EXHIBIT 10.1
AGREEMENT OF PURCHASE AND SALE
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[The Courts on Pear Ridge Apartments, Dallas, Texas]
This Agreement of Purchase and Sale ("Agreement") is made and entered into by
and between Purchaser and Seller.
RECITALS
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A. Defined terms are indicated by initial capital letters. Defined terms shall
have the meaning set forth herein, whether or not such terms are used
before or after the definitions are set forth.
B. Purchaser desires to purchase the Property and Seller desires to sell the
Property, all upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual terms, provisions, covenants
and agreements set forth, herein, as well as the sums to be paid by Purchaser to
Seller, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Purchaser and Seller agree as follows:
ARTICLE 1 - BASIC INFORMATION
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1.1 CERTAIN BASIC TERMS. The following defined terms shall have the
meanings set forth below:
1.1.1 Seller: PS II Real Estate Limited Partnership, a
Delaware limited partnership
1.1.2 Purchaser: Cornerstone Realty Income Trust, Inc.
1.1.3 Purchase Price: $11,500,000.00
1.1.4 Xxxxxxx Money: $100,000 (the "Initial Xxxxxxx Money"),
including interest thereon, to be deposited in
accordance with Section 3.1 below, to be
increased by $100,000 (the "Additional Xxxxxxx
Money") to $200,000, plus interest thereon,
pursuant to Section 3.1, plus, if deposited in
accordance with Section 7.1 hereof, the
Extension Xxxxxxx Money.
Page 1
1.1.5 Title Company: Title Network, Ltd. (as agent for Fidelity
National Title Insurance Company)
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxx Xxxxx
Telephone: (972) - 000-0000
Facsimile: (972) - 867-0619
1.1.6 Escrow Agent: Title Network, Ltd. (as agent for Fidelity
National Title Insurance Company)
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxx Xxxxx
Telephone: (972) - 000-0000
Facsimile: (972) - 867-0619
1.1.7 Broker: The Apartment Group
1.1.8 Effective Date: The date on which this Agreement is executed
by the latter to sign of Purchaser or Seller,
as indicated on the signature page of this
Agreement.
1.1.9 Property
Information
Delivery Date: The date which is five (5) days after the
Effective Date.
1.1.10 Title Commitment
Delivery Date: The date which is five (5) days after the
Effective Date.
1.1.11 Survey Delivery
Date: The date which is five (5) days after the
Effective Date.
1.1.12 Title and Survey
Review Period: The period ending ten (10) days after
Purchaser's receipt of the Initial Title
Commitment and the initial Survey, but in any
event not later than the expiration of the
Inspection Period.
1.1.13 Inspection Period: The period beginning on the Effective Date and
ending November 5, 1998.
1.1.14 Closing Date: November 18, 1998 subject to possible
extension as provided in Section 7.1.
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1.2 CLOSING COSTS. Closing costs shall be allocated and paid as follows:
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COST RESPONSIBLE PARTY
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Title Commitment required to be delivered pursuant to Section 5.1 Seller
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Premium for standard form Title Policy required to be delivered pursuant to Seller
Section 5.4
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Premium for any upgrade of Title Policy for extended or additional coverage Purchaser
and any endorsements desired by Purchaser, any inspection fee charged by the Title
Company, tax certificates, municipal and utility lien certificates, and any
other Title Company charges
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Costs of Survey and/or any revisions, modifications or recertifications thereto Purchaser
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Costs of UCC Searches Purchaser
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Recording Fees for the Deed Seller
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Any deed taxes, documentary stamps, transfer taxes, intangible taxes, mortgage Purchaser
taxes or other similar taxes, fees or assessments
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Any escrow fee charged by Escrow Agent for holding the Xxxxxxx Money or Purchaser 1/2
conducting the Closing Seller 1/2
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Real Estate Sales Commission to Broker Seller
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All other closing costs, expenses, charges and fees -- Purchaser
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1.3 NOTICE ADDRESSES:
Purchaser: Cornerstone Realty Income Copy to: Xxxxxxxxxx & Taubenfeld
Trust, Inc. 000 Xxxxxxxx Xxxxxx
000 Xxxx Xxxx Xxxxxx X.X. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx, XX 00000
Attention: Mr. Xxx X. Remppies Attn: Xxxxx Xxxxxxxxxx, Esq.
Telephone:__________________ Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Seller: PS II Real Estate Limited Copy to: Xxxxxx and Xxxxx, L.L.P.
Partnership, 000 Xxxx Xxxxxx
a Delaware limited partnership Xxxxx 0000
x/x Xxxxxx Xxxxx Xxxxxx, Xxxxx 00000
000 Xxx Xxxxxxx Xxxx., Xxx. 0000 Attn: C. Xxxxxxxx Xxxxx, Esq.
Xxxxxx, Xxxxx 00000 Telephone: 000-000-0000
Attn: Mr. Xxxx Xxxxxx Facsimile: 000-000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
1.4 INDEX OF CERTAIN ADDITIONAL DEFINED TERMS:
Asset Manager ................................................... Section 12.18
Asset Manager's Employee .......................................... Section 9.3
Assignment ................................................... Subsection 7.3.2
CERCLA ........................................................... Section 11.3
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Closing.............................................................Section 7.1
Deed ..........................................................Subsection 7.3.1
Designated Representative(s) .....................................Section 12.20
Due Diligence Termination Notice ...................................Section 4.1
ERISA ....................................................... Subsection 7.4.3
Hazardous Materials ...............................................Section 11.4
Improvements ..................................................Subsection 2.1.1
Independent Consideration ..........................................Section 3.2
Intangible Personal Property ..................................Subsection 2.1.4
Land ..........................................................Subsection 2.1.1
Lease Files ...................................................Subsection 4.2.1
Material Damage ...............................................Subsection 2.1.2
Permitted Exceptions ...............................................Section 5.3
Permitted Outside Parties ..........................................Section 4.8
Property ...........................................................Section 2.1
Property Documents .................................................Section 4.5
RCRA ..............................................................Section 11.3
Real Property .................................................Subsection 2.1.1
Reports ............................................................Section 4.4
Rules ............................................................Section 12.21
Seller's Casualty Termination Notice ..........................Subsection 6.2.1
Survey .............................................................Section 5.2
Tangible Personal Property ....................................Subsection 2.1.3
Taxes ..............................................................Section 8.1
Tenant Receivables ............................................Subsection 8.1.3
Title Commitment ...................................................Section 5.1
Title Policy .......................................................Section 5.4
Unbilled Tenant Receivables .................................Subsection 8.1.3(a)
Uncollected Tenant Receivables ..............................Subsection 8.1.3(a)
ARTICLE 2 - PROPERTY
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2.1 Subject to the terms and conditions of this Agreement, Seller agrees to
sell to Purchaser, and Purchaser agrees to purchase from Seller, the following
property (collectively, the "Property):
2.1.1 REAL PROPERTY. The land described in Exhibit A attached hereto
(the "Land"), together with (i) all improvements located thereon, including that
certain 242-unit apartment complex ("Improvements"), (ii) all and singular the
rights, benefits, privileges, easements, tenements, hereditaments, and
appurtenances thereon or in anywise appertaining thereto, and (iii) without
warranty, all right, title, and interest of Seller, if any, in and to all strips
and gores and any land lying in the bed of any street, road or alley, open or
proposed, adjoining such Land (collectively, the "Real Property").
2.1.2 LEASES. All of Seller's right, title and interest, without
warranty, in all leases of the Real Property, including leases which may be made
by Seller after the Effective Date and prior to Closing as permitted by this
Agreement (the "Leases").
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2.1.3 TANGIBLE PERSONAL PROPERTY. All of Seller's right, title and
interest, without warranty, in the equipment, machinery, furniture, furnishings,
supplies and other tangible personal property, if any, owned by Seller and now
or hereafter located in and used in connection with the operation, ownership or
management of the Real Property, including those items listed on Exhibit G
hereto, but specifically excluding any items of personal property owned by
tenants at or on the Real Property and further excluding any items of personal
property owned by third parties and leased to Seller (collectively, the
"Tangible Personal Property ).
2.1.4 INTANGIBLE PERSONAL PROPERTY. All of Seller's right, title and
interest, if any, without warranty, in all intangible personal property related
to the Real Property and the Improvements, including, without limitation: all
trade names and trade marks associated with the Real Property and the
Improvements, including Seller's rights and interests, if any, in the name of
the Real Property; the plans and specifications and other architectural and
engineering drawings for the Improvements, if any (to the extent assignable);
warranties (to the extent assignable); contract rights related to the
construction, operation, ownership or management of the Real Property, if any
(but only to the extent assignable and Seller's obligations thereunder are
expressly assumed by Purchaser pursuant to this Agreement); governmental
permits, approvals and licenses, if any (to the extent assignable); and
telephone exchange numbers (to the extent assignable) (collectively the
"Intangible Personal Property").
ARTICLE 3 - Xxxxxxx Money
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3.1 DEPOSIT AND INVESTMENT OF XXXXXXX MONEY. Within three (3) business days
after the Effective Date, Purchaser shall deposit the Initial Xxxxxxx Money with
Escrow Agent. If upon the expiration of the Inspection Period, this Agreement is
still in force and effect, Purchaser shall, no later than the last day of the
Inspection Period, deposit the Additional Xxxxxxx Money, if any, as specified in
Subsection 1.1.4 above, with Escrow Agent. Escrow Agent shall invest the Xxxxxxx
Money in government insured interest-bearing accounts satisfactory to Seller and
Purchaser, shall not commingle the Xxxxxxx Money with any funds of Escrow Agent
or others, and shall promptly provide Purchaser and Seller with confirmation of
the investments made. Such account shall have no penalty for early withdrawal,
and Purchaser accepts all risks with regard to such account.
3.2 INDEPENDENT CONSIDERATION, Simultaneously with the delivery of the
Initial Xxxxxxx Money to the Title Company by the Purchaser, Purchaser shall pay
to Seller One Hundred and No/100 Dollars ($100.00) as independent consideration
for Seller's performance under this Agreement ("Independent Consideration"),
which shall be retained by Seller, in all instances, and shall not be applied
against the Purchase Price.
3.3 FORM; FAILURE TO DEPOSIT. The Xxxxxxx Money and Independent
Consideration shall be in the form of a certified or cashier's check or the wire
transfer to Escrow Agent of immediately available U.S. federal funds. If
Purchaser fails to timely deposit any Portion of the Xxxxxxx Money or the
Independent Consideration within the time periods required, Seller may terminate
this Agreement by written notice to Purchaser, in which event the parties hereto
shall have no further rights or obligations hereunder, except for rights and
obligations which, by their terms, survive the termination hereof (and to the
extent any deposits have been made by Purchaser, same shall be returned to
Purchaser).
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3.4 DISPOSITION OF XXXXXXX MONEY. The Xxxxxxx Money shall be applied as a
credit to the Purchase Price at Closing. However, if Purchaser elects to
terminate this Agreement prior to the expiration of the Inspection Period
pursuant to Section 4.5, Escrow Agent shall pay the entire Xxxxxxx Money to
Purchaser one (1) business day following receipt of the Due Diligence
Termination Notice from Purchaser (as long as the current investment can be
liquidated and disbursed in one business day). No notice to Escrow Agent from
Seller shall be required for the release of the Xxxxxxx Money to Purchaser by
Escrow Agent if Purchaser terminates this Agreement pursuant to Section 4.5. In
the event of a termination of this Agreement by either Seller or Purchaser for
any reason other than pursuant to Section 4.5, Escrow Agent is authorized to
deliver the Xxxxxxx Money to the party hereto entitled to same pursuant to the
terms hereof on or before the tenth (10th) business day following receipt by
Escrow Agent and the non-terminating party of written notice of such termination
from the terminating party, unless the other party hereto notifies Escrow Agent
that it disputes the right of the other party to receive the Xxxxxxx Money. In
such event, Escrow Agent may interplead the Xxxxxxx Money into a court of
competent jurisdiction in the county in which the Xxxxxxx Money has been
deposited. All attorneys' fees and costs and Escrow Agent's costs and expenses
incurred in connection with such interpleader shall be assessed against the
party that is not awarded the Xxxxxxx Money, or if the Xxxxxxx Money is
distributed in part to both parties, then in the inverse proportion of such
distribution.
ARTICLE 4 - DUE DILIGENCE
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4.1 DUE DILIGENCE MATERIALS TO BE DELIVERED. To the extent such items are
in Seller's possession, Seller shall deliver to Purchaser the following (the
"Property Information") on or before the Property Information Delivery Date:
4.1.1 RENT ROLL. A current rent roll ("Rent Roll") for the Property;
4.1.2 FINANCIAL INFORMATION. Copy of operating statements and a
summary of capital expenditures pertaining to the Property for the twelve (12)
months preceding the Effective Date of this Agreement or such lesser period as
Seller has owned the Property ("Operating Statements";
4.1.3 LEASE FORM. Copy of Seller's current standard lease form;
4.1.4 ENVIRONMENTAL REPORTS. Copy of any environmental reports or site
assessments related to the Property prepared for the benefit of Seller;
4.1.5 TAX STATEMENTS. Copy of ad valorem tax statements relating to
the Property for the current tax period;
4.1.6 TITLE AND SURVEY. Copy of Seller's most current title insurance
information and survey of the Property;
4.1.7 SERVICE CONTRACTS. A list, together with copies, of service,
supply, equipment rental, and other service contracts related to the operation
of the Property ("Service Contracts");
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4.1.8 PERSONAL PROPERTY. A list of Tangible Personal Property; and
4.1.9 [RESERVED]
4.2 DUE DILIGENCE MATERIALS TO BE MADE AVAILABLE. To the extent such items
are in Seller's possession, Seller shall make available to Purchaser for
Purchaser's review, at Seller's option at either the offices of Seller's Asset
Manager or property manager or at the Property, the following items and
information (the "Additional Property Information") on or before the Property
Information Delivery Date, and Purchaser at its expense shall have the right to
make copies of same:
4.2.1 LEASE FILES. The lease files for all tenants, including the
Leases, amendments, guaranties, any letter agreements and assignments which are
then in effect ("Lease Files");
4.2.2 MAINTENANCE RECORDS AND WARRANTIES. Maintenance work orders for
the twelve (12) months preceding the Effective Date of this Agreement and
warranties, if any, on roofs, air conditioning units, fixtures and equipment;
4.2.3 PLANS AND SPECIFICATIONS. Building plans and specifications
relating to the Property; and
4.2.4 LICENSES, PERMITS AND CERTIFICATES OF OCCUPANCY. Licenses,
permits and certificates of Occupancy relating to the property.
4.3 PHYSICAL DUE DILIGENCE. Commencing on the Effective Date and continuing
until the Closing, Purchaser shall have reasonable access to the Property all
reasonable times during normal business hours, upon appropriate notice to
tenants as permitted or required under the Leases, for the purpose of conducting
reasonably necessary tests, including surveys and architectural, engineering,
geotechnical and environmental inspections and tests, provided that (i)
Purchaser must give Seller twenty-four (24) hours' prior telephone or written
notice of any such inspection or test, and with respect to any intrusive
inspection or test (i.e., core sampling) must obtain Seller's prior written
consent (which consent may be given, withheld or conditioned in Seller's sole
discretion), (ii) prior to performing any inspection or test, Purchaser must
deliver a certificate of insurance to Seller evidencing that Purchaser and its
contractors, agents and representatives have in place reasonable amounts of
comprehensive general liability insurance and workers compensation insurance for
its activities on the Property in terms and amounts reasonably satisfactory to
Seller covering any accident arising in connection with the presence of
Purchaser, its contractors, agents and representatives on the Property, which
insurance shall name Seller and Asset Manager as additional insureds thereunder,
and (iii) all such tests shall be conducted by Purchaser in Compliance with
Purchaser's responsibilities set forth in below. Purchaser shall bear the cost
of all such inspections or tests and shall be responsible for and act as the
generator with respect to any wastes generated by those tests. Subject to the
provisions of Section 4.8 hereof, Purchaser or Purchaser's representatives may
meet with any tenant; provided, however, Purchaser must contact Seller at least
forty-eight (48) hours in advance, by telephone or fax to inform Seller of
Purchaser's intended meeting and to allow Seller the opportunity to attend such
meeting if Seller desires. Subject to the provisions of Section 4.8 hereof,
Purchaser or Purchaser's representatives may meet with any governmental
authority
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for any good faith, reasonable purpose in connection with the transaction
contemplated by this Agreement; provided, however, Purchaser must contact Seller
at least forty-eight (48) hours in advance by telephone or fax to inform Seller
of Purchaser's intended meeting and to allow Seller the opportunity to attend
such meeting if Seller desires.
4.4 [Reserved]
4.5 DUE DILIGENCE/TERMINATION RIGHT. Purchaser shall have through the last
day of the Inspection Period in which to (i) examine, inspect, and investigate
the Property Information and the Additional Property Information (collectively,
the "Property Documents") and the Property and, in Purchaser's sole and absolute
judgment and discretion, determine whether the Property is acceptable to
Purchaser, (ii) obtain all necessary internal approvals, and (iii) satisfy all
other contingencies of Purchaser. Notwithstanding anything to the contrary in
this Agreement, Purchaser may terminate this Agreement for any reason or no
reason by giving written notice of termination to Seller and Escrow Agent (the
'Due Diligence Termination Notice ") on or before the last day of the Inspection
Period. If Purchaser does not give a Due Diligence Termination Notice, this
Agreement shall continue in full force and effect, Purchaser shall be deemed to
have waived its right to terminate this Agreement pursuant to Section 4.4 and
this Section 4.5, and Purchaser shall be deemed to have acknowledged that it has
received or had access to all Property Documents and conducted all inspections
and tests of the Property that it considers important.
4.6 RETURN OF DOCUMENTS AND REPORTS. If this Agreement terminates for any
reason other than Seller's default hereunder, Purchaser shall promptly return
and/or deliver to Seller all Property Documents and copies thereof. Purchaser's
obligation to deliver the Property Documents to Seller shall survive the
termination of this Agreement.
4.7 SERVICE CONTRACTS. On or prior to the last day of the Inspection
Period, Purchaser will advise Seller in writing of which Service Contracts it
will assume and for which Service Contracts Purchaser requests that Seller
deliver written termination at or prior to Closing, provided Seller shall have
no obligation to terminate, and Purchaser shall be obligated to assume, any
Service Contracts which by their terms cannot be terminated without penalty or
payment of a fee. Seller shall deliver at Closing notices of termination of all
Service Contracts that are not so assumed. Purchaser must assume the obligations
arising from and after the Closing Date under those Service Contracts (i) that
Purchaser has agreed to assume, or that Purchaser is obligated to assume
pursuant to this Section 4.7, and (ii) for which a termination notice is
delivered as of or prior to Closing but for which termination is not effective
until after Closing. Notwithstanding the foregoing, Seller's existing management
agreement for the Property will be terminated as of Closing.
4.8 PROPRIETARY INFORMATION; CONFIDENTIALITY. Purchaser acknowledges that
the Property Documents are proprietary and confidential and will be delivered to
Purchaser solely to assist Purchase in determining the feasibility of Purchasing
the Property. Purchaser shall not use the Property Documents for any purpose
other than as set forth in the preceding sentence. Purchaser shall not disclose
the contents to any person other than to those Persons who are responsible for
determining the feasibility of Purchaser's acquisition of the Property and who
have agreed to preserve the confidentiality of such information as required
hereby (collectively, "Permitted Outside Parties"). At any time and from time to
time, within two (2) business days after Seller's request, Purchaser shall
deliver to Seller a
Page 8
list of all parties to whom Purchaser has provided any Property Documents or any
information taken from the Property Documents, Purchaser shall not divulge the
contents of the Property Documents and other information except in strict
accordance with the confidentiality standards set forth in this Section 4.8. In
permitting Purchaser to review the Property Documents or any other information,
Seller has not waived any privilege or claim of confidentiality with respect
thereto, and no third party benefits or relationships of any kind, either
express or implied, have been offered, intended or created. Seller will not
disclose the pertinent terms of this transaction to any third party other than
those persons and entities who, in Seller's ordinary course of business, have a
need to know such terms, including, without limitation, Seller's property
managers, brokers, agents, attorneys, consultants, accountants, auditors,
contractors, lenders, investors and prospective investors or purchasers, and
except as otherwise required by law or in connection with any legal proceeding.
4.9 NO REPRESENTATION OR WARRANTY BY SELLER. Purchaser acknowledges that,
except as expressly set forth in this Agreement, neither Seller nor Asset
Manager has made nor makes any warranty or representation regarding the truth,
accuracy or completeness of the Property Documents or the source(s) thereof.
Purchaser further acknowledges that some if not all of the Property Documents
were prepared by third parties other than Seller and Asset Manager. Seller and
Asset Manager expressly disclaim any and all liability for representations or
warranties, express or implied, statements of fact and other matters contained
in such information, or for omissions from the Property Documents, or in any
other written or oral communications transmitted or made available to Purchaser.
Purchaser shall rely solely upon its own investigation with respect to the
Property, including, without limitation, the Property's physical, environmental
or economic condition, compliance or lack of compliance with any ordinance,
order, permit or regulation or any other attribute or matter relating thereto.
Seller and Asset Manager have not undertaken any independent investigation as to
the truth, accuracy or completeness of the Property Documents and are providing
the Property Documents solely as an accommodation to Purchaser. Seller confirms,
however, that the Property Documents are maintained by Seller in the ordinary
course of Seller's business.
4.10 PURCHASER'S RESPONSIBILITIES. In conducting any inspections,
investigations or tests of the Property and/or Property Documents, Purchaser and
its agents and representatives shall: (i) not disturb the tenants or interfere
with their use of the Property pursuant to their respective Leases; (ii) not
interfere with the operation and maintenance of the Property; (iii) not damage
any part of the Property or any personal property owned or held by any tenant or
any third party; (iv) not injure or otherwise cause bodily harm to Seller, Asset
Manager, or their respective agents, guests, invitees, contractors and employees
or any tenants or their guests or invitees; (v) comply with all applicable laws;
(vi) promptly pay when due the costs of all tests, investigations, and
examinations done with regard to the Property; (vii) not permit any liens to
attach to the Real Property by reason of the exercise of its rights hereunder;
(viii) repair any damage to the Real Property resulting directly or indirectly
from any such inspection or tests; and (ix) not reveal or disclose prior to
Closing any information obtained during the Inspection Period concerning the
Property and the Property Documents to anyone other than the Permitted Outside
Parties, in accordance with the confidentiality standards set forth in Section
4.8 above, or except as may be otherwise required by law.
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4.11 PURCHASER'S AGREEMENT TO INDEMNIFY. Upon timely notice with right to
defend, Purchaser indemnifies and holds Seller and Asset Manager harmless from
and against any and all liens, claims, causes of action, damages, liabilities
and expenses (including reasonable attorneys' fees) arising out of Purchaser's
inspections or tests permitted under this Agreement or any violation of the
provisions of Sections 4.3, 4.8 and 4.10; provided, however, the indemnity shall
not extend to protect Seller from any pre-existing liabilities for matters
merely discovered by Purchaser (i.e., latent environmental contamination) so
long as Purchaser's actions do not aggravate any pre-existing liability of
Seller. Purchaser also indemnifies and holds any tenant harmless from and
against any and all claims, causes of action, damages, liabilities and expenses
which such tenant may suffer or incur due to Purchaser's breach of its
obligation under Section 4.8 above to maintain the confidential nature of any
Property Documents or other information relative to such tenant. Purchaser's
obligations under this Section 4.11 shall survive the termination of this
Agreement and shall survive the Closing for a period of one (1) year.
4.12 ENVIRONMENTAL STUDIES; SELLER'S RIGHT TO TERMINATE. As additional
consideration for the transaction contemplated in this Agreement, Purchaser may
provide to Seller, immediately following the receipt of same by Purchaser,
copies of any and all reports, tests or studies involving contamination of or
other environmental concerns relating to the Property; provided, however,
Purchaser shall have no obligation to cause any such tests or studies to be
performed on the Property. Seller acknowledges that Purchaser has not made and
does not make any warranty or representation regarding the truth or accuracy of
any such studies or reports. Notwithstanding Section 4.11 above, Purchaser shall
have no liability or culpability of any nature as a result of having provided
such information to Seller or as a result of Seller's reliance thereon or
arising out of the fact that Purchaser merely conducted such tests or studies,
so long as Purchaser's actions do not aggravate any preexisting liability of
Seller. In the event that such reports, tests or studies indicate the existence
or reasonable potential existence of any contamination of any portion of the
Property that is not disclosed in the Property Documents and that is material
(meaning that the reasonably estimated cost of remediation and/or other
liability associated therewith, as determined by Seller's environmental
consultants, exceeds $50,000.00), then Seller may terminate this Agreement by
giving written notice to Purchaser within ten (10) business days after Purchaser
has provided Seller with copies of such reports, tests or studies, whereupon the
Xxxxxxx Money shall be returned to Purchaser, the parties shall have no further
obligations hereunder except for obligations that expressly survive the
termination hereof, and seller shall pay to Purchaser an amount equal to the
lesser of (A) Purchaser's actual out-of-pocket expenditures incurred directly in
connection with negotiating this Agreement and/or conducting due diligence
activities contemplated hereunder (including a reasonable allowance for in-house
expenses), or (B) Twenty-Five Thousand and No/100 Dollars ($25,000.00),
provided, however, that Purchaser must make written demand of Seller for such
reimbursement and provide Seller reasonable supporting documentation of actual
expenditures within thirty (30) days of the termination of this Agreement, and
if Purchaser fails to provide such written demand and supporting documentation
within such thirty (30) day period, then Purchaser shall be deemed to have
forever waived its right to recover any amount from Seller.
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ARTICLE 5 - TITLE AND SURVEY
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5.1 TITLE COMMITMENT. Seller shall cause to be prepared and delivered to
Purchaser on or before the Title Commitment Delivery Date: (i) a current
commitment for title insurance or preliminary title report (the "Title
Commitment") issued by the Title Company, in the amount of the Purchase Price
and on a Texas T-1 Standard Form commitment, with Purchaser as the proposed
insured, and (ii) copies of all documents of record referred to in the Title
Commitment as exceptions to title to the Property.
5.2 NEW OR UPDATED SURVEY. Purchaser may elect to obtain a new survey or
revise, modify, or re-certify an existing survey ("Survey") as necessary in
order for the Title Company to delete the survey exception from the Title Policy
or to otherwise satisfy Purchaser's objectives.
5.3 TITLE REVIEW. During the Title Review Period, Purchaser shall review
title to the Property as disclosed by the Title Commitment and the Survey.
Seller shall have no obligation to cure title objections except financing liens
and mechanic's and materialman's liens of an ascertainable amount created by,
under or through Seller, which liens Seller shall cause to be released at or
prior to Closing (with Seller having the right to apply the Purchase Price or a
portion thereof for such purpose), and Seller shall deliver the Property free
and clear of any such financing and mechanic's and materialman's liens. Seller
further agrees to remove any exceptions or encumbrances to title which are
voluntarily created by, under or through Seller after the Effective Date without
Purchaser's consent (if requested, such consent shall not be unreasonably
withheld or delayed). The term "Permitted Exceptions" shall mean: the specific
exceptions (excluding exceptions that are part of the promulgated title
insurance form) in the Title Commitment that the Title Company has not agreed to
remove from the Title Commitment as of the end of the Title and Survey Review
Period and that Seller is not required to remove as provided above; matters
created by, through or under Purchaser; items shown on the Survey which have not
been removed as of the end of the Inspection Period; real estate taxes not yet
due and payable; tenants under the Leases; and any licensees under any Service
Contracts not terminated as of Closing.
5.4 DELIVERY OF TITLE POLICY at CLOSING. In the event that the Title
Company does not issue at Closing, or unconditionally commit at Closing to
issue, to Purchaser, an owner'S title policy in accordance with the Title
Commitment, insuring Purchaser's title to the property in the amount of the
Purchase Price, subject only to the standard exceptions and exclusions from
coverage contained in such policy and the Permitted Exceptions (the "Title
Policy"), Purchaser shall have the right to terminate this Agreement, in which
case the Xxxxxxx Money shall be immediately returned to Purchaser and the
parties hereto shall have no further rights or obligations, other than those
that by their terms survive the termination of this Agreement.
ARTICLE 6 - OPERATIONS AND RISK OF LOSS
---------------------------------------
6.1 ONGOING OPERATIONS. From the Effective Date through Closing:
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6.1.1 LEASES AND SERVICE CONTRACTS. Seller will perform its material
obligations under the Leases and Service Contracts.
6.1.2 NEW CONTRACTS. Except as provided in Subsection 6.1.4, Seller
will not enter into any contract that will be an obligation affecting the
Property subsequent to the Closing, except contracts entered into in the
ordinary course of business that are terminable without cause and without the
payment of any termination penalty on not more than thirty (30) days' prior
notice.
6.1.3 MAINTENANCE OF IMPROVEMENTS; REMOVAL OF PERSONAL PROPERTY.
Subject to Sections 6.2 and 6.3, Seller shall maintain all Improvements
substantially in their present condition (ordinary wear and tear and casualty
excepted) and in a manner consistent with Seller's maintenance of the
Improvements during Seller's period of ownership. Seller will not remove any
Tangible Personal Property except as may be required for necessary repair or
replacement, and replacement shall be of approximately equal quality and
quantity as existed as the removed item of Tangible Personal Property.
6.1.4 LEASING. Seller will continue to lease apartment units in the
Improvements in the ordinary course of business up to the date of Closing,
including, without limitation, a continuation of its efforts to re-lease units
in the ordinary course of business that may be vacated during the term of this
Agreement. Any units that have been vacant for more than seven (7) days as of
Closing will be delivered to Purchaser in a "rent ready" condition consistent
with Seller's ordinary course of business. Further, Seller will not enter into
any new leases with a term of more than one (1) year, and any new leases entered
into will be for residential purposes only.
6.2 DAMAGE. If prior to Closing the Property is damaged by fire or other
casualty, Seller shall estimate the cost to repair and the time required to
complete repairs and will provide Purchaser written notice of Seller's
estimation (the "Casualty Notice") as soon as reasonably possible after the
occurrence of the casualty.
6.2.1 MATERIAL. In the event of any Material Damage to or destruction
of the Property or any portion thereof prior to Closing, Purchaser may, at its
option, terminate this Agreement by delivering written notice to Seller on or
before the expiration of thirty (30) days after the date Seller delivers the
Casualty Notice to Purchaser (and if necessary, the Closing Date shall be
extended to give the parties the full thirty-day period to make such election
and to obtain insurance settlement agreements with Seller's insurers). Upon any
such termination, the Xxxxxxx Money shall be returned to Purchaser and the
parties hereto shall have no further rights or obligations hereunder, other than
those that by their terms survive the termination of this Agreement. If
Purchaser does not terminates this Agreement within said thirty (30) day period,
then the parties shall proceed under this Agreement and close on schedule
(subject to extension of Closing as provided above), and as of Closing Seller
shall assign to Purchaser, without representation or warranty by or recourse
against Seller, all of Seller's rights in and to any resulting insurance
proceeds (including any rent loss insurance applicable to any period on and
after the Closing Date) due Seller as a result of such damage or destruction and
Purchaser shall assume full responsibility for all needed repairs, and Purchaser
shall receive a credit at Closing for any deductible amount under such insurance
policies (but the amount of the deductible plus insurance proceeds shall not
exceed the lesser of (A) the cost of repair or (B) the Purchase Price and a pro
rata share of the rental or
Page 12
business loss proceeds, if any). For the purposes of this Agreement, "Material
Damage" and "Materially Damaged" means damage which, in Seller's reasonable
estimation, exceeds $100,000.00 to repair or which, in Seller's reasonable
estimation, will take longer than ninety (90) days to repair.
6.2.2 NOT MATERIAL. If the Property is not Materially Damaged, then
neither Purchaser nor Seller shall have the right to terminate this Agreement,
and Seller shall, at its option, either (i) repair the damage before the Closing
in a manner reasonably satisfactory to Purchaser, or (ii) credit Purchaser at
Closing for the reasonable cost to complete the repair plus a pro rata share of
the rental or business loss proceeds, if any, applicable to the period of time
after Closing (in which case Seller shall retain all insurance proceeds and
Purchaser shall assume full responsibility for all needed repairs).
6.3 CONDEMNATION. If proceedings in eminent domain are instituted with
respect to the Property or any portion thereof, Purchaser may, at its option, by
written notice to Seller given within ten (10) days after Seller notifies
Purchaser of such proceedings (and if necessary the Closing Date shall be
automatically extended to give Purchaser the full ten-day period to make such
election), either: (i) terminate this Agreement, in which case the Xxxxxxx Money
shall be immediately returned to Purchaser and the parties hereto shall have no
further rights or obligations, other than those that by their terms survive the
termination of this Agreement, or (ii) proceed under this Agreement, in which
event Seller shall, at the Closing, assign to Purchaser its entire right, title
and interest in and to any condemnation award, and Purchaser shall have the sole
right after the Closing to negotiate and otherwise deal with the condemning
authority in respect of such matter, If Purchaser does not give Seller written
notice of its election within the time required above, then Purchaser shall be
deemed to have elected option (ii) above.
ARTICLE 7 - CLOSING
-------------------
7.1 CLOSING. The consummation of the transaction contemplated herein
("Closing") shall occur on the Closing Date at the offices of Escrow Agent (or
such other location as may be mutually agreed upon by Seller and Purchaser).
Funds shall be deposited into and held by Escrow Agent in a closing escrow
account with a bank satisfactory to Purchaser and Seller. Upon satisfaction or
completion of all closing conditions and deliveries, the parties shall direct
Escrow Agent to immediately record and deliver the closing documents to the
appropriate parties and make disbursements according to the closing statements
executed by Seller and Purchaser. Purchaser shall have a one-time right to
extend the Closing to November 25, 1998 by (i) notifying Seller in writing of
said extension at least ten (10) days prior to the then scheduled Closing, and
(ii) simultaneously with delivery of the written notice of extension to Seller,
depositing with the Title Company in good funds the additional sum of Fifty
Thousand and No/100 Dollars ($50,000.00) (the "Extension Xxxxxxx Money") to be
held by the Title Company as part of the Xxxxxxx Money. Purchaser shall have
waived its right to extend the Closing in accordance with this Section 7.1 if it
does not deliver the written notice and the Extension Xxxxxxx Money within the
time required above.
7.2 CONDITIONS TO PARTIES' OBLIGATION TO CLOSE. In addition to all other
conditions set forth herein, the obligation of Seller, on the one hand, and
Purchaser, on the
Page 13
other hand, to consummate the transactions contemplated hereunder are
conditioned upon the following:
7.2.1 REPRESENTATIONS AND WARRANTIES. The other party's
representations and warranties contained herein shall be true and correct in all
material respects as of the date of this Agreement and the Closing Date;
7.2.2 DELIVERIES. As of the Closing Date, the other party shall have
tendered all deliveries to be made at Closing; and
7.2.3 ACTIONS, SUITS, ETC. There shall exist no pending or threatened
actions, suits, arbitrations, claims, attachments, proceedings, assignments for
the benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings, against the other party that would materially and adversely affect
the operation or value of the Property or the other party's ability to perform
its obligations under this Agreement.
So long as a party is not in default hereunder, if any condition to such
party's obligation to proceed with the Closing hereunder has not been satisfied
as of the Closing Date (or such earlier date as is provided herein), such party
may, in its sole discretion, terminate this Agreement by delivering written
notice to the other party on or before the Closing Date, or elect to close
notwithstanding the non-satisfaction of such condition, in which event such
party shall be deemed to have waived any such condition. In the event such party
elects to close, notwithstanding the non-satisfaction of such condition, said
party shall be deemed to have waived said condition, there shall be no liability
on the part of any other party hereto for breaches of representations and
warranties of which the party electing to close had knowledge at the Closing.
7.3 SELLER'S DELIVERIES IN ESCROW. As of or prior to the Closing Date,
Seller shall deliver in escrow to Escrow Agent the following:
7.3.1 DEED. A special warranty or other limited warranty deed (as
Seller's local counsel or Title Company shall advise, warranting title only
against any party claiming by, through or under Seller) in form acceptable for
recordation under the law of the state where the Property is located and
restating (in summary form) the provisions of Article 11 hereof and including a
list of Permitted Exceptions to which the conveyance shall be subject, executed
and acknowledged by Seller, conveying to Purchaser Seller's interest in the real
Property (the "Deed");
7.3.2 XXXX OF SALE, ASSIGNMENT AND ASSUMPTION. A Xxxx of Sale,
Assignment and Assumption of Leases and Contracts in the form of Exhibit B
attached hereto (the "Assignment"), executed and acknowledged by Seller, vesting
in Purchaser, without warranty, Seller's right, title and interest in and to the
Property described therein free of any claims, except for the Permitted
Exceptions to the extent applicable;
7.3.3 CONVEYANCING OR TRANSFER TAX FORMS OR RETURNS. Such conveyancing
or transfer tax forms or returns, if any, as are required to be delivered or
signed by Seller by applicable state and local law in connection with the
conveyance of the Real Property;
Page 14
7.3.4 FIRPTA. A Foreign Investment in Real Property Tax Act affidavit
executed by Seller;
7.3.5 AUTHORITY. Evidence of the existence, organization and authority
of Seller and of the authority of the persons executing documents on behalf of
Seller reasonably satisfactory to the underwriter for the Title Policy;
7.3.6 ADDITIONAL DOCUMENTS. Any additional documents that Escrow Agent
or the Title Company may reasonably require for the proper consummation of the
transaction contemplated by this Agreement, including, without limitation, a
customary owner's affidavit sufficient to permit the Title Company to delete the
"standard" printed exceptions from the Title Policy (provided, however, no such
additional document shall expand any obligation, covenant, representation or
warranty of Seller or result in any new or additional obligation, covenant,
representation or warranty of Seller under this Agreement beyond those expressly
set forth in this Agreement);
7.3.7 UPDATED RENT ROLL. An updated rent roll, dated within five (5)
business days of Closing; and
7.3.8 EVIDENCE OF TERMINATION OF MANAGEMENT AGREEMENT. Evidence
reasonably satisfactory to Purchaser of termination, effective as of Closing, of
Seller's property management agreement for the Property,
7.4 PURCHASER'S DELIVERIES IN ESCROW. As of or prior to the Closing Date,
Purchaser shall deliver in escrow to Escrow Agent the following:
7.4.1 XXXX OF SALE, ASSIGNMENT AND ASSUMPTION. The Assignment,
executed and acknowledged by Purchaser;
7.4.2 ERISA LETTER. A letter to Seller in the form of Exhibit C
attached hereto duly executed by Purchaser, confirming that Purchaser is not
acquiring the Property with the assets of an employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
and, in the event Purchaser is unable or unwilling to make such a
representation, Purchaser shall be deemed to be in default hereunder, and Seller
shall have the right to terminate this Agreement and to receive and retain the
Xxxxxxx Money;
7.4.3 CONVEYANCING OR TRANSFER TAX FORMS OR RETURNS. Such Conveyancing
or transfer tax forms or returns, if any, as are required to be delivered or
signed by Purchaser by applicable state and local law in connection with the
conveyance of Real Property; and
7.4.4 ADDITIONAL DOCUMENTS. Any additional documents that Seller,
Escrow Agent or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement (provided,
however, no such additional document shall expand any obligation, covenant,
representation or warranty of Purchaser or result in any new or additional
obligation, covenant, representation or warranty of Purchaser under this
Agreement beyond those expressly set forth in this Agreement).
Page 15
7.5 CLOSING STATEMENTS. As of or prior to the Closing Date, Seller and
Purchaser shall deposit with Escrow Agent executed closing statements consistent
with this Agreement in the form required by Escrow Agent.
7.6 PURCHASE PRICE. At or before 1:00 p.m. local time on the Closing Date,
Purchaser shall deliver to Escrow Agent the Purchase Price, less the Xxxxxxx
Money that is applied to the Purchase Price, plus or minus applicable
prorations, in immediate, same-day U.S. federal funds wired for credit into
Escrow Agent's escrow account, which funds must be delivered in a manner to
permit Escrow Agent to deliver good funds to Seller or its designee on the
Closing Date (and, if requested by Seller, by wire transfer); in the event that
Escrow Agent is unable to deliver good funds to Seller or its designee on the
Closing Date, then the closing statements and related prorations will be revised
as necessary.
7.7 POSSESSION. Seller shall deliver possession of the Property to
Purchaser at the Closing subject only to the Permitted Exceptions.
7.8 DELIVERY OF BOOKS AND RECORDS. After the Closing, Seller shall deliver
to the offices of Purchaser's property manager or to the Real Property to the
extent in Seller's or its property manager's possession or control: Lease Files;
maintenance records and warranties; plans and specifications; licenses, permits
and certificates of occupancy; copies or originals of all books and records of
account, contracts, and copies of correspondence with tenants and suppliers;
receipts for deposits, unpaid bills and other papers or documents which pertain
to the Property; all advertising materials; booklets; keys; and other items, if
any, used in the operation of the Property.
7.9 NOTICE TO TENANTS. Seller and Purchaser shall deliver to each tenant
immediately after the Closing a notice regarding the sale in substantially the
form of Exhibit D attached hereto, or such other form as may be required by
applicable state law.
7.10 TITLE POLICY. The party obligated to pay for the Title Policy in
accordance with Section 1.2 shall pay the premium therefor and use reasonable
efforts to cause the Title Company to issue the Title Policy (or a final
commitment to issue same) at Closing in accordance with Section 5.4 hereof
ARTICLE 8 - PRORATIONS, DEPOSITS, COMMISSIONS
---------------------------------------------
8.1 PRORATIONS. At Closing, the following items shall be prorated as of the
date of Closing with all items of income and expense for the Property being
borne by Purchaser from and after (but including) the date of Closing: Tenant
Receivables and other income and rents; fees and assessments; prepaid expenses
and obligations under Service Contracts as are assumed by Purchaser pursuant to
this Agreement; accrued operating expenses; real and personal ad valorem taxes
("Taxes"); and any assessments by private covenant for the then current calendar
year of Closing. Specifically, the following shall apply to such prorations:
8.1.1 TAXES. If Taxes for the year of Closing are not known or cannot
be reasonably estimated, Taxes shall be prorated based on Taxes for the year
prior to Closing. Any additional Taxes relating to the year of Closing or prior
years arising out of a change in the use of the Real Property or a change in
ownership shall be assumed by Purchaser
Page 16
effective as of Closing and paid by Purchaser when due and payable, and
Purchaser shall indemnify Seller from and against any all such Taxes, which
indemnification obligation shall survive the Closing.
8.1.2 UTILITIES. Purchaser shall take all steps necessary to
effectuate the transfer of all utilities to its name as of the Closing Date, and
where necessary, post deposits with the utility companies. Seller shall ensure
that all utility meters are read as of the Closing Date. Seller shall be
entitled to recover any and all deposits held by any utility company as of the
Closing Date.
8.1.3 TENANT RECEIVABLES. Rents due from tenants under Leases and
operating expenses and/or taxes payable by tenants under Leases (collectively,
"Tenant Receivables") shall be apportioned on the basis of the period for which
the same is payable and if, as and when collected, as follows:
(a) Purchaser shall apply rent and other income received from tenants
under Leases after Closing in the following order of priority: (i) first, to
payment of the current Tenant Receivables then due for the month in which the
Closing Date occurs, which amount shall be apportioned between Purchaser and
Seller as of the Closing Date as set forth in Section 8.1 hereof (with Seller's
portion thereof to be delivered to Seller); (ii) second, to payment of Tenant
Receivables first coming due after Closing but applicable to the period of time
before Closing, including, without limitation, the Tenant Receivables described
in Subsection 8.1.3(b) below (collectively, "Unbilled Tenant Receivables"),
which amount shall be delivered to Seller; (iii) third, to Tenant Receivables
first coming due after Closing and applicable to the period of time after
Closing, which amount shall be retained by Purchaser; and (iv) thereafter, to
delinquent Tenant Receivables which were due and payable as of Closing but not
collected by Seller as of Closing (collectively, "Uncollected Delinquent Tenant
Receivables"), which amount shall be delivered to Seller. Notwithstanding the
foregoing, Seller shall have the right to pursue the collection of Uncollected
Delinquent Tenant Receivables for a period of one (1) year after Closing without
prejudice to Seller's rights or Purchaser's obligations hereunder, provided,
however, Seller shall have no right to cause any such tenant to be evicted or to
exercise any other "landlord" remedy (as set forth in such tenant's Lease)
against such tenant other than to xxx for collection. Any sums received by
Purchaser to which Seller is entitled shall be held in trust for Seller on
account of such past due rents Payable to Seller, and Purchaser shall remit to
Seller any such sums received by Purchaser to which Seller is entitled within
ten (10) business days after receipt thereof less reasonable, actual costs and
expenses of collection, including reasonable attorneys' fees, court costs and
disbursements, if any. Seller expressly agrees that if Seller receives any
amounts after the Closing Date which are attributable, in whole or in part, to
any Period after the Closing Date, Seller shall remit to Purchaser that portion
of the monies so received by Seller to which Purchaser is entitled within ten
(10) business days after receipt thereof. With respect to Unbilled Tenant
Receivables, Purchaser covenants and agrees to (A) xxxx the same when billable
and (B) cooperate with Seller to determine the correct amount of operating
expenses and/or taxes due. The provisions of this Subsection 8.1.3(a) shall
survive the Closing for a period of six (6) months.
(b) Without limiting the generality of the requirements of Subsection
8.1.3(a)(ii) above, if the final reconciliation or determination of operating
expenses and/or taxes due under the Leases shows that a net amount is owed by
Seller to Purchaser,
Page 17
Purchaser's pro rata portion shall be paid by Seller to Purchaser within ten
(10) business days of such final determination under the Leases. If the final
determination of operating expenses and/or taxes due under the Leases shows that
a net amount is owed by Purchaser to Seller, Purchaser shall, within ten (10)
business days of such final determination, remit to Seller's portion of
operating expenses and/or taxes for the period up to and including the Closing
Date, if, as and when received. Purchaser agrees to receive and hold any monies
received on account of such past due expenses and/or taxes in trust for Seller
and to pay same promptly to Seller as aforesaid. The provisions of this
Subsection 8.1.3(b) shall survive the Closing.
8.2 RENT CONCESSIONS. If and to the extent Seller has committed to give any
future monetary rent concessions to tenants under existing Leases to which
Purchaser would become liable as of Closing, then Seller shall credit Purchaser
at Closing for the amount of any such concessions.
8.3 CLOSING COSTS. Closing costs shall be allocated between Seller and
Purchaser in accordance with Section 1.2.
8.4 FINAL ADJUSTMENT AFTER CLOSING. If final bills are not available or
cannot be issued prior to Closing for any item being prorated under Section 8.1,
then Purchaser and Seller agree to allocate such items on a fair and equitable
basis as soon as such bills are available, final adjustment to be made as soon
as reasonably possible after the Closing. Payments in connection with the final
adjustment shall be due within thirty (30) days of written notice. All such
rights and obligations shall survive the Closing.
8.5 TENANT DEPOSITS. All tenant security deposits collected and not applied
by Seller (and interest thereon if required by law or contract) shall be
transferred or credited to Purchaser at Closing. As of the Closing, Purchaser
shall assume Seller's obligations related to tenant security deposits, but only
to the extent they are credited or transferred to Purchaser.
8.6 COMMISSIONS. Seller shall be responsible to Broker for a real estate
sales commission at Closing (but only in the event of a Closing in strict
accordance with this Agreement) in accordance with a separate agreement between
Seller and Broker. Broker may share its commission with any other licensed
broker involved in this transaction, but the Payment of the commission by Seller
to Broker shall fully satisfy any obligations of Seller to pay a Commission
hereunder. Under no circumstances shall Seller owe a commission or other
compensation directly to any other broker, agent or person. Any cooperating
broker shall not be an affiliate, subsidiary or related in any way to Purchaser.
Other than as stated above in this Section 8.6, Seller and Purchaser each
represent and warrant to the other that no real estate brokerage commission is
payable to any Person or entity in connection with the transaction contemplated
hereby, and each agrees to and does hereby indemnify and hold the other harmless
against the payment of any commission to any other person or entity claiming by,
through or under Seller or Purchaser, as applicable. This indemnification shall
extend to any and all claims, liabilities, costs and expenses (including
reasonable attorneys' fees and litigation costs) arising as a result of such
claims and shall survive the Closing.
Page 18
ARTICLE 9 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
9.1 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and warrants
to Purchaser that:
9.1.1 ORGANIZATION AND AUTHORITY. Seller has been duly organized, is
validly existing, and is in good standing in the state in which it was formed.
Seller has the full right and authority and has obtained any and all consents
required to enter into this Agreement and to consummate or cause to be
consummated the transactions contemplated hereby. This Agreement has been, and
all of the documents to be delivered by Seller at the Closing will be,
authorized and executed and constitute, or will constitute, as appropriate, the
valid and binding obligation of Seller, enforceable in accordance with their
terms.
9.1.2 CONFLICTS AND PENDING ACTIONS. There is no agreement to which
Seller is a party or, to Seller's knowledge, that is binding on Seller which is
in conflict with this Agreement. To Seller's knowledge, there is no action or
proceeding pending or threatened against Seller or relating to the Property,
which challenges or impairs Seller's ability to execute or perform its
obligations under this Agreement.
9.1.3 TITLE TO PROPERTY. Seller owns fee simple title to the Real
Property and has the power to convey same in accordance with the terms of this
Agreement.
9.1.4 SERVICE CONTRACTS. To Seller's knowledge, the list of Service
Contracts to be delivered to Purchaser pursuant to this Agreement will be
correct and complete as of the date of its delivery.
9.1.5 NOTICES FROM GOVERNMENTAL AUTHORITIES. To Seller's knowledge,
Seller has not received from any governmental authority written notice of any
material violation of any laws applicable (or alleged to be applicable) to the
Real Property, or any part thereof (including environmental laws pertaining to
Hazardous Materials), that has not been corrected.
9.1.6 NON-FOREIGN. Seller is not a "foreign person" as that term is
defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended.
9.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents and
warrants to Seller that:
9.2.1 ORGANIZATION AND AUTHORITY. Purchaser has been duly organized
and is validly existing as a_____________ in good standing in the State of
______________ and is qualified to do business in the state in which the Real
Property is located. Purchaser has the full right and authority and has obtained
any and all consents required to enter into this Agreement and to consummate or
cause to be consummated the transactions contemplated hereby. This Agreement has
been, and all of the documents to be delivered by Purchaser at the Closing will
be, authorized and properly executed and constitute, or will constitute, as
appropriate, the valid and binding obligation of Purchaser, enforceable in
accordance with their terms.
Page 19
9.2.2 CONFLICTS AND PENDING ACTION. There is no agreement to which
Purchaser is a party or to Purchaser's knowledge binding on Purchaser which is
in conflict with this Agreement. There is no action or proceeding pending or, to
Purchaser's knowledge, threatened against Purchaser which challenges or impairs
Purchaser's ability to execute or perform its obligations under this Agreement.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in this Article 9 are made as of the date of this Agreement
and, except in the case of Subsection 9.1.5, are remade as of the Closing Date
and shall not be deemed to be merged into or waived by the instruments of
Closing, but shall survive the Closing for a period of six (6) months (the
"Survival Period,"). Terms such as "to Seller's knowledge," "to the best of
Seller's knowledge" or like phrases mean the actual present and conscious
awareness or knowledge of Xxxxx Xxxxxxx, asset manager of the Property ("Asset
Manager's Employee"), without any duty of inquiry or investigation; provided
that so qualifying Seller's knowledge shall in no event give rise to any
personal liability on the part of Asset Manager's Employee or any other officer
or employee of Seller or its Asset Manager, on account of any breach of any
representation or warranty made by Seller herein. Said terms do not include
constructive knowledge, imputed knowledge, or knowledge Seller or such persons
do not have but could have obtained through further investigation or inquiry. No
broker, agent, or party other than Seller is authorized to make any
representation or warranty for or on behalf of Seller. Each party shall have the
right to bring an action against the other on the breach of a representation or
warranty hereunder, but only on the following conditions: (i) the party bringing
the action for breach first learns of the breach after within the Survival
Period, and (ii) neither part shall have Closing and files such action the light
to bring a cause of action for a breach of a representation or warranty unless
the damage to such party on account of such breach (individually or when
combined with damages from other breaches) equals or exceeds $15,000.00. Neither
party shall have any liability after Closing for the breach of a representation
or warranty hereunder of which the other party hereto had knowledge as of
Closing. Furthermore, Purchaser agrees that the maximum liability of Seller for
the alleged breach of any or all representations or warranties set forth in this
Agreement is limited to $450,000.00. The Provisions of this Section 9.3 shall
survive the Closing, Any breach of a representation or warranty that occurs
prior to Closing shall be governed by Article 10.
9.4 LEAD BASED PAINT DISCLOSURE. N/A
ARTICLE 10 - DEFAULT AND REMEDIES
---------------------------------
10.1 SELLER'S REMEDIES. If Purchaser fails to Perform its obligations
pursuant to this Agreement at or prior to Closing for any reason except failure
by Seller to perform hereunder, or if prior to Closing any one or more of
Purchaser's representations or warranties are breached in any material respect,
Seller shall be entitled, as its sole remedy (except as Provided in Sections
4.11, 8.6, 10.3 and 10.4 hereof), to terminate this Agreement and recover the
Xxxxxxx Money as liquidated damages and not as penalty, in full satisfaction of
claims against Purchaser hereunder. Seller and Purchaser agree that Seller's
damages resulting from Purchaser's default are difficult, if not impossible, to
determine and the Xxxxxxx Money is a fair estimate of those damages which has
been agreed to in an effort to cause the amount of such damages to be certain.
Notwithstanding anything in this Section 10.1 or in Exhibit F
Page 20
to the contrary, in the event of Purchaser's default or a termination of this
Agreement, Seller shall have all remedies available at law or in equity in the
event Purchaser or any party related to or affiliated with Purchaser is
asserting any claims or right to the Property that would otherwise delay or
prevent Seller from having clear, indefeasible and marketable title to the
Property. In all other events Seller's remedies shall be limited to those
described in this Section 10.1 and Sections 4.11, 8.6, 10.3 and 10.4 hereof. If
Closing is consummated, Seller shall have all remedies available at law or in
equity in the event Purchaser fails to perform any obligation of Purchaser under
this Agreement.
10.2 PURCHASER'S REMEDIES. If Seller fails to perform its obligations
pursuant to this Agreement for any reason except failure by Purchaser to perform
hereunder, or if prior to Closing any one or more of Seller's representations or
warranties are breached in any material respect, Purchaser shall elect, as its
sole remedy, either to (i) terminate this Agreement by giving Seller timely
written notice of such election prior to or at Closing and recover the Xxxxxxx
Money, (ii) enforce specific performance, or (iii) waive said failure or breach
and proceed to Closing. Notwithstanding anything herein to the contrary,
Purchaser shall be deemed to have elected to terminate this Agreement if
Purchaser fails to deliver to Seller written notice of its intent to file a
claim or assert a cause of action for specific performance against Seller on or
before ten (10) business days following the scheduled Closing Date or, having
given such notice, fails to file a lawsuit asserting such claim or cause of
action in the county in which the Property is located within four (4) months
following the scheduled Closing Date. Purchaser's remedies shall be limited to
those described in this Section 10.2 and Sections 10.3 and 10.4 hereof. If,
however, the equitable remedy of specific Performance is not available,
Purchaser may seek any other right or remedy available at law or in equity;
provided, however, that in no event shall Seller's liability exceed the lesser
of (i) $100,000.00 or (ii) the actual reasonable out-of-pocket expenses incurred
by Purchaser and paid (A) to Purchaser's attorneys in connection with the
negotiation of this Agreement and (B) to unrelated and unaffiliated third Party
consultants in connection with the performance of examinations, inspections
and/or investigations pursuant to Article 4 (with a reasonable allowance for
in-house expenses). For purposes of this provision, specific performance shall
be considered not available to Purchaser only if a court of competent
jurisdiction determines conclusively that Purchaser is entitled to specific
performance on the merits Of its claim but said court is unable to enforce
specific performance due to reasons beyond the control of the court. IN NO EVENT
SHALL SELLER'S DIRECT OR INDIRECT PARTNERS, SHAREHOLDERS, OWNERS OR AFFILIATES,
ANY OFFICER, DIRECTOR, EMPLOYEE OF THE FOREGOING, OR ANY AFFILIATE OR
CONTROLLING PERSON THEREOF HAVE ANY LIABILITY FOR ANY CLAIM, CAUSE OF ACTION OR
OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY
WHETHER BASED ON CONTRACT, COMMON LAW, STATUTE, EQUITY OR OTHERWISE.
10.3 ATTORNEYS' FEES. In the event either party hereto employs an attorney
in and connection with claims by one party against the other arising from the
operation of this Agreement, the non-prevailing party shall pay the prevailing
party all reasonable fees expenses, including attorneys' fees, incurred in
connection with such transaction.
10.4 OTHER EXPENSES. If this Agreement is terminated due to the default of
a party, then the defaulting party shall pay any fees or charges due to Escrow
Agent for holding the Xxxxxxx Money as well as any escrow cancellation fees or
charges and any fees
Page 21
or charges due to the Title Company for preparation and/or cancellation of the
Title Commitment.
ARTICLE 11 - DISCLAIMERS, RELEASE AND INDEMNITY
-----------------------------------------------
11.1 DISCLAIMERS BY SELLER. Except as expressly set forth in this
Agreement, it is understood and agreed that Seller and Asset Manager have not at
any time made and are not now making, and they specifically disclaim, any
warranties or representations of any kind or character, express or implied, with
respect to the Property, including, but not limited to, warranties or
representations as to (i) matters of title, (ii) environmental matters relating
to the Property or any portion thereof, including, without limitation, the
presence of Hazardous Materials in, on, under or in the vicinity of the
Property, (iii) geological conditions, including, without limitation,
subsidence, subsurface conditions, water table, underground water reservoirs,
limitations regarding the withdrawal of water, and geologic faults and the
resulting damage of past and/or future faulting, (iv) whether, and to the extent
to which the Property or any portion thereof is affected by any stream (surface
or underground), body of water, wetlands, flood prone area, flood plain,
floodway or special flood hazard, (v) drainage, (vi) soil conditions, including
the existence of instability, past soil repairs, soil additions or conditions of
soil fill, or susceptibility to landslides, or the sufficiency of any
undershoring, (vii) the presence of endangered species or any environmentally
sensitive or protected areas, (viii) zoning or building entitlements to which
the Property or, any portion thereof may be, subject, (ix) the availability of
way utilities to the Property or any portion thereof including, without
limitation, water, sewage, gas and electric, (x) usages of adjoining Property,
(xi) access to the Property or any portion thereof, (xii) the value, compliance
with the plans and specifications, size, location, age, use, design, quality,
description, suitability, structural integrity, operation, title to, or physical
or financial condition of the Property or any portion thereof, or any income,
expenses, charges, liens, encumbrances, rights or claims on. or affecting or
pertaining to the Property or any part thereof, (xiii) the condition or use of
the Property or compliance of the Property with any or all past, present or
future federal, state or local ordinances, rules, regulations or laws, building,
fire or zoning ordinances, codes or other similar laws, (xiv) the existence or
non-existence of underground storage tanks, surface impoundments, or landfills,
(xv) the merchantability of the Property or fitness of the Property for any
Particular purpose, (xvi) the truth, accuracy or completeness of the Property
Documents, (xvii) tax consequences, or (xviii) any other matter or thing with
respect to the Property.
11.2 SALE "AS IS, WHERE IS." Purchaser acknowledges and agrees that upon
Closing, Seller shall sell and convey to Purchaser and Purchaser shall accept
the Property "AS IS, WHERE IS, WITH ALL FAULTS," except to the extent expressly
provided otherwise in this Agreement and any document executed by Seller and
delivered to Purchaser at Closing. Except as expressly set forth in this
Agreement, Purchaser has not relied and will not rely on, and Seller has not
made and is not liable for or bound by, any express or implied warranties,
guarantees, statement representations or information pertaining to the Property
or relating thereto (including specifically, without limitation, Property
information packages distributed with respect to the Property) made or furnished
by Seller, the Asset Manager of the Property, or any real estate broker, agent
or third party representing or purporting to represent Seller, to whomever made
or given, directly or indirectly, orally or in writing. Purchaser represents
that it is a knowledgeable, experienced and sophisticated purchaser of
Page 22
real estate and that, except as expressly set forth in this Agreement, it is
relying solely on its own expertise and that of Purchaser's consultants in
purchasing the Property and shall make an independent verification of the
accuracy of any documents and information provided by Seller. Purchaser will
conduct such inspections and investigations of the Property as Purchaser deems
necessary, including, but not limited to, the physical and environmental
conditions thereof, and shall rely upon same. By failing to terminate this
Agreement prior to the expiration of the Inspection Period, Purchaser
acknowledges that Seller has afforded Purchaser a full opportunity to conduct
such investigations of the Property as Purchaser deemed necessary to satisfy
itself as to the condition of the Property and the existence or non-existence or
curative action to be taken with respect to any Hazardous Materials on or
discharged from the Property, and will rely solely upon same and not upon any
information provided by or on behalf of Seller or its agents or employees with
respect thereto, other than such representations, warranties and covenants of
Seller as are expressly set forth in this Agreement. Upon Closing, Purchaser
shall assume the risk that adverse matters, including, but not limited to,
adverse physical or construction defects or adverse environmental, health or
safety conditions, may not have been revealed by Purchaser's inspections and
investigations.
PURCHASER'S INITIALS /s/ GGR
--------
11.3 SELLER RELEASED FROM LIABILITY. Purchaser acknowledges that it will
have the opportunity to inspect the Property during the Inspection Period, and
during such period, observe its physical characteristics and existing conditions
and the opportunity to conduct such investigation and study on and of the
Property and adjacent areas as Purchaser deems necessary, and Purchaser hereby
FOREVER RELEASES AND DISCHARGES Seller and Asset Manager from all responsibility
and liability, including without limitation, liabilities under the Comprehensive
Environmental Response, Compensation and Liability Act Of 1980 (42 U.S.C.
Sections 9601 et seq.), as amended ("CERCLA"), regarding the condition
(including the presence in the soil, air, structures and surface and subsurface
waters, of Hazardous Materials or other materials or substances that have been
or may in the future be determined to be toxic, hazardous, undesirable or
subject to regulation and that may need to be specially treated, handled and/or
removed from the Property under current or future federal, state and local laws,
regulations or guidelines), valuation, salability or utility of the Property, or
its suitability for any purpose whatsoever. Purchaser further hereby WAIVES (and
by closing this transaction will be deemed to have waived) any and all
objections to or complaints regarding (including, but not limited to, federal,
state and common law based actions), or any private right of action under, state
and federal law to which the Property is or may be subject, including, but not
limited to, CERCLA, RCRA, physical characteristics and existing conditions,
including, without limitation, structural and geologic conditions, subsurface
soil and water conditions and solid and hazardous waste, and Hazardous Materials
on, under, adjacent to or other-wise affecting the Property. Purchaser further
hereby assumes the risk of changes in applicable laws and regulations relating
to past, present and future environmental conditions, on the Property and the
risk that adverse physical characteristics and conditions, including, without
limitation, the presence of Hazardous Materials or other contaminants, may not
have been revealed by its investigation.
11.4 "HAZARDOUS MATERIALS" DEFINED. For purposes hereof, "Hazardous
Materials" means "Hazardous Material" means "Hazardous Substance," "Pollutant or
Contaminant," and "Petroleum" and "Natural Gas Liquids," as those terms are
defined or
Page 23
used in Section 101 of CERCLA, and any other substances regulated because of
their effect or potential effect on public health and the environment,
including, without limitation, PCBs, lead paint, asbestos, urea formaldehyde,
radioactive materials, putrescible, and infectious materials.
11.5 INDEMNITY. Purchaser agrees to indemnify and hold Seller harmless of
and from any and all liabilities, claims, demands, and expenses of any kind or
nature which arise or accrue after Closing and which are in any way related to
the ownership, maintenance, or operation of the Property by Purchaser and its
successors and assigns, including, without limitation, in connection with
Hazardous Materials.
11.6 SURVIVAL. The terms and conditions of this Article 11 shall expressly
survive the Closing, not merge with the provisions of any closing documents and
shall be incorporated into the Deed.
Purchaser acknowledges and agrees that the disclaimers and other agreements
set forth herein are an integral part of this Agreement and that Seller would
not have agreed to sell the Property to Purchaser for the Purchase Price without
the disclaimers and other agreements set forth above.
ARTICLE 12 - MISCELLANEOUS
12.1 PARTIES BOUND; ASSIGNMENT. This Agreement, and the terms, covenants,
and conditions herein contained, shall inure to the benefit of and be binding
upon the heirs, personal representatives, successors, and assigns of each of the
parties hereto. Purchaser may assign its rights under this Agreement upon the
following conditions: (i) the Assignee of Purchaser must be an affiliate of
Purchaser or an entity controlling, controlled by, or under common control with
Purchaser, (ii) all of the Xxxxxxx Money must have been delivered in accordance
herewith, (iii) the Inspection Period shall be deemed to have ended, (iv) the
assignee of Purchaser shall assume all obligations of Purchaser hereunder, but
Purchaser shall remain primarily liable for the performance of Purchaser's
obligations, and (v) a copy Of the fully executed written assignment and
assumption agreement shall be delivered to Seller at least ten (10) days prior
to Closing.
12.2 HEADINGS. The article, section, subsection, paragraph and/or other
headings of this Agreement are for convenience only and in no way limit or
enlarge the scopew or meaning of the language hereof.
12.3 INVALIDITY AND WAIVER. If any portion of this Agreement is held
invalid or inoperative, then so far as is reasonable and possible the remainder
of this Agreement shall be deemed valid and operative, and, to the greatest
extent legally possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The failure by either party to enforce
against the other any term or provision of this Agreement shall not be deemed to
be a waiver of such party's right to enforce against the other party the same or
any other such term or provision in the future.
Page 24
12.4 GOVERNING LAW. This Agreement shall, in all respects, be governed,
construed, applied, and enforced in accordance with the law of the state in
which the Real Property is located.
12.5 SURVIVAL. The provisions of this Agreement that contemplate
performance after the Closing and the obligations of the parties not fully
performed at the Closing shall survive the Closing and shall not be deemed to be
merged into or waived by the instruments of Closing.
12.6 ENTIRETY AND AMENDMENTS. This Agreement embodies the entire agreement
between the parties and supersedes all prior agreements and understandings
relating to the Property. This Agreement may be amended or supplemented only by
an instrument in writing executed by the party against whom enforcement is
sought.
12.7 TIME. Time is of the essence in the performance of this Agreement.
12.8 CONFIDENTIALITY. Purchaser shall make no public announcement or
disclosure of any information related to this Agreement to outside brokers or
third parties, before or after the Closing, without the prior written specific
consent of Seller; provided, however, that Purchaser may, subject to the
provisions of Section 4.8, make disclosure of this Agreement to its Permitted
Outside Parties as necessary to perform its obligations hereunder and as may be
required under laws or regulations applicable to Purchaser. Seller will not
disclose the pertinent terms of this transaction to any third party other than
those persons and entities who, in Seller's ordinary course of business, have a
need to know such terms including, without limitation, Seller's property
managers, brokers, agents, attorneys, consultants, accountants, auditors,
contractors, lenders, investors and prospective investors or purchasers, and
except as otherwise required by law or in connection with any legal proceeding.
12.9 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the addresses set forth in Section
1.3. Any such notices shall, unless otherwise provided herein, be given or
served (i) by depositing the same in the United States mail, postage paid,
certified and addressed to the party to be notified, with return receipt
requested, (ii) by overnight delivery using a nationally recognized overnight
courier, (iii) by personal delivery, or (iv) by facsimile, evidenced by
confirmed receipt. Notice deposited in the mail in the manner hereinabove
described shall be effective on the third (3rd) business day after such deposit.
Notice given in any other manner shall be effective only if and when received by
the party to be notified between the hours of 8:00 a.m. and 5:00 p.m. of any
business day with delivery made after such hours to be deemed received the
following business day. A party's address may be changed by written notice to
the other party; provided, however, that no notice of a change of address shall
be effective until actual receipt of such notice. Copies of notices are for
informational purposes only, and a failure to give or receive copies of any
notice shall not be deemed a failure to give notice. Notices given by counsel to
the Purchaser shall be deemed given by Purchaser and notices given by counsel to
the Seller shall be deemed given by Seller.
12.10 CONSTRUCTION. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and agree that the normal rule
of construction -
Page 25
to the effect that any ambiguities are to be resolved against the drafting party
- shall not be employed in the interpretation of this Agreement or any exhibits
or amendments hereto.
12.11 CALCULATION OF TIME PERIODS. Unless otherwise specified, in computing
any period of time described herein, the day of the act or event after which the
designated period of time begins to run is not to be included and the last day
of the period so computed is to be included, unless such last day is a Saturday,
Sunday or legal holiday for national banks in the location where the Property is
located, in which event the period shall run until the end of the next day which
is neither a Saturday, Sunday, or legal holiday. The last day of any period of
time described herein shall be deemed to end at 5:00 p.m. local time in the
state in which the Real Property is located.
12.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of such counter-parts shall constitute one Agreement. To facilitate execution of
this Agreement, the parties may execute and exchange by telephone facsimile
counterparts of the signature pages, provided that executed originals thereof
are forwarded to the other party on the same day by any of the delivery methods
set forth in Section 12.9 other than facsimile.
12.13 NO RECORDATION. Without the prior written consent of Seller, there
shall be no recordation of either this Agreement or any memorandum hereof, or
any affidavit pertaining hereto, and any such recordation of this Agreement or
memorandum or affidavit by Purchaser without the prior written Consent of Seller
shall constitute a default hereunder by Purchaser, whereupon Seller shall have
the remedies set forth in Section 10.1 hereof.
12.14 FURTHER ASSURANCES. In addition to the acts and deeds recited herein
and contemplated to be performed, executed and/or delivered by either party at
Closing, each party agrees to perform, execute and deliver, but without any
obligation to incur any additional liability or expense, on or after the Closing
any further deliveries and assurances as may be reasonably necessary to
consummate the transactions contemplated hereby or to further perfect the
conveyance, transfer and assignment of the Property to Purchaser.
12.15 DISCHARGE OF OBLIGATIONS. The acceptance of the Deed by Purchaser
shall be deemed to be a full performance and discharge of every representation
and warranty made by Seller herein and every agreement and obligation on the
part of Seller to be performed pursuant to the provisions of this Agreement,
except those which are herein specifically stated to survive Closing.
12.16 ERISA. Under no circumstances shall Purchaser have the right to
assign this Agreement to any person or entity owned or controlled by an employee
benefit plan if Seller's sale of the Property to such person or entity would, in
the reasonable opinion of Seller's ERISA advisors or consultants, create or
otherwise cause a "prohibited transaction" under ERISA. In the event Purchaser
assigns this Agreement or transfers any ownership interest in Purchaser, and
such assignment or transfer would make the consummation of the transaction
hereunder a "prohibited transaction" under ERISA and necessitate the termination
of this Agreement then, notwithstanding any contrary provision which may be
contained herein, Seller shall have the right to terminate this Agreement.
Page 26
12.17 NO THIRD PARTY BENEFICIARY. The provisions of this Agreement and of
the documents to be executed and delivered at Closing are and will be for the
benefit of Seller, Asset Manager and Purchaser only and are not for the benefit
of any third party (other than Asset Manager), and accordingly, shall have the
right to enforce the provisions of this Agreement or of the documents to be
executed and delivered at Closing, except that a tenant of the Property may
enforce Purchaser's indemnity obligation under Section 4.11 hereof.
12.18 ASSET MANAGER: DESIGNATED REPRESENTATIVE. Seller has engaged Archon
Group, L.P. or affiliated companies ("Asset Manager") to provide certain asset
management services with respect to the Property, including acting as a liaison
between Seller and Purchaser in connection with the Property and this Agreement.
The Asset Manager will appoint one or more representatives ("Designated
Representatives(s)") to deal with Purchaser. Whenever any approval, acceptance,
consent, direction or action of Seller is required pursuant to this Agreement,
Purchaser shall send to the Designated Representatives a written notice
requesting same, which notice shall: (i)describe in detail the matter for which
such approval, acceptance, consent, direction or other action of Seller is
requested; (ii) be accompanied by a copy of any contract, agreement or other
document to be executed by Seller evidencing such approval, consent, acceptance,
direction or action of Seller; and (iii) be accompanied by such other documents,
written explanations and information as may be reasonably necessary to explain
the request fully and completely. The Asset Manager will communicate Seller's
response to any such requests to Purchaser.
12.19 [INTENTIONALLY OMITTED]
12.20 AUDIT LETTER. If, after Closing, Purchaser is required to have the
Property audited under the regulations of the Securities and Exchange Commission
or as may be required by other federal laws and regulations applicable to real
estate investment trusts, at Purchaser's request, at any time after the
expiration of the Inspection Period (if Purchaser has elected to proceed with
this Agreement) or within one (1) year after Closing, Seller shall provide to
Purchaser's designated independent auditor a letter regarding Seller's books and
records of the Property covering the period of time that Seller owned the
Property (or such lesser period of time as may be required by the particular
audit), which letter shall be in substantially the form attached hereto as
Exhibit F. Purchaser agrees that it is not relying and shall not rely on such
letter as constituting a representation or warranty of Seller to Purchaser, and
Purchaser further agrees to indemnify, defend and hold hanniess Seller from any
claim, damage, loss, or liability to which Seller is at any time subjected by
any person who is not a party to this Agreement as a result of Seller's
compliance with this Section 12.20. This Section 12.20 shall survive Closing.
[SIGNATURE PAGES AND EXHIBITS TO FOLLOW]
Page 27
SIGNATURE PAGE TO AGREEMENT OF
PURCHASE AND SALE
BY AND BETWEEN
PS II REAL ESTATE LIMITED PARTNERSHIP
AND
CORNERSTONE REALTY INCOME TRUST, INC.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year written below.
SELLER:
PS II REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: PS II Gen-Par, Inc.,
a Delaware corporation,
General Partner
Date executed by Seller: By:
---------------------------
Name:
-------------------------- -------------------------
Title:
-------------------------
PURCHASER:
----------
Cornerstone Realty Income Trust, Inc.,
a Virginia Corporation
Date executed by Purchaser: By: /s/ Xxx X. Remppies
-----------------------------------
11-11-98 Name: Xxx X. Remppies
-------------------------- ---------------------------------
Title: Vice President
--------------------------------
Page 28
JOINDER BY ESCROW AGENT
Escrow Agent has executed this Agreement in order to confirm that Escrow Agent
has received and shall hold the Initial Earliest Money required to be deposited
under this Agreement and the interest earned thereto, in escrow, and shall
disburse the Earliest Money, and the interest earned thereon, pursuant to the
provisions of this Agreement.
Title Network, Ltd.
(as agent for Fidelity National
Title Insurance Company)
a
-----------------------------------
Date executed by Escrow Agent: By:
---------------------------------
---------------------- Name:
-------------------------------
Title:
------------------------------
Page 29
