SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) July 2, 1998
------------
PaineWebber Equity Partners Two Limited Partnership
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(Exact name of registrant as specified in its charter)
Virginia 0-15705 04-2918819
- --------------------------------------------------------------------------------
(State or other jurisdiction) (Commission (IRS Employer
of incorporation File Number) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
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(Former name or address, if changed since last report)
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS TWO LIMITED PARTNERSHIP
ITEM 2 - Disposition of Assets
The Gables of Erin Shades, Richmond, Virginia
Disposition Date - July 2, 1998
On July 2, 1998, Richmond Gables Associates, a joint venture in which
Paine Webber Equity Partners Two Limited Partnership ("the Partnership") has an
interest, sold the property known as The Gables at Erin Shades Apartments
located in Richmond, Virginia, to an unrelated third party, Cornerstone Realty
Income Trust, Inc., a Virginia corporation, for $11.5 million. The Partnership
received net proceeds of approximately $5,153,000 after deducting closing costs
of approximately $286,000, closing proration adjustments of approximately
$33,000, the repayment of the existing mortgage note of approximately $4,977,000
and a prepayment penalty of approximately $472,000 and a payment of
approximately $579,000 to the Partnership's co-venture partner for its share of
the sale proceeds in accordance with the joint venture agreement. Despite
incurring a sizable prepayment penalty on the repayment of the outstanding first
mortgage loan, management believed that a current sale of The Gables property
was in the best interests of the Limited Partners due to the exceptionally
strong market conditions that exist at the present time and which resulted in
the achievement of a very favorable selling price. In addition, management was
concerned about the impact of expected development activity in the Richmond
market on the future market value of The Gables at Erin Shades Apartments. The
Partnership will distribute all of the net sales proceeds from the sale of The
Gables, along with an amount of excess cash reserves, in the form of a special
distribution totalling approximately $5,243,000, or $39 per original $1,000
investment, to be paid on July 20, 1998 to unitholders of record as of July 2,
1998.
ITEM 7 - Financial Statements and Exhibits
(a) Financial Statements: None
(b) Exhibits:
(1)Purchase and Sale Agreement by and between Richmond Gables Associates and
Cornerstone Realty Group, Inc., dated June 26, 1998.
(2)General Warranty Deed by and between Richmond Gables Associates and
Cornerstone Realty Income Trust, Inc., dated June 30, 1998.
(3)Bill of Sale by Richmond Gables Associates in favor of Cornerstone
Realty Income Trust, Inc., dated June 30, 1998.
(4)Assignment and Assumption of Leases and Security Deposits between
Richmond Gables Associates and Cornerstone Realty Income Trust, Inc.,
dated June 30, 1998
(5)Assignment and Assumption of Contracts between Richmond Gables
Associates and Cornerstone Realty Income Trust, Inc., dated June 30,
1998
(6)Seller's Settlement Statement between Richmond Gables Associates and
Cornerstone Realty Income Trust, Inc., dated June 30, 1998
(7)Purchaser's Settlement Statement between Richmond Gables Associates and
Cornerstone Realty Income Trust, Inc., dated June 30, 1998
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS TWO LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINEWEBBER EQUITY PARTNERS
TWO LIMITED PARTNERSHIP
-----------------------
(Registrant)
By: /s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: July 15, 1998
<PAGE>
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
RICHMOND GABLES ASSOCIATES ("SELLER")
AND
CORNERSTONE REALTY GROUP, INC. ("BUYER")
GABLES OF ERIN SHADES APARTMENTS
RICHMOND, VIRGINIA
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.....................................................................1
DEFINITIONS.............................................................1
ARTICLE 2.....................................................................4
PURCHASE AND SALE.......................................................4
ARTICLE 3.....................................................................4
PURCHASE PRICE; DEPOSIT; ADJUSTMENTS....................................4
ARTICLE 4.....................................................................7
PRECLOSING OPERATION....................................................7
ARTICLE 5.....................................................................8
ACCESS, INSPECTION, DILIGENCE...........................................8
ARTICLE 6....................................................................13
TITLE AND SURVEY.......................................................13
ARTICLE 7....................................................................15
CONDITIONS PRECEDENT AND CLOSING.......................................15
ARTICLE 8....................................................................18
CASUALTY AND CONDEMNATION..............................................18
ARTICLE 9....................................................................19
BROKERAGE COMMISSIONS..................................................19
ARTICLE 10...................................................................20
DEFAULT, TERMINATION AND REMEDIES......................................20
ARTICLE 11...................................................................21
REPRESENTATIONS AND WARRANTIES.........................................21
ARTICLE 12...................................................................25
MISCELLANEOUS..........................................................25
ARTICLE 13...................................................................29
IRS FORM 1099-S DESIGNATION............................................29
<PAGE>
LIST OF EXHIBITS
EXHIBIT A - THE LAND
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - PROPERTY CONTRACTS
EXHIBIT D - EARNEST MONEY ESCROW INSTRUCTIONS
EXHIBIT E - RENT ROLL
EXHIBIT F - FORM OF ESCROW CLOSING INSTRUCTIONS
EXHIBIT G - LEAD-BASED PAINT DISCLOSURE
EXHIBIT H - DILIGENCE DOCUMENTS
SCHEDULE D - 1099 DESIGNATION AGREEMENT
SCHEDULE E - FORM OF AUDIT LETTER
<PAGE>
PURCHASE AND SALE AGREEMENT
Gables of Erin Shades Apartments
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of
the 26th day of June, 1998 by and between Seller and Buyer, upon the following
terms and conditions:
WHEREAS, Seller desires to sell and Buyer desires to purchase, the
Property (hereinafter defined) on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual undertakings, covenants and
agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
References in this Agreement to the following terms shall have the
following meanings:
Buyer: Cornerstone Realty Group, Inc., a Virginia corporation
- ------
Deposit: See Section 3.1
- --------
Documents: all documents listed on Exhibit H, attached hereto.
- ----------
Environmental
- -------------
Requirements: All laws, ordinances, statutes, codes, rules,
- ------------
regulations, agreements, judgments, orders and decrees
now or hereafter enacted, promulgated, or amended, of
the United States, the states, the counties, the
cities or any other political subdivisions in which
the Real Property is located and any other political
subdivision, agency or instrumentality exercising
jurisdiction over the owner of the Real Property, the
Real Property or the use of the Real Property relating
to pollution, the protection or regulation of human
health, natural resources or the environment, or the
emission, discharge, release or threatened release of
pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or waste or Hazardous
Materials into the environment (including, without
limitation, ambient air, surface water, ground water
or land or soil).
Escrowed Amount: See Section 3.1
- ----------------
Hazardous Substances: Any substance which is or contains: (i) any
- --------------------
"hazardous substance" as now or hereafter defined in
Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.) or any
regulations promulgated under CERCLA; (ii) any
"hazardous waste" as now or hereafter defined in the
Recourse Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) or regulations promulgated under
RCRA; (iii) any substance regulated by the Toxic
Substances Control Act (15 U.S.C. Section 2601
et. seq.); (iv) gasoline, diesel fuel or other
petroleum hydrocarbons; (v) asbestos and asbestos
containing materials, in any form, whether friable or
nonfriable; (vi) polychlorinated biphenyls;
(vii) radon gas; and (viii) any additional substances
or materials which are now or hereafter classified or
considered to be hazardous or toxic under
Environmental Requirements or the common law, or any
other applicable law related to the Property.
Hazardous Materials shall include, without limitation,
any substance, the presence of which on the Real
Property: (A) requires reporting, investigation or
remediation under Environmental Requirements;
(B) causes or threatens to cause a nuisance on the Real
Property or adjacent property or poses or threatens to
pose a hazard to the health or safety of persons on
the Real Property or adjacent property; or (C) if
emanated or migrated from the Real Property, could
constitute a trespass.
Improvements: All buildings, structures and other improvements
- ------------- situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land,
which include 224 rental units.
Intangible Property: All of Seller's right, title and interest, if
- ------------------- any, in all intangible assets of any nature relating
to the Land, the Improvements or the Personal
Property, including, without limitation, all of
Seller's right, title and interest in all
(i) warranties and guaranties relating to the
Improvements or Personal Property in the possession of
Seller, (ii) all licenses, permits and approvals
relating to the Real Property, (iii) all logos and
trade names currently used by Seller exclusively in
the operation of the Land and Improvements, including
the use of the name Gables of Erin Shades Apartments,
and (iv) all plans and specifications, in each case to
the extent that Seller may legally transfer the same.
Land: All of the land described on Exhibit A attached
- ---- hereto, together with all privileges, rights,
easements, and appurtenances belonging to such land
and all right, title and interest (if any) of Seller
in and to any streets, alleys, passages, and other
rights-of-way or appurtenances included in, adjacent
to or used in connection with such land and all right,
title and interest (if any) of Seller in all mineral
and development rights appurtenant to such land.
Leases: All of Seller's rights in all leases covering any
- ------- portion of the Land or Improvements.
Personal Property: All furniture, carpeting, appliances, equipment,
- ----------------- machinery, inventories, supplies, signs and other
tangible personal property of every kind and nature,
if any, owned by Seller and installed, located at and
used in connection with the ownership, occupation and
operation of the Real Property, including, without
limitation, the Personal Property listed on Exhibit B
attached hereto. Personal Property specifically
excludes: (i) any items of personal property owned by
tenants at or on the Real Property, and (ii) any items
of personal property owned by third parties and leased
to Seller.
Property: The Real Property, the Personal Property, the Leases,
- --------- the Tenant Deposits, the Intangible Property and the
Property Contracts known as Gables of Erin Shades
Apartments, located at Richmond, Virginia.
Property Contracts: All of Seller's rights, if any, in the contracts
- ------------------ listed on Exhibit C attached hereto, being all
service, supply and equipment rental, management,
operating and leasing contracts affecting the
Property, to the extent that (i) Seller is entitled to
transfer the same to Buyer, and (ii) Buyer does not
elect to have Seller terminate them in accordance with
Section 4.3 below.
Purchase Price: $11,500,000.00
- --------------
Real Property: The Land and the Improvements.
- -------------
Seller: Richmond Gables Associates, a Virginia general
- ------- partnership
Tenant Deposits: Seller's rights to unapplied security deposits under
- --------------- the Leases.
Title Company: Commonwealth Land Title Insurance Company
- -------------
ARTICLE 2
PURCHASE AND SALE
2.1 Seller hereby agrees to sell and convey the Property to Buyer and
Buyer hereby agrees to buy the Property from Seller for the Purchase Price and
otherwise subject to the covenants, provisions, terms and conditions contained
herein.
ARTICLE 3
PURCHASE PRICE; DEPOSIT; ADJUSTMENTS
3.1 Deposit. Contemporaneously with the execution and delivery of this
Agreement (and as a condition precedent to the effectiveness of this Agreement),
Buyer shall deposit immediately available funds with the Title Company
(hereinafter the "Escrow Agent") the sum of Two Hundred Fifty Thousand and
00/100 ($250,000.00) Dollars (the "Deposit") to secure Buyer's obligations under
this Agreement. The Escrow Agent shall hold the Deposit in a segregated interest
bearing money market account with an FDIC insured bank reasonably acceptable to
Buyer and Seller. The Deposit and all interest accrued on the Deposit
(collectively, the "Escrowed Amount") shall be maintained by the Escrow Agent in
such account or accounts until the Escrow Agent is required to cause the
Escrowed Amount to be disbursed pursuant to the terms and conditions of this
Agreement and the Earnest Money Escrow Instructions attached hereto as Exhibit
D. The Escrowed Amount shall be applied to the Purchase Price if the Closing
occurs, as provided in Section 3.2(c) below.
3.2 Purchase Price. The Purchase Price, subject to adjustment as provided
herein, shall be as specified in Article 1 above and shall be paid on the
Closing Date (as hereinafter defined) in United States dollars by wire transfer
of federal funds, less the Escrowed Amount (the "Cash Balance").
3.3 Tax Proration. All due and payable real estate taxes, all general and
special assessments on the Land and ad valorem taxes, if any, on the Personal
Property (based on the most recent ascertainable taxes) attributable to the
Property through the Closing Date shall be prorated and adjusted as of the
Closing Date. In no event shall Seller be charged with or be responsible for any
increase in the taxes on the Property resulting from the sale of the Property or
from any improvements made or leases entered into on or after the Closing Date.
If the tax statements for the fiscal year during which the Closing Date occurs
are not finally determined, then the tax figures for the immediately prior
fiscal year shall be used for the purposes of prorating taxes on the Closing
Date, provided that there shall be no further adjustment to be made after the
Closing Date. Any tax refunds or proceeds (including interest thereon) on
account of a favorable determination resulting from a challenge, protest, appeal
or similar proceeding relating to taxes and assessments relating to the Property
(i) for all tax periods occurring prior to the applicable tax period in which
the Closing occurs shall be retained by and paid exclusively to Seller and (ii)
for the applicable tax period in which the Closing occurs shall be prorated as
of the Closing Date after reimbursement to Seller and Buyer, as applicable, for
all fees, costs and expenses (including reasonable attorneys' and consultants'
fees) incurred by Seller or Buyer, as applicable, in connection with such
proceedings such that Seller shall retain and be paid that portion of such tax
refunds or proceeds as is applicable to the portion of the applicable tax period
prior to the Closing Date and Buyer shall retain and be paid that portion of
such tax refunds or proceeds as is applicable to the portion of the applicable
tax period from and after the Closing Date. Neither Seller nor Buyer shall
settle any tax protests or proceedings in which taxes for the tax period for
which the other party is responsible are being adjudicated without the consent
of such party, which consent shall not be unreasonably withheld, conditioned or
delayed. After the Closing, Buyer shall be responsible for and control any tax
protests or proceedings for any period for which taxes are adjusted between the
parties under this Agreement and for any later period. Buyer and Seller shall
cooperate in pursuit of any such proceedings and in responding to reasonable
requests of the other for information concerning the status of and otherwise
relating to such proceedings; provided, however, that neither party shall be
obligated to incur any out-of-pocket fees, costs or expenses in responding to
the requests of the other.
3.4 Contract Proration. To the extent Property Contracts are not
terminated pursuant to Section 4.3, (a) prepaid or past due amounts and (b)
prepaid fees or bonuses under any Property Contracts which are assigned to Buyer
at Closing shall be prorated and adjusted as of the Closing Date.
3.5 Utility Proration. Seller shall use commercially reasonable efforts to
terminate its accounts for electricity, gas, water, sewer or other public
utility usage at the Property as of the Closing Date, and the Seller shall pay
all charges for such utilities which have accrued on or prior to the Closing
Date; provided, however, that if and to the extent such charges are paid
directly by tenants, no such termination or payment shall be required. Buyer
shall activate its own account as of the Closing Date. If Seller is unable to
terminate any of its accounts, the Seller shall cause all meters for
electricity, gas, water, sewer or other public utility usage at the Property to
be read as of the day immediately preceding the Closing Date, and the Seller
shall pay all charges for such utilities which have accrued on or prior to the
Closing Date; provided, however, that if and to the extent such charges are paid
directly by tenants, no such reading or payment shall be required. If the
utility companies are unable or refuse to read meters for which payment by the
Seller is required, all charges for such utilities to the extent unpaid shall be
prorated and adjusted as of the Closing Date based on the most recent bills
therefor and no further adjustment shall be made. The Seller shall provide
notice to the Buyer within five (5) days of the Closing Date setting forth (i)
whether utility accounts will be terminated by Seller or (ii) whether utility
meters will be read as of the Closing Date and shall provide a copy of the most
recent bill for any utility charges which are to be prorated and adjusted as of
the Closing Date.
3.6 Income and Expense Proration. Collected rents for the then current and
any future period, prepaid rentals, and all expenses and other charges in
connection with the operation of the Property shall be apportioned and full
value shall be adjusted as of the Closing Date, and the net amount thereof, if
in favor of Seller, shall be added to the Purchase Price, or if in favor of
Buyer, shall be deducted from the Purchase Price. Security deposits which have
not been previously applied by Seller shall be added to the Purchase Price. From
and after Closing all security deposits credited to Buyer shall thereafter be
deemed transferred to Buyer and Buyer shall assume and be solely responsible for
the payments of security deposits to tenants in accordance with the Leases and
applicable law. Seller shall be entitled to retain or if transferred to Buyer
receive a credit for any utility deposits and any deposits for third parties
under any of the Property Contracts. For a period of sixty (60) days after the
Closing Date, Buyer shall use commercially reasonable efforts to collect owing
past due or uncollected rents as of the Closing Date, and such past due or
uncollected rents, less reasonable expenses of collection thereof, shall be
apportioned between Buyer and Seller (if and when collected). If Seller has
committed to give any future monetary concessions to tenants under existing
leases to which Buyer would become liable, then such amount shall be deducted
from the Purchase Price at Closing.
3.7 Prorations Generally. A statement of prorations and other adjustments
shall be prepared by Seller in conformity with the provisions of this Article 3
and submitted to Buyer for review and approval not less than two (2) business
days prior to the Closing Date. For purposes of making prorations, Seller shall
be deemed to be in title to the Property and entitled to the income from and
responsible for the expenses thereof, on the closing Date.
3.8 Closing Costs.
(a) Seller shall pay: (i) its legal fees and expenses related to the
negotiation and preparation of this Agreement and all documents required
to close the transaction contemplated hereby, (ii) 50% of the escrow fees
of the Escrow Agent, (iii) grantor's tax and (iv) all expenses of
satisfaction and prepayment of the any outstanding mortgages on the
Property.
(b) Buyer shall pay: (i) 50% of the escrow fees of the Escrow Agent,
(ii) charges to record the deed, and evidence of Buyer's existence or
authority, (iii) Buyer's legal fees and expenses related to the
negotiation of this Agreement and all documents required to close the
transaction contemplated hereby, (iv) all costs related to the Buyer's
inspection and due diligence, including, without limitation, the cost of
appraisals, architectural, engineering, credit and environmental reports,
(v) all costs associated with title examination and preparation of a title
commitment as well as all charges and premiums for an owner's title
policy, (vi) all costs allocable to preparation of the survey, (vii) the
cost of the Phase I Report update, and (viii) all state and county taxes
associated with the transfer of the property.
(c) All other closing costs shall be paid by Seller or Buyer in
accordance with the custom in the jurisdiction where the Property is
located.
ARTICLE 4
PRECLOSING OPERATION
4.1 Leases. A rent roll (the "Rent Roll") containing a list of all
occupants of the Property pursuant to the Leases as of the date hereof is
attached hereto as Exhibit E. During the pendency of this Agreement, Seller may
enter into Leases with new tenants or modifications of Leases with existing
tenants substantially in accordance with Seller's existing leasing practices,
provided that in all events any new or modified Leases shall (i) be at or near
market rent, (ii) be for a term of not more than one (1) year (with respect to
residential Leases only), and (iii) on the Seller's current standard form of
lease.
4.2 Conduct of Business. At all times prior to Closing, Seller shall
continue (a) to conduct business with respect to the Property in the same manner
in which said business has been heretofore conducted, (b) to insure the Property
substantially as currently insured, and (c) maintain the Property in its current
condition, reasonable wear and tear and damage by casualty excepted, including
ordinary preparation for occupancy of residential units vacated prior to
Closing.
4.3 Property Contracts. Seller shall make copies of all Property Contracts
available for Buyer to review promptly after the date hereof. On or before the
Diligence Date (as defined below), unless Buyer has provided written notice to
Seller of Buyer's election to terminate this Agreement, Buyer shall provide
written notice to Seller of the Property Contracts that Buyer desires to have
terminated by Seller, and Seller will terminate the Property Contracts so
identified at or before Closing, provided that such Property Contracts may be
terminated without cost or liability to Seller and if there is cost or liability
to Seller, Buyer shall be responsible for any such liability. At Closing, Seller
shall assign and Buyer shall assume the Property Contracts, except those
Property Contracts which Seller has agreed to terminate. Buyer and Seller shall
indemnify, defend and hold the other harmless from and against any and all
claims under the Property Contracts which relate to its respective period of
ownership. Notwithstanding the foregoing, Seller's existing management contract
and exclusive brokerage contract for the Property shall be terminated by Seller
effective as of the Closing Date at no cost to Buyer.
ARTICLE 5
ACCESS, INSPECTION, DILIGENCE
5.1 Access/Purchaser's Responsibilities/Purchaser's Indemnity.
(a) From the date hereof through the Diligence Date (hereinafter
defined), Seller agrees that Buyer and its authorized agents or
representatives shall be entitled to enter upon the Real Property during
normal business hours upon advance written notice to Seller and make such
reasonable, nondestructive investigations, studies and tests including,
without limitation, surveys and engineering studies as Buyer deems
necessary or advisable, provided, however, that Buyer shall not be
permitted to conduct physical testing without Seller's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Seller's prior written consent for physical inspections or
testing may be conditioned upon receipt of a detailed description of the
proposed physical inspection or testing, a list of contractors who will be
performing the physical inspection or testing, evidence of insurance
satisfactory to Seller, and such other information as Seller reasonably
requires in connection with such proposed inspection or testing. Buyer
acknowledges that Seller has delivered to Buyer or has made available to
Buyer at the Property, on or before the date hereof, all Documents.
(b) Buyer agrees that in conducting any inspections, investigations
or tests of the Property and/or the Documents, Buyer and its agents and
representatives shall (i) not unreasonably interfere with the operation
and maintenance of the Property, (ii) not unreasonably disturb the tenants
under the Leases or unreasonably interfere with their use of the Property
pursuant to their respective Leases, (iii) not damage any part of the
Property or any personal property owned or held by any tenant or third
party, (iv) not injure of otherwise cause bodily harm to Seller, the
property manager, or their respective guests, agents, invitees,
contractors ad employees or any tenant or their guests or invitees, (v)
maintain comprehensive general liability insurance in terms and amounts
reasonably acceptable to Seller covering any accident arising in
connection with the presence of Buyer, its agents and representatives on
the Property, and deliver a certificate of insurance verifying such
coverage to Seller prior to entry upon the Property; (vi) promptly pay
when due the costs of all tests, investigations and examinations done with
regard to the Property; (vii) not permit any liens to attach to the Real
Property by reason of the exercise of Buyer's rights hereunder, (viii)
fully restore the Property to the condition in which the same was found
before any such inspection or tests were undertaken; and (ix) not reveal
or disclose any information obtained during the due diligence period
concerning the Property and the Documents to anyone outside Buyer's
organization, except in accordance with the confidentiality standards set
forth in Section 5.5 herein.
(c) Buyer will indemnify, defend, and hold Seller and its property
manager harmless from all losses, costs, liens, claims, causes of action,
liability, damages and out-of pocket expenses, including, without
limitation, reasonable attorneys= fees incurred by Seller as a result of
the entry upon or inspections, tests or investigations of the Property
conducted by or on behalf of Buyer. This indemnity obligation of Buyer
shall survive the termination of this Agreement for any reason.
(d) Buyer acknowledges and agrees that the Documents are provided to
Buyer for informational purposes only and do not constitute
representations or warranties of Seller or its agents, employees or
representatives of any kind as to the truth, accuracy or completeness of
the Documents or the source(s) thereof. Seller has not undertaken any
independent investigation as to the truth, accuracy or completeness of the
Documents, and is providing the Documents solely as an accommodation to
Buyer.
5.2 Diligence. Subject to Section 5.1, above, Buyer shall promptly
commence and actively pursue the following due diligence items:
(a) Review title and survey matters;
(b) Review Property Contracts;
(c) Obtain and review engineering reports;
(d) Review environmental reports on oil, hazardous waste, and
asbestos;
(e) Review applicable zoning and other land use controls, and other
permits, licenses, permissions, approvals and consents; and
(f) Review all Leases affecting the Property.
Buyer shall complete its due diligence on or before July 8, 1998 (the
"Diligence Date"). Notwithstanding any other term or provision herein to the
contrary, in the event that Buyer's due diligence shall reveal any matters which
are not acceptable to Buyer, in Buyer's sole discretion, Buyer may elect, by
written notice to Seller, received by Seller on or before the Diligence Date,
not to proceed with this purchase, in which event this Agreement shall
terminate, the Escrow Agent shall return the Escrowed Amount to the Buyer and
this Agreement shall be null and void without recourse to either party hereto
(except to the extent such recourse arises in connection with a provision of
this Agreement which is intended to survive termination). In the event that
Buyer does not terminate this Agreement pursuant to this Paragraph 5.2, the
Escrowed Amount shall become nonrefundable and shall either be (a) applied to
the Purchase Price as provided in Section 3.2, or (b) in the event of default,
casualty or condemnation, disbursed to either Buyer or Seller according to the
applicable terms hereof. BUYER ACKNOWLEDGES THAT, PURSUANT TO THE TERMS OF THIS
AGREEMENT, BUYER SHALL BE AFFORDED A FULL OPPORTUNITY TO INSPECT THE PROPERTY,
OBSERVE ITS PHYSICAL CHARACTERISTICS AND EXISTING CONDITIONS AND CONDUCT SUCH
INVESTIGATIONS AND STUDIES ON AND OF SAID PROPERTY AS IT DEEMS NECESSARY AND
THAT, UNLESS BUYER TERMINATES THIS AGREEMENT PURSUANT TO THIS SECTION 5.3 BUYER
SHALL BE DEEMED TO HAVE WAIVED ON THE DILIGENCE DATE ANY AND ALL OBJECTIONS TO
OR COMPLAINTS REGARDING (INCLUDING, BUT NOT LIMITED TO, FEDERAL, STATE OF COMMON
LAW BASED ACTIONS AND ANY PRIVATE RIGHT OF ACTION UNDER STATE AND FEDERAL LAW TO
WHICH THE PROPERTY IS OR MAY BE SUBJECT, INCLUDING BUT NOT LIMITED TO, CERCLA
AND RCRA) PHYSICAL CHARACTERISTICS AND EXISTING CONDITIONS, INCLUDING, WITHOUT
LIMITATION, STRUCTURAL AND GEOLOGIC CONDITIONS, SUBSURFACE SOIL AND WATER
CONDITIONS AND SOLID AND HAZARDOUS WASTE AND HAZARDOUS SUBSTANCES ON, UNDER,
ADJACENT TO OR OTHERWISE AFFECTING THE PROPERTY. BUYER FURTHER HEREBY ASSUMES
THE RISK OF CHANGES IN APPLICABLE LAWS AND REGULATIONS RELATING TO PAST, PRESENT
AND FUTURE ENVIRONMENTAL CONDITIONS ON THE PROPERTY AND THE RISK THAT ADVERSE
PHYSICAL CHARACTERISTICS AND CONDITIONS, INCLUDING, WITHOUT LIMITATION, THE
PRESENCE OF HAZARDOUS SUBSTANCES OR OTHER CONTAMINANTS, MAY NOT HAVE BEEN
REVEALED BY ITS INVESTIGATION.
5.3 Copies of Reports/Return of Documents.
(a) Seller has delivered to Buyer a copy of the Phase I
Environmental Site Assessment for the Gables Apartments prepared by CURA,
Inc. dated September 13, 1994 (the "Phase I Report"). If the Phase I
Report indicates the existence or reasonable potential existence of any
environmental, hazardous waste or Hazardous Substance contamination of any
portion of the Property, Buyer may terminate this Agreement by giving
written notice to Seller by the Diligence Date. Upon such termination, in
accordance with paragraphs (b) and (c) below, the Escrowed Amount shall be
promptly returned to Buyer and neither Buyer nor Seller shall have any
further obligation or liability to the other hereunder, except those
obligations arising under provisions of this Agreement which are expressly
intended to survive termination. Buyer hereby acknowledges and agrees that
if it fails to terminate this Agreement pursuant to this Section 5.3(a),
it waives its right to terminate this Agreement pursuant to Section 5.2
above for any reason pertaining to or in connection with information
contained in the Phase I Report.
(b) If this Agreement is terminated for any reason whatsoever, Buyer
shall promptly deliver to Seller all Documents delivered to Buyer or
Buyer's agents, representatives or designees by Seller or Seller's agents,
representatives or employees pursuant to this Agreement.
(c) The return of the Escrowed Amount to Buyer under this Agreement
shall be contingent upon Buyer's fulfillment of its obligations under
Section 5.4(a) and (b).
5.4 Confidentiality. Buyer acknowledges and agrees that any and all of the
Documents are proprietary and confidential in nature and will be delivered to
Buyer solely to assist Buyer in determining the feasibility of purchasing the
Property. Further, each party hereto agrees to maintain in confidence, and not
to discuss with or to disclose to any person or entity who is not a party to
this Agreement, any material term of this Agreement or any aspect of the
transactions contemplated hereby, except as provided in this Section. Seller may
publicly disclose the existence of this Agreement provided that the identity of
Buyer is not disclosed. Buyer shall not disclose to anyone other than its
partners and financiers the Documents and/or any information disclosed by Seller
to Buyer which is not generally known by the public regarding Seller's
operations and/or the Property. Each party hereto may discuss with and disclose
to its accountants, attorneys, existing or prospective lenders, investment
bankers, underwriters, rating agencies, partners, consultants and other advisors
to the extent such parties reasonably need to know such information and are
bound by a confidentiality obligation identical in all material respects to the
one created by this Section. Additionally, each party may discuss and disclose
such matters to the extent necessary to comply with any requirements of the
Securities and Exchange Commission or in order to comply with any law or
interpretation thereof or court order. This provision shall survive termination
of this Agreement but shall terminate upon the Closing. Any press release to be
made regarding any matter which is the subject of the confidentiality obligation
created in this Section shall be subject to the reasonable approval of Buyer and
the Seller, respectively both as to timing and content.
5.5 Buyer's Acknowledgment. BUYER ACKNOWLEDGES THAT AS OF THE DILIGENCE
DATE IT HAS HAD AN OPPORTUNITY TO CONDUCT DILIGENCE ON THE PROPERTY AND IS
ACQUIRING THE PROPERTY IN ITS CURRENT CONDITION BASED ON ITS DILIGENCE. BUYER
FURTHER ACKNOWLEDGES THAT NEITHER SELLER NOR ITS EMPLOYEES, AGENTS OR
REPRESENTATIVES HAVE MADE ANY REPRESENTATION OR WARRANTY AS TO THE CONDITION OF
THE PROPERTY OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS ON, IN, UNDER
OR WITHIN THE PROPERTY OR A PORTION THEREOF WHICH SURVIVE CLOSING HEREUNDER. THE
BUYER ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS TO BE CONVEYED BY THE SELLER
TO THE BUYER "AS IS," "WITH ALL FAULTS," AND SUBSTANTIALLY IN ITS CURRENT
CONDITION. THE BUYER FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY
CONTAINED HEREIN, NEITHER THE SELLER NOR ANY AGENT, EMPLOYEE OR OTHER
REPRESENTATIVE OF THE SELLER (OR PURPORTED AGENT, EMPLOYEE OR OTHER
REPRESENTATIVE OF THE SELLER) HAS MADE ANY GUARANTEE, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED (AND THE SELLER SHALL NOT HAVE ANY LIABILITY
WHATSOEVER) AS TO THE VALUE, USES, HABITABILITY, CONDITION, DESIGN, OPERATION,
FINANCIAL CONDITION OR PROSPECTS, OR FITNESS FOR PURPOSE OR USE OF THE PROPERTY
(OR ANY PART THEREOF) OR ANY OTHER GUARANTEE, REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY PART
THEREOF) OR INFORMATION SUPPLIED TO BUYER WITH RESPECT THERETO. FURTHER, THE
SELLER SHALL HAVE NO LIABILITY FOR ANY LATENT, HIDDEN, OR PATENT DEFECT AS TO
THE PROPERTY OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH
ANY APPLICABLE LAWS AND REGULATIONS. IN PARTICULAR, THE BUYER ACKNOWLEDGES AND
AGREES THAT ANY INFORMATION PROVIDED TO BUYER BY SELLER WITH RESPECT TO THE
PROPERTY UNDER THIS AGREEMENT (AND ANY OTHER INFORMATION THE BUYER MAY HAVE
OBTAINED REGARDING IN ANY WAY ANY OF THE PROPERTY, INCLUDING WITHOUT LIMITATION,
ITS OPERATIONS OR ITS FINANCIAL HISTORY OR PROSPECTS FROM THE SELLER OR ITS
AGENTS, EMPLOYEES OR OTHER REPRESENTATIVES) IS DELIVERED TO THE BUYER AS A
COURTESY, WITHOUT REPRESENTATION OR WARRANTY AS TO ITS ACCURACY OR COMPLETENESS,
AND NOT AS AN INDUCEMENT TO ACQUIRE THE PROPERTY; THAT NOTHING CONTAINED IN SUCH
DELIVERIES SHALL CONSTITUTE OR BE DEEMED TO BE A GUARANTEE, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, IN ANY REGARD AS TO ANY OF THE PROPERTY (EXCEPT AS
EXPRESSLY PROVIDED HEREIN); AND THAT THE BUYER IS RELYING ONLY UPON THE
PROVISIONS OF THIS AGREEMENT AND ITS OWN INDEPENDENT ASSESSMENT OF THE PROPERTY
AND ITS PROSPECTS IN DETERMINING WHETHER TO ACQUIRE THE PROPERTY. THE PROVISIONS
OF THIS PARAGRAPH SHALL SURVIVE CLOSING.
5.6 Buyer's Release of Seller. SELLER AND ITS PROPERTY MANAGER ARE HEREBY
RELEASED FROM ALL RESPONSIBILITY AND LIABILITY REGARDING THE CONDITION
(INCLUDING THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND SURFACE AND SUBSURFACE
WATERS, OF MATERIALS OR SUBSTANCES THAT HAVE BEEN OR MAY BE IN THE FUTURE
DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR SUBJECT TO REGULATION AND THAT
MAY NEED TO BE SPECIALLY TREATED, HANDLED AND/OR REMOVED FROM THE PROPERTY UNDER
CURRENT OR FUTURE FEDERAL, STATE AND LOCAL LAWS, REGULATIONS OR GUIDELINES),
VALUATION, SALABILITY OR UTILITY OF THE PROPERTY, OR ITS SUITABILITY FOR ANY
PURPOSE WHATSOEVER. BUYER ACKNOWLEDGES THAT ANY INFORMATION OF ANY TYPE WHICH
BUYER HAS RECEIVED OR MAY RECEIVE FROM SELLER, ITS PROPERTY MANAGER OR THEIR
RESPECTIVE AGENTS, INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL REPORTS AND
SURVEYS, IS FURNISHED ON THE EXPRESS CONDITION THAT BUYER SHALL MAKE AN
INDEPENDENT VERIFICATION OF THE ACCURACY OF SUCH INFORMATION, ALL SUCH
INFORMATION BEING FURNISHED WITHOUT ANY WARRANTY WHATSOEVER.
ARTICLE 6
TITLE AND SURVEY
6.1 Title and Survey. Promptly following the execution of this Agreement,
Buyer shall obtain:
(a) A current ALTA as-built survey of the Real Property or an update
of Seller's survey (the "Survey"); and
(b) A commitment for an ALTA Owner's Policy of Title Insurance from
the Escrow Agent (the "Title Commitment"). Buyer shall cause a copy of the
completed Title Commitment to be forwarded to Seller.
If the Survey or matters listed as exceptions in the Title Commitment are
not satisfactory to Buyer, Buyer shall, five (5) business days before the
Diligence Date, provide Seller with written notice of such objections (the
"Title Objections"). Seller, at its sole cost and expense shall have the right,
but not the obligation, to cure or remove any Title Objections and shall give
Buyer written notice on or prior to the Diligence Date, identifying those Title
Objections, if any, that Seller agrees to use reasonable efforts to cure;
provided, however, that Seller shall not be obligated to incur any costs or
expenses in excess of $10,000 in connection with any such cure undertaken by
Seller. If there are Title Objections which Seller is unable or unwilling to
cure by the Diligence Date, Buyer may terminate this Agreement as provided in
Section 5.3, above or waive such objections which Seller is not willing or able
to cure and proceed to closing. Those exceptions or title deficiencies which (i)
Buyer does not object to pursuant to this Section 6.1 or (ii) are waived because
Seller is unwilling or unable to cure shall be the "Permitted Exceptions."
6.2 Deed. On the Closing Date, Seller shall convey by good and sufficient
special warranty deed to Buyer good and clear record and marketable fee simple
title to all of the Real Property free and clear of all liens, encumbrances,
conditions, easements, assessments, restrictions and other conditions, except
for the following:
(a) All Leases;
(b) All zoning, building and other laws applicable to the Property;
(c) All matters which arise after the Diligence Date which are
agreed upon or consented to by Buyer;
(d) The lien, if any, for real estate taxes for current year not due
and payable prior to the Closing Date (subject to proration in accordance
with Section 3.3 herein);
(e) All matters shown on Schedule B of the Title Commitment or of
public record as of the effective date of the Title Commitment and which
Seller has not agreed to cure pursuant to Section 6.1, above;
(f) The Permitted Exceptions;
(g) Any matters shown on the Survey; and
(h) All matters, whether or not of record, to the extent caused by
Buyer or its agents, representatives or contractors.
6.3 Lease Assignment. At the Closing, Seller shall assign the Leases to
Buyer and Buyer shall assume Seller's obligations thereunder and Seller shall
convey the Personal Property to Buyer by quitclaim bill of sale.
ARTICLE 7
CONDITIONS PRECEDENT AND CLOSING
7.1 Buyer's Conditions Precedent. In addition to any other conditions
precedent in favor of Buyer as may be set forth elsewhere in this Agreement,
Buyer's obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.1 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may be
waived in whole or in part only by written notice of such waiver from Buyer to
Seller.
(a) Seller performing and complying in all material respects with
all of the terms of this Agreement to be performed and complied with by
Seller prior to or at the Closing.
Notwithstanding the foregoing, if any conditions of Closing (other than an
obligation of Buyer under Section 7.2 below) shall not have been fulfilled on or
before the Closing Date, Seller shall have the right (in its sole discretion),
exercisable by written notice to Buyer at or before the Closing, to extend the
Closing Date for a period of up to forty-five (45) days to provide additional
time for the fulfillment of such conditions. Upon any such extension, the term
"Closing Date" as used herein shall mean the date set forth in such written
notice from Seller. If Buyer's conditions as set forth in this Section 7.1 have
not been met as of the Closing Date (as the same may be extended as aforesaid)
then Buyer shall have the right to terminate this Agreement by written notice to
Seller, and upon receipt of such notice Seller shall direct the Escrow Agent to
return the Escrowed Amount to Buyer and this Agreement shall thereupon terminate
and be of no further force or effect.
7.2 Seller's Conditions Precedent. In addition to any other conditions
precedent in favor of Seller as may be set forth elsewhere in this Agreement,
Seller's obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.2 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may be
waived in whole or part only by written notice of such waiver from Seller to
Buyer.
(a) Buyer performing and complying in all material respects with all
of the terms of this Agreement to be performed and complied with by Buyer
prior to or at the Closing, including, without limitation, payment by the
Buyer of the Purchase Price (as adjusted as otherwise provided herein);.
(b) On the Closing Date, all of the representations of Buyer set
forth in this Agreement shall continue to be true, accurate and complete.
7.3 Closing Date. Subject to Seller's right to extend the Closing Date as
provided in Section 7.1 and Buyer's right to extend the Closing Date as provided
below , the consummation of the purchase and sale contemplated in this Agreement
(the "Closing") shall occur through an escrow closing arrangement as described
in Exhibit F attached hereto on July 15, 1998 (the "Closing Date"), at the
office of the Escrow Agent or through the escrow closing arrangements set forth
in the Form of Escrow Closing Instructions attached hereto as Exhibit F. It is
agreed that time is of the essence in this Agreement.
Buyer shall have the right to extend the Closing Date for up to ten (10)
additional business days upon the deposit with Escrow Agent of the sum of One
Hundred Thousand Dollars ($100,000.00) (the "Additional Deposit"). The Escrow
Agent will hold the Additional Deposit with the Deposit, together with all
interest earned thereon, as the Escrowed Amount. The Escrowed Amount shall be
maintained by the Escrow Agent until the Escrow Agent is required to cause the
Escrowed Amount to be disbursed pursuant to the terms and conditions of this
Agreement and the Earnest Money Escrow Instructions. The Escrowed Amount,
including the Additional Deposit, shall be applied to the Purchase Price if the
Closing occurs, as provided in Section 3.2(c), above.
7.4 Closing Deliveries. On the Closing Date, Seller shall deliver or
cause to be delivered:
(a) A duly executed and acknowledged special warranty deed conveying
the Land and the Improvements to Buyer;
(b) A duly executed quitclaim bill of sale and general assignment
conveying the Personal Property and the Intangible Property to Buyer;
(c) A duly executed assignment and assumption of the Leases and
Tenant Deposits (the "Assignment of Leases");
(d) A duly executed assignment and assumption of Property Contracts
being assumed (the "Assignment of Contracts");
(e) A certificate or certificates of non-foreign status from Seller;
(f) Customary affidavits sufficient for the Escrow Agent to delete
any exceptions for mechanic's or materialmen's liens and parties in
possession from Buyer's title policy and such other affidavits relating to
such title policy as the Escrow Agent may reasonably request;
(g) An updated Rent Roll (including a list if all delinquent and
prepaid rents) certified by the Seller as true and correct as of the
Closing Date;
(h) Such other instruments as Buyer or the Escrow Agent may
reasonably request to effectuate the transactions contemplated by this
Agreement;
(i) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of the Purchase Price as adjusted;
(j) Evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Seller to sell the
Property and the authority of the person or persons executing the various
documents on behalf of Seller in connection with the sale of the Property;
(k) Originals, or where unavailable, copies of all Property
Contracts, Leases (with all amendments and modifications thereto),
operating information, permits, warranties and financial information about
the Property in Seller's possession or control relating to the Property;
(l) All keys to all locks on the Property and similar items, to the
extent in Seller's possession;
(m) An indemnity pursuant to Section 4.3 with respect to each
Property Contract;
(n) To the extent required, documents for the transfer of telephone,
electric, water and sewer, and gas utilities, as may be required by the
utility; and
(o) A satisfactory and valid written termination of the management
agreement executed by the existing management and rental agent for the
Property.
7.5 Buyer's Deliveries. On the Closing Date, Buyer shall deliver or cause
to be delivered at its expense each of the following to Seller:
(a) The Purchase Price for the Property, as such Purchase Price may
have been adjusted pursuant to the provisions of this Agreement and
credited for any portion of the Escrowed Amount paid to Seller, in the
manner provided for in Article 3;
(b) Evidence in form and substance reasonably satisfactory to Escrow
Agent and Seller of Buyer's authority to purchase the Property;
(c) The Assignment of Leases;
(d) The Assignment of Contracts;
(e) Such other instruments as Seller or Escrow Agent may reasonably
request to effectuate the transactions contemplated by this Agreement;
(f) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of such amounts;
(g) Such evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Buyer and the authority
of the person or persons who are executing the various documents on behalf
of Buyer in connection with the purchase of the Property;
(h) Acknowledgment by Buyer of Buyer's receipt from Seller of the
Tenant Deposits;
(i) An indemnity pursuant to Section 4.3 of this Agreement with
respect to each Property Contract assumed by Buyer; and
(j) Executed counterparts of any other documents listed in Section
7.4 required to be signed by Buyer.
7.6 Possession. Possession of the Property shall be delivered to Buyer by
Seller at the Closing, subject only to those items listed in Section 6.2 of this
Agreement and rights arising under any Property Contracts not terminated by
Buyer pursuant to Section 4.3. Seller and Buyer covenant and agree to execute,
at Closing, a written notice of the acquisition of the Property by Buyer, for
duplication and transmittal to all tenants affected by the sale and purchase of
the Property (or otherwise in such manner as will comply with applicable law
respecting notification of tenants). Such notice shall be prepared by Buyer and
approved by Seller, shall notify the tenants of the sale and transfer and shall
contain appropriate instructions relating to the payment of future rentals, the
giving of future notices, and other matters reasonably required by Buyer or
required by law. Unless a different procedure is required by applicable law, in
which event such laws shall be controlling, Buyer agrees to transmit or
otherwise deliver such letters to the tenants promptly after the Closing.
ARTICLE 8
CASUALTY AND CONDEMNATION
8.1 Casualty. If the Improvements are materially damaged by fire or any
other casualty and are not substantially restored to the condition immediately
prior to such casualty before the Closing Date, Buyer shall have the following
elections:
(a) to purchase the Property in its then condition and pay the
Purchase Price, in which event Seller shall pay over or assign to Buyer as
the case may be, on the Closing Date, (i) any deductible, (ii) rent loss
insurance proceeds and (iii) amounts recovered or recoverable by Seller on
account of any insurance as a result of such casualty up to the amount of
the Purchase Price, less any amounts reasonably expended by Seller for
partial restoration; or
(b) if any portion of the Improvements suffers damage in excess of
$350,000.00 from fire or any other casualty which Seller, in its sole
option, elects not to repair, to terminate this Agreement by giving notice
of termination to Seller on or before that date which is thirty (30) days
after the occurrence of the fire or other casualty or on the Closing Date,
whichever occurs first, in which event the Escrow Agent shall return the
Escrowed Amount to Buyer, this Agreement shall terminate and neither
Seller nor Buyer shall have any recourse against the other (except to the
extent such recourse arises in connection with a provision of this
Agreement which is intended to survive termination).
8.2 Condemnation. If any substantial portion of or interest in the
Property shall be taken or is in the process of being taken by exercise of the
power of eminent domain or if any governmental authority notifies Seller prior
to the Closing Date of its intent to take or acquire any portion of or interest
in the Property (each an "Eminent Domain Taking"), Seller shall give notice
promptly to Buyer of such event and Buyer shall have the option to terminate
this Agreement by providing notice to Seller to such effect on or before the
date which is ten (10) days from Seller's notice to Buyer of such Eminent Domain
Taking or on the Closing Date, whichever occurs first, in which event the Escrow
Agent shall return the Escrowed Amount to Buyer, this Agreement shall terminate,
and neither Seller nor Buyer shall have any recourse against the other (except
to the extent such recourse arises in connection with a provision of this
Agreement which is intended to survive termination). If Buyer does not timely
notify Seller of its election to terminate this Agreement, Buyer shall purchase
the Property and pay the Purchase Price, and Seller shall pay over or assign to
Buyer on delivery of the deed awards recovered or recoverable by Seller on
account of such Eminent Domain Taking up to the amount of the Purchase Price,
less any amounts reasonably expended by Seller in obtaining such award.
"Substantial portion or interest" shall mean (i) a portion of the Property
valued in excess of $350,000.00 or (ii) a portion of the parking area such that
the Property is no longer in compliance with zoning requirements.
ARTICLE 9
BROKERAGE COMMISSIONS
Seller and Buyer each mutually represent and warrant to the other that
they have not dealt with, and are not obligated to pay, any fees or commissions
to any broker in connection with the transaction contemplated by this Agreement
other than Insignia/ESG, Inc. (the "Broker"). Seller agrees to pay all
commissions, payments and fees due to the Broker at the Closing. Buyer agrees to
indemnify, defend and hold Seller harmless from and against all loss,
liabilities, costs, damages and expenses (including reasonable attorney'= fees)
arising from any claims for brokerage or finder's fees, commissions or other
similar fees in connection with the transaction covered by this Agreement
insofar as such claims shall be based upon alleged arrangements or agreements
made by Buyer or on Buyer's behalf. Seller hereby agrees to indemnify, defend
and hold Buyer harmless from and against all loss, liabilities, costs, damages
and expenses (including reasonable attorneys' fees) arising from any claims for
brokerage or finder'= fees, commissions or other similar fees, including any
claim made by the Broker, in connection with the transaction covered by this
Agreement as such claims shall be based upon alleged arrangements or agreements
made by Seller or on Seller's behalf. The covenants and agreements contained in
this Article shall survive the termination of this Agreement or the Closing of
the transaction contemplated hereunder.
ARTICLE 10
DEFAULT, TERMINATION AND REMEDIES
10.1 Seller's Default. In the event that Seller shall have failed in any
material respect adverse to Buyer as of the Closing Date to have performed any
of the covenants and agreements contained in this Agreement which are to be
performed by Seller on or before the Closing Date or Seller defaults in its
obligation to close hereunder, Buyer shall have the right to terminate this
Agreement and receive (a) the Escrowed Amount and (b) reimbursement for actual
costs incurred by Buyer in conducting its due diligence pursuant to this
Agreement in a total amount not to exceed $35,000.00, whereupon this Agreement
shall terminate without further recourse. Buyer hereby waives and relinquishes
any right to sue Seller for any reason whatsoever, and agrees that Seller shall
not be liable to Buyer for any actual, punitive, speculative, consequential or
other damages for breach by Seller prior to the Closing, except for payment of
the Escrowed Amount. IN NO EVENT SHALL SELLER, ITS DIRECT OR INDIRECT PARTNERS,
SHAREHOLDERS, OWNERS OR AFFILIATES, ANY OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF
THE FOREGOING, OR ANY AFFILIATE OR CONTROLLING PERSON THEREOF, HAVE ANY
LIABILITY BEYOND ITS INTEREST IN THE PROPERTY FOR ANY CLAIM, CAUSE OF ACTION OR
OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY,
WHETHER BASED ON COMMON LAW, CONTRACT, STATUTE, EQUITY OR OTHERWISE.
10.2 Buyer's Default. In the event that Buyer shall have failed in any
material respect adverse to Seller as of the Closing Date to have performed any
of the covenants and agreements contained in this Agreement which are to be
performed by Buyer on or before the Closing Date, or if Buyer defaults in its
obligation to close hereunder, Seller shall be entitled to receive the Escrowed
Amount as liquidated damages, in lieu of all other remedies available to Seller
at law or in equity for such default, and Buyer shall direct the Escrow Agent to
release the Escrowed Amount to Seller. Seller and Buyer agree that the damages
resulting to Seller as a result of such default by Buyer as of the date of this
Agreement are difficult or impossible to ascertain and the liquidated damages
set forth in the preceding sentence constitute Buyer's and Seller's reasonable
estimate of such damages.
10.3 Indemnity. Buyer agrees to indemnify, hold harmless and defend Seller
from and against any and all claims, demands, causes of action, loss,
liabilities, damages, costs and expenses (including reasonable attorneys= fees
and court costs) of every kind and character asserted against or incurred by
Seller at any time and from time to time by reason of or arising as a result of
the ownership, occupancy, operation, use, and/or maintenance of the Property by
Buyer for the period from and after the Closing Date. Seller agrees to
indemnify, hold harmless and defend Buyer from and against any and all claims,
demands, causes of action, loss, liabilities, damages, costs and expenses
(including reasonable attorneys= fees and court costs) of every kind and
character asserted against or incurred by Buyer at any time and from time to
time by reason of or arising as a result of the ownership, occupancy, operation,
use, and/or maintenance of the Property by Seller for the period prior to the
Closing Date. Each indemnifying party shall be given notice of any claims by the
indemnified party. The provisions of this Section 10.3 shall survive the
Closing.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 Buyer's Representations and Warranties. Buyer represents and warrants
to Seller that:
(a) Buyer is a corporation, duly organized and in good standing
under the laws of the Commonwealth of Virginia, is qualified to do
business in the Commonwealth of Virginia and has the power and authority
to enter into this Agreement and to execute and deliver this Agreement and
to perform all duties and obligations imposed upon it hereunder. As of the
date of this Agreement, Buyer has obtained all necessary corporate,
partnership or other organizational authorizations required in connection
with the execution and delivery of this Agreement. Each of the individuals
executing this Agreement on Buyer's behalf is authorized to do so. Buyer
has the financial ability to pay the Purchase Price by tendering the Cash
Balance, and to perform the other covenants of Buyer set forth in this
Agreement.
(b) Neither the execution nor the delivery of this Agreement, nor
the consummation of the purchase and sale transaction contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement conflict with or will result in the breach of any of the terms,
conditions or provisions of any agreement or instrument to which Buyer is
a party or by which Buyer or any of Buyer's assets is bound;
(c) Buyer is not in any way affiliated with Seller;
(d) No approval, consent, order or authorization of, or designation,
registration or declaration with, any of the United States, the
Commonwealth of Virginia, any department, board, agency, office,
commission or other subdivisions thereof, or any official thereof or any
third party is required in connection with the valid execution and
delivery of, and performance of the covenants of, this Agreement by Buyer.
(e) There are no actions, suits or proceedings pending or, to the
knowledge of Buyer, threatened, against or affecting Buyer which, if
determined adversely to Buyer, would adversely affect its ability to
perform its obligations hereunder.
As a condition precedent to Seller's obligation to close the purchase and
sale transaction contemplated in this Agreement, Buyer's representations and
warranties contained herein must remain and be true and correct as of the
Closing Date. Prior to the Closing Date, Buyer shall notify Seller in writing of
any facts, conditions or circumstances which render any of the representations
and warranties set forth in this Section 11.1 in any way inaccurate, incomplete,
incorrect or misleading.
11.2 Seller's Representations and Warranties. Seller is a general
partnership existing under the laws of the Commonwealth of Virginia.
(a) Seller has full right, power and authority and is duly
authorized to enter into this Agreement, to perform each of the covenants
on its part to be performed hereunder and to execute and deliver, and to
perform its obligations under all documents required to be executed and
delivered by it pursuant to this Agreement and this Agreement constitutes
the valid and binding obligation of Seller enforceable in accordance with
its terms.
(b) Seller has directed its manager to deliver or to make available
to Buyer (i) complete copies of all Leases and (ii) the Rent Roll.
(c) Seller has caused its property manager to deliver or to make
available copies of all Property Contracts.
(d) Seller has not been served with notice of any actions, suits, or
proceedings against or affecting the Seller or the Property that either
(i) are not covered by applicable insurance or (ii) if determined
adversely to Seller would materially affect the ownership or operation of
the Property or Seller's ability to perform its obligations under this
Agreement.
Seller reserves the right to update the representations and warranties
made by it herein. All of Seller's representations and warranties shall be
deemed to be updated by information disclosed to or obtained by Purchaser in
connection with its due diligence investigations.
11.3 Seller; Seller's Knowledge. Whenever a representation is made to
"Seller's knowledge", or a term of similar import, the accuracy of such
representation shall be based solely on the actual knowledge of Peter F.
Sullivan (ASullivan"), without independent investigation or inquiry except for
inquiry of Seller's property manager for the Property. Sullivan is an officer of
a general partner of Seller who has had primary responsibility for the sale of
the Property to Buyer. Notwithstanding the foregoing, if, prior to the Closing,
Buyer obtains actual knowledge that any representation or warranty of Seller is
inaccurate and Buyer nonetheless proceeds with the Closing, Seller shall have no
liability for any such matter regarding which Buyer had actual knowledge prior
to Closing.
11.4 Property Conveyed "AS IS". (a) NOTWITHSTANDING ANYTHING CONTAINED
HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT, EXCEPT AS EXPRESSLY
SET FORTH HEREIN, SELLER AND ITS PROPERTY MANAGER HAVE NOT MADE AND ARE NOT NOW
MAKING, AND THEY SPECIFICALLY DISCLAIM, ANY OTHER WARRANTIES, REPRESENTATIONS OR
GUARANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF TITLE (OTHER THAN
SELLER'S WARRANTY OF TITLE SET FORTH IN THE DEED (HEREINAFTER DEFINED) TO BE
DELIVERED AT CLOSING), (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR
ANY PORTION THEREOF, (III) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION,
SUBSIDENCE, SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER RESERVOIRS,
LIMITATIONS REGARDING THE WITHDRAWAL OF WATER, AND EARTHQUAKE FAULTS AND THE
RESULTING DAMAGE OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND TO THE
EXTENT TO WHICH THE PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM
(SURFACE OR UNDERGROUND), BODY OF WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY
OR SPECIAL FLOOD HAZARD, (V) DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE
EXISTENCE OF INSTABILITY, PAST SOLID REPAIRS, SOIL ADDITIONS OR CONDITIONS OF
SOIL FILL, OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY
UNDERSHORING, (VII) ZONING TO WHICH THE PROPERTY OR ANY PORTION THEREOF MAY BE
SUBJECT, (VIII) THE AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION
THEREOF INCLUDING, WITHOUT LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (IX)
USAGES OF ADJOINING PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF,
(XI) THE VALUE, COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION,
AGE, USE, DESIGN, QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY,
OPERATION, TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY
PORTION THEREOF, OR ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS
OR CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, OR
ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR
AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, (XII) THE PRESENCE
OF HAZARDOUS SUBSTANCES (HEREINAFTER DEFINED) IN OR ON, UNDER OR IN THE VICINITY
OF THE PROPERTY, (XIII) THE CONDITION OR USE OF THE PROPERTY OR COMPLIANCE OF
THE PROPERTY WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR LOCAL
ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES,
CODES OR OTHER SIMILAR LAWS, (XIV) THE EXISTENCE OR NON-EXISTENCE OF UNDERGROUND
STORAGE TANKS, (XV) ANY OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE
REAL PROPERTY, (XVI) THE POTENTIAL FOR FURTHER DEVELOPMENT OF THE PROPERTY,
(XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS
AFFECTING THE PROPERTY, (XVIII) THE MERCHANTABILITY OF THE PROPERTY OR FITNESS
OF THAT PROPERTY FOR ANY PARTICULAR PURPOSE (BUYER AFFIRMING THAT BUYER HAS NOT
RELIED ON SELLER'S OR ITS PROPERTY MANGER'S SKILL OR JUDGMENT TO SELECT OR
FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT SELLER MAKES NO
WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE), OR (XIX) TAX
CONSEQUENCES.
(b) BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER
DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ITS PROPERTY
MANAGER OR ANY OF THEIR RESPECTIVE AGENTS, EXPECT AS EXPRESSLY SET FORTH HEREIN,
AND ACKNOWLEDGES THAT NO OTHER SUCH REPRESENTATIONS HAVE BEEN MADE. BUYER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF
REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
BUYER'S CONSULTANTS IN PURCHASING THE PROPERTY. BUYER WILL CONDUCT SUCH
INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY AS BUYER DEEMS NECESSARY,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF, AND SHALL RELY UPON SAME. UPON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND
INVESTIGATIONS. BUYER ACKNOWLEDGES AND AGREED THAT UPON CLOSING, SELLER SHALL
SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY AAS IS, WHERE IS"
WITH ALL FAULTS. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE
PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. THE TERMS AND
CONDITIONS OF THIS SECTION 11.4(B) SHALL EXPRESSLY SURVIVE THE CLOSING, NOT
MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE INCORPORATED
INTO THE DEED. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. BUYER
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE "AS IS" NATURE OF THIS SALE
AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE
ASSOCIATED WITH THE PROPERTY. BUYER HAS FULLY REVIEWED THE DISCLAIMERS AND
WAIVERS SET FORTH IN THE THIS AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE
SIGNIFICANCE AND EFFECT THEREOF.
--------------
Buyer's Initials
ARTICLE 12
MISCELLANEOUS
12.1 Successors and Assigns. Without the prior written consent of Seller,
Buyer shall not, directly or indirectly, assign this Agreement or any of its
rights hereunder. Any attempted assignment in violation hereof shall, at the
election of Seller in its sole discretion, be of no force or effect and shall
constitute a default by Buyer. Notwithstanding the foregoing Buyer may elect to
have a nominee entity accept title to the Property at Closing, provided that any
such nominee must be an affiliated entity controlled by or under common control
with Buyer, and Buyer shall give written notice of such nominee to Seller,
together with any reasonable evidence of affiliation requested by Seller, a
minimum of fifteen (15) days prior to Closing. No designation of a nominee to
receive title shall release Buyer from its obligations under this Agreement.
12.2 Notices. Except as otherwise specifically provided herein, any notice
required or permitted to be delivered under this Agreement shall be in writing
and shall be deemed given (i) when delivered or refused if sent by hand during
regular business hours, (ii) three (3) days after being sent by United States
Postal Service, registered or certified mail, postage prepaid, return receipt
requested, or (iii) on the next business day when sent by a reputable overnight
express mail service that provides tracing and proof of receipt or refusal of
items mailed, addressed to Seller or Buyer, as the case may be, at the address
or addresses set forth below or such other addresses as the parties may
designate in a notice similarly sent. Any notice given by a party to Escrow
Agent shall be simultaneously given to the other party. Any notice given by a
party to the other party relating to its entitlement to the Escrowed Amount
shall be simultaneously given to the Escrow Agent.
(1) If to Seller:
c/o Paine Webber Properties Incorporated
265 Franklin Street - 15th Floor
Boston, MA 02110
Attn: Mr. Peter F. Sullivan, Vice President
and
<PAGE>
Mr. James Cobb
CTJ Real Estate, Inc.
212 South Tryon Street, Suite 1350
Charlotte, NC 20281
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Andrew C. Sucoff, Esq.
(2) If to Buyer:
Cornerstone Realty Group, Inc.
306 East Main Street
Richmond, Virginia 23219
Attention: Mr. Gus G. Remppies
with a copy to:
Harry S. Taubenfeld, Esq.
Zuckerbrod & Taubenfeld
575 Chestnut Street
Cedarhurst, New York 11516
with a copy to:
Steven D. Delaney, Esq.
707 East Main Street, 11th Floor
Richmond, Virginia 23219
(3) If to the Escrow Agent:
Lucy Strange
Commonwealth Land Title Insurance Company
823 East Main Street
Suite 1300
Richmond, Virginia 23219
12.3 Construction. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words of a singular number
shall be held to include the plural and vice versa, unless the context requires
otherwise.
12.4 Captions. The captions used in connection with the Articles of this
Agreement are for convenience only and shall not be deemed to extend, limit or
otherwise define or construe the meaning of the language of this Agreement.
12.5 No Other Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
12.6 Amendments. This Agreement may be amended only by a written
instrument executed by Seller and Buyer (or Buyer's assignee or transferee).
12.7 Severability. If any provision of this Agreement or application to
any party or circumstance shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law.
12.8 Applicable Law. This Agreement shall be construed under and in
accordance with the laws of state in which the Property is located.
12.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original but such counterparts together
shall constitute one and the same instrument notwithstanding that both Buyer and
Seller are not signatory to the same counterpart.
12.10 Time of the Essence. Time is expressly declared to be of the essence
of this Agreement, provided, however that in the event any date hereunder falls
on a Saturday, Sunday or legal holiday, the date applicable shall be the next
business day.
12.11 No Personal Liability. The obligations of Seller hereunder shall be
binding only on the Property and neither Buyer nor anyone claiming by, through
or under Buyer shall be entitled to obtain any judgment extending liability
beyond the Property or creating personal liability on the part of the partners
of the Seller or of the officers, directors, shareholders, advisors or agents of
Seller or Seller's partners or any of their successors.
12.12 No Recordation. Without the prior written consent of Seller, there
shall be no recordation of either this Agreement or any memorandum hereof, or
any affidavit pertaining hereto, and any such recordation of this Agreement or
memorandum hereto by Purchaser without the prior written consent of Seller shall
constitute a default hereunder by Buyer, whereupon this Agreement shall, at the
option of Seller, terminate and be of no further force and effect. Upon
termination, the Escrowed Amount shall be immediately delivered to Seller,
whereupon the parties shall have no further duties or obligations to one another
except as otherwise specifically provided herein.
12.13 Waiver. The excuse or waiver of the performance by a party of any
obligation of the other party under this Agreement shall only be effective if
evidenced by a written statement signed by the party so excusing or waiving. No
delay in exercising any right or remedy shall constitute a waiver thereof, and
no waiver by Seller or Buyer of the breach of any covenant of this Agreement
shall be construed as a waiver of any preceding or succeeding breach of the same
or any other covenant or condition of this Agreement.
12.14 Binding On Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
12.15 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. All Exhibits and Schedules attached hereto are a part of this
Agreement and are incorporated herein by reference.
12.16 Construction of Agreement. This Agreement shall not be construed
more strictly against one party than against the other merely by virtue of the
fact that it may have been prepared primarily by counsel for one of the parties,
it being recognized that both Buyer and Seller have contributed substantially
and materially to the preparation of this Agreement.
12.17 Further Instruments. Each party, promptly upon the request of the
other, shall execute and have acknowledged and delivered to the other or to
Escrow Agent, as may be appropriate, any and all further instruments reasonably
requested or appropriate to evidence or give effect to the provisions of this
Agreement and which are consistent with the provisions of this Agreement.
12.18 Buyer Represented by Counsel. Buyer hereby represents and warrants
to Seller that (i) Buyer is not in a significantly disparate bargaining position
in relation to Seller, (ii) Buyer is represented by legal counsel in connection
with the transaction contemplated by this Agreement, and (iii) Buyer is buying
the Property for business, commercial, investment or other similar purpose and
not for use as Buyer's residence.
12.19 Preparation of Documents. All of the documents to be executed at the
Closing shall be in the form prepared to the reasonable satisfaction of Seller's
and Buyer's counsel and delivered to Buyer on or before five (5) days prior to
the Closing Date, provided that the failure to timely deliver such documents
shall not constitute a default by Seller hereunder.
12.20 Public Entity. Seller acknowledges that Buyer is a public entity and
that it is required to furnish financial statements to the Securities and
Exchange Commission in connection with this acquisition. To the extent available
and in Seller's possession, Seller agrees, from the date of this Agreement and
for a period of ninety (90) days following the Closing Date, to make the
information available for Purchaser to audit the last 12 months of operation of
the Property so that a report can be generated that is in compliance with
accounting Regulation S-X of the Securities and Exchange Commission. In
addition, Seller agrees to submit to the form of letter attached hereto as
Schedule E to the property manager for signature.
ARTICLE 13
IRS FORM 1099-S DESIGNATION
In order to comply with information reporting requirements of Section
6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder, the parties agree (1) to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as Schedule D at or prior to
the Closing to designate the Escrow Agent (the "Designee") as the party who
shall be responsible for reporting the contemplated sale of the Property to the
Internal Revenue Service (the "IRS") on IRS Form 1099-S; (2) to provide the
Designee with the information necessary to complete Form 1099-S; (3) that the
Designee shall not be liable for the actions taken under this Agreement, or for
the consequences of those actions, except as they may be the result of gross
negligence or willful misconduct on the part of the Designee; and (4) that the
Designee shall be indemnified by the parties for any costs or expenses incurred
as a result of the actions taken hereunder, except as they may be the result of
gross negligence or willful misconduct on the part of the Designee. The Designee
shall provide all parties to this transaction with copies of the IRS Forms
1099-S filed with the IRS and with any other documents used to complete IRS Form
1099-S.
[Signatures on next page.]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
SELLER:
RICHMOND GABLES ASSOCIATES, a Virginia general
partnership
By: PaineWebber Equity Partners Two Limited
Partnership, a Virginia limited partnership,
general partner
By: Second Equity Partners, Inc., a
Delaware corporation, managing
general partner
By:/s/ Peter F. Sullivan
---------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
BUYER:
CORNERSTONE REALTY GROUP, INC., a Virginia
corporation
By:/s/ Gus G. Remppies
-------------------
Name: Gus G. Remppies
Title: Vice President
<PAGE>
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:/s/ Lucy Strange
----------------
Name: Lucy Strange
Title: Vice President
<PAGE>
JOINDER BY TITLE COMPANY
Commonwealth Land Title Insurance Company, referred to in this Agreement
as the Escrow Agent, hereby acknowledges that it received this Agreement
executed by Seller and Buyer on the ___ day of June, 1998, and accepts the
obligations of the Escrow Agent as set forth herein. It further acknowledges
that it received the Deposit on the __ day of ______, 199_. The Escrow Agent
agrees to deposit the Deposit and to distribute the Escrowed Amount in
accordance with the terms and provisions of this Agreement.
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: _____________________________
Name:
Title:
Date:
<PAGE>
ACKNOWLEDGMENT BY BROKER
The undersigned Broker signs below to evidence that such Broker (i) knows
of no other brokers, salespersons or other parties entitled to any compensation
for brokerage services arising out of this transaction other than those whose
names appear in this Agreement, (ii) has not made any of the representations or
warranties specifically disclaimed by Seller in Section 11.4(a), and (iii) is a
duly licensed broker in the Commonwealth of Virginia and is currently permitted
to conduct business in the Commonwealth of Virginia and be paid a real estate
commission.
BROKER: INSIGNIA/ESG, INC.
BY: ____________________________
Name:
Title:
License No:
Tax Id. No.:
Date:
<PAGE>
EXHIBIT A
The Land
--------
All that certain piece or parcel of land, with improvements thereon and
appurtenances thereto belonging, lying and being in the Three Chopt District,
Henrico County, Virginia, on the northside of Broad Street Road (U.S. Route 250)
as shown on that certain plat of survey prepared by J.K. Timmons & Associates,
P.C., dated July 17, 1987, last revised May 26, 1988, entitled "Improvements on
15.550 Acres of Land at the Northeast Intersection of Broad Street Road and
Innsbrook Drive known as Erin Shades", and being more particularly described as
follows:
Beginning at a rod found 38.64' north of the intersection of Broad
Street Road (U.S. Route 250) and Innsbrook Drive; thence along the east line
of Innsbrook Drive N. 39E 19' 57" E. 948.61' to a rod found; thence S. 50E 40'
03" E. 290.00' to a rod found; thence N. 39E 19' 57" E. 330.49' to a rod
found; thence S. 50E 40' 03" E. 162.81' to a rod found; thence S. 20E 51' 39"
E. 349.08' to a rod found; thence S. 42E 52' 26" W 652.20' to a rod found;
thence N. 47E 07' 34" W. 206.06' to a rod found; thence S 42E 52' 26" W.
215.00' to a rod found; thence along a curve to the left having a radius of
101.78' and a length of 49.17' to a rod set; thence along a curve to the left
having a radius of 15.00' and a length of 23.58' to a rod found on the north
line of Broad Street Road; thence along the north line of Broad Street Road N.
74E 52' 03" W. 536.95' to a rod found; thence along a curve to the right
having a radius of 25.00' and a length of 49.83' to a point and place of
beginning.
Less and except that portion containing .182 acre conveyed to the
Commonwealth of Virginia, by Final Order Entered December 7, 1990, recorded
December 12, 1990, in the Clerk's Office, Circuit Court, County of Henrico,
Virginia, in Deed Book 2271, page 1951.
<PAGE>
EXHIBIT B
Personal Property
-----------------
See attached.
<PAGE>
EXHIBIT C
Property Contracts
------------------
See attached.
<PAGE>
EXHIBIT D
Form of Earnest Money Escrow Instructions
Escrow Officer:
Escrow No.:
Phone No.:
Facsimile No.:
Date:
TO: Commonwealth Land Title Insurance Company ("Escrow Agent")
823 East Main Street
Suite 1300
Richmond, Virginia 23219
Attn: Ms. Lucy Strange
The amount of Two Hundred Fifty Thousand Dollars ($250,000.00) (the
"Deposit") is being deposited in escrow with the Escrow Agent by Cornerstone
Realty Group, Inc. (the "Buyer") under that certain Purchase and Sale Agreement
(the "Agreement"), dated June 26, 1998, by and between Buyer and Richmond Gables
Associates (the "Seller").
As escrowee, you are hereby directed to hold, deal with and dispose of the
Escrowed Amount (as defined in the Agreement) in accordance with the following
terms and conditions:
1. You are to hold the Escrowed Amount until: (a) you are in receipt of a
joint order by the undersigned Seller and Buyer as to the disposition of the
Escrowed Amount; or (b) you are in receipt of a written demand (the "Demand")
from either Seller or Buyer for the payment of the Escrowed Amount or any
portion thereof. Upon receipt of any Demand, you are directed to so notify the
other party, enclosing a copy of the Demand. If within five (5) days after the
non-demanding party has received or is deemed to have received your notice of
your receipt of the Demand, you have not received from the non-demanding party
its notice of objection to the Demand, then you are to disburse the Escrowed
Amount as requested by the Demand. If within said five-day period you receive
from the non-demanding party its notice of objection to the Demand, then you are
to continue to hold the Escrowed Amount until you are in receipt of a joint
order as aforesaid, but after sixty (60) days you may deposit the Escrowed
Amount with a Court of competent jurisdiction.
2. Notwithstanding the foregoing, as escrowee, you are hereby expressly
authorized to regard and to comply with and obey any and all orders, judgments
or decrees entered or issued by any Court, and in case you obey or comply with
any such order, judgment or decree of any Court, you shall not be liable to
either of the parties hereto or any other person or entity by reason of such
compliance, notwithstanding any such order, judgment or decree be entered
without jurisdiction or be subsequently reversed, modified, annulled, set aside
or vacated. In case of any suit or proceeding regarding these Escrow
Instructions, to which you are or may at any time be a party, the undersigned
Seller and Buyer agree that the non-prevailing party shall pay to you upon,
demand all reasonable costs and expenses incurred by you in connection herewith.
3. Any escrow fee to be charged by you is to be borne equally by the
undersigned Seller and Buyer.
4. All notices or other Communications hereunder shall be in writing and
shall be personally delivered or sent by overnight courier (such as Federal
Express), by facsimile transmission or by first class United States Mail,
postage prepaid, registered or certified (return receipt requested) to the
respective addresses for the Seller, Buyer and escrowee as herein provided in
the Agreement. A notice is given on the date it is personally delivered, sent by
overnight courier or facsimile transmission, or deposited with the United States
Mail for delivery as aforesaid. A notice is received on the date it is
personally delivered, the day after sent if sent by overnight courier or
facsimile transmission or, if sent by mail as aforesaid, on the date noted on
the return receipt.
5. This Escrow Agreement is being entered into to implement the Agreement
and shall not (nor be deemed to.) amend, modify or supersede the Agreement or
act as a waiver of any rights, obligations or remedies set forth therein;
provided, however, that you may rely solely upon these Escrow Instructions.
6. Escrow Agent shall not be liable to anyone by reason of any error of
judgment, or for any act done or step taken or omitted by Escrow Agent in good
faith, or for any mistake of fact or law, or for anything which Escrow Agent may
do or refrain from doing in connection herewith, unless caused by or arising out
of Escrow Agent's gross negligence or intentional misconduct.
7. Escrow Agent shall be entitled to rely, and shall be protected in
acting in reliance, upon any writing furnished to Escrow Agent by either Buyer
or on behalf of Seller and shall be entitled to treat as genuine, and as the
document it purports to be, any letter, paper or other document furnished to
Escrow Agent. Escrow Agent may rely on any affidavit of either Buyer or Growth
II on behalf of Seller or any other person as to the existence of any facts
stated therein to be known by the affiant.
8. In the event of any disagreement between Buyer and Seller resulting in
adverse claims and demands being made in connection with or against the funds
held in escrow, Escrow Agent shall refuse to comply with the claims or demands
of either party until such disagreement is finally resolved (i) by a court of
competent jurisdiction (in proceedings which Escrow Agent or any other party may
initiate, it being understood and agreed by Buyer and Seller that Escrow Agent
has authority (but not the obligation) to initiate such proceedings), or (ii) by
an arbitrator in the event that Buyer and Seller determine to submit the dispute
to arbitration pursuant to the rules of the American Arbitration Association,
and in so doing Escrow Agent shall not be or become liable to a party, or (iii)
by written settlement between Buyer and Seller.
9. Buyer and Seller each agree to jointly and severally indemnify and hold
harmless Escrow Agent against any and all losses, liabilities, costs (including
legal fees) and other expenses in any way incurred by Escrow Agent in connection
with or as a result of any disagreement between Buyer and Seller under this
Agreement or otherwise incurred by Escrow Agent in any way on account of its
role as Escrow Agent.
10. All of Escrow Agent's obligations under this Agreement shall
automatically terminate upon disbursing the Escrowed Amount as set forth above.
Agreed and Acknowledged this ____ day of ____________, 1998.
SELLER:
Richmond Gables Associates, a Virginia
general partnership
By: PaineWebber Equity Partners Two
Limited Partnership, a Virginia
limited partnership
By: Second Equity Partners,
Inc., a Delaware
corporation, managing
general partner
By:______________________
Peter F. Sullivan
Vice President
<PAGE>
BUYER:
Cornerstone Realty Group, Inc. a Virginia
corporation
By: _________________________________
Name:
Title:
<PAGE>
Escrow Agent:
Commonwealth Land Title Insurance Company
By: _________________________________
Name:
Title:
<PAGE>
EXHIBIT E
Rent Roll
---------
See diligence materials for Buyer at Property
<PAGE>
EXHIBIT F
Form of Escrow Closing Instructions
________________ __, 1998
FEDERAL EXPRESS
_____________________ ("Escrow Agent")
- ---------------------
- ---------------------
Re: ______________ _______, ___________ (the "Property")
Dear ________:
This letter ("Letter") is furnished to you in connection with the
anticipated closing of the sale of the Property to ____________, a ___________,
("Buyer") by ________________ (the "Seller") under the Agreement by and between
Seller and Buyer with an effective date of _____________, 1998 (the "Purchase
and Sale Agreement"). The sale is scheduled to be completed on ___________,
199__ (the "Closing Date"). This Letter constitutes the escrow instructions of
Buyer and Seller in connection with such closing.
A. Deposit of Funds. On or before 11:00 A.M. Eastern Time on the Closing
Date, Buyer will wire transfer to you pursuant to the instructions set forth in
Exhibit A an amount agreed upon by Seller and Buyer. The amount so transferred,
combined with the amount of Deposit previously paid to you by Buyer pursuant to
the Purchase and Sale Agreement and interest thereon shall be referred to as the
"Funds". You agree to hold and disburse the Funds strictly in accordance with
the terms of this letter.
B. Delivery of Documents-Seller. On or before the Closing Date, Seller
will be delivering to you the following documents:
(i) an original duly executed and acknowledged Deed to the
Property from Seller to Buyer in the form attached hereto as
Exhibit B;
(ii) evidence of authority of Seller in form and substance
necessary to satisfy the requirements of the title
commitment (as defined below);
(iii) two (2) duly executed originals of the Bill of Sale and
Assignment from Seller to Buyer in the form of Exhibit C
attached hereto;
(iv) two (2) duly executed originals of the Assignment of Leases
from Seller to Buyer in the form attached hereto as Exhibit
D;
(v) two (2) duly executed originals of the Assignment of Service
Contracts from Seller to Buyer in the form attached hereto
as Exhibit E;
(vi) two (2) duly executed original non-foreign affidavits in the
form attached hereto as Exhibit F;
(vii) two (2) duly executed original Affidavits from Seller;
(viii)a Closing Statement duly executed by Seller (which may be
executed by facsimile);
(ix) original tenant notice letters addressed to each tenant;
(x) transfer tax returns required under applicable law;
(xi) such other documentation required under the Purchase and
Sale Agreement, or as agreed upon between Buyer and Seller.
C. On or before the Closing Date, Buyer will be delivering to you the
following documents in escrow, to be held on the terms and conditions herein
contained:
(i) two (2) duly executed originals of the Assignment of Leases
in the form attached hereto as Exhibit D;
(ii) two (2) duly executed originals of the Assignment of Service
Contracts in the form attached hereto as Exhibit E;
(iii) a Closing Statement duly executed by Buyer (may be executed
by facsimile).
D. Conditions to Close of Escrow. The Funds shall be disbursed and the
documents listed in paragraphs B and C above (the "Documents") shall be
delivered and recorded when the following conditions are satisfied:
(i) You have received all of the Funds (and such additional
funds required to be delivered to you from Seller to clear
title, if the Funds are not sufficient).
(ii) You have received the Documents and you are unconditionally
and irrevocably prepared to issue to Buyer an ALTA Seller's
Title Policy (the "Title Policy") dated the later of the
Closing Date or as of the date and time the Deed is
recorded, in a form identical to the hand marked title
commitment attached hereto as Exhibit H (the "Title
Commitment").
(iii) You have received oral or written instructions (by
facsimile) from counsel to Buyer and Seller authorizing you
to complete the closing.
E. Close of Escrow. If the conditions specified in paragraph D above are
satisfied on or before the Closing Date, you shall simultaneously take the
following actions on the Closing Date:
(i) Assemble fully executed counterparts of the originally
executed Documents, as necessary;
(ii) Sign three copies of the Closing Statement;
(iii) Arrange for Recordation of the Deed;
(iv) Sign the hand marked commitment as your unconditional
issuance of the Title Policy, fax that signed hand-marked
commitment to Buyer's counsel at (617) 227-8591 and forward
an original of that signed hand-marked commitment by
overnight mail to Buyer's counsel;
(v) Fax originals of the duly executed Closing Statement to
counsel for each of Buyer at (617) 227-8591 and Seller at
(___) ________ and send originals by overnight mail to
counsel for each of Buyer and Seller;
(vi) Disburse the Funds in accordance with the Closing Statement,
including, without limitation, completing payment to the
Seller by wire transfer as specified in the Closing
Statement.
F. Delivery of Documents. You shall deliver:
(i) Within two (2) business days after recording to Buyer's
counsel, a dated, time stamped copy of the Deed (and all
other documents recorded therewith).
(ii) Within two (2) business days from the Closing Date to
Seller's and Buyer's counsel, originals or photocopies of
the Documents in accordance with the instructions contained
on Exhibit I attached hereto.
(iii) Within five (5) business days from receipt of the deed after
being returned by the county to Buyer's counsel, the Title
Policy.
G. Cancellation of Instructions. Notwithstanding anything to the
contrary herein, if the conditions specified in Paragraph D hereof are not
satisfied on or before 2:00 p.m. (Eastern time) on ________________, you shall
immediately contact Andrew C. Sucoff at (617) 570-1995 and _______________ at
(___) ____________. Unless you receive written instructions not to cancel this
escrow from_______________ and Andrew C. Sucoff, the instructions set forth in
paragraphs A through F above shall be deemed canceled. Concurrently therewith,
you shall immediately:
(i) return the Funds to Buyer by wire transfer according to
instructions which will be separately provided to you;
(ii) return the documents listed in paragraph B to counsel to
Seller by overnight courier; and
(iii) return the documents listed in paragraph C to counsel to
Buyer by overnight courier.
H. Execution by Counterparts. This letter of instructions may be
executed in two or more counterparts, each of which shall be an original, but
all of which shall constitute one and the same letter of instructions.
Please acknowledge your receipt of this letter and your agreement to
comply strictly with the foregoing instructions by returning a copy of this
letter duly endorsed by you in the space provided below.
Very truly yours,
BUYER'S COUNSEL:
By:_____________________________
<PAGE>
SELLER'S COUNSEL:
GOODWIN, PROCTER & HOAR LLP
By:_____________________________
ACCEPTED AND AGREED TO:
Escrow Agent
By:___________________________
<PAGE>
Exhibit A: Wire Instructions into Escrow Agent
Exhibit B: Deed
Exhibit C: Bill of Sale and Assignment
Exhibit D: Assignment of Leases
Exhibit E: Assignment of Service Contracts
Exhibit F: Non-Foreign Affidavit
Exhibit G: Audit Letter
Exhibit H: Title Commitment
Exhibit I: Instructions for Disbursement of Documents
<PAGE>
Exhibit I
---------
Instructions for Disbursement of Documents
Special Warranty Deed - to be returned to counsel to Buyer after recordation
thereof in accordance with Section E(i) of the Joint Closing Escrow Letter
Evidence of Authority of Seller - original to counsel to Buyer
Bill of Sale and Assignment - originals to counsel for each of Seller and Buyer
Assignment of Leases - originals to counsel for each of Seller and Buyer
Assignment of Service Contracts - originals to counsel for each of Seller and
Buyer
Non-Foreign Affidavit - retain originals and deliver copies to counsel for
each of Seller and Buyer
Rent Roll - originals to counsel to Buyer
Evidence of Authority of Buyer - original to counsel to Seller
Affidavits as to Debts and Liens - copy to Buyer and originals for Assured
Quality Escrow Agent
<PAGE>
EXHIBIT G
Lead-Based Paint Disclosure
---------------------------
See attached.
<PAGE>
EXHIBIT H
Diligence Documents
-------------------
Current rent roll for the Property; detailed statements of income and
expenses with respect to the Property for the past two years; the most recent
tax bills for the Property; utility bills for the Property for the past
twelve (12) months previous to the date of this Agreement; documents creating
liens of security interest on personal property at the Property, if any; to
the extent available, all insurance policies or certificates applicable to
the Property; plans and specifications for the Property, service contracts,
Certificates of Occupancy, to the extent reasonably available; copy of the
existing title policy and updated title commitment, together with, to the
extent available, copies of instruments listed thereon which evidence
exceptions to title, except those which will be released at and as a
condition of closing; most recent copy of the survey for the Property.
<PAGE>
SCHEDULE D
1099 Designation Agreement
IRS FORM 1099-S DESIGNATION AGREEMENT
-------------------------------------
This AGREEMENT is made this _______ day of _________, 199_ by and between
RICHMOND GABLES ASSOCIATES, a Virginia general partnership (the "TRANSFEROR"),
CORNERSTONE REALTY GROUP, INC., a Virginia corporation (the "TRANSFREE"), and
COMMONWEALTH LAND TITLE INSURANCE COMPANY (the "DESIGNEE").
The TRANSFEROR is the present owner of certain property (the "Premises")
known as The Gables of Erin Shades Apartments located in Henrico County,
Virginia, as more particularly described in a Purchase and Sale Agreement (the
"Agreement") dated June 26, 1998, by and between the TRANSFEROR and the
TRANSFEREE.
In order to comply with information reporting requirements provided by
Section 6045(e) of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder, the parties hereby agree as follows:
(1) to designate DESIGNEE as the party who shall be responsible for reporting
to the Internal Revenue Service (the "IRS") the sale of the Premises on IRS
form 1099-S;
(2) to provide DESIGNEE with the information necessary to complete Form
1099-S;
(3) That DESIGNEE shall provide all parties to this transaction with a copy
of the IRS Form 1099-S filed with the IRS and with any documentation used to
complete IRS Form 1099-S;
(4) That DESIGNEE shall not be liable for the actions taken under this
Agreement or for the consequences of those actions, except as they may be the
result of gross negligence or willful misconduct on the part of the DESIGNEE;
(5) That the parties shall indemnify DESIGNEE for any costs and expenses
incurred as a consequence of the actions taken under this Agreement, except
as they may be the result of gross negligence or willful misconduct on the
part of the DESIGNEE; and
(6) that all parties to this Agreement will retain this Agreement for four
(4) years following December 31 of the calendar year in which the date of
closing occurs.
[Signatures on next page}
<PAGE>
TRANSFEROR:
RICHMOND GABLES ASSOCIATES, a Virginia general
partnership
By: PaineWebber Equity Partners Two Limited
Partnership, a Virginia limited partnership,
general partner
By: Second Equity Partners, Inc., a Delaware
corporation, managing general partner
By:_____________________________
Peter F. Sullivan
Vice President
<PAGE>
TRANSFEREE:
CORNERSTONE REALTY GROUP, INC., a Virginia
corporation
By:_____________________________
Name:
Title:
<PAGE>
DESIGNEE:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:_______________________
Name:
Title:
<PAGE>
SCHEDULE E
FORM OF AUDIT LETTER
<PAGE>
GENERAL WARRANTY DEED
---------------------
THIS DEED OF BARGAIN AND SALE is made as of June 30, 1998, by and between
RICHMOND GABLES ASSOCIATES, a Virginia general partnership with an address c/o
PaineWebber Equity Partners Two Limited Partnership, 265 Franklin Street,
Boston, Massachusetts 02110, as Grantor; and CORNERSTONE REALTY INCOME TRUST,
INC., a Virginia corporation with an address of 306 East Main
Street, Richmond, Virginia, 23219, as Grantee.
W I T N E S S E T H:
In consideration of the sum of Ten Dollars ($10.00) cash in hand paid by
Grantee to Grantor and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Grantor grants and conveys unto Grantee,
with General Warranty and, except as hereinafter set forth, English Covenants of
title, the property described on Schedule A attached hereto and by this
reference made a part hereof, and all improvements located thereon.
This conveyance is made subject to and with the benefit of easements,
conditions, restrictions and agreements of record.
IN WITNESS WHEREOF, Grantor has caused its name to be signed hereto by its
general partner, being duly authorized so to act.
RICHMOND GABLES ASSOCIATES, a
Virginia general partnership
By: PaineWebber Equity Partners Two
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Second Equity Partners, Inc.,
Delaware corporation, its
managing general partner
(SEAL)
By:/s/ Peter F. Sullivan
---------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK
The foregoing instrument was acknowledged before me this 30th day of June,
1998, by Peter F. Sullivan, as Vice President of Second Equity Partners, Inc.,
managing general partner of PaineWebber Equity Partners Two Limited Partnership,
general partner of Richmond Gables Associates.
/s/ Linda Z. MacDonald
----------------------
Notary Public
[AFFIX NOTARIAL SEAL] My commission expires: November 12, 1999
<PAGE>
SCHEDULE A
All that certain piece or parcel of land, with improvements thereon and
appurtenances thereto belonging, lying and being in the Three Chopt District,
Henrico County, Virginia, on the northside of Broad Street Road (U.S. Route 250)
as shown on that certain plat of survey prepared by J.K. Timmons & Associates,
P.C., dated July 17, 1987, last revised May 26, 1988, entitled "Improvements on
15.550 Acres of Land at the Northeast Intersection of Broad Street Road and
Innsbrook Drive known as Erin Shades", a copy of which plat is recorded in the
Clerk's Office, Circuit Court of Henrico County, Virginia, in Plat Book 84, page
205, to which reference is made for a more particular description.
Less and except that portion of the property acquired by the Commonwealth
of Virginia by Certificate of Take recorded December 7, 1990, in Deed Book 2271,
page 1951, and Final Order entered December 7, 1990, a copy of which was
recorded December 12, 1990 in Deed Book 2272, page 715.
Together with the Easement Area, Fort McHenry Access Drive and Signage
Easement as described in Declaration of Access Easement and Maintenance
Agreement dated February 28, 1991, recorded March 22, 1991, in Deed Book 2284,
page 990.
Being a part of the same real estate conveyed to Grantor by deed of
Richmond Erin Shades Associates Limited, a Virginia limited Partnership, dated
September 4, 1987 and recorded September 4, 1987 in the Clerk's Office, Circuit
Court, Henrico County, Virginia, in Deed Book 2095, page 356.
<PAGE>
THE GABLES OF ERIN SHADES APARTMENTS
RICHMOND, VIRGINIA
BILL OF SALE
------------
THIS BILL OF SALE (this "Bill of Sale") is executed as of the 30th day of
June, 1998, by Richmond Gables Associates ("Seller"), a Virginia general
partnership having an address c/o PaineWebber Equity Partners Two Limited
Partnership, 265 Franklin Street, Boston, Massachusetts 02110, in favor of
Cornerstone Realty Income Trust, Inc. ("Purchaser"), a Virginia corporation,
having an office at 306 East Main Street, Richmond, Virginia 23219.
1. Real Property. The AReal Property@ shall mean the Land and
Improvements.
2. Land. The "Land" shall mean all of the land described on Exhibit A
attached hereto, together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title and interest (if any)
of Seller in and to any streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in connection with such land and
all right, title and interest (if any) of Seller in all mineral and development
rights appurtenant to such land.
3. Improvements. The "Improvements" shall mean all buildings, structures
and other improvements situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land, which include 224 rental
units.
2. Personal Property. The "Personal Property" shall mean all furniture,
carpeting, appliances, equipment, machinery, inventories, supplies, signs and
other tangible personal property of every kind and nature, if any, owned by
Seller and installed, located at and used in connection with the ownership,
occupation and operation of the Real Property, including, without limitation,
the Personal Property listed on Exhibit B attached hereto. Personal Property
specifically excludes: (i) any items of personal property owned by tenants at or
on the Real Property, and (ii) any items of personal property owned by third
parties and leased to Seller.
3. Sale. For good and valuable consideration received by Seller, the
receipt and sufficiency of which are hereby acknowledged, Seller hereby sells,
assigns and transfers the Personal Property to Purchaser.
4. As Is. The Personal Property is sold, transferred and delivered by
Seller and hereby accepted by Purchaser in its current "as is" condition,
without any warranties, covenants or representations by Seller. Without limiting
the generality of the foregoing, the Personal Property is transferred, sold and
delivered without any express or implied warranty of merchantability or fitness.
5. Counterparts. This Bill of Sale may be executed in multiple
counterparts, any or all of which may contain the signatures of fewer than all
of the parties, but all of which shall constitute a single instrument.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale the day and year
first above written.
SELLER:
RICHMOND GABLES ASSOCIATES, a
Virginia general partnership
By: PaineWebber Equity Partners Two
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Second Equity Partners, Inc.,
a Delaware corporation, its
managing general partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
EXHIBIT A
---------
All that certain piece or parcel of land, with improvements thereon and
appurtenances thereto belonging, lying and being in the Three Chopt District,
Henrico County, Virginia, on the northside of Broad Street Road (U.S. Route 250)
as shown on that certain plat of survey prepared by J.K. Timmons & Associates,
P.C., dated July 17, 1987, last revised May 26, 1988, entitled "Improvements on
15.550 Acres of Land at the Northeast Intersection of Broad Street Road and
Innsbrook Drive known as Erin Shades", a copy of which plat is recorded in the
Clerk's Office, Circuit Court of Henrico County, Virginia, in Plat Book 84, page
205, to which reference is made for a more particular description.
Less and except that portion of the property acquired by the Commonwealth
of Virginia by Certificate of Take recorded December 7, 1990, in Deed Book 2271,
page 1951, and Final Order entered December 7, 1990, a copy of which was
recorded December 12, 1990 in Deed Book 2272, page 715.
Together with the Easement Area, Fort McHenry Access Drive and Signage
Easement as described in Declaration of Access Easement and Maintenance
Agreement dated February 28, 1991, recorded March 22, 1991, in Deed Book 2284,
page 990.
Being a part of the same real estate conveyed to Grantor by deed of
Richmond Erin Shades Associates Limited, a Virginia limited Partnership, dated
September 4, 1987 and recorded September 4, 1987 in the Clerk's Office, Circuit
Court, Henrico County, Virginia, in Deed Book 2095, page 356.
<PAGE>
EXHIBIT B
PERSONAL PROPERTY
See attached.
<PAGE>
THE GABLES OF ERIN SHADES APARTMENTS
RICHMOND, VIRGINIA
ASSIGNMENT AND ASSUMPTION
OF LEASES AND SECURITY DEPOSITS
-------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS (this
"Assignment") is entered into as of the 30th of June, 1998, between Richmond
Gables Associates ("Assignor"), a Virginia general partnership with an address
c/o PaineWebber Equity Partners Two Limited Partnership, 265 Franklin Street,
Boston, Massachusetts 02110 and Cornerstone Realty Income Trust, Inc.,
("Assignee"), a Virginia corporation, with an address of 306 East Main Street,
Richmond, Virginia 23219.
1. Real Property. The AReal Property@ shall mean the Land and
Improvements.
2. Land. The "Land" shall mean all of the land described on Exhibit A
attached hereto, together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title and interest (if any)
of Seller in and to any streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in connection with such land and
all right, title and interest (if any) of Seller in all mineral and development
rights appurtenant to such land.
3. Improvements. The "Improvements" shall mean all buildings, structures
and other improvements situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land, which include 224 rental
units.
2. Leases. The "Leases" means all leases, tenancies, rental agreements and
occupancy agreements affecting the Real Property which are described in Exhibit
B attached to this Assignment.
3. Tenant Deposits. "Tenant Deposits" means those security deposits held
by or for Assignor on account of tenants under the Leases as such deposits and
with respect to which Assignee received a credit at the closing of the
transaction with respect to which this Assignment has been executed and
delivered. The Tenant Deposits are set forth on attached Exhibit C.
4. Assignment. For good and valuable consideration received by Assignor,
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee the entire right, title and interest
of Assignor in and to the Leases and the Tenant Deposits.
5. Assumption. Assignee hereby assumes the covenants, agreements and
obligations of Assignor as landlord or lessor under the Leases and Assignee
further assumes all liability of Assignor for the proper refund or return of the
Tenant Deposits if, when and as required by the Leases.
6. Indemnity. Assignee hereby agrees to indemnify and hold Assignor, its
successors and assigns, harmless against all costs, expenses and liabilities
(including, without limitation, attorneys' fees and disbursements) of the lessor
under all Leases for any matters arising from and after the date hereof.
Assignor hereby agrees to indemnify and hold Assignee, its successors and
assigns, harmless against all costs, expenses and liabilities (including,
without limitation, attorneys' fees and disbursements) of the lessor under the
Leases for any matters existing prior to the date hereof; provided, however, it
is expressly understood and agreed that Assignor shall not be responsible to the
lessees under the Leases for Assignee's duty and obligation to return the Tenant
Deposits to lessees under the Leases to the extent the Tenant Deposits are
assigned to Assignee hereunder.
7. Attorneys' Fees. If either Assignee or Assignor, or their respective
successors or assigns, file suit to enforce the obligations of the other party
under this Assignment, the prevailing party shall be entitled to recover the
reasonable fees and expenses of its attorneys.
8. Successors and Assigns. This Assignment shall be binding upon and inure
to the benefit of Assignor and Assignee and their respective successors and
assigns.
<PAGE>
9. Counterparts. This Assignment may be executed in multiple counterparts, any
or all of which may contain the signatures of fewer than all of the parties, but
all of which shall constitute a single instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this
Assignment the day and year first above written.
SELLER:
RICHMOND GABLES ASSOCIATES, a Virginia
general partnership
By: PaineWebber Equity Partners Two
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Second Equity Partners, Inc., a
Delaware corporation, its
managing general partner
By:/s/ Peter F. Sullivan
---------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
PURCHASER:
CORNERSTONE REALTY INCOME TRUST, INC., a
Virginia corporation
By: /s/ Gus G. Remppies
-------------------
Name: Gus G. Remppies
Title: Vice President
<PAGE>
EXHIBIT A
---------
All that certain piece or parcel of land, with improvements thereon and
appurtenances thereto belonging, lying and being in the Three Chopt District,
Henrico County, Virginia, on the northside of Broad Street Road (U.S. Route 250)
as shown on that certain plat of survey prepared by J.K. Timmons & Associates,
P.C., dated July 17, 1987, last revised May 26, 1988, entitled "Improvements on
15.550 Acres of Land at the Northeast Intersection of Broad Street Road and
Innsbrook Drive known as Erin Shades", a copy of which plat is recorded in the
Clerk's Office, Circuit Court of Henrico County, Virginia, in Plat Book 84, page
205, to which reference is made for a more particular description.
Less and except that portion of the property acquired by the Commonwealth
of Virginia by Certificate of Take recorded December 7, 1990, in Deed Book 2271,
page 1951, and Final Order entered December 7, 1990, a copy of which was
recorded December 12, 1990 in Deed Book 2272, page 715.
Together with the Easement Area, Fort McHenry Access Drive and Signage
Easement as described in Declaration of Access Easement and Maintenance
Agreement dated February 28, 1991, recorded March 22, 1991, in Deed Book 2284,
page 990.
Being a part of the same real estate conveyed to Grantor by deed of
Richmond Erin Shades Associates Limited, a Virginia limited Partnership, dated
September 4, 1987 and recorded September 4, 1987 in the Clerk's Office, Circuit
Court, Henrico County, Virginia, in Deed Book 2095, page 356.
<PAGE>
EXHIBIT B
---------
See attached Rent Roll.
<PAGE>
EXHIBIT C
---------
See attached Security Deposit Audit Report.
<PAGE>
THE GABLES OF ERIN SHADES APARTMENTS
RICHMOND, VIRGINIA
ASSIGNMENT AND ASSUMPTION
OF CONTRACTS
------------
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this "Assignment") is entered
into as of the 30th day of June, 1998, between Richmond Gables Associates, a
Virginia general partnership, ("Assignor"), with an address c/o PaineWebber
Equity Partners Two Limited Partnership, 265 Franklin Street, Boston,
Massachusetts 02110 and Cornerstone Realty Income Trust, Inc. ("Assignee"), a
Virginia corporation, with an address of 306 East Main Street, Richmond,
Virginia.
1. Real Property. The "Real Property" shall mean the Land and
Improvements.
2. Land. The "Land" shall mean all of the land described on Exhibit A
attached hereto, together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title and interest (if any)
of Seller in and to any streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in connection with such land and
all right, title and interest (if any) of Seller in all mineral and development
rights appurtenant to such land.
3. Improvements. The "Improvements" shall mean all buildings, structures
and other improvements situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land, which include 224 rental
units.
2. Contracts. "Contracts" shall mean all of Assignor's rights, if any, in
the contracts listed on Exhibit B attached hereto, being all service, supply and
equipment rental, management, operating and leasing contracts affecting the Real
Property, to the extent that (i) Seller is entitled to transfer the same to
Buyer, and (ii) Buyer has not elect to have Seller terminate them.
4. Assignment. For good and valuable consideration received by Assignor
the receipt and sufficiency of which is hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee the entire right, title and interest
of Assignor in and to the Contracts.
5. Assumption. Assignee hereby assumes the covenants, agreements and
obligations of Assignor under the Contracts which are applicable to the period
and required to be performed from and after the date of this Assignment, but not
otherwise. Assignor shall remain liable for the covenants, agreements and
obligations of Assignor under the Contracts which are applicable to the period
and required to be performed prior to the date of this Assignment.
6. Indemnity. Assignee hereby agrees to indemnify and hold Assignor, its
successors and assigns, harmless against all loss, costs, expenses, liabilities,
damages, actions, causes of action, demands or claims (including, without
limitation, attorneys= fees and disbursements) arising out of or in connection
with the obligations of Assignor as vendee under the Contracts which are
applicable to the period and required to be performed from and after the date of
this Assignment. Assignor hereby agrees to indemnify and hold Assignee, its
successors and assigns, harmless against all loss, costs, expenses, liabilities,
damages, actions, causes of action, demands or claims (including, without
limitation, attorneys= fees and disbursements) arising out of or in connection
with the obligations of Assignor as vendee under the Contracts which are
applicable to the period and required to be performed prior to the date of this
Assignment.
7. Attorneys' Fees. If either Assignee or Assignor or their respective
successors or assigns, file suit to enforce the obligations of the other party
under this Assignment, the prevailing party shall be entitled to recover the
reasonable fees and expenses of its attorneys.
8. Successors and Assigns. This Assignment shall be binding upon and inure
to the benefit of Assignor and Assignee and their respective successors and
assigns.
9. Counterparts. This Assignment may be executed in multiple counterparts,
any or all of which may contain the signatures of fewer than all of the parties,
but all of which shall constitute a single instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this
Assignment the day and year first above written.
SELLER:
RICHMOND GABLES ASSOCIATES, a
Virginia general partnership
By: PaineWebber Equity Partners Two
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Second Equity Partners, Inc.
its managing general partner
By:/s/ Peter F. Sullivan
---------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
PURCHASER:
CORNERSTONE REALTY INCOME TRUST, INC., a
Virginia corporation
By: Gus G. Remppies
----------------
Name: Gus G. Remppies
Title: Vice President
<PAGE>
EXHIBIT A
---------
All that certain piece or parcel of land, with improvements thereon and
appurtenances thereto belonging, lying and being in the Three Chopt District,
Henrico County, Virginia, on the northside of Broad Street Road (U.S. Route 250)
as shown on that certain plat of survey prepared by J.K. Timmons & Associates,
P.C., dated July 17, 1987, last revised May 26, 1988, entitled AImprovements on
15.550 Acres of Land at the Northeast Intersection of Broad Street Road and
Innsbrook Drive known as Erin Shades", a copy of which plat is recorded in the
Clerk's Office, Circuit Court of Henrico County, Virginia, in Plat Book 84, page
205, to which reference is made for a more particular description.
Less and except that portion of the property acquired by the Commonwealth
of Virginia by Certificate of Take recorded December 7, 1990, in Deed Book 2271,
page 1951, and Final Order entered December 7, 1990, a copy of which was
recorded December 12, 1990 in Deed Book 2272, page 715.
Together with the Easement Area, Fort McHenry Access Drive and Signage
Easement as described in Declaration of Access Easement and Maintenance
Agreement dated February 28, 1991, recorded March 22, 1991, in Deed Book 2284,
page 990.
Being a part of the same real estate conveyed to Grantor by deed of
Richmond Erin Shades Associates Limited, a Virginia limited Partnership, dated
September 4, 1987 and recorded September 4, 1987 in the Clerk's Office, Circuit
Court, Henrico County, Virginia, in Deed Book 2095, page 356.
<PAGE>
EXHIBIT B
---------
See attached list of Contracts.
<PAGE>
SELLER'S SETTLEMENT STATEMENT
PURCHASER: Cornerstone Realty Income Trust
306 East Main Street
Richmond, VA 23219
SELLER: Richmond Gables Associates
c/o PaineWebber Properties Incorporated
265 Franklin Street, 15th Floor
Boston, MA 02110
CLOSING DATE: June 30, 1998
PROPERTY: "Erin Shades" at the northeast intersection of Broad
Street Road and Innsbrook Drive, Henrico County,
Virginia
SETTLEMENT: Commonwealth Land Title Insurance Company
FILE HE982769C 823 E. Main Street, Suite 1300
Richmond, VA 23219
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DEBIT CREDIT
Purchase Price: $11,500,000.00
Special per diem 4,800.00
Payoff existing mortgage: $5,448,812.00
Prudential Insurance
Security deposits: 28,012.50
Pet deposits: 4,290.00
Caldwell Gregory laundry contract 5,351.08
Deed recording charges:
Grantor's Tax 11,500.00
Release Fees 36.50
Title charges:
1/2 settlement fee 125.00
overnight courier 25.00
Broker Fees:
Insignia/ESG, Inc. 225,000.00
Fee to CTF Realty: 50,000.00
Distribution to
Richmond Erin Shades 578,556.12
Seller's legal fees:
Goodwin, Proctor & Hoar (POC)
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Amount due Seller: $5,153,091.80
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PURCHASER'S SETTLEMENT STATEMENT
PURCHASER: Cornerstone Realty Income Trust
306 East Main Street
Richmond, VA 23219
SELLER: Richmond Gables Associates
c/o PaineWebber Properties Incorporated
265 Franklin Street, 15th Floor
Boston, MA 02110
CLOSING DATE: June 30, 1998
PROPERTY: "Erin Shades" at the northeast intersection of Broad
Street Road and Innsbrook Drive, Henrico County,
Virginia
SETTLEMENT: Commonwealth Land Title Insurance Company
FILE HE982769C 823 E. Main Street, Suite 1300
Richmond, VA 23219
================================================================================
DEBIT CREDIT
Purchase Price: $11,500,000.00
Deposit: $250,000.00
Security deposits: 28,012.50
Pet deposits: 4,090.00
Caldwell Gregory laundry contract 5,351.08
Deed recording charges:
State tax 17,250.00
Local tax 5,750.00
Clerk's Fee 16.00
Title charges:
Owners premiums & endorsements 8,050.00
Title examination, copies, etc. 382.40
1/2 settlement fee 125.00
Purchaser legal fees:
Leclair Ryan 9,674.00
Survey:
Charles H. Fleet & Assoc. (POC)
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Amount due from Purchaser: $11,253,793.82
