shall return or credit the Earnest Money
to Purchaser.
11.5 Upon completion of Closing, Seller shall deliver to
Purchaser possession of the Property free and clear of all
tenancies of every kind and parties in possession.
12. Condemnation. If, before closing, a material portion
of the Property becomes subject to condemnation or eminent
domain proceedings, then Seller shall promptly notify Purchaser
thereof. Purchaser shall have the right to elect to proceed
with Closing (subject to the other provisions of this Agreement)
by delivering notice thereof to Seller within five (5) business
days of receipt of Seller's notice respecting the taking, but
Purchaser shall be entitled to all condemnation awards payable
as a result of such taking; and, to the extent the same may be
necessary or appropriate, Seller shall assign to Purchaser at
Closing Seller's rights to such awards. Seller hereby agrees to
execute and deliver to Purchaser at Closing (or thereafter, on
demand) all proper instruments for the assignment to, and
collection by, Purchaser of any award. If, within five (5)
business days of receipt of Seller's notice respecting the
taking, Purchaser notifies Seller of its intent to terminate
this Agreement, the same shall terminate pursuant to Section
13.2 hereof. If Purchaser does not timely notify Seller of its
intent to so terminate this Agreement, it shall have waived its
right to do so. In the event of an immaterial taking, then
Seller shall assign to Purchaser, at Closing, all of Seller's
rights to any award for such immaterial taking and the
transaction contemplated by this Agreement shall be consummated
in accordance with the other provisions of this Agreement. In
the event Purchaser chooses to waive such right of termination
and receive all condemnation proceeds, the negotiations with the
condemning authority shall be the responsibility of the
Purchaser. At any time prior to or after closing any and all
condemnation proceeds relative to any condemned land covered by
the Promissory Note/Deed of Trust shall be applied to the next
successive installment(s) (principal only), except for monies
remaining after applying a payment to a taking as referenced
herein below. Any damages to the land as a result of a taking
of any kind shall be paid seventy-five percent (75 %) to
Purchaser and twenty-five percent (25 %) to Seller without any
release from Seller being required. Seller's portion of any
damage award will applied to the Note and shall count towards
partial releases as provided in Section 2.1 (c). Release(s) for
condemnation proceeds will be based on the corresponding release
prices for the release tracts as referenced herein and will be
handled as referenced in Section 2.l(c) hereof. There shall be
two releases due upon Purchaser's payment to Seller's of any
condemnation proceeds; (1) release of the condemned land, and
(2) an optional release of an amount (to be determined by
Purchaser) of Tract "A", Tract "B", Tract "C", or Tract "D"
based upon the corresponding release price as referenced herein
with the monies remaining after applying the payment to the
condemnation taking at Thirty Seven Thousand Four Hundred
Seventy Four Dollars ($37,474.00) per acre. Said monies may or
may not be applied to a release tract. Purchaser may elect not
to pursue an optional release of any of the tracts and simply
receive the remaining monies, so long as Seller is satisfied
that the value of the remaining land sufficiently covers the
remaining balance of the note. If this should occur Seller will
rely on the condemning authorities valuation of the remaining
lands as a guide in determining said value. Purchaser may also
elect to apply the remaining monies to the next successive
principal installment(s) and save the amount(s) in order to
apply said amount(s) to a release tract at a later date per
section 2.1 (c) herein.
13. Termination and Remedies.
13.1 If Purchaser fails to consummate the purchase of the
Property pursuant to this Agreement for any reason other than
termination hereof pursuant to a right granted to Purchaser in
Sections 6, 7, and 12 hereof, then Seller (at its sole remedy
therefor) shall have the right to terminate this Agreement by
notifying Purchaser thereof, in which event the Title Company
shall deliver the Earnest Money to Seller as liquidated damages
(because of the difficulty, inconvenience, and uncertainty of
ascertaining actual damages), whereupon neither Purchaser nor
Seller shall have any further rights or obligations hereunder.
This provision shall not limit Purchaser's liability in respect
of the indemnities contained in Section 7.2 hereof.
13.2 If Purchaser terminates this Agreement pursuant to
Sections 6, 7, or 12 hereof, then the Title Company shall return
the Earnest Money to Purchaser, whereupon neither party hereto
shall have any further rights or obligations hereunder.
13.3 If Seller fails to consummate the sale of the Property
pursuant to this Agreement for any reason other than Purchaser's
failure to perform its obligations hereunder or termination
hereof by Purchaser in accordance with Section 13.2, or should
Seller's representations or warranties herein be not true and
accurate in any material respect, then Purchaser (as its sole
remedy) shall have the right to either (1) terminate this
Agreement by notifying Seller thereof, in which case the Title
Company shall return the Earnest Money to Purchaser and neither
party hereto shall have any further rights or obligations
hereunder; or (2) enforce specific performance of the
obligations of Seller hereunder, in no event shall Seller be
liable to Purchaser for damages of any kind, whether actual,
consequential, or punitive.
14. Notices. All notices permitted to be given under this
Agreement must be in writing and may be served by depositing
same in the United States mail, addressed to the party, to be
notified, postage prepaid and registered or certified with
return receipt requested; by delivering the same in person to
such party; by prepaid telegram or telex; or by facsimile copy
transmission. Notice given in accordance herewith shall be
effective upon receipt at the address of the addressee. The
addresses of the parties shall be as follows:
If to Seller: LNH Reit, Inc.
Marshall Loeb
P.O. Box 22728
Jackson, Ms. 39225-2728
Telephone:601/948-4091
Facsimile:601/949-4077
With a copy to: Robert C. Hutchison
Forman, Perry, Watkins & Krutz
P.O. Box 22608
Jackson, Mississippi 39225-2608
Telephone:(601) 969-7837
Facsimile:(601) 960-8613
With a copy to: Charles Lusk
Realty Advisory Group, Inc.
One West Loop south, Suite 690
Houston, Texas 77027
Telephone:7131621-5556
Facsimile:713/621-6132
If to Purchaser: Elektra Enterprises, Inc.
71 Walnut Cove
Willis, Texas 77378
Telephone:409/856-3277
Facsimile:409/856-2923
With a copy to: Troy K. Walker
TKW Realty, Inc.
71 Walnut Cove
Willis, Texas 77378
Telephone:409/856-2081
Facsimile:409/856-2923
Either party hereto may change its address for notice by giving
three (3) days' prior written notice to the other party.
15. Brokerage Commissions. If (and only if) the Closing occurs,
Seller has agreed to pay a real estate brokerage commission in
the aggregate amount of six percent (6 %) of the total
consideration payable to Realty Advisory Group, Inc. and TKW
Realty, Inc. (Brokers), upon the consummation of Closing. If
this transaction does not close for any reason (including the
default of Seller or Purchaser), said Brokers shall not be
entitled to any commission or payment. Except as set forth in
the preceding sentence, Seller shall defend, indemnify, and hold
Purchaser harmless (which indemnity shall survive the Closing)
from and against all claims by third parties for brokerage,
commission, finders, or other fees relative to this Agreement or
the sale of the Property and all court costs, attorney fees, and
other costs or expenses arising therefrom and alleged to be due
by authorization of the indemnifying party. Except as otherwise
provided herein, Purchaser shall defend, indemnify, and hold
Seller harmless (which indemnity shall survive the Closing) from
and against all claims by third parties for brokerage,
commission, finder, or other fees relative to this Agreement or
the Sale of the Property and all court costs, attorney fees, and
other costs or expenses arising therefrom and alleged to be due
by authorization of the indemnifying party.
As provided for in the Texas Real Estate License Act, Purchaser
is advised to have an abstract of title with regard to the
Property examined by an attorney of its choice, or to obtain a
policy of title insurance. The brokers are executing this
Agreement to evidence their agreement to the matters contained
in this Section 15, and are not otherwise a party to this
Agreement.
16. Assigns: Beneficiaries. Purchaser shall have the right to
assign this Agreement with written consent of Seller, subject to
Seller's approval of assignee's creditworthiness as provided in
Section 25. A copy of any such assignment shall be delivered to
Seller at least ten (10) days prior to the Closing Date;
provided, however, Seller shall in any event have thirty (30)
days to review the creditworthiness of the assignee. Subject to
the foregoing provisions of this Section, this Agreement shall
inure to the benefit of and be binding upon the parties hereto
and their respective heirs, legal representatives, successors,
and assigns. This Agreement is for the sole benefit of Seller
and Purchaser, and no third party is intended to be a
beneficiary of this Agreement.
17. Governing Law. This Agreement shall be governed and
construed in accordance with the substantive federal laws of the
United States and the laws of the state of Texas. Venue for any
dispute arising out of this Agreement shall lie in Harris
County, Texas.
18. Confidentiality. Seller and Purchaser agree that at all
times after the Effective Date no press release concerning this
transaction shall be made unless consented to in writing by
both parties.
19. Multiple Counterparts. This Agreement may be
executed in a number of identical counterparts. If so executed,
each of such counterparts is to be deemed an original for all
purposes, and all such counterparts shall, collectively,
constitute one agreement; but in making proof of this agreement,
it shall not be necessary to
produce or account for more than one such counterpart.
20. Severability. Each section of this Agreement constitutes a
separate agreement between the parties. In the event that any
provision of this Agreement which would not deprive the parties
of the benefit of the bargain, is deemed to be invalid or
unenforceable on its face or as applied, then such provision
shall be deemed severed herefrom to the extent invalid and
unenforceable.
21. Entire Agreement. This Agreement is the entire agreement
between Seller and Purchaser concerning the sale of the
Property, all previous agreements (oral or otherwise) are merged
herein, and no modification hereof or subsequent agreement
relative to the subject matter hereof shall be binding on either
party unless reduced to writing and signed by the party to be
bound. EXHIBITS A, B, C, D, E, AND F, attached hereto, are
incorporated herein by this reference for all purposes.
22. DTPA Waiver. It is the intention of the parties that
Purchaser's rights and remedies with respect to this
transaction, and with respect to all acts or practices of Seller
(past, present, or future) in connection with this transaction,
shall be governed by legal principles other than the Texas
Deceptive Trade Practices -- Consumer Protection Act (the
"DTPA"). As such, Purchaser hereby waives the applicability of
the DTPA to this transaction and any and all duties, rights, or
remedies that might be imposed by the DTPA, whether such duties,
rights, and remedies are applied directly by the DTPA itself or
indirectly in connection with other statutes; provided, however,
Purchaser does not waive Section 17.555 of the DTPA. Purchaser
represents and warrants that Purchaser is not in a significantly
disparate bargaining position with respect to the Seller in
connection with this transaction; that Purchaser freely and
fairly agreed to this waiver as a part of the negotiations for
this transaction; that Purchaser is represented by legal counsel
in connection with this transaction and Purchaser has conferred
with Purchaser's counsel concerning this waiver; and that the
Property will not be occupied by Purchaser as Purchaser's family
residence. Purchaser expressly recognizes that the price for
which Seller has agreed to perform its obligations under this
Agreement has been predicated upon the inapplicability of the
DTPA and this waiver of the DTPA. Purchaser further recognizes
that Seller, in determining to proceed with the entering into
this Agreement, has expressly relied on this waiver and the
inapplicability of the DTPA.
23. Trustee Only. Purchaser agrees and acknowledges that no
individual trustee, officer, agent or holder of any beneficial
interest of Seller shall be personally liable on this Agreement
in any manner and that any liability of Seller hereunder shall
be collected solely from the property and assets of Seller.
24. Attorney Fees. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof or to recover
damages for breach of this Agreement, then the nonprevailing
party in any final judgment agrees to pay the other party all
reasonable costs, charges, and expenses (including reasonable
attorney fees) expended or incurred in connection therewith.
25. Approval of Creditworthiness. In the event Purchaser
elects to finance the Purchase Price, Seller shall have a period
of thirty (30) days after the Effective Date (herein the "Credit
Approval Period") within which to approve, in its sole
discretion, Purchaser's creditworthiness, which approval shall
not be unreasonably withheld or delayed. In the event Seller
does not approve Purchaser's creditworthiness, the Seller must
give Purchaser written notice of such disapproval on or before
the last day of the Credit Approval Period. In the event Seller
fails to timely give such notice, Seller shall be deemed to have
disapproved Purchaser's creditworthiness. If Seller does not
approve Purchaser's creditworthiness, Purchaser shall have five
(5) days to elect to close on a cash basis, or this Agreement
shall terminate, the Title Company shall return the Earnest
Money to Purchaser and the parties shall be relieved of their
respective rights and obligations set forth in this Agreement.
26. Ambiguities. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement, and that
the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any
exhibits hereto or any amendments hereof.
27. Cutoff Date. The execution of this Agreement by Seller and
delivery thereof to Purchaser shall constitute an "offer" by
Seller, which shall be automatically revoked, withdrawn, and
terminated unless Purchaser accepts the same by executing this
Agreement and delivering four fully executed copies thereof to
Seller before October 10, 1994.
IN WITNESS WHEREOF, Purchaser and Seller have executed this
Agreement as of the dates set forth below their signatures. The
Effective Date of this Agreement is the date a fully executed
copy of this Agreement is receipted by the Title Company, as set
forth below.
SELLER:
LNH REIT, INC.
BY: /s/ David H. Hoster
PRINTED NAME: David H. Hoster
TITLE: Executive Vice President
DATE: 10-7-94
BY: /s/ Sarah P. Clark
PRINTED NAME: Sarah P. Clark
TITLE: Vice President
DATE: 10-7-94
PURCHASER:
ELEKTRA ENTERPRISES, INC.
BY: /s/ Maria C. Thodos
PRINTED NAME: Maria C. Thodos
TITLE: President
DATE: 10-10-94
BROKER:
REALTY ADVISORY GROUP, INC.
BY: /s/ Charles M. Lusk
PRINTED NAME: Charles M. Lusk
TITLE: President
DATE: 9-28-94
BROKER:
TKW Realty, Inc.
BY: /s/ Troy K. Walker
PRINTED NAME: Troy K. Walker
DATE: 10-10-94
First Surety Title Company acknowledges receipt of a fully
executed copy of this Agreement, on October 10, 1994 (the
"Effective Date")
First Surety Title Company
BY: /s/ Peggy Randolph
PRINTED NAME: Peggy Randolph
TITLE: Escrow Officer
LNH REIT, Inc. 8-K
Exhibit 2(b)
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This First Amendment to Purchase and Sale Agreement is
entered into on the 14th day of October, 1994, by and between
LNH REIT, INC. ("Seller") and ELEKTRA ENTERPRISES, INC.
("Purchaser"),
RECITALS
A. Purchaser and Seller have entered into that certain
Purchase and Sale Agreement effective October 10, 1994
(hereafter referred to as the "Agreement"), pursuant to which
Seller has agreed to sell to Purchaser, and Purchaser has agreed
to purchase from Seller, subject to the terms, provisions and
conditions of the Agreement, that certain 90 acre tract of land
in the City of Webster, Harris County, Texas, known as the
Baypointe Land, more particularly described in the Agreement
(the "Property"),
B. All terms in this Amendment which are defined terms
under the Agreement shall have the same meaning as said terms
have in the Agreement unless otherwise provided herein.
C. The parties hereto have agreed to amend the Agreement
pursuant to the terms, conditions and covenants particularly
described herein and not otherwise.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Purchaser
and Seller agree as follows:
AGREEMENTS
1. Delivery of Title Information by Seller. The time period allowed for
Seller's delivery of title information shall be extended from
fifteen (1 5) days to twenty-five (25) days after the Effective
Date.
2. Survey. The time period allowed for Purchaser to
obtain a Survey shall be extended from fifteen (15) days to
forty-five (45) days after the Effective Date.
3. The Agreement, as amended, is hereby ratified and
confirmed, and shall continue In full force and effect. IN
WITNESS WHEREOF, the parties have executed this First Amendment
as of the 14th day of October, 1994.
SELLER:
LNH REIT, INC.
BY: /s/ N. Keith McKey
PRINTED NAME: /s/ N. Keith McKey
TITLE: CFO
BY: /s/ David H. Hoster
PRINTED NAME: /s/ David H. Hoster
TITLE: Executive Vice President
PURCHASER:
ELEKTRA ENTERPRISES, INC.
BY: /s/ Maria C. Thodos
PRINTED NAME: /s/ Maria C. Thodos
TITLE: President
LNH REIT, Inc. 8-K
Exhibit 2(c)
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Second Amendment to Purchase and Sale Agreement is
entered into on the 3rd day of January, 1995, by and between LNH
REIT, INC. ("Seller") and ELEKTRA ENTERPRISES, INC.
("Purchaser").
R E C I T A L S
A. Purchaser and Seller have entered into that certain
Purchase and Sale Agreement effective October 10, 1994
(hereafter referred to as the "Agreement"), pursuant to which
Seller has agreed to sell to Purchaser, and Purchaser has agreed
to purchase from Seller, subject to the terms, provisions and
conditions of the Agreement, that certain 90 acre tract of land
in the City of Webster, Harris County, Texas, known as the
Baypointe Land, more particularly described in the Agreement
(the "Property").
B. All terms in this Amendment which are defined terms
under the Agreement shall have the same meaning as said terms
have in the Agreement unless otherwise provided herein.
C. The parties hereto have agreed to amend the Agreement
pursuant to the terms, conditions and covenants particularly
described herein and not otherwise.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Purchaser
and Seller agree as follows:
AGREEMENTS
1. Right of Inspection; Contingency Period. In
consideration for Three Thousand Dollars ($3,000.00), Seller
shall hereby extend the time period allowed Purchaser to inspect
the property from ninety (90) days following the Effective Date
to one hundred twenty (120) days following the Effective Date.
This additional Three Thousand Dollars ($3,000.00) shall be
mailed to Seller upon execution of this amendment.
Additionally, these funds shall be non-refundable to Purchaser
but may be applied to the Purchase Price upon closing.
2. The Agreement, as amended, is hereby ratified and
confirmed, and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment as of the 3rd day of January, 1995.
SELLER:
LNH REIT, INC.
BY: /s/ N. Keith McKey
PRINTED NAME: /s/ N. Keith McKey
TITLE: CFO
BY: /s/ David H. Hoster
PRINTED NAME: /s/ David H. Hoster
TITLE: Executive Vice President
PURCHASER:
ELEKTRA ENTERPRISES, INC.
BY: /s/ Maria C. Thodos
PRINTED NAME: /s/ Maria C. Thodos
TITLE: President
LNH REIT, Inc. 8-K
Exhibit 2(d)
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Third Amendment to Purchase and Sale Agreement is
entered into on the 7TH day of February, 1995, by and between
LNH REIT, INC. ("Seller") and ELEKTRA ENTERPRISES, INC.
("Purchaser").
RECITALS
A. Purchaser and Seller have entered into that certain
Purchase and Sale Agreement effective October 10, 1994
(hereafter referred to as the "Agreement"), pursuant to which
Seller has agreed to sell to Purchaser, and Purchaser has agreed
to purchase from Seller, subject to the terms, provisions and
conditions of the Agreement, that certain 90 acre tract of land
in the City of Webster, Harris County, Texas, known as the
Baypointe Land, more particularly described in the Agreement
(the "Property").
B. All terms in this Amendment which are defined terms
under the Agreement shall have the same meaning as said terms
have in the Agreement unless otherwise provided herein.
C. The parties hereto have agreed to amend the Agreement
pursuant to the terms, conditions and covenants particularly
described herein and not otherwise.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Purchaser
and Seller agree as follows:
AGREEMENTS
1. Right of lnspection; Contingency Period. Seller shall
hereby extend the time period allowed Purchaser to inspect the
property from one hundred twenty (120) days following the
Effective Date to one hundred thirty-five (135) days following
the Effective Date.
2. The Agreement, as amended, is hereby ratified and
confirmed, and shall continue in full force and effect,
IN WITNESS WHEREOF, the parties have executed this Third
Amendment as of the 7th day of February, 1995.
SELLER:
LNH REIT, INC.
BY: /s/ N. Keith McKey
PRINTED NAME: /s/ N. Keith McKey
TITLE: CFO
BY: /s/ David H. Hoster
PRINTED NAME: /s/ David H. Hoster
TITLE: Executive Vice President
PURCHASER:
ELEKTRA ENTERPRISES, INC.
BY: /s/ Maria C. Thodos
PRINTED NAME: /s/ Maria C. Thodos
TITLE: President
LNH REIT,Inc. 8-K
Exhibit 2(e)
FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Fourth Amendment to Purchase and Sale Agreement is
entered into on the 24th day of February, 1995, by LNH REIT,
INC. ("Seller"), and ELEKTRA ENTERPRISES, INC. ("Purchaser").
RECITALS
A. Purchaser and Seller have entered into that certain
Purchase and Sale Agreement effective October 10, 1994
(hereafter referred to as the "Agreement"), as amended by that
certain First Amendment and those certain Second and Third
Amendments to Purchase and Sale Agreement, pursuant to which
Seller has agreed to sell to Purchaser, and Purchaser has agreed
to purchase from Seller, subject to the terms, provisions and
conditions of the Agreement, that certain 90 acre tract of land
in the City of Webster, Harris County, Texas, known as the
Baypointe Land, more particularly described in the Agreement
(the "Property");
B. All terms in this Amendment which are defined terms
under the Agreement shall have the same meaning as said terms
have in the Agreement unless otherwise provided herein.
C. The parties hereto have agreed to amend the Agreement
pursuant to the terms, conditions and covenants particularly
described herein and not otherwise.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Purchaser
and Seller agree as follows:
AGREEMENTS
1. Sections 2, 2.1(a) and 2.1(b) of the Agreement are
hereby amended to read in their entirety as follows:
2. Purchase Price. The price for which Seller shall sell
and convey the Property to Purchaser, and which Purchaser shall
pay to Seller at Closing in the manner hereinafter specified
shall be Two Million Seven Hundred Fiffy, Thousand Dollars
($2,750,000.00) ("Purchase Price").
2.1. The Purchase Price, if financed by Seller, shall be paid as
follows:
a. Down Payment. At the time of closing, Purchaser shall
pay Seller the sum of 25% of the Purchase Price in cash.
b. Note Amount. The balance of the Purchase Price shall be
paid by the delivery at Closing, of Purchaser's Promissory Note
(herein the "Note") in the amount of the Purchase Price less the
25% cash down payment. Said note shall carry no personal or
corporate liability. The interest rate on such Note shall be as
follows:
(1) For the first three (3) years, said Note shall bear
interest at the rate of nine and one-half percent (9.5%) per
annum;
(2) For the fourth (4th) year of such Note, such Note shall
bear interest at the prime rate charged by Texas Commerce Bank
Houston, plus one and one-half percent (1-1/2%), with a cap of
twelve percent (12%). The principal and interest of such Note
shall be paid semi-annually based upon a twenty (20) year
amortization, with the entire balance of said Note, if not
sooner paid, to be due and owing on the fourth (4th) anniversary
thereof. The Purchaser shall have the right to prepay the
outstanding principal balance of the Note in whole or in part at
any time without penalty or premium. Said Note shall be secured
by a first lien Deed of Trust and Security Agreement (herein the
"Deed of Trust") encumbering the Real Property.
2. The following sentence is added to the Agreement as Section
2.1(c)(11):
(11) Proceeds of Sale. Notwithstanding anything in this
Subsection 2.1(c), if Purchaser sells a parcel covered by the
Note, at the time of the sale, for a gross sales price of more
than $4.00 per square foot. then twenty-five percent (25%) of
the sales price over $4.00 per square foot shall be paid to
the Seller and applied to the Note.
3. Section 2.1(c)(4)(d) is hereby amended to read in its
entire as follows:
d. Releases with respect to Tract "D". Tract "D" is hereby
created at the Southernmost portion of the property. This Tract
"D" may only be released in its entirety, the per acre release
price in Tract "D" shall be Twenty Seven Thousand Four Hundred
Sixty Two Dollars ($27,462.00) per acre.
4. The last two sentences of Section 2.1(c)(4)(a) are hereby
deleted.
5. The first sentence of Section 11 is hereby amended to read
in its entirety as follows:
11. Closing. Closing ("Closing") of the sale of the Property
by Seller to Purchaser shall occur on April 14, 1995 (the
"Closing Date").
6. Section 12 of the Agreement is hereby amended to read in
its entirety as follows:
12. Condemnation. If, before closing, a material portion of
the Property becomes subject to condemnation or eminent domain
proceedings, then Seller shall promptly notify Purchaser
thereof. Purchaser shall have the right to elect to proceed with
Closing (subject to the other provisions of this Agreement) by
delivering notice thereof to Seller within five (5) business
days of receipt of Seller's notice respecting the taking, but
Purchaser shall be entitled to all condemnation awards payable
as a result of such taking; and, to the extent the same may be
necessary or appropriate, Seller shall assign to Purchaser at
Closing Seller's rights to such awards. Seller hereby agrees to
execute and deliver to Purchaser at Closing (or thereafter, on
demand) all proper instruments for the assignment to, and
collection by, Purchaser of any award. If, within five (5)
business days of receipt of Seller's notice respecting the
taking, Purchaser notifies Seller of its intent to terminate
this Agreement, the same shall terminate pursuant to Section
13.2 hereof. If Purchaser does not timely notify Seller of its
intent to so terminate this Agreement, it shall have waived its
right to do so. In the event of an immaterial taking, then
Seller shall assign to Purchaser, at Closing, all of Seller's
rights to any award for such immaterial taking and the
transaction contemplated by this Agreement shall be consummated
in accordance with the other provisions of this Agreement. In
the event Purchaser chooses to waive such right of termination
and receive all condemnation proceeds, the negotiations with the
condemning authority shall be the responsibility of the
Purchaser. At any time prior to or after closing any and all
condemnation proceeds relative to any condemned land covered by
the Promissory Note/Deed of Trust shall be applied to the next
successive installment(s) (principal only), except for monies
remaining after applying a payment to a taking as referenced
herein below. Any damages to the land as a result of a taking
of any kind shall be paid fifty percent (50%) to Purchaser and
fifty percent (50%) to Seller without any release from Seller
being required. Seller's portion of any damage award will
applied to the Note and shall count towards partial releases as
provided in Section 2.1 (c). Release(s) for condemnation
proceeds will be based on the corresponding release prices for
the release tract, as referenced below and will be handled as
referenced in Section 2.1(c) hereof. There shall be two
releases due upon Purchaser's payment to Seller's of any
condemnation proceeds; (1) release of the condemned land, and
(2) an optional release of an amount (to be determined by
Purchaser) of Tract "A", Tract "B", Tract "C", or Tract "D"
based upon the corresponding release price as referenced herein
with the monies remaining after applying the payment to the
condemnation taking at Fifty Six Thousand Nine Hundred
Thirty-Six Dollars ($56,936.00) per acre. Said monies may or
may not be applied to a release tract. Purchaser may elect not
to pursue an optional release of any of the tracts and simply
receive the remaining monies, so long as Seller is satisfied
that the value of the remaining land sufficiently covers the
remaining balance of the note. If this should occur Seller will
rely on the condemning authorities valuation of the remaining
lands as a guide in determining said value. Purchaser may also
elect to apply the remaining monies to the next successive
principal installment(s) and save the amount(s) in order to
apply said amount(s) to a release tract at a later date per
section 2.1(c) herein.
6. The 14 acre tract described in Exhibit "A" attached hereto
shall be released at Closing and shall not be encumbered by the
Deed of Trust.
7. The Agreement, as amended, is hereby ratified and
confirmed, and shall continue in full force and effect. IN
WITNESS WHEREOF, the parties have executed this Third Amendment
to Purchase and Sale Agreement as of the 24th day of February,
1995.
SELLER:
LNH REIT, INC.
BY: /s/ N. Keith McKey
PRINTED NAME: /s/ N. Keith McKey
TITLE: CFO
BY: /s/ David H. Hoster
PRINTED NAME: /s/ David H. Hoster
TITLE: Executive Vice President
PURCHASER:
ELEKTRA ENTERPRISES, INC.
BY: /s/ Maria C. Thodos
PRINTED NAME: /s/ Maria C. Thodos
TITLE: President
LNH REIT, Inc. 8-K
Exhibit 2 (f)
FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Fifth Amendment to Purchase and Sale Agreement is
entered into on the 12th day of April, 1995, by and between LNH
REIT, INC. ("Seller") and ELEKTRA ENTERPRISES, INC.
("Purchaser").
RECITALS
A. Purchaser and Seller have entered into that certain
Purchase and Sale Agreement dated October 10, 1994 hereafter
referred to as the "Agreement"), as amended by those certain
First, Second, Third, and Fourth Amendments to Purchase and Sale
agreement, pursuant to which Seller has agreed to sell to
Purchaser and Purchaser has agreed to purchase from Seller,
subject to the terms, provisions and conditions of the
agreement, that certain 90 acre tract of land in the City of
Webster, Harris County, Texas, known as the Baypointe Land, more
particularly described in the Agreement (the "Property");
B. All terms in this Amendment which are defined terms
under the Agreement shall have the same meaning as said terms
have in the Agreement unless otherwise provided herein.
C. The parties hereto have agreed to amend the Agreement
pursuant to the terms, conditions and covenants particularly
described herein and not otherwise.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Purchaser
and Seller agree as follows:
AGREEMENTS
1. Closing Date: In consideration of Thirty Two Thousand dollars
($32,000-00), receipt of which is hereby acknowledged, seller
shall hereby extend the closing date from April 14, 1995
until May 2, 1995. This additional Thirty Two Thousand
Dollars ($32,000.00) shall be mailed to Seller upon execution of
this amendment. Additionally, these funds shall be
non-refundable to Purchaser, but shall be applied to the
Purchase Price upon closing.
2. The agreement, as amended is hereby ratified and confirmed,
and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Fifth
Amendment as of the 12th day of April, 1995.
Seller: LNH REIT, INC. Purchaser: ELEKTRA ENTERPRISES, INC.
BY: /s/ N. Keith McKey BY: /s/ Maria C. Thodos
Printed Name: /s/ N. Keith McKey Printed Name:/s/ Maria C. Thodos
Title: CFO Title: President
By: /s/ David H. Hoster
Printed Name: /s/ David H. Hoster
Title: Executive V.P.
LNH REIT, Inc.
Exhibit 2(g)
AMENDED AND RESTATED FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Amended and Restated Fifth Amendment to Purchase and Sale
Agreement is entered into as of April 13, 1995, by LNH REIT,
INC. ("Seller") and ELEKTRA ENTERPRISES, INC. ("Purchaser").
RECITALS
A. Purchaser and Seller have entered into that certain
Purchase and sale Agreement effective October 10, 1994
(hereafter referred to as the "Agreement"), as amended by that
certain First Amendment and those certain Second, Third and
Fourth Amendments to Purchase and Sale Agreement, pursuant to
which Seller has agreed to sell to Purchaser, and Purchaser has
agreed to purchase from Seller, subject to the terms, provisions
and conditions of the Agreement, that certain 90 acre tract of
land in the City of Webster, Harris County, Texas, known as the
Baypointe Land, more particularly described in the Agreement
(the "Property");
B. All terms in this Amendment which are defined terms under
the Agreement shall have the same meaning as said terms have in
the Agreement unless otherwise provided herein; and
C. The parties hereto have agreed to amend the Agreement
pursuant to the terms, conditions and covenants particularly
described herein and not otherwise.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Purchaser
and Seller agree as follows:
AGREEMENTS
1. Closing. Closing of the sale of the Property by Seller to
Purchaser shall occur on April 20, 1995.
2. Down Payment. At the time of Closing, Purchaser shall pay to
Seller the amount of $550,000 (20% of the Purchase Price) in
cash.
3. Note. The Note shall be for the balance of the Purchase
Price less the twenty percent (20%) down payment.
4. Release of Tract "E". Tract E which is the 14 acre tract of
land shown of Exhibit A attached hereto and incorporated herein
shall be released from the lien of the Deed of Trust upon the
payment by Purchaser of $137,500 (the "Tract E Release Price:)
plus accrued interest on such portion of the Note within 45 days
of Closing. If Purchaser does not timely pay the Tract E
Release Price, such Tract E Release Price shall increase at the
rate of $1,000 per day beginning on the forty-sixth (46th) day
after Closing. If Purchaser has not paid the Tract E Release
Price by the seventy-fifth (75) day after Closing, Seller shall
not have any obligation to release Tract E and may immediately
proceed to exercise any and all of its rights under the Deed of
Trust. The previous provisions shall not in anyway affect
Sellers right to enforce its lien and the Deed of Trust should
Purchaser be in default thereunder.
5. Earnest Money. Purchaser hereby acknowledges that the
"Earnest Money" and any additional consideration paid to Seller
is "at-risk" and, therefore, non-refundable regardless of
whether or not the transaction closes.
6. Full Force and Effect. The Agreement, as amended, is hereby
ratified and confirmed, and shall continue in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Fifth
Amendment to Purchase and Sale Agreement as of the day first
above written.
SELLER:
LNH REIT, INC.
By: /s/ Leland R. Speed
Name: Leland R. Speed
Title: President
By: /s/ Keith McKey
Name: Keith McKey
Title: CFO
PURCHASER:
ELEKTRA ENTERPRISES, INC.
By: /s/ Maria C. Thodos
Maria C. Thodos
President
LNH REIT, Inc.
Exhibit 2(h)
PROMISSORY NOTE
April 20, 1995
$2,200,000.00 Houston, Texas
FOR VALUE RECEIVED, the undersigned, ELEKTRA ENTERPRISES, INC.,
a Texas corporation, and David Angel, an individual resident of
the State of Texas (collectively, "Maker"), hereby promises to
pay to the order of LNH Reit, Inc., a Maryland real estate
investment trust ("Lender"), payable at Lender's office located
at 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi 39201 (Post Office Box 22728, Jackson, Mississippi,
39225-2728), in immediately available funds and in lawful coin
or currency of the United States of America which shall be legal
tender for payment of all debts and dues, public and private,
the principal sum of TWO MILLION TWO HUNDRED THOUSAND AND NO/100
DOLLARS ($2,200,000.00), together with interest on the unpaid
principal balance at the rate of (i) nine and one-half percent
(9.5%) per annum from the date hereof until March 31, 1998, and
(ii) the lesser of one and one-half percent (1.5%) above the
Texas Commerce Bank prime rate or twelve percent (12.0%) (the
"Rate") beginning April 1, 1998 until paid in full. In the
event such bank discontinues the practice of announcing the
Prime Rate, the "Prime Rate" shall mean the highest rate charged
by such bank on short term, unsecured loans to its most
credit-worthy large corporate borrowers.
1. Repayment. Unless accelerated pursuant to the terms
hereof, the principal of this Note together with accrued and
unpaid interest on the principal balance of this Note shall be
due and payable as follows:
a. Six (6) semi-annual payments of One Hundred Sixteen
Thousand One Hundred Twelve and 04/100 Dollars ($116,112.04),
commencing on the first day of October 1995 and continuing on a
semi-annual basis on the first day of April and October
thereafter; and
b. one principal payment of $23,968.46, plus accrued
interest, shall be due and payable on October 1, 1998; and
c. the entire unpaid balance of principal and accrued
interest balance hereof shall be due and payable in full on
April 1, 1999.
2. Late Payment Charges. In the event that Maker is more
than fifteen (15) days late in the payment of any portion of
principal and interest hereunder as and when the same is or
becomes due, Maker shall pay a late payment charge in the amount
of four percent (4%) of the amount of any delinquency if such
delinquency is not paid in full as and when each payment of
principal and interest is due hereunder. Only one late payment
charge may be charged with respect to any specific semi-annual
and no such late payment charge may be collected on a partial
payment resulting solely from the deduction of a late payment
charge. In no event shall the late payment charge exceed the
maximum rate allowable by law.
3. Non-Recourse. Except as provided below in this Section ,
in seeking payment of the indebtedness or the payment or
performance of monetary obligations under this Note, Lender
agrees to look solely to the Deed of Trust and to any other
security now or hereafter given in respect to the indebtedness.
Lender further agrees that except as provided below it will
neither seek nor accept any deficiency or other money judgment
against the Maker or its directors, shareholders, officers or
other representatives. Nothing in this Note shall be construed,
however, to affect, limit or impair any other rights or remedies
of the Lender against the Property under the terms of the Deed
of Trust or under the terms of any other instrument given to
secure payment of this Note. Nor shall this Section prevent
the joining of Maker in a request for injunctive or other
relief, so long as Maker is not held liable under such action,
except as permitted hereunder. However, nothing contained in
this paragraph shall be deemed to impede or prejudice the rights
of the Lender under this Note or the Deed of Trust:
(a) to recover any losses, damages or costs incurred or
suffered by Lender as a result of fraud or material
misrepresentation by Maker, its agents or representatives;
(b) to recover any condemnation proceeds, or other funds or
payments attributable to the Property, held as security for the
Note, which come under Maker's control and which are not applied
as required by the terms of the Deed of Trust;
(c) to recover the value of any Improvements removed from the
Property by Maker under the Deed of Trust after an Event of
Default occurs; or
(d) to recover interest accruing on any of the Indebtedness
from and after thirty (30) days after the occurrence of an Event
of Default and the expiration of any applicable grace period;
provided, however, this subparagraph (d) shall not apply if
Grantor surrenders possession and title to Lender within such
thirty (30) day period.
Maker shall be personally liable for all amounts recoverable
under the foregoing subparagraphs (a) through (d), which shall
include, without limitation, reasonable attorneys' fees and
other costs incurred by Lender in exercising its remedies under
the foregoing. The obligations of Maker shall survive an action
for foreclosure, a sale under power of sale, a deed in lieu of
foreclosure or any other form of enforcement of or collection on
the security of the Note.
4. Default Rate. In the event a default occurs in the timely
payment of any portion of principal and interest hereon as and
when the same is or becomes due and such payment is not made by
Maker within ten (10) calendar days after written demand is
given to Maker, or if an event of default shall occur under the
Deed of Trust and such default remains uncured for a period of
thirty (30) days after Lender gives maker written notice
thereof, then, at the option of the Lender, all amounts then
outstanding hereunder or under the Deed of Trust shall bear
interest for the period beginning with the date of occurrence of
such default at a<PAGE>
rate of three percent (3.0%) per annum above the Rate,
but in no event, to exceed the highest lawful rate.
5. Prepayment. Maker shall have the privilege of prepaying
the whole amount due hereunder or any portion thereof at any
time before maturity without premium or penalty. All payments
of principal and interest hereunder shall be first applied to
accrued interest, if any, and then to principal installment or
installments next maturing.
6. Vendor's Lien. This Note is secured by a vendor's lien and
superior title retained in the Special Warranty Deed of even
date herewith executed by Lender as Grantor therein, and by a
Deed of Trust and Security Agreement of even date herewith
executed by Maker as Grantor therein, covering certain property
in Harris County, Texas, as more particularly described therein.
7. No Usury Intended; Spreading. Notwithstanding any
provision to the contrary contained in this Note, it is
expressly provided that in no case or event shall the aggregate
of (i) all interest on the unpaid balance of this Note, accrued
or paid from the date hereof and (ii) the aggregate of any other
amounts accrued or paid pursuant to this Note, which under
applicable laws are or may be deemed to constitute interest upon
the indebtedness evidenced by this Note from the date hereof,
ever exceed the highest lawful rate. In this connection, it is
expressly stipulated and agreed that it is the intent of the
Maker and the Lender to contract in strict compliance with the
applicable usury laws of the State of Texas and of the United
States, whichever from time to time permit the higher rate of
interest. In furtherance hereof, none of the terms of this Note
shall ever be construed to create a contract to pay, as
consideration for the use, forbearance or detention of money,
interest at a rate in excess of the highest lawful rate. The
Maker or other parties now or hereafter becoming liable for
payment of the indebtedness evidenced by this Note shall never
be liable for interest in excess of the highest lawful rate.
If, for any reason whatever, the interest paid or received on
this Note during its full term produces a rate which exceeds the
highest lawful rate, the holder of this Note shall refund to the
payor or, at the holder's option, credit against the principal
of this Note such portion of said interest as shall be necessary
to cause the interest paid on this Note to produce a rate equal
to the highest lawful rate. All sums paid or agreed to be paid
to the holder of this Note for the use, forbearance or detention
of the indebtedness evidenced hereby shall, to the extent
permitted by applicable law, be amortized, prorated, allocated
and spread in equal parts throughout the full term of this Note.
The provisions of this paragraph shall control all agreements,
whether now or hereafter existing and whether written or oral,
between the Maker and the Lender.
8. Default. The occurrence of any one or more of the
following events shall constitute a default under this Note,
whereupon Lender or any holder hereof may, at its, his or her
option, exercise any or all rights, powers and remedies afforded
under any loan, credit or security agreement with Lender, all
other instruments evidencing, securing or guaranteeing this Note
and by law, including the right to declare the unpaid balance of
principal and accrued interest on this Note at once mature, due
and payable and to offset against the amounts then owing under
this Note or any and all monies, securities, notes and other
properties of the Maker in the possession, custody or control
of, or on deposit with, or otherwise pledged or owed to Lender
or any other holder hereof, including, without limitation, all
such monies, securities, notes and other properties held in
general or special accounts or for safekeeping or as collateral
or otherwise by Lender:
a. Maker shall fail to pay the principal and interest due
under this Note as and when the same becomes due and payable
and/or performable after giving effect to the fifteen (15) day
grace period for the payment of principal and interest
hereunder, whether by acceleration or otherwise; or
b. should Maker: (i) voluntarily suspend transaction of
business; (ii) file a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization; (iii) make an
assignment for the benefit of creditors; or (iv) apply for or
consent to the appointment of any receiver or trustee for all or
any substantial portion of the property of Maker; or
c. in respect of Maker: (i) an involuntary petition shall be
filed with any court or other authority seeking reorganization
or a creditor's arrangement of Maker or the adjudication of
Maker as bankrupt or insolvent; (ii) an order of any court or
other authority shall be entered appointing any receiver or
trustee for Maker or for all or any substantial portion of the
property of Maker; (iii) a writ or warrant of attachment or any
similar petition shall be issued by any court or other authority
against all or any substantial portion of the property of Maker
and such petition seeking reorganization, creditor's arrangement
or adjudication or such order appointing a receiver or trustee
is not vacated or stayed, or such writ, warrant of attachment or
similar process is not vacated, released or bonded within thirty
(30) days after its entry or levy; (iv) a notice of lien, levy
or assessment is filed of record to all or any portion of
Maker's assets by the United States, or any department, agency
or instrumentality thereof, or by any state, county, municipal
or other governmental agency or if any taxes or debts owing at
any time or times hereafter to any one of them becomes a lien or
encumbrance upon the collateral pledged as security for this
Note, or any other asset of Maker and the same is not dismissed,
released or discharged within thirty (30) days after the same
becomes a lien or encumbrance or, in the case of ad valorem
taxes, prior to the last day when payment may be made without
penalty; or
d. Maker shall be prevented or relieved by any governmental
authority from performing or observing any material term,
covenant or condition of this Note; or
e. any action, suit or proceeding shall be commenced by or on
behalf of Maker, involving the validity or enforceability of
this Note, at law or in equity, or before any governmental
authority, which in the reasonable judgment of Lender, impairs
or would impair Lender's ability to collect the secured
indebtedness when due or the enforceability of this Note.
9. No Waiver by Lender. No delay or omission on the part of
Lender, or any other holder, in exercising any right hereunder
or related to the obligations evidenced hereby shall operate as
a waiver of such right or of any other right. A waiver on any
one occasion shall not be construed as a bar to or waiver of any
such right and/or remedy on any future occasion.
10. Right of Setoff. Maker agrees that any monies or other
property at any time in the possession of Lender belonging to
Maker and any other sums at any time due from Lender to Maker,
may at all times, at the option of Lender, be held and treated
as collateral security for the payment of any liability of Maker
to Lender, whether due or not due, and Lender may, at its sole
option and at anytime before or after default, setoff the amount
due or to become due hereon against any claim of Maker against
Lender.
11. Waiver. Maker hereby waives presentment, demand, notice,
protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or endorsement of
this Note.
12. Paragraph Headings. Paragraph headings appearing in this
Note are for convenience of reference only and shall not be used
to interpret, expand or limit the meaning of any provision of
this Note.
13. Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of Texas and
the United States of America.
14. Successors and Assigns. This Note and all the covenants
and agreements contained herein shall be binding upon, and shall
inure to the benefit of, the respective legal representatives,
heirs, successors and assigns of the Maker and Lender.
15. Severability. If any provision of this Note or the
application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this
Note and the application of such provisions to other persons or
circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
16. Waiver of Jury Trial. MAKER HEREBY EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY.
17. Notices.
(a) Any notice required to be given or furnished under this
Note to Maker or Lender shall be in writing, shall be sent by
certified mail, return receipt requested, personal delivery
against receipt and shall be deemed to have been validly served,
given or delivered when delivered against receipt or one (1)
business day after deposit in the U. S. Mail, postage prepaid,
addressed as follows:
If to Maker, at: ELEKTRA ENTERPRISES, INC.
71 Walnut Cove
Willis, Texas 77378
ATTN: Maria C. Thodos
David Angel
P. O. Box 1398
La Porte, Texas 77572-1398
If to Lender, at: LNH Reit, Inc.
One Jackson Place, Suite 300
188 East Capitol Street
Jackson, Mississippi 39201
ATTN: Marshall Loeb
(b) Either party may change the address to which such notice
is to be delivered or mailed, by furnishing written notice of
such change to the other party in the manner authorized above,
but no such notice of change shall be effective unless and until
received by such other party.
IN WITNESS WHEREOF, this Promissory Note has been executed by
the undersigned as of the day and year first hereinabove written.
MAKER:
ELEKTRA ENTERPRISES, INC.
WITNESSED BY:
By: /s/ Maria C. Thodos
---------------------------------
Maria C. Thodos, President
WITNESSED BY:
/s/ David Angel
--------------------------------
David Angel, Individually
