Exhibit 10.4
drs. 3
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 30th day of August 1996, between
CORNERSTONE REALTY GROUP INC. or its nominee, (hereinafter called "Purchaser")
and BOYS AND GIRLS CLUB OF PITT COUNTY, INC., a North Carolina Non Profit
Corporation, (hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 Sale of Property. Seller agrees to sell and convey, and Purchaser
agrees to purchase, Seller's real property known as DOCTORS PARK APARTMENTS
located in GREENVILLE, NC, with all buildings and improvements located thereon,
as more particularly described in the attached legal description in Exhibit A
including, but not limited to 171 individually heated and air conditioned
apartment units, with all appurtenances, together with all appliances, drapes,
carpeting, shrubbery and all other personal property owned by Seller located on
and used in connection with the premises, including, the inventory of personal
property to be supplied by Seller and attached hereto as Exhibit B (all such
real and personal property hereinafter collectively referred to as the
"Property" unless the context clearly indicates otherwise).
1.2 Title of Property. The parties understand that the Property is
currently owned by DOCTORS PARK APARTMENT GROUP, A North Carolina General
Partnership, (hereinafter called the "General Partnership") which has entered
into an agreement with the Seller herein to sell the Property to the Seller
prior to or simultaneously with the transfer of the Property from the Seller to
the Purchaser herein.
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 Purchase Price. The total purchase price shall be FIVE MILLION FOUR
HUNDRED SIXTY TWO THOUSAND NINE HUNDRED FORTY EIGHT ($5,462,948) DOLLARS as
evidenced by cash or immediately available funds at closing.
ARTICLE III
TITLE MATTERS
3.1 Marketable Title. Seller, shall convey good and marketable title by
Limited Warranty Deed, subject only to general taxes for the current year not
yet due and payable and utility easements which do not materially interfere with
the present use of the Property and existing leases on the units.
(A) Title shall be free from any and all liens or mortgages and Seller
shall be responsible for any prepayment penalties necessary to deliver such free
title.
3.2 Title Defects: Election to Cure. Purchaser shall obtain a commitment
for Title Insurance, (the commitment). If title is not marketable, except as
stated above in the preceding paragraph, Purchaser shall give written notice of
any defects in title to Seller's counsel within fifteen (15) days after
Purchaser's receipt of a title report which report shall include copies of
backup documents relating to any title exceptions, a current survey, a flood
zone certification letter and a Surveyor's Certification letter. Seller may, at
its option, elect whether to cure said defects or by written notice to Purchaser
indicate its intention not to cure.
3.3 Election Not to Cure Defects. Should Seller elect not to cure title
defects, this Agreement, at Purchaser's option, shall be void; each party shall
thereupon be released from all obligations hereunder; and all deposits shall be
immediately returned to Purchaser.
ARTICLE IV
PRORATIONS
4.1 Income and Expense Allocations. The following shall be prorated, on a
calendar-month basis, to date of delivery of deed: rents and other income from
the Property; operating expenses (on such service contracts and other
obligations as Purchaser may agree to assume); and general and real property
taxes and personal and business property taxes for the year of closing (based on
the most recent assessment and the most recent levy). Purchaser shall receive
August rent in the sum of $62,822.
4.2 Closing Costs. Purchaser and Seller shall pay their customary share of
all taxes, recording fees, if any, imposed on the Deed, or any other documents
executed in connection with the transfer of the Property. Purchaser agrees to
pay cost of title insurance. Seller shall pay any prepayment penalty charged by
the holders of any existing notes.
4.3 Allocation of Rents. Rents collected by Seller prior to Closing shall
be prorated as agreed in 4.1 above. Purchaser shall apply rents received after
Closing first to payment of the current rent due to Purchaser, then to
delinquent rents due to Purchaser, and last to rents due to Seller as of the
Closing but uncollected prior to settlement. Purchaser agrees to use its best
efforts in good faith to collect the amount of any rental arrears from tenants
and Purchaser agrees to remit promptly to Seller any such arrears actually paid
by such tenants to Purchaser. Seller shall retain the right to commence legal
action against a tenant for any delinquent rent apportioned to the Seller. It is
agreed that delinquency rent is $3,089.50.
4.4 Prior Lease Concessions. Seller has made no lease concessions.
ARTICLE V
POSSESSION OF THE PROPERTY
5.1 Possession. Possession of the Property shall be delivered to Purchaser
at closing, subject to the rights of the tenants under existing leases and
rental agreements.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent. Purchaser's obligation to purchase shall be
subject to and contingent upon the satisfaction of the following conditions
present:
(A) Receipt by Purchaser and Seller of an engineering report of
building and site conditions, satisfactory to Purchaser in its sole discretion,
said report to include in part, a description of any hazardous waste sites,
hazardous wastes and/or hazardous materials affecting the property. Purchaser
shall have fifteen (15) days in which to review the reports set forth herein and
exercise its right to reject the Property based thereon or the right hereunder
shall be deemed waived. PURCHASER AND SELLER HAVE RECEIVED THE ENGINEERING
REPORT AND WAIVE THE FIFTEEN-DAY REVIEW PERIOD.
(B) The receipt by Purchaser of Seller documents described in 7.2
below.
(C) On the condition that Sellers representations and warranties
described in Article VIII below remain true and correct.
(D) On the condition that there have been no material or adverse
changes to the property or leases.
(E) Seller acknowledges that Purchaser is a public entity and that it
is required to furnish financial statements to the Securities and Exchange
Commission in connection with this acquisition. Seller agrees to make the
information available for Purchaser to audit the last 12 months of operation of
the Property so that a report can be generated that is in compliance with
accounting Regulation S-X of the Securities and Exchange Commission. Seller
shall have no obligation to provide such information in any specific format.
(F) Survey which shall show no encroachments onto the Land from any
adjacent property, no encroachments by or from the Land onto adjacent property
and no violation of or encroachments upon any recorded building lines,
restrictions or easements affecting the Property. If the Survey discloses any
such encroachment or violation, Seller shall have thirty (30) days from the date
of delivery of the Survey (with a commensurate extension of the closing date) to
have the Title Insurer issue its endorsement insuring against damage caused by
such encroachment or violation and to provide evidence thereof to Purchaser, and
if Seller fails to or is unable to have the same insured against within such
thirty (30) day period, Purchaser may elect, on or before the Closing Date, to
(i) terminate this Agreement (in which case the Earnest Money shall be returned
to Purchaser) and neither party shall have any further liability or obligation
to the other hereunder, or (ii) accept the property subject to any such
encroachment or violation.
6.2 Inspection. This Agreement shall be further subject to and contingent
upon Purchaser's satisfactory inspection as follows herein below.
6.2.1 Preparation for Inspection. At the execution of this Agreement, to
the extent they are available to Seller at no cost or are in Seller's
possession, Seller shall deliver to Purchaser copies of the following: The
current rent roll for the Property; detailed statements of income and expenses
with respect to the Property for the past two years; the most recent tax bills
for the Property; utility bills for the Property for the twelve (12) months
previous to the date hereof; all contract, mortgages, and other documents
creating liens of security interest on the Property, or any part thereof and all
promissory notes secured thereby; all insurance policies applicable to the
Property to include loss runs for the last five (5) years; Plans and
Specifications for the Property, service contracts, Certificates of Occupancy,
to the extent reasonably available; a copy of the title policy and most recent
survey for the Property. A copy of any environmental or engineering reports on
the Property. All these items shall be certified by Seller to be accurate and
complete to the best of its knowledge and belief.
6.2.4 "Rent Ready". Prior to closing, Seller shall permit Purchaser to
inspect all apartments to satisfy itself that all apartments are rent ready.
6.2.5 Condition of Personal Property at Closing. Except for items listed in
Exhibit D hereof, all personal property included in the sale shall be in good
working order at time of closing.
ARTICLE VII
CLOSING
7.1 Closing. Closing will be held on or about August __, 1996 at such place
and at such time as the parties may agree.
7.2 Seller's Deliveries. At closing, Seller shall execute and deliver to
Purchaser the Limited Warranty Deed referred to in Paragraph 3.1 hereof and
shall also execute, where necessary, and deliver to Purchaser, the following:
(A) A Bill of Sale, with limited warranty of title transferring the
personal property (as shown in Schedule B) to Purchaser free of all liens,
charges and encumbrances.
(B) Originals or copies of all signed leases and rental agreements in
effect with tenants of the Property.
(C) All security deposits made by such tenants. Purchaser will give
the tenants the required notice of such transfer in compliance with the laws of
North Carolina.
(D) An affidavit of Seller in such form as will cause the Title
Company to omit from the title insurance policy the exclusion relating to
unrecorded mechanic's and materialmen's liens.
(E) A rent roll certified by Seller to be true and correct to the best
of its knowledge as of the date of closing showing the name of, and the amount
of monthly rental payable, by each tenant of the Property, the apartment
occupied by the tenant, the date to which rent has been paid, any advance
payment of rent, and the amount of any escrow, or security deposit of tenant.
(F) An affidavit of Seller that to the best of its information and
belief there are, on the date of closing, no unsatisfied judgments, creditor's
claims, tax liens, or pending bankruptcies involving Seller.
(G) Assignments of all Seller's interest in the following: (1) all
assignable licenses, and permits relating to the operation of the Property, (2)
the leases and rental agreements with tenants of the Property, (3) the existing
Property telephone number and (4) the business and trade name as set forth in
Par. 1.1; provided, however, Purchaser is aware and consents to the continued
use of the name of "The Doctors Park Apartment Group" by the partnership which
presently owns the Property.
(H) Assignments of all warranties and guarantees to the extent such
are still in effect and assignable and provide Purchaser with copies of all such
warranties and guarantees for all
appliances, dishwashers, disposals, refrigerators, heating and air conditioning
units, washers and dryers.
(I) Consent of the Seller's authorized officer to the sale of the
Property and any other approvals required under Seller's articles or by-laws,
which may affect Seller's ability to convey marketable title.
(J) Provide documents for the transfer of the telephone, electric,
water and sewer, and gas utilities, as may be required by the utility, for
execution at closing.
(K) Satisfactory evidence of the power and authority of Seller to
enter into and consummate this agreement, including but not limited to:
(i) An opinion of Seller's counsel, in a form satisfactory to
Purchaser, stating that:
(a) The individual(s) executing the deed and related
documents are duly authorized to do all such acts as are necessary to consummate
this sale, without further consent of any other party.
(b) That the partner or officer can bind the Partnership or
Corporation.
(L) Affidavit that Seller has no actual knowledge of the presence of
asbestos and/or any other hazardous material at the Property.
(M) Seller shall provide a satisfactory and valid written termination
of the management agreement executed by the existing management and rental agent
for the Property, without cost to the Purchaser.
(N) A notice letter to all the residents of the apartment complex as
to change of ownership in the form prepared by the Purchaser.
(O) All such other documents as are normally transferred at settlement
in the jurisdiction in which the property is located or are reasonably requested
by Purchaser or its counsel.
(P) A representation letter as normally required by auditors for a
public company, a copy of which is attached hereto and Exhibit C. This clause
shall survive closing for one year.
(Q) An assignment of any representations and warranties Seller obtains
when it acquires the Property which are assignable.
7.3 Purchaser's Deliveries. At closing and contemporaneously with the
Seller's compliance with the provisions of Section 7.2, Purchaser shall:
(A) Pay to Seller the cash portion of the purchase price, adjusted for
the prorations herein provided for in Article IV.
(B) Execute and deliver an assumption of obligations under leases,
securities, any contracts which may be accepted by the Purchaser and any other
obligations specifically set forth herein.
(C) Deliver to the Seller a resolution of the Purchaser and an opinion
of Purchaser's counsel that:
(i) This Agreement has been duly authorized, executed and
delivered by the Purchaser and is a valid and binding agreement of Purchaser,
and
(ii) Purchaser has complete unrestricted power to buy the
Property from the Seller and to execute any documents required to effectuate the
transfer.
ARTICLE VIII
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations of the Parties. Seller warrants (which warranties shall
not survive settlement unless designated to the contrary) that as of the date of
closing hereof, EXCEPT THAT THE SELLER AGREES TO ASSIGN SUCH WARRANTIES THAT IT
HAS RECEIVED AT TIME OF PURCHASE, WHICH WARRANTIES SHALL SURVIVE FOR THE PERIOD
OF TIME SET FORTH THEREIN:
(A) That Seller, is the owner of the Property and has the power to
convey same.
(B) That Seller is not subject to any other agreements or
arrangements, with the exception of those contained in any existing mortgage
documents which would prevent Seller from selling the Property to Purchaser.
This warranty shall survive for one year following closing.
(C) All necessary action has been taken by Seller to authorize the
execution of this Agreement and the performance of the obligations contemplated
hereunder, which are not excluded elsewhere in existing mortgage documents. This
warranty shall survive for one year following closing.
(D) Seller has no actual knowledge and has not been advised in writing
that it is in default under any lease, rental agreement service or equipment
contract, or mortgage or
other encumbrances relating to the Property.
(E) Seller has no actual knowledge of any patent or latent defect in
the Property or any part thereof.
(F) Seller has no actual knowledge of any existing or threatened
litigation which relates to or which would affect the Property.
(G) To the best of Seller's information and belief, the Property abuts
on and has direct vehicular access to a public road.
(H) To the best of Seller's information and belief, all building and
other improvements at the Property are located entirely within the boundary
lines of the Property.
(I) Seller has no actual knowledge that any part of the Property or
the operation of the Property, is in violation or may violate any governmental
statute, regulation, ordinance or building code or of any private restriction,
that any governmental authority requires any work to be done on or affecting the
Property, or that any governmental authority has expressed an intent to condemn
or to make special improvements for the benefit of the Property or any part
thereof.
(J) That to the best of Seller's information and belief, the drainage
within the project is satisfactory and complies in all respects with all
government regulation.
(K) That Seller is not a "foreign person" within the meaning of the
Internal Revenue Code of 1954, as amended (the "Code"), and that Seller will
furnish to Purchaser prior to closing an affidavit in form satisfactory to
Purchaser confirming the same.
(L) That to the best of Seller's information and belief, the Property
was never utilized as a disposal site for hazardous waste products and will
furnish to Purchaser an affidavit affirming such.
(M) Seller has not in any manner taken any steps which might damage
the reputation of the Property or the relationship with tenants, has not
modified, extended or canceled any lease and has, in fact, not dealt with any
tenant.
(N) With respect to the representations and warranties provided
herein, references to the "actual knowledge" of Seller and/or "Seller's
information and beliefs" shall be limited to mean only the knowledge,
information and belief of the individuals who serve on the Executive Committee
of Seller and the individuals who execute this contract on behalf of Seller.
8.2 Continuation of Representations, Warranties and
Covenants to the Date of Closing. Seller has not acted in any manner which
would affect any of the warranties or representations that it received as
purchaser and assigned to the Purchaser herein.
ARTICLE IX
PROPERTY DAMAGE
9.1 Fire Loss. It is understood that there has been a fire loss in Apt.
D-12 and the Seller shall procure an assignment to the Purchaser of the
insurance proceeds for said damage. Purchaser shall have the right to adjust
said loss and be entitled to all proceeds thereunder.
ARTICLE X
BROKER'S COMMISSION
10.1 Commission. Purchaser agrees to pay a brokerage fee to EDWARD E. LANE
JR., pursuant to a separate agreement between Purchaser and Broker. Said
brokerage fee shall be deemed earned if, and only if, settlement occurs
hereunder, and shall not be deemed earned even if Purchaser and/or Seller
wrongfully fail(s) to consummate the purchase and sale herein contemplated.
Seller and Purchaser represent and warrant to each other that no other brokerage
fees are or shall be owing in connection with this transaction or in any way
with the Apartments and Seller and Purchaser hereby indemnify and hold the other
harmless from any and all claims of any other person so claiming.
ARTICLE XI
DEFAULT
11.1 Default Defined. Default for the purpose of this Agreement shall mean
any failure by Seller or Purchaser to fulfill all the terms, conditions and
covenants contained herein, however, it shall not be an event of default for
either party to exercise its rights to terminate this contract as contained in
other provisions herein.
11.2 Seller's Default. Upon a default by Seller, which is discovered prior
to closing and recording of the deed to the Property, Purchaser, at it's
election, may either (1) require specific performance of Seller, or pursue its
other remedies at law or equity, (2) cancel this Agreement and obtain a prompt
return of the deposit, in which case this Agreement shall be terminated and the
parties released from all obligations hereunder, or (3) the Purchaser may waive
such defaults and proceed to settlement. Upon a default by Seller which is not
discovered until after closing and recording of the deed, Purchaser's sole
remedy shall be a suit for monetary damages. In no event shall Seller be
required to pay more than $10,000 in actual damages.
11.3 Purchaser's Default. Upon Purchaser's default, and the payment of
$10,000 in liquidated damages by Purchaser to Seller, this Agreement shall be
terminated and both parties released from all obligations hereunder. Seller
shall have no other remedy against Purchaser in the event of Purchaser's
default.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Entire Agreement. This Agreement sets forth the entire understanding
between the parties; it supersedes all previous agreements and representations
which are deemed merged herein and may not be modified except in writing.
12.2 Assignment. Purchaser may assign this Agreement without the consent of
Seller.
12.3 Severability. If any provision, sentence, phrase or word of this
Agreement or the application thereof to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision,
sentence, phrase, or word to persons or circumstances, other than those as to
which it is held invalid, shall remain in full force and effect.
12.4 Binding Effect. The parties to the Agreement mutually agree that it
shall be binding upon and inure to the benefit of their respective heirs,
representatives, successors in interest and assigns.
12.5 Controlling Law. It is the intent of the parties hereto that all
questions with respect to the construction of this Agreement and the rights and
liabilities of the parties shall be determined in accordance with the provisions
of the laws of the State set forth in Par. 1.1.
12.6 Counterparts. To facilitate execution, this Agreement may be executed
in as many counterparts as may be required. It shall not be necessary that the
signature on behalf of both parties hereto appear in each counterpart hereof,
and it shall be sufficient that the signature on behalf of both parties hereto
appear on one or more such counterparts. All counterparts shall collectively
constitute a single contract.
12.7 Incorporation by Reference. All of the Exhibits referred to herein
and/or attached hereto shall be deemed to constitute a part of the Agreement.
12.8 Headings. The headings of the Articles and sections hereof are
inserted for convenience only and shall not be deemed to constitute a part of
the Agreement.
12.9 Construction of Contract. Each party hereto have
reviewed and revised (or requested revisions of) this Agreement, and therefore
the normal rule of construction that any ambiguities are to be resolved against
a particular party shall not be applicable in the construction and
interpretation of this Contract or any amendments or exhibits hereto.
ARTICLE XIII
NOTICE
13.1 Notice. All notices required or permitted to be given under this
Agreement shall be in writing and shall be sent or delivered to the address set
forth below (or such other address as may be hereafter specified in writing):
To Seller: Boys And Girls Clubs of Pitt County, Inc.
P.O. Box 20293
Greenville, NC 27858
With a copy to
Seller's Attorneys: H.L. Stephenson, III
Ward & Smith, PA
120 West Fire Tower Road
Greenville, NC 27835
To Purchaser: S. J. Olander
Cornerstone Realty Group, Inc.
306 E. Main Street
Richmond, VA 23219
With a copy to
Purchaser's Attorneys: Harry S. Taubenfeld, Esq.
Zuckerbrod & Taubenfeld
575 Chestnut St., P.O. Box 488
Cedarhurst, NY 11516
and
Ted Oliver, Esq.
Manning, Fulton & Skinner, P.A.
500 UCB Plaza
3605 Glenwood Avenue
Raleigh, NC 27612
13.2 Delivery of Notice. Notices sent either by Registered or Certified
Mail, Return Receipt Requested, or by overnight express mail shall be deemed
given when deposited in the United States Mail, postage prepaid, or delivered to
a reliable overnight courier. Notices sent in any other manner shall be deemed
given only when actually delivered at the specified address.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed this day and date first written above.
SELLER:
BOYS AND GIRLS CLUB OF PITT COUNTY, INC.
BY: /s/ John H. Coff
-------------------
JOHN H. COFF
ITS: ___________________
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
BY: ___________________
ITS: ___________________