Exhibit 10.3

 

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT

 

THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”), is made
and entered into as of this 20th day of February, 2015 (the “Date of
Amendment”), by and between PARK KINGSTON INVESTORS, LLC, a North Carolina
limited liability company (“Seller”), and BLUEROCK REAL ESTATE, L.L.C., a
Delaware limited liability company (“Buyer”).

 

WITNESSETH:

 

WHEREAS, Buyer and Seller entered into that certain Purchase and Sale Agreement
dated January 15, 2015, as amended by that certain Amendment to Purchase and
Sale Agreement dated January 17, 2015 (as amended, the "Purchase and Sale
Agreement"), for purchase of that certain apartment complex which is commonly
known as Park & Kingston, located in the City of Charlotte, Mecklenburg County,
North Carolina, and which is more particularly described on Schedule B-1 and
Schedule B-2 to the Purchase and Sale Agreement;

 

WHEREAS, in accordance with Section 6.02 of the Purchase and Sale Agreement,
Buyer desires to provide Seller notice of its election to proceed with the
transaction contemplated by the Purchase and Sale Agreement, as amended hereby;

 

WHEREAS, in accordance with Section 8.02 of the Purchase and Sale Agreement,
Buyer desires to provide Seller notice of which Service Contracts Buyer has
elected to cause Seller to terminate (but with certain qualification as more
particularly discussed in Paragraph 2 of this Amendment);

 

WHEREAS, Seller and Buyer also desire to amend the Purchase and Sale Agreement
as set forth herein; and

 

WHEREAS, except as otherwise expressly provided for herein, capitalized terms
used herein shall have the meaning as set forth in the Purchase and Sale
Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Seller and Buyer agree as follows:

 

1.          Election to Proceed. Pursuant to Section 6.02 of the Purchase and
Sale Agreement, Buyer hereby provides notice of its election to proceed with the
transaction as contemplated by the Purchase and Sale Agreement, as amended
hereby.

 

2.          Service Contracts.         Pursuant to Section 8.02 of the Purchase
and Sale Agreement, Buyer hereby delivers notice of which Service Contracts
Buyer has elected to cause Seller to terminate, such Service Contracts being
listed on Exhibit A attached hereto; provided, however, that Seller shall not
terminate the submetering contract with Conservice or either compactor rental
contracts with Republic Waste unless and until receiving further written notice
to do so from Buyer. To the extent Buyer elects to terminate the submetering
contract with Conservice or either compactor rental contracts with Republic
Waste, then Buyer agrees to pay all costs and fees associated with such
termination.

 

 

 

 

3.          Purchase Price. Section 2.01 of the Purchase and Sale Agreement
shall be amended by deleting "$31,250,000.00" and replacing it with
"$30,720,000.00", so that the Purchase Price of the Property shall be
$30,720,000.00.

 

4.          Extension Deposit. Section 2.03(c) of the Purchase and Sale
Agreement shall be amended by removing any reference to the Extension Deposit,
so that the Deposit shall consist only of the Initial Deposit, the Additional
Deposit and the Final Deposit.

 

5.          Extension Deposit Receipt. Section 2.04 of the Purchase and Sale
Agreement shall be amended by removing any reference to the Extension Deposit or
the Extension Deposit Receipt. The Extension Deposit Receipt, which is attached
to the Purchase and Sale Agreement as an Escrow Agent signature page, shall be
removed and deleted from the Purchase and Sale Agreement.

 

6.          Phase I Closing Date. Section 3.01 of the Purchase and Sale
Agreement shall be amended by deleting the first (1st) paragraph of said Section
3.01 and replacing it with the following, so that the Phase I Closing Date shall
be March 16, 2015:

 

3.01         Except as otherwise provided in this Agreement, the Closing for the
Phase I Real Property shall be conducted through an escrow administered by
Escrow Agent by means of concurrent delivery of the documents described in
Sections 9 and 10 below and the applicable portion of the Purchase Price on
March 16, 2015 (the “Phase I Closing Date”), or such earlier date or place as
Buyer and Seller shall mutually agree in writing.

 

7.          Conditions Precedent. New subsections viii, ix, x and xi of Section
3.02 shall be added to the Purchase and Sale Agreement which shall state as
follows:

 

viii.         Seller shall complete the Pre-Closing ADA Compliance Actions, as
such term is defined in Section 16.20 of this Agreement.

 

ix.         Seller shall record a modification to that certain Post-Construction
Stormwater Best Practices Operations and Maintenance Agreement and Easement
Agreement, by and between Park Kingston Investors, LLC and the City of Charlotte
recorded in Book 28993, Page 804, Official Records of Mecklenburg County, North
Carolina (the "Stormwater Agreement"), which modification shall be executed by
Seller and the City of Charlotte and include exhibits, acceptable to Purchaser,
Seller and the City of Charlotte in their mutual reasonable discretion, which
were omitted from said instrument as originally recorded; provided, however, if
the City of Charlotte is unwilling to execute the foregoing or cooperate with
Seller or Buyer in this regard, then such event shall not be deemed an event of
default on the part of Seller hereunder.

 

 

 

 

x.         Seller shall provide to the City of Charlotte the Declaration of
Transfer of Inspection/Maintenance Responsibilities of Stormwater BMP Facilities
in the form necessary to satisfy Paragraph 11 of the Stormwater Agreement.

 

xi.            Buyer shall have obtained written confirmation from its lender
that such lender has approved the environmental condition of the Property
without imposing any additional conditions upon Buyer in connection with such
approval, including, without limitation, any expansions or enhancements to the
lender's standard carve-outs to non-recourse liability; provided, however, if
Buyer does not waive this condition xi. on or before 5:00 pm Eastern Time on
February 27, 2015, then Seller thereafter shall have the right, but not the
obligation, to terminate this Purchase and Sale Agreement by delivering written
notice thereof to Buyer, in which event, the entire Deposit shall be returned to
Buyer and neither party shall have any further obligation to the other
hereunder, except for those matters which would otherwise survive termination
pursuant to the terms hereof.

 

8.          Representations and Warranties Regarding Stormwater Agreement. New
subsections (m) and (n) of Section 5.01 shall be added to the Purchase and Sale
Agreement immediately after subsection (l) of Section 5.01 which shall state as
follows:

 

(m)          to Seller's knowledge (which knowledge is based solely on
assurances from Seller’s engineers), the BMP Facilities, as such term is defined
in the Stormwater Agreement, were constructed in accordance with the approved
plans and specifications attached hereto as Schedule 5.01(m) as well as the City
of Charlotte Post-Construction Stormwater Ordinance (§18-101 et. seq. of the
Charlotte City Code of Ordinances) and Seller is in compliance with all
inspection obligations for said BMP Facilities as set forth in Paragraph 7 of
the Stormwater Agreement.

 

(n)          to Seller's knowledge, Seller is not in default under the
Stormwater Agreement, nor has Seller received any notice from the City of
Charlotte, Charlotte-Mecklenburg Storm Water Services, or any other party with
the authority to enforce the restrictions and covenants within the Stormwater
Agreement, of any such default or any pending default under said Stormwater
Agreement.

  

 

 

 

9.          ADA Escrow. A new Section 16.20 shall be added to the Purchase and
Sale Agreement, which shall state as follows:

 

16.20         ADA Compliance.

 

(a)          At Closing, Seller shall deposit into escrow with Escrow Agent an
amount equal to $107,750.00, but subject to adjustment pursuant to subsection
(b) below (the "Escrowed ADA Funds") to cure certain Americans with Disabilities
Act ("ADA") deficiencies which are highlighted blue on the spreadsheet attached
hereto as Schedule 16.20.1 (the “Post-Closing ADA Compliance Actions”). On or
prior to the Phase I Closing Date, Seller and Buyer shall enter into an escrow
agreement with Escrow Agent (the "ADA Escrow Agreement") whereby Buyer shall
have the right to draw upon the Escrowed ADA Funds to pay costs and expenses
associated with the Post-Closing ADA Compliance Actions. If the Escrowed Funds
are not sufficient to perform all of the Post-Closing ADA Compliance Actions,
any additional cost shall be borne entirely by Buyer. The ADA Escrow Agreement
shall provide that it will expire no later than three (3) years after the Phase
I Closing Date, after which any remaining Escrowed ADA Funds shall be returned
to Seller.

 

(b)          To the extent any of the Post-Closing ADA Compliance Actions are
completed by Seller (to the reasonable satisfaction of Buyer) prior to the Phase
I Closing Date, then the Escrowed ADA Funds shall be reduced by an amount
proportional to the Post-Closing ADA Compliance Actions so completed by Seller
and in accordance with the cost schedule set out in Schedule 16.20.2 attached
hereto.

 

(c)          Prior to the Phase I Closing Date, Seller shall perform those
installations and repairs necessary to cure certain other ADA deficiencies which
are highlighted yellow on the spreadsheet attached hereto as Schedule 16.20.1
(the "Pre-Closing ADA Compliance Actions"). Failure to complete the Pre-Closing
ADA Compliance Actions shall constitute the failure of a condition precedent to
Buyer's obligation to consummate the transaction pursuant to Section 3.02 of
this Agreement.

 

10.         Intentionally Deleted.

 

11.         Allocated Purchase Price. Schedule A to the Purchase and Sale
Agreement shall be amended to reflect the new Purchase Price by deleting
"$3,400,000.00" as the Allocated Purchase Price for Phase II and replacing it
with "$2,870,000.00", so that the Allocated Purchase Price for Phase II shall be
$2,870,000.00. Schedule A to the Purchase and Sale Agreement shall also be
amended by removing the column labeled "Allocated Portion of the Extension
Deposit."

 

12.         Entirety and Amendments. The Purchase and Sale Agreement, as amended
hereby, embodies the entire agreement between the parties and supersedes all
prior agreements and understandings relating to the Property. There are no oral
agreements or understandings between the parties that are not expressly set
forth in the Purchase and Sale Agreement, as amended hereby.

 

13.         Continued Effect. Except as amended hereby, the Purchase and Sale
Agreement shall remain in full force and effect in accordance with its original
terms and conditions.

 

 

 

 

14.         Counterpart and Facsimile Execution. This Amendment may be executed
in a number of identical counterparts, and an electronic or facsimile
transmission shall be binding on the party or parties whose signatures appear
thereon. If so executed, each of such counterparts is to be deemed an original
for all purposes, and all such counterparts shall, collectively, constitute one
agreement.

[SIGNATURES ON NEXT PAGE]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal
as of the Date of Amendment.

 

  SELLER:       PARK KINGSTON INVESTORS, LLC   a North Carolina limited
liability       By: /s/ George S. Warren   Name: George S. Warren   Title:
Executive Vice President, Marsh Properties, LLC,     its Manager       BUYER:  
    BLUEROCK REAL ESTATE, L.L.C.   a Delaware limited liability company      
By: /s/ Jordan Ruddy   Name: Jordan Ruddy   Title: Authorized Signatory

 

 

 

 

EXHIBIT A

 

LIST OF SERVICE CONTRACTS TO TERMINATE

 

Supplier   Service Provided TASCO   Answering Service Conservice   Submetering
Republic Waste   Compactor Rental Republic Waste   Compactor Rental

 

 

 

 

SCHEDULE 5.01(m)

 

APPROVED PLANS AND SPECIFICATIONS FOR BMP FACILITIES

 

[BEGINS ON NEXT PAGE]

 

 

 

 

SCHEDULE 16.2.1

 

ADA COMPLIANCE SPREADSHEET

 

[BEGINS ON NEXT PAGE]

 

 

 

 

SCHEDULE 16.2.2

 

ADA COMPLIANCE COST SCHEDULE

 

Task  Number   Cost   Total  Repair shower D unit   8   $3,000   $24,000  Repair
kitchen sink E unit   16   $3,000   $48,000  Move outlet C unit   75   $250  
$18,750  Move switch E unit   24   $250   $6,000  Contingency           
$11,000                   Total   123        $107,750