SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) April 14, 1997
BALCOR PENSION INVESTORS-III
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Exact Name of Registrant
Illinois 0-11129
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3164211
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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Orchards Shopping Center
In 1983, the Partnership funded a $3,709,772 loan collateralized by a
wrap-around mortgage on the Orchards Office Building (the "Building") and
Shopping Center (the "Center"), Loveland, Colorado (together, the "Property").
In 1987, the Partnership received $100,000 from the borrower as a principal
payment. Subsequently in 1987, the Partnership obtained title to the
Property through foreclosure subject to two existing mortgage loans. The
Partnership sold a 1.1-acre outparcel in 1989 and received net proceeds of
approximately $340,000. In 1991, the Partnership acquired approximately
83,333 square feet of vacant land adjacent to the Property and sold the land
in 1993 receiving net proceeds of approximately $277,000. In 1991, the
Partnership repaid one of the mortgage loans utilizing $3,292,496 of
Partnership funds and in 1992 refinanced the other underlying mortgage loan
with a new $2,853,000 loan (the "Loan") from an unaffiliated lender (the
"Lender"). The Partnership received approximately $2,044,000 of net proceeds.
In 1994, the Partnership sold the Building to an unaffiliated third party.
From the sale proceeds, the Partnership paid the Lender a $1,000,000 principal
payment and a $50,000 prepayment premium and the Lender released its first
mortgage lien from the Building. The Partnership received approximately
$150,000 of net proceeds from the sale of the Building.
On April 14, 1997, the Partnership contracted to sell the Center to an
unaffiliated party, 29th Street Investments, LLC, a Colorado limited liability
company, for a sale price of $7,200,000. The purchaser has deposited
$150,000 into an escrow account as earnest money. The remainder of the sale
price will be payable in cash at closing, scheduled for June 3, 1997. Upon
certain conditions, the purchaser has the right to extend the closing to June
17, 1997 upon written notice to the Partnership on or before May 30, 1997.
From the proceeds of the sale, the Partnership will repay the outstanding
principal balance of the first mortgage loan, which is expected to be
approximately $1,603,000 at closing, and will pay a prepayment penalty of
approximately $23,000 and a total of $252,000 as a brokerage commission to
two parties, one of which is an affiliate of the third party providing
property management services for the Center. The Partnership will receive the
remaining proceeds of approximately $5,322,000, less closing costs.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the Center. The General Partner
will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be
complied with and, therefore, it is possible the sale of the Center may not
occur.
ITEM 5. OTHER EVENTS
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The Woods Apartments
As previously reported, on March 12, 1997, the Partnership contracted to sell
The Woods Apartments to an unaffiliated party, Mid-America Apartments of
Texas, L.P., a Texas limited partnership. The sale price is $10,000,000.
The sale closed on April 15, 1997. From the proceeds of the sale, the
Partnership paid $200,000 as a brokerage commission to an affiliate of the
third party providing property management services for the property and
$30,158 in closing costs. The Partnership received the remaining proceeds of
approximately $9,770,000. Of such proceeds, $200,000 will be retained by the
Partnership and will not be available for use or distribution by the
Partnership until 60 days after the closing.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) Agreement of Sale relating to the sale of the
Orchards Shopping Center, Loveland, Colorado.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR PENSION INVESTORS-III
By: Balcor Mortgage Advisors-II, an Illinois
general partnership, its general
partner
By: RGF-Balcor Associates-II,
an Illinois general partnership,
a partner
By: The Balcor Company,
a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Managing Director
and Secretary
Dated: April 28, 1997
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 14
day of April, 1997, by and between 29TH STREET INVESTMENTS, LLC, a Colorado
limited liability company ("Purchaser"), and ORCHARDS INVESTORS, an Illinois
general partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Seven Million Two Hundred Thousand And No/100 Dollars
($7,200,000.00) (the "Purchase Price"), that certain property commonly known
as Orchards Shopping Center, Loveland, Colorado legally described on Exhibit
A attached hereto (the "Property"). Included in the Purchase Price is all of
the personal property set forth on Exhibit B attached hereto (the "Personal
Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally
wired "immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Near North National Title
Corporation, as agent for First American Title Company (hereinafter referred
to as ("Title Insurer") dated February 3, 1997 for the Property (the "Title
Commitment"). For purposes of this Agreement, "Permitted Exceptions" shall
mean: (a) the general printed exceptions contained in the standard title
policy to be issued by Title Insurer based on the Title Commitment;
(b) general real estate taxes, association assessments, special assessments,
special district taxes and related charges not yet due and payable;
(c) matters shown on the "Existing Survey" (hereinafter defined);
(d) matters caused by the actions of Purchaser; and (e) the title exceptions
set forth in Schedule B of the Title Commitment as Numbers 1 through 28,
inclusive and 32 through 38 inclusive, to the extent that same affect the
Property. All other exceptions to title shall be referred to as "Unpermitted
Exceptions". The Title Commitment shall be conclusive evidence of good title
as therein shown as to all matters to be insured by the title policy, subject
only to the exceptions therein stated.
On the Closing Date, Title Insurer shall deliver to Purchaser a standard title
policy, or at Purchaser's request, an ALTA title policy, in conformance with
the previously delivered Title Commitment, subject to Permitted Exceptions and
Unpermitted Exceptions waived by Purchaser (the "Title Policy"). Purchaser
shall pay for all of the costs of the Title Commitment and Title Policy,
including, without limitation, the cost of any endorsements to, or extended
coverage on, the Title Policy.
3.2. Purchaser has received a survey of the Property prepared by Don
Frederick Land Surveying dated September 28, 1992 (the "Existing Survey").
Purchaser shall pay for the costs of updating the Existing Survey and Seller
shall deliver the updated survey (the "Updated Survey") to Purchaser within
15 days after the date hereof. Purchaser hereby acknowledges that all matters
disclosed by the Existing Survey are acceptable to Purchaser.
<PAGE>
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS. In addition to the costs set forth in
Paragraphs 3.1 and 3.2, Purchaser shall pay for all of the costs of the
documentary or transfer stamps to be paid with reference to the "Deed"
(hereinafter defined) and all other stamps, intangible, transfer, documentary,
recording, sales tax and surtax imposed by law with reference to any other
sale documents delivered in connection with the sale of the Property to
Purchaser and all other charges of the Title Insurer in connection with this
transaction.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to
the Title Commitment or the Updated Survey discloses any new Unpermitted
Exception, Seller shall have thirty (30) days from the date of the date-down
to the Title Commitment or the Updated Survey, as applicable, at Seller's
expense, to (i) bond over (in a manner reasonably acceptable to Purchaser),
cure and/or have any Unpermitted Exceptions which, in the aggregate, do not
exceed $25,000.00, removed from the Title Commitment or to have the Title
Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions, or (ii) have the right, but not the obligation,
to bond over (in a manner reasonably acceptable to Purchaser), cure and/or
have any Unpermitted Exceptions which, in the aggregate, equal or exceed
$25,000.00, removed from the Title Commitment or to have the Title Insurer
commit to insure against loss or damage that may be occasioned by such
Unpermitted Exceptions. In such event, the time of Closing shall be delayed,
if necessary, to give effect to said aforementioned time periods. If Seller
fails to cure or have said Unpermitted Exception removed or have the Title
Insurer commit to insure as specified above within said thirty (30) day
period or if Seller elects not to exercise its rights under (ii) in the
preceding sentence, Purchaser may terminate this Agreement upon notice to
Seller within five (5) business days after the expiration of said thirty
(30) day period. Absent notice from Purchaser to Seller in accordance with the
preceding sentence, Purchaser shall be deemed to have elected to take title
subject to said Unpermitted Exception. If Purchaser terminates this
Agreement in accordance with the terms of this Paragraph 5.1, this Agreement
shall become null and void without further action of the parties and all
Earnest Money theretofore deposited into the escrow by Purchaser together
with any interest accrued thereon, shall be returned to Purchaser, and
neither party shall have any further liability to the other, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject
only to the Permitted Exceptions and any Unpermitted Exceptions waived in
writing by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall
be extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty.
<PAGE>
Seller shall promptly notify Purchaser in writing of any such fire or other
casualty and Seller's determination of the cost to repair the damage caused
thereby. In the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost in excess of
$100,000.00 (as determined by Seller in good faith), then this Agreement may
be terminated at the option of Purchaser, which option shall be exercised, if
at all, by Purchaser's written notice thereof to Seller within five (5)
business days after Purchaser receives written notice of such fire or other
casualty and Seller's determination of the amount of such damages, and
upon the exercise of such option by Purchaser this Agreement shall become
null and void, the Earnest Money deposited by Purchaser shall be returned to
Purchaser together with interest thereon, and neither party shall have any
further liability or obligations hereunder. In the event that Purchaser does
not exercise the option set forth in the preceding sentence, the Closing
shall take place on the Closing Date and Seller shall assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in
and to all insurance proceeds paid or payable to Seller on account of the
fire or casualty.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result
in the taking of any part of the Property or the taking or closing of any right
of access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having
jurisdiction over the Property or any portion thereof; (iii) result in a
taking of greater than ten percent (10%) of rentable square footage of the
Property; or (iv) materially and adversely impair the use of the Property as
it is currently being operated (hereinafter collectively referred to as
a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award
made in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall
be delayed, if necessary, until Purchaser makes such election. If Purchaser
fails to make an election within such five (5) business day period, Purchaser
shall be deemed to have elected to exercise its rights under Paragraph 6.2.2.
If between the date of this Agreement and the Closing Date, any condemnation
or eminent domain proceedings are initiated which do not constitute a
Material Event, Purchaser shall be required to proceed with the Closing, in
which event Seller shall assign to Purchaser all of Seller's right, title and
interest in and to any award made in connection with such condemnation or
eminent domain proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on March 31, 1997 and ending at 5:00
p.m. Chicago time on May 1, 1997 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property,
at any reasonable time and upon reasonable prior notice to Seller, to inspect
the Property, including a review of leases located at the Property, and to
conduct and prepare such studies, tests and surveys as Purchaser may deem
reasonably necessary and appropriate.
<PAGE>
In connection with Purchaser's review of the Property, Seller agrees to
deliver to Purchaser copies of the current rent roll for the Property, copies
of leases affecting the Property, the most recent tax and insurance bills,
utility account numbers, service contracts, building plans for the Property
(to the extent available to Seller) and unaudited year end 1994 (if available),
1995, 1996 and 1997 year-to-date operating statements.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability,
cost and expense (including without limitation, reasonable attorney's fees,
court costs and costs of appeal) suffered or incurred by Seller or Affiliates
of Seller for injury to persons or property caused by Purchaser's
investigations and inspection of the Property. Purchaser shall undertake its
obligation to defend set forth in the preceding sentence using attorneys
selected by Seller, in Seller's sole discretion.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph
7.1, Purchaser shall have the right to terminate this Agreement by giving
written notice of such termination to Seller at any time prior to the
expiration of the Inspection Period. If written notice is not received by
Seller pursuant to this Paragraph 7.1 prior to the expiration of the Inspection
Period, then the right of Purchaser to terminate this Agreement pursuant to
this Paragraph 7.1 shall be waived. If Purchaser terminates this Agreement by
written notice to Seller prior to the expiration of the Inspection Period: (i)
Purchaser shall promptly deliver to Seller copies of all studies, reports and
other investigations obtained by Purchaser from unaffiliated third parties in
connection with its due diligence during the Inspection Period; and (ii) the
Earnest Money deposited by Purchaser shall be immediately paid to Purchaser,
together with any interest earned thereon, and neither Purchaser nor Seller
shall have any right, obligation or liability under this Agreement, except
for Purchaser's obligation to indemnify Seller and restore the Property, as
more fully set forth in this Paragraph 7.1. Notwithstanding anything contained
herein to the contrary, the terms of this Paragraph 7.1, shall survive the
Closing and the delivery of the Deed and termination of this Agreement.
7.2. Except as otherwise set forth in Paragraph 16, Seller makes no
representations or warranties relating to the condition of the Property or the
Personal Property. Subject to Seller's representations and warranties set
forth in Paragraph 16, Purchaser acknowledges and agrees that it will be
purchasing the Property and the Personal Property based solely upon its
inspections and investigations of the Property and the Personal Property, and
that Purchaser will be purchasing the Property and the Personal Property "AS
IS" and "WITH ALL FAULTS", based upon the condition of the Property and the
Personal Property as of the end of the Inspection Period, wear and tear and
loss by fire or other casualty or condemnation excepted. Without limiting the
foregoing, Purchaser acknowledges that, except as may otherwise be
specifically set forth elsewhere in this Agreement, neither Seller nor its
consultants, brokers or agents have made any representations or warranties of
any kind upon which Purchaser is relying as to any matters
<PAGE>
concerning the Property or the Personal Property, including, but not limited
to, the condition of the land or any improvements comprising the Property,
the existence or non-existence of "Hazardous Materials" (as hereinafter
defined), economic projections or market studies concerning the Property, any
development rights, taxes, bonds, covenants, conditions and restrictions
affecting the Property, water or water rights, topography, drainage, soil,
subsoil of the Property, the utilities serving the Property or any zoning or
building laws, rules or regulations or "Environmental Laws" (hereinafter
defined) affecting the Property. Seller makes no representation or warranty
that the Property complies with Title III of the Americans with Disabilities
Act or any fire code or building code. Purchaser hereby releases Seller and
the Affiliates of Seller from any and all liability in connection with any
claims which Purchaser may have against Seller or the Affiliates of Seller,
and Purchaser hereby agrees not to assert any claims for contribution, cost
recovery or otherwise, against Seller or the Affiliates of Seller, relating
directly or indirectly to the existence of asbestos or Hazardous Materials on,
or environmental conditions of, the Property, whether known or unknown. As
used herein, "Environmental Laws" means all federal, state and local statutes,
codes, regulations, rules, ordinances, orders, standards, permits, licenses,
policies and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation
or conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et
seq., the Emergency Planning and Community Right-to-Know Act ("Right-to-Know
Act"), 42 U.S.C. Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq., the Federal Water Pollution Control Act ("Clean
Water Act"), 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe
Drinking Water Act"), 42 U.S.C. Section 300f et seq., the Atomic Energy Act
("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational Safety and Health
Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the Hazardous Materials
Transportation Act (the "Transportation Act"), 49 U.S.C. Section 1802 et seq.
As used herein, "Hazardous Materials" means: (1) "hazardous substances," as
defined by CERCLA; (2) "hazardous wastes," as defined by RCRA; (3) any
radioactive material including, without limitation, any source, special
nuclear or by-product material, as defined by AEA; (4) asbestos in any form
or condition; (5) polychlorinated biphenyls; and (6) any other material,
substance or waste to which liability or standards of conduct may be imposed
under any Environmental Laws. Notwithstanding anything contained herein to
the contrary, the terms of this Paragraph 7.2 shall survive the Closing and the
delivery of the Deed and termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of
the Property and allocations of revenues or expenses may be vastly different
than Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to
the operation of the Property and releases Seller and the Affiliates of
Seller from any liability with respect to such historical information.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.3 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment prepared by Law Associates, Inc. dated July 31,
1992
<PAGE>
("Existing Report"). Seller makes no representation or warranty concerning
the accuracy or completeness of the Existing Report. Purchaser hereby releases
Seller and the Affiliates of Seller from any liability whatsoever with respect
to the Existing Report, or, including, without limitation, the matters set
forth in the Existing Report, and the accuracy and/or completeness of the
Existing Report. Furthermore, Purchaser acknowledges that it will be purchasing
the Property with all faults disclosed in the Existing Report. Notwithstanding
anything contained herein to the contrary, the terms of this Paragraph 7.4
shall survive the Closing and the delivery of the Deeds and termination of
this Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall be on June
3, 1997 (the "Closing Date"), at the office of Title Insurer, Denver, Colorado
at which time Seller shall deliver possession of the Property to Purchaser.
This transaction shall be closed through an escrow with Title Insurer, in
accordance with the general provisions of the usual and customary form of deed
and money escrow for similar transactions in Colorado, or at the option of
either party, the Closing shall be a "New York style" closing at which the
Purchaser shall wire the Purchase Price to Title Insurer on the Closing Date
and prior to the release of the Purchase Price to Seller, Purchaser shall
receive the Title Policy or marked up commitment dated the date of the Closing
Date. In the event of a New York style closing, Seller shall deliver to Title
Insurer any customary affidavit in connection with a New York style closing.
All closing and escrow fees shall be divided equally between the parties
hereto.
9. CLOSING DOCUMENTS.
9.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, Purchaser
shall deliver to Title Insurer (which shall hold such items on behalf of
Seller) the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3 and 9.2.4 and such other documents as may be
reasonably required by the Title Insurer in order to consummate the transaction
as set forth in this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
9.2.8. possession of the Property to Purchaser, subject to the terms
of leases;
<PAGE>
9.2.9. evidence of the termination of the management agreement;
9.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the
leases and the obligation to refund the security deposits (in the form of
Exhibit K); and
9.2.11. an updated rent roll.
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY
AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7 AND THE RIGHT OF PURCHASER TO RECEIVE FROM SELLER ITS ACTUAL,
DOCUMENTED THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE
DILIGENCE HEREUNDER AND THE PREPARATION OF THE AGREEMENT, NOT TO EXCEED $50,000
IN THE AGGREGATE. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY,
IF SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER ANY OF THE CONVEYANCE
DOCUMENTS SET FORTH IN PARAGRAPHS 9.2.1 THROUGH 9.2.11, INCLUSIVE, THEN
PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); water and
other utility charges; fuels; prepaid operating expenses; real and personal
property taxes prorated on a "net" basis (i.e. adjusted for all tenants'
liability, if any, for such items); operating expenses which are reimbursable
by the tenants for the period prior to the Closing Date less any amount
previously paid by the Tenants shall be credited to Seller; and other similar
items shall be adjusted ratably as of 11:59 p.m. on the Closing Date, and
credited against the balance of the cash due at Closing. Assessments payable
in installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. All prorations will be final except as to delinquent rent
referred to in Paragraph 12.2 below.
12.2. All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date after the payment to Purchaser of all current
rent and any past due rent owed to Purchaser shall be deemed a "Post-Closing
Receipt" until such time as all such indebtedness is paid in full. Within ten
(10) days following each receipt by Purchaser of a Post-Closing Receipt,
Purchaser shall pay such Post-Closing Receipt to Seller. During the first 90
days after the Closing Date, Purchaser shall use commercially reasonable
efforts to collect all amounts which, upon collection, would constitute
Post-Closing Receipts hereunder but shall have no obligation to bring legal
action or incur legal fees. Within 120 days after the Closing Date, Purchaser
<PAGE>
shall deliver to Seller a reconciliation statement of Post-Closing Receipts
through the first 90 days after the Closing Date. Upon the delivery of the
Post-Closing Receipts reconciliation, Purchaser shall deliver to Seller any
Post-Closing Receipts owing to Seller and not previously delivered to Seller
in accordance with the terms hereof. Seller retains the right to conduct an
audit, at reasonable times and upon reasonable notice and at Seller's cost,
of Purchaser's books and records to verify the accuracy of the Post-Closing
Receipts reconciliation statement and, in the event that additionalfunds are
determined by the audit to be owing to Seller, Purchaser shall pay to Seller
said additional Post-Closing Receipts and reimburse Seller for the cost
of performing Seller's audit. Paragraph 12.2 of this Agreement shall survive
the Closing and the delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller, except that
no consent shall be required with respect to an assignment to an entity in
which Paul D. Menzies and Marvin T. Levin have a direct or indirect 25%
ownership interest. Except as provided in the foregoing sentence, any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this
transaction other than to Insignia Mortgage & Investment Company ("Insignia")
(to be paid by Seller) and Fuller and Company ("Fuller") (to be paid by
Insignia). Seller's commission to Insignia and the commission owed to Fuller
shall only be payable out of the proceeds of the sale of the Property in the
event the transaction set forth herein closes. Purchaser and Seller shall
indemnify, defend and hold the other party hereto harmless from any claim
whatsoever (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) from anyone claiming by or through the
indemnifying party any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated other than to
Insignia and Fuller. The indemnifying party shall undertake its obligations
set forth in this Paragraph 15 using attorneys selected by the indemnifying
party and reasonably acceptable to the indemnified party. The provisions of
this Paragraph 15 will survive the Closing and delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Alan Muench (the "Seller's Representative"), and any representation
or warranty of the Seller is based upon those matters of which the Seller's
Representative has actual knowledge. Any knowledge or notice given, had or
received by any of Seller's agents, servants or employees shall not be imputed
to Seller, the general partner or limited partners of Seller, the subpartners of
the general partner or limited partners of Seller or Seller's Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
survive Closing for a period of ninety (90) days (i.e., the claiming party
shall have no right to make any claims against the other party for a breach of
a representation or warranty after the expiration of ninety (90) days
immediately following Closing): (i) Seller has no knowledge of any pending
or threatened litigation, claim, cause of action or<PAGE>
administrative proceeding
concerning the Property or Seller, except as set forth on Exhibit N; (ii)
Seller has the power to execute and deliver this Agreement and consummate the
transactions contemplated herein; (iii) the rent roll attached hereto as
Exhibit M which Seller will update as of the Closing Date is accurate as of
the date set forth thereon; (iv) all documents materially relevant to
Purchaser's due diligence pursuant to this Agreement have either been
delivered to Purchaser by Seller or are available to Purchaser and located at
Insignia Commercial Group's office at 5779 North Academy Boulevard, Colorado
Springs, CO 80918; and (v) Seller has not received written notice from any
governmental authority that the Property or the use and operation of the
Property is in violation of applicable building codes, zoning or land use
laws which has not previously been corrected.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
16.4. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate actions to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement and the sole remedy of the other party shall be to terminate
this Agreement, except for Purchaser's obligation to indemnify Seller and
restore the Property, as more fully set forth in Paragraph 7. In the event
Purchaser terminates this Agreement pursuant to this Paragraph 16.4, all
Earnest Money deposited by Purchaser, together with any interest thereon,
shall be returned to Purchaser.
17. LIMITATION OF LIABILITY.
(a) Except as set forth in Section 17(b) below, neither Seller, nor any
Affiliate of Seller, nor any of their respective beneficiaries, shareholders,
partners, officers, directors, agents or employees, heirs, successors or
assigns shall have any personal liability of any kind or nature for or by
reason of any matter or thing whatsoever under, in connection with, arising out
of or in any way related to this Agreement and the transactions contemplated
herein, and Purchaser hereby waives for itself and anyone who may claim by,
through or under Purchaser any and all rights to sue or recover on account of
any such alleged personal liability.
(b) Purchaser hereby agrees that the maximum aggregate liability of
Seller, in connection with, arising out of or in any way related to a breach by
Seller under this Agreement or any document or conveyance agreement in
connection with the transaction set forth herein after the Closing shall be
$250,000. Purchaser hereby waives for itself and anyone who may claim by,
through or under Purchaser any and all rights to sue or recover from Seller
any amount greater than said limit.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
<PAGE>
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4367
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: 29th Street Investments, LLC
1981 N. Broadway
Suite 415
Walnut Creek, California 94596
Attention: Paul D. Menzies and Alex Kray
(510) 937-4111
(510) 921-4173 (FAX)
and one copy to: Crosby, Heafey, Roach & May
1999 Harrison Street
Oakland, California 94612
Attention: Eun-Hee Chang
(510) 466-6819
(510) 273-8832 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same
is deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as
aforesaid shall be deemed to be given, delivered or made upon receipt of the
same by the party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
<PAGE>
21. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of the Colorado, except that with respect to the retainage of the
Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
25. NEW LEASES. On or before seven (7) days prior to the expiration of the
Inspection Period, Seller may execute any new lease or modify or renew any
existing lease affecting the Property without Purchaser's consent. Seller
shall deliver a copy of any such new lease or existing lease modification or
renewal (together with an estimation of the "New Lease Costs" (as hereinafter
defined)), as applicable, to Purchaser within three (3) business days of
execution by Seller and the new tenant or existing tenant, as applicable, but
in any event on or before two (2) business days prior to the expiration of
the Inspection Period. In the event Purchaser disapproves of such new lease
or existing lease modification or renewal, Purchaser's sole remedy shall be
to terminate this Agreement in accordance with Paragraph 7 hereof. In the
event that Purchaser does not terminate this Agreement as aforesaid,
Purchaser shall be responsible for the costs of all tenant improvements,
leasing costs and commissions associated with the negotiation and execution
of any such new lease or existing lease modification or renewal ("New Lease
Costs"); provided that, to the extent that rent commences under such new
lease or modification and is received by Seller, the New Lease Costs shall be
prorated at Closing (between the entire term of the new and modified lease
and the period between such rent commencement and Closing). Subject to such
proration, Seller shall receive a credit at Closing for any New Lease Cost
incurred by Seller prior to Closing.
After the date seven (7) business days prior to the expiration of the
Inspection Period, Seller shall not execute any new lease or existing lease
modification or renewal affecting the Property without Purchaser's prior
written consent, which may be withheld in Purchaser's sole discretion.
Purchaser's consent shall be deemed given if Purchaser has not responded to
the contrary within five (5) business days after Seller's written request and
Purchaser's receipt of such new lease or existing lease modification or renewal
(together with an estimation of the New Lease Costs). If approved by
Purchaser, a complete copy of any such new lease or existing lease
modification or renewal shall be delivered to Purchaser within ten (10) days
of the full execution thereof. All New Lease Costs shall be paid by
Purchaser and Seller shall receive a credit at Closing for any New Lease
Costs incurred by Seller prior to Closing.
26. TENANT CERTIFICATE CONDITION TO CLOSING.
26.1. The following terms have been defined as follows for convenience
of reference:
(i) "Tenant Certificate" means a certificate addressed to Purchaser,
in the form set forth on Exhibit L hereto.
(ii) "Qualification" means any assertion in a Tenant Certificate
that, in Purchaser's good faith judgment, is of (a) a material and adverse
claim, counterclaim, offset or defense against the landlord, (b)
information which is
<PAGE>
contrary to the information contained in the rent roll attached hereto as
Exhibit M or to the leases delivered to Purchaser by Seller, (c) a
material obligation of the landlord not contained in this Agreement or any
written material (including any lease) delivered by Seller to Purchaser or
(d) a default on the part of the landlord giving rise to a termination
right of tenant;
(iv) "Unacceptable Qualification" means any Qualification other than
the following:
(a) a Qualification which is expressly disclosed on the rent
roll attached hereto as Exhibit M, provided the same is not as a
result of a default by Seller; or
(b) a Qualification expressly disclosed in this Agreement or
the Exhibits attached hereto and made a part hereof.
26.2. If a Qualification is not an Unacceptable Qualification, it
shall not affect Purchaser's obligations to close hereunder or give rise to any
liability from Seller to Purchaser.
26.3. Seller shall promptly request a Tenant Certificate in the form
of Exhibit L from all tenants, and shall use commercially reasonable efforts to
pursue the collection of the same. Seller shall deliver to Purchaser, upon
Seller's receipt thereof, all Tenant Certificates signed by tenants (whether in
the form of Exhibit L or otherwise).
26.4. It shall be a condition to Purchaser's obligations hereunder
(the "Estoppel Condition") that Seller deliver to Purchaser, at or prior to
May 27, 1997 (i) a Tenant Certificate from (i) each tenant of the Property
occupying or leasing at least 10,000 square feet of gross leasable area of
the Property ("Major Tenant"), and (ii) a Tenant Certificate from tenants
leasing in the aggregate fifty percent (50%) of the rentable square footage
remaining of the Property after the deduction of the square footage rented by
the Major Tenants. A Tenant Certificate shall not be counted toward
satisfaction of the Estoppel Condition if such certificate discloses
Unacceptable Qualifications; provided that Unacceptable Qualifications with
an aggregate "Estoppel Qualification Sum" (hereinafter defined) of less than
$100,000 shall be permitted as provided herein. The "Estoppel Qualification
Sum" shall mean the following:
(i) if the claim asserted arises out of a defect which can be cured,
with the expenditure of money on a one time basis, such as a physical
defect, then such sum shall be calculated by a reasonable estimate of the
cost to repair or remediate said defect; and
(ii) if the claim asserted affects a continuing obligation of a
tenant under the lease, such as the payment of rent, then the claim shall
be calculated by (i) determining the amount of the claim on a per annum
basis, (ii) multiplying said amount by the number of years or partial
years said claim would affect the monetary obligations under the lease
and (iii) discounting said product on a present value basis using a
discount rate of 10% per annum.
If the Unacceptable Qualifications have an Estoppel Qualification Sum of
less than $100,000 in the aggregate for all of the Leases, then Seller shall
either (i) grant Purchaser a credit at Closing for an amount equal to the
Estoppel Qualification Sum, or (ii) cure all conditions giving rise to an
Unacceptable Qualification on or before the Closing. The determination to
perform the covenant contained in subparagraphs (i) or (ii) in the preceding
sentence shall be made by Seller in its sole discretion. Provided Seller
performs its covenant in this Paragraph 26.4, the disclosure of Unacceptable
Qualifications having an Estoppel
<PAGE>
Qualification Sum of less than $100,000 in the
aggregate shall not affect Purchaser's obligations to close hereunder or give
rise to any additional liability from Seller to Purchaser.
26.5. If Seller has not satisfied the Estoppel Condition on or before
May 27, 1997, then Purchaser shall have the right either (i) to terminate this
Agreement, or (ii) extend the Closing Date until June 17, 1997, by delivering
written notice to Seller on or before May 30, 1997. If Purchaser exercises its
rights to terminate in accordance with the terms of this Paragraph 26.5, this
Agreement shall be null and void without further action of the parties and all
Earnest Money theretofore deposited by Purchaser together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for those obligations which
specifically survive the terms hereof. If Purchaser does not terminate this
Agreement pursuant to the first sentence of this Paragraph 26.5, the parties
shall proceed to Closing and (i) Purchaser shall receive a credit at Closing
equal to the amount of the Estoppel Qualification Sum of the Unacceptable
Qualifications contained in the Tenant Certificates and Seller Tenant
Certificates, up to an aggregate amount of $100,000 or (ii) Seller shall cure
all conditions giving rise to an Unacceptable Qualification Sum up to an
aggregate amount of $100,000. The determination to perform the covenant
contained in subparagraphs (i) or (ii) in the preceding sentence shall be made
by Seller in its sole discretion.
26.6. Notwithstanding anything contained herein to the contrary, if
Seller does not satisfy the Estoppel Condition because the Estoppel
Qualification Sum exceeds $100,000 and Purchaser has terminated the
Agreement pursuant to Paragraph 26.5, Seller shall have the right to vitiate
Purchaser's termination by written notice on or before 5:00 p.m. Chicago time
on June 2, 1997 in which case the parties shall proceed to Closing and Seller
shall either (i) grant Purchaser at Closing a credit for an amount to the
Estoppel Qualification Sum or (ii) cure all conditions giving rise to an
Unacceptable Qualification on or before the Closing. The determination to
perform the covenant contained in subparagraphs (i) or (ii) in the preceding
sentence shall be made by Seller in its sole discretion.
27. CITY OF LOVELAND LITIGATION. Purchaser acknowledges that Seller has filed
a Complaint against the parties described on Exhibit N (the "Litigation"), and
that Seller is pursuing its claims under such Complaint. During the Inspection
Period, Seller and Purchaser shall negotiate in good faith to agree upon an
assignment or other resolution of the rights of Seller to the Litigation. In
the event an agreement cannot be reached between Seller and Purchaser on or
before the Inspection Period, Purchaser may terminate the Agreement as set
forth in Paragraph 7 above.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
29TH STREET INVESTMENTS, LLC, a Colorado limited
liability company
By:/s/Paul D. Menzies
----------------------
Name: Paul D. Menzies
----------------------
Its: Manager
----------------------
SELLER:
ORCHARDS INVESTORS, an Illinois general
partnership
By: Balcor Mortgage Advisors-II, an Illinois
general partnership, a general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a general partner
By: The Balcor Company, a Delaware
corporation, its general partner
By:/s/John K. Powell
---------------------------
Name: John K. Powell
---------------------------
Its: Senior Vice President
---------------------------
<PAGE>
Al Lieberman of Insignia Mortgage & Investment Company ("Seller's Broker")
executed this Agreement in its capacity as a real estate broker and
acknowledges that the fee or commission due it from Seller as a result of the
transaction described in this Agreement is as set forth in that certain Listing
Agreement, dated Nov. 20, 1996 between Seller and Seller's Broker (the "Listing
Agreement"). Seller's Broker also acknowledges that payment of the aforesaid
fee or commission is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt to
the Seller at the Closing for the fee or commission due Seller's Broker and a
release, in the appropriate form, stating that no other fees or commissions are
due to it from Seller or Purchaser.
Insignia Mortgage & Investment Company
By:/s/Al Lieberman
-------------------
<PAGE>
of Fuller and Company ("Co-Broker") executed this
Agreement in its capacity as a real estate broker and acknowledges that the
fee or commission due it from Insignia Mortgage & Investment Company
("Insignia") as a result of the transaction described in this Agreement is as
set forth in that certain co-brokerage agreement between Insignia and
Co-Broker (the "Co-Brokerage Agreement"). Co-Broker also acknowledges that
payment of the aforesaid fee or commission is conditioned upon the Closing
and the receipt of the Purchase Price by the Seller. Co-Broker agrees to
deliver a receipt to the Seller at the Closing for the fee or commission due
Co-Broker and a release, in the appropriate form, stating that no other fees
or commissions are due to it from Seller or Purchaser.
Fuller and Company
By:
--------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Tenant Certificate
M - Rent Roll
