FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 1996 0-13331
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
(Exact Name of Registrant as specified in its Charter)
Delaware 16-1234990
- -------------------- -----------------------------------
(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
Indicate by a check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of June 30, 1996, the issuer had 15,551 units of limited partnership interest
outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
INDEX
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
June 30, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended June 30, 1996 and 1995 4
Statements of Operations -
Six Months Ended June 30, 1996 and 1995 5
Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 6
Statements of Partners' (Deficit) Capital -
Six Months Ended June 30, 1996 and 1995 7
Notes to Financial Statements 8 - 19
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- -------- FINANCIAL CONDITION AND RESULTS OF OPERATIONS 20 - 21
---------------------------------------------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 1,410,000 $ 1,410,000
Buildings and improvements 17,232,630 17,238,605
Furniture and fixtures 2,275,548 2,275,548
------------ ------------
20,918,178 20,924,153
Less accumulated depreciation 9,638,598 9,283,886
------------ ------------
Property, net 11,279,580 11,640,267
Investment in joint venture 147,699 167,321
Cash -- --
Cash - security deposits 54,800 53,989
Accounts receivable, net of allowance for doubtful
accounts of $895,282 and $800,839, respectively 8,473 21,238
Other assets 633,205 520,876
------------ ------------
Total Assets $ 12,123,757 $ 12,403,691
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Cash overdraft $ 141,299 $ 36,921
Mortgages payable 10,168,100 10,276,248
Accounts payable and accrued expenses 972,942 777,976
Accounts payable - affiliates 1,182,484 1,258,243
Accrued interest 95,059 88,868
Security deposits and prepaid rents 313,935 269,591
------------ ------------
Total Liabilities 12,873,819 12,707,847
------------ ------------
Partners' (Deficit) Capital:
General partners (440,776) (427,399)
Limited partners (309,286) 123,243
------------ ------------
Total Partners' (Deficit) (750,062) (304,156)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 12,123,757 $ 12,403,691
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Income:
Rental $ 1,019,899 $ 1,149,863
Interest and other income 43,687 68,757
----------- -----------
Total income 1,063,586 1,218,620
----------- -----------
Expenses:
Property operations 594,105 874,444
Interest:
Paid to affiliates 37,241 21,574
Other 192,180 283,941
Depreciation and amortization 185,774 194,503
Administrative:
Paid to affiliates 75,729 146,300
Other 137,019 118,805
----------- -----------
Total expenses 1,222,048 1,639,567
----------- -----------
Loss before allocated loss from joint venture (158,462) (420,947)
Allocated loss from joint venture (16,097) (17,965)
----------- -----------
Net loss $ (174,559) $ (438,912)
=========== ===========
Loss per limited partnership unit $ (10.89) $ (27.38)
=========== ===========
Distributions per limited partnership unit $ -- $ --
=========== ===========
Weighted average number of
limited partnership units
outstanding 15,551 15,551
=========== ===========
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Income:
Rental $ 2,055,648 $ 2,256,624
Interest and other income 138,490 125,717
----------- -----------
Total income 2,194,138 2,382,341
----------- -----------
Expenses:
Property operations 1,205,978 1,545,998
Interest:
Paid to affiliates 72,828 40,611
Other 564,730 613,239
Depreciation and amortization 372,676 372,615
Administrative:
Paid to affiliates 145,110 257,306
Other 259,100 284,937
----------- -----------
Total expenses 2,620,422 3,114,706
----------- -----------
Loss before allocated loss from joint venture (426,284) (732,365)
Allocated loss from joint venture (19,622) (42,571)
----------- -----------
Net loss $ (445,906) $ (774,936)
=========== ===========
Loss per limited partnership unit $ (27.81) $ (48.34)
=========== ===========
Distributions per limited partnership unit $ -- $ --
=========== ===========
Weighted average number of
limited partnership units
outstanding 15,551 15,551
=========== ===========
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Cash flow from operating activities:
Net loss $(445,906) $(774,936)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 372,676 372,615
Loss from joint venture 19,622 42,571
Changes in operating assets and liabilities:
Cash - security deposits (811) 2,543
Accounts receivable 12,765 13,501
Other assets (130,293) (124,934)
Accounts payable and accrued expenses 194,966 247,162
Accrued interest 6,191 --
Security deposits and prepaid rent 44,344 30,548
--------- ---------
Net cash provided by (used in) operating activities 73,554 (190,930)
--------- ---------
Cash flow from investing activities:
Capital expenditures 5,975 --
Distributions from joint venture -- --
--------- ---------
Net cash provided by investing activities 5,975 --
--------- ---------
Cash flows from financing activities:
Cash overdraft 104,378 --
Accounts payable - affiliates (75,759) 292,310
Principal payments on mortgages and notes (108,148) (107,777)
Distributions to partners -- --
--------- ---------
Net cash (used in) provided by financing activities (79,529) 184,533
--------- ---------
Increase (decrease) in cash -- (6,397)
Cash - beginning of period -- 8,534
--------- ---------
Cash - end of period $ -- $ 2,137
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 558,539 $ 580,378
========= =========
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
Six Months Ended June 30, 1996 and 1995
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1995 $ (385,610) 15,551 $ 1,474,437
Net loss (23,248) -- (751,688)
----------- ----------- -----------
Balance, June 30, 1995 $ (408,858) 15,551 $ 722,749
=========== =========== ===========
Balance, January 1, 1996 $ (427,399) 15,551 $ 123,243
Net loss (13,377) -- (432,529)
----------- ----------- -----------
Balance, June 30, 1996 $ (440,776) 15,551 $ (309,286)
=========== =========== ===========
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
1. GENERAL PARTNER'S DISCLOSURE
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership III, all adjustments necessary for the fair
presentation of the Partnership's financial position, results of
operations, and changes in cash flows for the six months ended June 30,
1996 and 1995 have been made in the financial statements. The financial
statements are unaudited and subject to any year-end adjustments which may
be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
Realmark Property Investors Limited Partnership III (the "Partnership"), a
Delaware Limited Partnership, was formed November 18, 1983, to invest in a
diversified portfolio of income-producing real estate.
In February 1984 the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to organization,
it had no business activities and, accordingly, had not incurred any
expenses or earned any income until the first interim closing (minimum
closing) of the offering which occurred April 26, 1984. All items of income
and expense arose subsequent to this date. On January 31, 1985 the offering
was concluded, at which time 15,551 units of limited partnership interest
were outstanding. The General Partners are Realmark Properties, Inc., a
Delaware corporation, the corporate General Partner, and Mr. Joseph M.
Jayson, the individual General Partner. Joseph M. Jayson is the sole
shareholder of J.M. Jayson & Company, Inc. (JMJ) and Realmark Properties,
Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc.
Under the Partnership agreement, the General Partners and affiliates can
receive compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership.
-8-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
Net income or loss arising from the sale or refinancing shall be
distributed first to the limited partners in an amount equivalent to a 7%
return on the average of their adjusted capital contributions, then in an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a disposition fee, then to all partners in an
amount equal to their respective positive capital balances, and finally, in
the ratio of 87% to the limited partners and 13% to the general partners.
Partnership income or loss not arising from sale or refinancing shall be
allocated 97% to the limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Cash - security deposits
------------------------
Cash - security deposits represents cash on deposit in accordance with
terms of a U.S. Department of Housing and Urban Development (HUD)
regulatory agreement for multi-family housing projects under Section
223(f).
Property and depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System are used to calculate
depreciation expense for tax purposes.
Rental income
-------------
Leases for residential properties have terms of one year or less.
Commercial leases generally have terms of one to five years. Rental income
is recognized on the straight-line method over the term of the lease.
-9-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment in Joint Venture
---------------------------
The interest in joint venture is accounted for on the equity method.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
In August 1984 the Partnership acquired a 112 unit apartment complex (Bryn
Mawr) located in Ypsilanti, Michigan for a purchase price of $1,833,554,
which included $134,857 in acquisition fees. In 1985 the acquisition fees
related to the purchase of Bryn Mawr were reduced by $18,600 and
reallocated to properties by the Partnership that year.
In August 1986 the Bryn Mawr Apartments were sold for $3,110,000. The net
cash proceeds of approximately $667,000 from the sale were distributed to
the investors on a pro rata basis. The Partnership recognized a gain for
financial statement purposes of $1,475,313. For income tax purposes, the
gain will be recognized under the installment sale method.
In February 1985 the Partnership acquired a 190 unit apartment complex
(Castle Dore) in Indianapolis, Indiana for a purchase price of $4,601,233,
which included acquisition fees of $414,279.
In February 1985 the Partnership acquired a 208 unit apartment complex
(Parc Bordeaux) in Indianapolis, Indiana for a purchase price of
$2,845,064, which included acquisition fees of $371,233.
In December 1988 the Partnership sold Parc Bordeaux Apartments for a sale
price of $5,300,000 which generated a total net gain for financial
statement purposes of $2,338,067. For income tax purposes, the gain will be
recognized under the installment sale method.
In June 1985 the Partnership acquired a 200 unit apartment complex
(Williamsburg South Apartments) in Atlanta, Georgia for a purchase price of
$5,138,745, which included acquisition fees of $368,745.
In August 1985 the Partnership acquired a 38,500 square foot office complex
(Perrymont) in Pittsburgh, Pennsylvania for a purchase price of $2,078,697,
which included acquisition fees of $168,697.
-10-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
In October 1985 the Partnership acquired a 130 unit apartment complex
(Pleasant Run) in Cincinnati, Ohio for a purchase price of $3,434,728,
which included acquisition fees of $267,228.
In December 1985 the Partnership acquired a 280 unit apartment complex
(Ambassador Towers, formerly Cedar Ridge) in Monroeville, Pennsylvania for
a purchase price of $6,766,424, which included acquisition fees of
$646,424.
5. INVESTMENT IN JOINT VENTURES
In April 1985 the Partnership entered into an agreement and formed the
Inducon Joint Venture - Amherst (the Joint Venture), for the primary
purpose of constructing office/warehouse buildings in Erie County, New York
as income producing property. The site is part of the Amherst Foreign Trade
Zone. This is U.S. Customs Territory under federal supervision, where
foreign and domestic merchandise is brought for storage, manufacturing,
salvage, repair, exhibit, repacking, relabeling or re-export. Under the
terms of the joint venture agreement, the Partnership supplied $545,000 of
capital to acquire the land and undertake initial development of Phase I
and $275,000 for Phase II. The other Joint Venturer delivered and completed
on behalf of the Joint Venture all plans, specifications, maps, surveys,
accounting pro-formas for construction, initial leasing and operations, and
cost estimates with respect to development.
Ownership of the Joint Venture is divided equally between the Partnership
and the other Joint Venturer. The Joint Venture agreement provides that the
Partnership will be allocated 95% of any income or loss.
Net cash flow from the Joint Venture is to be distributed as follows:
To the Partnership until has received a return of 7% per annum on its
underwritten syndicated equity. To the extent a 7% return is not received
from year to year, it will accrue and be paid from the next available cash
flow.
To the other Joint Venturer in an amount equal to that paid to the
Partnership. No amount will accumulate in favor of the other investor.
Any remaining amount will be divided equally.
-11-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
To the extent there are net proceeds from any sale or refinancing of the
subject property, the proceeds will be paid in the following order of
priority:
To the Partnership to the extent the 7% per annum returned on its
underwritten equity is unpaid.
Next to the Partnership until it has received an overall 9% cumulative
return on its underwritten equity.
Next to the Partnership until it has received an amount equal to its total
underwritten equity, reduced by any prior distribution of sale, financing
or refinancing proceeds.
Next to the Partnership until it has received a cumulative 20% per year
return on its total underwritten equity.
Thereafter any remaining net proceeds will be divided 50% to the
Partnership and 50% to the other joint venturer.
A summary of the assets, liabilities and capital of the joint venture as of
June 30, 1996 and December 31, 1995 and the results of its operations for
the six months ended June 30, 1996 and 1995 is as follows:
-12-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
BALANCE SHEETS
June 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 177,709 $ 177,709
Land improvements 221,399 221,399
Buildings and improvements 3,070,246 3,072,913
Equipment 8,466 8,466
Furniture and fixtures 2,101 2,101
---------- ----------
3,479,921 3,482,588
Less accumulated depreciation 1,138,551 1,074,688
---------- ----------
Property, net 2,341,370 2,407,900
Cash and cash equivalents 176,029 157,789
Other assets 31,276 39,925
Deferred debt expense, net of accumulated
amortization of $280,396 and $273,372, respectively 41,545 28,841
---------- ----------
Total Assets $2,590,220 $2,634,455
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Bonds payable $2,040,000 $2,040,000
Mortgage payable 286,655 292,033
Accounts payable and accrued expenses 67,073 87,679
Accounts payable - affiliates 34,310 31,906
---------- ----------
Total Liabilities 2,428,038 2,451,618
---------- ----------
Partners' Capital:
The Partnership 147,699 167,321
Other joint venturer 14,483 15,516
---------- ----------
Total Partners' Capital 162,183 182,837
---------- ----------
Total Liabilities and Partners' Capital $2,590,220 $2,634,455
========== ==========
</TABLE>
-13-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1996 and 1995
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Income:
Rental $ 223,580 $ 204,321
Interest and other income 4,942 5,138
--------- ---------
Total income 228,522 209,459
--------- ---------
Expenses:
Property operations 49,415 59,596
Interest 93,497 91,894
Depreciation and amortization 85,034 87,556
Administrative 21,230 15,225
--------- ---------
Total expenses 249,176 254,271
--------- ---------
Net loss $ (20,654) $ (44,812)
========= =========
Allocation of net loss:
The Partnership $ (19,622) $ (42,571)
Other Joint Venturer (1,033) (2,241)
--------- ---------
$ (20,654) $ (44,812)
========= =========
A reconciliation of the Partnership's investment in the joint venture for the
six month periods ended June 30, 1996 and 1995 is as follows:
1996 1995
---- ----
Investment in joint venture - beginning of period $ 167,321 $ 261,019
Allocated loss (19,622) (42,571)
--------- ---------
Investment in joint venture - end of period $ 147,699 $ 218,448
========= =========
-14-
<PAGE>
6. MORTGAGES AND NOTES PAYABLE
Castle Dore
-----------
A mortgage of $2,144,384 and $2,197,403 at June 30, 1996 and 1995,
respectively, bearing interest at 7.50%. The mortgage provides for annual
principal and interest payments of $216,026 payable in equal monthly
installments through September 1, 2014. The carrying amount of the mortgage
of $1,556,102 and $1,570,627 at June 30, 1996 and 1995, respectively,
reflects an unamortized mortgage discount of $588,282 and $626,776 at June
30, 1996 and 1995, respectively. The discount is based on an imputed
interest rate of 12.5% and will be amortized using the interest method over
the remaining term of the mortgage.
Williamsburg
------------
A 12.85% mortgage which provides for annual principal and interest payments
of $341,602 payable in equal monthly installments through December 1999.
The mortgage had a balance of $2,412,875 at June 30, 1996.
Perrymont
---------
A mortgage which provides for interest rates and monthly installments
through December 1998 as follows:
Year Rate Payment
---- ---- -------
1995 7.50% $ 7,907 (Interest only)
1996 7.875% $ 9,660 (Principal and interest)
1997 - 1998 8.50% $ 10,187 (Principal and interest)
The outstanding balance at June 30, 1996 and 1995 respectively was
$1,265,185 (to date no principal has been paid).
Pleasant Run
------------
A 10% mortgage with a balance of $2,211,259 at June 30, 1996, providing for
annual principal and interest payments of $245,349 payable in equal monthly
installments, with the remaining balance due August 1, 1998.
-15-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
Ambassador Towers (formerly Cedar Ridge)
----------------------------------------
A mortgage with a balance of $494,542 and $561,513 at June 30, 1996 and
1995, respectively, bearing interest at 7.75%. The mortgage provides for
monthly principal and interest payments of $8,980 through April 1, 2002.
A mortgage with a balance of $1,232,902 and $1,477,232 at June 30, 1996 and
1995, respectively, bearing interest at 8.75%. The mortgage provides for
monthly principal and interest payments of $20,455 through October 1, 2003.
A mortgage with a balance of $995,235 and $1,000,000 at June 30, 1996 and
1995, respectively which provides for interest payments at prime rate plus
2% (10.25% at June 30, 1996). The mortgage was originally due in September
1994, but in September 1995 the General Partner negotiated an extension
until May 1996. The Partnership has been utilizing a temporary extension
while it seeks refinancing for the loan.
The aggregate maturities of the mortgages for each of the next five years
and thereafter are as follows:
Year Amount
---- ------
1996 $ 1,319,177
1997 349,132
1998 2,525,632
1999 3,849,622
2000 74,225
Thereafter 2,925,584
------------
11,043,303
(Unamortized discount) ( 767,055)
------------
TOTAL $ 10,276,248
============
-16-
<PAGE>
7. RELATED PARTY TRANSACTIONS
Management fees for the management of Partnership's properties are paid to
an affiliate of the General Partner. The management agreement provides for
5% of gross monthly rental receipts of the complex to be paid as fees for
administering the operations of the property. These fees totaled $112,800
and $114,739 for the six months ended June 30, 1996 and 1995, respectively.
According to the terms of the Partnership agreement, the general partners
are entitled to receive a Partnership management fee equal to 7% of net
cash flow (as defined in the Partnership agreement), 2% of which is
subordinated to the limited partners having received an annual cash return
equal to 7% of their adjusted capital contributions. No such fee has been
paid or accrued by the Partnership for the six months ended June 30, 1996
and 1995.
The general partners are also allowed to collect property disposition fees
upon sale of acquired properties. This fee is not to exceed the lesser of
50% of amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties or 2.75% of the sales
price. The property disposition fee is subordinate to payments to the
limited partners of a cumulative annual return (not compounded) equal to 7%
of their average adjusted capital balances and to repayment to the limited
partners of an amount equal to their capital contributions.
The general partners have not to date received a disposition fee on the
sale of Bryn Mawr or Parc Bordeaux, as the limited partners have not
received a return of 7% on their average adjusted capital or their original
capital as defined in the Partnership agreement. Once the limited partners
receive their original capital and a 7% return, the general partners will
be entitled to disposition fees of 2.75%.
Accounts payable - affiliates amounted to $1,182,484 and $978,687 at June
30, 1996 and 1995, respectively. The payable represents fees due to the
general partner or to affiliates of the general partner. Interest charged
on amounts due affiliates totaled $72,828 for the six month period ended
June 30, 1996.
-17-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
Pursuant to the terms of the Partnership agreement, the corporate general
partner charges the Partnership for reimbursement of certain costs and
expenses incurred by the corporate general partner and its affiliates in
connection with the administration of the Partnership. These charges were
for the Partnership's allocated share of costs and expenses such as
payroll, travel and communication, costs related to partnership accounting,
and partner's communication and relations.
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $7,020 for the six months ended June 30, 1996
and 1995.
8. INCOME TAXES
No provision has been made for income taxes since the income or loss of the
Partnership is to be included in the tax returns of the individual
partners.
The tax returns of the Partnership are subject to examination by federal
and state taxing authorities. Under federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded
varying interpretations and, accordingly, reported Partnership amounts
could be changed as a result of any such examination.
The reconciliation of net loss for the six month periods ended June 30,
1996 and 1995 as reported in the statements of operations, and as would be
reported for tax purposes respectively, is as follows:
June 30, June 30,
1996 1995
---- ----
Net loss -
Statement of operations $ (445,906) $ (774,936)
(Add to) deduct from:
Difference in depreciation ( 42,882) ( 62,800)
Difference in amortization 32,862 32,861
Non-deductible expenses 125,792 41,853
Difference in loss of joint venture 3,224 10,400
---------- ----------
Net loss for tax purposes $ (326,910) $ (752,622)
========== ==========
-18-
<PAGE>
INCOME TAXES (CONTINUED)
The reconciliation of partner's (deficit) capital at June 30, 1996 and
December 31, 1995 as reported in the balance sheets, and as reported for
tax purposes, is as follows:
June 30, December 31,
1996 1995
---- ----
Partner's (Deficit) Capital -
balance sheet $ (750,062) $ (304,156)
Add to (deduct from):
Accumulated difference in
depreciation (3,967,532) (3,924,650)
Accumulated difference in
amortization 60,987 11,694
Syndication fees and selling
expenses 1,842,060 1,842,060
Gain on sale of property ( 817,092) ( 817,092)
Other non-deductible expenses 932,547 806,755
Difference in book and tax
depreciable cost basis 915,085 915,085
Difference in book and tax
basis of investments (740,376) (743,600)
Other ( 69,286) ( 69,286)
------------ ------------
Partner's (Deficit) Capital -
tax return $ (2,593,669) $ (2,283,190)
============ ============
9. SUBSEQUENT EVENTS
On July 16, 1996 the Corporate General Partner entered into a contract on
behalf of the Partnership to sell Castle Dore Apartments, Ambassador Towers
(formerly Cedar Ridge Apartments), Pleasant Run Apartments and Williamsburg
South Apartments at sales prices of $5,500,000, $5,800,000, $3,350,000 and
$4,831,000, respectively. The contract is subject to a number of
contingencies as were described in Form 8-K filed on July 31, 1996. No firm
closing date on the sale has been established to date.
-19-
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Partnership continues to struggle with cash shortfalls being funded by the
General Partner, although under no obligation to do so. At this point in time,
there is no assurance that the General Partner will continue to advance funds to
assist with the Partnership's cash flow difficulties. Although the Partnership
had a better quarter than it did in the previous year, and also a better six
months than in the same period a year ago, it still suffered from another
disappointing quarter. Operating revenue decreased approximately $201,000 from
the same six month period in the previous year, while total expenses also
decreased slightly over $494,000. Management is optimistic that the decrease in
expenses will continue as more control is being exercised over expenditures;
with more control over spending now in place, management is focusing on ways to
increase operating revenue.
The Partnership continues to review the possibility of refinancing mortgages in
order to reduce interest rates and increase cash flow.
There were no distributions for the six month periods ended June 30,1996 and
1995. The Partnership does not expect to resume distributions until it is able
to generate sufficient excess cash flow and repay the General Partner advances.
Results of Operations:
- ----------------------
For the quarter ended June 30, 1996, the Partnership's net loss was $174,559 or
$10.89 per limited partnership unit. Net loss for the quarter ended June 30,
1995 amounted to $438,912 or $27.38 per unit. For the six month period ended
June 30, 1996, the net loss was $445,906 or $27.81 per limited partnership unit
as compared to $774,936 or $48.34 per limited partnership unit for the six month
period ended June 30, 1995.
Partnership revenue for the quarter ended June 30, 1996 totaled $1,063,586, a
decrease of approximately $155,000 from the 1995 amount of $1,218,620. Total
rental revenue dropped almost $130,000, which makes up most of the decrease in
total revenue. The majority of the decrease can be attributed to falling
economic occupancy levels at Ambassador Towers (formerly Cedar Ridge) and
continued vacancies at Perrymont Office Building. Compared to the prior year,
physical occupancy dropped, while rental concessions and delinquencies
increased. Management continues to offer rental concessions and other promotions
in an attempt to increase the occupancies.
-20-
<PAGE>
Results of Operations (continued):
- --------------------- ------------
For the quarter ended June 30, 1996, Partnership expenses amounted to
$1,222,048, decreasing an inordinate $417,000 from the same 1995 quarter amount.
For the six month period ended June 30, 1996, Partnership expenses decreased by
over $494,000 from the same period in 1995. A large decrease in property
operations expenditures should be noted; in this area, specifically, at
Williamsburg South Apartments, there was a roughly $10,000 decrease in payroll
and associated costs and repairs and maintenance; at Perrymont, there were
decreases in most operations costs including repairs and maintenance expenses,
contracted services and utilities; at Pleasant Run there were similar decreases
in payroll expenses, repairs and maintenance and utilities; at Ambassador Towers
(formerly Cedar Ridge), operating expenses remained fairly consistent with those
of the same period in the previous year; inconsistent with the trend of the
other properties in the Partnership, there were increases in payroll and
associated costs, repairs and maintenance and utilities at Castle Dore.
Depreciation and amortization expenses remained fairly stable between the six
month periods ended June 30, 1996 and 1995.
Some of the properties did begin to see an increase in occupancy levels, which
should ultimately lead to increased revenue for the Partnership in the near
future. The Partnership is beginning to see vacancy levels decrease and an
increase in rental rates; as occupancy levels increase, rental concessions will
diminish.
On a tax basis, the partnership had a loss of $326,910 or $20.39 per limited
partner unit for the six month period ended June 30, 1996 versus a tax loss of
$752,622 or $46.95 per unit for the six month period ended June 30, 1995.
-21-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not a party to, nor are any of the Partnership's properties
subject to any material pending legal proceedings other than ordinary, routine
litigation incidental to the Partnership's business.
Items 2, 3, 4 and 5
- -------------------
Not applicable.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
Item 7 (c) - Financial Statements and Exhibits - Contract between the
Partnership and Partnership Equities, Inc. dated July 16, 1996 attached.
Exhibit 27 - Financial Data Schedule (Electronic filing only)
Form 8-K was filed July 31, 1996.
-22-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP III
By: /s/Joseph M. Jayson January 2, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/Joseph M. Jayson January 2, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer January 2, 1997
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
REAL ESTATE PURCHASE AGREEMENT
CASTLE DORE APARTMENTS
This purchase agreement ("Agreement" or "Contract"), made and entered into
by and between Realmark Property Investors Limited Partnership-III, a Delaware
limited partnership ("Seller") and Partnership Equities, Inc., a Ohio
corporation ("Buyer").
RECITALS:
A. Buyer desires to purchase from Seller, and Seller wishes to sell to
Buyer, a certain parcel of real property and all of the improvements and
buildings situated thereon, and the hereditaments and appurtenances thereto,
consisting of an apartment complex (the "Real Property"), and all personal
property, equipment, fixtures and intellectual property (excluding, however, any
use of the name "Realmark" or any related or similar name, it being understood
that only the right, title and interest of Seller to the name of the apartment
complex shall be transferred, and also excluding software not able to be
transferred vis a vis existing licensing agreements, if any) owned by Seller,
utilized in the operation or management of the apartment complex, and located at
said apartment complex as described on EXHIBIT B (collectively the "Personal
Property"). The Real Property together with the Personal Property applicable to
the apartment complex will be herein referred to as the "Property".
B. Attached hereto and made a part hereof is the legal description of the
Real Property, marked with the name of the apartment complex and attached as
EXHIBIT A. A more detailed list of the Personal Property will be prepared by
Seller and submitted during the first ten (10) days of the due diligence period
set forth in Section 3 below and will thereafter be attached to this Agreement
as an amendment to EXHIBIT B. Any subsequent amendment to either EXHIBIT A or
EXHIBIT B, or to any other Exhibit to this Agreement, is to be considered an
integral part of this Agreement.
FOR AND IN CONSIDERATION of the mutual promises, covenants and agreements,
hereinafter set forth, the Parties agree as follows:
SECTION 1. PURCHASE PRICE.
(a) The purchase price to be paid Seller for the Real Property will
be $5,500,000.00 ("Purchase Price") paid in the following manner:
Initial Earnest Money Deposit
at signing of Purchase Agreement $10,000.00
<PAGE>
Additional Earnest Money Deposit
after Due Diligence Period (as
defined herein). 70,000.00
Cash at closing (subject to
credit for Earnest Money,
prorations and allocations per
Section 5) $ 5,420,000.00
------------
Total $ 5,500,000.00
and payable by Buyer on closing of title and delivery of the Deed ("Closing") in
immediately available good, federal funds. The Additional Earnest Money Deposit
shall be paid to the Escrow Agent within five (5) days after the expiration of
the Due Diligence Period.
(b) All existing debt, liens, impositions and similar encumbrances
affecting the Real Property will be discharged or, if annual liens, prorated in
accordance with Section 5 and paid at the Closing.
(c) The Initial Earnest Money in the amount stated in Section 1 (a)
above (the "Initial Earnest Money") will be deposited with Andrews, Sanchez,
Amigone, Mattrey & Marshall, LLP in Buffalo, New York, as Escrow Agent (the
"Escrow Agent"), within four (4) days from the date of Seller's execution (as
communicated to Buyer by written facsimile and orally by telephone on such date
of execution) of this Agreement. Within five (5) days after the end of the Due
Diligence Period (as hereinafter defined) Buyer will deposit an additional sum
of $70,000.00 as Additional Earnest Money (the "Additional Earnest Money") with
the Escrow Agent. The Initial Earnest Money and the Additional Earnest Money are
hereinafter collectively referred to as the "Earnest Money". Absent any contrary
provision of this Agreement, the total Earnest Money in the amount of $80,000.00
will remain on deposit with the Escrow Agent until the Closing of the Property.
If either of the Earnest Money deposits are not made by the dates as herein
above set forth, Seller may terminate this Agreement. Interest on the Earnest
Money shall follow the principal sum on any payment or refund. Interest payable
to Buyer shall be credited to Tax ID #31-0863929. Upon any permitted termination
of this Agreement by Buyer, including but not limited to the failure of the
conditions precedent set out in Section 7, the Earnest Money shall be returned
to Buyer upon demand, and in compliance with all other terms and provisions of
this Agreement.
SECTION 2. PLACE AND TIME OF CLOSING.
(a) Subject to the conditions precedent set forth herein having been
met or waived, the Closing will take place on or before 240 days after execution
2
<PAGE>
of this Agreement by both parties, unless extended as otherwise set forth in
this Agreement. As used herein the terms "Closing" will mean the meeting of the
parties at which delivery of the Deed and payment of the Purchase Price as
called for in Section 1 occurs for the Real Property.
(b) Buyer and Seller agree that they will use their best efforts to
complete the Closing within two hundred forty (240) days from the execution of
this Agreement. Buyer agrees that it will use best efforts and good faith in
applying for a Bond Cap allocation and/or for financing for the Real Property
and will obtain same as soon as reasonably possible and will close on said Real
Property promptly thereafter. Notwithstanding the foregoing, and upon
satisfaction of all conditions precedent, Buyer shall complete the Closing by
March 15, 1997.
(c) This Agreement, as an offer to purchase when signed by Buyer,
shall automatically terminate if not accepted in final form by Seller by 5 P.M.,
Eastern Standard Time, five busi ness days from the date on which Buyer executed
this Agreement as indicated below.
SECTION 3. PURCHASER'S CONTINGENCIES.
(a) DUE DILIGENCE. Buyer, or its designees, will have a period of sixty
(60) days from July 20, 1996 (the "Due Diligence Period"), to enter the Property
to make inspections, engineering tests, surveys, and other such tests,
examinations and inspections as Buyer may desire as long as such tests,
examinations, etc., do not unreasonably interfere with the operations or any
current use of the Property. All entry upon the Property and any and all contact
with on site employees of Seller by Buyer shall be upon prior notice to Seller
and, at Seller's option, accompanied by an agent of Seller.
If the Closing of the Property does not occur, Buyer will make such
repairs as necessary to leave the Property in the same condition as prior to
entry by Buyer.
(i) During the Due Diligence Period, Buyer will inspect the Real
Property, and if any, the plans and specifications for design, quality,
structural and mechanical integrity and maintenance during the Due Diligence
Period. At the commencement of Buyer's due diligence or within ten (10) days
thereafter, Seller shall provide or make available at designated locations,
those operational and title information items which relate to the Property,
reasonably requested by Buyer, including, but not limited to:
o Inventory of Personal Property
o Current Rent Roll - December 1995 or April 1996
3
<PAGE>
o 1994 & 1995 year-end Operating Statements
o Operating Statement for the year 1996 to date (as of 4/30/96)
o December 1995 Operating Statement and 1996 Operating Budget
(It is specifically understood that Operating Budgets are
projections of Seller only and Seller makes no warranty or
representation with respect to any parties' achievement of any
such items in said Budget.)
o Detailed breakdown of the Property's payroll account including
a list of on-site personnel, salary and benefits
o Copy of current ad valorem tax bills, copy of each separate
utility bill for the Property for the past 3 months and a
listing by month of utility charges for 1995
o As-built survey, construction drawings, soil report,
compaction tests, and copies of all Certificates of Occupancy,
if any of the foregoing are in Seller's possession
o Copies of all third-party contracts (e.g., termite, landscape,
pool maintenance, etc.)
o Copies of any environmental reports, engineering reports,
feasibility studies, or appraisals in Seller's possession
(obtained within the last 36 months, it being understood that
Seller makes no warranty or representation with respect to the
information set forth in any of said studies)
o Copies of the latest insurance policy covering the Project,
with current coverage and deductibles along with a paid
invoice for said policy(s) (the same may be within a master
policy)
o Name, firm name, and telephone number for the lawyer most
recently involved with the Project. (It is agreed that at this
time the foregoing shall be identified as William H. Mattrey,
Esq., of Andrews, Sanchez, Amigone, Mattrey & Marshall, LLP,
(716) 852-1300.)
o Make available to Buyer all income information in Seller's
possession on all tenants currently leasing units in the
Property.
4
<PAGE>
o Originals or copies of all tenant leases, rent rolls for the
Property, including security deposits held by Seller in
connection with each apartment unit, credit reports and other
information concerning the leases which are currently in
Seller's file, service agreements, party-wall agreements, and,
if in Seller's possession engineering or architectural reports
for the Properties.
o Proof of zoning classification, if any, in Seller's possession
o A list of all equipment leases and/or any financing documents
for personal property, equipment, etc., affecting the
apartment complex
o Any other items which a prudent buyer reasonably requests and
needs in order to conduct a satisfactory due diligence review.
All of the foregoing will either be at the Property location or at Seller's
offices in Amherst, New York, or at Seller's option, will be forwarded to Buyer.
Any documents not provided by Seller to Buyer within the above ten (10) day
period will be made available by Seller, as soon as such documents are
available. In the event of any such failure to deliver any documents, except
those which are not in Seller's possession and which are so qualified
hereinabove as excusable items, the Due Diligence Period will be extended to a
date no less than five (5) days after delivery of the items not delivered within
the Due Diligence Period.
All Due Diligence materials must be maintained by Buyer on a confidential basis
and returned to Seller if Buyer terminates this Agreement. Buyer agrees that it
will not use the Due Diligence materials for any purpose other than to determine
whether to acquire the Property and agrees that it will not make contact with
Seller's tenants unless closing occurs. In addition, Buyer agrees that it will
under no circumstances make any offer, or use the Due Diligence materials, to
acquire the interest of any partner(s) of the selling entities for a period of
two (2) years after the date of this Contract. Buyer and/or its agents will not,
under any circumstances, disclose to any of Seller's employees that it is
contemplating acquisition of the Property without Seller's written consent prior
to closing. All reports desired by Buyer during its Due Diligence Period shall
be ordered by Buyer at Buyer's expense, but Buyer agrees that it will supply
copies of each and every report it receives immediately upon their completion
and availability to Buyer.
5
<PAGE>
(ii) During the Due Diligence Period, Buyer will conduct a review of
the economics and feasibility of acquiring and operating the Property as
required by its funding source, including inspection of all zoning and other
government permits and regulations and other matters and documents relating to
the operation of the Property, and as detailed in Section 3(a).
(iii) After Seller provides all required documents to the Buyer,
Buyer agrees to accept or reject all documents prior to the end of the Due
Diligence Period. If Buyer does not cancel this Contract during the Due
Diligence Period, Buyer shall be deemed to have accepted the Property and it
will close on the Property in accordance with this Contract, except for
cancellation in accordance with the specific provisions of this Contract.
(b) This Contract is contingent upon Buyer obtaining a "firm" commitment
(per the practice of HUD for 221D4 mortgages) for financing the purchase of Real
Property in accordance with the Contract upon terms and conditions satisfactory
to Buyer. Buyer agrees to apply for said commitment promptly after July 20,
1996, and shall have a period of 150 days to obtain said commitment. Should
Buyer be unable to obtain said commitment within said 150- day period, either
party may terminate this Contract by written notice to the other in which case
the Earnest Money shall be returned to Buyer and neither party shall have any
further liability, except the obligation to restore the premises after due
diligence. Buyer shall have the right to extend the mortgage contingency period
for up to 30 days on prior written notice to Seller if the mortgage application
is through HUD.
SECTION 4. DEED AND TITLE.
(a) Seller shall deliver to Buyer at Closing, a special or limited
warranty deed (or bargain and sale deed, where appropriate) ("Deed"), conveying
good and marketable fee simple title to the Property, subject only to such
easements, restrictions of record and title exceptions set forth in the
commitment for title insurance specifically approved by Buyer, and taxes not
delinquent. Further, the title insurance commitment for the Property must
contain provision for the endorsements that are reasonably required by Buyer's
funding source, which endorsements shall be ordered by Buyer at Buyer's expense.
In addition, Seller shall convey title to the Personal Property to Buyer, free
and clear of all liens and encumbrances (except those disclosed during due
diligence; e.g., equipment leases or personal property financing documents), by
the execution and delivery at Closing of a Bill of Sale in form and substance
reasonably satisfactory to Buyer, without warranty, except as to Seller's title.
(b) Seller agrees to provide a copy of its existing title insurance
policy to Buyer. Buyer shall then obtain an ALTA Form B Title Insurance
Commitment (the "Title Commitment"), within thirty (30) days of the date of
6
<PAGE>
commencement of Buyer's due diligence period, issued by a title insurance
company selected by Buyer, committing to insure fee simple marketable title to
the Property in the amount of the Purchase Price for such Property in Buyer's
name, with all standard exceptions removed (except for the rights of tenants
under unrecorded leases and/or except for standard exceptions normally not
removed pursuant to local custom with respect to each Property), and containing
no other exceptions not specifically approved by Buyer. Buyer shall have ten
(10) days after receipt to examine the Title Commitment and inform Seller of
Buyer's objection to any exception contained in or title defect revealed by the
Title Commitments.
(c) If Buyer's examination of the Title Commitment reveals that the
Title Commitment for the Property contains objectionable exceptions or that the
title to the Property is defective and thereafter, the issuing title insurance
company refuses to delete the objectionable exceptions or the defects cannot be
cured within a reasonable period of time after written notice by Buyer,
specifically pointing out the objection/defects, or if the title company refuses
to issue endorsements as required by Buyer's lender, then Buyer may elect to
terminate this Agreement upon written notice to Seller. Notwithstanding the
foregoing, however, in order to terminate the Contract, an objectionable
exception or defect must be one which renders title unmarketable and uninsurable
because of such specified objection or defect, or the specified objection or
defect shall be materially inconsistent with the present use of the Property as
an apartment complex.
(d) Seller will pay for preparation of the Deed for the Property.
(e) Buyer will pay for any survey of the Property, the recording of
the Deed for the Property, state tax and register's fees on the Deed, the cost
of obtaining a title commitment, and the premium due for the title insurance
policy to be issued for the Property, and all endorsements.
(f) Seller and Buyer will each pay their own attorney's fees.
SECTION 5. PRORATIONS AND ALLOCATIONS. (a) Rents, taxes, service
contracts, equipment leases or other personal property financing, utility
deposits, insurance and other expenses whether or not a lien, assessed or to be
assessed for the tax year in which the transaction is consummated. will be
prorated as to the Property to the date of the Closing based on a 365-day year.
Real estate tax adjustments, however, will be based upon dates taxes are payable
and adjusted as if they are assessed for the calendar year of closing.
7
<PAGE>
(b) Security deposits held by Owner or paid by any lessees at the
Property will be transferred to Buyer in full at Closing, including any interest
earned thereon and payable to the Tenant under State law.
SECTION 6. CONDEMNATION OR CASUALTY. Seller agrees to give Purchaser
prompt written notice of any fire or other casualty occurring to all or any
portion of the improvements at the Property and/or Personalty between the date
hereof and the date of closing. If prior to the closing, there shall occur:
(i) damage to the improvements at the Property caused by fire or
other casualty which would cost 5% of the Purchase Price of the Property or more
to repair based on the estimate of a reputable third party contractor chosen by
Seller; or
(ii) the taking or condemnation of all or any portion of the Real
Property and/or the improvements as aforesaid as would materially interfere with
the use thereof; then, if any of such events set forth in (i) or (ii) above
occurs, Buyer or Seller, at its option, may terminate its obligations under this
Agreement by written notice given to Seller within seven (7) days after Buyer
has received the notice referred to above or at the closing, whichever is
earlier. If Buyer does not elect to terminate its obligations as aforesaid, the
closing shall take place as provided herein without an abatement of the purchase
price (except that Buyer shall be allowed a credit for any deductible under
Seller's insurance) and there shall be assigned to the Buyer at closing, all
interest of the Seller in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of such occurrence. Notwithstanding
the foregoing, should Buyer elect to terminate, Seller may notify Buyer within
15 days that Seller intends to restore the Premises fully and in that event,
Buyer's termination notice shall be null and void and Seller shall proceed as
outlined above at closing.
If, prior to the closing, there shall occur:
(i) damage to the Property caused by fire or other casualty which
would cost less than 5% of the allocable Purchase Price of the Property based on
the estimate of a reputable third party contractor chosen by Seller to which
Buyer has no reasonable objection; or
(ii) the taking or condemnation of all or any portion of the said
Real Property and/or improvements as aforesaid which is not material to the use,
thereof; then, if any of such events set forth in (i) or (ii) above occurs,
Buyer shall have no right to terminate its obligations under this Agreement, but
there shall be assigned to Buyer at closing all interest of Seller in and to any
insurance proceeds or condemnation awards which may be payable to Seller on
account of any such occurrence, and in addition, Buyer shall be allowed a credit
for any deductible under Seller's insurance policy.
8
<PAGE>
Seller shall be responsible for maintaining fire and extended
coverage insurance prior to closing as is currently in place.
SECTION 7. CONDITIONS. The following shall each be conditions precedent
to Buyer's obligations hereunder, unless specifically waived in whole or in part
in writing by Buyer:
(a) LITIGATION. There being no existing or pending claims, lawsuits,
or governmental proceedings, or appeals, which challenge Seller's title to the
Property.
(b) TITLE INSURANCE POLICY. Title to the Property at Closing being
marketable or insurable, and/or in accordance with the provisions of Section 4
above, free and clear of all liens and encumbrances. In addition, Buyer
receiving assurances at Closing from the title insurance company issuing the
Title Commitment, that after Closing, Buyer will be issued an ALTA Form B Title
Insurance Policy, with all standard exceptions, except as set forth in Section 4
above, and all other exceptions objected to by Buyer deleted from such policy,
insuring fee simple marketable title to the Property or in accordance with
Section 4 above, in the amount of the Purchase Price, in Buyer's name, free and
clear of all liens and encumbrances not otherwise specifically agreed to by
Buyer prior to Closing.
(c) PERSONAL PROPERTY. Seller conveying title to the Personal
Property to Buyer at Closing free and clear of all liens and encumbrances
(except for equipment leases and personal property financing disclosed during
due diligence) by a Bill of Sale without warranties except as to title in form
and substance reasonably satisfactory to Buyer.
(d) LAWS AND REGULATIONS. Prior to Closing Seller not having
received written notice of non-compliance under any and all Federal, State,
County and Municipal laws, ordinances, requirements and regulations, including
but not limited to any and all environmental laws and regulations, affecting the
Property. Notwithstanding the foregoing, however, in the event Seller does
receive a written notice of violation of any of the foregoing, then and in that
event, Seller shall have the option of curing the matter which is the subject of
such notice before closing and/or making reasonable arrangements to complete the
cure of such violation after closing, provided an escrow is established for the
cost of said cure; and provided Seller either cures the subject of such notice
or makes adequate provisions to cure same and escrow the funds as set forth
hereinabove to do so, then and in that event, Buyer shall have no right to
terminate this Contract.
9
<PAGE>
(e) SELLER COOPERATION. Seller agrees to cooperate with and assist
Buyer and to execute any and all applications, petitions and attend and
participate in any necessary hearings, and undertake all other reasonable acts
to obtain any necessary permits for which Buyer may make application prior to
closing, provided that Buyer shall bear all expenses incidental thereto,
including all of Seller's out-of-pocket expenses.
(f) COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. Seller will be
in compliance with all other representations and warranties made herein at
Closing to the reasonable satisfaction of Buyer.
(g) NOTICE OF CLOSING. If all the conditions specified herein have
not been met within 240 days after execution of this Contract, Buyer shall have
the option to terminate this Agreement, by giving written notice to Seller
specifying the condition not met and provided that Seller does not cure or
remove said condition within 60 days after such notice, or such extended time as
the parties may agree, and in that event the Earnest Money shall be returned to
Buyer. However, in the event that all conditions specified herein have been met
by the Closing date, Buyer shall close the Purchase within the time period
specified, subject to non-performance by Seller under the terms hereof.
SECTION 8. SELLER'S WARRANTIES. The following warranties of Seller shall
survive the Closing for a period of sixty (60) days.
(a) The legal description of the Property contained in the recitals
to this Agreement is substantially correct and will be confirmed by any survey
obtained by Buyer.
(b) To Seller's best knowledge and belief (Seller meaning Joseph M.
Jayson or an officer of the general partner of Seller) Seller has not received
written notification that the Property is not in compliance with all federal,
state, county and municipal laws, ordinances and regulations, including but not
limited to all federal, state, county and municipal environmental laws and
regulations, applicable to or affecting the Property, subject to Seller's right
to cure as hereinabove stated.
(d) Seller will convey fee simple, marketable or insurable title to
the Property to Buyer at Closing and will convey title to the Personal Property
to Buyer at Closing by Bill of Sale, in form and substance reasonably
satisfactory to Buyer, free and clear of all liens and encumbrances.
(e) Seller will not interfere with Buyer's opportunity to hire
Seller's on-site employees, who work at the Property, but Buyer will have no
obligation to hire any of those individuals. Buyer will make no efforts to hire
such employees until after all contingencies have been removed and no earlier
than 10 days before closing.
10
<PAGE>
(f) Seller shall be responsible for (and Buyer shall not assume the
obligation of) all employee wages, benefits (including payments for accrued
bonuses, vacation or sick pay, unemployment compensation, employment taxes,
medical claims or similar payments), contributions under any benefit program or
agreement, severance pay obligations and other related employee costs arising as
a result of any events, acts (or failures to act) prior to the Closing Date with
respect to the Property at which such persons are employed, whether or not
disclosed on the schedules to this Agreement.
(g) Seller retains all liability and responsibility for fulfilling
all federal and/or state COBRA and continuation of group health insurance
coverage requirements (pursuant to Section 4980B of the Code, sections 601-608
of ERISA, and any applicable state laws) with respect to Seller's current or
former employees (and their dependents). Buyer does not hereby and will not at
the Closing of the Property assume any obligation to provide medical insurance
coverage to persons that it employs because it acquires the Property.
SECTION 9. NON-PERFORMANCE.
(a) If Seller fails to deliver the Deed or meet any of the
conditions hereof willfully, Buyer, at Buyer's sole option, may terminate this
Agreement whereupon the Earnest Money shall be returned to Buyer on demand or
Buyer may bring an action for specific performance, and if Buyer prevails, all
costs and expenses of any such action shall be paid by Seller as a reduction of
the Purchase Price. The foregoing shall not prevent Buyer from bringing an
action for monetary damages. The foregoing shall be the sole and exclusive
remedies of Buyer. However, if Buyer elects to bring an action for monetary
damages, they shall be specifically limited, if proven, to an amount equal to
the Earnest Money as set forth hereinabove.
(b) If Buyer defaults at any time, Seller and Buyer agree that it
will be extremely difficult or impractical to fix Seller's actual damages.
Therefore, in such an event, the entire Earnest Money shall be delivered to
Seller as liquidated damages for loss of a bargain and not as a penalty. Buyer
will then be released from all liability to Seller related to this Agreement,
such liquidated damages being Seller's sole remedy.
SECTION 10. BROKERS, AGENTS AND CONSULTANTS. Seller represents and
warrants to Buyer that no broker, consultant or agent is due a commission or fee
from the proceeds of the Closing, claiming by, through or under Seller and
hereby agrees to indemnify and hold harmless Buyer from the claims of any agent,
consultant or broker for the payment of a commission or commissions.
11
<PAGE>
Buyer represents and warrants to Seller that no other broker, consultant
or agent is due a commission or fee from the proceeds of the closing claiming
by, through or under Buyer, and hereby agrees to indemnify and hold harmless
Seller and the Property from the claims of any other agent, consultant or broker
for the payment of any commission, finder's fee or other compensation.
SECTION 11. LEASES.
(a) Seller agrees that prior to the Closing it will not enter into
any long term commercial leases or service agreements without the prior written
consent of Buyer which will not be unreasonably withheld or delayed. This
provision shall not be applicable until after the expiration of Buyer's Due
Diligence Period.
(b) Seller shall assign the existing tenant leases to Buyer at
Closing along with all service contracts and other agreements affecting the
Property, provided that Buyer shall execute an assumption agreement or other
agreements with respect to all tenant leases and service contracts or other
agreements from and after the date of closing.
SECTION 12. INSURANCE. Seller will cancel its insurance coverage on the
Property effective at Closing of the Property, and Buyer will place new
insurance coverage on the Property effective on the same date.
SECTION 13. ASSIGNMENT. Buyer shall not have the right to assign this
Agreement, in whole or in part, to any party with whom it is not affiliated
without the express written consent of Seller. Upon any such assignment approved
by Seller, the assignee shall assume the obligations of Buyer and provided said
consent is obtained, Buyer shall thereafter be relieved of liability for the
performance of this Agreement. Seller's consent pursuant to this section shall
be in its sole discretion and shall include approval of all proposed assignment
documents.
SECTION 14. ENTIRE AGREEMENT. All prior understandings and agreements of
the parties are merged herein, and this Agreement reflects the entire
understanding of the parties. This Agreement may not be changed or terminated
orally.
SECTION 15. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, successors and assigns.
SECTION 16. INDEMNIFICATION.
(a) SELLERS INDEMNITY. Seller shall indemnify, defend and hold Buyer
harmless from any claims, demand, loss, liability, damage, or expense (including
12
<PAGE>
reasonable attorneys' fees) in connection with third-party claims for injury or
damage to personal property in connection with the ownership or operation of the
Properties prior to Closing. These indemnification obligations of Seller shall
be repeated at and shall survive the Closing.
(b) BUYERS INDEMNITY. Buyer shall indemnify, defend and hold Seller
harmless from any claim, demand, loss, liability, damage, or expense (including
reasonable attorneys' fees), due to Buyers operation of the Property from and
after Closing. The indemnification obligations of Buyer shall be repeated at and
shall survive the Closing.
SECTION 17. NOTICES. All notices required or permitted hereby shall be in
writing and delivered either in person or sent electronically, or by national
overnight express carrier. Notices shall be deemed to have been given when sent
as follows:
Buyer: Partnership Equities, Inc.
c/o The Wallick Companies
6880 Tussing Road
Columbus, OH 43068
Attention: Sandy Goldston
Seller: c/o Joseph M. Jayson
J. M. Jayson and Company
2350 North Forest Road
Suite 12 A
Getzville, NY 14068
Fax No.: (716) 636-0466
Copy to: William H. Mattrey
Andrews, Sanchez, Amigone,
Mattrey & Marshall, LLP
1300 Main Place Tower
Buffalo, NY 14202
Fax No.: (716) 852-1355
SECTION 18. CONSTRUCTION. Time shall be construed to be of the essence.
SECTION 19. GOVERNING LAW. This Agreement will be governed by and
construed according to New York law, except for matters of title or real estate
law which shall be governed by the laws of the state in which the Property is
located.
SECTION 20. ESCROW. The Escrow Agent hereby acknowledges receipt of the
Earnest Money and agrees to hold the same in escrow until the closing or sooner
termination of this Agreement and shall pay over and apply the proceeds thereof
in accordance with the terms of this Agreement. If, for any reason, the closing
does not occur and either party makes a written demand upon the Escrow Agent for
13
<PAGE>
payment of the Earnest Money, the Escrow Agent shall give written notice to the
other party of such demand. If the Escrow Agent does not receive a written
objection from the other party to the proposed payment within five (5) business
days after the giving of such notice, the Escrow Agent is hereby authorized to
make such payment. If the Escrow Agent does receive such written objection
within such five (5) day period, or if for any reason the Escrow Agent in good
faith shall elect not to make such payment, the Escrow Agent shall continue to
hold the Earnest Money until otherwise directed by written instructions from the
parties to this Agreement or until a final judgment (beyond any applicable
appeal period) by a Court of competent jurisdiction is rendered disposing of
such Earnest Money.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Earnest Money and the delivery
of same in accordance with the terms of this Agreement. The Escrow Agent will
not be liable for any act or omission done in good faith, or for any claim,
demand, loss or damage made or suffered by any party to this Agreement,
excepting such as may arise through or be caused by the Escrow Agent's
negligence or willful misconduct.
SECTION 21. ASSIGNMENT OF BOND CAP ALLOCATION. If Buyer obtains a Bond Cap
allocation or a financing commitment or other related approvals with respect to
the Property, and should Buyer otherwise cancel this Contract as to such
Property or does not close for any reason whatsoever, then and in that event, to
the extent allowable by law, Buyer shall assign the Bond Cap allocation and all
related approvals or commitments with respect to such Property to Seller or its
designee wherever possible and/or if allowed by any lender or other authority
and Buyer will cooperate with Seller in all respects with respect to any
requirements to complete such assignment.
IN WITNESS WHEREOF, this Agreement has been executed by the parties, or by
the duly authorized officer of the parties, on the day and year shown below.
BUYER:
Executed JULY 16, 1996
-------------
PARTNERSHIP EQUITIES, INC.
By: /S/ SANFORD GOLDSTON
---------------------------------------------------------
CHAIRMAN
14
<PAGE>
SELLER:
Executed JULY 16, 1996
-------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
BY: /S/ JOSEPH M. JAYSON
---------------------------------------------------------
G.P.
RECEIPT OF ESCROW AGENT
The undersigned hereby acknowledges receipt of the Earnest Money provided for
herein, and that the same is being held as Escrow Agent pursuant to the terms of
the above Purchase Agreement.
ANDREWS, SANCHEZ, AMIGONE, MATTREY & MARSHALL, LLP
as Escrow Agent
By: /S/ WILLIAM H. MATTREY
---------------------------------------------------------
Member
REAL ESTATE PURCHASE AGREEMENT
CEDAR RIDGE APARTMENTS
This purchase agreement ("Agreement" or "Contract"), made and entered into
by and between Realmark Property Investors Limited Partnership-III, a Delaware
limited partnership ("Seller") and Partnership Equities, Inc., a Ohio
corporation ("Buyer").
RECITALS:
A. Buyer desires to purchase from Seller, and Seller wishes to sell to
Buyer, a certain parcel of real property and all of the improvements and
buildings situated thereon, and the hereditaments and appurtenances thereto,
consisting of an apartment complex (the "Real Property"), and all personal
property, equipment, fixtures and intellectual property (excluding, however, any
use of the name "Realmark" or any related or similar name, it being understood
that only the right, title and interest of Seller to the name of the apartment
complex shall be transferred, and also excluding software not able to be
transferred vis a vis existing licensing agreements, if any) owned by Seller,
utilized in the operation or management of the apartment complex, and located at
said apartment complex as described on EXHIBIT B (collectively the "Personal
Property"). The Real Property together with the Personal Property applicable to
the apartment complex will be herein referred to as the "Property".
B. Attached hereto and made a part hereof is the legal description of the
Real Property, marked with the name of the apartment complex and attached as
EXHIBIT A. A more detailed list of the Personal Property will be prepared by
Seller and submitted during the first ten (10) days of the due diligence period
set forth in Section 3 below and will thereafter be attached to this Agreement
as an amendment to EXHIBIT B. Any subsequent amendment to either EXHIBIT A or
EXHIBIT B, or to any other Exhibit to this Agreement, is to be considered an
integral part of this Agreement.
FOR AND IN CONSIDERATION of the mutual promises, covenants and agreements,
hereinafter set forth, the Parties agree as follows:
SECTION 1. PURCHASE PRICE.
(a) The purchase price to be paid Seller for the Real Property will
be $5,800,000.00 ("Purchase Price") paid in the following manner:
Initial Earnest Money Deposit
at signing of Purchase Agreement $10,000.00
<PAGE>
Additional Earnest Money Deposit
after Due Diligence Period (as
defined herein). 70,000.00
Cash at closing (subject to
credit for Earnest Money,
prorations and allocations per
Section 5) $ 5,720,000.00
------------
Total $ 5,800,000.00
and payable by Buyer on closing of title and delivery of the Deed ("Closing") in
immediately available good, federal funds. The Additional Earnest Money Deposit
shall be paid to the Escrow Agent within five (5) days after the expiration of
the Due Diligence Period.
(b) All existing debt, liens, impositions and similar encumbrances
affecting the Real Property will be discharged or, if annual liens, prorated in
accordance with Section 5 and paid at the Closing.
(c) The Initial Earnest Money in the amount stated in Section 1 (a)
above (the "Initial Earnest Money") will be deposited with Andrews, Sanchez,
Amigone, Mattrey & Marshall, LLP in Buffalo, New York, as Escrow Agent (the
"Escrow Agent"), within four (4) days from the date of Seller's execution (as
communicated to Buyer by written facsimile and orally by telephone on such date
of execution) of this Agreement. Within five (5) days after the end of the Due
Diligence Period (as hereinafter defined) Buyer will deposit an additional sum
of $70,000.00 as Additional Earnest Money (the "Additional Earnest Money") with
the Escrow Agent. The Initial Earnest Money and the Additional Earnest Money are
hereinafter collectively referred to as the "Earnest Money". Absent any contrary
provision of this Agreement, the total Earnest Money in the amount of $80,000.00
will remain on deposit with the Escrow Agent until the Closing of the Property.
If either of the Earnest Money deposits are not made by the dates as herein
above set forth, Seller may terminate this Agreement. Interest on the Earnest
Money shall follow the principal sum on any payment or refund. Interest payable
to Buyer shall be credited to Tax ID #31-0863929. Upon any permitted termination
of this Agreement by Buyer, including but not limited to the failure of the
conditions precedent set out in Section 7, the Earnest Money shall be returned
to Buyer upon demand, and in compliance with all other terms and provisions of
this Agreement.
SECTION 2. PLACE AND TIME OF CLOSING.
(a) Subject to the conditions precedent set forth herein having been
met or waived, the Closing will take place on or before 330 days after execution
2
<PAGE>
of this Agreement by both parties, unless extended as otherwise set forth in
this Agreement. As used herein the terms "Closing" will mean the meeting of the
parties at which delivery of the Deed and payment of the Purchase Price as
called for in Section 1 occurs for the Real Property.
(b) Buyer and Seller agree that they will use their best efforts to
complete the Closing within three hundred thirty (330) days from the execution
of this Agreement. Buyer agrees that it will use best efforts and good faith in
applying for a Bond Cap allocation and/or for financing for the Real Property
and will obtain same as soon as reasonably possible and will close on said Real
Property promptly thereafter. Notwithstanding the foregoing, and upon
satisfaction of all conditions precedent, Buyer shall complete the Closing by
June 15, 1997.
(c) This Agreement, as an offer to purchase when signed by Buyer,
shall automatically terminate if not accepted in final form by Seller by 5 P.M.,
Eastern Standard Time, five busi ness days from the date on which Buyer executed
this Agreement as indicated below.
SECTION 3. PURCHASER'S CONTINGENCIES.
(a) DUE DILIGENCE. Buyer, or its designees, will have a period of sixty
(60) days from October 20, 1996 (the "Due Diligence Period"), to enter the
Property to make inspections, engineering tests, surveys, and other such tests,
examinations and inspections as Buyer may desire as long as such tests,
examinations, etc., do not unreasonably interfere with the operations or any
current use of the Property. All entry upon the Property and any and all contact
with on site employees of Seller by Buyer shall be upon prior notice to Seller
and, at Seller's option, accompanied by an agent of Seller.
If the Closing of the Property does not occur, Buyer will make such
repairs as necessary to leave the Property in the same condition as prior to
entry by Buyer.
(i) During the Due Diligence Period, Buyer will inspect the Real
Property, and if any, the plans and specifications for design, quality,
structural and mechanical integrity and maintenance during the Due Diligence
Period. At the commencement of Buyer's due diligence or within ten (10) days
thereafter, Seller shall provide or make available at designated locations,
those operational and title information items which relate to the Property,
reasonably requested by Buyer, including, but not limited to:
o Inventory of Personal Property
o Current Rent Roll - December 1995 or April 1996
3
<PAGE>
o 1994 & 1995 year-end Operating Statements
o Operating Statement for the year 1996 to date (as of 4/30/96)
o December 1995 Operating Statement and 1996 Operating Budget
(It is specifically understood that Operating Budgets are
projections of Seller only and Seller makes no warranty or
representation with respect to any parties' achievement of any
such items in said Budget.)
o Detailed breakdown of the Property's payroll account including
a list of on-site personnel, salary and benefits
o Copy of current ad valorem tax bills, copy of each separate
utility bill for the Property for the past 3 months and a
listing by month of utility charges for 1995
o As-built survey, construction drawings, soil report,
compaction tests, and copies of all Certificates of Occupancy,
if any of the foregoing are in Seller's possession
o Copies of all third-party contracts (e.g., termite, landscape,
pool maintenance, etc.)
o Copies of any environmental reports, engineering reports,
feasibility studies, or appraisals in Seller's possession
(obtained within the last 36 months, it being understood that
Seller makes no warranty or representation with respect to the
information set forth in any of said studies)
o Copies of the latest insurance policy covering the Project,
with current coverage and deductibles along with a paid
invoice for said policy(s) (the same may be within a master
policy)
o Name, firm name, and telephone number for the lawyer most
recently involved with the Project. (It is agreed that at this
time the foregoing shall be identified as William H. Mattrey,
Esq., of Andrews, Sanchez, Amigone, Mattrey & Marshall, LLP,
(716) 852-1300.)
o Make available to Buyer all income information in Seller's
possession on all tenants currently leasing units in the
Property.
4
<PAGE>
o Originals or copies of all tenant leases, rent rolls for the
Property, including security deposits held by Seller in
connection with each apartment unit, credit reports and other
information concerning the leases which are currently in
Seller's file, service agreements, party-wall agreements, and,
if in Seller's possession engineering or architectural reports
for the Properties.
o Proof of zoning classification, if any, in Seller's possession
o A list of all equipment leases and/or any financing documents
for personal property, equipment, etc., affecting the
apartment complex
o Any other items which a prudent buyer reasonably requests and
needs in order to conduct a satisfactory due diligence review.
All of the foregoing will either be at the Property location or at Seller's
offices in Amherst, New York, or at Seller's option, will be forwarded to Buyer.
Any documents not provided by Seller to Buyer within the above ten (10) day
period will be made available by Seller, as soon as such documents are
available. In the event of any such failure to deliver any documents, except
those which are not in Seller's possession and which are so qualified
hereinabove as excusable items, the Due Diligence Period will be extended to a
date no less than five (5) days after delivery of the items not delivered within
the Due Diligence Period.
All Due Diligence materials must be maintained by Buyer on a confidential basis
and returned to Seller if Buyer terminates this Agreement. Buyer agrees that it
will not use the Due Diligence materials for any purpose other than to determine
whether to acquire the Property and agrees that it will not make contact with
Seller's tenants unless closing occurs. In addition, Buyer agrees that it will
under no circumstances make any offer, or use the Due Diligence materials, to
acquire the interest of any partner(s) of the selling entities for a period of
two (2) years after the date of this Contract. Buyer and/or its agents will not,
under any circumstances, disclose to any of Seller's employees that it is
contemplating acquisition of the Property without Seller's written consent prior
to closing. All reports desired by Buyer during its Due Diligence Period shall
be ordered by Buyer at Buyer's expense, but Buyer agrees that it will supply
copies of each and every report it receives immediately upon their completion
and availability to Buyer.
5
<PAGE>
(ii) During the Due Diligence Period, Buyer will conduct a review of
the economics and feasibility of acquiring and operating the Property as
required by its funding source, including inspection of all zoning and other
government permits and regulations and other matters and documents relating to
the operation of the Property, and as detailed in Section 3(a).
(iii) After Seller provides all required documents to the Buyer,
Buyer agrees to accept or reject all documents prior to the end of the Due
Diligence Period. If Buyer does not cancel this Contract during the Due
Diligence Period, Buyer shall be deemed to have accepted the Property and it
will close on the Property in accordance with this Contract, except for
cancellation in accordance with the specific provisions of this Contract.
(b) This Contract is contingent upon Buyer obtaining a "firm" commitment
(per the practice of HUD for 221D4 mortgages) for financing the purchase of Real
Property in accordance with the Contract upon terms and conditions satisfactory
to Buyer. Buyer agrees to apply for said commitment promptly after December 20,
1996, and shall have a period of 85 days to obtain said commitment. Should Buyer
be unable to obtain said commitment within said 85-day period, either party may
terminate this Contract by written notice to the other in which case the Earnest
Money shall be returned to Buyer and neither party shall have any further
liability, except the obligation to restore the premises after due diligence.
Buyer shall have the right to extend the mortgage contingency period for up to
30 days on prior written notice to Seller if the mortgage application is through
HUD.
SECTION 4. DEED AND TITLE.
(a) Seller shall deliver to Buyer at Closing, a special or limited
warranty deed (or bargain and sale deed, where appropriate) ("Deed"), conveying
good and marketable fee simple title to the Property, subject only to such
easements, restrictions of record and title exceptions set forth in the
commitment for title insurance specifically approved by Buyer, and taxes not
delinquent. Further, the title insurance commitment for the Property must
contain provision for the endorsements that are reasonably required by Buyer's
funding source, which endorsements shall be ordered by Buyer at Buyer's expense.
In addition, Seller shall convey title to the Personal Property to Buyer, free
and clear of all liens and encumbrances (except those disclosed during due
diligence; e.g., equipment leases or personal property financing documents), by
the execution and delivery at Closing of a Bill of Sale in form and substance
reasonably satisfactory to Buyer, without warranty, except as to Seller's title.
(b) Seller agrees to provide a copy of its existing title insurance
policy to Buyer. Buyer shall then obtain an ALTA Form B Title Insurance
Commitment (the "Title Commitment"), within thirty (30) days of the date of
6
<PAGE>
commencement of Buyer's due diligence period, issued by a title insurance
company selected by Buyer, committing to insure fee simple marketable title to
the Property in the amount of the Purchase Price for such Property in Buyer's
name, with all standard exceptions removed (except for the rights of tenants
under unrecorded leases and/or except for standard exceptions normally not
removed pursuant to local custom with respect to each Property), and containing
no other exceptions not specifically approved by Buyer. Buyer shall have ten
(10) days after receipt to examine the Title Commitment and inform Seller of
Buyer's objection to any exception contained in or title defect revealed by the
Title Commitments.
(c) If Buyer's examination of the Title Commitment reveals that the
Title Commitment for the Property contains objectionable exceptions or that the
title to the Property is defective and thereafter, the issuing title insurance
company refuses to delete the objectionable exceptions or the defects cannot be
cured within a reasonable period of time after written notice by Buyer,
specifically pointing out the objection/defects, or if the title company refuses
to issue endorsements as required by Buyer's lender, then Buyer may elect to
terminate this Agreement upon written notice to Seller. Notwithstanding the
foregoing, however, in order to terminate the Contract, an objectionable
exception or defect must be one which renders title unmarketable and uninsurable
because of such specified objection or defect, or the specified objection or
defect shall be materially inconsistent with the present use of the Property as
an apartment complex.
(d) Seller will pay for preparation of the Deed for the Property.
(e) Buyer will pay for any survey of the Property, the recording of
the Deed for the Property, state tax and register's fees on the Deed, the cost
of obtaining a title commitment, and the premium due for the title insurance
policy to be issued for the Property, and all endorsements.
(f) Seller and Buyer will each pay their own
attorney's fees.
SECTION 5. PRORATIONS AND ALLOCATIONS. (a) Rents, taxes, service con-
tracts, equipment leases or other personal property financing, utility deposits,
insurance and other expenses whether or not a lien, assessed or to be assessed
for the tax year in which the transaction is consummated. will be prorated as to
the Property to the date of the Closing based on a 365-day year.
(b) Security deposits held by Owner or paid by any lessees at the
Property will be transferred to Buyer in full at Closing, including any interest
earned thereon and payable to the Tenant under State law.
7
<PAGE>
SECTION 6. CONDEMNATION OR CASUALTY. Seller agrees to give Purchaser
prompt written notice of any fire or other casualty occurring to all or any
portion of the improvements at the Property and/or Personalty between the date
hereof and the date of closing. If prior to the closing, there shall occur:
(i) damage to the improvements at the Property caused by fire or
other casualty which would cost 5% of the Purchase Price of the Property or more
to repair based on the estimate of a reputable third party contractor chosen by
Seller; or
(ii) the taking or condemnation of all or any portion of the Real
Property and/or the improvements as aforesaid as would materially interfere with
the use thereof; then, if any of such events set forth in (i) or (ii) above
occurs, Buyer or Seller, at its option, may terminate its obligations under this
Agreement by written notice given to Seller within seven (7) days after Buyer
has received the notice referred to above or at the closing, whichever is
earlier. If Buyer does not elect to terminate its obligations as aforesaid, the
closing shall take place as provided herein without an abatement of the purchase
price (except that Buyer shall be allowed a credit for any deductible under
Seller's insurance) and there shall be assigned to the Buyer at closing, all
interest of the Seller in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of such occurrence. Notwithstanding
the foregoing, should Buyer elect to terminate, Seller may notify Buyer within
15 days that Seller intends to restore the Premises fully and in that event,
Buyer's termination notice shall be null and void and Seller shall proceed as
outlined above at closing.
If, prior to the closing, there shall occur:
(i) damage to the Property caused by fire or other casualty which
would cost less than 5% of the allocable Purchase Price of the Property based on
the estimate of a reputable third party contractor chosen by Seller to which
Buyer has no reasonable objection; or
(ii) the taking or condemnation of all or any portion of the said
Real Property and/or improvements as aforesaid which is not material to the use,
thereof; then, if any of such events set forth in (i) or (ii) above occurs,
Buyer shall have no right to terminate its obligations under this Agreement, but
there shall be assigned to Buyer at closing all interest of Seller in and to any
insurance proceeds or condemnation awards which may be payable to Seller on
account of any such occurrence, and in addition, Buyer shall be allowed a credit
for any deductible under Seller's insurance policy.
8
<PAGE>
Seller shall be responsible for maintaining fire and extended
coverage insurance prior to closing as is currently in place.
SECTION 7. CONDITIONS. The following shall each be conditions precedent
to Buyer's obligations hereunder, unless specifically waived in whole or in part
in writing by Buyer:
(a) LITIGATION. There being no existing or pending claims, lawsuits,
or governmental proceedings, or appeals, which challenge Seller's title to the
Property.
(b) TITLE INSURANCE POLICY. Title to the Property at Closing being
marketable or insurable, and/or in accordance with the provisions of Section 4
above, free and clear of all liens and encumbrances. In addition, Buyer
receiving assurances at Closing from the title insurance company issuing the
Title Commitment, that after Closing, Buyer will be issued an ALTA Form B Title
Insurance Policy, with all standard exceptions, except as set forth in Section 4
above, and all other exceptions objected to by Buyer deleted from such policy,
insuring fee simple marketable title to the Property or in accordance with
Section 4 above, in the amount of the Purchase Price, in Buyer's name, free and
clear of all liens and encumbrances not otherwise specifically agreed to by
Buyer prior to Closing.
(c) PERSONAL PROPERTY. Seller conveying title to the Personal
Property to Buyer at Closing free and clear of all liens and encumbrances
(except for equipment leases and personal property financing disclosed during
due diligence) by a Bill of Sale without warranties except as to title in form
and substance reasonably satisfactory to Buyer.
(d) LAWS AND REGULATIONS. Prior to Closing Seller not having
received written notice of non-compliance under any and all Federal, State,
County and Municipal laws, ordinances, requirements and regulations, including
but not limited to any and all environmental laws and regulations, affecting the
Property. Notwithstanding the foregoing, however, in the event Seller does
receive a written notice of violation of any of the foregoing, then and in that
event, Seller shall have the option of curing the matter which is the subject of
such notice before closing and/or making reasonable arrangements to complete the
cure of such violation after closing, provided an escrow is established for the
cost of said cure; and provided Seller either cures the subject of such notice
or makes adequate provisions to cure same and escrow the funds as set forth
hereinabove to do so, then and in that event, Buyer shall have no right to
terminate this Contract.
(e) SELLER COOPERATION. Seller agrees to cooperate with and assist
Buyer and to execute any and all applications, petitions and attend and
participate in any necessary hearings, and undertake all other reasonable acts
9
<PAGE>
to obtain any necessary permits for which Buyer may make application prior to
closing, provided that Buyer shall bear all expenses incidental thereto,
including all of Seller's out-of-pocket expenses.
(f) COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. Seller will be
in compliance with all other representations and warranties made herein at
Closing to the reasonable satisfaction of Buyer.
(g) NOTICE OF CLOSING. If all the conditions specified herein have
not been met within 330 days after execution of this Contract, Buyer shall have
the option to terminate this Agreement, by giving written notice to Seller
specifying the condition not met and provided that Seller does not cure or
remove said condition within 60 days after such notice, or such extended time as
the parties may agree, and in that event the Earnest Money shall be returned to
Buyer. However, in the event that all conditions specified herein have been met
by the Closing date, Buyer shall close the Purchase within the time period
specified, subject to non-performance by Seller under the terms hereof.
SECTION 8. SELLER'S WARRANTIES. The following warranties of Seller shall
survive the Closing for a period of sixty (60) days.
(a) The legal description of the Property contained in the recitals
to this Agreement is substantially correct and will be confirmed by any survey
obtained by Buyer.
(b) To Seller's best knowledge and belief (Seller meaning Joseph M.
Jayson or an officer of the general partner of Seller) Seller has not received
written notification that the Property is not in compliance with all federal,
state, county and municipal laws, ordinances and regulations, including but not
limited to all federal, state, county and municipal environmental laws and
regulations, applicable to or affecting the Property, subject to Seller's right
to cure as hereinabove stated.
(d) Seller will convey fee simple, marketable or insurable title to
the Property to Buyer at Closing and will convey title to the Personal Property
to Buyer at Closing by Bill of Sale, in form and substance reasonably
satisfactory to Buyer, free and clear of all liens and encumbrances.
(e) Seller will not interfere with Buyer's opportunity to hire
Seller's on-site employees, who work at the Property, but Buyer will have no
obligation to hire any of those individuals. Buyer will make no efforts to hire
such employees until after all contingencies have been removed and no earlier
than 10 days before closing.
10
<PAGE>
(f) Seller shall be responsible for (and Buyer shall not assume the
obligation of) all employee wages, benefits (including payments for accrued
bonuses, vacation or sick pay, unemployment compensation, employment taxes,
medical claims or similar payments), contributions under any benefit program or
agreement, severance pay obligations and other related employee costs arising as
a result of any events, acts (or failures to act) prior to the Closing Date with
respect to the Property at which such persons are employed, whether or not
disclosed on the schedules to this Agreement.
(g) Seller retains all liability and responsibility for fulfilling
all federal and/or state COBRA and continuation of group health insurance
coverage requirements (pursuant to Section 4980B of the Code, sections 601-608
of ERISA, and any applicable state laws) with respect to Seller's current or
former employees (and their dependents). Buyer does not hereby and will not at
the Closing of the Property assume any obligation to provide medical insurance
coverage to persons that it employs because it acquires the Property.
SECTION 9. NON-PERFORMANCE.
(a) If Seller fails to deliver the Deed or meet any of the
conditions hereof willfully, Buyer, at Buyer's sole option, may terminate this
Agreement whereupon the Earnest Money shall be returned to Buyer on demand or
Buyer may bring an action for specific performance, and if Buyer prevails, all
costs and expenses of any such action shall be paid by Seller as a reduction of
the Purchase Price. The foregoing shall not prevent Buyer from bringing an
action for monetary damages. The foregoing shall be the sole and exclusive
remedies of Buyer. However, if Buyer elects to bring an action for monetary
damages, they shall be specifically limited, if proven, to an amount equal to
the Earnest Money as set forth hereinabove.
(b) If Buyer defaults at any time, Seller and Buyer agree that it
will be extremely difficult or impractical to fix Seller's actual damages.
Therefore, in such an event, the entire Earnest Money shall be delivered to
Seller as liquidated damages for loss of a bargain and not as a penalty. Buyer
will then be released from all liability to Seller related to this Agreement,
such liquidated damages being Seller's sole remedy.
SECTION 10. BROKERS, AGENTS AND CONSULTANTS. Seller represents and
warrants to Buyer that no broker, consultant or agent is due a commission or fee
from the proceeds of the Closing, claiming by, through or under Seller and
hereby agrees to indemnify and hold harmless Buyer from the claims of any agent,
consultant or broker for the payment of a commission or commissions.
11
<PAGE>
Buyer represents and warrants to Seller that no other broker, consultant
or agent is due a commission or fee from the proceeds of the closing claiming
by, through or under Buyer, and hereby agrees to indemnify and hold harmless
Seller and the Property from the claims of any other agent, consultant or broker
for the payment of any commission, finder's fee or other compensation.
SECTION 11. LEASES.
(a) Seller agrees that prior to the Closing it will not enter into
any long term commercial leases or service agreements without the prior written
consent of Buyer which will not be unreasonably withheld or delayed. This
provision shall not be applicable until after the expiration of Buyer's Due
Diligence Period.
(b) Seller shall assign the existing tenant leases to Buyer at
Closing along with all service contracts and other agreements affecting the
Property, provided that Buyer shall execute an assumption agreement or other
agreements with respect to all tenant leases and service contracts or other
agreements from and after the date of closing.
SECTION 12. INSURANCE. Seller will cancel its insurance coverage on the
Property effective at Closing of the Property, and Buyer will place new
insurance coverage on the Property effective on the same date.
SECTION 13. ASSIGNMENT. Buyer shall not have the right to assign this
Agreement, in whole or in part, to any party with whom it is not affiliated
without the express written consent of Seller. Upon any such assignment approved
by Seller, the assignee shall assume the obligations of Buyer and provided said
consent is obtained, Buyer shall thereafter be relieved of liability for the
performance of this Agreement. Seller's consent pursuant to this section shall
be in its sole discretion and shall include approval of all proposed assignment
documents.
SECTION 14. ENTIRE AGREEMENT. All prior understandings and agreements of
the parties are merged herein, and this Agreement reflects the entire
understanding of the parties. This Agreement may not be changed or terminated
orally.
SECTION 15. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, successors and assigns.
SECTION 16. INDEMNIFICATION.
(a) SELLERS INDEMNITY. Seller shall indemnify, defend and hold Buyer
harmless from any claims, demand, loss, liability, damage, or expense (including
12
<PAGE>
reasonable attorneys' fees) in connection with third-party claims for injury or
damage to personal property in connection with the ownership or operation of the
Properties prior to Closing. These indemnification obligations of Seller shall
be repeated at and shall survive the Closing.
(b) BUYERS INDEMNITY. Buyer shall indemnify, defend and hold Seller
harmless from any claim, demand, loss, liability, damage, or expense (including
reasonable attorneys' fees), due to Buyers operation of the Property from and
after Closing. The indemnification obligations of Buyer shall be repeated at and
shall survive the Closing.
SECTION 17. NOTICES. All notices required or permitted hereby shall be in
writing and delivered either in person or sent electronically, or by national
overnight express carrier. Notices shall be deemed to have been given when sent
as follows:
Buyer: Partnership Equities, Inc.
c/o The Wallick Companies
6880 Tussing Road
Columbus, OH 43068
Attention: Sandy Goldston
Seller: c/o Joseph M. Jayson
J. M. Jayson and Company
2350 North Forest Road
Suite 12 A
Getzville, NY 14068
Fax No.: (716) 636-0466
Copy to: William H. Mattrey
Andrews, Sanchez, Amigone,
Mattrey & Marshall, LLP
1300 Main Place Tower
Buffalo, NY 14202
Fax No.: (716) 852-1355
SECTION 18. CONSTRUCTION. Time shall be construed to be of the essence.
SECTION 19. GOVERNING LAW. This Agreement will be governed by and
construed according to New York law, except for matters of title or real estate
law which shall be governed by the laws of the state in which the Property is
located.
SECTION 20. ESCROW. The Escrow Agent hereby acknowledges receipt of the
Earnest Money and agrees to hold the same in escrow until the closing or sooner
termination of this Agreement and shall pay over and apply the proceeds thereof
in accordance with the terms of this Agreement. If, for any reason, the closing
does not occur and either party makes a written demand upon the Escrow Agent for
13
<PAGE>
payment of the Earnest Money, the Escrow Agent shall give written notice to the
other party of such demand. If the Escrow Agent does not receive a written
objection from the other party to the proposed payment within five (5) business
days after the giving of such notice, the Escrow Agent is hereby authorized to
make such payment. If the Escrow Agent does receive such written objection
within such five (5) day period, or if for any reason the Escrow Agent in good
faith shall elect not to make such payment, the Escrow Agent shall continue to
hold the Earnest Money until otherwise directed by written instructions from the
parties to this Agreement or until a final judgment (beyond any applicable
appeal period) by a Court of competent jurisdiction is rendered disposing of
such Earnest Money.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Earnest Money and the delivery
of same in accordance with the terms of this Agreement. The Escrow Agent will
not be liable for any act or omission done in good faith, or for any claim,
demand, loss or damage made or suffered by any party to this Agreement,
excepting such as may arise through or be caused by the Escrow Agent's
negligence or willful misconduct.
SECTION 21. ASSIGNMENT OF BOND CAP ALLOCATION. If Buyer obtains a Bond Cap
allocation or a financing commitment or other related approvals with respect to
the Property, and should Buyer otherwise cancel this Contract as to such
Property or does not close for any reason whatsoever, then and in that event, to
the extent allowable by law, Buyer shall assign the Bond Cap allocation and all
related approvals or commitments with respect to such Property to Seller or its
designee wherever possible and/or if allowed by any lender or other authority
and Buyer will cooperate with Seller in all respects with respect to any
requirements to complete such assignment.
IN WITNESS WHEREOF, this Agreement has been executed by the parties, or by
the duly authorized officer of the parties, on the day and year shown below.
BUYER:
Executed JULY 16, 1996
-------------
PARTNERSHIP EQUITIES, INC.
By: /S/ SANFORD GOLDSTON
---------------------------------------------------------
CHAIRMAN
14
<PAGE>
SELLER:
Executed JULY 16, 1996
-------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
BY: /S/ JOSEPH M. JAYSON
---------------------------------------------------------
G.P.
RECEIPT OF ESCROW AGENT
The undersigned hereby acknowledges receipt of the Earnest Money provided for
herein, and that the same is being held as Escrow Agent pursuant to the terms of
the above Purchase Agreement.
ANDREWS, SANCHEZ, AMIGONE, MATTREY & MARSHALL, LLP
as Escrow Agent
By: /S/ WILLIAM H. MATTREY
---------------------------------------------------------
Member
REAL ESTATE PURCHASE AGREEMENT
PLEASANT RUN APARTMENTS
This purchase agreement ("Agreement" or "Contract"), made and entered into
by and between Realmark Property Investors Limited Partnership-III, a Delaware
limited partnership ("Seller") and Partnership Equities, Inc. ("Buyer").
RECITALS:
A. Buyer desires to purchase from Seller, and Seller wishes to sell to
Buyer, a certain parcel of real property and all of the improvements and
buildings situated thereon, and the hereditaments and appurtenances thereto,
consisting of an apartment complex (the "Real Property"), and all personal
property, equipment, fixtures and intellectual property (excluding, however, any
use of the name "Realmark" or any related or similar name, it being understood
that only the right, title and interest of Seller to the name of the apartment
complex shall be transferred, and also excluding software not able to be
transferred vis a vis existing licensing agreements, if any) owned by Seller,
utilized in the operation or management of the apartment complex, and located at
said apartment complex as described on EXHIBIT B (collectively the "Personal
Property"). The Real Property together with the Personal Property applicable to
the apartment complex will be herein referred to as the "Property".
B. Attached hereto and made a part hereof is the legal description of the
Real Property, marked with the name of the apartment complex and attached as
EXHIBIT A. A more detailed list of the Personal Property will be prepared by
Seller and submitted during the first ten (10) days of the due diligence period
set forth in Section 3 below and will thereafter be attached to this Agreement
as an amendment to EXHIBIT B.
FOR AND IN CONSIDERATION of the mutual promises, covenants and agreements,
hereinafter set forth, the Parties agree as follows:
SECTION 1. PURCHASE PRICE.
(a) The purchase price to be paid Seller for the Real Property will
be $3,350,000.00 ("Purchase Price") paid in the following manner:
Initial Earnest Money Deposit
at signing of Purchase Agreement $10,000.00
Additional Earnest Money Deposit
after Due Diligence Period (as
defined herein). 50,000.00
<PAGE>
Cash at closing (subject to
credit for Earnest Money,
prorations and allocations per
Section 5) $ 3,290,000.00
------------
Total $ 3,350,000.00
and payable by Buyer on closing of title and delivery of the Deed ("Closing") by
wire transfer in immediately available good, federal funds. The Additional
Earnest Money Deposit shall be paid to the Escrow Agent within five (5) days
after the expiration of the Due Diligence Period.
(b) All existing debt, liens, impositions and similar encumbrances
affecting the Real Property will be discharged or, if annual liens, prorated in
accordance with Section 5 and paid at the Closing.
(c) The Initial Earnest Money in the amount stated in Section 1 (a)
above (the "Initial Earnest Money") will be deposited with Andrews, Sanchez,
Amigone, Mattrey & Marshall, LLP in Buffalo, New York, as Escrow Agent (the
"Escrow Agent"), within four (4) days from the date of Seller's execution (as
communicated to Buyer by written facsimile and orally by telephone on such date
of execution) of this Agreement. Within five (5) days after the end of the Due
Diligence Period (as hereinafter defined) Buyer will deposit an additional sum
of $50,000.00 as Additional Earnest Money (the "Additional Earnest Money") with
the Escrow Agent. The Initial Earnest Money and the Additional Earnest Money are
hereinafter collectively referred to as the "Earnest Money". Absent any contrary
provision of this Agreement, the total Earnest Money in the amount of $60,000.00
will remain on deposit with the Escrow Agent until the Closing of the Property.
If either of the Earnest Money deposits are not made by the dates as herein
above set forth, Seller may terminate this Agreement. Interest on the Earnest
Money shall follow the principal sum on any payment or refund. Interest payable
to Buyer shall be credited to Tax ID #31-0863929. Upon any permitted termination
of this Agreement by Buyer, the Earnest Money shall be returned to Buyer upon
demand, and in compliance with all other terms and provisions of this Agreement.
Notwithstanding the foregoing, the Initial Earnest Money Deposit of
$10,000.00 shall be non-refundable immediately on signing this Contract and may
be released to Seller. An additional $12,500.00 shall be non-refundable after
Buyer's due diligence expires unless Seller defaults.
SECTION 2. PLACE AND TIME OF CLOSING.
(a) Subject to the conditions precedent set forth herein having been
met or waived, the Closing will take place on or before 240 days after execution
of this Agreement by both parties, unless extended as otherwise set forth in
2
<PAGE>
this Agreement. As used herein the terms "Closing" will mean the meeting of the
parties at which delivery of the Deed and payment of the Purchase Price as
called for in Section 1 occurs for the Real Property.
(b) Buyer and Seller agree that they will use their best efforts to
complete the Closing within one hundred twenty (120) days from the execution of
this Agreement. Buyer agrees that it will use best efforts and good faith in
applying for a Bond Cap allocation and/or for financing for the Real Property
and will obtain same as soon as reasonably possible and will close on said Real
Property promptly thereafter. Notwithstanding the foregoing, and upon
satisfaction of all conditions precedent, Buyer shall complete the Closing by
November 20, 1996.
(c) This Agreement, as an offer to purchase when signed by Buyer,
shall automatically terminate if not accepted in final form by Seller by 5 P.M.,
Eastern Standard Time, five busi ness days from the date on which Buyer executed
this Agreement as indicated below.
SECTION 3. CONTINGENCIES.
(a) DUE DILIGENCE. Buyer, or its designees, will have a period of sixty
(60) days after Seller's execution of this Agreement (the "Due Diligence
Period"), to enter the Property to make inspections, engineering tests, surveys,
and other such tests, examinations and inspections as Buyer may desire as long
as such tests, examinations, etc., do not unreasonably interfere with the
operations or any current use of the Property. All entry upon the Property and
any and all contact with on site employees of Seller by Buyer shall be upon
prior notice to Seller and, at Seller's option, accompanied by an agent of
Seller.
If the Closing of the Property does not occur, Buyer will make such
repairs as necessary to leave the Property in the same condition as prior to
entry by Buyer.
(i) During the Due Diligence Period, Buyer will inspect the Real
Property, and if any, the plans and specifications for design, quality,
structural and mechanical integrity and maintenance during the Due Diligence
Period. At the signing of this Agreement or within ten (10) days thereafter,
Seller shall provide or make available at designated locations, those
operational and title information items which relate to the Property, reasonably
requested by Buyer, including, but not limited to:
o Inventory of Personal Property
o Current Rent Roll - December 1995 or April 1996
3
<PAGE>
o 1994 & 1995 year-end Operating Statements
o Operating Statement for the year 1996 to date (as of 4/30/96)
o December 1995 Operating Statement and 1996 Operating Budget
(It is specifically understood that Operating Budgets are
projections of Seller only and Seller makes no warranty or
representation with respect to any parties' achievement of any
such items in said Budget.)
o Detailed breakdown of the Property's payroll account including
a list of on-site personnel, salary and benefits
o Copy of current ad valorem tax bills, copy of each separate
utility bill for the Property for the past 3 months and a
listing by month of utility charges for 1995
o As-built survey, construction drawings, soil report,
compaction tests, and copies of all Certificates of Occupancy,
if any of the foregoing are in Seller's possession
o Copies of all third-party contracts (e.g., termite, landscape,
pool maintenance, etc.)
o Copies of any environmental reports, engineering reports,
feasibility studies, or appraisals in Seller's possession
(obtained within the last 36 months, it being understood that
Seller makes no warranty or representation with respect to the
information set forth in any of said studies)
o Copies of the latest insurance policy covering the Project,
with current coverage and deductibles along with a paid
invoice for said policy(s) (the same may be within a master
policy)
o Name, firm name, and telephone number for the lawyer most
recently involved with the Project. (It is agreed that at this
time the foregoing shall be identified as William H. Mattrey,
Esq., of Andrews, Sanchez, Amigone, Mattrey & Marshall, LLP,
(716) 852-1300.)
o Make available to Buyer all income information in Seller's
possession on all tenants currently leasing units in the
Property.
4
<PAGE>
o Originals or copies of all tenant leases, rent rolls for the
Property, including security deposits held by Seller in
connection with each apartment unit, credit reports and other
information concerning the leases which are currently in
Seller's file, service agreements, party-wall agreements, and,
if in Seller's possession engineering or architectural reports
for the Properties.
o Proof of zoning classification, if any, in Seller's possession
o A list of all equipment leases and/or any financing documents
for personal property, equipment, etc., affecting the
apartment complex
o Any other items which a prudent buyer reasonably requests and
needs in order to conduct a satisfactory due diligence review.
All of the foregoing will either be at the Property location or at Seller's
offices in Amherst, New York, or at Seller's option, will be forwarded to Buyer.
Any documents not provided by Seller to Buyer within the above ten (10) day
period will be made available by Seller, as soon as such documents are
available. In the event of any such failure to deliver any documents, except
those which are not in Seller's possession and which are so qualified
hereinabove as excusable items, the Due Diligence Period will be extended to a
date no less than five (5) days after delivery of the items not delivered within
the Due Diligence Period.
All Due Diligence materials must be maintained by Buyer on a confidential basis
and returned to Seller if Buyer terminates this Agreement. Buyer agrees that it
will not use the Due Diligence materials for any purpose other than to determine
whether to acquire the Property and agrees that it will not make contact with
Seller's tenants unless closing occurs. In addition, Buyer agrees that it will
under no circumstances make any offer, or use the Due Diligence materials, to
acquire the interest of any partner(s) of the selling entities for a period of
two (2) years after the date of this Contract. Buyer and/or its agents will not,
under any circumstances, disclose to any of Seller's employees that it is
contemplating acquisition of the Property without Seller's written consent prior
to closing. All reports desired by Buyer during its Due Diligence Period shall
be ordered by Buyer at Buyer's expense, but Buyer agrees that it will supply
copies of each and every report it receives immediately upon their completion
and availability to Buyer.
5
<PAGE>
(ii) During the Due Diligence Period, Buyer will conduct a review of
the economics and feasibility of acquiring and operating the Property as
required by its funding source, including inspection of all zoning and other
government permits and regulations and other matters and documents relating to
the operation of the Property, and as detailed in Section 3(a).
(iii) After Seller provides all required documents to the Buyer,
Buyer agrees to accept or reject the Premises and all documents prior to the end
of the Due Diligence Period. If Buyer does not cancel this Contract during the
Due Diligence Period, Buyer shall be deemed to have accepted the Property and it
will close on the Property in accordance with this Contract, except for
cancellation in accordance with the specific provisions of this Contract. If
Buyer does cancel this Contract within the Due Diligence Period, which shall be
in its sole discretion, the Earnest Money shall be returned to Buyer and neither
party shall have any further liability to the other.
(b) FINANCE. This Contract is contingent upon Buyer obtaining a "firm"
commitment (per the practice of HUD for 221D4 mortgages) for financing the
purchase of Real Property in accordance with the Contract upon terms and
conditions satisfactory to Buyer. Buyer agrees to apply for said commitment
promptly upon the commencement of its Due Diligence period set forth in (a)
above, and shall have a period of 85 days to obtain said commitment. Should
Buyer be unable to obtain said commitment within said 85-day period, either
party may terminate this Contract by written notice to the other in which case
the Earnest Money shall be returned to Buyer and neither party shall have any
further liability, except the obligation to restore the premises after due
diligence. Notwithstanding the foregoing, Buyer shall have the right to waiver
this finance contingency during the aforesaid 85-day period.
(c) This Contract is further contingent upon Buyer's closing of the
purchase of Gold Key Apartments from Seller or its affiliates either before or
simultaneously with this transaction.
Seller shall be excused from performance if Buyer does not proceed with the
Gold Key transaction.
SECTION 4. DEED AND TITLE.
(a) Seller shall deliver to Buyer at Closing, a special or limited
warranty deed (or bargain and sale deed, where appropriate) ("Deed"), conveying
good and marketable fee simple title to the Property, subject only to such
easements, restrictions of record and title exceptions set forth in the
commitment for title insurance specifically approved by Buyer, and taxes not
delinquent. Further, the title insurance commitment for the Property must
contain provision for the endorsements that are reasonably required by Buyer's
funding source, which endorsements shall be ordered by Buyer at Buyer's expense.
6
<PAGE>
In addition, Seller shall convey title to the Personal Property to Buyer, free
and clear of all liens and encumbrances (except those disclosed during due
diligence; e.g., equipment leases or personal property financing documents), by
the execution and delivery at Closing of a Bill of Sale in form and substance
reasonably satisfactory to Buyer, without warranty, except as to Seller's title.
(b) Seller agrees to provide a copy of its existing title insurance
policy to Buyer. Buyer shall then obtain an ALTA Form B Title Insurance
Commitment (the "Title Commitment"), within thirty (30) days of the date of
execution of this Contract by both parties, issued by a title insurance company
selected by Buyer, committing to insure fee simple marketable title to the
Property in the amount of the Purchase Price for such Property in Buyer's name,
with all standard exceptions removed (except for the rights of tenants under
unrecorded leases and/or except for standard exceptions normally not removed
pursuant to local custom with respect to each Property), and containing no other
exceptions not specifically approved by Buyer. Buyer shall have ten (10) days
after receipt to examine the Title Commitment and inform Seller of Buyer's
objection to any exception contained in or title defect revealed by the Title
Commitments.
(c) If Buyer's examination of the Title Commitment reveals that the
Title Commitment for the Property contains objectionable exceptions or that the
title to the Property is defective and thereafter, the issuing title insurance
company refuses to delete the objectionable exceptions or the defects cannot be
cured within a reasonable period of time after written notice by Buyer,
specifically pointing out the objection/defects, or if the title company refuses
to issue endorsements as required by Buyer's lender, then Buyer may elect to
terminate this Agreement upon written notice to Seller. Notwithstanding the
foregoing, however, in order to terminate the Contract, an objectionable
exception or defect must be one which renders title unmarketable and uninsurable
because of such specified objection or defect, or the specified objection or
defect shall be materially inconsistent with the present use of the Property as
an apartment complex.
(d) Seller will pay for preparation of the Deed for the Property.
(e) Buyer will pay for any survey of the Property, the recording of
the Deed for the Property, state tax and register's fees on the Deed, the cost
of obtaining a title commitment, and the premium due for the title insurance
policy to be issued for the Property, and all endorsements.
(f) Seller and Buyer will each pay their own attorney's fees.
7
<PAGE>
SECTION 5. PRORATIONS AND ALLOCATIONS. (a) Rents, taxes, service con-
tracts, equipment leases or other personal property financing, utility deposits,
insurance and other expenses whether or not a lien, assessed or to be assessed
for the tax year in which the transaction is consummated. will be prorated as to
the Property to the date of the Closing based on a 365-day year.
(b) Security deposits held by Owner or paid by any lessees at the
Property will be transferred to Buyer in full at Closing, including any interest
earned thereon and payable to the Tenant under State law.
SECTION 6. CONDEMNATION OR CASUALTY. Seller agrees to give Purchaser
prompt written notice of any fire or other casualty occurring to all or any
portion of the improvements at the Property and/or Personalty between the date
hereof and the date of closing. If prior to the closing, there shall occur:
(i) damage to the improvements at the Property caused by fire or
other casualty which would cost 5% of the Purchase Price of the Property or more
to repair based on the estimate of a reputable third party contractor chosen by
Seller; or
(ii) the taking or condemnation of all or any portion of the Real
Property and/or the improvements as aforesaid as would materially interfere with
the use thereof; then, if any of such events set forth in (i) or (ii) above
occurs, Buyer or Seller, at its option, may terminate its obligations under this
Agreement by written notice given to Seller within seven (7) days after Buyer
has received the notice referred to above or at the closing, whichever is
earlier. If Buyer does not elect to terminate its obligations as aforesaid, the
closing shall take place as provided herein without an abatement of the purchase
price (except that Buyer shall be allowed a credit for any deductible under
Seller's insurance) and there shall be assigned to the Buyer at closing, all
interest of the Seller in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of such occurrence. Notwithstanding
the foregoing, in the case of casualty loss only, should Buyer elect to
terminate, Seller may notify Buyer within 15 days that Seller intends to restore
the Premises fully and in that event, Buyer's termination notice shall be null
and void and Seller shall proceed as outlined above at closing, provided,
however, that the foregoing shall not be applicable unless restoration can be
completed within time frames allowed by Buyer's lender.
If, prior to the closing, there shall occur:
(i) damage to the Property caused by fire or other casualty which
would cost less than 5% of the allocable Purchase Price of the Property based on
the estimate of a reputable third party contractor chosen by Seller to which
Buyer has no reasonable objection; or
8
<PAGE>
(ii) the taking or condemnation of all or any portion of the said
Real Property and/or improvements as aforesaid which is not material to the use,
thereof; then, if any of such events set forth in (i) or (ii) above occurs,
Buyer shall have no right to terminate its obligations under this Agreement, but
there shall be assigned to Buyer at closing all interest of Seller in and to any
insurance proceeds or condemnation awards which may be payable to Seller on
account of any such occurrence, and in addition, Buyer shall be allowed a credit
for any deductible under Seller's insurance policy.
Seller shall be responsible for maintaining fire and extended
coverage insurance prior to closing as is currently in place.
SECTION 7. CONDITIONS. The following shall each be conditions precedent
to Buyer's obligations hereunder, unless specifically waived in whole or in part
in writing by Buyer:
(a) LITIGATION. There being no existing or pending claims, lawsuits,
or governmental proceedings, or appeals, which challenge Seller's title to the
Property.
(b) TITLE INSURANCE POLICY. Title to the Property at Closing being
marketable or insurable, and/or in accordance with the provisions of Section 4
above, free and clear of all liens and encumbrances. In addition, Buyer
receiving assurances at Closing from the title insurance company issuing the
Title Commitment, that after Closing, Buyer will be issued an ALTA Form B Title
Insurance Policy, with all standard exceptions, except as set forth in Section 4
above, and all other exceptions objected to by Buyer deleted from such policy,
insuring fee simple marketable title to the Property or in accordance with
Section 4 above, in the amount of the Purchase Price, in Buyer's name, free and
clear of all liens and encumbrances not otherwise specifically agreed to by
Buyer prior to Closing.
(c) PERSONAL PROPERTY. Seller conveying title to the Personal
Property to Buyer at Closing free and clear of all liens and encumbrances
(except for equipment leases and personal property financing disclosed during
due diligence) by a Bill of Sale without warranties except as to title in form
and substance reasonably satisfactory to Buyer.
(d) LAWS AND REGULATIONS. Prior to Closing Seller not having
received written notice of non-compliance under any and all Federal, State,
County and Municipal laws, ordinances, requirements and regulations, including
but not limited to any and all environmental laws and regulations, affecting the
9
<PAGE>
Property. Notwithstanding the foregoing, however, in the event Seller does
receive a written notice of violation of any of the foregoing, then and in that
event, (i) if the cure of said violation would cost less than $10,000.00, Seller
shall be required to cure said violation and/or escrow funds necessary to do so
after closing or (ii) Seller shall have the option of curing the matter which is
the subject of such notice before closing and/or making reasonable arrangements
to complete the cure of such violation after closing, provided an escrow is
established for the cost of said cure; and provided Seller either cures the
subject of such notice or makes adequate provisions to cure same and escrow the
funds as set forth hereinabove to do so, then and in either of the foregoing
events, Buyer shall have no right to terminate this Contract.
(e) SELLER COOPERATION. Seller agrees to cooperate with and assist
Buyer and to execute any and all applications, petitions and attend and
participate in any necessary hearings, and undertake all other reasonable acts
to obtain any necessary permits for which Buyer may make application prior to
closing, provided that Buyer shall bear all expenses incidental thereto,
including all of Seller's out-of-pocket expenses.
(f) COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. Seller will be
in compliance with all other representations and warranties made herein at
Closing to the reasonable satisfaction of Buyer.
(g) NOTICE OF CLOSING. If all the conditions specified herein have
not been met within 120 days after execution of this Contract, Buyer shall have
the option to terminate this Agreement, by giving written notice to Seller
specifying the condition not met and provided that Seller does not cure or
remove said condition within 60 days after such notice, or such extended time as
the parties may agree, and in that event the Earnest Money shall be returned to
Buyer. However, in the event that all conditions specified herein have been met
by the Closing date, Buyer shall close the Purchase within the time period
specified, subject to non-performance by Seller under the terms hereof.
SECTION 8. SELLER'S WARRANTIES. The following warranties of Seller shall
survive the Closing for a period of ninety (90) days.
(a) The legal description of the Property contained in the recitals
to this Agreement is substantially correct and will be confirmed by any survey
obtained by Buyer.
(b) Seller (Seller meaning Joseph M. Jayson or an officer of the
general partner of Seller only) has not received written notification that the
Property is not in compliance with all federal, state, county and municipal
laws, ordinances and regulations, including but not limited to all federal,
state, county and municipal environmental laws and regulations, applicable to or
affecting the Property, subject to Seller's right to cure as hereinabove stated.
10
<PAGE>
(d) Seller will convey fee simple, marketable or insurable title to
the Property to Buyer at Closing and will convey title to the Personal Property
to Buyer at Closing by Bill of Sale, in form and substance reasonably
satisfactory to Buyer, free and clear of all liens and encumbrances.
(e) Seller will not interfere with Buyer's opportunity to hire
Seller's on-site employees, who work at the Property, but Buyer will have no
obligation to hire any of those individuals. Buyer will make no efforts to hire
such employees until after all contingencies have been removed and no earlier
than 10 days before closing.
(f) Seller shall be responsible for (and Buyer shall not assume the
obligation of) all employee wages, benefits (including payments for accrued
bonuses, vacation or sick pay, unemployment compensation, employment taxes,
medical claims or similar payments), contributions under any benefit program or
agreement, severance pay obligations and other related employee costs arising as
a result of any events, acts (or failures to act) prior to the Closing Date with
respect to the Property at which such persons are employed, whether or not
disclosed on the schedules to this Agreement.
(g) Seller retains all liability and responsibility for fulfilling
all federal and/or state COBRA and continuation of group health insurance
coverage requirements (pursuant to Section 4980B of the Code, sections 601-608
of ERISA, and any applicable state laws) with respect to Seller's current or
former employees (and their dependents). Buyer does not hereby and will not at
the Closing of the Property assume any obligation to provide medical insurance
coverage to persons that it employs because it acquires the Property.
SECTION 9. NON-PERFORMANCE.
(a) If Seller fails to deliver the Deed or meet any of the
conditions hereof willfully, Buyer, at Buyer's sole option, may terminate this
Agreement whereupon the Earnest Money shall be returned to Buyer on demand or
Buyer may bring an action for specific performance, and if Buyer prevails, all
costs and expenses of any such action shall be paid by Seller as a reduction of
the Purchase Price. The foregoing shall not prevent Buyer from bringing an
action for monetary damages. The foregoing shall be the sole and exclusive
remedies of Buyer. However, if Buyer elects to bring an action for monetary
damages, they shall be specifically limited, if proven, to an amount equal to
the Earnest Money as set forth hereinabove.
11
<PAGE>
(b) If Buyer defaults at any time, Seller and Buyer agree that it
will be extremely difficult or impractical to fix Seller's actual damages.
Therefore, in such an event, the entire Earnest Money shall be delivered to
Seller as liquidated damages for loss of a bargain and not as a penalty. Buyer
will then be released from all liability to Seller related to this Agreement,
such liquidated damages being Seller's sole remedy.
SECTION 10. BROKERS, AGENTS AND CONSULTANTS. Seller represents and
warrants to Buyer that no broker, consultant or agent is due a commission or fee
from the proceeds of the Closing, claiming by, through or under Seller and
hereby agrees to indemnify and hold harmless Buyer from the claims of any agent,
consultant or broker for the payment of a commission or commissions.
Buyer represents and warrants to Seller that no other broker, consultant
or agent is due a commission or fee from the proceeds of the closing claiming
by, through or under Buyer, and hereby agrees to indemnify and hold harmless
Seller and the Property from the claims of any other agent, consultant or broker
for the payment of any commission, finder's fee or other compensation.
SECTION 11. LEASES.
(a) Seller agrees that prior to the Closing it will not enter into
any long term commercial leases or service agreements without the prior written
consent of Buyer which will not be unreasonably withheld or delayed. This
provision shall not be applicable until after the expiration of Buyer's Due
Diligence Period.
(b) Seller shall assign the existing tenant leases to Buyer at
Closing along with all service contracts and other agreements affecting the
Property, provided that Buyer shall execute an assumption agreement or other
agreements with respect to all tenant leases and service contracts or other
agreements from and after the date of closing.
SECTION 12. INSURANCE. Seller will cancel its insurance coverage on the
Property effective at Closing of the Property, and Buyer will place new
insurance coverage on the Property effective on the same date.
SECTION 13. ASSIGNMENT. Buyer shall not have the right to assign this
Agreement, in whole or in part, to any party with whom it is not affiliated
without the express written consent of Seller. Upon any such assignment approved
by Seller, the assignee shall assume the obligations of Buyer and provided said
consent is obtained, Buyer shall thereafter be relieved of liability for the
performance of this Agreement. Seller's consent pursuant to this section shall
be in its sole discretion and shall include approval of all proposed assignment
documents.
12
<PAGE>
SECTION 14. ENTIRE AGREEMENT. All prior understandings and agreements of
the parties are merged herein, and this Agreement reflects the entire
understanding of the parties. This Agreement may not be changed or terminated
orally.
SECTION 15. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, successors and assigns.
SECTION 16. INDEMNIFICATION.
(a) SELLERS INDEMNITY. Seller shall indemnify, defend and hold Buyer
harmless from any claims, demand, loss, liability, damage, or expense (including
reasonable attorneys' fees) in connection with third-party claims for injury or
damage to personal property in connection with the ownership or operation of the
Properties prior to Closing. These indemnification obligations of Seller shall
be repeated at and shall survive the Closing.
(b) BUYERS INDEMNITY. Buyer shall indemnify, defend and hold Seller
harmless from any claim, demand, loss, liability, damage, or expense (including
reasonable attorneys' fees), due to Buyers operation of the Property from and
after Closing. The indemnification obligations of Buyer shall be repeated at and
shall survive the Closing.
SECTION 17. NOTICES. All notices required or permitted hereby shall be in
writing and delivered either in person or sent electronically, or by national
overnight express carrier. Notices shall be deemed to have been given when sent
as follows:
Buyer: Partnership Equities, Inc.
c/o The Wallick Companies
6880 Tussing Road
Columbus, OH 43068
Attention: Sandy Goldston
Seller: c/o Joseph M. Jayson
J. M. Jayson and Company
2350 North Forest Road
Suite 12 A
Getzville, NY 14068
Fax No.: (716) 636-0466
Copy to: William H. Mattrey
Andrews, Sanchez, Amigone,
Mattrey & Marshall, LLP
1300 Main Place Tower
Buffalo, NY 14202
Fax No.: (716) 852-1355
13
<PAGE>
SECTION 18. CONSTRUCTION. Time shall be construed to be of the essence.
SECTION 19. GOVERNING LAW. This Agreement will be governed by and
construed according to New York law, except for matters of title or real estate
law which shall be governed by the laws of the state in which the Property is
located.
SECTION 20. ESCROW. The Escrow Agent hereby acknowledges receipt of the
Earnest Money and agrees to hold the same in escrow until the closing or sooner
termination of this Agreement and shall pay over and apply the proceeds thereof
in accordance with the terms of this Agreement. If, for any reason, the closing
does not occur and either party makes a written demand upon the Escrow Agent for
payment of the Earnest Money, the Escrow Agent shall give written notice to the
other party of such demand. If the Escrow Agent does not receive a written
objection from the other party to the proposed payment within five (5) business
days after the giving of such notice, the Escrow Agent is hereby authorized to
make such payment. If the Escrow Agent does receive such written objection
within such five (5) day period, or if for any reason the Escrow Agent in good
faith shall elect not to make such payment, the Escrow Agent shall continue to
hold the Earnest Money until otherwise directed by written instructions from the
parties to this Agreement or until a final judgment (beyond any applicable
appeal period) by a Court of competent jurisdiction is rendered disposing of
such Earnest Money.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Earnest Money and the delivery
of same in accordance with the terms of this Agreement. The Escrow Agent will
not be liable for any act or omission done in good faith, or for any claim,
demand, loss or damage made or suffered by any party to this Agreement,
excepting such as may arise through or be caused by the Escrow Agent's
negligence or willful misconduct.
SECTION 21. ASSIGNMENT OF BOND CAP ALLOCATION. If Buyer obtains a Bond
Cap allocation or a financing commitment or other related approvals with respect
to the Property, and should Buyer otherwise cancel this Contract as to such
Property or does not close for any reason whatsoever, then and in that event, to
the extent allowable by law, Buyer shall assign the Bond Cap allocation and all
related approvals or commitments with respect to such Property to Seller or its
designee wherever possible and/or if allowed by any lender or other authority
and Buyer will cooperate with Seller in all respects with respect to any
requirements to complete such assignment.
14
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties, or by
the duly authorized officer of the parties, on the day and year shown below.
BUYER:
Executed JULY 16, 1996
--------------
PARTNERSHIP EQUITIES, INC.
By: /S/ SANFORD GOLDSTON
------------------------------------------------
CHAIRMAN
SELLER:
Executed JULY 16, 1996
--------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
BY: /S/ JOSEPH M. JAYSON
------------------------------------------------
G.P.
RECEIPT OF ESCROW AGENT
The undersigned hereby acknowledges receipt of the Earnest Money provided for
herein, and that the same is being held as Escrow Agent pursuant to the terms of
the above Purchase Agreement.
ANDREWS, SANCHEZ, AMIGONE, MATTREY & MARSHALL, LLP
as Escrow Agent
By: /S/ WILLIAM H. MATTREY
-------------------------------------------------
Member
15
REAL ESTATE PURCHASE AGREEMENT
WILLIAMSBURG SOUTH APARTMENTS
This purchase agreement ("Agreement" or "Contract"), made and entered into
by and between Realmark Property Investors Limited Partnership-III, a Delaware
limited partnership ("Seller") and Partnership Equities, Inc., an Ohio
corporation ("Buyer").
RECITALS:
A. Buyer desires to purchase from Seller, and Seller wishes to sell to
Buyer, a certain parcel of real property and all of the improvements and
buildings situated thereon, and the hereditaments and appurtenances thereto,
consisting of an apartment complex (the "Real Property"), and all personal
property, equipment, fixtures and intellectual property (excluding, however, any
use of the name "Realmark" or any related or similar name, it being understood
that only the right, title and interest of Seller to the name of the apartment
complex shall be transferred, and also excluding software not able to be
transferred vis a vis existing licensing agreements, if any) owned by Seller,
utilized in the operation or management of the apartment complex, and located at
said apartment complex as described on EXHIBIT B (collectively the "Personal
Property"). The Real Property together with the Personal Property applicable to
the apartment complex will be herein referred to as the "Property".
B. Attached hereto and made a part hereof is the legal description of the
Real Property, marked with the name of the apartment complex and attached as
EXHIBIT A. A more detailed list of the Personal Property will be prepared by
Seller and submitted during the first ten (10) days of the due diligence period
set forth in Section 3 below and will thereafter be attached to this Agreement
as an amendment to EXHIBIT B.
FOR AND IN CONSIDERATION of the mutual promises, covenants and agreements,
hereinafter set forth, the Parties agree as follows:
SECTION 1. PURCHASE PRICE.
(a) The purchase price to be paid Seller for the Real Property will
be $4,831,000.00 ("Purchase Price") paid in the following manner:
Initial Earnest Money Deposit
at signing of Purchase Agreement $10,000.00
Additional Earnest Money Deposit
after Due Diligence Period (as
defined herein). 70,000.00
<PAGE>
Cash at closing (subject to
credit for Earnest Money,
prorations and allocations per
Section 5) $4,751,000.00
------------
Total $4,831,000.00
and payable by Buyer on closing of title and delivery of the Deed ("Closing") by
wire transfer in immediately available good, federal funds. The Additional
Earnest Money Deposit shall be paid to the Escrow Agent within five (5) days
after the expiration of the Due Diligence Period.
(b) All existing debt, liens, impositions and similar encumbrances
affecting the Real Property will be discharged or, if annual liens, prorated in
accordance with Section 5 and paid at the Closing.
(c) The Initial Earnest Money in the amount stated in Section 1 (a)
above (the "Initial Earnest Money") will be deposited with Andrews, Sanchez,
Amigone, Mattrey & Marshall, LLP in Buffalo, New York, as Escrow Agent (the
"Escrow Agent"), within four (4) days from the date of Seller's execution (as
communicated to Buyer by written facsimile and orally by telephone on such date
of execution) of this Agreement. Within five (5) days after the end of the Due
Diligence Period (as hereinafter defined) Buyer will deposit an additional sum
of $70,000.00 as Additional Earnest Money (the "Additional Earnest Money") with
the Escrow Agent. The Initial Earnest Money and the Additional Earnest Money are
hereinafter collectively referred to as the "Earnest Money". Absent any contrary
provision of this Agreement, the total Earnest Money in the amount of $80,000.00
will remain on deposit with the Escrow Agent until the Closing of the Property.
If either of the Earnest Money deposits are not made by the dates as herein
above set forth, Seller may terminate this Agreement. Interest on the Earnest
Money shall follow the principal sum on any payment or refund. Interest payable
to Buyer shall be credited to Tax ID #31-0863929. Upon any permitted termination
of this Agreement by Buyer, the Earnest Money shall be returned to Buyer upon
demand, and in compliance with all other terms and provisions of this Agreement.
Upon expiration of the Due Diligence Period, $17,500.00 of the Earnest
Money shall be non-refundable unless Seller defaults.
SECTION 2. PLACE AND TIME OF CLOSING.
(a) Subject to the conditions precedent set forth herein having been
met or waived, the Closing will take place on or before 120 days after execution
of this Agreement by both parties, unless extended as otherwise set forth in
this Agreement. As used herein the terms "Closing" will mean the meeting of the
parties at which delivery of the Deed and payment of the Purchase Price as
called for in Section 1 occurs for the Real Property.
2
<PAGE>
(b) Buyer and Seller agree that they will use their best efforts to
complete the Closing within one hundred twenty (120) days from the execution of
this Agreement. Buyer agrees that it will use best efforts and good faith in
applying for a Bond Cap allocation and/or for financing for the Real Property
and will obtain same as soon as reasonably possible and will close on said Real
Property promptly thereafter. Notwithstanding the foregoing, and upon
satisfaction of all conditions precedent, Buyer shall complete the Closing by
November 20, 1996.
(c) This Agreement, as an offer to purchase when signed by Buyer,
shall automatically terminate if not accepted in final form by Seller by 5 P.M.,
Eastern Standard Time, five busi ness days from the date on which Buyer executed
this Agreement as indicated below.
SECTION 3. PURCHASER'S CONTINGENCIES.
(a) DUE DILIGENCE. Buyer, or its designees, will have a period of sixty
(60) days after Seller's execution of this Agreement (the "Due Diligence
Period"), to enter the Property to make inspections, engineering tests, surveys,
and other such tests, examinations and inspections as Buyer may desire as long
as such tests, examinations, etc., do not unreasonably interfere with the
operations or any current use of the Property. All entry upon the Property and
any and all contact with on site employees of Seller by Buyer shall be upon
prior notice to Seller and, at Seller's option, accompanied by an agent of
Seller.
If the Closing of the Property does not occur, Buyer will make such
repairs as necessary to leave the Property in the same condition as prior to
entry by Buyer.
(i) During the Due Diligence Period, Buyer will inspect the Real
Property, and if any, the plans and specifications for design, quality,
structural and mechanical integrity and maintenance during the Due Diligence
Period. At the signing of this Agreement or within ten (10) days thereafter,
Seller shall provide or make available at designated locations, those
operational and title information items which relate to the Property, reasonably
requested by Buyer, including, but not limited to:
o Inventory of Personal Property
o Current Rent Roll - December 1995 or April 1996
o 1994 & 1995 year-end Operating Statements
3
<PAGE>
o Operating Statement for the year 1996 to date (as of 4/30/96)
o December 1995 Operating Statement and 1996 Operating Budget
(It is specifically understood that Operating Budgets are
projections of Seller only and Seller makes no warranty or
representation with respect to any parties' achievement of any
such items in said Budget.)
o Detailed breakdown of the Property's payroll account including
a list of on-site personnel, salary and benefits
o Copy of current ad valorem tax bills, copy of each separate
utility bill for the Property for the past 3 months and a
listing by month of utility charges for 1995
o As-built survey, construction drawings, soil report,
compaction tests, and copies of all Certificates of Occupancy,
if any of the foregoing are in Seller's possession
o Copies of all third-party contracts (e.g., termite, landscape,
pool maintenance, etc.)
o Copies of any environmental reports, engineering reports,
feasibility studies, or appraisals in Seller's possession
(obtained within the last 36 months, it being understood that
Seller makes no warranty or representation with respect to the
information set forth in any of said studies)
o Copies of the latest insurance policy covering the Project,
with current coverage and deductibles along with a paid
invoice for said policy(s) (the same may be within a master
policy)
o Name, firm name, and telephone number for the lawyer most
recently involved with the Project. (It is agreed that at this
time the foregoing shall be identified as William H. Mattrey,
Esq., of Andrews, Sanchez, Amigone, Mattrey & Marshall, LLP,
(716) 852-1300.)
o Make available to Buyer all income information in Seller's
possession on all tenants currently leasing units in the
Property.
o Originals or copies of all tenant leases, rent rolls for the
Property, including security deposits held by Seller in
4
<PAGE>
connection with each apartment unit, credit reports and other
information concerning the leases which are currently in
Seller's file, service agreements, party-wall agreements, and,
if in Seller's possession engineering or architectural reports
for the Properties.
o Proof of zoning classification, if any, in Seller's possession
o A list of all equipment leases and/or any financing documents
for personal property, equipment, etc., affecting the
apartment complex
o Any other items which a prudent buyer reasonably requests and
needs in order to conduct a satisfactory due diligence review.
All of the foregoing will either be at the Property location or at Seller's
offices in Amherst, New York, or at Seller's option, will be forwarded to Buyer.
Any documents not provided by Seller to Buyer within the ten (10) day period
will be made available by Seller, as soon as such documents are available. In
the event of any such failure to deliver any documents, except those which are
not in Seller's possession and which are so qualified hereinabove as excusable
items, the Due Diligence Period will be extended to a date no less than five (5)
days after delivery of the items not delivered within the Due Diligence Period.
All Due Diligence materials must be maintained by Buyer on a confidential basis
and returned to Seller if Buyer terminates this Agreement. Buyer agrees that it
will not use the Due Diligence materials for any purpose other than to determine
whether to acquire the Property and agrees that it will not make contact with
Seller's tenants unless closing occurs. In addition, Buyer agrees that it will
under no circumstances make any offer, or use the Due Diligence materials, to
acquire the interest of any partner(s) of the selling entities for a period of
two (2) years after the date of this Contract. Buyer and/or its agents will not,
under any circumstances, disclose to any of Seller's employees that it is
contemplating acquisition of the Property without Seller's written consent prior
to closing. All reports desired by Buyer during its Due Diligence Period shall
be ordered by Buyer at Buyer's expense, but Buyer agrees that it will supply
copies of each and every report it receives immediately upon their completion
and availability to Buyer.
(ii) During the Due Diligence Period, Buyer will conduct a review of
the economics and feasibility of acquiring and operating the Property as
5
<PAGE>
required by its funding source, including inspection of all zoning and other
government permits and regulations and other matters and documents relating to
the operation of the Property, and as detailed in Section 3(a).
(iii) After Seller provides all required documents to the Buyer,
Buyer agrees to accept or reject the Premises and all documents prior to the end
of the Due Diligence Period. If Buyer does not cancel this Contract during the
Due Diligence Period, Buyer shall be deemed to have accepted the Property and it
will close on the Property in accordance with this Contract, except for
cancellation in accordance with the specific provisions of this Contract. If
Buyer does cancel this Contract within the Due Diligence Period, which shall be
in its sole discretion, the Earnest Money shall be returned to Buyer and neither
party shall have any further liability to the other.
(b) FINANCE. This Contract is contingent upon Buyer obtaining a "firm"
commitment (per the practice of HUD for 221D4 mortgages) for financing the
purchase of Real Property in accordance with the Contract upon terms and
conditions satisfactory to Buyer. Buyer agrees to apply for said commitment
promptly upon the commencement of its Due Diligence period set forth in (a)
above, and shall have a period of 85 days to obtain said commitment. Should
Buyer be unable to obtain said commitment within said 85-day period, either
party may terminate this Contract by written notice to the other in which case
the Earnest Money shall be returned to Buyer and neither party shall have any
further liability, except the obligation to restore the premises after due
diligence. Notwithstanding the foregoing, Buyer shall have the right to waive
this finance contingency during the aforesaid 85-day period.
(c) This Contract is further contingent upon Buyer's closing of the
purchase of Gold Key Apartments and Pleasant Run Apartments from Seller or its
affiliates either before or simultaneously with this transaction. Seller shall
be excused from performance if Buyer does not proceed with the foregoing two
transactions.
SECTION 4. DEED AND TITLE.
(a) Seller shall deliver to Buyer at Closing, a special or limited
warranty deed (or bargain and sale deed, where appropriate) ("Deed"), conveying
good and marketable fee simple title to the Property, subject only to such
easements, restrictions of record and title exceptions set forth in the
commitment for title insurance specifically approved by Buyer, and taxes not
delinquent. Further, the title insurance commitment for the Property must
contain provision for the endorsements that are reasonably required by Buyer's
funding source, which endorsements shall be ordered by Buyer at Buyer's expense.
6
<PAGE>
In addition, Seller shall convey title to the Personal Property to Buyer, free
and clear of all liens and encumbrances (except those disclosed during due
diligence; e.g., equipment leases or personal property financing documents), by
the execution and delivery at Closing of a Bill of Sale in form and substance
reasonably satisfactory to Buyer, without warranty, except as to Seller's title.
(b) Seller agrees to provide a copy of its existing title insurance
policy to Buyer. Buyer shall then obtain an ALTA Form B Title Insurance
Commitment (the "Title Commitment"), within thirty (30) days of the date of
execution of this Contract by both parties, issued by a title insurance company
selected by Buyer, committing to insure fee simple marketable title to the
Property in the amount of the Purchase Price for such Property in Buyer's name,
with all standard exceptions removed (except for the rights of tenants under
unrecorded leases and/or except for standard exceptions normally not removed
pursuant to local custom with respect to each Property), and containing no other
exceptions not specifically approved by Buyer. Buyer shall have ten (10) days
after receipt to examine the Title Commitment and inform Seller of Buyer's
objection to any exception contained in or title defect revealed by the Title
Commitments.
(c) If Buyer's examination of the Title Commitment reveals that the
Title Commitment for the Property contains objectionable exceptions or that the
title to the Property is defective and thereafter, the issuing title insurance
company refuses to delete the objectionable exceptions or the defects cannot be
cured within a reasonable period of time after written notice by Buyer,
specifically pointing out the objection/defects, or if the title company refuses
to issue endorsements as required by Buyer's lender, then Buyer may elect to
terminate this Agreement upon written notice to Seller. Notwithstanding the
foregoing, however, in order to terminate the Contract, an objectionable
exception or defect must be one which renders title unmarketable and uninsurable
because of such specified objection or defect, or the specified objection or
defect shall be materially inconsistent with the present use of the Property as
an apartment complex.
(d) Seller will pay for preparation of the Deed for the Property.
(e) Buyer will pay for any survey of the Property, the recording of
the Deed for the Property, state tax and register's fees on the Deed, the cost
of obtaining a title commitment, and the premium due for the title insurance
policy to be issued for the Property, and all endorsements.
(f) Seller and Buyer will each pay their own attorney's fees.
SECTION 5. PRORATIONS AND ALLOCATIONS. (a) Rents, taxes, service con-
tracts, equipment leases or other personal property financing, utility deposits,
7
<PAGE>
insurance and other expenses whether or not a lien, assessed or to be assessed
for the tax year in which the transaction is consummated. will be prorated as to
the Property to the date of the Closing based on a 365-day year.
(b) Security deposits held by Owner or paid by any lessees at the
Property will be transferred to Buyer in full at Closing, including any interest
earned thereon and payable to the Tenant under State law.
SECTION 6. CONDEMNATION OR CASUALTY. Seller agrees to give Purchaser
prompt written notice of any fire or other casualty occurring to all or any
portion of the improvements at the Property and/or Personalty between the date
hereof and the date of closing. If prior to the closing, there shall occur:
(i) damage to the improvements at the Property caused by fire or
other casualty which would cost 5% of the Purchase Price of the Property or more
to repair based on the estimate of a reputable third party contractor chosen by
Seller; or
(ii) the taking or condemnation of all or any portion of the Real
Property and/or the improvements as aforesaid as would materially interfere with
the use thereof; then, if any of such events set forth in (i) or (ii) above
occurs, Buyer or Seller, at its option, may terminate its obligations under this
Agreement by written notice given to Seller within seven (7) days after Buyer
has received the notice referred to above or at the closing, whichever is
earlier. If Buyer does not elect to terminate its obligations as aforesaid, the
closing shall take place as provided herein without an abatement of the purchase
price (except that Buyer shall be allowed a credit for any deductible under
Seller's insurance) and there shall be assigned to the Buyer at closing, all
interest of the Seller in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of such occurrence. Notwithstanding
the foregoing, in the case of casualty loss only, should Buyer elect to
terminate, Seller may notify Buyer within 15 days that Seller intends to restore
the Premises fully and in that event, Buyer's termination notice shall be null
and void and Seller shall proceed as outlined above at closing, provided,
however, that the foregoing shall not be applicable unless restoration can be
completed within time frames allowed by Buyer's lender.
If, prior to the closing, there shall occur:
(i) damage to the Property caused by fire or other casualty which
would cost less than 5% of the allocable Purchase Price of the Property based on
the estimate of a reputable third party contractor chosen by Seller to which
Buyer has no reasonable objection; or
8
<PAGE>
(ii) the taking or condemnation of all or any portion of the said
Real Property and/or improvements as aforesaid which is not material to the use,
thereof; then, if any of such events set forth in (i) or (ii) above occurs,
Buyer shall have no right to terminate its obligations under this Agreement, but
there shall be assigned to Buyer at closing all interest of Seller in and to any
insurance proceeds or condemnation awards which may be payable to Seller on
account of any such occurrence, and in addition, Buyer shall be allowed a credit
for any deductible under Seller's insurance policy.
Seller shall be responsible for maintaining fire and extended
coverage insurance prior to closing as is currently in place.
SECTION 7. CONDITIONS. The following shall each be conditions precedent
to Buyer's obligations hereunder, unless specifically waived in whole or in part
in writing by Buyer:
(a) LITIGATION. There being no existing or pending claims, lawsuits,
or governmental proceedings, or appeals, which challenge Seller's title to the
Property.
(b) TITLE INSURANCE POLICY. Title to the Property at Closing being
marketable or insurable, and/or in accordance with the provisions of Section 4
above, free and clear of all liens and encumbrances. In addition, Buyer
receiving assurances at Closing from the title insurance company issuing the
Title Commitment, that after Closing, Buyer will be issued an ALTA Form B Title
Insurance Policy, with all standard exceptions, except as set forth in Section 4
above, and all other exceptions objected to by Buyer deleted from such policy,
insuring fee simple marketable title to the Property or in accordance with
Section 4 above, in the amount of the Purchase Price, in Buyer's name, free and
clear of all liens and encumbrances not otherwise specifically agreed to by
Buyer prior to Closing.
(c) PERSONAL PROPERTY. Seller conveying title to the Personal
Property to Buyer at Closing free and clear of all liens and encumbrances
(except for equipment leases and personal property financing disclosed during
due diligence) by a Bill of Sale without warranties except as to title in form
and substance reasonably satisfactory to Buyer.
(d) LAWS AND REGULATIONS. Prior to Closing Seller not h aving
received written notice of non-compliance under any and all Federal, State,
County and Municipal laws, ordinances, requirements and regulations, including
but not limited to any and all environmental laws and regulations, affecting the
Property. Notwithstanding the foregoing, however, in the event Seller does
receive a written notice of violation of any of the foregoing, then and in that
event, (i) if the cure of said violation would cost less than $10,000.00, Seller
9
<PAGE>
shall be required to cure said violation and/or escrow funds necessary to do so
after closing, or (ii) Seller shall have the option of curing the matter which
is the subject of such notice before closing and/or making reasonable
arrangements to complete the cure of such violation after closing, provided an
escrow is established for the cost of said cure; and provided Seller either
cures the subject of such notice or makes adequate provisions to cure same and
escrow the funds as set forth hereinabove to do so, then and in either of the
foregoing events, Buyer shall have no right to terminate this Contract.
(e) SELLER COOPERATION. Seller agrees to cooperate with and assist
Buyer and to execute any and all applications, petitions and attend and
participate in any necessary hearings, and undertake all other reasonable acts
to obtain any necessary permits for which Buyer may make application prior to
closing, provided that Buyer shall bear all expenses incidental thereto,
including all of Seller's out-of-pocket expenses.
(f) COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. Seller will be
in compliance with all other representations and warranties made herein at
Closing to the reasonable satisfaction of Buyer.
(g) NOTICE OF CLOSING. If all the conditions specified herein have
not been met within 120 days after execution of this Contract, Buyer shall have
the option to terminate this Agreement, by giving written notice to Seller
specifying the condition not met and provided that Seller does not cure or
remove said condition within 60 days after such notice, or such extended time as
the parties may agree, and in that event the Earnest Money shall be returned to
Buyer. However, in the event that all conditions specified herein have been met
by the Closing date, Buyer shall close the Purchase within the time period
specified, subject to non-performance by Seller under the terms hereof.
SECTION 8. SELLER'S WARRANTIES. The following warranties of Seller shall
survive the Closing for a period of ninety (90) days.
(a) The legal description of the Property contained in the recitals
to this Agreement is substantially correct and will be confirmed by any survey
obtained by Buyer.
(b) Seller (Seller meaning Joseph M. Jayson or an officer of the
general partner of Seller only) has not received written notification that the
Property is not in compliance with all federal, state, county and municipal
laws, ordinances and regulations, including but not limited to all federal,
state, county and municipal environmental laws and regulations, applicable to or
affecting the Property, subject to Seller's right to cure as hereinabove stated.
10
<PAGE>
(d) Seller will convey fee simple, marketable or insurable title to
the Property to Buyer at Closing and will convey title to the Personal Property
to Buyer at Closing by Bill of Sale, in form and substance reasonably
satisfactory to Buyer, free and clear of all liens and encumbrances.
(e) Seller will not interfere with Buyer's opportunity to hire
Seller's on-site employees, who work at the Property, but Buyer will have no
obligation to hire any of those individuals. Buyer will make no efforts to hire
such employees until after all contingencies have been removed and no earlier
than 10 days before closing.
(f) Seller shall be responsible for (and Buyer shall not assume the
obligation of) all employee wages, benefits (including payments for accrued
bonuses, vacation or sick pay, unemployment compensation, employment taxes,
medical claims or similar payments), contributions under any benefit program or
agreement, severance pay obligations and other related employee costs arising as
a result of any events, acts (or failures to act) prior to the Closing Date with
respect to the Property at which such persons are employed, whether or not
disclosed on the schedules to this Agreement.
(g) Seller retains all liability and responsibility for fulfilling
all federal and/or state COBRA and continuation of group health insurance
coverage requirements (pursuant to Section 4980B of the Code, sections 601-608
of ERISA, and any applicable state laws) with respect to Seller's current or
former employees (and their dependents). Buyer does not hereby and will not at
the Closing of the Property assume any obligation to provide medical insurance
coverage to persons that it employs because it acquires the Property.
SECTION 9. NON-PERFORMANCE.
(a) If Seller fails to deliver the Deed or meet any of the
conditions hereof willfully, Buyer, at Buyer's sole option, may terminate this
Agreement whereupon the Earnest Money shall be returned to Buyer on demand or
Buyer may bring an action for specific performance, and if Buyer prevails, all
costs and expenses of any such action shall be paid by Seller as a reduction of
the Purchase Price. The foregoing shall not prevent Buyer from bringing an
action for monetary damages. The foregoing shall be the sole and exclusive
remedies of Buyer. However, if Buyer elects to bring an action for monetary
damages, they shall be specifically limited, if proven, to an amount equal to
the Earnest Money as set forth hereinabove.
(b) If Buyer defaults at any time, Seller and Buyer agree that it
will be extremely difficult or impractical to fix Seller's actual damages.
Therefore, in such an event, the entire Earnest Money shall be delivered to
11
<PAGE>
Seller as liquidated damages for loss of a bargain and not as a penalty. Buyer
will then be released from all liability to Seller related to this Agreement,
such liquidated damages being Seller's sole remedy.
SECTION 10. BROKERS, AGENTS AND CONSULTANTS. Seller represents and
warrants to Buyer that no broker, consultant or agent is due a commission or fee
from the proceeds of the Closing, claiming by, through or under Seller and
hereby agrees to indemnify and hold harmless Buyer from the claims of any agent,
consultant or broker for the payment of a commission or commissions.
Buyer represents and warrants to Seller that no other broker, consultant
or agent is due a commission or fee from the proceeds of the closing claiming
by, through or under Buyer, and hereby agrees to indemnify and hold harmless
Seller and the Property from the claims of any other agent, consultant or broker
for the payment of any commission, finder's fee or other compensation.
SECTION 11. LEASES.
(a) Seller agrees that prior to the Closing it will not enter into
any long term commercial leases or service agreements without the prior written
consent of Buyer which will not be unreasonably withheld or delayed. This
provision shall not be applicable until after the expiration of Buyer's Due
Diligence Period.
(b) Seller shall assign the existing tenant leases to Buyer at
Closing along with all service contracts and other agreements affecting the
Property, provided that Buyer shall execute an assumption agreement or other
agreements with respect to all tenant leases and service contracts or other
agreements from and after the date of closing.
SECTION 12. INSURANCE. Seller will cancel its insurance coverage on the
Property effective at Closing of the Property, and Buyer will place new
insurance coverage on the Property effective on the same date.
SECTION 13. ASSIGNMENT. Buyer shall not have the right to assign this
Agreement, in whole or in part, to any party with whom it is not affiliated
without the express written consent of Seller. Upon any such assignment approved
by Seller, the assignee shall assume the obligations of Buyer and provided said
consent is obtained, Buyer shall thereafter be relieved of liability for the
performance of this Agreement. Seller's consent pursuant to this section shall
be in its sole discretion and shall include approval of all proposed assignment
documents.
SECTION 14. ENTIRE AGREEMENT. All prior understandings and agreements of
the parties are merged herein, and this Agreement reflects the entire
understanding of the parties. This Agreement may not be changed or terminated
orally.
12
<PAGE>
SECTION 15. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, successors and assigns.
SECTION 16. INDEMNIFICATION.
(a) SELLERS INDEMNITY. Seller shall indemnify, defend and hold Buyer
harmless from any claims, demand, loss, liability, damage, or expense (including
reasonable attorneys' fees) in connection with third-party claims for injury or
damage to personal property in connection with the ownership or operation of the
Properties prior to Closing. These indemnification obligations of Seller shall
be repeated at and shall survive the Closing.
(b) BUYERS INDEMNITY. Buyer shall indemnify, defend and hold Seller
harmless from any claim, demand, loss, liability, damage, or expense (including
reasonable attorneys' fees), due to Buyers operation of the Property from and
after Closing. The indemnification obligations of Buyer shall be repeated at and
shall survive the Closing.
SECTION 17. NOTICES. All notices required or permitted hereby shall be in
writing and delivered either in person or sent electronically, or by national
overnight express carrier. Notices shall be deemed to have been given when sent
as follows:
Buyer: Partnership Equities, Inc.
c/o The Wallick Companies
6880 Tussing Road
Columbus, OH 43068
Attention: Sandy Goldston
Seller: c/o Joseph M. Jayson
J. M. Jayson and Company
2350 North Forest Road
Suite 12 A
Getzville, NY 14068
Fax No.: (716) 636-0466
Copy to: William H. Mattrey
Andrews, Sanchez, Amigone,
Mattrey & Marshall, LLP
1300 Main Place Tower
Buffalo, NY 14202
Fax No.: (716) 852-1355
SECTION 18. CONSTRUCTION. Time shall be construed to be of
the essence.
13
<PAGE>
SECTION 19. GOVERNING LAW. This Agreement will be governed by and
construed according to New York law, except for matters of title or real estate
law which shall be governed by the laws of the state in which the Property is
located.
SECTION 20. ESCROW. The Escrow Agent hereby acknowledges receipt of the
Earnest Money and agrees to hold the same in escrow until the closing or sooner
termination of this Agreement and shall pay over and apply the proceeds thereof
in accordance with the terms of this Agreement. If, for any reason, the closing
does not occur and either party makes a written demand upon the Escrow Agent for
payment of the Earnest Money, the Escrow Agent shall give written notice to the
other party of such demand. If the Escrow Agent does not receive a written
objection from the other party to the proposed payment within five (5) business
days after the giving of such notice, the Escrow Agent is hereby authorized to
make such payment. If the Escrow Agent does receive such written objection
within such five (5) day period, or if for any reason the Escrow Agent in good
faith shall elect not to make such payment, the Escrow Agent shall continue to
hold the Earnest Money until otherwise directed by written instructions from the
parties to this Agreement or until a final judgment (beyond any applicable
appeal period) by a Court of competent jurisdiction is rendered disposing of
such Earnest Money.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Earnest Money and the delivery
of same in accordance with the terms of this Agreement. The Escrow Agent will
not be liable for any act or omission done in good faith, or for any claim,
demand, loss or damage made or suffered by any party to this Agreement,
excepting such as may arise through or be caused by the Escrow Agent's
negligence or willful misconduct.
SECTION 21. ASSIGNMENT OF BOND CAP ALLOCATION. If Buyer obtains a Bond Cap
allocation or a financing commitment or other related approvals with respect to
the Property, and should Buyer otherwise cancel this Contract as to such
Property or does not close for any reason whatsoever, then and in that event, to
the extent allowable by law, Buyer shall assign the Bond Cap allocation and all
related approvals or commitments with respect to such Property to Seller or its
designee wherever possible and/or if allowed by any lender or other authority
and Buyer will cooperate with Seller in all respects with respect to any
requirements to complete such assignment.
11
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties, or by
the duly authorized officer of the parties, on the day and year shown below.
BUYER:
Executed JULY 16, 1996
--------------
PARTNERSHIP EQUITIES, INC.
By: /S/ SANFORD GOLDSTON
------------------------------------------------
CHAIRMAN
SELLER:
Executed JULY 16, 1996
--------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
BY: /S/ JOSEPH M. JAYSON
------------------------------------------------
G.P.
RECEIPT OF ESCROW AGENT
The undersigned hereby acknowledges receipt of the Earnest Money provided for
herein, and that the same is being held as Escrow Agent pursuant to the terms of
the above Purchase Agreement.
ANDREWS, SANCHEZ, AMIGONE, MATTREY & MARSHALL, LLP
as Escrow Agent
By: /S/ WILLIAM H. MATTREY
-------------------------------------------------
Member
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III FOR
SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 54,800
<SECURITIES> 0
<RECEIVABLES> 903,755
<ALLOWANCES> 895,282
<INVENTORY> 0
<CURRENT-ASSETS> 844,177
<PP&E> 20,918,178
<DEPRECIATION> 9,638,598
<TOTAL-ASSETS> 12,123,757
<CURRENT-LIABILITIES> 2,705,719
<BONDS> 10,168,100
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,123,757
<SALES> 0
<TOTAL-REVENUES> 2,194,138
<CGS> 0
<TOTAL-COSTS> 2,620,422
<OTHER-EXPENSES> 19,622
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 637,558
<INCOME-PRETAX> (445,906)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (445,906)
<EPS-PRIMARY> (27.81)
<EPS-DILUTED> 0
</TABLE>
