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) August 27, 1996
BALCOR EQUITY PROPERTIES-XII
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Exact Name of Registrant
Illinois 0-11126
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3169763
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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
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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Sandridge Apartments, Phase I
In 1982, the Partnership acquired Sandridge Apartments, Phase I, Pasadena,
Texas, utilizing approximately $3,917,000 in offering proceeds. The property
was acquired subject to mortgage financing of $7,640,000 which included a first
mortgage loan from a third party of approximately $6,645,000 and an unsecured
loan from the seller of approximately $995,000 ("Seller's Note"). An affiliate
of the General Partner purchased the first mortgage loan in 1987. Pursuant to
a settlement with the seller in 1988, the principal balance of the Seller's
Note was reduced to $500,000. In 1994, the Partnership paid $150,000 in full
satisfaction of the Seller's Note. The first mortgage loan was refinanced in
1989 with a new $5,334,000 first mortgage loan from a third party and a
$1,692,596 unsecured loan from an affiliate of the General Partner (the
"Affiliate Loan"). In 1994, the first mortgage loan was refinanced with a new
$5,921,000 first mortgage loan from a third party. The Partnership received
excess refinancing proceeds of $392,000. In addition, the Affiliate Loan was
repaid with funds borrowed from the General Partner. The General Partner loan
has been partially repaid from Partnership operations and had an outstanding
balance of $440,724 at June 30, 1996.
On August 27, 1996, the Partnership contracted to sell the property for a sale
price of $8,616,667 to an unaffiliated party, Alliance Holdings, L.L.C., an
Illinois limited liability company. The purchaser has deposited $75,000 into
an escrow account as earnest money. The remainder of the sale price will be
payable in cash at closing, scheduled for September 30, 1996. From the
proceeds of the sale, the Partnership will pay the outstanding balance of the
first mortgage loan which is expected to be approximately $5,837,000 at
closing, a prepayment penalty of approximately $150,000 and $129,250 to a third
party as a brokerage commission. An affiliate of the third party providing
property management services for the property will receive a fee of $64,625 for
services rendered in connection with the sale of the property. The Partnership
will receive the remaining proceeds of approximately $2,436,000 less closing
costs. A portion of these proceeds is expected to be used to repay the
remaining balance of the General Partner loan.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the property. The General Partner
will be reimbursed by the Partnership for its actual expenses incurred in
connection with the sale.
An affiliate of the General Partner has simultaneously contracted to sell
Sandridge Apartments, Phase II, located adjacent to Phase I, to the purchaser.
In the event that the agreement of sale for Phase I or Phase II is terminated
for any reason, the agreement of sale for the other phase will also be
terminated. In addition, affiliates of the General Partner have recently
contracted to sell two other properties to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions,
including the sale of Phase II. 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 property may not occur.
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ITEM 5. OTHER EVENTS
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Brierwood Apartments
As previously reported, on April 23, 1996, the Partnership contracted to sell
Brierwood Apartments, Jacksonville, Florida, to an unaffiliated party, ERP
Operating Limited Partnership, an Illinois limited partnership, for a sale
price of $5,250,000. The sale closed on August 30, 1996. From the proceeds of
the sale, the Partnership paid the outstanding balance of the first mortgage
loan of $3,749,391, legal fees of approximately $15,000 and a $65,625 fee to an
affiliate of the third party providing property management services for the
property for services rendered in connection with the sale of the property.
Pursuant to the agreement of sale, the purchaser paid all closing costs
relating to the sale, including title charges. The Partnership received
approximately $1,420,000 of remaining proceeds. Of such amount, $500,000 is
being retained by the Partnership and will not be available for use or
distribution by the Partnership until 120 days after closing.
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) (a) Agreement of Sale and attachment thereto relating
to the sale of Sandridge Apartments, Phase I,
Pasadena, Texas.
(b) Modification Agreement relating to the sale
of Sandridge Apartments, Phase I, Pasadena, Texas.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
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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 EQUITY PROPERTIES-XII
By: Balcor Partners-XII, 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, Vice President
and Secretary
Dated: September 11, 1996
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AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 27th
day of August, 1996, by and between ALLIANCE HOLDINGS, L.L.C., an Illinois
limited liability company ("Purchaser"), and SANDRIDGE I LIMITED PARTNERSHIP,
an Illinois limited 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 Eight Million Six Hundred Sixteen Thousand Six Hundred
Sixty-Seven And No/100 Dollars ($8,616,667.00) (the "Purchase Price"), that
certain property commonly known as Sand Ridge Apartments, Pasadena, Texas
legally described on Exhibit A attached hereto (the "Property"), together
with all buildings, easements, rights of way, leases, phone numbers, service
contracts, security deposits, trade names and any assignable warranties,
related thereto and owned or in the possession of Seller. 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 Seventy-Five
Thousand and No/100 Dollars ($75,000.00) (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;
2.2. On the Closing Date 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 Charter Title Company as
agent for Lawyers Title Insurance Corporation (hereinafter referred to as
"Title Insurer") dated June 27, 1996 for the Property (the "Title
Commitment"), containing the following endorsements, to the extent available:
extended coverage, zoning 3.1 with parking, access, survey and location. 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 except as deleted by
extended coverage; (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 10
through 15 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 in conformance with the previously
delivered Title Commitment, subject to Permitted Exceptions and Unpermitted
Exceptions waived by Purchaser (the "Title Policy"). Seller and Purchaser
shall each pay for one-half of the costs of the Title Commitment and Title
<PAGE>
Policy and Purchaser shall pay for the cost of any endorsements to, and
extended coverage on, the Title Policy.
3.2. Purchaser has received a survey of the Property prepared by Powers
Engineering dated May 1, 1982, last updated June 30, 1994 (the "Existing
Survey"). Seller and Purchaser shall each pay for one-half of the costs of
updating the Existing Survey and Seller shall deliver the updated survey (the
"Updated Survey") to Purchaser within 14 days after the date hereof.
Purchaser hereby acknowledges that all matters disclosed by the Existing
Survey are acceptable to Purchaser.
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.
3.4 Notwithstanding anything contained herein to the contrary,
Purchaser shall have five (5) business days after receipt of the last of the
title documents, Title Commitment and Existing Survey to advise Seller of any
title and survey objections. Seller shall have five (5) business days after
receipt of Purchaser's title and survey objections to advise Purchaser of
which title and survey objections Seller will cure which may include title
insurance reasonably acceptable to Purchaser. In the event Seller does not
advise Purchaser that it will cure all Purchaser's title and survey
objections within said five (5) business days, Purchaser, upon written notice
to Seller, may terminate the Agreement and the Earnest Money shall be
immediately returned to Purchaser. Seller, at Closing, shall cure all title
and survey objections which Seller advised Purchaser that Seller would cure.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser and Seller shall each pay for one-half 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, 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 (in form reasonably acceptable
to Purchaser) against loss or damage that may be occasioned by such
Unpermitted Exceptions, or (ii) have the right, but not the obligation, to
bond over, 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
<PAGE>
under (ii) in the preceding sentence, Purchaser may terminate this Agreement
upon notice to Seller within five (5) 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 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 and
Purchaser in good faith) Purchaser shall not have the right to terminate its
obligations under this Agreement by reason thereof, but 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 such fire or casualty and grant Purchaser a credit at Closing for
the amount of the deductible under such insurance policies. 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 and Purchaser 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 and grant Purchaser a credit at Closing for the amount of
the deductible under such insurance policies.
<PAGE>
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; or (iii) 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 the date hereof and ending at 5:00
p.m. Chicago time on September 5, 1996 (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. In connection with Purchaser's review
of the Property, Seller agrees to deliver to Purchaser copies of the current
rent roll for the Property, the most recent tax and insurance bills, utility
account numbers, service contracts, and unaudited year end 1995 and
year-to-date 1996 operating statements. Furthermore, if the following are
reasonably available to Seller, Seller shall deliver to Purchaser plans and
specifications.
<PAGE>
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 in Purchaser's sole and unfettered discretion, 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 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. Seller can make no representations or warranties relating to the
condition of the Property or the Personal Property. 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 date of this Agreement, 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
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
<PAGE>
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
relating directly or indirectly to the existence of asbestos or Hazardous
Materials on, or environmental conditions of, the Property, whether known or
unknown, 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. Except as specifically
set forth herein, 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
<PAGE>
upon its own investigation and inquiry with respect to the operation of the
Property and, except as specifically set forth herein, 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 EMG, dated May 7, 1996
("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
September 30, 1996, (the "Closing Date"), at the office of Title Insurer, 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 Texas, 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 Seller the balance of the Purchase Price (less the
Earnest Money), 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);
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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 (to 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;
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.
PURCHASER AND SELLER AGREE THAT A DEFAULT BY PURCHASER UNDER ANY OF THE
TERMS OR CONDITIONS OF THE COMPANION CONTRACT (AS HEREINAFTER DEFINED) SHALL
BE DEEMED A DEFAULT OF PURCHASER UNDER THIS AGREEMENT. IN ADDITION,
PURCHASER AND SELLER AGREE THAT A DEFAULT BY PURCHASER UNDER THIS AGREEMENT
SHALL BE DEEMED A DEFAULT OF PURCHASER UNDER THE COMPANION CONTRACT. IF THE
TRANSACTION CONTEMPLATED BY THE COMPANION CONTRACT FAILS TO CLOSE FOR ANY
REASON WHATSOEVER, PURCHASER SHALL NOT BE ENTITLED TO ANY RIGHTS OF SETOFF
UNDER THIS AGREEMENT IN CONNECTION WITH ANY LIABILITY ARISING UNDER THE
COMPANION CONTRACT.
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
<PAGE>
FULLY IN PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, IF SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED,
THEN PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE. PURCHASER
AND SELLER AGREE THAT A DEFAULT BY SELLER UNDER ANY OF THE TERMS OR
CONDITIONS OF THE COMPANION CONTRACT SHALL BE DEEMED A DEFAULT OF SELLER
UNDER THIS AGREEMENT. IN ADDITION, SELLER AND PURCHASER AGREE THAT A DEFAULT
BY SELLER UNDER THIS AGREEMENT SHALL BE DEEMED A DEFAULT OF SELLER UNDER THE
COMPANION CONTRACT.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid
rents); 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
based on 105% of the most current and available tax bills; 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 rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for rent for the month during which
the Closing occurs 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
Seller's pro-rata share of such Post-Closing Receipt to Seller. Purchaser
shall use diligent efforts to collect all amounts which, upon collection,
would constitute Post-Closing Receipts hereunder. Within 120 days after the
Closing Date, Purchaser 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, of Purchaser's books and records to verify the accuracy of
the Post-Closing Receipts reconciliation statement and upon the verification
of additional funds owing to Seller, Purchaser shall pay to Seller said
additional Post-Closing Receipts and 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.
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. Notwithstanding the
foregoing, Purchaser may assign its rights under this Agreement to any entity
controlled by, or under common control with, Purchaser, provided that
Purchaser shall not be released from any liability or obligations hereunder.
<PAGE>
15. BROKER. Seller agrees to pay all broker commissions or finder fees
arising by or through Seller. Purchaser agrees to pay all broker commissions
or finder fees arising by or through Purchaser. Any commissions payable by
Seller 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. 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 Mark A. Saturno (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
not survive Closing: (i) Seller has no knowledge of any pending or
threatened litigation, claim, cause of action or administrative proceeding
concerning the Property; (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 L which Seller will update as of the
Closing Date is accurate as of the date set forth thereon; (iv) Seller has
not received written notice of any uncured violations of Environmental Laws,
or applicable building and zoning laws; and (v) from the date hereof to the
Closing Date, Seller shall operate, repair and maintain the Property in
substantially the same manner as it has heretofore been operated and
maintained.
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.
17. LIMITATION OF LIABILITY. Neither any Affiliate of Seller, nor any of
Seller's or any Affiliate of Seller's 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.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
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
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(708) 317-4360
(708) 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: Alliance Holdings, L.L.C.
221 North LaSalle Street
Suite 1653
Chicago, Illinois 60601
Attention: Mr. Andrew W. Schor
(312) 332-8000
(312) 332-0513 (FAX)
and one copy to: Schain Firsel & Burney
222 North LaSalle Street
Suite 1910
Chicago, Illinois 60601
Attention: Michael Ross, Esq.
(312) 332-0200
(312) 332-4514 (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
<PAGE>
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.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of Florida, 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. COMPANION PROPERTY. Notwithstanding anything contained in this
Agreement to the contrary, it is a condition precedent to Seller's and
Purchaser's obligations to perform under this Agreement that Purchaser
acquire that certain property commonly known as the Sandridge II Apartments
(the "Other Property") in accordance with the terms of that certain Agreement
of Sale (the "Companion Contract") by and between Sandridge II Limited
Partnership, an Illinois limited partnership, an affiliate of Seller, and
Purchaser of even date herewith for the sale of the Other Property to
Purchaser. If this Agreement is terminated pursuant to any section of this
Agreement, then the Companion Contract shall also be deemed terminated.
Similarly, if the Companion Contract is terminated pursuant to any paragraph
of the Companion Contract, then this Agreement shall also be deemed
terminated. Nothing contained in this Paragraph 25 shall be deemed to
circumvent the terms of Paragraph 10 if this Agreement is terminated as a
result of a default of Purchaser and nothing in this Paragraph 25 shall be
deemed to circumvent the terms of Paragraph 11 if this Agreement is
terminated as a result of a default of Seller.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as
of the date first set forth above.
PURCHASER:
ALLIANCE HOLDINGS, L.L.C., an Illinois limited
liability company
By: /s/Andrew W. Schor
--------------------------------
Name: Andrew W. Schor
--------------------------------
Its: President
--------------------------------
SELLER:
SANDRIDGE I LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Sandridge I of Illinois, Inc., an Illinois
corporation, its general partner
By: /s/James B. Mendelson
-------------------------------
Name: James B. Mendelson
-------------------------------
Its: Authorized Representative
-------------------------------
<PAGE>
[Sandridge I Apartments]
_________________ of Cushman & Wakefield ("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
__, 199_ 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.
CUSHMAN & WAKEFIELD OF FLORIDA, INC.
By: _______________________________
Name:_______________________________
Its: _______________________________
<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 - Rent Roll
<PAGE>
MODIFICATION AGREEMENT
This Modification Agreement ("Modification") dated this 5th day of
September, 1996, by and between ALLIANCE HOLDINGS, L. L. C., an Illinois
limited liability company ("Purchaser") and SANDRIDGE I LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
WITNESSETH:
WHEREAS, Purchaser and Seller entered into an Agreement of Sale dated
August 27, 1996 ("Contract") for the Sand Ridge Apartments, Pasadena, Texas;
and
WHEREAS, Purchaser and Seller desire to modify the Contract as hereinafter
provided; and
NOW, THEREFORE, in consideration of the sum of Ten and 00/100 Dollars
($10.00) and other good and valuable consideration, in hand paid, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. The date September 5, 1996 contained in the second (2nd) line of
Section 7.1 of the Contract is hereby deleted and the date September 17, 1996
is hereby substituted therefor.
2. Except as above provided, the Contract remains unmodified and in full
force and effect.
PURCHASER: SELLER:
ALLIANCE HOLDINGS, L.L.C. SANDRIDGE I LIMITED PARTNERSHIP,
an Illinois limited an Illinois limited partnership
liability company
By: /s/ Andrew W. Schor By: Sandridge I of Illinois, Inc. an
------------------------------ Illinois corporation, its general
Name: Andrew W. Schor partner
------------------------------
Its: President By: /s/ John K. Powell, Jr.
------------------------------ ------------------------------
Name:
------------------------------
Its:
------------------------------
<PAGE>
