EXHIBIT 10.1
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 20th day of October 1998, between
CORNERSTONE REALTY GROUP, INC. or its nominee, (hereinafter called "Purchaser")
and SOUTHEASTERN INCOME PROPERTIES II LIMITED PARTNERSHIP, a Virginia limited
partnership, (hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 SALE OF PROPERTY. Seller agrees to sell and convey, and Purchaser
agrees to purchase, Seller's real property known as HUNTERS CREEK APARTMENTS
located in CHARLOTTESVILLE, VA with all buildings and improvements located
thereon, as more particularly described in the attached legal description in
EXHIBIT A including, but not limited to 240 individually heated and air
conditioned apartment units, with all appurtenances, together with all
appliances, drapes, carpeting, shrubbery and all other personal property used in
connection with the premises, including, the inventory of personal property to
be supplied by Seller and attached hereto as EXHIBIT B (all such real and
personal property hereinafter collectively referred to as the "Property" unless
the context clearly indicates otherwise).
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 PURCHASE PRICE. The total purchase price shall be SEVEN MILLION SEVEN
HUNDRED FIFTY THOUSAND ($7,750,000) as evidenced by cash or cash equivalent at
closing.
2.2 NON-REFUNDABLE DEPOSIT. Upon the execution of this Agreement, Purchaser
shall deposit the sum of TWENTY FIVE THOUSAND ($25,000) DOLLARS in escrow as a
non-refundable fee. However, in the event that Seller does not fulfill its
obligations to Purchaser as required in this Agreement prior to the completion
of the "Inspection Period" described in Article VI below (whether or not
Purchaser proceeds to closing), then this sum shall be refundable.
2.3 DEPOSIT. SEVENTY FIVE THOUSAND ($75,000) DOLLARS to be placed in escrow
at the end of the "Inspection Period"
described in Article VI below. Said deposits shall be placed in escrow with
Commonwealth Land Title Insurance Company or its authorized agent as an xxxxxxx
money deposit which may be credited against the purchase price or applied as per
Article XI below.
ARTICLE III
TITLE MATTERS
3.1 MARKETABLE TITLE. Seller, shall convey good and marketable title by
Special Warranty Deed in the form attached hereto as EXHIBIT C, subject only to
general taxes for the current year not yet due and payable and those matters of
record accepted by Purchaser in accordance with paragraphs 3.2 and 3.3 below.
(A) Title shall be free from any and all liens or mortgages and Seller
shall be responsible for any prepayment penalties necessary to deliver such free
title.
3.2 TITLE DEFECTS; ELECTION TO CURE. Seller shall furnish to Purchaser a
commitment for Title Insurance, (the commitment). If title is not marketable,
except as stated above in the preceding paragraph, Purchaser shall give written
notice of any defects in title to Seller's counsel during the Inspection Period.
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.
3.3 ELECTION NOT TO CURE DEFECTS. Should Seller elect not to cure title
defects, this Agreement, at Purchaser's option, execised by written notice to
Seller within five (5) business days after receipt of Seller's notice, shall be
void; each party shall be released from all obligations hereunder except those
that expressly survive pursuant to the terms of this Agreement; and all deposits
shall be immediately returned to Purchaser.
3.4 TITLE. Purchaser shall have the obligation to review the title report
and Survey as part of its "Inspection Period" described in Article VI below.
ARTICLE IV
PRORATIONS
4.1 INCOME AND EXPENSE ALLOCATIONS. The following shall be prorated, on a
calendar-month basis, as of 12:00 midnight on the day prior to the closing:
rents and other income from the Property; operating expenses; any pre-paid rent;
advances and/or consideration (on such service contracts and other obligations
as Purchaser may agree to assume); and general and real property taxes
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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 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. 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. Purchaser's obligation to purchase shall be
subject to and contingent upon the satisfaction of the following conditions
precedent:
(A) Receipt by Purchaser of an engineering report of building and site
conditions, satisfactory to Purchaser in its sole discretion, said report to
include in part, a description of any hazardous waste sites, hazardous wastes
and/or hazardous materials affecting the property. Purchaser shall have until
the expiration of the Inspection Period 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.
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(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 in all material
respects.
(D) On the condition that there have been no material or adverse
changes to the property or to the terms of the 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.
(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, Purchaser may elect, or or before the completion
of the Inspection Period to (i) terminate this Agreement (in which case the
Xxxxxxx Money shall be returned to Purchaser) and neither party shall have any
further liability or obligation to the other hereunder, or (ii) accept the
property subject to any such encroachment or violation.
6.2 INSPECTION. This Agreement shall be further subject to and contingent
upon Purchaser's satisfactory inspection as follows herein below.
6.2.1 PREPARATION FOR INSPECTION. At the execution of this Agreement,
Seller shall deliver to Purchaser copies of the following: 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 contracts, all loss runs for the last five (5) years, if available;
Plans and Specifications for the Property, if available, service contracts,
Certificates of Occupancy, to the extent reasonably available; a copy of the
title policy and most recent survey for the Property, if available. The Seller
warrants that all these items were those actually relied upon by the Seller and
were prepared or received in the ordinary course of business.
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6.2.2 INSPECTION OF BOOKS AND RECORDS; ACCESS. Upon execution of this
Agreement and receipt of fully executed copies by both parties or their
attorneys, 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 and upon reasonable prior notice to
Seller 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. In the event any
invasive tests shall be used by the Purchaser, then the Purchaser shall give
notice to the Seller for approval (not to be unreasonably withheld) prior to the
commencement of said testing. In any event, the Purchaser shall be responsible
for any actual damages to the Property as a result thereof and Purchaser shall
carry insurance to hold Seller harmless from any claims as a result of the
inspection. Where insurance does not provide coverage and Purchaser is liable,
the Purchaser agrees to hold Seller harmless over and above insurance. 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.
6.2.3 RIGHT OF TERMINATION DURING INSPECTION PERIOD. If Purchaser is not
satisfied, in its sole and exclusive discretion, with the state of maintenance
and repair of the Property or the rents, occupancy or expenses of the Property,
then notwithstanding anything contained herein to the contrary, Purchaser shall
have the right to terminate this Agreement by giving written notice to Seller
before the end of the Inspection Period, and no party hereto shall have any
further liability to any other party hereto, and all deposits 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 fourteen (14)
days from the date of this Agreement or such other date as the parties may agree
to in writing. However, it is agreed that in the event of any delay caused in
the obtaining of either the title report and/or the Survey that there will be an
automatic extension of the Inspection Period, as to these two items only, of
five (5) after the receipt of the title report and/or Survey, but in no event
later than November 11, 1998.
6.2.5 "RENT READY". During the "Inspection Period", both Seller and
Purchaser will inspect an apartment unit at the Property and mutually agree that
said apartment shall be representative of a "rent ready" unit by which all other
units shall be judged for "rent ready" condition at closing. All vacant, but in
no event later than November 11, 1998.
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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 on or about 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 Xxxx of Sale, with warranty of title transferring the personal
property (as shown in Schedule B) to Purchaser free of all liens, charges and
encumbrances.
(B) Originals or copies of all signed leases and rental agreements in
effect with tenants of the Property.
(C) All security and cleaning deposits made by such tenants. Seller
will give the tenants the required notice of such transfer in compliance with
the laws of VIRGINIA.
(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.
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(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) 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.
(H) 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.
(I) Seller's affidavit that it is authorized to execute this Agreement
and to complete the sale without any further action on its behalf.
(J) 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.
(K) Satisfactory evidence of the power and authority of Seller to
enter into and consummate this agreement.
(L) 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.
(M) A notice letter to all the residents of the apartment complex as
to change of ownership in the form prepared by the Purchaser and reasonably
acceptable to Seller.
(N) 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.
(O) A representation letter as normally required by auditors for a
public company in the form attached hereto as EXHIBIT E.
(P) Purchaser hereby waives any claim it may have against Seller as a
result of Seller's compliance with the above Paragraph O, and further agrees to
indemnify and hold harmless
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Seller and its property manager from a claim, damage, loss or liability to which
Seller or its property manager are at any time subject by any person not a party
to this Agreement as a result of Seller's compliance with this paragraph.
7.3 PURCHASER'S DELIVERIES. At closing and contemporaneously with the
Seller's compliance with the provisions of Section 7.2, Purchaser shall:
(A) Pay to Seller the cash portion of the purchase price, adjusted for
the prorations herein provided for in Article IV.
(B) Execute and deliver an assumption of obligations under leases,
securities, any contracts which may be accepted by the Purchaser and any other
obligations specifically set forth herein.
(C) Deliver to the Seller a resolution of the Purchaser that:
(i) This Agreement has been duly authorized, executed and
delivered by the Purchaser and is a valid and binding agreement of Purchaser,
and
(ii) Purchaser has complete unrestricted power to buy the
Property from the Seller and to execute any documents required to effectuate the
transfer.
ARTICLE VIII
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 REPRESENTATIONS OF THE PARTIES. Seller warrants 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.
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(D) Seller has no actual knowledge and has not been advised in writing
that it is in default under any lease, rental agreement service or equipment
contract, or mortgage or other encumbrances relating to the Property. This
warranty shall survive for one year following closing.
(E) Seller has no actual knowledge of any existing or threatened
litigation which relates to or which would affect the Property, except for
actions against tenants for rent, none of which having a counterclaim.
(F) 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. This warranty shall survive for one year following closing.
(G) 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.
(H) To Seller's knowledge, during the period of Seller's ownership, no
portion of the Property has ever been used by Seller as a landfill or as a dump
to receive garbage, refuse, waste or fill material whether or not hazardous.
Seller, to Seller's knowledge, during the period of Seller's ownership, has not
stored, handled, installed or disposed of any Hazardous Substances (as
hereinafter defined) in, or about the Property or any other location within the
vicinity of the Property; and, to Seller's knowledge, there are no Hazardous
Substances on the Property. As used in this Agreement, the term "Hazardous
Substances" means asbestos, polychlorinated biphenyl and such materials, waste,
contaminants or other substances defined as toxic, dangerous to health or
otherwise hazardous by cumulative reference to the following sources as amended
from time to time: (I) the Resource and Recovery Act of 1976, 42 USC Section
6901 et. seq. ("RCRA"); (ii) the Hazardous Materials Transportation Act, 49 USC
Section 1801, et. seq.; (iii) the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 USC Section 9601 et. seq. ("CERCLA");
(iv) applicable laws of the jurisdiction where the Property is located; and (v)
any federal, state or local statutes, regulations, ordinances, rules or orders
issued or promulgated under or pursuant to any of those laws or otherwise by any
department, agency or other administrative, regulatory or judicial body. The
term "Hazardous Substances" does not include usual and customary cleaning and
other supplies necessary for the
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normal maintenance and/or occupancy of the Property.
(I) 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,
which consent shall not be unreasonably withheld or delayed. 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.
(J) The representations and warranties of Seller contained in this
Agreement will survive the Closing for a period of one (1) year after the
Closing; and any claim based upon any alleged breach thereof must be alleged (in
writing) within such one year period. Failure to give notice on any alleged
breach within the time period specified herein shall constitute a waiver of any
such claim. In addition, and notwithstanding any other provision of this
Agreement, if Purchaser has actual knowledge of any misrepresentation or breach
of Seller on or prior to the Closing, and nevertheless proceeds to close on the
Closing Date, then Purchaser shall be deemed to waive, and hereby waives, any
such misrepresentations and breach.
8.2 CONTINUATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS TO THE DATE
OF CLOSING. If each of the warranties set forth in this section does not remain
true up to and including the time of closing as to any material matters, this
Agreement, at Purchaser's election, shall be terminated, Seller shall return all
payments made by Purchaser, or Purchaser may elect to close the sale and waive
failure of the warranties.
8.3 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Notwithstanding
the provisions of 8.2 above, Seller shall indemnify Purchaser for all reasonable
costs incurred as a result of the failure of any of Seller's representations,
warranties or covenants contained herein to remain true as of the date of
closing.
8.4 "AS IS". Purchaser represents, warrants and agrees that (i) except as,
and solely to the extent specifically set forth in this Agreement, neither
Seller nor any of the employees, agents
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or attorneys of Seller make any verbal or written representations, warranties,
promises or guaranties whatsoever to Purchaser, whether express or implied, of
any sort or nature relating to the condition (physical, financial or otherwise)
or operation of the Property, the access, fitness for any specific use,
merchantability, habitability, or the lie and topography, of all or any portion
of the Property, the existence, location or availability of utility, lines for
water, sewer, drainage, electricity or any other utility, the income-producing
potential of the Property, the competition or market of the Property or the
actual or projected revenue and expenses of the Property, the laws, regulations
and rules applicable to the Property or the compliance (or non-compliance) of
the Property therewith, any environmental laws, regulations and rules (or other
laws relative to Hazardous Materials) applicable to the Property or the
compliance (or non-compliance) of the Property therewith, the quantity, quality
or condition of the articles of personal property included in the transactions
contemplated hereby, the use or occupancy of the Property or any part thereof or
any other matter or thing affecting or relating to the Property or the
transactions contemplated hereby, and Purchaser has not relied upon any such
representations, warranties, promises or guarantees or upon any statements made
in any informational brochure with respect to the Property, and (ii) upon the
expiration of the Inspection Period and provided Purchaser does not elect to
terminate this Agreement as provided for herein the Purchaser will have examined
the Property, and based upon such examination, will be familiar with the
physical condition thereof, and will have conducted such investigations of the
financial affairs and management to the Property as Purchaser considered
appropriate, and elected to proceed with the transaction having made and relied
solely on Purchaser's own independent investigation, inspection, analysis,
appraisal, examination and evaluation of the facts and circumstances expect as,
and solely to the extent specifically set forth in this Agreement.
Except as specifically provided for in this Agreement, Purchaser agrees to
accept the Property "as is" in its present condition, subject to the reasonable
use, wear, tear and natural deterioration of the Property between the date of
this Agreement and the Closing.
ARTICLE IX
CONDEMNATION; RISK OF LOSS
9.1 PROPERTY DAMAGE. If, prior to closing, any part of the Property is
damaged by fire or other casualty, the Seller agrees to assign all of its
insurance covering said loss, tender its deductible under its policy as a
closing adjustment, and further compensate Purchaser for lost rent collection to
the extent of the insurance proceeds. Seller shall promptly notify Purchaser in
writing upon the occurrence of any such damage and Purchaser
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shall have the right to review the insurance, the damages and other relevant
data. The Purchaser shall, within thirty (30) days, either accept the premises
pursuant to the terms of this paragraph or send a notice of cancellation. In the
event of cancellation, all funds paid by Purchaser under this Agreement shall be
returned to the Purchaser and this Agreement shall become null and void and the
parties shall be released of all obligations hereunder.
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) 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.
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 INSIGNIA CAPITOL
ADVISORS, pursuant to a separate agreement between Seller and Broker. 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
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Agreement shall mean any failure by Seller or Purchaser to fulfill all the
terms, conditions and covenants contained herein, however, it shall not be an
event of default for either party to exercise its rights to terminate this
contract as contained in other provisions herein.
11.2 SELLER'S DEFAULT. Upon Seller's default, the Purchaser, at it's
election, may elect (a) to terminate this Agreement whereupon the Title Company
shall return the Xxxxxxx Money to Purchaser and Seller shall pay Purchaser
Twenty Five Thousand ($25,000) Dollars under this Agreement as agreed-upon
liquidated damages and not as a penalty, it being otherwise difficult or
impossible to estimate Purchaser's actual damages, and which liquidated damages
shall be in lieu of any other damages or the right to specific performance; or
(b) be entitled to xxx Seller for specific performance of this Agreement,
provided, however, Seller shall not be required to expend is excess of Twenty
Five Thousand ($25,000) Dollars under this Agreement to correct any matter
Seller did not deliberately cause, except for monetary liens, including but not
limited to taxes, mortgages, mechanic's Liens, etc.; or (c) Purchaser may
commence an injunction proceeding to stop conveyance contrary to this Agreement.
Seller shall indemnify Purchaser for any and all expenses incurred if Purchaser
elects to pursue its option under (b) or (c) above, including reasonable
attorneys' fees.
11.3 PURCHASER'S DEFAULT. Upon Purchaser's default, this Agreement shall be
terminated and both parties released from all obligations hereunder, and the
deposit shall be retained by the Seller as liquidated damages. 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 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 once to Cornerstone Realty Income
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Trust, Inc.
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.
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 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
14
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.
12.11 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:
(a) EXHIBIT A, the legal description of the Land.
(b) EXHIBIT B, list of personal property.
(c) EXHIBIT C, the form of Deed.
(d) EXHIBIT D, (i) the form of Xxxx of Sale
(ii) Assignment and Assumption of Leases, etc.
(e) EXHIBIT E, the form of the Representation
Letter.
ARTICLE XIII
NOTICE
13.1 NOTICE. All notices required or permitted to be given under this
Agreement shall be in writing signed by the party giving the same or its
attorney 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:
With a copy to
Seller's Attorneys: Xxxxxxx Post, Esq.
Post & Xxxxxxx
000 Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
To Purchaser: Xx. Xxx Xxxxxxxx
Cornerstone Realty Group, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to
Purchaser's Attorneys: Xxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxxxx & Taubenfeld
000 Xxxxxxxx Xx., X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
00
-xxx-
Xxxxx Xxxxxxx, Xxx.
XxXxxxx Xxxx
000 Xxxx Xxxx Xxxxxx - 00xx Xx.
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
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 (provided receipt of the
notice is confirmed and the original follows by one of the other methods of
delivery described herein). 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: Southeastern Income Properties II Limited Partnership, a Virginia
limited partnership
BY: Winthrop Southeast Limited Partnership, a Delaware limited partnership, its
general partner
BY: Eight Winthrop Properties, Inc., a Delaware corporation, it general partner
BY: /s/ Xxxx Xxxx
-----------------------------
Date:
-------------
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
BY: /s/ Xxx X. Remppies
-----------------------------
Its: Vice President Date:
---------------------------- -------------
16
FIRST MODIFICATION TO PURCHASE CONTRACT
(HUNTERS CREEK APARTMENTS)
This First Modification to Purchase Contract ("MODIFICATION") is made and
entered into this ____ day of November 1998 between CORNERSTONE REALTY GROUP,
INC. ("PURCHASER") and SOUTHEASTERN INCOME PROPERTIES II LIMITED PARTNERSHIP
("SELLER").
WHEREAS, Purchaser and Seller entered into a Purchase Contract on the 20th
day of October 1998 ("AGREEMENT").
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.
2. ARTICLE II, Paragraph 2.1, is hereby amended and restated as follows:
2.1 PURCHASE PRICE. The total purchase price shall be SEVEN
MILLION SEVEN HUNDRED FIFTY THOUSAND ($7,750,000) DOLLARS payable by
cash or cash equivalent at closing.
3. Purchaser shall recieve a credit against the purchase price upon closing
in the amount of the then outstanding principal balance of the Note (as defined
herein) on the date of closing.
4. ARTICLE II, Paragraph 2.2, is hereby amended and restated in its
entirety as follows:
2.2 NON-REFUNDABLE DEPOSIT. Upon execution of xxxxx Modification,
Purchaser shall deliver to Seller the sum of Twenty Five Thousand
($25,000) Dollars as a non-refundable fee. In the event closing
occurs, such amount will be credited towards the purchase price, but
1
shall otherwise be non-refundable in the event the sale does not
occur, except for failure to close as a result of the acts or defualt
of the Seller.
5. ARTICLE II, Paragraph 2.3, is hereby amended and restated in its
entirety as follows:
2.3 DEPOSIT. FOUR HUNDRED SEVENTY FIVE THOUSAND ($475,000)
DOLLARS to be placed in escrow by November 4, 1998. Said deposit shall
be placed in escrow in an interest-bearing account with Commonwealth
Land Title Insurance Company or its authorized agent as a xxxxxxx
money deposit which may be credited against the purchase price or
applied as per Article XI below.
6. ARTICLE II is hereby further amended to add the following Paragraph:
2.4 EXISTING MORTGAGE.
(a) The Property shall be conveyed subject to Purchaser's
assumption and promise to pay in accordance with its terms the loan
(the "Loan") evidenced by that certain Promissory Note (the "Note"),
dated February 17, 1993 in the original principal sum of FOUR MILLION
ONE HUNDRED THOUSAND ($4,100,000) DOLLARS payable to the order of
HANOVER CAPITAL MORTGAGE CORPORATION (the "Lender"), and assumption
and promise to perform all covenants and obligations of Seller under
the documents or instruments governing, securing, evidencing or
pertaining to the indebtedness evidenced by the Note (collectively,
the "Loan Documents"), including, but not limited to, that certain
Indenture of Mortgage, Deed of Trust, Deed to Secure Debt, Security
Agreement, Fixture Filing, Financing Statement and Assignment of Rents
and leases of even date with the Note (the "Deed of Trust") recorded
in the Real Property Records of Albemarle County, Virginia.
(b) Seller represents and warrants that (i) Seller will deliver
to Purchaser true and complete copies of the existing Deed of Turst,
the Note secured thereby and any extensions and modifications thereof
in its possession or in the possession of its attorney, and (ii) there
are no monetary defaults by Seller under
2
the terms of the Loan Documents and it has received no written notice
of any defualt under any of the terms of the Loan Documents. From and
after the Effective Date of this Agreement to the Closing Date, Seller
agrees to pay to Lender all installments of principal, interest and
escrows and any other sums of which Seller has notice that are due and
payable under the Loan Documents, as and when such payments are due.
(c) Seller and Purchaser shall immediately upon the execution of
this Agreement take whatever steps are necessary to contact the Lender
and initiate the procedure to procure the right to assign the Loan to
the Purchaser pursuant to an Assignment and Assumption Agreement. The
Purchaser and Seller agree to cooperate with the other in procuring
permission for Purchaser to purchase the Property and assume the Loan
set forth herein above. Seller agrees to provide copies of all
correspondence and applications to the Purchaser. The Purchaser agrees
to submit promptly to Lender, but in any event no later than five (5)
business days after receipt of Lender's "Assumption Package", all
information requested by Lender to process the Property transfer
request, and thereafter diligently and promptly submit all additional
information reasonable requested by Lender. The parties further agrees
to use their reasonable efforts to procure said approval within sixty
(60) days from the execution of this Modification.
(d) Purchaser agrees to execute and deliver to the Lender all
documents and instruments reasonably requested by the Lender in
connection with the assumption, to form an "SPE Entity" and take title
to the Property in such entity if required by the Lender, and further
agrees to pay to the Lender all reasonable fees and reasonable
expenses of the Lender, and its reasonable counsel fees in connection
with the assumption, including, but not limited to, any assumption or
transfer fee provided for in the Deed of Trust and the reasonable fees
of Lender's attorney in connection with preparation of the assumption
documents. Purchaser shall also pay all premiums for any endorsements
required by the Lender in connection with the assumption to the
Lender's mortgagee policy of
3
title insurance or the cost of a new mortgage policy of title
insurance, if required by the lender. Seller shall not be obligated to
incur any expenses other than normally required in a sale and its
legal fees.
(e) Seller shall assign to Purchaser all its escrow and reserve
accounts held by Lender and in that case Purchaser shall pay amount in
the escrow account or reserve fund to Seller at Closing.
(f) It is understood that in the event that the assignment of the
mortgage is not approved, the deposit set forth in Paragraph 2.3,
together with interest, shall be returned to the Purchaser at the
termination of the sixty (60) days or extension thereof and
notification by the Purchaser.
7. ARTICLE IV is hereby amended to add the following Paragraph:
4.5 MORTGAGE ADJUSTMENT. Purchaser shall receive a credit for
what would have been the prepayment charge required by the aforesaid
Lender if the Loan had not been assumed as of 11/3/98 in the amount of
$254,521.90, and Purchaser agrees to assume the cost of the assignment
fee. Interest on the loan shall be prorated as of the closing date.
8. ARTICLE VI, Paragraph 6.2.4, is hereby amended and restated as follows:
6.2.4 TERMINATION OF INSPECTION PERIOD. Purchaser acknowledges
that it has inspected the Property and hereby agrees that the
Inspection Period has terminated and it has elected to proceed with
the purchase of the Property upon the terms and conditions set forth
in the Agreement, as amended hereby, except for the terms of the
mortgage and note to be assumed. The Inspection Period for the
mortgage assignment shall remain open for three (3) days after receipt
of the final documents.
9. ARTICLE VII, Paragraph 7.1, is hereby amended and restated in its
entirety to read as follows:
4
7.1 CLOSING. Closing will be held on or about five (5) days after
the notification that the assignment of the Existing Mortgage has been
completed, with an extension of an additional thirty (30) days if
requested by the Purchaser, at such place and at such time as the
parties may agree, but in any event no later than February 10, 1999.
10. Except as herein modified, the terms and provisions of the Agreement
shall remain in full force and effect.
11. 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.
12. 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.
SELLER:
SOUTHEASTERN INCOME PROPERTIES II LIMITED
PARTNERSHIP
BY: WINTHROP SOUTHEAST LIMITED PARTNERSHIP,
a Delaware limited partnership,
Its General Partner
BY: EIGHT WINTHROP PROPERTIES, INC.,
a Delaware corporation,
Its General Partner
By: /s/ Xxxx Xxxx
-------------------------------
Xxxx Xxxx
Its: Vice President
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ Xxx X. Remppies
---------------------------
Its: Vice President
--------------------------
5
