Apple Residential Income Trust Inc · 8-K · For 1/28/97 · EX-10

Filed On 2/12/97   ·   SEC File 333-10635   ·   Accession Number 916641-97-93

Current Report   ·   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Apple Residential Income Trust, Inc. 8-K              23     62K 
 2: EX-10       Exhibit 10.1 Earnest Money Contract                   35    130K 
 3: EX-10       Exhibit 10.2 Agreement of Sale                        17     74K 
 4: EX-10       Exhibit 10.3 Agreement of Sale                        16     74K 
 5: EX-10       Exhibit 10.4 Purchase Contract                        15     56K 
 6: EX-10       Exhibit 10.5 Modification to Agmt. of Sale             4     12K 
 7: EX-10       Exhibit 10.6 Modif. to Agmt of Sale                    4     12K 
 8: EX-10       Exhibit 10.7 Property Mgmt. Agreement                  6     23K 
 9: EX-10       Exhibit 10.8 Property Mgmt Agreement                   4     24K 
10: EX-10       Exhibit 10.9 Property Mgmt Agreement                   6     24K 

EX-10   ·   Exhibit 10.1 Earnest Money Contract
Exhibit Table of Contents

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EARNEST MONEY CONTRACT

by and between

PARAGON GROUP L.P., 

as Seller 

and 

CORNERSTONE REALTY GROUP INCORPORATED,

as Purchaser

Premises: Brookfield Apartments 
Dallas, Texas 

Date: December 10, 1996   

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TABLE OF CONTENTS 
----------------- 

                                                                          Page
                                                                          ----
Parties....................................................................  1  

ARTICLE I 

Property
--------

Section 1.01.   Property...................................................  1  

ARTICLE II

Purchase Price
--------------

Section 2.01.   Purchase Price.............................................  2  
Section 2.02.   Earnest Money..............................................  2  
Section 2.03.   Independent Contract Consideration.........................  3  

ARTICLE III 

Review Items
------------

Section 3.01.   Survey.....................................................  3  
Section 3.02.   Title Commitment...........................................  4  
Section 3.03.   Other Review Items.........................................  4  
Section 3.04.   Inspection.................................................  6  
Section 3.05.   Insurance..................................................  6  
Section 3.06.   Indemnity..................................................  7  

ARTICLE IV

Review Period 
------------- 

Section 4.01.   Review Period..............................................  7  
Section 4.02.   Purchaser's Notice.........................................  7  
Section 4.03.   Seller's Notice............................................  8  
Section 4.04.   Termination................................................  9  

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                                                                        Page
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ARTICLE V 

Good and Indefeasible Title 
--------------------------- 

Section 5.01.   Conveyance.................................................  9  
Section 5.02.   Owner Policy............................................... 10  

ARTICLE VI

Closing 
------- 

Section 6.01.   Closing.................................................... 10  
Section 6.02.   Seller's Obligations....................................... 10  
Section 6.03.   Purchaser's Obligations.................................... 12  
Section 6.04.   Possession................................................. 12  

ARTICLE VII 

Closing Adjustments 
------------------- 

Section 7.01.   General Prorations......................................... 12  
Section 7.02.   Specific Prorations........................................ 13  
Section 7.03.   Transaction Costs.......................................... 14  
Section 7.04.   Brokerage Commissions...................................... 15  
Section 7.05.   Survival................................................... 15  

ARTICLE VIII

Termination and Remedies
------------------------

Section 8.01.   Purchaser's Default........................................ 15  
Section 8.02.   Seller's Default........................................... 16  
Section 8.03.   Survival................................................... 16  

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                                                                          Page
                                                                          ----

ARTICLE IX

Representations, Warranties and Covenants 
----------------------------------------- 

Section 9.01.   Disclaimer................................................. 16  
Section 9.02.   Seller's Representations................................... 18  
Section 9.03.   Purchaser's Representations................................ 19  
Section 9.04.   Discovery.................................................. 20  
Section 9.05.   Operating Covenants........................................ 20  

ARTICLE X 

Notices 
------- 

Section 10.01.   Notices................................................... 22  

ARTICLE XI

Risk of Loss
------------

Section 11.01.   Minor Damage.............................................. 23  
Section 11.02.   Major Damage.............................................. 24  
Section 11.03.   Risk of Loss.............................................. 24  

ARTICLE XII 

Miscellaneous 
------------- 

Section 12.01.   Entire Agreement.......................................... 25  
Section 12.02.   No Recordation............................................ 25  
Section 12.03.   No Rule of Construction................................... 25  
Section 12.04.   Multiple Counterparts;                                         
               Governing Law............................................. 25
Section 12.05.   Attorneys' Fees........................................... 25  
Section 12.06.   Assignment................................................ 25  
Section 12.07.   Interpretation............................................ 26  

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                                                                          Page
                                                                          ----

Section 12.08.   Exhibits and Schedules.................................... 27  
Section 12.09.   Modifications; Reporting Person........................... 27  
Section 12.10.   Time of Essence........................................... 27  
Section 12.11.   No Publicity.............................................. 28  
Section 12.12.   Partial Invalidity........................................ 28  
Section 12.13.   Facsimile Signatures...................................... 28  
Section 12.14.   Section 1031 Exchange..................................... 28  
Section 12.15.   Seller's Investment Committee............................. 28  
Section 12.16.   Purchaser's Investment Committee.......................... 29  

EXHIBITS

Schedule 1 - schedule of Personal Property
----------                                

 Schedule 2 - schedule of Property Contracts
----------                                

Exhibit A  - Legal Description            
---------                                 

Exhibit B  - form of Deed                 
---------                                 

Exhibit C  - form of Assignment of Leases 
---------                                 

Exhibit D  - form of Bill of Sale         
---------                                 

Exhibit E  - form of Closing Memorandum   
---------                                 

Exhibit F  - form of FIRPTA Affidavit     
---------                                 

Exhibit G  - form of Tenant Letter        
---------                                 

Exhibit H  - form of Representation Letter
---------                                 

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EARNEST MONEY CONTRACT

THE STATE OF TEXAS    ss                                                        

ss  KNOW ALL MEN BY THESE PRESENTS: 

COUNTY OF DALLAS      ss                                                        

    THIS EARNEST MONEY CONTRACT (the "Contract") is made and entered into as
of this 10th day of December, 1996 (the "Effective Date") by and between PARAGON
GROUP L.P., a Delaware limited partnership ("Seller"), whose business address is
7557 Rambler Road, Suite 1200, Dallas, Texas, 75231 and CORNERSTONE REALTY GROUP
INCORPORATED, a Virginia corporation ("Purchaser"), whose business address is   
306 East Main Street, Richmond, Virginia 23219.                                 

ARTICLE I 

Property
--------

Section 1.01. Property. Seller hereby agrees to sell and convey to  
Purchaser, and Purchaser hereby agrees to purchase from Seller, upon the terms  
and conditions set forth herein, the following properties and assets:           

       (a) That certain tract of real property located in Dallas County,
Texas, more particularly described in Exhibit A attached hereto and made a part 
hereof for all purposes, together with all and singular the rights, privileges, 
tenements, heriditaments, easements, appendages and appurtenances pertaining to 
such real property (all of the foregoing being hereinafter collectively referred
to as the "Real Property").                                                     

       (b) All improvements, structures and fixtures with respect to and
situated on the Real Property, including without limitation that certain 232    
unit apartment complex and related surface parking areas located on the Real    
Property, commonly known as the "Brookfield Apartments" (all of the foregoing   
being hereinafter collectively referred to as the "Improvements").              

          (c) All of Seller's right, title and interest, if any, in and to all
leases and occupancy agreements and all amendments, modifications and letter    
agreements modifying or affecting said leases and occupancy agreements covering 
all or any portion of the Real Property and/or the Improvements (the            

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"Leases"), and all contract rights, licenses, condemnation proceeds or awards   
now pending or hereafter made with respect to the Real Property and/or the      
Improvements and all other intangible rights which are owned by Seller, if any, 
and which are appurtenant to the Real Property and/or the Improvements,         
including all right, title and interest of Seller, if any, in and to the name   
"Brookfield Apartments" (all of the foregoing being hereinafter collectively    
referred to as the "Intangible Property").                                      

       (d) All equipment, machinery, appliances, furniture, furnishings,
heating, ventilation and air conditioning systems and equipment and all other   
tangible personal property now owned by Seller, if any, and situated on the Real
Property and used or to be used in connection therewith or with the Improvements
as listed on Schedule 1 attached hereto (all of the foregoing being hereinafter 
collectively referred to as the "Personal Property").                           

All of the foregoing items purchased under this Contract shall be hereinafter   
sometimes referred to collectively as the "Property".                           

ARTICLE II

Purchase Price
--------------

     Section 2.01. Purchase Price. The purchase price ("Purchase Price") to be
paid by Purchaser to Seller shall be FIVE MILLION FOUR HUNDRED THOUSAND AND     
NO/100 DOLLARS ($5,400,000.00). The Purchase Price shall be paid by Purchaser to
Seller at the Closing (as hereinafter defined) in cash or immediately available 
wire transferred funds.                                                         

   Section 2.02. Earnest Money. On or before the second (2nd) business day
following the Effective Date, Purchaser shall deposit the amount of ONE HUNDRED 
THOUSAND AND NO/100 DOLLARS ($100,000.00) as earnest money hereunder (such      
amount, together with all interest accrued thereon, is collectively referred to 
as the "Earnest Money Deposit"), with American Title Company (the "Title        
Company") whose business address is 6029 Belt Line Road, Suite 250, Dallas,     
Texas 75240 Attention: Carol Badgett. The Earnest Money Deposit shall, at the   
option of Purchaser, be in the form of cash, certified check, cashier's check or
other immediately available funds. The Title Company shall hold the Earnest     
Money Deposit in an interest-bearing account at a bank designated by Seller,    
with                                                                            

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all interest being paid to Purchaser or Seller, as the case may be, in          
accordance with the terms of this Contract. At the Closing, the Earnest Money   
Deposit shall be applied toward the Purchase Price, but otherwise the Earnest   
Money Deposit shall be held by the Title Company, returned to Purchaser, or     
delivered to Seller, in accordance with the terms of this Contract.             

Section 2.03. Independent Contract Consideration. In addition to the
Earnest Money Deposit, Purchaser shall, concurrently with its execution hereof, 
deliver to Seller a check in the amount of FIFTY AND NO/100 DOLLARS ($50.00)    
(the "Independent Contract Consideration") which amount Seller and Purchaser    
agree has been bargained for as consideration for Seller's execution and        
delivery of this Contract and Purchaser's right to inspect the Property pursuant
to Section 3.04. The Independent Contract Consideration is in addition to and   
independent of any other consideration or payment provided for in this Contract 
and is non-refundable in all events.                                            

ARTICLE III 

Review Items
------------

     Section 3.01. Survey. Seller agrees to deliver, within ten (10) days from
the Effective Date, one (1) print of Seller's most recent survey of the         
Property. Purchaser has the right, at Purchaser's expense, to obtain a new or   
recertified survey of the Property (the "Survey"). Purchaser may instruct the   
surveyor to (a) locate all easements, rights-of-way and building lines on the   
Real Property (identified by recording data, if applicable); (b) show the       
location and size of all Improvements on the Real Property and streets, roads   
and utility lines on or immediately adjacent to the Real Property; (c) reflect  
any encroachments and protrusions; (d) certify, if applicable, that no portion  
of the Real Property lies within the 100 year flood plain or within a flood     
prone area; (e) include an appropriate metes and bounds description of the Real 
Property; and (f) include a certification by the surveyor to Seller, Purchaser  
and the Title Company in form reasonably satisfactory to Purchaser and the Title
Company. Subject to approval of the Survey by Seller, Purchaser and the Title   
Company, the metes and bounds description of the Real Property contained in the 
Survey, if applicable, shall be the description of the Real Property used in the
Deed (as hereinafter defined).                                                  

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     Section 3.02. Title Commitment. Seller agrees to deliver, within ten (10)
days from the Effective Date, to Purchaser a current commitment for a Texas     
Owner's Policy of Title Insurance issued by the Title Company, as Agent for     
Lawyers Title Insurance Corporation (the "Title Commitment"), which sets forth  
the state of title of the Property and all exceptions, including easements,     
restrictions, rights-of-way, covenants, reservations or other conditions or     
matters affecting the Property which would appear in an owner's policy of title 
insurance, together with legible copies of such easements, restrictions,        
rights-of-way, covenants, reservations or other matters.                        

     Section 3.03. Other Review Items. In addition to the Survey and the Title
Commitment, Seller will, to the extent available to and currently in Seller's   
possession, make available to Purchaser the following:                          

          (a) Copies of any hazardous materials reports in Seller's possession
prepared for Seller during the thirty (30) months preceding the Effective Date. 
By providing copies of hazardous materials reports to Purchaser, Seller is not  
making any representations or warranties, implied or otherwise, as to the       
accuracy of the factual information provided or the conclusions formed by the   
consultants who prepared the hazardous materials reports. Further, Seller is    
making no representations or warranties as to the skill and care taken by the   
consultant in preparing the hazardous materials reports. Seller will not be     
responsible for conditions or consequences arising from relevant facts that were
concealed, withheld, or not fully disclosed by the consultant, any regulatory or
governmental agency, or from persons interviewed as part of the preparation of  
the hazardous materials report. Purchaser also acknowledges that the facts and  
conditions referenced in the hazardous materials report may change over time and
the conclusions and recommendations set forth therein are applicable only to the
facts and conditions as described in the hazardous materials report. Purchaser  
should use good faith efforts in determining whether the hazardous materials    
reports are accurate.                                                           

         (b) Operating statements for the Property in the format customarily
prepared for Seller for the calendar year prior to the Effective Date and the   
most recently available interim period, including, without limitation, records  
of income, expenses, and capital expenditures.                                  

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  (c) Copies of all management, service, maintenance and other
contracts in force with respect to the Property (collectively, the "Property    
Contracts") as listed on Schedule 2 attached hereto.                            

           (d) Copies of all Leases and other occupancy agreements in force with
respect to the Property.                                                        

       (e) Copies of the ad valorem and personal property tax statements
covering the Property for the current tax year (if available) and the tax year  
immediately preceding the Effective Date.                                       

        (f) An original rent roll for the Property for the month preceding
the Effective Date in the format customarily prepared for Seller and showing    
tenant names, vacant premises, expiration dates of all Leases, and a current    
schedule of rent for each lease.                                                

        (g) A current schedule of all refundable security and other tenant
deposits paid by tenants at the Property under existing Leases.                 

          (h) Copies of all insurance loss claims relating to the Property for
the thirty (30) months preceding the Effective Date.                            

         (i) Seller has been advised by Purchaser that Purchaser is a public
entity and that it is required to furnish statements to the Securities and      
Exchange Commission in connection with this acquisition. In the event Purchaser 
closes and purchases the Property, Seller agrees to make the information        
described in Section 3.03(a)-(h) above available for Purchaser to audit the last
twelve (12) months of operation of the Property so that a report can be         
generated that is in compliance with accounting Regulation S-X of the Securities
and Exchange Commission. This Section 3.03(i) shall survive Closing.            

Seller will instruct Seller's property manager to cooperate fully with Purchaser
with respect to the foregoing review items subject to the provisions of this    
Section 3.0. Notwithstanding the foregoing, Purchaser shall have no right to    
inspect (i) any internal memoranda or reports prepared by or on behalf of Seller
which Seller deems confidential, nor (ii) any appraisals of the Property        
prepared by or on behalf of Seller. SUBJECT TO SECTION 9.02 HEREOF, PURCHASER   
ACKNOWLEDGES AND AGREES THAT ANY AND ALL REPORTS, AGREEMENTS, LEASES AND OTHER  
INFORMATION DELIVERED OR OTHERWISE MADE AVAILABLE TO PURCHASER UNDER THIS       

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CONTRACT OR OTHERWISE HAVE BEEN DELIVERED AND MADE AVAILABLE BY OR ON SELLER'S  
BEHALF WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, BY
SELLER - IT BEING AGREED THAT SELLER DOES NOT VERIFY THE ACCURACY THEREOF. In   
the event this Contract shall terminate for any or no reason, Purchaser agrees  
to return to Seller, no later than two (2) days after request, all documents and
other materials delivered to Purchaser hereunder.                               

     Section 3.04. Inspection. Purchaser shall have the right, upon reasonable
notice to Seller, subject to the rights of tenants in possession, if any,       
pursuant to the Leases, to conduct on-site physical inspections of the Property 
(including, without limitation, termite inspections and environmental           
assessments) during the Review Period (hereinafter defined), including, without 
limitation, the right to enter and inspect all portions of the Property and all 
of Seller's books and records at the Property relating solely to the Property.  
Seller hereby directs the manager of the Property to reasonably cooperate with  
Purchaser in the exercise of Purchaser's inspection rights, subject to the terms
of this Contract. A representative of Seller shall have the right to be present 
during any physical tests, inspections and investigations at or about the       
Property. Purchaser has no right to make any alterations to the Property without
Seller's prior written consent. Purchaser shall, at Purchaser's sole expense,   
promptly fill and compact any holes and otherwise restore any damage to the     
Property caused as a result of any test, inspection or investigation by or on   
Purchaser's behalf. Any soil, waste or materials removed during any             
environmental testing must be properly disposed of by Purchaser at Purchaser's  
sole cost, even though Purchaser may elect to terminate the Contract. Purchaser 
shall not permit any liens or encumbrances to arise against the Property in     
connection with or as a result of such inspections, studies or investigations.  
The foregoing obligations shall survive the termination of this Contract.       

 Section 3.05. Insurance. Purchaser has furnished Seller with evidence
acceptable to Seller that Purchaser maintains public liability insurance with   
limits of at least $1,000,000 for bodily or personal injury or death, property  
damage insurance in an amount of at least $500,000, and contractual liability   
insurance with respect to Purchaser's indemnification obligations under Section 
3.06(c) with respect to damage to the Property and/or injury to persons or      
property. Purchaser agrees to maintain such insurance policies in effect for a  
period of at least six (6) months following the earlier to occur of the Closing 
or the date of termination of this Contract.                                    

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   Section 3.06. Indemnity. Purchaser shall (a) hold any and all materials
delivered to Purchaser under this Contract in confidence subject to the terms   
hereof; (b) not unreasonably interfere with the operation of the Property, or   
the business conducted by any tenant of the Property during any testing,        
inspection or investigation performed with respect to the Property; and (c)     
indemnify, protect, defend and hold Seller, its partners and their respective   
officers, directors, trustees, employees, agents, affiliates, successors and    
assigns harmless from and against any and all loss (including, without          
limitation, damage to the Property or injury to persons or property), cost,     
claim, liability or expense (including, without limitation, reasonable          
attorneys' fees) arising or resulting, directly or indirectly, from any         
unauthorized disclosure, test, investigation, inspection or contact made by     
Purchaser, or anyone acting on behalf of Purchaser, pursuant to this Contract,  
or otherwise. Seller agrees to promptly notify Purchaser of any claims as soon  
as they are made. Notwithstanding anything to the contrary contained herein, the
provisions of this Section shall survive the termination of this Contract by    
either Purchaser or Seller, and/or the Closing and delivery of the Deed for a   
period of six (6) months following Closing. For purposes of this Section 3.06,  
unauthorized disclosure shall be a disclosure of proprietary and confidential   
information by Purchaser regarding the Property to a person or entity other than
Purchaser's lending sources, investors, third parties performing Purchaser's due
diligence review, and Purchaser's accountants, investment advisors and          
attorneys.                                                                      

ARTICLE IV

Review Period 
------------- 

   Section 4.01. Review Period. Purchaser shall have from the date of this
Contract until 12:00 noon Dallas, Texas time, on the twenty first (21st) day    
following the Effective Date (the "Review Period") to review the Survey, the    
Title Commitment, and the items delivered by Seller to Purchaser under Section  
3.03, and to conduct physical, mechanical, environmental and other inspections  
of the Property.                                                                

      Section 4.02. Purchaser's Notice. If for any reason Purchaser, in its sole
and absolute discretion, is not satisfied with the condition of the Property or 
any portion thereof, or any matter in or pertaining to the items delivered or to
be delivered by Seller to Purchaser pursuant to Article III of this Contract, or
any other fact or situation with respect to the Property, then in such event    
Purchaser shall                                                                 

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have the right to terminate this Contract by giving Seller written notice       
thereof (the "Purchaser's Notice"), and this Contract shall be immediately      
terminated upon Purchaser's delivery of the Purchaser's Notice to Seller and    
(except as otherwise provided below) the Earnest Money Deposit shall be returned
to Purchaser, as Purchaser's sole and exclusive remedy. The Purchaser's Notice  
need not set forth the reason for such termination; provided, however, that if  
Purchaser, in its sole and absolute discretion, desires to give Seller an       
opportunity to cure Purchaser's dissatisfaction before Purchaser terminates this
Contract, then Purchaser may state such intention in the Purchaser's Notice and 
shall set forth in reasonable detail the basis for any such dissatisfaction, in 
which event this Contract shall not be immediately terminated and Seller shall  
have the right, but not the obligation, to cure Purchaser's dissatisfaction or  
reduce the Purchase Price as set forth in Section 4.03 below. In the event      
Purchaser fails to deliver the Purchaser's Notice on or before the expiration of
the Review Period then this Contract shall be immediately terminated and the    
Earnest Money Deposit shall be returned to Purchaser, as Purchaser's sale and   
exclusive remedy.                                                               

 Section 4.03. Seller's Notice. If Purchaser states in the Purchaser's
Notice its intention to give Seller an opportunity to cure Purchaser's          
dissatisfaction before Purchaser terminates this Contract and includes therein  
the basis for Purchaser's dissatisfaction, then Seller shall have the right, but
not the obligation, by delivery of written notice (the "Seller's Notice") to    
Purchaser within five (5) business days after Seller's receipt of the           
Purchaser's Notice, to elect either to (i) cure any such matter to the          
reasonable satisfaction of Purchaser at Seller's sole cost and expense, (ii)    
proceed to Closing, and reduce the Purchase Price by an amount equal to the cost
to Purchaser of any such cure, or (iii) terminate the Contract. In the event    
Seller fails to deliver the Seller's Notice within such five (5) business day   
period, Seller shall be deemed to have waived Seller's rights to cure; the      
Earnest Money Deposit shall be returned to Purchaser, as Purchaser's sole and   
exclusive remedy; and this Contract shall be deemed terminated. If Seller       
delivers a Seller's Notice, Seller and Purchaser agree in good faith to         
reasonably determine, within five (5) business days after delivery of the       
Seller's Notice, the method, timing, cost and means to cure any such            
objectionable item, or the cost to Purchaser of any such cure, as the case may  
be. In the event Seller and Purchaser are unable, after the exercise of good    
faith efforts, to agree in writing on the curative action required or the amount
to be reduced from the Purchase Price as a credit for the cost to cure, as the  
case may be, within such five (5) business day period, then, this Contract shall
be deemed automatically terminated, and the Earnest Money Deposit shall be      
returned to Purchaser, as Purchaser's sole and exclusive remedy.                

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      Section 4.04. Termination. In the event that Purchaser elects to terminate
this Contract in accordance with, and subject to the terms of this Article IV,  
the parties hereto shall be relieved of all liabilities and obligations         
hereunder (expressly, excluding, however, Purchaser's indemnity of Seller under 
Section 3.06 which shall survive any termination of this Contract by either     
party hereto) and the Earnest Money Deposit shall be refunded fully and promptly
to Purchaser as Purchaser's sole and exclusive remedy.                          

ARTICLE V 

Good and Indefeasible Title 
--------------------------- 

      Section 5.01. Conveyance. At the Closing, Seller shall convey title to the
Real Property and the Improvements to Purchaser by the Deed, free and clear of  
any and all deeds of trust, mortgages or other liens or indebtedness,           
encumbrances, conditions, easements, rights-of-way, assessments and             
restrictions, except for the following (collectively, the "Permitted            
Exceptions"):                                                                   

     (a) Real estate taxes and assessments for the year in which the
Closing occurs and subsequent years not yet due and payable.        

(b) All easements, restrictions, rights-of-way, party wall
     agreements, encroachments, covenants, reservations, agreements, licenses,
     conditions and other matters affecting all or any portion of the Property
 to the extent (i) reflected on Schedule B to the Title Commitment and
      approved or deemed approved by Purchaser; (ii) reflected on the Survey and
approved or deemed approved by Purchaser; and/or (iii) created by or
consented and agreed to in writing by Purchaser prior to or at the  
Closing.                                                            

       (c) All building restrictions, zoning regulations and other laws,
    rules and regulations, now or hereafter in effect, to the extent adopted
      by any municipal, governmental or other public authority and applicable to
all or any portion of the Property.                                 

       (d) The rights of tenants in possession as tenants only under the
Leases.                                                             

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      Section 5.02. Owner Policy. At the Closing, Seller shall, at Seller's sole
cost and expense, purchase an Owner Policy of Title Insurance (the "Owner       
Policy"), in the standard ALTA form, issued by the Title Company in Purchaser's 
favor in an amount equal to the Purchase Price, insuring Purchaser's fee simple 
title to the Property subject only to the Permitted Exceptions, and the standard
printed exceptions; provided, however, (a) the exception for restrictive        
covenants shall, as applicable, be deleted or shall list only those restrictive 
covenants as may be Permitted Exceptions; (b) any exception for parties in      
possession of the Real Property or the Improvements shall be limited to the     
rights of tenants in possession, as tenants only, pursuant to unrecorded leases;
(c) there shall be no general exception for visible and apparent easements,     
roads and highways or any other matters which would be disclosed by a current   
survey of the Property; and (d) at Purchaser's option and sole expense, the     
"survey exception" regarding area and boundary lines, encroachments and         
overlapping of improvements may be modified so as to refer only to "shortages in
area".                                                                          

ARTICLE VI

Closing 
------- 

Section 6.01. Closing. The purchase and sale of the Property (the   
"Closing") shall be held at the offices of the Title Company or at such other   
place as shall be agreed upon by Seller and Purchaser, and shall occur, subject 
to satisfaction of all conditions precedent set forth in this Contract, at 9:00 
a.m. Dallas, Texas time on January 15, 1997, or such earlier date as may be     
mutually agreeable to Seller and Purchaser (the "Closing Date").                

    Section 6.02. Seller's Obligations. At the Closing, Seller shall execute
and deliver to Purchaser, and/or cause the execution and delivery by all parties
other than Purchaser of, the following:                                         

     (a) That certain special warranty deed (the "Deed") in the form
    attached hereto as Exhibit B and made a part hereof for all purposes, or
as approved by the Title Company.                                   

           (b) That certain assignment of leases (the "Assignment of Leases") in
the form attached hereto as Exhibit C and made a part hereof for all
purposes.                                                           

      (c) That certain blanket conveyance, bill of sale and assignment
     ("Bill of Sale") in the form attached hereto as Exhibit D and made a part
hereof for all purposes.                                            

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       (d) That certain closing memorandum and indemnification agreement
   (the "Closing Memorandum") in the form attached hereto as Exhibit E and
made a part hereof for all purposes.                                

     (e) That certain affidavit (the "FIRPTA Affidavit") in the form
 attached hereto as Exhibit F and made a part hereof for all purposes.

          (f) That certain tenant notification letter (the "Tenant Letter") in
the form attached hereto as Exhibit G and made a part hereof for all
purposes.                                                           

     (g) All keys to all locks on the Property and, to the extent in
Seller's possession, original counterparts of all Leases, Property  
 Contracts and other documents included within the Property. The items
  referred to in this clause (g) may be delivered at the Property rather
than at the Closing.                                                

      (h) A current rent roll in the form described in Section 3.03(f)
   certified by Seller as being true, correct and complete in all material
respects as of the date thereof.                                    

           (i) The Owner Policy, provided that the Title Company may deliver the
  Owner Policy to Purchaser following the Closing in accordance with the
Title Company's customary practices.                                

      (j) Appropriate evidence of Seller's authority to consummate the
transactions contemplated by this Contract.                         

     (k) An affidavit of Seller in such form as will cause the Title
     Company to omit from the title insurance policy the exclusion relating to
unrecorded mechanic's and materialmen's liens.                      

    (l) Seller shall provide a termination of management agreement
      executed by Seller and Paragon Residential Services, Inc., without cost to
Purchaser.                                                          

        (m) Such other documents as are normally transferred at Closing in
Texas or are reasonably requested by Purchaser or its counsel.      

       (n) A representation letter as normally required by auditors of a
public company in the form attached hereto as Exhibit H executed by 
Seller. This clause shall survive Closing for one year.             

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Section 6.03. Purchaser's Obligations. At the Closing, Purchaser shall
deliver the balance of the Purchase Price (the Earnest Money Deposit being      
applied thereto) to Seller by wire transfer of immediately available funds, and 
shall execute and deliver to Seller, and/or cause the execution and delivery by 
all parties other than Seller of, the following:                                

(a) The Assignment of Leases.                             

(b) The Bill of Sale.                                     

(c) The Closing Memorandum.                               

(d) The Tenant Letter.                                    

         (e) Appropriate evidence of Purchaser's authority to consummate the
transactions contemplated by this Contract.                         

        (f) Such other documents as are normally transferred at Closing in
Texas or are reasonably requested by Seller or its counsel.         

      Section 6.04. Possession. Possession of the Property shall be delivered by
Seller to Purchaser at the Closing, subject to the Permitted Exceptions.        

ARTICLE VII 

Closing Adjustments 
------------------- 

   Section 7.01. General Prorations. The following shall be apportioned at
the Closing:                                                                    

        (a) rents, if any, as and when collected (the term "rents" as used
  in this Contract including all rent and other payments due and payable
under any Lease) and all other revenue from the Property;           

           (b) taxes and other assessments (including personal property taxes on
      the Personal Property on the basis customarily followed in the locality of
 the Property), any apportionment of real estate taxes to be made with
     respect to a tax year for which either the tax rate or assessed valuation
 or both have not yet been fixed, to be upon the basis of the tax rate
  and/or assessed valuation last fixed; provided that the parties hereto
agree that to the extent the actual                                 

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   taxes for the current year differ from the amount so apportioned at the
Closing, the parties hereto will make all necessary adjustments by  
   appropriate payments between themselves following the Closing, and this
provision shall survive delivery of the Deed;                       

        (c) payments under any service and/or other contracts that are not
otherwise terminated at or prior to Closing;                        

   (d) gas, electricity and other utility charges, if any, to be
      apportioned on the basis of meter readings on the day immediately prior to
the Closing; and                                                    

      (e) other operating expenses of the Property incurred during the
   month in which the Closing occurs, including, without limitation, costs
    due and payable by Seller under, or with respect to, any Lease of all or
any portion of the Property.                                        

In making such apportionments, Purchaser shall be entitled to rents and other   
income paid with respect to the day of the Closing, and Purchaser shall be      
responsible for taxes and other expenses incurred with respect to the day of the
Closing. All such apportionments shall be subject to post-closing adjustments as
necessary to reflect later relevant information not available at the Closing and
to correct any errors made at the Closing with respect to such apportionments;  
provided, however, that such apportionments shall in any event (i.e., regardless
of whether later relevant information becomes available or errors are           
discovered) be deemed final and not subject to further post-closing adjustment  
on the sixtieth (60th) day following the Closing Date. Seller and Purchaser     
agree that, except as otherwise set forth herein, all costs and expenses        
actually incurred in connection with the ownership, operation, leasing, repair, 
maintenance or management of the Property shall, to the extent attributable to  
the period prior to the Closing Date, be the sole responsibility of Seller, and 
shall, to the extent attributable to the period from and after the Closing Date,
be the sole responsibility of Purchaser.                                        

    Section 7.02. Specific Prorations. Anything hereinabove contained to the
contrary notwithstanding:                                                       

      (a) Seller and Purchaser agree that all rents received after the
  Closing shall be applied first to any rent unpaid for the month of the
Closing, then to current rentals, if any, in the order of their     

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 maturity, and then to delinquent rentals in inverse order of maturity
   (i.e., to be applied to the most recent delinquent rental first, and so
      on, until the oldest delinquent rental has been paid), and Purchaser shall
     promptly deliver to Seller any such delinquent rentals received after the
      Closing which remain to be applied to rent obligations which accrued prior
     to the Closing. Purchaser has no obligation to collect any past due rents
owed Seller as of the Closing Date. Seller may, at Seller's option, 
   institute an action to collect any delinquent rentals after the Closing
from tenants who are no longer in occupancy at the Closing, but not 
otherwise.                                                          

         (b) At the Closing, Seller shall credit to the account of Purchaser
     against the Purchase Price any security and other tenant deposits paid by
 tenants at the Property under then existing Leases, less any security
    deposits previously applied by Seller to rents or other charges accruing
pursuant to the Leases.                                             

      (c) As to gas, electricity and other utility charges, Seller may
  elect to pay one or more of said items accrued to the date hereinabove
fixed for apportionment directly to the person or entity entitled   
thereunto and to the extent Seller so elects, such item shall not be
    apportioned hereunder, and Seller's obligation to pay such item directly
in such case shall survive the Closing.                             

         (d) At the Closing, Purchaser shall receive a credit from Seller in
     an amount equal to $500 for each apartment unit which is not "rent ready"
    as required by Section 9.05(e); provided, however, such aggregate credit
shall not exceed $5,000.                                            

  Section 7.03. Transaction Costs. With the exception of (a) any fees or
real estate commissions (which are subject to and governed by the provisions of 
Section 7.04); (b) all attorneys' fees and expenses, if any, of counsel to      
Purchaser (which shall be borne by Purchaser); (c) any inspection or other cost 
incurred by Purchaser (which shall be borne by Purchaser); (d) all attorneys'   
fees and expenses of counsel to Seller (which shall be borne by Seller); (e) the
cost of an update of the Survey (which shall be borne by Seller); and (f) the   
cost of the Owner Policy (which shall be borne by Seller); all other transaction
costs actually incurred, including, without limitation, any escrow and other    
charges of the Title Company, and recording fees shall be apportioned in        
accordance with local custom in the State of Texas.                             

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Section 7.04. Brokerage Commissions. Seller agrees to pay to O'Boyle
Properties ("Broker") a real estate commission equal to two percent (2.00%) of  
the purchase price if, and only if, the Closing occurs in accordance with this  
Contract, but not otherwise. Except for Broker, Seller and Purchaser acknowledge
and agree that neither has dealt with any other real estate broker, agent or    
salesman, and any other fees or real estate commissions occasioned by the       
execution and/or consummation of this Contract shall be the sole responsibility 
of the party contracting therefor, and such party agrees to indemnify and hold  
harmless the other party for any and all losses or expenses attributable to such
other fees or real estate commissions. By its signature hereto, Broker          
represents to Seller and Purchaser that such broker has not entered into any    
arrangement with any other party whereby such other party is entitled to any    
commission or finder's fee in connection with this transaction, and such broker 
agrees that should any claim be made for brokerage commissions or finder's fees 
by any other party claiming by, through or on account of any acts of such broker
or its representatives, such broker shall hold Purchaser and Seller free and    
harmless from and against any and all loss, cost, damage and expense in         
connection therewith. In the event the transaction envisioned hereby fails to   
close for any reason, including without limitation either party's default,      
neither party shall have any obligation for the payment to Broker or any other  
person of any commission or similar type fee hereunder, or otherwise. Purchaser 
has been and is hereby advised that Purchaser should have the abstract covering 
the Property examined by an attorney of Purchaser's selection or Purchaser      
should be furnished with a policy of title insurance.                           

Section 7.05. Survival. The terms of this Article shall survive the 
Closing and delivery of the Deed or, if applicable, the earlier termination of  
this Contract.                                                                  

ARTICLE VIII

Termination and Remedies
------------------------

      Section 8.01. Purchaser's Default. In the event that Purchaser should fail
to consummate this Contract for any reason, except Seller's default or the      
permitted termination of this Contract by Purchaser or Seller as herein         
expressly provided, Seller shall be entitled, as Seller's sole and exclusive    
remedy, to terminate this Contract and receive the Earnest Money Deposit and    
Seller's acceptance (by negotiation, deposit or otherwise) of the Earnest Money 
Deposit shall conclusively operate to terminate this Contract and release and   

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fully discharge Seller and Purchaser from any and all liability hereunder       
(expressly excluding, however, Purchaser's indemnity of Seller under Section    
3.06 which shall survive termination of this Contract by either party). Seller  
and Purchaser acknowledge and agree that delivery of the Earnest Money Deposit  
shall be deemed liquidated damages for Purchaser's breach of this Contract, it  
being further agreed that the actual damages to Seller in the event of such     
breach are impractical to ascertain and the amount of the Earnest Money Deposit 
is a reasonable estimate thereof. Prior to delivery of the Earnest Money to     
Seller, Seller shall give Purchaser seventy-two hours prior notice of same.     

   Section 8.02. Seller's Default. In the event that Seller should fail to
consummate this Contract for any reason, except Purchaser's default or the      
permitted termination of this Contract by either Seller or Purchaser as herein  
expressly provided, Purchaser shall be entitled, as Purchaser's sole and        
exclusive remedies, to either (a) the return of the Earnest Money Deposit and   
Purchaser's acceptance (by negotiation, deposit or otherwise) of the Earnest    
Money Deposit shall conclusively operate to terminate this Contract and release 
and fully discharge Seller and Purchaser from any and all liability hereunder   
(expressly excluding, however, Purchaser's indemnity of Seller under Section    
3.06 which shall survive any termination of this Contract by either party       
hereto); or (b) enforce specific performance of Seller's obligations hereunder, 
subject, however, to all conditions and termination rights set forth herein and 
Purchaser shall be entitled to all costs or expenses (including reasonable      
attorneys' fees) incurred by Purchaser in pursuing its remedy under this Section
8.02(b). Purchaser shall have no right to sue for or seek, whether at law, in   
equity or otherwise, any monetary award or judgment and/or any consequential,   
incidental or other damages against Seller, any officer, trustee, director,     
employee or agent of Seller, or their respective successors and assigns all of  
which are hereby knowingly, voluntarily and intentionally waived, released and  
discharged by Purchaser.                                                        

Section 8.03. Survival. The terms of this Article shall survive the 
Closing and delivery of the Deed or, if applicable, the earlier termination of  
this Contract.                                                                  

ARTICLE IX

Representations, Warranties and Covenants 
----------------------------------------- 

Section 9.01. Disclaimer. PURCHASER AGREES THAT PURCHASER IS BEING  
AFFORDED THE RIGHT TO PERFORM EXAMINATIONS AND INVESTIGATIONS OF THE PROPERTY   
PRIOR TO THE EXPIRATION OF THE REVIEW PERIOD, INCLUDING, WITHOUT LIMITATION,    
EXAMINATION AND                                                                 

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INVESTIGATION FOR THE PRESENCE OF ASBESTOS, PCB EMISSIONS, CLEANING SOLVENTS    
(E.G., PCE), UNDERGROUND STORAGE TANKS AND HAZARDOUS WASTES ON ALL OR ANY       
PORTION OF THE PROPERTY, AND FOR THE PROPERTY'S COMPLIANCE WITH ANY AND ALL     
HANDICAPPED ACCESSIBILITY LAWS, RULES AND REGULATIONS (E.G., AMERICANS WITH     
DISABILITIES ACT OF 1990, OR ANY OTHER LAW, RULE OR REGULATION). PURCHASER WILL 
RELY SOLELY UPON SUCH EXAMINATIONS AND INVESTIGATIONS IN PURCHASING THE         
PROPERTY. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, AND EXCEPT AS        
PROVIDED IN SECTION 9.02, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT PURCHASER  
IS ACQUIRING THE PROPERTY "AS IS" AND "WHERE IS", AND WITH ALL FAULTS AND THAT, 
EXCEPT AS SET FORTH IN SECTION 9.02 AND THE DOCUMENTS TO BE DELIVERED AT THE    
CLOSING, SELLER HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATIONS OR           
WARRANTIES, STATUTORY, EXPRESSED OR IMPLIED, WITH RESPECT TO THE QUALITY,       
PHYSICAL CONDITION, EXPENSES, VALUE OF THE PROPERTY OR IMPROVEMENTS THEREON,    
HANDICAPPED ACCESSIBILITY LAW COMPLIANCE, PRESENCE/ABSENCE OF HAZARDOUS         
MATERIALS, ELECTROMAGNETIC FIELD EXPOSURE LEVELS OR ANY OTHER MATTER OR THING   
AFFECTING OR RELATED TO THE PROPERTY OR THIS CONTRACT (INCLUDING, WITHOUT       
LIMITATION, WARRANTIES OF HABITABILITY, WARRANTIES OF MERCHANTABILITY AND/OR OF 
FITNESS FOR A PARTICULAR PURPOSE), WHICH MIGHT BE PERTINENT IN CONSIDERING THE  
MAKING OF THE PURCHASE OF THE PROPERTY OR THE ENTERING INTO OF THIS CONTRACT,   
AND PURCHASER DOES HEREBY RELEASE AND FOREVER DISCHARGE SELLER, ITS OFFICERS,   
TRUSTEES, DIRECTORS, AND THEIR RESPECTIVE AGENTS, EMPLOYEES, SUCCESSORS AND     
ASSIGNS FROM ANY AND ALL CLAIM, OBLIGATION AND LIABILITY (WHETHER BASED IN TORT,
UNDER CONTRACT OR OTHERWISE) ATTRIBUTABLE, IN WHOLE OR IN PART, TO ANY SUCH     
REPRESENTATION, EXCEPT FOR THOSE PROVIDED IN SECTION 9.02 AND THE DOCUMENTS TO  
BE DELIVERED AT THE CLOSING, AND/OR ALLEGED REPRESENTATION, AND FURTHER         
PURCHASER DOES HEREBY EXPRESSLY ACKNOWLEDGE THAT, EXCEPT AS SET FORTH IN SECTION
9.02 AND THE DOCUMENTS TO BE DELIVERED AT THE CLOSING, NO SUCH REPRESENTATIONS  
HAVE BEEN MADE. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY WARRANTIES,  
EITHER EXPRESSED OR IMPLIED, GUARANTEES, PROMISES, STATEMENTS, REPRESENTATIONS  
OR INFORMATION PERTAINING TO THE PROPERTY MADE OR FURNISHED BY BROKER, OR ANY   
AGENT, BROKER, EMPLOYEE, SERVANT OR OTHER PERSON REPRESENTING OR PURPORTING TO  
REPRESENT SELLER. PURCHASER HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES     
SELLER FROM ANY AND ALL CLAIMS, DEMANDS AND CAUSES OF ACTION THAT PURCHASER MAY 
HAVE AGAINST SELLER WITH RESPECT TO ANY COSTS, LOSSES, EXPENSES OR OTHER        
LIABILITIES INCURRED IN CONNECTION WITH PROPERTY, INCLUDING, WITHOUT LIMITATION,
ANY RIGHT OF CONTRIBUTION, INDEMNITY OR REIMBURSEMENT PROVIDED UNDER THE        
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980,   
THE RESOURCE CONSERVATION AND RECOVERY ACT OR ANY OTHER FEDERAL, STATE OR LOCAL 
ENVIRONMENTAL LAW, RULE OR REGULATION. THE TERMS OF THIS SECTION 9.01 SHALL BE  
DEEMED INCORPORATED                                                             

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INTO EACH DOCUMENT EXECUTED BY SELLER AT THE CLOSING REGARDLESS OF WHETHER A    
SPECIFIC REFERENCE TO THIS SECTION IS MADE THEREIN. FURTHER, THE TERMS OF THIS  
SECTION 9.01 SHALL SURVIVE THE TERMINATION OF THIS CONTRACT AND/OR THE CLOSING  
AND DELIVERY OF THE DEED. NOTHING CONTAINED IN THIS SECTION 9.01 SHALL LIMIT OR 
IMPAIR THE SPECIAL WARRANTY OF TITLE SET FORTH IN THE DEED, EXCEPT WHERE        
OTHERWISE AGREED UPON.                                                          

Section 9.02. Seller's Representations. Seller hereby represents and
warrants to Purchaser as follows:                                               

      (a) Seller has all requisite power and authority to carry on its
business as now conducted.                                          

          (b) Seller has the capacity and complete authority to enter into and
  perform this Contract, and no consent, approval or other action by any
   other person or entity (other than the persons signing this Contract on
behalf of Seller) will be needed thereafter to authorize Seller's   
     execution and performance of this Contract. The execution and performance
    of this Contract is not prohibited by, and does not constitute a default
 under, any agreement to which Seller is a party or by which Seller is
bound.                                                              

        (c) Seller is not a "foreign person", "foreign partnership", nor a
   "foreign corporation" as those terms are defined in Section 7701 of the
Internal Revenue Code of 1986, as amended.                          

          (d) To Seller's knowledge, there is no pending litigation filed with
respect to the Property.                                            

       (e) To Seller's knowledge, Seller has not received written notice
     from any governmental authority reflecting eminent domain or condemnation
proceedings covering the Property.                                  

       (f) To Seller's knowledge, Seller has not received written notice
from any governmental authority that the Property is currently-in   
   violation of any zoning, building, fire or health statute, ordinance or
regulation.                                                         

       (g) To Seller's knowledge, Seller has not received written notice
 from any governmental, or regulatory authority reflecting an existing
environmental hazard on the Property.                               

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       (h) To Seller's knowledge, the items delivered to Purchaser under
    Section 3.03(b), (c), (d), (e), (f), (g) and (h) are true and correct in
all material respects.                                              

        (i) The Personal Property is owned by Seller free and clear of any
liens or encumbrances subject to the Permitted Exceptions.          

     (j) To the best of Seller's knowledge, there are no unsatisfied
judgments or pending bankruptcies against Seller with respect to the
Property.                                                           

 References to the "knowledge" of Seller above shall refer only to the
actual knowledge (as opposed to constructive, deemed or imputed knowledge) of   
Brenda Meetze and shall not be construed, by imputation or otherwise, to refer  
to the knowledge of Seller, or any affiliate of Seller, to any property manager,
or to any officer, agent, manager, representative or employee of Seller or any  
affiliate thereof or to impose upon Brenda Meetze any duty to investigate the   
matter to which such actual knowledge, or the absence thereof, pertains. Seller 
represents that Brenda Meetze is a Vice President of Paragon Residential        
Services, Inc., the current manager of the Property.                            

      Section 9.03. Purchaser's Representations. Purchaser hereby represents and
warrants to Seller as follows:                                                  

          (a) Purchaser is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Virginia, has duly  
      qualified to conduct business in the State of Texas, and has all requisite
power and authority to carry on its business as now conducted.      

         (b) Purchaser has the capacity and complete authority to enter into
      and perform this Contract, and no consent, approval or other action by any
      person or entity (other than the person signing this Contract on behalf of
   Purchaser) will be needed thereafter to authorize Purchaser's execution
   and performance of this Contract. The execution and performance of this
   Contract is not prohibited by, and does not constitute a default under,
     any agreement to which Purchaser is a party or by which Purchaser and its
assets may be bound.                                                

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          (c) Purchaser has knowledge and experience in financial and business
matters that enables it to analyze the merits and risks of the      
     transactions contemplated hereby, and Purchaser is not in a significantly
     disparate bargaining position with respect to Seller or such transaction.

 Section 9.04. Discovery. In the event that either Seller or Purchaser
discovers, prior to or at the Closing, that any representation or warranty of   
the other party under this Article IX is false, misleading or inaccurate in any 
material respect, the discovering party may, at its option, terminate this      
Contract and the parties hereto shall be relieved of all liabilities and        
obligations hereunder (expressly excluding, however, Purchaser's indemnity of   
Seller under Section 3.06 which shall survive any termination of this Contract  
by either party hereto) and (a) if Purchaser discovers that a representation or 
warranty made by Seller under Section 9.02 is materially false, misleading or   
inaccurate, Purchaser shall have the right to pursue its rights and remedies    
under Section 8.02 of this Contract, but (b) if Seller discovers that a         
representation or warranty made by Purchaser under Section 9.03 is materially   
false, misleading or inaccurate, Seller shall be entitled to pursue its remedies
under Section 8.01 of this Contract. Neither Seller nor Purchaser shall have the
right to rely on any representation or warranty of the other party set forth    
herein, in any document delivered at the Closing, or otherwise, to the extent   
that the relying party, on the Closing Date, knows that such representation or  
warranty is false, misleading or inaccurate. Representations and warranties     
under this Article IX shall fully survive the Closing and the delivery of the   
Deed, but to the extent that neither Seller nor Purchaser has made any claim as 
to the breach of any such representation or warranty within six (6) months after
the Closing Date, such representations and warranties will terminate and be of  
no further force and effect. In the event Purchaser discovers after the Closing 
that any representation or warranty is false, misleading or inaccurate in any   
material respect, Purchaser shall have no right to request a rescission of this 
Contract for failure of a condition precedent nor to otherwise pursue an action 
against Seller for punitive, treble or other damages, if any, incurred by       
Purchaser as a result thereof, but Purchaser shall otherwise be entitled to     
pursue an action against Seller for actual damages incurred by Purchaser, if    
any, as a result thereof.                                                       

    Section 9.05. Operating Covenants. Seller agrees to operate and maintain
or cause to be operated and maintained the Property prior to the Closing in a   
prudent and reasonable manner consistent with its current operating procedures. 
In connection with the foregoing, Seller covenants for so long as this Contract 
remains in effect as follows:                                                   

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           (a) Seller shall not create nor permit to exist any lien, encumbrance
   or charge on the Real Property or the Improvements, other than liens or
     encumbrances either noted in the Title Commitment or those which shall be
    released at Closing at Seller's expense; provided, however, Seller shall
  have the right to contest any such liens and encumbrances so long as a
     bond is posted by Seller and/or other procedures reasonably acceptable to
 the Title Company and Purchaser, so as to permit the Title Company to
     issue the Owner Policy without exception to any such lien or encumbrance,
      and in such event Purchaser shall have no right to terminate this Contract
as a result of any such lien or encumbrance.                        

           (b) Seller shall neither transfer nor remove any Personal Property or
   fixtures from the Property subsequent to the date hereof, except in the
  ordinary course of business or for purposes of replacement thereof, in
     which case such replacements shall be promptly installed prior to Closing
     and shall be reasonably comparable in quantity and quality to the item(s)
being replaced.                                                     

   (c) Seller shall conduct its leasing activities substantially
consistent with its normal, customary and ordinary leasing practice.
Seller covenants to Purchaser that there are no authorized rent     
  concessions with respect to the Leases except as set forth in the Rent
Roll or the Leases.                                                 

          (d) Seller shall keep the Property insured at all times prior to the
Closing under Seller's existing blanket-type insurance policy.      

           (e) All vacant apartment units at Closing, other than apartment units
vacated within five (5) days prior to Closing, will be "rent ready".
     Seller and Purchaser agree that during the Review Period, both Seller and
 Purchaser will inspect an apartment unit at the Property and mutually
    agree that said apartment unit shall be representative or a "rent ready"
    unit by which all other units shall be judged for "rent ready" condition
      at Closing. In the event Seller and Purchaser can not mutually agree prior
   to expiration of the Review Period as to a representative apartment for
   purposes of defining "rent ready", either party shall have the right to
    terminate the Contract upon notice to the other and upon such event, the
Contract shall terminate and the Earnest Money shall be returned to 
Purchaser, as Purchaser's sole and exclusive remedy.                

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Notwithstanding the foregoing, Seller has no obligation, express or implied, to 
make or otherwise pay for any capital improvements to all or any portion of the 
Property, including, without limitation, any parking lot repairs, painting,     
handicapped accessibility modifications, Personal Property repair or            
replacement, roof repair or replacement or any deferred maintenance item;       
provided, however, Seller will perform all of Seller's routine maintenance      
obligations.                                                                    

ARTICLE X 

Notices 
------- 

   Section 10.01. Notices. Any notice, demand or other communication which
may or is required to be given under this Contract shall be in writing and shall
be: (a) personally delivered; (b) transmitted by United States postage prepaid  
mail, registered or certified mail, return receipt requested; (c) transmitted by
reputable overnight courier service, such as Federal Express; or (d) transmitted
by legible facsimile (with answer back confirmation) to Purchaser and Seller as 
listed below. Except as otherwise specified herein, all notices and other       
communications shall be deemed to have been duly given on (i) the date of       
receipt if delivered personally, (ii) two (2) calendar days after the date of   
posting if transmitted by registered or certified mail, return receipt          
requested, (iii) the first (1st) business day after the date of deposit, if     
transmitted by reputable overnight courier service, or (iv) the date of         
transmission with confirmed answer back if transmitted by facsimile, whichever  
shall first occur. A notice or other communication not given as herein provided 
shall only be deemed given if and when such notice or communication and any     
specified copies are actually received in writing by the party and all other    
persons to whom they are required or permitted to be given. Purchaser and Seller
may change its address for purposes hereof by notice given to the other parties 
in accordance with the provisions of this Section, but such notice shall not be 
deemed to have been duly given unless and until it is actually received by the  
other parties. Notices hereunder shall be directed as follows:                  

If to Purchaser:      Cornerstone Realty Group Incorporated                     
306 East Main Street                
Richmond, Virginia 23219            
Attention: Gus G. Remppies          
Telecopy: (804) 782-9302            

with copies at the                                                              
the same time to:     Zuckerbrod & Taubenfeld                                   
575 Chesnut St., P.O. Box 488       
Cedarhurst, New York 11516          
Attention: Harry S. Taubenfeld      
Telecopy: (516) 374-3490            

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and                                                                             
Brown McCarroll & Oaks Hartine      
300 Crescent Court,                 
Suite 1400                          
Dallas, Texas 75201                 
Attn: Robert E. Morrison            
Telecopy: (214) 999-6170            

If to Seller:         Paragon Group L.P.                                        
7557 Rambler Road,                  
Suite 1200                          
Dallas, Texas 75231                 
Attention: John Berry               
Telecopy: (214) 891-2065            

with copies at                                                                  
the same time to:     Stutzman & Bromberg,                                      
A Professional Corporation          
2323 Bryan Street, Suite 2200       
Dallas, Texas 75201                 
Attention: Aguinaldo Valdez         
Telecopy: (214) 969-4999            

and                                                                             
Paragon Residential Services, Inc.  
7557 Rambler Road,                  
Suite 1200                          
Dallas, Texas 75231                 
Attention: Lynn T. Caldwell         
Telecopy: (214) 891-2065.           

ARTICLE XI

Risk of Loss
------------

      Section 11.01. Minor Damage. In the event of "minor" loss or damage (being
defined for the purpose of this Contract as damage to the Property which is such
that the Property could be repaired or restored, in the opinion of an           
architect reasonably satisfactory to both Seller and Purchaser, to a condition  
substantially identical to that of the Property immediately prior to the event  
of damage at a cost equal to or less than $250,000.000), this Contract shall    
continue in full force and effect and Seller shall assign all of Seller's right,
title and interest to any claims and proceeds Seller may have with respect to   
any casualty insurance policies, including, rental                              

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interruption insurance proceeds, or condemnation awards relating to the Property
and Purchaser shall receive a credit against the Purchase Price in an amount    
equal to the deductible under any such insurance policy to the extent such      
deductible is applicable to any such minor loss or damage, but not otherwise.   

 Section 11.02. Major Damage. In the event of a "major" loss or damage
(being defined as any loss or damage which is not "minor" as defined hereinabove
or a condemnation not minor and of a portion of the Property whereby five       
percent (5%) or more of the parking spaces on the Property are lost), Purchaser 
shall have the option of either: (a) terminating this Contract by written notice
to Seller, in which event the Earnest Money Deposit shall, to the extent        
delivered to the Title Company, be returned to Purchaser as Purchaser's sole and
exclusive remedy, and Seller and Purchaser shall be released from any and all   
liability hereunder (expressly excluding, however, Purchaser's indemnity of     
Seller under Section 3.06 which shall survive any termination of this Contract  
by either party hereto); or (b) proceeding with the Closing, provided Seller    
shall assign all of Seller's right, title and interest to any claims and        
proceeds Seller may have with respect to any casualty insurance policies,       
including, rental interruption insurance proceeds, or condemnation awards       
relating to the Property and Purchaser shall receive a credit against the       
Purchase Price in an amount equal to the deductible under any such insurance    
policy to the extent such deductible is applicable to any such major loss or    
damage, but not otherwise. Seller agrees to furnish Purchaser written notice of 
any such damage or loss, including any claims adjuster's estimate, within ten   
(10) days after the occurrence of any such damage or loss. In the event         
Purchaser fails to deliver written notice to Seller of Purchaser's election     
hereunder, within ten (10) days after Purchaser's receipt of written notice from
Seller of the occurrence of a "major" loss or damage, Purchaser shall be deemed 
to have elected the option set forth under subparagraph (a) of this Section.    

 Section 11.03. Risk of Loss. Prior to Closing, full risk of loss with
respect to the Property shall remain with Seller. Upon the Closing, full risk of
loss with respect to the Property shall pass to Purchaser. There shall be no    
reduction in the Purchase Price as a result of any loss or damage except as     
expressly set forth in Section 11.01 or Section 11.02.                          

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ARTICLE XII 

Miscellaneous 
------------- 

 Section 12.01. Entire Agreement. This Contract constitutes the entire
agreement between the parties hereto and supersedes any prior understanding or  
written or oral agreements between the parties concerning the Property.         

      Section 12.02. No Recordation. Neither this Contract nor any memorandum of
the terms hereof shall be recorded or otherwise placed of public record and any 
breach of this covenant shall, unless the party not placing same of record is   
otherwise in default hereunder, entitle the party not placing same of record to 
pursue its rights and remedies under Article VIII.                              

     Section 12.03. No Rule of Construction. This Contract has been drafted by
both Seller and Purchaser and no rule of construction shall be invoked against  
either party with respect to the authorship hereof or of any of the documents to
be delivered by the respective parties at the Closing.                          

     Section 12.04. Multiple Counterparts; Governing Law. This Contract may be
executed in multiple counterparts each of which shall be deemed an original but 
together shall constitute one and the same instrument, and shall be construed   
and interpreted under the laws of the State of Texas and all obligations of the 
parties created hereunder are performable in Dallas County, Texas.              

   Section 12.05. Attorneys' Fees. In the event of any litigation or other
proceeding brought by either party hereunder, the prevailing party shall be     
entitled to recover its reasonable attorneys' fees and costs of suit, and in    
addition to the foregoing, the non-prevailing party shall, if the dispute       
involves the return of the Earnest Money Deposit, be solely obligated, without  
contribution, to pay all reasonable attorneys' fees, costs and expenses incurred
by, or asserted against, the Title Company.                                     

    Section 12.06. Assignment. Purchaser may not assign, without the consent
of Seller, any of Purchaser's rights and obligations under this Contract, but   
Purchaser may assign this Contract, without Seller's consent, to Apple          
Residential Income Trust, Inc. or an entity controlled by one or more of        
Purchaser's affiliates and/or any of Purchaser's principals. Except as provided 
in the preceding sentence, Purchaser has no right to assign this Contract and no
interest held, directly or indirectly, in Purchaser may be sold, transferred or 
otherwise                                                                       

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conveyed without in each instance the prior written consent of Seller. No such  
assignment, however, shall release or otherwise relieve Purchaser from its      
obligations hereunder and under the documents to be executed at the Closing.    
This Contract and all rights hereunder shall inure to and be binding upon the   
respective heirs, executors, successors and permitted assigns of Seller and     
Purchaser.                                                                      

    Section 12.07. Interpretation. This Contract shall, unless otherwise
specified herein, be subject to the following rules of interpretation: (a) the  
singular includes the plural and the plural the singular; (b) words importing   
any gender include the other genders; (c) references to persons or entities     
include their permitted successors and assigns; (d) words and terms which       
include a number of constituent parts, things or elements, including the terms  
Improvements, Permitted Exceptions, Personal Property, Intangible Property and  
Property, shall be construed as referring separately to each constituent part,  
thing or element thereof, as well as to all of such constituent parts, things or
elements as a whole; (e) references to statutes are to be construed as including
all rules and regulations adopted pursuant to the statute referred to and all   
statutory provisions consolidating, amending or replacing the statute referred  
to; (f) references to agreements and other contractual instruments shall be     
deemed to include all subsequent amendments thereto or changes therein entered  
into in accordance with their respective terms; (g) the words "approve" or      
"consent" or "agree" or derivations or said words or words of similar import    
mean, unless otherwise expressly provided herein or therein, the prior approval,
consent, or agreement in writing of the person holding the right to approve,    
consent, or agree with respect to the matter in question, and the words         
"require" or "judgment" or "satisfy" or derivations of said words or words of   
similar import mean the requirement, judgment or satisfaction of the person who 
may make a requirement or exercise judgment or who must be satisfied, which     
approval, consent, agreement, requirement, judgment or satisfaction shall,      
unless otherwise expressly provided herein or therein, be in the reasonable     
discretion of the person holding the right to approve, consent or agree or who  
may make a requirement or judgment or who must be satisfied; (h) the words      
"include" or "including" or words of similar import shall be deemed to be       
followed by the words "without limitation"; (i) the words "hereto" or "hereby"  
or "herein" or "hereof" or "hereunder," or words of similar import, refer to    
this Contract in its entirety; (j) references to sections, articles, paragraphs 
or clauses are to the sections, articles, paragraphs or clauses of this         
Contract; and (k) numberings and headings of sections, articles, paragraphs and 
clauses are inserted as a matter of convenience only and shall not affect the   
construction of this Contract.                                                  

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 Section 12.08. Exhibits and Schedules. The following exhibits and
schedules attached hereto shall be deemed to be an integral part of this        
Contract and are hereby incorporated for all purposes:                          

Schedule 1 - list of Personal Property                  

Schedule 2 - list of Property Contracts                 

Exhibit A -  legal description of the Real Property     

Exhibit B -  form of Deed                               

Exhibit C -  form of Assignment of Leases               

Exhibit D -  form of Bill of Sale                       

Exhibit E -  form of Closing Memorandum                 

Exhibit F -  form of FIRPTA Affidavit                   

Exhibit G -  form of Tenant Letter                      

Exhibit H -  form of Representation Letter              

       Section 12.09. Modifications: Reporting Person. This Contract cannot be
changed orally, and no executory agreement shall be effective to waive, change, 
modify or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,    
change, modification or discharge is sought. Neither Broker nor the Title       
Company shall be necessary signatories to any such written agreement. Purchaser 
and Seller hereby designate the Title Company as the "reporting person" pursuant
to the provisions of Section 6045(e)) of the Internal Revenue Code, as amended. 

     Section 12.10. Time of Essence. Time is of the essence to both Seller
and Purchaser in the performance of this Contract, and they have agreed that    
strict compliance by both of them is required as to any date and/or time set out
herein, including, without limitation, the dates and times set forth in Article 
IV of this Contract. If the final day of any period of time set out in any      
provision of this Contract falls upon a Saturday, Sunday or a holiday observed  
by federally insured banks in the State of Texas or by the United States Postal 
Service, then and in such event, the time of such period shall be extended to   
the next day which is not a Saturday, Sunday or holiday. Unless otherwise       
specified, in computing any period of time described                            

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in this Contract, the day of the act or event after which the designated period 
of time begins to run is not to be included and the last day of the period so   
computed is to be included, unless such last day is a Saturday, Sunday or       
holiday in which event the period shall run until the end of the next day which 
is neither a Saturday, Sunday or holiday. Notwithstanding the foregoing,        
Purchaser shall have a one-time right to extend the Closing Date for up to      
thirty (30) days upon five (5) days prior written notice to Seller.             

      Section 12.11. No Publicity. Purchaser agrees that, prior to divulging
the transactions described in this Contract or publicizing them in any way, it  
will secure the prior written consent of Seller; provided that the foregoing    
does not require Seller's consent to any disclosures by Purchaser to Purchaser's
lenders, equity owners, attorneys and other advisors.                           

       Section 12.12. Partial Invalidity. If any term, provision, condition or
covenant of this Contract or the application thereof to any party or            
circumstance shall, to any extent, be held invalid or unenforceable, the        
remainder of this Contract, or the application of such term, provision,         
condition or covenant to persons or circumstances other than those as to whom or
which it is held invalid or unenforceable shall not be affected thereby, and    
each term and provision of this Contract shall be valid and enforceable to the  
fullest extent permitted by law, and said invalid or unenforceable term,        
provision, condition or covenant shall be substituted by a term, provision,     
condition or covenant as near in substance as may be valid and enforceable.     

    Section 12.13. Facsimile Signatures. The parties hereto hereby agree
that facsimile signatures by any party shall be fully binding upon and          
enforceable against such party.                                                 

        Section 12.14. Section 1031 Exchange. Purchaser agrees to cooperate with
Seller in effecting a Section 1031 exchange, including executing documents      
required by the exchange trustee or intermediary, provided, however, such       
cooperation shall be at no cost or liability to Purchaser. Seller agrees to hold
Purchaser harmless from any claims resulting from said Section 1031 exchange,   
including reasonable attorneys' fees. This Section 12.14 shall survive Closing. 

      Section 12.15. Seller's Investment Committee. Notwithstanding anything
to the contrary contained herein, this Contract and Seller's obligation under   
this Contract are expressly conditioned upon obtaining the consent and approval 
of this Contract and the transactions contemplated hereby by Seller's Investment
Committee and Seller's Board of Directors. Seller agrees to obtain such approval
within ten (10) days of the Effective Date.                                     

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Section 12.16. Purchaser's Investment Committee. Notwithstanding
anything to the contrary contained herein, this Contract and Purchaser's        
obligation under this Contract are expressly conditioned upon obtaining the     
consent and approval of this Contract and the transactions contemplated hereby  
by Purchaser's Board of Directors. Purchaser agrees to obtain such approval     
prior to the expiration of the Review Period.                                   

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    IN WITNESS WHEREOF, this Contract has been executed by Purchaser and
Seller on the dates written below.                                              

SELLER:                                                                         

PARAGON GROUP L.P.,                                                             
a Delaware limited partnership                                                  

By: Paragon Group                                                               
GP Holdings, Inc.,                                                      
a Delaware corporation                                                  

By:    /s/ John Berry                                                           
-----------------------                                             
Name:      John Berry                                                           
-----------------------                                             
Title:       S.V.P.                                                             
-----------------------                                             

PURCHASER:                                                                      

CORNERSTONE REALTY GROUP INCORPORATED,                                          
a Virginia corporation                                                          

By:     /s/ S. J. Olander                                                       
-------------------------                                           
Name:       S. J. Olander                                                       
-------------------------                                           
Title:        S.V.P.                                                            
-------------------------                                           

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Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 8-K Filing		Date		First		Last			Other Filings
		12/10/96		1
		1/15/97		15
For The Period Ended		1/28/97							8-K/A
Filed On / Filed As Of		2/12/97
Top									List All Filings