EXHIBIT 10.1
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 9th day of June, 1999 (the
"Effective Date"), between CORNERSTONE REALTY GROUP, INC. or its nominee,
(hereinafter called "Purchaser"), and AUSTIN/CANYON HILLS, LTD., a Texas limited
partnership (hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 SALE OF PROPERTY. Seller agrees to sell and convey, and Purchaser
agrees to purchase, Seller's real property known as CANYON HILLS APARTMENTS
located in AUSTIN, TX, with all buildings and improvements located thereon, as
more particularly described in the attached legal description in EXHIBIT A
including, but not limited to 229 individually heated and air conditioned
apartment units, with all appurtenances, together with all appliances, drapes,
carpeting, shrubbery and all other personal property owned by Seller and used in
connection with the premises, including, the inventory of personal property to
be supplied by Seller and attached hereto as EXHIBIT B (all such real and
personal property hereinafter collectively referred to as the "Property" unless
the context clearly indicates otherwise).
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 PURCHASE PRICE. The total purchase price (the "Purchase Price")
shall be TWELVE MILLION ONE HUNDRED FIFTY THOUSAND ($12,150,000) DOLLARS as
evidenced by cash or cash equivalent at closing.
2.2 DEPOSITS. ONE HUNDRED THOUSAND ($100,000) DOLLARS upon full
execution of this Agreement and an additional ONE HUNDRED THOUSAND ($100,000)
DOLLARS shall be placed in escrow by Purchaser at the end of the "Inspection
Period" described in Article VI below. In the event that Purchaser fails to
deposit such additional $100,000 with the Title Company within forty-eight (48)
hours after the end of the Inspection Period, Purchaser shall be deemed to be in
default of its obligations hereunder. Said deposits shall be placed in escrow
with Heritage Company of Austin, Inc. or its authorized agent (the "Title
Company"), 00 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, XX 00000, Attn.: Xxx Xxx
Xxxxx, as an xxxxxxx money deposit which may be credited against the purchase
price or applied as per Article XI below.
2.3 INDEPENDENT CONTRACT CONSIDERATION. Purchaser shall, concurrently
with its execution hereof, deliver to Seller a check in the amount of FIFTY
($50) DOLLARS (the "Independent Contract Consideration"), which amount Seller
and Purchaser agree has been bargained for as consideration for Seller's
execution and delivery of this Agreement and Purchaser's right to inspect the
Property. The Independent Contract Consideration is in addition
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to and independent of any other consideration or payment provided for in this
Agreement and is non-refundable in all events.
ARTICLE III
TITLE MATTERS
3.1 TITLE. Seller, shall convey good and indefeasible title by Special
Warranty Deed in the form attached hereto as EXHIBIT C, subject only to general
taxes for the current year not yet due and payable and utility easements which
do not interfere with the present use of the Property, and the "Permitted
Exceptions". "Permitted Exceptions" are those title exceptions listed in the
title commitment, which are not objected to or waived by Purchaser pursuant to
Section 3.2 below.
(A) Title shall be free from any and all liens or mortgages
and Seller shall be responsible for any prepayment penalties necessary to
deliver such free title.
3.2 TITLE DEFECTS; ELECTION TO CURE. Seller shall furnish to Purchaser
at Seller's expense a commitment for Title Insurance from the Title Company,
(the "Commitment" or the "Title Report") within ten (10) days after the
Effective Date, covering the Property binding the Title Company to issue a Texas
Owner Policy of Title Insurance (the "Title Policy") on the standard form
prescribed by the Texas State Board of Insurance at the Closing, in the full
amount of the Purchase Price, insuring Purchaser's fee simple title to the
Property to be good and indefeasible, together with true and correct copies of
all instruments listed on Schedule B to the Commitment (as well as any other
documents or instruments listed therein which will not be released at closing).
If the Commitment or the Survey (as hereinafter defined) shows any exceptions
which are not acceptable to Purchaser in Purchaser's sole discretion, Purchaser
shall give written notice of such objections to Seller's counsel during the
Inspection Period. Seller may, at its option, elect whether to cure said
objections or by written notice (Seller's Notice") to Purchaser indicate its
intention not to cure, Seller having no obligation to cure any such defects
which are objected to by Purchaser that would require the expenditure of more
than Ten Thousand ($10,000) Dollars.
3.3 ELECTION NOT TO CURE DEFECTS. Should Seller elect not to cure such
objections, Purchaser shall have the right, as its sole and exclusive remedies,
either to waive such objections and proceed to close this Agreement subject to
such uncured objections, but without reduction of the Purchase Price, or to
terminate this Agreement and receive a refund of all deposits previously made by
Purchaser, whereupon each party shall thereupon be released from all obligations
hereunder, and all deposits shall be immediately returned to Purchaser.
3.4 SURVEY. As soon as reasonably possible, and in any event within ten
(10) days after the Effective Date , Seller shall, at Seller's expense, deliver
or cause to be delivered to the Seller, the Title Company, and to Purchaser
Seller's existing survey (the "Survey") of the Property. In the event that
Purchaser elects to obtain an update of such existing Survey or a new Survey of
the Property, any costs incurred in so doing shall be borne by Purchaser.
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ARTICLE IV
PRORATIONS
4.1 INCOME AND EXPENSE ALLOCATIONS. The following shall be prorated, on
a calendar-month basis, as of the date of closing: rents and other income from
the Property; operating expenses (on such service contracts, including laundry
contract, and other obligations as Purchaser may agree to assume); and general
and real property taxes and personal and business property taxes for the year of
closing (based on the most recent assessment and the most recent levy).
Purchaser shall receive a credit against the Purchase Price for the amount of
any security deposits and prepaid rentals held by the Seller pursuant to
provisions of the tenant leases. Seller shall cause all utility meters to be
read on the date of closing, and Seller shall pay to Purchaser (or furnish
evidence of prior payment) an amount equal to utility charges incurred or
accrued up to the reading of such utility meters. Seller shall retain the right
to any security deposits on deposit with any utility companies, and Purchaser
shall be required to deposit with any such utility companies security deposits
for its own account. If final readings and xxxxxxxx cannot be obtained as of the
date of closing, the final bills when received shall be prorated based upon the
number of days Seller owned the Property in such final billing period.
4.2 CLOSING COSTS. Purchaser and Seller shall pay their customary share
of all taxes, recording fees, if any, imposed on the Deed, or any other
documents executed in connection with the transfer of the Property. Seller
agrees to pay the basic premium cost of the Title Policy. Purchaser shall pay
the premium for the amendment of the boundary exception in the Title Policy
referred to in Section 3.2 hereof, if Purchaser desires such amendment, together
with any other endorsements to the Title Policy required by Purchaser. Seller
shall pay any prepayment penalty charged by the holders of any existing
mortgages.
4.3 ALLOCATION OF RENTS. Rents collected by Seller prior to Closing
shall be prorated as agreed in 4.1 above. Purchaser shall apply rents received
after Closing first to payment of the current rent due to Purchaser, then to
delinquent rents due to Purchaser, and last to rents due to Seller as of the
Closing but uncollected prior to settlement. Purchaser agrees to use its best
efforts in good faith to collect the amount of any rental arrears from tenants
and Purchaser agrees to remit promptly to Seller any such arrears actually paid
by such tenants to Purchaser. Seller shall retain the right to commence legal
action against a tenant for any delinquent rent apportioned to the Seller.
4.4 PRIOR LEASE CONCESSIONS. If Seller has committed to give any future
monetary concessions to tenants under existing leases which relate to a period
of time after closing and as to which Purchaser would become liable, then Seller
shall pay to Purchaser said amount in a lump sum at closing.
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ARTICLE V
POSSESSION OF THE PROPERTY
5.1 POSSESSION. Possession of the Property shall be delivered to
Purchaser at closing, subject to the rights of the tenants under existing leases
and rental agreements.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent. Purchaser's obligation to purchase shall be
subject to and contingent upon the satisfaction of the following conditions
precedent:
(A) Receipt by Purchaser of an engineering report of building
and site conditions, satisfactory to Purchaser in its sole discretion, said
report to include in part, a description of any hazardous waste sites, hazardous
wastes and/or hazardous materials affecting the Property. Purchaser shall have
until the expiration of the Inspection Period (as hereinafter defined) to review
the reports set forth herein and exercise its right to reject the Property based
thereon or the right hereunder shall be deemed waived.
(B) The receipt by Purchaser of Seller documents described in
Section 7.2 below.
(C) On the condition that Seller's representations and
warranties described in Article VIII below remain true and correct in all
material respects.
(D) On the condition that there have been no material or
adverse changes to the property or leases.
(E) Seller acknowledges that Purchaser is a public entity and
that it is required to furnish financial statements to the Securities and
Exchange Commission in connection with this acquisition. Seller agrees to make
the information available for Purchaser at the Property to audit the last 12
months of operation of the Property so that a report can be generated that is in
compliance with accounting Regulation S-X of the Securities and Exchange
Commission.
(F) Purchaser determining during the Inspection Period that all
water, sewer, gas, electric, telephone, and drainage facilities and all other
utilities required by law or by the normal use and operation of the Property are
and at the time of closing will be installed to the property line, are and at
the time of closing will be connected pursuant to valid permits, and are and at
the time of closing will be adequate to service the Property and to permit full
compliance with all requirements of law and normal usage of the Property by the
tenants thereof and their licensees and invitees.
6.2 INSPECTION. This Agreement shall be further subject to and
contingent upon Purchaser's satisfactory inspection as follows herein below.
6.2.1 PREPARATION FOR INSPECTION. At the execution of this Agreement,
Seller shall deliver to Purchaser copies of the following: The current rent roll
for the Property; detailed statements of income and expenses with respect to the
Property for the past two years; the most
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recent tax bills for the Property; utility bills for the Property for the twelve
(12) months previous to the date hereof; all contract, mortgages, and other
documents creating liens of security interest on the Property, or any part
thereof and all promissory notes secured thereby; all insurance policies
applicable to the Property to include loss runs for the last three (3) years;
Plans and Specifications for the Property, service contracts, and Certificates
of Occupancy, to the extent reasonably available; a copy of Seller's title
policy and most Seller's most recent survey for the Property. A copy of any
environmental or engineering reports on the property. All these items shall be
certified by Seller to be accurate and complete to Seller's actual knowledge and
belief.
PURCHASER ACKNOWLEDGES THAT ALL INFORMATION AND REPORTS DELIVERED OR TO BE
DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING MADE
AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE RELIED UPON BY
PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY. HOWEVER, SELLER
WARRANTS THAT ALL RECORDS GIVEN TO THE PURCHASER WERE PREPARED IN THE ORDINARY
COURSE OF BUSINESS AND WERE RELIED UPON BY THE SELLER. PURCHASER AGREES THAT
SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR
OMISSION FROM ANY REPORT. PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO THE
EXPIRATION OF THE INSPECTION PERIOD, ITS OWN INVESTIGATION OF THE PHYSICAL
CONDITION OF THE PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO
BE NECESSARY OR APPROPRIATE. Purchaser and its representatives shall hold in
strictest confidence all data and information obtained with respect to the
Property, whether obtained before or after the execution and delivery of this
Agreement, and shall not disclose the same to others; provided, however, that it
is understood and agreed that Purchaser may disclose such data and information
to the employees, lenders, consultants, accountants and attorneys of Purchaser
or as otherwise may be required by law. In the event this Agreement is
terminated or Purchaser fails to perform hereunder, Purchaser shall promptly
return to Seller any statements, documents, schedules, exhibits or other written
information obtained from Seller in connection with this Agreement or the
transaction contemplated herein. In the event of a breach or threatened breach
by Purchaser or its agents or representatives of this Section 6.2.1, Seller
shall be entitled to an injunction restraining Purchaser or its agents or
representatives from disclosing, in whole or in part, such confidential
information.
6.2.2 INSPECTION OF BOOKS AND RECORDS; ACCESS. Upon receipt by
Purchaser of all documents requested in the paragraph above, Purchaser, its
employees, agents and contractors shall have until 5:00 p.m. Houston, Texas time
on June 8, 1999 (the "Inspection Period") to enter upon the Property (subject to
the rights of the tenants) during normal business hours for the purpose of
making physical inspections thereof, including but not limited to roofs,
heating, cooling, electrical and plumbing systems, swimming pool, appliances,
and structural elements of the buildings. Seller hereby reserves the right to
have a representative present at the time Purchaser makes any such inspections.
Purchaser shall notify Seller not less than one (1) business day in advance of
making any such inspection. In making any inspection hereunder, Purchaser will
treat, and will cause any representative of Purchaser to treat, all information
obtained by Purchaser pursuant to the terms of this Agreement as strictly
confidential. Purchaser
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agrees to indemnify and hold Seller harmless from any and all liens, claims,
liabilities or damages sustained by, or threatened against, Seller which result
from or arise out of any inspections by Purchaser or its authorized
representatives pursuant to this Section 6.2 or pursuant to any other provision
of this Agreement. Upon the conclusion of the Inspection Period this Contract
shall be deemed to be a firm agreement of purchase and sale binding the parties
hereto, subject to the other provisions and conditions contained herein. All
inspection fees, appraisal fees, engineering fees, environmental consultant's
fees, loan application fees, and other expenses of any kind incurred by
Purchaser relating to the inspection of the Property shall be solely Purchaser's
expense.
6.2.3 RIGHT OF TERMINATION DURING INSPECTION PERIOD. Purchaser shall
also be permitted to review all original leases, expense records, tenant cards
and occupancy data available, which information shall be made available to
Purchaser at the Property. If Purchaser is not satisfied, in its sole and
exclusive discretion, with the state of maintenance and repair of the Property
or the rents, occupancy or expenses of the Property, then notwithstanding
anything contained herein to the contrary, Purchaser shall have the right to
terminate this Agreement by giving written notice to Seller before the end of
the Inspection Period, and no party hereto shall have any further liability to
any other party hereto, and all deposits shall be returned to Purchaser. In the
event that Purchaser fails to give notice of termination to Seller prior to the
expiration of the Inspection Period, Purchaser shall be deemed to have elected
to waive its right to terminate this Agreement pursuant to this Section 6.2.3.
6.2.4 "RENT READY." During the Inspection Period, both Seller and
Purchaser will inspect an apartment unit at the Property and mutually agree that
said apartment shall be representative of a "rent ready" unit by which all other
units shall be judged for "rent ready" condition at closing. All vacant
apartment units, are to be in a "rent ready" condition (as defined above), at
the time of closing, containing, but not limited to the following amenities,
i.e., carpet, refrigerator, range, garbage disposal, heating, plumbing and
electrical systems; provided, however, Seller shall not be obligated to have
units which become vacant within one (1) week of closing rent ready. However, in
such event, the parties shall adjust the value of the work to be done.
6.2.5 CONDITION OF PERSONAL PROPERTY AT CLOSING. All personal property
included in the sale and all mechanical, electrical, heating, air conditioning,
sewer, water and plumbing systems will be substantially in the same working
order at the time of closing and in substantially the same condition as at the
time of the initial inspection by Purchaser. If Seller fails to make reasonable
efforts to conserve the Property, Purchaser shall have the option of waiving
such requirement, in writing, and proceeding to closing, or Purchaser may void
this Agreement and obtain a prompt return of its deposit.
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ARTICLE VII
CLOSING
7.1 CLOSING. Closing will be held on June 9, 1999, at such place and at
such time as the parties may agree.
7.2 SELLER'S DELIVERIES. At closing, Seller shall execute and deliver
to Purchaser the Special Warranty Deed referred to in Paragraph 3 hereof and
shall also execute, where necessary, and deliver to Purchaser, the following in
a form reasonably acceptable to Purchaser:
(A) A Xxxx of Sale, with special warranty of title
transferring the personal property (as shown in Schedule B) to Purchaser free of
all liens, charges and encumbrances.
(B) The Title Policy issued by the underwriter for the Title
Company pursuant to the Title Commitment, subject only to the Permitted
Exceptions, in the full amount of the Purchase Price, dated as of the date of
Closing.
(C) Originals or copies of all signed leases and rental
agreements in effect with tenants of the Property not for more than one (1)
year.
(D) All security and cleaning deposits made by such tenants.
Seller will give the tenants the required notice of such transfer in compliance
with the laws of TEXAS.
(E) An affidavit of Seller in such form as will cause the
Title Company to omit from the title insurance policy the exclusion relating to
unrecorded mechanic's and materialmen's liens.
(F) A rent roll certified by Seller to be true and correct as
of the date of closing showing the name of, and the amount of monthly rental
payable, by each tenant of the Property, the apartment occupied by the tenant,
the date to which rent has been paid, any advance payment of rent, and the
amount of any escrow, or security deposit of tenant.
(G) An affidavit of Seller that to its actual knowledge and
belief as well as that of its agents and/or representatives there are, on the
date of closing, no unsatisfied judgments, creditor's claims other than in the
course of business, tax liens, or pending bankruptcies involving Seller.
(H) Seller shall provide, a certificate from a licensed
extermination contractor, who is regularly engaged in the business of pest
control, that all buildings are free from any termite or other wood-boring
insect infestation. Said certificate shall be dated within 90 days of closing,
bearing the contractor's name, contractors license number, the signature of the
party authorized to sign for the contractor and the date of the inspection.
Should damage exist, Seller may, but shall not be obligated to proceed to have
any corrective work completed prior to closing. If Seller does not make the
repairs prior to closing, Purchaser, at its option, may either proceed to
settlement and have such sums required for repairs deducted from Seller's
proceeds, or may in its sole discretion terminate this Agreement. Seller shall
promptly return Purchaser's deposit upon such termination.
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(I) Assignments of all Seller's interest in the following in
the form attached hereto as EXHIBIT D: (1) all assignable licenses and permits
relating to the operation of the Property, (2) the leases and rental agreements
with tenants of the Property, (3) the existing Property telephone number and (4)
the business and trade name as set forth in Par. 1.1.
(J) Assignments without recourse of all warranties and
guarantees (see Exhibit D) to the extent the same are assignable and to the
extent such are still in effect and provide Purchaser with copies of all such
warranties and guarantees without limitation for all appliances, dishwashers,
disposals, refrigerators, heating and air conditioning units, washers and
dryers.
(K) Consent of the Seller's partners to the sale of the
Property and any other approvals required under Seller's organizational
documents, which may affect Seller's ability to convey title to the Property.
(L) Provide documents for the transfer of the telephone,
electric, water and sewer, and gas utilities, as may be required by the utility,
for execution at closing.
(M) Satisfactory evidence of the power and authority of Seller
to enter into and consummate this Agreement.
(N) Affidavit that Seller has received no notice from any
governmental agency or any other official body inspecting the Property of the
presence of asbestos and/or any other hazardous material at the Property.
(O) Seller shall provide a satisfactory and valid written
termination of the management agreement executed by the existing management and
rental agent for the Property, without cost to the Purchaser.
(P) A notice letter to all the residents of the apartment
complex as to change of ownership in the form prepared by the Purchaser.
(Q) All such other documents as are normally transferred at
settlement in the jurisdiction in which the property is located or are
reasonably requested by Purchaser or its counsel.
(R) A representation letter as normally required by auditors
for a public company in the form attached hereto as EXHIBIT E. This clause shall
survive closing for one year.
(S) Closing Memorandum and Indemnification Agreement in
substantially the form attached hereto as EXHIBIT F.
7.3 PURCHASER'S DELIVERIES. At closing and contemporaneously with the
Seller's compliance with the provisions of Section 7.2, Purchaser shall:
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(A) Pay to Seller the cash portion of the purchase price,
adjusted for the prorations herein provided for in Article IV.
(B) Execute and deliver an assumption of obligations under
leases and any contracts which may be accepted by the Purchaser and any other
obligations specifically set forth herein.
(C) Deliver to the Seller a resolution of the Purchaser that:
(i) This Agreement has been duly authorized, executed and
delivered by the Purchaser and is a valid and binding agreement of Purchaser,
and
(ii) Purchaser has complete unrestricted power to buy the
Property from the Seller and to execute any documents required to effectuate the
transfer.
(D) Execute all such other documents as are normally
transferred at settlement in the jurisdiction in which the Property is located
or are reasonably requested by Seller or its counsel.
ARTICLE VIII
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations of the Parties. Seller warrants (which warranties
shall not survive settlement unless designated to the contrary) that as of the
date hereof and as of closing hereof:
(A) That Seller, is the owner in fee simple of the Property
and has the power to convey same.
(B) That Seller is not subject to any other agreements or
arrangements, with the exception of those contained in any existing mortgage
documents which would prevent Seller from selling the Property to Purchaser.
This warranty shall survive for one year following closing.
(C) All necessary action has been taken by Seller to authorize
the execution of this Agreement and the performance of the obligations
contemplated hereunder, which are not excluded elsewhere in existing mortgage
documents. This warranty shall survive for one year following closing.
(D) Seller has no actual knowledge and has not been advised in
writing that it is in default under any lease, rental agreement service or
equipment contract, or mortgage or other encumbrances relating to the Property.
This warranty shall survive for one year following closing.
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(E) Seller has no actual knowledge of any existing or
threatened litigation which relates to or which would affect the Property,
except for a pending lawsuit, X.X. Xxxxxxx Paving Co., Inc. x. Xxxxxxx
Construction, Inc., et al. Seller agrees to take such steps as are necessary for
the Title Company to omit said item from the title report or by providing
sufficient sums to be deposited in the escrow account of the Title Company. This
warranty shall survive for one year following closing.
(F) Seller has no actual knowledge that any part of the
Property or the operation of the Property, is in violation or may violate any
governmental statute, regulation, ordinance or building code or of any private
restriction, that any governmental authority requires any work to be done on or
affecting the Property, or that any governmental authority has expressed an
intent to condemn or to make special improvements for the benefit of the
Property or any part thereof. This warranty shall survive for one year following
closing.
(G) That Seller is not a "foreign person" within the meaning of
the Internal Revenue Code of 1954, as amended (the "Code"), and that Seller will
furnish to Purchaser prior to closing an affidavit in form satisfactory to
Purchaser confirming the same.
(H) That to Seller's knowledge, the Property was never utilized
as a disposal site for hazardous waste products and will furnish to Purchaser an
affidavit confirming same.
(I) Seller covenants and agrees that, between this date and the
date of closing, Seller shall continue to maintain, operate and manage the
Property in a manner consistent with its prior practices, making every
reasonable effort to do nothing which might damage the reputation of the
Property or the relationships with the tenants. Seller shall not permit the
modification, extension or cancellation of any tenant lease (except in
accordance with the terms of such lease) or any dealing with any tenant other
than the ordinary course of managing the Property, without the prior written
consent of Purchaser. If the leases of any tenants expire before thirty (30)
days after the date of closing, Seller shall, up to the date of closing and
without cost to the Purchaser, continue its normal course of operation with
respect to causing tenants to be obtained for apartments which are unrented.
(J) Seller warrants that it has complied with the keyless,
dead-bolt lock requirement.
(K) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE
CLOSING DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH (THE "CLOSING
DOCUMENTS"), IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT
AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. PURCHASER ACKNOWLEDGES AND AGREES THAT, UPON CLOSING,
SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE
PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO
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THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT AND IN THE CLOSING
DOCUMENTS. PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING, BUT
NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY,
AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN
SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET
FORTH IN THIS AGREEMENT AND IN THE CLOSING DOCUMENTS.
All references in this Agreement to the phrases "actual
knowledge" or "knowledge" of Seller shall refer only to the current actual
knowledge of Xxxxxx X. Xxxxx, President of the General Partner of Seller, the
person who, as an officer of the General Partner of Seller, is primarily
responsible for supervision of the operation and management of the Property, and
shall not be construed to refer to the knowledge of any other officer, agent or
employee of Seller or any affiliate of Seller or the General Partner of Seller
or to impose upon Xxxxxx X. Xxxxx, Seller, or any other person or entity any
duty to investigate the matter to which such actual knowledge, or the absence
thereof, pertains; provided, however, the foregoing individual is acting solely
within his capacity as an officer of the General Partner of Seller and in no
manner, expressly or implied, is making any of the representations contained
herein in an individual capacity.
8.2 CONTINUATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS
TO THE DATE OF CLOSING. If each of the warranties set forth in this section does
not remain true up to and including the time of closing as to any material
matters, this Contract, at Purchaser's election, shall be terminated, the
deposits shall be returned to Purchaser with costs actually expended by
Purchaser for the inspection and preparation for closing, or Purchaser may elect
to close the sale and waive failure of the warranties.
8.3 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. No
claim for a breach of any representation or warranty of Seller shall be
actionable or payable if the breach in question results from or is based on a
condition, state of facts or other matter which was actually known to Purchaser
prior to the expiration of the Inspection Period, it being expressly
acknowledged and agreed by the parties hereto that Purchaser is performing
various inspections, tests, and studies of the Property and is engaging various
independent consultants with respect thereto. With respect to any representation
or warranty herein which, by its express terms, is to survive closing, Seller
shall have no liability to Purchaser for a breach of any representation or
warranty (a) unless the valid claims for all such breaches collectively
aggregate more than Twenty-Five Thousand and No/100 Dollars ($25,000.00), in
which event the full amount of such valid claims shall be actionable, up to the
Cap (as defined in this Section), and (b) unless written notice containing a
description of the specific nature of such breach shall have been given by
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Purchaser to Seller prior to the expiration of said one (1) year period, and an
action shall have been commenced by Purchaser against Seller within two (2)
years of Closing. As used herein, the term "Cap" shall mean the total net
proceeds received by Seller in connection with this transaction. Notwithstanding
the provisions of 8.2 above, Seller shall indemnify Purchaser for all reasonable
costs incurred as a result of the failure of any of Seller's representations,
warranties or covenants contained herein to remain true as of the date of
closing.
ARTICLE IX
CONDEMNATION; RISK OF LOSS
9.1 PROPERTY DAMAGE. If, prior to closing, any part of the Property is
damaged by fire or other casualty in an amount not greater than TWO HUNDRED
THOUSAND ($200,000) DOLLARS, Purchaser agrees to accept the Property with an
assignment of: (i) the insurance proceeds, (ii) any deductible, and (iii) rent
loss insurance proceeds. In the event that such damage is in an amount greater
than TWO HUNDRED THOUSAND ($200,000) DOLLARS, this Agreement may be canceled at
the option of the Purchaser within fifteen (15) days after notice of the
occurrence of such casualty. In the event of cancellation as aforesaid, this
Agreement shall become null and void and the parties shall be released of all
obligations hereunder and all payments made shall be returned. Should Purchaser
elect to carry out this Agreement despite such damage, Seller shall assign to
Purchaser all insurance proceeds and any deductible arising from such damage and
will compensate Purchaser for lost rent collections to the extent of insurance
proceeds received. Seller shall promptly notify Purchaser in writing upon the
occurrence of any such damage.
9.2 CONDEMNATION. In the event of any actual or threatened taking,
pursuant to the power of eminent domain, all or any part thereof, or any actual
or proposed sale in lieu thereof, the Seller shall give written notice thereof
to the Purchaser promptly after Seller learns or receives notice thereof. Upon a
taking of a material part of the Property greater than TWO HUNDRED THOUSAND
($200,000) DOLLARS or any part of the building or more than 5% of the parking
area, Purchaser may elect to either (a) terminate this Agreement within fifteen
(15) days after notice of the occurrence of such taking, in which event the
deposits shall be immediately returned to Purchaser and all other rights and
obligations of the parties hereunder shall terminate immediately, or (b) waive
its right to terminate this Agreement and proceed to closing, in which event all
proceeds, awards and other payments arising out of such condemnation or sale
(actual or threatened) shall be paid to the Purchaser at Closing, if such
payment has been received. If payment has not as yet been received, but an
amount has been agreed upon, Seller shall assign the claim to Purchaser.
9.3 RISK OF LOSS. Prior to closing, all risks of loss or damage by
every casualty shall be borne by the Seller.
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ARTICLE X
BROKER'S COMMISSION
10.1 COMMISSION. Purchaser agrees to pay a brokerage fee to XXXX REAL
ESTATE, LTD. and Seller agrees to pay a brokerage commission to C.B. XXXXXXX
XXXXX, INC., pursuant to separate agreements. Said brokerage fees shall be
deemed earned if, and only if, settlement occurs hereunder, and shall not be
deemed earned even if Purchaser and/or Seller wrongfully fail(s) to consummate
the purchase and sale herein contemplated. Seller and Purchaser represent and
warrant to each other that no other brokerage fees are or shall be owing in
connection with this transaction or in any way with the Property or this
Agreement, and Seller and Purchaser hereby indemnify and hold the other harmless
from any and all claims of any other person so claiming.
ARTICLE XI
DEFAULT
11.1 DEFAULT DEFINED. Default for the purpose of this Agreement shall
mean any failure by Seller or Purchaser to fulfill all the terms, conditions and
covenants contained herein, however, it shall not be an event of default for
either party to exercise its rights to terminate this Agreement as contained in
other provisions herein.
11.2 SELLER'S DEFAULT. Upon Seller's default, the Purchaser, at its
election, may as its sole and exclusive remedy, either (1) require specific
performance of Seller, or (2) cancel this Agreement and obtain a prompt return
of the deposits and all expenses incurred by Purchaser, in which case this
Agreement shall be terminated and the parties released from all obligations
hereunder, or (3) the Purchaser may waive such defaults and proceed to
settlement. Seller shall indemnify Purchaser for any reasonable costs incurred
by Purchaser if Purchaser elects to pursue its option (1) noted above, to
include reasonable attorney fees. Purchaser shall not have the right to
institute a suit for damages (and hereby waives any such right to institute a
suit for damages) against Seller.
11.3 PURCHASER'S DEFAULT. Upon Purchaser's default, this Agreement
shall be terminated and both parties released from all obligations hereunder,
and the deposit shall be retained by the Seller as liquidated damages. Such
amount and terms are agreed upon by and between Seller and Purchaser as
liquidated damages, due to the difficulty and inconvenience of ascertaining and
measuring actual damages, and the uncertainty thereof, and the payment of the
deposit and the terms provided herein shall constitute full satisfaction of
Purchaser's obligations under this Agreement. Such amount is agreed upon by and
between Seller and Purchaser as a reasonable estimate of just compensation for
the harm caused by Purchaser's default. Seller shall have no other remedy
against Purchaser in the event of Purchaser's default.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding between the parties; it supersedes all previous agreements and
representations which are deemed merged herein and may not be modified except in
writing.
12.2 ASSIGNMENT. Purchaser may assign this Agreement without the
consent of Seller to an entity associated with the Purchaser.
12.3 SEVERABILITY. If any provision, sentence, phrase or word of this
Agreement or the application thereof to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision,
sentence, phrase, or word to persons or circumstances, other than those as to
which it is held invalid, shall remain in full force and effect.
12.4 BINDING EFFECT. The parties to the Agreement mutually agree that
it shall be binding upon and inure to the benefit of their respective heirs,
representatives, successors in interest and assigns.
12.5 CONTROLLING LAW. It is the intent of the parties hereto that all
questions with respect to the construction of this Agreement and the rights and
liabilities of the parties shall be determined in accordance with the provisions
of the laws of the State of Texas.
12.6 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear in each counterpart
hereof, and it shall be sufficient that the signature on behalf of both parties
hereto appear on one or more such counterparts. All counterparts shall
collectively constitute a single contract.
12.7 INCORPORATION BY REFERENCE. All of the Exhibits referred to
herein and/or attached hereto shall be deemed to constitute a part of the
Agreement.
12.8 HEADINGS. The headings of the Articles and sections hereof are
inserted for convenience only and shall not be deemed to constitute a part of
the Agreement.
12.9 CONSTRUCTION OF CONTRACT. Each party hereto has reviewed and
revised (or requested revisions of) this Agreement, and therefore the normal
rule of construction that any ambiguities are to be resolved against a
particular party shall not be applicable in the construction and interpretation
of this Contract or any amendments or exhibits hereto.
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12.10 CONFIDENTIALITY. The parties shall keep confidential the
existence of this Agreement, the transactions described herein, and all
information obtained from the other party both during and subsequent to the
transaction. However, the covenants contained in this paragraph shall not apply
in respect to any information which (a) was already known to either party when
such information was received from the other, (b) was readily available to the
general public at the time of such receipt, (c) subsequently becomes known to
the general public through no fault or omission by the other party, (d) is
subsequently disclosed by a third party which has the bona fide right to make
such disclosure, or (e) is required to be disclosed by law or a governmental
agency. This clause shall survive closing.
12.11 HOLIDAYS. If any of the deadlines in this Agreement ends on, or
if any event is to occur on, a Saturday, Sunday, or legal holiday, the deadline
or the date for performance shall automatically be extended to the next day
which is not a Saturday, Sunday, or legal holiday.
12.12 LEAD WARNING STATEMENT. Every purchaser of any interest in
residential real property on which a residential dwelling was built prior to
1978 is notified that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead poisoning. Lead
poisoning in young children may produce permanent neurological damage, including
learning disabilities, reduced intelligence quotient, behavioral problems, and
impaired memory. Lead poisoning also poses a particular risk to pregnant women.
The seller of any interest in residential real property is required to provide
the buyer with any information on lead-based paint hazards from risk assessments
or inspections in the seller's possession and notify the buyer of any known
lead-based paint hazards. A risk assessment or inspection for possible
lead-based paint hazards is recommended prior to purchase.
12.12.1. Seller has no knowledge of lead-based paint and/or lead-based
paint hazard in the housing.
12.12.2. Seller has no reports or records pertaining to lead-based
paint and/or lead-based paint hazards in the housing.
12.12.3. Purchaser is hereby granted a 10-day opportunity (or the
length of the Inspection Period, whichever is longer) to conduct a risk
assessment or inspection for the presence of lead- based paint and/or lead-based
paint hazards.
12.13 EXHIBITS. The following exhibits are attached to this Agreement
and are incorporated into this Agreement by this reference and made a part
hereof for all purposes:
EXHIBIT A, the legal description of the Land.
EXHIBIT B, list of personal property
EXHIBIT C, the form of Deed.
EXHIBIT D, the form of the Assignment and Assumption of
Personal Property, Service Contracts, Warranties
and Leases.
EXHIBIT E, the form of the Representation Letter.
EXHIBIT F, Closing Memorandum and Indemnification Agreement.
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12.14 NON-RECORDING. The execution by Seller and Purchaser of this
Agreement has not been acknowledged before a notary public or other officer
authorized to take acknowledgments, and neither this Agreement nor any
memorandum or affidavit hereof is to be filed for record. In the event that
Purchaser records this Agreement or any memorandum or affidavit hereof, Seller
shall have the right, at its option, to terminate this Agreement, whereupon the
Deposit, together will all accrued interest thereon, shall be delivered to
Seller as liquidated damages for Purchaser's breach hereof and Seller and
Purchaser shall be fully and finally released herefrom.
12.15 ATTORNEYS' FEES. In the event it becomes necessary for either
party hereto to file a suit to enforce this Agreement or any provisions
contained herein, the party prevailing in such action shall be entitled to
recover, in addition to all other remedies or damages, reasonable attorneys'
fees incurred in such suit.
12.16 BROKER DISCLOSURE. Purchaser acknowledges that, at the time of
execution of this Agreement, the aforementioned Brokers advised Purchaser that
Purchaser should have the abstract covering the Property examined by an attorney
of Purchaser's own selection or that Purchaser should be furnished with or
obtain a policy of title insurance.
12.17 AMENDMENTS. This Agreement may not be modified or amended,
except by an agreement in writing signed by the Seller and the Purchaser. The
parties may waive any of the conditions contained herein or any of the
obligations of the other party hereunder, but any such waiver shall be effective
only if in writing and signed by the party waiving such conditions or
obligations.
12.18 AUTHORITY. Each person executing this Agreement warrants and
represents that he is fully authorized to do so.
12.19 TIME OF ESSENCE. Time is of the essence of this Agreement.
However, each party shall have the right to one adjournment to June 16th.
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ARTICLE XIII
NOTICE
13.1 NOTICE. All notices required or permitted to be given under this
Agreement shall be in writing and shall be sent or delivered to the address set
forth below (or such other address as may be hereafter specified in writing):
To Seller:
Xx. Xxxxxx Xxxxx
Falcon Group, Inc.
0000 Xxxx Xxx., #000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to Seller's Attorneys:
Xxxx Xxxxxxx, Esq.
Xxxxxx, Sommers, Lippman, Xxxxxx & Xxxxxx
0000 Xxxx Xxx Xxxx., 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
To Purchaser:
Xx. Xxx Xxxxxxxx
Cornerstone Realty Group, Inc
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to Purchaser's Attorneys:
Xxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxxxx & Taubenfeld
000 Xxxxxxxx Xx., X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
and
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxx XxXxxxxxx & Oaks Xxxxxxxx
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax: (000) 000-0000
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13.2 DELIVERY OF NOTICE. Notices sent either by Registered or Certified
Mail, Return Receipt Requested, or by overnight express mail shall be deemed
given when deposited in the United States Mail, postage prepaid, or delivered to
a reliable overnight courier or by fax. Notices sent in any other manner shall
be deemed given only when actually delivered at the specified address.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed this day and date first written above.
SELLER:
AUSTIN/CANYON HILLS, LTD., a Texas
limited partnership
BY: Austin/Canyon Hills I, Inc.,
a Texas corporation, General Partner
BY: /s/ Xxxx Xxxxx
-------------------
Name: Xxxx Xxxxx
Title: Secretary
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
BY: /s/ Xxx X. Remppies
---------------------
Its: Senior Vice President
----------------------
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XXXXXXX MONEY RECEIPT
Heritage Title Company of Austin, Inc. acknowledges receipt of this fully
executed Agreement and the Xxxxxxx Money in the amount of $100,000.00, on this
the ___ day of _____________, 1999 (the "Effective Date"), and agrees as
follows:
(a) immediately, by courier (for no later than next business day delivery), to
deliver to Seller, Seller's counsel, Purchaser, and Purchaser's counsel a copy
of this Agreement, as fully executed by Seller, Purchaser, Agent, and the Title
Company; and,
(b) to issue the Commitment (as defined in Section 3.2 of this Agreement) and
deliver same to Purchaser and to Purchaser's counsel, with a copy to Seller,
within ten (10) days after the Effective Date.
HERITAGE TITLE COMPANY OF AUSTIN, INC.
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
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