EXHIBIT 10.4
PURCHASE CONTRACT
THIS AGREEMENT made and entered into this 13 day of November 1996,
between CORNERSTONE REALTY GROUP, INC., or its nominee (hereinafter called
"Purchaser"), and ROBERT F. ANDERSON, TRUSTEE IN REORGANIZATION FOR WINDSOR
PLANTATION LIMITED PARTNERSHIP (hereinafter called "Seller").
ARTICLE I
THE PROPERTY
1.1 Sale of Property. Seller agrees to sell and convey, and Purchaser
agrees to purchase, certain real property owned by the bankruptcy estate of
Windsor Plantation Limited Partnership known as THE ARBORS AT WINDSOR LAKE
located in COLUMBIA, SC, with all buildings and improvements located thereon, as
more particularly described in the attached legal description in Exhibit A
including, but not limited to 228 individually heated and air conditioned
apartment units, with all appurtenances, together with all appliances, drapes,
carpeting, shrubbery and all other personal property 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).
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 Purchase Price. The total purchase price shall be TEN MILLION EIGHT
HUNDRED SEVENTY FIVE THOUSAND ($10,875,000) DOLLARS as evidenced by cash or cash
equivalent at closing.
2.2 Deposit. $100,000 to be placed in escrow at the end of the
"Inspection Period" described in Article VI below. Said deposit shall be placed
in escrow with Lawyers Title Insurance Corporation or its authorized agent as an
earnest money deposit which may be credited against the purchase price or
applied as per Article XI below.
ARTICLE III
TITLE MATTERS
3.1 Marketable Title. Seller shall convey good and marketable title,
free and clear of all liens, subject only to general taxes for the current year
not yet due and payable and utility easements which do not interfere with the
present use of the Property.
(A) Title shall be free from any and all liens or mortgages and
Seller shall be responsible for any actions necessary to deliver such free
title.
3.2 Sale Free and Clear of Liens. Sale shall be made pursuant to an
order of the Bankruptcy Court, ordering the sale of the property free and clear
of liens, subject to a current survey, a flood zone certification letter and a
Surveyor's Certification letter.
ARTICLE IV
PRORATIONS
4.1 Income and Expense Allocations. The following shall be prorated, on
a calendar-month basis, to the 1st day of the month of the closing: 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).
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.
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.
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ARTICLE V
UPSET BID
5.1 Rejection. It is understood that in the event the offer of
Purchaser herein is the first offer accepted by Seller and Purchaser commences
its due diligence, as set forth hereinafter in Article VII, and subsequent
thereto, the Court shall accept an offer of a third party (upset bid) no later
than December 9, 1996, after which no further bids can be accepted then in that
event the Seller shall be obligated to pay Purchaser $25,000 as liquidated
damages, subject to further review by the Bankruptcy Court. The parties
recognize that Purchaser's actual damages are potentially significant and
difficult to quantify.
ARTICLE VI
POSSESSION OF THE PROPERTY
6.1 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 VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent. Purchaser's obligation to purchase shall be
subject to and contingent upon the satisfaction of the following conditions
precedent:
(A) Receipt by Purchaser 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.
(B) The Purchaser's access to Seller's records and documents as set
forth in 7.2 below.
(C) On the condition that there have been no material or adverse
changes to the property or leases.
(D) 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
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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.
7.2 Inspection. This Agreement shall be further subject to and contingent upon
Purchaser's satisfactory inspection as follows herein below.
7.2.1 Preparation for Inspection. At the execution of this Agreement, Seller
shall deliver to Purchaser copies of the following: The current rent roll for
the Property; 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 or security interests 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; and 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 his knowledge and belief.
Seller agrees to make any and all information relevant to the property which is
in the possession or control of Seller, reasonably available for Purchaser's
review. Purchaser recognizes that Seller is Trustee in Reorganization and
therefore cannot guarantee the accuracy of any financial information generated
prior to his appointment.
7.2.2 Inspection of Books and Records: Access. Upon receipt by Purchaser of all
documents requested in the paragraph above, Purchaser, its employees, agents and
contractors shall have 21 days (the "Inspection Period") to enter upon the
Property subject to the rights of the tenants during normal business hours for
the purpose of making physical inspections thereof, including but not limited to
roofs, heating, cooling, electrical and
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plumbing systems, swimming pool, appliances, and structural elements of the
buildings. Upon the conclusion of the Inspection Period this contract shall be
deemed to be a firm agreement of purchase and sale binding the parties hereto,
except as it may be terminated by other provisions and conditions contained
herein, including but not limited to the condition imposed by Paragraph 7. 1(A)
above.
7.2.3 Right of Termination During Inspection Period. Purchaser shall also be
permitted to review all original leases, expense records, tenant cards and
occupancy data available. If Purchaser is not satisfied, in its sole and
exclusive discretion, with the state of maintenance and repair of the Property
or the rents, occupancy or expenses of the Property, then notwithstanding
anything contained herein to the contrary, Purchaser shall have the right to
terminate this Agreement by giving written notice to Seller before the end of
the Inspection Period.
7.2.4 "Rent Ready". During the "Inspection Period", both Seller and Purchaser
will inspect an apartment unit at the Property and mutually agree that said
apartment shall be representative of a "rent ready" unit by which all other
units shall be judged for "rent ready" condition at closing. All vacant
apartment units, are to be in a "rent ready" condition (as defined above), at
the time of closing, containing, but not limited to the following amenities,
i.e., carpet, refrigerator, range, heating, plumbing and electrical systems.
7.2.5 Condition of Personal Property at Closing. All personal property included
in the sale and all mechanical, electrical, heating, air conditioning, sewer,
water and plumbing systems will be in the same working order at the time of
closing and in the same condition as at the time of the initial inspection by
Purchaser. If Seller fails to make reasonable efforts to conserve the property,
Purchaser shall have the option of waiving such requirement, in writing, and
proceeding to closing, or Purchaser may void this Agreement and obtain a prompt
return of its deposit
ARTICLE VIII
CLOSING
8.1 Closing. Closing will be held on or about JANUARY 5, 1997.
at such place and at such time as the parties may agree.
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8.2 Seller's Deliveries. At closing, Seller shall execute and deliver to
Purchaser the Deed referred in Paragraph 3 hereof and shall also execute, where
necessary, and deliver to Purchaser, the following:
(A) A Bill of Sale, with 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 SOUTH
CAROLINA.
(D) A rent roll certified by Seller to be true and correct 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.
(E) Seller shall provide, a certificate from a licensed extermination
contractor, who is regularly engaged in the business of pest control, that all
buildings are free from any termite or other wood-boring insect infestation.
Said certificate shall be dated within 90 days of closing, bearing the
Contractor's name, contractors license number, the signature of the party
authorized to sign for the Contractor and the date of the inspection. Should
damage exist, Seller shall proceed to have any corrective work completed prior
to closing or Purchaser, at its option, may either proceed to settlement and
have such sums required for repairs deducted from Seller's proceeds, or may in
its sole discretion terminate this Agreement. Seller shall promptly return
Purchaser's deposit upon such termination.
(F) 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 Paragraph
1.1.
(G) Assignments of all warranties and guarantees to the extent such are still in
effect and provide Purchaser with copies of all such warranties and guarantees
without
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limitation for all appliances, dishwashers, disposals, refrigerators, heating
and air conditioning units, washers and dryers.
(H) Evidence satisfactory to Purchaser that all water, sewer, gas, electric,
telephone, and drainage facilities and all other utilities required by law or by
the normal use and operation of the Property are and at the time of closing will
be installed to the property line, are and at the time of closing will be
connected pursuant to valid permits, and are and at the time of closing adequate
to service the Property and to permit full compliance with all requirements of
law and nominal usage of the Property by the tenants thereof and their licensees
and invitees.
(I) 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.
(J) Affidavit that Seller has no actual knowledge of the presence of asbestos
and/or any other hazardous material at the Property.
(K) 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.
(L) A notice letter to all the residents of the apartment complex as to change
of ownership in the form prepared by the Purchaser.
(M) 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.
(N) An Order of the United States Bankruptcy Court for the District of South
Carolina approving said sale and authorizing the sale of the Property free and
clear of all liens and encumbrances.
8.3 Purchaser's Deliveries. At closing and contemporaneously with the Seller's
compliance with the provisions of Section 8.2, Purchaser shall:
(A) Pay to Seller the cash portion of the purchase price, adjusted for the
prorations herein provided for in Article IV.
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(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 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 IX
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Representations of the Parties. Seller is Trustee in Bankruptcy for Windsor
Plantation Limited Partnership, record owner of the property. The parties
recognize that the sale of said property and this contract, are specifically
made contingent upon the approval by the Bankruptcy Court of this contract,
after notice and an opportunity for hearing to all creditors. Upon such notice,
and approval by the court, the Bankruptcy Court may order said sale free and
clear of all liens and encumbrances, allowing the Trustee to transfer title free
and clear of all encumbrances of any kind whatever. Seller's warranties are
limited to the conditions of sale as approved by the United States Bankruptcy
Court for the District of South Carolina, and those warranties contained in
paragraph 9.2 herein.
9.2 Seller covenants and agrees that, between this date and the date of closing,
Seller shall continue to maintain, operate and manage the Property in a manner
consistent with its prior practices, making every reasonable effort to do
nothing which might damage the reputation of the Property or the relationships
with the tenants. Seller shall not permit the modification, extension or
cancellation of any tenant lease (except in accordance with the terms of such
lease) or any dealing with any tenant other than the ordinary course of managing
the Property, without the prior written consent of Purchaser. If the leases of
any tenants expire before thirty (30) days after the date of closing, Seller
shall, up to the date of closing and without cost to the Purchaser, continue its
normal course of operation with respect to causing tenants to be obtained for
apartments which are unrented.
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ARTICLE X
CONDEMNATION; RISK OF LOSS
10.1 Property Damage. If, prior to closing, any part of the Property is damaged
by fire or other casualty, Seller shall repair such damage before the date
provided herein for closing. If such damage cannot be repaired by such time,
this Agreement may be canceled at the option of the Purchaser. In the event of
cancellation as aforesaid, this Agreement shall become null and void and the
parties shall be released and all payments made shall be returned. Should
Purchaser elect to carry out this Agreement despite such damage Seller shall
assign to Purchaser all insurance proceeds arising from such damage and will
compensate Purchaser for lost rent collections to the extent of insurance
proceeds received. Seller shall promptly notify Purchaser in writing upon the
occurrence of any such damage.
10.2 Condemnation. In the event of any actual or threatened taking, pursuant to
the power of eminent domain, all or any part thereof, or any actual or proposed
sale in lieu thereof, the Seller shall give written notice thereof to the
Purchaser promptly after Seller learns or receives notice thereof. Upon a taking
of a material part of the Property (any part of the building or more than 5% of
the parking area), Purchaser may elect to either (a) terminate this Agreement,
in which event the Deposit shall be immediately returned to Purchaser and all
other rights and obligations of the parties hereunder shall terminate
immediately, or (b) to waive its right to terminate this Agreement and proceed
to closing, in which event all proceeds, awards and other payments arising out
of such condemnation or sale (actual or threatened) shall be paid to the
Purchaser at closing, if such payment has been received or Seller shall assign
to Purchaser the rights to such payments.
10.3 Risk of Loss. Prior to closing, all risks of loss or damage by every
casualty shall be borne by the Seller.
ARTICLE XI
BROKER'S COMMISSION
11.1 Commission. Seller agrees to pay a brokerage fee to , and
Purchaser agrees to pay a brokerage fee to Evans, Rivers, pursuant to separate
agreements between the parties. Said payment of Seller's brokerage fee is
subject to appointment of said
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broker by the Bankruptcy Court, and approval of such fees by the Court. Said
brokerage fees 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 XII
DEFAULT
12.1 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.
12.2 Seller's Default. Upon Seller's default, the Purchaser is entitled to
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 the Purchaser may waive such defaults and proceed to settlement.
Seller's default shall be defined as Seller's failure to submit this agreement
to the United States Bankruptcy Court for the District of South Carolina,
seeking approval of the same, within 30 days after this agreement is fully
executed.
12.3 Purchaser's Default. Upon Purchaser's default, this Agreement shall be
terminated and both parties released from all obligations hereunder, and the
deposit shall be retained by the Seller as liquidated damages. Seller shall have
no other remedy against Purchaser in the event of Purchaser's default.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 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.
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13.2 Assignment. Purchaser may assign this Agreement without the consent of
Seller.
13.3 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.
13.4 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.
13.5 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 of South Carolina.
13.6 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.
13.7 Incorporation by Reference. All of the Exhibits referred to herein and/or
attached hereto shall be deemed to constitute a part of the Agreement.
13.8 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.
13.9 Construction of Contract. Each party hereto has 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.
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ARTICLE XIV
NOTICE
14.1 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: Robert F. Anderson, Trustee
P.O. Box 76
Columbia, SC 29202
With a copy to Dana Wilkinson, Esq.
Seller's Attorneys: Anderson & Associates, P.A.
P.O. Box 76, 208 Candi Lane, Suite B
Columbia, SC 29202
To Purchaser: S. J. Olander
Cornerstone Realty Group, Inc.
306 E. Main Street
Richmond, VA 23219
With a copy to Harry S. Taubenfeld, Esq.
Purchaser's Attorneys: Zuckerbrod & Taubenfeld
575 Chestnut St., P.O. Box 488
Cedarhurst, NY 11516
14.2 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.
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SELLER:
By:________________________________
Its:_______________________________
PURCHASER:
CORNERSTONE REALTY GROUP, INC.
By: /s/ S. J. Olander
--------------------------------
Its: SENIOR VICE PRESIDENT
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