PARTNERSHIP INTEREST PURCHASE AGREEMENT
This Agreement is made and entered into as of March 1, 2006, by and between
C.R.H.C., Incorporated ("CRHC"), a Delaware corporation, and Capital Realty
Investors - III Limited Partnership ("CRI-III"), a Maryland limited partnership
(CRHC and CRI-III, collectively, "Seller"), and H. Xxxxxxx Xxxxxx, Xxxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx, jointly and severally
(collectively, "Purchaser"), with respect to partnership interests in Arboretum
Villages Limited Partnership, an Illinois limited partnership ("the
"Partnership").
Background
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CRHC owns a 0.01% General Partner interest and CRI-III owns a 98.99%
Limited Partner interest in the Partnership (collectively, the "Interests"),
which partnership owns a residential rental housing property in Lisle, Illinois,
commonly known as Arboretum Village Apartments; and
The Purchaser owns Heartland Realty Investors, Inc., which acts as property
management agent for the apartments, so Purchaser acknowledges its past
relationship with the Partnership; and
Seller desires to sell, and Purchaser desires to purchase, Seller's
partnership Interests in the Partnership upon and subject to the terms and
conditions hereinafter set forth.
Agreement
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NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, Seller and Purchaser agree as
follows:
1. DEFINITIONS
When used herein, the following terms shall have the following meanings:
Agreement: This Agreement.
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Agreement Date: The date first written above.
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Closing Date: Such date as Purchaser and Seller may mutually agree upon;
provided, however, that if the Closing Date has not occurred on or before March
31, 2006, Seller shall have the right to terminate the Agreement (unless the
failure to close is the result of a default by Seller hereunder), in which case
the Deposit shall be disbursed to Seller and neither party shall have any
further obligation hereunder except as expressly set forth herein.
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Deposit: The initial amount of Twenty-five Thousand Dollars ($25,000),
which shall be deposited by Purchaser with Escrow Agent within two (2) business
days after the Agreement Date, to be held as xxxxxxx money subject to the terms
of this Agreement. The Deposit shall be nonrefundable except as expressly set
forth herein. All interest and other earnings on the Deposit shall be added to
and become a part thereof. The Deposit shall be a credit against the Purchase
Price if closing occurs.
Escrow Agent: Xxxx & Xxxxxxx of Minneapolis, MN, Attn: Xxxxxxx X. Xxxx,
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Esq.
Interests: CRHC's 0.01% General Partner interest and CRI-III's 98.99%
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Limited Partner interest in the Partnership.
Lender: Citicorp Real Estate, Inc., the holder of a first mortgage on the
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Partnership's property.
Property: The real property and improvements located thereon, and personal
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property used in connection therewith, owned by the Partnership.
Purchase Price: The consideration payable by Purchaser to Seller for the
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Interests as provided in Section 3.
2. PURCHASE AND SALE
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Subject to the terms and conditions of this Agreement, Purchaser agrees to
purchase and acquire from Seller, and Seller agrees to sell and transfer to
Purchaser, the Interests: specifically, CRHC will transfer its entire General
Partner Interest to H. Xxxxxxx Xxxxxx and CRI-III will transfer is Limited
Partner Interests to the Purchaser as follows: H. Xxxxxxx Xxxxxx - 28.99%;
Xxxxxx X. Xxxxxx - 30%; Xxxxx X. Xxxxxx - 30%; and Xxxxxx X. Xxxxxxx - 10%. No
assets of the Partnership shall be distributed to Seller in connection with the
closing of the sale of the Interests, except as set forth in Section 10.3(f)
herein.
3. PURCHASE PRICE
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The Purchase Price for the Interests shall be Six Million Nine Hundred
Eighty-Eight Thousand Seven Hundred Fifty-Three Dollars ($6,988,753) to CRI-III
and Seven Hundred Sixty-Eight Dollars ($768) to CRHC, payable by wire transfer
of collected Federal funds on the Closing Date. The Deposit shall be applied
against the Purchase Price at Closing.
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4. ESCROW
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The parties shall establish an escrow with the Escrow Agent through which
the transactions contemplated herein shall be closed. The parties shall direct
the Escrow Agent to invest the Deposit in accounts or securities permitted by
Escrow Agent at the highest available rate of earnings, which earnings shall be
added to and become a part of the Deposit. The escrow shall be auxiliary to this
Agreement, and this Agreement shall not be merged into, nor in any manner
superseded by, the escrow. The escrow costs and fees shall be paid by Purchaser
and Seller equally, with each paying one-half of the costs and fees.
5. CONDITION OF INTERESTS
----------------------
Purchaser agrees, with respect to the condition and status of the Interests
and the Partnership Property, that:
(a) Purchaser is in as good a position as Seller to know the information
relevant to its decision to purchase the Interests because one of Purchasers is
a current General Partner and all Purchasers are affiliated with the property
manager of the Partnership. Accordingly, Purchaser agrees to accept the
Partnership Interests and their concomitant interests in all Partnership assets
and liabilities, "AS IS, WITH ALL FAULTS."
(b) The sale of the Interests is subject only to Seller's express
warranties and representations set forth in this Agreement. SELLER DISCLAIMS ANY
LIABILITIES OR WARRANTIES, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT.
6. CONDITION PRECEDENT
-------------------
The following is a condition precedent to the obligation of Seller to
close:
Purchaser shall either (i) obtain and deliver to Seller the Lender's
written consent to the transaction contemplated herein, releasing Seller from
any post-Closing Date liabilities, OR (ii) indemnify Seller from any and all
claims of Lender and its successors and assigns arising out of or in connection
with the election not to obtain Lender consent to the transaction and/or as to
any post-closing matters, such indemnification to include Seller's reasonable
attorneys' fees and costs. This indemnification shall be the joint and several
obligation of Purchaser and its affiliate, Heartland Realty Investors, Inc., and
shall survive closing or other termination of this Agreement.
7. REPRESENTATIONS AND WARRANTIES OF SELLER
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CRHC and CRI-III each individually represent and warrant to Purchaser as
follows:
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(a) Except for the Lender consent discussed in Section 6 above, CRHC and
CRI-III each have full capacity and authority to execute and perform this
Agreement and all documents to be executed by Seller pursuant hereto. The
undersigned signatory has full power and authority to execute this Agreement on
behalf of each of CRHC and CRI-III.
(b) CRHC is the sole owner of its Interests in the Partnership (holding a
0.01% General Partner Interest), free and clear of any liens, security
interests, pledges, options or other encumbrances. CRI-III is the sole owner of
its Interests in the Partnership (holding a 98.99% Limited Partner Interest),
free and clear of any liens, security interests, pledges, options or other
encumbrances.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser each individually hereby represent and warrant to Seller that,
except for the Lender consent discussed in Section 6 above, the Purchaser has
full capacity and authority to execute and perform this Agreement and all
documents to be executed by Purchaser pursuant hereto.
9. BROKERAGE
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Seller and Purchaser each warrant and represent to the other that no
brokerage fee or commission relating to this transaction is due to any party.
Seller and Purchaser each agree to indemnify and hold each other harmless from
and against all costs relating to any claim by third parties for brokerage
commissions, finder's or other fees relating to the transaction contemplated in
this Agreement alleged to be due because of authorization or other action by the
indemnifying party.
10. CLOSING
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10.1 Time and Place The transaction contemplated hereby shall close on the
Closing Date at such date, time and place as the parties may mutually agree.
10.2 Seller's Deliveries On the Closing Date, Seller shall deliver to
Purchaser:
(a) Five executed counterpart originals of an Assignment and Assumption
Agreement with respect to all of Seller's right, title and interest to the
Interests;
(b) Two executed counterpart originals of an Amendment to the Partnership
Agreement reflecting the transfer and withdrawal of CRHC and CRI-III;
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(c) Two executed counterpart originals of an Amendment to the Certificate
of Limited Partnership reflecting the withdrawal of CRHC as a General Partner;
and
(d) Such other instruments and certificates as may be reasonably requested
by Purchaser to consummate fully the transaction contemplated hereby.
10.3. Purchaser's Deliveries On the Closing Date, Purchaser shall deliver
to Seller:
(a) The Purchase Price, payable as set forth in Section 3;
(b) A copy of the consent of Lender to the transaction or an indemnity by
Purchaser and Heartland Realty Investors, Inc. of Seller with respect to claims
of Lender;
(c) Five executed counterpart originals of the Assignment and Assumption
Agreement;
(d) Two executed counterpart originals of an Amendment to the Partnership
Agreement reflecting the transfer and withdrawal of CRHC and CRI-III;
(e) Two executed counterpart originals of an Amendment to the Certificate
of Limited Partnership reflecting the withdrawal of CRHC as a General Partner;
(f) An amount to be agreed by the parties prior to the Closing Date that
represents Seller's pro rata share of Partnership's 2006 cash flow, tax and
insurance escrows and replacement reserves This amount shall not be considered a
part of the Purchase Price, but shall be a deemed distribution of cash flow
earned prior to the Closing Date. Prorations shall be based on the number of
days during the year each party owned its interests in the Partnership and the
parties' respective percentage interests in the Partnership. This Section
10.3(f) shall survive closing; and
(g) Such other instruments and certificates as may be reasonably required
by Seller to consummate fully the transaction contemplated hereby.
In addition, Purchaser agrees to deliver to Seller, within ten (10) days
after they have been completed by the Partnership's auditors, copies of the
annual financial statements and tax returns of the Partnership for that portion
of 2006 during which Seller was a partner.
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10.4. Closing Costs. Purchaser agrees to bear any costs involved in
obtaining Lender consent to the transaction, any state or local taxes imposed on
the transfer of partnership interests, and any recording costs involved in
amending the Partnership Agreement or Partnership Certificate to reflect the
transfers of the Interests. Any escrow or closing fees charged by Escrow Agent
shall be shared equally between Purchaser and Seller.
11. BREACH AND REMEDIES
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11.1 Breach Seller or Purchaser, as the case may be, shall be in breach in
the event that:
(a) It fails to timely and duly perform any of its obligations set forth in
this Agreement (except as set forth in subsection (b) below); or
(b) It fails or refuses to close the sale or purchase of the Interests (as
the case may be) in a timely manner, except if the failure to close is (i)
specifically excused under the terms of the Agreement (e.g. due to the failure
of a condition precedent to its obligation to close), or (ii) due to breach by
the other party.
11.2 Purchaser's Remedies In the event of a breach by Seller, Purchaser may
at its option, after written notice to Seller specifying the breach and giving
Seller a five (5) business day cure period, seek either of the following
remedies:
(a) Enforce the terms of the Agreement by seeking specific performance
hereof; or
(b) Terminate the Agreement by written notice to Seller specifying the
breach and obtain a refund of the Deposit, provided there is no concurrent
breach by Purchaser.
Purchaser agrees that the remedies set forth in this Section 11.2 shall be
Purchaser's only remedies, Purchaser hereby expressly waives all other remedies
at law or in equity, including without limitation, special, consequential,
incidental and/or punitive damages.
11.3 Seller's Remedies In the event of a breach by Purchaser, Seller may
terminate this Agreement by written notice to Purchaser specifying the breach
and (except in the case of a breach described in Section 11.1(b)) giving
Purchaser a five (5) business day cure period, in which event Seller shall be
entitled to retain the Deposit, as liquidated damages, not as a penalty.
PURCHASER AND SELLER AGREE THAT IT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL
TO QUANTIFY THE ACTUAL DAMAGES TO SELLER IN THE EVENT OF A BREACH BY PURCHASER,
THAT THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF SUCH ACTUAL DAMAGES,
AND THAT SELLER'S REMEDY IN THE EVENT OF A BREACH BY PURCHASER SHALL BE TO
RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES AND NOT AS PENALTY.
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11.4 Costs in the Event of Breach The parties agree that, in the event of a
breach of this Agreement as determined by a court of competent jurisdiction, the
party determined to be in breach shall pay all costs incurred by the other party
or parties in enforcing the remedies afforded herein including, but not limited
to, court costs and reasonable attorneys' fees.
12. NOTICES
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Any notice, request or other document required or permitted to be given or
served hereunder shall be in writing and shall be delivered personally or via
overnight express courier, postage prepaid, and addressed to the parties at
their respective addresses set forth below, and the same shall be effective upon
receipt. A party may change its address for receipt of notices by service of a
notice of such change in accordance herewith.
If to Purchaser: c/o Heartland Realty Investors, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxx, Vice President
Tel. No. 000 000-0000, ext. 15
Fax No. 000 000-0000
Email: xxxxxxx@xxxxxxxxx-xx.xxx
If to Seller: CRHC and/or CRI-III
00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxx, Senior Vice
President
and
Office of General Counsel
Tel. No. 000 000-0000
Fax No. 301
468-3150 Email: xxxxxxx@xxxxxxx.xxx
13. MISCELLANEOUS
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13.1 Entire Agreement; Amendments; Waivers This Agreement contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof, merging herein and superseding any negotiations and/or prior oral
or written agreements between the parties as to the purchase and sale of the
Interests. This Agreement may not be amended, modified or discharged, nor may
any of its terms be waived, except by an instrument in writing signed by the
party to be bound thereby.
13.2 Further Assurances The parties each agree to do, execute, acknowledge
and deliver all such further acts, instruments and assurances and to take all
such further action before or after the closing as shall be necessary or
desirable to carry out fully this Agreement and to consummate and effect the
transactions contemplated hereby.
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13.3 No Third Party Benefit This Agreement is for the sole and exclusive
benefit of the parties hereto and their respective successors and permitted
assigns, and no third party is intended to or shall have any rights hereunder.
13.4 Assignment Purchaser may not assign its rights hereunder without the
prior written consent of Seller, which may be withheld in its sole discretion.
13.5 Interpretation
(a) The headings and captions herein are inserted for convenience of
reference only and the same shall not limit construction of the sections or
paragraphs to which they apply or otherwise affect the interpretation hereof.
(b) The terms "include", "including" and similar terms shall be construed
as if followed by phrase "without being limited to".
(c) Each party hereto certifies that it has been represented by counsel of
its own choosing in the negotiation of this Agreement, and that the Agreement
shall not be construed as if either party is the maker thereof.
13.6 Counterparts This Agreement and any document or instrument executed
pursuant hereto may be executed in any number of counterparts each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. A fax copy of a signature on this Agreement shall have the
same effect as an original provided that an original is received by the other
party hereto within two business days thereafter.
13.7 Time
(a) Whenever under the terms of this Agreement the time for performance
of a covenant or condition falls upon a Saturday, Sunday or holiday, such time
for performance shall be extended to the next business day. Otherwise all
references herein to "days" shall mean calendar days.
(b) Time is of the essence with respect to all aspects of this Agreement.
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13.8 Governing Law This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois, without regard to its
conflict or choice of laws rules, but venue for any action arising out of or in
any way related to this Agreement shall lie in the state or Federal court
nearest to Rockville, Maryland.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
authorized representatives of Seller and Purchaser as of the date first set
forth above.
SELLER: PURCHASER:
C.R.H.C., INCORPORATED
By: ------------------------ --------------------------------
Xxxxxxx X. Xxxxxx H. XXXXXXX XXXXXX
Its: Senior Vice President
and
CAPITAL REALTY INVESTORS-III --------------------------------
LIMITED PARTNERSHIP XXXXXXX X. XXXXXX
By: C.R.I., Inc.
Its: Managing General Partner
By: ------------------------ --------------------------------
Xxxxxxx X. Xxxxxx XXXXX X. XXXXXX
Its: Senior Vice President
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XXXXXX X. XXXXXXX
AGREED in his capacity as a AGREED as to Section 6 only:
General Partner of the Partnership:
Heartland Realty Investors, Inc.
By:-----------------------------
--------------------------------- Xxxxxxx X. Xxxxxx
X. XXXXXXX XXXXXX Its: Vice President
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