UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 16, 2003
FOX STRATEGIC HOUSING INCOME PARTNERS
(Exact name of registrant as specified in its charter)
California 0-16877 94-3016373
(State or other jurisdiction (Commission (I.R.S. Employer
incorporation) File Number) Identification Number)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(Registrant's telephone number)
(864) 239-1000
Item 2. Acquisition or Disposition of Assets
On December 16, 2003, Westlake East Associates, L.P., an Ohio limited
partnership sold its investment property, Barrington Place Apartments, located
in Westlake, Ohio. Fox Strategic Housing Income Partners (the "Registrant") owns
a 99% interest in Westlake East Associates, L.P. Westlake East Associates, L.P.
sold Barrington Place Apartments to a third party, Barrington Place Apartments,
LLC, a Delaware limited liability company for $10,100,000. Barrington Place
Apartments, LLC became the purchaser through an assignment of the purchase and
sale contract from Prominent Realty Group of Georgia, Inc., a Georgia
corporation, also an unrelated party. The sale price was determined based on the
fair market value of the investment property.
In accordance with the Amended and Restated Certificate and Agreement of Limited
Partnership of the Registrant, the Registrant's general partner is evaluating
the cash requirements of the Registrant to determine whether any portion of the
net proceeds will be distributed to the Registrant's partners.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information.
The required pro forma financial information for the Registrant is not included
in this report. This information will be submitted no later than March 1, 2004.
(c) Exhibits (1)
10.7 Purchase and Sale Contract between Westlake East Associates, L.P., an
Ohio limited partnership, and Prominent Realty Group of Georgia, Inc.,
a Georgia corporation, dated November 3, 2003.
10.8 Amendment to Contract to Purchase between Westlake East Associates,
L.P. and Prominent Realty Group of Georgia, Inc., dated November 13, 2003.
10.9 Reinstatement and Second Amendment to Purchase and Sale Contract
between Westlake East Associates, L.P., and Prominent Realty Group of
Georgia, Inc., dated December 10, 2003.
10.10 Assignment of Contract between Prominent Realty Group of Georgia, Inc.,
and Barrington Place Apartments, LLC, a Delaware limited liability
company, dated December 16, 2003.
(1) Schedules and supplemental materials to the exhibits filed herewith have
been omitted but will be provided to the Securities and Exchange
Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOX STRATEGIC HOUSING INCOME PARTNERS
(a California Limited Partnership)
By: FOX PARTNERS VIII
Its General Partner
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
Date: December 29, 2003
Exhibit 10.7
PURCHASE AND SALE CONTRACT
BETWEEN
WESTLAKE EAST ASSOCIATES LIMITED PARTNERSHIP,
an Ohio limited partnership
AS SELLER
AND
PROMINENT REALTY GROUP OF GEORGIA, INC.,
a Georgia corporation
AS PURCHASER
BARRINGTON PLACE APARTMENTS
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT (this "Contract") is entered into as of
the 3rd day of November, 2003 (the "Effective Date") by and between WESTLAKE
EAST ASSOCIATES LIMITED PARTNERSHIP, an Ohio limited partnership, having an
address at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237
("Seller") and PROMINENT REALTY GROUP OF GEORGIA, INC., a Georgia corporation,
having a principal address at 4534 Cape Kure Court, Norcross, Georgia 30092
("Purchaser").
NOW, THEREFORE, in consideration of mutual covenants set forth herein,
Seller and Purchaser hereby agree as follows:
RECITALS
A. Seller owns the real estate located in Cuyahoga County, Ohio, as more
particularly described in Exhibit A attached hereto and made a part hereof, and
the improvements thereon, commonly known as BARRINGTON PLACE APARTMENTS.
B. Purchaser desires to purchase, and Seller desires to sell, such land,
improvements and certain associated property, on the terms and conditions set
forth below.
ARTICLE 1
DEFINED TERMS
1.1 Unless otherwise defined herein, any term with its initial letter
capitalized in this Contract shall have the meaning set forth in this ARTICLE 1.
1.1.1 "ADA" shall have the meaning set forth in Section 13.22.
1.1.2 "Additional Deposit" shall have the meaning set forth in Section 2.2.2.
1.1.3 "AIMCO" shall mean Apartment Investment and Management Company.
1.1.4 "AIMCO Marks" means all words, phrases, slogans, materials, software,
proprietary systems, trade secrets, proprietary information and lists, logos and
phone numbers and other intellectual property owned or used by Seller, the
Property Manager, or AIMCO in the marketing, operation or use of the Property
(or in the marketing, operation or use of any other properties managed by the
Property Manager or owned by AIMCO or an affiliate of either Property Manager or
AIMCO), but excluding any rights Seller has to the name "BARRINGTON PLACE
APARTMENTS".
1.1.5 "Appeal" shall have the meaning set forth in Section 5.4.14.
1.1.6 "Assumed Deed of Trust" shall have the meaning set forth in Section 4.5.1.
1.1.7 "Assumed Encumbrances" shall have the meaning set forth in Section 4.5.1.
1.1.8 "Assumed Loan Documents" shall have the meaning set forth in Section
4.5.1.
1.1.9 "Broker" shall have the meaning set forth in Section 9.1.
1.1.10 "Business Day" means any day other than
a Saturday or Sunday or Federal holiday or legal holiday in the States of
Colorado, Texas, or Ohio, or any day on which Lender is not open for business.
1.1.11 "Closing" means the consummation of the purchase and sale and related
transactions contemplated by this Contract in accordance with the terms and
conditions of this Contract.
1.1.12 "Closing Date" means the date on which date the Closing of the conveyance
of the Property is required to be held pursuant to Section 5.1.
1.1.13 "Code" shall have the meaning set forth in Section 2.3.6.
1.1.14 Intentionally Omitted.
1.1.15 "Consultants" shall have the meaning set forth in Section 3.1.
1.1.16 "Damage Notice" shall have the meaning set forth in Section 11.1.
1.1.17 "Deed" shall have the meaning set forth in Section 5.2.1.
1.1.18 "Deposit" means, to the extent actually deposited by Purchaser with
Escrow Agent, the Initial Deposit and the Additional Deposit.
1.1.19 "Escrow Agent" shall have the meaning set forth in Section 2.2.1.
1.1.20 "Excluded Permits" means those Permits which, under applicable law, are
nontransferable and such other Permits, if any, as may be designated as Excluded
Permits on Schedule 1.1.20.
1.1.21 "Feasibility Period" shall have the meaning set forth in Section 3.1.
1.1.22 "Final Response Deadline" shall have the meaning set forth in Section
4.3.
1.1.23 "FHA" shall have the meaning set forth in Section 13.22.
1.1.24 "Fixtures and Tangible Personal Property" means all fixtures, furniture,
furnishings, fittings, equipment, machinery, apparatus, appliances and other
articles of tangible personal property located on the Land or in the
Improvements as of the Effective Date and used or usable in connection with the
occupation or operation of all or any part of the Property, but only to the
extent transferable. The term "Fixtures and Tangible Personal Property" does not
include (a) equipment leased by Seller and the interest of Seller in any
equipment provided to the Property for use, but not owned or leased by Seller,
or (b) property owned or leased by any Tenant or guest, employee or other person
furnishing goods or services to the Property, or (c) property and equipment
owned by Seller, which in the ordinary course of business of the Property is not
used exclusively for the business, operation or management of the Property, or
(d) the property and equipment, if any, expressly identified in Schedule 1.1.24.
1.1.25 "General Assignment" shall have the meaning set forth in Section 5.2.3.
1.1.26 "Good Funds" shall have the meaning set forth in Section 2.2.1.
1.1.27 "Improvements" means all buildings and improvements located on the Land
taken "as is."
1.1.28 "Initial Deposit" shall have the meaning set forth in Section 2.2.1.
1.1.29 "Land" means all of those certain tracts of land located in the State of
Ohio described on Exhibit A, and all rights, privileges and appurtenances
pertaining thereto.
1.1.30 "Lease(s)" means the interest of Seller in and to all leases, subleases
and other occupancy contracts, whether or not of record, which provide for the
use or occupancy of space or facilities on or relating to the Property and which
are in force as of the Closing Date for the applicable Property.
1.1.31 "Leases Assignment" shall have the meaning set forth in Section 5.2.4.
1.1.32 "Lender" shall have the meaning set forth in Section 4.5.1.
1.1.33 "Loan" shall have the meaning set forth in Section 4.5.1.
1.1.34 "Loan Approval Period" shall have the meaning set forth in Section 4.5.4.
1.1.35 "Loan Approval Termination" shall have the meaning set forth in Section
4.5.4.
1.1.36 Intentionally Omitted.
1.1.37 "Loan Assumption and Release" shall have the meaning set forth in Section
4.5.2.
1.1.38 "Loan Balance" shall have the meaning set forth in Section 2.2.3.
1.1.39 Intentionally Omitted.
1.1.40 "Losses" shall have the meaning set forth in Section 3.4.1.
1.1.41 "Materials" shall have the meaning set forth in Section 3.5.
1.1.42 "Miscellaneous Property Assets" means all contract rights, leases,
concessions, warranties, guaranties, plans, drawings, agreements from
contractors, subcontractors, vendors and suppliers regarding their performance,
quality of workmanship and quality of materials supplied in connection with the
construction, manufacture, development, installation and operation of any and
all Improvements (to the extent assignable) and other items of intangible
personal property relating to the ownership or operation of the Property and
owned by Seller, excluding, however, (a) receivables, (b) Property Contracts,
(c) Leases, (d) Permits, (e) cash or other funds, whether in petty cash or house
"banks," or on deposit in bank accounts or in transit for deposit, (f) refunds,
rebates or other claims, or any interest thereon, for periods or events
occurring prior to the Closing Date, (g) utility and similar deposits, (h)
insurance or other prepaid items, (i) Seller's proprietary books and records, or
(j) any right, title or interest in or to the AIMCO Marks. The term
"Miscellaneous Property Assets" also shall include all of Seller's rights, if
any, in and to the name "BARRINGTON PLACE APARTMENTS" as it relates solely to
use in connection with the Property (and not with respect to any other property
owned or managed by Seller, Property Manager, AIMCO, or their respective
affiliates).
1.1.43 "Note" shall have the meaning set forth in Section 4.5.1.
1.1.44 "Objection Deadline" shall have the meaning set forth in Section 4.3.
1.1.45 "Objection Notice" shall have the meaning set forth in Section 4.3.
1.1.46 "Objections" shall have the meaning set forth in Section 4.3.
1.1.47 "Permits" means all licenses and permits granted by any governmental
authority having jurisdiction over the Property owned by Seller and required in
order to own and operate the Property.
1.1.48 "Permitted Exceptions" shall have the meaning set forth in Section 4.4.
1.1.49 "Property" means (a) the Land and Improvements and all rights of Seller,
if any, in and to all of the easements, rights, privileges, and appurtenances
belonging or in any way appertaining to the Land and Improvements, (b) the
right, if any and only to the extent transferable, of Seller in the Property
Contracts, Leases, Permits (other than Excluded Permits), and the Fixtures and
Tangible Personal Property, and (c) the Miscellaneous Property Assets owned by
Seller which are located on the Property and used in its operation.
1.1.50 "Property Contracts" means all contracts,
agreements, equipment leases, purchase orders, maintenance, service, or utility
contracts and similar contracts, excluding Leases, which relate to the
ownership, maintenance, construction or repair and/or operation of the Property,
but only to the extent the assignment of such contract to Purchaser is permitted
pursuant to the express terms of such contract, and not including (a) any
national contracts entered into by Seller, Property Manager, or AIMCO with
respect to the Property (i) which terminate automatically upon transfer of the
Property by Seller, or (ii) which Seller, in Seller's sole discretion, elects to
terminate with respect to the Property effective as of the Closing Date, or (b)
any property management contract for the Property. Property Contracts shall not
include forward or similar long-term contracts to purchase electricity, natural
gas, or other utilities, which contracts shall be "Utility Contracts" governed
by the provisions of Section 5.4.11.
1.1.51 "Property Contracts Notice" shall have the meaning set forth in Section
3.6.
1.1.52 "Property Manager" means the current property manager of the Property.
1.1.53 "Property Taxes" shall have the meaning set forth in Section 5.4.14.
1.1.54 "Proration Schedule" shall have the meaning set forth in Section 5.4.1.
1.1.55 "Purchase Price" means the consideration to be paid by Purchaser to
Seller for the purchase of the Property pursuant to Section 2.2.
1.1.56 "Regional Property Manager" shall have the meaning set forth in Section
6.4.
1.1.57 Intentionally Omitted.
1.1.58 "Refund" shall have the meaning set forth in Section 5.4.14.1.
1.1.59 "Required Loan Fund Amounts" shall have the meaning set forth in Section
4.5.3.
1.1.60 "Response Deadline" shall have the meaning set forth in Section 4.3.
1.1.61 "Response Notice" shall have the meaning set forth in Section 4.3.
1.1.62 "Seller's Indemnified Parties" shall have the meaning set forth in
Section 3.4.1
1.1.63 "Seller's Representations" shall have the meaning set forth in Section
6.1.
1.1.64 "Survey" shall have the meaning ascribed thereto in Section 4.2.
1.1.65 "Survival Period" shall have the meaning set forth in Section 6.3.
1.1.66 "Survival Provisions" shall have the meaning set forth in Section 13.28.
1.1.67 "Tax Year" shall have the meaning set forth in Section 5.4.14.3.
1.1.68 "Tenant" means any person or entity entitled to occupy any portion of the
Property under a Lease.
1.1.69 "Tenant Deposits" means all security deposits, prepaid rentals, cleaning
fees and other refundable deposits and fees collected from Tenants, plus any
interest accrued thereon, paid by Tenants to Seller pursuant to the Leases.
Tenant Deposits shall not include any non-refundable deposits or fees paid by
Tenants to Seller, either pursuant to the Leases or otherwise.
1.1.70 "Tenant Security Deposit Balance" shall have the meaning set forth in
Section 5.4.6.2.
1.1.71 "Terminated Contracts" shall have the meaning set forth in Section 3.6.
1.1.72 "Third-Party Costs" shall have the meaning set forth in Section
5.4.14.2(a).
1.1.73 "Title Commitment" shall have the meaning ascribed thereto in Section
4.1.
1.1.74 "Title Documents" shall have the meaning set forth in Section 4.1.
1.1.75 "Title Insurer" shall have the meaning set forth in Section 2.2.1.
1.1.76 "Title Policy" shall have the meaning set forth in Section 4.1.
1.1.77 "Uncollected Rents" shall have the meaning set forth in Section 5.4.6.1.
1.1.78 "Utility Contract" shall have the meaning set forth in Section 5.4.11.
1.1.79 "Vendor Terminations" shall have the meaning set forth in Section 5.2.5.
ARTICLE 2
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT
2.1 Purchase and Sale. Seller agrees to sell and convey the Property to
Purchaser and Purchaser agrees to purchase the Property from Seller, all in
accordance with the terms and conditions set forth in this Contract.
2.2
Purchase Price and Deposit. The total purchase price ("Purchase Price") for the
Property shall be an amount equal to Ten Million One Hundred Thousand and No/100
Dollars ($10,100,000.00), which amount shall be paid by Purchaser, as follows:
2.2.1 On the Effective Date, Purchaser shall deliver to Fidelity Title National
Insurance Company, c/o Lolly Avant, National Commercial Manager, 3D
International Tower, 1900 West Loop South, Suite 650, Houston, TX 77027,
800-879-1677 ("Escrow Agent" or "Title Insurer") an initial deposit (the
"Initial Deposit") of $101,000.00 by wire transfer of immediately available
funds ("Good Funds"). The Initial Deposit shall be held and disbursed in
accordance with the escrow provisions set forth in Section 2.3.
2.2.2 On the day that the Feasibility Period expires, Purchaser shall deliver to
Escrow Agent an additional deposit (the "Additional Deposit") of $101,000.00 by
wire transfer of Good Funds. The Additional Deposit shall be held and disbursed
in accordance with the escrow provisions set forth in Section 2.3.
2.2.3 At the Closing in connection with the Loan Assumption and Release, subject
to Purchaser's obligations under Section 4.5, Purchaser shall receive a credit
against the Purchase Price in the amount of the outstanding principal balance of
the Note being assumed by Purchaser, as of the Closing Date (the "Loan
Balance").
2.2.4 The balance of the Purchase Price for the Property shall be paid to and
received by Escrow Agent by wire transfer of Good Funds no later than 1:00 p.m.
(in the time zone in which Escrow Agent is located) on the Closing Date.
2.3 Escrow Provisions Regarding Deposit.
2.3.1 Escrow Agent shall hold the Deposit and make delivery of the Deposit to
the party entitled thereto under the terms of this Contract. Escrow Agent shall
invest the Deposit in insured interest-bearing bank accounts as Escrow Agent, in
its discretion, deems suitable, and all interest and income thereon shall become
part of the Deposit and shall be remitted to the party entitled to the Deposit
pursuant to this Contract.
2.3.2 Escrow Agent shall hold the Deposit until the earlier occurrence of (i)
the Closing Date, at which time the Deposit shall be applied against the
Purchase Price, or (ii) the date on which Escrow Agent shall be authorized to
disburse the Deposit as set forth in Section 2.3.3. The tax identification
numbers of the parties shall be furnished to Escrow Agent upon request.
2.3.3 If the Deposit has not been released earlier in accordance with Section
2.3.2, and either party makes a written demand upon Escrow Agent for payment of
the Deposit, Escrow Agent shall give written notice to the other party of such
demand. If Escrow Agent does not receive a written objection from the other
party to the proposed payment within 5 Business Days after the giving of such
notice, Escrow Agent is hereby authorized to make such payment. If Escrow Agent
does receive such written objection within such 5-Business Day period, Escrow
Agent shall continue to hold such amount until otherwise directed by written
instructions from the parties to this Contract or a final judgment or
arbitrator's decision. However, Escrow Agent shall have the right at any time to
deposit the Deposit and interest thereon, if any, with a court of competent
jurisdiction in the state in which the Property is located. Escrow Agent shall
give written notice of such deposit to Seller and Purchaser. Upon such deposit,
Escrow Agent shall be relieved and discharged of all further obligations and
responsibilities hereunder.
2.3.4 The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, that Escrow Agent shall
not be deemed to be the agent of either of the parties for any act or omission
on its part unless taken or suffered in bad faith in willful disregard of this
Contract or involving gross negligence. Seller and Purchaser jointly and
severally shall indemnify and hold Escrow Agent harmless from and against all
costs, claims and expenses, including reasonable attorney's fees, incurred in
connection with the performance of Escrow Agent's duties hereunder, except with
respect to actions or omissions taken or suffered by Escrow Agent in bad faith,
in willful disregard of this Contract or involving gross negligence on the part
of the Escrow Agent.
2.3.5 The parties shall deliver to Escrow Agent an executed copy of this
Contract, which shall constitute the sole instructions to Escrow Agent. Escrow
Agent shall execute the signature page for Escrow Agent attached hereto with
respect to the provisions of this Section 2.3; provided, however, that (a)
Escrow Agent's signature hereon shall not be a prerequisite to the binding
nature of this Contract on Purchaser and Seller, and the same shall become fully
effective upon execution by Purchaser and Seller, and (b) the signature of
Escrow Agent will not be necessary to amend any provision of this Contract other
than this Section 2.3.
2.3.6 Escrow Agent, as the person responsible for closing the transaction within
the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), shall file all necessary information, reports, returns,
and statements regarding the transaction required by the Code including, but not
limited to, the tax reports required pursuant to Section 6045 of the Code.
Further, Escrow Agent agrees to indemnify and hold Purchaser, Seller, and their
respective attorneys and brokers harmless from and against any Losses resulting
from Escrow Agent's failure to file the reports Escrow Agent is required to file
pursuant to this section.
2.3.7 The provisions of this Section 2.3 shall survive the termination of this
Contract, and if not so terminated, the Closing and delivery of the Deed to
Purchaser.
ARTICLE 3
FEASIBILITY PERIOD
3.1 Feasibility Period. Subject to the terms of Section 3.3 and 3.4 and the
right of Tenants under the Leases, from the Effective Date to and including the
date which is 30 days after the Effective Date (the "Feasibility Period"),
Purchaser and its agents, contractors, engineers, surveyors, attorneys,
accountants, advisors, lenders, affiliates, consultants, shareholders, investors
and employees (collectively, "Consultants") shall have the right from time to
time to enter onto the Property (subject to only a reasonable number of
individuals at any one time):
3.1.1 To conduct and make any and all customary studies, tests, examinations,
inquiries, and inspections, or investigations (collectively, the "Inspections")
of or concerning the Property (including, without limitation, engineering and
feasibility studies, evaluation of drainage and flood plain, soil tests for
bearing capacity and percolation and surveys, including topographical surveys);
3.1.2 To confirm any and all matters which Purchaser may reasonably desire to
confirm with respect to the Property;
3.1.3 To ascertain and confirm the suitability of the Property for Purchaser's
intended use of the Property; and
3.1.4 To review the Materials at Purchaser's sole cost and expense.
3.2 Expiration of Feasibility Period. If the results of any of the matters
referred to in Section 3.1 appear unsatisfactory to Purchaser for any reason or
if Purchaser elects not to proceed with the transaction contemplated by this
Contract for any other reason, or for no reason whatsoever, in Purchaser's sole
and absolute discretion, then Purchaser shall have the right to terminate this
Contract by giving written notice to that effect to Seller and Escrow Agent on
or before 5:00 p.m. (in the time zone in which the Escrow Agent is located) on
or before the date of the expiration of the Feasibility Period. If Purchaser
exercises such right to terminate, this Contract shall terminate and be of no
further force and effect, subject to and except for Purchaser's liability
pursuant to Section 3.3 and any other provision of this Contract which survives
such termination, and Escrow Agent shall forthwith return the amount of the
Initial Deposit to Purchaser. If Purchaser fails to provide Seller with written
notice of termination prior to the expiration of the Feasibility Period in
strict accordance with the notice provisions of this Contract, Purchaser's right
to terminate under this Section 3.2 shall be permanently waived and this
Contract shall remain in full force and effect, the Deposit (including both the
Initial Deposit and, when delivered in accordance with Section 2.2.2, the
Additional Deposit) shall be non-refundable, and Purchaser's obligation to
purchase the Property shall be non-contingent and unconditional except only for
satisfaction of the conditions expressly stated in Section 8.1 and subject to
the Lender's (as hereinafter defined) approval of the Loan Assumption and
Release (as hereinafter defined).
3.3 Conduct of Investigation. Purchaser shall not permit any mechanic's or
materialmen's liens or any other liens to attach to the Property by reason of
the performance of any work or the purchase of any materials by Purchaser or any
other party in connection with any Inspections conducted by or for Purchaser.
Purchaser shall give at least 48 hours notice to Seller prior to entry onto the
Property and shall permit Seller to have a representative present during all
Inspections conducted at the Property. All information made available by Seller
to Purchaser in accordance with this Contract or obtained by Purchaser in the
course of its Inspections shall be treated as confidential information in
accordance with the provisions of Section 13.14 herein by Purchaser, and, prior
to the purchase of the Property by Purchaser, Purchaser shall use its best
efforts to prevent its Consultants from divulging such information to any
unrelated third parties except as reasonably necessary to third parties engaged
by Purchaser for the limited purpose of analyzing and investigating such
information for the purpose of consummating the transaction contemplated by this
Contract. The provisions of this Section 3.3 shall survive the termination of
this Contract, and if not so terminated shall survive (except for the
confidentiality provisions of this Section 3.3) the Closing and delivery of the
Deed to Purchaser.
3.4 Purchaser Indemnification.
3.4.1 Purchaser shall indemnify, hold harmless and, if requested by Seller (in
Seller's sole discretion), defend (with counsel approved by Seller) Seller,
together with Seller's affiliates, parent and subsidiary entities, successors,
assigns, partners, managers, members, employees, officers, directors, trustees,
shareholders, counsel, representatives, agents, Property Manager, Regional
Property Manager, and AIMCO (collectively, including Seller, "Seller's
Indemnified Parties"), from and against any and all damages, mechanics' liens,
liabilities, losses, demands, actions, causes of action, claims, costs and
expenses (including reasonable attorneys' fees, including the cost of in-house
counsel and appeals) (collectively, "Losses") arising from or related to
Purchaser's or its Consultant's entry onto the Property, and any Inspections or
other matters performed by Purchaser with respect to the Property during the
Feasibility Period or otherwise.
3.4.2 Notwithstanding anything in this Contract to the contrary, Seller shall
have the right, without limitation, to disapprove any and all entries, surveys,
tests (including, without limitation, a Phase II environmental study of the
Property), investigations and other matters that in Seller's reasonable judgment
could result in any injury to the Property or breach of any contract, or expose
Seller to any Losses or violation of applicable law, or otherwise adversely
affect the Property or Seller's interest therein. Purchaser shall use best
efforts to minimize disruption to Tenants in connection with Purchaser's or its
Consultants' activities pursuant to this Section. No consent by the Seller to
any such activity shall be deemed to constitute a waiver by Seller or assumption
of liability or risk by Seller. Purchaser hereby agrees to restore, at
Purchaser's sole cost and expense, the Property to the same condition existing
immediately prior to Purchaser's exercise of its rights pursuant to this Article
3. Purchaser shall maintain and cause its third party Consultants to maintain in
an amount not less than $2,000,000 combined single limit (except for Purchaser's
surveyor, whose insurance shall be in an amount no less than $1,000,000,
combined single limit), together with workmen's compensation insurance if
required by state law (and if none if required by state law, it is understood
that each such party not having workmen's compensation insurance shall assume
all liability for their employees and Seller shall be indemnified from liability
for same), and in form and substance adequate to insure all liability of
Purchaser and its Consultants arising out of inspections and testing at the
Property or any part thereof made on behalf of Purchaser. Purchaser shall
deliver proof of the insurance coverage required pursuant to this Section 3.4.2
to Seller (in the form of a certificate of insurance) prior to Purchaser's or
Purchaser's Consultants' entry onto the Property. The provisions of this Section
3.4 shall survive the termination of this Contract, and if not so terminated,
the Closing and delivery of the Deed to Purchaser for a period of eighteen (18)
months.
3.5 Property Materials.
3.5.1 On the Effective Date, and to the extent the same exist and are in
Seller's possession or reasonable control (subject to Section 3.5.2), Seller
agrees to make the documents set forth on Schedule 3.5 (the "Materials")
available at the Property for review and copying by Purchaser at Purchaser's
sole cost and expense. In the alternative, at Seller's option and on the
Effective Date, Seller may deliver some or all of the Materials to Purchaser, or
make the same available to Purchaser on a secure web site (Purchaser agrees that
any item to be delivered by Seller under this Contract shall be deemed delivered
to the extent available to Purchaser on such secured web site). To the extent
that Purchaser determines that any of the Materials have not been made available
or delivered to Purchaser pursuant to this Section 3.5.1, Purchaser shall notify
Seller and Seller shall use commercially reasonable efforts to deliver the same
to Purchaser within 5 Business Days after such notification is received by
Seller; provided, however, that under no circumstances will the Feasibility
Period be extended and Purchaser's sole remedy will be to terminate this
Contract pursuant to Section 3.2.
3.5.2 In providing such information and Materials to Purchaser, Seller makes no
representation or warranty, express, written, oral, statutory, or implied, and
all such representations and warranties are hereby expressly excluded and
disclaimed except as provided in Section 6.1 and Section 9.1 herein, in the Deed
and in the Leases Assignment. Except as provided in Section 6.1 and Section 9.1
herein, in the Deed and in the Leases Assignment, any information and Materials
provided by Seller to Purchaser under the terms of this Contract are for
informational purposes only and shall be returned by Purchaser to Seller no
later than five (5) days after termination of this Contract. Except as provided
in Section 6.1 and Section 9.1 herein, in the Deed and in the Leases Assignment,
Purchaser shall not in any way be entitled to rely upon the accuracy of such
information and Materials. Purchaser recognizes and agrees that, except as
provided in Section 6.1 and Section 9.1 herein, in the Deed and in the Leases
Assignment, the Materials and other documents and information delivered or made
available by Seller pursuant to this Contract may not be complete or constitute
all of such documents which are in Seller's possession or control, but are those
that are readily available to Seller after reasonable inquiry to ascertain their
availability. Purchaser understands that, although Seller will use commercially
reasonable efforts to locate and make available the Materials and other
documents required to be delivered or made available by Seller pursuant to this
Contract, Purchaser will not rely on such Materials or other documents as being
a complete and accurate source of information with respect to the Property
except as provided in Section 6.1 and Section 9.1 herein, in the Deed and in the
Leases Assignment, and will instead in all instances, except as provided in
Section 6.1 and Section 9.1 herein, in the Deed and in the Leases Assignment,
rely exclusively on its own Inspections and Consultants with respect to all
matters which it deems relevant to its decision to acquire, own and operate the
Property.
3.5.3 The provisions of this Section 3.5 shall survive the Closing and delivery
of the Deed to Purchaser.
3.6 Property Contracts. On or before the expiration of the
Feasibility Period, Purchaser may deliver written notice to Seller (the
"Property Contracts Notice") specifying any Property Contracts with respect to
which Purchaser desires to have Seller deliver notices of termination at the
Closing (the "Terminated Contracts"); provided that (a) the effective date of
such termination after Closing shall be subject to the express terms of such
Terminated Contracts, (b) if any such Property Contract cannot by its terms be
terminated, it shall be assumed by Purchaser and not be a Terminated Contract,
and (c) to the extent that any such Terminated Contract requires payment of a
penalty or premium for cancellation, Purchaser shall be solely responsible for
the payment of any such cancellation fees or penalties. If Purchaser fails to
deliver the Property Contracts Notice on or before the expiration of the
Feasibility Period, there shall be no Terminated Contracts and Purchaser shall
assume all Property Contracts at the Closing. Seller shall deliver to Purchaser,
at least ten (10) days prior to the expiration of the Feasibility Period, a list
certified to Seller's knowledge, of all Property Contracts in existence relating
to the ownership and operation of the Property.
ARTICLE 4
TITLE
4.1 Title Documents. Within 10 calendar days after the Effective Date, Seller
shall cause to be delivered to Purchaser a standard form commitment for title
insurance ("Title Commitment") for the Property in an amount equal to the
Purchase Price from Title Insurer for an owner's title insurance policy (the
"Title Policy") on the most recent standard American Land Title Association
form, together with copies of all instruments identified as exceptions therein
(together with the Title Commitment, referred to herein as the "Title
Documents"). Seller shall be responsible only for payment of the basic premium
for the Title Policy. Purchaser shall be solely responsible for payment of all
other costs relating to procurement of the Title Commitment, the Title Policy,
and any requested endorsements, including all title search and examination fees.
4.2 Survey. Purchaser may cause to be prepared a survey (or an update to any
existing survey) for the Property ("Survey") to be delivered to Purchaser and
Seller no later than 10 days after the Effective Date. The costs of obtaining a
new Survey (or updating any existing survey) shall be split equally by Seller
and Purchaser. Within 5 days after the Effective Date, Seller shall deliver to
Purchaser or make available at the Property any existing survey of the Property,
subject to the surveyor being able to deliver an updated Survey within such time
frame, which to Seller's knowledge is in Seller's possession or reasonable
control (subject to Section 3.5.2). In the event the surveyor does not deliver
the Survey within such time frame, Purchaser may extend the date for providing
Purchaser's Objections (as hereinafter defined) to the Survey and the
Feasibility Period, with respect to the Survey only as referenced below in
Section 4.3, by one day for each day that Purchaser does not receive the Survey
within the time frame set forth above; provided, however, that such day to day
extension shall not exceed 7 days after the Objection Deadline (defined below).
4.3 Objection and Response Process. On or before the date which is 20 days after
the Effective Date but subject to the provisions of Section 4.2 with respect to
the existing survey (the "Objection Deadline"), Purchaser shall give written
notice (the "Objection Notice") to the attorneys for Seller of any matter set
forth in the Title Documents or the Survey to which Purchaser objects (the
"Objections"). If Purchaser fails to tender an Objection Notice on or before the
Objection Deadline (as extended for the Survey by the provisions of Section
4.2), Purchaser shall be deemed to have approved and irrevocably waived any
objections to any matters covered by the Title Documents and the Survey. On or
before 25 days after the Effective Date (as extended for the Survey by the
provisions set forth in Section 4.2) (the "Response Deadline"), Seller may, in
Seller's sole discretion, give Purchaser notice (the "Response Notice") of those
Objections which Seller is willing to cure, if any. Seller shall be entitled to
reasonable adjournments of the Closing Date (up to 30 days) to cure the
Objections. If Seller fails to deliver a Response Notice by the Response
Deadline, Seller shall be deemed to have elected not to cure or otherwise
resolve any matter set forth in the Objection Notice. If Purchaser is
dissatisfied with the Response Notice, Purchaser may, as its exclusive remedy,
elect by written notice given to Seller on or before the expiration of the
Feasibility Period (as extended for the Survey by the provisions set forth in
Section 4.2) (the "Final Response Deadline") either (a) to accept the Title
Documents and Survey with resolution, if any, of the Objections as set forth in
the Response Notice (or if no Response Notice is tendered, without any
resolution of the Objections) and without any reduction or abatement of the
Purchase Price, or (b) to terminate this Contract, in which event the amount of
the Initial Deposit shall be returned to Purchaser. If Purchaser fails to give
notice to terminate this Contract on or before the expiration of the Feasibility
Period (subject to the extension for Objections on the Survey described in
Section 4.2 above), Purchaser shall be deemed to have elected to approve and
irrevocably waived any objections to any matters covered by the Title Documents
and the Survey, subject only to resolution, if any, of the Objections as set
forth in the Response Notice (or if no Response Notice is tendered, without any
resolution of the Objections).
4.4 Permitted Exceptions. The Deed delivered pursuant to this Contract shall be
subject to the following, all of which shall be deemed "Permitted Exceptions":
4.4.1 All matters shown in the Title Documents and the Survey, other than (a)
those Objections, if any, which Seller has agreed to cure pursuant to the
Response Notice under Section 4.3, (b) mechanics' liens and taxes due and
payable with respect to the period preceding Closing, (c) the standard exception
regarding the rights of parties in possession which shall be limited to those
parties in possession pursuant to the Leases, and (d) the standard exception
pertaining to taxes which shall be limited to taxes and assessments payable in
the year in which the Closing occurs and subsequent taxes and assessments;
4.4.2 All Leases;
4.4.3 The Assumed Encumbrances;
4.4.4 Applicable zoning and governmental regulations and ordinances;
4.4.5 Any defects in or objections to
title to the Property, or title exceptions or encumbrances, arising by, through
or under Purchaser; and
4.4.6 The terms and conditions of this Contract.
4.5 Assumed Encumbrances.
4.5.1 Purchaser recognizes and agrees that, in connection with a loan (the
"Loan") made to Seller by Newport Mortgage Company, L.P., a Texas limited
partnership as subsequently assigned to Federal Home Loan Mortgage Corporation
(the "Lender"), the Property presently is encumbered by a mortgage dated July
30, 1998, and recorded August 3, 1998 (the "Assumed Deed of Trust") and certain
other security and related documents in connection with the Loan (collectively,
the "Assumed Encumbrances"). The Loan is evidenced by that certain promissory
note dated July 30, 1998 in the original principal amount of $4,900,000.00 (the
"Note," and together with the Assumed Deed of Trust and the Assumed Encumbrances
and any other documents executed by Seller in connection with the Loan, the
"Assumed Loan Documents"), and payable to the order of the Lender. Seller has
advised Purchaser that the outstanding principal balance of the Note as of the
Effective Date (after October 2003 payment was made) is $4,582,753.00 and that
the monthly payments of principal and interest under the Note presently are
$31,456.28. On the Effective Date Seller agrees that it will make available to
Purchaser (in the same manner in which Seller is permitted to make the Materials
available to Purchaser under Section 3.5.1) copies of the Assumed Loan Documents
which are in Seller's possession or reasonable control (subject to Section
3.5.2).
4.5.2 If this Contract is not terminated in accordance with the terms hereof,
Purchaser agrees that, subject to Section 5.4.7 hereof, at the Closing (a)
Purchaser shall assume Seller's obligations under the Note and all of the other
Assumed Loan Documents and accept title to the Property subject to the Assumed
Deed of Trust and the Assumed Encumbrances, and (b) the Lender shall release
Seller, as well as any guarantors and other obligated parties under the Assumed
Loan Documents, from all liability and obligations under the Assumed Loan
Documents (and any related guarantees or letters of credit), including, without
limitation, any obligation to make payments of principal and interest under the
Note (referred to herein as the "Loan Assumption and Release").
4.5.3 Purchaser further acknowledges that the Assumed Loan Documents require the
satisfaction by Purchaser of certain requirements as set forth therein to allow
for the Loan Assumption and Release. Accordingly, Purchaser, at its sole cost
and expense and within 15 days after the Effective Date, shall submit its loan
application to Lender for the Loan Assumption. Purchaser's requested assumption
shall not include any requirement by Purchaser to (a) change the terms of the
Loan, or (b) obtain any secondary financing from Lender or any other lender.
Purchaser hereby agrees to satisfy all requirements set forth in the Assumed
Loan Documents to allow for the Loan Assumption and Release. Purchaser shall
comply with Lender's assumption guidelines in connection with the Loan
Assumption and Release; provided, however, Purchaser shall only be required to
comply with standard Freddie Mac loan guidelines applicable to qualified
borrowers similar to Purchaser, which guidelines are in effect as of the time
the loan application is submitted by Purchaser. Purchaser shall pay all fees and
expenses (including, without limitation, all servicing fees and charges,
transfer fees, assumption fees, title fees, endorsement fees, prepayment
penalties, charges, premiums or other fees, and other fees to release Seller of
all liability under the Loan) imposed or charged by the Lender or its counsel
(such fees and expenses collectively being referred to as the "Lender Fees"), in
connection with and as necessary for Purchaser to obtain approval of Loan
Assumption and Release (which obligation shall survive the termination of this
Contract and the Closing). Additionally, to the extent such requirements comply
with standard Freddie Mac loan guidelines then in effect for similarly qualified
borrowers as of the time the loan application is submitted by Purchaser,
Purchaser shall be responsible for (a) replacing (and increasing to the extent
required by Lender) all reserves, impounds and other accounts required to be
maintained in connection with the Loan, and (b) funding any additional reserves,
impounds or accounts required by Lender to be maintained by Purchaser in
connection with the Loan after the Loan Assumption and Release (the foregoing
amounts in (a) and (b) collectively referred to herein as the "Required Loan
Fund Amounts"). Any existing reserves, impounds and other accounts required to
be replaced by Purchaser pursuant to the foregoing sentence shall be released in
Good Funds to Seller at the Closing. Purchaser agrees promptly to deliver to the
Lender all documents and information required by the Assumed Loan Documents, and
such other information or documentation as the Lender reasonably may request,
including, without limitation, financial statements, income tax returns and
other financial information for Purchaser and any required guarantor. Seller
agrees that it will cooperate with Purchaser and Lender, in connection with
Purchaser's application to Lender for approval of the Loan Assumption and
Release. Any costs incurred by Seller in connection with providing such
cooperation shall be the sole responsibility of Seller; provided, however, in no
event shall Seller be liable for any Lender Fees. Purchaser shall order a Phase
I Environmental study (prepared by an environmental engineer reasonably
acceptable to Seller and Lender), and Purchaser covenants that if this Contract
is not terminated in accordance with the terms hereof, such Phase I
Environmental study shall be delivered to Seller and Lender no later than 10
days prior to the Closing Date in connection with and as a precondition to the
Loan Assumption and Release.
4.5.4 Provided that (a) Purchaser fully complies with its obligations under this
Contract (including this Section 4.5) and (b) despite Purchaser's best efforts
to expeditiously and diligently initiate and pursue all steps necessary to
obtain the Loan Assumption and Release and (c) for reasons not caused by
Purchaser, Purchaser does not obtain the consent of the Lender to obtain the
Loan Assumption and Release within 45 days after the Effective Date (the "Loan
Approval Period"), then Purchaser shall have the right to give Escrow Agent
notice terminating this Contract based solely on the fact that the Loan
Assumption and Release has not been approved based upon the foregoing condition
in subparagraph (c) (the "Loan Approval Termination") on or before the
expiration of the Loan Approval Period, in which event this Contract shall be of
no further force and effect, subject to and except for Purchaser's liability
pursuant to Section 3.3 and any other provision of this Contract which survives
such termination, and Escrow Agent shall forthwith return the Deposit to
Purchaser. If Purchaser fails to provide Seller with such written notice of
termination prior to the expiration of the Loan Approval Period in strict
accordance with the notice provisions of this Contract, Purchaser's right to
terminate under this Section 4.5.4 shall be permanently waived, this Contract
shall remain in full force and effect, the Deposit shall be non-refundable, and
Purchaser's obligation to obtain the Lender's approval of the Loan Assumption
and Release and to purchase the Property shall be non-contingent and
unconditional except only for satisfaction of the conditions expressly stated in
Section 8.1. Purchaser recognizes and agrees that if the Loan Approval Period
expires and Purchaser does not terminate this Contract, the Loan Assumption and
Release shall not be a condition to Purchaser's obligation to close, and, if the
Loan Assumption and Release is not obtained and the Closing has not occurred on
or before the Closing Date, Purchaser shall be in default under this Contract,
entitling the Seller to terminate this Contract, in which event the Deposit
shall be immediately released to Seller by the Escrow Agent and this Contract
shall be of no further force and effect, subject to and except for Purchaser's
liability pursuant to Section 3.3 and any other provision of this Contract which
survives such termination.
ARTICLE 5
CLOSING
5.1 Closing Date. The Closing shall occur no later than December 30, 2003 (the
"Closing Date"), through an escrow with Escrow Agent, whereby the Seller,
Purchaser and their attorneys need not be physically present at the Closing and
may deliver documents by overnight air courier or other means. The Closing Date
may be extended without penalty at the option of Seller to a date not later than
30 days following the Closing Date specified in the first sentence of this
paragraph above to satisfy a condition to be satisfied by Seller, or such
earlier or later date as is mutually acceptable to Seller and Purchaser.
5.2 Seller Closing Deliveries. No later than 1 Business Day prior to the Closing
Date, Seller shall deliver to Escrow Agent (for disbursement to Purchaser upon
the Closing), each of the following items:
5.2.1 Limited Warranty Deed (the "Deed") in the form attached as Exhibit B to
Purchaser, subject to the Permitted Exceptions.
5.2.2 A Bill of Sale in the form attached as Exhibit C.
5.2.3 A General Assignment in the form attached as Exhibit D (the "General
Assignment").
5.2.4 An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the "Leases Assignment").
5.2.5 A letter prepared by Seller and countersigned by Purchaser to each of the
vendors under the Terminated Contracts informing them of the termination of such
Terminated Contract as of the Closing Date (subject to any delay in the
effectiveness of such termination pursuant to the express terms of each
applicable Terminated Contract) (the "Vendor Terminations").
5.2.6 A closing statement executed by Seller.
5.2.7 A title affidavit or at Seller's option an indemnity, as applicable, in
the customary form reasonably acceptable to Seller to enable Title Insurer to
delete the standard exceptions to the title insurance policy set forth in this
Contract (other than matters constituting any Permitted Exceptions and matters
which are to be completed or performed post-Closing) to be issued pursuant to
the Title Commitment; provided that such affidavit does not subject Seller to
any greater liability, or impose any additional obligations, other than as set
forth in this Contract. Seller informs Purchaser that Title Insurer has agreed
to insure the gap in connection with the Closing, if required, based solely on
Title Insurer's receipt of Seller's standard title affidavit.
5.2.8 A certification of Seller's non-foreign status pursuant to Section 1445 of
the Internal Revenue Code of 1986, as amended.
5.2.9 A rent roll for the Property certified by Seller, but limited to Seller's
knowledge, listing the monthly base rent payable, lease expiration date and
unapplied security deposit as of the Closing Date.
5.2.10 Resolutions, certificates of good standing, and such other organizational
documents as Title Insurer shall reasonably require evidencing Seller's
authority to consummate this transaction.
5.2.11 An operating statement for the Property as of the month immediately
preceding the month in which the Closing occurs, certified by Seller, but
limited to Seller's knowledge.
5.2.12 Such other instruments, documents or certificates as are required to be
delivered by Seller to Purchaser in accordance with any of the other provisions
of this Contract.
5.3 Purchaser Closing Deliveries. No later than 1 Business Day prior to the
Closing Date (except for the balance of the Purchase Price which is to be
delivered at the time specified in Section 2.2.4), Purchaser shall deliver to
the Escrow Agent (for disbursement to Seller upon the Closing) the following
items with respect to the Property being conveyed at such Closing:
5.3.1 The full Purchase Price (with credit for the Deposit and, if applicable,
the Loan Balance), plus or minus the adjustments or prorations required by this
Contract.
5.3.2 If required by Title Insurer, a title affidavit or at Purchaser's option
an indemnity, as applicable, in the customary form reasonably acceptable to
Purchaser to enable Title Insurer to delete the standard exceptions to the title
insurance policy set forth in this Contract (other than matters constituting any
Permitted Exceptions and matters which are to be completed or performed
post-Closing) to be issued pursuant to the Title Commitment; provided that such
affidavit does not subject Purchaser to any greater liability, or impose any
additional obligations, other than as set forth in this Contract and shall only
concern liens filed against the Property as a result of the actions of Purchaser
or Purchaser's Consultants.
5.3.3 Any declaration or other statement which may be required to be submitted
to the local assessor with respect to the terms of the sale of the Property.
5.3.4 A closing statement executed by Purchaser.
5.3.5 A countersigned counterpart of the General Assignment.
5.3.6 A countersigned counterpart of the Leases Assignment.
5.3.7 Notification letters to all Tenants prepared and executed by Purchaser in
the form attached hereto as Exhibit F.
5.3.8 A countersigned counterpart of the Vendor Terminations; provided, however,
that such Vendor Terminations do not subject Purchaser to any greater liability,
or impose any additional obligations other than as set forth in this Contract.
5.3.9 Any cancellation fees or penalties due to any vendor under any Terminated
Contract as a result of the termination thereof.
5.3.10 Resolutions, certificates of good standing, and such other organizational
documents as Title Insurer shall reasonably require evidencing Purchaser's
authority to consummate this transaction.
5.3.11 If Purchaser elects to cause and the Lender has agreed to permit the Loan
Assumption and Release, all documents, instruments, guaranties, Lender Fees,
Required Loan Fund Amounts, and other items or funds required by the Lender to
cause the Loan Assumption and Release.
5.3.12 Intentionally Omitted.
5.3.13 Such other instruments, documents or certificates as are required to be
delivered by Purchaser to Seller in accordance with any of the other provisions
of this Contract.
5.4 Closing Prorations and Adjustments.
5.4.1 General. All normal and customarily proratable items, including, without
limitation, collected rents, operating expenses, personal property taxes, other
operating expenses and fees, shall be prorated as of the Closing Date, Seller
being charged or credited, as appropriate, for all of same attributable to the
period up to the Closing Date (and credited for any amounts paid by Seller
attributable to the period on or after the Closing Date, if assumed by
Purchaser) and Purchaser being responsible for, and credited or charged, as the
case may be, for all of same attributable to the period on and after the Closing
Date. Seller shall prepare a proration schedule (the "Proration Schedule") of
the adjustments described in this Section 5.4 prior to Closing. Such adjustments
shall be paid by Purchaser to Seller (if the prorations result in a net credit
to Seller) or by Seller to Purchaser (if the prorations result in a net credit
to Purchaser), by increasing or reducing the cash to be paid by Purchaser at
Closing.
5.4.2 Operating Expenses. All of the operating, maintenance, taxes (other than
real estate taxes, such as rental taxes), and other expenses incurred in
operating the Property that Seller customarily pays, and any other costs
incurred in the ordinary course of business for the management and operation of
the Property, shall be prorated on an accrual basis. Seller shall pay all such
expenses that accrue prior to Closing and Purchaser shall pay all such expenses
that accrue from and after the Closing Date.
5.4.3 Utilities. The final readings and final billings for utilities will be
made if possible as of the Closing Date, in which case Seller shall pay all such
bills as of the Closing Date and no proration shall be made at the Closing with
respect to utility bills. Otherwise, a proration shall be made based upon the
parties' reasonable good faith estimate and a readjustment made within 30 days
after the Closing, if necessary. Seller shall be entitled to the return of any
deposit(s) posted by it with any utility company, and Seller shall notify each
utility company serving the Property to terminate Seller's account, effective as
of noon on the Closing Date.
5.4.4 Real Estate Taxes. In the event any of the real estate ad valorem or
similar taxes for the Property are delinquent at the time of Closing, Seller
shall pay same at Closing. Any real estate ad valorem or similar taxes for the
Property for the calendar year in which Closing occurs, or any installment of
assessments payable in installments which installment is payable in the calendar
year of Closing, shall be prorated to the date of Closing, based upon actual
days involved. The proration of real property taxes or installments of
assessments shall be based upon the assessed valuation and tax rate figures
(assuming payment at the earliest time to allow for the maximum possible
discount) for the year in which the Closing occurs to the extent the same are
available; provided, that in the event that actual figures (whether for the
assessed value of the Property or for the tax rate) for the year of Closing are
not available at the Closing Date, the proration shall be made using figures
from the preceding year (assuming payment at the earliest time to allow for the
maximum possible discount). The proration of real property taxes or installments
of assessments shall be final and not subject to re-adjustment after Closing.
5.4.5 Property Contracts. Purchaser shall assume at Closing the obligations
under the Property Contracts assumed by Purchaser, subject to proration of
operating expenses under Section 5.4.2; provided, however, that Seller shall be
responsible for any monetary obligations accruing thereunder to the date of
Closing.
5.4.6 Leases.
5.4.6.1 All collected rent (whether fixed monthly rentals, additional rentals,
escalation rentals, retroactive rentals, operating cost pass-throughs or other
sums and charges payable by Tenants under the Leases), income and expenses from
any portion of the Property shall be prorated as of the Closing Date (prorated
for any partial month). Purchaser shall receive all collected rent and income
attributable to dates from and after the Closing Date. Seller shall receive all
collected rent and income attributable to dates prior to the Closing Date.
Notwithstanding the foregoing, no prorations shall be made in relation to either
(a) non-delinquent rents which have not been collected as of the Closing Date,
or (b) delinquent rents existing, if any, as of the Closing Date (the foregoing
(a) and (b) referred to herein as the "Uncollected Rents"). In adjusting for
Uncollected Rents, no adjustments shall be made in Seller's favor for rents
which have accrued and are unpaid as of the Closing, but Purchaser shall pay
Seller such accrued Uncollected Rents as and when collected by Purchaser for a
period of six (6) months after the Closing Date; provided, however, after the
Closing all sums collected by Purchaser for any tenant delinquent in its rent
shall first be applied to pay Purchaser the amount of any rent owing for the
period after the Closing and the amount of Purchaser's out of pocket costs of
collection, and then such remaining amount shall be distributed by Purchaser to
Seller toward the Uncollected Rents. After the Closing, Seller shall continue to
have the right, but not the obligation, in its own name, to demand payment of
and to collect Uncollected Rents owed to Seller by any Tenant which is no longer
in possession at the Property, which right shall include, without limitation,
the right to continue or commence legal actions or proceedings against any
Tenant and the delivery of the Leases Assignment shall not constitute a waiver
by Seller of such right.
5.4.6.2 At Closing, Purchaser shall receive a credit against the Purchase Price
in an amount equal to the received and unapplied balance of all cash (or cash
equivalent) Tenant Deposits, including, but not limited to, security, damage or
other refundable deposits or required to be paid by any of the Tenants to secure
their respective obligations under the Leases, together, in all cases, with any
interest payable to the Tenants thereunder as may be required by their
respective Tenant Lease or state law (the "Tenant Security Deposit Balance").
Any cash (or cash equivalents) held by Seller which constitute the Tenant
Security Deposit Balance shall be retained by Seller in exchange for the
foregoing credit against the Purchase Price and shall not be transferred by
Seller pursuant to this Contract (or any of the documents delivered at Closing),
but the obligation with respect to the Tenant Security Deposit Balance
nonetheless shall be assumed by Purchaser. The Tenant Security Deposit Balance
shall not include any non-refundable deposits or fees paid by Tenants to Seller,
either pursuant to the Leases or otherwise.
5.4.6.3 With respect to operating expenses, taxes, utility charges, other
operating cost pass-throughs, retroactive rental escalations, sums or charges
payable by Tenants under the Tenant Leases, to the extent that Seller has
received as of the Closing payments allocable to periods subsequent to Closing,
the same shall be properly prorated with an adjustment in favor of Purchaser,
and Purchaser shall reserve a credit therefor at Closing. With respect to any
payments received by Purchaser after the Closing allocable to Seller prior to
Closing, Purchaser shall promptly pay the same to Seller.
5.4.7 Existing Loan. Seller shall be responsible for all principal payments
required to be paid under the terms of the Note prior to Closing, together with
all interest accrued under the Note prior to Closing. Purchaser shall be
responsible for the payment of all principal required to be paid from and after
Closing, together with all interest accruing under the Note from and after
Closing. Purchaser also shall be responsible for all Lender Fees and all other
fees, penalties, interest and other amounts due and owing from and after Closing
under the Assumed Loan Documents. As set forth in Section 4.5.3, any existing
reserves, impounds and other accounts maintained in connection with the Loan
shall be released in Good Funds to Seller at the Closing.
5.4.8 Insurance. No proration shall be made in relation to insurance premiums
and insurance policies will not be assigned to Purchaser.
5.4.9 Employees. All of Seller's and Seller's manager's on-site employees shall
have their employment at the Property terminated as of the Closing Date.
5.4.10 Closing Costs. Purchaser shall pay any transfer, mortgage assumption,
sales, use, gross receipts or similar taxes, any premiums or fees required to be
paid by Purchaser with respect to the Title Policy pursuant to Section 4.1, and
one-half of the customary closing costs of the Escrow Agent. Seller shall pay
the base premium for the Title Policy to the extent required by Section 4.1, the
cost of recording any instruments required to discharge any liens or
encumbrances against the Property, and one-half of the customary closing costs
of the Escrow Agent.
5.4.11 Utility Contracts. If Seller has entered into an agreement for the
purchase of electricity, gas or other utility service for the Property or a
group of properties (including the Property) (a "Utility Contract"), or an
affiliate of Seller has entered into a Utility Contract, then, at the option of
Seller, (a) Purchaser either shall assume the Utility Contract with respect to
the Property, or (b) the reasonably calculated costs of the Utility Contract
attributable to the Property from and after the Closing shall be paid to Seller
at the Closing and Seller shall remain responsible for payments under the
Utility Contract.
5.4.12 Survival. The provisions of this Section 5.4 shall survive the Closing
and delivery of the Deed to Purchaser.
5.4.13 Possession. Possession of the Property, subject to the Leases, Property
Contracts which are not identified as Terminated Contracts during the
Feasibility Period (subject to the limitations of Section 3.6), and Permitted
Exceptions, shall be delivered to Purchaser at the Closing upon release from
escrow of all items to be delivered by Purchaser pursuant to Section 5.3,
including, without limitation, the Purchase Price. To the extent reasonably
available to Seller, originals or copies of the Leases and Property Contracts,
lease files, warranties, guaranties, operating manuals, keys to the property,
and Seller's books and records (other than proprietary information) regarding
the Property shall be made available to Purchaser at the Property after the
Closing.
5.4.14 Tax Appeals. Purchaser acknowledges that Seller may have filed one or
more appeals (collectively, the "Appeal") with respect to real estate ad valorem
or other similar property taxes applicable to the Property (the "Property
Taxes").
5.4.14.1 If such Appeal relates to any Tax Year (defined below) prior to the Tax
Year in which the Closing occurs, Seller shall be entitled, in Seller's sole
discretion, to continue to pursue such Appeal after the Closing Date, and, in
the event that the Appeal is successful in reducing the amount of Property Taxes
payable with respect to any such prior Tax Year, Seller shall be entitled to the
full amount of any rebate, refund or reduction (collectively, a "Refund")
resulting from the Appeal. Purchaser shall execute any documents reasonably
requested by Seller for the purpose of facilitating Seller's prosecution of the
Appeal or collecting any Refund. Seller shall not be obligated to continue to
pursue any Appeal with respect to the Property, including, without limitation,
any Appeal that relates to a Tax Year during or after the Tax Year in which
Closing occurs.
5.4.14.2 If such Appeal relates to the Tax Year in which Closing occurs, then,
prior to the Closing, Seller shall notify Purchaser whether Seller desires to
continue to process the Appeal from and after the Closing Date. If Seller fails
to notify Purchaser of its election to continue the Appeal, Seller will be
deemed to have elected not to continue the Appeal from and after the Closing
Date and the provisions of Section 5.4.14.2(b) shall apply.
(a) If Seller elects to continue the Appeal, then, from
and after the Closing Date, Seller agrees that it will continue, at Seller's
sole cost and expense, to reasonably prosecute the Appeal to conclusion with the
applicable governmental tribunal (including any further appeals which Seller
deems reasonable to pursue). In the event that the Appeal is successful in
reducing the amount of Property Taxes payable with respect to the Tax Year in
which Closing occurs, then Purchaser and Seller shall share any Refund on a pro
rata basis (in accordance with the number of days in the Tax Year of Closing
that each held title to the Property) after first reimbursing Seller for its
actual, reasonable and documented third-party costs (collectively, the
"Third-Party Costs") incurred in connection with the Appeal. If Third-Party
Costs equal or exceed the amount of the Refund, then Seller shall be entitled to
the full amount of the Refund.
(b) If Seller does not elect to continue the Appeal,
then, from and after the Closing Date, Purchaser agrees that it will continue,
at Purchaser's sole cost and expense, to reasonably prosecute the Appeal to
conclusion with the applicable governmental tribunal (including any further
appeals which Purchaser deems reasonable to pursue). In the event that the
Appeal is successful in reducing the amount of Property Taxes payable with
respect to the Tax Year in which Closing occurs, then Purchaser and Seller shall
share any Refund on a pro rata basis (in accordance with the number of days in
the Tax Year of Closing that each held title to the Property) after first
reimbursing each of Purchaser and Seller for their respective Third-Party Costs
incurred in connection with the Appeal. If Third-Party Costs equal or exceed the
amount of the Refund, then the Refund shall be applied to such Third-Party Costs
on a pro rata basis, with each of Purchaser and Seller receiving a portion of
the Refund equal to the product of (i) a fraction, the numerator of which is the
respective party's Third-Party Costs, and the denominator of which is the total
of both parties' Third-Party Costs, and (ii) the amount of the Refund.
5.4.14.3 For purposes of this Section 5.4.14, "Tax Year" shall mean each
12-month period for which the applicable taxing authority assesses Property
Taxes, which may or may not be a calendar year.
5.5 Post Closing Adjustments. In general, and except as provided in this
Contract or the Closing Documents, Seller shall be entitled to all income, and
shall pay all expenses, relating to the operation of the Property for the period
prior to the Closing Date and Purchaser shall be entitled to all income, and
shall pay all expenses, relating to the operation of the Property for the period
commencing on and after the Closing Date. Purchaser or Seller may request that
Purchaser and Seller undertake to re-adjust any item on the Proration Schedule
(or any item omitted therefrom) in accordance with the provisions of Section 5.4
of this Contract; provided, however, that neither party shall have any
obligation to re-adjust any items (a) after the expiration of 120 days after
Closing, or (b) subject to such 120-day period, unless such items exceed
$2,000.00 in magnitude (either individually or in the aggregate). The provisions
of this Section 5.6 shall survive the Closing and delivery of the Deed to
Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER
6.1 Seller's Representations. Except, in all cases, for any fact, information or
condition disclosed in the Title Documents, the Permitted Exceptions, the
Property Contracts, or the Materials, or which is otherwise known by Purchaser
prior to the Closing, Seller represents and warrants to Purchaser the following
(collectively, the "Seller's Representations") as of the Effective Date and as
of the Closing Date (provided that Purchaser's remedies if any such Seller's
Representations are untrue as of the Closing Date are limited to those set forth
in Section 8.1):
6.1.1 Seller hereby acknowledges that as of the Effective Date Seller is not in
good standing under the laws of the state of its formation set forth in the
initial paragraph of this Contract, and Seller is currently taking all measures
necessary and appropriate to obtain its reinstatement under the laws of the
state of its formation; and at the Closing Seller, acting through any of its or
their duly empowered and authorized officers or members, shall have all
necessary entity power and authority to own and use its properties and to
transact the business in which it is engaged, and subject to Section 8.2.4 has
or at the Closing will have the full power and authority to enter into this
Contract, to execute and deliver the documents and instruments required of
Seller herein, and to perform its obligations hereunder. The compliance with or
fulfillment of the terms and conditions hereof will not conflict with, or result
in a breach of, the terms, conditions or provisions of, or constitute a default
under, any contract to which Seller is a party or by which Seller is otherwise
bound, which conflict, breach or default would have a material adverse affect on
Seller's ability to consummate the transaction contemplated by this Contract or
on the Property. This Contract is a valid, binding and enforceable agreement
against Seller in accordance with its terms, subject to bankruptcy and similar
laws affecting the rights and remedies of creditors generally;
6.1.2 Other than the Leases, the Property is not subject to any written lease
executed by Seller or, to Seller's knowledge, any other possessory interests of
any person;
6.1.3 Seller is not a "foreign person," as that term is used and defined in the
Internal Revenue Code, Section 1445, as amended;
6.1.4 Except for any actions by Seller to evict Tenants under the Leases, to
Seller's knowledge, there are no actions, proceedings, litigation or
governmental investigations or condemnation actions either pending or threatened
against the Property;
6.1.5 To Seller's knowledge, Seller has not received any written notice of any
uncured material violations of any federal, state, county or municipal law,
ordinance, order, regulation or requirement affecting the Property;
6.1.6 To Seller's knowledge, (A) Seller has not received any written notice of
any material default by Seller under any of (i) the Property Contracts that will
not be terminated on the Closing Date, or (ii) the Leases; (B) no Tenant is in
default under the Leases except as shown on the Rent Roll delivered by Seller to
Purchaser and as of the Effective Date, there are no pending eviction actions
against any Tenant; (C) the Rent Roll is true and correct in all material
respects; (D) no Tenant has any option to purchase the Property; (E) the
operating reports delivered by Seller to Purchaser (as described in section (g)
of Schedule 3.5 attached hereto) are true and correct in all material respects,
(F) the copies of the Leases delivered by Seller to Purchaser (or made available
to Purchaser) are true and correct copies of all the Leases, and (G) the copies
of the Property Contracts delivered by Seller to Purchaser (or made available to
Purchaser) are true and correct copies of all the Property Contracts.
6.1.7 To Seller's knowledge: (A) no hazardous or toxic materials or other
substances regulated by applicable federal or state environmental laws are
stored by Seller on, in or under the Property in quantities which violate
applicable laws governing such materials or substances, and (B) the Property is
not used by Seller for the storage, treatment, generation or manufacture of any
hazardous or toxic materials or other substances in a manner which would
constitute a violation of applicable federal or state environmental laws.
6.2 AS-IS. Except as provided in Section 6.1 and Section 9.1 herein, in the Deed
and in the Leases Assignment, the Property is expressly purchased and sold "AS
IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase Price and the terms and
conditions set forth herein are the result of arm's-length bargaining between
entities familiar with transactions of this kind, and said price, terms and
conditions reflect the fact that Purchaser shall have the benefit of, and is not
relying upon, any information provided by Seller or Broker or statements,
representations or warranties, express or implied, made by or enforceable
directly against Seller or Broker, including, without limitation, any relating
to the value of the Property, the physical or environmental condition of the
Property, any state, federal, county or local law, ordinance, order or permit;
or the suitability, compliance or lack of compliance of the Property with any
regulation, or any other attribute or matter of or relating to the Property
(except as provided in Section 6.1 and Section 9.1 herein, in the Deed and in
the Leases Assignment). Purchaser agrees that Seller shall not be responsible or
liable to Purchaser for any defects, errors or omissions, or on account of any
conditions affecting the Property except as provided in Section 6.1 and Section
9.1 herein, in the Deed and in the Leases Assignment. Purchaser, its successors
and assigns, and anyone claiming by, through or under Purchaser, hereby fully
releases Seller's Indemnified Parties from, and irrevocably waives its right to
maintain, any and all claims and causes of action that it or they may now have
or hereafter acquire against Seller's Indemnified Parties with respect to any
and all Losses arising from or related to any defects, errors, omissions or
other conditions affecting the Property except as provided in Section 6.1 and
Section 9.1 herein, in the Deed and in the Leases Assignment. Purchaser
represents and warrants that, as of the date hereof and as of the Closing Date,
it has and shall have reviewed and conducted such independent analyses, studies
(including, without limitation, environmental studies and analyses concerning
the presence of lead, asbestos, PCBs and radon in and about the Property),
reports, investigations and inspections as it deems appropriate in connection
with the Property. If Seller provides or has provided any documents, summaries,
opinions or work product of consultants, surveyors, architects, engineers, title
companies, governmental authorities or any other person or entity with respect
to the Property, including, without limitation, the offering prepared by Broker,
Purchaser and Seller agree that Seller has done so or shall do so only for the
convenience of both parties, and Purchaser shall not rely thereon and the
reliance by Purchaser upon any such documents, summaries, opinions or work
product shall not create or give rise to any liability of or against Seller's
Indemnified Parties except as provided in Section 6.1 and Section 9.1 herein, in
the Deed and in the Leases Assignment. Purchaser shall rely only upon any title
insurance obtained by Purchaser with respect to title to the Property except as
provided in Section 6.1 and Section 9.1 herein, in the Deed and in the Leases
Assignment. Except as provided in Section 6.1 and Section 9.1 herein, in the
Deed and in the Leases Assignment. Purchaser acknowledges and agrees that no
representation has been made and no responsibility is assumed by Seller with
respect to current and future applicable zoning or building code requirements or
the compliance of the Property with any other laws, rules, ordinances or
regulations, the financial earning capacity or expense history of the Property,
the continuation of contracts, continued occupancy levels of the Property, or
any part thereof, or the continued occupancy by tenants of any Leases or,
without limiting any of the foregoing, occupancy at Closing. Prior to Closing,
Seller shall have the right, but not the obligation, to enforce its rights
against any and all Property occupants, guests or tenants. Purchaser agrees that
the departure or removal, prior to Closing, of any of such guests, occupants or
tenants shall not be the basis for, nor shall it give rise to, any claim on the
part of Purchaser, nor shall it affect the obligations of Purchaser under this
Contract in any manner whatsoever subject to the provisions of Section 8.1
hereof; and Purchaser shall close title and accept delivery of the Deed with or
without such tenants in possession and without any allowance or reduction in the
Purchase Price under this Contract, subject to the provisions of Section 8.1
hereof. Purchaser hereby releases Seller from any and all claims and liabilities
relating to the foregoing matters except as otherwise expressly provided herein.
The provisions of this Section 6.2 shall survive the Closing and delivery of the
Deed to Purchaser.
6.3 Survival of Seller's Representations. Seller and Purchaser agree that
Seller's Representations shall survive Closing for a period of 6 months (the
"Survival Period"). Seller shall have no liability after the Survival Period
with respect to Seller's Representations contained herein except to the extent
that Purchaser has requested arbitration against Seller during the Survival
Period for breach of any of Seller's Representations. Under no circumstances
shall Seller be liable to Purchaser for more than $202,000 in any individual
instance or in the aggregate for all breaches of Seller's Representations, nor
shall Purchaser be entitled to bring any claim for a breach of Seller's
Representations unless the claim for damage (either in the aggregate or as to
any individual claim) by Purchaser exceeds $2,500. In the event that Seller
breaches any representation contained in Section 6.1 and Purchaser had knowledge
of such breach prior to the Closing Date, Purchaser shall be deemed to have
waived any right of recovery, and Seller shall not have any liability in
connection therewith.
6.4 Definition of Seller's Knowledge. Any representations and warranties made
"to the knowledge of Seller" shall not be deemed to imply any duty of inquiry.
For purposes of this Contract, the term Seller's "knowledge" shall mean and
refer only to actual knowledge of the Designated Representative of the Seller
and shall not be construed to refer to the knowledge of any other partner,
officer, director, agent, employee or representative of the Seller, or any
affiliate of the Seller, or to impose upon such Designated Representative any
duty to investigate the matter to which such actual knowledge or the absence
thereof pertains, or to impose upon such Designated Representative any
individual personal liability. As used herein, the term Designated
Representative shall refer to Jennifer Webb who is the Regional Property Manager
handling this Property (the "Regional Property Manager"), and Monica Yager who
is the property manager for this Property (the "Property Manager").
6.5 Representations And Warranties Of Purchaser. For the purpose of inducing
Seller to enter into this Contract and to consummate the sale and purchase of
the Property in accordance herewith, Purchaser represents and warrants to Seller
the following (collectively, the "Purchaser's Representations") as of the
Effective Date and as of the Closing Date:
6.5.1 Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Georgia.
6.5.2 Purchaser, acting through any of its or their duly empowered and
authorized officers or members, has all necessary entity power and authority to
own and use its properties and to transact the business in which it is engaged,
and has full power and authority to enter into this Contract, to execute and
deliver the documents and instruments required of Purchaser herein, and to
perform its obligations hereunder; and no consent of any of Purchaser's
partners, directors, officers or members are required to so empower or authorize
Purchaser. The compliance with or fulfillment of the terms and conditions hereof
will not conflict with, or result in a breach of, the terms, conditions or
provisions of, or constitute a default under, any contract to which Purchaser is
a party or by which Purchaser is otherwise bound, which conflict, breach or
default would have a material adverse affect on Purchaser's ability to
consummate the transaction contemplated by this Contract. This Contract is a
valid, binding and enforceable agreement against Purchaser in accordance with
its terms, subject to bankruptcy and similar laws affecting the rights and
remedies of creditors generally.
6.5.3 No pending or, to the knowledge of Purchaser, threatened litigation exists
which if determined adversely would restrain the consummation of the
transactions contemplated by this Contract or would declare illegal, invalid or
non-binding any of Purchaser's obligations or covenants to Seller.
6.5.4 Other than Seller's Representations, as provided in Section 9.1 herein, in
the Deed and in the Leases Assignment, Purchaser has not relied on any
representation or warranty made by Seller or any representative of Seller
(including, without limitation, Broker) in connection with this Contract and the
acquisition of the Property.
6.5.5 The Broker and its affiliates do not, and will not at the Closing, have
any direct or indirect legal, beneficial, economic or voting interest in
Purchaser (or in an assignee of Purchaser, which pursuant to Section 13.3,
acquires the Property at the Closing), nor has Purchaser or any affiliate of
Purchaser granted (as of the Effective Date or the Closing Date) the Broker or
any of its affiliates any right or option to acquire any direct or indirect
legal, beneficial, economic or voting interest in Purchaser.
6.6 .Survival of Purchaser's Representations. Seller and Purchaser agree that
Purchaser's Representations shall survive Closing for a period of 6 months (the
"Survival Period"). Purchaser shall have no liability after the Survival Period
with respect to Purchaser's Representations contained herein except to the
extent that Seller has filed a lawsuit against Purchaser during the Survival
Period for breach of any of Purchaser's Representations. Under no circumstances
shall Purchaser be liable to Seller for more than $202,000 in any individual
instance or in the aggregate for all breaches of Purchaser's Representations,
nor shall Seller be entitled to bring any claim for a breach of Purchaser's
Representations unless the claim for damage (either in the aggregate or as to
any individual claim) by Seller exceeds $2,500.00. In the event Purchaser
breaches any representation contained in Section 6.5 and Seller had knowledge of
such breach prior to the Closing Date, Seller shall be deemed to have waived any
right of recovery, and Purchaser shall not have any liability in connection
therewith.
6.7 Definition of Purchaser's Knowledge. Any representations and warranties made
"to the knowledge of Purchaser" shall not be deemed to imply any duty of
inquiry. For purposes of this Contract, the term Purchaser's "knowledge" shall
mean and refer only to actual knowledge of the Designated Representative of the
Purchaser and shall not be construed to refer to the knowledge of any other
partner, officer, director, agent, employee or representative of the Purchaser,
or any affiliate of the Purchaser, or to impose upon such Designated
Representative any duty to investigate the matter to which such actual knowledge
or the absence thereof pertains, or to impose upon such Designated
Representative any individual personal liability. As used herein, the term
Designated Representative shall refer to William M. Warfield, who is the
president of Purchaser, and Rick Scarola.
ARTICLE 7
OPERATION OF THE PROPERTY
7.1 Leases and Property Contracts. During the period of time from the Effective
Date to the Closing Date, in the ordinary course of business Seller may enter
into new Property Contracts, new Leases, renew existing Leases or modify,
terminate or accept the surrender or forfeiture of any of the Leases, modify any
Property Contracts, or institute and prosecute any available remedies for
default under any Lease or Property Contract without first obtaining the written
consent of Purchaser; provided, however, Seller agrees that any such new or
modified Property Contracts (a) shall not in the case of a new Property Contract
have a term in excess of 1 year, and in the case of any modified Property
Contract shall not be modified to extend the term thereof in excess of 1 year,
(b) shall be executed in the ordinary course of Seller's business and (c) in the
case of new Property Contracts shall be terminable upon thirty (30) days or less
notice without penalty or cost and in the case of any modified Property Contract
shall not be modified to revise the termination provisions thereof without
Purchaser's prior written consent; and provided further that any new, renewed or
modified Leases shall not have a term in excess of 1 year, shall be executed in
Seller's ordinary course of business, and shall be on Seller's standard form
lease (which is subject to change but in no event shall be in a form that
violates Ohio law). Seller agrees to promptly deliver to Purchaser copies of any
new or modified Property Contracts entered into by Seller after the Effective
Date.
7.2 General Operation of Property. Except as specifically set forth in this
Article 7, Seller shall operate the Property after the Effective Date in the
ordinary course of business, and except as necessary in the Seller's sole
discretion to address (a) any life or safety issue at the Property or (b) any
other matter which in Seller's reasonable discretion materially adversely
affecting the use, operation or value of the Property, Seller will not make any
material alterations to the Property or remove any material Fixtures and
Tangible Personal Property without the prior written consent of Purchaser which
consent shall not be unreasonably withheld, denied or delayed. Seller agrees to
maintain its existing insurance policies (or replacement policies on comparable
terms) covering the Property in full force and effect until the Closing Date.
7.3 Liens. Seller covenants that it will not voluntarily create or cause any
lien or encumbrance to attach to the Property between the Effective Date and the
Closing Date (other than Leases and Property Contracts as provided in Section
7.1) unless Purchaser approves such lien or encumbrance, which approval shall
not be unreasonably withheld or delayed. If Purchaser approves any such
subsequent lien or encumbrance, the same shall be deemed a Permitted Encumbrance
for all purposes hereunder.
7.4 Management Agreement. The existing management agreement for the Property
will be terminated on or prior to the Closing Date with no liability to
Purchaser.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
8.1 Purchaser's Conditions to Closing. Purchaser's obligation to close under
this Contract, shall be subject to and conditioned upon the fulfillment of each
and all of the following conditions precedent:
8.1.1 All of the documents required to be delivered by Seller to Purchaser at
the Closing pursuant to the terms and conditions hereof shall have been
delivered;
8.1.2 Each of the representations, warranties and covenants of Seller contained
herein shall be true in all material respects as of the Closing Date;
8.1.3 Seller shall have complied with, fulfilled and performed in all material
respects each of the covenants, terms and conditions to be complied with,
fulfilled or performed by Seller hereunder; and
8.1.4 The occupancy rate at the Property shall not be below eighty-five percent
(85%) as of 10 days prior to the Closing Date;
Notwithstanding anything to the contrary, there are no other conditions on
Purchaser's obligation to Close except as expressly set forth in this Section
8.1. If any condition set forth in Sections 8.1.1, 8.1.3 or 8.1.4 is not met,
Purchaser may (a) waive any of the foregoing conditions and proceed to Closing
on the Closing Date with no offset or deduction from the Purchase Price, (b) if
such failure constitutes a default by Seller, exercise any of its remedies
pursuant to Section 10.2 or (c) notify Seller of Purchaser's election to
terminate this Contract and receive a return of the Deposit from the Escrow
Agent. If the condition set forth in Section 8.1.2 is not met, Purchaser may, as
its sole and exclusive remedy, (i) notify Seller of Purchaser's election to
terminate this Contract and receive a return of the Deposit from the Escrow
Agent, or (ii) waive such condition and proceed to Closing on the Closing Date
with no offset or deduction from the Purchase Price. Notwithstanding the
foregoing, Seller and Purchaser acknowledge that Purchaser retains and does not
waive any right that Purchaser may have by law with respect to a claim against
Seller for any fraudulent misrepresentation made by Seller to Purchaser; however
this sentence shall not be construed to expand or in any way enhance any such
rights of Purchaser, and Seller is not agreeing to waive any defenses in
connection with any such claim.
8.2 Without limiting any of the rights of Seller elsewhere provided for in this
Contract, Seller's obligation to close with respect to conveyance of the
Property under this Contract shall be subject to and conditioned upon the
fulfillment of each and all of the following conditions precedent:
8.2.1 All of the documents and funds required to be delivered by Purchaser to
Seller at the Closing pursuant to the terms and conditions hereof shall have
been delivered;
8.2.2 Each of the representations, warranties and covenants of Purchaser
contained herein shall be true in all material respects as of the Closing Date;
8.2.3 Purchaser shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be complied
with, fulfilled or performed by Purchaser hereunder;
8.2.4 To the extent required, Seller shall have received all consents and
approvals to the consummation of the transactions contemplated hereby (a) of
Seller's partners, members, managers, shareholders or directors to the extent
required by Seller's (or Seller's affiliates') organizational documents, or (b)
that are required by law. Seller agrees to use its best efforts to obtain such
consents and approvals by the expiration of the Feasibility Period, and Seller
agrees that if Seller is unable to obtain such consents and approvals by the
expiration of the Feasibility Period, then Purchaser shall have the right to
terminate this Contract by giving written notice to Seller and Escrow Agent on
or before December 19, 2003. If Purchaser exercises such right to terminate, (a)
this Contract shall terminate and be of no further force and effect, subject to
and except for Purchaser's liability pursuant to Section 3.3 and any other
provision of this Contract which survives such termination, (b) Escrow Agent
shall forthwith return the Deposit to Purchaser, and (c) Seller shall reimburse
Purchaser for its out of pocket due diligence expenses and costs incurred in
connection with the transaction contemplated by this Contract, including,
without limitation reasonable attorneys fees and costs, in the aggregate not to
exceed $38,000.00 (collectively, the "Due Diligence Expenses"). Purchaser shall
provide Seller with written substantiation of the cost incurred in connection
with the Due Diligence Expenses. Seller shall pay the Purchaser the Due
Diligence Expenses within thirty (30) days of the presentation of such written
substantiation to Seller from Purchaser; and
8.2.5 In accordance with the terms set forth in Section 4.5.2, Purchaser shall
have obtained approval from the Lender for the Loan Assumption and Release.
If any of the foregoing conditions to Seller's obligation to close with
respect to conveyance of the Property under this Contract are not met, Seller
may (a) waive any of the foregoing conditions and proceed to Closing on the
Closing Date, or (b) terminate this Contract, and, if such failure constitutes a
default by Purchaser, exercise any of its remedies under Section 10.1.
ARTICLE 9
BROKERAGE
9.1 Indemnity. Seller represents and warrants to Purchaser that it has dealt
only with Ms. Debbie Corson of Apartment Realty Advisors Midwest, Inc., 331
Regency Ridge Drive, Dayton, Ohio 45459 (937-439-1094 (telephone), 937-439-1855
(facsimile)) ("Broker") in connection with this Contract. Seller and Purchaser
each represents and warrants to the other that, other than Broker, it has not
dealt with or utilized the services of any other real estate broker, sales
person or finder in connection with this Contract, and each party agrees to
indemnify, hold harmless, and, if requested in the sole and absolute discretion
of the indemnitee, defend (with counsel approved by the indemnitee) the other
party from and against all Losses relating to brokerage commissions and finder's
fees arising from or attributable to the acts or omissions of the indemnifying
party. The provisions of this Section 9.1 shall survive the termination of this
Contract, and if not so terminated, the Closing and delivery of the Deed to
Purchaser.
9.2 Survival. Seller agrees to pay Broker a commission according to the terms of
a separate contract. Broker shall not be deemed a party or third party
beneficiary of this Contract.
9.3 Broker Signature Page. Broker shall execute the signature page for Broker
attached hereto solely for purposes of confirming the matters set forth therein;
provided, however, that (a) Broker's signature hereon shall not be a
prerequisite to the binding nature of this Contract on Purchaser and Seller, and
the same shall become fully effective upon execution by Purchaser and Seller,
and (b) the signature of Broker will not be necessary to amend any provision of
this Contract.
ARTICLE 10
DEFAULTS AND REMEDIES
10.1 Purchaser Default. If Purchaser defaults in its obligations hereunder to
(a) deliver the Initial Deposit or Additional Deposit, (b) deliver to the Seller
the deliveries specified under Section 5.3 on the date required thereunder, or
(c) deliver the Purchase Price at the time required by Section 2.2.4 and close
on the purchase of the Property on the Closing Date, then, immediately and
without notice or cure, Purchaser shall forfeit the Deposit, and the Escrow
Agent shall deliver the Deposit to Seller, and neither party shall be obligated
to proceed with the purchase and sale of the Property. If, Purchaser defaults in
any of its other representations, warranties or obligations under this Contract,
and such default continues for more than 10 days after written notice from
Seller, then Purchaser shall forfeit the Deposit, and the Escrow Agent shall
deliver the Deposit to Seller, and neither party shall be obligated to proceed
with the purchase and sale of the Property. The Deposit is liquidated damages
and recourse to the Deposit is, except for Purchaser's indemnity obligations
hereunder, Seller's sole and exclusive remedy for Purchaser's failure to perform
its obligation to purchase the Property or breach of a representation or
warranty. Seller expressly waives the remedies of specific performance and
additional damages for such default by Purchaser. SELLER AND PURCHASER
ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE
DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES RESULTING FROM A DEFAULT BY
PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY. SELLER AND PURCHASER
FURTHER AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIQUIDATE THE
AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST
PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY
PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY OBLIGATIONS
HEREUNDER.
10.2 Seller Default. If Seller, prior to the Closing, defaults in its
warranties, covenants, or obligations under this Contract, including to sell the
Property as required by this Contract and such default continues for more than
10 days after written notice from Purchaser, then, at Purchaser's election and
as Purchaser's sole and exclusive remedy, either (A) this Contract shall
terminate, and all payments and things of value, including the Deposit, provided
by Purchaser hereunder shall be returned to Purchaser and Purchaser may recover,
as its sole recoverable damages (but without limiting its right to receive a
refund of the Deposit), its direct and actual out-of-pocket expenses and costs
(documented by paid invoices to third parties) in connection with this
transaction, which damages shall not exceed $50,000 in aggregate, or (B)
Purchaser may seek specific performance of Seller's obligation to deliver the
Deed pursuant to this Contract (but not damages). Purchaser agrees that it shall
promptly deliver to Seller an assignment of all of Purchaser's right, title and
interest in and to (together with possession of) all plans, studies, surveys,
reports, and other materials paid for with the out-of-pocket expenses reimbursed
by Seller pursuant to the foregoing sentence. SELLER AND PURCHASER FURTHER AGREE
THAT THIS SECTION 10.2 IS INTENDED TO AND DOES LIMIT THE AMOUNT OF DAMAGES DUE
PURCHASER AND THE REMEDIES AVAILABLE TO PURCHASER, AND SHALL BE PURCHASER'S
EXCLUSIVE REMEDY AGAINST SELLER, BOTH AT LAW AND IN EQUITY ARISING FROM OR
RELATED TO A BREACH BY SELLER OF ITS REPRESENTATIONS, WARRANTIES, OR COVENANTS
OR ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT.
UNDER NO CIRCUMSTANCES MAY PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL,
CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH PURCHASER
SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER, OF ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS OR ITS OBLIGATIONS UNDER THIS CONTRACT.
PURCHASER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN
AGAINST THE PROPERTY UNLESS AND UNTIL IT HAS IRREVOCABLY ELECTED TO SEEK
SPECIFIC PERFORMANCE OF THIS CONTRACT AND HAS FILED AN ACTION SEEKING SUCH
REMEDY.
ARTICLE 11
RISK OF LOSS OR CASUALTY
11.1 Major Damage. Seller shall provide Purchaser with prompt notification of
any known fire or other casualty at the Property. In the event that the Property
is damaged or destroyed by fire or other casualty prior to Closing, and the cost
of repair is more than $300,000, then Seller shall have no obligation to repair
such damage or destruction and shall notify Purchaser in writing of such damage
or destruction (the "Damage Notice"). Within 10 days after Purchaser's receipt
of the Damage Notice, Purchaser may elect at its option to terminate this
Contract by delivering written notice to Seller. In the event Purchaser fails to
terminate this Contract within the foregoing 10-day period, this transaction
shall be closed in accordance with the terms of this Contract for the full
Purchase Price notwithstanding any such damage or destruction and Purchaser
shall receive all insurance proceeds pertaining thereto (plus a credit against
the Purchase Price in the amount of any deductible payable by Seller in
connection therewith) at Closing.
11.2 Minor Damage. In the event that the Property is damaged or destroyed by
fire or other casualty prior to the Closing, and the cost of repair is less than
$300,000, this transaction shall be closed in accordance with the terms of this
Contract, notwithstanding the damage or destruction; provided, however, Seller
shall make such repairs to the extent of any recovery from insurance carried on
the Property if they can be reasonably effected before the Closing. Subject to
Section 11.3, if Seller is unable to effect such repairs, then Purchaser shall
receive all insurance proceeds pertaining thereto (plus a credit against the
Purchase Price in the amount of any deductible payable by Seller in connection
therewith) at Closing.
11.3 Repairs. To the extent that Seller elects to commence any repair,
replacement or restoration of the Property prior to Closing, then Seller shall
be entitled to receive and apply available insurance proceeds to any portion of
such repair, replacement or restoration completed or installed prior to Closing,
with Purchaser being responsible for completion of such repair, replacement or
restoration after Closing from the balance of any available insurance proceeds.
The provisions of this Section 11.3 shall survive the Closing and delivery of
the Deed to Purchaser.
ARTICLE 12
EMINENT DOMAIN
12.1 Eminent Domain. Seller shall provide Purchaser with prompt notification of
any known pending or threatened eminent domain action. In the event that, at the
time of Closing, any material part of the Property is (or previously has been)
acquired, or is about to be acquired, by any governmental agency by the powers
of eminent domain or transfer in lieu thereof (or in the event that at such time
there is any notice of any such acquisition or intent to acquire by any such
governmental agency), Purchaser shall have the right, at Purchaser's option, to
terminate this Contract by giving written notice within 10 days after
Purchaser's receipt from Seller of notice of the occurrence of such event, and
if Purchaser so terminates this Contract shall recover the Deposit hereunder. If
Purchaser fails to terminate this Contract within such 10-day period, this
transaction shall be closed in accordance with the terms of this Contract for
the full Purchase Price and Purchaser shall receive the full benefit of any
condemnation award.
ARTICLE 13
MISCELLANEOUS
13.1 Binding Effect of Contract. This Contract shall not be binding on either
party until executed by both Purchaser and Seller. As provided in Section 2.3.5
and Section 9.3 above, neither the Escrow Agent's nor the Broker's execution of
this Contract shall be a pre-requisite to its effectiveness.
13.2 Exhibits And Schedules. All Exhibits and Schedules, whether or not annexed
hereto, are a part of this Contract for all purposes.
13.3 Assignability. This Contract is not assignable by Purchaser without first
obtaining the prior written approval of the Seller, except that Purchaser may
assign this Contract to one or more entities so long as (a) William M. Warfield
(the president of Purchaser) is the managing member of such purchasing entity or
the managing member of the managing member of such purchasing entity, (b)
Covenant Apartment Fund III, L.P. (or another fund created and operated by
Covenant Capital Group, LLC) owns at least a 51% voting and economic interest in
such purchasing entity, (c) Purchaser is not released from its liability
hereunder, and (d) Purchaser promptly notifies Seller of such transfer.
13.4 Binding Effect. Subject to Section 13.3, this Contract shall be binding
upon and inure to the benefit of Seller and Purchaser, and their respective
successors, heirs and permitted assigns.
13.5 Captions. The captions, headings, and arrangements used in this Contract
are for convenience only and do not in any way affect, limit, amplify, or modify
the terms and provisions hereof.
13.6 Number And Gender Of Words. Whenever herein the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.
13.7 Notices. All notices, demands, requests and other communications required
or permitted hereunder shall be in writing, and shall be (a) personally
delivered with a written receipt of delivery; (b) sent by a nationally
recognized overnight delivery service requiring a written acknowledgement of
receipt or providing a certification of delivery or attempted delivery; (c) sent
by certified or registered mail, return receipt requested, or (d) sent by
facsimile. All notices shall be deemed effective when actually delivered as
documented in a delivery receipt (or a statement generated by the transmitting
facsimile machine in the case of delivery by facsimile); provided, however, that
if the notice was sent by overnight courier or mail as aforesaid and is
affirmatively refused or cannot be delivered during customary business hours by
reason of the absence of a signatory to acknowledge receipt, or by reason of a
change of address with respect to which the addressor did not have either
knowledge or written notice delivered in accordance with this paragraph, then
the first attempted delivery shall be deemed to constitute delivery. Each party
shall be entitled to change its address for notices from time to time by
delivering to the other party notice thereof in the manner herein provided for
the delivery of notices. All notices shall be sent to the addressee at its
address set forth following its name below:
To Purchaser:
Prominent Realty Group of Georgia, Inc.
3401 West End Avenue, Suite 680
Nashville, Tennessee 37203
Attention: Mr. Rick Scarola
Telephone: 615-250-1602
Facsimile: 615-356-6170
and a copy to:
Paul Huang, Esq.
Foltz Martin LLC
Five Piedmont Center, Suite 750
Atlanta, Georgia 30305-1541
Telephone: 404-231-9397
Facsimile: 404-237-1659
and a copy to:
Douglas Foppe
Prominent Realty Group of Georgia
4534 Cape Kure Court
Norcross, Georgia 30092
Telephone: 678-966-0066
Facsimile: 678-966-0603
To Seller:
c/o AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Attention: Mr. Patrick Slavin
Telephone: 303-691-4340
Facsimile: 303-300-3282
And:
c/o AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Attention: Mr. Harry Alcock
Telephone: 303-691-4344
Facsimile: 303-300-3282
with copy to:
Chad Asarch, Esq.
Vice President and Assistant General Counsel
AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Facsimile: 303-300-3297
and a copy to:
Loeb & Loeb LLP
10100 Santa Monica Boulevard, Suite 2200
Los Angeles, California 90067
Attention: Karen N. Higgins, Esq., and
Loretta Thompson, Esq.
Facsimile: 310-282-2200
Any notice required hereunder to be delivered to the Escrow Agent shall be
delivered in accordance with above provisions as follows:
Fidelity National Title Insurance Company
3D International Tower
1900 West Loop South, Suite 650
Houston, Texas 77027
Attention: Ms. Lolly Avant
Telephone: 713-621-9960
Facsimile: 713-623-4406
Unless specifically required to be delivered to the Escrow Agent pursuant
to the terms of this Contract, no notice hereunder must be delivered to the
Escrow Agent in order to be effective so long as it is delivered to the other
party in accordance with the above provisions.
13.8 Governing Law And Venue. The laws of the State of Ohio shall govern the
validity, construction, enforcement, and interpretation of this Contract, unless
otherwise specified herein except for the conflict of laws provisions thereof.
Subject to Section 13.25, all claims, disputes and other matters in question
arising out of or relating to this Contract, or the breach thereof, shall be
decided by proceedings instituted and litigated in a court of competent
jurisdiction in the state in which the Property is situated, and the parties
hereto expressly consent to the venue and jurisdiction of such court.
13.9 Entire Agreement. This Contract embodies the entire Contract between the
parties hereto concerning the subject matter hereof and supersedes all prior
conversations, proposals, negotiations, understandings and contracts, whether
written or oral.
13.10 Amendments. This Contract shall not be amended, altered, changed,
modified, supplemented or rescinded in any manner except by a written contract
executed by all of the parties; provided, however, that, (a) as provided in
Section 2.3.5 above, the signature of the Escrow Agent shall not be required as
to any amendment of this Contract other than an amendment of Section 2.3, and
(b) as provided in Section 9.3 above, the signature of the Broker shall not be
required as to any amendment of this Contract
13.11 Severability. In the event that any part of this Contract shall be held to
be invalid or unenforceable by a court of competent jurisdiction, such provision
shall be reformed, and enforced to the maximum extent permitted by law. If such
provision cannot be reformed, it shall be severed from this Contract and the
remaining portions of this Contract shall be valid and enforceable.
13.12 Multiple Counterparts/Facsimile Signatures. This Contract may be executed
in a number of identical counterparts. This Contract may be executed by
facsimile signatures which shall be binding on the parties hereto, with original
signatures to be delivered as soon as reasonably practical thereafter.
13.13 Construction. No provision of this Contract shall be construed in favor
of, or against, any particular party by reason of any presumption with respect
to the drafting of this Contract; both parties, being represented by counsel,
having fully participated in the negotiation of this instrument.
13.14 Confidentiality. Purchaser shall not disclose the terms and conditions
contained in this Contract and shall keep the same confidential, provided that
Purchaser may disclose the terms and conditions of this Contract (a) as required
by law or by regulatory or judicial process, (b) to consummate the terms of this
Contract, or any financing relating thereto, (c) to the extent such information
is a matter of public record, (d) to Purchaser's Consultants or Seller's
lenders, attorneys or accountants, or (e) to Purchaser's prospective investors;
provided, however, prior to any disclosure to a prospective investor, Purchaser
shall notify such prospective investor of Purchaser's confidentiality
obligations as set forth in this Section 13.14, and Purchaser shall cause such
prospective investor to comply with same. Any information and Materials provided
by Seller to Purchaser hereunder are confidential and Purchaser shall be
prohibited from making such information public to any other person or entity
other than as permitted by this Section 13.14, without Seller's prior written
authorization, which may be granted or denied in Seller's sole discretion.
Notwithstanding the foregoing, the parties (and each employee, representative,
or other agent of the parties) may disclose to any and all persons, without
limitation of any kind, the tax treatment and any facts that may be relevant to
the tax structure of the transaction, provided, however, that no party (and no
employee, representative, or other agent thereof) shall disclose any other
information that is not relevant to understanding the tax treatment and tax
structure of the transaction (including the identity of any party and any
information that could lead another to determine the identity of any party), or
any other information to the extent that such disclosure could result in a
violation of any federal or state securities law. Notwithstanding the provisions
of Section 13.9, Purchaser agrees that the covenants, restrictions and
agreements of Purchaser contained in any confidentiality agreement executed by
Purchaser prior to the Effective Date shall survive the execution of this
Contract and shall not be superceded hereby.
13.15 Time Of The Essence. It is expressly agreed by the parties hereto that
time is of the essence with respect to this Contract.
13.16 Waiver. No delay or omission to exercise any right or power accruing upon
any default, omission, or failure of performance hereunder shall impair any
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. No waiver, amendment, release, or modification of this Contract shall
be established by conduct, custom, or course of dealing and all waivers must be
in writing and signed by the waiving party.
13.17 Attorneys Fees. In the event either party hereto commences litigation or
arbitration against the other to enforce its rights hereunder, the prevailing
party in such litigation shall be entitled to recover from the other party its
reasonable attorneys' fees and expenses incidental to such litigation and
arbitration, including the cost of in-house counsel and any appeals.
13.18 Time Periods. Should the last day of a time period fall on a weekend or
legal holiday, the next Business Day thereafter shall be considered the end of
the time period.
13.19 1031 Exchange. Seller and Purchaser acknowledge and agree that the
purchase and sale of the Property may be part of a tax-free exchange under
Section 1031 of the Code for either Purchaser or Seller. Each party hereby
agrees to take all reasonable steps on or before the Closing Date to facilitate
such exchange if requested by the other party, provided that (a) no party making
such accommodation shall be required to acquire any substitute property, (b)
such exchange shall not affect the representations, warranties, liabilities and
obligations of the parties to each other under this Contract, (c) no party
making such accommodation shall incur any additional cost, expense or liability
in connection with such exchange, and (d) no dates in this Contract will be
extended as a result thereof. Notwithstanding anything to the contrary contained
in the foregoing, if Seller so elects to close the transfer of the Property as
an exchange, then (i) Seller, at its sole option, may delegate its obligations
to transfer the Property under this Contract, and may assign its rights to
receive the Purchase Price from Purchaser, to a deferred exchange intermediary
(an "Intermediary") or to an exchange accommodation titleholder, as the case may
be; (ii) such delegation and assignment shall in no way reduce, modify or
otherwise affect the obligations of Seller pursuant to this Contract; (iii)
Seller shall remain fully liable for its obligations under this Contract as if
such delegation and assignment shall not have taken place; (iv) Intermediary or
exchange accommodation titleholder, as the case may be, shall have no liability
to Purchaser; and (v) the closing of the transfer of the Property to Purchaser
shall be undertaken by direct deed from Seller (or, if applicable, from other
affiliates of Seller whom Seller will cause to execute such deeds) to Purchaser
or to exchange accommodation titleholder, as the case may be. Notwithstanding
anything to the contrary contained in the foregoing, if Purchaser so elects to
close the acquisition of the Property as an exchange, then (i) Purchaser, at its
sole option, may delegate its obligations to acquire the Property under this
Contract, and my assign its rights to receive the Property from Seller, to an
Intermediary or to an exchange accommodation titleholder, as the case may be;
(ii) such delegation and assignment shall in no way reduce, modify or otherwise
affect the obligations of Purchaser pursuant to this Contract; (iii) Purchaser
shall remain fully liable for its obligations under this Contract as if such
delegation and assignment shall not have taken place; (iv) Intermediary or
exchange accommodation titleholder, as the case may be, shall have no liability
to Seller; and (v) the closing of the acquisition of the Property by Purchaser
or the exchange accommodation titleholder, as the case may be, shall be
undertaken by direct deed from Seller (or, if applicable, from other affiliates
of Seller whom Seller will cause to execute such deeds) to Purchaser (or to
exchange accommodation titleholder, as the case may be).
13.20 No Personal Liability of Officers, Trustees or Directors of Seller's
Partners. Purchaser acknowledges that this Contract is entered into by Seller
which is an Ohio limited partnership, and Purchaser agrees that none of Seller's
Indemnified Parties shall have any personal liability under this Contract or any
document executed in connection with the transactions contemplated by this
Contract.
13.21 No Exclusive Negotiations. Seller shall have the right, at all times prior
to the expiration of the Feasibility Period, to solicit backup offers and enter
into discussions, negotiations, or any other communications concerning or
related to the sale of the Property with any third-party; provided, however,
that such communications are subject to the terms of this Contract, and that
Seller shall not enter into any contract or binding Contract with a third-party
for the sale of the Property unless such Contract is contingent on the
termination of this Contract without the Property having been conveyed to
Purchaser.
13.22 ADA Disclosure. Purchaser acknowledges that the Property may be subject to
the federal Americans With Disabilities Act (the "ADA"), and the federal Fair
Housing Act (the "FHA"). The ADA requires, among other matters, that tenants
and/or owners of "public accommodations" remove barriers in order to make the
Property accessible to disabled persons and provide auxiliary aids and services
for hearing, vision or speech impaired persons. Seller makes no warranty,
representation or guarantee of any type or kind with respect to the Property's
compliance with the ADA or the FHA (or any similar state or local law), and
Seller expressly disclaims any such representation.
13.23 No Recording. Purchaser shall not cause or allow this Contract or any
contract or other document related hereto, nor any memorandum or other evidence
hereof, to be recorded or become a public record without Seller's prior written
consent, which consent may be withheld at Seller's sole discretion. If the
Purchaser records this Contract or any other memorandum or evidence thereof,
Purchaser shall be in default of its obligations under this Contract. Purchaser
hereby appoints the Seller as Purchaser's attorney-in-fact to prepare and record
any documents necessary to effect the nullification and release of the Contract
or other memorandum or evidence thereof from the public records. This
appointment shall be coupled with an interest and irrevocable.
13.24 Relationship of Parties. Purchaser and Seller acknowledge and agree that
the relationship established between the parties pursuant to this Contract is
only that of a seller and a purchaser of property. Neither Purchaser nor Seller
is, nor shall either hold itself out to be, the agent, employee, joint venturer
or partner of the other party.
13.25 Dispute Resolution. Any controversy, dispute, or claim of any nature
arising out of, in connection with, or in relation to the interpretation,
performance, enforcement or breach of this Contract (and any closing document
executed in connection herewith), including any claim based on contract, tort or
statute, shall be resolved at the written request of any party to this Contract
by binding arbitration. The arbitration shall be administered in accordance with
the then current Commercial Arbitration Rules of the American Arbitration
Association. Any matter to be settled by arbitration shall be submitted to the
American Arbitration Association in the state in which the Property is located.
The parties shall attempt to designate one arbitrator from the American
Arbitration Association. If they are unable to do so within 30 days after
written demand therefor, then the American Arbitration Association shall
designate an arbitrator. The arbitration shall be final and binding, and
enforceable in any court of competent jurisdiction. The arbitrator shall award
attorneys' fees (including those of in-house counsel) and costs to the
prevailing party and charge the cost of arbitration to the party which is not
the prevailing party. Notwithstanding anything herein to the contrary, this
Section 13.25 shall not prevent Purchaser or Seller from seeking and obtaining
equitable relief on a temporary or permanent basis, including, without
limitation, a temporary restraining order, a preliminary or permanent injunction
or similar equitable relief, from a court of competent jurisdiction located in
the state in which the Property is located (to which all parties hereto consent
to venue and jurisdiction) by instituting a legal action or other court
proceeding in order to protect or enforce the rights of such party under this
Contract or to prevent irreparable harm and injury. The court's jurisdiction
over any such equitable matter, however, shall be expressly limited only to the
temporary, preliminary, or permanent equitable relief sought; all other claims
initiated under this Contract between the parties hereto shall be determined
through final and binding arbitration in accordance with this Section 13.25.
13.26 AIMCO Marks. Purchaser agrees that Seller, the Property Manager or AIMCO,
or their respective affiliates, are the sole owners of all right, title and
interest in and to the AIMCO Marks (or have the right to use such AIMCO Marks
pursuant to license agreements with third parties) and that no right, title or
interest in or to the AIMCO Marks is granted, transferred, assigned or conveyed
as a result of this Contract. Purchaser further agrees that Purchaser will not
use the AIMCO Marks for any purpose.
13.27 Non-Solicitation of Employees Prior to Expiration of the Loan Approval
Period. Purchaser acknowledges and agrees that, prior to the expiration of the
Loan Approval Period, without the express written consent of Seller, neither
Purchaser nor any of Purchaser's employees, affiliates or agents shall solicit
any of Seller's employees or any employees located at the Property for potential
employment.
13.28 Survival. Except for (a) all of the provisions of this Article 13 (other
than Section 13.19, 13.21 and 13.23), and (b) any provision of this Contract
which expressly states that it shall so survive (the foregoing (a) and (b)
referred to herein as the "Survival Provisions"), none of the terms and
provisions of this Contract shall survive the termination of this Contract, and,
if the Contract is not so terminated, all of the terms and provisions of this
Contract (other than the Survival Provisions) shall be merged into the Closing
documents and shall not survive Closing.
13.29 Multiple Purchasers. As used in this Contract, the term "Purchaser" means
all entities acquiring any interest in the Property at the Closing, including,
without limitation, any assignee(s) of the original Purchaser pursuant to
Section 13.3 of this Contract. In the event that "Purchaser" has any obligations
or makes any covenants, representations or warranties under this Agreement, the
same shall be made jointly and severally by all entities being a Purchaser
hereunder. In the event that Seller receives notice from any entity being a
Purchaser hereunder, the same shall be deemed to constitute notice from all
entities being a Purchaser hereunder. In the event that any entity being a
Purchaser hereunder takes any action, breaches any obligation or otherwise acts
pursuant to the terms of this Contract, the same shall be deemed to be the
action of the other entity(ies) being a Purchaser hereunder and the action of
"Purchaser" under this Contract. In the event that Seller is required to give
notice or take action with respect to Purchaser under this Contract, notice to
any entity being a Purchaser hereunder or action with respect to any entity
being a Purchaser hereunder shall be a notice or action to all entities being a
Purchaser hereunder. In the event that any entity being a Purchaser hereunder
desire to bring an action or arbitration against Seller, such action must be
joined by all entities being a Purchaser hereunder in order to be effective. In
the event that there is any agreement by Seller to pay any amount pursuant to
this Contract to Purchaser under any circumstance, that amount shall be deemed
maximum aggregate amount to be paid to all parties being a Purchaser hereunder
and not an amount that can be paid to each party being a Purchaser hereunder. In
the event that Seller is required to return the Initial Deposit, Additional
Deposit or other amount to Purchaser, Seller shall return the same to any entity
being a Purchaser hereunder and, upon such return, shall have no further
liability to any other entity being a Purchaser hereunder for such amount. The
foregoing provisions also shall apply to any documents, including, without
limitation, the General Assignment and Assumption and the Assignment and
Assumption of Leases and Security Deposits, executed in connection with this
Contract and the transaction(s) contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
NOW, THEREFORE, the parties hereto have executed this Contract as of the
date first set forth above.
Seller:
WESTLAKE EAST ASSOCIATES LIMITED
PARTNERSHIP,
an Ohio limited partnership
By: Fox Strategic Housing Income
Partners,
a California limited partnership,
its sole general partner
By: Fox Partners VIII,
a California general
partnership,
its sole general partner
By: Fox Capital Management
Corporation, a California
corporation, its managing
partner
By: /s/Harry Alcock
Name: Harry Alcock
Its: Executive Vice President
Purchaser:
PROMINENT REALTY GROUP
OF GEORGIA, INC.,
a Georgia corporation
By: /s/Douglas P. Foppe
Name: Douglas P. Foppe
Title: President
ESCROW AGENT SIGNATURE PAGE
The undersigned executes the Contract to which this signature page is
attached for the purpose of agreeing to the provisions of Section 2.3 of the
Contract, and hereby establishes November 4, 2003 as the date of opening of
escrow and designates 03-193555 as the escrow number assigned to this escrow.
ESCROW AGENT:
FIDELITY NATIONAL TITLE INSURANCE COMPANY
By:/s/Lolly Avant
Name: Lolly Avant
Title: Vice President
BROKER SIGNATURE PAGE
The undersigned Broker hereby executes this Broker Signature Page solely
to confirm the following: (a) Broker represents only the Seller in the
transaction described in the Contract to which this signature page is attached,
(b) Broker acknowledges that the only compensation due to Broker in connection
with the Closing of the transaction described in the Contract to which this
signature page is attached is as set forth in a separate agreement between
Seller and Broker, and (c) Broker represents and warrants to Seller that Broker
and its affiliates have not and will not receive any compensation (cash or
otherwise) from or on behalf of Purchaser or any affiliate thereof or any
assignee pursuant to Section 13.3 of the Contract in connection with the
transaction described in the Contract to which this signature page is attached,
and do not, and will not at the Closing, have any direct or indirect legal,
beneficial, economic or voting interest in Purchaser (or in an assignee of
Purchaser, which pursuant to Section 13.3 of the Contract, acquires the Property
at the Closing) nor has Purchaser granted (as of the Effective Date or the
Closing Date) the Broker or any of its affiliates any right or option to acquire
any direct or indirect legal, beneficial, economic or voting interest in
Purchaser.
BROKER:
APARTMENT REALTY ADVISORS
MIDWEST, INC.
By: /s/Debbie Corson
Name: Debbie Corson
Title: President
Exhibit 10.8
AMENDMENT TO CONTRACT TO PURCHASE
THIS AMENDMENT OF PURCHASE AND SALE CONTRACT (this "Amendment") is made as
of this 13th day of November by and among PROMINENT REALTY GROUP OF GEORGIA,
INC., a Georgia corporation (herein referred to as the "Purchaser") and WESTLAKE
EAST ASSOCIATES LIMITED PARTNERSHIP, an Ohio limited partnership (herein
referred to as the "Seller").
W I T N E S S E T H :
WHEREAS, Purchaser and Seller entered into that certain Purchase and Sale
Contract (the "Contract") dated as of November 3, 2003 for the purchase of
certain real property (the "Property") located in Cuyahoga County, Ohio, as more
particularly described in the Contract; and
WHEREAS, Purchaser and Seller desire to amend the Contract as set forth
herein.
NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. The notice address for Purchaser in Section 13.7 of the Contract is hereby
deleted in its entirety and the following sentence is inserted in lieu thereof:
Prominent Realty Group of Georgia
4534 Cape Kure Court
Norcross, Georgia 30092
c/o Mr. Douglas P. Foppe
Telephone: 678/966-0066
Facsimile: 678/966-0603"
and a copy to:
Covenant Capital Group, LLC
3401 West End Avenue, Suite 680
Nashville, Tennessee 37203
Attention: Mr. Rick Scarola
Telephone: 615-250-1602
Facsimile: 615-356-6170
and a copy to:
Paul P. Huang, Esq.
Foltz Martin, LLC
5 Piedmont Center, Suite 750
Atlanta, Georgia 30305
Telephone: 404-231-9397
Facsimile: 404-237-1659"
2. Section 13.3(a) of the Contract is hereby amended such that the name "William
M. Warfield" is deleted and the name "Douglas P. Foppe" is inserted in lieu
thereof.
3. Except as expressly provided herein, all terms and conditions of the Contract
shall remain in full force and effect in accordance with its terms as amended
hereby. From and after the date of this Amendment, references to the Contract
shall be deemed to be references to the Contract as amended by this Amendment.
4. This Amendment may be executed simultaneously in one or more faxed or
original counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement and may be executed
via facsimile counterparts.
[Signatures Contained on the Following Pages]
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed,
as of the day and year first set forth above.
Seller:
WESTLAKE EAST ASSOCIATES LIMITED
PARTNERSHIP,
an Ohio limited partnership
By: Fox Strategic Housing Income
Partners,
a California limited partnership
its sole general partner
By: Fox Partners VIII,
a California general
partnership,
its sole general partner
By: Fox Capital Management
Corporation, a
California corporation,
its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Its: Senior Vice
President
Purchaser:
PROMINENT REALTY GROUP OF GEORGIA,
INC., a Georgia corporation
By: /s/Douglas P. Foppe
Douglas P. Foppe, as its President
Exhibit 10.9
REINSTATEMENT AND SECOND AMENDMENT
OF PURCHASE AND SALE CONTRACT
(Barrington Place Apartments, Ohio)
This Reinstatement and Second Amendment of Purchase and Sale Contract
(this "Agreement") is entered into as of the 10th day of December, 2003 (the
"Effective Date") by and between WESTLAKE EAST ASSOCIATES LIMITED PARTNERSHIP,
an Ohio limited partnership, having a principal address at 4582 South Ulster
Street Parkway, Suite 1100, Denver, Colorado 80237 ("Seller") and PROMINENT
REALTY GROUP OF GEORGIA, INC., a Georgia corporation, having a principal address
at 4534 Cape Kure Court, Norcross, Georgia 30092 ("Purchaser").
RECITALS
A. Seller and Purchaser entered into a Purchase and Sale Contract dated as of
November 3, 2003, as amended (collectively, the "Contract"), pursuant to which
Seller agreed to sell to Purchaser, and Purchaser agreed to buy from Seller, the
Property (as defined in the Contract).
B. Pursuant to the Contract, Purchaser delivered to Escrow Agent an earnest
money deposit of $101,000.00 (the "Initial Deposit"), which Initial Deposit
continues to be held by Escrow Agent.
C. Pursuant to a letter dated as of December 3, 2003, from Purchaser's counsel,
on behalf of Purchaser, Purchaser terminated the Contract. Seller and Purchaser
desire to reinstate and modify the Contract pursuant to the terms set forth
below.
D. All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Contract.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, Seller and
Purchaser agree as follows:
AGREEMENTS
1. Reinstatement. The Contract is hereby reinstated as if such Contract had
never been terminated and shall remain in full force and effect and binding on
the parties hereto, subject to the terms and conditions thereof and hereof.
2. Waiver of Feasibility Period Contingencies. Purchaser hereby agrees and
acknowledges that all contingencies relating to the Feasibility Period have been
satisfied or waived by Purchaser as of the Effective Date of this Agreement.
Additionally, Purchaser hereby acknowledges and agrees that all contingencies
relating to Purchaser's review of the Title Commitment and Survey, as more
particularly set forth in Section 4.1, Section 4.2 and Section 4.3 of the
Contract, have been waived by Purchaser as of the Effective Date of this
Agreement.
3. Waiver of Loan Approval Period. Purchaser hereby agrees and acknowledges that
all contingencies relating to the Loan Approval Period have been satisfied or
waived by Purchaser as of the Effective Date of this Agreement.
4. Closing Date. Purchaser and Seller hereby agree and acknowledge that the
Closing Date shall occur on or before Wednesday, December 17, 2003.
5. Deposit. The Initial Deposit will remain deposited with Escrow Agent. On or
before 5:00 p.m. (in the time zone in which the Escrow Agent is located) on
Thursday, December 11, 2003, Purchaser shall deliver the Additional Deposit by
wire transfer of Good Funds in the amount of $101,000.00 to Escrow Agent. The
Initial Deposit shall be non-refundable upon execution of this Agreement and the
Additional Deposit shall be non-refundable when paid, except as otherwise
expressly provided in the Contract, and shall be held, credited and disbursed in
the manner provided for in the Contract with respect to the Deposit.
6. Effectiveness of Contract. Except as modified by this Agreement, all the
terms of the Contract shall remain unchanged and in full force and effect.
7. Counterparts. This Agreement may be executed in counterparts, and all
counterparts together shall be construed as one document.
8. Telecopied Signatures. A counterpart of this Agreement signed by one party to
this Agreement and telecopied to the other party to this Agreement or its
counsel (I) shall have the same effect as an original signed counterpart of this
Agreement, and (ii) shall be conclusive proof, admissible in judicial
proceedings, of such party's execution of this Agreement.
[Remaining Page Intentionally Left Blank]
IN WITNESS WHEREOF, Seller and Purchaser have entered into this
Reinstatement and Second Amendment of Purchase and Sale Contract as of the date
first set forth above.
Seller:
WESTLAKE EAST ASSOCIATES LIMITED PARTNERSHIP,
an Ohio limited partnership
By: Fox Strategic Housing Income Partners,
a California limited partnership,
its sole general partner
By: Fox Partners VIII,
a California general partnership,
its sole general partner
By: Fox Capital Management
Corporation, a California
corporation, its managing partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Its: Senior Vice President
Purchaser:
PROMINENT REALTY GROUP
OF GEORGIA, INC.,
a Georgia corporation
By: /s/Douglas Foppe
Name: Douglas Foppe
Title: President
Exhibit 10.10
ASSIGNMENT OF CONTRACT
THIS ASSIGNMENT OF CONTRACT ("Assignment") is entered into effective as of
December 16, 2003, by and between PROMINENT REALTY GROUP OF GEORGIA, INC.,
Georgia corporation ("Assignor"), and BARRINGTON PLACE APARTMENTS, LLC, a
Delaware limited liability company ("Assignee"). All initially capitalized terms
used but not defined herein shall have the meanings ascribed thereto in that
certain Purchase and Sale Agreement, entered into by Assignor and Westlake East
Associates Limited Partnership, an Ohio limited partnership ("Seller"), dated as
of November 3, 2003, as amended (collectively, the "Purchase Agreement").
R E C I T A L S:
1. Assignor is a party to the Purchase Agreement, pursuant to which Assignor has
agreed to purchase the property located in Cuyahoga County, Ohio, as more
particularly described therein (the "Property").
2. Assignor has formed Assignee to purchase the Property and otherwise fulfill
Assignor's obligations under the Purchase Agreement.
3. The parties desire to enter into this Assignment to evidence the transfer and
assignment of all of Assignor's right, title and interest in the Purchase
Agreement to Assignee.
NOW THEREFORE, in consideration of the foregoing, the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee all of
its right, title and interest in, to and under the Purchase Agreement.
2. Acceptance. Assignee hereby: (a) accepts the assignment of the Purchase
Agreement; (b) agrees to be bound by the terms and conditions of the Purchase
Agreement; and (c) assumes all of Assignor's obligations under the Purchase
Agreement.
3. Primary Liability. Pursuant to Section 13.3 of the Purchase Agreement,
Assignor is not released from its liability under the Purchase Agreement.
4. Further Assurances. Each of the parties hereto agrees to execute such other,
further and different documents and perform such other, further and different
acts as may be reasonably necessary or desirable to carry out the intent and
purpose of this Assignment.
5. Successors and Assigns. This Assignment shall be binding upon and share inure
to the benefit of the parties hereto and their respective successors and
assigns.
6. Governing Law. This Assignment shall be governed in all respects, including
validity, interpretation and effect, by and shall be enforceable in accordance
with the internal laws of the State of Georgia, without regard to conflicts of
laws principles.
7. Counterpart Execution. This Assignment may be executed in multiple
counterparts, each one of which will be deemed an original, but all of which
shall be considered together as one and the same instrument. Further, in making
proof of this Assignment, it shall not be necessary to produce or account for
more than one such counterpart. Execution by a party of a signature page hereto
shall constitute due execution and shall create a valid, binding obligation of
the party so signing, and it shall not be necessary or required that the
signatures of all parties appear on a single signature page hereto.
8. Entire Agreement. This Assignment contains the entire agreement between the
parties regarding the subject matter hereof. Any prior agreements, discussions
or representations not expressly contained herein shall be deemed to be replaced
by the provisions hereof and no party has relied on any such prior agreements,
discussions or representations as an inducement to the execution hereof.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Assignment to be executed by their duly authorized representatives as of the
date first above written.
ASSIGNOR:
PROMINENT REALTY GROUP OF GEORGIA, INC., a Georgia corporation
By: /s/Douglas P. Foppe
Douglas P. Foppe, as its President
ASSIGNEE:
BARRINGTON PLACE APARTMENTS, LLC
a Delaware limited liability company
By: PRG/Westlake, L.P.,
a Georgia limited partnership
Managing Member
By: PRG/Westlake Ohio, LLC
a Georgia limited liability company
General Partner
By: /s/Douglas P. Foppe
Douglas P. Foppe
Managing Member
By: /s/Richard K. Stetzer
Richard K. Stetzer
Managing Member