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) June 11, 1997
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-13357
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3274349
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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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Canyon Pointe Apartments
In 1984, the Partnership acquired the Canyon Pointe Apartments, San Antonio,
Texas, utilizing approximately $4,442,000 in offering proceeds. The property
was acquired subject to first mortgage financing of approximately $6,265,000.
In 1993, the first mortgage loan was refinanced with a new mortgage loan in
the amount of $5,250,000. In connection with the refinancing, the Partnership
partially repaid the prior loan with approximately $750,000 from its cash
reserves.
On June 11, 1997, the Partnership contracted to sell the property for a sale
price of $6,600,000 to an unaffiliated party, Churchill Forge, Inc., a
Massachusetts corporation. The purchaser has deposited $150,000 into an escrow
account as earnest money. The purchaser is expected to purchase the property
subject to the existing first mortgage loan which is expected to have an
outstanding principal balance of approximately $5,081,000 at closing,
scheduled for July 1, 1997. If the consent of the lender to the assumption of
the mortgage loan has not been received by June 25, 1997, the Partnership and
the purchaser each have the right, upon notice to the other party no later than
June 27, 1997, to extend the closing to a date no later than August 4, 1997.
From the proceeds of the sale, the Partnership will pay $132,000 as a brokerage
commission to an affiliate of the third party providing property management
services for the property. The Partnership will receive the remaining proceeds
of approximately $1,387,000, less closing costs. 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 actual expenses incurred in connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions,
including the consent of the holder of the mortgage loan. 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.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) Agreement of Sale and attachment thereto relating to the sale
of the Canyon Pointe Apartments, San Antonio, Texas.
No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
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-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Equity Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Managing Director
and General Counsel
Dated: June 19, 1997
<PAGE>
Canyon Point
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 11th
day of June, 1997, by and between CHURCHILL FORGE, INC., a Massachusetts
corporation ("Purchaser"), and VALLEY POINT PARTNERS 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 Six Million Six Hundred Thousand and No/100 Dollars
($6,600,000.00) (the "Purchase Price"), that certain property commonly known as
Canyon Point Apartments, San Antonio, Texas, 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 "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. By taking title to the Property subject to the existing first
mortgage ("First Mortgage") to the benefit of Value Line Mortgage Corporation
("Lender"), which secures a note to the benefit of Lender in the original
principal amount of $5,250,000.00 ("First Note"). The First Note and First
Mortgage were assigned to Legg Mason Multifamily Capital Corporation. The
unpaid principal balance on the First Note as of the Closing Date (as
hereinafter defined) will be approximately $5,076,000.00.
2.3. On the "Closing Date" (hereinafter defined), $1,374,000.00, adjusted
in accordance with the prorations, by federally wired "immediately available"
funds, on or before 11:00 a.m Chicago time. If the balance of the First Note,
as of the Closing Date, is different than the amount set forth in Paragraph 2.2
above, then the cash due at Closing will be adjusted accordingly.
3. UNDERLYING OBLIGATIONS. Copies of the First Note and First Mortgage are
attached hereto as Exhibit D and are sometimes hereinafter referred to as the
"Existing Note" and "Existing Encumbrance". If the First Mortgage documents
require that the Lender consent to the conveyance provided for in this
Agreement, then Seller's and Purchaser's obligations hereunder are subject to
receipt of the consent ("Consent"). The Purchaser agrees to execute the
documents required by the Lender in order to obtain Lender's Consent, provided
that Purchaser will not assume any personal liability for the indebtedness. If
the Consent is not received by Seller within five (5) days prior to the Closing
Date, then either party shall have the right upon notice to the other party
delivered not less than three (3) days prior to the Closing Date to extend the
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Closing Date to a date no later than August 4, 1997. If the Consent is not
received by July 30, 1997, then this Agreement shall be terminated. In the
event of termination of this Agreement, all the Earnest Money plus all accrued
interest shall be delivered to the Purchaser.
4. TITLE COMMITMENT AND SURVEY.
4.1. Attached hereto as Exhibit E is a copy of a title commitment for an
owner's standard title insurance policy issued by Chicago Title Insurance
Company, (hereinafter referred to as "Title Insurer") dated June 6, 1997 for
the Property (the "Title Commitment"). For purposes of this Agreement,
"Permitted Exceptions" shall mean: (a) the general printed exceptions contained
in the standard title policy to be issued by Title Insurer based on the Title
Commitment; (b) general real estate taxes, association 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 5 through 10 (which will be modified to provide
for tenants in possession under bona fide leases), 11 through 15 and 17 through
19, inclusive. 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 4.1, 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 the
deletion of the survey exception on the Title Policy.
4.2. Purchaser has received a survey of the Property prepared by Maverick
Land Surveying Co. dated as of July 30, 1996 (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.
5. PAYMENT OF CLOSING COSTS.
5.1. 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
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and all other charges of the Title Insurer in connection with this transaction.
Purchaser shall pay all fees, costs and attorney's fees charged by Lender in
connection with Lender's consent to the transfer of the Property and the
assumption of the Existing Note and the Existing Encumbrance.
6. CONDITION OF TITLE.
6.1. If, prior to Closing, a date-down to the Title Commitment discloses
an Unpermitted Exception, 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 6.1, 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 8.
6.2. 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.
7. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
7.1. 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
<PAGE>
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 8.1. 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.
7.2. 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:
7.2.1. 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 8; or
7.2.2. 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.
<PAGE>
7.3. 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 7.2.1 or Paragraph 7.2.2. 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 7.2.2.
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.
8. INSPECTION AND AS-IS CONDITION.
8.1. During the period commencing on the date hereto and ending at 5:00
p.m. Chicago time on June 20, 1997 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. 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 1996 operating statements
and year-to-date 1997 operating statements (to the extent available).
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 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
8.1, 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
<PAGE>
Purchaser pursuant to this Paragraph 8.1 prior to the expiration of the
Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 8.1 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 8.1.
8.2. 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. e 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
<PAGE>
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, (F) lead in water, paint
or elsewhere, (G) radon, (H) Polychlorinated Biphenyls (PCB's) and
(I) ureaformaldehyde.
8.3. 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.
9. CLOSING. The closing of this transaction (the "Closing") shall be on
July 1, 1997 (the "Closing Date"), at the office of Title Insurer, Houston,
Texas, 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.
10. CLOSING DOCUMENTS.
10.1. 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 and
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.
10.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
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10.2.1. the Deed (in the form of Exhibit F attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
10.2.2. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit G attached hereto);
10.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit H);
10.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
10.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
10.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which will be located at the Property);
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
10.2.8. possession of the Property to Purchaser;
10.2.9. evidence of the termination of the management agreement;
10.2.10. 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
10.2.11. an updated rent roll;
10.2.12. an executed assignment of escrows, if any (in the form of
Exhibit L), held by Lender (which will be credited to Seller at Closing).
11. DEFAULT BY PURCHASER. 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 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.
12. 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
<PAGE>
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 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
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 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 ABOVE, OR (v) SELLER'S FAILURE TO PRORATE
THE ITEMS SET FORTH IN PARAGRAPH BELOW, THEN PURCHASER WILL BE ENTITLED TO SUE
FOR SPECIFIC PERFORMANCE.
13. PRORATIONS.
13.1. Rents (exclusive of delinquent rents, but including prepaid rents);
security deposits which are refundable under the leases; escrow and/or impounds
held by the Lender (which will be assigned to Purchaser and credited to
Seller); interest on the First Note; 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 13.2 below.
13.2. 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
<PAGE>
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 13.2 of this Agreement shall
survive the Closing and the delivery and recording of the deed.
14. 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 11 hereof.
15. 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 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.
16. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Insignia Mortgage and Investment Company ("Insignia") (to be paid
by Seller). Seller's commission to Insignia shall only be payable out of the
proceeds of the sale of the Property in the event the transaction set forth
herein closes. Purchaser and Seller shall indemnify, defend and hold the other
party hereto harmless from any claim whatsoever (including without limitation,
reasonable attorney's fees, court costs and costs of appeal) from anyone
claiming by or through the indemnifying party any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated other than to Insignia. The indemnifying party shall undertake
its obligations set forth in this Paragraph 16 using attorneys selected by the
indemnifying party and reasonably acceptable to the indemnified party. The
provisions of this Paragraph 16 will survive the Closing and delivery of the
Deed.
17. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
17.1. 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 Michael Becker (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.
<PAGE>
17.2. Subject to the limitations set forth in Paragraph 17.1, 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 M 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.
17.3. 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 , 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.
18. 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.
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:
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: Jerry Ogle
(847) 267-1600
(847) 317-4458 (FAX)
<PAGE>
and to: Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
(312) 222-0800
(312) 222-0818 (FAX)
TO PURCHASER: Churchill Forge, Inc.
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.
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.
<PAGE>
22. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Texas, 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 N 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, INC.,
a Massachusetts corporation
By: /s/ Frank Resnek
------------------------------
Its: President
------------------------------
SELLER:
VALLEY POINT PARTNERS LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Valley Point Partners, Inc., an
Illinois corporation, the general partner
By: /s/ Michael J. Becker
------------------------------
<PAGE>
Canyon Point
Insignia Mortgage and Investment Company ("Broker") executes this Agreement in
its capacity as a real estate broker and acknowledges that the fee or
commission ("Fee") due to it as a result of the transaction described in this
Agreement is the amount as set forth in the listing agreement between Broker
and Seller. Broker also acknowledges that payment of the aforesaid Fee is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Broker agrees to deliver a receipt to the Seller at the Closing for
the Fee and a release stating that no other fees or commissions are due to
Broker from Seller or Purchaser.
INSIGNIA MORTGAGE AND INVESTMENT
COMPANY
By:
--------------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - First Note and First Mortgage Documents
E - Title Commitment
F - Deed
G - Bill of Sale
H - Assignment and Assumption of Intangible Property
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Assignment of Escrows
M - Disclosed Litigation
N - Service Contracts
