Exhibit 10.3
Highland Hills
Carrboro, NC
35117/55895
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made by and
between Condor One, Inc., a Delaware corporation ("Seller"), and Cornerstone
Realty Income Trust, a Virginia corporation ("Purchaser").
In consideration of the mutual covenants and representations herein
contained, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, Seller and Purchaser agree as follows:
1.
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to sell and convey to Purchaser, and
Purchaser, and Purchaser hereby agrees to purchase from Seller, all of the
Seller's assignable and transferable right, title and interest in and to the
following described property (herein collectively called the "Property"):
(a) Land. That certain tract of land (the "Land") located
in the City of Carrboro, Orange County, North Carolina, being more particularly
described on Exhibit A attached hereto and made a part hereof.
(b) Easements. All easements, if any, benefiting the Land
or the Improvements (as hereinafter defined).
(c) Rights and Appurtenances. All rights and appurtenances
pertaining to the Land, including any right, title and interest of Seller
in and to adjacent streets, alleys or rights-of-way.
(d) Improvements. All improvements and related amenities known
as "Highland Hills Apartments" (the "Improvements") in and on the Land,
containing 264 units and having an address of 180 E. BPW Club Road, Carrboro,
North Carolina 27510.
(e) Leases. All leases (the "Leases") of space in the Property,
concession leases, and all tenant security deposits held by Seller on the
Closing Date (as hereinafter defined).
(f) Tangible Personal Property. All appliances, fixtures,
equipment, machinery, furniture, carpet, drapes and other personal
property, if any, owned by
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Seller and located on or about the Land and the Improvements (the "Tangible
Personal Property").
(g) Contracts. To the extent assignable without the consent of
third parties, the Contracts (as hereinafter defined).
(h) Intangible Property. To the extent assignable without the
consent of third parties, all intangible property (the "Intangible Property"),
if any, owned by Seller and pertaining to the Land, the Improvements, or the
Tangible Personal Property including, without limitation, transferable utility
contracts, transferable telephone exchange numbers, plans and specifications,
engineering plans and studies, floor plans and landscape plans.
2.
PURCHASE PRICE
2.1 Purchase Price. The purchase price (the "Purchase Price") for the
Property shall be TWELVE MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($12,100,000.00) and shall be paid in cash by Purchaser to Seller at
the Closing (as defined herein) by wire transfer in accordance with wire
transfer instructions to be provided by Seller.
3.
ACKNOWLEDGMENTS BY PURCHASER
3.1 Delivery of Due Diligence Items. Purchaser acknowledges that Seller
has previously delivered the following:
(a) Contracts. Copies of all contracts pertaining to the
Property, and not cancelable on thirty (30) days notice without penalty
or premium (the "Contracts"), including, but not limited to, management
contracts, service contracts, equipment leases and maintenance contracts,
to the extent in the possession of GE Capital Realty Group, Inc. ("GECRG").
(b) Rent Roll. A certified rent roll describing (i) all
Leases of space in the Improvements as of the last month GECRG has
received such information from the property manager of the Property and (ii)
reflect the security deposits being held on account of the Leases.
(c) Commitment for Owner's Policy. A Commitment for Owner's
Policy of the Title Insurance (the "Title Commitment") with respect to
the Property, issued by the Title Company, and legible copies of any
restrictive covenants, easements, and other items listed as title
exceptions therein; and
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(d) Current Survey. A copy of the as-built survey of the
Property (the "Survey") showing the location of all of the Improvements,
prepared by Philip Post & Associates dated August 7, 1987 and updated
September 18, 1996.
3.1.1 Purchaser's Satisfaction. Purchaser acknowledges the
following to Seller:
(a) Purchaser's satisfaction, in Purchaser's sole discretion,
that the Property is suitable for Purchaser's intended uses; and
(b) Purchaser's being satisfied, in Purchaser's sole
discretion, with the items listed above in Section 4.1(a) through Section 4.1(d)
above, including the information reflected therein.
3.1.2 Permitted Encumbrances. The term "Permitted Encumbrances"
as used herein includes: (i) any easement, right of way, encroachment, conflict,
discrepancy, overlapping of improvements, protrusion, lien, encumbrance,
restriction, condition, convenant, exception or other matter with respect
to the Property that is reflected or addressed on the Survey of the Title
Commitment.
3.1.3 Limitations of Seller's Obligations. Notwithstanding anything
contained herein to the contrary, Seller shall have no obligation to take
any steps, bring any action or proceeding or incur any effort of expense
whatsoever to eliminate, modify or cure any objection Purchaser may have
pursuant to Section 3.1.1, Section 3.1.2, or Section 3.2.
3.2 Inspection. Purchaser acknowledges that Purchaser has inspected,
tested, and surveyed: (a) the Property, (b) all financial records pertaining
to the operations of the Property, and (c) photocopies of all Leases and
Contracts in the possession of GECRG. The said inspections of the Property
are deemed satisfactory to Purchaser and Purchaser shall be deemed to have
agreed to assume all obligations from and after the date of Closing with
respect to the Leases and the Contracts. All information provided
by Seller to Purchaser or obtained by Purchaser relating to the Property
in the course of Purchaser's review, including, without limitation,
any environmental assessment of audit (collectively, the "Reports") shall
be treated as confidential information by Purchaser and Purchaser shall
instruct all of its employees, agents, representatives and contractors
as to the confidentiality of all such information. Purchaser shall restore the
Property to its condition existing immediately prior to Purchaser's
inspection thereof, and Purchaser shall be liable for all damage or
injury to any person or property resulting from, relating to or
arising out of any such inspection, whether occasioned by the acts of Purchaser
or any of its employees, agents, representatives or contractors, and
Purchaser shall indemnify and hold harmless Seller and its agents, employees,
officers, directors, affiliates and asset managers from any liability
resulting therefrom. This indemnification by Purchaser shall survive the
Closing.
3.3 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that (a) Purchaser is a partnership or
corporation, duly organized and in good standing under the laws of the
State of Virginia, is qualified to do business in the State of North Carolina
and has the power to enter into this Agreement and to execute and
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deliver this Agreement and to perform all duties and obligations imposed upon it
hereunder, and Purchaser has obtained all necessary partnership and corporate
authorizations required in connection with the execution, delivery and
performance contemplated by this Agreement and has obtained the consent of all
entities and parties necessary to bind Purchaser to this Agreement, and (b)
neither the execution nor the delivery of this Agreement, nor the consummation
of the purchase and sale contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement conflict with or will
result in the breach of any of the terms, conditions, or provisions of any
agreement or instrument to which Purchaser, or any partner or related entity or
affiliate of Purchaser, is a party or by which Purchaser, any partner or related
entity or affiliate of Purchaser, or any of Purchaser's assets is bound, and (c)
neither Purchaser nor any partner, related entity of affiliate of Purchaser is
in any way affiliated with GE Capital Realty Group, Inc., General Electric
Capital Corporation, General Electric Realty Advisors, Inc., General Electric
Company or any affiliate of General Electric Company, and (d) that, with respect
to each source of funds to be used by its to purchase the Property
(respectively, the "Source"), at least one of the following statements shall be
accurate as of the Closing Date: (i) the Source does not include the assets of
(A) and "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which is subject
to Title I of ERISA, or (B) a "plan" as defined in Section 4975(a) of the
Internal Revenue Code of 1986, as amended ("Code"), or (ii) the Source includes
the assets of (A) an "employee benefit plan" as defined in Section 3(3) of ERISA
or (B) a "plan" as defined in Section 4975 of the Code (each of which has been
identified to the Seller in writing pursuant to this Section 3.3 at least ten
(10) business days prior to the Closing Date), but the use of such Source to
purchase the Property will not result in a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code. The Purchaser's
representations and warranties set forth in this Section 3.3 shall survive the
Closing or termination of this Agreement. Purchaser's representations and
warranties contained herein must be true and correct through the Closing Date,
and Purchaser's failure to notify Seller prior to the Closing Date of any
inaccuracies shall be a default by Purchaser under this Agreement.
3.4 Seller's Representations and Warranties. Seller represents and
warrants the following to Purchaser:
(a) Seller has the full partnership/corporate right, power,
and authority, without the joinder of any other person or entity, to enter
into, execute and deliver this Agreement, and to perform all duties and
obligations imposed on Seller under this Agreement;
(b) Neither the execution nor the delivery of this Agreement,
nor the consummation of the purchase and sale contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement conflict with or will result in the breach of any of the terms,
conditions, or provisions of any agreement of instrument to which Seller is a
party or by which Seller or any of Seller's assets is bound;
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(c) To the best of Seller's knowledge, Seller has not been
served with process in any lawsuit which would affect the consummation of the
transaction contemplated hereby;
(d) To the best of Seller's knowledge, there is not
condemnation proceeding pending against the Property; and
(e) To the best of Seller's knowledge, the leases listed
in the Rent Roll constitute all or the written and oral agreements of any kind,
for the leasing, rental or occupancy of any portion of the Property,
and the Seller has received no written notice from any tenant of the Property
of a default by Seller under such leases.
(f) To Seller's knowledge, Seller has not received any
written citation or other written notice from a governmental authority
of a presently existing violation of any laws which are applicable
to Seller's ownership, maintenance and operation of the Property;
3.5 Knowledge Defined. As used in Section 3.4, the term "to the best of
Seller's knowledge" (a) shall mean and apply to the actual knowledge
of Mr. A.T. Wolf, the asset manager of the Property, and not to any other, it
being understood and acknowledged that (i) Mr. Wolf, in many instances,
is not involved in the day-to-day operations of the Property and (ii)
Mr. Wolf is not charged with knowledge of all of the acts
and/or omissions of the predecessors in title to the Property or with
knowledge of all of the acts and/or omissions of Seller's agents or employees,
and (b) shall not apply to or be construed to apply to information or
material which may be in the possession of Seller generally or
incidentally, but which is not actually know to Mr. Wolf.
3.6 Termination of Management Agreement. Seller and Insignia
Management Group ("Manager") have entered into a management agreement for
the management of the Property (the "Management Agreement"), which Management
Agreement shall be terminated as of the Closing Date.
3.7 Survival; Liability.
(a) Any and all of the representations, warranties and covenants
of Seller as contained in this Agreement and to be performed prior to Closing
shall be void and of no further force or effect whatsoever from and after the
six (6) month anniversary of the Closing and any claim for breach of any
representation, warranty or covenant must be brought during such period.
Consequently, after such 6-month anniversary, Purchaser shall not have the
right to commence any action with respect to any alleged breach and/or
violation of any of such representations, warranties and/or covenants of Seller.
If Purchaser becomes aware prior to Closing of any breach and/or violation of
any Seller's representations, warranties or covenants as set forth herein,
Purchaser shall give Seller written notice of any such breach or violation,
and during the fifteen (15) day period after such notice, Seller shall have the
right, but not the obligation to
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cure any such breach or violation to the reasonable satisfaction of
Purchaser. If Purchaser becomes aware of any breach and/or violation
of any of Seller's representations, warranties and/or covenants
herein prior to Closing and thereafter proceeds to Closing, such
breach shall be deemed waived by Purchaser. If Purchaser timely commences
any action(s) under the Section 3.7 to enforce any alleged breach and/or
violation of any of the representations, warranties and/or covenants of
Seller as set forth in this Agreement, then Purchaser's sole remedy shall be
to seek recovery of its actual damages (but not any special, consequential,
punitive or other damages), in the aggregate (with respect to all such
breaches and/or violations) not to exceed One Hundred Thousand and No/100
Dollars ($100,000.00) per event, which sum shall include all of
Purchaser's attorneys' fees, costs, expert witness fees and court costs.
4.
NO REPRESENTATIONS OR WARRANTIES BY SELLER;
ACCEPTANCE OF PROPERTY
4.1 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3.4 ABOVE,
PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND
SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES (OTHER THAN
THE SPECIAL WARRANTY OF TITLE AS SET OUT IN THE DEED, AS DEFINED BELOW),
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE VALUE, NATURE, QUALITY
OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND
GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE PROPERTY, (C) THE SUITABILITY OF
THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER OR ANY TENANT
MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION
WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL
AUTHORITY OR BODY, (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, (F) THE
MANNER QUALITY OF THE CONSTRUCTION OF MATERIALS, IF ANY, INCORPORATED INTO THE
PROPERTY, (G) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE
PROPERTY, OR (H) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND
USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING THE EXISTENCE IN
OR ON THE PROPERTY OF HAZARDOUS MATERIALS (AS DEFINED BELOW) OR (I) ANY OTHER
MATTER WITH RESPECT TO THE PROPERTY ADDITIONALLY, NO PERSON ACTING ON BEHALF OF
SELLER IS AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF OF PURCHASER ACKNOWLEDGES
THAT NO PERSON HAS MADE, ANY REPRESENTATION, AGREEMENT, STATEMENT, WARRANTY,
GUARANTY OR PROMISE REGARDING THE
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PROPERTY OR THE TRANSACTION CONTEMPLATED HEREIN; AND NO SUCH REPRESENTATION,
WARRANTY, AGREEMENT, GUARANTY, STATEMENT OR PROMISE IF ANY, MADE BY ANY PERSON
ACTING ON BEHALF OF SELLER SHALL BE VALID OR BINDING UPON SELLER UNLESS
EXPRESSLY SET FORTH HEREIN. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, PURCHASER IS RELYING
SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION
PROVIDED OR TO BE PROVIDED BY SELLER AND AGREES TO ACCEPT THE PROPERTY AT THE
CLOSING AND WAIVE ALL OBJECTIONS OR CLAIMS AGAINST SELLER (INCLUDING, BUT NOT
LIMITED TO, ANY RIGHT OR CLAIM OF CONTRIBUTION) ARISING FROM OR RELATED TO THE
PROPERTY OR TO ANY HAZARDOUS MATERIALS ON THE PROPERTY. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH
RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER
HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION
AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY, TRUTHFULNESS OR COMPLETENESS OF
SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR
WRITTEN STATEMENT, REPRESENTATION OR INFORMATION PERTAINING TO THE PROPERTY, OR
THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, CONTRACTOR, AGENT,
EMPLOYEE, SERVANT OR OTHER PERSON. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTY AS
PROVIDED FOR HEREIN IS MADE ON ANY "AS IS" CONDITION AND BASIS WITH ALL FAULTS.
IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR
NEGOTIATION TO REFLECT THAT ALL OF THE PROPERTY IS SOLD BY SELLER AND PURCHASED
BY PURCHASER, SUBJECT TO THE FOREGOING. PURCHASER HEREBY AGREES TO INDEMNIFY,
PROTECT, DEFEND, SAVE AND HOLD HARMLESS SELLER FROM AND AGAINST ANY AND ALL
DEBTS, DUTIES, OBLIGATIONS, LIABILITIES, SUITS, CLAIMS, DEMANDS, CAUSES OF
ACTION, DAMAGES, LOSSES, FEES AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES AND EXPENSES AND COURT COSTS) IN ANY WAY RELATING TO, OR IN
CONNECTION WITH OR ARISING OUT OF PURCHASER'S ACQUISITION, OWNERSHIP, LEASING,
USE, OPERATION, MAINTENANCE AND MANAGEMENT OF THE PROPERTY. THE PROVISIONS OF
THIS SECTION 4 SHALL SURVIVE THE CLOSING OR ANY TERMINATION HEREOF.
4.2 Hazardous Materials. "Hazardous Materials" shall mean any substance
which is or contains (i) any "hazardous substance" as now or hereafter defined
in (Section)101(14) of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amend (42 U.S.C. (Section)9601 et seq.)
("CERCLA") or any regulations promulgated under CERCLA; (ii) any "hazardous
waste" as now or hereafter defined in the Resource Conservation and Recovery
Act (42 U.S.C. (Section)6901 et seq.) ("RCRA") or regulations promulgated
under RCRA; (iii) any substance regulated by the Toxic Substances Control
Act (15 U.S.C. (Section)2601 et seq.); (iv) gasoline, diesel fuel, or other
petroleum hydrocarbons;
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(v) asbestos and asbestos containing materials, in any form, whether friable
or non-friable; (vi) polychlorinated biphenyls; (vii) radon gas; and (viii)
any additional substances or materials which are now or hereafter classified
or considered to be hazardous or toxic under Environmental Requirements (as
hereinafter defined) or the common law, or any other applicable laws relating to
the Property. Hazardous Materials shall include, without limitation, any
substance, the presence of which on the Property, (A) requires reporting,
investigation or remediation under Environmental Requirements; (B) causes or
threatens to cause a nuisance on the Property or adjacent property or poses or
threatens to pose a hazard to the health or safety of persons on the Property or
adjacent property; or (C) which, if it emanated or migrated from the Property,
could constitute a trespass.
4.3 Environmental Requirements. "Environmental Requirements" shall mean
all laws, ordinances, statutes, codes, rules, regulations, agreements,
judgments, orders, and decrees, now or hereafter enacted, promulgated, or
amended, of the United States, the states, the counties, the cities, or any
other political subdivisions in which the Property is located, and any other
political subdivision, agency or instrumentality exercising jurisdiction over
the owner of the Property, the Property, or the use of the Property, relating to
pollution, the protection or regulation of human health, natural resources, or
the environment, or the emission, discharge, release or threatened release of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or waste or Hazardous Materials into the environment (including,
without limitation, ambient air, surface water, ground water or land or soil).
5.
CLOSING
5.1 Closing. The Closing (the "Closing") shall be held at the offices of
Chicago Title Insurance Company (the "Title Company") at One Exchange Plaza,
Suite 707, Raleigh, North Carolina 27601, Attention: Becky Goodwin, at a date
designated by Seller and Purchaser on or before September 30, 1996 (the "Closing
Date"), unless the parties mutually agree in writing upon another place, time or
date.
5.2 Possession. Possession of the Property shall be delivered to
Purchaser at the Closing, subject to the Permitted Encumbrances.
5.3 Proration. All rents, other amounts payable by the tenants under the
Leases, income, utilities and all other operating expenses with respect to the
Property for the month in which the Closing occurs, and real estate and personal
property taxes and other assessments with respect to the Property for the year
in which the Closing occurs, shall be prorated to the date Seller receives the
Purchase Price in immediately available funds with Seller receiving the benefits
and burdens of ownership on the Closing Date.
(a) If the Closing shall occur before rents and all other
amounts payable by the tenants under the Leases and all other income
from the Property have actually been paid for the month in which the
Closing occurs, the apportionment of such rents and other amounts and
other income shall be upon
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the basis of such rents, other amounts and other income actually
received by Seller. Subsequent to the Closing, if any such rents and
other income are actually received by Purchaser, all such amounts shall
first be applied to post-closing rents due to Purchaser which are past
due and the balance shall be immediately paid by Purchaser to Seller.
Purchaser shall make a good faith effort and attempt to collect any such
rents and other amounts and other income not apportioned at the Closing
for the benefit of Seller, however, Purchaser shall not be required to
expend any funds or institute any litigation in its collection efforts.
Nothing in this paragraph shall restrict Seller's right to collect
delinquent rents directly from a tenant by any legal means.
(b) If the Closing shall occur before the tax rate or the
assessed valuation of the Property is fixed for the then current year,
the apportionment of taxes shall be upon the basis of the tax rate for
the preceding year applied to the latest assessed valuation. Subsequent
to the Closing, when the tax rate and the assessed valuation of the
Property is fixed for the year in which the Closing occurs, the parties
agree to adjust the proration of taxes and, if necessary, to refund or
repay such sums as shall be necessary to effect such adjustment. If the
Property is not assessed as a separate parcel for tax or assessment
purposes, then such taxes and assessments attributable to the Property
shall be determined by Purchaser and Seller. If, as of the Closing, the
Property is not being treated as a separate tax parcel, then within
thirty (30) days after the Closing, Purchaser shall, at its sole cost
and expense, have the Property assessed separately for tax and
assessment purposes.
(c) If the Closing shall occur before the actual amount of
utilities and all other operating expenses with respect to the Property
for the month in which the Closing occurs are determined, the
apportionment of such utilities and other operating expenses shall be
upon the basis of an estimate by Seller of such utilities and other
operating expenses for such month. Subsequent to the Closing, when the
actual amount of such utilities and other operating expenses with
respect to the Property for the month in which the Closing occurs are
determined, the parties agree to adjust the proration of such utilities
and other operating expenses and, if necessary, to refund or repay such
sums as shall be necessary to effect such adjustment.
The agreements of Seller and Purchaser set forth in this Section 5.3 shall
survive the Closing.
5.4 Closing Costs. Except as otherwise expressly provided herein,
Seller shall pay, on the Closing Date, one-half (1/2) of any escrow fees, deed
stamps and other customary charges of the Title Company, and Purchaser shall
pay, on the Closing Date, the title insurance premium for the Owner's Policy (as
defined in Section 5.6(b)), all recording costs, the cost of the survey,
one-half (1/2) of any escrow fees and other customary charges of the Title
Company. Except as otherwise provided herein, each party shall pay its own
attorneys' fees.
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5.5 Seller's Obligations at the Closing. At the Closing, Seller
shall deliver to Purchaser the following:
(a) Deed. Special Warranty Deed (the "Deed") conveying the
Land and the Improvements to Purchaser subject to no exceptions other
than the Permitted Encumbrances, in the form attached to this Agreement
as Exhibit B.
(b) Evidence of Authority. Such organizational and
authorizing documents of Seller as shall be reasonably required by the
Title Company to evidence Seller's authority to consummate the
transactions contemplated by this Agreement.
(c) Foreign Person. An affidavit of Seller certifying that
Seller is not a "foreign person," as defined in the federal Foreign
Investment in Real Property Tax Act of 1980, and the 1984 Tax Reform
Act, as amended.
(d) Leases. The originals of all of the Leases and all
security deposits, if any, in the possession of GECRG on the Closing
Date. Purchaser shall receive a credit to the Purchase Price at Closing
for the amount of security deposit obligations outstanding under the
Leases as of the Closing Date.
(e) Contracts. The originals of all of the Contracts, if
any, in the possession of GECRG.
5.6 Purchaser's Obligations at the Closing. At the Closing, Purchaser
shall deliver to Seller the following:
(a) Purchase Price. The Purchase Price by wire transfer of
immediately available funds.
(b) Evidence of Authority. Such organizational and
authorizing documents of purchaser as shall be reasonably required by
Seller and/or the Title Company authorizing Purchaser's acquisition of
the Property pursuant to this Agreement and the execution of this
Agreement and any documents to be executed by Purchaser at the Closing.
(c) Taxpayer I.D. Certification, if the form attached to
Agreement as Exhibit D.
(d) Cost for Survey. Payment for all costs incurred in
connection with the Survey.
Purchaser shall be responsible for obtaining an Owner's Policy of Title
Insurance in ALTA standard form (the "Owner's Policy"), naming Purchaser as
insured, in the amount of the Purchase Price, insuring that Purchaser owns good
and indefeasible fee simple title to the Property, subject only to the Permitted
Encumbrances. Purchaser, at Purchaser's sole
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expense, may elect to cause the Title Company to amend the survey exception to
read "any shortages in area."
5.7 Documents to be executed by Seller and Purchaser. At the Closing,
Seller and Purchaser shall also execute and deliver the following:
(a) Tenant Notices. Signed statements or notices to all
tenants of the Property notifying such tenants that the Property has
been transferred to Purchaser and that Purchaser is responsible for
security deposits (specifying the amounts of such deposits), and, if
applicable, otherwise complying with the North Carolina Property Code.
(b) Assignment and Assumption of Personal Property, Service
Contracts, Warranties and Leases. Assignment in the form attached to
this Agreement as Exhibit C.
6.
RISK OF LOSS
6.1 Condemnation. If, prior to the Closing, action is initiated to
take any of the Property by eminent domain proceedings or by deed in lieu
thereof, Purchaser may either at or prior to Closing (a) terminate this
Agreement, or (b) consummate the Closing, in which latter event all of Seller's
assignable right, title and interest in and to the award of the condemning
authority shall be assigned to Purchaser at the Closing and there shall be no
reduction in the Purchase Price.
6.2 Casualty. Except as provided in Sections 3.2 and 4.1 of this
Agreement, Seller assumes all risks and liability for damages to or injury
occurring to the Property by fire, storm, accident, or any other casualty or
cause until the Closing has been consummated. If the Property, or any part
thereof, suffers any damage in excess of $500,000 prior to the Closing from fire
or other casualty, which Seller, at its sole option, does not elect to repair,
Purchaser may either at or prior to Closing (a) terminate this Agreement, or (b)
consummate the Closing, in which latter event all of Seller's right, title and
interest in and to the proceeds of any insurance covering such damage (less an
amount equal to any expenses and costs incurred by Seller to repair or restore
the Property and any portion of such proceeds paid or to be paid on account of
the loss of rents or other income from the Property for the period prior to and
including the Closing Date, all of which shall be payable to Seller), to the
extent the amount of such insurance does not exceed the Purchase price, shall be
assigned to Purchaser at the Closing. If the Property, or any part thereof,
suffers any damage less than $500,000 prior to the Closing, Purchaser agrees
that it will consummate the Closing and accept the assignment of the proceeds of
any insurance covering such damage plus an amount equal to Seller's deductible
under its insurance policy and there shall be no reduction in the Purchase
Price.
6.3 Existing Insurance Claims. Purchaser and Seller acknowledge
a portion of the Property has been damaged as a consequence of weather
conditions existing with
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Hurricane Fran in September of 1996, and requires certain repair (the "Damaged
Property"). Seller agrees to submit a claim under Claim No. 23P227431 (date of
casualty, September 6, 1996) ("Claim") to Cigna Property and Casualty ("Cigna")
in connection with the Damaged Property on a replacement cost basis. Seller also
agrees to undertake good faith efforts to collect on such Claim and will assign
to Purchaser any proceeds Seller receives with respect to such Claim (except for
any loss rental proceeds applicable to the period prior to the Closing Date).
If, (a) after Closing, Purchaser discovers additional Damaged Property other
than what was included and contemplated in the original Claim, Seller shall
submit a supplement to the Claim (such supplement to be prepared and documented
by Purchaser in good faith) to Cigna or (b) the amount of insurance paid by
Cigna in connection with the Claim is not satisfactory to Purchaser, Purchaser
shall provide Seller with supporting evidence that such proceeds are not
acceptable, and Seller shall resubmit same to Cigna, provided, however, Seller
shall not be obligated to submit or resubmit pursuant to the terms of the policy
any claims in connection with the Damaged Property to Cigna after 120 days from
the Closing Date. Purchaser shall, at Purchaser's expense, be entitled to
pursue any remedies available to Seller under Seller's Policy (but only to the
extent such policy applies to an individual claim and not an action under the
policy as a whole) in order to contest any payment made on behalf of the Claim.
In addition, Purchaser shall be entitled to any rent loss proceeds received by
either Seller or Purchaser for the period after the Closing Date with respect to
the Claim in accordance with the provisions under Seller's insurance policy.
Within ten (10) calendar days after receipt of the Claim amount, Purchaser shall
provide Seller with a written statement that Purchaser has received the
appropriate amount of insurance proceeds and releasing Seller from any further
obligations under this Section 6.3. Attached as Exhibit E is a memorandum
detailing the coverage of Seller's policy.
7.
DEFAULT
7.1 Breach by Seller. Except as Purchaser's remedies may otherwise
be expressly limited by the terms of this Agreement (including, without
limitation, the terms of Section 4.4):
(a) In the event that Seller shall breach any of its
representations, warranties or covenants in this Agreement which by the
express terms of this Agreement survive the Closing, Purchaser, as its
sole and exclusive remedy, and subject to the provisions of Section 3.7
and Subsection 7.1(b) below and, may pursue Seller for actual damages
incurred by Purchaser as a result of such breach.
(b) Notwithstanding the foregoing, in no event shall the
aggregate amount of actual damages which Purchaser may be entitled to
recover against Seller pursuant to Subsections 7.1(a) above exceed One
Hundred Thousand and No/100 Dollars ($100,000) and in no event shall
Seller be liable to Purchaser for any punitive, speculative or
consequential damages or to the remedy of specific performance.
7.2 Breach by Purchaser.
(a) If Purchaser fails to comply with any provision of
this Agreement other than Section 3.3, Seller may terminate this
Agreement and thereupon shall be entitled to sue for One Hundred
Thousand Dollars ($100,000) as liquidated damages (and not as a
penalty) and as Seller's sole remedy and relief hereunder
(except for the Surviving Obligations). Seller and Purchaser
have made this provision for liquidated damages bacause it would
be difficult to calculate, on the date hereof, the amount of
actual damages for such breach, and Seller and Purchaser agree
that these sums represent reasonable compensation to Seller for
such breach.
(b) In the event of any default ro breach of any
representation or warranty made by Purchaser under Section 3.3
of this Agreement, Seller shall have any and all rights and
remedies available at law or in equity without limitation by
reason of such default.
The provisions of this Section 7.2 shall not limit or affect any
of Purchaser's indemnities as provided in other Sections of this
Agreement.
8.
MISCELLANEOUS
8.1 Notices. All notices, demands and requests which may be
given or which are required to be given by either party to the other,
and any exercise of a right of termination provided by this Agreement,
shall be in writing and shall be deemed effective either: (a) on the date
personally delivered to the address below, as evidenced by written receipt
therefore, whether or not actually received by the person to whom addressed; (b)
on the third (3rd) business day after being sent, by certified or registered
mail, return receipt requested, addressed to the intended recipient at the
address specified below; (c) on the first (1st) business day after being
deposited into the custody of a nationally recognized overnight delivery service
such as Federal Express Corporation, Emery or Purolator, or (d) via facsimile
transmission with confirmation of receipt, addressed to such party at the
address specified below. For purposes of this Section 8.1, the addresses of the
parties for all notices are as follows (unless changed by similar notice in
writing given by the particular person whose address is to be changed):
If to Seller: Condor One, Inc.
c/o GE Capital Realty Group, Inc.
16479 Dallas Parkway, Suite 400
Dallas, Texas 75248-2605
Attention: Brian Selbo
Tel: (214) 447-2605
Fax: (214) 447-2667
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with a copy to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201-6776
Attention: Brian R. Forbes
Tel: (214) 740-8467
Fax: (214) 740-8800
If to Purchaser: Cornerstone Realty Income Trust, Inc.
306 East Main Street
Richmond, Virginia 23219
Attention: Gus G. Remppies
Tel: (804) 643-1761
Fax: (804) 782-9302
with a copy to: Harry Taubenfeld
Zuckerbrod & Taubenfeld
575 Chestnut Street
Cedarhurst, NY 11516
Tel: (516) 374-3133
Fax: (516) 378-3490
with additional Ted Oliver, Esq.
copy to: Manning, Fulton & Slunner, P.A.
500 UCB Plaza
3605 Glenwood Avenue
Raleigh, North Carolina 27612
Tel: (919) 787-8880
Fax: (919) 781-0811
If to Title
Company: Chicago Title Insurance
One Exchange Plaza, Suite 207
Raleigh, North Carolina 27601
Attention: Becky Goodwin
Tel: (919) 833-6900
Fax: (919) 833-6905
With a copy to: Newsom Graham Hedrick Kennon
Suite 1200, University Tower
3100 Tower Boulevard
Durham, North Carolina 27717-1519
Attention: Robert O. Belo
Tel: (919) 490-0500
Fax: (919) 490-0873
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8.2 Real Estate Commissions. Seller shall pay to CB Commercial
(hereinafter called "Agent" whether one or more) upon the Closing of the
transaction contemplated hereby, and not otherwise, a cash commission in the
amount agreed on in a separate listing agreement between Seller and Agent.
Purchaser shall pay to John Schelpfeffer ("Schelpfeffer") upon the Closing of
the transaction contemplated hereby, and not otherwise a cash commission in the
amount agreed on in a separate listing agreement between Purchaser and
Schelpfeffer. Said commission shall in no event be payable unless and until the
transaction contemplated hereby is closed in accordance with the terms of this
Agreement; if such transaction is not closed for any reason, including, without
limitation, failure of title or default by Seller of Purchaser or termination of
this Agreement pursuant to the terms hereof, then such commission will be deemed
not to have been earned and shall not be due or payable. Except as set forth
above with respect to Agent and Schelpfeffer, neither Seller nor Purchaser has
authorized any broker or finder to act on Purchaser's behalf in connection with
the sale and purchase hereunder and neither Seller nor Purchaser has dealt with
any broker or finder purporting to act on behalf of any other party. Purchaser
agrees to indemnify and hold harmless Seller from and against any and all
claims, losses, damages, costs or expenses of any kind or character arising out
of or resulting from any agreement, arrangement or understanding alleged to have
been made by Purchaser or on Purchaser's behalf with any broker or finder in
connection with this Agreement or the transaction contemplated hereby. Seller
agrees to indemnify and hold harmless Purchaser from and against any and all
claims, losses, damages, costs or expenses of any kind or character arising out
of or resulting from any agreement, arrangement or understanding alleged to have
been made by Seller or on Seller's behalf with any broker or finder in
connection with this Agreement or the transaction contemplated hereby.
Notwithstanding anything to the contrary contained herein, this Section 8.2
shall survive the Closing or any earlier termination of this Agreement.
8.3 Entire Agreement. This Agreement embodies the entire agreement
between the parties relative to the subject matter hereof, and there are no oral
or written agreements between the parties, nor any representations made by
either party relative to the subject matter hereof, which are not expressly set
forth herein.
8.4 Amendment. This Agreement may be amended only by a written
instrument executed by the party or parties to be bound thereby.
8.5 Headings. The captions and headings used in this Agreement are for
convenience only and do not in any way limit, amplify, or otherwise modify the
provisions of this Agreement.
8.6 Time of Essence. Time is of the essence of this Agreement; however,
if the final date of any period which is set out in any provision of this
Agreement falls on a Saturday, Sunday or legal holiday under the laws of the
United States or the State of North Carolina, then, in such event, the time of
such period shall be extended to the next day which is not a Saturday, Sunday or
legal holiday.
8.7 Governing Law. This Agreement shall be governed by the laws of the
State of North Carolina and the laws of the United States pertaining to
transactions in such State.
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8.8 Successors and Assigns; Assignment. This Agreement shall bind and
inure to the benefit of Seller and Purchaser and their respective heirs,
executors, administrators, personal and legal representatives, successors and
permitted assigns. Purchaser shall not assign Purchaser's rights under this
Agreement.
8.9 Invalid Provision. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable; this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
this Agreement; and, the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by such illegal, invalid, or
unenforceable provision or by its severance from this Agreement.
8.10 Attorneys' Fees. In the event it becomes necessary for either
party to file suit to enforce this Agreement or any provision contained herein,
the party prevailing in such suit shall be entitled to recover, in addition to
all other remedies or damages, as provided herein, reasonable attorneys' fees
incurred in such suit.
8.11 Multiple Counterparts. This Agreement may be executed in a number
of identical counterparts which, taken together, shall contstitute collectively
one (1) agreement; in making proof of this Agreement, it shall not be necessary
to produce or account for more than one such counterpart with each party's
signature.
8.12 Effective Date. As used herein in the term "Effective Date" shall
mean September 27, 1996.
8.13 Exhibits. The following exhibits are attached to this Agreement
and are incorporated into this Agreement by this reference and made a part
hereof for all purposes:
(a) Exhibit A, the legal description of the Land.
(b) Exhibit B, the form of the Deed.
(c) Exhibit C, the form of the Assignment and Assumption of
Personal Property, Service Contracts, Warranties and Leases.
(d) Exhibit D, the form of the Taxpayer I.D. Certification.
Exhibit E, Memorandum of Insurance Coverage.
8.14 No Recordation. Seller and Purchaser hereby acknowledge that
neither this Agreement nor any memorandum or affidavit thereof shall be recorded
of public record in Orange County, North Carolina or any other county. Should
Purchaser ever record or attempt to record this Agreement, or a memorandum or
affidavit thereof, or any other similar document, then, notwithstanding anything
herein to the contrary, said recordation or attempt at recordation shall
constitute a default by Purchaser hereunder, and, in addition to the other
remedies provided for herein, Seller shall have the express right to terminate
this Agreement by filing a notice of said termination in the county in which the
Land is located.
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8.15 Merger Provision. Except as otherwise expressly provided herein,
any and all rights of action of Purchaser for any breach by Seller of any
representation, warranty or covenant contained in this Agreement shall merge
with the Deed and other instruments executed at Closing, shall terminate at
Closing and shall not survive Closing.
8.16 Jury Waiver. TO THE EXTENT PERMITTED BY LAW, PURCHASER AND SELLER
DO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, OR UNDER
OR IN CONNECTION WITH THIS AGREEMENT, THE DOCUMENTS DELIVERED BY PURCHASER AT
CLOSING OR SELLER AT CLOSING, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING
OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING
WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT AND ANY
CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR SELLER TO
ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS DELIVERED BY PURCHASER AT
CLOSING AND SHALL SURVIVE THE CLOSING OF TERMINATION OF THIS AGREEMENT.
REMAINDER OF THIS DOCUMENT INTENTIONALLY LEFT BLANK
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PURCHASER:
Date of Execution CORNERSTONE REALTY INCOME TRUST, INC.,
by Purchaser: a Virginia corporation
9-27-96 By: /s/ S. J. Olander
- ----------------- ---------------------
Name: S. J. Olander
Its: Vice President
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SELLER:
Date of Execution CONDOR ONE, INC.,
by Seller: a Delaware corporation
- ----------------- By:
Name:
Title:
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