REAL ESTATE CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement") is entered into, for reference
purposes, as of August 21, 1997, between ASR Investments Corporation ("ASR"),
Heritage Communities L.P. ("Heritage" and collectively with ASR the "ASR
Parties") and Arbor Terrace I, L.L.C. and Arbor Terrace 11, L.L.C. (collectively
"Seller").
1. PARTIES
1.1 ASR Parties. ASR Parties hereby agree to the terms and conditions
set forth in this Agreement. ASR Parties shall have the right to assign ASR
Parties' rights hereunder to an entity in which ASR is a principal.
1.2 Seller. Seller agrees to contribute the real property hereinafter
described to Heritage upon the terms and conditions set forth in this Agreement.
1.3 Escrow Holder. The transaction contemplated by this Agreement shall
be closed through an escrow to be held by Chicago Title Insurance Company
("Escrow Holder") at its office located at 0000 X. 00xx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000.
2. PROPERTY
2.1 The real property ("Property") that is the subject of this
Agreement is Arbor Terrace I and 11 Apartments, located at 0000 Xxxxxx Xxxxxx,
Xxxx Xxxxxxx, Xxxxxxxxxx, and is legally described in Exhibit A which is
attached hereto and incorporated herein by this reference.
2.2 If the legal description of the Property is not complete or is
inaccurate, this Agreement shall not be invalid, but the legal description shall
be completed or corrected to meet the requirements of Chicago Title Insurance
Company (the "Title Company"), which shall issue the title insurance policy
hereinafter described.
2.3 The Property includes, at no additional cost to Heritage, the
permanent improvements thereon, including those items which the law of the State
of Washington provides is part of the Property, as well as the following items,
if any, owned by Seller and presently located in or on the Property: electrical
distribution systems, air conditioning equipment, carpets, window coverings,
wall coverings, and all appliances and fixtures owned by Seller and located in
individual dwelling units and common areas, if any.
2.4 Possession of the Property shall be given to Heritage at the
Closing, subject to the rights of existing tenants.
3. CONTRIBUTION OF PROPERTY TO HERITAGE
Seller shall contribute the Property, subject to the Mortgage Loans, to
Heritage in exchange for cash and Limited Partnership Units (herein "LP Units")
of Heritage as follows:
3.1 The Deemed Value of the Properties will be Seven Million Two
Hundred Twenty-Three Thousand and No/100 Dollars ($7,223,000-00) for Phase I and
Six Million Twenty-Six Thousand Eighty-Three and No/100 Dollars ($6,026,083.00)
for Phase II, for a combined total of Thirteen Million-Two Hundred Forty-Nine
Thousand Eighty-Three and No/100 Dollars ($13,249,083.00) including the Xxxxxxx
Money Deposit and all extension payments made by Buyer pursuant hereto and
including interest earned thereon.
3.2 Heritage shall assume the existing first lien note and deed of
trust on Phase I. The balance of said loan to be assumed shall be Four Million
Six Hundred Ninety-Five Thousand and No/100 Dollars ($4,695,000.00). Seller
agrees to pay, at the Closing, the amount required to reduce the actual balance
to the above stated amount. The contingencies contained in Paragraph 6.1.5 below
regarding the assumption of said loan are hereby incorporated into the terms of
this Paragraph. Heritage shall pay all costs incurred in obtaining the lender's
consent to the assumption.
3.3 Heritage shall obtain a new first position note and deed of trust
on Phase II of the Property for not less than Four Million Five Hundred Thousand
and No/100 Dollars ($4,500,000.00) as per the contingency stated in Paragraph
6.1.5 below. All costs and fees of the new loan shall be paid by Heritage.
3.4 In return for the contribution, Seller shall receive the following:
3.4.1 Cash of Two Million Fifty-Four Thousand Eighty-Three and
No/100 Dollars ($2,054,083.00), subject to adjustment for prorations and Closing
costs as defined elsewhere in this Agreement.
3.4.2 LP Units of Heritage with a "Value" of Two Million and
No/100 Dollars ($2,000,000.00) (determined by deducting the debt assumed in
Paragraphs 3.2 and 3.3 and the cash distribution in Paragraph 3.4.1 from the
Deemed Value in Paragraph 3. 1). The number of LP Units will be determined by
dividing the $2,000,000 by the average closing price of ASR's Common Stock on
the American Stock Exchange for the ten (10) day period preceding Closing (the
"ASR Stock Price"). Notwithstanding any assignment of the agreement by ASR
parties, such LP Units will be convertible into shares of ASR Common Stock upon
the terms and conditions of the Heritage partnership agreement and the Common
Stock to be received will be fully registered and listed on the American Stock
Exchange. The terms and conditions of Exhibit "B" attached hereto shall apply as
additional terms and conditions relating to the LP Units and/or stock to be
issued.
3.5 The Exchange Offer. Ten (10) days prior to Closing of the
Contribution, ASR shall make the "Exchange Offer" to any partner or member (a
"Member") of Seller. Each Member shall have the right to tender all or any part
of such Member's interest in Seller to ASR by delivering a validly executed
Letter of Transmittal to ASR prior to three (3) days after the Exchange Offer
(the "Commitment Date"). The obligations of ASR to accept for purchase and to
purchase any Member Interests tendered shall be subject only to the conditions
set forth in this Contribution Agreement. ASR shall not be entitled to accept or
purchase the Member interest tendered unless all of the conditions to the
consumption of the transaction contemplated in this Contribution Agreement are
satisfied or waived as provided herein.
3.5.1 Number of Shares. On the Closing date, ASR shall deliver
to the Escrow certificate of certificates registered in such Member's name for
the number of shares of ASR Common Stock equal to (i) the portion of the "Value"
attributable to such Member's interest being tendered divided by (ii) the ASR
Stock Price. No fractional shares of ASR Common Stock shall be issued in
connection with the exchange offer.
3.5.2 ASR Common Shares. The ASR Common Stock to be exchanged
shall be registered and listed on the American Stock Exchange.
3.5.3 Election to Tender Member's Interest. The election of a
Member to tender a part of Member's interest owned by the Member shall be made
by such Member's execution of a Letter of Transmittal and the return of the
Letter of Transmittal to the Escrow Holder for delivery to ASR. Following
expiration of the Commitment Date, such tender of the Member's interest shall be
irrevocable.
4. XXXXXXX MONEY DEPOSIT
ASR Parties shall deposit the sum of One Hundred Thousand and No/100
Dollars ($100,000.00) in the form of a company check due within 48 hours of
mutual execution of this Agreement as Xxxxxxx Money for full and faithful
performance of ASR Parties obligations hereunder. Xxxxxxx Money shall be held by
Chicago Title Insurance Company, Tacoma, Washington. The Xxxxxxx Money Deposit
shall be returned to ASR Parties if ASR Parties have not satisfied or waived in
writing each and every of the contingencies listed in Subsection 6. 1.1 through
6.1.6 on or before 45 days from mutual execution of this Agreement, otherwise,
if ASR Parties have so waived all of such contingencies, the Xxxxxxx Money
Deposit and any interest earned thereon shall be applied to the Cash Due Seller
at Closing. In the event ASR Parties fails to complete the purchase of Property
after the removal of said contingencies, the Xxxxxxx Money Deposit made by ASR
Parties shall forfeited to Seller as the sole and exclusive remedy available to
Seller for such failure. All Xxxxxxx Money shall be deposited at interest in a
federally insured account, and interest earned shall be credited to the party
entitled to the Xxxxxxx Money. Irrespective of the above, the contingencies
listed to subsections 6.1.7 through 6.1.9 shall continue to the date of Closing.
Should Closing fail to occur due to the failure of any of said contingencies,
ASR Parties shall be entitled to a refund of the Xxxxxxx Money Deposit or any
other remedies allowed by Washington law.
5. ESCROW AND CLOSING
5.1 When executed by both parties, this Agreement shall constitute not
only the agreement of contribution between ASR Parties and Seller, but also
instructions to Escrow Holder for the consummation of the Agreement through
escrow.
5.2 Unless extended as provided herein, the Escrow Holder shall close
the escrow on or before the 90th day after escrow is opened ("Closing Date") in
the offices of Escrow Holder.
5.3 Escrow Holder is hereby authorized and instructed to conduct the
escrow in accordance with this Agreement, applicable law, and the custom and
practice of real estate closings in Xxxxxx County, Washington.
5.4 Subject to satisfaction of the contingencies herein described,
Escrow Holder shall close this escrow (the "Closing") by recording the Statutory
Warranty Deed and other documents required and by disbursing the funds and
documents in accordance with this Agreement.
5.5 If this transaction is terminated for nonsatisfaction or nonwaiver
of an ASR Parties' Contingency as subsequently defined herein then neither of
the parties shall thereafter have any liability to other under this Agreement.
5.6 The Closing shall occur on or before the Closing Date unless the
Closing Date be extended herein provided. ASR Parties shall have the right to
extend the Closing Date for thirty (30) days by giving written notice to Seller
and Escrow Holder prior to the original Closing Date, and by paying into Escrow
such election to extend an extension fee in the amount of Fifty Thousand and
No/100 Dollars. ($50,000.0 Any extension payments paid shall be applied to the
cash due Seller at Closing. All extension payments shall held and considered as
additional Xxxxxxx Money under Section 4. The extension of the Closing Date
shall extend the time requirements for satisfying the contingencies set forth in
Paragraphs 6. 1.1 through 6.1.6.
6. CONTINGENCIES TO CLOSING
6.1 The closing of this transaction is contingent upon the satisfaction
or waiver of the follow contingencies:
6.1.1 Condition of Title. Within fifteen (15) days after
execution of this Agreement, Seller shall cause Chicago Title Insurance Company
(the "Title Issuer") to issue and deliver to Heritage a preliminary commitment
for an owner's policy of title insurance (the "Commitment"). Heritage shall give
Seller written notice on or before the expiration of twenty (20) days after
delivery of the Commitment to Heritage of an defects or encumbrances to which
Heritage objects. Any exceptions not objected to within that time shall be
deemed to have been approved by Heritage ("Permitted Exceptions"). Seller shall
have ten (10) days a receipt of Heritage's objections to give Heritage notice of
which objections will be removed from title. If Seller gives written notice
within said time that Seller is unable or unwilling to remove the exceptions
timely objected to by Heritage, then this transaction shall terminate and
neither party will be obligated to contribute or accept the Property to the
other unless Heritage elects by notice to Seller within ten (10) days after
Seller's notice to complete the contribution subject to the exceptions Seller is
unwilling to remove. There will be a separate title policy issued for each phase
of the Property.
6.1.2 Survey. Within fifteen (15) days after execution of this
Agreement, Seller shall cause a survey to be issued and delivered to Heritage.
Heritage's shall have twenty (20) days from receipt of said survey to issue its
written approval of said survey and of an ALTA title supplement based upon said
survey. Said survey shall be prepared by a licensed surveyor to American Land
Title Association standards for an owner's extended coverage policy, showing the
legal description and boundary lines of the Property, any easements of record,
and any improvements, poles, structures and things located within ten feet of
either side of the property boundary lines. The survey shall be prepared at
Seller's direction and expense. There will be a separate ALTA survey for each
phase of the Property.
6.1.3 Hazardous Substances Report. Heritage's written approval
prior to September 6, 1997 in Heritage's absolute discretion, of a Phase I
hazardous substances report concerning the Property. Such report will be
obtained at Heritage's direction and expense. A "hazardous substance" for
purposes of this Agreement is defined as any substance whose nature and/or
quantity of existence, use, manufacture, disposal or effect, render it subject
to federal state or local regulation, investigation, remediation, or removal as
potentially injurious to public health or welfare. A "hazardous substance
condition" for purposes of this Agreement is defined as the existence on or
under the Property of a hazardous substance that would require remediation
and/or removal under applicable federal, state, or local law.
6.1.4 Appraisal. Heritage's written approval prior to
September 6, 1997, in Buyer's absolute discretion of the contents and amount of
an appraisal of the Property as an operating apartment complex, to obtained by
Heritage at Heritage's expense.
6.1.5 Financing. Heritage's written approval prior to
September 6, 1997 in Heritage's absolute discretion of a financing commitment to
finance Phase II on terms and conditions acceptable to Heritage. Heritage's
written approval prior to September 6, 1997 of the terms and conditions of
Heritage's assumption of the existing note and deed of trust on Phase I. Such
assumption approval of the Phase I loan shall be further conditioned upon
obtaining a full release of Seller from all obligations to lender on said loan.
Additionally, should lender impose any prepayment penalties as a condition of
such assumption in connection with the required principal paydown, then either
Seller or Heritage shall have the unilateral right to terminate escrow with all
xxxxxxx money deposits being returned to Heritage if either party elects to
terminate. Should ASR parties assign this agreement, the assignee must be
acceptable to the lenders.
6.1.6 Destruction, Damage or Loss. If there shall have
occurred, prior to the Closing, destruction, damage, or loss to the Property or
any portion thereof, from any cause whatsoever, which would cost more than
$50,000.00 to repair or cure, Seller shall give Heritage prompt notice thereof
and Heritage shall have the option, within ten days after receipt of written
notice of such loss, either to terminate this transaction or to purchase the
Property notwithstanding such loss, but without deduction or offset against the
cash due Seller. If Heritage does not elect to terminate this transaction, and
if the damage is not repaired prior to Closing, Heritage shall be entitled to
any insurance proceeds applicable to such loss, whether paid before or after
Closing; and Seller shall pay or credit to Heritage the amount of any deductible
amount or self-retained limit under the applicable insurance policies. Unless
otherwise notified in writing by either party, Escrow Holder shall assume no
destruction, damage or loss costing more than $50,000.00 to repair or cure has
occurred prior to Closing.
6.1.7 Material Change. No material change, as hereinafter
defined, shall have occurred with respect to the Property that has not been
approved in writing by Heritage. For purposes of this Agreement, a "material
change" shall be a material change in the use, occupancy, or condition of the
Property that occurs after the date of this Agreement and prior to the Closing.
Heritage shall have ten days following receipt of written notice from any source
of any such material change within which to approve or disapprove the same.
Unless otherwise notified in writing by either party, Escrow Holder shall assume
that no material change has occurred prior to the Closing.
6.1.8 Seller Performance. The delivery of all documents and
due performance by Seller of each and every undertaking and agreement to be
performed by Seller under this Agreement.
6.1.9 Breach of Warranty. Each representation and warranty of
Seller herein shall be true and correct as of the Closing. Escrow Holder shall
assume that this condition has been satisfied unless notified to the contrary in
writing by Buyer prior to the Closing.
6.2 All of the contingencies specified in subparagraphs 6.1.1 through
6.1.9 are for the benefit of, and may be waived in writing by Heritage, and may
elsewhere herein be referred to as "Heritage's Contingencies."
6.3 Seller shall give Heritage free access to the Property at any
reasonable time, subject to the rights of existing tenants, for the purpose of
inspecting the Property, doing the work and conducting the tests contemplated by
the Heritage's Contingencies. Heritage shall repair any damage done to the
Property by Heritage or Heritage's agents in testing or inspecting the Property
and shall defend, indemnify and hold harmless Seller and the Property from any
and all claims, liabilities, demands, losses, costs, expenses (including
reasonable attorneys fees), damages or recoveries, including those for injury to
person or property, arising out of or relating to any such work or inspections.
6.4 Promptly after mutual execution hereof, Seller shall prepare,
certify as true and correct, and deliver to Heritage a list of current tenants
of the Property, showing for each the unit number and/or mailing address, phone
number, length of occupancy, term of current lease, monthly or other periodic
rent, the date through which rent is paid, amount of any damage, security or
rental deposits held, and a statement of what utilities, if any, are included in
the rent. Said list may hereinafter be referred to herein as a "Rent Roll."
Seller shall similarly prepare, certify as true and correct, and deliver to
Heritage an updated, current Rent Roll within two (2) days of the Closing Date.
7. DOCUMENTS REQUIRED AT CLOSING
7.1 Escrow Holder shall cause to be issued to Heritage an ALTA extended
coverage owner's form policy of title insurance (1970 form) effective as of the
Closing, issued by the Title Company in the full amount of the Deemed Value,
insuring fee simple absolute title to the Property vested in Heritage, subject
only to the Permitted Exceptions.
7.2 Seller shall deliver or cause to be delivered to Escrow Holder in
time for delivery to Heritage at Closing, executed originals of the following
documents:
7.2.1 A Statutory Warranty Deed, duly executed and in
recordable form, conveying good and indefeasible title to the Property to
Heritage, free and clear of any and all liens, encumbrances, easements,
assessments, reservations and restrictions, except as permitted herein and/or
approved by Buyer in writing.
7.2.2 A Xxxx of Sale, duly executed, containing warranties of
title, conveying title free and clear of all liens, to any personal property,
licenses, permits, maintenance or other contracts and warranties or guaranties
owned by the Property or the Seller and being transferred to Heritage. Seller
hereby discloses to Heritage that the telephone system is owned by Phone Plus
and that the cable system is owned by Cable Plus. Hence, the Xxxx of Sale will
not cover those two items.
7.2.3 An Assignment of Leases affecting the Property, duly
executed, assigning all leases, prepaid rents and security deposits to Heritage.
7.2.4 A certification by the Seller that Seller is not a
"foreign person" within the meaning of Internal Revenue Code, Section 1445 or
successor statutes. If Seller does not provide such affidavit in form reasonably
satisfactory to Buyer prior to the Closing, Escrow Holder shall, at the Closing,
deduct from Seller's proceeds and remit to the Internal Revenue Service such sum
as is required by applicable federal law with respect to purchase from foreign
Sellers.
7.3 Heritage shall deliver or cause to be delivered to Seller through
escrow the Deemed Value and such additional sums as are required of Heritage
under this Agreement for prorations, expenses and adjustments. ASR Parties'
funds shall be deposited to escrow by cashier's check drawn upon a major banking
institution, federal funds wire transfer, or any other method acceptable to
Escrow Holder as immediately collectable funds.
8. PRORATIONS, EXPENSES AND ADJUSTMENT
8.1 Seller shall pay the premium for the title insurance policy
required by Section 7.1 above and the cost, if any, of making title insurable as
required hereby, the payment of any real estate excise tax, and one-half of the
fees of the Escrow Holder.
8.2 Heritage shall pay the recording fee for the Statutory Warranty
Deed and for any other documents which Buyer may choose to record, and one-half
of the fees of the Escrow Holder.
8.3 Ad valorem personal property and real property taxes, tenant rents
due for the month of Closing or thereafter, and all other income and operating
expenses for or pertaining to the Property, including but not limited to utility
charges, shall be prorated between the parties at Closing. Rents applicable to
periods prior to Closing which are collected by Heritage after Closing shall be
remitted by Heritage to Seller within thirty (30) days after collection,
provided that Heritage shall have no affirmative duty to collect delinquent
rents for Seller, and provided further, that Heritage shall be entitled to apply
tenant rents to current charges before remitting to Seller for past due charges.
8.4 At the Closing, the amount of any and all deposits made by then
current tenants of the Property, including, but not limited to rental deposits,
damage deposits and nonrefundable cleaning fees, as well as the amount of any
unpaid bills relating to periods prior to Closing for which Heritage will be
responsible after Closing, shall be transferred by Seller to Heritage by an
equivalent credit against the purchase price.
8.5 Any items to be prorated which are not determined or determinable
at Closing shall be promptly adjusted by the parties by appropriate cash
payments outside of the escrow when the amount thereof has been determined.
8.6 Seller shall pay, at the Closing, the required amount to reduce the
loan balance on Phase I down to the amount that Heritage will be assuming.
Seller shall pay, at the Closing, any shortfall between the payoff amount on the
existing loan on Phase II and the net cash proceeds otherwise available from the
Heritage's new loan on Phase II.
8.7 Seller will deposit, at the Closing, at a mutually agreeable
location and escrow, the sum of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) into a "concession/ promotion/advertising/leasing expense" escrow
account. For a period of two years after the date of Closing, Heritage shall
have the full authority to draw from said account, on a monthly basis, any and
all costs incurred by Heritage for any leasing concessions, leasing promotions,
advertising costs, leasing commissions, etc. relating to the Property. Any such
costs shall be in relationship to any leasing and/or resident retention costs.
All such costs shall be at Heritage's sole discretion. At the end of two years
from the Closing, any funds remaining in said account shall be returned to the
Seller. Further, any interest earned on said account shall be disbursed to the
Seller as and when it is added to the account. If at any time prior to the end
of two years from the date of Closing the account has been reduced to a zero
balance, the account will be closed and all terms and conditions of said account
shall be terminated. Seller shall have no liability to Heritage for any funds
other than the original deposit amount into the account.
9. COVENANTS, REPRESENTATIONS AND WARRANTIES OF Seller
9.1 Seller hereby makes the following covenants, warranties and
representations to ASR Parties:
9.1.1 Seller is the owner of the Property and has the full
right, power and authority to sell, convey and transfer the Property to Buyer as
provided herein, and to perform Seller's obligations hereunder.
9.1.2 Seller possesses all licenses, permits and certificates
of occupancy. necessary or appropriate to own and operate the Property as an
apartment complex.
9.1.3 Seller has no knowledge of any aspect or condition of
the Property or the current use of the Property which violates applicable laws,
rules, regulations, codes, or covenant, conditions, or restrictions, or of
improvements or alterations made to the property without a permit where one was
required, or of any unfulfilled order or directive of any applicable
governmental agency or casualty insurance company that any work of
investigation, remediation, repair, maintenance or improvement is to be
performed on the Property.
9.1.4 Prior to Closing, Seller will not violate or modify,
orally or in writing, any existing lease or other agreement relating to the
Property, or create any new leases or other agreements affecting the Property
except in the ordinary and normal course of business on a basis consistent with
Seller's past practice in operation of the Property, or create any new leases
which would violate the representations contained in subsection 9.1.6 below,
provided that Seller may enter into month-to-month rental agreements which are
terminable on not more than 30 days notice or after Closing. The provisions of
this Section shall not be taken to prevent Seller from continuing, prior to
Closing, to lease the apartments for such terms not exceeding nine months, and
at such rental rates as are consistent with Seller's current practices in the
ordinary and normal course of its business in operating the Property.
9.1.5 Seller has no knowledge of any actions, suits, or
proceedings pending or threatened before any commission, board, bureau, agency,
instrumentality, arbitrator, court or tribunal that would affect the Property or
the right to occupy or utilize the Property.
9.1.6 Each Rent Roll is true and accurate in all material
respects. Except as shown in any Rent Roll, all tenant leases are in full force
and effect; there are no material breaches thereof by either Seller or any
tenant; no rent is prepaid for more than one month; other than as shown on the
rent roll, there are no rental rebates, rental concessions or free rent granted
or promised to any tenant; and all tenancies can be terminated after expiration
of fixed term after thirty (30) days notice.
9.1.7 Seller and each person executing the Agreement on behalf
of Seller have full and unrestricted power and authority to execute the
Agreement, and Seller has full and unrestricted power and authority to execute
the Agreement, and Seller has full and unrestricted power and authority to
perform Seller's obligations hereunder and to sell and convey the Property to
Buyer on the terms and conditions hereof.
9.1.8 To the best of Seller's knowledge, there are no parties
in possession of any portion of the Property as lessees, tenants at sufferance,
or trespassers except tenants disclosed in the Rent Roll and under the written
leases delivered to Buyer pursuant to this Agreement.
9.1.9 Seller has paid, through the current date, all taxes,
charges, debts, and other assessments due by the Seller with respect to the
Property.
9.1.10 The Property is not in a flood plain.
9.1.11 There will be no unrecorded liens or Uniform Commercial
Code liens against the Property which will not be satisfied out of the Purchase
Price.
9.1.12 Seller has no knowledge that the Property is subject to
any surface or sub-surface ground faults. Seller is aware, however, that all of
the Puget Sound area is subject to earthquakes.
9.1.13 The Property is not being used and Seller has no
knowledge that it has ever been used for the storage or disposal of any
hazardous or toxic materials.
9.1.14 To the best of Seller's knowledge, no fact or condition
exists which would result in the termination of the current access from the
Property to the presently existing highways and/or roads adjoining or situated
on the Property, or to any existing sewer or other utility facilities servicing,
adjoining, or situated on the Property.
9.1.15 Seller shall not further encumber, or allow the
encumbrance of, the title to the Property, or modify the terms or conditions of
any existing encumbrances without the written consent of Buyer.
9.2 Seller's representations and warranties shall survive the Closing
and delivery of the deed, and unless otherwise noted herein, are true material
and may be relied upon by Buyer in all respects, both as of the date of the
Agreement and as of the date of Closing. These warranties in Paragraph 9 shall
survive the Closing for a period of two years and apply only to claims made
prior to the end of the two year period.
9.3 Seller's Limited Warranty.
9.3.1 Through the first twelve (12) months following the date
of Closing, Seller warrants to Heritage that the buildings on the Property have
been constructed in a good and workmanlike manner and are free from defects as
to material and workmanship unless expressly excluded below. Claims by Heritage
under this warranty shall be valid only if delivered to Seller in writing within
one (1) year of the date Heritage acquires the Property. Said warranty shall
apply exclusively for the benefit of Heritage (including anyone whom Heritage
has assigned its interest in this Agreement prior to Closing) and shall
terminate at such time as Heritage (or the successor prior to Closing) ceases to
be the owner of the Property.
9.3.2 At Closing, Seller will deliver to Heritage all
manufacturers' warranty material applicable to the heating system, appliances,
and other equipment supplied with the Property. It is understood and agreed that
such manufacturers' warranties, as delivered to Heritage, shall be the exclusive
remedy as to all items installed in or around the Property which are covered by
such delivered separate manufacturers' warranties; and Seller does not give any
warranty express or implied as to the merchantability of such items or as to
their fitness for any purpose.
9.3.3 Seller shall not be required to warrant any of the
following: (1) concrete or floor mortar expansion cracks, (2) floor squeaks, (3)
cracks in sheet rock, (4) chips, scratches or mars in tile, woodwork, walls,
porcelain, brick, mirrors, plumbing fixtures, or glass not identified in writing
at the time of purchase, (5) spots on carpeting, (6) warpage of doors due to
temperature differential or changes, and (7) freezing of plumbing pipes and
faucets. The buildings are used and the warranty excludes normal wear and tear
resulting from usage as rental apartments.
9.3.4 There are no other terms, conditions or warranties,
express or implied, of quality, fitness, habitability or otherwise as to any of
the Property or any improvements construed thereto, other than or different from
those set forth in this paragraph and those set forth in this Agreement.
Heritage acknowledges that, at the conclusion of the one (1) year period, it
will have no claims against Seller for any defects in the Property or any
improvements thereto except for those matters about which a claim has been made
prior to the one (1) year limitation and are included in the warranty described
in this Paragraph 9.3.
10. GENERAL AND MISCELLANEOUS PROVISIONS
10.1 Broker Commission. Seller agrees to pay a commission of Two
Hundred Thousand and No/100 Dollars ($200,000.00) at Closing, payable one-half
to CB Commercial Real Estate Group, Inc. and one-half to The Xxxxxx Company.
Said commission shall be paid by a transfer of a portion of the ASR Investments
Corporation common stock that Seller is to receive from this transaction. ASR
Parties and Seller shall indemnify and hold harmless the other from any claims
asserted for commissions or fees alleged to be payable to any third party not
named above because of any act, omission or statement of the indemnified party.
10.2 Further Assurances. ASR Parties and Seller shall each, diligently
and in good faith, undertake all actions and procedures reasonably required to
place the escrow in condition for Closing as and when required by this Agreement
and to sign and deliver all documents and things reasonably necessary or
convenient to that end.
10.3 Attorney's Fees. In the event of any litigation or arbitration
between the ASR Parties and Seller concerning this transaction, the prevailing
party shall be entitled to recover from the other party reasonable attorney's
fees and costs in an amount to be determined by the court or arbitrator(s),
which amount shall be included in any judgment or award rendered in the matter.
10.4 Notices. Any notices required or permitted to be given pursuant to
the terms hereof shall be in writing and shall be personally delivered or sent
by certified or registered mail, postage prepaid, return receipt requested
("Mail") and addressed to the parties as follows:
If to Seller: If to ASR Parties:
Mr. Xxxx Xxxxxxx Xx. Xxx Xxxxx, Chairman
1800 Xxxxxx ASR Investments Corporation
Xxxx Xxxxxxx, XX 00000 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
With Copy to: Xxxx X. Xxxxxxxx With Copy to:
Xxxxxx Xxxxxx Honeywell c/o Heritage Residential Group, Inc.
Suite 2200
0000 Xxxxxxx Xxxxxx 0000 XX 0000 X, Xxxxx 000
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Notices shall be effective upon actual receipt or two business days after being
sent by Mail, whichever is sooner.
10.5 Applicable Law. This Agreement shall be governed by the laws of
the State of Washington and jurisdiction of any disputes shall be in Kitsap
County, Washington.
10.6 Counterparts. This Agreement may be executed in counterparts, each
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
10.7 Time of the Essence. Time is of the essence of every provision of
the Agreement.
10.8 Binding Effect. This Agreement embodies the entire understanding
of the parties regarding the subject matter hereof and supersedes all prior
agreements and understandings between the parties, whether written or oral,
relating to the subject matter hereof. No amendment or modification hereof shall
be binding unless in writing and signed by the party to be bound thereby. This
Agreement shall bind the parties hereto and their respective successors, legal
representatives and assigns as allowed hereunder.
10.9 Saturday, Sunday, and Legal Holidays. If the time from performance
of any of the terms, conditions, and provisions hereof shall fall on a Saturday,
Sunday or legal holiday, then the time of performance shall be extended to the
next business day thereafter.
10.10 Section 1031 Like-Kind Exchange. If either ASR Parties or Seller
intends for this transaction to be part of a Section 1031 Like-Kind Exchange,
then the other party agrees to cooperate in the completion of the Like-Kind
Exchange so long as such cooperating party incurs no additional expenses or
liabilities in doing so and so long as such exchange does not extend the Closing
date beyond the otherwise scheduled Closing date. Without limiting the
foregoing, ASR Parties shall not be obligated to acquire title to any other
property in order to implement the exchange.
10.11 Lead-Based Paint Disclosure. In order to comply with the
Residential Lead-Based Paint Hazardous Reduction Act of 1992, Seller represents
to Buyer that none of the units in the Property being purchased were built
before 1978.
10.12 Acceptance. This offer shall automatically expire if not accepted
by Purchaser and Seller on or before August 20, 1997.
Seller: ARBOR TERRACE I, L.L.C. ASR PARTIES
ASR Investments Corporation, By
Name: Signature Illegible Name: /s/ Xxxx X. Xxxxxx
------------------------------- --------------------------
Title: Managing Member Title: Vice President
------------------------------- --------------------------
Date: 8-20-97 Date: 8-18-97
------------------------------- --------------------------
Seller: ARBOR TERRACE II, L.L.C. ASR PARTIES
Heritage Communities L.P., By
Name: Signature Illegible Name: /s/ Xxxx X. Xxxxxx
------------------------------- --------------------------
Title: Managing Member Title: Vice President
------------------------------- --------------------------
Date: 8-20-97 Date: 8-18-97
------------------------------- --------------------------
BROKER BROKER:
Name: /s/ Xxxx Xxxxxx Name: CB Commercial
------------------------------- --------------------------
Title: The Xxxxxx Co. Title: /s/ Xxxxx Xxxxx
------------------------------- --------------------------
Date: 8-21-97 Date: 8-21-97
------------------------------- --------------------------
A TRUE COPY OF THE FOREGOING AGREEMENT, SIGNED BY THE SELLER, IS HEREBY RECEIVED
ON AUGUST 25, 1997 BY ASR PARTIES.
ASR Parties: Signature Illegible
--------------------------
SELLER'S SUPPLEMENT TO REAL ESTATE CONTRIBUTION
AGREEMENT
This is a Seller's Supplement to that Real Estate Contribution
Agreement covering the apartment properties known as Arbor Terrace 1 and Arbor
Terrace 2 located in Kitsap County, Washington between ASR INVESTMENTS
CORPORATION, HERITAGE COMMUNITIES L.P., ARBOR TERRACE 1 L.L.C and ARBOR TERRACE
11 L.L.C. which is being executed by the Seller this 21st day of August, 1997.
This Supplement amends the Real Estate Contribution Agreement as specified
herein and the Seller's acceptance of the Real Estate Contribution Agreement is
conditioned upon the purchasers' acceptance of this Supplement. If this
Supplement is not accepted, the Real State Contribution Agreement is terminated.
1. Paragraph 4 is amended to provide that the contingencies of 6.1
through 6.1.6 must be satisfied by Heritage's written approval prior to
September 6, 1997 and the reference to 45 days in paragraph 4 is deleted.
Further, the references to time in paragraphs 6.1.1 and 6.1.2 are changed to
require said approvals prior to September 6, 1997.
2. The Closing date described in paragraph 5.2 shall be changed to read
on or before the forty-fifth (45th) day following September 6, 1997.
3. Any costs pertaining to the assumption of the Phase I loan as
described in the Lender's Loan Consent Letter dated August 14, 1997, from
Lincoln National, shall be borne by the ASR Parties.
4. The ASR Parties will bear all costs of obtaining the new loan for
Phase II as identified in a commitment issued to the ASR Parties.
5. In all other particulars, the Real Estate Contribution Agreement as
executed this 21st day of August, 1997, the same date as this Supplement, is
affirmed and ratified.
Dated this 21st day of August, 1997.
Seller: ASR PARTIES
ARBOR TERRACE I L.L.C. ASR Investments Corporation, By
Name: Signature Illegible Name: /s/ Xxxx X. Xxxxxx
--------------------------- ---------------------------
Title: Managing Member Title: VP
-------------------------- --------------------------
Date: 8/21/97 Date: 8/21/97
--------------------------- ---------------------------
Seller: ASR PARTIES
ARBOR TERRACE II L.L.C. Heritage Communities L.P., By
Name: Signature Illegible Name: /s/ Xxxx X. Xxxxxx
--------------------------- ---------------------------
Title: Managing Member Title: VP
-------------------------- --------------------------
Date: 8/21/97 Date: 8/21/97
--------------------------- ---------------------------
BROKER: BROKER:
Name: /s/ Xxxx Xxxxxx Name: CB Commercial
---------------------------- ---------------------------
Title: The Xxxxxx Co. Title: /s/ Xxxxx Xxxxx
--------------------------- --------------------------
Date: 8/21/97 Date: 8/21/97
--------------------------- ---------------------------
SUPPLEMENT TO REAL ESTATE CONTRIBUTION AGREEMENT
This is a Supplement to that Real Estate Contribution Agreement and Seller's
Supplement to Real Estate Contribution Agreement, covering the apartment
properties collectively known as Arbor Terrace located in Port Orchard,
Washington between ASR Investments Corporation ("ASR"), Heritage Communities
L.P. ("Heritage" and collectively with ASR the "ASR Parties"), and Arbor Terrace
I, L.L.C. and Arbor Terrace II, L.L.C. collectively ("Seller") dated August 21,
1997. This supplement amends the Real Estate Contribution Agreement and Seller's
Supplement to Real Estate Contribution Agreement as specified herein and all
three agreements should be considered as one.
1. The number of shares of ASR Common Stock identified in item 3.4.2,
shall be valued at $23,20625, and the number of shares shall be Two Million and
No/00 Dollars ($2,000,000.00) divided by said $23,20625 (being the 10 day
average of the closing price of ASR's Common Stock on the American Stock
Exchange for each day the Common Stock was traded, from August 22, 1997 through
September 5, 1997, rounded to the nearest whole share, or $6,184 shares of ASR
Common Stock.
In all other particulars the Real Estate Contribution Agreement dated August 21,
1997 is affirmed and ratified.
Dated this 8th day of September, 1997.
Seller: Arbor Terrace I, L.L.C. ASR PARTIES
ASR Investments Corporation, By
Name: Signature Illegible Name: /s/ Xxxx X. Xxxxxx
--------------------------- ---------------------------
Title: Managing Member Title: Vice President
-------------------------- --------------------------
Date: 9/9/97 Date: September 8, 1997
--------------------------- ---------------------------
Seller: Arbor Terrace II, L.L.C. ASR PARTIES
Heritage Communities L.P., By
Name: Signature Illegible Name: /s/ Xxxx X. Xxxxxx
--------------------------- ---------------------------
Title: Managing Member Title: Vice President
-------------------------- --------------------------
Date: 9/9/97 Date: September 8, 1997
--------------------------- ---------------------------
A TRUE COPY OF THE FOREGOING AGREEMENT, SIGNED BY THE Seller, IS HEREBY RECEIVED
ON SEPTEMBER 10, 1997 BY ASR PARTIES.
ASR Parties: Signature Illegible
------------------------
