SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 16, 2000
CORNERSTONE REALTY INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 1-12875 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
<PAGE>
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 (The Enclave at
The Meadows Apartments)*
Historical Statement of Income and Direct
Operating Expenses (The Enclave at The
Meadows Apartments)*
Note to Historical Statement of Income and
Direct Operating Expenses (The Enclave at
The Meadows Apartments)*
Independent Auditors' Report (Greystone
Crossing Apartments)*
Historical Statement of Income and Direct
Operating Expenses (Greystone Crossing
Apartments)*
Note to Historical Statement of Income and
Direct Operating Expenses (Greystone
Crossing Apartments)*
b. Pro Forma Statement of Operations for the
Twelve Months ended December 31, 1997
(unaudited)*
Pro Forma Statement of Operations for the
Three Months ended March 31, 2000
(unaudited)*
Pro Forma Balance Sheet as of
March 31, 2000 (unaudited)*
c. Exhibits
10.1 Purchase Contract, as amended, for
The Enclave at The Meadows Apartments
10.2 Purchase Contract, as amended, for
Greystone Crossing Apartments
23.1 Consent of Independent Auditors*
23.2 Consent of Independent Auditors*
- -----------------------
* To be filed by amendment.
2
<PAGE>
Item 2. Acquisition or Disposition of Assets
THE ENCLAVE AT THE MEADOWS APARTMENTS
Asheville, North Carolina
On March 16, 2000, Cornerstone Realty Income Trust, Inc. (together with
its direct and indirect subsidiaries, the "Company") purchased The Enclave at
the Meadows Apartments, a 168-unit apartment complex having an address of 99
Ascension Drive, Asheville, North Carolina (the "Property"). The Company
purchased the Property from a seller (Meridia/New Leicester, LLC, a South
Carolina limited liability company) which was not affiliated with the Company.
The purchase price was $8,786,000, which was financed as a "Section 1031
Tax-Free Exchange" using a portion of the proceeds from the Company's sale of
properties that occurred on March 8, 2000.
Location. The following information is based in part upon information
provided by the Asheville Chamber of Commerce.
The Property is located in North Carolina, in the City of Asheville and
Buncombe County, which collectively have a population of approximately 250,000.
Asheville is located approximately 115 miles from Charlotte, North Carolina, and
65 miles from Greenville, South Carolina.
The City of Asheville and Buncombe County are represented by a number
of nationally recognized companies and organizations in the health care,
education and manufacturing sectors. Some of the major employers in the area
include Champion International (a manufacturer of paper and paperboard), GE
Lighting Systems, Westinghouse Electric and ITT Automotive. In addition,
Memorial Mission Hospital and St. Joseph Hospital are major area employers.
The major highways serving the area are Interstates 40, 26 and 240. The
Asheville Regional Airport is centrally located within the metropolitan area and
is approximately 20 miles from the Property. Also, Asheville is home to the
University of North Carolina at Asheville, with an enrollment of approximately
3,200 students.
The Property is located on Ascension Drive, just off Leicester Highway
in west Asheville (Buncombe County), North Carolina. The Property is located
adjacent to The Meadows, which is also owned by the Company. The immediate area
surrounding the Property consists of other multi-family and single-family
housing and commercial and retail development. The Property is convenient to
major shopping areas, and is readily accessible from Interstates 40 and 240. The
downtown area and the Asheville airport are also easily accessible from the
Property.
Description of the Property. The Property consists of 168 garden-style
apartment units in seven three-story buildings on approximately 17.3 acres of
land. Construction on the property was completed in 1999.
3
<PAGE>
The Property offers three unit types. The unit mix and rents currently
being charged new tenants as of April, 2000 are as follows:
<TABLE>
<CAPTION>
Approximately Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
<S> <C> <C>
60 One bedroom, one bathroom 816 $595
96 Two bedrooms, two bathrooms 1,075 700
12 Three bedrooms, two bathrooms 1,292 825
</TABLE>
The apartments provide a combined total of approximately 168,000 square
feet of net rentable area.
The Property has an outdoor swimming pool, a fitness center, a
clubhouse, a laundry facility, a car wash area and outdoor grills. There are
approximately 320 parking spaces, including 10 spaces that are
handicapped-designed.
Leases at the Property are for terms of one year or less. Since the
property is newly-constructed and newly-leased, there is no rental history.
The buildings are wood-frame construction on concrete slab. Exteriors
are vinyl siding with pitched roofs covered with asphalt shingles.
All apartment units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchens and baths. Each apartment unit has a cable
television hook-up and an individually-controlled heating and air conditioning
unit. Each apartment unit also has mini-blinds, a ceiling fan in the living
room, large walk-in closets and a patio or balcony. Each kitchen has a
refrigerator/freezer, electric range and oven, dishwasher and garbage disposal.
Selected apartment units have a fireplace, vaulted ceilings and washer/dryer
connections. The owner of the Property supplies cold water, sewer services and
trash removal. The tenants pay for their electric services, which includes
cooking, heating, air conditioning, hot water and lights.
There are at least 10 apartment properties in the area that compete
with the Property. All offer similar amenities and have rents that are generally
comparable to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing projects averaged
approximately 93% at April 10, 2000.
The residents of the Property are a mix of white-collar and blue-collar
workers, students and retired persons. On March 16, 2000, the Property was 88%
occupied.
4
<PAGE>
The 2000 tax assessment for the Property is not yet available. However,
the 1999 real estate tax rate applicable to the Property was $1.15 per $100 of
assessed value, and the real estate taxes for 1999 were calculated to be
$104,759. The assessed value was $9,109,500. The basis of the depreciable
residential real property portion of the Property (currently estimated at about
$8,439,486) 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 Asheville, 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.
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 located and proximate to major
employers and shopping.
4. The Company is familiar with the Asheville, North Carolina rental
market. The Company owns other apartment complexes in the area, including
particularly The Meadows, which is located adjacent to the Property. The Company
believes that the location may offer the Company operational efficiencies and
competitive advantages.
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 necessarily indicative of future
operating results.
5
<PAGE>
GREYSTONE CROSSING APARTMENTS
Charlotte, North Carolina
On May 10, 2000, the Company purchased the Greystone Crossing
Apartments (the "Property"), consisting of 408 apartments units located at 9610
Stoney Glen Drive, Charlotte, North Carolina.
The sellers, Greystone Crossing Apartments, LLC, and GCA-II, LLC, were
unaffiliated with the Company. The purchase price was $26,800,000, which was
financed as a "Section 1031 Tax-Free Exchange" using a portion of the proceeds
of the Company's sale of properties that occurred on March 8, 2000. The Company
paid $20,800,000 at closing, and the balance of $6,000,000 was paid into escrow.
The escrow is to be released to the sellers when certain "punch list"
construction items have been completed and Phase II of the Property has achieved
85% occupancy. The escrowed funds are in an interest-bearing account, and the
interest accrues to the benefit of the Company.
Location. The following information is based in part upon information
provided by the Charlotte Chamber of Commerce.
Based in part upon its fast rate of growth and a diversified economy,
Charlotte has in recent years come to national attention as an attractive
location for business and residential growth. According to the August 1995, Site
Selection magazine, Charlotte"s corporate popularity ranked second nationally
only to Dallas during the period between 1990 and 1994, being the site of 474
significant new and expanded facilities.
Charlotte has developed into a major financial, distribution and
transportation center, with a metropolitan population of approximately 1.3
million and a population of approximately 5.6 million within a 100-mile radius.
Charlotte"s growth is also attributable to its favorable year-round climate, a
moderate cost of living, excellent quality of life, educated work force,
pro-business political climate, extensive transportation network, and strategic
geographic location.
According to the Charlotte Chamber of Commerce, during the first six
months of 1995, approximately 530 firms announced new or expanded businesses
which were expected to provide approximately 6,200 new jobs in the area.
Charlotte is home to major offices of more than 225 of the Fortune 500
industrial firms and approximately 300 of the Fortune 500 service firms.
Charlotte is the recently-announced location for the world headquarters of
Sea-Land, the nation's largest container shipping company.
Charlotte is the leading financial center of the Southeast, serving as
corporate headquarters to NationsBank and First Union. The growth of Charlotte"s
banking and financial communities has had a positive effect on the growth of its
supporting industries, such as insurance, accounting, legal services, and real
estate. Another recent aspect of Charlotte's development is as the location of
professional basketball and football franchises known as the Charlotte Hornets
and the Carolina Panthers, respectively. Also, the newly-constructed NationsBank
Corporate Center includes a 2,000-seat performing arts center.
6
<PAGE>
The city of Charlotte is located near the border of North Carolina and
South Carolina within Mecklenburg County. It is located at the intersection of
Interstates 77 and 85, the major north/south and east/west thoroughfares in the
region, which provide convenient access to all other regional areas.
The Property is located in Mecklenburg County, in the southwestern
portion of the Charlotte metropolitan area. The immediate neighborhood
surrounding the Property consists of other multi-family and single-family
housing, and commercial and retail development. The southwest Charlotte market
is home to Charlotte's largest industrial employment center and the second
largest office submarket. The Property is convenient to major shopping areas and
is readily accessible from Interstate 85 and the 485 Beltway. The Property is
approximately 10 miles from downtown Charlotte and approximately 15 miles from
the Charlotte airport.
Description of the Property. The Property was built in two phases.
Phase I was completed in 1998 and Phase II is being completed in 2000. Phase I
consists of 300 garden-style apartment units in 15 three-story buildings on
approximately 19 acres of land. Phase II consists of 108 garden-style apartment
units in five three-story buildings on approximately 8.5 acres of land.
The unit mix and rents currently being charged new tenants in Phase I
are as follows.
<TABLE>
<CAPTION>
Approximate Interior
Quantity Type Square Footage Monthly Rental
-------- ---- -------------- --------------
<S> <C> <C>
60 One bedroom, one bathroom 695 $585
60 One bedroom, one bathroom 744 620
60 Two bedrooms, two bathrooms 883 720
60 Two bedrooms, two bathrooms 1,108 800
60 Three bedrooms, two bathrooms 1,356 890
</TABLE>
The units in Phase I provide a combined total of approximately 287,000
square feet of net rentable area. There are approximately 600 paved parking
spaces, including 30 spaces for disabled tenants.
7
<PAGE>
The unit mix and rents currently being charged new tenants in Phase II
are as follows:
<TABLE>
<CAPTION>
Approximate Interior
Quantity Type Square Footage Monthly Rental
-------- ---- -------------- --------------
<S> <C> <C>
48 One bedroom, one bathroom 730 $620
36 Two bedrooms, two bathrooms 937 745
12 Two bedrooms, two bathrooms 1,140 825
12 Three bedrooms, two bathrooms 1,448 928
</TABLE>
The units in Phase II provide for a combined total of approximately
100,000 square feet of net rentable area. There are approximately 216 paved
parking spaces, including 10 spaces for disabled tenants.
The Property has two outdoor swimming pools, a pool cabana, fitness
center, clubhouse, laundry facility, sauna and steam rooms, a volleyball court
and a children's playground.
As indicated above, Phase I was completed in 1998 and Phase II is now
being completed. The Company has not currently budgeted any amounts for planned
improvements, exclusive of the $6 million escrowed under the Real Estate
Purchase Contract for the completion of "punch list" construction items on Phase
II.
Leases at the Property are for terms of 15 months or less. Rental rates
in Phase I have generally increased since initial occupancy. As an example, a
two-bedroom, two-bathroom (883 square feet) apartment rented for $685 in 1998,
$700 in 1999 and $720 in 2000.
The buildings are wood-frame construction on concrete slabs with
pitched roofs covered with asphalt shingles. The exteriors are vinyl siding.
All apartment units have 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 includes miniblinds, optional alarm system, exterior storage,
patio or balcony and washer/dryer connections. Each kitchen is equipped with a
refrigerator/freezer, electric range and oven, built-in microwave, dishwasher
and garbage disposal. Select apartment units include a fireplace and vaulted
ceilings. The owner of the Property supplies cold water, sewer service and trash
removal. The tenants are responsible for electricity, which includes heating,
air conditioning, hot water, cooking and lights.
There are at least seven apartment properties in the area that compete
with the Property. The other properties that will compete with the Property
offer similar amenities and generally have rents that are lower than those of
the Property. Based on a recent telephone survey, the Company estimates that
occupancy in nearby competing projects now averages approximately 94%.
8
<PAGE>
According to information provided by the sellers, physical occupancy at
Phase I averaged approximately 90% during 1999. On April 24, 2000, Phase I
physical occupancy was approximately 96% and Phase II physical occupancy (which
is still undergoing lease-up) was approximately 35%. The average age of the
tenants is approximately 27 years and the majority of the tenants are
professionals.
The following table sets forth estimated 2000 real estate tax
information for the Property.
<TABLE>
<CAPTION>
Phase I
Jurisdiction Assessed Value Tax Rate Tax
------------ -------------- -------- ---
<S> <C> <C> <C>
Mecklenburg County $14,065,420 $ 0.0073 $102,681
Town of Mint Hill 14,065,420 0.00235 33,054
TOTAL TAX: $ 135,735
=========
Phase II
Jurisdiction Assessed Value Tax Rate Tax
------------ -------------- -------- ---
<S> <C> <C> <C>
Mecklenburg County $551,400 $0.0073 $4,025
Town of Mint Hill 551,400 0.00235 1,296
TOTAL TAX: $5,321
======
</TABLE>
The basis of the depreciable residential real property portion of the
Property (currently estimated at about 25,471,666) 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 included the following:
1. The Company believes that the Charlotte, North Carolina area will
experience continued strong 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.
2. The Property is newly constructed and is in excellent physical
condition with superior amenities. Management believes that these factors will
permit the Property to compete very effectively for tenants.
3. The Property is conveniently located and proximate to major
employers and shopping.
4. The Company is very familiar with the Charlotte rental market. The
Company already owns other apartment complexes in the Charlotte area, which may
provide certain economies and efficiency in operation.
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 (including amendments hereto) not to be
necessarily indicative of future operating results.
9
<PAGE>
ITEM 7.a.*
* To be filed by amendment. It is impracticable to include herein the required
financial statements for the Properties. 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.
10
<PAGE>
ITEM 7.b.*
* 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.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cornerstone Realty Income Trust, Inc.
Date: May 24, 2000 By:/s/ Stanley J. Olander, Jr.
---------------------------
Stanley J. Olander, Jr.,
Chief Financial Officer of
Cornerstone Realty Income Trust, Inc.
12
<PAGE>
EXHIBIT INDEX
Cornerstone Realty Income Trust
Form 8-K dated March 16, 2000
Exhibit Number Exhibit
- -------------- -------
10.1 Purchase Contract, as amended, for
The Enclave at The Meadows
Apartments
10.2 Purchase Contract, as amended, for
Greystone Crossing Apartments
23.1 Consent of Independent Auditors*
23.2 Consent of Independent Auditors*
* To be filed by amendment.
13
Exhibit 10.1
PURCHASE CONTRACT
-----------------
(The Meadows-Phase II, Section I)
THIS AGREEMENT made and entered into this 14th day of August 1997,
between CORNERSTONE REALTY GROUP, INC. or its nominee, (hereinafter called
"Purchaser") and MERIDIA/NEW LEICESTER, LLC, a South Carolina limited liability
company, (hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 Sale of Property. Seller agrees to construct, sell and convey, and
Purchaser agrees to purchase, Seller's real property known as SECTION 1 OF PHASE
II OF THE MEADOWS APARTMENTS located in ASHEVILLE, NC, with all buildings and
improvements located thereon, as more particularly described in the attached
legal description in EXHIBIT A (approximately 13.39 acres, which shall be
mutually agreed upon by the parties) including, but not limited to 168
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).
1.2 COMPLETE CONSTRUCTION. It is understood that the units to be
transferred as set forth in Paragraph 1.1 have not as yet been constructed. The
Seller agrees to file with the City of Asheville within 60 days a set of Plans
and Specifications, as exhibited to and approved by the Purchaser, for the
construction of not less than 168 units. In the event that less than 168 units
are approved by the City of Asheville, then the price set forth hereinafter
shall be adjusted accordingly.
1.3 SECTION 2. It is understood that the balance of the Property
remaining after the construction of the 168 units and the amenities shall be
used for the construction of an additional 48 units. The Seller agrees that
these units shall be constructed similar to the units completed in Section 1. In
the event that the Seller, within one (1) year after the completion of Section
1, does not commence the construction and/or enter into a contract with the
Purchaser to construct said units, it agrees to sell the vacant land to the
Purchaser for One ($1.00) Dollar with no further obligation by either party
under this Agreement. This clause shall survive the delivery of the Deed for
Section 1.
1.4 DESIGN. The design of the project would be as set forth in the
Plans attached hereto as EXHIBIT C. (The intent being to construct as close to
the Plans used for North Town Apartments in Spartanburg, South Carolina, a 204
unit project.)
<PAGE>
(A) The Purchaser and the Seller in the interest of expediting
the signing of this Agreement and clarifying their understanding have agreed to
use the following procedure to effectuate Paragraph 1.4:
It is understood that the Seller is currently in the final
stages of getting municipal approval of the Plans (Exhibit C), which may or may
not be attached to this Agreement. However, the Seller agrees to deliver to the
Purchaser a set of Plans as approved by the municipality within thirty (30) days
from the date of this Agreement and the Purchaser shall then have thirty (30)
days after the delivery of Exhibit C in which to either reject or approve said
Plans. Unless specifically stated, this shall not affect any other part of this
Agreement and the Letter of Credit set forth in Paragraph 2.2 shall not be
effective until the Plans are approved.
1.5 LAND CONTRACT. It is understood that simultaneously with the
execution of this Agreement, the Seller herein shall purchase certain land as
set forth in the contract attached hereto as EXHIBIT D ("the Land Contract"). In
the event that this Agreement and the attached agreement are not simultaneously
executed and the purchase of the land completed as set forth in the attached
contract, this Agreement shall be terminated and the Purchaser shall be relieved
of any obligation hereunder.
1.6 PURCHASER'S OPTION. Subject to Force Majeure (as hereinafter
defined), in the event that the construction is not completed by a date eighteen
(18) months after the acquisition of the Property, the Purchaser shall have the
option to terminate this agreement or extend the terms on a month-to-month
basis.
1.7 CONSTRUCTION AGREEMENT. Seller shall exhibit the construction
agreement to the Purchaser prior to the execution thereof including the
requirement set forth in Paragraph 7.2(S).
1.8 UNITS. Upon completion, Seller shall deliver a Certificate of
Occupancy for 168 Units.
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 PURCHASE PRICE. The total purchase price shall be EIGHT MILLION
THREE HUNDRED FIFTY THOUSAND ($8,350,000) DOLLARS as evidenced by cash or cash
equivalent at closing.
2.2 DEPOSIT. A Letter of Credit in the amount of ONE HUNDRED FIFTY
THOUSAND ($150,000) DOLLARS to be placed in escrow upon the execution hereof.
Said Letter of Credit shall be delivered to The Title Company of North Carolina
in Raleigh or its authorized agent as an earnest money deposit which at the
Purchaser's option may be credited against the purchase price or applied as per
Article XI below. In the event of a default, Article IX shall apply.
2
<PAGE>
ARTICLE III
TITLE MATTERS
3.1 MARKETABLE TITLE. Seller, shall convey good and marketable title by
Special Warranty Deed, subject only to general taxes for the current year not
yet due and payable and matters of title and Survey, which Purchaser has
approved pursuant to the Land Contract and such other matters as Purchaser may
approve in writing.
(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 sixty (60) days prior to the closing date (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 thirty (30) days 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. Seller will provide Purchaser with an "as
built" Survey updated to completion of construction to the extent available to
Seller without incurring additional cost.
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. However, Purchaser shall have the further
option to remedy the title defects and receive a credit for any expenditures,
including professional fees, at time of closing.
ARTICLE IV
PRORATIONS
4.1 INCOME AND EXPENSE ALLOCATIONS. The following shall be prorated, on
a calendar-month basis, to the 1st day of the month 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. Seller shall pay any prepayment penalty
charged by the holders of any existing notes.
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
3
<PAGE>
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 CONCESSIONS. Seller shall pay to Purchaser, in a lump
sum at closing, all future monetary concessions which Seller has given to
tenants under leases existing at the time of closing, if any.
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 CLOSING
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 at Seller's expense of (i) the design
architect's certification confirming that Seller has substantially completed its
improvements for the Property in accordance with the agreed-upon Plans and
Specifications subject only to an immaterial "punch list" attached hereto; and
(ii) an updated Phase 1 environmental review with respect to the Property
recommending no further environmental evaluation.
(B) Completion by the Seller of the construction of the
premises as per the Plans and Specifications attached hereto as Exhibit C or as
agreed to between Seller and Purchaser, as required under Paragraph 1.2.
(C) The receipt by Purchaser of Seller documents described in
7.2 below.
(D) On the condition that Sellers representations and
warranties described in Article VIII below remain materially true and correct.
(E) On the condition that the Property and all leases conform
and agree with the schedules contained herein.
(F) 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. 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.
4
<PAGE>
(G) 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 sixty (60) 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
sixty (60) 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. It
is understood that the Inspection Period shall commence upon notification by
Seller that it has substantially completed its obligation to construct, rent,
etc. and is giving Purchaser notice that it will close within a specific time.
6.2.1 PREPARATION FOR INSPECTION. Upon substantial completion of the
Property (substantial completion shall be certified by the architect or engineer
that Seller and Purchaser have agreed upon as the authority), 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 since initial occupancy; all insurance policies
applicable to the Property to include loss runs; "as-built" 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, if any. All these items shall be certified by Seller to be
accurate and complete to the best of its knowledge and belief. In addition,
Seller shall deliver a "notice of time for final inspection".
6.2.2 INSPECTION OF BOOKS AND RECORDS; ACCESS. Upon receipt by
Purchaser of the notice and all documents requested in the above paragraph
6.2.1, Purchaser, its employees, agents and contractors shall have 14 days (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. Upon the conclusion of the Inspection Period this
contract shall be deemed ready for Closing, 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.
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6.2.3 RIGHT OF TERMINATION DURING INSPECTION PERIOD. Purchaser shall
also be permitted to review all original leases, expense records, tenant cards
and occupancy data available. 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
adjourn the Closing called for in this Agreement until such time as the
conditions have been met by giving written notice to Seller before the end of
the Inspection Period or as an alternative, the Purchaser shall have the option
to close with an adjustment of the Purchase Price.
6.2. "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 sale and all mechanical, electrical, heating, air
conditioning, sewer, water and plumbing systems will be materially 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 shall have the option of waiving such
requirement, in writing, and proceeding to closing, or elect to receive a
financial adjustment at Closing to make any required repairs or modification.
6.2.6. NEW LEASES. Seller agrees to submit a monthly report to
Purchaser setting forth all new leases entered into attaching a copy of all such
new leases and showing that all minimum lease qualifications have been adhered
to as set forth in the attached EXHIBIT E. Purchaser's sole remedy for Seller's
failure to comply with the minimum lease qualifications will be a ground for
cancellation of this Agreement by the Purchaser with the return of the deposit
or proceed to closing with an adjustment to the Purchase Price to compensate the
Purchaser for Seller's failure to comply.
6.2.7 RESULTS OF INSPECTION. Purchaser shall prepare a "punch
list" as a result of its inspection of the Property and Seller shall have up to
thirty (30) days with which to cure the deficiencies noted in the "punch list".
If Seller, in Purchaser's reasonable opinion, fails to cure all or some of the
items on the "punch list", Purchaser may correct the deficiencies which are not
cured and deduct the cost to cure from the purchase price of the Property at
time of Closing or shall receive a deduction for work to be done post Closing
and sufficient escrow to correct the deficiencies on the "punch list".
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ARTICLE VII
CLOSING
7.1 CLOSING.
(A) Closing shall take place within thirty (30) days after the
following conditions shall have occurred:
(i) Occupancy of the premises shall be no less than
eighty-five (85%) percent under the terms and conditions as set forth in the
aforesaid Exhibit E, or 143 units (occupancy rate defined as physically occupied
units plus pre-leased units minus notices to vacate) with actual annualized
rental on day of closing of $1,077,936.
(ii) The receipt of the substantial completion
Certificate pursuant to Article 6.1(A) unless the municipality requires a
Certificate of Occupancy for rental of each unit.
(iii) All of the occupied units shall be leased at
such rents and without any rental concessions which carry future monetary value
and said rent shall be no less than those outlined in EXHIBIT F.
(iv) The rent roll shall indicate that the gross
annual potential rent shall not be less than $1,260,960.
(v) All tenants executing a lease subsequent to the
date of this Agreement shall have been qualified for rental using credit
qualifications that are not less than those outlined in Exhibit E.
(B) In the event that all of the occurrences do not transpire,
which would trigger the closing date as set forth above, the Purchaser may grant
an extension or series of extensions to allow the events to transpire, or the
Purchaser may waive any or all of the conditions and give fifteen (15) days
notice for a closing date. In the event Closing does not occur on a date thirty
(30) months after the date of this Contract, either party may terminate this
purchase agreement, without penalty, and the deposit will be returned to the
Purchaser. However, the Purchaser at its option may accept delivery of the
premises with an adjustment of the Purchase Price.
7.2 SELLER'S DELIVERIES. At closing, Seller shall execute and deliver
to Purchaser the Special 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.
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(C) All security deposits made by such tenants. Seller will
give the tenants the required notice of such transfer in compliance with the
laws of NORTH CAROLINA.
(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 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 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
leave sufficient funds in escrow to clear up damage.
(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 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) Evidence satisfactory to Purchaser that all water, sewer,
gas, electric, telephone, and drainage facilities and all other utilities
required by law or by the normal use and operation of the Property are and at
the time of closing will be installed to the property line, are and at the time
of closing will be connected pursuant to valid permits, and are and at the time
of closing adequate to service the Property and to permit full compliance with
all requirements of law and normal usage of the Property by the tenants thereof
and their licensees and invitees.
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(K) 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.
(L) Provide documents for the transfer of the telephone,
electric, water and sewer, and gas utilities, as may be required by the utility,
for execution at closing.
(M) Satisfactory evidence of the power and authority of Seller
to enter into and consummate this agreement, including but not limited to:
(i) An opinion of Seller's counsel, in a form
satisfactory to Purchaser, stating that:
(a) The individual(s) executing the deed and
related documents are duly authorized to do all such acts as are necessary to
consummate this sale, without further consent of any other party.
(b) That the member can bind the limited
liability company.
(N) Affidavit that Seller has no actual knowledge of the
presence of asbestos and/or any other hazardous material at the Property.
(O) 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.
(P) A notice letter to all the residents of the apartment
complex as to change of ownership in the form prepared by the Purchaser.
(Q) 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.
(R) A representation letter as normally required by auditors
for a public company in the form attached hereto as EXHIBIT G. This clause shall
survive closing for one year.
(S) Seller shall deliver an assignment of all warranties by
the contractor and Seller agrees to insert a clause in its contract with the
contractor stating as a minimum the following: That the Seller and contractor
agree that for (i) one (1) year after occupancy, or (ii) one (1) year after
issuance by the architect of the architect's certificate of substantial
completion and the receipt of all final certificates of occupancy for any
building, whichever shall first occur, contractor shall make all necessary
repairs to the buildings within the project arising out of defective
construction or building materials or any unapproved substantial deviation from
the plans and specifications. All other improvements shall be warranted for a
period of one (1) year commencing with Purchaser's use of same, such that
contractor shall make all necessary repairs
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to those improvements arising out of defective construction or building
materials. This one-year period does not establish a period of limitation with
respect to other obligations or the time within which a breach of this agreement
may be enforced.
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 in cash or other good funds the purchase
price due less the Deposit in escrow, adjusted for the prorations herein
provided for in Article IV.
(B) Execute and deliver an assumption of obligations under
leases, 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 (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, which would prevent Seller from selling the Property to Purchaser.
This warranty shall survive for one year following closing.
(C) All necessary action has been taken by Seller to authorize
the execution of this Agreement and the performance of the obligations
contemplated hereunder. This warranty shall survive for one year following
closing.
(D) Except as disclosed to Purchaser in writing, Seller 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 following closing.
(E) Seller has no actual knowledge of any patent or latent
defect in the Property or any part thereof. This warranty shall survive for one
year following closing.
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(F) Seller has no actual knowledge of any existing or
threatened litigation which relates to or which would affect the Property. This
warranty shall survive for one year following closing.
(G) All building and other improvements at the Property are
located entirely within the boundary lines of the Property.
(H) Seller has no actual knowledge 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. That Seller will receive approval for the
construction as set forth in this Agreement. This warranty shall survive for one
year following closing.
(I) That to the best knowledge of the Seller, the drainage
within the project complies in all respects with the agreed-upon Plans approved
by the municipality. 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.
(K) 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 the date of
initial occupancy and the date of closing, Seller shall maintain, operate and
manage the Property in a professional manner. 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 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. Subject to Seller's right to notice and cure, 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.
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8.3 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Notwithstanding the provisions of 8.2 above, Seller shall indemnify Purchaser
for all reasonable direct, out-of-pocket costs incurred as a result of the
willful failure of any of Seller's representations, warranties or covenants
contained herein to remain true as of the date of closing.
ARTICLE IX
CONDEMNATION; RISK OF LOSS
9.1 (A) SUBSTANTIAL LOSS. In the event that the Property or any portion
thereof is damaged or destroyed after the date hereof and prior to the Closing
resulting in a loss in excess of Two Hundred Fifty Thousand ($250,000) Dollars
(whether by fire, flood, or other casualty), the Purchaser may elect:
(i) to terminate this Agreement and any and all
obligations, contractual or otherwise, to purchase the Property (and to receive
back the earnest money), by giving written notice to the Seller, within fifteen
(15) days after receipt by the Purchaser of a written notice from the Seller of
(1) such damage, destruction or taking and (2) the amount of the award paid or
payable with respect to such damage, destruction or taking; or
(ii) to consummate the purchase of the Property,
without reduction of the Purchase Price.
If the Purchaser shall elect to consummate the purchase of the Property pursuant
to clause (ii) immediately preceding, the Seller shall, on the Closing Date, pay
to the Purchaser all insurance proceeds, deductible, loss of rent insurance and
other payments in connection with such damage, destruction or taking theretofore
actually received by the Seller less any amounts reasonably expended by the
Seller for any repairs, and, in addition, the Seller shall transfer and assign
to the Purchaser all rights of the Seller with respect to payments up to the
amount of the Purchase Price by or from and with respect to recovery against any
party whomsoever for damages or compensation on account of such damage,
destruction or taking.
(B) LESS THAN SUBSTANTIAL LOSS. In the event that the Property
or any portion thereof is damaged or destroyed after the date hereof and prior
to the Closing resulting in a loss of less than Two Hundred Thousand ($200,000)
Dollars (whether by fire, flood, or other casualty), the Seller may elect:
(i) to repair and restore the Property so that it
shall be in substantially the same condition as immediately prior to such damage
or destruction or taking, and the Closing shall be appropriately delayed; or
(ii) to consummate the sale of the Property, without
reduction of the Purchase Price. If Seller shall elect to consummate the sale of
the Property pursuant to clause (ii) immediately preceding, the Seller, shall,
on the Closing Date, pay to the Purchaser all insurance awards, deductible, loss
of rent insurance and other payments in connection with such damage, destruction
or taking theretofore actually received by the Seller up to the amount of the
Purchase
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Price less any amounts reasonably expended by the Seller for any repairs, and,
in addition, the Seller shall transfer and assign to the Purchaser all rights of
the Seller with respect to payments by or from or with respect to recovery
against any party whomsoever for damages or compensation on account of such
damage, destruction or taking.
(C) NOTICE OF DAMAGE. The Seller and/or Purchaser shall notify
the other party promptly upon the occurrence of any damage, destruction, taking
or threat of taking with respect to the Property, as well as the amount of
insurance coverage or condemnation award or awards, as applicable, and shall
promptly give all other notices contemplated under this Section.
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) 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.
ARTICLE X
BROKER'S COMMISSION
10.1 COMMISSION. Seller agrees to pay a brokerage fee to McGUIRE
PROPERTIES, 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.
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11.2 DEFAULT. Upon either Seller's or Purchaser's default, the other
party, at its election, may either (1) require specific performance of the other
party, or pursue its other remedies at law or equity, (2) cancel this Agreement
and Purchaser shall obtain a prompt return of the deposit, in which case this
Agreement shall be terminated and the parties released from all obligations
hereunder, however, upon Purchaser's default and the termination of this
Agreement, the Seller shall retain the deposit as liquidated damages, or (3) the
parties may waive such defaults and proceed to settlement. The parties shall
indemnify each other for any reasonable costs incurred by them if they elect to
pursue their option (1) noted above, to include reasonable attorney fees.
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. Purchaser may assign this Agreement without the
consent of Seller.
12.3 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.
12.4 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.
12.5 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.
12.6 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.
12.7 INCORPORATION BY REFERENCE. All of the Exhibits referred to herein
and/or attached hereto shall be deemed to constitute a part of the Agreement.
12.8 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.
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12.9 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.
12.10 RETURN OF ESCROW. Whenever the escrow is returned to the
Purchaser, it shall include interest thereon.
12.11 NOTICE AND CURE. In the event (i) any contingency which would
permit Purchaser to terminate this Agreement has not been satisfied and has not
been waived by Purchaser, or (ii) Seller is in default under this Agreement,
Purchaser shall deliver written notice to Seller specifying the contingency or
contingencies which have not been satisfied and/or the nature of Seller's
default. Thereafter, Seller shall have a period of thirty (30) days to cure the
unsatisfied contingency and/or the default.
12.12 FORCE MAJEURE. Seller's performance hereunder shall be subject to
delays caused by reasons beyond the control of Seller which are generally deemed
to be matters of "force majeure".
12.13 NO PARTNERSHIP. The relationship between Purchaser and Seller is
strictly that of contract parties and shall not be deemed or construed to be a
partnership, joint venture, unincorporated association or a principal/agent
relationship.
12.14 CONFIDENTIALITY. The parties shall keep confidential the
existence of this Agreement, the transactions described herein, and all
information obtained from the other party both during and subsequent to the
transaction. However, the covenants contained in this paragraph shall not apply
in respect to any information which (a) was already known to either party when
such information was received from the other, (b) was readily available to the
general public at the time of such receipt, (c) subsequently becomes known to
the general public through no fault or omission by the other party, (d) is
subsequently disclosed by a third party which has the bona fide right to make
such disclosure, or (e) is required to be disclosed by law or a governmental
agency. This clause shall survive closing.
12.15 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:
(a) EXHIBIT A, the legal description of the Land.
(b) EXHIBIT B, list of personal property.
(c) EXHIBIT C, Plans and Specifications.
(d) EXHIBIT D, the Land Contract
(e) EXHIBIT E, Minimum Lease Qualifications
(f) EXHIBIT F, Rent Schedule
(g) EXHIBIT G, Representation Letter
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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: Meridia/New Leicester, LLC
c/o Meridia, Inc.
P.O. Box 10528
Greenville, SC 29603
Attention: John H. Crabtree, III
Fax: (864) 232-8146
With a copy to
Seller's Attorneys: Marion M. Goodyear, Esq.
Suite 1102, NationsBank Plaza
7 N. Laurens Street
Greenville, SC 29601
Fax: (864) 271-6684
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
575 Chestnut St., P.O. Box 488
Cedarhurst, NY 11516
Fax: (516) 374-3490
-and-
Ted Oliver, Esq.
Manning, Fulton & Skinner
500 UCB Plaza
3605 Glenwood Avenue
Raleigh, NC 27612
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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 fax transmission. Notices sent in any other
manner shall be deemed given only when actually delivered at the specified
address.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed this day and date first written above.
SELLER:
MERIDIA/NEW LEICESTER, LLC
By: /s/ John H. Crabtree, III
----------------------------
Its: Member
----------------------------
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ S. J. Olander, Jr.
----------------------------
Its: S. V. P.
----------------------------
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FIRST MODIFICATION TO PURCHASE CONTRACT
THE MEADOWS-PHASE II, SECTION I
THIS FIRST MODIFICATION TO PURCHASE CONTRACT ("Modification") is made
and entered into this 14 day of August, 1997 between CORNERSTONE REALTY INCOME
TRUST, INC. ("Purchaser") and MERIDIA/NEW LEICESTER, LLC ("Seller").
WHEREAS, Purchaser and Seller entered into a Purchase Contract dated
the 14th day of August, 1997 ("Agreement"); and
WHEREAS, Purchaser and Seller now desire to modify and amend the
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreement hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement.
2. ARTICLE XII is hereby modified to add the following Paragraph 12.18:
"12.18 ASSIGNMENT OF CONTRACT. The parties agree that Seller
shall have the right to obtain a construction loan and the Purchaser
agrees to permit the assignment of this contract to a bank ("Bank")
pursuant to a Tri-party Agreement ("the Collateral Assignment"),
subject to the protection of Seller's interests. The parties shall
negotiate in reasonable good faith with Seller's Bank during the
contingency period of the Land Contract to agree upon the terms and
conditions of the Collateral Assignment. If a satisfactory Collateral
Assignment is not agreed to by the parties, either party, at its
election, may terminate this Agreement and the Land Contract prior to a
date thirty (30) days after the date of this First Modification. The
Seller shall deliver (i) copies of its payment and performance bonds;
and (ii) draw requests and lien waivers for all contractors and
material subcontractors at every draw."
3. Except as herein modified, the terms and provisions of the
Agreement shall remain in full force and effect.
4. In the event there is any conflict in the terms of this
Modification and the terms of the Agreement, the terms of this Modification
shall govern.
5. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.,
a Virginia Corporation
By: /s/ S. J. Olander
-----------------------------
Name: S.J. Olander
---------------------------
Its: S.V.P.
----------------------------
MERIDIA/NEW LEICESTER, LLC
By: /s/ John H. Crabtree III
-----------------------------
Name: John H. Crabtree III
---------------------------
Its: Member
<PAGE>
SECOND MODIFICATION TO PURCHASE CONTRACT
THE MEADOWS-PHASE II, SECTION I
THIS SECOND MODIFICATION TO PURCHASE CONTRACT ("MODIFICATION") is made
and entered into this 31st day of August, 1998 between CORNERSTONE REALTY GROUP,
INC. ("PURCHASER") and MERIDIA/NEW LEICESTER, LLC ("SELLER").
WHEREAS, Purchaser and Seller entered into an Agreement of Sale dated
the day of July 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the day of August 1997; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
2. ARTICLE II, Paragraph 2.1 PURCHASE PRICE, is hereby amended to read:
"The total purchase price shall be EIGHT MILLION FOUR HUNDRED
TWENTY FIVE THOUSAND ($8,425,000) DOLLARS as evidenced by cash or cash
equivalent at closing."
3. ARTICLE XII is hereby further amended to add the following
Paragraph 12.19:
"12.19 ENGINEERING AND SUPERVISION FEE. Seller agrees to
retain the services of Lidge Johnson as a supervising engineer and to
pay for his services in the amount of SEVENTY FIVE THOUSAND ($75,000)
DOLLARS."
4. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
4. In the event there is any conflict in the terms of this Modification
and the terms of the Agreement, the terms of this Modification shall govern.
5. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of
<PAGE>
which taken together will constitute one agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.,
a Virginia Corporation
By: /s/ Gus G. Remppies
-----------------------------
Name: Gus G. Remppies
---------------------------
Its: V.P.
----------------------------
MERIDIA/NEW LEICESTER, LLC
By: /s/ John H. Crabtree III
-----------------------------
Name: John H. Crabtree III
---------------------------
Its: Manager
----------------------------
<PAGE>
THIRD MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS-PHASE II, SECTION I)
This Third Modification to Purchase Contract ("MODIFICATION") is made
and entered into this 14th day of January 1999 between CORNERSTONE REALTY GROUP,
INC. ("PURCHASER") and ASHEVILLE APARTMENTS ASSOCIATES, LLC
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
14th day of August 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August 1998; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
2. ARTICLE II, Paragraph 2.1, which was previously amended by the
Second Modification, is hereby further amended to read:
2.1 PURCHASE PRICE. The total purchase price shall be EIGHT
MILLION SEVEN HUNDRED SIXTY ONE THOUSAND ($8,761,000) DOLLARS as
evidenced by cash or cash equivalent at closing.
3. ARTICLE VII. Paragraph 7.1(A)(i), is hereby amended to read as follows:
7.1(A)(i) Occupancy of the premises shall be no less than
1
<PAGE>
seventy-five (75%) percent under the terms and conditions as set forth
in the aforesaid Exhibit F (as amended and attached hereto), or 126
units (occupancy rate defined as physically occupied units plus
pre-leased units minus notices to vacate) with actual annualized rental
on day of closing of $1,007,640.
4. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
5. In the event there is any conflict in the terms of this Modification
and the terms of the Agreement, the terms of this Modification shall govern.
6. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.,
By: /s/ Gus G. Remppies
-----------------------------
Name: Gus G. Remppies
---------------------------
Its: Vice-President
----------------------------
MERIDIA/NEW LEICESTER, LLC
By: /s/ John H. Crabtree, III
-----------------------------
Name: John H. Crabtree, III
---------------------------
Its: Manager
----------------------------
2
<PAGE>
FOURTH MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS - PHASE II, SECTION 1)
This Fourth Modification to Purchase Contract ("Modification") is made
and entered into this 18th day of October, 1999 between CORNERSTONE REALTY
GROUP, INC. ("Purchaser") and ASHEVILLE APARTMENTS ASSOCIATES, LLC ("Seller").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
14th day of August, 1997 ("Agreement"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August, 1998; and
WHEREAS, Purchaser and Seller entered into a Third Modification to
Purchase Contract on the 14th day of January, 1999; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreement hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously
modified.
2. Section 7.1 of the Agreement shall be amended to provide that the
final date upon which closing may occur shall be November 15,
1999.
3. Purchaser acknowledges that all conditions precedent to closing
set forth under Article VI of the Agreement (including, without
limitation, occupancy and inspection conditions) have been
satisfied by Seller, and Purchaser hereby waives and releases any
rights Purchaser may have under said Article VI.
4. Except as herein modified, the terms and provisions of the
Agreement shall remain in full force and effect.
5. In the event there is any conflict in the terms of this
Modification and the terms of the Agreement, the terms of this
Modification shall govern.
6. This Modification may be executed in separate counterparts, each
of which shall be deemed an original and all of which taken
together will constitute one agreement between the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
--------------------------------
Gus G. Remppies, Vice President
ASHEVILLE APARTMENTS ASSOCIATES, LLC
By: /s/ John H. Crabtree
--------------------------------
John H. Crabtree, III, Manager
<PAGE>
FIFTH MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS - PHASE II, SECTION I)
This Fifth Modification to Purchase Contract ("MODIFICATION") is made
and entered into this 16th day of November 1999 between CORNERSTONE REALTY
GROUP, INC. ("PURCHASER") and ASHEVILLE APARTMENTS ASSOCIATES, LLC").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
14th day of August 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August 1998; and
WHEREAS, Purchaser and Seller entered into a Third Modification to
Purchase Contract on the 14th day of January 1999; and
WHEREAS, Purchaser and Seller entered into a Fourth Modification to
Purchase Contract on the ______ day of October 1999; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
2. Section 7.1 of the Agreement shall be further amended to provide
that the final date upon which closing may occur shall be January 20, 2000.
3. Section 2.2 of the Agreement shall be amended to provided that in
lieu of the Letter of Credit, the Purchaser shall deliver immediately after the
execution of this Fifth Amendment
1
<PAGE>
the sum of ONE HUNDRED FIFTY ($150,000) DOLLARS directly to the Seller, which
sum shall be applied towards the purchase price. In the event that the Seller
shall default for any reason, then said $150,000 shall be returned to the
Purchaser and in addition, the Purchaser shall have the option to exercise any
rights and remedies which it may have under the Agreement.
4. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
5. In the event there is any conflict in the terms of this Modification
and the terms of the Agreement, the terms of this Modification shall govern.
6. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
7. If Purchaser elects to make this transaction as part of a Section
1031 exchange transaction, Seller shall use its reasonable efforts to cooperate
provided that: (i) Seller shall not be responsible for any costs related to the
exchange aspects of the transaction, and (ii) nothing contained in the
documentation for the exchange shall be deemed to extend the closing date set
forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
----------------------------
Name: Gus G. Remppies
-------------------------
Its: S.V.P.
--------------------------
ASHEVILLE APARTMENTS ASSOCIATES, LLC
By: John H. Crabtree, III
----------------------------
Name: John H. Crabtree, III
--------------------------
Its: Manager
--------------------------
2
<PAGE>
SIXTH MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS - PHASE II, SECTION I)
This Sixth Modification to Purchase Contract ("MODIFICATION") is made
and entered into this 20th day of January 2000 between CORNERSTONE REALTY GROUP,
INC. ("PURCHASER") and ASHEVILLE APARTMENTS ASSOCIATES, LLC").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
14th day of August 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August 1998; and
WHEREAS, Purchaser and Seller entered into a Third Modification to
Purchase Contract on the 14th day of January 1999; and
WHEREAS, Purchaser and Seller entered into a Fourth Modification to
Purchase Contract on the 18th day of October 1999; and
WHEREAS, Purchaser and Seller entered into a Fifth Modification to
Purchase Contract on the 16th November 1999; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
2. Section 7.1 of the Agreement shall be further amended to provide
that the final date upon which closing may occur shall be February 3, 2000.
1
<PAGE>
3. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
4. In the event there is any conflict in the terms of this Modification
and the terms of the Agreement, the terms of this Modification shall govern.
5. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
----------------------------
Name: Gus G. Remppies
-------------------------
Its: S.V.P.
--------------------------
ASHEVILLE APARTMENTS ASSOCIATES, LLC
By: John H. Crabtree, III
----------------------------
Name: John H. Crabtree, III
--------------------------
Its: Manager
--------------------------
2
<PAGE>
SEVENTH MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS - PHASE II, SECTION I)
This Seventh Modification to Purchase Contract ("MODIFICATION") is made
and entered into this 1st day of February 2000 between CORNERSTONE REALTY GROUP,
INC. ("PURCHASER") and ASHEVILLE APARTMENTS ASSOCIATES, LLC ("SELLER").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
14th day of August 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August 1998; and
WHEREAS, Purchaser and Seller entered into a Third Modification to
Purchase Contract on the 14th day of January 1999; and
WHEREAS, Purchaser and Seller entered into a Fourth Modification to
Purchase Contract on the 18th day of October 1999; and
WHEREAS, Purchaser and Seller entered into a Fifth Modification to
Purchase Contract on the 16th November 1999; and
WHEREAS, Purchaser and Seller entered into a Sixth Modification to
Purchase Contract on the 20th day of January 2000; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
1
<PAGE>
2. Section 7.1 of the Agreement shall be further amended to provide
that the final date upon which closing may occur shall be February 17, 2000.
3. Section 2.2 of the Agreement, which was previously amended by the
Fifth Modification dated the 16th day of November 1999, is hereby further
amended to provide that upon the execution of this Seventh Modification,
Purchaser shall deliver an additional TWO HUNDRED FIFTY THOUSAND ($250,000)
DOLLARS directly to the Seller, which sum shall be applied towards the purchase
price, making a total of FOUR HUNDRED THOUSAND ($400,000) DOLLARS to be applied
towards the purchase price. Said amount shall be returned to the Purchaser in
the event of a default by the Seller. In addition thereto, Purchaser shall have
the option to exercise any rights and remedies it may have under the Agreement.
4. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
5. In the event there is any conflict in the terms of this
Modification and the terms of the Agreement, the terms of this Modification
shall govern.
6. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
---------------------------
Name Gus G. Remppies
---------------------------
Its: S.V.P.
---------------------------
ASHEVILLE APARTMENTS ASSOCIATES, LLC
By:
---------------------------
Name:
---------------------------
Its:
---------------------------
2
<PAGE>
EIGHTH MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS - PHASE II, SECTION I)
This Eighth Modification to Purchase Contract ("MODIFICATION") is made
and entered into this 14th day of February 2000 between CORNERSTONE REALTY
GROUP, INC. ("PURCHASER") and ASHEVILLE APARTMENTS ASSOCIATES, LLC ("SELLER").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
14th day of August 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August 1998; and
WHEREAS, Purchaser and Seller entered into a Third Modification to
Purchase Contract on the 14th day of January 1999; and
WHEREAS, Purchaser and Seller entered into a Fourth Modification to
Purchase Contract on the 18th day of October 1999; and
WHEREAS, Purchaser and Seller entered into a Fifth Modification to
Purchase Contract on the 16th November 1999; and
WHEREAS, Purchaser and Seller entered into a Sixth Modification to
Purchase Contract on the 20th day of January 2000; and
WHEREAS, Purchaser and Seller entered into a Seventh Modification to
Purchase Contract on the 1st day of February 2000; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to
1
<PAGE>
them in the Agreement unless previously modified.
2. Section 7.1 of the Agreement shall be further amended to provide
that the final date upon which closing may occur shall be FEBRUARY 29, 2000.
3. Section 2.2 of the Agreement, which was previously amended by the
Fifth and the Seventh Modifications dated the 16th day of November 1999 and the
1st day of February 2000, respectively, is hereby further amended to provide
that upon the execution of this Eighth Modification. Purchaser shall deliver an
additional ONE HUNDRED THOUSAND ($100,000) DOLLARS directly to the Seller, which
sum shall be applied towards the purchase price, making a total of FIVE HUNDRED
THOUSAND ($500,000) DOLLARS to be applied towards the purchase price. Said
amount shall be returned to the Purchaser in the event of a default by the
Seller. In addition thereto, Purchaser shall have the option to exercise any
rights and remedies it may have under the agreement.
4. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
5. In the event there is any conflict in the terms of this Modification
and the terms of this Agreement, the terms of this Modification shall govern.
6. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
---------------------------
Name Gus G. Remppies
---------------------------
Its: S.V.P.
---------------------------
ASHEVILLE APARTMENTS ASSOCIATES, LLC
By: /s/ John H. Crabtree, III
---------------------------
Name: John H. Crabtree, III
---------------------------
Its: Manager
---------------------------
<PAGE>
NINTH MODIFICATION TO PURCHASE CONTRACT
(THE MEADOWS - PHASE II, SECTION I)
This Ninth Modification to Purchase Contract ("MODIFICATION") is made
and entered into this 29th day of February 2000 between CORNERSTONE REALTY
GROUP, INC. ("PURCHASER") and ASHEVILLE APARTMENTS ASSOCIATES, LLC ("SELLER").
WHEREAS, Purchaser and Seller entered into a Purchaser Contract on the
14th day of August 1997 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller entered into a First Modification to
Purchase Contract on the 14th day of August 1997; and
WHEREAS, Purchaser and Seller entered into a Second Modification to
Purchase Contract on the 31st day of August 1998; and
WHEREAS, Purchaser and Seller entered into a Third Modification to
Purchase Contract on the 14th day of January 1999; and
WHEREAS, Purchaser and Seller entered into a Fourth Modification to
Purchase Contract on the 18th day of October 1999; and
WHEREAS, Purchaser and Seller entered into a Fifth Modification to
Purchase Contract on the 16th November 1999; and
WHEREAS, Purchaser and Seller entered into a Sixth Modification to
Purchase Contract on the 20th day of January 2000; and
WHEREAS, Purchaser and Seller entered into a Seventh Modification to
Purchase Contract on the 1st day of February 2000; and
WHEREAS, Purchaser and Seller entered into an Eight Modification to
Purchase Contract on the 14th day of February 2000; and
WHEREAS, Purchaser and Seller now desire to further modify and amend
the
1
<PAGE>
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
2. ARTICLE II, Paragraph 2.1, which was previously amended by the
Second and Third Modifications, is hereby further amended to read:
2.1 PURCHASE PRICE. The total purchase price shall be
EIGHT MILLION SEVEN HUNDRED EIGHTY SIXTY THOUSAND
($8,786,000) DOLLARS as evidenced by cash or cash
equivalent at closing.
3. Section 2.2 of the Agreement, which was previously amended by the
Fifth, Seventh and Eighth Modifications dated the 16th day of November 1999, the
1st day of February 2000, and the 14th day of February 2000 respectively, is
hereby further amended to provide that upon the execution of this Ninth
Modification, Purchaser shall deliver an additional TWO HUNDRED FIFTY THOUSAND
($250,000) DOLLARS directly to the Seller, which sum shall be applied towards
the purchase price, making a total of SEVEN HUNDRED FIFTY THOUSAND ($750,000)
DOLLARS to be applied towards the purchase price. Said amount shall be returned
to the Purchaser in the event of a default by the Seller. In addition thereto,
Purchaser shall have the option to exercise any rights and remedies it may have
under the Agreement.
4. Section 7.1 of the Agreement shall be further amended to provide
that the final date upon which closing may occur shall be MARCH 15, 2000.
5. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
6. In the event there is any conflict in the terms of this Modification
and the terms of the Agreement, the terms of this Modification shall govern.
7. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
----------------------------
Name: Gus G. Remppies
-------------------------
Its: S.V.P.
--------------------------
ASHEVILLE APARTMENTS ASSOCIATES, LLC
By: /s/ John H. Crabtree, III
----------------------------
Name: John H. Crabtree, III
--------------------------
Its: Manager
--------------------------
3
Exhibit 10.2
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 20th day of April
2000, between CORNERSTONE REALTY GROUP, INC. or its nominee, (hereinafter called
"Purchaser") and GREYSTONE CROSSING APARTMENTS, LLC, a North Carolina limited
liability company, and GCA-II, LLC, a North Carolina limited liability company,
(hereinafter GREYSTONE CROSSING APARTMENTS, LLC and GCA-II, LLC are collectively
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 GREYSTONE CROSSING
APARTMENTS located in Charlotte, NC, with all buildings and improvements located
thereon, as more particularly described in the attached legal description in
EXHIBIT A including, but not limited to 408 individually heated and air
conditioned apartment units (Phase I comprised of 300 units and Phase II
comprised of 108 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 shall be TWENTY
SIX MILLION EIGHT HUNDRED THOUSAND ($26,800,000) DOLLARS as evidenced by cash or
cash equivalent at closing. The parties agree to allocate the purchase price
among the purchased assets for federal and state tax purposes in accordance with
EXHIBIT C.
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 the Title Company of North
Carolina or its authorized agent as an earnest money deposit which may be
credited against the purchase price or applied as per Article XI below. Any
interest which shall accrue with respect to said deposit shall accrue for the
benefit of Purchaser.
ARTICLE III
TITLE MATTERS
3.1 Marketable Title. Seller, shall convey good and marketable
title by Special Warranty Deed, in the form attached hereto as EXHIBIT D,
subject only to general taxes
<PAGE>
for the current year not yet due and payable and utility easements which do not
interfere with the present use of the Property and the exceptions listed on
EXHIBIT G hereto ("Permitted Exceptions").
(A) Title shall be free from any and all liens or mortgages
(other than Permitted Exceptions) and Seller shall be responsible for any
prepayment penalties necessary to deliver such free title.
3.2 TITLE DEFECTS; ELECTION TO CURE. Seller shall deliver to
Purchaser a copy of its previous title insurance. 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
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.
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. If Purchaser does not elect
to void this Agreement, such defects shall become Permitted Exceptions with
respect to the Property.
ARTICLE IV
PRORATIONS
4.1 INCOME AND EXPENSE ALLOCATIONS. The following shall be
prorated, on a calendar-month basis, to the day of 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. Seller shall pay the costs of revenue stamps and
recording fees 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. Seller shall pay any prepayment penalty charged by the holders of any
existing notes.
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 such arrears
actually paid by such tenants to
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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 would become liable, then Seller shall pay to Purchaser said amount in
a lump sum 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.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS PRECEDENT. (a) 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 (ordered by Purchaser at its expense), 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 twenty-one (21) days,
pursuant to Paragraph 6.2.4, in which to review the reports set forth herein and
exercise its right to reject the Property based thereon or the right hereunder
shall be deemed waived. At Seller's request, Purchaser will provide to Seller a
copy of each engineering report prepared in connection with the Property at its
actual cost.
(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
and 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 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.
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(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. Within three (3) business
days of 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. A copy of any
environmental or engineering reports on the property. All these items shall be
certified by Seller to be accurate and complete in all material respects to the
best of its knowledge and belief.
6.2.2 INSPECTION OF BOOKS AND RECORDS; ACCESS. Upon receipt by
Purchaser of all documents requested in the paragraph above, Purchaser, its
employees, agents and contractors shall have 21 days (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, 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, 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, or for any other reason, then
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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 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
twenty-one (21) days from the date of this Agreement or such other date as the
parties may agree to in writing.
6.2.5 "RENT READY". During the "Inspection Period", both
Seller and Purchaser will inspect a vacant apartment unit at the Property and
mutually agree that said apartment shall be representative of a "rent ready"
unit by which all other vacant 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.
6.2.6 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. 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.
ARTICLE VII
CLOSING
7.1 CLOSING. Closing will be held seven (7) days after the
completion of the Inspection Period, 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 Special 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, in the form attached hereto as
EXHIBIT E, with warranty of title transferring the personal property (as shown
in Exhibit 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 NORTH
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CAROLINA.
(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 in all material respects 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 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 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 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.
(J) Evidence satisfactory to Purchaser that all
water, sewer, gas, electric, telephone, and drainage facilities and all other
utilities required by law or by the normal use and operation of the Property are
and at the time of closing will be installed to the property line, are and at
the time of closing will be connected pursuant to valid permits, and are and at
the time of closing adequate to service the Property and to permit full
compliance with all requirements of law and normal usage of the Property by the
tenants thereof and their licensees and invitees.
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(K) 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.
(L) Provide documents for the transfer of the
telephone, electric, water and sewer, and gas utilities, as may be required by
the utility, for execution at closing.
(M) Satisfactory evidence of the power and authority
of Seller to enter into and consummate this agreement, including but not limited
to:
(i) An opinion of Seller's counsel, in a
form satisfactory to Purchaser, stating that:
(a) The individual(s) executing the
deed and related documents are duly authorized to do all such acts as are
necessary to consummate this sale.
(b) That the officer of the manager
of the Seller can bind the Seller.
(N) Affidavit that Seller has no actual knowledge of
the presence of asbestos and/or any other hazardous material at the Property.
(O) 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.
(P) A notice letter to all the residents of the
apartment complex as to change of ownership in the form prepared by the
Purchaser.
(Q) 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.
(R) A representation letter as normally required by
auditors for a public company in the form attached hereto as EXHIBIT F. This
clause shall survive closing for one year.
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, allocations and closing costs herein
provided for in Article IV. However, it is understood that SIX MILLION
($6,000,000) DOLLARS of said purchase price shall be placed
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in escrow with Ted Oliver, Esq. ("Escrow Holder"), with offices at 500 UCB
Plaza, 3605 Glenwood Avenue, Raleigh, NC 27612, as agent for the Title Company
of North Carolina, subject to the terms set forth in Article VIII in an
interest-bearing account with interest thereon to accrue for the benefit of the
Purchaser.
(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
PHASE II ESCROW
8.1 CONDITIONS OF ESCROW. It is understood that the SIX
MILLION ($6,000,000) DOLLARS escrow referred to in Article VII, Paragraph
7.3(A), will be delivered to Escrow Holder at the time of closing. Said escrow
shall be placed in an interest-bearing account, which interest shall accrue to
the benefit of the Purchaser. Said escrow, without the interest earned thereon,
is to be released to the Seller upon the following terms and conditions:
(A) Completion of the "punch list" items for Phase II
as set forth in EXHIBIT H. Upon completion of the "punch list" items, in Exhibit
H, Seller shall give written notice of completion to Purchaser. Purchaser shall
provide Seller with written notice that Purchaser agrees that Seller has, in
fact, completed the "punch list" items in Exhibit H within ten (10) days from
receipt of Seller's notice of completion.
(B) Phase II shall have achieved eighty-five (85%)
percent occupancy.
(C) Upon compliance with the above items (A) and (B),
then within seven (7) days after Escrow Holder shall have been notified in
writing and instructed by both parties to terminate the escrow and deliver the
SIX MILLION ($6,000,000) DOLLARS to the Seller. However, the escrow shall not be
delivered for a minimum of sixty (60) days with an automatic extension of an
additional thirty (30) days unless Purchaser shall have previously notified the
Escrow Holder otherwise. Notwithstanding the foregoing, however, provided that
Section 8.1(A) has been satisfied by Seller, the escrow shall be released no
later than ninety (90) days after closing.
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ARTICLE IX
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 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) 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. This warranty shall survive for one year following closing.
(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 following closing.
(E) Seller has no actual knowledge of any material
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 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 no actual knowledge that any part of
the Property or the operation of the Property, is in material violation or may
materially 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
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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 to the best knowledge of the Seller, the
drainage within the project is satisfactory and complies in all respects with
all government regulation. This warranty shall survive for one year following
closing.
(K) That Seller is not a "foreign person" within the
meaning of the Internal Revenue Code of 1986, as amended (the "Code"), and that
Seller will furnish to Purchaser prior to closing an affidavit in form
satisfactory to Purchaser confirming the same.
(L) 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.
(M) 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 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.
9.2 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. If Purchaser shall have knowledge at
closing of the breach of a representation, warranty, covenant or agreement made
for its benefit herein or in any other document delivered herewith and elects
not to terminate this Agreement but proceed to closing, Purchaser shall be
deemed to have waived the breach of such representation, warranty, covenant or
agreement and Seller shall have no liability with respect thereto.
9.3 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Notwithstanding the provisions of 9.2 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 as of,
which failure occurs between the date of closing from the date of termination of
the Inspection Period and the date of closing.
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ARTICLE X
CONDEMNATION; RISK OF LOSS
10.1 PROPERTY DAMAGE. If, prior to closing, any part of the
Property is damaged by fire or other casualty in an amount not greater than TWO
HUNDRED THOUSAND ($200,000) DOLLARS, Purchaser agrees to accept the Property
with an assignment of: (i) the insurance proceeds, (ii) any deductible, and
(iii) rent loss insurance proceeds. Seller shall have the option to repair such
damage before the date provided herein for Closing. In the event that the damage
as a result of fire or other casualty cannot be reasonably repaired by such
time, 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 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. Seller shall promptly notify Purchaser in
writing upon the occurrence of any such damage.
10.2 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 greater than TWO
HUNDRED THOUSAND ($200,000) DOLLARS or 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) 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) shall be paid to the Purchaser
at Closing, if such payment has been received. If payment has not as yet been
received, but an amount has been agreed upon, Seller shall assign the claim to
Purchaser.
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
11.1 BROKER. Seller and Purchaser represent and warrant to
each other that no broker brought about this transaction and, therefore, no
brokerage fees are or shall be owing in connection with this transaction. Seller
and Purchaser agree to hold each other harmless in connection with any such
brokerage fees.
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ARTICLE XII
DEFAULT
12.1 DEFAULT DEFINED. Default for the purpose of this
Agreement shall mean any deliberate or intentional 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 it's election, may either (1) require specific performance of Seller, or
pursue its other remedies at law or equity, (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, 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 Seller as liquidated
damages. Such amount and terms are agreed upon by and between Seller and
Purchaser as liquidated damages, due to the difficulty and inconvenience of
ascertaining and measuring actual damages, and the uncertainty thereof, and the
payment of the deposit and the terms provided herein shall constitute full
satisfaction of Purchaser's obligations under this Agreement. Such amount is
agreed upon by and between Seller and Purchaser as a reasonable estimate of just
compensation for the harm caused by Purchaser's default. Seller shall have no
other remedy against Purchaser in the event of Purchaser's default.
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. Purchaser may assign all of its rights, but
not its obligations under this Agreement to a limited liability company without
the consent of Seller.
13.3 LIKE KIND EXCHANGE. Purchaser has advised Seller that
Purchaser is purchasing the Property to complete a like kind exchange
transaction under Section 1031 of the Internal Revenue Code of 1986, as amended.
Seller agrees to assist Purchaser in effecting such like kind exchange;
provided, however, that all costs incurred to effect such like kind exchange
shall be borne solely by Purchaser. Seller has advised Purchaser that Seller may
desire to effect a like kind exchange transaction under Section 1031 of the
Internal Revenue Code of 1986, as
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amended, with respect to some or all of the Property being purchased by
Purchaser. If Seller elects to effect a like kind exchange with respect to some
or all of the Property, Purchaser agrees to assist Seller in effecting such like
kind exchange; provided, however, that all costs incurred to effect such like
kind exchange shall be borne solely by Seller.
13.4 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.
13.5 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.
13.6 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.
13.7 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.
13.8 INCORPORATION BY REFERENCE. All of the Exhibits referred
to herein and/or attached hereto shall be deemed to constitute a part of the
Agreement.
13.9 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.
13.10 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.
13.11 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, legal description of the land
EXHIBIT B, list of personal property
EXHIBIT C, purchase price allocation
EXHIBIT D, form of Deed
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EXHIBIT E, (i) form of Bill of Sale, (ii) Assignments
and Assumptions of Leases, etc.
EXHIBIT F, form of Representation Letter
EXHIBIT G, Permitted Exceptions
EXHIBIT H, Phase II Punch List Items
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: Mr. Jeffery W. Kentner
State Street Companies, Inc.
211 East Boulevard
Charlotte, NC 28203
Tel: (704) 372-3703
Fax: (704) 372-3704
With a copy to
Seller's Attorneys: C. Mark Wiley, Esq.
Womble Carlyle Sandridge & Rice
200 West Second Street
Winston-Salem, NC 27101
Tel: (336) 721-3605
Fax: (336) 733-8406
To Purchaser: Mr. Gus Remppies
Cornerstone Realty Group, Inc.
306 E. Main Street
Richmond, VA 23219
Tel: (804) 643-1761
Fax: (804) 782-9302
With a copy to
Purchaser's Attorneys: Harry S. Taubenfeld, Esq.
Zuckerbrod & Taubenfeld
575 Chestnut St., P.O. Box 488
Cedarhurst, NY 11516
Tel: (516) 374-3133
Fax: (516) 374-3490
-and-
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Ted Oliver, Esq.
Manning, Fulton & Skinner
500 UCB Plaza
3605 Glenwood Avenue
Raleigh, NC 27612
Tel: (919) 787-8880
Fax: (919) 781-0811
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.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Agreement to be executed this day and date first written above.
SELLER:
GREYSTONE CROSSING APARTMENTS, LLC
By: STATE STREET COMPANIES, INC., Manager
By: /s/ Jeffery W. Kentner
-------------------------------------
Jeffery W. Kentner
Its: President
-------------------------------------
GCA-II, LLC
By: STATE STREET COMPANIES, INC., Manager
By: /s/ Jeffery W. Kentner
-------------------------------------
Jeffery W. Kentner
Its: President
-------------------------------------
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
-------------------------------------
Its: V. P. 4-20-00 GGR
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FIRST MODIFICATION TO PURCHASE CONTRACT
This First Modification to Purchase Contract ("Modification") is made
and entered into this 9th day of May 2000 between CORNERSTONE REALTY GROUP, INC.
or its nominee (hereinafter called "Purchaser") and GREYSTONE CROSSING
APARTMENTS, LLC and GCA-II, LLC (hereinafter collectively called "SELLER").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the
20th day of April 2000 ("AGREEMENT"); and
WHEREAS, Purchaser and Seller now desire to modify and amend the
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, Seller and Purchaser agree as follows:
1. All terms not specifically defined herein shall have the same
meaning as ascribed to them in the Agreement unless previously modified.
2. ARTICLE VIII, Paragraph 8.1(C), is hereby amended to read as
follows:
"(C) Upon compliance with the above items (A) and (B), then
within seven (7) days after Escrow Holder shall have been notified in
writing and instructed by both parties to terminate the escrow and
deliver the SIX MILLION ($6,000,000) DOLLARS to the Seller. However,
the escrow shall not be delivered for a minimum of sixty (60) days with
an automatic extension of an additional sixty (60) days unless
Purchaser shall have previously notified the Escrow Holder otherwise.
Notwithstanding the foregoing, however, provided that Section 8.1(A)
has been satisfied by Seller, the escrow shall be released no later
than one hundred twenty (120) days after closing."
3. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
4. In the event there is any conflict in the terms of this Modification
and the terms of the Agreement, the terms of this Modification shall govern.
5. This Modification may be executed in separate counterparts, each of
which shall be deemed an original and all of which taken together will
constitute one agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Modification
on the date first above written.
SELLER:
GREYSTONE CROSSING APARTMENTS, LLC
By: STATE STREET COMPANIES, INC., Manager
By: /s/ Tiffany Gay
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Its: V. P.
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GCA-II, LLC
By: STATE STREET COMPANIES, INC., Manager
By: /s/ Tiffany Gay
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Its: V. P.
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PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ Gus G. Remppies
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Its: V. P.
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