REAL ESTATE OPTION AGREEMENT
This REAL ESTATE OPTION AGREEMENT is made and entered into effective as of
the 9th day of December, 1996 (the "Effective Date"), by and between THE
DEVELOPMENT CORPORATION OF KNOX COUNTY, a Tennessee non-profit corporation,
hereinafter referred to as "Seller," and WELLS REAL ESTATE FUND IX, L.P., a
Georgia Limited Partnership, hereinafter referred to as "Purchaser."
WHEREAS, Seller is the owner in fee simple of a certain unimproved tract of
land consisting of approximately 5.622 acres, more or less, comprised of lot 13R
in the CenterPoint Business Park, located in Knox County, Tennessee, as is more
particularly described on Exhibit A, attached hereto and incorporated herein by
reference (hereinafter referred to as the "Premises"); and
WHEREAS, Purchaser wishes to purchase an option on the Premises as
NOW, THEREFORE, in consideration of the mutual covenants and provisions
herein contained, the payment of the Option Price hereinafter specified, the
foregoing recitals which are incorporated into this Agreement by reference, and
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. Subject to the conditions of this Agreement, Seller
hereby grants to Purchaser an option to purchase the Premises together with all
improvements thereon, if any, on an "as is, where is" basis.
2. Option Period. This Option shall remain in full force and effect for a
period of twenty (20) days from the Effective Date, such Option Period
commencing upon the Effective Date, and terminating at 11:59 p.m. on the 29th
day of December, 1996, which period of time is hereinafter referred to as the
"Exercise Period." By mutual agreement of the parties, the Exercise Period may
be extended for an additional period of thirty (30) days, which extension will
be evidenced by an amendment to this Agreement signed by both parties.
3. Exercise of Option. This Option may be exercised by Purchaser at any
time during the Exercise Period by written notice from Purchaser to Seller which
is actually delivered to and received by Seller during the Exercise Period.
4. Option Consideration. Purchaser shall pay to Seller the sum of Five
Thousand and No/100 Dollars ($5,000.00) ("Option Price") as consideration for
the granting of the Option, the receipt of which is hereby acknowledged. In the
event Purchaser does not properly exercise the Option as herein provided, the
Option Price shall be retained by Seller free and clear of all claims. In the
event Purchaser properly exercises the Option as herein provided, the Option
Price shall be credited against the Purchase Price.
5. Exceptions to Title. In the event of the exercise of the Option, the
Premises will be sold and conveyed subject to:
(a) Real property taxes for the year 1996, which shall be apportioned
between the parties hereto at the closing hereof and assumed by
(b) Utilities easements serving the Premises and plat restrictions of
(c) Such other easements, covenants, and restrictions as are of
record in the Knox County Register's Office; and
(d) Such other affirmative covenants and restrictions which are
contained in the proposed form of the warranty deed, attached
hereto as Exhibit B.
6. Purchase Price. In the event of the exercise of the Option, the total
purchase price for the Premises will be Five Hundred Eighty-Three Thousand Eight
Hundred and No/100 Dollars ($583,800.00). The Purchase Price shall be payable
(a) The Option Price shall be applied to the Purchase Price;
(b) The balance of the Purchase Price shall be paid in cash or by
cashier's or certified check at the Closing of the sale of the
Premises hereinafter specified (the "Closing").
7. Assignment of Option. This Agreement may not be assigned by Purchaser
without the prior written consent of Seller. Seller consents to the assignment
of this Agreement to the Bank of New York as agent for Wells Real Estate Fund
8. Existing Mortgages. If there be a mortgage or deed of trust on the
Premises and in the event of the exercise of the Option, Seller agrees to obtain
at Seller's expense and deliver to Purchaser, on or before the Closing
hereunder, a release thereof, properly executed and acknowledged in form for
9. Title to the Premises. Purchaser agrees at Purchaser's expense to
cause the title to the Premises to be examined by any reputable title company or
attorney, and to obtain a survey of the Premises, which survey shall be
certified and delivered to Seller and Purchaser. The new survey description
shall be used for the deed described in paragraph 12.
10. Purchaser's Rights on Seller's Default. In the event of the exercise
of the Option and if (i) Seller defaults in its performance hereunder; or (ii)
Seller is unable to convey good title to the Premises at Closing as required
hereunder; or (iii) a qualified and licensed architect or engineer concludes
that the Premises are unsuitable for construction due to soil or geologic
conditions, then Purchaser shall have the following rights:
(a) To accept the Premises or any part thereof subject to any of the
foregoing and, if necessary, obtain specific performance of this
Agreement subject to such matters; or
(b) To cancel and terminate this Agreement by written notice to
Seller, in which event the Option Price, together with any
accrued interest thereon, shall be returned to Purchaser.
Purchaser must elect one of the foregoing remedies, upon which election
the selected remedy shall become Purchaser's sole remedy at law or in equity.
11. Seller's Rights Upon Purchaser's Default. In the event Purchaser
should exercise the Option and thereafter default under this Agreement, Seller's
sole and exclusive remedy shall be to retain the Option Price as liquidated
damages and the parties hereto shall have no further rights or obligations
hereunder whatsoever. It is hereby agreed that Seller's damages will be
difficult to ascertain and that the Option Price constitutes a reasonable
liquidation thereof and is intended not as a penalty, but as fully liquidated
damages. Seller agrees that in the event of a default by Purchaser, it shall
not initiate any proceeding to recover damages from Purchaser, but shall limit
its recovery to the receipt and retention of the Option Price.
12. Title Documents. In the event of the exercise of the Option, the deed
by which the Premises are conveyed to Purchaser at the Closing shall be a
special warranty deed substantially in the form of Exhibit B, in proper
statutory form for recording and duly executed and acknowledged by Seller,
subject to the matters stated in paragraph 5. Seller shall pay the cost of
preparing said deed and Purchaser shall pay the cost of recording the same,
including all taxes. Purchaser agrees to pay all other closing costs.
13. Purchaser's Right to Possession. In the event of the exercise of the
Option, Seller agrees to give actual possession and occupancy of the Premises to
Purchaser at the time of Closing hereunder, provided, however, during the
Exercise Period, Purchaser shall have the right to enter the Premises, together
with men and materials,
for the following purposes: (i) to make a physical inspection of the Premises,
including subsurface tests, test borings, and hazardous waste tests; and (ii) to
make an accurate survey of the boundaries of the Premises. Purchaser shall also
have the right to inspect the Premises immediately prior to or on the day of
Closing. In the event Purchaser enters upon the Premises for the purposes
specified in subparagraphs (i) and (ii) above, Purchaser will indemnify Seller
for any claim made against Seller as a result of Purchaser's entry and, if the
Closing does not take place as provided hereunder, Purchaser will indemnify
Seller for any damage to the Premises caused by Purchaser's entry. Purchaser's
indemnity obligations contained in this
Paragraph 13 shall survive Closing.
14. Condemnation Prior to Closing. In the event of the exercise of the
Option and in the event of the taking of the Premises or any part thereof by
condemnation, the parties agree that Purchaser shall have the option to declare
this Agreement null and void (in which event the Option Price shall be returned
to Purchaser) or to accept the Premises in the condition in which they are left
following such taking, with an assignment by Seller to Purchaser of all rights
to the collection of any condemnation award.
15. Closing Adjustments. In the event of the exercise of the Option, at
the time of Closing hereunder, real estate taxes shall be apportioned and
adjusted between the parties as of the date of Closing.
16. Closing. In the event of the exercise of the Option, the Closing of
the purchase of the Premises by Purchaser shall be held within ten (10) days
after the exercise of the Option, with the location and time of said Closing to
be specified by Purchaser in a written notice; provided, however, that in no
event shall the Closing occur later than December 31, 1996. At said Closing, the
Purchase Price shall be paid by Purchaser to Seller as required in paragraph 6
hereof and Seller shall deliver to Purchaser a special warranty deed for the
Premises as required by paragraph 12 hereof.
17. Brokerage Commissions. In the event of the exercise of the Option and
Closing of the sale of the Premises as herein specified, Seller agrees to pay
ADEVCO Realty Group, Inc. a commission equal to Five (5%) percent of the
Purchase Price for arranging the sale of the Premises pursuant to a separate
agreement with said broker. Purchaser agrees to and hereby does indemnify and
hold Seller free and harmless from all losses, damages, costs, commissions and
expenses, including attorneys' fees, that Seller may suffer as a result of any
claims or suits brought by any other brokers or finders in connection with this
transaction, except with respect to a broker employed by Seller.
18. General Provisions.
(a) All notices or demands hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes
when presented personally or sent by registered or certified
United States mail, return receipt requested, or forwarded by a
nationally recognized overnight courier service, to any party
hereto at the address set forth below or at such other address as
any party shall subsequently designate in writing:
If to Seller:
The Development Corporation of Knox County
706 Walnut Street
Knoxville, Tennessee 37902
Contact: Melissa A. Ziegler
Phone: (423) 546-5887
If to Purchaser:
Wells Real Estate Fund IX, L.P.
3885 Holcomb Bridge Road
Norcross, GA 30092
Attn: Michael Berndt and Dave Kraxberger
(b) This Agreement shall be construed and enforced in
accordance with the laws of the State of Tennessee.
(c) If two or more persons constitute either Seller or Purchaser, the
word "Seller" or the word "Purchaser" shall be construed as if it
reads "Sellers" and "Purchasers" whenever the sense of this
Agreement so requires.
(d) The captions of this Agreement are inserted only for the purpose
of convenient reference and in no way define, limit, or prescribe
the scope or intent of this Agreement or any part thereof.
(e) This Agreement constitutes the entire contract between the
parties hereto, and may not be changed (including an extension of
the Exercise Period as provided in paragraph 2) or terminated
orally, but may only be modified by an instrument in writing
signed by the parties hereto.
(f) The provisions hereof shall apply to and inure to the benefit of
the successors, assigns and representatives of the respective
(g) This Agreement may be executed in multiple counterparts which
shall be construed together as one instrument.
(h) Seller hereby represents and warrants to Purchaser that, to the
best of Seller's knowledge, without independent investigation or
inquiry (i) no "hazardous substances", as that term is defined in
the Comprehensive Environmental Response, Compensation, and
Liability Act, and the rules and regulations promulgated pursuant
hereto, or any other pollutants, toxic materials, or contaminants
have been or shall prior to Closing be discharged, disbursed,
released, stored, treated, generated, disposed of, or allowed to
escape on the Property, (ii) no underground storage tanks are
located on the Property or were located on the Property and
subsequently removed or filled, and (iii) the Property has not
previously been used as a cemetery, landfill, or as a dump for
garbage or refuse or as a pit for burning any such garbage or
refuse (but Seller hereby discloses that a portion of Seller's
property located along the common boundary line between Lots 13R
and 11 of CenterPoint Park was used as a burning area several
years ago; however, Seller has no knowledge regarding the
materials which were burned in this area).
EXECUTED as of the day, year and month first above written.
THE DEVELOPMENT CORPORATION OF
Date and time executed KNOX COUNTY
By: /s/ Melissa Ziegler
Witness Melissa Ziegler
Its: Executive Director
WELLS REAL ESTATE FUND IX, L.P.
By: /s/ Leo F. Wells, III
Date and time executed