<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
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)
August 29, 1997
American Real Estate Investment Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-12514 84-1246585
- --------------------------------------- ----------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1670 Broadway, Suite 3350, Denver, Colorado 80202
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(Address of principal executive offices)
Registrant's telephone number, including area code: 303-869-4700
------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
------------------------------------
On August 29, 1997, pursuant to an agreement dated March 20, 1997 which was
subsequently amended on July 1, 1997, American Real Estate Investment
Corporation (the "Company"), through a limited partnership of which a wholly
owned subsidiary is the general partner and the Company's operating partnership
is the sole limited partner, sold the 276 unit apartment complex known as the
Sedona Apartments, which was constructed in 1971 and is located at 1039 South
Parker Road in Denver, Colorado. The gross selling price for the property was
$9,150,000. The property was sold to Greentree Village, Ltd., an unaffiliated
entity.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statement of businesses acquired.
Not applicable
(b) Pro forma financial information.
Pro Forma Balance Sheet as of June 30, 1997 (unaudited)
Pro Forma Statement of Operations for the six months ended June
30, 1997 (unaudited) and for the year ended December 31, 1996
(unaudited)
(c) Exhibits.
10(o) Contract for Purchase and Sale of Sedona Apartment Complex
dated as of March 20, 1997
10(o) Agreement to Amend/Extend Contract dated as of July 1,
1997
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.
American Real Estate
Investment Corporation
By: /s/ Rick A. Burger
----------------------------
Rick A. Burger, Treasurer
Dated: September 4, 1997
Enclosures
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
The pro forma balance sheet is presented as if the disposition of Sedona
apartments ("Sedona") had occurred on June 30, 1997. The sale of International
Apartments was reflected in the Company's historical consolidated balance sheet
as of December 31, 1996 and the sale of Timberleaf apartments was reflected in
the Company's historical consolidated balance sheet as of June 30, 1997. The pro
forma balance sheet should be read in conjunction with the financial statements
filed by the Company with the Securities and Exchange Commission, including the
Company's Form 10-QSB for the six months ended June 30, 1997.
This unaudited pro forma balance sheet is not necessarily indicative of what the
actual financial position would have been at June 30, 1997, nor does it purport
to represent the future financial position of the Company.
<TABLE>
<CAPTION>
American Pro Forma
Real Estate Adjustments
Investment -----------------
Corporation Sedona Pro Forma
----------------- ----------------- ----------------
(A)
<S> <C> <C> <C>
ASSETS
- ------
Real estate, net $ 35,159 $ (5,132)(B) $ 30,027
Other assets 5,371 2,573 (B)(C) 7,944
----------------- ----------------- ----------------
Total assets $ 40,530 $ (2,559) $ 37,971
================= ================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage notes payable $ 32,189 $ (5,678)(B) $ 26,511
Other liabilities 858 (165)(B) 693
----------------- ----------------- ----------------
Total liabilities 33,047 (5,843) 27,204
----------------- ----------------- ----------------
Minority interest 2,758 2,997 (C) 5,755
Shareholders' equity:
Preferred stock 0 0 0
Common stock 1 0 1
Additional paid-in capital 5,439 0 5,439
Cumulative net income 2,393 287 (C) 2,680
Cumulative dividends (3,108) 0 (3,108)
----------------- ----------------- ----------------
Total shareholders' equity 4,725 287 5,012
----------------- ----------------- ----------------
Total liabilities and shareholders' equity $ 40,530 $ (2,559) $ 37,971
================= ================= ================
</TABLE>
- -----------------
(A) Reflects the historical consolidated balance sheet of American Real
Estate Investment Corporation as of June 30, 1997.
(B) Represents adjustments for the assets and liabilities of Sedona.
(C) Reflects the gain on sale and net cash proceeds from the sale of
Sedona.
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
These pro forma Statements of Operations are presented as if the disposition of
Sedona apartments ("Sedona") and Timberleaf apartments ("Timberleaf") had
occurred on January 1, 1997 and the Company qualified as a REIT, distributed all
of its taxable income and, therefore, incurred no tax expense during the period.
These statements should be read in conjunction with the financial statements
filed by the Company with the Securities and Exchange Commission, including the
Company's Form 10-QSB for the six months ended June 30, 1997.
These unaudited pro forma Statements of Operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the aforementioned events had been completed as of January 1,
1997, nor does it purport to represent the results of operations for future
periods.
<TABLE>
<CAPTION>
American
Real Estate Pro Forma Adjustments
Investment ------------------------------
Corporation Timberleaf Sedona Pro Forma
----------- ----------- ----------- -----------
(A)
<S> <C> <C> <C> <C>
Revenues from rental properties $ 4,093 $ (363)(B) $ (790)(B) $ 2,940
Rental property expenses:
Repairs and maintenance 240 (29)(B) (43)(B) 168
Property taxes 178 (9)(B) (30)(B) 139
Property management fees 139 (12)(B) (26)(B) 101
Utilities 402 (90)(B) (144)(B) 168
Payroll 313 (33)(B) (84)(B) 196
Other property operations 365 (63)(B) (101)(B) 201
General & administrative 411 0 0 411
Depreciation and amortization 535 (45)(B) (118)(B) 372
----------- ----------- ----------- -----------
Total operating expenses 2,583 (281) (546) 1,756
----------- ----------- ----------- -----------
Financing expenses 1,658 (91)(C) (263)(C) 1,304
Minority interest 0 0 0 0
Equity in earnings from investment
in partnership 264 0 0 264
----------- ----------- ----------- -----------
Income before gain on sale of property 116 9 19 144
Gain on sale of property 403 (403) 0 0
----------- ----------- ----------- -----------
Net income (loss) $ 519 $ (394) $ 19 $ 144
=========== =========== =========== ===========
Primary earnings (loss) per share (D) $ 0.46 $ (0.34) $ 0.01 $ 0.13
=========== =========== =========== ===========
Fully diluted earnings (loss) per share (D) $ 0.28 $ (0.21) $ 0.01 $ 0.08
=========== =========== =========== ===========
</TABLE>
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
- -----------------------------
(A) Represents historical consolidated operating statement amounts for the six
months ended June 30, 1997 for American Real Estate Investment Corporation.
(B) Represents revenues and operating expenses, including depreciation and
amortization, for the six months ended June 30, 1997 relating to Timberleaf
and Sedona.
(C) Represents interest expense for the six months ended June 30, 1997 relating
to the first mortgage indebtedness for Timberleaf, along with the bank loan
and first mortgage indebtedness secured by Sedona.
(D) Pro forma amount represents the earnings per share obtained by incorporating
the net income effect of all pro forma adjustments for Timberleaf and
Sedona.
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
(UNAUDITED)
These pro forma Statements of Operations are presented as if the disposition of
Sedona apartments ("Sedona"), Timberleaf apartments ("Timberleaf") and
International apartments ("International") had occurred on January 1, 1996 and
the Company qualified as a REIT, distributed all of its taxable income and,
therefore, incurred no tax expense during the period. These statements should be
read in conjunction with the financial statements filed by the Company with the
Securities and Exchange Commission, including the Company's Form 10-KSB/A for
the year ended December 31, 1996.
These unaudited pro forma Statements of Operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the aforementioned events had been completed as of January 1,
1996, nor does it purport to represent the results of operations for future
periods.
<TABLE>
<CAPTION>
American
Real Estate Pro Forma Adjustments
Investment ------------------------------------------------
Corporation International Timberleaf Sedona Pro Forma
------------- -------------- ------------ ----------- -----------
(A)
<S> <C> <C> <C> <C> <C>
Revenues from rental properties $10,240 $ (746)(B) $ (2,212)(B) $ (1,654)(B) $ 5,628
Rental property expenses:
Repairs and maintenance 708 (67)(B) (164)(B) (127)(B) 350
Property taxes 417 (27)(B) (57)(B) (57)(B) 276
Property management fees 353 (25)(B) (74)(B) (56)(B) 198
Utilities 1,034 (116)(B) (372)(B) (212)(B) 334
Payroll 893 (99)(B) (235)(B) (168)(B) 391
Other property operations 1,005 (121)(B) (307)(B) (214)(B) 363
General & administrative 515 0 0 0 515
Depreciation and amortization 1,306 (112)(B) (252)(B) (219)(B) 723
-------- ----------- ------------ -------- --------
Total operating expenses 6,231 (567) (1,461) (1,053) 3,150
-------- ----------- ------------ -------- --------
Financing expenses 3,897 (158)(C) (593)(C) (415)(C) 2,731
Minority interest 1,364 (1,364)(D) 0
Equity in earnings from investment
in partnership 570 0 0 0 570
-------- ----------- ------------ ----------- --------
Income (loss) before gain on sale of property (682) 1,343 (158) (186) 317
Gain on sale of property 1,786 (1,786)(D) 0 0 0
-------- ----------- ------------ ----------- --------
Net income (loss) $ 1,104 $ (443) $ (158) $ (186) $ 317
======== =========== ============ =========== ========
Primary earnings (loss) per share (E) $ 1.00 $ (0.41) $ (0.14) $ (0.17) $ 0.28
======== =========== ============ =========== ========
Fully diluted earnings (loss) per share (E) $ 1.00 $ (0.46) $ (0.17) $ (0.20) $ 0.17
======== =========== ============ =========== ========
</TABLE>
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
(UNAUDITED)
- ------------------
(A) Represents historical consolidated operating statement amounts for the year
ended December 31, 1996 for American Real Estate Investment Corporation.
(B) Represents revenues and operating expenses, including depreciation and
amortization, for the year ended December 31, 1996 relating to Sedona,
Timberleaf and International.
(C) Represents interest expense for the year ended December 31, 1996 relating to
the first mortgage indebtedness for Timberleaf, along with Sedona's and
International's allocable share of the Company's line of credit and bank
loan secured by Sedona and International.
(D) Represents the adjustments required resulting from eliminating the gain on
sale of property resulting from the sale of International. The minority
interest allocation was adjusted accordingly, in accordance with the
allocation provisions specified in the operating partnership's partnership
agreement.
(E) Pro forma amount represents the earnings per share obtained by incorporating
the net income effect of all pro forma adjustments for Sedona, Timberleaf
and International, and the corresponding adjustment in the number of fully
diluted shares outstanding at December 31, 1996.
<PAGE>
CONTRACT FOR PURCHASE AND SALE OF SEDONA APARTMENT COMPLEX
This Contract for Purchase and Sale of Sedona Apartment Complex
("Contract") dated as of March 20, 1997, is between American Sedona Partners,
L.P., a Colorado limited partnership (the "Seller"), and Evans Real Estate
Group, LLC, a Colorado limited liability company (the "Purchaser").
RECITALS
A. The Seller is the owner of the tract of land and the improvements
thereon located in Denver County, Colorado, more particularly described on
EXHIBIT A attached as a part of this Contract (the "Land").
- ---------
B. The Land has been improved by the construction of apartment buildings
and certain amenities including fixtures, parking areas, landscaping and other
improvements located upon the Land (the "Improvements").
C. The Seller owns certain furniture, fixtures, furnishings, machinery,
equipment, and other personal property located on or about the Land and
Improvements and used in connection therewith, which personal property is more
particularly set forth in the list attached hereby as EXHIBIT B (the "Personal
---------
Property").
D. The Purchaser desires to purchase from the Seller the Land,
Improvements, and Personal Property, together with all appurtenances, rights,
easements, rights of way, privileges, licenses, appurtenances, tenements and
hereditaments incident thereto (all collectively called the "Property"), and the
Seller desires to sell and convey the Property to the Purchaser.
E. In order to effect the intent of the parties as described in these
Recitals, the parties have entered into this Contract and agree as set forth
below.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements set forth
below and other good and valuable consideration, the receipt and sufficiency of
which are hereby mutually acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
PROPERTY TO BE SOLD
1.1 LAND, IMPROVEMENTS, AND PERSONAL PROPERTY. The Purchaser agrees to
buy, and the Seller agrees to sell and convey to the Purchaser, the Property
pursuant to the terms and conditions set forth in this Contract.
ARTICLE 2
PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. The purchase price for the Property shall
be Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000.00). The
purchase price for the Property shall be paid as follows:
(a) By payment of Three Million Five Hundred Fifty Thousand Dollars
($3,550,000.00) in cash or cash equivalent at Closing, which amount shall be (i)
reduced by the Earnest Money Deposit and the Non-Refundable Deposit including
any interest earned thereon as provided for in Paragraph 12.1 below, (ii)
adjusted to reflect any difference between the loan assumption amount set forth
in paragraph 2.1(b) below and the actual principal balance of the loan
assumption as of the Closing Date, and (iii) subject to the prorations provided
for in Article 7 below; and
(b) By the Purchaser assuming and agreeing to pay an existing loan in
the approximate amount of Five Million Seven Hundred Thousand Dollars
($5,700,000.00), presently payable on the following terms: the promissory note
to be assumed (the "Note") is collateralized by the Property, bears interest at
two and one-half percent (2.5%) above the 30-day LIBOR index, has a term of
eighteen (18) months, and is amortized over twenty-five (25) years. Purchaser
shall, within ten (10) days of the date of this Contract, complete its
application to the lender including the provision of all supporting documents,
for qualification for the loan assumption and Purchaser shall diligently and in
good faith pursue obtaining the lender's approval. Purchaser shall have
obtained approval for the loan assumption before the end of the Due Diligence
Period. Purchaser agrees to pay any and all loan transfer and assumption fees
and costs and any expenses related thereto. Seller shall be fully released from
any and all liability on such loan and Seller's release from liability shall be
evidenced by an appropriate letter from the lender. Seller's receipt of such a
letter, in form and substance satisfactory to Seller in its sole and absolute
discretion, shall be a condition precedent to Seller's obligation to close.
Purchaser's approved assumption of the Note and First Deed of Trust without
modification of its material terms (other than the obligation to pay assumption
fees and costs) shall be an additional condition precedent to Purchaser's
obligations hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
<PAGE>
The Seller hereby represents, warrants, and covenants that, as of the date
hereof and as of the Closing, to the best of its knowledge:
3.1 AUTHORITY OF SELLER. The Seller is a limited partnership organized
under the laws of the State of Delaware, in good standing and qualified to do
business in the State of Colorado, and has the right, power, and authority to
enter into this Contract and to sell the Property in accordance with the terms
and conditions of this Contract.
3.2 REPAIRS AND MAINTENANCE PRIOR TO CLOSING. Subject to Article 8 hereof
concerning condemnation and risk of loss, and subject further to the disclosures
in Article 9 hereof concerning Upgrades and Repairs (as defined below), prior to
Closing the Seller shall maintain the Property substantially in its present
condition, reasonable wear and tear excepted.
3.3 EXISTING FINANCING. The Property is subject to a First Deed of Trust
(the "First Deed of Trust") held by GMAC Commercial Mortgage Corporation
("Lender") securing the repayment of an indebtedness (hereinafter referred to as
the "First Deed of Trust Debt") in the original principal amount of Five Million
Seven Hundred Thousand Dollars ($5,700,000.00), and is amortized over twenty-
five (25) years. The First Deed of Trust is not in default, nor has any event
occurred which, with the lapse of time or the giving of notice, would become a
default thereunder, nor has the holder of the First Deed of Trust asserted any
claim of default by the Seller thereunder, nor has the holder of the First Deed
of Trust permitted any moratorium or other postponement or forgiveness of
principal or interest payable thereunder.
3.4 TENANT LEASES. The Property is subject to those tenancies and leases
(sometimes collectively referred to as "Leases") listed on the rent roll
attached hereto as EXHIBIT C and current as of the date thereof. The rent roll
---------
has been compiled and maintained by the independent property management company
engaged by Seller to manage the Property. All leases listed on EXHIBIT C,
---------
including all modifications thereto, are available for inspection by the
Purchaser, upon reasonable notice to Seller.
3.5 STATUS OF TENANT LEASES. To the best of Seller's knowledge, except as
otherwise indicated on EXHIBIT C, all of the Leases are in good standing, valid
---------
and in full force and effect. The Seller has the sole right to collect the rents
under the Leases, and neither that right nor any of the Leases have been
assigned, pledged, hypothecated or otherwise encumbered by the Seller except as
additional collateral for the First Deed of Trust (which collateral security is
conditional in nature, and the holder of the First Deed of Trust has not
asserted or exercised any right to collect the rents). Seller shall not enter
into any new rental agreements with any of the tenants listed on EXHIBIT C, nor
---------
rent any unit to new tenants, except as provided in Article 9 below.
3.6 MANAGEMENT AGREEMENTS AND SERVICE CONTRACTS. The Seller has furnished
or made available to the Purchaser copies or originals of each real estate
management, maintenance, security and service contract, and all other agreements
in force with respect to the Property, known to the Seller.
3
<PAGE>
3.7 INSURANCE. The Seller has in full force insurance policies covering
the Improvements for loss or damage, liability, and loss of rents. Copies of
the insurance binders have been or will be provided to Purchaser.
3.8 CONDEMNATION PROCEEDINGS. The Seller knows of no condemnation or
eminent domain proceedings pending or contemplated against the Property or any
part thereof.
3.9 EMPLOYEES. Seller has made or will make available to Purchaser a
list of all persons presently employed by the Seller in connection with the
operation and maintenance of the Property. There are no labor disputes or
disputes between Seller and its employees pending or, to the best of the
Seller's knowledge, contemplated, which would affect the operation or
maintenance of the Property. The Seller is not a party to any union or other
collective bargaining contract relating to the Property.
3.10 MANUFACTURERS WARRANTIES. Seller has made or will make available to
purchaser all warranties of manufacturers, suppliers and/or installers relating
to the Property, or any part thereof, known to Seller.
3.11 NO DEFAULTS. To the best of Sellers' knowledge, neither the
execution of this Contract nor the consummation of the transactions contemplated
hereby will: (i) conflict with, or result in a breach of, any of the material
terms, conditions or provisions of, or constitute a material default under, any
agreement or instrument to which the Seller is a party; (ii) violate any
restriction to which the Seller is subject; (iii) constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order; or (iv) give anyone the right to cancel any contract
or lease pertaining to the Property.
3.12 EVENTS PRIOR TO CLOSING AND OTHER INFORMATION. The Seller will not
take or cause to be taken any action, or fail to perform any obligation, which
would cause any of the foregoing representations or warranties to be untrue as
of the Closing. The Seller shall immediately notify the Purchaser, in writing,
of any event or condition known to Seller which occurs prior to Closing
hereunder, which causes a material change in the facts relating to, or the truth
of, any of the above representations or warranties.
The Purchaser hereby represents and warrants to Seller as of the date
hereof and as of the Closing on the Closing date that:
3.13 DUE ORGANIZATION GOOD STANDING AND POWER. The Purchaser is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Colorado. The Purchaser has full right, power, and
authority to enter into this agreement and perform its obligations hereunder.
3.14 AUTHORIZATION AND VALIDITY OF DOCUMENTS. The execution, delivery,
and performance by the Purchaser of this agreement and the documents and
transactions contemplated hereby have been duly and validly authorized by the
Purchaser. This agreement has been duly executed, acknowledged, sealed, and
delivered by the Purchaser and is a legal, valid, and
4
<PAGE>
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms.
ARTICLE 4
TITLE, INSPECTIONS AND CLOSING DATE
4.1 TITLE INSURANCE. The Seller shall, at the Seller's expense, within
the Due Diligence Period, obtain and deliver to Purchaser a commitment (the
"Title Commitment") from a title insurance company of the Seller's choice which
is licensed to do business in the State of Colorado to issue an owner's title
insurance policy on Standard ALTA Policy Form B 1992, and to delete the standard
printed exceptions appearing in such form. Copies of all recorded documents
referred to in the commitment shall also be delivered to Purchaser by Seller.
If the title commitment shows exceptions to title which are in addition to those
listed on EXHIBIT D and have a material adverse effect upon the marketability of
---------
the title to the Property, the Purchaser shall give the Seller notice thereof
within the Due Diligence Period and, unless the Seller gives the Purchaser
written notice within such Due Diligence Period that the Seller will cause the
title defects to be cured at or prior to Closing, the Purchaser may, within the
Due Diligence Period and at its election: (i) terminate this Contract, in which
event the Earnest Money Deposit referred to in Article 12 below and all interest
earned thereon shall be promptly returned to the Purchaser, or (ii) waive all
those title defects not shown on EXHIBIT D which Seller will not cause to be
---------
cured and proceed with Closing hereunder as if the additional title defects did
not exist.
4.2 SURVEY. The Seller shall, at its expense, obtain and deliver to the
Purchaser, within the Due Diligence Period, the most recent survey of the
Property in Seller's possession prepared by a licensed surveyor registered in
the State of Colorado selected by the Seller.
4.3 INSPECTION OF BOOKS AND RECORDS. Following the date of this Contract,
the Seller shall either provide Purchaser with, or Purchaser shall have access
at reasonable times during ordinary business hours to, all documents, agreements
and other information in the possession of the Seller, or any employee, agent or
independent contractor of the Seller, pertaining to the ownership, use, rental
or operations of the Property, including, but not limited to: financial records,
tax returns, tax assessments, bills, any and all third party reports prepared
for GMAC, leases, most current rent roll, detailed operating statements for the
last two (2) calendar years, year-to-date operating statements, approved
management company budgets for 1997 in possession of Seller, property tax bills
or statements for 1995 and 1996, environmental studies for the property, copy of
current title commitments, including a legal description, and one copy of all
documents listed as exceptions to the title report, if in Seller's possession,
current insurance binders, personal property inventory, copies of all leases (to
be reviewed on property), personnel list, litigation for or against property,
insurance claims, current rent roll, copies of licenses in Seller's possession,
and copies of service contracts. Purchaser shall have the right, at its
expense, to make copies of any such documents.
4.4 INSPECTION OF THE PROPERTY. During the period ending at 5:00 p.m. MDT
on the day that is forty (40) days from the effective date hereof (the "Due
Diligence Period"), the Purchaser shall have the right, at its expense, during
ordinary business hours, to have an
5
<PAGE>
engineer or other independent inspector of its choice inspect the Property,
provided the Purchaser gives the Seller reasonable notice of any inspection and
provided further that the inspection of the interior of any apartment unit is
permitted by the terms of the lease to such apartment unit or is consented to by
the occupant thereof. Any disturbance to the Property caused by the inspection
shall be promptly remedied or repaired at the expense of the Purchaser. The
Purchaser agrees to indemnify and hold Seller harmless against and from any and
all liability, costs, and expenses (including reasonable counsel fees of the
Seller), arising out of or with respect to such inspections. Unless the
Purchaser gives the Seller notice within the Due Diligence Period that it waives
all contingencies to Closing, this Contract shall terminate in which event the
Earnest Money Deposit and the Non-Refundable Deposit referred to in Article 12
below and all interest earned thereon shall be promptly returned to the
Purchaser. After the Due Diligence Period has ended, the Earnest Money Deposit
and the Non-Refundable Deposit shall be non-refundable.
4.5 CLOSING. The purchase and sale contemplated by this Contract shall be
consummated at settlement (the "Closing"), which shall take place five (5) days
after the end of the Due Diligence Period, or such earlier date as may be
mutually agreed upon by the Seller and the Purchaser (the "Closing Date"). The
Closing shall take place at the offices of the title company issuing the
commitment referred to in paragraph 4.1 above in the City and County of Denver.
ARTICLE 5
SELLER'S DELIVERIES AND CONDITIONS
PRECEDENT TO PURCHASER'S OBLIGATIONS
In addition to other conditions precedent set forth elsewhere in this
Contract, the Seller shall deliver to the Purchaser at the Closing all of the
following, the delivery of which shall be a condition to Purchaser's obligation
to consummate the purchase of the Property and all being considered as occurring
simultaneously.
5.1 SPECIAL WARRANTY DEED. A special warranty deed which shall convey
title to the Land and Improvements, subject to the lien of the First Deed of
Trust and those title exceptions waived by the Purchaser pursuant to paragraph
4.1 and set forth as EXHIBIT D.
---------
5.2 BILL OF SALE. A bill of sale duly executed by the Seller and
transferring, assigning and conveying to the Purchaser: (i) good and marketable
title to all the Personal Property subject, however, to the existing liens
securing the First Deed of Trust (ii) all rights of the Seller as lessee under
any leases of the Personal Property; and (iii) all warranties and guarantees
pertaining to the Personal Property.
5.3 Assignment of Leases in a form acceptable to Purchaser and set forth
in EXHIBIT F.
---------
5.4 POSSESSION OF RECORDS. Seller shall deliver possession of the
originals of all Leases (including Lease guaranties, if any), service contracts
and originals or copies of all plans, reports, and approvals, if any, as
required herein to Purchaser on the Closing Date.
6
<PAGE>
5.5 TENANT SECURITY DEPOSITS. An assignment to Purchaser of all accounts
representing tenant security deposits, including all accrued interest thereon
required by law or other agreement to be paid thereon.
5.6 UPGRADES AND REPAIRS ESCROW. An assignment to Purchaser of Seller's
rights in and to funds escrowed with respect to the Upgrades and Repairs.
Purchaser shall assume, pursuant to paragraph 6.2 below, all of Seller's
obligations with respect to completion and payment for the Upgrades and Repairs,
including the payment of invoices for work done prior to Closing but not yet
paid; provided, however, that such obligations shall not exceed the funds
escrowed therefor, and any funds not so expended shall be the property of
Purchaser.
5.7 MISCELLANEOUS. Such other instruments (including a joint notice from
the Seller and the Purchaser to the tenants of the Property informing them of
the conveyance of the Property to the Purchaser and of the transfer of tenants'
security deposits to Purchaser) as may reasonably be required to consummate the
transactions contemplated by this Contract. Seller shall cause the Title
Insurance Policy to be delivered to Purchaser on or as soon as practicable after
closing at its expense.
5.8 POSSESSION. Possession of the Property shall be delivered to the
Purchaser at Closing, subject to the Leases shown on EXHIBIT C and such
---------
replacements thereof and new leases as are entered into in conformity with the
provisions of Article 9 below concerning operations prior to Closing.
ARTICLE 6
PURCHASER'S DELIVERIES AND CONDITIONS
PRECEDENT TO SELLER'S OBLIGATIONS
At the Closing and contemporaneously with the Seller's compliance with the
provisions of Article 5, Purchaser shall deliver to Seller at the Closing all of
the following, the delivery of which shall be a condition to Seller's obligation
to consummate the sale of the Property. Any one or more of the conditions
precedent to Seller's obligations hereunder, whether set forth in this Article 6
or elsewhere, may be waived by Seller in its absolute discretion.
6.1 CASH PORTION OF PURCHASE PRICE. Pay to Seller the cash portion of the
purchase price, adjusted as set forth in Paragraph 2.1(a).
6.2 ASSUMPTIONS. Execute and deliver to Seller and/or such third parties
as may be appropriate an assumption by Purchaser of (i) the First Deed of Trust,
(ii) all obligations of the Seller as lessor under the Leases, to be performed
from and after the date of Closing, and (iii) all obligations of the Seller with
respect to completion of and payment for the Upgrades and Repairs, such
obligations not to exceed the funds escrowed therefor. The Purchaser shall also
execute and deliver to the Seller a certificate of the Purchaser representing
and warranting to the Seller that from and after the date of Closing, the
Purchaser will comply with the provisions of C.R.S. (S) 38-12-101 et seq. with
respect to the security deposits assigned to the Purchaser.
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ARTICLE 7
PRORATED ITEMS AND ADJUSTMENTS
In connection with the transactions contemplated by this Contract, the
Seller and the Purchaser shall share equally the cost of any local transfer
taxes and Closing fees; Purchaser shall pay all documentary fees; Purchaser
shall pay for recordation of the deed and any instruments relating to the loan
assumption and any other of its loans. Seller shall pay the filing fee for
recording any existing encumbrances to be released at Closing. The Purchaser
and Seller shall each pay their own legal fees. At the Closing the following
adjustments and prorations shall be computed as of the date of Closing and the
cash portions of the purchase price shall be adjusted to reflect such
prorations:
7.1 RENT. All rentals collected by Seller up to the date of Closing,
which are allocable to the period from and after Closing, shall be paid by the
Seller to the Purchaser. That portion of any past due rentals payable to the
Seller at or prior to Closing which are allocable to the period prior to Closing
shall be remitted to the Seller by the Purchaser as and if collected by
Purchaser. Payments received by the Purchaser shall be applied first to current
rent due and then to past due rent starting with the most recent delinquency.
The Purchaser shall use reasonable diligence to collect past due rents.
7.2 REAL PROPERTY TAXES. Real property taxes for the year of
Closing, based on the most recent levy and most recent assessment, assessments
and all other public or governmental charges against the Land and Improvements
which are or may be payable on an annual basis (including special assessments,
liens or encumbrances for sewer, water, drainage, or other public improvements
completed or commenced on or prior to the date of this Contract or subsequent
thereto) to the extent the same are not payable by tenants pursuant to tax
escalation clauses in their Leases, shall be adjusted and apportioned as of the
date of Closing and assumed and paid thereafter by the Purchaser, whether
assessments have been levied or not as of the date of Closing.
7.3 PERSONAL PROPERTY TAXES. Personal property taxes attributable to
the Personal Property for the fiscal year in which the date of Closing occurs
shall be apportioned between the parties as of the date of Closing.
7.4 SERVICE CONTRACTS AND UTILITIES. All prepayments made or
payments due under any continuing Service Contracts affecting the property,
including water, sewer, electric, gas and utility bills, parking, garbage
removal, and maintenance agreements shall be adjusted and apportioned as of the
Closing and thereafter assumed by the Purchaser.
7.5 SALES TAXES. Any sales tax relating to the Personal Property and
fixtures shall be paid by Purchaser. Any further sales or use tax that may
accrue because of this transaction shall also be paid by Purchaser.
7.6 MISCELLANEOUS. All other charges and fees customarily prorated
and adjusted in similar transactions shall be prorated at Closing and thereafter
assumed by the Purchaser. In the
8
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event that accurate prorations and other adjustments cannot be made at Closing
because current bills or statements are not obtainable (as, for example, utility
bills), the parties shall prorate on the best available information, subject to
adjustment upon receipt of the final bill or statement.
ARTICLE 8
CONDEMNATION AND RISK OF LOSS
8.1 CONDEMNATION. In the event of condemnation or receipt of notice
of condemnation or taking of the Property or any portion thereof by governmental
authority prior to the date of Closing, then, provided that the estimated value
of the portion of the Property which is the subject thereof is in excess of
Three Hundred Thousand Dollars ($300,000.00), the Purchaser, at its option,
shall have the right to terminate this Contract, and the Earnest Money Deposit
and interest thereon shall thereupon be refunded to the Purchaser, at which time
all parties shall thereupon be relieved of all rights and responsibilities in
this Contract, at law and in equity. If the estimated value is less than Three
Hundred Thousand Dollars ($300,000.00), or if the Purchaser does not elect to
terminate this Contract, then Closing hereunder shall be consummated as herein
provided, without reduction of the Purchase Price, but all condemnation awards
or payments shall be paid or assigned to the Purchaser at Closing. In no event
shall Seller be under any duty to Purchaser to restore the Property following a
condemnation.
8.2 RISK OF LOSS. If prior to Closing the Property is damaged by
fire, other casualty, act of God or other event, then, provided the reasonably
estimated cost of the repair of the damages is in excess of Three Hundred
Thousand Dollars ($300,000.00) the Purchaser, at its option, shall have the
right to terminate this contract, and the Earnest Money Deposit and interest
thereon shall thereupon be refunded to Purchaser, at which time all parties
shall be relieved of all rights and responsibilities in the Contract, at law and
in equity. If the estimated cost of the repair of the damage is less than Three
Hundred Thousand Dollars ($300,000.00), or if the Purchaser does not elect to
terminate, as aforesaid, then Closing hereunder shall be consummated as herein
provided, without reduction of the Purchase Price, and, unless the damage shall
have been repaired by the Seller prior to the Closing, all insurance proceeds
payable as a result of such damage or casualty, if any, shall be paid or
assigned to the Purchaser.
ARTICLE 9
OPERATIONS PRIOR TO CLOSING
9.1 MAINTENANCE. Subject to the provisions of Article 8 concerning
repairs and replacements in the event of condemnation or casualty, until Closing
the Seller, at its expense, shall maintain the Property substantially in its
present condition, subject to normal wear and tear. Purchaser acknowledges that
(a) Seller is required under the terms of the Note, the First Deed of Trust and
the associated collateral loan documents to complete certain upgrades and
repairs (the "Upgrades and Repairs") on the Improvements, and (b) substantial
renovations to the Improvements are currently in progress. Seller agrees to
consult with Purchaser with respect to such upgrades, repairs and renovations
but such consultation shall in no way subject Seller to any additional
obligations.
9
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9.2 OPERATIONS. Until Closing the Seller, at its expense, shall
operate the Property in substantially the same manner as the Property is being
operated on the date of this Contract. The Seller shall use reasonable efforts
to maintain the goodwill of existing tenants and suppliers and to relet any
apartment unit on the Property which becomes vacant prior to Closing, provided
the reletting is to an unrelated third party pursuant to a bona fide lease, and
is at a rent comparable to that being charged for similar units in the Property.
Seller's contract with the management company for the operation of the Property
shall be terminated as of Closing and Seller shall indemnify Purchaser for any
liability to such management company.
9.3 THE FIRST DEED OF TRUST. Until Closing the Seller will perform
all of its obligations under the First Deed of Trust and will make all periodic
payments required thereunder.
9.4 OTHER ACTS. Until Closing the Seller shall not undertake or
omit to undertake any other act which would have a material adverse effect on
the Property or the operations thereof as presently conducted.
ARTICLE 10
FURTHER ASSURANCES
10.1 CONTINUING ACCESS. After Closing, the Seller shall execute and
deliver to the Purchaser any additional documents and instruments which
Purchaser may reasonably determine are necessary to further assure to the
Purchaser the consummation of the purchase and sale contemplated herein, without
additional expense to the Seller. From and after Closing each party shall
afford to the other reasonable access to any information in its possession
concerning the operations of the Property (including the right to copy the same
at the expense of the party desiring the copy) for purposes of any tax
examination or audit or other similar purpose.
10.2 SECTION 1031 EXCHANGE. Purchaser agrees to use its best efforts
to cooperate with and assist Seller in realizing its opportunity to complete a
potential Section 1031 exchange transaction. Purchaser need only so cooperate
with any such exchange so long as it incurs no additional liability as a result
thereof, any such exchange in no way hinders or delays the timely performance of
this contract, and any such exchange does not in anyway otherwise modify the
provisions contained herein.
ARTICLE 11
REAL ESTATE COMMISSION
11.1 REAL ESTATE COMMISSION. Each party shall pay its own broker's
commissions.
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<PAGE>
ARTICLE 12
EARNEST MONEY DEFAULT
12.1 EARNEST MONEY DEPOSIT; PAYMENT TO SELLER AT CLOSING. No later
than two (2) business days after execution of this Contract, the Purchaser shall
pay to the title company as escrow agent (the "Escrow Agent") Fifty Thousand
Dollars ($50,000.00) in the form of certified funds payable to the Escrow Agent
(the "Earnest Money Deposit"). By 5:00 p.m. on the last day of the Due
Diligence Period, Purchaser shall pay to the title company an additional Fifty
Thousand Dollars ($50,000) in the form of certified funds or wire transfer
payable to the title company (the "Non-Refundable Deposit"). The Non-Refundable
Deposit is not subject to any contingencies and is not refundable to Purchaser
except in the event of Seller's default as described in paragraph 12.3 below.
At Closing, the Earnest Money Deposit and the Non-Refundable Deposit, including
all interest earned thereon, shall be paid by the Escrow Agent to the Seller and
applied to the payment of the cash portion of the purchase price. If Closing
does not occur, the Earnest Money Deposit and the Non-Refundable Deposit,
including all interest earned thereon, shall be paid over in accordance with the
terms of this Contract. The Escrow Agent shall deposit the Earnest Money
Deposit in an interest-bearing account in a federally insured bank or savings
and loan association. The Escrow Agent shall be reimbursed equally by the
parties hereto for all expenses.
12.2 PURCHASER'S DEFAULT; LIQUIDATED DAMAGES. The Purchaser and the
Seller each acknowledge that it would be difficult to ascertain the actual
damages which would be suffered by the Seller if the Purchaser defaults in
consummating the purchase and sale contemplated by this Contract. Accordingly,
if all conditions precedent to the Purchaser's obligation to consummate the
transactions contemplated by this Contract have been satisfied or waived, but
the Purchaser fails, refuses or is unable to consummate the purchase and sale
contemplated by this Contract, then the Seller's sole remedy shall be to give
the Escrow Agent and the Purchaser written notice of the Purchaser's default, in
which event the Escrow Agent shall pay the Earnest Money Deposit, together with
interest earned thereon, to the Seller. Upon payment of the Earnest Money
Deposit, including the interest earned thereon, to the Seller, neither party to
this Contract shall have any further liability to the other and this Contract
shall be and become null and void and of no further force and effect, either at
law or in equity.
12.3 SELLER'S DEFAULT. If all conditions and other events precedent
to the Seller's obligations to consummate the transactions contemplated by this
Contract have been satisfied or waived, but the Seller fails, refuses or is
unable to consummate the purchase and sale contemplated by this Contract, then
the Purchaser may at its election either (a) have the right to give the Escrow
Agent written notice of the Seller's default, in which event the Escrow Agent
shall pay the Earnest Money Deposit and the Non-Refundable Deposit, together
with interest earned thereon, to the Purchaser or (b) pursue specific
performance.
12.4 RIGHTS OF ESCROW AGENT. In the event of any dispute as to who
is entitled to receive the Earnest Money Deposit and interest earned thereon,
the Escrow Agent shall have the right to retain the funds and disburse them in
accordance with the final order of a court of competent jurisdiction, or to
deposit the Earnest Money Deposit and interest thereon with the
11
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court, pending a final decision of the controversy. The parties hereto further
agree that the Escrow Agent shall not be liable for failure of the depository.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 COMPLETENESS. The Contract, documents, and agreements entered
into pursuant thereto constitute the entire agreement between the parties with
respect to the transactions contemplated herein, and supersede all prior
discussions, understandings or agreements between the parties.
13.2 BINDING EFFECT. This Contract shall be binding upon and inure
to the benefit of the parties hereto, and their respective successors and
assigns.
13.3 SURVIVAL. Article 3, paragraph 7.1, Article 11 and this
paragraph 13.3 shall survive the Closing.
13.4 WAIVER. Failure by the Purchaser or the Seller to insist upon
or enforce any of their respective rights hereunder shall not constitute a
waiver thereof, except as provided for herein.
13.5 GOVERNING LAW. This Contract shall be construed, interpreted
and enforced in accordance with the laws of the State of Colorado, without
regard to principles of conflict of laws.
13.6 ARTICLE HEADINGS. The Article and paragraph headings as herein
used are for convenience or reference only and shall not be deemed to vary the
content of this Contract or the covenants, agreements, representations and
warranties herein set forth or limit the provisions or scope of any Article or
paragraph.
13.7 COUNTERPARTS. To facilitate execution, this Contract may be
executed in as many counterparts as may be required and it shall not be
necessary that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on more than one
counterpart. All counterparts shall collectively constitute a single agreement.
13.8 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered (a)
personally on a business day during business hours or (b) mailed by first class,
registered or certified mail, return receipt requested, postage prepaid or (c)
by facsimile transmission or (d) by prepaid overnight courier service, return
receipt requested:
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(a) If to the Purchaser, to
Evans Real Estate Group, LLC
Attention: Thomas B. Evans
1780 S. Bellaire, Suite 707
Denver, CO 802242
(303) 756-6636
(303) 756-6733 (FAX)
or to such other address as may have been furnished by the Purchaser to the
Seller in writing.
(b) If to the Seller, to
American Sedona Partners, L.P.
Attention: Evan H. Zucker
1670 Broadway, Suite 3350
Denver, CO 80202
(303) 869-4700
(303) 869-4602 FAX
or to such other address as may have been furnished by the Seller to the
Purchaser in writing, with a copy to
Edward D. White, Esq.
Dufford & Brown, P.C.
1700 Broadway, Suite 1700
Denver, CO 80290-1701
(303) 861-8013
(303) 832-3804
and
(c) If to Escrow Agent, to
Bev Saunders
North American Title Company
44 Cook Street, Suite 300
Denver, CO 80206
(303) 333-8184
(303) 331-0882 FAX
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<PAGE>
or to such other address as may have been furnished by the Escrow Agent in
writing to the Purchaser and the Seller.
Any notice, request, consent or other communication shall be deemed
received when it is personally delivered or on the third business day after it
is deposited in the United States mails, as the case may be.
13.9 ASSIGNMENT. The Purchaser shall not have the right to assign
this Contract to another person or entity without the prior written consent of
the Seller; provided, however, that no such prior written consent will be
required in the event that Purchaser so assigns this Contract to an entity in
which Thomas B. Evans or Terry E. Johnson is the controlling principal.
13.10 TIME OF THE ESSENCE. Time shall be of the essence with respect
to this Contract.
13.11 SPECIAL DISTRICTS. Special Taxing Districts may be subject to
general obligation indebtedness that is paid by revenues produced from annual
tax levies on the taxable property within such districts. Property owners in
such districts may be placed at risk for increased mill levies and excessive tax
burdens to support the servicing of such debt where circumstances arise
resulting in the inability of such a district to discharge such indebtedness
without such an increase in mill levies. Purchaser is aware of and understands
the debt financing requirements of the authorized general obligation
indebtedness of such districts, existing mill levies of such district servicing
such indebtedness, and the potential for an increase in such mill levies.
13.12 ATTORNEYS FEES. The prevailing party in any dispute relating
to the enforceability of this Agreement shall be entitled to an award of
reasonable attorneys fees and costs.
13.13 INDEMNIFICATION. Each party hereby agrees to indemnify the
other party and hold it harmless from and against any and all liabilities, costs
and damages including reasonable attorneys fees resulting from claims made by
third parties against the indemnified party arising out of the acts or omissions
of the indemnifying party with respect to the Property.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and affixed their seals as of the day and year first above written.
SELLER: AMERICAN SEDONA PARTNERS, L.P.
By: American Sedona Corp.
Its: General Partner
By:____________________________________________
Its:___________________________________________
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<PAGE>
PURCHASER: EVANS REAL ESTATE GROUP, LLC
______________________________
Thomas B. Evans
The Escrow Agent has joined in the execution of this Contract to
acknowledge its appointment as Escrow Agent and hereby agrees to perform the
duties imposed upon the Escrow Agent by this Contract.
ESCROW AGENT: NORTH AMERICAN TITLE COMPANY
By:___________________________
Bev Saunders
15
<PAGE>
AGREEMENT TO AMEND/EXTEND CONTRACT
Explanatory Statement
On March 20, 1997, American Sedona Partners, L.P. ("Seller") and Evans Real
Estate Group, LLC ("Purchaser") executed the Contract for Purchase and Sale of
Sedona Apartment Complex ("Contract") for the Property as is more specifically
described in the attached EXHIBIT A and which Contract is attached hereto as
----------
EXHIBIT B. The Contract has since expired. Therefore, in consideration for the
- ---------
mutual covenants and agreements contained in the Contract and for the additional
mutual covenants and agreements contained in this Agreement to Amend/Extend
Contract ("Addendum"), the Purchaser and the Seller hereby reinstate the
Contract as of the date of last signing below, subject to the modification and
the additional terms contained herein. All capitalized terms shall have the
same meaning as ascribed in the Contract, unless stated otherwise.
Agreement
1. The first sentence of Paragraph 2.1 of the Contract is hereby deleted.
In its stead the parties agree as follows: The purchase price for the Property
shall be Nine Million One Hundred Fifty Thousand Dollars ($9,150,000.00).
2. Paragraphs 2.1(a) and 2.1(b) of the Contract are hereby deleted. In
its stead the parties agree as follows: The purchase price for the Property
shall be paid in certified funds at Closing ("Cash Due at Closing"). The Cash
Due at Closing shall be (i) reduced by the Earnest Money Deposit including any
interest earned thereon as provided for in Paragraph 12.1 of the Contract as
modified by this Addendum, and (ii) subject to the prorations provided for in
Article 7 of the Contract. In addition to the Cash Due at Closing, Purchaser
shall pay to Seller all those fees ("Prepayment Fees") Seller will incur and is
obligated to pay to GMAC Commercial Mortgage Corporation ("Lender"), including
(without limitation) exit fees, associated with Seller's prepayment of the Loan.
Purchaser may finance any portion of the purchase price. If Purchaser finances
any portion of the purchase price by obtaining a new loan with Lender and if
Lender does not charge to Seller any Prepayment Fees, then Purchaser shall not
be obligated to pay those to Seller. Prepayment fees, if any, will not exceed
$60,000.00 (due GMAC). Further, if purchaser uses GMAC for refinancing there
will be no such fees. Seller shall use the proceeds of the purchase price to
repay the First Deed of Trust Debt which shall be released at Closing.
3. Paragraph 4.1 of the Contract is hereby deleted. In its stead the
parties agree as follows: Purchaser acknowledges that Seller already has
delivered to Purchaser a commitment ("Prior Commitment") to issue an owner's
title insurance policy on Standard ALTA Policy Form B 1992, and to delete the
standard printed exceptions appearing in such form. Copies of all recorded
documents referred to in the commitment have been delivered to Purchaser by
Seller. As soon as practicable after
<PAGE>
the execution hereof, Seller shall provide to Purchaser an updated commitment
("Title Commitment"). If the Title Commitment shows exceptions to title which
are in addition to those listed on the most recent Prior Commitment and have a
material adverse effect upon the marketability of the title to the Property, the
Purchaser shall give the Seller notice thereof within three (3) business days
("Notice Period") of receipt of the Title Commitment. Unless the Seller gives
the Purchaser written notice (after three (3) business days after Purchaser's
notice of additional defects), that the Seller will cause the title defects to
be cured at or prior to Closing, the Purchaser may, within the Notice Period and
at its election: (i) terminate this Contract, in which event the Earnest Money
Deposit referred to in Article 12 of the Contract as amended by this Addendum
and all interest earned thereon shall be promptly returned to the Purchaser, or
(ii) waive all those title defects not shown on the Prior Commitment which
Seller will not cause to be cured and proceed with Closing hereunder as if the
additional title defects did not exist.
4. Paragraph 4.2 of the Contract is hereby deleted. Purchaser
acknowledges that Seller has delivered to Purchaser the most recent survey of
the Property in Seller's possession.
5. Paragraphs 4.3 and 4.4 of the Contract are hereby deleted. Purchaser
acknowledges that there will be no Due Diligence Period as contemplated by the
Contract.
6. The first sentence of Paragraph 4.5 is hereby deleted. In its stead
the parties agree as follows: The purchase and sale contemplated by this
Contract and this Addendum shall be consummated at settlement (the "Closing"),
which shall take place seventy (70) days after the execution of this Addendum
(the "Closing Date"), or such earlier date as may be mutually agreed upon by the
Seller and the Purchaser.
7. Paragraph 6.2 of the Contract is hereby deleted.
8. Paragraph 12.1 of the Contract is hereby deleted. In its stead the
parties agree as follows: No later than two (2) business days after execution
of this Addendum, the Purchaser shall pay to the title company as escrow agent
(the "Escrow Agent") One Hundred Thousand Dollars ($100,000.00) in the form of
certified funds payable to the Escrow Agent (the "Earnest Money Deposit"). The
Earnest Money Deposit is not subject to any contingencies and is not refundable
to Purchaser except in the event of Seller's default as described in Paragraph
12.3 of the Contract. All interest is to accrue to the benefit of Purchaser.
At Closing, the Earnest Money Deposit shall be paid by the Escrow Agent to the
Seller and applied to the payment of the cash portion of the purchase price. If
Closing does nor occur, the Earnest Money Deposit shall be paid over in
accordance with the terms of this Contract as amended by this Addendum. The
Escrow Agent shall deposit the Earnest Money Deposit in an
<PAGE>
interest-bearing account in a federally insured bank or savings and loan
institution. The Escrow Agent shall be reimbursed equally by the parties hereto
for all expenses.
9. The reference to the Non-Refundable Deposit in Paragraph 12.3 of the
Contract is hereby deleted.
10. Seller agrees to spend all monies listed in Column H of Exhibit "A"
(attached hereto) toward substantially completing those items listed in Column B
of Exhibit A, including (without limitation) exterior painting, carpeting and
lighting in breezeways, completing certain aluminum wiring improvements, and
installing a pool cover. Alternatively, Seller agrees to leave unspent escrow
money in the GMAC Escrow Account to be used by Purchaser.
11. Seller has spent approximately $28,986 to date on landscaping and
irrigation work and has verbally contracted to spend approximately an additional
$35,000. Seller agrees that Purchaser will be provided notification and be given
the chance to provide input on the expenditure of all remaining money required
to be spent on landscaping and irrigation beyond the $63,986 described above.
12. Pursuant to Paragraph 13.9, Purchaser hereby assigns the Contract and
this Addendum to Greentree Village, Ltd. ("Assignee"), the address of which is
#2 Inverness Drive East #200, Englewood, Colorado 80112. Seller hereby consents
to this assignment, provided that by reason of this assignment Seller shall have
no duties additional to those provided for in the Contract and in the Addendum.
Assignee, by its signature below, agrees hereby to be bound by all terms,
duties, and obligations contained in the Contract and in this Addendum. Without
limiting the preceding sentences, Assignee represents and warrants as follows:
(a) The Assignee is a limited partnership duly organized and
registered, validly existing, and in good standing under the laws of the
State of California. The Assignee has full right, power, and authority to
enter into this Contract and this Addendum and to perform its obligations
hereunder.
(b) The execution, delivery, and performance by the Assignee of this
Contract and this Addendum and the documents and transactions contemplated
hereby have been duly and validly authorized by the Assignee. This
agreement has been duly executed, acknowledged, sealed, and delivered by
the Assignee and is a legal, valid, and binding obligation of the Assignee
enforceable against the Assignee in accordance with its terms.
<PAGE>
13. All other terms and conditions of the Contract shall remain the same.
If not executed by all parties this Agreement to Amend/Extend Contract shall
become null and void at 5:00 P.M. MST, July 2, 1997.
IN WITNESS WHEREOF, the parties hereto have duly executed this Addendum and
affixed their seals as of the day and year first above written.
SELLER: AMERICAN SEDONA PARTNERS, L.P.
By: American Sedona Corp.
Its: General Partner
Date:______________ By:__________________________________
Its:_________________________________
PURCHASER: EVANS REAL ESTATE GROUP, LLC
Date:______________ ____________________________________________
By: Thomas B. Evans
ASSIGNEE: GREENTREE VILLAGE, LTD.
Date:______________ ____________________________________________
By: John A. Woodward, General Partner
The Escrow Agent has joined in the execution of the Contract and the
Addendum to acknowledge its appointment as Escrow Agent and hereby agrees to
perform the duties imposed upon the Escrow Agent by the Contract as amended by
this Addendum.
ESCROW AGENT: NORTH AMERICAN TITLE COMPANY
Date:______________ By: ________________________________________
Bev Saunders
