EXHIBIT 10.3
PROPERTY ACQUISITION/DISPOSITION
AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1996, by and between Apple Residential Income Trust, Inc., a
Virginia corporation (hereinafter referred to as "Owner"), and Apple Realty
Group, Inc., a Virginia corporation (hereinafter referred to as "Agent").
W I T N E S S E T H :
WHEREAS, Owner plans to conduct business as a "real estate investment
trust," and, in connection therewith, plans to, from time to time, acquire and
dispose of real property, including particularly residential apartment complexes
(hereinafter referred to individually as a "Property" and collectively as the
"Properties");
WHEREAS, Owner desires to use the services of Agent as a broker in
connection with the acquisition and disposition of the Properties on the terms
set forth in this Agreement; and
WHEREAS, Owner and Agent desire to enter into this Agreement for the
purposes herein contained.
NOW, THEREFORE, in consideration of the promises herein contained, and
for other valuable consideration, receipt of which is hereby acknowledged, the
parties agree as follows:
1. Engagement of Agent as Broker for the Properties. Owner hereby
engages Agent as a broker in connection with the purchase and sale of the
Properties, upon the conditions and for the term and compensation herein set
forth. All or any portion of the services being performed by Agent may be
contracted or subcontracted by Agent to another company, provided that such
company agrees to be bound by the terms of this Agreement.
2. Term of Agreement; Renewal. This Agreement shall be valid for an
initial term of five (5) years. Unless either party by written notice sent to
the other party at least sixty (60) days before the end of any 5-year term
hereof elects not to renew this Agreement, this Agreement shall renew
automatically for successive terms of five (5) years on the same terms as
contained herein.
3. Acceptance of Engagement. Agent hereby accepts its engagement as a
broker for the purchase and sale of the Properties and agrees to perform all
services necessary to effectuate such purchases and sales which are customarily
provided by commercial real estate brokers, and, without limitation, Agent
agrees:
a. To supervise, on behalf of Owner, the preparation of
contracts of purchase or sale for each Property, on such terms as are specified
by Owner or its duly authorized representatives, and all other documents related
thereto or required to effectuate such purchase or sale;
b. To coordinate the activities of, and act as liaison between
Owner and, independent professionals connected with the purchase or sale of a
Property, including attorneys, appraisers, engineers, inspectors, lenders, if
any, and others;
c. To assist Owner and its authorized representatives in
satisfying any conditions precedent to the purchase or sale of a Property, which
shall include contracting on behalf of Owner with any third parties whose
services are required to close any such purchase or sale;
d. To represent Owner at the closing of the purchase or sale
of a Property, to coordinate the activities of professionals and other third
persons connected with such closing, and to supervise the compliance by Owner
with all requirements and customary actions associated with such purchase or
sale, including, without limitation, the obtaining of property title insurance,
the delivery and recordation of deeds and other instruments of conveyance, and
the delivery and recordation, as required, of any documents evidencing loans
obtained or made by Owner;
e. Generally to act on behalf of Owner in connection with such
purchase or sale as a commercial real estate broker would customarily act with
respect to such transaction, including the provision of such additional services
as would normally be provided by such a person.
4. Indemnification. Owner hereby agrees to indemnify and hold harmless
Agent against and in respect of any loss, cost or expense (including reasonable
investigative expenses and attorneys' fees), judgment, award, amount paid in
settlement, fine, penalty and liability of any and every kind incurred by or
asserted against Agent by reason of or in connection with the engagement of
Agent hereunder, the performance by Agent of the services described herein or
the occurrence or existence of any event or circumstance which results or is
alleged to have resulted in death or injury to any person or destruction of or
damage to any property and any suit, action or proceeding (whether threatened,
initiated or completed) by reason of the foregoing; provided, however, that no
such indemnification of Agent shall be made, and Agent shall indemnify and hold
Owner harmless against, and to the extent of, any loss that a court of competent
jurisdiction shall, by final adjudication, determine to have resulted from
willful misconduct, gross negligence or fraud by or on the part of Agent.
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5. Compensation of Agent. Owner shall pay to Agent a real estate
commission in connection with each purchase of a Property in an amount equal to
two percent (2%) of the gross purchase price of the Property (which does not
include amounts budgeted for repairs and improvements), in consideration of
Agent (or any person with whom Agent subcontracts or contracts hereunder)
performing the services provided for in this Agreement in connection with the
purchase of the Property, provided, that if indebtedness is assumed or incurred
in connection with the acquisition, the fee that would have been payable with
respect to the portion of the purchase price represented by such indebtedness
shall not be payable until such time, if ever, that such indebtedness is repaid
with the proceeds of the sale of the Owner's common stock or other equity
financing. In consideration of Agent (or any person with whom Agent subcontracts
or contracts hereunder) performing the services provided for in this Agreement
in connection with the sale of a Property, Owner shall pay to Agent the
following: a real estate commission in connection with the sale of a Property in
an amount equal to two percent (2%) of the gross sales price of the Property,
if, but only if, the sales price of the Property exceeds the sum of (A) the
Company's cost for the Property (consisting of the original purchase price plus
all capitalized costs and expenditures connected with the Property), without any
reduction for depreciation, and (B) ten percent (10%) of such cost. If the sales
price of the Property does not equal such amount, Agent shall be entitled only
to payment by the Company of its "direct costs" incurred in marketing such
property (where "direct costs" refers to a reasonable allocation of all costs,
including salaries of personnel, overhead and utilities), allocable to services
in marketing such property. If the two percent (2%) real estate commission is
payable in connection with sale of a Property, Agent shall not also be paid the
reimbursement of its "direct costs" as described in the preceding sentence.
If the person from whom Owner purchases or to whom Owner sells a Property pays
any fee to Agent, such amount shall decrease the amount of Owner's obligation to
Agent. Furthermore, Agent shall not be entitled to any real estate commission in
connection with a sale of a Property by Owner to Cornerstone Realty Income
Trust, Inc. or any Affiliate or Agent (where "Affiliate" has the meaning
specified in the Prospectus of Owner), but Agent will, in such case, be entitled
to payment by Owner of its direct costs in such regard.
6. Power of Attorney. Owner hereby makes, constitutes and appoints
Agent its true and lawful attorney-in-fact, for it and in its name, place and
stead and for its use and benefit to sign, acknowledge and file all documents
and agreements (other than contracts for purchase or sale of a Property,
promissory notes, mortgages, deeds of trust or other documents or instruments
which would bind Owner to purchase or sell a Property, result or evidence the
incurrence of debt by Owner, or encumber a Property) necessary to perform or
effect the duties and obligations of Agent under the terms of this Agreement.
The foregoing power of attorney is a special power of attorney coupled with an
interest.
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It shall terminate when this Agreement terminates as provided herein.
7. Relationship of Parties. The parties agree and acknowledge that
Agent is and shall operate as an independent contractor in performing its duties
under this Agreement, and shall not be deemed an employee of Owner.
8. Entire Agreement. This Agreement represents the entire understanding
between the parties hereto with regard to the transactions described herein and
may only be amended by a written instrument signed by the party against whom
enforcement is sought.
9. Governing Law. This Agreement shall be construed in accordance with
and be governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OWNER:
APPLE RESIDENTIAL INCOME TRUST, INC.,
a Virginia corporation
By: /s/ Xxxxx X. Xxxxxx
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Title: President
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AGENT:
APPLE REALTY GROUP, INC.,
a Virginia corporation
By: /s/ Xxxxx X. Xxxxxx
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Title: President
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