SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - -----
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13349
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BALCOR REALTY INVESTORS-84
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(Exact name of registrant as specified in its charter)
Illinois 36-3215399
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 1,075,588 $ 1,311,019
Certificate of deposit - restricted 700,000
Escrow deposits 2,264,025 2,501,015
Accounts and accrued interest receivable 831,286 914,727
Deferred expenses, net of accumulated
amortization of $1,003,448 in 1995 and
$952,643 in 1994 1,262,306 1,353,111
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5,433,205 6,779,872
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Investment in real estate:
Land 18,056,596 18,397,507
Buildings and improvements 123,843,880 130,982,523
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141,900,476 149,380,030
Less accumulated depreciation 55,403,474 57,774,549
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Investment in real estate, net
of accumulated depreciation 86,497,002 91,605,481
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$ 91,930,207 $ 98,385,353
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LIABILITIES AND PARTNERS' CAPITAL
Loans payable - affiliate $ 9,353,202 $ 12,153,202
Accounts payable 276,134 328,647
Due to affiliates 665,074 197,822
Accrued liabilities, principally real estate
taxes 1,093,400 1,201,714
Security deposits 539,971 582,347
Mortgage notes payable 107,298,165 112,812,222
Mortgage notes payable - affiliates 1,967,211 1,967,211
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Total liabilities 121,193,157 129,243,165
Affiliate's participation in joint venture (309,997)
Partners' capital (140,000 Limited Partnership
Interests issued and outstanding) (29,262,950) (30,547,815)
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$ 91,930,207 $ 98,385,353
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 7,017,397 $ 7,633,225
Interest on short-term investments 57,039 13,981
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Total income 7,074,436 7,647,206
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Expenses:
Interest on mortgage notes payable 2,298,177 2,793,189
Interest on short-term loans 182,300 112,079
Depreciation 993,624 1,153,099
Amortization of deferred expenses 90,805 183,418
Property operating 2,284,103 2,829,799
Real estate taxes 522,504 786,200
Property management fees 347,474 377,840
Administrative 220,327 231,342
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Total expenses 6,939,314 8,466,966
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Income (loss) before gain on sale of property,
affiliate's participation in (income) loss
from joint venture and extraordinary item 135,122 (819,760)
Gain on sale of property 1,814,970
Affiliate's participation in (income) loss
from joint venture (755,586) 7,841
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Income (loss) before extraordinary item 1,194,506 (811,919)
Extraordinary item:
Gain on forgiveness of debt 90,359
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Net income (loss) $ 1,284,865 $ (811,919)
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Income (loss) before extraordinary item
allocated to General Partner $ 11,945 $ (8,119)
============= =============
Income (loss) before extraordinary item
allocated to Limited Partners $ 1,182,561 $ (803,800)
============= =============
Income (loss) before extraordinary item
per Limited Partnership Interest (140,000
issued and outstanding) $ 8.45 $ (5.74)
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Extraordinary item allocated to
General Partner $ 904 None
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<PAGE>
Extraordinary item allocated to
Limited Partners $ 89,455 None
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Extraordinary item per Limited Partnership
Interest (140,000 issued and outstanding) $ 0.64 None
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Net income (loss) allocated to General Partner $ 12,849 $ (8,119)
============= =============
Net income (loss) allocated to
Limited Partners $ 1,272,016 $ (803,800)
============= =============
Net income (loss) per Limited Partnership
Interest (140,000 issued and outstanding) $ 9.09 $ (5.74)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income (loss) $ 1,284,865 $ (811,919)
Adjustments to reconcile net income (loss) to
net cash provided by or (used in) operating
activities:
Extraordinary item:
Gain on forgiveness of debt (90,359)
Gain on sale of property (1,814,970)
Affiliate's participation in income
(loss) from joint venture 755,586 (7,841)
Depreciation of properties 993,624 1,153,099
Amortization of deferred expenses 90,805 183,418
Deferred interest on note receivable (98,568)
Net change in:
Escrow deposits 170,869 946,378
Accounts and accrued interest
receivable 83,441 (248,778)
Accounts payable (52,513) (567,046)
Due to affiliates 53,376 143,848
Accrued liabilities (108,314) (769,304)
Security deposits (42,376) 18,569
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Net cash provided by or (used in) operating
activities 1,324,034 (58,144)
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Investing activities:
Redemption of certificate of deposit -
restricted 700,000
Proceeds from sale of property 6,140,000
Payment of selling costs (210,175)
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Net cash provided by investing activities 6,629,825
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Financing activities:
Capital contribution by joint venture
partner - affiliate 4,953
Distribution to joint venture partner -
affiliate (31,713)
Proceeds from loan payable - affiliate 88,385
Repayment of loan payable - affiliate (2,800,000)
Proceeds from issuance of mortgage
note payable 3,128,700
Repayment of mortgage notes payable (5,058,226) (2,841,601)
Repayment of mortgage notes payable -
affiliate (287,099)
<PAGE>
Principal payments on mortgage notes payable (365,472) (379,195)
Principal payments on mortgage notes
payable - affiliate (10,732)
Payment of deferred expenses (72,513)
Payment of financing escrows (15,750)
Release of financing escrows 66,121
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Net cash used in financing activities (8,189,290) (384,852)
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Net change in cash and cash equivalents (235,431) (442,996)
Cash and cash equivalents at beginning
of period 1,311,019 736,429
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Cash and cash equivalents at end of period $ 1,075,588 $ 293,433
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the quarter ended March 31,
1995, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarter ended March 31, 1995 and 1994, the Partnership incurred
interest expense on mortgage notes payable to non-affiliates of $2,247,670 and
$2,591,489 and paid interest expense of $2,247,670 and $2,427,934,
respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1995 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost: None $198,895
During the quarter ended March 31, 1995, the Partnership repaid $2,800,000 of
the General Partner loan. As of March 31, 1995, the Partnership had loans
totaling $9,353,202 from the General Partner with accrued interest payable on
these loans totaling $52,303. During the quarter ended March 31, 1995 and 1994,
the Partnership incurred interest expense of $182,300 and $112,079 and paid
interest expense of $198,560 and $109,450 on these loans, respectively.
Interest expense is computed at the American Express Company cost of funds rate
plus a spread to cover administrative costs. As of March 31, 1995, this rate
was 6.552%.
As of March 31, 1995, the Partnership had junior loans outstanding from BREHI
relating to the Chestnut Ridge Phase II and Woodland Hills apartment complexes
in the aggregate amount of $1,967,211 with accrued interest payable on these
loans totaling $56,662. During 1994, the Partnership also had mortgage loans
outstanding from BREHI relating to the Ridgepoint Hill and Ridgepoint View
apartment complexes. These loans were repaid when the properties were sold in
August 1994. During the quarter ended March 31, 1995 and 1994, the Partnership
incurred interest expense on the affiliated loans of $50,507 and $201,700 and
paid interest expense of $23,468 and $673,670, respectively.
<PAGE>
4. Property Sale:
In February 1995, Pinebrook Apartments, which was owned by a joint venture
consisting of the Partnership and an affiliate, was sold in a cash sale for
$6,140,000. From the proceeds of the sale, $5,058,226 was paid to the third
party mortgage holders in full satisfaction of the first, second and fourth
mortgage loans, as well as a brokerage commission and other closing costs. The
basis of the property was $4,114,855, which is net of accumulated depreciation
of $3,364,699. For financial statement purposes, the Partnership recognized a
gain of $1,814,970 from the sale of this property, of which $780,279 was the
affiliated minority joint venture partner's share. Total proceeds received from
the sale of this property were $871,599, of which $422,115 was the minority
joint venture partner's share. The proceeds due to the minority joint venture
partner, net of its share of the first quarter operating deficit of $8,239, is
included in due to affiliates in the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors-84 (the "Partnership") was formed in 1982 to invest in
and operate income-producing real property. The Partnership raised $140,000,000
from sales of Limited Partnership Interests and utilized these proceeds to
acquire twenty-three real property investments and a minority joint venture
interest in one additional property. To date, five properties have been sold
and titles to five properties, including the property in which the Partnership
held a minority joint venture interest, have been relinquished through
foreclosure. The Partnership continues to operate the fourteen remaining
properties.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1994 for a more complete understanding of
the Partnership's financial position.
Operations
- - ----------
Summary of Operations
- - ---------------------
The Partnership sold two properties in August 1994 and one additional property
in February 1995. As a result of these transactions and improved property
operations at several of the Partnership's remaining properties, the
Partnership generated net income during the quarter ended March 31, 1995 as
compared to a net loss in the same period in 1994. Further discussion of the
Partnership's operations is summarized below.
1995 Compared to 1994
- - ---------------------
The Partnership sold the Ridgepoint Hill and Ridgepoint View apartment
complexes in August 1994 and the Pinebrook Apartments in February 1995. These
sales resulted in decreases in rental and service income, interest expense on
mortgage notes payable, depreciation, property operating expenses, real estate
taxes and property management fees during the quarter ended March 31, 1995 as
compared to same period in 1994. In addition, the Partnership recognized a gain
on the sale of the Pinebrook Apartments during the quarter ended March 31,
1995.
All fourteen of the Partnership's remaining properties experienced improved
occupancy and/or higher rental rates in 1995 which resulted in increased rental
and service income and property management fees and partially offset the
decreases from the three property sales.
Due to higher average cash balances and higher interest rates on short-term
interest bearing instruments, interest income on short-term investments
increased during the quarter ended March 31, 1995 as compared to the same
period in 1994.
<PAGE>
Due to increases in interest rates during 1995, interest expense on short-term
loans increased during the quarter ended March 31, 1995 as compared to the same
period in 1994.
The March 1994 refinancing of the Chestnut Ridge Phase II mortgage loan
resulted in the full amortization of deferred expenses related to the prior
loan. This resulted in the decrease in amortization expense during the quarter
ended March 31, 1995 as compared to the same period in 1994.
Higher repair and maintenance expenditures incurred during 1994, which included
roof and structural repairs, at the Antlers, Canyon Sands, Courtyards of
Kendall, Creekwood and Quail Lakes apartment complexes contributed to the
decrease in property operating expenses during the quarter ended March 31, 1995
as compared to the same period in 1994.
During 1993, the Partnership recognized real estate tax expense for the
Ridgetree Phase I Apartments that was less than the amount subsequently paid
during 1994. The additional expense was recognized during 1994 and resulted in
a further decrease in real estate tax expense during the quarter ended March
31, 1995 as compared to the same period in 1994.
The gain recognized in connection with the sale of the Pinebrook Apartments
resulted in affiliate's participation in income from joint venture during the
quarter ended March 31, 1995 as compared to a loss during the same period in
1994.
Liquidity and Capital Resources
- - -------------------------------
The cash position of the Partnership decreased as of March 31, 1995 as compared
to December 31, 1994. The Partnership received cash from its operating
activities which consisted primarily of cash flow generated from property
operations which was partially offset by the payment of administrative expenses
and interest expense on short-term loans. The Partnership also received cash
from its investing activities relating to the redemption of a restricted
certificate of deposit and the sale of the Pinebrook Apartments. A portion of
the proceeds received from the sale was used in its financing activities to
repay the related mortgage notes. The Partnership used cash to fund its other
financing activities which consisted primarily of the repayment of a portion of
the loan from the General Partner and principal payments on mortgage notes
payable.
The Partnership owes approximately $9,405,000 to the General Partner at March
31, 1995 in connection with the funding of operating deficits and borrowings
needed for loan refinancings. These loans are expected to be repaid from
available cash flow from future property operations, and from proceeds received
from the disposition or refinancing of the Partnership's real estate
investments, prior to any distributions to Limited Partners.
<PAGE>
Although an affiliate of the General Partner has, in certain circumstances,
provided mortgage loans for certain properties to the Partnership, there can be
no assurance that loans of this type will be available from either an affiliate
or the General Partner in the future. The General Partner may continue to
provide additional short-term loans to the Partnership or to fund working
capital needs or property operating deficits, although there is no assurance
that such loans will be available. Should such short-term loans not be
available, the General Partner will seek alternative third party sources of
financing working capital. However, the current economic environment and its
impact on the real estate industry make it unlikely that the Partnership would
be able to secure financing from third parties to fund working capital needs or
operating deficits. Should additional borrowings be needed and not be available
either through the General Partner or third parties, the Partnership may be
required to dispose of some of its properties to satisfy these obligations.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered to be significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the properties revenue
receipts less property related expenditures, which include debt service
payments. For the quarter ended March 31, 1995, thirteen of the fourteen
remaining properties owned by the Partnership generated positive cash flow and
one generated a marginal cash flow deficit. For the quarter ended March 31,
1994, of these fourteen properties, eight generated positive cash flow and six
generated marginal cash flow deficits.
Five properties which had generated marginal deficits during the quarter ended
March 31, 1994 generated positive cash flow during the quarter ended March 31,
1995. The Antlers, Creekwood Phase I and Courtyards of Kendall apartment
complexes experienced slightly higher rental income and decreased property
operating expense, while Drayton Quarter Apartments experienced higher rental
income. Cash flow improved at Chestnut Ridge Phase II Apartments due to reduced
debt service payments resulting from the 1994 refinancing.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties including refinancing of mortgage
loans, improving property operating performance, and seeking rent increases
where market conditions allow. As of March 31, 1995, the occupancy rates of the
Partnership's properties ranged from 89% to 97%. Despite improvements during
1994 and 1995 in the local economies and rental markets where certain of the
Partnership's properties are located, the General Partner believes that
continued ownership of many of the properties is in the best interests of the
Partnership in order to maximize potential returns to Limited Partners. As a
result, the Partnership will continue to own these properties for longer than
the holding period for the assets originally described in the prospectus.
Each of the Partnership's properties is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. During November 1995, the
mortgage loan of approximately $4,765,000 collateralized by the Drayton Quarter
apartment complex matures. On May 10, 1995, the Partnership signed a contract
to sell the property. See Item 5. Other Information for additional information.
<PAGE>
The Pinebrook Apartments was owned by Pinebrook Investors, a joint venture
consisting of the Partnership and an affiliate. In February 1995, Pinebrook
Investors sold the property in a cash sale for $6,140,000. From the proceeds,
Pinebrook Investors paid $5,058,226 to the third party mortgage holders in full
satisfaction of the first, second and fourth mortgage loans. Additionally,
Pinebrook Investors paid $716,729 in full satisfaction of the third mortgage
note payable to Pinebrook Limited Partnership, a separate joint venture
consisting of the Partnership and the affiliate. Total proceeds received from
this transaction were $871,599, of which $449,484 was the Partnership's share.
See Note 4 of Notes to Financial Statements for additional information.
A certificate of deposit of $700,000 had been pledged as additional collateral
for the mortgage loan relating to the Canyon Sands Apartments. In March 1995,
the certificate was released to the Partnership.
During 1995, the Partnership recognized an extraordinary gain on forgiveness of
debt of $90,359 in connection with the settlement reached with the seller of
certain of the Partnership's properties.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents depending on general
or local economic conditions. In the long-term, inflation will increase
operating costs and replacement costs and may lead to increased rental revenues
and real estate values.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- - -------------------------
Drayton Quarter Apartments
- - --------------------------
In August 1983, the Partnership acquired the Drayton Quarter Apartments (the
"Property") utilizing approximately $3,522,835 in offering proceeds. The
Property was acquired subject to first mortgage financing of $5,000,000.
On May 10, 1995, the Partnership contracted to sell the Property for a sale
price of $6,250,000 to Churchill Forge, Inc., a Massachusetts corporation. The
closing of the sale is scheduled for July 31, 1995. An affiliate of the
Partnership has contracted to sell a property adjacent to the Property to the
same purchaser, which sale is expected to close May 31, 1995. The purchaser has
deposited $150,000 relating to the Property into an escrow account as earnest
money. On or before May 31, 1995, the purchaser will deposit an additional
$150,000 into the escrow account. The remaining portion of the sale price will
be payable in cash at closing. From the proceeds of the sale, the Partnership
will repay the first mortgage loan, which had an outstanding principal balance
of approximately $4,785,984 at March 31, 1995. The General Partner will be
reimbursed by the Partnership for actual expenses incurred with the sale.
The purchaser has the option to extend the closing date to August 31, 1995 upon
written notice of the Partnership and the deposit of an additional $100,000 of
earnest money.
The closing is subject to the satisfaction of numerous terms and conditions,
including the closing of the sale of the adjacent property. 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.
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement, previously filed as Exhibit 4.1 to
Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated
December 16, 1983 (Registration No. 2-86317) and Form of Confirmation regarding
Interests in the Registrant set forth as Exhibit 4.2 to the Registrant's Report
on Form 10-Q for the quarter ended June 30, 1992 (Commission File No. 0-13349)
are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the three month period
ending March 31, 1995 is attached hereto.
(99) Agreement of sale relating to the sale of Drayton Quarter Apartments,
Charleston County, South Carolina is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1995.
<PAGE>
SIGNATURES
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, thereunto duly authorized.
BALCOR REALTY INVESTORS-84
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XV, the General Partner
By: /s/Brian Parker
-----------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XV, the General
Partner
Date: May 15, 1995
----------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the __ day of
May, 1995, by and between CHURCHILL FORGE, INC., a Massachusetts corporation
("Purchaser"), and DRAYTON INVESTORS, 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 Six Million Two Hundred Fifty Thousand and No/100 Dollars
($6,250,000.00) (the "Purchase Price"), that certain property commonly known as
the Drayton Quarter Apartments, Charleston, South Carolina legally described
and depicted 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 "Initial 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 or before the closing of the transaction set forth in that
certain Agreement of Sale between Sedgefield Associates and Purchaser, its
successors or assigns ("Affiliate of Purchaser"), dated May __, 1995 providing
for the purchase and sale of the Sedgefield Apartments, Charleston, South
Carolina (the "Sedgefield Agreement"), the additional sum of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) (the "Additional Earnest Money", the
Additional Earnest Money and the Initial Earnest Money are hereinafter
sometimes referred to collectively as the "Earnest Money") to be held in escrow
by and in accordance with the provisions of the Escrow Agreement; and
2.3. 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.
<PAGE>
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 Lawyer's Title Insurance
Company, (hereinafter referred to as "Title Insurer") dated February 3, 1995
for the Property as modified by endorsement dated March 9, 1995 (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 assessment, special district taxes and related
charges, if any, not yet due and payable; (c) matters shown on the "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
2 through 10 inclusive, to the extent that same effect 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 or before the Closing Date, purchaser shall
notify Seller in writing whether Purchaser desires to receive a "Title Policy"
(as hereinafter defined) at "Closing" (as hereinafter defined). If Purchaser
elects to receive a Title Policy, on the Closing Date Title Insurer shall
deliver to Purchaser a standard title policy in conformance with the previously
delivered Title Commitment, subject only to Permitted Exceptions and
Unpermitted Exceptions waived by Purchaser (the "Title Policy").
Notwithstanding whether Purchaser elects to receive a Title Policy in
accordance with this Paragraph 3.1, Seller shall give Purchaser a credit
against the Purchase Price in the amount of one-half (1/2) of the costs of the
Title Commitment and Title Policy and Purchaser shall be responsible for all
costs in connection thereof including, 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 C. Roger
Jennings Surveyor dated March 28, 1995 (the "Survey"). Purchaser hereby
acknowledges that all matters disclosed by the Survey are acceptable to
Purchaser. Purchaser and Seller shall each pay for one-half of the costs of
updating the Survey to add a certification to Purchaser in a form reasonably
acceptable to Purchaser.
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.
<PAGE>
5. CONDITION OF TITLE.
5.1. If, prior to Closing, a date-down to the Title Commitment discloses
an Unpermitted Exception (other than the current financing secured by the
Property described in the Title Commitment as Schedule B, Section 1, Items (d),
(e) and (f) which will be satisfied at Closing, Seller shall have thirty (30)
days from the date of the date-down to the Title Commitment 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 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. If Seller's expense to
bond over, cure and/or remove any Unpermitted Exceptions from the Title
Commitment will, in the aggregate, exceed $25,000, Seller shall notify
Purchaser in writing within ten (10) days of receiving knowledge of such
Unpermitted Exceptions, whether Seller intends to seek to bond over, cure
and/or remove such Unpermitted Exceptions from the Title Commitment. 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 then this Agreement
shall terminate unless Purchaser gives Seller written notice within five (5)
days after the expiration of said thirty (30) day period that Purchaser waives
such Unpermitted Exceptions. 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 ("Deed") in recordable form subject only to
the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
<PAGE>
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions of Section 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 an insured 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 and Seller shall pay
to Purchaser at the Closing the amount of Seller's insurance deductible .
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) or an uninsured casualty, 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 except for Purchaser's obligations
to indemnify Seller and restore the Property, as set forth more fully in
Paragraph 7.1. 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 Seller shall pay to
Purchaser at the Closing the amount of Seller's insurance deductible. Seller
covenants to keep in place full replacement cost casualty insurance on the
Property from the date hereof through the Closing.
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
impairs the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
<PAGE>
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,
except for Purchaser's obligations to indemnify Seller and restore the
Property, as set forth more fully in Paragraph 7; 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 hereto and ending at 5:00
p.m. Chicago time on May 12, 1995 (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 1994 operating statements
and year-to-date 1995 operating statements (to the extent available).
<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, 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 given by
Purchaser 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.
<PAGE>
7.2. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspections and investigations of the Property,
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the 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, including, but not limited to, the condition of the
land or any improvements comprising the Property, the existence or non-
existence of toxic waste and/or any hazardous materials or substances, 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, environmental or building laws,
rules or regulations 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, and Purchaser hereby
agrees not to assert any claims for contribution, cost recovery or otherwise,
against Seller, relating directly or indirectly to the existence of asbestos or
hazardous materials or substances on, or environmental conditions of, the
Property, whether known or unknown. As used herein, the term "hazardous
materials or substances" means (i) hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases, including but not limited to substances defined as "hazardous
wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," or other similar designations in, or
otherwise subject to regulation under, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), 42
U.S.C. Section 9601 et seq.; the Toxic Substance Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1802; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601. et seq.; the Clean Water Act ("CWA"), 33 U.S.C. Section
1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq.; and in any permits,
licenses, approvals, plans, rules, regulations or ordinances adopted, or other
criteria and guidelines promulgated pursuant to the preceding laws or other
similar federal, state or local laws, regulations, rules or ordinance now or
hereafter in effect relating to environmental matters (collectively the
"Environmental Laws"); and (ii) any other substances, constituents or wastes
subject to any applicable federal, state or local law, regulator or ordinance,
including any Environmental Law, now or hereafter in effect, including but not
limited to (A) petroleum, (B) refined petroleum products, (C) waste oil, (D)
waste aviation or motor vehicle fuel and (E) asbestos.
<PAGE>
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 from any liability with respect
to such historical information.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
July 31, 1995 (the "Closing Date"), at the office of Title Insurer, Charleston,
South Carolina 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 South Carolina, 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. Notwithstanding anything contained herein to the contrary,
Purchaser may extend the Closing Date to August 31, 1995 by providing Seller
written notice of such extension and concurrently depositing an additional One
Hundred Thousand and No/100 Dollars ($100,000) of earnest money in escrow in
accordance with the Escrow Agreement (the "Extension Money", which to the
extent deposited shall be included in the definition of Earnest Money) on or
before July 21, 1995.
9. CLOSING DOCUMENTS.
9.1. On the Closing Date, Seller and Purchaser shall execute and deliver
a joint closing statement. In addition, Purchaser shall deliver 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:
<PAGE>
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);
9.2.4. an assignment and assumption of leases and security deposits (in
the form attached hereto as Exhibit H);
9.2.5. non-foreign affidavit (in the form of Exhibit I attached hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession;
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;
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 J); and
9.2.11. an updated rent roll.
<PAGE>
10. DEFAULT BY PURCHASER.
10.1. 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 (INCLUDING, WITHOUT LIMITATION, A DEFAULT AS SET FORTH IN
PARAGRAPH 10.2 BELOW), 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.
10.2. PURCHASER AND SELLER AGREE THAT ANY DEFAULT OF PURCHASER OR AN
AFFILIATE OF PURCHASER UNDER THE TERMS OF THE SEDGEFIELD AGREEMENT SHALL BE
DEEMED A DEFAULT OF PURCHASER UNDER THIS AGREEMENT. PURCHASER AND SELLER AGREE
THAT ANY DEFAULT OF AN AFFILIATE OF SELLER UNDER THE TERMS OF THE SEDGEFIELD
AGREEMENT SHALL BE DEEMED A DEFAULT OF SELLER UNDER THIS AGREEMENT. IF THE
TRANSACTION SET FORTH IN THE SEDGEFIELD AGREEMENT DOES NOT CLOSE, PURCHASER
SHALL NOT BE ENTITLED TO ANY RIGHTS OF SETOFF UNDER THIS AGREEMENT IN
CONNECTION WITH ANY LIABILITY ARISING UNDER THE SEDGEFIELD AGREEMENT.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT (INCLUDING, WITHOUT LIMITATION, A DEFAULT AS SET FORTH IN PARAGRAPH
10.2 ABOVE), 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 PURCHASER'S RIGHT TO RECEIVE FROM SELLER ITS ACTUAL, DOCUMENTED
THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE DILIGENCE HEREUNDER
AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED $25,000 IN THE AGGREGATE.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
IS (i) SELLER'S REFUSAL TO DELIVER THE CLOSING DOCUMENTS DESCRIBED IN PARAGRAPH
9.2 ABOVE, (ii) SELLER'S FAILURE TO EXPEND UP TO $25,000, IF SELLER IS ABLE TO
BOND OVER, CURE OR REMOVE AN UNPERMITTED EXCEPTION AT A COST NOT TO EXCEED
$25,000, (iii) SELLER'S FAILURE TO ASSIGN AND TRANSFER SELLER'S RIGHT, TITLE
AND INTEREST IN AND TO ALL INSURANCE PROCEEDS PAID OR PAYABLE TO SELLER AND PAY
TO PURCHASER AT CLOSING THE AMOUNT OF SELLER'S INSURANCE DEDUCTIBLE, IF SO
REQUIRED PURSUANT TO THE TERMS OF PARAGRAPH 6.1 ABOVE, (iv) SELLER'S FAILURE TO
ASSIGN TO PURCHASER ALL OF SELLER'S RIGHT TITLE AND INTEREST IN AND TO ANY
AWARD MADE IN CONNECTION WITH A CONDEMNATION OR EMINENT DOMAIN PROCEEDING, IF
SO REQUIRED PURSUANT TO PARAGRAPH 6.2.2 AND 6.3 ABOVE, OR (v) SELLER'S FAILURE
TO PRORATE THE ITEMS SET FORTH IN PARAGRAPH 12.1 BELOW, THEN PURCHASER WILL BE
ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
<PAGE>
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
security deposits which are refundable under the leases regardless of the
effect of Seller's bankruptcy or any foreclosure may have on such security
deposits (which will be assigned to and assumed by Purchaser and credited to
Purchaser at Closing); water and other utility charges; fuels; operating
expenses; real and personal property taxes; and other similar items shall be
adjusted ratably as of 11:59 p.m. on the later of the Closing Date or the
actual date of the closing of this transaction ("Proration Date"), and credited
to 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 any period prior to and including
the Closing Date 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 to Seller
an amount equal to the amount such Post-Closing Receipt exceeds the amount
currently due by the tenant paying such Post-Closing Receipt under its lease.
Purchaser shall use its best efforts to collect all amounts which, upon
collection, would constitute Post-Closing Receipts hereunder provided, however,
that Purchaser shall not be required to instigate litigation to collect Post-
Closing Receipts. 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. This Agreement shall not 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.
<PAGE>
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 anything
contained herein to the contrary, Purchaser shall have the right to assign its
interest in this Agreement without the prior written consent of Seller to an
entity in which Purchaser, Frank Resnek and Gerald Rosen, either together, or
individually, own(s) a controlling interest and such assignee assumes all of
Purchaser's obligations under this Agreement without releasing Purchaser of any
of its liability hereunder.
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 Atlantic International ("Atlantic") (to be paid by Purchaser).
Purchaser's commission to Atlantic 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 Atlantic. 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. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
16.1. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing shall only mean such knowledge or
notice that has actually been received by Phillip Schechter (hereinafter
"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 other than as disclosed on Exhibit K hereto (the "Disclosed
Litigation"); (ii) Seller has the power to execute this Agreement and
consummate the transactions contemplated herein; and (iii) the rent rolls which
Seller has submitted to the Purchaser and updated as of the Closing Date are
accurate.
<PAGE>
16.3. Seller covenants that as of the Closing Date, all apartments at the
Property which have been vacant for more than fourteen (14) days immediately
preceding the Closing Date ("14-Day Apartments") shall be cleaned and painted
after the date such apartment has been vacated. Purchaser shall receive as its
sole and exclusive remedy under this Paragraph 16.3, a credit against the
Purchase Price of One hundred Fifty and No/100 Dollars ($150.00) for each 14-
day Apartment which has not been painted and cleaned since such apartment has
been vacated.
17. LIMITATION OF LIABILITY. Neither Seller, nor any of its respective
beneficiaries, shareholders, partners, officers, 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. SEDGEFIELD CONDITION.
If an Affiliate of Seller or an Affiliate of Purchaser terminates the
Sedgefield Agreement for any reason other than the default of the other party
thereunder, than either Purchaser or Seller shall have the option to terminate
this Agreement by giving written notice to the other party within five (5)
business days of the termination of the Sedgefield Agreement. If Purchaser or
Seller terminate this Agreement in accordance with the immediately preceding
sentence, 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 the indemnities set forth in this Paragraph 7.1 of this Agreement.
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. 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, facsimile delivered or given or made
by overnight courier such as Federal Express or made by United States
registered or certified mail addressed as follows:
<PAGE>
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Complex
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Complex
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(708) 677-2900
(708) 982-4027 (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: Churchill Forge Properties
57 Wells Avenue
Newton, Massachusetts 02159
Attention: Frank Resnek
(800) 843-4310
(617) 244-7112 (FAX)
and one copy to: Graves, Dougherty, Hearon & Moody
515 Congress Avenue
Suite 2300
P.O. Box 98
Austin, Texas 78701
Attention: Rick Triplett
(512) 480-5600
(512) 478-1976 (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, on the same day if sent by facsimile transmission prior to 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 or by
overnight courier 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.
<PAGE>
21. 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.
22. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the South Carolina, except that with respect to the retainage of the
Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
23. 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.
24. 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.
25. 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.
26. SERVICE CONTRACTS. Attached hereto as Exhibit L is a list of service
contracts affecting the Property. Seller shall assign the service contracts to
Purchaser at Closing, and Purchaser shall assume responsibility and obligations
under the service contracts. Seller agrees not to enter into any other service
contracts affecting the Property. Seller agrees to terminate any and all
management agreements affecting the Property as of the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
CHURCHILL FORGE, a Massachusetts corporation
By: /s/Frank M. Resnek
---------------------------------------
Its: President
SELLER:
DRAYTON INVESTORS, an Illinois limited
partnership
By: Balcor Partners-XV, an Illinois general
partnership, its general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Phillip Schechter
------------------------------
Its: Authorized Agent
<PAGE>
BROKER JOINDER
Cody Jones of Atlantic International ("Purchaser's Broker") executed this
Agreement in its capacity as a real estate broker and acknowledges that the fee
or commission due it from Purchaser as a result of the transaction described in
this Agreement is $___________. Purchaser'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. Purchaser's Broker agrees to
deliver a receipt to the Purchaser at the Closing for the fee or commission due
Purchaser's Broker and a release stating that no other fees or commissions are
due to it from Purchaser.
ATLANTIC INTERNATIONAL
By:
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 - Assignment and Assumption of Leases and Security Deposits
I - Non-Foreign Affidavit
J - Notice to Tenants
K - Disclosed Litigation
L - Service Contracts
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1076
<SECURITIES> 0
<RECEIVABLES> 831
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4171
<PP&E> 141900
<DEPRECIATION> 55403
<TOTAL-ASSETS> 91930
<CURRENT-LIABILITIES> 11928
<BONDS> 109265
<COMMON> 0
0
0
<OTHER-SE> (29263)
<TOTAL-LIABILITY-AND-EQUITY> 91930
<SALES> 0
<TOTAL-REVENUES> 8134
<CGS> 0
<TOTAL-COSTS> 3154
<OTHER-EXPENSES> 1305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2480
<INCOME-PRETAX> 1195
<INCOME-TAX> 0
<INCOME-CONTINUING> 1195
<DISCONTINUED> 0
<EXTRAORDINARY> 90
<CHANGES> 0
<NET-INCOME> 1285
<EPS-PRIMARY> 9.09
<EPS-DILUTED> 9.09
</TABLE>
