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EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
by and between
COLONIAL PROPERTIES SERVICES, INC. ,
an Alabama corporation
as Seller
and
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
a Delaware limited partnership
as Buyer
Property Name: Shelby Farms II
Location: Memphis, Tennessee
Effective Date: June 11, 2008
TABLE OF CONTENTS
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PAGE |
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| ARTICLE 1. - |
CERTAIN DEFINITIONS |
6 |
| ARTICLE 2. - |
SALE OF PROPERTY |
10 |
| ARTICLE 3. - |
PURCHASE PRICE |
10 |
|
3.1 Deposit Money |
10 |
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3.2 Cash at Closing |
11 |
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3.3 Seller Purchase Money
Loan |
11 |
| ARTICLE 4. - |
TITLE MATTERS |
12 |
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4.1 Title to Real
Property |
12 |
|
4.2 Title Defects |
12 |
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4.2.1 Buyer's
Objections to Title |
12 |
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4.2.2 Discharge
of Title Objections |
13 |
|
4.2.3 No
New Exceptions |
13 |
|
4.3 Title Insurance |
14 |
| ARTICLE 5. - |
BUYER'S DUE DILIGENCE/CONDITION OF THE PROPERTY |
14 |
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5.1 Buyer's Inspections and Due
Diligence |
14 |
|
5.2 As-Is Sale |
14 |
|
5.3 Termination of Agreement
During Due Diligence Period |
17 |
| ARTICLE 6. - |
ADJUSTMENTS AND PRORATIONS |
17 |
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6.1 Lease Rentals |
17 |
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6.1.1 Rents |
17 |
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6.1.2 Other
Revenues |
18 |
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6.2 Real Estate and Personal
Property Taxes |
19 |
|
6.2.1 Proration
of Ad Valorem Taxes |
16 |
|
6.2.2 Insufficient
Information |
20 |
|
6.2.3 Special
Assessments |
20 |
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6.3 Other Property Operating
Expenses |
20 |
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6.4 Closing Costs |
21 |
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6.5 Apportionment
Credit |
21 |
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6.6 Cash Security
Deposits |
21 |
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6.7 Delayed Adjustment; Delivery
of Operating and Other Financial Statements |
21 |
| ARTICLE 7. - |
CLOSING |
21 |
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7.1 Closing Date |
21 |
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7.2 Title Transfer and Payment of
Purchase Price |
22 |
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7.3 Seller's Closing
Deliveries |
22 |
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7.4 Buyer's Closing
Deliveries |
24 |
| ARTICLE 8. - |
CONDITIONS TO CLOSING |
25 |
|
8.1 Conditions to Seller's
Obligations |
25 |
2
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8.2 Conditions to Buyer's
Obligations |
25 |
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8.3 Waiver of Failure of
Conditions Precedent |
26 |
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8.4 Approvals not a Condition to
Buyer's Performance |
26 |
| ARTICLE 9. - |
REPRESENTATIONS AND WARRANTIES |
26 |
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9.1 Buyer's
Representations |
26 |
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9.1.1 Buyer's
Authorization |
26 |
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9.1.2 Buyer's
Financial Condition |
27 |
|
9.2 Seller's
Representations |
27 |
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9.2.1 Seller's
Authorization |
27 |
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9.2.2 Other
Seller's Representations |
27 |
|
9.2.3 Delivery
of Documents |
29 |
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9.2.4 Designated
Employees |
29 |
|
9.3 General Provisions |
29 |
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9.3.1 No
Representation as to Leases |
29 |
|
9.3.2 Definition
of "Seller's Knowledge" |
30 |
|
9.3.3 Seller's
Representations Deemed Modified |
30 |
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9.3.4 Notice
of Breach; Seller's Right to Cure |
29 |
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9.3.5 Survival;
Limitation on Seller's Liability |
30 |
| ARTICLE 10. - |
COVENANTS |
30 |
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10.1 Buyer's Covenants |
30 |
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10.1.1 Buyer's
Indemnity; Delivery of Reports |
30 |
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10.1.2 Limit
on Government Contacts |
31 |
|
10.2 Seller's
Covenants |
31 |
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10.2.1 Contracts |
31 |
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10.2.2 Maintenance
of Property |
31 |
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10.2.3 Access
to Property |
32 |
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10.2.4 Termination
of Certain Contracts |
32 |
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10.2.5 New
Leases; Lease Modifications |
33 |
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10.3 Mutual Covenants |
33 |
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10.3.1 Publicity |
33 |
|
10.3.2 Broker |
34 |
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10.3.3 Tax
Protests; Tax Refunds and Credits |
34 |
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10.4 Survival |
35 |
| ARTICLE 11. - |
FAILURE OF CONDITIONS; DEFAULT |
35 |
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11.1 To Seller's
Obligations |
35 |
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11.2 To Buyer's
Obligations |
35 |
| ARTICLE 12. - |
CONDEMNATION/CASUALTY |
35 |
|
12.1 Condemnation |
35 |
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12.1.1 Right
to Terminate |
35 |
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12.1.2 Assignment
of Proceeds |
36 |
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12.2 Destruction or
Damage |
36 |
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12.3 Insurance |
37 |
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12.4 Effect of
Termination |
37 |
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12.5 Waiver |
37 |
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| ARTICLE 13. - |
ESCROW |
37 |
| ARTICLE 14. - |
MISCELLANEOUS |
38 |
|
14.1 Buyer's
Assignment |
38 |
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14.2 Designation
Agreement |
39 |
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14.3 Survival/Merger |
39 |
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14.4 Integration;
Waiver |
39 |
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14.5 Governing Law |
40 |
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14.6 Captions Not Binding;
Exhibits |
40 |
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14.7 Binding Effect |
40 |
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14.8 Severability |
40 |
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14.9 Notices |
40 |
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14.10 Counterparts |
41 |
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14.11 No Recordation |
41 |
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14.12 Additional Agreements;
Further Assurances |
41 |
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14.13 Construction |
41 |
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14.14 ERISA |
42 |
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14.15 Maximum Aggregate
Liability |
42 |
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14.16 WAIVER OF JURY
TRIAL |
42 |
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14.17 Facsimile
Signatures |
42 |
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14.18 Section 1031
Exchange |
44 |
4
EXHIBITS
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Exhibit
A |
Legal
Description |
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Exhibit
B |
List of
Contracts |
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Exhibit
C |
Intentionally omitted |
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Exhibit
D |
Seller's
Certificate as to Representations and Warranties |
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Exhibit
E |
Form of
Special Warranty Deed |
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Exhibit
F |
Form of Bill
of Sale |
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Exhibit
G |
Form of
Assignment of Leases |
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Exhibit
H |
Form of
Assignment of Intangible Property |
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Exhibit
I |
Form of
FIRPTA Affidavit |
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Exhibit
J |
Intentionally omitted |
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Exhibit
K |
Litigation
Notices, Contract Defaults and Governmental Violations |
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Exhibit
L |
Rent
Roll |
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Exhibit
M |
Personal
Property |
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PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (“ Agreement ”) is
made to be effective as of June 11, 2008, by and between COLONIAL
PROPERTIES SERVICES, INC., an Alabama corporation (“
Seller ”), and NTS REALTY HOLDINGS LIMITED
PARTNERSHIP, a Delaware limited partnership (“ Buyer
”).
W I T N E S S E T H:
In
consideration of the mutual covenants and agreements set forth
herein the parties hereto do hereby agree as follows:
ARTICLE 1. -- CERTAIN DEFINITIONS
As used
herein, the following terms shall have the following
meanings:
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“ Broker ” shall mean CB Richard
Ellis. |
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“ Business day ” shall mean any day other
than a Saturday, Sunday or any federal or State of Tennessee
holiday. If any period hereunder expires on a day that is not a
business day, or any event or condition is required by the terms of
this Agreement to occur or be fulfilled on a day that is not a
business day, such period shall expire or such event or condition
shall occur or be fulfilled, as the case may be, on the next
succeeding business day. |
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“ Buyer’s Representatives ” shall mean
the following designated employees of Buyer: Brian F. Lavin, Neil
A. Mitchell, Rosann D. Tafel or Greg McDearmon. |
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“ Closing ” shall mean the closing of the
Transaction. |
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“ Closing Date ” shall mean June 27,
2008. |
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“ Colonial ” shall mean Colonial Properties
Services, Inc., an Alabama corporation. |
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“ Contracts ” shall mean all service,
supply, maintenance, utility and commission agreements, all
equipment leases, and all other contracts, subcontracts and
agreements relating to the Real Property and the Personal Property,
all of which are described in Exhibit B attached
hereto and incorporated herein by this reference, and any
additional contracts, subcontracts and agreements entered into in
accordance with the terms of Subsection 10.2.1
hereof. |
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“ Confidential Materials ” shall mean any
books, computer software, records or files that consist of or
contain appraisals, the capital budgets for calendar year 2008 or
any future period, the operating budgets for calendar year 2008 or
any future period, strategic plans for the Real Property, internal
analyses, information regarding the marketing of the |
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Property for sale, submissions relating to obtaining internal
authorization for the sale of the Property by Seller, attorney and
accountant work product, attorney-client privileged documents,
internal correspondence of Seller and its affiliates and
correspondence between or among such parties, or other information
in the possession or control of Seller or Seller’s property
manager which such party reasonably deems proprietary or
confidential. |
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“ Deemed to know ” (or words of similar
import) shall have the following meaning: (a) Buyer shall be
“deemed to know ” of the existence of a fact or
circumstance to the extent that any Buyer’s Representative
has actual knowledge of such fact or circumstance, or such fact or
circumstance is disclosed by this Agreement, or any studies, tests,
reports, or analyses prepared by or for or otherwise obtained by
Buyer or Buyer’s Representatives; and (b) Seller shall
be “ deemed to know ” that any Seller’s
warranty is untrue, inaccurate or incorrect to the extent that
Seller or any Seller Parties has actual knowledge of information
which is inconsistent with such Seller’s Warranty, or this
Agreement, the Documents, or any studies, tests, reports or
analyses prepared by or for or otherwise obtained by Seller or any
Seller Parties contains information which is inconsistent with such
Seller’s Warranty. |
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“ Designated Employees ” shall mean Ray
Hutchinson, Robert Given and the Regional Property Manager for the
Property, Pam Brooks. |
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“ Documents ” shall mean the documents and
instruments applicable to the Property or any portion thereof that
Seller or any of the other Seller Parties deliver or make available
to Buyer prior to Closing or otherwise allow Buyer access to prior
to Closing, including, but not limited to, the Title Commitment,
the Survey, the Title Documents, and the Property Documents,
together with the documents and items delivered by Seller pursuant
to Section 7.3 . |
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“ Due Diligence ” shall mean examinations,
inspections, investigations, tests, studies, analyses, appraisals,
evaluations and/or investigations with respect to the Property, the
Documents, and other information and documents regarding the
Property, including, without limitation, examination and review of
title matters, applicable land use and zoning Laws and other Laws
applicable to the Property, the physical condition of the Property,
and the economic status of the Property. |
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“ Due Diligence Period ” shall mean the
period commencing on the Effective Date and expiring on the earlier
of: (i) 30 days after the Effective Date; or (ii) June 26,
2008. |
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“ Effective Date ” shall mean the date first
set forth in this Agreement, which shall be the date on which both
Buyer and Seller have executed and delivered this
Agreement. |
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“ Escrow Agent ” shall mean Land Title
Insurance Company of Alabama, 600 North 20 th Street,
Suite 100, Birmingham, Alabama 35203, Attention: Mr. Jack Miller,
in its capacity as escrow agent. |
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“ ERISA ” shall mean the Employee Retirement
Income Security Act of 1974, as amended. |
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“ Hazardous Materials ” shall mean any
substance, chemical, waste or material that is or becomes regulated
by any federal, state or local governmental authority because of
its toxicity, infectiousness, radioactivity, explosiveness,
ignitability, corrosiveness or reactivity, including, without
limitation, asbestos or any substance containing more than 0.1
percent asbestos, the group of compounds known as polychlorinated
biphenyls, flammable explosives, oil, petroleum or any refined
petroleum product. |
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“ Knowledge ” as used herein shall mean,
with reference to Seller, the actual knowledge of Seller or any
Seller Parties, or anything which Seller is “deemed to
know.” |
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“ Laws ” shall mean all municipal, county,
state or federal statutes, codes, ordinances, laws, rules or
regulations. |
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“ Leases ” shall mean all leases of tenants
of the Property on the Closing Date. |
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“ Liabilities ” shall mean, collectively,
any and all problems, conditions, losses, costs, damages, claims,
liabilities, expenses, demands or obligations of any kind or nature
whatsoever. |
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“ New Leases ” shall mean, collectively, any
lease for space at the Property entered into between May 20, 2008
and the Closing Date. |
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“ Other Property Rights ” shall mean,
collectively, Seller’s interest in and to all of the
following, if and to the extent the same are assignable by Seller
without any expense to Seller: (a) to the extent that the same
are in effect as of the Closing Date, any licenses, permits and
other written authorizations necessary for the use, operation or
ownership of the Real Property, (b) those guaranties and
warranties in effect with respect to any portion of the Property as
of the Closing Date, and (c) all rights of Seller (if any) to
the name “Shelby Farms” (it being acknowledged by Buyer
that Seller does not have exclusive rights to use such name and
that Seller has not registered the same in any manner).
Specifically excluded from the Other Property Rights being
transferred herein are the names “Colonial”,
“Colonial Plaza”, “Colonial Center”,
“Colonial Realty”, “Colonial Village”,
“Colonial Grand”, “Colonial Shoppes”,
“Colonial Mall”, “Colonial Promenade” or
“Where You Live, Work and Shop “, or any variation
thereof, along with any tradename, trademark or trade dress of
Seller (collectively, the “Excluded Names &
Marks”), or any signs containing the Excluded Names &
Marks or any tradename, trademark or trade dress of Seller. Buyer
shall remove all such signage within thirty (30) days of
closing. |
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“ Owner’s Policy ” shall mean an ALTA
Owner’s Form of title insurance policy in the amount of the
Purchase Price. |
|
“ Permitted Exceptions ” shall mean and
include all of the following (except to the extent any matters
included in clauses (b), (c), and (d) are objected to by Buyer as
provided in |
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Section 4.2 hereof): (a) applicable zoning and building
ordinances and land use regulations, (b) all liens, encumbrances,
covenants, conditions, restrictions, easements and other matters of
record except to the extent that the same are caused or created by
Seller in violation of the terms of Section 4.2.3 ; (c) such
exceptions to title as are listed on Schedule B of the Title
Commitment, (d) such state of facts as disclosed in the Survey, (e)
the lien of taxes and assessments not yet due and payable (it being
agreed by Buyer and Seller that if any tax or assessment is
levied or assessed with respect to the Property after the
date hereof and the owner of the Property has the election to
pay such tax or assessment either immediately or under a payment
plan with interest, Seller (with Buyer’s prior written
approval) may elect to pay under a payment plan, which election
shall be binding on Buyer), (f) any exceptions caused by Buyer, its
agents, representatives or employees, (g) if Buyer shall consent in
writing, such other exceptions as the Title Company shall commit to
insure over, without any additional cost to Buyer, whether such
insurance is made available in consideration of payment, bonding,
indemnity of Seller or otherwise, (h) the rights of the tenants
under the Leases, as tenants only, and (i) any matters deemed to
constitute additional Permitted Exceptions under Subsection
4.2.1 hereof. |
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“ Personal Property ” shall mean,
collectively, (a) all tangible personal property owned by Seller
that is located on the Real Property and used exclusively in the
ownership, operation and maintenance of the Real Property, as of
the date hereof, including but not limited to the items listed on
Exhibit M, and (b) all books, records and files relating solely to
the Real Property, the Contracts or the Leases, and the historical
net income of the Real Property but specifically excluding: (i) any
Confidential Materials or any computer software that is licensed to
Seller or Seller’s property manager, and (ii) the Excluded
Names and Marks. |
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“ Plans ” shall mean employee benefit plans,
as defined in Section 3(3) of ERISA. |
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“ Property ” shall mean, collectively, (a)
the Real Property, (b) the Personal Property, (c) Seller’s
interest as landlord in all Leases; (d) if and to the extent
assignable by Seller without any expense to Seller, the Contracts,
and (e) the Other Property Rights. |
|
“ Property Documents ” shall mean,
collectively, (a) the Leases, (b) the Contracts and (c) any other
documents or instruments which constitute or otherwise create any
portion of the Property. |
|
“ Real Property ” shall mean those certain
interests in parcels of real estate located in Memphis, Tennessee
and legally described in Exhibit A attached hereto and
incorporated herein by this reference, together with all buildings,
improvements and fixtures located thereon and owned by Seller as of
the Closing Date and all rights, privileges and appurtenances
pertaining thereto including all of Seller’s right, title and
interest in and to all rights-of-way, open or proposed streets,
alleys, easements, strips or gores of land adjacent
thereto. |
|
“ Rent Roll ” shall mean a current, updated
(as of the date of delivery to Buyer from time to time and at
Closing) Rent Roll for the Property. |
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“ Seller Parties ” shall mean and include,
collectively, (a) Seller; (b) Seller’s Designated
Employees; and (c) Seller’s counsel. |
|
“ Seller’s Warranties ” shall mean
Seller’s representations and warranties set forth in
Section 9.2 and any documents executed by Seller for
the benefit of Buyer in connection with Closing, as such
representations and warranties may be modified or waived as herein
provided. |
|
“ Survey ” shall mean a current survey
(dated no earlier than 30 days prior to the Closing Date) of the
Property prepared by a surveyor licensed in the State of Tennessee
and in form and content satisfactory to Buyer |
|
“ Tax Year ” shall mean the period
commencing on January 1 of each calendar year and ending on
December 31 of each calendar year, being the real estate tax
assessment year for the county in which the Property is
located. |
|
“ Title Commitment ” shall mean an ALTA
owners and lenders title commitment to issue an Owner’s and
Lender’s Policy of Title Insurance with respect to the
Property, issued by the Title Company. |
|
“ Title Company ” shall mean Chicago Title
Insurance Company. |
|
“ Title Documents ” shall mean all recorded
documents referred to on Schedule B of the Title Commitment as
exceptions to coverage. |
|
“ Transaction ” shall mean the transaction
contemplated by this Agreement. |
ARTICLE 2. -- SALE OF PROPERTY
Seller
agrees to sell, transfer and assign, and Buyer agrees to purchase,
accept and assume, subject to the terms and conditions set forth in
this Agreement and the Exhibits attached hereto, all of
Seller’s right, title and interest in and to the
Property.
ARTICLE 3. - PURCHASE PRICE
The total
purchase price to be paid by Buyer for the purchase of the Property
is the sum of Fifteen Million Eight Hundred Thousand Dollars
($15,800,000.00) in immediately available funds (the “
Purchase Price ”). The Purchase Price shall be paid in
the following manner:
| 3.1 |
Deposit Money . On or before 5:00 p.m. Central time on
the fifth (5th) business day following the full execution and
delivery of this Agreement, and as a condition precedent to the
effectiveness of this Agreement, Buyer shall deposit the sum of One
Hundred Thousand Dollars ($100,000.00) in immediately available
funds with Escrow Agent (the “ First Deposit
”). On or before the expiration of the Due Diligence Period,
Buyer shall make an additional deposit of One Hundred Thousand
Dollars ($100,000.00) (the “Additional Deposit”). The
First Deposit and Second Deposit shall jointly be referred to as
the “Deposit”. The Deposit shall be held and delivered
by Escrow Agent in accordance |
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with the provisions of Article 13 . Any interest earned
on the Deposit shall be considered a part of the Deposit, but shall
belong to Buyer and shall either be applied to the Purchase Price
or returned to the Buyer in accordance with the terms of this
Agreement. In the event Seller is entitled to the Deposit under
this Agreement, the interest earned thereon shall be returned to
Buyer. Except as otherwise set forth herein, the Deposit shall be
applied against the Purchase Price on the Closing Date and shall
otherwise be held and delivered by Escrow Agent in accordance with
the Provisions of Article 13 . Notwithstanding any provision
in this Agreement to the contrary, if Buyer fails timely to make
the Deposit as provided herein, Buyer shall be deemed to have
elected to terminate this Agreement, and the parties shall have no
further rights or obligations hereunder except for obligations
which expressly survive the termination of this
Agreement. |
| 3.2 |
Cash at Closing . On the Closing Date, Buyer shall pay
to Seller an amount equal to the balance of the Purchase Price,
less the Seller Purchase Money Loan as set forth in Paragraph 3.3
below, subject to the prorations and adjustments set
forth in Article 6 or as otherwise provided under this
Agreement, plus any other amounts required hereunder to be
paid by Buyer at Closing, in immediately available federal funds by
wire transfer as more particularly set forth in Section 7.2
. |
| 3.3 |
Seller Purchase Money Loan . Seller shall make, or shall
cause an affiliate of Seller to make, a purchase money mortgage
loan pursuant to which Seller shall loan to Buyer the sum of Nine
Million Two Hundred Thousand Dollars ($9,200,000.00) (the
“Loan” which shall be evidenced by a Promissory Note
made by Buyer, payable to the order of Seller, in the amount of the
Loan (the “Note.”) and secured by a mortgage on the
Property. The Loan shall be due and payable on or before July 27,
2008. Buyer may, at its sole option, extend the Loan for a period
of sixty (60) days to expire on August 27, 2008. Interest for the
first thirty (30) days shall accrue at a fixed rate equal to six
and one-half percent (6.5%) per annum. The extension of the Loan
shall be on the same terms and conditions except that interest on
the outstanding Loan amount from July 28, 2008 through August 27,
2008, if applicable, shall accrue at a fixed rate equal to eight
percent (8%) per annum. Buyer may, at it sole option, extend the
Loan for an additional period ending on September 30, 2008, and
such extension shall be on the same terms and conditions as the
then-current terms, except that interest from August 28, 2008
through September 30, 2008 shall accrue at a fixed rate equal to
twelve percent (12%) per annum. No further extensions shall be
authorized. The Note, mortgage, deed of trust and any other
documents evidencing or securing the Loan shall be in form and
substance reasonably acceptable to Seller and Buyer. At Closing,
Buyer shall pay the costs (including mortgage tax) to record the
mortgage. In the event Buyer satisfies the loan on or before
September 30, 2008, Buyer shall be entitled to reduce the payoff of
the loan by the recording fees and mortgage tax for the mortgage.
In the event of a failure to pay off the Loan on or before
September 30, 2008, the Loan shall automatically convert to a ten
(10) year loan at a fixed rate of interest equal to twelve percent
(12%) per annum. |
11
ARTICLE 4. - TITLE MATTERS
| 4.1 |
Title to Real Property . Seller has delivered to Buyer
(a) the Title Commitment and (b) copies of all of the Title
Documents. Seller has delivered to Buyer the Survey. |
| |
4.2.1 |
Buyer’s Objections to Title . |
| |
(a) |
Prior to the end of the Due Diligence Period, Buyer shall have
the right to object in writing to any title matters that appear on
the Title Commitment or Survey. In addition, after expiration of
the Due Diligence Period, Buyer shall have the right to object in
writing to any title matters that (i) are not Permitted Exceptions,
and (ii) materially adversely affect Buyer’s title to, or
Buyer’s ability to use as intended by Buyer, the Real
Property, and (iii) first appear on any supplemental title reports
or updates to the Title Commitment issued after expiration of the
Due Diligence Period, so long as such objection is made by Buyer
within five (5) business days after Buyer becomes aware of the same
(but in any event prior to the Closing Date). Unless Buyer is
entitled to and does timely object to any such title matters, all
such title matters shall be deemed to constitute additional
Permitted Exceptions. Any exceptions which are timely objected to
by Buyer shall be herein collectively called the “
Title Objections .” |
| |
(b) |
If this Agreement is not terminated by Buyer in accordance with
the provisions hereof, Seller shall, at Closing, remove or cause to
be removed any Title Objections to the extent (and only to the
extent) that (i) such Title Objections have not been caused by
Buyer or any Buyer, Representatives, and (ii) such Title
Objections are either (A) liens evidencing monetary encumbrances
(other than liens for non-delinquent general real estate taxes), or
(B) liens created or suffered to exist by Seller or its agents and
affiliates but only to the extent such liens are created after the
date of this Agreement in violation of Section 4.2.3
(collectively, the “ Required Exceptions ”). In
addition, Seller may elect (but shall not be obligated) to remove,
or cause to be removed at its expense, any other Title Objections,
as provided in Section 4.2.2 . |
| |
(c) |
To the extent that the same do not constitute Required
Exceptions, Seller shall notify Buyer in writing within ten (10)
days after receipt of Buyer’s notice of Title Objections (but
in any event, prior to the Closing Date) whether Seller elects to
remove the same. If Seller elects not to remove one or more of such
Title Objections, then within five (5) days after Seller’s
election (but in any event, prior to the Closing Date), Buyer may
elect in writing to either (i) terminate this Agreement, in
which event the Deposit shall be paid to Buyer, and thereafter, the
parties shall have no further rights or obligations hereunder
except for obligations that |
12
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expressly survive the termination of this Agreement, or (ii)
waive such Title Objections, in which event the Closing shall occur
as herein provided without any reduction of or credit against the
Purchase Price. Any such Title Objection so waived (or deemed
waived) by Buyer shall be deemed to constitute an additional
Permitted Exception, and the Closing shall occur as herein provided
without any reduction of or credit against the Purchase
Price. |
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(d) |
If Seller is unable, after using good faith, commercially
reasonably efforts, to remove any Required Exceptions or other
Title Objections that it has previously elected to remove prior to
the Closing, Buyer may at Closing elect either to (a) terminate
this Agreement, in which event the Deposit shall be paid to Buyer,
and thereafter, the parties shall have no further rights or
obligations hereunder except for obligations which expressly
survive the termination of this Agreement, or (b) waive such Title
Objections, in which event the Closing shall occur as herein
provided without any reduction of or credit against the Purchase
Price (except that if Buyer uses its own funds to cure any Title
Exceptions consisting of monetary liens, Buyer shall be entitled to
a corresponding credit against the Purchase Price). Seller shall be
entitled to a reasonable adjournment of the Closing (not to exceed
ninety (90) days) for the purpose of the removal of any Required
Exceptions or other Title Objections, which removal will be deemed
effected, but only if specifically agreed to in writing by Buyer,
by the issuance of title insurance eliminating or insuring against
the effect of the Title Objections as provided in
Section 4.2.2 . |
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4.2.2 |
Discharge of Title Objections . If on the Closing Date
there are any Required Exceptions or any other Title Objections
which Seller has elected to pay and discharge, Seller may use any
portion of the Purchase Price to satisfy the same, provided Seller
shall either (a) deliver to Buyer at the Closing
instruments in recordable form and sufficient to cause such Title
Objections to be released of record, together with the cost of
recording or filing such instruments, or (b) if specifically
agreed to in writing by Buyer, cause the Title Company to insure
over the same, without any additional cost to Buyer, whether such
insurance is made available in consideration of payment, bonding,
indemnity of Seller or otherwise, provided that any such insurance
over any matter other than a monetary lien shall be subject to
Buyer’s written approval. |
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4.2.3 |
No New Exceptions . From and after the Effective Date,
Seller shall not execute any deed, easement, restriction, covenant
or other matter affecting title to the Property unless Buyer has
received a copy thereof and has approved the same in writing. If
Buyer fails to object in writing to any such proposed instrument
within five (5) business days after receipt of such instrument,
Buyer shall be deemed to have approved the proposed instrument.
Buyer shall not unreasonably withhold, condition or delay its
approval with respect to any such instrument. |
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| 4.3 |
Title Insurance . At Closing, the Title Company shall
issue to Buyer the Owner’s Policy (with all endorsements
requested by Buyer, such endorsements at Buyer’s cost)
insuring that title to the Real Property is vested in Buyer,
subject only to the Permitted Exceptions. Buyer shall be entitled
to request that the Title Company provide such endorsements (or
amendments) to the Owner’s Title Policy as Buyer may
reasonably require, provided that the Closing shall not be delayed
as a result of Buyer’s request for endorsements. |
ARTICLE 5. - BUYER’S DUE DILIGENCE/CONDITION OF THE
PROPERTY
| 5.1 |
Buyer’s Inspections and Due Diligence . The
provisions contained in this Agreement hereby supersede the Access
Agreement dated as of May 20, 2008 executed by Seller and Buyer,
and the Access Agreement is hereby terminated. During the Due
Diligence Period, Seller shall provide Buyer and Buyer’s
representatives access to the Property and all files related to the
leasing, operation and maintenance of the Property, the payment of
rent, defaults by tenants and relationships with tenants (but
specifically excluding Confidential Materials). Buyer shall
complete its Due Diligence at its sole cost and expense. Buyer
shall independently inspect and investigate the Property and verify
such information with respect to the Property as Buyer deems
necessary or desirable to evaluate fully the Transaction and the
physical condition and economic status of the Property. Such Due
Diligence shall include, without limitation, Buyer’s review
and approval, in its sole and absolute discretion, of all title
matters, applicable land use and zoning laws and regulations, the
physical condition of the Property, leases and contracts affecting
the Property and such other items related to the Property as Buyer
may deem relevant. Seller agrees to make employees of the Property
available to Buyer and Buyer’s Representatives during the Due
Diligence Period as reasonably requested by Buyer. Buyer shall
immediately return the Property to its condition existing prior to
any tests and inspections performed by Buyer’s
Representatives or consultants. By Buyer’s execution of this
Agreement, Buyer hereby confirms its agreement to indemnify, defend
and hold each of the Seller Parties free and harmless from and
against any and all Liabilities (including reasonable
attorneys’ fees and expenses) arising out of or resulting
from the entry on the Property and/or the conduct of any Due
Diligence by Buyer’s Representatives or consultants at any
time prior to Closing. |
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(a) EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET
FORTH IN SECTION 9.2 HEREOF, SELLER MAKES NO REPRESENTATION OR
WARRANTY AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF ANY
MATERIALS, DATA OR INFORMATION DELIVERED BY SELLER TO BUYER IN
CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY. BUYER
ACKNOWLEDGES AND AGREES THAT ALL MATERIALS, DATA AND INFORMATION
DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE TRANSACTION
CONTEMPLATED HEREBY ARE PROVIDED TO BUYER |
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AS A CONVENIENCE ONLY AND THAT ANY RELIANCE ON OR USE OF SUCH
MATERIALS, DATA OR INFORMATION BY BUYER SHALL BE AT THE SOLE RISK
OF BUYER, EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES AND
AGREES THAT (A) ANY ENVIRONMENTAL OR OTHER REPORT WITH RESPECT TO
THE PROPERTY WHICH IS DELIVERED BY SELLER TO BUYER SHALL BE FOR
GENERAL INFORMATIONAL PURPOSES ONLY, (B) BUYER SHALL NOT HAVE ANY
RIGHT TO RELY ON ANY SUCH REPORT DELIVERED BY SELLER TO BUYER, BUT
RATHER WILL RELY ON ITS OWN INSPECTIONS AND INVESTIGATIONS OF THE
PROPERTY AND ANY REPORTS COMMISSIONED BY BUYER WITH RESPECT
THERETO, AND (C) NEITHER SELLER, ANY AFFILIATE OF SELLER NOR THE
PERSON OR ENTITY WHICH PREPARED ANY SUCH REPORT DELIVERED BY SELLER
TO BUYER SHALL HAVE ANY LIABILITY TO BUYER FOR ANY INACCURACY IN OR
OMISSION FROM ANY SUCH REPORT. |
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(b) EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES OF
SELLER SET FORTH IN SECTION 9.2 HEREOF, BUYER UNDERSTANDS AND
AGREES THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED
OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER
THAN SELLER’S LIMITED OR SPECIAL WARRANTY OF TITLE TO BE SET
FORTH IN THE DEED), ZONING, TAX CONSEQUENCES, LATENT OR PATENT
PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY
OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE
OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE ABSENCE OR PRESENCE OF
HAZARDOUS MATERIALS OR OTHER TOXIC SUBSTANCES (INCLUDING WITHOUT
LIMITATION MOLD OR ANY MOLD CONDITION), COMPLIANCE WITH
ENVIRONMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE
PROPERTY DOCUMENTS OR ANY OTHER INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER TO BUYER, OR ANY OTHER MATTER OR THING REGARDING
THE PROPERTY. BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING
SELLER SHALL TRANSFER AND CONVEY TO BUYER AND BUYER SHALL ACCEPT
THE PROPERTY “ AS IS, WHERE IS, WITH ALL FAULTS
”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT OR IN ANY AGREEMENT OR INSTRUMENT EXECUTED BY SELLER AND
DELIVERED TO BUYER AT CLOSING (“CLOSING DOCUMENTS”).
BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE
FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE
PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT
TO THE |
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PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY
OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH
IN THIS AGREEMENT. |
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BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY,
INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL
CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY TO SATISFY ITSELF AS
TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE
OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS
MATERIALS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY
(INCLUDING WITHOUT LIMITATION ANY MOLD OR MOLD CONDITION), AND WILL
RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR
ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON
CLOSING, BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE
PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED
BY BUYER’S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE
DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND
SELLER’S AND ITS PARTNERS’ RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN TORT OR UNDER ANY ENVIRONMENTAL LAW), LOSSES, DAMAGES,
LIABILITIES (WHETHER BASED ON STRICT LIABILITY OR OTHERWISE),
LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR
CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR
ALLEGED AGAINST SELLER (AND SELLER’S AND ITS PARTNERS’
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS)
AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY
APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL
LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES
OR MATTERS REGARDING THE PROPERTY. THE FOREGOING SHALL NOT BE
INTERPRETED TO WAIVE ANY CLAIM OF BUYER WITH RESPECT TO ANY BREACH
BY SELLER OF ANY EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY
SELLER IN SECTION 9.2 THAT EXPRESSLY SURVIVE CLOSING OF ANY
COVENANT IN ANY BREACH OF CLOSING DOCUMENTS. |
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BUYER AGREES THAT SHOULD ANY INVESTIGATION, CLEANUP,
REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER
ENVIRONMENTAL CONDITIONS (INCLUDING WITHOUT LIMITATION ANY MOLD OR
MOLD CONDITION) ON OR RELATED TO THE PROPERTY BE REQUIRED AFTER THE
DATE OF CLOSING, SELLER SHALL HAVE NO LIABILITY TO BUYER TO PERFORM
OR PAY FOR SUCH INVESTIGATION, CLEAN-UP, REMOVAL OR REME-DIATION,
AND BUYER EXPRESSLY WAIVES AND RELEASES ANY CLAIM TO THE CONTRARY.
THE FOREGOING SHALL NOT BE INTERPRETED TO WAIVE ANY CLAIM OF BUYER
WITH RESPECT TO ANY BREACH BY SELLER OF ANY EXPRESS REPRESENTATIONS
AND WARRANTIES MADE BY SELLER IN SECTION 9.2 THAT EXPRESSLY SURVIVE
CLOSING OR BREACH OF ANY COVENANT IN ANY CLOSING
DOCUMENTS. |
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(c) BUYER REPRESENTS AND WARRANTS THAT THE TERMS OF THE RELEASE
CONTAINED HEREIN AND ITS CONSEQUENCES HAVE BEEN COMPLETELY READ AND
UNDER-STOOD BY BUYER, AND BUYER HAS HAD THE OPPORTUNITY TO CONSULT
WITH, AND HAS CONSULTED WITH, LEGAL COUNSEL OF BUYER’S CHOICE
WITH REGARD TO THE TERMS OF THIS RELEASE. BUYER ACKNOWLEDGES AND
WARRANTS THAT BUYER’S EXECUTION OF THIS RELEASE IS FREE AND
VOLUNTARY. |
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(d) Seller and Buyer acknowledge that the provisions of this
Section 5.2 are an integral part of the transactions contemplated
in this Agreement and a material inducement to Seller to enter into
this Agreement and that Seller would not enter into this Agreement
but for the provisions of this Section 5.2. Seller and Buyer agree
that the provisions of this Section 5.2 shall survive Closing or
any termination of this Agreement. |
| 5.3 |
Termination of Agreement During Due Diligence Period .
If Buyer, in its sole and absolute discretion, is not satisfied
with the results of its Due Diligence during the Due Diligence
Period, Buyer may terminate this Agreement by written notice to
Seller given in accordance with the provisions of
Section 14.9 hereof at any time prior to 5:00 p.m.
Central Time on the last day of the Due Diligence Period, and, in
the event of such termination, neither Seller nor Buyer shall have
any liability hereunder except for those obligations which
expressly survive the termination of this Agreement, and Buyer
shall be entitled to the return of the Deposit. In the event Buyer
fails to terminate this Agreement prior to 5:00 p.m. Central
Time on the last day of the Due Diligence Period, Buyer shall be
deemed to have waived its rights to terminate this Agreement in
accordance with this Article 5 . |
ARTICLE 6. - ADJUSTMENTS AND PRORATIONS
The
following adjustments and prorations shall be made at
Closing:
| |
6.1.1 |
Rents . All collected rents shall be prorated for the
month of Closing based on the actual number of calendar days in
such month between Seller and Buyer as of |
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12:01 a.m. on the Closing Date. Seller shall be entitled to all
rents attributable to the period up to but not including the
Closing Date. Buyer shall be entitled to all rents attributable to
any period on and after the Closing Date. Rents not collected as of
the Closing Date shall not be prorated at the time of Closing.
After Closing, Buyer shall make a good faith effort for a period
not less than ninety (90) days to collect any rents not collected
as of the Closing Date on Seller’s behalf and to tender the
same to Seller upon receipt (which obligation of Buyer shall
survive the Closing and not be merged therein); provided ,
however , that all rents collected by Buyer on or after the
Closing date shall first be applied to all amounts due under the
Leases at the time of collection ( i.e. , current rents and
sums due Buyer as the current owner and landlord) with the balance
(if any) payable to Seller, but only to the extent of amounts
delinquent and actually due Seller (and prorated between Seller and
Buyer based upon the Closing Date as previously calculated for
collected rents). Seller agrees that the invoicing of delinquent
tenants on a monthly basis shall constitute a good faith effort and
Buyer shall not be obligated to enforce its rights under the
Leases, or threaten such enforcement, or to bring any proceedings
in a court of law or equity. Buyer shall not have an exclusive
right to collect the sums due Seller under the Leases, and Seller
hereby retains its rights to pursue any tenant under the Leases for
sums due Seller for periods attributable to Seller’s
ownership of the Property; provided , however , that
Seller (i) shall be required to notify Buyer in writing of its
intention to commence or pursue such legal proceedings;
(ii) shall only be permitted to commence or pursue any legal
proceedings after the date which is three (3) months after Closing
and shall commence such proceeding, if at all, prior to the 1
st anniversary of the Closing Date; and (iii) shall
not be permitted to commence or pursue any legal proceedings
against any tenant seeking eviction of such tenant or the
termination of the underlying lease. The terms of the immediately
preceding sentence shall survive the Closing and not be merged
therein. |
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6.1.2 |
Other Revenues . Revenues from Property operations
(other than Rents (which shall be prorated as provided in
Subsection 6.1.1 ), including, but not limited to, pet
rents, garage rentals and laundry rentals (if any) that are
actually collected shall be prorated between Buyer and Seller as of
12:01 a.m. on the Closing Date. Seller shall be entitled to all
such revenues attributable to any period up to, but not including
the Closing Date, and Buyer shall be entitled to all such revenues
attributable to any period on and after the Closing Date. After
Closing, Buyer shall make a good faith effort for a period not less
than six (6) months to collect any such revenues not collected as
of the Closing Date on Seller’s behalf and to tender the same
to Seller upon receipt (which obligation of Buyer shall survive the
Closing and not be merged therein); provided ,
however , that all such other revenues collected by Buyer on
or after the Closing Date shall first be applied to all amounts
that may be due from such payor to Buyer at the time of collection
with the balance (if any) payable to Seller, but only to the extent
of amounts delinquent and actually due to Seller. Seller agrees
that the invoicing of delinquent payors on a monthly basis shall
constitute a good faith effort and Buyer shall not be obligated to
enforce its rights under the agreements pursuant to |
18
|
which such revenues are due, or threaten such enforcement, or
to bring any proceedings in a court of law or in equity. Buyer
shall not have an exclusive right to collect such revenues, and
Seller hereby retains its rights to pursue any parties for sums due
Seller for periods attributable to Seller’s ownership of the
Property; provided , however , that Seller (i) shall
be required to notify Buyer in writing of its intention to commence
or pursue such legal proceedings; (ii) shall only be permitted to
commence or pursue any legal proceedings after the date which is
three (3) months after Closing and shall commence such proceeding,
if at all, prior to the 1 st anniversary of the Closing
Date; and (iii) to the extent any such delinquent payor is a tenant
at the Property, shall not be permitted to commence or pursue any
legal proceedings against such tenant seeking eviction of such
tenant or the termination of the underlying lease. The terms of the
immediately preceding sentence shall survive the Closing and not be
merged therein. |
| |
6.1.3 |
Security Deposits . Seller shall credit Buyer, at
Closing, with an amount equal to all unapplied Security
Deposits(including any pet deposits), whether collected or
uncollected, by Seller under Leases. |
| 6.2 |
Real Estate and Personal Property Taxes . |
| |
6.2.1 |
Proration of Ad Valorem Taxes . Buyer and Seller
shall only prorate ad valorem real estate and personal
property taxes for the Property that are assessed for the Tax Year
in which Closing occurs. There shall be no proration of ad
valorem real estate or personal property taxes other than as
set forth hereinabove, and, as between Buyer and Seller, Buyer
agrees that it shall be solely responsible for all such ad
valorem real estate |
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