Exhibit 10.1

 

SINGLE FAMILY HOMES

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

 

by and between

 

EASY RENTALS, LLC,

An Alabama limited liability company

 

as Seller

 

and

 

REVEN HOUSING REIT, INC.,

a Maryland corporation,

as Buyer

 

December 9, 2016

 

 

 

 

THIS SINGLE FAMILY HOMES PURCHASE AND SALE AGREEMENT (this “Agreement”) is made
and entered into as of December 9, 2016 (“Effective Date”), by and between EASY
RENTALS, LLC, an Alabama limited liability company (“Seller”), and REVEN HOUSING
REIT, INC., a Maryland corporation (“Buyer”).

 

BASIC TERMS

 

The following terms, as used in this Agreement, will have the meanings assigned
to such terms in this Basic Terms section of the Agreement, subject to any
adjustments set forth elsewhere in this Agreement.

 

Purchase Price: $5,550,000.00, subject to adjustment in accordance with the
provisions of this Agreement.

 

Deposit: $55,500.00 [1% of Purchase Price].

 

Closing Date: The date on which the Escrow Holder issues the final settlement
statement, which in no event shall extend beyond 30 days after the expiration of
the Due Diligence Period.

 

Due Diligence Period: Subject to the provisions of Section 7 below, the period
commencing on the Effective Date and ending on the date that is 45 days after
Buyer receives all Property Information, to be delivered to Buyer pursuant to
Section 6(a)(3) and Section 7(a), during which period Buyer will be provided the
opportunity to review all aspects of the Property.

 

Escrow Holder: Fidelity National Title Insurance Company.

 

Title Company: Fidelity National Title Insurance Company.

 

Seller’s Broker: Southpace Properties, Inc. Referring Broker: Bellator Real
Estate & Development

 

Buyer’s Broker: None.

 

PRELIMINARY STATEMENTS

 

A.           Seller is the owner of the Property (as defined herein); and

 

B.           Seller desires to sell, and Buyer desires to buy, the Property, at
the price and on the terms and conditions hereafter set forth.

 

In consideration of the recitals, mutual covenants, and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, Seller and Buyer hereby agree as
follows:

 

 

 

 

1.          Premises. The real estate which is the subject of this Agreement
consists of 72 single family homes, in the State of Alabama, which are
identified and generally described on Exhibit A attached hereto, together with
all of the improvements and structures located thereon (“Improvements”), any
heating and ventilating systems and other fixtures located therein or thereon,
and all rights, interests, benefits, privileges, easements and appurtenances to
the land and the Improvements, if any (collectively, the “Premises”).

 

2.          Personal Property and Leases.

 

(a)          The “Personal Property” referred to herein shall consist of all
right, title, and interest of Seller, if any, in all tangible (including all
advertising materials, plans and specifications) and intangible personal
property, including any equipment, appliances, or furnishings that remain in the
Premises at the Closing, and any and all existing licenses and permits held by
Seller and not constituting part of the real estate, located on and used in
connection with the Premises; provided that such licenses and permits are
Property specific, transferable and not related to the general business
operations of the Seller.

 

(b)          The “Leases” referred to herein shall consist of the leases,
occupancy and rental agreements between the Seller, as landlord and tenants of
the single family homes that comprise the Premises that are in effect as of the
date of the Closing (defined below), as well as service contracts relating to
the maintenance and repair of such homes.

 

3.          Sale/Conveyance and Assignment. Seller agrees to sell, convey and
assign to Buyer, and Buyer agrees to buy and assume from Seller, at the price
and upon the other terms and conditions hereafter set forth (a) the Premises,
(b) the Personal Property, (c) the Improvements, and (d) the Leases (a-d
collectively, the “Property”).

 

4.          Transfer of Title.

 

(a)          Title to the Property shall be conveyed to Buyer by a statutory
warranty deed (the “Deed”) executed by Seller, in the form attached hereto as
Exhibit C.

 

(b)          The Personal Property shall be conveyed to Buyer by a bill of sale
(the “Bill of Sale”) executed by Seller, in the form attached hereto as Exhibit
D.

 

(c)          The Leases shall be assigned by Seller and assumed by Buyer by an
Assignment Leases and Contracts (the “Assignment of Leases and Contracts”), in
the form attached hereto as Exhibit E.

 

5.          Purchase Price; Deposit.

 

(a)         Delivery of Purchase Price. The purchase price for the Property
shall be the price identified in the Basic Terms (the “Purchase Price”), which
shall be subject to reduction in accordance with this Section 5 and Section 7(d)
and payable by Buyer to Seller as follows:

 

 

 

 

(1)         Within five (5) business days after the execution of this Agreement
by Buyer and Seller, Buyer shall deposit into an escrow account (the “Escrow”)
established with Escrow Holder (as identified in the Basic Terms), which will
serve as escrow holder for this transaction a deposit in the amount of the
Deposit (as identified in the Basic Terms above). If Buyer notifies Seller that
it elects to proceed to purchase the Property in accordance with the provisions
of Section 7, then the Deposit (as defined in the Basic Terms) will become
non-refundable to Buyer, except in the event of a default or breach of this
Agreement by Seller. The Deposit shall at all times prior to Closing be invested
in United States treasury obligations or such other interest bearing accounts or
securities as are approved by Buyer in writing; all interest earned on the
Deposit will be administered, paid or credited (as the case may be) in the same
manner as the Deposit and, when credited to the escrow account shall constitute
additional Deposit. At the closing of the transactions contemplated by this
Agreement (the “Closing”), Buyer shall receive a credit against the Purchase
Price for the Deposit.

 

(2)         The Purchase Price, less a credit for the Deposit, and plus or minus
prorations and adjustments as set forth in Section 17 hereof, shall be paid by
Buyer to Seller by wire transfer of immediately available federal funds on the
Closing Date.

 

(b)          Property Valuation. Buyer has entered this Agreement based on its
own valuation of the Seller's rental portfolio using a Gross Rental Income (GRI)
formula, which is its controlling valuation factor in reaching agreement upon
the Purchase Price.  Additionally, the value of the rental portfolio is
reflected by the Jefferson County Tax Assessor’s valuation, which, in Buyer’s
opinion, is sufficient to support the Purchase Price.  In the event the Buyer
elects to engage a third-party to prepare a valuation report during the Due
Diligence Period, Buyer reserves the right to negotiate a reasonable and fair
adjustment to the Purchase Price, if the third-party valuation report is less
than the Purchase Price.  If agreement cannot be reached on a revised Purchase
Price during the Due Diligence Period, Buyer shall have the right to terminate
this Agreement on or before the expiration of the Due Diligence Period, in which
event the parties will have no further obligations to each other (except for any
indemnities or other provisions that expressly survive termination of this
Agreement) and Escrow Holder shall refund the Deposit to Buyer; provided,
however, if no such agreement is reached by the parties hereto and Buyer does
not elect to terminate this Agreement on or before the expiration of the Due
Diligence Period, this Agreement shall continue in full force and effect without
an adjustment to the Purchase Price.  

 

(c)          Notwithstanding the Buyer’s rights under Section 5(b) above and
Section 7(d) below, Buyer may, in lieu of adjusting the Purchase Price as a
result of necessary repairs and replacements or a mutually agreed adjustment in
the Purchase Price in accordance with Section 5(b) above, elect to exclude
specified properties from the properties identified on Exhibit A. If, as a
result of its due diligence investigations, Buyer elects to exclude one or more
properties from the Property being acquired in accordance with this Agreement,
then at least two business days before the Closing Date, Buyer will notify
Seller that certain specified properties (“Excluded Properties”) are to be
excluded from the sale contemplated in this Agreement. Following Buyer’s
notification to Seller and identification of the Excluded Properties, (i) the
description of the properties that comprise the Property, as identified on
Exhibit A, will be deemed modified to exclude the Excluded Properties; and (ii)
the Purchase Price will be reduced by the product of the number of homes that
comprise the Excluded Properties and the value assigned to each home (the
“Assigned Home Value”). Once Buyer identifies to Seller the Excluded Properties,
those properties so identified will no longer be the subject of this Agreement
and Seller will be free to sell them to another party or take any action that
Seller elects with respect to the Excluded Properties. The parties further agree
that if 10 or more properties become Excluded Properties, Seller shall have the
right to terminate this Agreement without penalty.

 

 

 

 

(d)          Security Deposit Deficit. Prior to the expiration of the Due
Diligence Period, Seller shall provide Buyer with a list (the “Security Deposit
Deficit List”) of all tenants under the Leases who have a security deposit in an
amount that is less than the amount of their monthly rent (the “Security Deposit
Deficit”). The Security Deposit Deficit List shall include the names of those
tenants with a Security Deposit Deficit and the amount of their respective
Security Deposit Deficit. At Closing, Buyer shall receive a credit in the sum of
the Security Deposit Deficits of all tenants listed on the Security Deposit
Deficit List.

 

7.          Representations, Warranties and Covenants.

 

(a)          Seller’s Representations and Warranties. As a material inducement
to Buyer to execute this Agreement and consummate this transaction, Seller
represents and warrants to Buyer as follows:

 

(1)         Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the state of its formation. Seller has the
full right and authority and has obtained any and all consents required therefor
to enter into this Agreement, consummate or cause to be consummated the sale and
make or cause to be made transfers and assignments contemplated herein. The
persons signing this Agreement on behalf of Seller are authorized to do so. This
Agreement and all of the documents to be delivered by Seller at the Closing have
been authorized and properly executed and will constitute the valid and binding
obligations of Seller, enforceable against Seller in accordance with their
terms.

 

(2)         Conflicts. There is no agreement to which Seller is a party or, to
Seller’s Knowledge, binding on Seller or the Property, that is in conflict with
this Agreement or that would limit or restrict the timely performance by Seller
of its obligations pursuant to this Agreement.

 

(3)         Documents and Records. To Seller’s Knowledge, Seller has provided
(or upon the execution hereof will provide) Buyer with, or has made available to
Buyer, true, correct and complete copies of the items scheduled in Schedule
6(a)(3) attached hereto (all of the foregoing collectively the “Property
Information”). The Property Information consists of all documents relating to
the Property in Seller’s possession or control.

 

(4)         Litigation. There is no action, suit or proceeding pending or to
Seller’s knowledge threatened which (i) if adversely determined, would not be
covered by insurance (subject to the payment of a customary insurance
deductible) or adversely affect the Property, or (ii) which challenges or
impairs Seller’s ability to execute, deliver or perform this Agreement or
consummate the transaction contemplated hereby.

 

 

 

 

(5)         Leases. Schedule 6(a)(5) sets forth a list of the leases and all
contracts (including all service, maintenance, and warranty contracts) that
apply to the properties that comprise the Property, which, to Seller’s
Knowledge, is true and correct and complete list of such leases and contracts as
of the date of such schedule. To Seller’s Knowledge, except as scheduled in
Schedule 6(a)(5), neither Seller nor any other party is in material default with
respect to any of its obligations or liabilities pertaining to the Leases. To
Seller’s Knowledge, other than the Leases and any other matters disclosed in the
Title Report, there are no leases, licenses or other occupancy agreements to
which Seller is a party or is bound affecting any portion of the Property as of
the date hereof, which will be in force on the Closing Date. Seller has
delivered or made available at the Property, true and correct copies of the
Leases to Buyer. No lessee under any Lease has any right of first refusal or
option to purchase the property that is the subject of their Lease. With respect
to any property identified on Exhibit A, if any Lease expires and Seller desires
to extend or renew the same, or if Seller elects to sign a new Lease, during the
period this Agreement is in effect, then such extended, renewed and/or new Lease
must be submitted to Buyer for review and written approval, if such Lease shall
have a term shorter than one year, include any free rent period or cancellation
right on the part of the tenant.

 

(6)         Contracts. Exhibit B sets forth all contracts presently outstanding
with respect to the Property. To Seller’s Knowledge and except as set forth on
Schedule 6(a)(6), neither Seller nor any other party is in default with respect
to any of its obligations or liabilities pertaining to any contracts that will
survive the Close of Escrow.

 

(7)         Notice of Violations. Seller has received no written notice that
either the Property or the use thereof violates in any material respect, any
laws, rules and regulations of any federal, state, city or county government or
any agency, body, or subdivision thereof having any jurisdiction over the
Property that have not been resolved to the satisfaction of the issuer of the
notice.

 

(8)         Withholding Obligation. Seller is not a “foreign person” within the
meaning of Section 1445 of the Internal Revenue Code of 1986, as amended.

 

(9)         Condemnation. Except for any condemnation proceedings which Seller
has not yet been served with process, there are no pending or, to Seller’s
Knowledge, threatened condemnation or similar proceedings affecting the Property
or any individual property that is a part thereof.

 

(10)        Employees.        Seller has no employees at the Property.

 

(11)        No Bankruptcy Proceedings. Seller has not (i) made a general
assignment for the benefit of creditors, (ii) filed any voluntary petition in
bankruptcy or suffered the filing of any involuntary petition by Seller’s
creditors, (iii) suffered the appointment of a receiver to take possession of
all or substantially all of Seller’s assets, or (iv) suffered the attachment or
other judicial seizure of all or substantially all of Seller’s assets.

 

 

 

 

(12)        Unrecorded Documents. Other than as disclosed in the Property
Information, the Title Commitment, or any other documents delivered to Buyer,
Seller has not entered into any unrecorded contracts, leases, easements or other
agreements with respect to the Property that would be binding on Buyer or the
Property following the Closing. Seller has no knowledge of any claim of any
third party affecting the use, title, occupancy or development of the Property
that has not been disclosed to Buyer. Seller has not granted any right of first
refusal, option or other right to acquire all or any part of the Property.

 

For purposes of this Section 6(a), the term “Seller’s Knowledge” means the
actual knowledge of Gordon Morton, the person who Seller represents to be the
most knowledgeable about the Property.

 

(b)          Buyer’s Representations and Warranties. As a material inducement to
Seller to execute this Agreement and consummate this transaction, Buyer
represents and warrants to Seller that Buyer has been duly organized and is
validly existing as a Maryland corporation. Buyer has the full right and
authority and has obtained any and all consents required therefore to enter into
this Agreement, consummate or cause to be consummated the purchase, and make or
cause to be made the deliveries and undertakings contemplated herein or hereby.
The persons signing this Agreement on behalf of Buyer are authorized to do so.
This Agreement and all of the documents to be delivered by Buyer at the Closing
have been authorized and properly executed and will constitute the valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
terms.

 

(c)          Covenants of Seller. Seller covenants and agrees that during the
period from the date of this Agreement through and including the Closing Date:

 

(1)         Seller will timely pay and perform its obligations under the Leases
and any contracts to be assumed by Buyer pursuant hereto.

 

(2)          Any landlord agreed tenant repair requests, including move-in
punch-list items have been fixed properly or will be fixed properly and paid for
before the close of escrow, or an amount to pay for such repairs will be
credited to the Buyer at Closing.

 

(3)         Delivery of 8-06 Financials. Upon request from Buyer, Seller agrees
to prepare for delivery to Buyer, unaudited income statements, along with
accompanying notes, with respect to the Property for the twelve months ended
December 31, 2015 and the twelve months ended December 31, 2016 (the “Income
Statements”). The Income Statements shall be (a) in accordance with the books
and records of Seller, (b) present fairly in all material respects the results
of operations of the Property for the periods therein specified, (c) prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, and Rule 8-06 of Regulation S-X (17 C.F.R. Part 210), and (d) otherwise
acceptable to Buyer in its reasonable discretion. Upon request from Buyer,
Seller shall also provide to Buyer, any schedules or supporting documentation
that Buyer may reasonably request that relate to the transactions included or to
be included in the Income Statements. Upon request from Buyer, Seller agrees to
cooperate with Buyer, and provide all assistance and access to the books and
records of Seller, as required for the audit of the Income Statement, to be
completed no later than the 70th day following the Closing. The audit of the
Income Statement shall be at Buyer’s expense and shall be conducted by an
independent accounting firm registered with the Public Company Accounting
Oversight Board retained by Buyer. Upon request from Buyer, Seller shall provide
the items listed in Exhibit G attached hereto and incorporated herein, to the
extent in Seller’s possession or control.

 

 

 

 

(d)          Seller Representation Regarding Tenants. Except as set forth on
Schedule (6)(d), Seller hereby represents and warrants that each tenant is
occupying its respective home and is current in the payment of rent, and no
default currently exists and no condition exists, which, with the passage of
time may become a default under any of the Leases.

 

(1)         Following the expiration of the Due Diligence Period, Seller will
not enter into any contract (other than new Leases) that will be an obligation
affecting the Property subsequent to the Closing Date except for contracts
entered into in the ordinary course of business that are terminable without
cause and without payment of a penalty on not more than 30-days’ notice.

 

(2)         Seller will not remove any Personal Property from the Property
except as may be required for necessary repair or replacement, and in the event
of such replacement, the replacement shall be of materially equal or better
quality and quantity as existed as of the time of its removal.

 

(3)         Seller will continue to operate and maintain the Property in
accordance with past practices and will not make any material alterations or
changes thereto;

 

(4)         Seller will maintain casualty and liability insurance of a level and
type consistent with the insurance maintained by Seller prior to the execution
of this Agreement with respect to the Property;

 

(5)         Seller will not do anything, or authorize anything to be done, that
would adversely affect the condition of title as shown on the Title Commitment.

 

(6)         Seller agrees to terminate by written notice to the other parties
thereto, effective as of Closing, any service contracts that Buyer, pursuant to
written notice to Seller prior to the expiration of the Due Diligence Period,
requests Seller to terminate. Seller shall deliver to Buyer copies of all
notices of termination given by Seller pursuant to this subsection.

 

(7)         Seller shall repair all homes that become vacant at least five (5)
days prior to the Closing to “rent-ready” condition in accordance with Seller’s
customary practice and procedure for the Property. Buyer shall receive a $3,500
credit against the Purchase Price with respect to any unit that is vacant and
not in “rent ready” condition on the Closing Date. At Buyer’s request, Seller
shall inspect each of the vacant units prior to the Closing to determine if any
of such units cannot be restored to “rent ready” condition at a cost of $3,500
or less, and Buyer and Seller hereby agree to make such adjustments to the
$3,500 per unit credit as Buyer and Seller agree, acting reasonably, are
necessary in order to pay for the cost of restoring the vacant units to “rent
ready” condition. In the event the parties cannot agree on the restoration cost,
such property shall become an additional Excluded Property subject to the
provisions of Sections 5(c) and 7(e). Upon request, Seller shall keep Buyer
reasonably informed as to the status of leasing prior to the Closing Date and
shall deliver to Buyer copies of all new Leases.

 

 

 

 

(e)          Representation and Warranties Prior to Closing. The continued
validity in all respects of the foregoing representations and warranties shall
be a condition precedent to the obligation of the party to whom the
representation and warranty is given to close this transaction. If any of
Seller’s representations and warranties are not true and correct at any time on
or before the Closing even if true and correct as of the date of this Agreement
or whether any change in facts or circumstances has made the applicable
representation and warranty no longer true and correct and regardless as to
whether Buyer becomes aware of such fact through Seller’s notification or
otherwise, then Buyer may, at Buyer’s option, exercised by written notice to
Seller (and as its sole and exclusive remedy), either (i) proceed with this
transaction, accepting the applicable representation and warranty as being
modified by such subsequent matters or knowledge and waiving any right relating
thereto, if any, or (ii) terminate this Agreement and declare this Agreement of
no further force and effect and in which event Escrow Holder shall, without
further instruction, return the Deposit to Buyer and Seller shall have no
further liability hereunder by reason thereof; provided, that if the breach of
any representation or warranty of Seller hereunder results from the willful and
intentional act of Seller, Buyer will have the rights and remedies available to
Buyer under Section 18(b) of this Agreement upon a default by Seller of its
obligations under this Agreement.

 

8.          Due Diligence Period.

 

(a)          Buyer will have a period commencing on the Effective Date and
ending at 6:00 PM Pacific Time on the date that is 45 days after Buyer has
received all Property Information set forth in Schedule 6(a)(3) (the “Due
Diligence Period”) to examine, inspect, and investigate the Property and, in
Buyer’s sole judgment and discretion, to determine whether Buyer desires to
purchase the Property. If Buyer is acting diligently and in good faith to
proceed with the consummation of the transaction contemplated by this Agreement,
Seller will agree, upon the written request of Buyer, to extend the Due
Diligence Period up to fourteen (14) days. Buyer agrees to submit a notice to
Seller confirming Buyer has received all Property Information once received and
the date of the notice will become the Effective Date.

 

(b)          Buyer may terminate this Agreement for any or no reason by giving
written notice of such termination to Seller on or before the last day of the
Due Diligence Period. If this Agreement is terminated pursuant to this Section
7, the Deposit shall be immediately refunded to Buyer, and neither party shall
have any further liability or obligation to the other under this Agreement
except for the indemnity provisions set forth in Section 7(c) of this Agreement
and any other provision of this Agreement that is expressly intended to survive
the termination of this Agreement. In the event this Agreement is terminated
Escrow Holder is required to return Buyer’s Deposit immediately and Seller
agrees and will not cause Escrow Holder to delay the return of the Deposit to
Buyer for any reason. If Buyer does not elect to exercise its right to terminate
this Agreement during the Due Diligence Period, then Buyer shall notify Seller
of Buyer’s intention to acquire the Property before the expiration of the Due
Diligence Period. If Buyer does not, before the expiration of the Due Diligence
Period, either affirmatively notify Seller of its desire to acquire the Property
or send a termination notice to Seller, then Buyer will be deemed to have
elected to terminate this Agreement. If Buyer elects to proceed to purchase the
Property, and this Agreement is not terminated or deemed terminated before the
expiration of the Due Diligence Period, then the Deposit shall be non-refundable
except in the event of a default hereunder by Seller.

 

 

 

 

(c)          Subject to the rights of tenants under the Leases, Seller will
provide to Buyer reasonable access to the Property for the purpose of examining
any or all aspects thereof, including conducting on a non-intrusive basis,
surveys, architectural, engineering, non-invasive geo-technical and
environmental inspections and tests, and any other inspections, studies, or
tests reasonably required by Buyer. Buyer shall give Seller reasonable notice by
telephone or e-mail before entering onto any of the properties that comprise the
Property to perform inspections or tests, and in the case of tests (i) Buyer
shall specify to Seller the precise nature of the test to be performed, and (ii)
Seller may require, as a condition precedent to Buyer’s right to perform any
such test, that Buyer deliver Seller evidence of public liability and other
appropriate insurance naming Seller as an additional insured thereunder. Such
examination of the physical condition of the Property, including the Third Party
Inspection Report (defined in Section 7(d) below) may include an examination for
the presence or absence of hazardous or toxic materials, substances or wastes,
which shall be performed or arranged by Buyer at Buyer’s sole expense. Buyer
shall keep the Property free and clear of any liens and will indemnify, protect,
defend, and hold each Seller Related Party (defined below) harmless from and
against all losses, costs, damages, claims, liabilities and expenses (including
reasonable attorneys’ fees and court costs) (collectively, “Losses”) arising
from damage to the Property and injury to persons asserted against or incurred
by any Seller Related Party as a result of such entry by Buyer, its agents,
employees or representatives (except that Buyer shall have no liability or
indemnity obligation for any diminution in the value of the Property as a result
of any unfavorable analysis, test, study, opinion or recommendation made to or
for or reach by Buyer). If any inspection or test disturbs the Property and
Buyer does not acquire the Property, Buyer will restore the Property to
substantially the same condition as existed prior to any such inspection or
test. Buyer and its agents, employees, and representatives may, upon not less
than 24 hours prior telephonic notice to Seller, examine and make copies of all
books and records and other materials relating to the condition of the Property
in Seller’s possession at the office where such records are maintained. Any
information provided to or obtained by Buyer with respect to the Property shall
be subject to the provisions of Section 22(p) of this Agreement. The obligations
of Buyer under this Section shall survive the termination of the Agreement.

 

 

 

 

(d)          Buyer may retain a contractor or home inspector to prepare a report
or reports describing the physical condition of the Property (collectively, the
“Third Party Inspection Report”), which Third Party Inspection Report shall
adequately identify any necessary repairs or replacements and the estimated
costs of such repairs or replacements (collectively, the “Necessary Repairs”).
The person or entity preparing the Third Party Inspection Report must be
licensed to perform such inspections in the jurisdiction where the Property is
located, and may not be, or have ever been, owned or controlled by Buyer or an
affiliate of Buyer or otherwise not at arm’s length from Buyer. Buyer will
provide a copy of the Third Party Inspection Report to Seller prior to the
expiration of the Due Diligence Period. If any Necessary Repairs are identified
in the Third Party Inspection Report and subject to the limitations set forth
below, Seller shall have the right to (i) make the Necessary Repairs after
Closing and the estimated cost of the Necessary Repairs as set forth in the
Third Party Inspection Report shall be held in escrow by the Escrow Holder until
such Necessary Repairs are completed as described in Section 7(d)(1) below, or
(ii) reduce the Purchase Price by the estimated cost of the repairs or
replacements set forth in the Third Party Inspection Report. In the event Seller
elects to reduce the Purchase Price, Seller and Buyer agree that the Purchase
Price will not be reduced by an amount greater than ten percent (10%) of the
Purchase Price without Seller’s written agreement. Normal wear and tear shall
not constitute grounds for a reduction in the Purchase Price. If the cost to
make the repairs and replacements identified in the Third Party Inspection
Report exceeds ten percent (10%) of the Purchase Price, and Seller does not
agree (i) to make the Necessary Repairs after Closing and escrow the cost of the
Necessary Repairs, or (ii) to reduce the Purchase Price by the identified cost
of such repairs and replacements as set forth in the Third Party Inspection
Report, then Buyer may, upon written notice to Seller and prior to the end of
the Due Diligence Period, elect to (i) close the transaction as contemplated
with a ten percent (10%) reduction of the Purchase Price or (ii) terminate this
Agreement. If Buyer terminates this Agreement in accordance with this Section
7(d), then this Agreement will have no further force or effect, the parties will
have no further obligations to each other (except for any indemnities or other
provisions that expressly survive termination of this Agreement) and Escrow
Holder shall refund the Deposit to Buyer. The reductions to the Purchase Price
contemplated in this Section 7(d) are subject to and limited by the Purchase
Price reduction contemplated in Section 5(b) and the Excluded Properties
limitation of Section 5(c) of this Agreement.

 

(1)         If Seller elects to make the Necessary Repairs contemplated in
Section 7(d) above, a Purchase Price Escrow Repair Holdback amount of up to 10%
of purchase price (the “Purchase Price Escrow Repair Holdback”) shall be
withheld by the Escrow Holder until such time as Seller has completed all
Necessary Repairs to Buyer’s reasonable satisfaction. Such Necessary Repairs
shall be completed by Seller, at Seller’s sole cost and expense but in an amount
not to exceed the Purchase Price Escrow Repair Holdback, not later than ninety
(90) days after Closing (the “Holdback Repair Period”). Seller shall provide to
Buyer invoices and related back-up documentation reasonably acceptable to Buyer
pertaining to all Necessary Repairs, as well as photographs reasonably
acceptable to Buyer depicting each and every item to be repaired before such
repair has begun and after such repair has been completed. Purchase Price Escrow
Repair Holdback funds shall remain held by the Escrow Holder until all Necessary
Repairs are completed to Buyer’s reasonable satisfaction or the Purchase Price
Escrow Repair Holdback funds are exhausted. Upon the end of the Holdback Repair
Period or sooner upon Buyer’s election, Buyer shall review the status of the
Necessary Repairs and, if any repairs have been completed to Buyer’s reasonable
satisfaction, Buyer shall at that time instruct the Escrow Holder to release
funds pertaining to such completed repairs described in the Third Party
Inspection Report. If after Buyer’s review of the Necessary Repairs Buyer
determines that all of the Necessary Repairs have been completed during the
Holdback Repair Period, any Purchase Price Escrow Repair Holdback funds
remaining in Escrow Holder’s custody shall be released to Seller.

 

 

 

 

(e)          Notwithstanding any provision to the contrary set forth herein, in
addition to the rights set forth in Sections 5(c), 5(b) and 7(d), at any time
during the Due Diligence Period, Buyer may in its sole discretion, elect to
designate specified properties from the properties identified on Exhibit A as
Excluded Properties as defined in Section 5(c), provided that the total of
Excluded Properties does not exceed ten (10). In the event of such an election,
Buyer shall deliver to Seller a notice stating which additional properties it
has designated as Excluded Properties no later than two (2) days prior to the
Closing Date (the “Notice to Seller”). Upon delivery of the Notice to Seller,
the designated properties described in the Notice to Seller shall be Excluded
Properties, and the terms of Section 5(c) shall apply with respect thereto. In
such event, any Purchase Price Escrow Repair Holdback funds related to such
additional Excluded Properties shall be deleted from the Purchase Price Escrow
Repair Holdback fund computation.

 

9.          As Is Sale.

 

(a)          BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS SELLING
AND BUYER IS PURCHASING THE PROPERTY ON AN “AS IS WITH ALL FAULTS” BASIS AND
THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE CLOSING DOCUMENTS
DELIVERED BY SELLER TO BUYER AT CLOSING, BUYER IS NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM
SELLER, ITS AGENTS, OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY,
INCLUDING WITHOUT LIMITATION: (I) THE QUALITY, NATURE, ADEQUACY AND PHYSICAL
CONDITION OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO THE STRUCTURAL
ELEMENTS, FOUNDATION, ROOF, APPURTENANCES, ACCESS, LANDSCAPING, PARKING
FACILITIES AND THE ELECTRICAL, MECHANICAL, HVAC, PLUMBING, SEWAGE, AND UTILITY
SYSTEMS, FACILITIES AND APPLIANCES, (II) THE QUALITY, NATURE, ADEQUACY, AND
PHYSICAL CONDITION OF SOILS, GEOLOGY AND ANY GROUNDWATER, (III) THE EXISTENCE,
QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES SERVING THE
PROPERTY, (IV) THE DEVELOPMENT POTENTIAL OF THE PROPERTY, AND THE PROPERTY’ USE,
HABITABILITY, MERCHANTABILITY, OR FITNESS, SUITABILITY, VALUE OR ADEQUACY OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE, (V) THE ZONING OR OTHER LEGAL STATUS OF THE
PROPERTY OR ANY OTHER PUBLIC OR PRIVATE RESTRICTIONS ON USE OF THE PROPERTY,
(VI) THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY APPLICABLE CODES,
LAWS, REGULATIONS, STATUTES, ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS
OF ANY GOVERNMENTAL OR QUASI-GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON OR
ENTITY, (VII) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS (AS DEFINED IN ANY
ENVIRONMENTAL STATUTE) ON, UNDER OR ABOUT THE PROPERTY OR THE ADJOINING OR
NEIGHBORING PROPERTY, (VIII) THE QUALITY OF ANY LABOR AND MATERIALS USED IN ANY
IMPROVEMENTS ON THE PROPERTY, (IX) THE CONDITION OF TITLE TO THE PROPERTY, (X)
THE LEASES (INCLUDING ALL SERVICE CONTRACTS) AND ANY OTHER AGREEMENTS AFFECTING
THE PROPERTY AND (XI) THE ECONOMICS OF ANY PAST OR FUTURE OPERATIONS OF THE
PROPERTY.

 

 

 

 

10.         Survival of Representations and Warranties After Closing.

 

(a)          All representations and warranties of Seller herein shall survive
the Closing for a period of one (1) year (the “Limitation Period”).

 

(b)          Buyer shall provide actual written notice to Seller of any breach
of any of Seller’s warranties or representations of which Buyer acquires
knowledge, through any means, at any time after the Closing Date but prior to
the expiration of the Limitation Period, and shall allow Seller thirty (30) days
within which to cure such breach, or, if such breach is susceptible of cure but
cannot reasonably be cured within thirty (30) days, an additional reasonable
time period required to effect such cure so long as such cure has been commenced
within such thirty (30) days and diligently pursued but in no event more than
ninety (90) days. If Seller fails to cure such breach after actual written
notice and within such cure period (as extended), Buyer’s sole remedy shall be
an action at law for damages as a consequence thereof, which must be commenced,
if at all, within the six (6) months after the expiration of the Limitation
Period.

 

11.         Closing.

 

(a)          The purchase and sale transaction contemplated in this Agreement
shall occur on the date and in the manner specified in the Basic Terms section
of this Agreement (the “Closing Date”), provided that all conditions precedent
to the Closing have been fulfilled or have been waived in writing by the
respective party entitled to waive same.

 

(b)          On or before the Closing Date, the parties shall establish the
usual form of deed and money escrow with Escrow Holder. Counsel for the
respective parties are hereby authorized to execute the escrow trust
instructions as well as any amendments thereto.

 

12.         Conditions to Buyer’s Obligation to Close.

 

(a)          Buyer will not be obligated to proceed with the Closing unless and
until each of the following conditions has been either fulfilled or waived in
writing by Buyer:

 

(1)         This Agreement shall not have been previously terminated pursuant to
any other provision hereof;

 

(2)         Seller shall be prepared to deliver or cause to be delivered to
Buyer all instruments and documents to be delivered to Buyer at the Closing
pursuant to Section 14 and Section 16 or any other provision of this Agreement;
and

 

(3)         All property managing services provided to the Property under any
property management agreement shall have been terminated on or prior to the
Closing at no cost, liability or expense to Buyer.

 

(b)          If any of the foregoing conditions are not fulfilled on or before
the time for Closing hereunder, then subject to the provisions of Section 18(b)
hereof, Buyer may elect, upon notice to Seller, to terminate this Agreement, in
which event the Deposit shall be returned to Buyer, and neither party shall have
any further liability or obligation to the other, except for the provisions of
this Agreement which are expressly stated to survive the termination of this
Agreement.

 

 

 

 

13.         Conditions to Seller’s Obligation to Close.

 

(a)          Seller will not be obligated to proceed with the Closing unless and
until each of the following conditions has been fulfilled or waived in writing
by Seller:

 

(1)         Buyer shall be prepared to pay to Seller the Purchase Price and all
other amounts to be paid to it at Closing pursuant to the provisions of this
Agreement;

 

(2)         Buyer shall be prepared to deliver to Seller all instruments and
documents to be delivered to Seller at the Closing pursuant to Section 15 and
Section 16 or any other provision of this Agreement; and

 

(3)         This Agreement shall not have been previously terminated pursuant to
any other provision hereof.

 

(b)          If the foregoing conditions are not fulfilled on or before the time
for Closing hereunder, then subject to the provisions of Section 18(a) hereof,
Seller may elect, upon notice to Buyer, to terminate this Agreement, in which
event the Deposit shall be returned to Buyer, and neither party shall have any
further liability or obligation to the other, except for the provisions of this
Agreement which are expressly stated to survive the termination of this
Agreement.

 

14.         Title Insurance.

 

(a)          Following the execution and delivery of this Agreement, at Seller’s
expense, Buyer shall cause Title Company to deliver to Buyer a commitment for
the Title Policy described in subsection (b) below (the “Title Commitment”),
together with legible copies of all of the underlying documentation described in
such Title Commitment. Seller shall, within two business days after the
execution of this Agreement, deliver to Buyer the most recent surveys of the
properties that comprise the Property in Seller’s possession or control (the
“Surveys”)

 

(b)          At Closing, and as a condition thereof, Buyer shall receive an
owner’s title insurance policy (the “Title Policy”) issued by Title Company,
dated the day of Closing, with liability in the full amount of the Purchase
Price, the form of which shall be an American Land Title Association Owner’s
Policy, Standard Form B, 1992 (or other form preferred by Buyer or required or
promulgated pursuant to applicable state insurance regulations), subject only to
the Permitted Exceptions (defined below). The Title Policy may contain any
endorsements requested by Buyer.

 

(c)          Prior to the expiration of the Due Diligence Period, Buyer shall
review title to the Property as disclosed by the Title Commitment and the
Surveys, and satisfy itself as to the availability from the Title Company of the
Title Policy and all requested endorsement to such Title Policy. Buyer shall
have the right to obtain an update of the Surveys or to secure new surveys at
any time prior to the expiration of the Due Diligence Period.

 

 

 

 

(d)          Seller shall have no obligation to remove or cure title objections,
except for (1) liens of an ascertainable amount created by Seller, which liens
Seller shall cause to be released at the Closing or affirmatively insured over
by the Title Company with Buyer’s approval, (2) any exceptions or encumbrances
to title which are created by Seller after the date of this Agreement without
Buyer’s consent, and (3) non-consensual liens (other than inchoate liens for
real estate taxes and assessments not yet due and payable) which liens Seller
shall cause to be released at the Closing or affirmatively insured over by the
Title Company. In addition, Seller shall provide the Title Company with any
affidavits, ALTA statements or personal undertakings (collectively, an “Owner’s
Affidavit”), in form and substance reasonably acceptable to the Title Company,
that will permit the Title Company to remove the standard “mechanics lien” and
“GAP” exceptions and otherwise issue the Title Policy in the form required by
Buyer.

 

(e)          “Permitted Exceptions” shall mean: (1) any exception arising out of
an act of Buyer or its representatives, agents, employees or independent
contractors; (2) zoning and subdivision ordinances and regulations; (3) the
specific exceptions in the Title Commitment that the Title Company has not
agreed to insure over or remove from the Title Commitment as of the end of the
Due Diligence Period and that Seller is not required to remove as provided
above; (4) items shown on the Surveys or any updated or new surveys of the
Property which have not been removed as of the end of the Due Diligence Period;
(5) real estate taxes and assessments not yet due and payable; and (6) rights of
tenants under the Leases, as occupancy tenants only and without any rights of
first refusal, rights of first offer or purchase options.

 

15.         Documents to be Delivered to Buyer at Closing. At Closing, Seller
shall deliver or cause to be delivered to Buyer each of the following
instruments and documents:

 

(a)         Deed. The Deed, in the form attached hereto as Exhibit C.

 

(b)         Bill of Sale. The Bill of Sale covering the Personal Property, in
the form attached hereto as Exhibit D.

 

(c)         The Title Policy. The Title Policy may be delivered after the
Closing if at the Closing the Title Company issues a currently effective,
duly-executed “marked-up” Title Commitment and irrevocably commits in writing to
issue the Title Policy in the form of the “marked-up” Title Commitment after the
Closing.

 

(d)         Assignment of Leases and Contracts. An Assignment of Leases and
Contracts, in the form attached hereto as Exhibit E, transferring and assigning
to Buyer, to the extent the same are assignable, all right, title and interest
of Seller in the Leases and the other property described therein.

 

(e)         Transfer Tax Declarations. Original copies of any required real
estate transfer tax or documentary stamp tax declarations executed by Seller or
any other similar documentation required to evidence the payment of any tax
imposed by the state, county and city on the transaction contemplated hereby.

 

 

 

 

(f)         FIRPTA. An affidavit, in the form attached hereto as Exhibit F,
stating Seller’s U.S. taxpayer identification number and that Seller is a
“United States person”, as defined by Internal Revenue Code Section 1445(f)(3)
and Section 7701(b).

 

(g)        Owner’s Affidavit. The Owner’s Affidavit materials referred to in
Section 13(d) above.

 

(h)        Surveys, Plans, Permits and Specifications.         All existing
surveys, blueprints, drawings, plans and specifications, permits, and operating
manuals for or with respect to any of the properties that comprise the Property
or any part thereof to the extent the same are in Seller’s possession.

 

(i)          Keys.         All keys to the improvements, to the extent the same
are in Seller’s possession.

 

(j)          Leases.          Originals of all Leases in effect on the Closing
Date (or copies thereof in the event the originals are not in Seller’s
possession, or in the possession of Sellers’ property manager and such copies of
Leases are in Seller’s possession), and the tenant files with respect to such
Leases, to the extent the same are in Seller’s possession.

 

(k)         Certificate.         A certificate (the “Update”) of Seller dated as
of the Closing Date certifying that the representations and warranties of Seller
set forth in Section 6(a) of this Agreement as applicable, remain true and
correct in all material respects as of the Closing Date, except as to Schedule
6(a)(5), which Update shall be dated no earlier than three (3) days prior to
Closing.

 

(l)          Other Deliveries. Such other documents and instruments as may be
required by any other provision of this Agreement or as may reasonably be
required to carry out the terms and intent of this Agreement.

 

16.         Documents to be Delivered to Seller at Closing. At Closing, Buyer
shall deliver or cause to be delivered to Seller each of the following
instruments, documents and amounts:

 

(a)         Purchase Price. The Purchase Price, subject to adjustment and
proration as provided in Section 17 below.

 

(b)         Transfer Tax Declarations. Original copies of any required real
estate transfer tax or documentary stamp tax declarations executed by Buyer or
any other similar documentation required to evidence the payment of any tax
imposed by the state, county and city on the transaction contemplated hereby.

 

(c)         Assignment of Leases. A counterpart of the Assignment of Leases and
Contracts, in the form attached hereto as Exhibit E.

 

(d)         Certificate.         A certificate of Buyer (the “Buyer’s Update”)
dated as of the Closing Date certifying that the representations and warranties
of Buyer set forth in Section 6(b) of this Agreement as applicable, remain true
and correct in all material respects as of the Closing Date, which Buyer’s
Update shall be dated no earlier than three (3) days prior to Closing.

 

 

 

 

(e)         Other Documents. Such other documents and instruments as may be
required by any other provision of this Agreement or as may reasonably be
required to carry out the terms and intent of this Agreement.

 

17.         Documents to be Delivered by Seller and Buyer at Closing. At
Closing, Buyer and Seller shall deliver or cause to be delivered each of the
following instruments and documents:

 

(a)         Escrow Instructions. Escrow instructions (as described in
Section 10(b)).

 

(b)        Settlement Statement. A fully executed settlement statement.

 

(c)         Notice to Tenants. A duly executed notice to each of the tenants
under the Leases.

 

18.         Prorations and Adjustments.

 

(a)          The following items shall be prorated and adjusted based upon the
number of calendar days in the measuring period between Seller and Buyer as of
midnight on the date of Closing, except as otherwise specified:

 

(1)         Taxes. All real estate taxes and assessments (“Taxes”) assessed
against the Property for the year of Closing shall be prorated as follows:
Seller will be responsible for the payment of Taxes applicable to the period
before the Closing Date, and Buyer will be responsible for the period on and
after the Closing Date, with the recognition that taxing jurisdictions in
Alabama differ upon their treatment of assessment and payment of municipal and
school taxes. If the actual taxes and assessments cannot be determined for such
year as of the Closing Date, then the parties shall make such proration based
upon One Hundred and Ten percent (110%) of the most recently issued tax bill for
the Property and thereafter, make a final adjustment of such Taxes upon receipt
of the final bill. The provisions of this Section 17(a)(1) shall survive
Closing.

 

(2)         Utilities. All utilities shall be prorated based upon estimates
using the most recent actual invoices. Seller shall receive a credit for the
amount of deposits, if any, with utility companies that are transferable and
that are assigned to Buyer at the Closing. In the case of non-transferable
deposits, Buyer shall be responsible for making any security deposits required
by utility companies providing service to the Property.

 

 

 

 

(3)         Collected Rent. Buyer shall receive a credit for any rent and other
income (and any applicable state or local tax on rent) under Leases collected by
Seller before Closing that applies to any period after Closing. Uncollected rent
and other uncollected income shall not be prorated at Closing. After Closing,
Buyer shall apply all rent and income collected by Buyer from a tenant (x) first
to such tenant’s rental obligations for the month in which the Closing occurs,
(y) next to such tenant’s monthly rental for the month in which the payment is
made, and (z) then to arrearages in the reverse order in which they were due,
remitting to Seller, after deducting collection costs, any rent or expense
reimbursements properly allocable to Seller’s period of ownership. Buyer shall
bill and attempt to collect such rent arrearages in the ordinary course of
business, but shall not be obligated to engage a collection agency or take legal
action to collect any rent arrearages. Any rent or other income received by
Seller or Buyer after Closing which are owed to Seller or Buyer shall be
remitted to Seller or Buyer as applicable, promptly after receipt.

 

(b)          Tenant Security Deposits. All unapplied tenant security deposits
(and interest thereon if required by law or contract to be earned thereon) under
the Leases, shall be credited to Buyer at Closing.

 

(1)         Service Contracts. With respect to any contracts that are assumed by
Buyer and survive the Closing, Seller shall receive a credit for prepaid charges
and premiums applicable to Buyer’s period of ownership. The Buyer shall receive
a credit for any payments made in arrears. In addition and without limitation of
the foregoing, Buyer shall receive a credit under any assumed contract (each a
“Service Provider Contract”) in which Seller has received any advance payments
or other income from the servicer provider under such Service Provider Contract
in exchange for agreeing to enter into such Service Contract (regardless of
whether such advance payment or other income was paid in a lump sum or in
installments). Any lump sum payments shall be pro-rated on a straight line basis
over the term of any applicable Service Provider Contract.

 

(2)         Owner Deposits. Seller shall be entitled to the return of all bonds,
deposits, letters of credit, set aside letters or other similar items, if any,
that are outstanding with respect to the Property that have been provided by
Seller or any of its affiliates, agents or investment advisors to any
governmental agency, public utility, or similar entity (collectively, “Owner
Deposits”). Buyer shall replace such Owner Deposits. To the extent that any
funds are released as a result of the termination of any Owner Deposits for
which Seller did not receive a credit, such funds shall be delivered to Seller
immediately upon their receipt.

 

(c)          Final Prorations. With regards to any prorations set forth in this
Section 17 that are based upon estimates, such prorations shall be readjusted
based upon the actual bills after the Closing and before the expiration of the
Limitation Period. The provisions of this Section 17(c) shall survive Closing.

 

19.         Default; Termination. (a) IF THE CLOSING FAILS TO OCCUR BECAUSE OF
BUYER’S DEFAULT, THE DEPOSIT SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES.
THE PARTIES HERETO EXPRESSLY AGREE AND ACKNOWLEDGE THAT SELLER’S ACTUAL DAMAGES
IN THE EVENT OF A DEFAULT BY BUYER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE
TO ASCERTAIN BECAUSE OF THE NATURE OF THE PROPERTY AND THAT THE AMOUNT OF THE
DEPOSIT REPRESENTS THE PARTIES’ REASONABLE ESTIMATE OF SUCH DAMAGES. THE PAYMENT
OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY
WITHIN THE MEANING OF ANY APPLICABLE LAWS, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS SECTION 18, SELLER AND BUYER AGREE THAT THIS LIQUIDATED DAMAGES
PROVISION IS INTENDED TO BE SELLER’S SOLE AND EXCLUSIVE REMEDY FOR A DEFAULT BY
BUYER, BUT IS NOT INTENDED AND SHOULD NOT BE DEEMED OR CONSTRUED TO LIMIT IN ANY
WAY BUYER’S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT

 

SELLER’S INITIALS: _____          BUYER’S INITIALS: _____

 

 

 

 

(b)          If Seller defaults in any material respect hereunder, then provided
Buyer is not in default any material respect, Buyer may, at its sole election,
either:

 

(1)         Terminate this Agreement, whereupon the Deposit shall be promptly
returned to Buyer, as well as Buyer’s actual out of pocket costs to unrelated
and independent third party vendors, including reasonable attorneys’ fees
incurred as a result of this transaction, which costs and fees shall not exceed
One Hundred Thousand and 00/100 Dollars ($100,000.00), and neither party shall
have any further liability or obligation to the other, except for the provisions
of this Agreement which are expressly stated to survive the termination of this
Agreement; or

 

(2)         Assert and seek judgment against Seller for specific performance
with respect to one or more (at Buyer’s election) of the properties that
comprise the Property; provided that if Buyer elects to purchase less than all
of such properties, then the Purchase Price will be reduced by the aggregate
Assigned Home Value of the excluded properties. If a court of competent
jurisdiction determines that the remedy of specific performance is not available
to Buyer, then Buyer shall have the right to assert and seek judgment against
Seller for actual contract damages.

 

20.         Expenses.

 

(a)          The premium for an extended coverage ALTA Owner’s Title Policy
(including any endorsements reasonably required by Buyer) issued through Escrow
Holder, one-half of the Escrow Holder’s fee, the cost of a new or updated ALTA
Survey if Buyer elects to commission a survey, and all sales, transfer and
intangible taxes and any other taxes, fees or recording charges that may be
imposed on the transaction (whether on the deed, title or otherwise) where the
applicable Property is located in a jurisdiction where the Buyer customarily
pays such transfer taxes shall be borne and paid by Buyer. One-half of the
Escrow Holder’s fee, the cost of the title search, , brokerage fees and
commissions, and all sales, transfer and intangible taxes and any other taxes,
fees or recording charges that may be imposed on the transaction (whether on the
deed, title or otherwise) where the applicable Property is located in a
jurisdiction where the Seller customarily pays such transfer taxes shall be
borne and paid by Seller.

 

(b)          All other costs, charges, and expenses shall be borne and paid as
provided in this Agreement, or in the absence of such provision, in accordance
with custom where the properties in question are located.

 

 

 

 

21.         Intermediaries.

 

(a)          Buyer and Seller acknowledge and agree that Seller’s Broker (as
defined in the Basic Terms) has acted as a broker in connection with this
transaction on behalf of Seller and Buyer’s Broker (as defined in the Basic
Terms) has acted as a broker in connection with this transaction on behalf of
Buyer. Upon Closing, Seller agrees to pay a brokerage commission to Seller’s
Broker pursuant to a separate agreement between Seller and Seller’s Broker. All
brokerage fees are to be paid through Escrow Holder at Closing as a Closing
Cost.

 

(b)          Seller represents to Buyer, and Buyer represents to Seller, that
except for Seller’s Broker and Buyer’s Broker, respectively, there are no fees
owed to any broker, finder, or intermediary of any kind with whom such party has
dealt in connection with this transaction. Except as expressly set forth above,
if any claim is made for broker’s or finder’s fees or commissions in connection
with the negotiation, execution or consummation of this Agreement or the
transactions contemplated hereby, each party shall defend, indemnify and hold
harmless the other party from and against any such claim based upon any
statement, representation or agreement of such party, which obligation shall
survive Closing.

 

22.         Destruction of Improvements.

 

(a)          If, prior to Closing, any of the Improvements on any of the
properties that comprise the Property are damaged or destroyed such that the
cost of repair or replacement of such improvements is material (“Material
Damage”), or a condemnation proceeding is commenced or threatened in writing by
a governmental or quasi-governmental agency with the power of eminent domain
(“Condemnation”), then:

 

(1)         Buyer may elect, within fourteen (14) days from receipt of notice of
said Material Damage, or notice of a Condemnation, by written notice to Seller,
to exclude the individual property affected by such event from this transaction;
provided that if more than twenty-five percent (25%) of the properties that
comprise the Property suffer Material Damage, or become the subject of a
Condemnation, then Buyer may terminate this Agreement. If necessary, the time of
Closing shall be extended to permit Buyer to evaluate and make the elections
contemplated in this Section 21. If Buyer elects to terminate this Agreement in
accordance with this Section 21, then the Deposit shall be returned to Buyer
and, except for the provisions of this Agreement that expressly survive Closing
or earlier termination of this Agreement, this Agreement shall be void and of no
further force and effect, and neither party shall have any liability to the
other by reason hereof; or

 

(2)         If Buyer elects to exclude certain properties from this transaction,
and proceed to the Closing, then the Purchase Price will be reduced by the
aggregate Assigned Home Value of the excluded properties. If, however, it is
determined that any damage to one or more properties does not constitute a
Material Damage, or Buyer elects to purchase one or more properties that have
suffered Material Damage, then the transaction contemplated hereby shall be
closed without a reduction in the Purchase Price, and Seller shall assign to
Buyer Seller’s rights in any insurance proceeds or Condemnation award to be paid
to Seller in connection with such damage or Condemnation, and, in the case of
Material Damage, Seller shall pay to Buyer an amount equal to the deductible
under Seller’s policy of casualty insurance and Seller shall execute and deliver
to Buyer all required proofs of loss, assignments of claims and other similar
items.

 

 

 

 

(b)          For purposes of this Section 21, damage or destruction will be
considered “Material Damage” if (i) one (1) or more of the properties that
comprise the Property are rendered uninhabitable, or if the time to repair such
damage, despite reasonable expectations with respect to repairs, is reasonably
by Buyer to exceed three months, and (ii) Buyer has already designated ten (10)
properties as Excluded Properties hereunder. If, prior to Closing, any of the
improvements on the Property are damaged or destroyed and such damage is not
Material Damage, Buyer shall remain obligated to close hereunder with no
abatement in the Purchase Price. At Closing, Seller shall assign to Buyer
Seller’s rights in any insurance proceeds to be paid to Seller in connection
with such damage or destruction, and Buyer shall receive a credit against the
Purchase Price in an amount equal to the deductible amount under Seller’s
casualty insurance policy.

 

23.         General Provisions.

 

(a)         Entire Agreement. This written Agreement, including all Exhibits
attached hereto and documents to be delivered pursuant hereto, shall constitute
the entire agreement and understanding of the parties, and there are no other
prior or contemporaneous written or oral agreements, undertakings, promises,
warranties, or covenants not contained herein.

 

(b)         Amendments in Writing. This Agreement may be amended only by a
written memorandum subsequently executed by all of the parties hereto.

 

(c)         Waiver. No waiver of any provision or condition of this Agreement by
any party shall be valid unless in writing signed by such party. No such waiver
shall be taken as a waiver of any other or similar provision or of any future
event, act, or default.

 

(d)         Time of the Essence. Time is of the essence of this Agreement.
However, if Buyer is acting diligently and in good faith to proceed with the
consummation of the transaction contemplated by this Agreement on the Closing
Date, Seller will agree, upon the written request of Buyer, to extend the
Closing Date up to three (3) business days. In the computation of any period of
time provided for in this Agreement or by law, any date falling on a Saturday,
Sunday or legal holiday when banks are not open for business in the State where
the Property is located, will be deemed to refer to the next day which is not a
Saturday, Sunday, or legal holiday when banks are not open for business in such
State.

 

(e)         Severability. If any provision of this Agreement is rendered
unenforceable in whole or in part, such provision will be limited to the extent
necessary to render the remainder of the Agreement valid, or will be deemed to
be removed from this Agreement, as circumstances require, and this Agreement
shall be construed as if said provision had been incorporated herein as so
limited, or as if said provision has not been included herein, as the case may
be.

 

 

 

 

(f)          Headings. Headings of sections are for convenience of reference
only, and shall not be construed as a part of this Agreement.

 

(g)         Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefits of the parties hereto, and their respective
successors, and permitted assigns. This Agreement may not be assigned by either
party without the consent of the other party, except that Buyer may, without
consent from Seller, assign this Agreement to an affiliate of Buyer, Reven
Housing REIT, Inc., or any affiliate of Reven Housing REIT, Inc. or any entity
formed by Buyer for the purpose of acquiring or taking title to the Property;
provided that such assignment will not release Buyer from its obligations under
this Agreement. Any assignment in accordance with this Section 22(g) will
entitle the assignee thereunder to all rights and benefits, and subject such
assignee to all obligations, of Buyer hereunder.

 

(h)         Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed, or sent by Federal Express,
UPS or other recognized overnight courier service for next business day
delivery, or sent by facsimile transmission or electronic mail (so long as
reasonable evidence that such notice was sent and received is obtained by the
sending party). Any notice provided hereunder shall be deemed to be given when
sent in accordance with this provision, but any time to respond to such notice
as provided in this Agreement will not commence until the actual receipt of the
notice. Notices will be deemed valid if sent to the parties as follows:

 

IF TO BUYER

 

Reven Housing REIT, Inc.

P.O. Box 1459

La Jolla, California 92038-1459

Phone: 858-459-4000

e-mail: cmc@revenhousingreit.com

e-mail: mps@revenhousingreit.com

Attention: Chad Carpenter and Michael Soni

 

with a copy to:

 

Greenberg Traurig, LLP

1000 Louisiana

Suite 1700

Houston, Texas 77002

Phone: (713) 374-3521

e-mail: parkerd@gtlaw.com

Attention: David W. Parker

 

 

 

 

IF TO SELLER:

 

Easy Rentals, LLC

Gordon Morton

17 North 20th Street, Suite 600

Birmingham, Alabama 35203

Phone: _________________

e-mail: gordonm@bellsouth.net

Attention: Kris Mapes

 

With copies to:

 

Maurice L. Shevin

Sirote & Permutt, P. C.

2311 Highland Avenue, South

Suite 500

Birmingham, Alabama 35205

Phone: 205/930-5149

e-mail: mshevin@sirote.com

 

IF TO ESCROW HOLDER:

 

Fidelity National Title Insurance Company

1300 Dove Street, Suite 130

Newport Beach, California  92660

Phone: (949) 221-4715

e-mail: paul.mcdonald@fnf.com

Attention:  Paul McDonald

 

or to such additional or other persons, at such other address or addresses as
may be designated by notice from Buyer or Seller, as the case may be, to the
other. Notices by mail shall be sent by United States certified or registered
mail, return receipt requested, postage prepaid, and shall be deemed given upon
receipt or refusal of receipt. Notices by facsimile or electronic mail shall be
deemed given and effective upon receipt or refusal of receipt. Notices by
overnight courier shall be deemed given and effective upon receipt or refusal of
receipt from Federal Express, UPS or another recognized overnight courier
service.

 

(i)          Governing Law; Venue. To the extent enforceable, the parties agree
that this Agreement shall be governed in all respects by the internal laws of
the State of Delaware; provided that if the dispute involves an individual
property the law of the State where such property is located will apply. In any
dispute arising out of or related to this Agreement, an action must be brought
in Federal or State court, as applicable, in the County of Los Angeles,
California. The provisions of this Section 22(i) will survive the termination of
this Agreement.

 

(j)          Counterparts. This Agreement may be executed in any number of
identical counterparts, any or all of which may contain the signatures of less
than all of the parties, and all of which shall be construed together as but a
single instrument.

 

 

 

 

(k)          Attorneys’ Fees. If any action or proceeding brought by either
party against the other under this Agreement, the prevailing party shall be
entitled to recover all costs and expenses including its attorneys’ fees in such
action or proceeding in such amount as the court may adjudge reasonable. The
prevailing party shall be determined by the court based upon an assessment of
which party’s major arguments made or positions taken in the proceedings could
fairly be said to have prevailed over the other party’s major arguments or
positions on major disputed issues in the court’s decision. If the party that
commenced or instituted the action, suit or proceeding dismisses or discontinues
it without the concurrence of the other party, such other party shall be deemed
the prevailing party. The provisions of this Section 22(k) will survive any
termination of this Agreement.

 

(l)          Construction. This Agreement will not be construed more strictly
against either party by virtue of the fact that it was prepared by one party or
its counsel, it being recognized that each party hereto has had the opportunity
to review, have its counsel review, and provide input into this Agreement. All
words herein that are expressed in the neuter gender shall be deemed to include
the masculine, feminine and neuter genders and any word herein that is expressed
in the singular or plural shall be deemed, whenever appropriate in the context,
to include the plural and the singular.

 

(m)        Reporting Obligations. Seller and Buyer hereby designate Escrow
Holder to act as and perform the duties and obligations of the “reporting
person” with respect to the transaction contemplated by this Agreement for
purposes of 26 C.F.R. Section 1.6045-4(e)(5) relating to the requirements for
information reporting on real estate transactions. If required under applicable
law, Seller, Buyer and Escrow Holder shall execute at Closing a Designation
Agreement designating the Escrow Holder as the reporting person with respect to
the transaction contemplated by this Agreement.

 

(n)         1031 Exchange. Either party may involve this transaction in a
like-kind exchange under Internal Revenue Code Section 1031, the cost and
expense of which will be borne solely by the party invoking such structure. Each
party shall reasonably cooperate with the other in such structure, provided that
the party that is not participating in a like-kind exchange shall incur no
material costs, expenses or liabilities in connection with the other’s exchange
and will not be required to take title to or contract for purchase of any other
property. If either party uses a qualified intermediary or exchange accommodator
to effectuate the exchange, any assignment of the rights or obligations of such
party shall not relieve, release or absolve such party of its obligations to the
other.

 

(o)         Bulk Sales. Seller agrees to indemnify and hold Buyer, any permitted
assignee of Buyer’s rights under this Agreement and any of their respective
affiliates, officers, directors, shareholders, members, partners, agents,
employees and advisors (collectively, the “Indemnified Parties”) harmless from
and against any and all claims, damages, losses, costs, expenses, liens, actions
and causes of actions (including, without limitation, reasonable attorneys’ fees
and expenses) that may be incurred by, or asserted against, Buyer, any of the
other Indemnified Parties or the Property by reason of either such noncompliance
with the Bulk Sales laws applicable in the state or states where the Property is
located, or the failure of Seller to have paid any taxes, penalties or interest
which are the subject of such laws. The provisions and obligations of this
Section 24(o) shall survive the Closing.

 

 

 

 

(p)         Confidentiality. Buyer, Seller, and their respective representatives
shall hold in strictest confidence all data and information obtained with
respect to the transaction contemplated herein, including, without limitation,
the operation and management of the Property, whether obtained before or after
the execution and delivery hereof, as well as of Buyer’s plans to purchase the
Property or other properties in other locations, and shall not use such data or
information for purposes unrelated to this Agreement or disclose the same to
others except as expressly permitted hereunder. The preceding sentence shall not
be construed to prevent Buyer or Seller from disclosing to their prospective
lenders or investors, or to its officers, directors, attorneys, accountants,
architects, engineers and consultants to perform their designated tasks in
connection with Buyer’s inspection and proposed acquisition of the Property,
provided Buyer advises any such party of the confidential nature of the
information disclosed. However, neither party shall have this obligation
concerning information which: (a) is published or becomes publicly available
through no fault of either the Buyer or Seller; (b) is rightfully received from
a third party; or (c) is required to be disclosed by law. Notwithstanding the
preceding, nothing in this Agreement will prevent or be deemed to limit Buyer’s
ability to disclose the existence of this Agreement, and the nature of any
material terms herein, to the Securities and Exchange Commission or any other
governmental agency to which Buyer, or its successors hereunder, have a
disclosure obligation under any applicable law. The terms of this Section 22(p)
shall survive the consummation of the transaction contemplated herein or the
earlier termination of this Agreement.

 

(q)         Post-Closing Vacancy Holdback. Thirty-Five Thousand and 00/100
Dollars ($35,000.00) of the Purchase Price (the “Post-Closing Vacancy Holdback”)
shall be withheld by the Escrow Holder subject to the following terms. If any of
the properties that comprise the Property become tenantless or vacant because
the tenant or other occupant breached the lease or other occupancy agreement
within ninety (90) days after Closing, for each such property, Buyer shall
provide back-up documentation reasonably satisfactory to Seller documenting the
breach and missing tenant or vacancy and shall be refunded Five Thousand and
00/100 Dollars ($5,000.00) from the Post-Closing Vacancy Holdback. After ninety
(90) days have elapsed after the closing, the balance of the Post-Closing
Vacancy Holdback, if any, shall be delivered to Seller. Liability of Seller for
vacancies is limited to the Post-Closing Vacancy Holdback.

 

(r)          Post-Closing Return of Properties. If during the ninety (90) day
period after Closing Buyer learns that any leases, other occupancy agreements or
contracts of any kind on properties that comprise the Property provide the
tenant, occupant or any other third party with an option to purchase the
property, a right of first refusal, a right of first offer or any other
contractual option or right to purchase the property, then the sale of such
property to Buyer shall be rescinded and the purchase price of such property
shall be refunded by Seller to Buyer within thirty (30) days of Buyer’s written
notice to Seller. Buyer’s notice to Seller shall include back-up documentation
reasonably satisfactory to Seller demonstrating the existence of the option to
purchase the property, a right of first refusal, a right of first offer, or any
other contractual option or right to purchase the property.

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first above written.

 

  SELLER       EASY RENTALS, LLC,   An Alabama limited liability company        
By:   /s/ Gordon Morton       Gordon Morton, Manager       BUYER       REVEN
HOUSING REIT, INC.   a Maryland corporation         By: /s/ Chad Carpenter    
  Chad Carpenter       Chief Executive Officer