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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): October 10, 1997
CLUSTER HOUSING PROPERTIES,
A California Limited Partnership
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-13556 04-2817478
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(Commission File Number) (IRS Employer Identification No.)
5110 Langdale Way, Colorado Springs, CO 80906
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (719) 527-0544
NA
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 10, 1997, Cluster Housing Properties, A California Limited
Partnership (the "Partnership") sold Villa Antigua Apartments Phase I ("Villa
Antigua"), an 88-unit multi-family rental property in Scottsdale, Arizona
pursuant to the terms of a Purchase and Sale Agreement and Escrow Instructions
(the "Agreement") dated May 6, 1997, as amended. Villa Antigua was sold to Villa
Antigua Condominium Ventures Limited Partnership, an Arizona limited partnership
unaffiliated with the Partnership. The purchase price for Villa Antigua was
$6,248,000, subject to certain customary adjustments and the repayment of
mortgage financing in the amount of $3,010,362, paid at closing utilizing a
portion of proceeds from the sale.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
10.1 Purchase and Sale Agreement and Escrow Instructions,
dated as of May 6, 1997, as amended.
SIGNATURE
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 thereunto duly authorized.
CLUSTER HOUSING PROPERTIES,
A California Limited Partnership
By: GP L'Auberge Communities, L.P., A
California Limited Partnership,
General Partner
By: L'Auberge Communities, Inc., its
General Partner
By: /s/ EARL C. ROBERTSON
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Earl C. Robertson, Executive Vice
President and Chief Financial Officer
Date: October 23, 1997
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PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
[VILLA ANTIGUA]
BETWEEN
CLUSTER HOUSING PROPERTIES,
A CALIFORNIA LIMITED PARTNERSHIP
AND
VILLA ANTIGUA II DEVELOPMENT PARTNERS,
A MASSACHUSETTS LIMITED PARTNERSHIP,
AS SELLER,
AND
CAPITAL MANAGEMENT SYSTEMS, INC.,
A PENNSYLVANIA CORPORATION,
AS PURCHASER
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TABLE OF CONTENTS
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Paragraph/Topic Page
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Recitals................................................................... 1
Section 1. Definitions.................................................... 3
Section 2. Purchase and Sale.............................................. 5
Section 3. Purchase Price................................................. 5
Section 4. Closing........................................................ 7
Section 5. Conditions to Closing.......................................... 10
Section 6. Title and Survey............................................... 15
Section 7. Representations and Warranties................................. 16
Section 8. Purchaser's Acceptance of Property As-Is....................... 21
Section 9. Seller's Covenants............................................. 22
Section 10. Prorations.................................................... 23
Section 11. Transfer Taxes; Title Charges;
Other Closing Costs and Escrow Cancellation................ 27
Section 12. Risk of Loss.................................................. 27
Section 13. Condemnation.................................................. 29
Section 14. Default....................................................... 29
Section 15. Notices....................................................... 31
Section 16. Time of Essence............................................... 32
Section 17. Termination of Agreement...................................... 32
Section 18. Governing Law; Jurisdiction; Venue............................ 33
Section 19. Counterparts and Facsimile Signatures......................... 33
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Section 20. Captions...................................................... 33
Section 21. Assignability................................................. 33
Section 22. Binding Effect................................................ 34
Section 23. Modifications; Waiver......................................... 34
Section 24. Entire Agreement.............................................. 35
Section 25. Partial Invalidity; Further Assurances........................ 35
Section 26. Survival...................................................... 35
Section 27. No Third-Party Rights......................................... 35
Section 28. Attorneys' Fees............................................... 35
Section 29. Broker........................................................ 36
Section 30. Opening of Escrow............................................. 36
Section 31. Exhibits...................................................... 36
Section 32. Intentionally deleted......................................... 37
Section 33. Form of Title Policy.......................................... 37
Section 34. No Partnership or Other Liability............................. 37
Section 35. General Provisions Regarding Title Company.................... 37
LIST OF EXHIBITS
A -- Legal Description
B -- Diagram of the Property and Improvements
C -- Schedule of Personal Property
D -- Form of General Warranty Deed
E -- Form of Bill of Sale
F -- Form of Assignment of Leases
G -- Assignment of Tradename and Trademark Rights
H -- Form of Assignment of Intangible Property
I -- Form of Tenant Letters
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J -- Certificate of Rent Roll
K -- Form of Non-Foreign Affidavit
L -- Form of Affidavit of Value
M -- Form of Property Management Agreement
N -- Renovation Items
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PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
Villa Antigua
This Purchase and Sale Agreement (AGREEMENT) is entered into as of May
6, 1997 (EFFECTIVE DATE), by and between CLUSTER HOUSING PROPERTIES, A
California Limited Partnership (CHP) and VILLA ANTIGUA II DEVELOPMENT PARTNERS,
a Massachusetts limited partnership (VAII), collectively as SELLER and Capital
Management Systems, Inc., a Pennsylvania corporation, as PURCHASER, with
reference to the following:
RECITALS
A. Seller is the owner of:
(1) the land (REAL PROPERTY) in Scottsdale (the "City"), Arizona, and
located at 5950 North 78th Street, Scottsdale, Arizona. The Real Property is
more particularly described in Exhibit A and generally depicted on Exhibit B
attached hereto and incorporated herein by this reference and is commonly known
as Villa Antigua Apartments;
(2) all structures, buildings, improvements and fixtures on the Real
Property (collectively, IMPROVEMENTS), including without limitation an apartment
complex consisting of 130 units (the UNITS) situated in 15 buildings (the
COMPLEX) together with all equipment, appliances, and amenities used in
connection with the Complex;
(3) certain personal property on the Real Property or the
Improvements or personal property used primarily in connection with the
operation and maintenance of the Real Property or the Improvements, more
particularly described in Exhibit C attached hereto and incorporated herein by
this reference (PERSONAL PROPERTY);
(4) all of Seller's interest in all leases and other agreements, if
any, to occupy all or any portion on the Units, as amended from time to time
(such leases and agreements being sometimes collectively referred to in this
Agreement as LEASES);
(5) all of Seller's interest, if any, in mineral, water and
irrigation rights, if any, running with or otherwise pertaining to the Real
Property; and,
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(6) all intangible property used in connection with the Real
Property, the Improvements or the Personal Property, including but not limited
to the trade name Villa Antigua and related trademarks and associated good will
(collectively the TRADENAME) used in connection with the Real Property or the
Improvements (but not any tradename utilizing the term "L'Auberge" except as
otherwise provided in the Property Management Agreement (hereinafter defined));
plans and specifications in Seller's or Property Manager's possession, custody
or control that were prepared in connection with the construction of the
Improvements; all hereditaments, privileges, tenements and appurtenances
pertaining to the Real Property; all Seller's rights to open or proposed
highways, streets, roads, avenues, alleys, easements, strips, gores and
rights-of-way in any way affecting the Real Property; all currently effective
and transferable licenses, permits and warranties for the Real Property, the
Improvements and the Personal Property; and all written contracts and guarantees
running in favor of Seller in effect at Closing as approved by Purchaser that
relate in any way to the Property (CONTRACTS) (collectively, INTANGIBLE
PROPERTY).
The Real Property, the Improvements, the Personal Property, the Leases
and the Intangible Property are sometimes collectively referred to in this
Agreement as the PROPERTY.
B CHP owns fee title to Parcel No. 1 as described on Exhibit A (the
CHP PARCEL) containing approximately 5.39 acres and VAII owns fee title to
Parcel No. 2 as described on Exhibit A (the VAII PARCEL) containing
approximately 2.33 acres. The CHP Parcel and the VAII Parcel are contiguous and
abut one another as depicted on Exhibit B and together comprise the Complex.
This Agreement constitutes a binding agreement between Seller (as to each of CHP
as to the CHP Parcel and VAII as to the VAII Parcel) and Purchaser.
C Purchaser desires to purchase the Property from Seller, and
Seller desires to sell the Property to Purchaser, on the terms and conditions in
this Agreement.
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
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SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall be defined in
Section 1:
ADDITIONAL EARNEST MONEY is defined in Section 3(b).
AGREEMENT is defined in the preamble.
APPROVED EXCEPTIONS is defined in Section 6(b).
ASSIGNEE PURCHASER is defined in Section 21(b).
BUSINESS DAY means a calendar day on which banks in Phoenix, Arizona
shall be open to transact business (other than by automated teller or
similar equipment).
CITY is defined in Recital A(1).
CLOSING is defined in Section 4(a).
CLOSING DATE is defined in Section 4(a).
CODE is defined in Section 5(a)(viii).
COMMITMENT is defined in Section 5(c).
COMPLEX is defined in Section 5(c).
CONTRACTS is defined in Recital A(6).
COURT is defined in Section 5(a)(1).
DISAPPROVAL NOTICE is defined in Section 6(b).
DISAPPROVED EXCEPTIONS is defined in Section 6(b).
DUE DILIGENCE PERIOD is defined in Section 5(a).
EFFECTIVE DATE is defined in the preamble.
ERISA is defined in Section 30.
EARNEST MONEY is defined in Section 3(b).
ESCROW is defined in Section 4(a).
FINAL PLANS is defined in Recital A(2).
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FINANCING COMMITMENT PERIOD is defined in Section 5(c).
IMPROVEMENTS is defined in Recital A(2).
INITIAL EARNEST MONEY is defined in Section 3(a).
INTANGIBLE PROPERTY is defined in Recital A(6).
LEASES is defined in Recital A(4).
LOSS THRESHOLD is defined in Section 12(a).
OFFER PERIOD is defined in Section 17.
OPENING OF ESCROW is defined in Section 30.
PERSONAL PROPERTY is defined in Recital A(3).
PRELIMINARY REPORT is defined in Section 6(a).
PROPERTY is defined in Recital A.
PROPERTY MANAGEMENT AGREEMENT is defined in Section 4(e).
PROPERTY MANAGER is defined in Section 4(e).
PURCHASE PRICE is defined in Section 3.
PURCHASE TRANSACTION is defined in Section 2.
PURCHASER is defined in the preamble.
PURCHASER'S EVENT OF DEFAULT is defined in Section 14(a).
REAL PROPERTY is defined in Recital A(1).
RENOVATIONS is defined in Section 7(a)(ix).
RENT CONCESSION is defined in Section 10(a)(iv).
SELLER is defined in the preamble.
SELLER'S ACTUAL KNOWLEDGE is defined in Section 7(a).
SELLER'S BROKER is defined in Section 29.
SELLER'S DISCLOSURE DOCUMENTATION is defined in Section 5(a)(ii).
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SELLER'S EVENT OF DEFAULT is defined in Section 14(b).
STUDIES is defined in Section 5(a)(i).
SURVEY is defined in Section 6(a).
SURVIVAL ITEMS is defined in Section 5(a).
TENANT LETTERS is defined in Section 4(c)(vi).
TITLE COMPANY is defined in Section 3.
TITLE POLICY is defined in Section 6(b).
TRADENAME is defined in Recital A(6).
UNIT is defined in Recital A.
SECTION 2. PURCHASE AND SALE.
In consideration of the mutual covenants contained in this Agreement,
Seller agrees to sell the Property to Purchaser, and Purchaser agrees to
purchase the Property from Seller, on the terms and conditions hereinafter set
forth (the PURCHASE TRANSACTION).
SECTION 3. PURCHASE PRICE.
The purchase price for the Property shall be Nine Million Two Hundred
Thirty Thousand and No/100 Dollars ($9,230,000.00) (PURCHASE PRICE). The
Purchase Price shall be payable as follows:
(a) The sum of Forty-Seven Thousand Dollars ($47,000.00) shall be
tendered to Seller in the form of Purchaser's check made payable to First
American Title Insurance Company (TITLE COMPANY), simultaneously with
Purchaser's delivery of triplicate fully executed originals of this Agreement to
Title Company, as earnest money (INITIAL EARNEST MONEY). The Initial Earnest
Money shall be applied to the Purchase Price at Closing or paid to Seller or
Purchaser, as applicable, upon cancellation of this Agreement as provided in
this Agreement. Upon execution of this Agreement by Seller, the Initial Earnest
Money shall be deposited with and held by Title Company in accordance with this
Agreement. Any interest on the Earnest Money shall belong to Purchaser and shall
be applied to the Purchase Price in accordance with Section 3(c), unless the
Purchase Transaction fails to close or is
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terminated because of a Purchaser's Event of Default (as defined below).
Purchaser shall concurrently with its deposit of the Initial Earnest Money
furnish its Federal Taxpayer Identification No. to Title Company.
(b) Within two (2) Business Days after satisfaction or waiver, in
writing, of the conditions precedent in Section 5(a) and within two (2) Business
Days after satisfaction or waiver, in writing, of the conditions precedent in
Section 5(b), Purchaser shall in each case tender to Seller the sum of
Forty-Seven Thousand Dollars ($47,000.00) in the form of Purchaser's check made
payable to Title Company (ADDITIONAL EARNEST MONEY). The Initial Earnest Money
and the Additional Earnest Money (collectively, EARNEST MONEY) shall be invested
by Title Company in a federally insured, daily interest-bearing account as
directed by Purchaser, and all interest shall become part of the Earnest Money.
As long as the conditions precedent in Section 5(a) and in Section 5(b) shall
have been satisfied or otherwise waived, in writing, by Purchaser and Seller
does not default in the performance of its obligations under this Agreement, the
Earnest Money shall be applied against the Purchase Price at the Closing or, if
a Purchaser's Event of Default exists under this Agreement, immediately
disbursed to Seller pursuant to Section 14 as Seller's agreed and total
liquidated damages, it being acknowledged and agreed by Purchaser and Seller
that it would be extremely difficult or impossible to determine Seller's exact
damages. If a Seller's Event of Default exists under this Agreement and
Purchaser elects to terminate this Agreement, the Earnest Money together with
accrued interest thereon shall be immediately released to Purchaser.
(c) On or before the Closing Date, Purchaser shall deposit with Title
Company, in immediately available funds in addition to the Earnest Money, the
sum necessary to make the total consideration equal to the Purchase Price, plus
or minus prorations, in accordance with this Agreement, which funds are to be
held in escrow by Title Company until cancellation of this Agreement as provided
in this Agreement or paid to Seller at the Closing.
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SECTION 4. CLOSING.
(a) The purchase and sale of the Property (CLOSING) shall be consummated
through an escrow established by the Title Company (ESCROW) that shall close at
Title Company's office or, at Purchaser's option, at the office of Purchaser's
counsel in Phoenix, Arizona, by 5:00 p.m. MST on the date that is 105 days after
the Opening of Escrow (as defined below) (CLOSING DATE), unless such date is
extended pursuant to this Agreement or otherwise by written agreement signed by
the parties.
(b) Prior to or at the Closing, Purchaser shall pay the Purchase Price
into the Escrow, Purchaser and Seller shall execute and deliver into Escrow all
necessary documents and Seller shall deliver marketable fee title and possession
of the Property to Purchaser free and clear of all tenants or occupants other
than the tenants of the Units under the Leases (TENANTS).
(c) On or before the Closing Date, Seller shall deliver into Escrow the
following documents and things:
(i) a Special Warranty Deed, in recordable form and properly
executed and acknowledged on behalf of Seller, conveying to Purchaser
the Real Property and the Improvements in fee simple, in substantially
the form attached hereto as Exhibit D and incorporated herein by this
reference;
(ii) a Bill of Sale executed by Seller transferring to
Purchaser the Personal Property, with a warranty of title only. No
warranty of condition or fitness for any use or purpose will be made.
The Bill of Sale shall be substantially in the form attached hereto as
Exhibit E and incorporated herein by this reference;
(iii) a duly executed Assignment of Leases that assigns and
transfers to Purchaser, as of the Closing, all of Seller's interests
under the Leases and that contains an assumption by Purchaser of
Seller's obligations under the Leases, including without limitation
obligations relating to security deposits. The Assignment of Leases
shall be substantially in the form attached hereto as Exhibit F and
incorporated herein by this reference;
(iv) a duly executed Assignment of Tradename and Trademark
Rights that assigns and transfers all of Seller's
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interest in the Tradename. The Assignment of Tradename shall be
substantially in the form attached hereto as Exhibit G and incorporated
by reference;
(v) a duly executed and acknowledged Assignment of Intangible
Property that assigns and transfers to Purchaser as of the Closing all
of Seller's interests to the Intangible Property and the Contracts
substantially in the form attached hereto as Exhibit H and incorporated
herein by this reference;
(vi) a form of letter to Tenants (TENANT LETTERS) at the Real
Property and Improvements that instruct the Tenants, after the Closing
Date, to pay rent to Purchaser and to recognize Purchaser as the new
lessor under their respective Leases substantially in the form attached
hereto as Exhibit I attached hereto and incorporated by reference;
(vii) originals or, if originals are not available, complete
copies, of all Leases in Seller's or Property Manager's possession,
together with a Certificate of Rent Roll substantially in the form of
Exhibit J attached hereto and incorporated herein by this reference
dated as of the Closing Date;
(viii) Seller's affidavit that Seller is not a foreign person
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended (the CODE) substantially in the form attached hereto as
Exhibit K and incorporated by reference as prescribed by Treas. Reg.
1.1445-2(b). If Seller does not timely furnish the Non-Foreign
Affidavit, Purchaser may withhold (or direct Title Company to withhold)
from the Purchase Price an amount equal to the amount required to be so
withheld pursuant to Section 1445(a) of the Code, and such withheld
funds shall be deposited with the Internal Revenue Service as required
by Section 1445(a) and the regulations promulgated thereunder. The
amount withheld, if any, shall nevertheless be deemed to be part of the
Purchase Price paid to Seller;
(ix) a duly executed and acknowledged Affidavit of Value
substantially in the form attached hereto as Exhibit L and incorporated
by reference; and
(x) termination notices that terminate, as of the Closing
Date, all of the management services and leasing
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contracts for the Improvements as selected by Purchaser in accordance
with this Agreement;
(xi) delivery by Seller to Purchaser at Closing of the security
deposits under the Leases that have not been applied in the form of a
credit in favor of Purchaser against the Purchase Price;
(xii) delivery by Seller to Purchaser at Closing of a complete
list of the names, addresses and telephone numbers of all contractors,
subcontractors and materials suppliers known to Seller or Property
Manager and who worked on or supplied materials in regard to the
Improvements within the last twelve (12) months prior to Closing;
(xiii) Seller, at Seller's cost and prior to Closing, paying in
full all real estate commissions which may be due from Seller in regard
to the Leases, including any commission due in regard to any of the
Leases which commissions shall be due and payable on or before Closing
or within twelve (12) months after Closing. In this regard, Seller shall
deposit with Title Company, for delivery to Purchaser at Closing,
written documentation signed by the applicable real estate brokers that
such commissions, if any, to be paid by Seller have been paid in full;
and
(xiv) Seller, at Seller's cost, completing by Closing all
improvements, if any, to the Units required under the respective Leases;
and,
If the foregoing conditions have not been satisfied by the specified date or
Closing, as the case may be, then Purchaser shall have the right, at Purchaser's
sole option, exercisable by written notice to Seller and Title Company, to
cancel this Agreement, whereupon the Earnest Money plus interest shall be paid
immediately by Title Company to Purchaser and, except for any Survival Items (as
defined below), neither Purchaser nor Seller shall have any further liability or
obligation under this Agreement.
(d) Provided that a Purchaser's Event of Default does not then exist
under this Agreement, Purchaser shall have the right, exercisable not less than
five (5) Business Days prior to the Closing Date originally scheduled for
consummating the Purchase Transaction, to extend the Closing Date for up to an
additional thirty (30) days by (i) delivering to Seller and Title Company
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written notice of such extension and (ii) delivering into Escrow the additional
sum of Forty-Seven Thousand Dollars ($47,000.00), which amount shall be deemed
Earnest Money to be governed by all of the provisions of this Agreement
pertaining thereto.
(e) At Closing, Purchaser shall enter into a Property Management
Agreement (the PROPERTY MANAGEMENT AGREEMENT) substantially in the form attached
hereto as Exhibit M and incorporated herein by this reference, pursuant to which
L'Auberge Communities Inc., a California corporation (PROPERTY MANAGER)
affiliated with Seller, shall render management services to the Property for the
benefit of Purchaser on the terms and conditions set forth therein.
SECTION 5. CONDITIONS TO CLOSING.
In addition to the other conditions to the completion of the Purchase
Transaction, Seller and Purchaser agree that the Closing is subject to the
satisfaction, approval or waiver, in writing, by Purchaser, in Purchaser's sole
discretion, of the following conditions contained in this Section 5:
(a) Purchaser's due diligence conditions shall be the following:
(i) the conduct and approval of any inspection, investigation
and approval, deemed necessary by Purchaser in Purchaser's sole
discretion and at Purchaser's sole cost and expense, of any physical,
structural, geological and environmental or other condition of the
Property (including without limitation the availability of access,
utility services, zoning, environmental risks, engineering and soil
conditions) deemed necessary by Purchaser to determine the feasibility
of acquiring the Property (collectively, the "STUDIES"). The Studies
shall include, but not be limited to, Purchaser's right to: (i) review
and approve the Survey (as defined below), the Leases and the Contracts;
and, (ii) meet and confer with the Property Manager. For the purpose of
conducting physical inspections by Purchaser or Purchaser's lender,
Seller agrees to provide full and complete access to the Property at
reasonable times, upon not less than two (2) Business Days' notice to
Seller or to Property Manager, up to and including the Closing Date.
Purchaser shall conduct such inspections in a nondisruptive manner as to
the Tenants and in compliance with any
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applicable legal requirements and shall in no event conduct destructive
testing of the Real Property and the Improvements without Seller's prior
written consent, such consent not to be unreasonably withheld. Except
for the negligence, breach of contract or willful misconduct by Seller
or Seller's agents or employees, Purchaser agrees to defend, indemnify
and hold Seller, Seller's agents and employees, and the Property
harmless from and against any losses, costs, damages, claims, or
liabilities, including but not limited to mechanics' and materialmen's
liens, personal injury or death, property damage and attorneys' fees and
costs, arising from or otherwise relating to Purchaser's entry upon the
Property for the aforementioned purposes under this subsection. Except
for Seller's or Seller's agents' or employees' negligence, breach of
contract or non-feasance, Purchaser shall immediately repair any damage
caused by such inspection and shall restore the Real Property and the
Improvements to their condition prior to such testing. Purchaser's
indemnity and hold harmless obligations under this Section shall survive
the termination or expiration of this Agreement or the Closing, as
applicable, for a period of twelve (12) months after which Purchaser's
obligations shall automatically terminate unless prior to the end of the
twelve-month period, Seller shall have brought suit against Purchaser in
the Maricopa County, Arizona Superior Court or the United States
District Court for the District of Arizona located in Phoenix, Arizona
(either, the COURT) to enforce Purchaser's indemnity and hold harmless
obligations.
(ii) subject to Seller's delivery obligations under Section 5(b),
inspection and approval, in Purchaser's sole discretion, of all
documents relating to the Property that are in Seller's or Property
Manager's possession or under Seller's or Property Manager's custody or
control (collectively, SELLER'S DISCLOSURE Documentation), all of which
shall be made available at all reasonable times after Opening of Escrow
to Purchaser at the Property for Purchaser's inspection and copying, all
at Purchaser's sole cost and expense. The information made available to
Purchaser by Seller under this subsection shall not be released or
otherwise disclosed by Purchaser to any third parties other than to
Purchaser's attorneys, accountants or in-house property evaluation
personnel or to any prospective partner of, or lender to, Purchaser in
connection with the
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Purchase Transaction. If the Purchase Transaction does not close for any
reason, Purchaser and Purchaser's agents, representatives, attorneys and
accountants shall refrain from disclosing such information to any third
party whatsoever. Except for the negligence, breach of contract or
willful misconduct of Seller or Seller's agents or employees, Purchaser
shall defend, indemnify and hold Seller harmless (which indemnification
shall survive the termination or expiration of this Agreement) for all
loss, damage or expense incurred by Seller because of any unauthorized
disclosure of such information by Purchaser or Purchaser's attorneys,
accountants or in-house property evaluation personnel; provided,
however, that Purchaser's indemnity and hold harmless obligations shall
only exist for a period of twelve (12) months after the effective date
of such termination or expiration after which Purchaser's obligations
shall automatically terminate unless prior to the end of the
twelve-month period, Seller shall have brought suit against Purchaser in
the Court to enforce Purchaser's indemnity and hold harmless
obligations.
During the period commencing with the Opening of Escrow (as defined below) and
ending at 5:00 p.m. (MST) on the thirtieth (30th) day thereafter (DUE DILIGENCE
PERIOD), Purchaser shall have the right to examine and investigate to
Purchaser's full and complete satisfaction the physical, financial and legal
status of the Property and the Seller's Disclosure Documentation. In the event
Purchaser notifies Seller in writing within the Due Diligence Period that one or
more of the conditions in Section 5(a) shall not have been satisfied or
otherwise waived by Purchaser, this Agreement shall terminate at the end of the
final day of the Due Diligence Period. Upon termination of this Agreement, the
Earnest Money, together with accrued interest thereon, shall be immediately
refunded to Purchaser by Title Company, both Seller and Purchaser shall be
released from all further obligations under this Agreement (excluding the
indemnity obligations of Purchaser under Section 5(a)) and neither Seller nor
Purchaser shall be subject to a claim by the other for damages of any kind,
except for Purchaser's indemnity and hold harmless agreement provided in Section
5(a) of this Agreement and in other indemnity provisions of this Agreement, if
any (a SURVIVAL ITEM). In the event Purchaser fails to notify Seller in writing
within the Due Diligence Period that one or more of such conditions shall not
have been satisfied or waived by Purchaser,
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each of such conditions shall conclusively be deemed to have been satisfied.
(b) Seller agrees to make available and to cause Property Manager to
make available at the Property to Purchaser or Purchaser's agents or employees
contemporaneously with the Opening of Escrow all information in Seller's or
Property Manager's possession, custody or control relating to the leasing,
operating, maintenance, construction, repair, zoning, platting, engineering,
soil tests, water tests, environmental tests, construction, master planning,
architectural drawings and like matters regarding the Property as part of
Seller's Disclosure Documentation. The foregoing shall include, but not be
limited to, copies of all: (i) Contracts; (ii) books of account and records for
the Property for the last twenty-four (24) months; (iii) the Leases including
any amendments thereto and a current detailed rent roll in regard thereto; (iv)
a detailed listing of all capital expenditures on the Property for the last
twenty-four (24) months; (v) the maintenance history of the Property for the
last twenty-four (24) months; (vi) all current maintenance contracts for the
Property including any amendments thereto; (vii) all agreements, if any, with
the City regarding the Property; (viii) claims or suits by the Tenants or third
parties involving the Property or any contracts (whether or not covered by
insurance); (ix) a list of all claims or suits by or against Seller regarding
the Property for the last twenty-four (24) months; (x) the plans, as approved by
the City, pursuant to which the Improvements were constructed (the FINAL PLANS);
and (xi) the construction contract with the general contractor pursuant to which
the Improvements were constructed in compliance with the Final Plans.
(c) Within seventy-five (75) days following the Opening of Escrow
(FINANCING COMMITMENT PERIOD), Purchaser shall, at Purchaser's sole cost, use
its best efforts to obtain a financing commitment in the name of Assignee
Purchaser (as defined below), in a form acceptable to Purchaser in Purchaser's
sole discretion, from an institutional lender for a loan to be secured by a
first lien against the Property (the COMMITMENT). If Purchaser is unable to
obtain the Commitment within the Financing Commitment Period, Purchaser shall
notify Seller and Title Company in writing that Purchaser has been unable to
obtain the Commitment, whereupon this Agreement shall terminate at the end of
the final day of the Financing Commitment Period. Upon termination of this
Agreement, the Earnest Money, together with accrued interest
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thereon, shall be refunded to Purchaser by Title Company, both Seller and
Purchaser shall be released from all further obligations under this Agreement
(excluding any Survival Item) and neither Seller nor Purchaser shall be subject
to a claim by the other for damages of any kind, except for Purchaser's
indemnity and hold harmless agreement provided in Section 5 of this Agreement
and in other surviving indemnity provisions of this Agreement, if any. In the
event Purchaser fails to notify Seller in writing within the Financing
Commitment Period that Purchaser has not been able to obtain the Commitment, the
condition contained in this Section 5(c) shall conclusively be deemed to have
been satisfied.
(d) Seller's representations and warranties contained in this Agreement
shall be true and correct in all material respects as of the Closing, and Seller
shall have performed each and every obligation to be performed by Seller under
this Agreement prior to or at the Closing.
Anything contained herein to the contrary notwithstanding, the obligations of
Seller and Purchaser under this Agreement shall be conditioned upon the
procurement by VAII of the written consent of its limited partners to the
Purchase Transaction as is required under its limited partnership agreement (the
"Consent"). In the event Seller shall not satisfy or waive in writing, by notice
to Purchaser and Title Company, such condition by 5:00 p.m. MST on the sixtieth
(60th) day following the Opening of Escrow, this Agreement shall automatically
terminate. In the event of such termination, the Earnest Money and all interest
earned thereon shall immediately be released to Purchaser and neither party
shall have any obligation or liability to the other under this Agreement. The
Due Diligence Period, Financing Commitment Period and the establishment of the
Closing Date shall be calculated from the date on which Seller delivers written
notice to Purchaser that the Consent shall have been obtained or that the
condition that the Consent be obtained shall have been waived.
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SECTION 6. TITLE AND SURVEY.
(a) Within seven (7) Business Days following the Opening of Escrow,
Seller shall cause Title Company to deliver to Purchaser a current title
insurance commitment from Title Company covering the Property, together with
full and legible copies of all supporting documents (collectively, PRELIMINARY
REPORT). The Preliminary Report is to be preliminary to the extended coverage
owner's policy of title insurance to be issued to Purchaser by Title Company
insuring Purchaser's fee simple title to the Property in the amount of the
Purchase Price (the TITLE POLICY). Seller shall pay only the premium for a
standard owner's policy in the amount of the Purchase Price with the Purchaser
to pay all additional costs in regard to extended coverage, if elected by
Purchaser, and for all endorsements, if any, required by Purchaser.
(b) In addition to the contingencies set forth in Section 5, Purchaser
shall have to the end of the Due Diligence Period to disapprove, in writing, any
exceptions to title shown on the Preliminary Report or reflected on the Survey
(as defined below) (collectively, DISAPPROVED EXCEPTIONS) and to provide Seller
and Title Company with notice of disapproval in writing describing the defect
with reasonable particularity (DISAPPROVAL NOTICE). In the event Purchaser fails
to deliver a Disapproval Notice to Seller and Title Company within the Due
Diligence Period, all such exceptions to title shall be deemed to have been
approved. Within ten (10) Business Days after Seller's receipt of the
Disapproval Notice, if any, Seller shall notify Purchaser whether Seller intends
to remove the Disapproved Exceptions. If Seller notifies Purchaser in writing
within such ten-day period that Seller intends to eliminate the Disapproved
Exceptions, Seller shall do so on or before 5:00 p.m. MST on the seventieth
(70th) day after Opening of Escrow. If Seller fails to notify Purchaser in
writing within such ten-day period that Seller intends to eliminate all the
Disapproved Exceptions or Seller elects to eliminate some but not all of the
Disapproved Exceptions, Purchaser may, by notifying Seller and Title Company
within ten (10) days after the later of: (i) Purchaser's receipt of Seller's
notice to Purchaser; or (ii) the end of Seller's ten-day notice period, elect
either to terminate this Agreement or to take title to the Property subject to
the Disapproved Exceptions that Seller has not undertaken to remove. Seller
shall cause the Title Company to issue the Title Policy at the Close of Escrow
insuring marketable fee title to the Real Property in Purchaser
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in the amount of the Purchase Price, subject only to the following matters
(collectively, APPROVED EXCEPTIONS):
(i) a lien for current real property taxes or general or
special assessments not then delinquent;
(ii) matters affecting title to the Property not disapproved by
Purchaser in accordance with this Section 6(b); and
(iii) matters affecting title to the Property created by or with
the consent of Purchaser.
(c) Purchaser, at Purchaser's sole cost, shall deliver to Seller and
Title Company on or before 5:00 p.m. MST on the twentieth (20th) day after
Opening of Escrow, a certified ALTA survey of the Property (the SURVEY) to be
completed by a surveyor licensed in the State of Arizona, whereupon the legal
description in the Survey shall control over the description in Exhibit A to the
extent they may be inconsistent. The Survey shall set forth the legal
description and boundaries of the Property and all easements, encroachments and
Improvements thereon and shall comply with all requirements of Title Company in
regard to Title Company's issuance of the Title Policy.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
(a) As used herein, "SELLER'S ACTUAL KNOWLEDGE" shall mean the actual
knowledge of the corporate general partner of the general partner of Seller,
Stephen B. Boyle, Karen Boyle and the onsite property manager without any duty
of inquiry. Seller represents and warrants to Purchaser, as of the Effective
Date and again as of the Closing Date, as follows:
(i) that to Seller's actual knowledge, Seller has received no
notice from any governmental authority of (A) any pending or threatened
zoning, building, fire or health code violations or violations of other
governmental regulations concerning the Property or the operation of the
Property that has not previously been corrected or (B) any pending or
threatened condemnation of the Property or any part of the Property.
Seller further covenants that if Seller should receive any such notice
prior to the Closing Date, Seller will provide Purchaser with copies of
the notice promptly following the receipt thereof by Seller. As an
additional condition precedent to Closing, Seller agrees
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to use reasonable efforts to correct any matters disclosed in any such
notice on or before Closing; provided, however, that Seller need not
expend more than an aggregate amount of Twenty-Five Thousand Dollars
($25,000) for such corrections. If any such matter(s) cannot be
corrected by Seller by Closing, Seller shall give Purchaser a credit at
Closing for the amount reasonably estimated by Seller and Purchaser
required to correct the matter(s), but in no event more than Twenty-Five
Thousand Dollars ($25,000). If the estimated cost to correct the
matter(s) is greater than Twenty-Five Thousand ($25,000) and Seller, by
written notice to Purchaser, elects not to correct the matter(s) prior
to Closing, Purchaser may deliver written notice of termination of this
Agreement to Seller and Title Company whereupon this Agreement shall
terminate and the Earnest Money shall be immediately returned to
Purchaser, unless Purchaser, in Purchaser's sole discretion, elects in
writing to pay the excess required to correct the matter(s);
(ii) that to Seller's actual knowledge, no legal actions are
pending or threatened against the Property, nor are there any violations
of building codes or other statutes affecting the use, operation,
occupancy and enjoyment of the Property;
(iii) that to Seller's actual knowledge, there exist no
violations of any statutes, ordinances, regulations or administrative or
judicial orders or holdings, whether or not appearing in public records,
with respect to the Improvements or the Property, and the present use of
the Property complies with existing zoning laws and ordinances;
(iv) that to Seller's actual knowledge, Seller has received no
notices from insurers of defects in the Improvements which have not been
corrected;
(v) that to Seller's actual knowledge, there exist no
continuing, pending or threatened public improvements that would result
in a tax assessment or other similar charge being levied or assessed
against the Property;
(vi) that Seller has disclosed to Purchaser all information,
records and studies for the Property in Seller's or Property Manager's
possession, custody or control concerning hazardous, toxic or
governmentally
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regulated materials that are or have been stored, handled, disposed of
or released on the Property;
(vii) that no leases or other agreements for occupancy are in
effect for the Property except for the Leases as described on the rent
roll attached hereto as Exhibit J;
(viii) that to Seller's actual knowledge, all mechanical,
electrical, structural and plumbing systems for the Property are in good
operating condition;
(ix) that there exist no (A) agreements or arrangements
pursuant to which goods, services, water, equipment, labor, supplies or
any other items are being or will be furnished to the Property, except
as relate to refurbishment and upgrading of various common amenities of
the Project as more particularly set forth in Exhibit N attached hereto
and incorporated by reference (the RENOVATIONS), to the Intangible
Property or to standard arrangements for utility services; (B)
agreements other than the Leases whereby any person or entity holds any
right, license or privilege to possess or use the Property; and (C)
licenses, franchises or permits issued or required for the ownership of
the Property;
(x) that to Seller's actual knowledge, there exist no
agreements or understandings relating to the Property, except for this
Agreement and the agreements (if any) shown as exceptions to the title
to the Property;
(xi) the Purchase Transaction will not in any material respect
violate any other agreements to which Seller is a party;
(xii) prior to Closing or any earlier termination of this
Agreement, Seller will not enter into or execute any employment,
management or service contract with respect to the Property without
Purchaser's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, and any such contract so
entered by Seller with Purchaser's consent shall provide that such
contract can be terminated by Seller, or Seller's successor, at any time
without penalty, upon not more than thirty (30) days' prior written
notice to the other party thereto. When
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any such contracts are fully executed, Seller shall deliver a copy
thereof to Purchaser;
(xiii) no default of Seller exists under any of the Contracts
and, to Seller's actual knowledge, no default of the other parties
exists under any of the Contracts. Between the Effective Date and the
Closing Date, or any earlier termination of this Agreement, Seller,
without Purchaser's prior written consent which consent shall not be
unreasonably withheld, conditioned or delayed, shall not amend, modify
in any material respect (such as increasing or decreasing the term or
monetary obligations thereunder) or terminate any Contract or Lease or
waive any substantial right thereunder;
(xiv) no consent of any third party other than the limited
partners of VA II is required in order for Seller to enter into this
Agreement and perform Seller's obligation hereunder. Without limiting
the generality of the foregoing, no consent of any third party is
required in order for Seller to assign to Purchaser the Contracts;
(xv) except for any item to be prorated at Closing in
accordance with this Agreement, all bills or other charges, costs or
expenses arising out of or in connection with or resulting from Seller's
construction, use, ownership, or operation of the Property up to Closing
shall be paid in full by Seller on or before Closing;
(xvi) all general real estate taxes, assessments and personal
property taxes that have become due with respect to the Property (except
for those that will be prorated at Closing in accordance with this
Agreement) have been paid or will be so paid by Seller prior to Closing;
(xvii) between the Effective Date and the Closing Date or any
earlier termination of this Agreement, Seller shall not execute or enter
into any new lease of any part of the Improvements, except in the normal
course of business using Seller's standard form of lease and adhering to
Seller's standard rental schedule;
(xviii) except in the ordinary course of business or as required
by a governmental agency and except for the Renovations, Seller shall
not place or permit to be placed on any portion of the Real Property any
new improvements of
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any kind or remove or permit any improvements to be removed from the
Real Property without the prior written consent of Purchaser, which
consent may be granted or withheld for any reason;
(xix) Seller shall not restrict, rezone, file or modify any
development plan or zoning plan or establish or participate in the
establishment of any improvements district with respect to all or any
portion of the Real Property without Purchaser's prior written consent,
which consent may be granted or withheld for any reason; and,
(xx) without Purchaser's prior written consent, which may be
granted or withheld for any reason, Seller shall not, by voluntary or
intentional act or omission to act, further cause or create any
easement, encumbrance, or mechanic's or materialmen's liens, and/or
similar liens or encumbrances to arise or to be imposed upon the
Property or any portion thereof.
(b) If Seller learns of anything that would make the representations and
warranties set forth above untrue in any material respect prior to the Closing,
Seller shall immediately notify Purchaser in writing. Upon written notice to
Seller and Title Company within five (5) Business Days following receipt of
Seller's notice, Purchaser shall be entitled to terminate this Agreement if
Purchaser reasonably concludes that the Property will be adversely affected in
any material respect, in which case Purchaser shall be entitled to an immediate
return of the Earnest Money together with accrued interest thereon. After such
disposition of the Earnest Money, the Escrow shall be canceled and neither party
shall have any rights or responsibilities to the other except as otherwise
expressly provided by this Agreement.
(c) Each of the parties represents and warrants to the other that each
of the persons executing this Agreement on behalf of the warranting party is
authorized to do so; that the execution, delivery and performance of this
Agreement will not conflict with, or result in a breach or other violation of,
any contract, agreement or instrument to which Purchaser or Seller, as the case
may be, is a party; and that upon execution, this Agreement shall be a valid
obligation of, binding upon and enforceable against Purchaser or Seller, as the
case may be.
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(d) All representations made in this Agreement by Seller shall survive
the execution and delivery of this Agreement or the cancellation of this
Agreement or Closing, as applicable. Seller shall and does hereby indemnify
against and hold Purchaser harmless from any loss, damage, liability and
expense, together with all court costs and attorneys' fees which Purchaser may
incur, by reason of any third party claims asserted against Purchaser and based
upon any material misrepresentation by Seller or any material breach of any of
Seller's warranties. Seller's representations and indemnity obligations under
this Section 7 shall survive for eight (8) months after cancellation of this
Agreement or Closing, as applicable, whereupon Seller's obligations shall
terminate automatically unless Purchaser shall have commenced an action thereon
against Seller in the Court within such period.
SECTION 8. PURCHASER'S ACCEPTANCE OF PROPERTY AS-IS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN AND/OR IN THE DOCUMENTS TO
BE DELIVERED AT CLOSING, PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT
MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT
OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE VALUE, NATURE,
QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION THE WATER,
SOIL AND GEOLOGY, AND ANY IMPROVEMENTS CONSTRUCTED THEREON, (B) THE INCOME TO BE
DERIVED FROM THE PROPERTY, (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON, (D) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PROPERTY, (E) THE MANNER OR QUALITY OF THE CONSTRUCTION OR
MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY, OR (F) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY. EXCEPT FOR THOSE ITEMS OF
SELLER'S DISCLOSURE DOCUMENTATION THAT HAVE BEEN PREPARED BY SELLER, PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO
INSPECT THE PROPERTY, PURCHASER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF
THE PROPERTY. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
PROVIDED OR TO BE PROVIDED TO PURCHASER WITH RESPECT TO THE PROPERTY WAS
OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS
AS TO THE ACCURACY OR COMPLETENESS OF
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SUCH INFORMATION. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
SELLER'S DISCLOSURE DOCUMENTATION OR IN THE DOCUMENTS TO BE DELIVERED AT
CLOSING, SELLER IS NOT AND SHALL NOT BE LIABLE OR BOUND IN ANY MANNER BY ANY
VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE
PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT,
EMPLOYEE, SERVANT OR OTHER PERSON. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN
AND/OR IN THE DOCUMENTS TO BE DELIVERED AT CLOSING, PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF
THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS," "WHERE IS" AND "WITH
ALL FAULTS" CONDITION AND BASIS.
SECTION 9. SELLER'S COVENANTS.
From and after the Effective Date until Closing, and so long as this
Agreement remains in effect, Seller shall:
(a) except as otherwise provided in Section 7(a), maintain, manage and
operate the Property substantially in accordance with Seller's and Property
Manager's established practices;
(b) maintain the Property in its present condition, ordinary wear and
tear and casualty loss excepted;
(c) maintain all casualty, liability and hazard insurance currently in
force for the Property;
(d) except as otherwise provided in Section 7(a), operate, manage and
enter into contracts for the Property and maintain present services and
sufficient supplies and equipment for the operation and maintenance of the
Property, all in the same manner as that done by Seller and Property Manager
prior to the Effective Date; provided, however, that Seller shall not enter into
any service contract that cannot be terminated within thirty (30) days following
notice to the vendor;
(e) except as otherwise provided in Section 7(a), not enter into any
Lease of the Real Property and the Improvements other than in the ordinary
course of Seller's business;
(f) substantially in accordance with Seller's and Property Manager's
established practices, keep as many Units leased as possible and, in this
regard, after the Financing Commitment Period ends and assuming Purchaser has
not theretofore canceled this Agreement as Purchaser is entitled so to do,
Seller and
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Property Manager shall meet and confer with Purchaser or Purchaser's duly
appointed agents at Seller's offices in Scottsdale, Arizona, on a weekly basis
to review and approve Seller's and Property Manager's plans and proposals for
continued leasing of the Units; and
(g) use reasonable diligence in completing and paying for the
Renovations prior to the Closing Date; provided, however, that if Seller is
despite reasonable diligence unable to complete or pay for the Renovations prior
to the Closing Date, Purchaser and Seller shall, pursuant to a mutually
agreeable written "holdback agreement," authorize the Title Company to hold back
an amount equal to 150% of the remaining cost to complete the Renovations, in
which event Seller shall continue to use reasonable diligence in completing and
paying for the Renovations as soon as possible following the Closing. In the
event Seller does not complete and pay for the Renovations within ninety (90)
days following the Closing. Purchaser shall have the right (but not the
obligation) to complete the Renovations and obtain reimbursement for the cost of
such completion out of the funds withheld from the Purchase Price.
If Seller enters into leases or grants concessions in violation of this Section
9, Purchaser may either waive the violation or, as Purchaser's sole remedy,
terminate this Agreement and require the return of the Earnest Money together
with accrued interest thereon.
SECTION 10. PRORATIONS.
The following adjustments to the Purchase Price shall be made between
Seller and Purchaser:
(a) The following items, as applicable, shall be prorated between
Purchaser and Seller on a per diem basis as of the Closing Date:
(i) all nondelinquent real estate taxes, installments of
general and special assessments, homeowner's association dues, if any,
and fire protection service charges, if any, due and payable in the
calendar year in which Closing occurs, based upon the most recent
information available to Seller. If Closing shall occur before the tax
rate or assessment for the current year is fixed, the initial proration
of such taxes or assessments shall be based upon the latest available
information. Thereafter,
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when the actual tax rate for such current year becomes known, Seller and
Purchaser shall, outside of escrow and after Closing, re-prorate any
such taxes or assessments to the extent that the actual rate thereof was
different than the rate used for prorations made at Closing and shall
pay, one to the other, any adjustment due as a result of such
re-proration;
(ii) current rents, advance rentals, deposits, operating expense
escalations and other charges, if any, payable by Tenants under the
Leases;
(iii) all charges for fuel, water, sewer, electricity and other
utility services furnished to the Property which are not metered to
Tenants. Seller, to the extent the same is obtainable, shall furnish
meter readings for such utilities through the close of business on the
day prior to the Closing. If any such meter readings are not so
obtainable, then Seller shall provide meter readings as of a date not
more than thirty (30) days prior to the Closing Date, and the proration
of utility charges shall initially be based upon such prior reading.
Upon the taking of actual meter readings first after Closing, such
proration shall be readjusted outside of escrow after Closing and Seller
or Purchaser, as the case may be, shall promptly pay to the other the
amount determined to be so due upon such readjustment; and,
(iv) with regard to any rental concession (whether in the form
of free rent, a rent concession coupon or otherwise (collectively, a
RENT CONCESSION)) which Seller has granted to Tenants prior to Seller's
execution of this Agreement and which is applicable to the period
following the Closing, Seller hereby grants to Buyer and Buyer hereby
accepts a credit equal to the amount of such Rent Concession. If, after
Closing, a Tenant is entitled to use or apply any Rent Concession
theretofore granted to such Tenant by Seller, Purchaser, at Purchaser's
sole cost, shall honor and apply such Rent Concession to the rent due
from such Tenant. Seller represents and warrants to Buyer, in regard to
the Rent Concessions, if any, granted by Seller between the Effective
Date of this Agreement and Closing, that Seller will not grant any Rent
Concessions which exceed in economic value: (a) 1/2 month's rent on a "6
month lease"; or, (b) 1 month's rent on a "12 month lease."
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(b) All other items of accrued or prepaid income and expense, except
delinquent rents, shall be prorated as of the Closing Date, on the basis of the
most recent ascertainable amounts of or other reliable information for each item
of income and expense. Seller and Purchaser shall duly cooperate with each other
and the Title Company in making prorations, adjustments and credits pursuant to
this Section 10 and shall, as requested by the Title Company, furnish to the
Title Company such information as is in the possession of or obtainable by them
to assist in making such prorations, adjustments or credits. In the event, for
any reason beyond the reasonable control of the Parties hereto, information
necessary to calculate any proration, adjustment or credit for any item required
to be prorated, adjusted or credited under this Section 10 is not available
prior to Closing, then such items shall be prorated, adjusted or credited
outside of escrow after Closing as soon as such information is available, and
Seller and Purchaser shall duly cooperate with each other in regard thereto and
shall pay, one to the other, any amounts which may be owing as a result of any
such subsequent proration, adjustment or credit. In the event, at any time
within six (6) months after Closing, errors shall be discovered in any
prorations, adjustments or credits made pursuant to this Section 10, Seller and
Purchaser shall correct such errors and shall pay, one to the other, any sums
owning as a result of such correction.
(c) For purposes of all prorations provided for in this Agreement,
Seller shall be responsible for all days up to and including the Closing Date,
and Purchaser shall be responsible for all days after the Closing Date. Except
as otherwise expressly provided in this Agreement, all prorations shall be
final.
(d) Security deposits, including cleaning and pet deposits and prepaid
rent and any interest thereon, shall be credited to Purchaser at Closing.
(e) If on the Closing Date any Tenant is delinquent in the payment of
rent, including any additional rent billed but unpaid at the time of Closing,
the delinquent rent shall remain the property of Seller and be paid to Seller
if, as and when collected by Purchaser out of last moneys received by Purchaser
from such tenant, and no proration of such delinquent rent shall be made at
Closing. For a period of ninety (90) days after Closing, Purchaser shall attempt
to collect and shall remit to
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Seller any such delinquent rents owing to Seller; provided, however, that (i)
Purchaser shall be required only to periodically send bills to the Tenant(s)
owing such delinquent rent and shall not be required to commence any litigation
or undertake any other collection efforts in regard thereto; and (ii) in the
event Purchaser collects rent from a person who owes rent for any period of time
after Closing and for a period of time prior to Closing, all amounts collected
from such person shall be applied first to the amount of rents owing by such
person for the period of time after Closing and only the excess, if any, shall
be remitted to Seller.
(f) Contemporaneously with the Closing, Seller shall deliver to
Purchaser at the offices of the Property Manager all originals (including
computer discs and tapes) of books and records of accounts, contracts, leases,
leasing correspondence, receipts for deposits, bills and other papers that
pertain to the Property, together with all advertising materials, booklets, keys
and other items, if any, used in the Property's operation. Seller, at Seller's
cost, may retain a copy of the foregoing items for tax reporting purposes. After
the Closing and solely for the purposes of Section 10, Seller, at Seller's sole
cost and upon at least five (5) days' prior written request to Purchaser, shall
have the right to inspect the books and records for the Property located at
Property Manager's office to verify that Purchaser is remitting to Seller the
proper amounts according to this Agreement and for any other purpose related to
Seller's prior ownership of the Property.
(g) The cost of any tenant improvements paid or incurred by Seller for
Leases approved by Purchaser and executed after the date of this Agreement shall
be paid in full by Seller at or before Closing. Seller shall supply to Purchaser
and Title Company paid invoices and final lien waivers for all such tenant
improvement work to the extent performed on or prior to the Closing Date. Any
provision of this Agreement to the contrary notwithstanding, after the Effective
Date, Seller shall not undertake any tenant improvement work on any Unit without
the prior written consent of Purchaser, such consent not to be unreasonably
withheld, conditioned or delayed.
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SECTION 11. TRANSFER TAXES; TITLE CHARGES;
OTHER CLOSING COSTS AND ESCROW CANCELLATION.
(a) Seller and Purchaser agree to execute any real estate transfer
declarations required by the state, county or municipality in which the Real
Property is located. Seller shall pay: (i) one-half of the escrow charges of
Title Company (which are to be at the "developer rate"); (ii) one-half of the
cost of recording the instruments of conveyance; and (iii) the portion of the
premium charged for the Title Policy attributable to standard coverage.
Purchaser shall pay all other costs of consummating this transaction, including
without limitation the premium for the Title Policy in excess of standard
coverage and for any endorsements required by Purchaser, all transfer taxes and
other fees (if any) assessed by any governmental authority against the Real
Property because of this sale and transfer, all sales and transfer taxes or
other fees assessed by any governmental authority against the Personal Property
(if any) and the cost of any municipal deed or transfer taxes (if any). The
parties shall each pay their own attorneys' fees in regard to the negotiation
and documentation of the Purchase Transaction.
(b) If the Escrow fails to close because of a Seller's Event of Default,
Seller shall be liable for the cancellation charge, if any, of Title Company. If
the Escrow fails to close because of Purchaser's Event of Default, Purchaser
shall be liable for the cancellation charge, if any, of Title Company. If the
Escrow fails to close for any other reason, Seller and Purchaser shall each be
liable for one-half of the cancellation charge, if any, of Title Company.
SECTION 12. RISK OF LOSS.
(a) Except as provided in any indemnity provisions of this Agreement,
Seller shall bear all risk of loss for the Property up to the Closing.
(b) The foregoing to the contrary notwithstanding, if the Property is
damaged by fire or other casualty prior to the Closing Date and is insured under
one or more fire or casualty insurance policies maintained by Seller, and if
Seller determines, in Seller's reasonable good faith discretion, that repair of
the Property would cost less than One Hundred Thousand Dollars ($100,000.00)
(LOSS THRESHOLD), Purchaser shall not have the right to terminate this Agreement
and Seller, in Seller's
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sole discretion, may elect either: (i) to repair and restore the Property to its
condition immediately preceding the fire or casualty; or (ii) to proceed to
close this Purchase Transaction without reduction in the Purchase Price provided
that, as a condition precedent thereto and in a form acceptable to Purchaser, in
Purchaser's reasonable discretion, Seller assigns and transfers to Purchaser on
the Closing Date all of Seller's right, title and interest in and to the
insurance proceeds paid or payable to Seller under the policy covering the
damage and pay to Purchaser the amount of Seller's deductible under the
insurance policy.
(c) However, if the Property is damaged by fire or other casualty prior
to the Closing Date and is insured under one or more fire or casualty insurance
policies maintained by Seller, and if Seller determines, in Seller's reasonable
good faith discretion, that the repair of the damage would cost an amount equal
to or in excess of the Loss Threshold, Purchaser, in Purchaser's sole
discretion, may elect either: (i) to terminate this Agreement and have the Title
Company immediately return the Earnest Money together with accrued interest
thereon to Purchaser; or (ii) to proceed to close this Purchase Transaction,
without reduction in the Purchase Price, and, as a condition precedent thereto
and in a form acceptable to Purchaser in Purchaser's reasonable discretion, have
Seller assign and transfer to Purchaser on the Closing Date all of Seller's
right, title and interest in and to the insurance proceeds paid or payable to
Seller under the policy covering the damage and pay to Purchaser the amount of
Seller's deductible under the insurance policy.
(d) Immediately after Seller obtains notice of any fire or casualty,
Seller shall notify Purchaser thereof in writing, including Seller's reasonable
determination of the repair cost; provided, however, that in the event Purchaser
shall in good faith dispute the repair cost so determined by Seller, Purchaser
shall immediately notify Seller of such dispute, in which event Seller shall as
soon as practicable obtain three (3) bids to repair such damage from reputable
contractors licensed in the State of Arizona and furnish copies thereof to
Purchaser. The average of the two bids that are the closest to each other shall
be determinative as to whether the Loss Threshold shall have been exceeded. If
the repair cost so determined exceeds the Loss Threshold, Purchaser shall notify
Seller in writing within fifteen (15) Business Days after Purchaser's receipt of
Seller's
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Notice whether Purchaser elects to terminate this Agreement in accordance with
this Section 12. Closing shall be delayed, if necessary, to allow Purchaser to
make such election. If Purchaser fails to make the election within such
fifteen-day period, Purchaser shall be deemed to have elected to terminate this
Agreement.
SECTION 13. CONDEMNATION.
(a) If, between the Effective Date and the Closing Date, any
condemnation or eminent domain proceedings are commenced or threatened that
might result in the taking of all or any part of the Real Property or the
Improvements or the taking or closing of any access right to the Property,
Purchaser, in Purchaser's sole discretion, may either:
(i) terminate this Agreement by written notice to Seller and
have the Title Company return the Earnest Money together with accrued
interest thereon; or
(ii) proceed with the Closing and, as a condition precedent
thereto and in a form acceptable to Purchaser, in Purchaser's sole
discretion, have Seller assign to Purchaser all of Seller's right, title
and interest in and to any award made or to be made for the condemnation
or eminent domain action.
(b) Immediately after Seller obtains notice of the commencement or the
threatened commencement of eminent domain or condemnation proceedings, Seller
shall notify Purchaser in writing. Purchaser shall then notify Seller, within
fifteen (15) Business Days after Purchaser's receipt of Seller's notice, whether
Purchaser elects to terminate this Agreement in accordance with Section
13(a)(i). Closing shall be delayed, if necessary, to allow Purchaser to make
such election. If Purchaser fails to make the election within such fifteen-day
period, Purchaser shall be deemed to have elected to terminate this Agreement.
SECTION 14. DEFAULT.
(a) Purchaser shall be in default under this Agreement (a PURCHASER'S
EVENT OF DEFAULT) if any of the following events shall occur:
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(i) Purchaser fails to close the Escrow on the date scheduled
therefor as provided in this Agreement; provided, however, that the failure of
the Closing to occur solely as a result of: [a] the breach by Purchaser's lender
of the lender's obligation to fund under the Commitment; or [b] the failure of a
condition in the Commitment that is not caused by any action or inaction by
Purchaser or by any failure by Purchaser to use its best efforts to close the
Loan at Closing, shall not constitute a Purchaser's Event of Default and shall
entitle Purchaser to terminate this Agreement and obtain an immediate refund of
the Earnest Money plus interest;
(ii) Purchaser shall fail to pay any monies due in accordance
with this Agreement (other than the obligations referenced in Subparagraph (i))
by 5:00 p.m. MST on the third Business Day after the stated due date; or,
(iii) Purchaser shall fail to fully and timely perform any of
Purchaser's obligations (other than the monetary obligations referenced in
Subparagraphs (i) and (ii)) arising under this Agreement by 5:00 p.m. MST on the
fifth (5th) Business Day after Purchaser's receipt of written notice from Seller
specifying Purchaser's nonperformance.
(b) Seller shall be in default under this Agreement (a "Seller's Event
of Default") if:
(i) Seller fails to close the Escrow on the date scheduled
therefor as provided in this Agreement; or,
(ii) Seller shall fail to fully and timely perform any of
Seller's obligations arising under this Agreement (other than the obligations
referenced in Subparagraph (i)) and such failure shall continue past 5:00 p.m.
MST on the fifth (5th) Business Day after Seller's receipt of written notice
from Purchaser specifying Seller's nonperformance.
(c) If a Seller's Event of Default shall exist, Purchaser, at
Purchaser's sole option and as Purchaser's sole remedies, may also: (i) by
written notice to Seller and Title Company, cancel this Agreement whereupon the
Earnest Money plus interest shall be paid immediately by Title Company to
Purchaser and, except as otherwise provided in this Agreement as to any Survival
Item, neither Purchaser nor Seller shall have any further liability or
obligation hereunder; or, (ii) seek specific performance against Seller by
delivering the Purchase Price into the Escrow;
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<PAGE> 35
provided, however, that as conditions precedent to such action: [a] no uncured
Purchaser's Event of Default shall exist and no event shall have occurred which
with the passage of time or with notice, or both, could become a Purchaser's
Event of Default; [b] Purchaser delivers the Purchase Price into the Escrow
albeit Purchaser shall be entitled thereafter to withdraw immediately from the
Escrow the Purchase Price (less the Earnest Money) pending the outcome of the
action; and [c] Purchaser shall not seek to amend the Purchase Price in such
action, in which event the Closing shall be automatically extended as necessary.
(d) If a Purchaser's Event of Default shall exist, as Seller's sole
remedy (in lieu of any other legal or equitable remedies against Purchaser which
Seller expressly waives except as hereinafter provided otherwise) Seller shall
be entitled to retain the Earnest Money only in accordance with Section 3(b) as
Seller's agreed and total liquidated damages unless Purchaser objects to, fails
to cooperate with or otherwise opposes Seller's withdrawal of such Earnest Money
out of the Escrow, in which event Seller shall have all of the remedies
otherwise available to Seller at law or in equity.
SECTION 15. NOTICES.
All notices under this Agreement shall be in writing and sent by: (a)
certified or registered mail, postage prepaid and return receipt requested, in
which case notice shall be deemed delivered at the earlier of actual receipt or
three (3) business days after deposit in the United States Mail, (b) by a
nationally recognized overnight courier, in which case notice shall be deemed
delivered one (1) business day after deposit with that courier, or (c) telecopy
or similar means, if a copy of the notice is also sent by United States
certified mail, in which case notice shall be deemed delivered on the date of
confirmed receipt, as follows:
If to Seller:
c/o L'Auberge Communities Inc.
14988 North 78th Way, Suite 211
Scottsdale, Arizona 85260
Attention: Stephen B. Boyle
Facsimile No.: (602) 607-9773
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<PAGE> 36
With a copy to:
Hughes Hubbard & Reed LLP
350 South Grand Avenue, Suite 3600
Los Angeles, California 90071-3442
Attn: George A. Furst, Esq.
Facsimile No.: (213) 613-2950
If to Purchaser:
Capital Management Systems, Inc.
1925 Arch Street
Philadelphia, Pennsylvania 19103-1484
Attention: Paul Silberberg, President
Facsimile No.: (215) 246-3068
With a copy to:
Mariscal, Weeks, McIntyre & Friedlander
2901 North Central Avenue, Suite 200
Phoenix, Arizona 85012
Attention: Peter A. Winkler, Esq.
Facsimile No.: (602) 285-5100
The addresses above may be changed by written notice to the other party;
provided, however, that no notice of a change of address shall be effective
until actual receipt of the notice by the addressee thereof. Copies of notices
are for informational purposes only, and a failure to give or receive copies of
any notice shall not be deemed a failure to give notice.
SECTION 16. TIME OF ESSENCE.
Time is of the essence in this Agreement and the performance of each and
every obligation hereunder. However, if this Agreement requires any act to be
done or action to be taken on a date which is a Saturday, Sunday or legal
holiday, such act or action shall be deemed to have been validly done or taken
if done or taken on the next succeeding day which is not a Saturday, Sunday or
legal holiday.
SECTION 17. TERMINATION OF AGREEMENT.
If triplicate fully executed originals of this Agreement have not been
delivered by Purchaser to Seller by 5:00 p.m. MST
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<PAGE> 37
on May 7, 1997 for immediate deposit by Purchaser with Title Company along with
the Initial Earnest Money, this Agreement shall automatically be deemed revoked
and null and void.
SECTION 18. GOVERNING LAW; JURISDICTION; VENUE.
This Agreement shall be governed by and construed in accordance with
Arizona law. In regard to any litigation which may arise in regard to this
Agreement, the Parties shall and do hereby submit to the sole jurisdiction of
and the Parties hereby agree that the sole proper venue shall be in the Court.
SECTION 19. COUNTERPARTS AND FACSIMILE SIGNATURES.
(a) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(b) The Parties' execution of this Agreement may be evidenced by
facsimile signatures with originals to be immediately distributed thereafter
albeit the Agreement may be deemed binding upon transmittal of the facsimiles.
SECTION 20. CAPTIONS.
The captions in this Agreement are inserted for convenience of reference
only and in no way define, describe or limit the scope or intent of this
Agreement or any of its provisions.
SECTION 21. ASSIGNABILITY.
(a) Except as expressly set forth in Paragraph 21(b) below, Purchaser
shall not have the right to assign this Agreement or any of Purchaser's rights
under this Agreement prior to Closing to any person or entity without the prior
written consent of Seller, which consent shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, such consent shall be
conditioned upon the assignee's assumption of Purchaser's duties and obligations
under this Agreement by delivering to Seller and Title Company duplicate
originals of an assumption agreement in form and substance reasonably acceptable
to Seller, Seller shall not incur any additional expense because of such
assignment and such assignment shall not delay the Closing.
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<PAGE> 38
(b) Purchaser may, upon written notice to Seller and Title Company but
without being obligated to seek or obtain Seller's written consent, assign all
(or any part) of Purchaser's rights under this Agreement (for purposes of this
Paragraph 21(c), the "Assignment") to a third party entity (the "Assignee
Purchaser"); provided, however, that: (i) the Assignment shall not occur prior
to the tenth (10th) day before the date scheduled for the Closing; (ii) an
uncured Purchaser's Event of Default does not then exist and no event shall have
occurred which with the passage of time or with notice, or both, could become a
Purchaser's Event of Default; (iii) the Assignee Purchaser is a newly formed
entity in which an entity under common control with Purchaser is the majority
equity investor; and (iv) Purchaser and the Assignee Purchaser shall comply with
the requirements in the second sentence of Paragraph 21(a). In the event of an
Assignment, the original Purchaser (Capital Management Systems, Inc.) shall
thereupon be automatically released from all obligations and liabilities of
Purchaser theretofore or thereafter arising under this Agreement.
(c) Seller shall not have the right or authority to assign this
Agreement or any of Seller's rights under this Agreement prior to Closing to any
person or entity without the prior written consent of Purchaser, which consent
may be granted or withheld in Purchaser's sole discretion. In the event
Purchaser consents to such an assignment, the consent may be conditioned upon
the assignee's assumption of Seller's duties and obligations under this
Agreement by delivery to Purchaser and Title Company of duplicate originals of
an assumption agreement in form and substance reasonably acceptable to
Purchaser.
SECTION 22. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, successors, heirs and
permitted assigns.
SECTION 23. MODIFICATIONS; WAIVER.
No waiver, modification, amendment, discharge or other change of this
Agreement shall be valid unless it is in writing and signed by the party against
which the enforcement of the modification, waiver, amendment, discharge or other
change is sought.
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SECTION 24. ENTIRE AGREEMENT.
This Agreement and the exhibits attached hereto contain the entire
agreement between the parties relating to the Purchase Transaction. All prior or
contemporaneous letters of intent (including but not limited to that certain
non-binding letter of intent between Seller and Purchaser dated March 20, 1997),
agreements, understandings, representations or statements, whether oral or
written, with respect to the subject matter hereof are superseded hereby.
SECTION 25. PARTIAL INVALIDITY; FURTHER ASSURANCES.
If any provision of this Agreement shall be determined by any
court to be invalid, illegal or unenforceable to any extent, the remainder of
this Agreement shall not be affected and this Agreement shall be construed as if
the invalid, illegal or unenforceable provision had never been contained in this
Agreement. Prior to and after Closing, the parties hereto agree to take such
action and execute, acknowledge, file and record any additional documents
reasonably necessary to effectuate the terms and provisions of this Agreement.
SECTION 26. SURVIVAL.
Except as expressly provided in this Agreement to the contrary, all
representations, warranties, covenants, agreements and other obligations of
Seller and Purchaser in this Agreement shall not survive the Closing of the
Purchase Transaction.
SECTION 27. NO THIRD-PARTY RIGHTS.
Nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties to this Agreement and their respective
successors and permitted assigns, any rights or remedies.
SECTION 28. ATTORNEYS' FEES.
If any legal action or any other proceeding, including without
limitation an action for declaratory relief, is brought to enforce this
Agreement or any rights or obligations hereunder or because of a dispute,
breach, default or misrepresentation in connection with this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding (including without
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limitation any appeal or post-judgment enforcement proceedings), in addition to
any other relief to which that party may be entitled. "Prevailing party" shall
include the party determined to be the prevailing party by the Court.
SECTION 29. BROKER.
Seller and Purchaser each represent and warrant to the other that it has
not had any dealings with any broker, finder or other party concerning
Purchaser's purchase of the Property, except Univest Commercial L.L.C. (SELLER'S
BROKER). Seller agrees to pay at Closing a commission to Seller's Broker
pursuant to a separate agreement between Seller and Seller's Broker, a copy of
which shall be deposited in escrow on or before Closing if Seller's Broker is to
be paid through escrow at Closing. Seller and Purchaser each agree to defend,
indemnify and hold the other harmless from and against any such all loss,
liability, damage, cost or expense, including without limitation reasonable
attorneys' fees, incurred by the other as a result of any claim arising out of
the acts of the indemnifying party, or others on that party's behalf, for a
commission, finder's fee or similar compensation made by any broker (including
Seller's Broker), finder or any person who claims to have dealt with the
indemnifying party. The representations, warranties and covenants contained in
this Section 29 shall survive the Closing or termination of this Agreement.
SECTION 30. OPENING OF ESCROW.
The term "Opening of Escrow" shall mean the date of delivery to Title
Company of triplicate fully executed originals of this Agreement by Seller and
Purchaser together with the delivery by Purchaser to Title Company of the
Initial Earnest Money.
SECTION 31. EXHIBITS.
The following exhibits have been attached to this Agreement and
incorporated herein by reference:
Exhibit A -- Legal Description
Exhibit B -- Diagram of the Property and Improvements
Exhibit C -- Schedule of Personal Property
Exhibit D -- Form of Special Warranty Deed
Exhibit E -- Form of Bill of Sale
Exhibit F -- Form of Assignment of Leases
Exhibit G -- Assignment of Tradename and Trademark Rights
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Exhibit H -- Form of Assignment of Intangible Property
Exhibit I -- Form of Tenant Letters
Exhibit J -- Certificate of Rent Roll
Exhibit K -- Form of Non-Foreign Affidavit
Exhibit L -- Form of Affidavit of Value
Exhibit M -- Form of Property Management Agreement
Exhibit N -- Renovation Items
SECTION 32. SEVERABILITY.
[Intentionally deleted.]
SECTION 33. FORM OF TITLE POLICY.
The Title Policy to be issued by Title Company shall be Title Company's
most current form. A specimen of the Title Policy is to be delivered to
Purchaser contemporaneously with the delivery of the Preliminary Report to the
Parties. The Policy is to include, among other things, the following
endorsements which are also to be delivered to Purchaser at Purchaser's cost:
(i) a survey endorsement to the effect that the insured legal description and
the Survey legal description describe one and the same property; (ii) if
necessary, a patent endorsement; (iii) if necessary, a contiguity endorsement;
(iv) if necessary, an endorsement insuring against archaic deed restrictions;
and, (v) if necessary, the owner's equivalent of a 3R and 5 endorsement.
SECTION 34. NO PARTNERSHIP OR OTHER LIABILITY.
Any and all provisions, implications, or interpretations of or from this
Agreement to the contrary notwithstanding, no partnership, joint venture or
other relationship is created, implied or acknowledged between or among the
Parties.
SECTION 35. GENERAL PROVISIONS REGARDING TITLE COMPANY.
(a) Title Company will make all adjustments and/or prorations on the
basis of the actual number of days in a month, and by credit and/or debit to the
respective accounts of Seller and Purchaser in the Escrow.
(b) For purposes of the instructions to Title Company, the expression
"Closing" shall mean the date the Deed is recorded.
(c) Title Company shall: (i) make disbursements by wire transfer of
federal funds; (ii) mail instruments to the addresses
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of the Parties shown above, unless Title Company is instructed otherwise; and,
(iii) wire funds to Seller by wire transfer as directed by Seller.
(d) No change of instructions shall be of any effect on Title Company
unless given in writing by all of the Parties hereto. In the event conflicting
demands are made or conflicting notices served upon Title Company with respect
to the Escrow, the Parties expressly agree that Title Company shall have the
absolute right at Title Company's election to do either or both of the
following: (i) withhold and stop all further proceedings in, and performance of,
the Escrow; or (ii) file a suit in interpleader and obtain an order from the
Court requiring the Parties to interplead and litigate in the Court their
several claims and rights among themselves. In the event such interpleader suit
is brought, Title Company shall ipso facto be fully released and discharged from
all obligations to further perform any and all duties or obligations imposed
upon Title Company in the Escrow, and the Parties jointly and severally agree to
pay all reasonable costs, expenses, and reasonable attorneys' fees expended or
incurred by Title Company, the amount thereof to be fixed and a judgment
therefor entered by the Court in such suit.
(e) Except for Title Company's negligence, fraud, willful misconduct or
breach of contract, Title Company shall not be held liable for the identity,
authority or rights of any person executing any document deposited in the
Escrow, or for Seller or Purchaser's failure to comply with any of the
provisions of any agreement, contract or other instrument deposited in the
Escrow, and Title Company's duties hereunder shall be limited to the safekeeping
of such money, instruments or other documents received by Title Company as
escrow holder, and to the disposition of same in accordance with the written
instructions accepted by Title Company in the Escrow.
(f) It is agreed by the Parties to this Agreement that so far as Title
Company's rights and liabilities are concerned, this transaction is an escrow
and not any other legal relation.
<PAGE> 43
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
"Purchaser"
CAPITAL MANAGEMENT SYSTEMS, INC.
a Pennsylvania corporation
By: /s/ RICHARD A. MITCHELL
---------------------------------
Name: Richard A. Mitchell
Title: Vice President
"Seller"
CLUSTER HOUSING PROPERTIES,
A California Limited Partnership,
By: GP L'Auberge Communities, L.P.,
a California limited partnership,
its general partner
By: L'Auberge Communities Inc.,
a California corporation,
its general partner
By: /s/ STEPHEN B. BOYLE
-------------------------------
Name: Stephen B. Boyle
Title: President
VILLA ANTIGUA II DEVELOPMENT PARTNERS,
a Massachusetts limited partnership
By: GP L'Auberge Communities II, L.P.,
a California limited partnership,
its general partner
By: L'Auberge Communities Inc.,
a California corporation,
its general partner
By: /s/ STEPHEN B. BOYLE
-------------------------------
Name: Stephen B. Boyle
Title: President
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<PAGE> 44
TITLE COMPANY'S ACCEPTANCE
The foregoing fully executed Agreement together with the Initial Earnest
Money is accepted by the undersigned this 8th day of May, 1997 which for the
purposes of this Agreement shall be deemed to be the date of "Opening of
Escrow".
First American Title Insurance Company
By: /s/ DIXIE LIDO for
Sharon McKenzie
--------------------------------------
Its: Escrow Officer
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FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
[Villa Antigua]
DATED: To be effective as of July 24, 1997 (the "Effective Date").
PARTIES: The parties to this First Amendment to Purchase and Sale Agreement
and Escrow Instructions (the "First Amendment") are:
(a) VILLA ANTIGUA II DEVELOPMENT PARTNERS, a Massachusetts limited
partnership, and CLUSTER HOUSING PROPERTIES, a California limited
partnership (collectively, "Seller"); and,
(b) CAPITAL MANAGEMENT SYSTEMS, INC., a Pennsylvania corporation
("Purchaser").
ESCROW AGENT: FIRST AMERICAN TITLE INSURANCE COMPANY
ESCROW NO.: 227-227-1063575
RECITALS:
A. Seller and Purchaser entered into that certain Purchase and Sale
Agreement and Escrow Instructions [Villa Antigua] dated to be effective as of
May 6, 1997 (the "Purchase Agreement").
B. The Parties desire to amend the Purchase Agreement all as more
particularly set forth in this First Amendment.
AGREEMENTS:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. INCORPORATION OF RECITALS. All of the foregoing Recitals are
incorporated herein as agreements of the Parties.
2. AMENDMENT TO PURCHASE AGREEMENT. The Purchase Agreement is hereby
amended as follows:
(a) Seller acknowledges that Purchaser has notified Seller of
certain physical deficiencies with respect to the Property more particularly
identified on Schedule 1 (the "Schedule") attached hereto and incorporated
herein by this reference. Purchaser hereby approves each and every condition set
forth in Section 5(a) of the Purchase Agreement (and without limiting the
generality of the foregoing hereby approves the physical, financial and legal
<PAGE> 46
status of the Property and the Seller's Disclosure Documentation) other than
those items requiring repair that are expressly identified on the Schedule.
(b) Seller shall, at Seller's sole cost and expense but subject to
Subparagraph (iii) below, perform (or cause the performance of) the repair of
each of the items identified on the Schedule (collectively, the "Repairs") in a
good and workmanlike manner, in compliance with all applicable legal
requirements and otherwise in accordance with the following:
(i) Seller shall commence (or cause to be commenced) the Repairs
on or before September 20, 1997, and shall use commercially reasonable efforts
to complete the Repairs prior to or at Closing; provided, however, that the
Closing shall not be extended in the event Seller shall not have completed the
Repairs by the date otherwise set for the Closing.
(ii) Seller shall be entitled to obtain competitive bids for
such Repairs from one or more contractors that are qualified to perform the work
for which the bid shall be sought, the identity of the contractor, the scope of
the work and the final contract terms all to be subject to the prior written
approval of Purchaser. Such approval shall not be unreasonably withheld or
conditioned and shall be deemed given unless Purchaser shall have disapproved
any of such matters in writing, specifying the reasons for such disapproval with
particularity, within three (3) business days after the identity and
qualifications of such contractor, a description of the scope of the work and
the form of contract (as the case may be) shall have been delivered to Purchaser
by Seller. Purchaser's failure to disapprove any such matter in accordance with
the foregoing shall be deemed approval.
(iii) Notwithstanding anything contained herein to the contrary,
Seller shall not be required to expend an amount to complete any item of such
Repairs in excess of the amount set forth on the Schedule as the "Cost to
Remediate" with respect to each such item, determined on a category-by-category
basis, and savings in one category shall not be available to perform any Repairs
in another category, and Seller shall be entitled to retain any savings
resulting from the completion of any such item at cost less than that set forth
for such item on the Schedule.
(c) (i) To the extent Seller shall not have commenced any particular
item of the Repairs on or before September 20, 1997, Seller shall credit
Purchaser with the amount shown on the Schedule for the cost of such item
against the Purchase Price at the Closing.
(ii) In the event and to the extent Seller shall not have
completed any item of the Repairs prior to Closing, Seller and Purchaser shall
enter into an escrow agreement whereby Title Company is appointed as escrow
agent to hold funds delivered into escrow by Seller sufficient in amount to pay
the cost to complete such item(s) as soon after Closing as possible (but in no
event more than thirty (30) days after the Closing); provided, however, that for
each item of such Repairs, the sum of the amount delivered into escrow and the
amount theretofore expended on such item by Seller shall in no event exceed the
"Cost to Remediate" for such item identified on the Schedule and provided
further that for "floorcoverings" as described on the Schedule, Seller shall
deliver the funds not theretofore expended to pay for "floorcoverings" diretly
to Purchaser instead of into escrow but otherwise subject to each of the
provisons of this Amendment. Seller shall be entitled to withdraw funds from
such escrow for the sole purpose of
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<PAGE> 47
paying costs relating to such repairs, such withdrawals to be subject to the
prior written approval of Purchaser. Such approval shall not be unreasonably
withheld or conditioned and shall be deemed given unless Purchaser shall have
disapproved such withdrawal in writing, specifying the reasons for such
disapproval with particularity, within three (3) business days after the
request for approval of a withdrawal shall have been delivered to Purchaser by
Seller. Purchaser's failure to disapprove a withdrawal in accordance with the
foregoing shall be deemed approval. Notwithstanding the foregoing, to the
extent such item(s) shall not have been completed on or before the thirtieth
(30th) day after the Closing, the funds then held by Title Company shall be
released to Purchaser and used by Purchaser to complete such otherwise
incomplete item(s) of the Repairs, provided that Purchaser shall promptly
return to Seller such funds as are not required to complete such items.
3. NO FURTHER AMENDMENTS. Except as set forth in Paragraph 2, all
other terms and conditions of the Purchase Agreement shall remain in full force
and effect.
4. COUNTERPARTS. This First Amendment may be executed in any number
of counterparts.
5. TELECOPIES. Telecopies of the executed signature pages of this
First Amendment shall be effective and binding upon the Parties as if such
signatures were original signatures and Escrow Agent is hereby authorized by the
Parties and entitled to accept and treat such telecopies signatures as
originals. Immediately after sending the signature pages, if any, by telecopy,
the Party providing such telecopy shall send the originals of such pages to the
other Party and to the Escrow Agent by hand delivery or overnight courier, as
applicable.
IN WITNESS WHEREOF, the Parties have executed this First Amendment
as of the Effective Date.
`SELLER' VILLA ANTIGUA II DEVELOPMENT PARTNERS,
a Massachusetts limited partnership
By: GP L'Auberge Communities II, L.P.,
a California limited partnership,
its general partner
By: L'Auberge Communities Inc.,
a California corporation,
its general partner
By: /s/ STEPHEN B. BOYLE
-------------------------------
Name: Stephen B. Boyle
Title: President
[signatures continued.]
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<PAGE> 48
CLUSTER HOUSING PROPERTIES,
A California limited partnership,
By: GP L'Auberge Communities, L.P.,
a California limited partnership,
its general partner
By: L'Auberge Communities Inc.,
a California corporation,
its general partner
By: /s/ STEPHEN B. BOYLE
-------------------------------
Name: Stephen B. Boyle
Title: President
"BUYER" CAPITAL MANAGEMENT SYSTEMS, INC.,
a Pennsylvania corporation
By: /s/ RICHARD A. MITCHELL
-------------------------------
Name: Richard A. Mitchell
Title: Vice President
-4-
