(NAPERVILLE, IL)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") dated as of June 12,
2001 by and among Krupp Realty Courtyards Limited Partnership ("Seller"), with
an address of c/o The Berkshire Group, One Beacon Street, Suite 1500, Boston, MA
02108, Attention: David C. Quade, Telecopier No. 617-423-8916, and Home
Properties of New York, L.P., a New York limited partnership ("Buyer"), with an
address of 850 Clinton Square, Rochester, New York 14604.
WHEREAS, Seller is the sole owner of the beneficial interest and sole
holder of the power of direction (the "Beneficial Interest") under that certain
Trust Agreement dated December 1, 1972, as amended on May 6, 1976, and as
further amended on November 30, 1992, and known as Trust Number 77424 (the
"Trust") and having American National Bank and Trust Company of Chicago, not
individually but solely as trustee thereunder;
WHEREAS, the Trust is the record owner of the Property (as hereinafter
defined);
NOW, THEREFORE, in consideration of the mutual undertakings and covenants
herein contained, Seller and Buyer hereby covenant and agree as follows:
SECTION 1
SALE OF PROPERTY AND ACCEPTABLE TITLE
1.01 Agreement to Buy and to Sell; Property. Seller shall sell to Buyer,
and Buyer shall purchase from Seller, at the price and upon the terms and
conditions set forth in this Agreement the following:
(a) that certain tract or parcel of land located in Naperville,
Illinois, more particularly described in Schedule A attached hereto (the
"Land");
(b) the 224 unit apartment complex, commonly known as the Courtyard
Village Apartments, which contains related improvements, facilities,
amenities, structures, driveways and walkways, all of which have been
constructed on the Land (collectively, the "Improvements");
(c) all right, title and interest of Seller in and to any alleys,
strips or gores adjoining the Land, and any easements, rights-of-way or
other interests in, on, under or to, any land, highway, street, road,
right-of-way or avenue, open or proposed, in, on, under, across, in front
of, abutting or adjoining the Land, and all right, title and interest of
Seller in and to any awards for damage thereto by reason of a change of
grade thereof;
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(d) the accessions, appurtenant rights, privileges, appurtenances and
all the estate and rights of Seller in and to the Land and the
Improvements, as applicable, or otherwise appertaining to any of the
property described in the immediately preceding clauses (a), (b) and/or
(c);
(e) all personal property, including, without limitation, the personal
property listed in Schedule B attached hereto, owned by Seller and located
on or in or used solely in connection with the Land and Improvements, but
expressly excluding all computer programs and computer software
(collectively, the "Personal Property"); and
(f) To the extent assignable without cost to Seller, all of Seller's
interest in all permits, warranties, guaranties, plans, specifications,
reports, books and records, and any intangible property, now or hereafter,
owned by Seller and used in connection with the Land, Improvements and
Personal Property, including without limitation the right to use any trade
style or name now used in connection with the same, any contract rights,
escrow or security deposits, utility agreements or other rights related to
the ownership of or use and operation of the Property, as hereinafter
defined.
All of the items described in subparagraphs (a), (b), (c), (d), (e) and (f)
above are collectively referred to as the "Property".
1.02 Title. Seller shall direct the Trust to convey to Buyer by warranty
deed (the "Deed"), and Buyer shall accept the fee simple title to the Property
in accordance with the terms of this Agreement, and Buyer's obligation to accept
said title shall be conditioned upon Buyer then being conveyed good and clear
record and marketable fee simple title to the Property, subject only to the
Permitted Exceptions (as hereinafter defined).
As promptly as possible after the date of this Agreement, Seller shall
furnish Buyer with a copy of the most recent title policy for the Property in
Seller's possession and Buyer shall obtain from LandAmerica Title Insurance
Corporation, Boston NCS office, Attention: Robert Soule, Esq. (the "Title
Insurer") a Commitment For Title Insurance with copies of all instruments and
plans mentioned therein as exceptions to title (all of such items are
hereinafter collectively referred to as the "Commitment"). The Commitment shall
be in the amount of the Purchase Price (as defined in Section 2.01 hereof).
Should such Commitment contain any title exceptions which are not acceptable to
Buyer, in its sole discretion, Buyer shall, prior to the expiration of the
Inspection Period, notify Seller if any such exceptions are unacceptable. If
Buyer fails to so notify Seller of any unacceptable exceptions as described
above, the exceptions set forth in Schedule B of the Commitment and any other
matters of record existing as of the date of the Commitment shall be deemed
accepted by Buyer. If any exceptions are unacceptable to Buyer and Buyer timely
notifies Seller in writing of such fact as above provided, Seller, in Seller's
sole discretion, shall have thirty (30) days from the date Seller receives
notice of such unacceptable exceptions to remove or cure such exceptions, except
with respect to the Mortgage Liens (as hereinafter defined), which Seller shall
remove or cure at Closing with the proceeds from the Purchase Price. Seller
shall be deemed to have
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given notice to Buyer that Seller refuses to cure any unacceptable exceptions,
which Seller may so do in its sole discretion, unless Seller, within ten (10)
days after receipt of notice from Buyer, shall notify Buyer in writing that
Seller will attempt to cure such unacceptable exceptions. If Seller fails or
refuses to cure said unacceptable exceptions within the time period above
provided, Buyer may (a) terminate this Agreement within ten (10) days after
Seller gives notice, or is deemed to have given notice, that Seller refuses to
cure such unacceptable exceptions and the Deposit shall be returned to Buyer, or
(ii) if Buyer fails to so terminate, Buyer shall be deemed to have waived such
exceptions and accept title subject thereto, in which event there shall be no
reduction in the Purchase Price. Notwithstanding the foregoing, Seller, at its
cost, shall be obligated to cure or remove by Closing all mortgages and deeds of
trust against the Property, specifically excepting the mortgage and other
recorded documents relating to the Existing Loan (collectively, the "Mortgage
Liens") or other monetary liens not exceeding $50,000 in the aggregate.
1.03 Survey. Seller shall furnish Buyer with a copy of the most recent
as-built survey of the Property in Seller's possession (the "Prior Survey"), and
on or before the expiration of the Inspection Period, Buyer may obtain a current
as-built survey (the "Survey") of the Land and the Improvements by a registered
land surveyor.
Should the Prior Survey contain any encumbrances, encroachments or other
survey defects (collectively "Prior Survey Matters") which are not acceptable to
Buyer in its sole discretion, Buyer shall, prior to the expiration of the
Inspection Period, notify Seller if any such Prior Survey Matters are
unacceptable. In addition, if Buyer obtains a New Survey, should the New Survey
contain any encumbrances, encroachments or other survey defects which do not
appear on the Prior Survey (collectively, "New Survey Matters") and which are
not acceptable to Buyer in its sole discretion, Buyer shall, not later than the
expiration of the Inspection Period, notify Seller if any such New Survey
Matters are unacceptable. (The Prior Survey Matters and the New Survey Matters
are referred to collectively as "Survey Matters"). If Buyer does not obtain a
New Survey or if Buyer fails to so notify Seller of any unacceptable Survey
Matters as described above, all Survey Matters shall be deemed accepted by
Buyer. If any Survey Matters are unacceptable to Buyer and Buyer timely notifies
Seller in writing of such fact as above provided, Seller, in Seller's sole
discretion, shall have thirty (30) days from the date Seller receives notice of
such unacceptable Survey Matters to cure such Survey Matters. Seller shall be
deemed to have given notice to Buyer that Seller refuses to cure any
unacceptable Survey Matters, which Seller may so do in its sole discretion,
unless Seller, within ten (10) days after receipt of notice from Buyer, shall
notify Buyer in writing that Seller will attempt to cure such unacceptable
Survey Matters. If Seller fails or refuses to cure said unacceptable Survey
Matters within the time period provided, Buyer may (a) terminate this Agreement
within ten (10) days after Seller gives notice, or is deemed to have given
notice, that Seller refuses to cure such unacceptable Survey Matters and the
Deposit shall be returned to Buyer, or (b) if Buyer fails to so terminate, Buyer
shall be deemed to waive such Survey Matters and accept title subject thereto,
in which event there shall be no reduction in the Purchase Price.
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1.04 Permitted Exceptions. The following items are hereinafter referred to
as the "Permitted Exceptions".
(a) All possible title objections, survey objections, and any defects
in or to title to the Property or other matters affecting or relating to
the title to, or the survey of, or the condition of the Property existing
as of the expiration of the Inspection Period and not objected to by Buyer
and/or which Buyer has otherwise approved or is deemed to have approved
pursuant to Section 1.02 and/or Section 1.03;
(b) Leases described on Schedule C and Service Contracts described on
Schedule D, or which Seller is permitted to enter into pursuant to this
Agreement;
(c) the Existing Loan documents;
(d) the lien of non-delinquent real and personal property taxes and
assessments not yet due and payable as of the Closing;
(e) rights of parties in possession not shown by the public records,
and any subtenants or licensees under any Leases;
(f) discrepancies, conflicts in boundary lines, shortages in area,
encroachments, and any state of facts which an inspection of the Property
would disclose and which are not shown by the public records;
(g) easements or claims of easements shown by the public records or
which an inspection of the Property would disclose;
(h) Subject to any proration provisions hereof, any service,
installation, connection, maintenance or construction charges due after
Closing, and charges for sewer, water, electricity, telephone, cable
television or gas; and
(i) any and all liens, exceptions, obligations or other matters which
are caused or created by or on behalf of Buyer or any of Buyer's agents,
employees or representatives.
SECTION 2
PURCHASE PRICE, ACCEPTABLE FUNDS,
DEPOSIT AND ESCROW OF DEPOSIT
2.01 Purchase Price. The purchase price ("Purchase Price") to be paid by
Buyer to Seller for the Property is TWELVE MILLION SEVEN HUNDRED SIXTY-EIGHT
THOUSAND AND NO/00 DOLLARS ($12,768,000.00), subject to the prorations and
adjustments as hereinafter provided in this Agreement.
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2.02 Payment of Monies. All monies payable under this Agreement, unless
otherwise specified in this Agreement, shall be paid by wire transfer of
immediately available funds.
2.03 Payment of Purchase Price. The Purchase Price, subject to prorations
and adjustments, shall be paid as follows:
(a) Deposit. Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) has been paid as a deposit this day (the "Deposit");
(b) Existing Loan. Approximately Five Million One Hundred Thousand
Dollars ($5,100,000.00) shall be paid by Buyer's assumption of the Existing
Loan (as defined in Section 16.01), the exact amount of which shall be
based upon the outstanding principal balance of the Existing Loan as of the
closing;
(c) Payment at Closing. At the consummation of the transaction
contemplated hereby (the "Closing"), Buyer shall deliver to Escrow Agent
cash in an amount equal to the Purchase Price less (i) the outstanding
principal balance of the Existing Loan (as defined herein) at Closing, and
(ii) the amount of the Deposit held by the Escrow Agent, and subject to
adjustments and apportionments as set forth herein. The Purchase Price, as
adjusted, shall be paid at Closing by wire transfer of immediately
available federal funds, transferred to the order or account of Seller or
such other person as Seller may designate in writing.
2.04 Deposit; Escrow Agent. The Deposit shall be delivered by Buyer to
LandAmerica Title Insurance Corporation (the "Escrow Agent") within one (1)
business day after the date of this Agreement. Failure of the Buyer to so
deliver the Deposit shall constitute a breach by Buyer of this Agreement for
which the Seller may exercise the remedies set forth in Section 12.03. Upon
receipt from Buyer of the Deposit, Escrow Agent shall invest the Deposit in an
interest-bearing account or money market fund acceptable to Buyer and Seller.
All interest on the Deposit shall accrue to Buyer, except as otherwise provided
in Section 12.03 hereof. At the Closing, Escrow Agent shall release the Deposit
to Seller, which Deposit shall be credited against the balance of the Purchase
Price owed by Buyer to Seller. Escrow Agent shall agree to hold and dispose of
the Deposit in accordance with the terms and provisions of this Agreement.
2.05 Escrow Provisions. Escrow Agent hereby acknowledges receipt by Escrow
Agent of the Deposit paid by Buyer to be applied to the Purchase Price of the
Property under the terms hereof. Escrow Agent agrees to hold, keep and deliver
said Deposit and all other sums delivered to it pursuant hereto in accordance
with the terms and provisions of this Agreement. Escrow Agent shall not be
entitled to any fees or compensation for its services hereunder. Escrow Agent
shall be liable only to hold said sums and deliver the same to the parties named
herein in accordance with the provisions of this Agreement, it being expressly
understood that by acceptance of this agreement Escrow Agent is acting in the
capacity of a depository only and shall not be liable or responsible to anyone
for any damages, losses or expenses unless same shall have been
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caused by the gross negligence or willful malfeasance of Escrow Agent. In the
event of any disagreement between Buyer and Seller resulting in any adverse
claims and demands being made in connection with or for the monies involved
herein or affected hereby, Escrow Agent shall refuse to comply with any such
claims or demands so long as such disagreement may continue; and in so refusing
Escrow Agent shall make no delivery or other disposition of any of the monies
then held by it under the terms of this Agreement, and in so doing Escrow Agent
shall not become liable to anyone for such refusal; and Escrow Agent shall
refrain from acting until (a) the rights of the adverse claimants shall have
been finally adjudicated in a court of competent jurisdiction of the monies
involved herein or affected hereby, or (b) all differences shall have been
adjusted by agreement between Seller and Buyer, and Escrow Agent shall have been
notified in writing of such agreement signed by the parties hereto. Escrow Agent
shall not be required to disburse any of the monies held by it under this
Agreement unless in accordance with either a joint written instruction of Buyer
and Seller or an undisputed Escrow Demand from either Buyer or Seller in
accordance with the provisions hereinafter. Upon receipt by Escrow Agent from
either Buyer or Seller (the "Notifying Party") of any notice or request (the
"Escrow Demand") to perform any act or disburse any portion of the monies held
by Escrow Agent under the terms of this Agreement, Escrow Agent shall give
written notice to the other party (the "Notified Party"). If within five (5)
business days after the giving of such notice, Escrow Agent does not receive any
written objection to the Escrow Demand from the Notified Party, Escrow Agent
shall comply with the Escrow Demand. If Escrow Agent does receive written
objection from the Notified Party in a timely manner, Escrow Agent shall take no
further action until the dispute between the parties has been resolved pursuant
to either clause (a) or (b) above. Further Escrow Agent shall have the right at
all times to pay all sums held by it into any court of competent jurisdiction
after a dispute between or among the parties hereto has arisen, whereupon Escrow
Agent's obligations hereunder shall terminate.
Seller and Buyer jointly and severally agree to indemnify and hold harmless
said Escrow Agent from any and all costs, damages and expenses, including
reasonable attorneys' fees, that said Escrow Agent may incur in its compliance
of and in good faith with the terms of this agreement; provided, however, this
indemnity shall not extend to any act of gross negligence or willful malfeasance
on the part of the Escrow Agent.
SECTION 3
THE CLOSING
Except as otherwise provided in this Agreement, the delivery of all
documents necessary for the closing of this transaction pursuant to this
Agreement (the "Closing") shall take place in the offices of Seller's counsel,
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts or such other place
as Seller and Buyer shall mutually agree, at 10:00 A.M. local time on July 31,
2001 or such earlier date or place as Buyer and Seller shall mutually agree in
writing (the "Original Closing Date"). It is agreed that time is of the essence
of this Agreement. Notwithstanding the foregoing, if the consent of the Existing
Lender is not obtained by the Original Closing Date, either party may elect to
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extend the Original Closing Date for an additional thirty (30) days.
Additionally, if Seller shall elect to cure any title or survey matter under
Section 1.02 or Section 1.03, if necessary, the Original Closing Date shall be
extended until fifteen (15) days after the earlier of (a) the expiration of the
thirty (30) day cure period as set forth in said Section 1.02 or Section 1.03,
as applicable, or (b) the date Seller notifies Buyer that such matter has been
cured. At either party's request, Closing shall be conducted through an escrow
administered by Escrow Agent.
SECTION 4
SELLER'S PRE-CLOSING DELIVERIES
4.01 Seller shall furnish to Buyer, or make available at the Property,
immediately after the date hereof, for inspection and approval by Buyer, the
following (to the extent in the possession of Seller):
(a) Leases. Seller shall provide Buyer with access on-site to the
originals (or copies, if originals are not available) of all leases and
related lease files.
(b) Taxes. A copy of 2001 real estate and personal property tax (if
applicable) statements for the Property and tax abatements or abatement
applications for such year (if any).
(c) Current Rent Roll. A list of the current rents now being collected
on each of the apartment units in the Improvements which includes:
apartment number, unit type, tenant name, commencement and termination
dates, lease rent and security deposits.
(d) Service Contracts. Copies of all service, maintenance, supply,
governmental, utility and management contracts entered into by Seller
currently affecting the use, ownership, maintenance and/or operation of the
Property.
(e) Utility Bills. Copies of all utility bills (gas, electric, water
and sewer) relating to the Property for the immediately prior twelve (12)
month period.
(f) Existing Loan Documentation. Copies of the loan documentation
relating to the Existing Loan.
(g) Environmental Reports. Copies of any existing environmental
reports (Phase I or other) for the Property.
(h) Other. To the extent reasonably available to Seller, such other
documentation or information as requested by Buyer and reasonably necessary
to its investigation and due diligence review of the Property.
4.02 Except as otherwise expressly set forth in this Agreement, Seller
makes no representations or warranties as to the truth, accuracy, or
completeness of any materials,
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data, or other information, including without limitation, the contents of
Seller's or its property manager's books and records, marketing materials
prepared by Seller, the Leases, the Service Contracts, rent rolls or income and
expense statements, supplied to Buyer in connection with Buyer's inspection of
the Property. It is the parties' express understanding and agreement that all
such materials are provided by Seller solely for Buyer's convenience in making
its own examination and determination prior to the expiration of the Inspection
Period (as hereinafter defined) as to whether it wishes to purchase the
Property, and, in making such examination and determination, Buyer shall rely
exclusively on its own independent investigation and evaluation of the Property
and not on any materials supplied by Seller.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.01 Leases. As of the date of this Agreement there are no leases or other
rental agreements or occupancy agreements (written or verbal) entered into by
Seller which grant any possessory interest in and to any space situated on or in
the Improvements or that otherwise give rights with regard to use of the
Improvements other than the leases (the "Leases") described in Schedule C
attached hereto (the "Rent Roll"). The Rent Roll is true, accurate and complete
in all material respects as of the date hereof. Except as otherwise specifically
set forth in the Rent Roll or elsewhere in this Agreement:
(a) to the knowledge of Seller, the Leases are in full force and
effect;
(b) Except as set forth on Schedule 5.01, Seller has neither sent
written notice to any current tenant of the Property, nor received any
written notice from any such tenant, claiming that such tenant, or Seller,
as the case may be, is in default, which default remains uncured;
(c) to the knowledge of Seller, no action or proceeding instituted
against Seller by any tenant of any unit in the Property is presently
pending;
(d) there are no security deposits or other deposits other than those
set forth in the Rent Roll;
(e) no rent has been paid more than thirty (30) days in advance under
any Lease other than as shown on the Rent Roll; and
(f) no leasing commission shall be due for any period subsequent to
the Closing other than for tenants who have executed a lease after the date
hereof but do not move in until after the Closing, which commissions shall
be paid by Buyer.
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5.02 Service and Management Contracts. Schedule D attached hereto lists all
governmental, utility, services, maintenance, supply and management contracts
(collectively, "Service Contracts") entered into by Seller currently affecting
the operation of the Property.
5.03 Ability to Perform. Seller has full power to execute, deliver and
carry out the terms and provisions of this Agreement and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the legal, valid and binding obligation of Seller
enforceable in accordance with its terms. Except as set forth in this Agreement,
no order, permission, consent, approval, license, authorization, registration or
validation of, or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is required
in connection with, the execution, delivery and performance of this Agreement by
Seller or the taking by Seller of any action contemplated by this Agreement.
5.04 No Actions. Except as set forth on Schedule E attached hereto, there
are no pending, or to Seller's knowledge, threatened legal actions or
proceedings against or relating to Seller or the ownership of the Property.
5.05 No Violation Notice. To Seller's knowledge, Seller has not received
written notice:
(a) from any federal, state, county or municipal authority alleging
any fire, health, safety, building, pollution, environmental, deed
restriction or other violation of law in respect of the Property or any
part thereof, which has not been corrected;
(b) concerning the possible or anticipated condemnation of any part of
the Property, or the widening, change of grade or limitation on use of
streets abutting the same or concerning any special taxes or assessments
levied or to be levied against the Property or any part thereof;
(c) from any insurance company or bonding company of any defects or
inadequacies in the Property or any part thereof, which would adversely
affect the insurability of the same or cause the imposition of
extraordinary premiums or charges therefor or of any termination or
threatened termination of any policy of insurance or bond; or
(d) concerning any change in the deed restriction classification of
the Property or any part thereof.
5.06 No Management Contracts, Employment Contracts, Unions, Pension Plans.
Seller has not entered into any management contracts, employment contracts or
labor union contracts and has not established any retirement, pension or profit
sharing plans relating to the operation or maintenance of the Property which
shall survive the Closing or for which Buyer shall have any liability or
obligation.
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5.07 Existing Loan. To Seller's knowledge, there is no existing default on
the part of Seller under the Existing Loan.
As used in this Agreement, or in any other agreement, document, certificate
or instrument delivered by Seller to Buyer, the phrase "to Seller's knowledge",
"to Seller's actual knowledge", "to the best of Seller's knowledge" or any
similar phrase shall mean the actual, not constructive or imputed, knowledge of
David C. Quade, Executive Vice President and Chief Financial Officer of The
Berkshire Group and Rick Ragsdale, Regional Operations Vice President, but
without any obligation on their part to make any independent investigation of
the matters being represented and warranted, or to make any inquiry of any other
persons, or to search or examine any files, records, books, correspondence and
the like.
At Closing, Seller shall represent and warrant to Buyer by delivering to
Buyer a certificate (the "Seller's Representation Certificate") certifying that
all representations and warranties of Seller in this Agreement remain true and
correct in all material respects as of the Closing Date and all of the
representations and warranties contained herein shall be deemed remade by Seller
effective as of the Closing Date; provided, however, that to the extent that
Seller becomes aware of any facts or circumstances which would make a
representation or warranty untrue in any material respect, Seller shall promptly
deliver written notice to Buyer of such facts or circumstances after becoming
aware of same (but in no event later than the Closing Date) and, the Seller's
Representation Certificate may be revised at Closing to make exception or
qualification with respect to such matters as may be necessary for such
representations to remain true, but Buyer's agreement to allow such amendment of
Seller's Representation Certificate shall not affect or indicate any waiver of
any condition to Closing set forth in this Agreement, and Buyer may terminate
this Agreement and receive the Deposit, if Seller fails, for any reason, to
deliver Seller's Representation Certificate at Closing without any material
change, except as to changes which are permitted or contemplated pursuant to
Section 8 hereof.
Buyer agrees to inform Seller promptly in writing if it discovers that any
representation or warranty of Seller is inaccurate in any material respect, or
if it believes that Seller has failed to deliver to Buyer any document or
material which it is obligated to deliver hereunder.
If Buyer notifies Seller prior to Closing that any representation or
warranty made in Section 5 is not true and correct in any material respect and
Seller fails to cure or remedy the same prior to Closing, Buyer may either (a)
except as otherwise set forth in this paragraph, terminate this Agreement and
the Deposit shall be returned to Buyer, and neither party shall have further
rights or obligations pursuant to this Agreement, except for Buyer's obligation
to repair any damage to the Property and to indemnify Seller as set forth in
Section 6.01; or (b) waive any such representation or warranty and close the
transaction without any reduction in the Purchase Price. Notwithstanding the
foregoing, Buyer shall not have the right to terminate this Agreement on account
of a breach of a Seller representation or warranty to the extent that, prior to
the end of the Inspection Period, Buyer discovers or learns of information (from
whatever source, including,
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without limitation, a disclosure from Seller or Seller's agents or employees or
as a result of Buyer's due diligence tests, investigations and inspections of
the Property) that contradicts any such representations and warranties, or
renders any such representations and warranties untrue or incorrect, and Buyer
nevertheless does not terminate this Agreement prior to the expiration of the
Inspection Period in accordance with Section 6.02.
If subsequent to Closing Buyer notifies Seller within six (6) months after
Closing that Buyer discovered post-closing that any representation or warranty
made in Section 5 was not true and correct in any material respect and
specifying the breach with particularity, subject to the limitations set forth
in Section 17.02, Buyer shall have available all remedies at law or in equity as
a consequence thereof. If Buyer does not notify Seller of the breach of any of
its representations and warranties set forth in this Section 5 and institute a
lawsuit therefor in a court of competent jurisdiction within six (6) months
after the Closing, Buyer shall be deemed to have waived all of its rights to
claim and sue for any breach by Seller of any of its representations and
warranties made in this Section 5.
SECTION 6
INSPECTION PERIOD; ACCESS; PURCHASE "AS IS"
6.01 During the Inspection Period, Buyer, its agents and representatives,
shall be entitled to enter upon the Property (as coordinated through Seller's
property manager), including all leased areas, upon at least two (2) business
days prior notice to Seller, to perform inspections and tests of the Property,
including surveys, environmental studies, examinations and tests of all
structural and mechanical systems within the Improvements, and to examine the
books and records and all other documents relating to the Property in the
possession or control of Seller or Seller's property manager. Buyer shall also
have the right to interview Seller's on-site personnel and vendors. Seller shall
have the right to have a representative present during all times that Buyer, its
agents, consultants or representatives have entered the Property for the purpose
of conducting its investigations in accordance with this Section 6.01. Before
entering upon the Property, Buyer shall furnish to Seller evidence of general
liability insurance coverage naming Seller as an insured in such amounts and
insuring against such risks as Seller may reasonably require. Notwithstanding
the foregoing, Buyer shall not be permitted to interfere unreasonably with
Seller's operations at the Property or interfere with any tenant's occupancy at
the Property, and the scheduling of any inspections shall take into account the
timing and availability of access to tenants' premises, pursuant to tenants'
rights under the Leases or otherwise. If Buyer wishes to engage in any testing
which will damage or disturb any portion of the Property, Buyer shall obtain
Seller's prior consent thereto, which may be granted, refused or conditioned in
the sole and absolute discretion of Seller. Without limiting the generality of
the foregoing, Seller's written approval shall be required prior to any testing
or sampling of surface or subsurface soils, surface water, groundwater or any
materials in or about the Property in connection with Buyer's environmental due
diligence. Buyer shall restore the Property to the same condition as existed
prior to such
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tests or investigations, shall repair any damage to the Property caused by any
such tests or investigations, and shall indemnify Seller from any and all
liabilities, claims, costs and expenses resulting therefrom or from any breach
of any other obligations of Buyer under this Section 6.01. Buyer and its agents
and representatives shall not reveal or disclose any information obtained during
the Inspection Period concerning the Property or the Seller to anyone outside of
Buyer's organization, other than its agents, consultants and representatives.
The obligations and indemnification set forth in this Section 6.01 shall survive
Closing or the termination of this Agreement.
6.02 The term "Inspection Period," as used herein, shall mean the period
ending at 5:00 p.m. Boston time on June 30, 2001. Buyer shall have the right to
terminate this Agreement, in its sole discretion, by giving written notice of
such election to Seller on any day prior to and including the final day of the
Inspection Period, in which event the Deposit shall be returned forthwith to
Buyer and, except as expressly set forth herein, neither party shall have any
further liability or obligation to the other hereunder. In the absence of such
written notice, the contingency provided for in this Section 6.02 shall no
longer be applicable, Buyer shall be deemed to have waived its right to
terminate hereunder and this Agreement shall continue in full force and effect.
In the event Buyer timely elects to terminate this Agreement during the
Inspection Period as permitted above, Buyer shall deliver to Seller with Buyer's
notice of termination copies of all studies, surveys, plans, investigations and
reports obtained by Buyer in connection with Buyer's inspection of the Property
at no cost to Seller.
6.03 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND
AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS
AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL
FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT.
BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND
BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS
OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING
SPECIFICALLY, WITHOUT LIMITATION, ANY PROSPECTUS DISTRIBUTED WITH RESPECT TO THE
PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL
ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO
WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS
SPECIFICALLY SET FORTH IN THIS AGREEMENT. BUYER ALSO
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ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE
PROPERTY IS BEING SOLD "AS-IS."
BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR
TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO,
THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR
DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE
EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS
AND WARRANTIES OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, UPON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S AFFILIATED ENTITIES AND EACH OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS
(COLLECTIVELY, "SELLER AFFILIATES")) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY
AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED
OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR
PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE
LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS
REGARDING THE PROPERTY (COLLECTIVELY, THE "LIABILITIES").
THE PROVISIONS OF THIS SECTION SHALL SURVIVE CLOSING OR ANY TERMINATION OF
THIS AGREEMENT.
6.04 Without limiting the generality of the foregoing release provisions of
this Section 6, Buyer waives any rights it may have against Seller or any Seller
Affiliates in connection with any and all Liabilities which arise or which are
in any way related to any Hazardous Materials in, on, above or beneath the
Property or emanating therefrom including, without limitation, under CERCLA
(defined below), and Buyer agrees that it shall not (i) implead Seller, (ii)
bring a contribution action or similar action against Seller or (iii) attempt in
any way to hold Seller responsible with respect to any such matter. As
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used herein, "Hazardous Materials" shall mean and include, but shall not be
limited to any petroleum product and all hazardous or toxic substances, wastes
or substances, any substances which because of their quantitated concentration,
chemical, or active, flammable, explosive, infectious or other characteristics,
constitute or may reasonably be expected to constitute or contribute to a danger
or hazard to public health, safety or welfare or to the environment, including,
without limitation, any hazardous or toxic waste or substances which are
included under or regulated (whether now exiting or hereafter enacted or
promulgated, as they may be amended from time to time) including, without
limitation, the Comprehensive and Liability Act of 1980, 42 U.S.C. Section 9601
et seq. ("CERCLA"), the Federal Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., similar state laws and regulations adopted
thereunder (collectively, "Hazardous Materials Laws"). The provisions of this
Section 6.04 shall survive Closing or any termination of this Agreement.
6.05 Seller has provided to Buyer certain unaudited historical financial
information regarding the Property relating to certain periods of time in which
Seller owned the Property. Seller makes no representation or warranty that such
material is complete or accurate or that Buyer will achieve similar financial or
other results with respect to the operations of the Property, it being
acknowledged by Buyer that Seller's operation of the Property and allocations of
revenues or expenses may be vastly different than Buyer may be able to attain.
Buyer acknowledges that it is a sophisticated and experienced purchaser of real
estate and further that Buyer has relied upon its own investigation and inquiry
with respect to the operation of the Property and releases Seller from any
liability with respect to such historical information.
SECTION 7
INSURANCE
7.01 Maintenance of Insurance. Until the Closing, Seller shall maintain its
present insurance on the Property. Subject to the provisions of Section 7.02,
the risk of loss in and to the Property shall remain vested in Seller until the
Closing. Buyer will obtain its own insurance on the Property at Closing.
7.02 Casualty or Condemnation. If prior to the Closing, the Improvements or
any material portion thereof (having a replacement cost equal to or in excess of
twenty percent (20%) of the Purchase Price) are damaged or destroyed by fire or
casualty, or are taken by eminent domain by any governmental entity, and Seller
is unable to restore such damage or destruction prior to the Closing Date in the
case of a casualty, then Buyer shall have the option, exercisable by written
notice given to Seller at or prior to the Closing, to terminate this Agreement,
whereupon all obligations of all parties hereto shall cease, the Deposit shall
be returned to Buyer and this Agreement shall be void and without recourse to
the parties hereto except for provisions which are expressly stated to survive
such termination. If Buyer does not elect to terminate this Agreement or if such
damage or destruction or taking has a replacement cost or is in an amount of
less than twenty percent (20%) of the Purchase Price, Buyer shall proceed with
the purchase of the Property
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without reduction or offset of the Purchase Price, and in such case, unless
Seller shall have previously restored the Property to its condition prior to the
occurrence of any such damage or destruction, Seller shall pay over or assign to
Buyer all amounts received or due from, and all claims against, any insurance
company or governmental entity as a result of such destruction or taking and
Buyer shall be entitled to a credit against the Purchase Price equal to the
deductible amount under Seller's insurance.
SECTION 8
SELLER'S OBLIGATIONS PRIOR TO CLOSING
Seller covenants that between the date of this Agreement and the Closing:
8.01 Leases. Seller shall not after the expiration of the Inspection
Period, without Buyer's prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), (a) enter into any new lease for
an apartment unit with a first-time tenant unless the lease is for a period of
no more than one year and the rent shall be not less than the then current lease
rent for such unit; or (b) enter into, amend, renew or extend any Lease for an
apartment unit with an existing tenant unless the lease is for a period of not
more than one year and that the rent for the amended, renewal or extension term
shall not be less than the current lease rent for such unit; or (c) terminate
any Lease except by reason of a default by the tenant thereunder or by reason of
the provisions contained in the Lease. If Buyer fails to reply to Seller's
request for consent in a notice given within five (5) days after Buyer receives
such request, Buyer's consent shall be deemed to have been granted. Prior to the
expiration of the Inspection Period, Seller shall not be required to obtain
Buyer's written consent prior to engaging in any leasing arrangements.
8.02 Continuation of Service Contracts. Seller shall not modify or amend
any Service Contract or enter into any new service contract for the Property
unless the same is terminable without penalty by the then owner of the Property
upon not more than thirty (30) days' notice. If Buyer notifies Seller in writing
on or prior to the expiration of the Inspection Period of any Service Contracts
(the "Terminable Service Contracts") which (i) Buyer does not desire to assume
and (ii) may be terminated as of right by Seller without payment of any
termination fee, Seller shall promptly give notice of termination of each
Terminable Service Contract effective as of Closing or as of such later date as
such Service Contract may first be terminated. Otherwise, Buyer shall assume all
Service Contracts at Closing.
8.03 Replacement of Personal Property. No personal property included as
part of the Property shall be removed from the Property unless the same is
replaced with similar items of at least equal quality prior to the Closing.
8.04 Tax Procedure. Seller shall not withdraw, settle or otherwise
compromise any protest or reduction proceeding affecting real estate taxes
assessed against the Property for any fiscal period in which the Closing is to
occur or any subsequent fiscal period without the prior written consent of
Buyer. Real estate tax refunds and credits
15
received after the Closing which are attributable to the fiscal tax year during
which the Closing occurs shall be apportioned between Seller and Buyer, after
deducting the expenses of collection thereof, based upon the relative time
periods each owns the Property, which obligation shall survive the Closing.
8.05 Access. Seller shall allow Buyer or Buyer's representatives access to
the Property, the Leases and other documents required to be delivered under this
Agreement upon reasonable prior notice at reasonable times; provided Buyer
agrees that the original leases and all other original documents shall remain
on-site at the Property.
8.06 Operations. Seller shall manage and maintain the Property in good
operating condition comparable to that existing as of the date hereof, normal
wear and tear and casualty and condemnation damage excepted. Seller will perform
all current non-structural maintenance and repairs as may be needed to maintain
the Property or as may be reasonably appropriate to facilitate the leasing of
vacant rental space. Seller will make replacements of items of furniture,
fixtures and equipment under the same circumstances and according to the same
standard that such replacements have been made in the past.
SECTION 9
SELLER'S CLOSING OBLIGATIONS
9.01 Closing, Deliveries and Obligations. At the Closing, Seller shall
deliver the following to Buyer:
(a) Deed. The Deed, in form reasonably satisfactory to Buyer's and
Seller's counsel, duly executed and acknowledged, which conveys the Land
and Improvements to Buyer, subject only to Permitted Exceptions.
(b) Bill of Sale. A bill of sale, without warranty of title, in form
reasonably satisfactory to Buyer's and Seller's counsel, which conveys all
of Seller's right, title and interest in and to the tangible and intangible
personal property.
(c) Existing Loan Assignment. An Assignment and Assumption Agreement
(the "Existing Loan Assignment") in a form reasonably satisfactory to the
Existing Lender (as defined in Section 16.01) and Seller, pursuant to which
Seller will assign all of its rights, title and interest in the Existing
Loan documents to Buyer and from and after the Closing Buyer will assume
all obligations and liabilities of Seller under the Existing Loan documents
and agree to indemnify Seller for all obligations and liabilities with
respect to the Existing Loan and the Existing Loan documents.
(d) Assignment of Leases and Security Deposits. An assignment and
assumption of the Leases and Security Deposits in form reasonably
satisfactory to Buyer's and Seller's counsel. In lieu of an assignment of
Security Deposits, the Buyer may receive a credit at Closing equal to the
total of all Security Deposits plus accrued interest to the extent required
by law.
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(e) Lease Records. Original copies of all Leases, and related
documents in the possession or under the control of Seller. Such records
shall include a schedule of all cash security deposits (including pet
deposits and interest, if any) and a check to Buyer or credit against the
Purchase Price in the amount of such security deposits (including pet
deposits and interest, if any) held by Seller at the Closing under the
Leases together with appropriate instruments of transfer or assignment with
respect to any lease securities which are other than cash and a schedule
updating the Rent Roll and setting forth all arrears in rents and all
prepayments of rents.
(f) Permits; Warranties. Seller shall deliver, to the extent in the
possession of Seller, all original warranties and guaranties and original
copies of all certificates, licenses, permits, authorizations and approvals
issued for or with respect to the Property by governmental authorities
having jurisdiction, except that photocopies may be substituted if the
originals are posted at the Property or are otherwise not available.
(g) Assignment of Service Contracts. An assignment and assumption of
all assignable Service Contracts (other than Service Contracts to be
terminated hereunder), in form reasonably satisfactory to Buyer's and
Seller's counsel.
(h) Title Affidavits. Such affidavits as the Title Insurer may
reasonably require in order to omit from its title insurance policy all
exceptions for (i) parties in possession other than under the rights to
possession granted under the Leases; and (ii) mechanics' liens.
(i) Files. Seller shall make all of its files and records relating to
the Property available to Buyer at the Property upon reasonable prior
notice for copying, which obligation shall survive the Closing.
(j) Notices of Sale. Sufficient letters, executed by Seller, advising
the tenants under the Leases of the sale of the Property to Buyer and
directing that all rents and other payments thereafter becoming due under
the Leases be sent to Buyer or as Buyer may direct.
(k) Non-Foreign Affidavit. Seller shall execute and deliver to Buyer
and Buyer's counsel, at Closing such evidence as may be reasonably required
by Buyer to show compliance by Seller with the Foreign Investment and Real
Property Tax Act, IRC Section 1445(b)(2), as amended.
(l) Seller's Representation Certificate. The Seller's Representation
Certificate duly executed by Seller as provided in Section 5 hereof in form
reasonably satisfactory to Buyer's and Seller's counsel.
(m) Transfer Tax Declaration. Any transfer tax declaration required to
be filed in connection with the recording of the Deed.
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(n) Closing Statement. A closing statement, in form reasonably
satisfactory to Buyer's and Seller's counsel.
(o) Buyer shall have received either (i) a Seller's affidavit
providing that Seller is not liable to the Illinois Department of Revenue
for any amounts owed by Seller and attributable to the time period prior to
the Closing for which Buyer could be held liable pursuant to bulk sales and
other similar laws ("Seller Bulk Sales Obligations"), and containing an
agreement of Seller to indemnify the Buyer for any loss or liability
related to any Seller Bulk Sales Obligations; or (ii) a notification from
the Illinois Department of Revenue that no amount is required to be
withheld from the purchase price with respect to the sale of the Property.
(p) Buyer shall have received as of the Closing a completed and
executed Environmental Disclosure Document For Transfer of Real Property,
if required by the Illinois Responsible Property Transfer Act ("IRPTA")
(which disclosure document shall be delivered to Buyer not less than
fifteen (15) days prior to the Closing Date).
9.02 Seller's Expenses. Seller shall pay its own counsel fees, any state or
county (but not municipality) transfer taxes relating to the Deed (if any),
title insurance premiums for Buyer's owner's title policy (exclusive of
endorsements) and one-half of any escrow fees.
SECTION 10
BUYER'S CLOSING OBLIGATIONS
At the Closing, Buyer shall:
10.01 Payment of Purchase Price. Deliver to Seller the Purchase Price, as
adjusted for (i) apportionments under Section 11, (ii) any adjustments thereto
required pursuant to the express provisions of this Agreement, and (iii) the
Existing Loan to be assumed by Buyer in accordance with Section 2.03.
10.02 Lease, Security Deposit and Service Contract Assumption. Deliver to
Seller assumption agreements signed by Buyer with respect to the performance by
Buyer of the landlord's obligations under the Leases, Security Deposits and the
Service Contracts assumed by Buyer, in each case in respect of the period from
and after the Closing.
10.03 Exiting Loan Assignment. Execute, acknowledge and deliver the
Existing Loan Assignment, together with all other documents, instruments,
agreements, legal opinions and other items as may be requested by the Existing
Lender in connection with the assumption of the Existing Loan by Buyer.
10.04 Recording Deed. Cause the Deed to be recorded.
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10.05 Other Documents. Deliver a closing statement and any other documents
required by this Agreement to be delivered by Buyer.
10.06 Buyer's Expenses. Pay its own counsel fees, costs of endorsements to
Buyer's owner's title policy, costs of survey, all costs relating to the
assumption of the Existing Loan (including, without limitation, any transfer or
assumption fees), any municipality transfer taxes and all costs related to its
due diligence investigations, and one-half of any escrow fees.
10.07 Environmental Disclosure. If an Environmental Disclosure Document for
Transfer of Real Property ("Environmental Disclosure") is delivered by Seller to
Buyer with respect to the Property, then at or before Closing, Buyer shall
execute the Environmental Disclosure and shall cause the Environmental
Disclosure to be recorded and filed as provided by applicable law.
SECTION 11
APPORTIONMENTS AND ADJUSTMENTS TO PURCHASE PRICE
The following apportionments shall be made between the parties at the
Closing as of the close of the business day prior to the Closing:
(a) Buyer shall receive from Seller a credit for any rent and other
income under Leases collected by Seller before Closing that applies to any
period after Closing. Uncollected rent and other uncollected income shall
not be prorated at Closing. After Closing, Buyer shall apply all rent and
income collected by Buyer from a tenant, first to the month in which
Closing occurred, then to such tenant's current monthly rental and then to
arrearages in the reverse order in which they were due, remitting promptly
to Seller, any balance properly allocable to Seller's period of ownership.
Buyer shall bill and use commercially reasonable efforts to collect such
rent arrearages in the ordinary course of business, but shall not be
obligated to engage a collection agency or take legal action to collect any
rent arrearages. After the Closing, the Seller shall continue to have the
right, in its own name, to demand payment of and to collect rent arrearages
owed to the Seller by any tenant, which right shall include, without
limitation, the right to continue or commence legal actions or proceedings
against any tenant. The Buyer agrees to cooperate with the Seller in
connection with all efforts by the Seller to collect such rents and to take
all steps, whether before or after the Closing Date, as may be reasonably
necessary to carry out the intention of the foregoing, including, without
limitation, the delivery to the Seller, upon demand, of any relevant books
and records (including any rent statements, receipted bills and copies of
tenant checks used in payment of such rent), the execution of any and all
consents or other documents, and the undertaking of any action reasonably
necessary for the collection of such rents by the Seller;
(b) it is the intent of the parties that all security deposits
(including pet deposits and interest, if any) shown on the Rent Roll shall
be transferred by Seller to Buyer at Closing; on the Closing, Buyer shall
in writing acknowledge receipt of and expressly assume all Seller's
financial and custodial obligations with respect thereto, it
19
being the intent and purpose of this provision that, at Closing, Seller
will be relieved of all fiduciary and custodial obligations, and that Buyer
will assume all such obligations and be directly accountable to the
residents of the Property with respect thereto;
(c) there shall be no adjustment for wages, vacation pay, pension and
welfare benefits and other fringe benefits of all persons employed by
Seller at the Property; it being the intent of the parties that
simultaneously with the Closing, Seller shall terminate any existing
management agreement and Buyer shall have no liability or obligation with
respect to any employee of Seller or its management company prior to
Closing;
(d) electricity charges, water charges, sewer rents and vault charges,
if any, and other utility charges on the basis of the fiscal period for
which assessed; to the extent possible, as of Closing, Seller shall close
each utility account, retain any utility deposit and arrange for a final
utility reading; otherwise apportionment of utilities at the Closing shall
be based on the last available reading, subject to adjustment after the
Closing on a per diem basis, when the next reading is available;
(e) all general real estate and personal property taxes and other ad
valorem taxes and assessments; and
(f) prepayments paid by Seller under Service Contracts and under any
Terminable Service Contract, but only to the extent not terminated until
after Closing.
If the Closing shall occur before a new tax rate is fixed, the
apportionment of taxes at the Closing shall be upon the basis of the old tax
rate for the preceding period applied to the latest assessed valuation. Promptly
after the new tax rate is fixed, the apportionment of taxes shall be recomputed.
Any discrepancy resulting from such recomputation and any errors or omissions in
computing apportionments at the Closing shall be promptly corrected, which
obligation shall survive the Closing. If any operating expenses or other
prorations cannot conclusively be determined as of the date of Closing, then the
same shall be adjusted at Closing based upon the most recently issued bills thus
far and shall be re-adjusted within sixty (60) days, or such longer period as
may be necessary, after the Closing occurs. The provisions of this Section 11
shall survive the Closing.
SECTION 12
FAILURE TO PERFORM
12.01 Buyer's Election. If Seller is unable to satisfy all of Seller's
obligations as set forth in this Agreement, Buyer shall have the right to elect,
in its sole discretion, at the Closing, to accept such title as Seller can
deliver to the Property in its then condition and to pay therefor the Purchase
Price without reduction or offset, in which case Seller shall convey such title
for such price.
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12.02 Seller's Default. If at the Closing, Seller is unable to satisfy all
of Seller's obligations as set forth in this Agreement, and Buyer does not elect
to take title as provided in Section 12.01, Seller shall be in default under
this Agreement and all Deposits made hereunder shall be forthwith returned to
Buyer. Except as set forth in the next succeeding sentence, the return of the
Deposit shall be the sole and exclusive remedy of Buyer. In addition to the
foregoing, if Buyer desires to purchase the Property in accordance with the
terms of this Agreement and Seller intentionally refuses to perform Seller's
obligations hereunder, Buyer, at its option, and as Buyer's sole and exclusive
remedy, shall have the right to compel specific performance by Seller hereunder
(and, if Buyer is the prevailing party, Buyer shall be reimbursed for its
reasonable attorney's fees) in which event any Deposit made hereunder shall be
delivered to Seller at Closing and credited against the Purchase Price.
12.03 Buyer's Default. The parties acknowledge that in the event of Buyer's
failure to fulfill its obligations hereunder it is impossible to compute exactly
the damages which would accrue to Seller in such event. The parties have taken
these facts into account in setting the amount of the Deposit, required pursuant
to Section 2.04, and hereby agree that: (i) such amount together with the
interest earned thereon is the pre-estimate of such damages which would accrue
to Seller; (ii) such amount represents damages and not any penalty against
Buyer; and (iii) if this Agreement shall be terminated by Seller by reason of
Buyer's failure to fulfill Buyer's obligations hereunder, the Deposit together
with the interest thereon shall be Seller's full and liquidated damages in lieu
of all other rights and remedies which Seller may have against Buyer at law or
in equity.
SECTION 13
BROKERAGE FEES
13.01 Brokerage Fees. Seller and Buyer mutually represent and warrant that
neither Seller nor Buyer has dealt with any broker in connection with this
purchase and sale and that neither Seller nor Buyer knows of any broker who has
claimed or may have the right to claim a commission in connection with this
purchase and sale. Seller and Buyer shall indemnify and defend each other
against any costs, claims or expenses, including attorneys' fees, arising out of
the breach on their respective parts of any representations, warranties or
agreements contained in this Section. The representations and obligations under
this Section shall survive the Closing or, if the Closing does not occur, the
termination of this Agreement.
SECTION 14
NOTICES
14.01 Effective Notices. All notices under this Agreement shall be in
writing and shall be delivered personally or shall be sent by Federal Express or
other comparable overnight delivery courier, addressed as set forth at the
beginning of this Agreement. Notices shall be deemed effective, when so
delivered. Copies of all such notices to
21
Buyer shall also be sent to Home Properties of New York, L.P., 850 Clinton
Square, Rochester, New York 14604, Attention: Kathleen K. Suher, Esq. and Norman
Leenhouts, and copies of all such notices to Seller shall also be sent to Scott
D. Spelfogel, Esq., The Berkshire Group, One Beacon Street, Boston,
Massachusetts 02108 and Richard A. Toelke, Esq., Bingham Dana LLP, 150 Federal
Street, Boston, Massachusetts 02110.
SECTION 15
LIMITATIONS ON SURVIVAL
15.01 Representations and Warranties. Except as otherwise expressly
provided in this Agreement, no representations, warranties, covenants or other
obligations of Seller set forth in this Agreement shall survive the Closing, and
no action based thereon shall be commenced after Closing. The representations,
warranties, covenants and other obligations of Seller set forth in Section 5
shall survive until six (6) months after the Closing, and no action based
thereon shall be commenced more than six (6) months after the Closing.
15.02 Merger. The delivery of the Deed by Seller, and the acceptance and
recording thereof by Buyer, shall be deemed the full performance and discharge
of each and every obligation on the part of Seller to be performed hereunder and
shall be merged in the delivery and acceptance of the Deed, except as provided
in Section 15.01 and except for such other obligations of Seller which are
expressly provided herein to survive the Closing.
SECTION 16
CONDITIONS PRECEDENT
16.01 Existing Lender Approval. It shall be a condition to closing that
FHLMC (the "Existing Lender") shall provide written approval of Buyer's
assumption of that certain loan secured by a mortgage on the Property having an
outstanding principal balance as of March 31, 2001 of Five Million Ninety Five
Thousand Six Hundred Thirty Five and No/100 Dollars ($5,095,635.00) (the
"Existing Loan"). Buyer and Seller agree to fully and timely cooperate with each
other to obtain the Existing Lender's approval. Buyer agrees to submit an
assumption application to the Existing Lender within five (5) business days of
the date hereof. In the event that the Existing Lender has not approved the
assumption within sixty (60) days of the date hereof, then, subject to the
extension rights set forth in Section 3, either party may terminate this
Agreement upon written notice to the other in which event this Agreement shall
be null and void and neither party shall have any further rights or obligations
under this Agreement, except that the Buyer shall have the right to the return
of the Deposit.
16.02 Existing Loan Fees. Buyer shall pay any transfer or assumption fee
incurred in connection with Buyer's assumption of the Existing Loan provided
such transfer or assumption fees do not amount to greater than one percent (1%)
of the current
22
principal balance of the Existing Loan. Buyer shall also pay all other costs and
expenses payable in connection with Buyer's assumption of the Existing Loan
(including, without limitation, attorneys fees of Existing Lender's counsel).
16.03 Board of Directors Approval. It shall be a condition to Buyer's
obligation to close that during the Inspection Period, the Buyer shall obtain
the approval of the Board of Directors (the "Board") of its general partner,
Home Properties of New York, Inc., to the acquisition of the Property on the
terms and conditions described herein ("Board Approval"). If Buyer does not
obtain the Board Approval within the Inspection Period, the Buyer shall promptly
notify the Seller in which event this Agreement shall be null and void and
neither party shall have any further rights or obligations under this Agreement
except that Buyer shall have the right to the return of the Deposit. Buyer's
failure to notify the Seller within the Inspection Period of its failure to
obtain Board Approval shall be deemed a waiver by Buyer of the conditions
contained in this Section.
Section 17
MISCELLANEOUS PROVISIONS
17.01 Assignment. Buyer shall not have the right to assign this Agreement
without Seller's prior written consent, which consent may be given or withheld
in Seller's sole and absolute discretion. Notwithstanding the foregoing, Buyer
shall be entitled to assign this Agreement and its rights hereunder to a
corporation, general partnership, limited partnership, limited liability company
or other lawful entity entitled to do business in the state in which the
Property is located provided such entity shall be controlled by, controlling or
under the common control with Buyer ("Assignee"). In the event of such an
assignment of this Agreement to Assignee (a) Buyer shall notify Seller at least
seven (7) days prior to Closing and (b) Assignee shall assume all obligations of
Buyer under this Agreement, provided that Buyer shall remain jointly and
severally liable for all obligations under this Agreement, including, without
limitation, payment of the Purchase Price.
17.02 Limitation of Seller's Liability. No shareholders, partners or
members of Seller, nor any of its or their respective officers, directors,
agents, employees, heirs, successors or assigns shall have any personal
liability of any kind or nature for or by reason of any matter or thing
whatsoever under, in connection with, arising out of or in any way related to
this Agreement and the transactions contemplated herein, and Buyer hereby waives
for itself and anyone who may claim by, through or under Buyer any and all
rights to sue or recover on account of any such alleged personal liability.
Notwithstanding anything set forth in this Agreement to the contrary, Buyer
agrees that Seller shall have no liability to Buyer for any breach of Seller's
covenants, agreements, representations or warranties hereunder or under any
other agreement, document, certificate or instrument delivered by Seller to
Buyer unless the valid claims for all such breaches collectively aggregate more
than Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00), in which event
the full amount of such valid claims shall
23
be actionable, up to the cap set forth in the following sentence. Further, Buyer
agrees that any recovery against Seller for any breach of Seller's covenants,
agreements, representations and warranties hereunder or under any other
agreement, document, certificate or instrument delivered by Seller to Buyer, or
under any law applicable to the Property or this transaction, shall be limited
to Buyer's actual damages not in excess of Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00) in the aggregate and that in no event shall Buyer be
entitled to seek or obtain any other damages of any kind, including, without
limitation, consequential, indirect or punitive damages.
17.03 Integration. This Agreement embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior agreements, understandings, representations and
statements, oral or written, are merged into this Agreement. Neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged
or terminated except by an instrument signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such instrument.
17.04 Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the state in which the Property is located.
17.05 Captions. The captions in this Agreement are inserted for convenience
of reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions hereof.
17.06 Bind and Inure. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective, permitted successors
and assigns.
17.07 Drafts. This Agreement shall not be binding or effective until
properly executed and delivered by both Seller and Buyer. The delivery by Buyer
to Seller of an executed counterpart of this Agreement shall constitute an offer
which may be accepted by the delivery to Buyer of a duly executed counterpart of
this Agreement and the satisfaction of all conditions under which such offer is
made, but such offer may be revoked by Buyer by written notice given at any time
prior to such acceptance and satisfaction.
17.08 Number and Gender. As used in this Agreement, the masculine shall
include the feminine and neuter, the singular shall include the plural and the
plural shall include the singular, as the context may require.
17.09 Attachments. If the provisions of any schedule or rider to this
Agreement are inconsistent with the provisions of this Agreement, the provisions
of such schedule or rider shall prevail. The Schedules attached are hereby
incorporated as integral parts of this Agreement.
17.10 No Recording. Neither this Agreement nor any memorandum or short form
hereof shall be recorded or filed in any public land or other public records of
any
24
jurisdiction, by either party and any attempt to do so may be treated by the
other party as a breach of this Agreement.
17.11 Time of the Essence. Time is of the essence with respect to this
Agreement, including but not limited to the occurrence of the Closing as of the
originally scheduled date and the expiration of the Inspection Period.
17.12 Property Information and Confidentiality. The Buyer agrees that,
prior to the Closing, all Property information furnished by Seller to Buyer or
discovered by Buyer during the Inspection Period shall be kept strictly
confidential and shall not, without the prior consent of the Seller, be
disclosed by the Buyer or the Buyer's representatives, in any manner whatsoever,
in whole or in part, and will not be used by the Buyer or the Buyer's
representatives, directly or indirectly, for any purpose other than evaluating
the Property. Moreover, the Buyer agrees that, prior to the Closing, such
information will be transmitted only to the Buyer's representatives (i) who need
to know such information for the purpose of evaluating the Property, and who are
informed by the Buyer of the confidential nature of such information and (ii)
who agree to be bound by the terms of this Section 17.12. The provisions of this
Section 17.12 shall in no event apply to information which is a matter of public
record and shall not prevent Buyer from complying with applicable laws,
including, without limitation, governmental regulatory disclosure, tax and
reporting requirements.
17.13 Press Releases. The Buyer and Seller, for the benefit of each other,
hereby agree that between the date hereof and the Closing Date, they will not
release or cause or permit to be released any press notices, publicity (oral or
written) or advertising promotion relating to, or otherwise announce or disclose
or cause or permit to be announced or disclosed, in any manner whatsoever, the
terms, conditions or substance of this Agreement or the transactions
contemplated herein, without first obtaining the written consent of the other
party hereto. It is understood that the foregoing shall not preclude either
party from discussing the substance or any relevant details of the transactions
contemplated in this Agreement with any of its attorneys, accountants,
professional consultants or potential lenders, as the case may be, or prevent
either party hereto from complying with applicable laws, including, without
limitation, governmental regulatory, disclosure, tax and reporting requirements.
17.14 Return of Property Information. In the event this Agreement is
terminated, the Buyer and the Buyer's representatives shall promptly deliver to
the Seller all originals and copies of all information provided to Buyer to
Seller relating to the Property. Notwithstanding anything contained herein to
the contrary, in no event shall the Buyer be entitled to receive a return of the
Deposit or the accrued interest thereon, if any, if and when otherwise entitled
thereto pursuant to this Agreement until such time as the Buyer and the Buyer's
Representatives shall have performed the obligations contained in the preceding
sentence.
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17.15 Tax-Free Exchange.
(a) Notwithstanding any terms in this Agreement to the contrary,
Seller and Buyer shall have the right to consummate the transactions
contemplated by this Agreement in a manner which qualifies as a
tax-deferred exchange, in whole or in part, under the provisions of Section
1031 of the Code, and the Treasury Regulations thereunder.
(b) Buyer and Seller agree to cooperate with each other with respect
to any tax-deferred exchange pursuant to the provisions of Section 1031 of
the Code and the Treasury Regulations thereunder and to execute any and all
documents reasonably requested by the other party in connection therewith,
provided that (i) the cooperating party shall not incur additional costs or
expenses attributable to the exchange, including reasonable attorneys'
fees, deed excise taxes and recording fees; and (ii) the cooperating party
shall not be required to purchase any replacement property in connection
with any such deferred exchange (the "Replacement Property").
(c) Seller and Buyer acknowledge that the cooperating party shall not
be deemed the requesting party's agent in connection with any such
exchange. Seller and Buyer further acknowledge that all agreements in
connection with performing the exchange shall be prepared at the requesting
party's expense by the requesting party's counsel.
(d) Without limiting the foregoing, each of Seller and Buyer shall
have the right to transfer all or any portion of its interests under this
Agreement to a qualified intermediary (the "Intermediary") in accordance
with the provisions of Section 1031 of the Code and the Treasury
Regulations thereunder.
(e) The terms and provisions of this Section 17.15 shall survive the
Closing.
17.16 Audit. The Seller will provide access by Buyer's representatives, to
all financial and other information relating to the Property as is sufficient to
enable them to prepare audited financial statements, at Buyer's expense, in
conformity with Regulation S-X of the Securities and Exchanges Commission (the
"Commission") and any registration statement, report or disclosure statement
required to be filed with the Commission.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
SELLER:
KRUPP REALTY COURTYARDS LIMITED
PARTNERSHIP, an Illinois
limited partnership
By: The Krupp Corporation, a Massachusetts
corporation, its general partner
WITNESS:
By:
- ---------------------------------------- --------------------------------
Name:
------------------------------
Title:
-----------------------------
By: Krupp Realty Limited Partnership
- VII, a Massachusetts limited
partnership, its general partner
By: The Krupp Corporation, a
Massachusetts corporation, its
general partner
WITNESS:
By:
- ---------------------------------------- --------------------------------
Name:
------------------------------
Title:
-----------------------------
27
BUYER:
WITNESS:
HOME PROPERTIES OF NEW YORK L.P.
By: HOME PROPERTIES OF
- ---------------------------------------- NEW YORK, INC.,
its general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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RECEIPT
The Purchase and Sale Agreement, has been received by the Escrow Agent on
this the ______ day of ______________, 2001, and the Escrow Agent acknowledges
the terms thereof and agrees to perform as Escrow Agent in accordance therewith.
ESCROW AGENT
LANDAMERICA TITLE INSURANCE CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
29
LIST OF SCHEDULES
Schedule A - Description of Land
Schedule B - Personal Property
Schedule C - Rent Roll
Schedule D - Service Contracts
Schedule E - Litigation