SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 27, 1997
CORNERSTONE REALTY INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 0-23954 54-1589139
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
306 EAST MAIN STREET
RICHMOND, VIRGINIA 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
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CORNERSTONE REALTY INCOME TRUST, INC.
FORM 8-K
Index
Item 2. Acquisition or Disposition of Assets
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
a. Independent Auditors' Report
(Paces Arbor Apartments)*
Historical Statement of Income and
Direct Operating Expenses
(Paces Arbor Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Paces Arbor Apartments)*
b. Independent Auditors' Report
(Paces Forest Apartments)*
Historical Statement of Income and
Direct Operating Expenses
(Paces Forest Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Paces Forest Apartments)*
c. Independent Auditors' Report
(Carlyle Club Apartments)*
Historical Statement of Income and
Direct Operating Expenses
(Carlyle Club Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Carlyle Club Apartments)*
d. Independent Auditors' Report
(Ashley Run Apartments)*
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* To be filed by amendment.
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Historical Statement of Income and
Direct Operating Expenses
(Ashley Run Apartments)*
Note to Historical Statement of
Income and Direct Operating
Expenses (Ashley Run Apartments)*
e. Pro Forma Statement of Operations for
the Three Months ended March 31, 1997
(unaudited)*
Pro Forma Balance Sheet as of
March 31, 1997 (unaudited)*
Pro Forma Statement of Operations
for the Year ended December 31, 1996
(unaudited)*
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* To be filed by amendment.
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f. Exhibits
10.1 Purchase Contract for Paces Arbor Apartments
and Paces Forest Apartments
10.2 Purchase Contract for Carlyle Club Apartments
10.3 Purchase Contract for Ashley Run Apartments
23.1 Consent of Independent Auditors*
23.2 Consent of Independent Auditors*
23.3 Consent of Independent Auditors*
23.4 Consent of Independent Auditors*
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* To be filed by amendment.
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Item 2. Acquisition or Disposition of Assets
PACES ARBOR and PACES FOREST APARTMENTS
Raleigh, North Carolina
On March 27, 1997, Cornerstone Realty Income Trust, Inc. (the
"Company") purchased the Paces Arbor Apartments, a 101-unit apartment complex
("Paces Arbor"), and the Paces Forest Apartments, a 117-unit apartment complex
("Paces Forest"), both located in Wake County, near Raleigh, North Carolina.
Paces Arbor and Paces Forest are sometimes referred to collectively herein as
the "Property."
The Company purchased the Property from sellers unaffiliated with the
Company and its affiliates. The aggregate purchase price for the Property was
$12,061,700. The entire purchase price was borrowed on an interim basis under
the Company's unsecured line of credit and title to the Property was conveyed to
the Company by limited warranty deed.
Location. The following information is based in part on information
provided by the Raleigh Chamber of Commerce.
Paces Arbor and Paces Forest are located in Wake County, near Raleigh
within the Raleigh/Durham Metropolitan Statistical Area. The area is also know
as the Research Triangle, and contains the cities of Raleigh, Durham and Chapel
Hill. It is the second largest metropolitan area in North Carolina, after the
Charlotte area.
Raleigh is the capital of North Carolina and is the fastest growing
major city in North Carolina. The population of the city was approximately
150,000 in 1980 and estimated to be approximately 208,000 in 1993.
Research Triangle Park, which is located an approximately 20-minute
drive from the Property, is the largest planned research and development
industrial park in the United States. It was founded in 1958 as a cooperative
effort among Duke University, the University of North Carolina and North
Carolina State University. The Park comprises approximately 6,800 acres and
contains over 14 million square feet of industrial space. Among the Park's
approximately 60 research-oriented firms are IBM, Glaxo and Northern Telecom.
Raleigh's economy generally is a blend of industry, education and
government. The city's employment stability, strategic location, favorable labor
climate, pro-business
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attitude and pool of educated workers have helped the area attract many major
businesses and industries. Major industries in the area include electronics,
electrical equipment and machinery, metal working and food processing.
The Research Triangle is home to Duke University, the University of
North Carolina at Chapel Hill and North Carolina State University.
Paces Arbor is located on Lynn Road off of Six Forks Road. Paces Forest
is located on Millbrook Road. The immediate area around each apartment community
consists of other multi-family housing, commercial and retail development and
single-family housing. Both apartment communities are conveniently located near
shopping, schools and churches. Each apartment community is an approximately
20-minute drive from Raleigh/Durham International Airport. Paces Arbor and Paces
Forest are within two miles of each other.
Description of the Property. The Property consists of two apartment
communities comprising 218 garden-style apartment units. Paces Arbor consists of
six two- and three-story buildings containing 101 units on approximately 10
acres. Paces Forest consists of six two- and three-story buildings containing
117 units on approximately 19.5 acres. Each apartment community was built in
1986.
The Company believes that Paces Arbor is generally in good condition.
However, the Company has budgeted approximately $89,417 for various repairs and
improvements to Paces Arbor, including painting, clubhouse renovations,
siding/wood repair, and addition of an exercise facility.
Paces Arbor offers four unit types. The unit mix and rents currently
being charged new tenants are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ---- ------- ------
18 One bedroom, one 625 $560-$625
bathroom
35 One bedroom, one 788 580-645
bathroom
13 Two bedrooms, one 938 680-755
bathroom
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ---- ------- ------
35 Two bedrooms, two 1,136 740-805
bathrooms
The apartments in Paces Arbor provide a combined total of approximately
91,000 square feet of net rentable area.
Leases at Paces Arbor are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example, a one-bedroom, one-bath apartment unit (788 square feet) rented for
$455 in 1992, $485 in 1993, $485 in 1994, $535 in 1995, and $535 in 1996. The
average effective annual rental per square foot at the Property for 1992, 1993,
1994, 1995 and 1996 was $6.72, $7.17, $7.17, $7.91 and $7.91, respectively.
The Company believes that Paces Forest is generally in good condition.
However, the Company has budgeted approximately $103,583 for various repairs and
improvements to Paces Forest, including painting, clubhouse renovation, wood
siding repairs and addition of an exercise facility.
Paces Forest also offers four unit types. The unit mix and rents
currently being charged new tenants at Paces Forest are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ---- ------- ------
24 One bedroom, one 625 $580-$635
bathroom
38 One bedroom, one 788 620-675
bathroom
21 Two bedrooms, one 938 710-775
bathroom
34 Two bedrooms, two 1,136 790-835
bathrooms
The apartments in Paces Forest provide a combined total of
approximately 103,000 square feet of net rentable area.
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Leases at Paces Forest are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example, a one-bedroom, one-bath apartment unit (788 square feet) rented for
$525 in 1992, $550 in 1993, $565 in 1994, $575 in 1995, and $575 in 1996. The
average effective annual rental per square foot at the Property for 1992, 1993,
1994, 1995 and 1996 was $7.80, $8.17, $8.39, $8.54 and $8.54, respectively.
The buildings at each apartment community are wood frame construction
with crawl spaces. Exteriors are wood cedar siding and brick veneer. The
buildings have pitched roofs covered with asphalt shingles.
Each apartment unit at the Property has wall-to-wall carpeting in the
living areas and vinyl floors in the kitchen and bath, as well as a cable
television hook-up and individually controlled heating and air conditioning
unit. Each apartment unit has washer/dryer connections, miniblinds, pantry and
outside storage, and some units include a wood-burning fireplace, stackable or
full-sized washer and dryer, vaulted ceilings and ceiling fans. Each kitchen is
equipped with a refrigerator/freezer, electric range and oven, dishwasher and
garbage disposal. The owner supplies cold water, sewer service and trash
removal. The tenants pay for their electricity, which includes heat, air
conditioning, cooking, hot water and lights.
Paces Arbor has an outdoor swimming pool and jacuzzi, an
exercise/weights room, a basketball court, gas grills and a gazebo. Paces Arbor
has a clubhouse with a rental office and lounge. There is ample paved parking
for tenants.
Paces Forest has an outdoor swimming pool, a jacuzzi, tennis courts, an
exercise/weights room, a basketball court and a barbeque area. The apartment
community also has a clubhouse with a rental office and lounge. There is ample
paved parking for the tenants.
There are at least seven apartment properties in the area which compete
with the Property. All offer similar amenities and have rents that generally are
comparable to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing properties now averages
approximately 95%.
According to information provided by the seller, physical occupancy at
Paces Arbor averaged approximately 93% in 1992, 94% in 1993, 95% in 1994, 95% in
1995 and 96% in 1996. On March 25, 1997, Paces Arbor was 96% occupied.
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According to information provided by the seller, physical occupancy at
Paces Forest averaged approximately 92% in 1992, 94% in 1993, 95% in 1994, 95%
in 1995 and 97% in 1996. On March 25, 1997, Paces Forest was 94% occupied.
The residents at each apartment community are a mix of white-collar and
blue-collar workers, students and retired persons.
The following table sets forth the 1996 real estate tax information on
the Property:
Jurisdiction Assessed Value Rate Tax
- ------------ -------------- ---- ---
Paces Arbor $3,430,017 $1.1675 $41,560.45*
Paces Forest 3,835,732 1.1675 46,537.17**
* Includes a residential waste reduction fee of $1,515.
** Includes a residential waste reduction fee of $1,755.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $2,723,473 for Paces Arbor and $3,016,732
for Paces Forest) will be depreciated over 27.5 years on a straight-line basis.
The basis of the personal property portion will be depreciated in accordance
with the modified accelerated cost recovery system of the Internal Revenue Code
of 1986, as amended ("the Code"). Amounts to be spent by the Company on repairs
and improvements will be treated for tax purposes as permitted by the Code based
on the nature of the expenditures.
The Company believes that the Property is and will continue to be
adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Company to be relevant in evaluating the Property for
acquisition by the Company included the following:
1. The Company believes that the Raleigh, North Carolina area will
enjoy continued economic development and steady population increase, and that
such development and increase will support stable occupancy rates and reasonable
increases in rents at the Property. In particular, the Company believes that the
presence of Research Triangle Park and three major universities in the area and
associated businesses and activities will have a positive impact on the area for
the indefinite future.
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2. Based upon an engineering report and its own inspections, the
Company believes that the Property is generally in sound condition.
3. The Property is conveniently proximate to major employers and
shopping.
The Company is not aware of any material adverse factors relating to
the Property not set forth in this report that would cause the financial
information contained in this report not to be indicative of future operating
results.
CARLYLE CLUB APARTMENTS
Lawrenceville, Georgia
On April 30, 1997, the Company purchased the Carlyle Club Apartments, a
243-unit apartment complex located at 3348 Fairway Oaks Drive, Lawrenceville,
Georgia (the "Property").
The Company purchased the Property from a seller unaffiliated with the
Company and its affiliates. The purchase price was $11,580,000, all of which was
borrowed by the Company on an interim basis under the Company's unsecured line
of credit. Title to the Property was conveyed to the Company by limited warranty
deed.
Location. The Property is located in the City of Lawrenceville, County
of Gwinnett, just outside Atlanta, Georgia. The following information is based
in part upon information provided by the greater Atlanta Chamber of Commerce.
The economy of the greater Atlanta area is diverse, and includes as
significant sectors manufacturing, transportation, distribution, retailing,
wholesaling, finance, government, research, education and medicine. More than
80% of the Fortune 500 industrial companies and over 1,800 local manufacturing
firms have operations in the area. Atlanta is the national headquarters of
Coca-Cola, Cable News Network, Delta Air Lines, United Parcel Service, Home
Depot and Holiday Inn Worldwide. The city is also headquarters for the Sixth
District Federal Reserve Bank.
The convention and visitor trade is also one of Atlanta's primary
industries and has an important impact on the overall economy of the city.
Atlanta's hosting of the 1996 Centennial
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Olympic Games furthered its visibility as an important city internationally.
Atlanta sits at the junction of three major Interstate Highways (I-20,
I-75 and I-85). There are several airports in the area, but the principal
airport is Hartsfield-Atlanta International Airport, which had over 60,000
flights and over 4.5 million passengers in 1994. Atlanta also has a rapid rail
transit system (known as the Metropolitan Atlanta Rapid Transit Authority, or
"MARTA").
The Property is located within Gwinnett County. It is located
approximately 1.5 miles from Gwinnett Place, a 1.6 million square-foot regional
mall anchored by Sears, Macy's, Rich's, Mervyns and Parisians. The Property is
also approximately 1.5 miles from Interstate 85, which provides convenient
access to all portions of the metropolitan area as well as other cities in the
region.
Gwinnett County had the highest population growth rate of any large
county in the United States during the 1980's. From 1980 to 1990, Gwinnett
County added almost 190,000 new residents, and the population growth for the
County from 1990 to 2000 is projected to exceed 142,000, which would cause it to
remain among the fastest growing counties in the nation.
The immediate area surrounding the Property consists of other
multi-family housing, commercial and retail development and single-family
housing. The Property is adjacent to a golf course and is conveniently near
major shopping, schools and churches.
Description of the Property. The Property consists of 243 garden and
townhouse style apartment units in 27 two- and three- story buildings on
approximately 19.8 acres of land. The Property was built in 1974.
The Company believes that the Property is generally in very good
condition. In 1991, the Property was substantially renovated. The renovations at
that time included siding repair and replacement, new roofs and new appliances.
The Company has budgeted approximately $121,500 for additional repairs and
improvements, including renovation of the clubhouse and center hallways, parking
area resealing and restriping and power washing of all buildings.
The Property offers nine unit types. The unit mix and rents currently
being charged new tenants are as follows:
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ---- ------- ------
50 One bedroom, one 800 $627
bathroom
30 One bedroom, one 936 670
bathroom, den
40 Two bedrooms, one 1,040 670
and one-half
bathrooms
38 Two bedrooms, one 1,140 725
full and two half
bathrooms, TH
17 Two bedrooms, one 1,140 760
and one-half
bathrooms, TH
24 Two bedrooms, two 1,184 780
bathrooms, den
9 Two bedrooms, one 1,290 865
and one-half
bathrooms, den, TH
18 Three bedrooms, two 1,395 935
and one-half
bathrooms, TH
17 Three bedrooms, two 1,600 950
and one-half
bathrooms, TH
The apartments provide a combined total of approximately 265,000 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example, a two-bedroom, 1.5-bath apartment unit (1,290 square feet) rented for
$550 in 1992, $575 in 1993, $655 in 1994, $825 in 1995 and $840 in 1996. The
average effective annual rental per square foot at the Property for 1992, 1993,
1994, 1995 and 1996 was $5.14, $5.38, $6.13, $7.72 and $7.86, respectively.
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The buildings are wood-frame construction on concrete slabs with vinyl
siding exteriors. The buildings have pitched roofs covered with asphalt
shingles.
Each apartment unit has wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually controlled heating and air conditioning unit. Each
apartment unit also includes washer/dryer connections, miniblinds, a pantry and
a private balcony or patio. Each kitchen has a refrigerator/freezer with
icemaker, self-cleaning electric range and oven, dishwasher and garbage
disposal. The owner of the Property supplies cold water, sewer service and trash
removal. The tenants pay for their electricity, which includes air conditioning,
cooking, hot water and lights. The tenants also pay for gas usage for heating.
The Property has two outdoor swimming pools, two small lakes, a tennis
court, a playground, two laundry rooms and a clubhouse. A portion of the
Property overlooks the adjacent golf course, which is known as Northwoods
Country Club. There is ample paved parking for tenants.
There are at least seven apartment properties in the area that compete
with the Property. All offer similar amenities and have rents that generally are
comparable to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing properties now averages
approximately 95%.
According to information provided by the seller, physical occupancy at
the Property averaged approximately 95% in 1992, 96% in 1993, 96% in 1994, 95%
in 1995 and 95% in 1996. On April 21, 1997, the Property was 96% occupied.
The tenants at the Property are a mix of white-collar workers, students
and retired persons.
The 1996 real estate tax rate established by Gwinnett County for the
Property was $0.035950. The assessed value was $8,400,000 and the taxable value
(40% of assessed value) was $3,360,000. The taxes were calculated as $120,792.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $5,816,100) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Code. Amounts to be spent by the Company on repairs and
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improvements will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.
The Company believes that the Property is and will continue to be
adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Company to be relevant in evaluating the Property for
acquisition by the Company included the following:
1. The Company believes that the greater Atlanta, Georgia metropolitan
area will continue to enjoy strong population increase and steady economic
development and that such increase and development will support stable occupancy
rates and reasonable increases in rents at the Property. In particular, the
Company believes that the Property is located in a particularly desirable part
of the Atlanta metropolitan area.
2. Based upon an engineering report and its own inspections, the
Company believes that the Property is in very good condition. The Company
particularly believes that the Property benefited from a significant renovation
completed in 1991.
3. The Property has a convenient location relative to shopping
(including a major regional mall). The Property also benefits from being
adjacent to a golf course.
The Company is not aware of any material adverse factors relating to
the Property not set forth in this report that would cause the financial
information contained in this report not to be indicative of future operating
results.
ASHLEY RUN APARTMENTS
Norcross, Georgia
On April 30, 1997, the Company purchased the Ashley Run Apartments, a
348-unit apartment complex located at 3495 Jones Mill Road, Norcross, Georgia
(the "Property").
The Company purchased the Property from a seller unaffiliated with the
Company and its affiliates. The purchase price for the Property was $18,000,000,
which the Company borrowed on an interim basis under its unsecured line of
credit. Title to the Property was conveyed to the Company by limited warranty
deed.
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Location. The Property is located in the City of Norcross, which is
within Gwinnett County. Gwinnett County is part of the greater Atlanta, Georgia
metropolitan area. For information on the greater Atlanta metropolitan area, see
"Carlyle Club Apartments" above.
The immediate area surrounding the Property consists of other
multi-family housing, commercial and retail development and single-family
housing. The Property is located in the area known as "Peachtree Corners," and
is near businesses, major shopping, entertainment facilities, schools and
churches. The Property is readily accessible from Interstates 85 and 285.
Description of the Property. The Property consists of 348 garden and
townhouse style apartment units contained in 18 and two- and three-story
buildings on approximately 45 acres of land. The Property was built in 1987.
The Company believes that the Property has been well maintained and is
generally in good condition. Within the last two years, the owner of the
Property painted the building exteriors, replaced siding as necessary, installed
new roofs on four buildings and purchased new fitness equipment. The Company has
budgeted approximately $348,000 for certain renovations, including renovations
to the clubhouse, additional new roofs, painting (a new color) and siding
repairs and replacement.
The Property offers six unit types. The unit mix and rents currently
being charged new tenants are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ---- ------- ------
36 One bedroom, one 835 $625
bathroom
60 Two bedrooms, one 1,089 650
bathroom
86 Two bedrooms, two 1,090 700
bathrooms
60 Two bedrooms, two 1,096 700
bathrooms
100 Three bedrooms, two 1,373 850
bathrooms
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
- -------- ---- ------- ------
6 Three bedrooms, two 1,328 900
bathrooms, TH
The apartments provide a combined total of approximately 400,000 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less.
Average rental rates for the past five years have generally increased. As an
example, a two-bedroom, two-bath apartment unit (1,090 square feet) rented for
$510 in 1992, $540 in 1993, $600 in 1994, $650 in 1995 and $660 in 1996. The
average effective annual rental per square foot at the Property for 1992, 1993,
1994, 1995 and 1996 was $5.54, $5.86, $6.51, $7.06 and $7.17, respectively.
The buildings are wood-frame construction on concrete slabs with a
combination of wood siding and brick veneer. The buildings have pitched roofs
covered with asphalt shingles.
Each apartment unit has wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually controlled heating and air conditioning unit. Each
apartment unit also includes washer/dryer connections, a security system, a
fireplace and a dining room ceiling fan. Each kitchen is equipped with a
refrigerator/freezer with icemaker, electric range and oven, dishwasher and
garbage disposal. The owner of the Property supplies cold water, sewer service
and trash removal. The tenants pay for their electricity usage, which includes
air conditioning, cooking and lights. The tenants also pay for gas which
provides their heat and hot water.
The Property has an outdoor swimming pool which is adjacent to a
seven-acre lake. The Property also has a lighted tennis court, a playground, two
laundry facilities, an exercise room and a clubhouse, which is also situated on
the lake. There is ample paved parking for tenants.
There are at least eight apartment properties in the area that compete
with the Property. All offer similar amenities and have rents that generally are
comparable to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing properties now averages
approximately 95%.
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According to information provided by the seller, physical occupancy at
the Property averaged approximately 93% in 1992, 92% in 1993, 95% in 1994, 94%
in 1995 and 96% in 1996. On April 22, 1997, the Property was 96% occupied.
The tenants at the Property are a mix of white-collar and blue-collar
workers, students and retired persons.
The 1996 real estate tax rate imposed by Gwinnett County on the
Property was $0.035950. The assessed value of the Property was $11,875,000 and
the taxable value (40% of assessed value) was $4,750,000. The real estate taxes
were calculated as $170,762.50.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $9,329,700) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Code. Amounts to be spent by the Company on repairs and improvements will
be treated for tax purposes as permitted by the Code based on the nature of the
expenditures.
The Company believes that the Property is and will continue to be
adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Company to be relevant in evaluating the Property for
acquisition by the Company included the following:
1. The Company believes that the greater Atlanta, Georgia metropolitan
area will continue to enjoy strong population increase and steady economic
development and that such increase and development will support stable occupancy
rates and reasonable increases in rents at the Property. In particular, the
Company believes that the Property is located in a particularly desirable part
of the Atlanta metropolitan area, known as Peachtree Corners.
2. The Property is has a convenient location relative to business
and shopping.
3. Based upon an engineering report and its own inspections, the
Company believes that the Property is in very good condition. The Company
particularly believes that the Property benefited from significant renovations
accomplished during the past two years.
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4. The Company believes that the Property has a particularly spacious
and attractive site, which includes a seven-acre lake adjacent to the Property's
swimming pool and clubhouse.
The Company is not aware of any material adverse factors relating to
the Property not set forth in this report that would cause the financial
information contained in this report not to be indicative of future operating
results.
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ITEM 7.a.*
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* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.b.*
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* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.c.*
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* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.d.*
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* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment to this report as soon as possible, but in no event more
than 60 days after the date of filing of this report.
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ITEM 7.e.*
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* To be filed by amendment. It is impracticable to include herein the required
pro forma financial information. The required pro forma financial information
will be filed as an amendment to this report as soon as possible, but in no
event more than 60 days after the date of filing of this report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cornerstone Realty Income Trust, Inc.
Date: May 14, 1997 By:/s/ Stanley J. Olander, Jr.
---------------------------
Stanley J. Olander, Jr.,
Chief Financial Officer
of Cornerstone Realty
Income Trust, Inc.
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EXHIBIT INDEX
Cornerstone Realty Income Trust
Form 8-K dated March 27, 1997
Exhibit Number Exhibit Page Number
- -------------- ------- -----------
10.1 Purchase Contract for
Paces Arbor Apartments and
Paces Forest Apartments
10.2 Purchase Contract for Carlyle Club
Apartments
10.3 Purchase Contract for Ashley Run Apartments
23.1 Consent of Independent Auditors*
23.2 Consent of Independent Auditors*
23.3 Consent of Independent Auditors*
23.4 Consent of Independent Auditors*
* To be filed by amendment.
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PURCHASE AND SALE AGREEMENT
DATED MARCH 1st, 1997
BETWEEN
CORNERSTONE REALTY INCOME TRUST, INC., AS BUYER,
AND
PACES ARBOR APARTMENTS LIMITED PARTNERSHIP
AND
PACES FOREST APARTMENTS LIMITED PARTNERSHIP,
AS SELLER
TABLE OF CONTENTS
1. Description of Property . . . . . . . . . . . . . . . . . . . 1
2. Purchase Price and Manner of Payment . . . . . . . . . . . . . 2
3. Binder Deposit and Escrow Agent's Rights and Duties. . . . . . 2
4. Site Analysis Period . . . . . . . . . . . . . . . . . . . . . 3
5. Survey and Title Insurance . . . . . . . . . . . . . . . . . . 7
6. Seller's Closing Documents and Escrow . . . . . . . . . . . . 8
7. Buyer's Closing Documents . . . . . . . . . . . . . . . . . . 10
8. Closing and Closing Date . . . . . . . . . . . . . . . . . . 11
9. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 11
10. Closing Costs and Expenses . . . . . . . . . . . . . . . . . 12
11. Seller's Covenants . . . . . . . . . . . . . . . . . . . . . 13
12. Seller's Representations . . . . . . . . . . . . . . . . . . 15
13. Buyer's Representations and Warranties . . . . . . . . . . . 18
14. Remedies on Default: Treatment of Binder Deposit. . . . . . . 19
15. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16. Survival of Provisions . . . . . . . . . . . . . . . . . . . 21
17. Assignment of Buyer's Interest . . . . . . . . . . . . . . . 21
18. Closing Adjustments and Apportionments . . . . . . . . . . . 21
19. Memorandum of Agreement . . . . . . . . . . . . . . . . . . . 23
20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 24
i
STATE OF NORTH CAROLINA
PURCHASE AND SALE AGREEMENT
COUNTY OF WAKE
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into as of the 1st day of March, 1997, by and between PACES ARBOR APARTMENTS
LIMITED PARTNERSHIP, a North Carolina limited partnership and PACES FOREST
APARTMENTS LIMITED PARTNERSHIP, a North Carolina limited partnership,
hereinafter collectively referred to as the "Seller"; and CORNERSTONE REALTY
INCOME TRUST, INC., a corporation, hereinafter referred to as the "Buyer."
(Seller and Buyer are sometimes hereinafter referred to collectively as the
"Parties," and each of Seller and Buyer is sometimes hereinafter referred to as
a "Party.")
W I T N E S S E T H:
FOR AND IN CONSIDERATION OF the mutual agreements and undertakings
herein set forth and other valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, Seller agrees to sell and convey to Buyer, and
Buyer agrees to purchase from Seller, the Property described in Paragraph 1
herein on the terms and conditions hereinafter set forth:
1. Description of Property. The property which is subject to this
Agreement (the "Property") consists of:
a. approximately 10.33 acres of land known as "Paces Arbor Apartments"
and 19.54 acres of land known as "Paces Forest Apartments," each in
Wake County, Raleigh, North Carolina and more particularly described
on Exhibit A and Exhibit A-1 attached hereto and incorporated herein
by reference (collectively the "Land");
b. all of Seller's right, title and interest to buildings (including 117
apartment units at Paces Forest Apartments and 1O1 apartment units at
Paces Arbor Apartments), the parking lots, driveways, curb, gutter,
sidewalks, pavement and all other improvements located on the Land
(collectively, the "Improvements");
c. all easements, if any, benefitting the Land;
d. all rights and appurtenances pertaining to the Land, including any
right, title and interest of Seller in and to adjacent streets,
alleys or rights of way;
e. all of Seller's right, title and interest in and to all fixtures,
equipment, apparatus, machinery, appliances, furnishings, books and
records (or copies thereof) wherever located (including computer
stored data, programs, etc., not including software), and other
tangible personal property owned by Seller and used in connection
with the operation and ownership of the Improvements, and all
leasehold improvements located thereon(collectively, the "Personal
Property"), such Personal Property to include without limitation, the
personal property described on the schedule to be delivered to Buyer
pursuant to Paragraph 4(a)(v); and
f. All of Seller's right, title and interest in and to all intangible
property now or hereafter owned or held by Seller between the date of
this Agreement and the "Closing Date" (as hereinafter defined) and
used solely in connection with the Land, the Leases (as defined in
Paragraph 6(b)), the Improvements, or the Personal Property,
including, but not limited to, all assignable guarantees and
warranties (including guarantees and warranties pertaining to the
Improvements); all assignable licenses and other governmental permits
and permissions relating to the Land, the Improvements, and the
operation thereof; all assignable contracts and contract rights; and
all trade names, trademarks, and logos used in connection with the
ownership and operation of the Improvements, including, but not
limited to, the names "Paces Arbor" and "Paces Forest" (collectively,
the "Intangible Property"), provided Seller shall have no obligation
to incur cost in connection with any such transfer or assignment,
except as otherwise expressly permitted herein. Notwithstanding
anything contained herein to the contrary, Seller shall be obligated
to fulfill its prior obligations with respect to the Intangible
Property which have accrued prior to Closing.
2. Purchase Price and Manner of Payment. Subject to adjustment, if any,
as hereinafter provided, the purchase price (the "Purchase Price") to be paid
for the Property shall be Twelve Million and No/100 Dollars ($12,000,000.00).
The Purchase Price shall be payable in United States currency by way of Federal
wire transfer or other immediately available funds at Closing.
3. Binder Deposit and Escrow Agent's Rights and Duties. Upon expiration
of the Site Analysis Period (as herein defined), Buyer shall pay and deliver to
The Title Company of North Carolina, Inc. (the "Escrow Agent") Two Hundred
Thousand and No/100 Dollars ($200,000.00) in the form of cash or other
immediately available funds to be held by Escrow Agent pursuant to this
Agreement. The cash deposit shall serve as a binder deposit (the "Binder
Deposit") to be held in trust for the mutual benefit of the parties, subject
to the following terms and conditions:
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a. If Escrow Agent shall be unable to determine at any time to whom the
Binder Deposit should be delivered or if a dispute should develop
between Seller and Buyer concerning the disposition of the Binder
Deposit, then in any such event, Escrow Agent shall deliver the
Binder Deposit in accordance with the joint (or consistent) written
instructions of Seller and Buyer. In the event that such joint (or
consistent) written instructions shall not be received by Escrow
Agent within ten (10) days after Escrow Agent shall have served
written requests for such joint (or consistent) written instructions
upon Seller and Buyer, Escrow Agent shall have the right to deposit
the Binder Deposit with a state court in Raleigh, North Carolina,
having jurisdiction relative to such matter and to interplead Seller
and Buyer in respect thereof; and, thereafter, Escrow Agent shall be
discharged of any further or continuing obligations in connection
with the Binder Deposit.
b. If costs and expenses (including reasonable attorneys' fees) are
incurred by Escrow Agent because of litigation or any dispute between
Seller and Buyer arising out of the holding of the Binder Deposit,
the non-prevailing party (i.e., either Seller or Buyer) shall
reimburse Escrow Agent for such reasonable costs and expenses
incurred. Seller and Buyer hereby agree and acknowledge that Escrow
Agent assumes no liability in connection with the holding of the
Binder Deposit pursuant hereto, except for the negligence or willful
misconduct of Escrow Agent and its employees and agents. Escrow Agent
shall not be responsible for the validity, correctness or genuineness
of any document or notice referred to herein; and, in the event of
any dispute under this Agreement relating to the disposition of the
Binder Deposit, Escrow Agent may seek advice from its own counsel and
shall be fully protected in any action taken in good faith in
accordance with the opinion of Escrow Agent's counsel.
c. Escrow Agent's address for purposes of mailing or delivering
documents and notices hereunder is as follows:
The Title Company of North Carolina, Inc.
150 Fayetteville Street Mall, Suite 2710
Raleigh, North Carolina 27601
Attention: Alice Murdock
Telephone: 800-277-0081
Facsimile: 919-832-0877
4. Site Analysis Period.
a. Seller's Information. Within five (5) days after the Effective Date
(as hereinafter defined), Seller agrees to make available to Buyer at the
Property or at Seller's offices in Charlotte, North Carolina for copying at
Buyer's expense, documents relating to the Property which Buyer may reasonably
request, to the extent not delivered prior to the date of this Agreement,
including without limitation:
(i) utility bills, property tax assessments and tax bills and all
correspondence pertaining to Property taxes with respect to the
Property for the past three (3) calendar years;
(ii) feasibility studies, market studies, appraisals and any such
matters as may be material to an evaluation of the Property, if
available;
(iii) existing soil reports, engineering and architectural studies,
grading plans, topographical maps and similar data relating to
the Property, if available;
(iv) all service and maintenance contracts and management agreements
and other written agreements of any kind pertaining to the
Property, and all amendments and modifications thereto, that
Seller or its agents and affiliates have entered into in
connection with the construction, development, maintenance,
ownership, and operation of the Property and that might survive
the Closing, together with a schedule listing such contracts.
(v) a schedule listing all Personal Property;
(vi) leases, including all modifications or amendments thereto, and
any default notices sent to any tenant or, if no such default
notices exist, a certification to that effect;
(vii) a rent roll certified as true and correct by Seller dated no
earlier than five (5) calendar days prior to the date of this
Agreement, to be supplemented by a rent roll as Buyer may
reasonably request from time to time, showing the name and
address of each tenant, the unit type, the commencement and
expiration dates of each lease and the rent, security, key, pet
and cleaning deposits (collectively, the "Security Deposits"),
market rent and offsets, if any;
(viii) an existing Phase I environmental site assessment, if available,
verifying that the Property is free of any toxic contamination,
including radon, and that the Improvements are free of any
asbestos, delivered during the Site Analysis Period;
(ix) monthly and annual income and operating statements for the
Property for the past thirty-six (36) months;
(x) any existing title insurance policies and the most recent
surveys of the Property;
(xi) a list and complete copies of all licenses, permits, maps,
certificates of occupancy, building inspection approvals,
covenants, conditions and restrictions with respect to
the Property, if available;
(xii) to the extent in Seller's possession, copies of insurance
loss runs for the immediately preceding five (5) years;
(xiii) to the extent in Seller's possession, plans and specifica-
tions and certificates of occupancy relating to the Property;
and
(xiv) to the extent in Seller's possession engineering reports, if
any, relating to the Property.
All copies of the documents referenced above are true, correct, and
complete. In no event shall Seller's failure to provide the foregoing extend the
Site Analysis Period (as hereinafter defined).
b. Access. Seller shall provide Buyer, and Buyer's agents and representa-
tives complete access to any portion of the Property for the purpose of making a
physical inspection of the Property and copying any documents relating to the
Property to determine whether the Property is suitable for Buyer's purposes.
Such inspection may include, among other things, termite, engineering,
environmental and feasibility studies. Buyer's rights hereunder to conduct said
investigation shall, however, be subject to the following requirements and
limitations: (i) any entry upon the Property by Buyer, Buyer's authorized agents
and employees, as well as others authorized by Buyer, shall require reasonable
advance notice to Seller of the date and time of the entry and the specific
investigations to be conducted in connection with the entry, (ii) Seller shall
be entitled to have one or more representatives present to observe the
investigations on the Property, (iii) Buyer shall not be entitled to conduct any
environmental investigations on the Property beyond a "Phase I" environmental
site assessment (i.e. no sampling, drilling, etc.) without first obtaining
Seller's prior written consent, not to be unreasonably withheld, subject to
reasonable restrictions and (iv) said investigation shall not result in any
damage to the Property or adverse change to the physical characteristics of the
Property. Buyer hereby agrees to indemnify and hold harmless Seller against any
loss, liability, damages, costs or expenses including reasonable attorneys'
fees, incurred by Seller as a result of any property damage or personal injury
resulting from the inspections conducted by Buyer under this Paragraph 4.b.
Buyer acknowledges and agrees that any such inspection conducted by Buyer or
Buyer's agents and representatives shall be solely at the risk of Buyer.
c. Site Analysis Period. Buyer shall have the Site Analysis Period (as
hereinafter defined) in which to ascertain whether the Property is acceptable to
Buyer, including but not limited to the review of the leases, title issues,
survey, contracts, taxes and financial information relative to the Property. The
"Site Analysis Period" shall mean the period commencing on the Effective Date
(as defined in Paragraph 21(a) herein) and expiring at 5:00 p.m. EST on March
24, 1997. If Buyer determines in Buyer's sole and absolute discretion that the
Property is unacceptable, then Buyer shall have the right to terminate this
Agreement by giving written notice of termination to Seller prior to the
expiration of the Site Analysis Period, in which event Seller and Buyer shall
pay their respective costs incurred as of the termination date in accordance
with Paragraph 10 hereof and neither Party shall have any further rights or
obligations hereunder except for the Indemnification Obligations (as herein
defined).
In the event Buyer fails to terminate this Agreement prior to the
expiration of the Site Analysis Period, as same may be extended in writing by
mutual agreement of Buyer and Seller, except in the case of a default by Seller
hereunder (which shall be governed by the terms of Paragraph 14.b herein) and
except in the event of a termination of this Agreement by either party pursuant
to any specific termination rights set forth herein which requires the return of
the Binder Deposit to Buyer, the Binder Deposit shall be paid over to the Escrow
Agent in accordance with Paragraph 3 and shall be deemed for all purposes under
this Agreement to be non-refundable to Buyer. Buyer agrees that it will forward
to Seller copies of all reports and due diligence materials and information
obtained by Buyer relative to the Property within a reasonable time after
receipt of same. At Closing, the Binder Deposit shall be applied to the Purchase
Price or, at the election of Buyer and provided substitute proceeds are
delivered to Seller at Closing, returned to Buyer.
Seller agrees that all vacant apartment units at the Property shall be
maintained in "rent ready" condition in a manner which is consistent with the
past practices of Seller at the Property relative to vacated units. All
apartment units vacant or vacated at least five days (5) prior to Closing shall
be in a "rent ready" condition at Closing and shall contain, without limitation,
the following: carpet, refrigerator, range, garbage disposal, heating, plumbing
and electrical systems.
5. Survey and Title Insurance. Buyer may cause an "as built" survey
(the "Survey") of the Property to be prepared by a professional licensed land
surveyor (the "Surveyor") during the Site Analysis Period. A copy of the Survey
shall be provided to Seller at the earliest practicable time after completion of
same, but in any event, not later than the expiration of the Site Analysis
Period. In addition, Buyer shall, at Buyer's sole cost and expense, (i) cause a
national title insurance company selected by Buyer (the "Title Company") to
issue to Buyer a current commitment (having an effective date not earlier than
the Effective Date) for an ALTA policy of owner's title insurance (the "Title
Commitment") setting forth the state of title to the Property and committing
the Title Company to issue to Buyer an owner's policy of title insurance
insuring Buyer's fee simple interest in the Property with such endorsements
thereto as Buyer may require, and (ii) deliver to Seller a complete copy of the
Title Commitment along with a legible copy of any recorded instruments (if any)
that are disclosed in the Title Commitment.
Buyer shall have until the expiration of the Site Analysis Period to
give Seller written notice of Buyer's objection to the condition of title to the
Property, as reflected by the Survey and the Title Commitment. The failure of
Buyer to provide such notice to Seller prior to the expiration of the Site
Analysis Period shall constitute a waiver of all of Buyer's rights under this
Paragraph 5 as such rights relate to title matters of record or existing as of
the effective date and time of the Title Commitment. Such matters not objected
to shall be hereinafter referred to as the "Permitted Exceptions." Additionally,
if Buyer gives written notice to Seller of title objections as permitted herein
prior to the expiration of the Site Analysis Period, Seller shall have five (5)
days from receipt of such written notice either (A) to have such objections
satisfied and removed or to commit to Buyer in writing to cause such objections
to be satisfied and removed at or prior to the Closing or (B) to give Buyer
written notice of Seller's inability or refusal to satisfy the objections. If
any such objection is not properly satisfied and removed within said five (5)
day period or Seller does not commit to Buyer in writing within said five (5)
day period to cause any such objection to be satisfied and removed at or prior
to the Closing, Buyer, as its sole and exclusive remedy, may elect either (i) to
terminate this Agreement or (ii) to accept and approve all such unsatisfied
objections and to complete the purchase of the Property (in which case all such
unsatisfied objections shall automatically become Permitted Exceptions under
this Agreement), with the right to pay at Closing and deduct from the Purchase
Price only the amount of liens of a definite, ascertainable amount, subject to
Seller's right to require said amount to be escrowed under terms and conditions
reasonably acceptable to Seller pending Seller's own contest of the validity or
amount of such lien(s); provided, however, the escrow of said funds shall be
structured so as to allow the Title Company to insure title to the Property
without exception for said lien(s). Buyer shall notify Seller of its election
pursuant to the immediately preceding sentence within five (5) days after the
earlier to occur of the following two events: (1) the receipt by Buyer of
Seller's written notice of Seller's inability or refusal to satisfy the
objections (or any of them) or (2) the passage of the five (5) day period during
which Seller is permitted to respond with regard to the objections. Subject to
the conditions set forth herein, if Buyer elects to terminate this Agreement as
provided in this Paragraph 5, the Binder Deposit shall be promptly returned by
Escrow Agent to Buyer, whereupon the parties hereto shall have no further
rights, obligations or liabilities with respect to each other hereunder, except
for the indemnification obligations under Paragraph 4.b herein (the
"Indemnification Obligations").
6. Seller's Closing Documents and Escrow.
At Closing Seller shall execute and deliver the following documents for
each apartment complex comprising the Property:
a. Deed. A special warranty deed (the "Deed") in the form attached
hereto as Exhibit B, conveying to Buyer good, marketable and insurable title to
the Property, without exception except as to the Permitted Exceptions and
additional Permitted Exceptions (if any) created or established under this
Agreement.
b. Assignment of Leases. An assignment of the original leases (the
"Lease Assignment") in the form attached hereto as Exhibit C assigning all of
the Seller's right, title and interest as lessor under the leases, tenancies,
occupancy agreements, rental agreements, options, licenses and concessions
relating to the Property, and all guaranties of the foregoing (collectively, the
"Leases"), all of which are (i) described on the Rent Roll, as hereinafter
defined, or (ii) hereafter consented to by Buyer, together with all Security
Deposits made by the tenants (the "Tenants") under the Leases.
c. Rent Roll. A rent roll (the "Rent Roll"), certified as true and
complete as of the Closing Date by Seller, showing unleased units and itemizing
Leases and Security Deposits on a Tenant-by-Tenant basis for the Property. The
Rent Roll as of the Effective Date is attached hereto as Exhibit D and Exhibit
D-1.
d. Bill of Sale. A bill of sale in the form attached hereto as Exhibit
E, transferring and conveying to Buyer all of Seller's right, title and interest
to the Personal Property.
e. Assignment of Contracts. To the extent assignable and at no cost to
Seller, an assignment (the "Contract Assignment") in the form attached hereto as
Exhibit F, of all of Seller's right, title and interest as the owner of the
Property under the service contracts and agreements, personal property leases
and agreements (collectively, the "Contracts") which are described on Exhibit H
attached hereto. Subject to Paragraph 6.h herein, Buyer agrees to assume all
such Contracts at Closing; provided, however, Buyer may inform Seller not less
than ten (10) business days prior to the Closing, which Contracts, if any, Buyer
wishes Seller to terminate as of Closing, and Seller will do so provided such
termination can occur without expense to Seller.
f. Title Insurance Affidavit. Seller agrees to provide at Closing an
executed Owner's Affidavit or other document required by the Title Company in
issuing an owner's title insurance policy to Buyer without exception to the
possible lien claims of mechanics, laborers and materialmen.
g. FIRPTA Certificate/Withholding. A certificate in the form and
substance attached hereto as Exhibit G ("FIRPTA Affidavit");
h. Termination of Management and Seller Affiliated Contracts.
Notwithstanding anything contained herein to the contrary, Seller agrees to
deliver agreements signed by (i) the parties to any management agreement for the
Property and (ii) the parties to all Contracts between the Seller or its
predecessors in interest and parties affiliated with or controlled by Seller
which terminate such agreements as of the Closing, without any liability or
obligation on the part of the Buyer or the Property.
i. Permits. Upon the request of Buyer, original or copies of Permits
which Seller shall transfer to Buyer to the extent transferable without cost to
Seller. Seller agrees to keep such Permits in full force and effect and to
comply with all terms and conditions thereof prior to Closing.
j. Closing Statement. A closing statement executed by Seller.
k. Escrow Instructions. Signed escrow instructions, reasonably
satisfactory to Escrow Agent, in form and substance acceptable to the parties
and sufficient to carry out the Closing.
l. Partnership Resolution. A partnership resolution evidencing the
authority of Seller to consummate the sale of the Property, and the authority of
the general partner to execute any and all documents necessary to consummate the
transaction, together with a Certificate of Good Standing from the state of
Seller's organization evidencing that Seller is duly organized, validly existing
and in good standing in the state of Seller's organization.
m. Letter to Tenants. An executed letter to be sent to each of the
Tenants stating that the Property together with the Security Deposits (as herein
defined) and other tenant deposits, if any, have been transferred to Buyer and
directing the Tenants thereafter to pay all rent to Buyer or its designee.
n. Non-Resident Seller Form. To the extent Seller is a foreign limited
partnership, a NC-1099NRS to be filed with the North Carolina Department of
Revenue.
o. Termite Bonds. Any existing standard termite bonds for the Property
in Seller's possession. Any additional termite bonds for the Property and any
required corrective work may be requested by Buyer and shall be conducted at
Buyer's sole cost and expense.
p. Assignment. Assignments of all Seller's interest in the following:
(i) all assignable licenses and permits relating to the operation of the
Property, (ii) the existing Property telephone number, and (iii) the business
and trade name as herein set forth.
q. Assignment of Warranties. Assignments of all warranties and
guarantees to the extent in Seller's possession and still in effect. Seller
agrees to provide Buyer with copies of all such warranties and guarantees, to
the extent in Seller's possession, for all appliances, dishwashers, disposals,
refrigerators, heating and air-conditioning units, washers and dryers.
r. Transfer of Utilities. All appropriate documents, if any, for the
transfer of the telephone, electric, water and sewer, and gas utilities, as may
be required by the utility company, for execution at Closing.
s. Representation Letter. A representation letter as reasonably required
by auditors for a public company acquiring property of the same type and size as
the Property. The form will be similar to that attached hereto as Exhibit I.
This clause shall survive Closing for three (3) months.
t. Other Documents. Such other documents as may be reasonably required
to close the transaction contemplated by this Agreement.
7. Buyer's Closing Documents.
At Closing Buyer shall execute and deliver to Seller the following
documents to Escrow Agent for each apartment complex comprising the Property:
a. Assignment of Leases. The Lease Assignment, acknowledging the
assumption by Buyer of Seller's obligations under the Leases which accrue after
the Closing Date.
b. Assignment of Contracts. The Contract Assignment, acknowledging the
assumption by Buyer of Seller's obligations under the Contracts which accrue
after the Closing Date.
c. Closing Statement. A closing statement executed by Buyer.
d. Escrow Instructions. Signed escrow instructions, reasonably
satisfactory to Escrow Agent, in form and substance acceptable to the parties
and sufficient to carry out the Closing.
e. Other Documents. Such other documents as may be reasonably required
to close the transaction contemplated by this Agreement.
8. Closing and Closing Date. The consummation of the sale and purchase
of the Property hereunder (the "Closing") shall take place on March 27, 1997
unless otherwise extended in accordance with the terms herein. The Closing may
occur on a prior date selected by Buyer upon at least three (3) days prior
written notice to Seller, at a mutually convenient time and location in Raleigh,
North Carolina. Exclusive possession of the Property shall be delivered to Buyer
at Closing. The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
9. Risk of Loss.
a. Seller shall bear all risk of loss to the Property until the Closing
Date. If, between the date of this Agreement and the Closing Date, all or any
portion of the Property is damaged or destroyed by fire or other casualty and
the cost to repair and restore the Property is more than $200,000.00, Buyer at
its sole option, may elect to terminate this Agreement within ten (10) days
after notice of such casualty without cost, obligation, or liability on Buyer's
part, in which event all rights and obligations of the parties hereunder shall
cease and the full Binder Deposit shall be returned to Buyer. If this Agreement
is not terminated, Seller shall assign to Buyer all of Seller's right, title,
and interest in and to any insurance proceeds (including any rental interruption
proceeds) payable as a result of such damage or destruction and Buyer shall
receive a credit to the Purchase Price equal to any deductibles applicable to
such insurance proceeds. If Buyer fails to notify Seller of its election, such
failure shall constitute an election to terminate this Agreement as aforesaid
and Escrow Agent shall immediately return the Binder Deposit to Buyer and
thereafter, neither party shall have any liability, or obligation to the other
hereunder, except for the indemnities set forth in this Agreement, which shall
survive termination hereunder. The Closing Date shall be adjusted, if necessary,
to allow for such election.
b. If, between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated that might result in
the taking of any material part of the Improvements or the Land (other than the
Leadmine Road condemnation, which for purposes of this Agreement shall not
deemed "material"), Buyer, at its sole option, may elect to terminate this
Agreement without cost, obligation, or liability on the part of Buyer, in which
event all rights and obligations of the parties hereunder shall cease. If this
Agreement is not terminated, Seller shall assign to Buyer all of Seller's right,
title, and interest in and to any award pertaining to the Property made in
connection with such condemnation or eminent domain proceedings.
10. Closing Costs and Expenses.
a. Expenses.
i. Seller shall pay any and all fees or costs required to be
paid by Seller to the holder of any loans encumbering the
Property, in connection with the sale of the Property,
including, but not limited to prepayment fees, lender's
consent fees or lender's counsel fees, if any.
ii. Buyer shall pay the costs and expenses of: (i) any
environmental audit of the Property and any other
investigations of the Property undertaken by Buyer, if
Buyer elects to obtain an environmental audit or to
undertake any other investigation of the Property, (ii) the
Survey, (iii) the Commitment and Title Policy, and (iv) the
cost of the per-page recording charges for filing the Deed
and any mortgage taxes applicable to the Closing.
iii. Each Party shall pay its own attorney's fees.
iv. Seller shall pay the cost and expense for preparing the
Deed and any documentary or transfer tax stamps to be
affixed to the Deed.
v. Other than as specifically provided herein (i) Seller shall
bear all costs and expenses that are normally and
customarily borne by sellers of similar real estate in the
locale where the Property is located; and (ii) Buyer shall
bear all costs and expenses that are normally and
customarily borne by buyers of similar real estate in the
locale where the Property is located.
11. Seller's Covenants. In addition to other covenants and agreements
of Seller in this Agreement, Seller hereby covenants as follows:
a. In the event Seller obtains written notice at any time prior to the
Closing of any pending condemnation action affecting the Property
(or any portion thereof), Seller shall promptly notify Buyer.
Seller hereby discloses that it has received notice from the City
of Raleigh attached hereto as Exhibit J (the "City Notice")
relative to the potential widening of Leadmine Road which is
adjacent to one of the apartment complexes constituting the
Property.
b. If Seller has actual notice thereof prior to the Closing, Seller
shall advise Buyer promptly of any litigation, arbitration or
administrative hearing concerning or affecting the use and
development of the Property.
c. From the Effective Date until the Closing, Seller shall:
(i) pay in full, or prior to the Closing Date, all bills and
invoices for labor, goods, materials, and services of any kind
relating to the Property, and all utility charges subject to the
prorations and adjustments made at Closing for any such items;
(ii) promptly notify Buyer of any material adverse change in
any physical condition with respect to the Property or of any event
or circumstance of which Seller has actual knowledge (with no duty
to investigate) which makes any representation or warranty of
Seller under this Agreement materially untrue or misleading, or any
material covenant of Seller under this Agreement incapable of being
performed;
(iii) cause the Property to be staffed, operated, repaired,
maintained (including the preparation of vacant apartment units for
re-leasing) and managed in a manner consistent with the management
of the Property during the 12-month period immediately proceeding
the date of this Agreement;
(iv) maintain the Personal Property and all mechanical,
electrical, heating, air conditioning, sewer, water and plumbing
systems in their current condition, subject to customary usage and
wear and tear in the normal course of Seller's business.
d. Between the date of this Agreement and the Closing Date, Seller will
not, without first obtaining the written consent of Buyer:
(i) except in the ordinary course of business, make any
lease or rental of the Property, or any portion thereof,
or negotiate or enter into any other letter of intent,
contract or option for the sale of the Property, or any
portion thereof, or further voluntarily or consensually
encumber title to the Property with any restriction,
easement or other title encumbrance, except for a
Permitted Exception;
(ii) except in the ordinary course of business, sell, convey,
or remove from the Property any Personal Property or
Intangible Property, without replacing said Personal
Property or Intangible Property with similar, like-kind
property;
(iii) cancel or permit cancellation of any hazard or liability
insurance carried with respect to the Property or its
operation unless substantially equivalent replacement
insurance is obtained;
(iv) unless such activity does not impose any obligation on
Buyer, materially extend, renew, modify, or replace any
of the Contracts without Buyer's prior consent, not to
be unreasonably withheld;
(v) convey an interest in any licenses, permits, plans and
specifications, or any of the other Personal Property or
Intangible Property;
e. If Seller acquires knowledge of any fact(s) rendering any of the
representations and warranties of Seller under this Agreement
(including representations of Seller under Paragraph 12 herein)
incorrect in any material respect at any time prior to Closing,
Seller shall promptly notify Buyer in writing of such fact(s).
f. 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. Seller
agrees to make the information available for Buyer to audit the last
twelve (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.
12. Seller's Representations. Seller hereby makes the following
representations to Buyer:
a. Seller is not a party to any other contract, agreement, or commitment
to sell, to convey, to assign, to transfer, or otherwise to dispose
of any portion or portions of the Property other than this Agreement.
b. Seller has full right, power and authority and has taken all
requisite action to enter into this Agreement and to sell and convey
the Property to Buyer as provided in this Agreement and to carry out
its obligation as set forth hereunder.
c. Seller is now, and at the Closing will be, a limited partnership duly
organized and validly existing under the laws of the state of its
formation and is and will be duly licensed and qualified to do
business in the state in which the Property is located.
d. Seller has made available to Buyer true, correct and complete copies
of all Leases and other agreements with tenants of the Property,
including all amendments thereto and modifications thereof. To the
best of Seller's actual knowledge, Seller is not in material default
of any of its obligations under the Leases.
e. Seller has or will furnish Buyer with true, correct and complete
copies of all Contracts, none of which, to the best of Seller's
knowledge, are in default.
f. Except for the City Notice, there is no actual litigation pending or,
to the best of Seller's knowledge without independent investigation
and except as may be disclosed by documents made available to Buyer
for review during the Site Analysis Period or otherwise disclosed to
or discovered by Buyer through its due diligence, threatened which
Seller has actual notice against Seller or the Property that relates
to or, if decided adversely, could have a material adverse effect
upon, the Property (including condemnation or similar proceeding).
g. To the best of Seller's knowledge, there are no other existing
actions, suits, proceedings, judgments, orders, decrees, defaults,
delinquencies or deficiencies pending, outstanding or, to the best of
Seller's knowledge, threatened of which Seller has actual notice
against the Property or against Seller or relating to its business
properties or assets that could affect Seller's ability to carry out
its obligations under this Agreement and the documents to be executed
in connection therewith; and to the best of Seller's knowledge there
are no facts that might reasonably give rise to such actions, claims,
or proceedings.
h. All Personal Property is located on or at the Property.
i. The financial statements with respect to the Property supplied to
Buyer in connection with this Agreement, as of their respective
dates, are to the best of Seller's knowledge, materially true,
complete and accurate.
j. To the best of Seller's actual knowledge without independent
investigation and except as may be disclosed by documents made
available to Buyer for review during the Site Analysis Period or
otherwise disclosed to or discovered by Buyer through its due
diligence, there are not presently pending, and Seller has received
no notice of, any special assessments of any nature with respect to
the Property or any part thereof (other than currently outstanding
assessments totalling approximately $7,917.00 for paving, sewer and
sidewalk improvements which have been disclosed to Buyer (the "Known
Assessments")), nor has Seller received any notice of any special
assessments being contemplated that would increase the real estate
taxes on the Property.
k. All required federal, state, county, and municipal tax returns with
respect to Seller and the Property have been filed, and all taxes due
thereunder have been or will be paid prior to Closing.
l. To the best of Seller's actual knowledge, Seller has not placed or
stored on the Property any hazardous or toxic chemical, material,
substance or waste that may be prohibited, limited or regulated by
any federal, state or local authority, and Seller has not knowingly
permitted any other person or entity to place or store same on the
Property in violation of applicable environmental laws. To the best
of Seller's actual knowledge without independent investigation and
except as otherwise disclosed by environmental reports of the
Property (copies of which have been provided to Buyer), the Property
contains no hazardous or toxic materials except for ordinary cleaning
and sanitizing materials which have been used, stored and disposed of
in material compliance with applicable laws.
m. No attachments, execution proceedings, assignments for the benefit of
creditors, insolvency, bankruptcy, reorganization, or other
proceeding are pending or, to the best of Seller's knowledge,
threatened against Seller, or the Property, and no such proceedings
are contemplated by Seller.
n. Any property management contract affecting the Property will be
terminated as of the Closing Date.
o. To the best of Seller's actual knowledge without independent
investigation, there are no material actions, suits, claims and other
legal or administrative proceedings affecting the Property nor has
Seller received actual notice of any threatened actions, suits,
claims or other legal or administrative proceedings affecting the
Property.
p. Seller is not a "foreign person," as that term is used in Section
1445 of the Internal Revenue Code of 1986, as amended.
q. No consent or approval of any third party (including without
limitation, any Government) is or was required to execute and deliver
this Agreement or consummate this transaction.
r. Upon the signing and delivery of this Agreement, it will be legally
binding upon Buyer in accordance with all of its provisions, except
as may be limited by bankruptcy, moratorium, insolvency or other laws
generally affecting creditors' rights.
s. Seller has no actual knowledge that any portion of the Property or
the operation of the Property is in violation or may violate any
governmental statute, regulation, ordinance or building code or of
any private restriction, that any government authority requires any
work to be done on or effecting the Property or that any governmental
authority has expressed an intent to condemn or to make special
improvements for the benefit of the Property or any part thereof.
t. Seller covenants and agrees that between the date hereof and the date
of Closing, Seller shall continue to maintain, operate and manage the
Property in a manner consistent with its prior practices, making
every reasonable effort to do nothing which might damage the
reputation of the Property or the relationships with the Tenants.
Seller shall not permit the modification, extension or cancellation
of any tenant lease other than in the ordinary course of Seller's
business or in accordance with the terms of such lease, or any
dealing with any tenant other than in the ordinary course of managing
the Property, without the prior written consent of Buyer. If any
Lease is expired before thirty (30) days after the date of Closing,
Seller shall, up to the date of Closing and without cost to Buyer,
continue its normal course of operation with respect to causing
tenants to be obtained for apartments which are unrented.
All representations of Seller contained in this Agreement or any
document or exhibit required to be executed by Seller pursuant hereto shall be
true at the Closing as though such representations were made at such time. If
any such representation is not true when made and at the Closing (except to the
extent any such representation, although true as of the Effective Date, is no
longer true at the Closing as a result of a matter, event or circumstance beyond
Seller's reasonable control), Buyer may consider same as an event of default
hereunder and may pursue such remedies as set forth in Paragraph 14 herein. If
any representation of Seller herein, although true as of the Effective Date, is
no longer true at the Closing as a result of a matter, event or circumstance
beyond Seller's reasonable control, Buyer may not consider same as an event of
default hereunder; but rather, in such case, Buyer may, at Buyer's option and as
Buyer's sole and exclusive remedy, terminate this Agreement and have the Binder
Deposit refunded by Escrow Agent, whereupon the parties hereto shall have no
further rights, obligations or liabilities with respect to each other hereunder,
except for the Indemnification Obligations. Further, if Seller acquires
knowledge of any fact(s) rendering any of the foregoing representations and
warranties false at any time prior to Closing, Seller shall promptly notify
Buyer in writing of such fact(s).
13. Buyer's Representations and Warranties. Buyer represents and
warrants to Seller that:
a. Buyer is a corporation duly organized and validly existing pursuant
to the law of the jurisdiction of its incorporation.
b. Buyer is authorized and empowered to enter into this Agreement and
perform all of its obligations under this Agreement.
c. No consent or approval of any third party (including without
limitation, any Government) is or was required to execute and deliver
this Agreement or consummate this transaction.
d. Upon the signing and delivery of this Agreement, it will be legally
binding upon Buyer in accordance with all of its provisions, except
as may be limited by bankruptcy, moratorium, insolvency or other
laws generally affecting creditors' rights.
e. The person signing this Agreement on behalf of Buyer has been duly
authorized to sign and deliver this Agreement on behalf of Buyer.
f. Buyer has not committed any act or permitted any action to be taken
which would materially adversely affect its ability to perform all
of its obligations under this Agreement.
g. The execution and delivery of this Agreement by Buyer and Buyer's
performance of its obligations under this Agreement shall not
conflict with any Law or any contract or other agreement to which
Buyer is a party or otherwise bound.
14. Remedies on Default; Treatment of Binder Deposit.
a. Buyer's Default. In the event that the terms and conditions of this
Agreement have been satisfied and Buyer refuses or is unable to
settle on this Agreement within the time limits herein set forth,
Seller, as Seller's sole and exclusive remedy, shall be entitled to
declare this Agreement canceled, and the Binder Deposit shall be
paid over to Seller as full liquidated damages. The amount
identified in this Paragraph 14.a as liquidated damages has been
agreed upon by Seller and Buyer after due deliberation and
discussion, and the same constitutes good faith estimates of the
damages of the Seller, the Seller's actual damages being difficult,
if not impossible, to ascertain. Upon the delivery of the Binder
Deposit to Seller, the Parties shall have no further rights,
obligations or liabilities with respect to each other hereunder.
b. Seller's Default. In the event that Seller is unable to convey title
to the Property or to deliver or comply with any other item herein
required of Seller at Closing or to otherwise perform pursuant to
the terms of this Agreement, Buyer shall have the right and option,
as Buyer's sole and exclusive remedy, to either (i) immediately
terminate this Agreement upon written notice to Seller and receive
back the full amount of the Binder Deposit, or (ii) demand and
compel by legal proceedings, using diligent and good faith efforts,
the remedy of specific performance, including, without limitation,
the immediate conveyance of the Property by Seller; provided,
however, that
(i) Buyer has furnished ten (10) days prior written notice
to Seller of its intent and election to seek specific
enforcement of this Agreement;
(ii) Buyer is not in material default under this Agreement;
and
(iii) any such suit for specific performance must be filed
within sixty (60) days after the scheduled Closing
Date or any extensions thereto which have been agreed
upon by Buyer and Seller.
(iv) Notwithstanding anything to the contrary contained
herein, if Buyer seeks specific performance under this
Agreement, Buyer agrees to accept the Property in
accordance with the provisions of this Agreement.
In the event Buyer elects to pursue specific
performance upon Seller's default, Seller agrees to
reimburse Buyer for all reasonable costs incurred by
Buyer in obtaining specific performance, including
without limitation, reasonable attorneys' fees.
c. Notice and Cure. Notwithstanding anything contained herein to the
contrary, each party shall be entitled to written notice of default
from the other once prior to Closing and four (4) days within which
to cure such default, but in no event shall Closing be delayed by
either Buyer or Seller beyond 11:00 a.m. EST on March 31, 1997.
15. Brokerage. Other than Dickinson, Logan, Todd & Barber, Inc. and BNP
Management, Inc. (collectively, the "Broker"), Seller and Buyer represent and
warrant each to the other that they have not dealt with any broker in connection
with this transaction. Except for the Broker, whose compensation shall be the
exclusive obligation of Seller, each Party agrees to indemnify and save the
other harmless from and against any and all claims, suits, liabilities, costs,
judgments and expenses, including reasonable attorneys' fees, for brokerage
commissions resulting from or arising out of its actions in connection with the
purchase and sale contemplated hereby.
16. Survival of Provisions. All covenants, representations, warranties,
obligations and agreements set forth in this Agreement shall survive the Closing
for a period of three (3) months.
17. Assignment of Buyer's Interest. Seller and Buyer understand and
agree that this Agreement is personal to Buyer and that Buyer may not, without
Seller's prior written consent (which consent Seller may withhold or deny in
Seller's sole discretion), assign Buyer's right, title and interest in and to
this Agreement at any time to any party.
18. Closing Adjustments and Apportionments. All of the items of income
and expense mentioned in this Paragraph 18 shall be apportioned or adjusted
between Seller and Buyer. All apportionments and adjustments shall be made as of
12 a.m. on the Closing Date, except those items which are not susceptible of
determination on the Closing Date on which this Paragraph 18 expressly provides
are to be determined on a subsequent date, which shall be apportioned or
adjusted after Closing, but computed as of 12 a.m. on the Closing Date. To the
extent that the apportionments and adjustments at the Closing are not based upon
final figures or there are any errors or omissions in the calculation or
determination thereof, promptly after notice (and no later than thirty (30) days
after notice) of such final figures or errors or omissions, the Parties shall
readjust or reapportion and make the payment required as a result thereof.
a. Rents. There shall be an adjustment to the funds Buyer is obligated
to deliver at Closing, based on a proration as of 12:00 a.m. of the Closing Date
on a per diem basis for rents ("Rents") which have been collected by Seller
under Leases, and without limitation, other payments payable by tenants,
licensees, concessionaires, and other persons using or occupying the Property or
any part thereof, for or in connection with such use or occupancy not including,
however, any security deposits held by Seller pursuant to the Leases; provided,
however, any installments of assessments for sewer, sidewalk or paving
improvements on the Property payable after Closing shall be the exclusive
responsibility of Buyer. Any of the Rents applicable to any period of time on or
prior to the Closing Date which are due and payable by the Tenants, but which
have not been collected by the Seller on or prior to the Closing Date, and which
are paid after the Closing Date (the "Arrears") shall be first applied to the
current month's rent due, then to delinquent rents for any period occurring from
and after the Closing Date, and then paid to Seller, and if the Arrears are
received by Buyer, Buyer shall pay the Arrears to Seller after collection by
Buyer in accordance with the above described distribution plan. Notwithstanding
anything contained herein to the contrary, Seller shall retain the right to
independently pursue the collection of any Arrears; provided, however, Buyer
shall not be obligated to evict or otherwise pursue summary proceedings against
any such tenant or join in any of the Seller's collection proceedings.
b. Utilities. To the extent not payable by Tenants, the actual or
estimated charges for utilities accrued and payable by Seller, provided Buyer is
required by law or elects to assume Seller's account. Deposits for utilities
(the "Utility Deposits"), plus any interest on the Utility Deposits to which
Seller is or will be entitled, held by the provider of the utilities and which
are freely transferable to Buyer, shall at the election of the Buyer, be
assigned by Seller to Buyer and Buyer shall pay Seller the full amount thereof
at Closing, in addition to the Purchase Price. Seller shall retain the right to
obtain a refund of any Utility Deposits which are not required to be assigned to
Buyer and Buyer will cooperate with Seller in obtaining any refund. With respect
to water, sewer, electric and gas charges, Seller shall make reasonable efforts
to obtain a reading of the meter or other consumption measuring device as of the
Closing Date. If the Seller is unable to obtain such a reading Seller shall
furnish a reading as of a date not more than ten (10) days prior to the Closing
Date and the unknown charges shall be apportioned on the basis of an estimate
computed by utilizing such reading and the most recent bill from the utility
provider.
c. Contracts. Prepaid charges, payments and accrued charges under the
Contracts.
d. Taxes. Ad valorem taxes on the basis of the most recent available tax
bill shall be apportioned at Closing, provided, however, in the event that the
tax bill for the tax year in which the Closing Date occurs is not available at
Closing and the Parties prorate on the basis of the prior tax year's bill, Taxes
shall be reprorated after Closing between the Parties outside of escrow when the
bill for the tax year in which the Closing Date occurs is available. The Party
who is determined to owe any additional amount as a result of such reproration
shall promptly pay such amount to the other Party. Buyer shall receive at
Closing a credit to the Purchase Price in the amount of $7,197.00 which
represents the currently outstanding Known Assessments.
e. Permits. Permit or license fees to the extent transferred and
government inspection fees, if any.
f. Security Deposits. Buyer shall receive a credit against the funds due
at Closing, in an amount equal to the sum of the Security Deposits and interest
thereon, if payable to tenants under state or local law, if any, which Seller is
holding pursuant to the Leases as reflected on the Rent Roll.
g. Customary Items. Any other items of income and expense not
specifically mentioned in this Paragraph 18 which are customarily apportioned in
real property transactions of the character contemplated by this Agreement.
19. Memorandum of Agreement. Neither party shall be entitled to record
this Agreement or any memorandum thereof in any land record office where land
records (e.g., conveyance and encumbrance instruments) relating to the Property
are customarily recorded.
20. Notices. Any notices, requests, or other communications required or
permitted to be given hereunder shall be in writing and shall be either (i)
delivered by hand, (ii) mailed by United States registered mail, return receipt
requested, postage prepaid, (iii) sent by a reputable, national overnight
delivery service (e.q., Federal Express, Airborne, etc.) or (iv) sent by
facsimile (with the original being sent by one of the other permitted means or
by regular United States mail) and addressed to each party at the applicable
address set forth herein. Any such notice, request, or other communication shall
be considered given or delivered, as the case may be, on the date of hand
delivery (if delivered by hand), on the fifth (5th) day following deposit in the
United States mail (if sent by United States registered mail), on the next
business day following deposit with an overnight delivery service with
instructions to deliver on the next day or on the next business day (if sent by
overnight delivery service), or on the day sent by facsimile (if sent by
facsimile, provided the original is sent by one of the other permitted means as
provided herein in this Paragraph 20 or by regular United States mail). However,
the time period within which a response to any notice or request must be given,
if any, shall commence to run from the date of actual receipt of such notice,
request, or other communication by the addressee thereof. Rejection or other
refusal to accept or inability to deliver because of a changed address of which
no notice was given shall be deemed to be receipt of the notice, request, or
other communication. By giving at least five (5) days prior written notice
thereof, any party hereto may, from time to time and at any time, change its
mailing address hereunder.
Seller: Paces Arbor Apartments Limited Partnership
Paces Forest Apartments Limited Partnership
c/o Boddie Investment Company
P. O. Box 1908
Rocky Mount, N.C. 27802-1908
Attention: Douglas E. Anderson
Telephone: (919) 937-2000
Facsimile: (919) 937-2978
With a copy to: Kennedy Covington Lobdell & Hickman,
L.L.P.
100 North Tryon Street, Suite 4200
Charlotte,North Carolina 28202-4006
(704) 331-7400
Attention: E. Allen Prichard, Esq.
Telephone: (704) 331-7497
Facsimile: (704) 331-7598
Buyer: Cornerstone Realty Group, Inc.
306 E. Main Street
Richmond, Virginia 23219
Attention: Mr. Gus Remppies
Telephone: (804) 782-9302
Facsimile: (804) ----------
With a copy to: Harry S. Taubenfeld, Esq.
Zuckerbrod & Taubenfeld
575 Chestnut Street
Post Office Box 488
Cedarhurst, New York 11516
Telephone: (516) 374-3490
Facsimile: (516) ------------
Ted Oliver, Esq.
Manning, Fulton & Skinner
500 UCB Plaza
3605 Glenwood Avenue
Raleigh, North Carolina 27612
Telephone: (919) --------------
Facsimile: (919) 781-0811
21. Miscellaneous.
a. The term "Effective Date," as used in this Agreement, shall be deemed to
refer to the date a fully executed original of this Agreement is delivered
to each party hereto as mutually agreed upon by Buyer and Seller, or an
agent thereof, and the Effective Date shall be inserted as the date of this
Agreement in the introductory paragraph of this Agreement.
b. Buyer and Seller acknowledge and agree that except as otherwise provided
herein, the Property is being conveyed in its "AS-IS" condition.
c. This Agreement constitutes the entire agreement between the parties hereto
with respect to the transaction contemplated herein; and it is understood
and agreed that all undertakings, negotiations, representations, promises,
inducements and agreements heretofore had between these parties are merged
herein. This Agreement may not be changed orally, but only by an agreement
in writing signed by both Buyer and Seller; and no waiver of any of the
provisions in this Agreement shall be valid unless in writing and signed by
the party against whom such waiver is sought to be enforced.
d. The provisions of this Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective heirs and permitted
successors and assigns, as may be applicable.
e. Except as otherwise expressly set forth herein, TIME IS OF THE ESSENCE. In
addition, if the final day of any period of time set out in any provision of
this Agreement, including, without limitation, the date of Closing and the
Investigation Period, falls on a Saturday, Sunday or Federal holiday then in
such case, such period shall be deemed extended to the next day which is not
a Saturday, Sunday or Federal holiday.
f. No presumption shall be created in favor of or against Seller or Buyer with
respect to the interpretation of any term or provision of this Agreement due
to the fact that this Agreement was prepared by or on behalf of one of said
parties.
g. Words of any gender used in this Agreement shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural and vice versa, unless the context requires otherwise.
h. The captions used in connection with the paragraphs of this Agreement are
for reference and convenience only and shall not be deemed to construe or
limit the meaning of the language contained in this Agreement or be used in
interpreting the terms and provisions of this Agreement.
i. Whenever any statement, representation or warranty is made in this Agreement
"to the best of Seller's knowledge" is limited "to the knowledge of Seller"
or is similarly limited, such statement, representation or warranty shall be
deemed made hereunder based solely upon the actual knowledge, information and
belief of Douglas E. Anderson, Vice President of Boddie Investment Company,
corporate general partner of Seller, without independent investigation or any
duty (actual or constructive) to investigate any set of facts or to be aware
of any legal or other requirements. Furthermore, in no event shall the
knowledge of any non-employee agents of Seller or any affiliated company be
attributed to Seller relative to any statement, representation or warranty
made by Seller in this Agreement.
j. This Agreement may be executed in two or more counterparts and shall be
deemed to have become effective when and only when one or more of such
counterparts shall have been signed by or on behalf of each of the parties
hereto (although it shall not be necessary that any single counterpart be
signed by or on behalf of each of the Parties hereto, and all such
counterparts shall be deemed to constitute but one and the same instrument),
and shall have been delivered by each of the Parties to the other.
k. When anything is described or referred to in this Agreement in general terms
and one or more examples or components of what has been described or referred
to generally is associated with that description (whether or not following
the word "including"), the examples or components shall be deemed
illustrative only and shall not be construed as limiting the generality of
the description or reference in any way.
l. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid or enforceable.
m. This Agreement is intended to be performed in the State in which the Property
is located and shall be construed and enforced in accordance with the laws of
said State.
n. Each Party hereto represents and warrants to the other party that the
execution of this Agreement and any other documents required or necessary to
be executed pursuant to the provisions hereof are valid, binding obligations
and are enforceable in accordance with their terms.
o. The exhibits set forth below and attached to this Agreement are hereby
incorporated by reference in their entirety with the same force and effect as
if they were set forth at length in this Agreement.
Exhibit A - Legal Description
Exhibit B - Deed
Exhibit C - Lease Assignment
Exhibit D - Rent Roll
Exhibit E - Bill of Sale
Exhibit F - Contract Assignment
Exhibit G - FIRPTA Affidavit
Exhibit H - Contracts
Exhibit I - Representation Letter
Exhibit J - City Notice
p. The Parties shall at any time, and from time to time on and after the Closing
Date, upon the request of the other Party, do, execute, acknowledge and
deliver all such further acts, deeds, assignments and other instruments as
may be reasonably required for the consummation of this transaction.
q. Buyer shall not contact any of Seller's non-management employees or any
Tenants until this Agreement has been fully executed by both Buyer and
Seller, and such contact shall be subject to the following limitations: (i)
Buyer shall not disclose the terms of this Agreement or discuss the contents
of any materials pertaining to the Property with any party other than Buyer's
officers, directors, employees, agents, advisors, consultants, investors,
attorneys and representatives of Buyer's lender, each of whom agrees to
maintain the confidentiality thereof, and (ii) no public announcement of this
Agreement or the closing thereof shall be made prior to the Closing Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by persons duly empowered to bind the parties to perform their
respective obligations hereunder the day and year first above written.
"BUYER"
CORNERSTONE REALTY GROUP, INC.
[SEAL]
/s/ Stanley J. Olander, Jr.
By:-------------------------------
Its: S.V. President
"SELLER"
PACES ARBOR APARTMENTS LIMITED
PARTNERSHIP [SEAL]
By: Residential Equity Portfolio
Limited Partnership, General
Partner [SEAL]
By: Boddie Investment Company,
Corporate General Partner
/s/ Douglas E. Anderson
By: -------------------------------
Vice President
PACES FOREST APARTMENTS LIMITED
PARTNERSHIP [SEAL]
By: Residential Equity Portfolio
Limited Partnership, General
Partner [SEAL]
By: Boddie Investment Company,
Corporate General Partner
/s/ Douglas E. Anderson
By:--------------------------------
Vice President
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 30th day of April 1997,
between CORNERSTONE REALTY GROUP INC. or its nominee, (hereinafter called
"Purchaser") and GWINNETT I LIMITED PARTNERSHIP, a Georgia limited partnership,
(hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 Sale of Property. Seller agrees to sell and convey, and Purchaser
agrees to purchase, Seller's real property known as CARLYLE CLUB APARTMENTS
located in GWINNETT COUNTY, GA, with all buildings and improvements located
thereon, as more particularly described in the attached legal description in
EXHIBIT A including, but not limited to 243 individually heated and air
conditioned apartment units, with all appurtenances, together with all
appliances, drapes, carpeting, shrubbery and all other personal property used in
connection with the premises and set forth on the inventory of personal property
to be supplied by Seller and attached hereto as EXHIBIT B (all such real and
personal property hereinafter collectively referred to as the "Property" unless
the context clearly indicates otherwise).
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 Purchase Price. The total purchase price shall be ELEVEN MILLION
FIVE HUNDRED EIGHTY THOUSAND ($11,580,000) DOLLARS as evidenced by cash or cash
equivalent at closing.
2.2 Deposit. ONE HUNDRED THOUSAND ($100,000) DOLLARS to be placed in
escrow at the end of the "Inspection Period" described in Article VI below. Said
deposit shall be placed in escrow with Chicago Title Insurance Corporation or
its authorized agent as an earnest money deposit which may be credited against
the purchase price or applied as per Article XI below.
ARTICLE III
TITLE MATTERS
3.1 Marketable Title. Seller, shall convey good and marketable title by
Limited Warranty Deed, subject only to general taxes for the current year not
yet due and payable, the matters set forth on EXHIBIT C hereto, and utility
easements
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which do not interfere with the present use of the Property.
(A) Title shall be free from any and all liens or mortgages and Seller
shall be responsible for any prepayment penalties necessary to deliver such free
title.
3.2 Title Defects; Election to Cure. Seller shall furnish to Purchaser a
commitment for Title Insurance, (the commitment). If title is not marketable,
except as stated above in the preceding paragraph, Purchaser shall give written
notice of any defects in title to Seller's counsel within fifteen (15) days, but
in no event later than the expiration of the Inspection Period after Purchaser's
receipt of a title report which report shall include copies of backup documents
relating to any title exceptions, a current survey, a flood zone certification
letter and a Surveyor's Certification letter. Seller may, at its option, elect
whether to cure said defects or by written notice to Purchaser indicate its
intention not to cure. The commitment shall be furnished without cost to
Purchaser, except and unless Purchaser obtains a policy, but Purchaser shall be
directly responsible for and pay the cost of the aforesaid Survey.
3.3 Election Not to Cure Defects. Should Seller elect not to cure title
defects, this Agreement, at Purchaser's option, shall be void; each party shall
thereupon be released from all obligations hereunder; and all deposits shall be
immediately returned to Purchaser. In the event Purchaser does not elect to
terminate, its only other option is to acquire the Property subject to such
defects.
ARTICLE IV
PRORATIONS
4.1 Income and Expense Allocations. The following shall be prorated, on
a calendar-month basis, to the day of the closing: rents and other income from
the Property; operating expenses (on such service contracts and other
obligations as Purchaser may agree to assume); and general and real property
taxes and personal and business property taxes for the year of closing (based on
the most recent assessment and the most recent levy).
4.2 Closing Costs. Purchaser and Seller shall pay their customary share
of all taxes, recording fees, if any, imposed on the Deed, or any other
documents executed in connection with the transfer of the Property. Purchaser
agrees to pay cost of title insurance and Survey. Seller shall pay any
prepayment penalty charged by the holders of any existing notes. Purchaser shall
pay all costs of investigation of the Property.
4.3 Allocation of Rents. Rents collected by Seller prior to Closing
shall be prorated as agreed in 4.1 above. Purchaser shall apply rents received
after Closing first to payment
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of the current rent due to Purchaser, then to delinquent rents due to Purchaser,
and last to rents due to Seller as of the Closing but uncollected prior to
settlement. Purchaser agrees to use its best efforts in good faith to collect
the amount of any rental arrears from tenants and Purchaser agrees to remit
promptly to Seller any such arrears actually paid by such tenants to Purchaser.
Seller shall retain the right to commence legal action against a tenant for any
delinquent rent apportioned to the Seller.
4.4 Prior Lease Conoessions. If Seller has committed to give any future
monetary concessions to tenants under existing leases to which Purchaser would
become liable, then Seller shall pay to Purchaser said amount in a lump sum at
closing. There are no rent schedules other than the schedule of rents shown on
the rent roll and no incentives have been given for renewals.
ARTICLE V
POSSESSION OF THE PROPERTY
5.1 Possession. Possession of the Property shall be delivered to
Purchaser at closing, subject to the rights of the tenants under existing leases
and rental agreements.
ARTICLE VI
CONDITIONS PRECEDENT TO CL0SING
6.1 Conditions Precedent. Purchaser's obligation to purchase shall be
subject to and contingent upon the satisfaction of the following conditions
precedent:
(A) Receipt by Purchaser of an engineering report of building and site
conditions, satisfactory to Purchaser in its sole discretion, said report to
include in part, a description of any hazardous waste sites, hazardous wastes
and/or hazardous materials affecting the property. Purchaser shall have fifteen
(15) days in which to review the reports set forth herein and exercise its right
to reject the Property based thereon prior to the expiration of the Inspection
Period or the right hereunder shall be deemed waived.
(B) The receipt by Purchaser of Seller documents described in 7.2 below.
(C) On the condition that Sellers representations and warranties
described in Article VIII below remain true and correct.
(D) On the condition that there have been no material or adverse changes
to the property or leases.
(E) Seller acknowledges that Purchaser is a public entity and that it is
required to furnish financial statements to
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the Securities and Exchange Commission in connection with this acquisition.
Seller agrees 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.
(F) Survey which shall show no encroachments onto the Land from any
adjacent property, no encroachments by or from the Land onto adjacent property
and no violation of or encroachments upon any recorded building lines,
restrictions or easements affecting the Property. If the Survey discloses any
such encroachment or violation, Seller shall have thirty (30) days from the date
of delivery of the Survey (with a commensurate extension of the closing date) to
have the Title Insurer issue its endorsement insuring against damage caused by
such encroachment or violation and to provide evidence thereof to Purchaser, and
if Seller fails to or is unable to have the same insured against within such
thirty (30) day period, Purchaser may elect, on or before the Closing Date, to
(i) terminate this Agreement (in which case the Earnest Money shall be returned
to Purchaser) and neither party shall have any further liability or obligation
to the other hereunder, or (ii) accept the property subject to any such
encroachment or violation.
6.2 Inspection. This Agreement shall be further subject to and
contingent upon Purchaser's satisfactory inspection as follows herein below.
6.2.1 Preparation for Inspection. At the execution of this Agreement,
Seller shall deliver to Purchaser copies of the following to the extent in the
possession of Seller: The 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 twelve (12) months previous to the date hereof; all contract;
all insurance policies applicable to the Property to include loss runs for the
last two (2) years; Plans and Specifications for the Property, service
contracts, Certificates of Occupancy, to the extent reasonably available; a copy
of the title policy and most recent survey for the Property. A copy of any
environmental or engineering reports on the property. All these items shall be
certified by Seller to be accurate (if prepared by and/or relied upon Seller)
and complete to the best of its knowledge and belief.
6.2.2 Inspection of Books and Records: Access. Upon execution of the
Agreement, Purchaser, its employees, agents and contractors shall have 30 days
(the "Inspection Period") to enter upon the Property, upon 24-hour notice to
Seller who may accompany Purchaser, subject to the rights of the tenants during
normal business hours for the purpose of making physical inspections
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thereof, including but not limited to roofs, heating, cooling, electrical and
plumbing systems, swimming pool, appliances, and structural elements of the
buildings. Purchaser shall also be permitted to review all original leases,
expense records for the previous two (2) calendar years, tenant cards and
occupancy data available. Upon the conclusion of the Inspection Period this
contract shall be deemed to be a firm agreement of purchase and sale binding the
parties hereto, except as it may be terminated by other provisions and
conditions contained herein, including but not limited to the condition imposed
by Paragraph 6.1(A) above.
6.2.3 Right of Termination During Inspection Period. If Purchaser is not
satisfied, in its sole and exclusive discretion, with the state of maintenance
and repair of the Property or the rents, occupancy or expenses of the Property,
then notwithstanding anything contained herein to the contrary, Purchaser shall
have the right to terminate this Agreement by giving written notice to Seller
before the end of the Inspection Period, and no party hereto shall have any
further liability to any other party hereto, and all deposits (less One Hundred
($100) Dollars which shall be paid to Seller as consideration for the Inspection
Period) shall be returned to Purchaser.
6.2.4 Termination of Inspection Period. Notwithstanding anything to the
contrary set forth herein, the Inspection Period shall expire on May 3, 1997 or
such other date as the parties may agree in writing.
6.2.5 "Rent Ready". During the "Inspection Period", both Seller and
Purchaser will inspect an apartment unit at the Property and mutually agree that
said apartment shall be representative of a "rent ready" unit by which all other
units shall be judged for "rent ready" condition at closing. All vacant
apartment units, which were vacated at least ten (10) days before closing, are
to be in a "rent ready" condition (as defined above), at the time of closing,
containing, but not limited to the following amenities, i.e., carpet,
refrigerator, range, garbage disposal, heating, plumbing and electrical systems.
6.2.6 Condition of Personal Property at Closing. All personal property
included in the sale and all mechanical, electrical, heating, air conditioning,
sewer, water and plumbing systems will be in the same working order at the time
of closing and in the same condition as at the time of the initial inspection by
Purchaser ordinary wear and tear excepted. If Seller fails to make reasonable
efforts to conserve the property, Purchaser shall have the option of waiving
such requirement, in writing, and proceeding to closing, or Purchaser may void
this Agreement and obtain a prompt return of its deposit.
6.2.7 Indemnification. Purchaser agrees to indemnify and hold Seller
harmless from any damages, costs and liability
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arising from Purchasers inspection of the Property.
ARTICLE VII
CLOSING
7.1 Closing. Closing will be held on or about May 17, 1997, at such
place and at such time as the parties may agree.
7.2 Seller's Deliveries. At closing, Seller shall execute and deliver to
Purchaser the Limited Warranty Deed referred to in Paragraph 3 hereof and shall
also execute, where necessary, and deliver to Purchaser, the following:
(A) A Bill of Sale, with warranty of title transferring the
personal property (as shown in Schedule B) to Purchaser free of all liens,
charges and encumbrances.
(B) Originals or copies of all signed leases and rental
agreements in effect with tenants of the Property.
(C) All security and cleaning deposits made by such tenants.
Seller will give the tenants the required notice of such transfer in compliance
with the laws of GEORGIA.
(D) An affidavit of Seller in such form as will cause the Title
Company to omit from the title insurance policy the exclusion relating to
unrecorded mechanic's and materialmen's liens.
(E) A rent roll certified by Seller to be true and correct as of
the date of closing showing the name of, and the amount of monthly rental
payable, by each tenant of the Property, the apartment occupied by the tenant,
the date to which rent has been paid, any advance payment of rent, and the
amount of any escrow, or security deposit of tenant.
(F) An affidavit of Seller that to the best of its information
and belief there are, on the date of closing, no unsatisfied judgments,
creditor's claims, tax liens, or pending bankruptcies involving Seller.
(G) Seller shall provide, a certificate from a licensed
extermination contractor, who is regularly engaged in the business of pest
control, that all buildings are free from any current termite or other
wood-boring insect infestation. Said certificate shall be dated within 90 days
of closing, bearing the Contractor's name, contractors license number, the
signature of the party authorized to sign for the Contractor and the date of the
inspection. Should damage exist, Seller may proceed to have any corrective work
completed prior to closing and if Seller does not proceed, Purchaser, at its
option, may either proceed to settlement and have such sums required for repairs
deducted from Seller's
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proceeds, or may in its sole discretion terminate this Agreement. Seller shall
promptly return Purchaser's deposit upon such termination.
(H) Assignments of all Seller's interest in the following: (l)
all assignable licenses, and permits relating to the operation of the Property,
(2) the leases and rental agreements with tenants of the Property, (3) the
existing Property telephone number and (4) the business and trade name as set
forth in Par. 1.1.
(I) Assignments of all assignable warranties and guarantees to
the extent such are still in effect and provide Purchaser with copies of all
such warranties and guarantees without limitation for all appliances,
dishwashers, disposals, refrigerators, heating and air conditioning units,
washers and dryers.
(J) Consent of the Seller's authorized officer to the sale of
the Property and any other approvals required under Seller's articles or
by-laws, which may affect Seller's ability to convey marketable title.
(K) Provide documents for the transfer of the telephone for
execution at closing.
(L) Provide the applicable title company satisfactory evidence
of the power and authority of Seller to enter into and consummate this
agreement.
(M) Affidavit that Seller has no actual knowledge of the
presence of asbestos and/or any other hazardous material at the Property, other
than as set forth in the environmental given to Purchaser by Seller.
(N) Seller shall provide a satisfactory and valid written
termination of the management agreement executed by the existing management and
rental agent for the Property, without cost to the Purchaser.
(O) A notice letter to all the residents of the apartment
complex as to change of ownership in the form prepared by the Purchaser.
(P) All such other documents as are normally transferred at
settlement in the jurisdiction in which the property is located or are
reasonably requested by Purchaser or its counsel.
(Q) A representation letter as normally required by auditors for
a public company in the form attached hereto as EXHIBIT D. This clause shall
survive closing for one year.
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7.3 Purchaser's Deliveries. At closing and contemporaneously with the
Seller's compliance with the provisions of Section 7.2, Purchaser shall:
(A) Pay to Seller the cash portion of the purchase price,
adjusted for the prorations herein provided for in Article IV.
(B) Execute and deliver an assumption of obligations under
leases, securities, any contracts which may be accepted by the Purchaser and any
other obligations specifically set forth herein.
Purchaser that:
(C) Deliver to the Seller a resolution of the
(i) This Agreement has been duly authorized, executed
and delivered by the Purchaser and is a valid and binding agreement of
Purchaser, and
(ii) Purchaser has complete unrestricted power to buy
the Property from the Seller and to execute any documents required to effectuate
the transfer and authorizing the officer who signs any documents at closing to
sign same.
ARTICLE VIII
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations of the Parties. Seller warrants (which warranties
shall not survive settlement unless designated to the contrary) that as of the
date of closing hereof:
(A) That Seller, is the owner in fee simple of the Property and
has the power to convey same.
(B) That Seller is not subject to any other agreements or
arrangements, with the exception of those contained in any existing mortgage
documents which would prevent Seller from selling the Property to Purchaser.
This warranty shall survive for one year following closing.
(C) Subject to obtaining the consent of a majority of the
limited partners of Seller, all necessary action has been taken by Seller to
authorize the execution of this Agreement and the performance of the obligations
contemplated hereunder, which are not excluded elsewhere in existing mortgage
documents. If Seller does not provide evidence of such consent to Purchaser on
or before fifteen (15) days after the execution of this Agreement, the Purchaser
may terminate this Agreement. This warranty "hall survive for one year following
closing.
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(D) Seller has no actual knowledge and has not been advised in
writing that it is in default under any lease, rental agreement service or
equipment contract, or mortgage or other encumbrances relating to the Property.
This warranty shall survive for one year the following closing.
(E) Seller has received no written notice of any patent or
latent defect in the Property or any part thereof. This warranty shall survive
for one year following closing.
(F) Seller has no actual knowledge of any existing or threatened
pending litigation which relates to or which would affect the Property. This
warranty shall survive for one year following closing.
(G) The Property abuts on and has direct vehicular access to a
public road.
(H) All building and other improvements at the Property are
located entirely within the boundary lines of the Property.
(I) Seller has received no written notice that any part of the
Property or the operation of the Property, is in violation or may violate any
governmental statute, regulation, ordinance or building code or of any private
restriction, that any governmental authority requires any work to be done on or
affecting the Property, or that any governmental authority has expressed an
intent to condemn or to make special improvements for the benefit of the
Property or any part thereof. This warranty shall survive for one year following
closing.
(J) That Seller is not a "foreign person" within the meaning of
the Internal Revenue Code of 1954, as amended (the "Code"), and that Seller will
furnish to Purchaser prior to closing an affidavit in form satisfactory to
Purchaser confirming the same.
(X) That to the best of Seller's knowledge, the Property was
never utilized as a disposal site for hazardous waste products and will furnish
to Purchaser an affidavit confirming same.
(L) Seller covenants and agrees that, between this date and the
date of closing, Seller shall continue to maintain, operate and manage the
Property in a manner consistent with its prior practices, making every
reasonable effort to do nothing which might damage the reputation of the
Property or the relationships with the tenants. Seller shall not permit the
modification, extension or cancellation of any tenant lease (except in
accordance with the terms of such lease) or any dealing with any tenant other
than the ordinary course of managing the Property, without the prior written
consent of Purchaser. If the leases of any tenants
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expire before thirty (30) days after the date of closing, Seller shall, up to
the date of closing and without cost to the Purchaser, continue its normal
course of operation with respect to causing tenants to be obtained for
apartments which are unrented.
8.2 Continuation of Representations. Warranties and Covenants to the
Date of Closing. If each of the warranties set forth in this section does not
remain true up to and including the time of closing as to any material matters,
this Agreement, at Purchaser's election, shall be terminated, Seller shall
return all payments made by Purchaser, or Purchaser may elect to close the sale
and waive failure of the warranties.
8.3 Breach of Representations, Warranties and Covenants. Notwithstanding
the provisions of 8.2 above, Seller shall indemnify Purchaser for all reasonable
costs (not to exceed $50,000) incurred as a result of the failure of any of
Seller's representations, warranties or covenants contained herein to remain
true as of the date of closing caused by an act of Seller.
ARTICLE IX
CONDEMNATION; RISK OF LOSS
9.1 Property Damage. If, prior to closing, any part of the Property is
damaged by fire or other casualty and the cost to repair is more than $250,000,
this Agreement may be canceled at the option of the Purchaser. In the event of
cancellation as aforesaid, this Agreement shall become null and void and the
parties shall be released and all payments made shall be returned. Should
Purchaser elect to carry out this Agreement despite such damage or should the
cost to repair be $250,000 or less, Seller shall assign to Purchaser all
insurance proceeds and any deductible arising from such damage and will
compensate Purchaser for lost rent collections to the extent of insurance
proceeds received by Seller for such loss of rents. Seller shall promptly notify
Purchaser in writing upon the occurrence of any such damage.
9.2 Condemnation.In the event of any actual or threatened taking,
pursuant to the power of eminent domain, all or any part thereof, or any actual
or proposed sale in lieu thereof, the Seller shall give written notice thereof
to the Purchaser promptly after Seller learns or receives notice thereof. Upon a
taking of a material part of the Property (any part of the building or more than
5% of the parking area), Purchaser may elect to either (a) terminate this
Agreement, in which event the Deposit shall be immediately returned to Purchaser
and all other rights and obligations of the parties hereunder shall terminate
immediately, or (b) to waive its right to terminate this Agreement and proceed
to closing, in which event all proceeds, awards and other payments arising out
of such condemnation or sale (actual or threatened)
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shall be paid to the Purchaser at closing, if such payment has been received or
Seller shall assign to Purchaser the rights to such payments.
9.3 Risk of Loss. Prior to closing, all risks of loss or damage by every
casualty shall be borne by the Seller, subject to Paragraph 9.1.
ARTICLE X
BROKER'S COMMISSION
10.1 Commission. Seller agrees to pay a brokerage fee to GABLES
RESIDENTIAL BROKERAGE SERVICES, pursuant to a separate agreement between Seller
and Brokers. Said brokerage fee shall be deemed earned if, and only if,
settlement occurs hereunder, and shall not be deemed earned even if Purchaser
and/or Seller wrongfully fail(s) to consummate the purchase and sale herein
contemplated. Purchaser shall not be obligated for any brokerage fees to any
broker, and Seller agrees to hold Purchaser harmless in connection with such
fees. Seller and Purchaser represent and warrant to each other that no other
brokerage fees are or shall be owing in connection with this transaction or in
any way with the Apartments and Seller and Purchaser hereby indemnify and hold
the other harmless from any and all claims of any other person so claiming.
ARTICLE XI
DEFAULT
11.1 Default Defined. Default for the purpose of this Agreement shall
mean any failure by Seller or Purchaser to fulfill all the terms, conditions and
covenants contained herein, however, it shall not be an event of default for
either party to exercise its rights to terminate this contract as contained in
other provisions herein.
11.2 Seller's Default. Upon Seller's default, the Purchaser, at it's
election, may either (1) require specific performance of Seller, or pursue its
other remedies at law or equity not to exceed $50,000, (2) cancel this Agreement
and obtain a prompt return of the deposit, in which case this Agreement shall be
terminated and the parties released from all obligations hereunder, or (3) the
Purchaser may waive such defaults and proceed to settlement. Seller shall
indemnify Purchaser for any reasonable costs incurred by Purchaser if Purchaser
elects to pursue its option (1) noted above and does obtain specific
performance, to include reasonable attorney fees.
11.3 Purchaser's Default. Upon Purchaser's default, this Agreement shall
be terminated and both parties released from all obligations hereunder, and the
deposit shall be retained by the Seller as liquidated damages. Seller shall have
no other remedy
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against Purchaser in the event of Purchaser's default.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Entire Agreement. This Agreement sets forth the entire
understanding between the parties; it supersedes all previous agreements and
representations which are deemed merged herein and may not be modified except in
writing.
12.2 Assignment At and in connection with closing, Purchaser may assign
this Agreement without the consent of Seller.
12.3 Lead Warning Statement. Every purchaser of any interest in
residential real property on which a residential dwelling was built prior to
1978 is notified that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead poisoning. Lead
poisoning in young children may produce permanent neurological damage, including
disabilities, reduced intelligence quotient, behavioral problems, and impaired
memory. Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to provide the
buyer with any information on lead-based paint hazards from risk assessments or
inspections in the seller's possession and notify the buyer of any known
lead-based paint hazards. A risk assessment or inspection for possible
lead-based paint hazards is recommended prior to purchase.
12.4 Seller has no knowledge of lead-based paint and/or lead-based paint
hazard in the housing.
12.5 Seller has no reports or records pertaining to lead-based paint
and/or lead-based paint hazards in the housing.
12.6 Purchaser is hereby granted a 10-day opportunity (or the length of
the Inspection Period, whichever is longer) to conduct a risk assessment or
inspection for the presence of leadbased paint and/or lead-based paint hazards.
12.7 Severability. If any provision, sentence, phrase or word of this
Agreement or the application thereof to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision,
sentence, phrase, or word to persons or circumstances, other than those as to
which it is held invalid, shall remain in full force and effect.
12.8 Binding Effect. The parties to the Agreement mutually agree that it
shall be binding upon and inure to the benefit of their respective heirs,
representatives, successors in interest and assigns.
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12.9 Controlling Law. It is the intent of the parties hereto that all
questions with respect to the construction of this Agreement and the rights and
liabilities of the parties shall be determined in accordance with the provisions
of the laws of the State set forth in Par. 1.1.
12.10 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear in each counterpart
hereof, and it shall be sufficient that the signature on behalf of both parties
hereto appear on one or more such counterparts. All counterparts shall
collectively constitute a single contract.
12.11 Incorporation by Reference. All of the Exhibits referred to herein
and/or attached hereto shall be deemed to constitute a part of the Agreement.
12.12 Headings. The headings of the Articles and sections hereof are
inserted for convenience only and shall not be deemed to constitute a part of
the Agreement.
12.13 Construction of Contract. Each party hereto have reviewed and
revised (or requested revisions of) this Agreement, and therefore the normal
rule of construction that any ambiguities are to be resolved against a
particular party shall not be applicable in the construction and interpretation
of this Contract or any amendments or exhibits hereto.
ARTICLE XIII
NOTICE
13.1 Notice. All notices required or permitted to be given under this
Agreement shall be in writing and shall be sent or delivered to the address set
forth below (or such other address as may be hereafter specified in writing):
To Seller: GWINNETT I LIMITED PARTNERSHIP
(Prior to 4/28/97)
Suite 207
3301 Buckeye Road
Atlanta, GA 30341
Fax: (770) 451-7996
(After 4/28/97)
266 Pardo North
5600 Roswell Road
Atlanta, GA 30342
Fax: (404) 255-9033
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With a copy to
Seller's Attorneys: Alexander W. Suto, Esq.
Hunton & Williams
Suite 1400 NationsBank Plaza
600 Peachtree Street, N.E.
Atlanta, GA 30308
Fax: (404) 888-4190
Phone: (404) 888-4000
To Purchaser: Mr. Gus Remppies
Cornerstone Realty Group, Inc.
306 E. Main Street
Richmond, VA 23219
Fax: (804) 782-9302
With a copy to
Purchaser's Attorneys: Harry S. Taubenfeld, Esq.
Zuckerbrod & Taubenfeld
575Chestnut St.,
P.O. Box 488
Cedarhurst, NY 11516
Fax: (516) 374-3490
Phone: (516) 374-3133
-and-
Michael W. Tighe, Esq.
Callison, Tighe Robinson & Anastasion
1812 Lincoln Street
Columbia, SC 29201
Fax: (803) 256-6431
Phone: (803) 256-2371
13.2 Delivery of Notice. Notices sent either by Registered or Certified
Mail, Return Receipt Requested, or by overnight express mail shall be deemed
given when deposited in the United States Mail, postage prepaid, delivered to a
reliable overnight courier or by facsimile transmission. Notices sent in any
other manner shall be deemed given only when actually delivered at the specified
address.
ARTICLE XIV
LIKE-KIND EXCHANGE
14.1 Section 1031 Exchange. Purchaser agrees to cooperate with Seller in
effecting a Section 1031 exchange, including executing documents required by the
exchange trustee or intermediary, provided, however, such cooperation shall be
at no cost or liability to Purchaser.
14.2 Hold Harmless. At closing, Seller will deliver to Purchaser an
agreement to hold the Purchaser harmless as
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<PAGE>
to any claims as a result of the Like-Kind Exchange set forth in
paragraph 14.1.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed this day and date first written above.
SELLER:
GWINNETT I LIMITED PARTNERSHIP
BY: PINNACLE CARLYLE CLUB LIMITED PARTNERSHIP,
a Georgia limited partnership,
BY: CARLYLE CLUB, INC.
Its General Partner
By: /s/[Illegible]
-----------------------------
Its: President
___________________________
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ Stanley J. Olander, Jr.
---------------------------
Stanley J. Olander, Jr.
Its: S.V.P.
---------------------------
15
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 30th day of April 1997,
between CORNERSTONE REALTY GROUP INC. or its nominee, (hereinafter called
"Purchaser") and SNAP/PALM HOLDING COMPANY, a Georgia corporation,
(hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 Sale of Property. Seller agrees to sell and convey, and Purchaser
agrees to purchase, all of Seller's right, title and interest in and to the
improved real property known as ASHLEY RUN APARTMENTS located in GWINNETT
COUNTY, GEORGIA, with all buildings and improvements located thereon, as more
particularly described in the attached legal description in EXHIBIT A including,
but not limited to 348 individually heated and air conditioned apartment units,
with all appurtenances, together with all appliances, drapes, carpeting,
shrubbery and all other personal property used in connection with the premises,
including, the inventory of personal property to be supplied by Seller and
attached hereto as EXHIBIT B (all such real and personal property hereinafter
collectively referred to as the "Property" unless the context clearly indicates
otherwise).
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 Purchase Price. The total purchase price for the Property shall be
EIGHTEEN MILLION ($18,000,000) DOLLARS and shall be paid by Purchaser to Seller
in cash or in other funds available for the immediate credit to Seller's account
in New York, New York, on the Closing Date (as hereinafter defined) by bank wire
transfer in accordance with wire transfer instructions to be provided by Seller.
2.2 Earnest Money. Concurrently with delivery of this Agreement,
Purchaser shall deliver to Chicago Title Insurance Company (the "Escrow Agent"
or "Title Company") its check payable to the Escrow Agent in the amount of FIFTY
THOUSAND ($50,000) DOLLARS (which amount, together with all interest accrued
thereon and any additional deposits is herein called the "Deposit") which will
be invested by the Escrow Agent in an interest-bearing account as Purchaser and
Seller shall direct. If Purchaser does not sooner terminate this Agreement as
hereafter provided, then at or before the end of the Inspection Period,
Purchaser shall deposit the additional sum of FIFTY THOUSAND ($50,000) DOLLARS
with the Escrow Agent as additional Deposit hereunder. The Escrow Agent shall
pay
<PAGE>
the Deposit to Seller at and upon the Closing, or otherwise, to the party
entitled to receive the Deposit in accordance with this Agreement. The Deposit
shall be held and disbursed by the Escrow Agent pursuant to that certain Earnest
Money Escrow Agreement which the parties have executed contemporaneously with
this Agreement.
ARTICLE III
TITLE AND SURVEY REVIEW
3.1 Purchaser's Survey. Purchaser may, at its own cost and expense,
cause to be prepared and delivered to Purchaser and its counsel such plats of
survey (the "Survey") relating to the Property as Purchaser may desire. Seller
shall have no obligation or liability of any kind for or in connection with the
Survey or for any cost or expense thereof, that Purchaser may wish to obtain, or
may obtain, in connection with the transactions contemplated by this Agreement.
Within five (5) days after Purchaser's receipt thereof, Purchaser shall deliver
to Seller a copy of each Survey of or relating to the Property that Purchaser
obtains or receives before the Closing.
3.2. Purchaser's Title Commitment. At its expense, Purchaser may cause
to be prepared and delivered to Purchaser and its counsel such commitment or
commitments for title insurance (collectively the "Title Commitment") relating
to the Property as Purchaser may desire. Any and all title examination costs and
expenses and title insurance premiums shall be paid by Purchaser. Within five
(5) days after Purchaser's receipt thereof, Purchaser shall deliver to Seller a
copy of the Title Commitment relating to the Property and Purchaser obtains or
receives before Closing.
3.3 Title Review and Cure. Seller will cooperate with Purchaser in
curing any objections Purchaser may have to title to the Property. If Purchaser
fails to give written notice to Seller of any title objections prior to the end
of the Inspection Period, Purchaser shall be deemed to have waived such
objections appearing of record and existing as of the effective date of the
Title Commitment. If, within the Inspection Period, Purchaser gives written
notice to Seller of any title objection which affects the marketability of
Seller's title, other than those matters set forth on EXHIBIT C attached hereto
and by this reference incorporated herein and made a part hereof, and Seller
shall not cure such matters prior to Closing, then Purchaser may terminate this
Agreement and receive a refund of the Deposit. Seller shall have no obligation
to cure title objections except (i) final judgment liens, mortgage liens
(excluding mortgage liens encumbering any easements appurtenant to the
Property), mechanic's or materialmen's liens arising from work performed or
requested by Seller, broker liens for any sales commissions which are the
obligation of Seller, and liens for past due taxes, if any, which liens Seller
shall cause to be released of record or bonded off at Closing, and (ii)
exceptions or encumbrances to title which are created by, under or
2
through Seller after the effective date of the Title Commitment. If Seller fails
to cure any such title matter described in clauses (i) and (ii) of the preceding
sentence, Purchaser shall have the right, but not the obligation to pay or cure
such matter (if curable by the payment of money) and the proceeds so paid by
Purchaser shall be credited against the Purchase Price payable to Seller at
Closing, or Purchaser may terminate this Agreement and receive a refund of the
Earnest Money expenses. The term "Permitted Exceptions" shall mean the specific
exceptions (exceptions that are not part of the promulgated title insurance
form) in the Title Commitment received by Purchaser prior to the end of the
Inspection Period that the Title Company has not agreed to insure over or remove
from the Title Commitment and that Seller is not required to remove as provided
above, real estate taxes not yet due and payable, rights of
tenants-in-possession as tenants only under the leases, any matter which would
be shown on a current survey of the Property, those specific matters set forth
on EXHIBIT C hereto and any matter created or caused by, under or through
Purchaser; provided, that in connection with any limited warranty of title which
Seller makes to Purchaser at Closing, the term Permitted Exceptions shall also
include those specific exceptions in the Title Commitment which the Title
Company has agreed to insure over or remove from the Title Commitment provided
Seller is not required to remove such exceptions as provided above.
ARTICLE IV
PRORATIONS
4.1 Income and Expense Allocations. The following shall be prorated as
of the close of the day immediately preceding the Closing Date: rents and other
income from the Property; operating expenses (on such service contracts and
other obligations as Purchaser may agree to assume); and general and real
property taxes and personal and business property taxes for the year of closing
(based on the most recent assessment and the most recent levy).
4.2 Closing Costs. Seller shall pay the transfer tax and the recording
fees due upon the filing of the Limited Warranty Deed and Purchaser shall pay
the cost of the surveys, title examination and title insurance premium. Any
other closing costs shall be paid by Seller or Purchaser in accordance with
local custom. Each party shall pay its respective attorney's fees.
4.3 Allocation of Rents. Rents collected by Seller prior to Closing
shall be prorated as agreed in 4.1 above. Purchaser shall apply rents received
after Closing first to payment of the current rent due to Purchaser, then to
delinquent rents due to Purchaser, and last to rents due to Seller as of the
Closing but uncollected prior to settlement. Purchaser agrees to use its best
efforts in good faith to collect the amount of any rental arrears from tenants
and Purchaser agrees to remit promptly to Seller any
3
such arrears actually paid by such tenants to Purchaser. Seller shall retain the
right to commence legal action against a tenant for any delinquent rent
apportioned to the Seller.
4.4 Prior Lease Concessions. If Seller has committed to give any future
monetary concessions to tenants under existing leases to which Purchaser shall
become liable, then Seller shall pay to Purchaser in a lump sum said amount at
closing.
ARTICLE V
POSSESSION OF THE PROPERTY
5.1 Possession. Possession of the Property shall be delivered to
Purchaser at closing, subject to the rights of the tenants under existing leases
and rental agreements and the Permitted Exceptions.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent. Purchaser's obligation to purchase shall be
subject to and contingent upon the satisfaction of the following conditions
precedent at or prior to the end of the Inspection Period:
(A) Receipt by Purchaser of an engineering report of building
and site conditions, satisfactory to Purchaser in its sole discretion, said
report to include in part, a description of any hazardous waste sites, hazardous
wastes and/or hazardous materials affecting the property.
(B) The receipt by Purchaser of Seller documents described in
7.2 below.
(C) Seller's representations and warranties set forth in Article
VIII below are true and correct in all material respects as of Closing.
(D) On the condition that there have been no material and
adverse changes to the property or leases, except as set forth herein.
(E) Seller acknowledges that Purchaser 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 in the
possession of Seller, Seller agrees 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.
(F) Survey which shall show no encroachments onto the Land from
any adjacent property, no encroachments by or from
4
the Land onto adjacent property and no violation of or encroachments upon any
recorded building lines, restrictions or easements affecting the Property.
6.2 Inspection. This Agreement shall be further subject to and
contingent upon Purchaser's satisfactory inspection as follows herein below.
6.2.1 Preparation for Inspection. If available, at the execution of this
Agreement, Seller shall deliver to Purchaser copies of the following: The
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 twelve (12) months
previous to the date hereof; all contract, mortgages, and other documents
creating liens of security interest on the Property, or any part thereof and all
promissory notes secured thereby; all insurance policies applicable to the
Property to include loss runs for the last five (5) years; Plans and
Specifications for the Property, service contracts, Certificates of Occupancy,
to the extent reasonably available; a copy of the title policy and most recent
survey for the Property; and a copy of any environmental or engineering reports
on the Property. Seller does not represent or warrant, and is not responsible
for, the accuracy, correctness, validity, completeness or currency of any
reports, surveys, plans, or other document, writing or other matter delivered or
furnished to Purchaser or which Purchaser examines or copies from Seller's
records or files, or which Purchaser otherwise obtains, pursuant to or as
contemplated in this Section 6.2.1 or any other provision of this Agreement,
except tot he extent (if any) expressly set forth in an express representation
or warranty by Seller set forth in this Agreement.
6.2.2 Inspection of Books and Records; Access. Purchaser, its employees,
agents and contractors shall have 30 days from and after the date of this
Agreement (the "Inspection Period") to enter upon the Property subject to the
rights of the tenants during normal business hours for the purpose of making
physical inspections thereof, including but not limited to roofs, heating,
cooling, electrical and plumbing systems, swimming pool, appliances, and
structural elements of the buildings. Purchaser shall also be permitted to
review all original leases (or copies), expense records, tenant cards and
occupancy data available. Upon the conclusion of the Inspection Period this
contract shall be deemed to be a firm agreement of purchase and sale binding the
parties hereto, except as it may be terminated by other provisions and
conditions contained herein.
6.2.3 Right of Termination During Inspection Period. If Purchaser is not
satisfied, in its sole and exclusive discretion, with the state of maintenance
and repair of the Property or the rents, occupancy or expenses of the Property,
then
5
notwithstanding anything contained herein to the contrary, Purchaser shall have
the right to terminate this Agreement by giving written notice to Seller before
the end of the Inspection Period, the Deposit shall be returned to Purchaser,
and no party hereto shall have any further liability to any other party hereto,
except for those provisions of the Agreement which expressly survive a
termination.
6.2.4 "Rent Ready". During the "Inspection Period", both Seller and
Purchaser will inspect an apartment unit at the Property and mutually agree that
said apartment shall be representative of a "rent ready'' unit by which all
other units shall be judged for "rent ready" condition at closing. All vacant
apartment units, are to be in a "rent ready" condition (as defined above), at
the time of closing, containing, but not limited to the following amenities,
i.e., carpet, refrigerator, range, garbage disposal' heating, plumbing and
electrical systems.
6.2.5 Condition of Personal Property at Closing. All personal property
included in the "ale and all mechanical, electrical, heating, air conditioning,
sewer, water and plumbing systems will be in the same working order at the time
of closing and in the same condition as at the time of the initial inspection by
Purchaser. If Seller fails to make reasonable efforts to conserve the property,
Purchaser "hall have the option of waiving such requirement, in writing, and
proceeding to closing, or Purchaser may void this Agreement and obtain 8 prompt
return of its deposit.
6.2.6 Purchaser's Requirement Notwithstanding anything to the contrary
set forth herein, Purchaser shall be required to object to any matters or
conditions relating to the Property, including, without limitation, those
matters or conditions described in Paragraphs 3.2, 6.1, and 6.2, on or prior
which expires on the earlier of Closing or thirty the date of this Agreement
(the "Inspection Period") _ _ and any right of Purchaser to terminate hereunder
with respect to such matters or conditions existing as of Closing or the
expiration of the Inspection Period shall be deemed waived.
6.2.7 Purchaser's Representations and Warranties. Purchaser represents
and warrants to Seller that (a) Purchaser is a partnership or corporation, duly
organized and in good standing under the laws of the State of Virginia, is
qualified to do business in the State of Georgia and has the power to enter into
the Agreement and to execute and deliver this Agreement and to perform all
duties and obligations imposed upon it hereunder, and Purchaser has obtained all
necessary partnership and corporate authorizations required in connection with
the execution, delivery and performance contemplated by this Agreement and has
obtained the consent of all entities and parties necessary to bind Purchaser to
this Agreement, and (b) neither the execution nor the delivery of
this Agreement, nor the consummation of the purchase and sale contemplated
thereby, 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 Purchaser, or
any partner or related entity or affiliate of Purchaser, is a party or by which
Purchaser, any partner or related entity or affiliate of Purchaser, or any
Purchaser's assets is bound, and (c) neither Purchaser nor any partner, related
entity or affiliate of Purchaser is in any way affiliated with GE Capital Realty
Group, Inc., General Electric Capital Corporation, General Electric Realty
Advisors, inc., General Electric Company or any affiliate of General Electric
Company, and (d) that, with respect to each source of funds to be used by it to
purchase the Property (respectively, the "Source"), at least one of the
following statements shall be accurate as of the Closing Date: (i) the Source
does not include the assets of (A) an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA, or (B) a "plan" as defined in
Section 4975(a) of the Internal Revenue Code of 1986, as amended ("Code"), or
(ii) the Source includes the assets of (A) an "employee benefit plan" as defined
in Section 3(3) of ERISA or (B) a "plan" as defined in Section 4975 of the Code
(each of which has been identified to the Seller in writing pursuant to this
Section 6.2.7 at least ten (10) business days prior to the Closing Date), but
the use of such Source to purchase the Property will not result in a nonexempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
The Purchaser's representations and warranties set forth in this Section 6.2.7
shall survive the Closing or termination of this Agreement. Purchaser's
representations and warranties contained herein must be true and correct through
the Closing Date, and Purchaser's failure to notify Seller prior to the Closing
Date of any inaccuracies shall be a default by Purchaser under this Agreement.
6.2.8 Indemnity. If any inspection or test performed by Purchaser or its
representatives disturbs or damages the Property, Purchaser shall (at its sole
expense) restore the Property as soon as reasonably possible to the same
condition as existed prior to any such inspection or test. Notwithstanding
anything to the contrary contained in this Agreement: (i) Purchaser will not do,
or cause or direct to be done, any subsurface testing or boring, or any testing
of subsurface water, or any coring, boring or other intrusive testing, without
the prior written consent of Seller, which consent will not be unreasonably
withheld; (ii) Purchaser will not do, or cause or direct to be done, any
inspection of or entry upon the Property without giving Seller prior reasonable
notice thereof and an opportunity to have Seller's representatives be present to
accompany and observe all such inspections and entries; (iii) Purchaser will not
enter or cause or direct any entry upon any premises which are leased to a
tenant without giving Seller at least two (2) business days' prior notice
7
thereof and an opportunity to have Seller's representative be present to
accompany and observe all such inspections and entries and to notify such tenant
of such inspection, and in carrying out such entry, Purchaser will use its best
efforts to minimize interference with such tenant; (iv) Purchaser hereby
indemnifies Seller, and agrees to defend and hold Seller harmless, from and
against any and all claims, losses, damages and liabilities that may be asserted
against or incurred by Seller for or in connection with any injuries or damage
to any persons or property, which directly or indirectly are caused by or result
from any entry, inspection, testing or other action done or caused or directed
to be done by Purchaser or its representatives or contractors. The indemnity set
forth in the preceding sentence shall survive any termination of this Agreement.
6.2.9 Confidentiality. All information provided by Seller to Purchaser
or obtained by Purchaser relating to the Property in the course of Purchaser's
review shall be treated as confidential information by Purchaser and Purchaser
shall instruct all of its employees, agent, representatives and contractors as
to the confidentiality of all such information.
ARTICLE VII
CLOSING
7.1 Closing. Unless otherwise agreed by Seller and Purchaser, the
consummation of the sale and purchase contemplated by this Agreement (the
"Closing") shall be held at 10:00 a.m., Atlanta, Georgia local time, on the 14th
day after the end of the Inspection Period (the "Closing Date") in the offices
of Chicago Title Insurance Company.
7.2 Seller's Deliveries. At Closing, Seller shall execute and deliver to
Purchaser a Limited Warranty Deed conveying the Property, subject to the
Permitted Exceptions, and shall also execute, where necessary, and deliver to
Purchaser, the following:
(A) A Bill of Sale in the form attached hereto as EXHIBIT D,
transferring the personal property (as shown in Schedule B) to Purchaser free of
all liens, charges and encumbrances.
(B) Originals or copies of all signed leases and rental
agreements in effect with tenants of the Property.
(C) All security and cleaning deposits made by such tenants.
Seller will give the tenants the required notice of such transfer in compliance
with the laws of Georgia.
(D) An affidavit of Seller in customary form as will cause the
Title Company to omit from the title insurance policy the exclusion relating to
unrecorded mechanic's and materialmen's liens.
8
(E) A rent roll certified by Seller to be true and correct as of
the date of closing showing the name of, and the amount of monthly rental
payable, by each tenant of the Property, the apartment occupied by the tenant,
the date to which rent has been paid, any advance payment of rent, and the
amount of any escrow, or security deposit of tenant.
(F) An affidavit of Seller that to the best of its information
and belief there are, on the date of closing, no unsatisfied judgments,
creditor's claims, tax liens, or pending bankruptcies involving Seller, which
affect title to the Property, other than the Permitted Exceptions.
(G) Seller shall provide, a certificate from a licensed
extermination contractor, who is regularly engaged in the business of pest
control, that all buildings are free from any termite or other wood-boring
insect infestation. Said certificate shall be dated within 90 days of closing,
bearing the Contractor's name, contractors license number, the signature of the
party authorized to sign for the Contractor and the date of the inspection.
Should damage exict, Seller shall proceed to have any corrective work completed
prior to closing or Purchaser, at its option, may either proceed to settlement
and have such sums required for repairs deducted from Seller's proceeds, or may
in its sole discretion terminate this Agreement Seller shall promptly return
Purchaser's deposit upon such termination.
(H) Assignments of all Seller's interest in the following: (1)
all assignable licenses, and permits relating to the operation of the Property,
(2) the leases and rental agreements with tenants of the Property, (3) the
existing Property telephone number and (4) the business and trade name as set
forth in Par. 1. 1.
(I) Assignments of all Seller's interest in the warranties and
guarantees to the extent such are still in effect and assignable and provide
Purchaser with copies of all such warranties and guarantees, including, without
limitation, for all appliances, dishwashers, disposals refrigerators, heating
and air conditioning units, washers and dryers, to the extent in Seller' B
possession or control possession of its management company.
(J) Provide documents for the transfer of the telephone,
electric, water and sewer, and gas utilities, a" may be required by the utility,
for execution at closing.
(K) Evidence sufficient to the Title Company of the power and
authority of Seller to enter into and consummate this agreement.
(L) Affidavit that Seller has no actual knowledge
9
of the presence of asbestos and/or any other hazardous material at the Property,
except for what is shown in the report furnished to the Purchaser.
(M) Seller shall terminate the management agreement executed
with the existing management and rental agent for the Property, without cost to
the Purchaser, pursuant to a written termination agreement, reasonably
satisfactory to Purchaser.
(N) A notice letter to all the residents of the apartment
complex as to change of ownership in the form prepared by the Purchaser and
approved by Seller.
(O) All such other documents as are normally transferred at
settlement in the jurisdiction in which the Property is located or are
reasonably requested by Purchaser or its counsel and which are consistent with
the terms of this Agreement.
(P) A representation letter from Seller's management company,
"Insignia", as normally required by auditors for a public company in the form
attached hereto as EXHIBIT E. This clause shall survive closing for "ix months.
7.3 Purchaser's Deliveries. At closing and contemporaneously with the
Seller's compliance with the provisions of Section 7.2, Purchaser shall:
(A) Pay to Seller the cash portion of the purchase price,
adjusted for the prorations herein provided for in Article IV.
(B) Execute and deliver an assumption of obligations under
leases, securities, any contracts which may be accepted by the Purchaser and any
other obligations specifically set forth herein.
(C) Deliver to the Seller a resolution of the Purchaser that:
(i) This Agreement has been duly authorized, executed
and delivered by the Purchaser and is a valid and binding agreement of
Purchaser, and
(ii) Purchaser has complete unrestricted power to buy
the Property from the Seller and to execute any documents required to effectuate
the transfer.
ARTICLE VIII
SELLER;S REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations of the Parties. Seller warrants
10
(which warranties shall not survive Closing unless designated to the contrary)
that as of the date of Closing hereof:
(A) That Seller is not subject to any other agreements or
arrangements, with the exception of those contained in the Permitted Exceptions
and accepted which would prevent Seller from selling the Property to Purchaser.
(B) All necessary action has been taken by Seller to authorize
the execution of this Agreement and the performance of the obligations
contemplated hereunder.
(C) Seller has no actual knowledge and has not been advised in
writing that it is in default under any lease, rental agreement service or
equipment contract, or mortgage or other encumbrances relating to the Property.
This warranty shall survive for six months following closing.
(D) To Seller's actual knowledge, there is no action or
proceeding pending or threatened against the Property, including, without
limitation, any condemnation or rezoning proceedings, or which challenges or
impairs Seller's ability to execute or perform its obligations under this
Agreement.
(E) Except as may be otherwise set forth in any engineering or
other reports delivered to Purchaser, as contemplated by this Agreement, Seller
has received no written notice that the Property, as it is currently utilized,
violates any governmental law or regulations, excluding, however, the Americans
With Disabilities Act, or any covenants or restrictions encumbering the
Property. This warranty shall survive for six months following
(F) That Seller is not a "foreign person" within the meaning of
the Internal Revenue Code of 1954, as amended (the "Code"), and that Seller will
furnish to Purchaser prior to closing an affidavit in form satisfactory to
Purchaser confirming the same.
(G) That to the best of Seller's knowledge, the Property was
never utilized as a disposal site for hazardous waste products, except as may be
reflected in the environmental report obtained by Purchaser. This warranty shall
survive for six months following closing.
(H) Seller covenants and agrees that, between this date and the
date of closing, Seller shall continue to maintain, operate and manage the
Property in a manner consistent with its prior practices, making every
reasonable effort to do nothing which might damage the reputation of the
Property or the relationships with the tenants. Seller shall not permit the
modification, extension or cancellation of any tenant lease (except in
accordance with the terms OF such lease) or any dealing with any tenant other
11
than the ordinary course of managing the Property, without the prior written
consent of Purchaser. If the leases of any tenants expire before thirty (30)
days after the date of closing, Seller shall, up to the date of closing and
without cost to the Purchaser, continue its normal course of operation with
respect to causing tenants to be obtained $or apartments which are unrented.
8.2 Continuation of Representations Warranties and Covenants to the Date
of Closing. If each of the warranties set forth in this section does not remain
true up to and including the time of closing as to any material matters, this
Agreement, at Purchaser'. election, shall be terminated, Seller shall return all
payment" made by Purchaser, or Purchaser may elect to close the sale and waive
failure of the warranties.
8.3 Broach of Representations. Warranties and Covenants. Notwithstanding
the provisions of 8.2 above, Seller shall indemnify Purchaser for all reasonable
costs incurred as a result of the failure of any of Seller's representations,
warranties or covenants contained herein to remain true a" of the date of
closing.
8.4 Knowledge Defined. As used in this Article VIII, the term "to the
beat of Seller's knowledge" (a) shall mean and apply to the actual knowledge of
Scott D. Stringer and Stephen R. Dieckman,, and not to any other, it being
understood and acknowledged that Scott D. Stringer and Stephen R. Dieckman, in
many instances, are not involved in the day-to-day operations of the Property
and are not charged with knowledge of all of the acts and/or omissions of the
predecessors in title to the Property or with knowledge of all of the acts
and/or omissions of Seller's agents or employees, and (b) shall not apply to or
ho construed to apply to information or material which may be in the possession
of Seller generally or incidentally, but which is not actually known to Scott D.
Stringer and Stephen R. Dieckman.
8.5 Survivals Liability. (a) Any and all of the representations,
warranties and covenants of Seller as contained in this Agreement which survive
Closing shall be void and of no further force or effect whatsoever from and
after the six (6) month anniversary of the Closing and any claim for breach of
any such surving representation, warranty or covenant must be brought during
such period. Consequently, after such 6-month anniversary, Purchaser shall not
have the right to commence any action with respect to any alleged breach and/or
violation of any of such surviving representations, warranties and/or covenants
of Seller. If Purchaser becomes aware prior to Closing of any breach and/or
violation of any of Seller's representations, warranties or covenants -s set
forth herein, Purchaser shall give Seller written notice of any such breach or
violation, and during the fifteen (15) day period after such notice, Seller
shall have the right, but not the obligation to cure any such breach or
violation to the
12
reasonable satisfaction of Purchaser. If Purchaser becomes aware of any breach
and/or violation of any of Seller's representations, warranties and/or covenants
herein prior to Closing and thereafter proceeds to Closing, such breach shall be
deemed waived by Purchaser. If Purchaser timely commences any action(s) under
this Paragraph 8.5 to enforce any alleged breach and/or violation of any of the
surviving representations, warranties and/or covenant of Seller as set forth in
this Agreement, then Purchaser's sole remedy shall be to seek recovery of its
actual damages (but not any special, consequential, punitive or other damages),
in the aggregate (with respect to all such breaches and/or violations) not to
exceed One Hundred Thousand ($100,000) Dollars per event, which sum shall
include all of Purchaser's attorneys' fees, costs, expert witness fees and court
costs.
ARTICLE IX
NO REPRESENTATIONS OR WARRANTIES BY SELLER;
ACCEPTANCE OF PROPERTY
9.1 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE VIII ABOVE,
PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND
SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES (OTHER THAN
THE SPECIAL WARRANTY OF TITLE AS SET OUT IN THE DEED), PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE
DERIVED FROM THE PROPERTY, (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH PURCHASER OR ANY TENANT MAY CONDUCT THEREON, (D) THE
COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES,
ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (E)
THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PROPERTY, (F) THE MANNER OR QUALITY OF THE
CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY, (G) THE
MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY, OR (H)
COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES,
REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING THE EXISTENCE IN OR ON THE
PROPERTY OF HAZARDOUS MATERIALS (AS DEFINED BELOW) OR (I) ANY OTHER MATTER WITH
RESPECT TO THE PROPERTY. ADDITIONALLY, NO PERSON ACTING ON BEHALF OF SELLER IS
AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF OF PURCHASER ACKNOWLEDGES THAT NO
PERSON HAS MADE, ANY REPRESENTATION, AGREEMENT, STATEMENT, WARRANTY, GUARANTY OR
PROMISE REGARDING THE PROPERTY OR THE TRANSACTION CONTEMPLATED HEREIN; AND NO
SUCH REPRESENTATION, WARRANTY, AGREEMENT, GUARANTY, STATEMENT OR PROMISE IF ANY,
MADE BY ANY PERSON ACTING ON BEHALF OF SELLER SHALL BE VALID OR BINDING UPON
SELLER UNLESS EXPRESSLY SET FORTH HEREIN. PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, PURCHASER
IS RELYING
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SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION
PROVIDED OR TO BE PROVIDED BY SELLER AND AGREES TO ACCEPT THE PROPERTY AT THE
CLOSING AND WAIVE ALL OBJECTIONS OR CLAIMS AGAINST SELLER (INCLUDING, BUT NOT
LIMITED TO, ANY RIGHT OR CLAIM OF CONTRIBUTION) ARISING FROM OR RELATED TO THE
PROPERTY OR TO ANY HAZARDOUS MATERIALS ON THE PROPERTY. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH
RESPECT TO THE PROPERTY HAS BEEN OBTAINED FROM A VARIETY OF SOURCES AND THAT
SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OR SUCH
INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY, TRUTHFULNESS OR
COMPLETENESS OF SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY
ANY VERBAL OR WRITTEN STATEMENT, REPRESENTATION OR INFORMATION PERTAINING TO THE
PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER,
CONTRACTOR, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF
THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AS "AS IS" CONDITION AND BASIS
WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE HAS BEEN
ADJUSTED BY PRIOR NEGOTIATION TO REFLECT THAT ALL OF THE PROPERTY IS SOLD BY
SELLER AND PURCHASED BY PURCHASER SUBJECT TO THE FOREGOING. PURCHASER HEREBY
AGREES TO INDEMNIFY, PROTECT, DEFEND, SAVE AND HOLD HARMLESS SELLER FROM AND
AGAINST ANY AND ALL DEBTS, DUTIES, OBLIGATIONS, LIABILITIES, SUITS, CLAIMS,
DEMANDS, CAUSES OF ACTION, DAMAGES, LOSSES, FEES AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES AND COURT COSTS) IN ANY WAY
RELATING TO, OR IN CONNECTION WITH OR ARISING OUT OF PURCHASER'S ACQUISITION,
OWNERSHIP, LEASING, USE, OPERATION, MAINTENANCE AND MANAGEMENT OF THE PROPERTY.
THE PROVISIONS OF THIS ARTICLE IX SHALL SURVIVE TIIE CLOSING OR ANY TERMINATION
HEREOF.
9.2 Hazardous Materials. "Hazardous Materials" shall mean any substance
which is or contains (i) any "hazardous substance" as now or hereafter defined
in Section 101(14) of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amend (42 U.S.C. Section 9601 et seq.) ("CERCLA")
or any regulations promulgated under CERCLA; (ii) any "hazardous waste" as now
or hereafter defined in the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) ("RCRA") or regulations promulgated under RCRA; (iii) any
substance regulated by the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.); (iv) gasoline, diesel fuel, or other petroleum hydrocarbons; (v)
asbestos and asbestos containing materials, in any form, whether friable or
non-friable; (vi) polychlorinated biphenyls; (vii) radon gas; and (viii) any
additional substances or materials which are now or hereafter classified or
considered to be hazardous or toxic under Environmental Requirements (as
hereinafter defined) or the common law, or any other applicable laws relating to
the Property. Hazardous Materials shall include, without limitation, any
substance, the presence of which on the Property, (A) requires reporting,
investigation or remediation under Environmental Requirements; (B) causes or
threatens to cause a nuisance on the
14
Property or adjacent property or poses or threatens to pose a hazard to the
health or safety or persons on the Property or adjacent property; or (C) which,
if it emanated or migrated from the Property, could constitute a trespass.
9.3 Environmental Requirements. "Environmental Requirements" shall mean
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 Property is located, and any other
political subdivisions, agency or instrumentality exercising jurisdiction over
the owner of the Property, the Property, or the use of the 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).
ARTICLE X
CONDEMNATION; RISK OF LOSS
10.1 Property Damage. If any time prior to closing any portion of the
Property is destroyed or damaged by fire or any other casualty whatsoever,
Seller shall give notice thereof to Purchaser within one (1) business day after
Seller becomes aware of such casualty, but in any event prior to Closing. The
rights and obligations of the parties by reason of such destruction or damage
shall be as follows:
(a) If the cost of repair and restoration of such destruction or
damage shall be $500,000 or less, Seller shall repair such damage as promptly as
is reasonably possible, restoring the damaged Property at least to its condition
immediately prior to such damage; and in such event, Purchaser may elect to
defer closing until such repair is made to Purchaser's reasonable satisfaction
or accept the proceeds of Seller's insurance plus deductible and loss of rent
reimbursement for the period after closing to the extent Seller receives such
reimbursement from its insurer.
(b) If the cost of repair and restoration of such destruction or
damage, as agreed to by Purchaser and Seller, shall exceed $500,000, Purchaser
may elect to terminate this Agreement; and if Purchaser does not elect to
terminate this Agreement, closing shall occur as scheduled, whereupon Seller
shall pay to Purchaser, at closing, all insurance proceeds payable for such
damage, plus an amount equal to any deductible and reimbursement for loss of
rent for the period after closing, to the extent Seller
15
receives such reimbursement from its insurer. and the sale shall be closed
without Seller's repairing such damage. In the event Purchaser elects to
terminate this Agreement, this Agreement shall be rendered null and void, the
deposit shall be returned, and the parties shall have no further obligations or
liabilities hereunder, other than any indemnification obligations set forth
herein.
10.2 Condemnation. In the event of any actual or threatened taking,
pursuant to the power of eminent domain, of the Property or any part thereof, or
any actual or proposed sale in lieu thereof, Seller shall give written notice
thereof to the Purchaser promptly after Seller learns or receives notice
thereof. Upon a taking of a "material part of the Property" (as hereinafter to
either (a) terminate this Agreement in which event the Deposit shall be
immediately returned to the Purchaser and all other rights and obligations of
the parties hereunder shall terminate immediately other than any indemnification
obligations set forth herein, or (b) waive its right to terminate this Agreement
and proceed to Closing, in which event all proceeds, awards and other payments
arising out of any such condemnation, taking or sale (actual or threatened)
shall be paid to Purchaser at Closing, if such payment has been received, or
Seller shall assign to Purchaser its rights to such payments. In the event of
any other condemnation, taking or sale, this Agreement shall continue in full
force and effect and all proceeds, awards and other payments arising out of any
such condemnation, sale or taking, shall be paid to the Purchaser at Closing, if
such payment has been received, or Seller shall assign to Purchaser its rights
to such payments. As used in this Section, a "material part of the Property"
means the taking of (i) any part of an apartment building, (ii) more than 5% of
the existing parking areas or any amount of parking area which results in the
Property's violation of applicable zoning ordinances, or (iii) a portion of the
Property, the value of which exceeds $200,000.
10.3 Risk of Loss. Prior to closing, all risks of loss or damage by
every casualty shall be borne by the Seller.
ARTICLE XI
BROKER'S COMMISSION
11.1 Commission. Seller agrees to pay a brokerage fee to APARTMENT
REALTY ADVISORS ("Broker"), pursuant to a separate agreement between Seller and
Broker. The brokerage fee shall be deemed earned if, and only if, the Closing
occurs hereunder, and shall not be deemed earned even if Purchaser or Seller
wrongfully fails to consummate the purchase and sale contemplated by this
Agreement. Purchaser shall not be obligated to pay any brokerage fee to the
Broker.
11.2 Seller's Warranty and Indemnity Obligation.
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Seller represents and warrants to Purchaser that, except for the Broker, Seller
has not retained or employed any broker, agent salesman or other person entitled
to a commission or similar fee in connection with this transaction. Seller will
indemnify and hold harmless Purchaser and the Property from and against any and
all claims, loss, liability, costs and expenses (including reasonable attorneys'
fees) resulting from any claims that may be made against Purchaser or the
Property by any broker or other person, other than the Broker, claiming a
commission, fee or other compensation from Seller or Purchaser by reason of the
transaction contemplated by this Agreement if the same shall arise by or on
account of any act of Seller.
11.3 Purchaser's Warranty and Indemnity obligation. Purchaser represents
and warrants to Seller that, except for the Broker, Purchaser has not retained
or employed any broker, agent salesman or other person entitled to a commission
or similar fee in connection with this transaction. Purchaser will indemnify and
hold harmless Seller from and against any and all claims, loss, liability, costs
and expenses (including reasonable attorneys' fees) resulting from any claims
that may be made against Seller by any broker or other person, other than the
Broker, claiming a commission, fee or other compensation from Seller by reason
of the transaction contemplated by this Agreement if the same shall arise by or
on account of any act of Purchaser.
ARTICLE XII
DEFAULT
12.1 Default Defined. Default for the purpose of this Agreement shall
mean any failure by Seller or Purchaser to fulfill all the terms, conditions and
covenants contained herein, however, it shall not be an event of default for
either party to exercise its rights to terminate this contract as contained in
other provisions herein.
12.2 Seller's Default. Upon Seller's default, the Purchaser, at its
election, may as its sole and exclusive right and remedy under this Agreement
either (1) require specific performance of Seller, (2) cancel this Agreement and
obtain a prompt return of the deposit, in which case this Agreement shall be
terminated and the parties released from all obligations hereunder, or (3) waive
such defaults and proceed to settlement. Seller shall indemnify Purchaser for
any reasonable costs incurred by Purchaser if Purchaser elects to pursue its
option (1) noted above and is the prevailing party, to include reasonable
attorney fees.
12.3 Purchaser's Default. Upon Purchaser's default, this Agreement shall
be terminated and both parties released from all obligations hereunder, and the
deposit shall be retained by the
17
Seller as liquidated damages. Seller shall have no other remedy against
Purchaser in the event of Purchaser's default. The parties acknowledge that it
is impossible to estimate precisely the damages which might be suffered by
Seller upon Purchaser's default and agree that the Deposit is a reasonable
pre-estimate of Seller's probable loss in the event of a default by Purchaser.
Seller's retention of the Deposit is not intended as a penalty, but as full
liquidated damages pursuant to O.C.G.A. Section 13-6-7. The right to retain the
Deposit as full liquidated damages is Seller's sole and exclusive remedy, and
Seller hereby waives and releases any right to (and hereby covenants that it
shall not) sue the Purchaser for specific performances of this Agreement or to
recover damages in excess of the Deposit. Purchaser hereby waives and releases
any right to (and hereby covenant that it will not) sue Seller or seek or claim
a refund of the Deposit (or any part hereof) on the grounds that it is
unreasonable in amount and exceeds Seller's actual damages or that retention by
Seller constitutes a penalty and not agreed upon reasonable liquidated damages
as permitted under O.C.G.A Section 13-6-7. Notwithstanding the foregoing of this
Section 12.3, with respect to any indemnities given by Purchaser to Seller in
this Agreement, Seller's recourse is not and will not be limited to the Deposit.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Entire Agreement. This Agreement sets forth the entire
understanding between the parties; it supersedes all previous agreements and
representations which are deemed merged herein and may not be modified except in
writing.
13.2 Assignment. Contemporaneously with the Closing, Purchaser may
assign this Agreement without the consent of Seller, but no such assignment
shall release or relieve Purchaser from its obligations to Seller under this
Agreement. No additional assignment of Purchaser's rights and interests in this
Agreement shall be permitted.
13.3 Severability. If any provision, sentence, phrase or word of this
Agreement or the application thereof to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision,
sentence, phrase, or word to persons or circumstances, other than those as to
which it is held invalid, shall remain in full force and effect.
13.4 Binding Effect. The parties to the Agreement mutually agree that it
shall be binding upon and inure to the benefit of their respective heirs,
representatives, successors in interest and assigns.
13.5 Controlling Law. It is the intent of the parties
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hereto that all questions with respect to the construction of this Agreement and
the rights and liabilities of the parties shall be determined in accordance with
the provisions of the laws of the State set forth in Par. 1.1.
13.6 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear in each counterpart
hereof, and it shall be sufficient that the signature on behalf of both parties
hereto appear on one or more such counterparts. All counterparts shall
collectively constitute a single contract.
13.7 Incorporation by Reference. All of the Exhibits referred to herein
and/or attached hereto shall be deemed to constitute a part of the Agreement.
13.8 Headings. The headings of the Articles and sections hereof are
inserted for convenience only and shall not be deemed to constitute a part of
the Agreement.
13.9 Construction of Contract. Each party hereto have reviewed and
revised (or requested revisions of) this Agreement, and therefore the normal
rule of construction that any ambiguities are to be resolved against a
particular party shall not be applicable in the construction and interpretation
of this Contract or any amendments or exhibits hereto.
ARTICLE
XIV
NOTICE
14.1 Notice. All notices required or permitted to be given under this
Agreement shall be in writing and shall be sent or delivered to the address set
forth below (or such other address as may be hereafter specified in writing):
To Seller: Snap/Palm Holding Company
c/o General Electric Capital Corporation
Attn: Mr. Stephen R. Dieckman
Suite 900 600 West
Peachtree Street, N.E.
Atlanta, Georgia 30308
Fax: (404) 876-0236
Phone: (404) 877-1609
With copies to
Sellers Attorneys: King & Spalding
Attn: Mason W. Stephenson, Esq.
Suite 4900
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
19
<PAGE>
Fax: (404) 572-5148
Phone: (404) 572-4945
General Electric Capital Corporation
Attn: William P. Moore, Esq.
Legal Operations
292 Long Ridge Road
Stamford, Connecticut 06927
Fax: (203) 357-6768
Phone: (203) 357-4203
To Purchaser: Mr. Gus Remppies
Cornerstone Realty Group, Inc.
306 E. Main Street
Richmond, VA 23219
Fax: (804) 782-9302
Phone: (804) 643-1761
With a copy to
Purchaser's Attorneys: Harry S. Taubenfeld, Esq.
Zuckerbrod & Taubenfeld 575
Chestnut St.,
P.O.. Box 488
Cedarhurst, NY 11516
Fax: (516) 374-3490
Phone: (516) 374-3133
-and-
Michael W. Tighe, Esq.
Callison Tighe Robinson & Anastasion
1812 Lincoln Street
Columbia, SC 29201
Fax: (803) 256-6431
Phone: (803) 256-2371
14.2 Delivery of Notice. Notices sent either by Registered or Certified
Mail, Return Receipt Requested, or by overnight express mail shall be deemed
given when deposited in the United States Mail, postage prepaid, delivered to a
reliable overnight courier, or by facsimile transmission. Notices sent in any
other manner shall be deemed given only when actually delivered at the specified
address.
14.3 Exhibits. The following exhibits are attached to this Agreement and
are incorporated into this Agreement by this reference and made a part hereof
for all purposes:
Exhibit A, the legal description of the Land
Exhibit B, inventory of personal property
Exhibit C, the form of the Deed
Exhibit D, Bill of Sale
20
<PAGE>
Exhibit E, representation letter
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed this day and date first written above.
SELLER:
SNAP/PALM HOLDING COMPANY,
a Georgia corporation
By: /s/ [Illegible]
---------------------------
Its: Vice President
---------------------------
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ Stanley J. Olander, Jr.
---------------------------
Its: S.V.P.
---------------------------
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