EXHIBIT 10.14
CONTRACT OF SALE
BETWEEN
JEFFERSON COMMONS - XXXXXXXX, X.X.
AND JEFFERSON COMMONS - WABASH, L.P.
AS SELLERS,
AND
EDUCATION REALTY OPERATING PARTNERSHIP, LP
AS BUYER
TABLE OF CONTENTS
ARTICLE 1 PURCHASE PRICE AND XXXXXXX MONEY................................................................2
Section 1.1 Agreement to Sell and Purchase.......................................................2
Section 1.2 Purchase Price.......................................................................2
Section 1.3 Xxxxxxx Money........................................................................3
ARTICLE 2 TITLE INSURANCE, OTHER INFORMATION, AND SURVEY..................................................5
Section 2.1 Title Insurance......................................................................5
Section 2.2 Other Information....................................................................5
Section 2.3 Survey...............................................................................6
Section 2.4 Other Property.......................................................................7
ARTICLE 3 TITLE REVIEW AND DUE DILIGENCE..................................................................7
Section 3.1 Title Review.........................................................................7
Section 3.2 Due Diligence Period.................................................................7
ARTICLE 4 SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS.............................................9
Section 4.1 Seller's Representations and Warranties..............................................9
Section 4.2 Several Liability; Survival of Representations and
Warranties..........................................................................13
Section 4.3 Knowledge Standard..................................................................14
Section 4.4 Seller's Covenants..................................................................14
ARTICLE 5 BUYER'S REPRESENTATIONS AND WARRANTIES.........................................................16
Section 5.1 Buyer's Representations and Warranties..............................................16
Section 5.2 Buyer's Covenants...................................................................17
ARTICLE 6 CLOSING AND PRORATIONS.........................................................................18
Section 6.1 Closing Date........................................................................18
Section 6.2 Closing Matters.....................................................................19
Section 6.3 Prorations..........................................................................21
Section 6.4 Closing Costs.......................................................................22
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Section 6.5 Assumption Approval.................................................................23
Section 6.6 Release Approval....................................................................23
ARTICLE 7 DEFAULTS AND REMEDIES..........................................................................24
Section 7.1 Material Breach of Seller's Representations and
Warranties Prior to Closing.........................................................24
Section 7.2 Buyer's Remedies....................................................................24
Section 7.3 Seller's Remedies...................................................................26
ARTICLE 8 CASUALTY AND CONDEMNATION......................................................................26
Section 8.1 Risk of Loss and Notice.............................................................26
Section 8.2 Minor Casualty......................................................................27
Section 8.3 Major Casualty and Condemnation.....................................................27
ARTICLE 9 MISCELLANEOUS..................................................................................28
Section 9.1 Notices.............................................................................28
Section 9.2 Performance.........................................................................30
Section 9.3 Binding Effect......................................................................30
Section 9.4 Entire Agreement....................................................................30
Section 9.5 Assignment..........................................................................30
Section 9.6 Commissions.........................................................................31
Section 9.7 Headings............................................................................31
Section 9.8 Holidays, Etc.......................................................................31
Section 9.9 Legal Fees..........................................................................31
Section 9.10 Governing Law.......................................................................31
Section 9.11 Severability........................................................................31
Section 9.12 Disclaimers, Waivers, and Releases..................................................32
Section 9.13 Rule of Construction................................................................35
Section 9.14 Effective Date......................................................................35
Section 9.15 Independent Contract Consideration..................................................35
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Section 9.16 Counterparts and Facsimile Signatures...............................................35
Section 9.17 No Recording........................................................................35
Section 9.18 Further Acts........................................................................35
Section 9.19 Arbitration.........................................................................35
Section 9.20 Exchange............................................................................37
Section 9.21 Related Property....................................................................37
Section 9.22 Confidentiality.....................................................................38
EXHIBIT A-1 Legal Description of the Real Property Located in Xxxxxxx County, Kansas
EXHIBIT A-2 Legal Description of the Real Property Located in Tippecanoe County, Indiana
EXHIBIT B List of Approved Service Contracts
EXHIBIT C List of Personal Property
EXHIBIT D Reports
EXHIBIT E List of Delivered Loan Documents
EXHIBIT F List of Delivered Survey
EXHIBIT G Other Contracts for Development
EXHIBIT H Deed Restrictions
EXHIBIT I Litigation
EXHIBIT J (Intentionally Omitted)
EXHIBIT K Written Notice from Governmental Authority
EXHIBIT L Knowledge Individuals
EXHIBIT M Deed
EXHIBIT N Xxxx of Sale
EXHIBIT O Assignment of Leases, Contracts, Security Deposits, and Warranties
EXHIBIT P IRC Section 1445 Certificate
EXHIBIT Q Tenant Notice Letter
EXHIBIT R Non-Exclusive Service Xxxx License Agreement
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EXHIBIT S Legal Opinion
Page iv
CONTRACT OF SALE
This Contract of Sale (this CONTRACT) is between JEFFERSON COMMONS - LAWRENCE,
L.P., a Delaware limited partnership (XX XXXXXXXX), XXXXXXXXX COMMONS - WABASH,
L.P., a Delaware limited partnership (JC WABASH, which, together with XX
Xxxxxxxx, are collectively referred to as SELLER or SELLERS), and EDUCATION
REALTY OPERATING PARTNERSHIP, LP, a Delaware limited partnership (BUYER).
BACKGROUND
Buyer wants to purchase, and each Seller wants to sell, all of its interest in:
a. the real property located in Xxxxxxx County, Kansas, more
particularly described on EXHIBIT A-1 and the real property
located in Tippecanoe County, Indiana, more particularly
described on EXHIBIT A-2 (collectively, the REAL PROPERTY),
and all rights and appurtenances pertaining to the Real
Property, including any interest of Seller in adjacent
streets, alleys, easements, and rights-of-way;
b. all improvements, structures, and fixtures located on the
respective tracts of Real Property (collectively, the
IMPROVEMENTS);
c. the landlord's interest in all residential leases, affecting
the respective tracts of Real Property (LEASES), related
security deposits (DEPOSITS) and guaranties (GUARANTIES), and
the Service Contracts listed in EXHIBIT B attached to this
Contract not terminated on or before the Closing Date (defined
in SECTION 6.1) in accordance with SECTION 3.2(e) (the SERVICE
CONTRACTS);
d. the personal property located on the respective tract of Real
Property described on the list attached as EXHIBIT C to this
Contract (the PERSONAL PROPERTY) but excluding any personal
property specifically excluded on EXHIBIT C;
e. the respective Seller's interest in all plans for the
Improvements (the PLANS);
f. the respective Seller's interest in all warranties and
guaranties relating to the Improvements, if any, including all
unexpired third party warranties and guarantees, if any,
received in connection with the construction, improvement, or
equipment of the Improvements, but excluding all warranties
and guaranties from any Seller Affiliate (defined in SECTION
9.5) (the WARRANTIES);
g. all records and correspondence relating to tenants in the
respective Seller's possession or the respective Seller's
property manager, JPI Apartment Management, L.P. (PROPERTY
MANAGER), used in the continuing operation of the Improvements
excluding all documents that are subject to an attorney-client
privilege (the RECORDS).
The Real Property, the Improvements, the Leases, the Deposits, the Guaranties,
the Service Contracts, the Personal Property, the Plans, the Warranties, and the
Records are collectively called the PROPERTY.
Without limitation, the following are not included in the Property: the name
"Jefferson", "Jefferson Commons", the initials "JPI" (although Seller's
affiliate has provided a limited license for use of
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such names/initials pursuant to a license agreement hereafter more particularly
set forth), any logo, trade name, or other name utilizing "Jefferson",
"Jefferson Commons" or "JPI", any software owned by or licensed to any company
or entity other than Seller, any professional photographs of the Property,
including, but not limited to, photographs, negatives, and transparencies in
digital or other form, and any bonds or letters of credit issued in favor of any
Governmental Authorities (defined in SECTION 4.1) by Seller or any Seller
Affiliate in connection with the construction of the Improvements.
ARTICLE 1
PURCHASE PRICE AND XXXXXXX MONEY
Section 1.1 Agreement to Sell and Purchase.
Each Seller shall sell to Buyer, and Buyer shall purchase from each Seller, the
Property, free and clear of any and all liens and encumbrances and subject only
to the Permitted Exceptions (defined in SECTION 3.1), upon the terms of this
Contract.
Section 1.2 Purchase Price.
(a) The PURCHASE PRICE of the Property is $38,205,000, subject to
all prorations and credits set forth herein, payable in
immediately available United States funds at Closing (defined
in SECTION 6.1).
(b) The Purchase Price is allocated as follows:
Individual Property's Owner Purchase Price Allocation(1)
--------------------------- ---------------------------
XX Xxxxxxxx $16,905,000
JC Wabash $21,300,000
-----------
Total Purchase Price $38,205,000
(c) The Purchase Price is payable at Closing (defined in SECTION
6.1) as follows:
(i) By Buyer taking title to the Property assuming
(subject to, and inclusive of the non-recourse
provisions thereof) all obligations accruing from and
after the Closing Date under Seller's Existing Loans
(as defined in SECTION 2.2(i)) which are generally
described in SECTION 2.2(i), but excluding those
obligations resulting from a default by Seller under
the Existing Loans. Seller shall cooperate with and
assist Buyer, but at no cost or expense to Seller
(other than its attorney's fees) and without Seller
or Seller Affiliates having to incur any additional
obligations, in connection with the Buyer seeking
consent from the Lenders for the assumption of the
Existing Loans (subject to and inclusive of, the
non-recourse provisions thereof) on terms and
conditions acceptable to Buyer in its sole discretion
--------
(1) Allocation of any portion of the Purchase Price to Personal Property by
Buyer shall be based on the then reasonable market value of such
Personal Property, but in no event shall such amount exceed 10% of the
respective Purchase Price Allocation. This provision shall survive
Closing.
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and specifically without Buyer being required to
agree to any material change of any term of any
Existing Loan document, as a condition to Lender's
approval of the assumption (the ASSUMPTION). Any and
all fees or expenses required to be paid to Lenders
in connection with Buyer's Assumption (subject to and
inclusive of, the non-recourse provisions thereof) of
the Existing Loans shall be borne one-half (1/2) by
Buyer and one-half (1/2) by Seller; provided,
however, any fees, expenses or payments (but not
payments representing all or substantially all of the
remaining balance of the Existing Loans) resulting
from a default by Seller under the Existing Loans
prior to Closing shall be paid solely by Seller at
Closing. Additionally, Buyer shall use commercially
reasonable efforts to obtain a release, reasonably
acceptable to Seller, of all liabilities, indemnities
and guarantees of Seller and Seller Affiliates
accruing from and after the Closing Date under the
Existing Loans (the SELLER RELEASES) but Buyer shall
not be obligated to assume any additional obligations
to the Lenders to do so and Seller shall not be
obligated to pay any costs or fees (other than its
share of the assumption fees and costs set forth
above) not approved by Seller; and
(ii) By Buyer paying cash, by wire transfer, for
disbursement to Seller at Closing, the amount of the
Purchase Price, less the total amount of unpaid
principal and accrued but unpaid interest owing
pursuant to the Existing Loans as of the Closing
Date, subject to prorations and other debits or
credits provided for in this Contract (the NET
AMOUNT). All Cash shall be sent by wire transfer to
the Closing Agent for disbursement to each Seller at
Closing in the amount set forth above (the CASH).
Section 1.3 Xxxxxxx Money.
(a) On the Effective Date (defined in SECTION 9.14), as a
condition to the continued effectiveness of this Contract,
Buyer shall deposit with Marble Title Company, L.L.C. (TITLE
COMPANY), as agent for Chicago Title Insurance Company
(CLOSING AGENT), 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000, Attention: Xxxxx X. Xxxxxx, Phone: (000) 000-0000, Fax:
(000) 000-0000, $101,000 in (i) immediately available federal
funds or (ii) the form of an unconditional and irrevocable
letter of credit in favor of Seller and Closing Agent on terms
and from an issuer reasonably acceptable to Seller (a LETTER
OF CREDIT) (the XXXXXXX MONEY).
(b) The Xxxxxxx Money, if paid in the form of immediately
available federal funds (and not by Letter of Credit), shall
be applied to the Purchase Price at Closing, however, any
Letter of Credit shall be returned to Buyer after Closing with
no portion of its funds having been credited against the
Purchase Price. The Xxxxxxx Money is non-refundable to Buyer
in all events, except for a Seller default or as otherwise
specifically set forth herein. If Buyer fails to deliver the
Xxxxxxx Money, this Contract will automatically terminate. If
Buyer fails to close the transaction on January 31, 2005, and
the Closing is not extended by mutual written agreement of the
parties or pursuant to the provisions of SECTION 6.1, this
Contract will automatically terminate, the Xxxxxxx Money will
be paid to Seller and the parties will have no further
obligations to each other. If any of the Xxxxxxx Money is in
the form of a Letter of Credit then, any reference in this
Contract to Seller being paid
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any portion of the Xxxxxxx Money is deemed to include and
Seller shall have the right to draw upon the Letter of Credit
and retain the proceeds.
(c) If this Contract does not close, the Xxxxxxx Money will be
paid or the Closing Agent shall deliver the Letter of Credit
as provided in this Contract. Closing Agent shall, promptly
upon receipt, place the wire transferred Xxxxxxx Money in a
federally insured, interest bearing account. All interest on
the Xxxxxxx Money becomes part of the Xxxxxxx Money. All
interest on the Xxxxxxx Money will be reported to the Internal
Revenue Service as income of Buyer. Buyer shall promptly
execute and deliver to Closing Agent all forms reasonably
requested by Closing Agent with respect to the Xxxxxxx Money.
Buyer acknowledges and agrees that, except for a default by
Sellers under SECTION 7.1 or SECTION 7.2 or the occurrence of
a Major Casualty prior to Closing, the Xxxxxxx Money is
non-refundable to Buyer. Buyer acknowledges and agrees that,
except for a default by Sellers under SECTION 7.1 or SECTION
7.2 or the occurrence of a Major Casualty occurs prior to
Closing, the Xxxxxxx Money is non-refundable to Buyer.
(d) Closing Agent is authorized and directed to pay the Xxxxxxx
Money and/or deliver any Letter of Credit for any portion of
the Xxxxxxx Money to the party entitled to receive the Xxxxxxx
Money under the terms of this Contract. Sellers or Buyer, as
appropriate, shall deliver a letter of instruction to Closing
Agent directing the disbursement of the Xxxxxxx Money or the
delivery of the Letter of Credit to the party or parties
entitled to receive the Xxxxxxx Money promptly upon receipt of
a demand from that party or parties.
(e) Upon delivery of the Letter of Credit, if any, to Seller,
Seller is authorized to immediately present it to the issuer
for payment.
(f) The Letter of Credit shall contain an expiry date of not
earlier than April 29, 2005. If, for whatever reason, Seller
has been unable to present the Letter of Credit for payment on
or before March 29, 2005, or if, once presented, Seller has
not been paid the full amount of the Letter of Credit by March
29, 2005, in any such case, Buyer shall immediately cause a
substitute Letter of Credit to be issued in the same amount
with an expiry date of no earlier than May 30, 2005 (this
process shall continue monthly until the Letter of Credit is
either delivered to Buyer or tendered by Seller to the issuing
bank such that they do not expire prior thereto). If, for
whatever reason, Buyer fails to cause a substitute Letter of
Credit to be issued at least twenty-five (25) days prior to
the expiry date of the existing Letter of Credit, then Buyer
and Seller hereby authorize Closing Agent to immediately
present the existing Letter of Credit for payment and, once
paid, to hold the proceeds as "Xxxxxxx Money" in accordance
with the terms of this Contract. Buyer and Seller agree that
Closing Agent is authorized to present the Letter of Credit
for payment even if Buyer has delivered instructions to the
contrary to Closing Agent; provided, that Closing Agent shall
not present the existing Letter of Credit as authorized by
this SECTION 1.3(f) only if Closing Agent receives written
instructions to the contrary from both Buyer and Seller. TO
SIGNIFY THEIR AWARENESS AND AGREEMENT TO BE BOUND BY THE
TERMS, OF THIS SECTION 1.3(f), BUYER AND SELLER, THROUGH THEIR
AUTHORIZED REPRESENTATIVES HAVE SEPARATELY INITIALED THIS
SECTION 1.3(f). This SECTION 1.3(f) shall survive the
termination or expiration of this Contract.
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BUYER'S INITIALS:
---------------------
SELLER'S INITIALS:
---------------------
ARTICLE 2
TITLE INSURANCE, OTHER INFORMATION, AND SURVEY
Section 2.1 Title Insurance.
(a) Seller shall cause Closing Agent to agree to issue to Buyer as
soon as practicable after Closing, an ALTA Standard Coverage
Owner Policy of Title Insurance for all the respective Real
Property and Improvements on the standard form in use in the
State where the Property is located (collectively, the OWNER
POLICY), which may be based on a marked up title commitment or
binder agreed to and delivered by Closing Agent, at Closing
(it being agreed between Buyer and Seller that Seller's only
obligation is to cause delivery of the Owner Policy and Seller
has no obligation to cause Closing Agent to provide a marked
up title commitment or binder), dated as of the Closing Date,
in the amount of the respective allocated Purchase Price,
insuring good and marketable fee simple title to the XX
Xxxxxxxx Real Property and Improvements and the JC Wabash Real
Property and Improvements. Buyer may request that Title
Company issue other available endorsements to the Owner
Policy, but any affidavits, indemnities or other documents
requested by Title Company in order for it to issue any
endorsements are subject to approval by Seller in its sole
discretion. Seller is responsible only for payment of the
premium for the Standard Coverage Owner Policy. Buyer shall
pay the premiums charged for and costs associated with
obtaining extended coverage and endorsements to the Owner
Policy and for any loan policy or endorsements required by the
Lenders or any other Lenders of Buyer. Upon issuance, the
Owner Policy will except only to the Permitted Exceptions
which remain at Closing after the title commitment or binder
has been marked up as agreed to between the Buyer and the
Closing Agent.
(b) Sellers have previously caused Closing Agent to furnish to
Buyer a title insurance commitment for each Property, in the
standard form used by the State where the Property is located,
covering each Real Property (collectively, the COMMITMENT),
together with copies of all documents referenced as title
exceptions in the Commitment.
Section 2.2 Other Information.
Buyer and Sellers acknowledge that, prior to the Effective Date, Sellers have
delivered to Buyer the following for each individual Property (collectively, the
DOCUMENTS):
(a) a rent roll (by building, apartment number and bedroom) (RENT
ROLL), certified to be true and correct in all material
respects by Seller, dated no earlier than 5 days prior to the
date Seller delivers same, showing:
(i) move-in, term, and expiration date for each Lease;
(ii) name of the tenant listed on each Lease;
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(iii) the amount of the monthly rent for the unit, any
garage, and any other amenity leased by the tenant;
(iv) the amount of the security and other deposits; and
(v) if the apartment is vacant, the market rent for the
unit;
(b) a delinquency report showing the amount of any arrearages or
delinquencies by tenants under the Leases, certified to be
true and correct in all material respects by Seller;
(c) a concession matrix identifying rent concessions or
forbearances for the Leases, certified to be true and correct
in all material respects by Seller;
(d) copies of the reports listed in EXHIBIT D attached to this
Contract (the REPORTS) which Reports are delivered "AS IS"
and, except as specifically set forth in SECTION 4.1(h),
Seller makes no representation or warranty concerning the
accuracy, correctness, completeness, suitability or utility of
the Reports or the information contained or not contained
therein;
(e) copies of the Service Contracts;
(f) copies of all certificates of occupancy and other permits or
licenses necessary for the operation of the Property which are
in Seller's possession or the possession of Property Manager;
(g) a copy of the most recent as-built survey of the Real Property
and Improvements in Seller's possession;
(h) copies of ad valorem tax statements for tax years 2002 and
2003;
(i) copies of the documents and instruments listed on EXHIBIT E
executed in connection with the indebtedness (the EXISTING
LOANS) payable to the order of JPMorgan Chase Bank or
Citigroup Global Markets Realty Corp., their respective
successors and assigns as "Lenders" (LENDERS); and
(j) financial statements showing income and expense for the years
2001 (to the extent available), 2002, and 2003 (on a monthly
basis), certified true, correct, and complete in all material
respects by an authorized officer of Seller.
Additionally, Seller shall furnish an operating statement for the
current year (updated monthly within twenty (20) days after the end of
the month through Closing) detailing all income and expense items for
the Property, certified true, correct and complete in all material
respects by an authorized officer of Seller.
Section 2.3 Survey.
Buyer acknowledges that Seller has previously delivered to Buyer an as-built,
ALTA/ACSM (or similar) survey of each Property prepared by the surveyors and
dated as set forth on EXHIBIT F (collectively, the SURVEY). Updates to or
recertifications of the Survey shall be at Buyer's expense.
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Section 2.4 Other Property.
Seller hereby discloses that as of the Effective Date it has not entered into
any contacts for the purchase of property to be developed as "for rent" student
housing within a ten (10) mile radius of any Property, except as set forth on
EXHIBIT G.
ARTICLE 3
TITLE REVIEW AND DUE DILIGENCE
Section 3.1 Title Review.
(a) Buyer acknowledges that it has reviewed the Commitment, the
title exception documents listed therein and the Survey prior
to execution of this Contract, waives any objection it might
have to such items and accepts and approves all matters shown
thereon. Except as specifically set forth in SECTION 3.1(b),
by its execution of this Contract, Buyer accepts the Property
and all title and survey matters and the Xxxxxxx Money is
non-refundable to Buyer, except as specifically set forth in
this Contract.
(b) Seller has no obligation to cure any matters shown on the
Commitment or the Survey. Notwithstanding the preceding
sentence, Seller shall cure monetary liens that can be cured
solely by the payment of money and shall bond around any
mechanics' or materialmen's lien(s) and abstract(s) of
judgment to Closing Agent's reasonable satisfaction; provided,
that Seller will not be required to expend or, in the case of
a bond, be liable for more than $25,000 for any single
Property to cure any such monetary liens or bond around any
mechanics' or materialmen's lien(s) and abstract(s) of
judgment related to any individual Property.
(c) All exceptions shown on the Commitment, the title exception
documents, or the Survey, except for mechanics' or
materialmen's lien(s) and abstract(s) of judgment which Seller
shall cure to the extent provided in SECTION 3.1(b), are the
PERMITTED EXCEPTIONS. The Permitted Exceptions include the
restriction against conversion of the Real Property to a
condominium regime specified in the Deed (defined in SECTION
6.2(a)).
(d) At or prior to Closing, the Sellers shall execute and record a
deed restriction (the DEED RESTRICTIONS) in substantially the
form attached to this Contract as EXHIBIT H prohibiting the
imposition of a condominium regime on the Real Property and
Improvements for a period of 15 years after the Closing Date
without the consent of Sellers
Section 3.2 Due Diligence Period.
(a) Until this Contract is terminated in accordance with its
terms, Buyer may enter the Real Property and Improvements to
conduct inspections of the Real Property and Improvements,
including any third party inspections, review the Records, and
review and analyze all materials, surveys, maps, and reports
provided by Sellers under this Contract. Buyer must notify
Seller of its or its agents or contractors intention to enter
the Real Property and Improvements at least 24 hours prior to
each intended entry and obtain Sellers' prior approval, not to
be unreasonably withheld, of the proposed scope of the
inspections and tests. No invasive testing
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or inspections may be performed without prior written approval
of Sellers, which approval may be withheld or given in
Seller's reasonable discretion. Seller may, at its option,
have a representative present for each inspection or test.
Buyer may not enter into any unit except in accordance with
the Lease and in accordance with applicable law. All
consultants who perform inspections or testing at the Real
Property on behalf of Buyer are subject to Seller's prior
approval, not to be unreasonably withheld.
(b) Buyer acknowledges that it has entered the Real Property and
Improvements prior to the Effective Date to conduct
inspections of the Real Property and Improvements, review the
Records, and review and analyze all materials, surveys, maps,
reports, and other matters and information provided by Seller
under this Contract. By its execution of the Contract, Buyer
accepts the Property and the Xxxxxxx Money is non-refundable
to Buyer, except as specifically set forth in this Contract.
(c) Prior to any entry on the Real Property and Improvements,
Buyer or its Affiliate shall deliver to Sellers a reasonably
satisfactory certificate of insurance evidencing that Buyer or
its Affiliate has commercial general liability insurance and
automobile liability insurance, on an occurrence basis, with
limits of at least $2,000,000 and $1,000,000, respectively,
each issued by an insurance company licensed to do business in
the State where the Real Property is located and with an A. M.
Best Company rating of at least A-VIII and a reasonably
satisfactory endorsement identifying Sellers and the property
management company as additional insureds. Buyer's or its
Affiliate's insurance policies must be primary with respect to
any liability insurance carried by Sellers.
(d) Buyer shall perform, and shall cause its agents, employees,
and contractors to perform, all inspections and reviews of the
Property so as not to cause any damage, loss, cost, or expense
to, or claims against Seller or the Property. Buyer shall, at
its expense, promptly repair any damage to the Property caused
by or attributable to Buyer's inspections or testing to the
condition existing prior to the inspection or testing. Buyer
shall indemnify, defend, and hold Seller and its property
management company and their respective agents and employees
harmless for, from and against any damage, loss, cost, expense
(including, without limitation, reasonable legal fees, court
costs, and expenses), or claims caused by, attributable to, or
resulting from the acts or omissions on or about the Property
by Buyer, its agents, employees, contractors, or consultants.
Notwithstanding the foregoing, Buyer shall have no liability
for pre-existing conditions discovered by Buyer's tests,
inspections or reviews. Buyer shall cause any lien filed
against the Real Property by a consultant, contractor,
subcontractor, or other person or entity arising by, through,
or under Buyer or otherwise attributable to Buyer's
inspection, testing, and review of the Property to be released
of record (whether through payment or bonding) within 20 days
after receipt of notice from Seller of the filing of any lien.
The terms of this SECTION 3.2(d) are not limited by SECTION
7.3.
(e) Buyer acknowledges that it has reviewed all Service Contracts
listed in EXHIBIT B and all Service Contracts listed in
EXHIBIT B are approved by Buyer and Buyer may not reject any
Service Contract listed in EXHIBIT B. All Service Contracts
listed in EXHIBIT B will be assumed by Buyer at Closing. Buyer
will be liable for
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any obligations under all Service Contracts approved by Buyer
extending past the Closing Date.
(f) The terms of this SECTION 3.2 survive the Closing or any
termination of this Contract.
ARTICLE 4
SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 4.1 Seller's Representations and Warranties.
Each Seller for itself and not on behalf of the other Sellers, represents and
warrants to Buyer:
(a) Each Seller is a limited partnership, validly existing and in
good standing under the laws of the State of Delaware, and is,
to the extent necessary, qualified to do business in the State
where its respective Real Property is located.
(b) Each entity comprising Seller has the authority to execute
this Contract and to perform its obligations under this
Contract. The person executing this Contract on behalf of
Seller is duly authorized to do so.
(c) Other than as listed on EXHIBIT I attached hereto and made a
part hereof, there is no pending or, to Seller's knowledge,
overtly threatened litigation, or other process, private or
regulatory, affecting the Property or any entity comprising
Seller that, if decided adversely, would have a Material
Adverse Effect on the use or operation of the Property or
Seller's ability to perform its obligations hereunder.
(d) Seller is in compliance with the requirements of Executive
Order No. 133224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the
ORDER) and other similar requirements contained in the rules
and regulations of the Office of Foreign Assets Control,
Department of the Treasury (OFAC) and in any enabling
legislation or other Executive Orders or regulations in
respect thereof (the Order and such other rules, regulations,
legislation, or orders are collectively called the ORDERS).
(e) Neither Seller nor any beneficial owner of Seller nor any
Person who provides loans to Seller:
(i) is listed on the Specially Designated Nationals and
Blocked Persons List maintained by OFAC pursuant to
the Order and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of
the rules and regulations of OFAC or pursuant to any
other applicable Orders (such lists are collectively
referred to as the LISTS);
(ii) is an individual, corporation, partnership, limited
liability company, unincorporated organization,
government or any agency or political subdivision
thereof or any other form of entity (collectively, a
PERSON) who has been determined by competent
authority to be a Person with whom a U.S. Person is
prohibited from transacting business, whether such
prohibition arises under U.S. law, regulation,
executive orders or any lists published by the United
States Department of Commerce, the United
Page 9
States Department of Treasury or the United States
Department of State including any agency or office
thereof;
(iii) is owned or controlled by, or acts for or on behalf
of, any Person on the Lists or any other Person who
has been determined by competent authority to be a
Person with whom a U.S. Person is prohibited from
transacting business, whether such prohibition arises
under U.S. law, regulation, executive orders or any
lists published by the United States Department of
Commerce, the United States Department of Treasury or
the United States Department of State including any
agency or office thereof; or
(iv) is under investigation by any governmental authority
for, or has been charged with, or convicted of, money
laundering, drug trafficking, terrorist-related
activities, any crimes which in the United States
would be predicate crimes to money laundering, or any
violation of any Anti-Money Laundering Laws.
For purposes of this Section and Section 5.1, U.S. PERSON
means any United States citizen, any entity organized under
the laws of the United States or its constituent states or
territories, or any entity, regardless of where organized,
with a principal place of business within the United States or
any of its territories. For purposes of this Section and
Section 5.1, ANTI-MONEY LAUNDERING LAWS means those laws,
rules, regulations, orders and sanctions, state and federal,
criminal and civil, that (i) limit the use of and/or seek the
forfeiture of proceeds from illegal transactions; (ii) limit
commercial transactions with designated countries or
individuals believed to be terrorists, narcotic dealers or
otherwise engaged in activities contrary to the interests of
the United States; or (iii) are designed to disrupt the flow
of funds to terrorist organizations. Such laws, regulations
and sanctions are deemed to include the Executive Order Number
13224 on Terrorism Financing (September 23, 2001), the Patriot
Act; the Currency and Foreign Transactions Reporting Act (also
known as the Bank Secrecy Act, 31), the Trading with the Enemy
Act, 50 U.S.C. Appx. Section 1 et seq., the International
Emergency Economics Powers Act, 50 U.S.C. Section 1701 et
seq., and the sanction regulations promulgated pursuant
thereto by OFAC, as well as laws relating to prevention and
detection of money laundering in 18 U.S.C. Sections 1956 and
1957, as amended.
(f) There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings
in bankruptcy or under other debtor relief laws contemplated
by, pending, or, to the Seller's knowledge, threatened against
the Seller, any entity comprising Seller, or any of the
Property. Seller and each entity comprising Seller has been
and will be solvent at all times prior to and immediately
following the transfer of the Property to Buyer.
(g) The Leases available for review by Buyer are true and correct
copies of the actual Leases in Seller's possession and are the
complete written documentation of the agreement between
Seller, as landlord, and the tenants.
(h) The Service Contracts, Plans, Warranties, Records, and Reports
provided to Buyer by or on behalf of Sellers are true and
correct copies of all such documents.
Page 10
(i) Except for the Existing Loans that Buyer will assume at
Closing, there are no rights, options, or other agreements of
any kind to purchase or otherwise acquire or sell or otherwise
dispose of the Property or any interest in the Property.
(j) Except for the consent of (1) the Lenders for Buyer's
assumption of the Existing Loans and (2) the Lender under that
certain mezzanine financing from RAIT Limited Partnership
(RAIT), no further consent, approval, authorization, order,
license, certificate, permit, registration, designation or
filing by or with any third party or governmental agency or
body is necessary for the execution, delivery and performance
of this Contract and the transactions contemplated hereby by
any entity comprising Seller (although some permits may
require assignment or reapplication with respect to continued
operations).
(k) The Seller's execution, delivery and performance of this
Contract and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate,
partnership or limited liability company action of the Seller
and no other action is required by law, or pursuant to the
Seller's limited partnership agreement for such authorization;
this Contract is the legal, valid, and binding obligation of,
and is enforceable against the Seller in accordance with its
terms, except to the extent such enforcement may be affected
by general principles of equity, or by bankruptcy and other
laws affecting the rights of creditors generally; assuming the
consent required of the Lenders for the assumption of the
Existing Loans and the transfer of the Properties is obtained,
the execution and delivery of this Contract and the compliance
with the terms and conditions of this Contract by the Seller
will not breach or conflict with any of the terms, conditions,
or provisions of any agreement or instrument to which the
Seller is a party or by which the Seller is or may be bound,
or constitute a default thereunder; and, to the Seller's
knowledge, and except as otherwise provided under the Existing
Loans, the authorization, execution, and delivery of this
Contract and the consummation of the transaction contemplated
hereby, will not, with or without the giving of notice or
passage of time or both:
(i) violate, conflict with or result in the breach of any
terms or provisions of, or require any notice,
filing, or consent, which has not been obtained,
under:
(A) the limited partnership agreement of the
Seller; or
(B) any statutes, laws, rules, or regulations of
any governmental body applicable to the
Seller; or
(C) any judgment, decree, writ, injunction,
order or award of any arbitrator, court or
governmental authority binding upon either
the Seller or the Property.
(ii) conflict with, result in the breach of any terms or
provisions of, require any notice or consent under,
give rise to a right of termination of, or constitute
a default under, the tenant Leases or any agreement
or instrument of any kind to which the Seller is a
party or by which the Property is bound; or
(iii) result in any lien, claim, encumbrance or restriction
on the Property.
Page 11
(l) With respect to the Property, as of the Effective Date of this
Contract:
(i) There are no maintenance, management, or Service
Contracts in effect with respect to or affecting the
Property or any part thereof that will not be
terminated as of the Closing, other than the
agreements set forth in EXHIBIT B.
(ii) There are no persons now employed by Seller or a
Seller Affiliate who Buyer will be obligated to hire
or retain at or after Closing.
(iii) There are no condemnation proceedings pending or, to
the actual knowledge of Seller, threatened against
the Real Property, the Improvements or any part
thereof.
(iv) The Seller has not received any written notice and to
the Seller's knowledge, which knowledge is deemed to
be limited to the environmental reports included as
part of the Reports (collectively, the ESA), and
except for matters and materials present at the Real
Property and Improvements in the ordinary course of
operation of the Real Property and Improvements as an
apartment complex, there are no Hazardous Materials
(defined in SECTION 9.12(a) but excluding from such
definition fungi of all forms and types) present at
the Real Property and Improvements other than any
specified in the ESA. The Seller makes no
representation or warranty relating to fungi of any
form or type.
(v) Except for the Existing Loans, no person or entity
holds or claims a right of first refusal or option to
acquire the Property or, except for the Existing
Loans and the Permitted Exceptions, an interest in
the Property or any part thereof.
(m) Except as included in the Leases or as has been disclosed in
writing to Buyer, there are no other rights of occupancy by
any person.
(n) The Documents required by SECTION 2.2 to be certified by the
Seller as true and correct are true and correct in all
material respects.
(o) To the Seller's knowledge, Seller is not in material default
under any of the Leases.
(p) The Seller has no employees.
(q) The list of Personal Property set forth on EXHIBIT C is true,
correct and complete in all material respects. Seller owns all
of the tangible Personal Property which is used in and,
individually or in the aggregate with other such property, is
material to the operation of the Properties; provided,
however, Seller holds no license for the use of the management
software and such software license shall not be transferred to
Buyer. Except for the Existing Loans, to the Seller's
knowledge, such Personal Property is free and clear of all
liens. All Personal Property located at or on the Property
shall remain and not be removed prior to the Closing, except
in the ordinary course of business or for equipment that
becomes obsolete or unusable, which may be replaced in the
ordinary course of business.
Page 12
(r) The list of Service Contracts set forth on EXHIBIT B is true,
correct and complete in all material respects. To the Seller's
knowledge, no event of default exists (which remains uncured)
under any of the Service Contracts which would have a Material
Adverse Effect. For purposes of this Contract, MATERIAL
ADVERSE EFFECT means an event that would have a material
adverse effect on the business, financial condition or results
of operations of the Property. True and complete copies of the
Service Contracts have been provided to Buyer.
(s) The environmental reports listed in EXHIBIT D are the latest
reports obtained by Seller with respect to the respective
Properties.
(t) The list of documents set forth on EXHIBIT E is a complete
list of all material Loan Documents (as hereinafter defined)
related to the Existing Loans. To the Seller's knowledge, the
Existing Loans and the documents entered into in connection
therewith (collectively, the LOAN DOCUMENTS) are in full force
and effect as of the Effective Date. To the Seller's
knowledge, no event of default or event that with the passage
of time or giving of notice or both would constitute an event
of default has occurred as of the Effective Date under any of
the Loan Documents which would have a Material Adverse Effect.
True and complete copies of the Loan Documents have been
provided to Buyer.
(u) Except as set forth on EXHIBIT K, Seller has received no
written notice concerning the Real Property or the
Improvements from any Governmental Authority stating that the
Real Property or the Improvements are in violation of any
federal, state, county, or city statute, ordinance, code,
rule, or regulation which remains uncured or which, if uncured
at Closing, would have a Material Adverse Effect. The terms
GOVERNMENTAL AUTHORITY and GOVERNMENTAL AUTHORITIES mean the
United States of America, the State, the county, and city
where the Real Property is located, and any other political
subdivision in which the Real Property is located or that
exercises jurisdiction over the Real Property and Improvements
or the construction of multifamily residential improvements on
the Real Property, and any agency, department, commission,
board, bureau, property owners association, utility district,
flood control district, improvement district, or similar
district, or other instrumentality of any of them.
(v) There is no pending or, to Seller's knowledge, threatened
condemnation or change in zoning affecting the Property.
Except as disclosed in writing to Buyer, no portion of any
Property is a designated historic property or located within a
designated historic area.
(w) There are no so-called "redec" or "redecorating fees"
collected from tenants of the Properties.
Section 4.2 Several Liability; Survival of Representations and Warranties.
(a) Notwithstanding anything contained herein to the contrary,
each of the parties comprising Seller shall be responsible and
liable hereunder only with respect to its respective Property.
All covenants and agreements of the Seller under this Contract
shall be the several obligations of such Seller and shall bind
and/or be made by each Seller only as to the Property owned by
such Seller as if a separate agreement had been executed by
and between such respective Seller and Buyer
Page 13
for each Property. Notwithstanding the foregoing, a default
under this Contract by any Seller shall constitute a default
under this Contract with respect to all Sellers and all
Properties.
(b) The representations and warranties in SECTION 4.1 will be
deemed made on and as of the Closing Date with the same force
and effect as if made at that time and shall survive Closing
for a period of 9 months, at which time they terminate unless
a claim for breach thereof has been instituted within the
11-month period as specified in the next sentence. Buyer may
bring an action against a respective Seller for a material
(defined in SECTION 7.1) breach of any of Seller's
representations and warranties only if (i) Buyer gives such
Seller written notice of the circumstances giving rise to a
material breach within the 11-month period after Closing, (ii)
the aggregate, actual damages from all breaches by such Seller
exceeds $10,000, and (iii) the breach was not waived pursuant
to SECTION 7.1 hereof. Buyer may collect only actual damages
for any breach of Seller's representations and warranties
under this Contract. Buyer and Seller waive the right to
collect special, consequential, incidental, punitive, or any
other damages other than actual damages in connection with
this transaction and this Contract. Except for (i) any
adjustment of the prorations as set forth in SECTION 6.3, (ii)
the warranties in the Deed, the Xxxx of Sale, and the
Assignment of Leases, and (iii) claims in tort which are
covered (in whole or in part) by Seller's liability insurance,
(a) any Seller's liability for damages related to any single
Property is limited to $300,000; provided, that the aggregate
liability of all Sellers for all damages of any kind related
to this Contract or this transaction is limited to and shall
not exceed $300,000 (Buyer hereby waiving the right to claim
damages in excess thereof), except for fraud, and (b) any suit
against Seller for damages must be instituted within 2 years
and 1 day after Closing or the damages are thereafter barred.
(c) The provisions of this SECTION 4.2 survive the Closing or any
termination of this Contract.
Section 4.3 Knowledge Standard.
For purposes of this Contract, the terms SELLER'S KNOWLEDGE and BUYER'S
KNOWLEDGE mean the current, actual knowledge of the individuals listed on
EXHIBIT L attached to this Contract, without independent inquiry and without any
actual or implied duty to inquire, and does not include knowledge imputed to
Seller or to the Buyer, as the case may be, from any other person. The named
individuals are acting for and on behalf of Seller or Buyer, as the case may be,
and in a capacity as an officer of Seller or Buyer, respectively or one or more
of Seller's or Buyer's Affiliates and are in no manner expressly or impliedly
making any representations or warranties in an individual capacity. Buyer and
Seller waive any right to xxx or to seek any personal judgment or claim against
any of the named individuals.
Section 4.4 Seller's Covenants.
Each Seller, severally and not jointly, covenants with Buyer as follows:
(a) At all times from the Effective Date to the Closing Date,
Seller shall maintain in force property insurance and
commercial general liability insurance covering the Real
Property and the Improvements in accordance with Seller's
customary procedures.
Page 14
(b) At all times from the Effective Date to the Closing Date,
Seller shall keep and perform or cause to be kept and
performed all of the material obligations to be performed by
the landlord under the Leases.
(c) Seller shall not, without Buyer's prior consent, which consent
will not be unreasonably withheld or delayed, modify,
terminate, amend, or allow the assignment of existing Leases,
except in accordance with Seller's historical course of
conduct in operating the Property.
(d) After the Effective Date, Seller shall not remove any Personal
Property from the Improvements without replacing it with items
of like kind and quality.
(e) Seller agrees to obtain Buyer's written approval prior to
entering into any new Service Contract that is not terminable
on thirty (30) days notice.
(f) Seller will manage, operate, repair and maintain the Property
in generally the same manner as it managed, operated, repaired
and maintained the same prior to the date hereof and, to its
reasonable ability, will keep the Property in its present
state of repair subject to normal wear and tear, exercising
the same degree of care in such matters as Seller has
previously exercised.
(g) Seller shall update the Rent Roll on Buyer's request, but no
more often than once per month. Seller shall not lease any
portion of the Property to any employees of an Affiliate of
Seller, except under leases providing for thirty (30) day
termination by the owner of the Property.
(h) Seller will use its reasonable business efforts to renew all
of the licenses and permits applicable to the Property and
which are necessary for the continued operation of the
Property as they expire from time to time and shall notify
Buyer at least thirty (30) days prior to the expiration date
or threatened cancellation date of any license or operating
permit.
(i) Seller will not cause any action to be taken which would cause
any of the representations or warranties made by Seller in
this Contract to be false on or as of Closing Date.
(j) Seller shall not enter into or record any easement, covenant,
license, permit, agreement or other instrument against the
Property or any portion thereof except as may be required to
enable Seller to perform its obligations under this Contract
or to operate in the ordinary course of business.
(k) Effective as of the Closing, Seller shall terminate all
management agreements relating to the Property.
(l) Seller shall not change the existing use of any Property.
(m) Seller shall not knowingly violate or fail to use commercially
reasonable efforts to prevent the violation of any applicable
laws in any way related to the Property; however, this is not
intended as a representation that there are no current
violations of applicable laws, nor shall it serve as a
covenant to correct violations of laws, if any, that currently
exist;
Page 15
(n) Seller shall not materially alter the manner of keeping its
books, accounts or records or the accounting methods therein
reflected.
(o) Subsequent to the Closing, but at no cost to Seller, Seller
agrees to reasonably cooperate with Buyer's independent
auditors to provide reasonable and necessary access to
financial records required to permit the preparation and audit
of financial statements of the Properties for the year 2004
pursuant to applicable SEC regulations. This provision shall
survive the Closing.
(p) Seller shall continue to perform all its obligations under the
Existing Loans, and shall not enter into any modification,
amendment or restatement thereof that would have a Material
Adverse Effect without Buyer's consent, which consent will not
be unreasonably withheld.
(q) Seller agrees to expend at least $500,000 in the aggregate,
when combined with the expenditures pursuant to the
Partnership Sale Contract (as defined in SECTION 9.21) and the
Asset Sale Contract (as defined in SECTION 9.21), in capital
expenditures on the Properties prior to Closing (the CAPITAL
EXPENDITURE AMOUNT). As of the Effective Date, there is
approximately $311,000 in an escrow account held by the
Lenders entitled "Required Repair Fund" (the REQUIRED REPAIR
FUND). All amounts that Seller is reimbursed by the Lenders
prior to Closing from the Required Repair Fund shall be
included in determining if Seller achieves the Capital
Expenditure Amount. If the Seller expends less than $500,000
in capital expenditures on the Properties, when combined with
the expenditures pursuant to the Partnership Sale Contract and
the Asset Sale Contract, prior to Closing, then the Seller
shall pay to the Buyer at Closing the positive difference
between the actual amount of capital expenditures made by the
Seller and $500,000 (the CAPITAL PAYMENT). The Seller may
elect to assign all or a portion of the Required Repair Fund
to Buyer, at no cost to Buyer, as part of the Capital Payment.
ARTICLE 5
BUYER'S REPRESENTATIONS AND WARRANTIES
Section 5.1 Buyer's Representations and Warranties.
Buyer represents and warrants to each Seller, which representations and
warranties are also deemed to be made on and as of the Closing Date:
(a) Buyer is a limited partnership, validly existing and in good
standing under the laws of the State of Delaware, and, at
Closing, will be, to the extent necessary, qualified to do
business in the States where the each Property is located.
(b) Buyer has the authority to execute this Contract and to
perform its obligations under this Contract. The person
executing this Contract on behalf of Buyer is duly authorized
to do so.
(c) There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings
in bankruptcy or under other debtor relief laws contemplated
by, pending, or threatened against Buyer.
Page 16
(d) Buyer is in compliance with the requirements of the Orders and
other similar requirements contained in the rules and
regulations of the OFAC and in any enabling legislation or
other Executive Orders or regulations in respect thereof.
(e) Neither Buyer nor any beneficial owner of Buyer:
(i) is listed on the Lists;
(ii) is a Person who has been determined by competent
authority to be a Person with whom a U.S. Person is
prohibited from transacting business, whether such
prohibition arises under U.S. law, regulation,
executive orders or any lists published by the United
States Department of Commerce, the United States
Department of Treasury or the United States
Department of State including any agency or office
thereof; or
(iii) is owned or controlled by, or acts for or on behalf
of, any Person on the Lists or any other Person who
has been determined by competent authority to be a
Person with whom a U.S. Person is prohibited from
transacting business, whether such prohibition arises
under U.S. law, regulation, executive orders or any
lists published by the United States Department of
Commerce, the United States Department of Treasury or
the United States Department of State including any
agency or office thereof; or
(iv) is under investigation by any governmental authority
for, or has been charged with, or convicted of, money
laundering, drug trafficking, terrorist-related
activities, any crimes which in the United States
would be predicate crimes to money laundering, or any
violation of any Anti-Money Laundering Laws.
Section 5.2 Buyer's Covenants.
Buyer covenants and agrees:
(a) to make its policies, procedures and practices regarding
compliance with the Orders, if any, available to Sellers for
their review and inspection during normal business hours and
upon reasonable prior notice.
(b) that if Buyer obtains knowledge that Buyer or any of its
beneficial owners becomes listed on the Lists or is indicted,
arraigned, or custodially detained on charges involving money
laundering or predicate crimes to money laundering, Buyer
shall immediately notify Sellers in writing, and in such
event, Sellers shall have the right to terminate this Contract
without penalty or liability to Buyer immediately upon
delivery of written notice thereof to Buyer.
(c) that Buyer shall continue to use commercially reasonable and
diligent efforts to assume the Existing Loans on terms and
conditions reasonably acceptable to Buyer; provided, that
Buyer is not required to agree to any material change of any
term of any Existing Loans document as a condition to Lenders'
approval of the Assumption.
Page 17
(d) Buyer will forward to Lenders, or a third party entity
designated by Lenders, if applicable, the documentation and
information requested in the loan assumption package, within
10 days after the Effective Date. Buyer acknowledges that
Seller has caused Lenders to deliver to Buyer Lenders' loan
assumption package prior to the Effective Date.
(e) Buyer will, within 10 days after the Effective Date, if
required by Lenders, (i) provide to the Lenders organizational
documents of the Buyer's borrowing entity (BUYER'S BORROWER),
(ii) provide to the Lenders financial statements of Buyer's
Borrower, (iii) authorize the Lenders to conduct credit
reports on the Buyer's Borrower, (iv) authorize the Lenders to
contact other Lenders who hold loans from entities related to
Buyer's Borrower, (v) execute and return the application for
the assumption of the Existing Loans on the Lenders' approved
form, and (vi) pay one-half (1/2) all processing fees and
other expenses required by the Lenders and Seller shall pay
one-half (1/2) all processing fees and other expenses required
by the Lenders.
(f) Buyer will respond timely to all requests from Lenders, but in
no event later than 5 business days and will deliver copies of
all correspondence (other than correspondence consisting of
financial statements and financial condition, or
correspondence deemed by Buyer to be confidential to Buyer or
its Affiliates) between Buyer, Lenders, and any agent of
Lenders to Seller as soon as reasonably practicable.
(g) Buyer shall deliver the executed Tenant Notice Letters to all
tenants within ten (10) days after Closing. This provision
shall survive Closing.
(h) Buyer shall not initiate employment conversations with
Seller's manager's employees until after the earlier of (i)
three (3) business days prior to the Closing Date and (ii)
January 17, 2004.
ARTICLE 6
CLOSING AND PRORATIONS
Section 6.1 Closing Date.
The CLOSING of this Contract will take place in Title Company's offices
commencing at 10:00 a.m., Dallas, Texas time, or such other place as is mutually
agreeable to the parties upon three (3) business days prior written notice from
Buyer that Buyer has received or will receive the proceeds from the Public
Offering from the underwriter(s) (the PUBLIC OFFERING CLOSING); provided,
however, that this Contract shall terminate if Closing does not occur prior to
January 31, 2005 (the CLOSING DATE). Notwithstanding the foregoing, Seller
acknowledges that it is possible that, due to unanticipated delays in the
regulatory review and approval process associated with the Public Offering that,
the Public Offering Closing may not occur on or before January 31, 2005, despite
the reasonable and diligent efforts of Buyer, the REIT and the underwriters to
cause the Public Offering Closing to occur before such date. Accordingly, in the
event that the Public Offering Closing has not occurred on or before January 31,
2005, and if Buyer has used reasonable and diligent efforts to cause the Public
Offering Closing to occur before such date and the failure of the Public
Offering Closing to occur is beyond the reasonable control of Buyer, then the
Closing Date shall be automatically extended hereunder to a date not earlier
than three (3) business days after prior written notice from Buyer to Seller
that either the
Page 18
Public Offering Closing has occurred or is anticipated to occur but in no event
later than February 28, 2005; provided that if the Closing has not occurred by
February 28, 2005, if Seller is not then in default hereunder, the Xxxxxxx Money
and the Letter of Credit shall be paid (or delivered, as appropriate) to Seller,
this Contract shall terminate, and the parties shall have no further rights,
liabilities or obligations under this Contract (except for those that expressly
survive termination).
Section 6.2 Closing Matters.
(a) Expressly conditioned upon Buyer's compliance with its
obligations under SECTION 6.2(b), Sellers shall deliver at
Closing:
(i) a Deed (containing special or, as appropriate,
limited warranties of title) for each Property (the
DEED), duly executed and acknowledged by Seller,
containing no exceptions or conditions except the
Permitted Exceptions, conveying to Buyer, fee simple
title to the Real Property and Improvements as
specified in SECTION 2.1(a), substantially in the
form attached to this Contract as EXHIBIT M;
(ii) at least 2 counterparts of a Xxxx of Sale for each
Property (the XXXX OF SALE), duly executed by Seller,
substantially in the form attached to this Contract
as EXHIBIT N;
(iii) at least 2 counterparts of an Assignment of Leases,
Contracts, Security Deposits, and Warranties for each
Property (the ASSIGNMENT OF LEASES) duly executed by
Seller, substantially in the form attached to this
Contract as EXHIBIT O.
(iv) an IRC Section 1445 Certification, duly executed by
each Seller, substantially in the form attached to
this Contract as EXHIBIT P;
(v) at least 1 counterpart of a notice to tenants for
each Property (the TENANT NOTICE LETTER), duly
executed by Seller in substantially the form attached
to this Contract as EXHIBIT Q, to be addressed to
each tenant at the Real Property;
(vi) at least 2 counterparts of Restriction Against
Condominium Conversion for each Property (the
RESTRICTION), duly executed and acknowledged by
Seller, substantially in the form attached to this
Contract as EXHIBIT H;
(vii) at least 1 counterpart of all assumption documents
required to be executed by Seller with respect to
Buyer's assumption of the Existing Loans;
(viii) a Rent Roll for each Property dated no earlier than 5
days prior to Closing, certified by Seller to be true
and correct in all material respects;
(ix) a list of aged rent delinquencies for each Property,
identifying each delinquent tenant by name and unit
number, dated no earlier than 5 days prior to the
date Sellers deliver same;
Page 19
(x) possession of each Property, subject to the Permitted
Exceptions and the rights of tenants in possession
under the Leases; and
(xi) the following to the extent they are in the Seller's
possession or control:
(A) originals (or copies if originals are not
available) of the Leases, the Service
Contracts, the Plans, the Warranties, and
the Records; and
(B) all keys to the Improvements, including, but
not limited to, keys to all door locks and
keys of any vehicles or equipment being
conveyed (and an accounting for keys in
possession of others), which keys shall be
marked and identified; and all documents in
the possession of the Seller, pertaining to
occupants of the Property, including, but
not by way of limitation, all leases,
applications, correspondence and credit
reports relating to each such occupant;
(xii) a fully executed termination of the management
agreement for each Property at Seller's sole cost and
expense;
(xiii) a license in the form attached hereto as EXHIBIT R
authorizing Buyer's continued display of the name
"Jefferson", "Jefferson Commons" and the initials
"JPI" for a period of nine (9) months after the
Closing Date, as well as Buyer's agreement to cause
the removal of such names from the Property by no
later than nine (9) months after the Closing Date
(the LICENSE);
(xiv) such evidence or documents as may be reasonably
required by the Title Company evidencing the status
and capacity of Seller and the authority of the
person or persons who are executing the various
documents on behalf of the Seller in connection with
the sale of the Property;
(xv) Seller's executed closing statement confirming the
prorations and the distribution of the closing
proceeds; provided, that the closing statement will
only be delivered to the Title Company and Closing
Agent and will not be delivered to Buyer; and
(xvi) a duly executed legal opinion of Seller's counsel in
the form attached hereto as EXHIBIT S.
(b) No later than 4:00 p.m., Dallas, Texas time, on the Closing
Date, Buyer shall deliver to Closing Agent as a condition
precedent to the obligation of Seller to perform its
obligations under SECTION 6.2(a):
(i) by wire transfer or other immediately available
federal funds, the cash portion of the Purchase
Price, subject to applicable prorations and credits;
and
(ii) at least 2 counterparts of the Assignment of Leases
and the Xxxx of Sale, duly executed by Buyer;
Page 20
(iii) at least 1 counterpart of all assumption documents
with respect to Buyer's assumption of the Existing
Loans, duly executed by Buyer and the respective
Lenders including, without limitation, the Seller
Releases;
(iv) at least 1 counterpart of the Tenant Notice Letter,
duly executed by Buyer;
(v) at least 1 counterpart of the License, duly executed
by Buyer;
(vi) a written confirmation by Buyer dated as of the
Closing Date of the acknowledgements set forth in
SECTION 9.12(a);
(vii) such evidence or documents as may be reasonably
required by the Title Company evidencing the status
and capacity of Buyer and the authority of the person
or persons who are executing the various documents on
behalf of the Buyer in connection with the purchase
of the Property;
(viii) Buyer's executed closing statement confirming the
prorations and the distribution of the closing
proceeds.
(c) Each Seller and Buyer shall execute and deliver to the
appropriate parties any additional documents and instruments
that, in the mutual opinion of Buyer's counsel and any
Seller's counsel, are necessary to consummate this
transaction.
Section 6.3 Prorations.
(a) Ad valorem taxes and assessments (whether for real estate or
personal property) against the Property will be prorated at
Closing as of the Closing Date based on the tax bills for the
year of the Closing. Buyer will receive at Closing a credit
against the Purchase Price in an amount equal to the portion
of the taxes and assessments on the Property from the
beginning of the current year to the Closing Date. If Closing
occurs before that year's tax bills are available, the
proration will be based on the latest tax rate applied to the
latest unappealed tax value. If an estimated proration is
made, then after the taxes and assessments for the year in
which the Closing occurs are finally assessed, within 30 days
after demand, Buyer shall refund to Seller any amount overpaid
by Seller or Seller shall pay to Buyer the amount of any
deficiency in the proration. Buyer shall pay all taxes and
assessments against the Property before they become
delinquent.
(b) All income and expenses of the Real Property and Improvements
(other than ad valorem taxes and assessments) will be prorated
at Closing as of the Closing Date on an accrual basis. All
rents actually prepaid for a portion of the term on or after
Closing, shall be paid to Buyer at Closing or, at Seller's
option, offset against the Purchase Price. All other income
and expense items subject to proration pertaining to the
period prior to the Closing Date will be allocated to and paid
by Sellers and all income and expense items subject to
proration pertaining to the period starting on the Closing
Date will be allocated to and paid by Buyer. Seller is
responsible for Lease commissions due Seller's employees and
locator fees for Leases under which the tenant moves into a
unit prior to the Closing Date. Buyer is responsible for
locator fees for Leases under which the tenant moves into a
unit on or after the Closing Date. All application fees which
are not prepaid security deposits shall be retained by Seller.
Any income payable in connection with any
Page 21
Service Contract will be prorated, but no lump sum or up front
payments paid to Seller with respect to any Service Contract
will be prorated. Rent will be prorated based on the Rent Roll
provided by Seller at Closing. No later than 3 business days
prior to the Closing Date, Buyer and each Seller shall
mutually approve and provide to Closing Agent a schedule of
prorations in as complete and accurate a form as possible. No
later than 60 days after Closing, Seller and Buyer shall make
appropriate post-closing adjustments to the prorations of
income and expenses but in no event will any readjustment be
made after the 60th day after the Closing Date, other than a
readjustment of ad valorem taxes and assessments.
(c) All Deposits paid as refundable security for rent, cleaning,
pet deposits, or any other purposes will be paid to Buyer at
Closing and the obligation, if any, to refund the cash
deposits to tenants is assumed by Buyer. Except as provided in
SECTION 6.3(d), no non-refundable deposits or fees paid by
tenants shall be paid or payable to Buyer.
(d) Any amounts of so-called "hassle free move-out" payments paid
to Seller for current leases on the Properties shall be
equally split between Seller and Buyer and, at Closing, Seller
shall pay to Buyer its share thereof.
(e) All deposits and escrows made by Seller with the respective
Lenders will be delivered to the Sellers at Closing and will
be retained by the Seller or will be credited to the Seller at
Closing.
(f) The obligations of Sellers and Buyer under this SECTION 6.3
survive the Closing.
Section 6.4 Closing Costs.
Costs of closing this transaction will be allocated between Sellers and Buyer as
follows:
(a) Sellers shall pay (i) 50% of the prepayment premium for the
RAIT Loan to cause RAIT to release at Closing any security
interests in its collateral relating to Seller or its
constituent entities (any escrows held by the Lenders will be
returned to Seller or credited to Seller at Closing), (ii) the
cost of providing the Title Commitment, (iii) if the Closing
occurs on or prior to December 31, 2004, then the portion
(which may be all) of the negative arbitrage associated with
the RAIT Loan from the Closing Date until the RAIT Loan is
prepaid which is not paid by Buyer; (iv) the cost 50% of any
escrow fees or similar charges of Title Company and Closing
Agent, (v) the cost of the premiums for a "standard coverage"
Owner Policy, (vi) 50% of all costs payable to the Lenders in
connection with Buyer's assumption of the Existing Loans,
(vii) 50% of any and all transfer fees and sales, intangibles,
and conveyance taxes (or equivalents) related to the Closing,
if any, and (viii) the costs, if any, incurred by Seller in
connection with the performance of its obligations under this
Contract, including any endorsement to the Title Policy which
Seller, in its sole and absolute discretion, agrees to obtain
in order to cure title defects.
(b) Buyer shall pay (i) any premiums related to title insurance
for extended coverage or any endorsements or modifications to
any policy requested by Buyer and all premiums related to any
mortgagee policy, (ii) the cost of recording the Deed and
Page 22
any other conveyance documents that Buyer may choose to
record, (iii) 50% of any escrow fee or similar charges of
Title Company and Closing Agent, (iv) the cost of the Survey,
(v) 50% of any and all transfer fees and sales, intangibles,
and conveyance taxes (or equivalents) related to the Closing,
if any, (vi) 50% of all costs payable to the Lenders in
connection with Buyer's assumption of the Existing Loans,
(vii) 50% of the prepayment premium for the RAIT Loan to cause
RAIT to release at Closing any security interests in its
collateral relating to Seller or its constituent entities (any
escrows held by the Lenders will be returned to Seller or
credited to Seller at Closing), (viii) if Buyer is required to
pay the negative arbitrage under the Partnership Sale Contract
and the Asset Sale Contract and if the Closing occurs on or
prior to December 31, 2004, then 50% of the negative arbitrage
associated with the RAIT Loan from the Closing Date until the
RAIT Loan is prepaid, but Buyer shall not be required to pay
in excess of $200,000 in the aggregate with respect to all
Interests or Properties purchased, and (ix) the costs, if any,
incurred by Buyer in connection with the performance of its
obligations under this Contract.
(c) All other expenses incurred by any Seller or Buyer with
respect to the Closing, including, but not limited to, legal
fees of Buyer and each Seller (except in the event of
litigation), will be borne and paid exclusively by the party
incurring same, without reimbursement, except to the extent
otherwise specified in this Contract.
Section 6.5 Assumption Approval.
By no later than 5:00 p.m., Dallas, Texas time on January 18, 2005 (the
ASSUMPTION APPROVAL DATE), Buyer shall either:
(a) terminate this Contract by giving a termination notice to
Sellers stating that the terms of the Assumption are not
acceptable to Buyer, following which Closing Agent shall
deliver the Xxxxxxx Money to Seller (together with all
interest thereon) and the parties shall have no further
rights, liabilities, or obligations under this Contract (other
than those that expressly survive termination); or
(b) waive its right to terminate this Contract for matters related
to the Assumption by proceeding to Closing (absent a
termination pursuant to (a) above, Buyer shall be deemed to
have waived its right to terminate this Contract by virtue of
an unacceptable Assumption).
Buyer covenants to communicate with Sellers and to keep Sellers informed with
respect to the status of the Assumption and the Seller Releases. Buyer will
promptly notify Sellers when each Lender consents to the Assumption and the
Seller Releases. If Buyer is unable to obtain the Seller Releases by noon,
Dallas, Texas time on January 17, 2005, Buyer will promptly notify Sellers in
writing thereof.
Section 6.6 Release Approval.
By no later than the Assumption Approval Date, Sellers shall either:
(a) terminate this Contract by giving a termination notice to
Buyer stating that the terms of the Seller Releases are not
acceptable to Sellers, following which Closing Agent shall
deliver the Xxxxxxx Money to Seller (together with all
interest thereon)
Page 23
and the parties shall have no further rights, liabilities, or
obligations under this Contract (other than those that
expressly survive termination); or
(b) waive its right to terminate this Contract for matters related
to the Seller Releases by proceeding to Closing (absent a
termination pursuant to (a) above, Seller shall be deemed to
have waived its right to terminate this Contract by virtue of
an unacceptable Seller Release);
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.1 Material Breach of Seller's Representations and Warranties
Prior to Closing.
Buyer and each Seller shall each notify the other parties to this Contract
promptly upon discovery at or prior to Closing that any of the representations
and warranties of any Seller in SECTION 4.1 are inaccurate in any material
respect. If (i) any of a Seller's representations and warranties in SECTION 4.1
are inaccurate in any material respect at or prior to Closing and (ii) the
Seller does not cure (it being understood that the Seller has no obligation to
cure at any cost to Seller in excess of $25,000 in the aggregate) the material
breach within 10 business days (or within 1 business day if Buyer's notice is
given on the Closing Date) after receipt of notice of the breach from Buyer,
then Buyer shall, as its sole and exclusive remedy, waiving all other remedies,
either:
(a) terminate this Contract by giving notice to each Seller on or
prior to the Closing Date (which will be extended as necessary
to accommodate the applicable cure period); or
(b) waive that representation and warranty in its entirety and
proceed to the Closing.
A breach of any representation and warranty by a Seller is deemed material for
the purposes of this SECTION 7.1 only if it will cause a material adverse
effect, including, without limitation, a financial effect on the Real Property
and Improvements of greater than $200,000 for any single Property and one or
more breaches by Seller of Seller's representations and warranties are deemed
material if they will cause a material adverse financial effect greater than
$300,000 in the aggregate with respect to any or all of the Properties. Any
breach of any representation and warranty by a Seller that is not material is
deemed waived by Buyer and Buyer and each Seller shall proceed with Closing
without any reduction in the Purchase Price. If Seller can effect a cure at a
cost of $25,000 or less in the aggregate, Seller shall effect the cure.
If Buyer terminates this Contract under this SECTION 7.1, then Closing Agent or
Sellers, as applicable, shall return the Xxxxxxx Money and the Letter of Credit
to Buyer and the parties have no further rights, liabilities, or obligations
under this Contract (other than those that expressly survive termination). If
Buyer has actual knowledge of the inaccuracy or breach of any representation or
warranty by any Seller at or prior to Closing and the Closing occurs, Buyer is
deemed to waive the breach of the representation and warranty in its entirety.
Section 7.2 Buyer's Remedies.
(a) Sellers Inability to Convey Title at Closing; Condemnation;
Major Casualty Damage. If:
Page 24
(i) the Seller's title to the Property at Closing is
subject to any title exception other than the
Permitted Exceptions for any reason other than an
affirmative act by any Seller (excluding any election
not to cure any objection by Buyer under SECTION 3.1)
that prevents Seller from having the title required
and the failure is not cured within 1 business day
thereafter or Buyer does not waive any defect in
title and accepts the Seller's title as it exists on
the Closing Date;
(ii) condemnation proceedings are initiated against all or
any portion of the Property and Buyer does not waive
its right to terminate this Contract as specified in
SECTION 8.3; or
(iii) a Major Casualty (defined in SECTION 8.3) occurs and
Buyer does not waive its right to terminate this
Contract as specified in SECTION 8.3;
then Buyer shall, as its sole and exclusive remedy, waiving
all other remedies, terminate this Contract by giving notice
to each Seller within 10 days after the event specified in
SECTION 7.2(a)(i) occurs or Seller delivers written notice to
Buyer of the occurrence of an event listed in SECTION
7.2(a)(ii) or (iii), and Closing Agent shall return the
Xxxxxxx Money and/or the Letter of Credit to Buyer, and the
parties have no further rights, liabilities, or obligations
under this Contract (other than those that expressly survive
termination).
(b) Other Seller Defaults. If (A) any Seller does not timely
perform its obligations under SECTION 6.2(a) for any reason
other than (i) Buyer's failure to timely perform its
obligations under SECTION 6.2(b) or (ii) an act that falls
under SECTION 7.2(a) (or the termination of this Contract
under any applicable provision of this Contract) or (B) any
Seller does not timely perform any of its material obligations
under this Contract other than its obligations under SECTION
6.2(a) (for any reason other than the termination of this
Contract under any applicable provision of this Contract) and
does not cure the default within 10 business days after
receipt of written notice of the default from Buyer, then
Buyer shall, as its sole and exclusive remedy, waiving all
other remedies, either:
(i) enforce specific performance of such Seller's
obligation to convey the Property to Buyer in
accordance with this Contract; or
(ii) terminate this Contract by giving notice to each
Seller within 5 business days thereafter, then
Closing Agent shall return the Xxxxxxx Money and, as
applicable, the Letter of Credit, to Buyer, and the
parties have no further rights, liabilities, or
obligations under this Contract (other than those
that expressly survive termination).
Buyer is deemed to elect to terminate this Contract, receive a
return of the Xxxxxxx Money and, as applicable, the Letter of
Credit as liquidated damages, and waive any right to enforce
specific performance against Sellers unless Buyer complies
with its obligations under SECTION 6.2(b) on the Closing Date,
gives Sellers notice of its intent to enforce specific
performance within 60 days after the Closing Date and files an
action to enforce specific performance against each Seller in
an appropriate State court having jurisdiction over the Real
Property within 2 years and 1 day after the Closing Date.
Page 25
(c) Seller's Failure or Refusal to Convey Title at Closing. Except
as set forth in SECTION 7.2(a)(i), if Seller fails or refuses
to convey title to Buyer at Closing and Seller does not remedy
the failure or refusal within 7 business days after receipt of
written notice from Buyer, then (1) this Contract will
automatically terminate, (2) Seller will reimburse Buyer for
its actual, verifiable, third party, out-of-pockets costs with
respect to this Contract, the Partnership Sale Contract and
the Asset Sale Contract in an aggregate amount not to exceed
$750,000, and (3) Closing Agent shall return the Xxxxxxx Money
and, as applicable, the Letter of Credit, to Buyer and the
parties have no further rights, liabilities, or obligations
under this Contract (other than those that expressly survive
termination).
Section 7.3 Seller's Remedies.
If:
(a) Buyer does not timely perform in accordance with SECTION
6.2(b) for any reason, except the termination of this Contract
under any applicable provision of this Contract; or
(b) Buyer is otherwise in default in the performance of any of its
material obligations under this Contract and does not cure the
default within 10 days after receipt of notice of the default
from any Seller (but no Seller is required to give Buyer
notice of default in the performance of Buyer's obligations
under SECTION 6.2(b) or any other obligation involving the
payment of money);
then, Sellers shall, as their sole and exclusive remedy, waiving all other
remedies, terminate this Contract by giving notice to Buyer, Closing Agent shall
pay the Xxxxxxx Money and, as applicable, shall deliver the Letter of Credit to
Sellers and Sellers will retain all Xxxxxxx Money or funds from the Letter of
Credit as liquidated damages, and the parties have no further rights,
liabilities, or obligations under this Contract (except for those that expressly
survive termination). The parties agree that Sellers' damages are difficult to
ascertain and that the Xxxxxxx Money is a fair approximation of Sellers'
damages. Notwithstanding anything to the contrary in this SECTION 7.3, Buyer's
indemnity obligations under SECTION 3.2(d) of this Contract are separate and
distinct obligations that are not subject to the liquidated damage provisions
contained in this SECTION 7.3. Buyer's and its issuers obligations under the
Letter of Credit will survive the termination of this Contract.
ARTICLE 8
CASUALTY AND CONDEMNATION
Section 8.1 Risk of Loss and Notice.
Subject to all other provisions of the Contract, including without limitation,
SECTION 3.2(d), the risk of loss or damage to the Real Property and Improvements
by fire or other casualty prior to the Closing Date is borne by Sellers. Each
Seller shall give Buyer prompt notice of any destruction of any part of the Real
Property and Improvements or the commencement of any condemnation proceedings
against the Real Property and Improvements between the Effective Date and the
Closing Date.
Page 26
Section 8.2 Minor Casualty.
Whether or not the notice required by SECTION 8.1 is given, if Improvements are
destroyed by fire or other casualty and the estimated cost of repairs, as
reasonably determined by Sellers based on a report by an independent
construction or architectural firm, is $500,000 or less for any individual
Property (a MINOR CASUALTY), Closing will occur with no reduction in the
Purchase Price and at Closing:
(a) Seller shall assign to Buyer all proceeds of property
insurance payable to Seller, less any amounts paid by Seller
to repair, restore, or clean up the Real Property and
Improvements;
(b) Buyer will receive a credit against the Purchase Price equal
to the amount of any unused deductible under Seller's property
insurance policy;
(c) Buyer shall accept the Real Property and remaining
Improvements in their damaged state; and
(d) as between Buyer and Sellers, Sellers have no obligation to
repair or restore any damaged or destroyed portions of the
Real Property and Improvements.
Section 8.3 Major Casualty and Condemnation.
If condemnation proceedings are commenced against any portion of the Real
Property and Improvements, or if Improvements are destroyed by fire or other
casualty and the estimated cost of repairs, as reasonably determined by Sellers
based on a report by an independent construction or architectural firm, is more
than $500,000 for any individual Property (a MAJOR CASUALTY), and Buyer has not
waived the exercise of its remedies under SECTION 7.2(a) within 10 days after
notice from any Seller of the occurrence of a Major Casualty or the initiation
of condemnation proceedings, then this Contract automatically terminates and
Buyer is deemed to have exercised its remedies under SECTION 7.2(a). If Buyer
waives the exercise of its remedies under SECTION 7.2(a) within 10 days after
notice from any Seller of the occurrence of a Major Casualty or the initiation
of condemnation proceedings, then Closing will occur without reduction in the
Purchase Price and at Closing:
(a) Seller shall assign its interest in all proceeds of property
insurance or condemnation awards to Buyer, less any amounts
paid by Seller to repair, restore, or clean up the Real
Property and Improvements;
(b) if a Major Casualty occurs:
(i) Buyer will receive a credit against the Purchase
Price equal to the amount of any unused deductible
under Seller's property insurance policy;
(ii) Buyer will accept the Real Property and remaining
Improvements in their damaged state; and
(iii) as between Buyer and Sellers, Sellers have no
obligation to repair or restore any damaged or
destroyed portions of the Real Property and
Improvements; and
Page 27
(c) if condemnation proceedings are begun:
(i) Buyer will accept the Real Property and remaining
Improvements subject to the condemnation proceedings;
(ii) Sellers have no liability with respect to any portion
of the Real Property and Improvements that is
condemned, or with respect to any costs or expenses
incurred by Buyer as a result of any condemnation
proceedings; and
(iii) Sellers shall reasonably cooperate with Buyer in any
condemnation proceedings.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Notices.
All notices, requests, approvals, consents, and other communications required or
permitted under this Contract (NOTICES) must be in writing and are effective:
(a) on the business day sent if (i) sent by fax prior to 5:00 p.m.
Dallas, Texas time, (ii) the sending fax generates a written
confirmation of sending, and (iii) a confirming copy is sent
on the same business day by one of the other methods specified
below;
(b) on the next business day after delivery, on a business day, to
a nationally recognized overnight courier service for prepaid
overnight delivery;
(c) 3 days after being deposited on a business day in the United
States mail, certified, return receipt requested, postage
prepaid, or
(d) upon receipt if delivered by any method other than the methods
specified above;
in each instance addressed to Buyer or a Seller, as the case may be, at the
following addresses, or to any other address either party may designate by 10
days' prior notice to the other party:
Seller: c/o JPI
000 Xxxx Xxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Page
Telephone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxx@xxx.xxx
Page 28
c/o JPI
000 Xxxx Xxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxxx@xxx.xxx
With a copy to:
Xxxxxx Xxxxx Xxxx & Xxxx, P.C.
0000 Xxxxxxxx Xxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxxxxxx@xxxxxx.xxx
Buyer: Education Realty Operating Partnership, LP
000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxx@xxxxx.xxx
With a copy to:
Martin, Tate, Xxxxxx & Xxxxxxx, P. C.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxx@xxxxxxxxxx.xxx
With a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxxxxx@xxxxxx.xxx
Page 29
Each party shall use commercially reasonable efforts to send a copy of any
notice of termination under this Contract to Closing Agent on the same date and
by the same method(s) as it is sent to the other party. The failure to send a
copy of any termination notice to Closing Agent does not invalidate an otherwise
valid termination notice. E-mail addresses are included in this SECTION 9.1 for
convenience only: e-mail is not an acceptable form for Notices under this
Contract.
Section 9.2 Performance.
Time is of the essence in the performance of this Contract.
Section 9.3 Binding Effect.
This Contract is binding upon and inures to the benefit of the successors and
assigns of the parties.
Section 9.4 Entire Agreement.
This Contract, the Exhibits to this Contract and any agreements called for by
this Contract supercede the existing letter of intent between the parties dated
July 2, 2004, embody the complete agreement between the parties and cannot be
varied except by written agreement of each Seller and Buyer. No delay or
omission in the exercise of any right or remedy accruing to Seller or Buyer upon
any breach under this Contract shall impair such right or remedy or be construed
as a waiver of any such breach theretofore or thereafter occurring. The waiver
by Seller or Buyer of any breach of any term, covenant, or condition herein
stated shall not be deemed to be a waiver of any other breach, or of a
subsequent breach of the same or any other term, covenant, or condition herein
contained.
Section 9.5 Assignment.
(a) This Contract may not be assigned by a party without the prior
consent of the other party except that the Buyer may assign
its rights and obligations to an Affiliate (defined below).
Any assignee of assignor's interest in this Contract is bound
by all approvals and waivers, actual and deemed, by assignor
prior to the assignment, and must assume in writing all of
assignor's obligations under this Contract. Assignor is not
released from the obligations created under this Contract as a
result of any permitted assignment. Upon Buyer's written
request received by Seller at least ten (10) days prior to the
Closing Date, Seller will cause the various Properties to be
conveyed at Closing to various specified Affiliates of Buyer
set forth in Buyer's request.
(b) Upon any assignment of this Contract, assignor shall promptly
deliver to the other party a fully executed original of the
assignment of this Contract and the assumption by the assignee
of assignor's obligations under this Contract, which
assignment must include the federal tax identification number
of the assignee.
(c) No consent given by a party to any transfer or assignment of
assignor's rights or obligations under this Contract may be
construed as a consent to any other transfer or assignment of
assignor's rights or obligations. No transfer or assignment in
violation of this SECTION 9.5 is valid or enforceable.
Page 30
(d) An AFFILIATE of an entity is any entity that controls, is
controlled by, or is under common control with the entity in
question. The term CONTROL means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of an entity, whether through the
ownership of voting securities or otherwise.
Section 9.6 Commissions.
Each party hereby warrants to the other party that it has not dealt with any
real estate broker or salesman in the negotiation of this Contract. Each party
shall indemnify, defend, and hold harmless the other party against any real
estate commissions due by virtue of the execution or Closing of this Contract,
the obligation or asserted claim for which arises from actions taken or claimed
to be taken by or through the indemnifying party. The provisions of this SECTION
9.6 survive the Closing or any earlier termination of this Contract.
Section 9.7 Headings.
Section headings or captions are used in this Contract for convenience only and
do not limit or otherwise affect the meaning of any provision of this Contract.
Section 9.8 Holidays, Etc.
Whenever any time limit or date provided herein falls on a Saturday, Sunday, or
legal holiday under the laws of the State of Texas or the State where the Real
Property is located or on a day when federal banks are closed, then that date is
extended to the next day that is not a Saturday, Sunday, or legal holiday or a
day when federal banks are closed. The term BUSINESS DAY as used in this
Contract means any day that is not a Saturday, Sunday, or legal holiday under
the laws of the State of Texas or the State where the Real Property is located
or a day when federal banks are closed.
Section 9.9 Legal Fees.
If there is litigation, arbitration, or mediation concerning the interpretation
or enforcement of this Contract or any portion of this Contract, the prevailing
party, upon a final non-appealable judgment has been entered in a court of
competent jurisdiction, is entitled to recover from the losing party its
reasonable legal fees and paraprofessional fees, court costs, and expenses. The
provisions of this SECTION 9.9 survive the Closing or any earlier termination of
this Contract.
Section 9.10 Governing Law.
The laws of the State where the Real Property is located govern this Contract.
Section 9.11 Severability.
If any provision in this Contract is unenforceable in any respect, the remainder
of this Contract remains enforceable and, in lieu of the unenforceable
provision, there will be added to this Contract upon the agreement of Buyer and
Seller, a provision as similar in terms to the unenforceable clause as may be
possible and be enforceable.
Page 31
Section 9.12 Disclaimers, Waivers, and Releases.
Buyer acknowledges and agrees that:
(a) EXCEPT AS MAY BE SPECIFICALLY STATED IN THE DEED, OTHER
CLOSING DOCUMENTS, OR IN SECTION 4.1, SELLER, FOR ITSELF AND
ON BEHALF OF JPI APARTMENT CONSTRUCTION, L.P., JPI APARTMENT
MANAGEMENT, L.P., JPI APARTMENT DEVELOPMENT, L.P., JPI
CONSTRUCTION, L.P., JPI LIFESTYLE APARTMENT COMMUNITIES, L.P.,
JPI INVESTMENT COMPANY, L.P. AND THEIR RELATED AFFILIATES
(COLLECTIVELY, THE "SELLER AFFILIATES"), SPECIFICALLY
DISCLAIMS, AND BUYER EXPRESSLY WAIVES, ANY WARRANTY, GUARANTY,
OR REPRESENTATION, ORAL OR WRITTEN, PAST, PRESENT, OR FUTURE,
OF, AS, TO, OR CONCERNING: (I) THE NATURE AND CONDITION OF THE
PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, AND
GEOLOGY, AND THE SUITABILITY OF THE REAL PROPERTY AND
IMPROVEMENTS FOR ANY AND ALL ACTIVITIES AND USES THAT BUYER
MAY ELECT TO CONDUCT THEREON; (II) MATTERS OF TITLE; (III) THE
NATURE, ENFORCEABILITY, AND EXTENT OF ANY RIGHT-OF-WAY, LEASE,
LIEN, ENCUMBRANCE, LICENSE, RESERVATION, CONDITION, OR
OTHERWISE RELATING TO THE REAL PROPERTY AND IMPROVEMENTS; (IV)
THE COMPLIANCE OF THE REAL PROPERTY AND IMPROVEMENTS OR THE
OPERATION THEREOF WITH ANY LAWS, RULES, ORDINANCES, OR
REGULATIONS OF ANY GOVERNMENTAL AUTHORITY OR OTHER BODY,
INCLUDING, WITHOUT LIMITATION, THE AMERICANS WITH DISABILITIES
ACT OR THE FAIR HOUSING ACT, AS AMENDED FROM TIME TO TIME; (V)
WHETHER THE IMPROVEMENTS ARE BUILT IN A GOOD AND WORKMANLIKE
MANNER; (VI) ZONING TO WHICH THE REAL PROPERTY AND
IMPROVEMENTS OR ANY PORTION THEREOF MAY BE SUBJECT; (VII) THE
AVAILABILITY OF ANY UTILITIES TO THE REAL PROPERTY AND
IMPROVEMENTS OR ANY PORTION THEREOF, INCLUDING, WITHOUT
LIMITATION, WATER, SEWAGE, GAS, ELECTRIC, PHONE, AND CABLE;
(VIII) USAGES OF ADJOINING PROPERTY; (IX) ACCESS TO THE REAL
PROPERTY AND IMPROVEMENTS OR ANY PORTION THEREOF; (X) THE
VALUE, COMPLIANCE WITH ANY PLANS AND SPECIFICATIONS PROVIDED
BY SELLER, SIZE, LOCATION, AGE, USE, DESIGN, QUALITY,
DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY, OPERATION,
TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE REAL
PROPERTY AND IMPROVEMENTS OR ANY PORTION THEREOF, OR ANY
INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS, OR
CLAIMS ON OR AFFECTING OR PERTAINING TO THE REAL PROPERTY AND
IMPROVEMENTS OR ANY PART THEREOF; (XI) THE EXISTENCE OR
NON-EXISTENCE OF UNDERGROUND STORAGE TANKS; (XII) ANY OTHER
MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE REAL
PROPERTY AND IMPROVEMENTS; (XIII) THE POTENTIAL FOR FURTHER
DEVELOPMENT OF THE REAL PROPERTY AND IMPROVEMENTS; (XIV) THE
EXISTENCE OF VESTED LAND USE, ZONING, OR BUILDING ENTITLEMENTS
AFFECTING THE REAL PROPERTY AND IMPROVEMENTS; (XV) TAX
CONSEQUENCES (INCLUDING, BUT NOT LIMITED TO, THE AMOUNT OF,
USE OF, OR PROVISIONS RELATING TO ANY TAX CREDITS); (XVI)
WARRANTIES (EXPRESS OR IMPLIED) OF CONDITION REGARDING THE
FITNESS OF THE REAL PROPERTY AND IMPROVEMENTS FOR A PARTICULAR
PURPOSE, MERCHANTABILITY, TENANTABILITY, HABITABILITY, OR
SUITABILITY FOR ANY INTENDED USE; (XVII) ANY ENVIRONMENTAL
CONDITIONS THAT MAY EXIST ON THE REAL PROPERTY AND
IMPROVEMENTS, INCLUDING, WITHOUT LIMITATION, THE EXISTENCE OR
NON-EXISTENCE OF PETROLEUM PRODUCTS, PETROLEUM RELATED
PRODUCTS, FUNGI OF ALL FORMS AND TYPES, "HAZARDOUS
SUBSTANCES," "HAZARDOUS MATERIALS," "TOXIC SUBSTANCES," OR
"SOLID WASTES" AS THOSE TERMS (WHICH ARE COLLECTIVELY REFERRED
TO IN THIS CONTRACT AS "HAZARDOUS MATERIALS") ARE DEFINED IN
THE COMPREHENSIVE
Page 32
ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT OF 1980,
AS AMENDED BY SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF
1986, THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976
("RCRA"), AND THE HAZARDOUS MATERIALS TRANSPORTATION ACT, AND
STATE ENVIRONMENTAL LAWS, AND IN THE REGULATIONS PROMULGATED
PURSUANT TO THOSE LAWS, ALL AS AMENDED (COLLECTIVELY, THE
"HAZARDOUS WASTE LAWS") AND BUYER RELEASES AND WAIVES ANY
CLAIMS OR CAUSES OF ACTION AGAINST EACH SELLER, EACH SELLER'S
AGENTS AND SELLER'S AFFILIATES BASED IN WHOLE OR IN PART ON
ANY VIOLATION OF, OR ARISING WITH RESPECT TO, ANY FEDERAL,
STATE, OR LOCAL STATUTE, ORDINANCE, RULE, OR REGULATION
RELATING THERETO; AND (XVIII) THE FINANCIAL EARNING CAPACITY
OR HISTORY OR EXPENSE HISTORY OF THE OPERATION OF THE REAL
PROPERTY AND IMPROVEMENTS.
(b) BUYER SHALL PERFORM ALL INVESTIGATIONS OF THE PROPERTY IT
DEEMS NECESSARY DURING THE DUE DILIGENCE PERIOD AND WILL RELY
SOLELY ON ITS OWN INVESTIGATIONS. ANY PLANS OR SPECIFICATIONS
PROVIDED BY SELLERS ARE PROVIDED SOLELY FOR CONVENIENCE AND
BUYER IS RELYING SOLELY ON ITS OWN PHYSICAL INVESTIGATION OF
THE PROPERTY AND IS NOT RELYING ON THE ACCURACY OF ANY PLANS
OR SPECIFICATIONS. IF BUYER DOES NOT TERMINATE THIS CONTRACT
PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, BUYER
ACCEPTS THE PROPERTY AS CONSTRUCTED REGARDLESS OF WHETHER THE
IMPROVEMENTS AS CONSTRUCTED CONFORM TO ANY PLANS OR
SPECIFICATIONS. BUYER ACKNOWLEDGES THAT THE IMPROVEMENTS AS
CONSTRUCTED MAY NOT AND VERY LIKELY DO NOT CONFORM IN ALL
RESPECTS TO THE PLANS AND SPECIFICATIONS AND BUYER HEREBY
WAIVES ANY CLAIMS IT MAY HAVE AS A RESULT OF ANY
NON-CONFORMITY OF ANY IMPROVEMENTS AS ACTUALLY CONSTRUCTED
WITH THE PLANS AND SPECIFICATIONS. BUYER IS NOT AND WILL NOT
RELY ON ANY INFORMATION PROVIDED OR NOT PROVIDED TO BUYER BY
SELLER TO MAKE A DECISION CONCERNING THE PURCHASE OR
NON-PURCHASE OF THE PROPERTY. ALL SELLER INFORMATION (DEFINED
BELOW) IS SUBJECT TO BUYER'S VERIFICATION AND, REGARDLESS OF
BUYER'S FAILURE TO SO VERIFY THE SELLER INFORMATION, BUYER
WILL NOT HOLD SELLER OR ANY SELLER AFFILIATE LIABLE FOR OR
MAKE ANY CLAIMS AGAINST ANY SELLER OR ANY SELLER AFFILIATE AS
TO THE ACCURACY OR INACCURACY OF ANY SELLER INFORMATION.
(c) BUYER REPRESENTS AND WARRANTS TO EACH SELLER THAT BUYER'S
OPPORTUNITY FOR INSPECTION AND INVESTIGATION OF THE PROPERTY
(AND OTHER PARCELS IN PROXIMITY THERETO) WILL BE ADEQUATE TO
ENABLE BUYER TO MAKE BUYER'S OWN DETERMINATION WITH RESPECT TO
THE ACQUISITION OR NON-ACQUISITION OF THE PROPERTY AND THE
PRESENCE OR DISPOSAL ON OR BENEATH THE REAL PROPERTY AND
IMPROVEMENTS (AND OTHER PARCELS IN PROXIMITY THERETO) OF
HAZARDOUS MATERIALS. BUYER ACCEPTS THE RISK OF THE PRESENCE OR
DISPOSAL OF HAZARDOUS MATERIALS ON OR NEAR THE REAL PROPERTY
AND IMPROVEMENTS.
(d) NO REPRESENTATIONS HAVE BEEN MADE BY ANY SELLER, ANY SELLER
AFFILIATE, OR ANY OF THEIR RESPECTIVE AGENTS, BROKERS, OR
EMPLOYEES, AND BUYER HAS NOT RELIED ON ANY INFORMATION
SUPPLIED BY ANY SELLER IN ENTERING INTO, CONTINUING THE
EFFECTIVENESS OF, OR CLOSING UNDER THIS CONTRACT OTHER THAN
SELLERS' REPRESENTATIONS AND WARRANTIES SPECIFIED IN SECTION
4.1. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER
ACKNOWLEDGES, WARRANTS, AND REPRESENTS TO EACH SELLER THAT NO
SELLER NOR ANY SELLER
Page 33
AFFILIATE, OR ANY OF THEIR RESPECTIVE AGENTS, BROKERS, OR
EMPLOYEES HAS MADE ANY REPRESENTATION OR STATEMENT TO BUYER
CONCERNING THE VALUE OF THE PROPERTY OR THE PROPERTY'S
INVESTMENT POTENTIAL OR RESALE AT ANY FUTURE DATE, AT A PROFIT
OR OTHERWISE, NOR HAS ANY SELLER OR ANY SELLER AFFILIATE OR
THEIR RESPECTIVE AGENTS, BROKERS, OR EMPLOYEES RENDERED ANY
ADVICE OR EXPRESSED ANY OPINION TO BUYER REGARDING ANY INCOME
TAX CONSEQUENCES OF OWNERSHIP OF THE PROPERTY.
(e) BUYER REPRESENTS AND WARRANTS TO EACH SELLER THAT BUYER IS
RELYING SOLELY ON BUYER'S INDEPENDENT ANALYSIS AND
INVESTIGATION OF THE PROPERTY AND BUYER ASSUMES THE RISK THAT
AN ADVERSE CONDITION OF THE PROPERTY MAY NOT HAVE BEEN
REVEALED BY ITS OWN DUE DILIGENCE. NO SELLER HAS ANY DUTY TO
INFORM, ADVISE, OR OTHERWISE PROVIDE INFORMATION TO BUYER THAT
THE SELLER MAY HAVE REGARDING THE PROPERTY EXCEPT AS EXPRESSLY
REQUIRED IN THIS CONTRACT. ANY INFORMATION, DOCUMENTS, OR
REPORTS SUPPLIED OR MADE AVAILABLE BY A SELLER, WHETHER
WRITTEN OR ORAL, OR IN THE FORM OF MAPS, SURVEYS, PLATS, SOIL
REPORTS, ENGINEERING STUDIES, ENVIRONMENTAL STUDIES, OPERATION
STATEMENTS, RENT ROLLS, OR OTHER INSPECTION REPORTS PERTAINING
TO THE PROPERTY (INCLUDING, WITHOUT LIMITATION, THE REPORTS)
(COLLECTIVELY "SELLER INFORMATION") ARE BEING DELIVERED TO
BUYER ON AN AS-IS, WHERE IS, AND WITH ALL FAULTS BASIS, SOLELY
AS A COURTESY. SELLER HAS NEITHER VERIFIED THE ACCURACY OF ANY
STATEMENTS OR OTHER INFORMATION IN ANY OF THE SELLER
INFORMATION, NOR ANY METHOD USED TO COMPILE THE SELLER
INFORMATION, NOR THE QUALIFICATIONS OF THE PERSON(S) PREPARING
THE SELLER INFORMATION. SELLER MAKES NO, AND BUYER WAIVES ANY,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR ARISING BY
OPERATION OF LAW AS TO THE ACCURACY, COMPLETENESS, OR ANY
OTHER ASPECT OF THE SELLER INFORMATION.
(f) EXCEPT AS SET FORTH IN THE CLOSING DOCUMENT OR SECTION 4.1, NO
SELLER NOR ANY SELLER AFFILIATE IS RESPONSIBLE OR LIABLE TO
BUYER OR ANY SUCCESSOR OR ASSIGNEE OF BUYER, AND BUYER, ON ITS
OWN BEHALF AND ON BEHALF OF ITS SUCCESSORS AND ASSIGNS,
RELEASES AND COVENANTS NOT TO XXX ANY SELLER OR ANY SELLER
AFFILIATE FOR ANY CONSTRUCTION OR DESIGN DEFECTS, ERRORS, OR
OMISSIONS, OR ON ACCOUNT OF ANY OTHER CONDITIONS AFFECTING THE
PROPERTY, KNOWN OR UNKNOWN. EXCEPT AS SET FORTH IN THE CLOSING
DOCUMENT OR SECTION 4.1, BUYER IS PURCHASING THE PROPERTY AS
IS, WHERE IS, AND WITH ALL FAULTS. EXCEPT AS SET FORTH IN THE
CLOSING DOCUMENT OR SECTION 4.1, BUYER RELEASES SELLER AND ALL
SELLER AFFILIATES AND THEIR RESPECTIVE EMPLOYEES, OFFICERS,
DIRECTORS, REPRESENTATIVES, AND AGENTS FOR ANY COST, LOSS,
LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION, OR CAUSE OF ACTION
ARISING FROM OR RELATED TO ANY CONSTRUCTION OR DESIGN DEFECTS,
ERRORS, OMISSIONS, OR OTHER CONDITIONS AFFECTING THE PROPERTY,
KNOWN OR UNKNOWN. THIS RELEASE WILL BE GIVEN FULL FORCE AND
EFFECT ACCORDING TO EACH OF ITS EXPRESS TERMS AND PROVISIONS,
INCLUDING, WITHOUT LIMITATION, THOSE RELATING TO UNKNOWN
CLAIMS, DAMAGES, AND CAUSES OF ACTION. THIS COVENANT RELEASING
EACH SELLER AND ALL SELLER AFFILIATES IS A COVENANT RUNNING
WITH THE PROPERTY AND IS BINDING UPON BUYER, ITS SUCCESSORS
AND ASSIGNS.
THE PROVISIONS OF THIS SECTION 9.12 SURVIVE THE CLOSING OR ANY EARLIER
TERMINATION OF THIS CONTRACT.
Page 34
Section 9.13 Rule of Construction.
Each party and its counsel have reviewed and revised this Contract. The normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party may not be employed in the interpretation of this
Contract or any amendments, schedules, or exhibits to this Contract.
Section 9.14 Effective Date.
The EFFECTIVE DATE of this Contract is September 17, 2004.
Section 9.15 Independent Contract Consideration.
Of the Xxxxxxx Money, $100.00 shall be deemed to be independent consideration
for the options granted in this Contract. Such independent consideration is
deemed to be earned upon the final execution of this Contract by all parties and
is non-refundable to Buyer; therefore, in the event Buyer terminates this
Contract for any reason and the Xxxxxxx Money is thereupon returnable to Buyer,
notwithstanding anything contained herein to the contrary, $100.00 of such
Xxxxxxx Money shall be tendered to Seller.
Section 9.16 Counterparts and Facsimile Signatures.
This Contract may be executed in one or more counterparts. Each counterpart is
an original and proof of this Contract may be made without more than one
counterpart. Facsimile signatures are binding on the party providing the
facsimile signatures.
Section 9.17 No Recording.
Buyer covenants that neither it nor any successor or assign will record in any
public real property records this Contract or any memorandum or affidavit
relating to this Contract or otherwise cloud title to the Property. In addition
to Seller's remedies in SECTION 7.3, if Buyer breaches this SECTION 9.17, Buyer
will record a release of any such memorandum or affidavit no later than five (5)
days after request by Seller. This SECTION 9.17 survives the Closing or earlier
termination of this Contract and Seller may enforce specific performance of
Buyer's obligations under this SECTION 9.17.
Section 9.18 Further Acts.
In addition to the acts, instruments and agreements recited herein and
contemplated to be performed, executed and delivered by Buyer and Seller, Buyer
and Seller shall perform, execute, and deliver or cause to be performed,
executed, and delivered at the Closing or after the Closing, any and all further
acts, instruments, and agreements and provide such further assurances as the one
party may reasonably require to consummate the transaction contemplated
hereunder as long as such performance, execution or delivery is reasonably
acceptable to the other party.
Section 9.19 Arbitration.
(a) If a claim (whether based on contract, statute, regulation, or
otherwise) between Seller and Buyer arising out of or relating
to this Contract (including, without limitation, the
construction, validity, interpretation, termination,
enforceability or alleged breach or threatened breach of the
provisions contained in this Contract)
Page 35
(defined for the purposes of this SECTION 9.19 only, Dispute)
cannot be resolved informally, then the parties, if requested
in writing by either party, shall each appoint a corporate
representative (with authority to make decisions) to meet in a
good faith effort to attempt to resolve such Dispute. If such
meeting is requested, the meeting shall occur within 10
business days after the request for such meeting. If the
corporate representatives of the parties are unable to resolve
the Dispute within 20 days after the meeting, the Dispute
shall be resolved by binding arbitration pursuant to SECTION
9.19(b).
(b) Any Dispute (including, without limitation, any dispute over
arbitrability or jurisdiction) not settled under SECTION
9.19(a) shall be, upon demand of a party to such Dispute,
resolved by arbitration held in Dallas, Texas, administered by
the AAA and, except as modified by this SECTION 9.19(b),
governed by the Commercial Arbitration Rules and Mediation
Procedures of the AAA (AAA RULES). The law applicable to the
arbitration process and procedure, including the
administration and enforcement thereof, shall be the Federal
Arbitration Act (9 U.S.C. Sections 1 et seq.), as amended. The
parties to the Dispute shall be entitled to engage in
reasonable discovery, including the right to production of
relevant documents by the opposing party or parties and the
right to take depositions reasonably limited in number, time
and place; provided that in no event shall any party to the
Dispute be entitled to refuse to produce relevant and
non-privileged documents or copies thereof requested by any
other party to the Dispute within the time limit set and to
the extent required by order of the arbitrator(s). The
arbitrator(s) shall determine the rights and obligations of
the parties to the Dispute according to the terms and
provisions of this Contract and the governing law specified in
SECTION 9.10 of this Contract to the extent not inconsistent
with the Federal Arbitration Act. The arbitrator(s) shall hear
and determine any preliminary issue of law asserted by any
party to the Dispute to be dispositive of any claim or
defense, in whole or in part, in the manner that a court would
hear and dispose of a motion to dismiss for failure to state a
claim or for summary judgment, pursuant to such terms and
procedures as the arbitrator(s) deem appropriate. Any award by
the arbitrator(s), whether preliminary or final, shall be in
writing, signed by each arbitrator, and specify the reasons
for the award, including specific findings of fact and law. An
arbitration award rendered in any such proceeding shall be
final, binding, and non-appealable, and may be modified or
vacated only on the grounds provided by the Federal
Arbitration Act. A judgment on the arbitration award may be
entered in any court having competent jurisdiction. The
arbitrators shall be divested of any power to award damages in
the nature of punitive, exemplary, or consequential damages.
With respect to a Dispute or Disputes in which the aggregate
amount of claims or amounts in controversy do not exceed
$100,000, a single arbitrator will be impaneled, who will have
authority to render a maximum award of $100,000, including all
damages of any kind and costs, fees, interest, and the like.
With respect to a Dispute or Disputes in which the aggregate
amount of claims or amounts in controversy exceed $100,000,
the Dispute(s) will be decided by a majority vote of three
arbitrators.
(c) If a Dispute is required under SECTION 9.19(b) to be heard by
three arbitrators, the selection of such arbitrators shall be
as follows: each party to the Dispute shall each appoint one
arbitrator within 20 days after the filing of the arbitration,
and the two arbitrators so appointed shall select the
presiding arbitrator within 20 days after the latter of the
two arbitrators has been appointed by the parties. If either
of
Page 36
the parties fails to appoint its party-appointed arbitrator or
if the two party-appointed arbitrators cannot reach agreement
on the presiding arbitrator within the applicable time period,
then the AAA shall appoint the remainder of the three
arbitrators not yet appointed. Each arbitrator shall be and
remain at all times wholly impartial, and, once appointed, no
arbitrator shall have any ex parte communications with any of
the parties to the Dispute concerning the arbitration or the
underlying Dispute other than communications directly
concerning the selection of the presiding arbitrator. If a
Dispute is required under SECTION 9.19(b) to be heard by one
arbitrator, the selection of the arbitrator shall be in
accordance with the AAA Rules then in effect. All arbitrators
shall be knowledgeable in the subject matter of the Dispute.
SECTION 9.20 Exchange.
(a) Sellers may elect to consummate the sale of the Property as
part of a so-called like kind exchange (the EXCHANGE) pursuant
to Section 1031 of the Internal Revenue Code of 1986, as
amended (the CODE).
(b) If Sellers so elect, the following provisions shall apply and
Buyer is obligated to cooperate with Sellers in effecting the
Exchange only if:
o the Closing Date is not delayed;
o Buyer incurs no additional liabilities of any kind in
effecting the Exchange;
o Buyer is not required to hold title to the exchange
property at any time; and
o Sellers shall pay all additional costs incurred by
Sellers and Buyer in effecting the Exchange,
including attorneys' fees.
Section 9.21 Related Property.
Buyer has entered into a Contract of Sale/Contribution (the PARTNERSHIP SALE
CONTRACT) with JPI-CGMEZZ LLC, JPI-MCMEZZ LLC, JPI GENPAR REALTY, LLC and JPI
INVESTMENT COMPANY, LLC concerning Buyer's acquisition of certain partnership,
limited liability company and limited partnership interests in the respective
entities and a Contract of Sale/Contribution (the ASSET SALE CONTRACT) with
JEFFERSON COMMONS - TUCSON PHASE II LIMITED PARTNERSHIP and JEFFERSON COMMONS -
COLUMBIA, L.P. concerning Buyer's acquisition of real property therein
described. If the Partnership Sale Contract or the Asset Sale Contract is
terminated, either Seller or Buyer may terminate this Contract by written notice
delivered to the other within 10 days after termination of the respective
contract. Additionally, if Buyer fails to deposit the Xxxxxxx Money hereunder or
under the Partnership Sale Contract or the Asset Sale Contract as required
herein or therein, Sellers may terminate this Contract, and both the Partnership
Sale Contract and the Asset Sale Contract by written notice delivered to Buyer
within 3 days after Buyer's failure to timely deliver such Xxxxxxx Money. If
this Contract is terminated under this Section, the Closing Agent shall deliver
the Xxxxxxx Money as provided in this Contract as though the reason for such
termination under the Partnership Sale Contract and the Cash Contract also
occurred under this Contract, and the parties thereafter have no further rights,
liabilities, or obligations under this Contract, the Partnership Sale Contract
or the Asset Sale Contract except for matters which expressly survive
termination of either this Contract, the Partnership Sale Contract or the Asset
Sale Contract. Seller's rights under this Section survive
Page 37
termination of this Contract. The intent of the parties is that this Contract,
the Partnership Sales Contract and the Asset Sale Contract be cross defaulted.
Section 9.22 Confidentiality.
Seller acknowledges that the matters relating to the REIT, the Public Offering,
this Contract, and this transaction (collectively, the INFORMATION) are
confidential in nature. Therefore, Seller and, if applicable, each Designated
Owner, covenants and agrees to keep the Information confidential and will not
(except as required by applicable law, regulation or legal process including
applicable securities laws), without the Buyer's prior written consent, disclose
any Information in any manner whatsoever; provided, however, (a) that the
Information may be revealed only to the Seller's directors, officers, employees,
legal counsel, consultants, and advisors and to the Existing Lenders
(collectively, the INFORMATION GROUP), in each case on a "need to know" basis,
each of whom shall be informed of the confidential nature of the Information,
and (b) this confidentiality agreement is not intended to limit Seller's
continued use of its books, records, documents and other materials necessary for
the continued conduct of Seller's daily business and that of the respective
Properties. If the Seller or any member of the Information Group is requested
pursuant to, or required by, applicable law, regulation or legal process to
disclose any of the Information, the applicable member of the Information Group
will notify the Buyer promptly so that it may seek a protective order or other
appropriate remedy or, in its sole discretion, waive compliance with the terms
of this SECTION 9.22. In the event that no such protective order or other remedy
is obtained, or that the Buyer waives compliance with the terms of this SECTION
9.22, the applicable member of the Information Group may furnish only that
portion of the Information which it is advised by counsel is legally required
and will exercise all reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the Information. Seller acknowledges
that remedies at law may be inadequate to protect the Buyer or the REIT against
any actual or threatened breach of this SECTION 9.22, and, without prejudice to
any other rights and remedies otherwise available, Seller agrees to the granting
of injunctive relief in favor of the REIT and/or the Buyer. Notwithstanding any
other express or implied agreement to the contrary, the parties agree and
acknowledge that each of them and each of their employees, representatives, and
other agents may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transaction and all materials
of any kind (including opinions or other tax analyses) that are provided to any
of them relating to such tax treatment and tax structure, except to the extent
that confidentiality is reasonably necessary to comply with U.S. federal or
state securities laws. For purposes of this paragraph, the terms TAX TREATMENT
and TAX STRUCTURE have the meanings specified in Treasury Regulation section
1.6011-4(c). Buyer agrees that if the transaction contemplated by this Contract
is not consummated for any reason, then Buyer will (i) return to Seller all
documents and information obtained from Seller promptly upon request and (ii)
keep the Information confidential and will not (except as required by applicable
law, regulation or legal process including applicable securities laws), without
the Seller's prior written consent, disclose any Information, the content or
results of Buyer's investigations and the information contained in the materials
delivered by Seller to Buyer, in any manner whatsoever or use the information
gathered by Buyer or sent by Seller to Buyer in a manner which will (a) harm or
tend to harm Seller, or (b) provide Buyer with an advantage in dealing with
third parties in competition with Seller or any Seller Affiliate.
[Signature page follows]
Page 38
EXECUTED by Seller on September 22, 2004, to be effective the 17th day of
September, 2004.
SELLER
JEFFERSON COMMONS - LAWRENCE, L.P.,
a Delaware limited partnership
By: XX - Xxxxxxxx LLC,
a Delaware limited liability company,
its general partner
By: /s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
-----------------------------------
Title: Assistant Vice President
----------------------------------
JEFFERSON COMMONS - WABASH, L.P.,
a Delaware limited partnership
By: JC - Wabash LLC,
a Delaware limited liability company,
its general partner
By: /s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
-----------------------------------
Title: Assistant Vice President
----------------------------------
EXECUTED by Buyer on September 21, 2004, to be effective the 17th day of
September, 2004.
BUYER
EDUCATION REALTY OPERATING PARTNERSHIP, a
Delaware limited partnership
By: Education Realty OP GP, Inc.,
Its General Partner
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
-----------------------------------
Title: President
----------------------------------
Buyer's Tax ID No.
--------------------------
The undersigned agrees to hold and disburse the Xxxxxxx Money in accordance with
this Contract.
CHICAGO TITLE COMPANY
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date:
--------------------------------------
EXHIBIT A-1
LEGAL DESCRIPTION OF REAL PROPERTY
LOCATED IN XXXXXXX COUNTY, KANSAS
EXHIBIT A-2
LEGAL DESCRIPTION OF REAL PROPERTY
LOCATED IN TIPPECANOE COUNTY, INDIANA
EXHIBIT B
SERVICE CONTRACTS
EXHIBIT C
PERSONAL PROPERTY
EXHIBIT D
REPORTS
EXHIBIT E
LOAN DOCUMENTS
EXHIBIT F
SURVEY
EXHIBIT G
OTHER CONTRACTS FOR DEVELOPMENT
EXHIBIT H
RESTRICTION
EXHIBIT I
PENDING LITIGATION
EXHIBIT J
[INTENTIONALLY OMITTED]
EXHIBIT K
WRITTEN NOTICE FROM GOVERNMENTAL AUTHORITY
EXHIBIT L
KNOWLEDGE INDIVIDUALS
EXHIBIT M
DEED
EXHIBIT N
XXXX OF SALE
EXHIBIT O
ASSIGNMENT OF LEASES, CONTRACTS,
SECURITY DEPOSITS, AND WARRANTIES
EXHIBIT P
IRC SECTION 1445 CERTIFICATE
EXHIBIT Q
TENANT NOTICE LETTER
EXHIBIT R
NON-EXCLUSIVE SERVICE XXXX LICENSE AGREEMENT
EXHIBIT S
LEGAL OPINION
