SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report October 23, 1997
(Date of earliest event reported)
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(exact name of registrant as specified in its charter)
CONNECTICUT
(State or other jurisdiction of incorporation)
0-14466 06-1115374
(Commission File Number) (IRS Employer Identification Number)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices) (Zip Code)
(860) 726-6000
(Registrant's telephone number, including area code)
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CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 23, 1997, the Partnership completed the sale of Stonebridge Manor
Apartments to TGM Realty Corp. #6, a Delaware corporation for an all cash gross
sales price of $9,800,000. The Contract for Purchase and Sale between the
parties was signed on October 22, 1997 and the transaction was completed with
the recording of the deed and receipt of consideration on October 23, 1997. The
property was purchased on November 26, 1985 for a total purchase price of
$10,409,845, including acquisition fees and closing costs. The property had a
depreciated cost of approximately $7,000,000 as of the date of sale. After
deducting closing costs, the Partnership expects to record a gain of
approximately $2,600,000.
ITEM 7(C). EXHIBITS
10(a) Agreement of Purchase and Sale dated October 22, 1997
between the Registrant and TGM Realty Corp. #6, a Delaware
corporation.
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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.
CONNECTICUT GENERAL REALTY INVESTORS III
LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. - Fifth
General Partner
Date: November 6, 1997 By: /s/ John D. Carey
---------------- -----------------
John D. Carey, President
(Principal Executive Officer)
Date: November 6, 1997 By: /s/ Josephine C. Donofrio
---------------- -------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
<PAGE>
FORM 8-K
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut Limited Partnership)
EXHIBIT INDEX
Exhibit
Number
10(a) Agreement of Purchase and Sale dated October 22, 1997
between the Registrant and TGM Realty Corp. #6, a
Delaware corporation.
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Exhibit 10(a)
AGREEMENT OF PURCHASE AND SALE
BETWEEN
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP, SELLER
AND
TGM REALTY CORP #6, PURCHASER
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TABLE OF CONTENTS
Page
Article 1 Property 1
Article 2 Purchase Price and Deposits 3
Article 3 Failure to Close 4
3.1 Purchaser's Default 4
3.2 Seller's Default 5
Article 4 Closing and Transfer of Title 6
4.1 Closing 6
4.2 Closing Procedure 7
4.3 Purchaser's Performance 9
4.4 Evidence of Authority; Miscellaneous 9
4.5 Possession 10
4.6 Seller's Debts 10
4.7 Pre-Closing Preparation of Documents 11
4.8 Title Policy 11
Article 5 Prorations of Rents, Taxes, Etc. 11
Article 6 Purchaser Inspections and Contingencies 15
6.1 Document Inspection 15
6.2 Physical Inspection 15
6.3 Feasibility Period 17
6.4 Survey Contingency 17
6.5 Title Contingency 20
6.6 Same Condition at Closing 22
Article 7 Loss due to Casualty or Condemnation 22
7.1 Loss due to Condemnation 22
7.2 Loss due to Casualty 23
Article 8 Maintenance of the Property, Etc. 26
8.1 Maintenance of Property 26
8.2 Operations Prior to Closing 27
8.3 Conditions to Closing 30
Article 9 Broker 30
Article 10 Representations and Warranties 31
10.1 Limitations on Representations and Warranties 31
10.2 Representations and Warranties of Seller 32
10.3 Seller's Knowledge 37
10.4 Survival 37
Article 11 Liability of Seller 38
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TABLE OF CONTENTS (Continued)
Page
Article 11 Liability of Seller 38
Article 12 Assignment 39
Article 13 Notices 40
Article 14 Expenses 42
Article 15 Escrow 42
Article 16 Miscellaneous 47
16.1 Successors and Assigns 47
16.2 Gender 47
16.3 Captions 47
16.4 Construction 47
16.5 Entire Agreement 47
16.6 Recording 48
16.7 No Continuance 48
16.8 Time of Essence 48
16.9 Original Document 48
16.10 Governing Law 48
16.11 Acceptance of Offer 49
16.12 Confidentiality 49
16.13 Surviving Covenants 49
16.14 Approval 50
16.15 Invalidity 50
16.16 Exhibits 50
16.17 No Third Party Beneficiary 50
16.18 Litigation 51
16.19 Further Assurances 51
16.20 Business Days 51
Exhibit A - Description of Land
Exhibit B - Act of Cash Sale
Exhibit C - Bill of Sale and General Assignment
Exhibit D - Assignment of Leases
Exhibit E - Form of Seller's Affidavit of
Non-Foreign Status
Exhibit F - List of Due Diligence Items
Exhibit G - Pending Litigation
Exhibit H - Rent Roll
Exhibit I - List of Contracts
Exhibit J - Personal Property
<PAGE>
AGREEMENT OF PURCHASE AND SALE
STONEBRIDGE MANOR APARTMENTS
GRETNA, LOUISIANA
THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") is made by and
between Connecticut General Realty Investors III Limited Partnership, a
Connecticut limited partnership ("Seller"), and TGM Realty Corp. #6, a Delaware
corporation ("Purchaser"), as of October 22, 1997.
Article I.
Property
Seller hereby agrees to sell, and Purchaser hereby agrees to buy, all
of the following property: (a) a parcel of real property (the "Land"), located
in the Parish of Jefferson, State of Louisiana, more particularly described on
Exhibit A attached to this Agreement, together with all rights, ways,
privileges, servitudes and advantages thereunto belonging or in anywise
appertaining, including, without limitation, any and all rights of Seller in and
to all oil, gas and other minerals and mineral rights, air rights, roads,
alleys, easements, streets and ways adjacent to the Land and rights of ingress
or egress thereto; (b) the buildings and other improvements located on the Land,
being a 264-unit residential apartment complex generally known as "Stonebridge
Manor Apartments" (the "Improvements"); (c) all tenant leases, licenses and
other occupancy agreements relating to the Improvements or the Land
(collectively, the "Leases") and all security deposits paid or deposited by
tenants under any Leases(individually, a "Tenant" and collectively, the
"Tenants") (the Land, Improvements, and Leases are referred to herein,
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collectively, as the "Real Property"); (d) all fixtures, equipment, and other
personal property (both tangible and intangible)owned by Seller and placed on,
contained in or related exclusively to the Land or Improvements now or before
Closing, but specifically excluding the movable maintenance shed located on such
land (the "Personal Property") , (e) to the extent assignable by Seller, all of
Seller's rights in and to all contractual rights, obligations and intangibles
with respect to the operation, maintenance, repair and improvement of the Land
and Improvements, including, without limitation, any service and maintenance
agreements applicable thereto, other than the property management agreement
(which shall be terminated), but also including, to the extent assignable by
Seller, all construction, material and labor contracts and other contracts, all
to the extent designated by the provisions of this Agreement (collectively, the
"Contracts"); (f) to the extent assignable by Seller, all governmental permits,
licenses, certificates and approvals in connection with the ownership of the
Property (collectively, the "Licenses"); (g) to the extent assignable by Seller,
all warranties of any contractor, manufacturer or materialman; (h) all of
Seller's interest in the right to the use of the trade name "Stonebridge Manor
Apartments" in connection with the Property, and all logos, if any, associated
therewith (collectively, the "Trade Name"); (i) to the extent assignable by
Seller, all of Seller's interest in the right to the use of all telephone
numbers used by Seller at the Property; and (j) if and to the extent provided in
this Agreement, all rights to any award made or to be made or settlement in lieu
thereof for damage to the Land or Improvements by reason of condemnation,
eminent domain, exercise of policy power or change of grade of any street
(collectively, the Real Property, the Personal Property, and all of the
foregoing items are sometimes referred to herein as the "Property").
<PAGE>
Article II.
Purchase Price and Deposits
The purchase price which the Purchaser agrees to pay and the Seller
agrees to accept for the Property shall be the sum of Nine Million Eight Hundred
Thousand Dollars ($9,800,000) (hereinafter referred to as the "Purchase Price"),
subject to adjustment as provided in Article V hereof, payable as follows:
(a) An earnest money deposit (the "Earnest Deposit") of One
Hundred Fifty Thousand Dollars ($150,000), in cash, which has been
previously deposited with Chicago Title Insurance Company (the "Title
Company");
(b) An additional earnest money deposit (the "Additional Deposit")
of One Hundred Thousand Dollars ($100,000), in cash, to be deposited by
Purchaser with the Title Company, upon the execution of this Agreement,
such amount to be held in escrow by the Title Company in accordance
with Article XV hereof (the Earnest Deposit and the Additional Deposit,
together with interest thereon, will be referred to hereinafter,
collectively, as the "Deposit"); and
(c) The balance of the Purchase Price shall be paid at time
of Closing by Federal wire transfer.
The Deposit shall be paid to Seller at the Closing as a credit against
the Purchase Price. Purchaser shall provide the Title Company with its tax
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identification number, and all interest shall be for Purchaser's account for
tax purposes.
The Deposit shall be held by the Title Company pursuant to the
provisions of Article XV hereof, which provisions shall, upon the execution and
delivery of this Agreement by all parties hereto, be deemed to supersede and
replace in their entirety the provisions of that certain Escrow Agreement dated
as of August 27,1997 among Purchaser, Seller and the Title Company.
Article III.
Failure to Close
3.1 Purchaser's Default. If Seller has complied with all of the
covenants and conditions contained herein and is ready, willing and able to
convey the Property in accordance with this Agreement and Purchaser fails to
consummate this Agreement and take title as a result of Purchaser's default or
failure to otherwise perform Purchaser's obligations under this Agreement, then
the parties hereto recognize and agree that the damages that Seller will sustain
as a result thereof will be substantial, but difficult if not impossible to
ascertain. Therefore, the parties agree that, in the event of such failure or
default of Purchaser, Seller shall, as its sole remedy, be entitled to retain
the Deposit as liquidated damages, and neither party shall have any further
rights or obligations with respect to the other under this Agreement, except for
the Surviving Covenants (hereinafter defined). Purchaser recognizes that the
Property will be removed by Seller from the market during the existence of this
Agreement and that if the purchase and sale which is the subject of this
Agreement is not consummated because of a default or failure to perform by
Purchaser, Seller shall be entitled to
<PAGE>
compensation for such detriment, and the Deposit as liquidated damages
represents a bona fide good faith estimate of the damages that Seller would
suffer in such event. The parties agree that the Deposit as liquidated damages
shall be the sole and exclusive relief to which Seller might otherwise be
entitled, Seller hereby specifically waiving any and all rights which it may
have to damages or specific performance as a result of Purchaser's default under
this Agreement.
3.2 Seller's Default. In the event that Seller fails to perform or
breaches its obligations set forth herein, or if any of the representations or
warranties made herein by Seller are untrue, then Purchaser shall have the right
only (i) to terminate this Agreement by giving written notice thereof to Seller
and the Title Company, in which event the Deposit shall be returned promptly to
Purchaser, and thereupon this Agreement shall terminate and be of no further
force or affect, and neither Seller nor Purchaser shall have any further rights,
duties, liabilities or obligations one to the other hereunder (other than the
Surviving Covenants) or (ii) to sue Seller for specific performance of its
obligations under this Agreement; which remedies set forth in the foregoing
clauses (i) and (ii) shall be in lieu of any other rights and remedies of
Purchaser, including, without limitation, any rights or claims for damages;
provided, however that notwithstanding the foregoing, in the event of a
misrepresentation by Seller, or if the remedy of specific performance is not
available to Purchaser, then Purchaser shall have the right to sue Seller for
the actual but not consequential damages suffered by Purchaser. If Purchaser
consummates the transaction contemplated by this Agreement, it shall be
conclusively deemed to have waived any breach by Seller of any covenant,
representation or warranty under this Agreement of which
<PAGE>
Purchaser had actual knowledge prior to the Closing. The provisions of this
Section 3.2 shall survive the Closing.
ARTICLE IV
Closing and Transfer of Title
4.1 Closing. The parties hereto agree to conduct a closing of this sale
(the "Closing")at such time and date, which shall be in no event earlier than
October 10, 1997 or later than October 23, 1997, as Purchaser shall designate in
writing in a notice to Seller of the time and date of Closing (given at least
ten (10) days prior to the Closing) (the actual date of such closing, the
"Closing Date") in the offices of Lemle & Kelleher, L.L.P., New Orleans,
Louisiana, or at such other place as may be agreed upon by the parties hereto.
This Agreement shall terminate if transfer of title is not completed by October
23, 1997 (unless such failure to close is due to Seller's default, the date for
Closing is extended pursuant to any provision hereof, including, without
limitation, the matters described in Sections 6.3, 6.4 and 6.5 hereof, or the
date for Closing is extended by agreement of the parties in their discretion,
which agreement shall be confirmed in writing).
4.2 Closing Procedure. Seller shall execute, cause to be acknowledged
(where appropriate), and deliver or cause to be delivered to Purchaser or its
permitted assignee or the Title Company, as the case may be, the following
documents and instruments, dated as of the Closing Date (unless otherwise
specified herein) at the Closing: (a) an Act of Cash Sale, in the form attached
hereto as Exhibit B, proper for recording, conveying the Real Property to
Purchaser, subject, however, only to (i) restrictions and
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exceptions to title created prior to Seller's ownership of the Property and
restrictions and exceptions to title created by Seller from and after Seller's
ownership in the Property which are reported in the Title Commitment (defined in
Section 6.5) or shown on the Survey (as defined in Section 6.4) and either
approved or deemed approved by Purchaser or as to which objection has been
waived by Purchaser (it being understood that nothing in this Agreement shall be
construed as a covenant or obligation of Seller to remove or clear any
encumbrance, restriction or exception to title, except (1) those relating to the
Hibernia Loan (hereinafter defined) or any other debts of Seller that constitute
a lien on or security interest in the Property, (2) any and all mechanic's and
materialmen's liens, (3) any title exception caused by or arising from a default
by Seller under this Agreement, (4) Regulatory Agreement and Declaration of
Restrictive covenants registered in Jefferson Parish in COB 1039, folio 223 and
recorded in MOB 868, folio 393 on 12/30/82, entry No. 104239, and (5) items 2
through 4, 6 through 9 and 12 and 13 of Schedule B - Section I and items 1, 2
and 3 of Schedule B - Section II of the Title Company's Commitment for Title
Insurance No. 97-3100 dated August 28, 1997 and captioned "Second Amended and
Superseding Commitment issued this 3rd day of October, 1997", and Seller shall
cause the matters described in the foregoing clauses (1) through (5) to be (x)
omitted from the Title Policy, as hereinafter defined, (y) terminated or
discharged of record if recorded, and (z) satisfied if constituting a
"Requirement" of the Title Company), (ii) taxes not yet due and payable, and
(iii) the rights of Tenants as tenants only, at the time of Closing; (b) a Bill
of Sale and General Assignment in the form attached hereto as Exhibit C, dated
as of the date of Closing conveying to Purchaser any and all Personal Property
(which shall include, but shall not be limited to, all Personal Property
indicated on the Schedule of Personal Property attached hereto as Exhibit J) and
assigning to Purchaser all
<PAGE>
Contracts, intangible, Licenses, warranties and guaranties referred to in
Article I; (c) an Assignment of Leases in the form attached hereto as Exhibit D,
dated the date of Closing, assigning all of the landlord's right, title and
interest in and to all Leases; (d) to the extent in Seller's possession, the
originals of all Leases; (e) an updated Rent Roll, in the form of the Rent Roll
previously delivered to Purchaser by Seller, dated within three (3) days prior
to the Closing and certified by Seller to be true and correct as of the date
thereof; (f) an affidavit that Seller is not a "foreign person" in the form
attached as Exhibit E; (g) a master key or duplicate key and any and all
combinations for all locks in the Improvements; and (h) to the extent in the
possession of Seller or Seller's property management company, all maintenance
records pertaining exclusively to the Property; (i) to the extent in Seller's
possession, originals of all Contracts, the originals of all Licenses and the
originals of all instruments of warranty or guaranty being assigned pursuant to
the aforedescribed Bill of Sale and General Assignment; (j) to the extent in
Seller's possession, all plans, specifications, mechanical, electrical and
plumbing layouts, operating manuals, purchase orders, brochures, marketing
materials, advertisements, Tenant lease files, and other files and records in
the possession of Seller or its managing agent and utilized exclusively in
connection with the on-site operation and maintenance of the Property; (k)
current tax bills and, if in Seller's possession, tax bills for the three prior
calendar years and utility bills for the year preceding the Closing Date; (l) a
certificate from Seller as to whether any proceeding for the reduction of real
or personal property taxes is on-going with respect to the Property as of the
Closing Date; (m) any other instruments specifically referred to in this
Agreement; (n) a letter to each Tenant in the form of Exhibit K hereto, which
shall be delivered to the Tenants by Purchaser (the "Tenant Notice Letter"); and
(o) certificates and affidavits as to facts
<PAGE>
within the knowledge of Seller relevant to the due performance by Seller of
its obligations hereunder.
4.3 Purchaser's Performance. At the Closing, Purchaser will cause the
Purchase Price to be delivered to Seller, and will execute and deliver the
Assignment of Leases, the Bill of Sale and General Assignment and the Tenant
Notice Letters.
4.4 Evidence of Authority; Miscellaneous. Both parties will deliver to
the Title Company and prior to and at the Closing, such evidence or documents as
may reasonably be required by the Title Company or either party hereto
evidencing the power and authority of Seller and Purchaser and the due authority
of, and execution and delivery by, any person or persons who are executing any
of the documents required hereunder in connection with the sale of the Property.
Both parties will execute and deliver or cause to be delivered such other
documents as are reasonably required to effect the intent of this Agreement.
4.5 Possession. As a simultaneous condition of Purchaser's
obligations at the Closing, possession of the Property, in accordance with
this Agreement, shall be delivered to Purchaser.
4.6. Seller's Debts.
Notwithstanding anything contained in this Agreement to the contrary, in no
event shall any lien which secures a debt of Seller which encumbers the Property
(including, but not limited to any UCC filings) be deemed a permitted exception
to title whether or not objected to by Purchaser in writing, and Seller shall
pay or discharge all such monetary liens at or prior to Closing.
<PAGE>
Seller shall specifically pay and cause to be discharged at Closing,
(which may be paid from the proceeds of the Purchase Price) that certain
$5,300,000 mortgage loan (the "Hibernia Loan") to Hibernia National Bank
("Hibernia"), which loan is secured by, among other things, a Loan Agreement, a
Mortgage and Security Agreement and an Assignment of Leases and Rentals, all
dated March 29, 1995, from Seller in favor of Hibernia (all such documents and
instruments encumbering the Property and relating to the Hibernia Loan, whether
or not specifically referenced herein, are collectively referred to herein as
the "Hibernia Security Documents").
4.7 Pre-Closing Preparation of Documents. Seller shall deliver to Alan
Linder all Closing documents to be prepared by Seller and signed by Purchaser
not less than five (5) days prior to the Closing Date.
4.8 Title Policy. It shall be a condition to Purchaser's obligation to
close this transaction that, at Closing, the Title Company deliver to Purchaser
an ALTA owner's title insurance policy (10/17/92) in the form annexed hereto as
Exhibit L (the "Title Policy"), which shall (i) be effective and enforceable as
of the Closing, (ii) insure Purchaser in the full amount of the Purchase Price,
(iii) not contain any exceptions except as set forth in Exhibit L and , (iv)
contain the affirmative insurance and endorsements set forth in Exhibit L.
Article V.
Prorations of Rents, Taxes, Etc.
Real estate taxes for 1997 shall be prorated as of the date of Closing
either using actual tax figures or, if actual figures are not available, then
<PAGE>
using as a basis for said proration the most recent assessed value of the
Property multiplied by the current tax rate, with a subsequent cash adjustment
to be made between Purchaser and Seller when actual tax figures are available
and payment shall be promptly made by either party owing same based on such
adjusted proration. If after Closing, real estate taxes are payable with respect
to any period prior to Closing, then Seller shall be obligated to pay such
taxes. Personal property taxes, annual permit or inspection fees and sewer
charges shall also be prorated as of the date of Closing. Rents that have been
collected for the month of the Closing will be prorated at the Closing,
effective as of the date of the Closing. After the Closing, Purchaser will
assume full responsibility for all security deposits and advance rental deposits
of current Tenants of the Real Property held by Seller at the Closing, to the
extent such deposits are itemized by Seller and transferred and paid over to
Purchaser at the Closing pursuant to next paragraph of this Article V. With
regard to rents that are delinquent as of the date of the Closing, no proration
will be made at the Closing. Purchaser will apply all rents collected by
Purchaser first to all rents first payable by the Tenants after the Closing,
then to rents for the month in which Closing occurs (prorated between Seller and
Purchaser as of the date of Closing), and the excess amount, if any, shall be
applied to the delinquent rent owed to Seller. Rents collected by Purchaser
after the Closing Date, to which Seller is entitled hereunder, if any, as set
forth above, shall be promptly paid to Seller. Rents collected by Seller
subsequent to the Closing Date, if any, shall be promptly turned over to
Purchaser in whole, to be applied by Purchaser as set forth above. It is agreed
that Purchaser will not be obligated to institute any lawsuit or other
collection procedures to collect delinquent rents. Seller shall not commence any
action against any Tenant after the Closing for past due rents, and Seller
shall, effective as of the
<PAGE>
Closing, terminate any litigation against any Tenant which is on-going as of
such date.
As of the Closing Date, Purchaser shall be entitled to a credit against
the Purchase Price for any tenant security deposits (including any pet and/or
cleaning deposits) and accrued interest to which Tenants are entitled pursuant
to the Leases or law which are to be assigned to Purchaser at the Closing.
Final readings on all gas, water, sewer and electric meters and any
fuel tanks shall be made as of the Closing Date, if possible. If reading is not
possible as of the Closing Date, a reading shall be obtained as of a date not
more than thirty (30) days prior to the Closing Date, and the unfixed meter
charges based thereon for the intervening period shall be apportioned on the
basis of such last reading. Upon the taking of a subsequent actual reading, such
apportionment shall be readjusted and Seller or Purchaser, as the case may be,
will promptly deliver to the other the amount determined to be so due upon such
readjustment. If Seller is unable to furnish any such prior reading, Purchaser
shall obtain a reading within thirty (30) days after the Closing Date, or soon
as possible thereafter, which shall be apportioned on a per diem basis from the
date of the reading taken immediately prior thereto and Seller shall pay the
proportionate charges due up to the date of Closing. Any deposits made by Seller
with utility companies shall be returned by the utility companies to Seller
without proration by the parties. Purchaser shall be responsible for making all
arrangements for the continuation of utility services.
Seller and Purchaser shall apportion as of the Closing Date all amounts
paid or payable in respect of any Contract assigned to Purchaser pursuant to
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the aforedescribed Bill of Sale and General Assignment, including but not
limited to, any up-front "bonus" payments made in consideration of entering into
any Contract (which up-front "bonus" payments, if any, shall be prorated based
upon the unexpired term of the Contract).
Except as expressly set forth in this Agreement, the customs of the
Parish in which the Property is located shall govern prorations.
If the foregoing prorations result in a payment due Purchaser, then the
portion of the Purchase Price payable at Closing shall be reduced by such sum.
If such prorations result in a payment due Seller, then the same shall be paid
to Seller in addition to the portion of the Purchase Price payable at Closing.
All prorations and made pursuant to this Article V shall be made as of 12:01 AM
on the Closing Date. The parties hereto shall endeavor to prepare a schedule of
prorations no less than five (5) days prior to Closing.
All items that are not subject to an exact determination shall be
estimated by the parties. When any item so estimated is, after the Closing,
capable of exact determination, the party in possession of the facts necessary
to make the determination shall send the other party a detailed report on the
exact determination so made and the parties shall adjust the prior estimate
within thirty (30) days after both parties have received said reports. The
parties hereto shall correct any errors in prorations as soon after the Closing
as amounts are finally determined.
Notwithstanding the above, all post-Closing prorations, adjustments and
corrections shall be deemed final on the date that is one year from the Closing
Date.
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The provisions of this Article V shall survive the Closing.
ARTICLE VI.
Purchaser Inspections and Contingencies
6.1 Document Inspection. Purchaser acknowledges receipt of
the items relating to the Real Property listed on Exhibit F attached hereto,
which Purchaser shall review during the Feasibility Period.
Purchaser agrees that if for any reason the Closing is not consummated,
Purchaser will immediately return to Seller all materials furnished to Purchaser
pursuant to this Section 6.1.
6.2 Physical Inspection. In addition to the items described in Section
6.1, Seller will make the Property available for inspection by Purchaser, and
Purchaser may, before the end of the Feasibility Period, at Purchaser's risk,
conduct an engineering and/or market and economic feasibility study of the
Property and undertake such physical and environmental inspection of the
Property as Purchaser deems appropriate, including, but not limited to, soil
borings, samplings and other tests and engineering inspections as Purchaser
deems necessary to determine the physical condition of the Property, including
but not limited to whether any Hazardous Materials (as hereinafter defined)
exist at the Property, and, if so, to determine the appropriate manner and cost
of removal or other corrective measures with respect to the same, and an
inspection of all books and records and financial information pertaining
thereto. During the Feasibility Period, Seller shall cooperate with Purchaser in
its inspection of the Property and Purchaser shall use good faith efforts to
minimize any disruption of a
<PAGE>
interference with the operation of the Property and the use and enjoyment of the
Property by Tenants. Such inspections shall be conducted at reasonable times
upon reasonable oral or written notice to Seller's property manager. Seller
shall have the right to designate a representative to accompany Purchaser's
employees, agents, and independent contractors on any such inspections.
Purchaser hereby agrees to pay, protect, defend, indemnify and save
Seller harmless against all liabilities, obligations, claims (including
mechanic's lien claims), damages, penalties, causes of action, judgments, costs
and expenses (including, without limitation, attorneys' fees and expenses)
imposed upon, incurred by or asserted against Seller in connection with or
arising out of the entry upon the Real Property before Closing by Purchaser's
employees, agents or independent contractors and the actions of such persons on
the Real Property at any time before Closing. In the event any part of the
Property is damaged or excavated by Purchaser, its employees, agents or
independent contractors, Purchaser agrees in the event its purchase hereunder is
not consummated, to make such additional payments to Seller as may be reasonably
required to return the Property to its condition immediately prior to such
damage or excavation or, at Seller's option, to cause such work to be done.
Notwithstanding any provision to the contrary herein, the indemnity which is the
subject of this paragraph shall not cover or apply to any already existing
Hazardous Materials situated on or about the Property or any damages or
liability arising therefrom unless such damage results from the gross negligence
and/or willful conduct of Purchaser or its agents. Purchaser's obligations under
this subparagraph shall survive the expiration or termination of this Agreement,
and shall survive Closing.
<PAGE>
6.3. Feasibility Period. Purchaser shall have a period (the
"Feasibility Period") ending on September 26, 1997 to conduct its inspection of
the documents delivered in accordance with Section 6.1 and to conduct the
physical inspections of the Property as set forth in Section 6.2. On or before
the last day of the Feasibility Period, if Purchaser, in Purchaser's sole
judgment, shall find such documents or inspections to be unsatisfactory for any
reason whatsoever or for no reason, Purchaser may, in its sole discretion
without obligation to specify which aspect of its documents or inspections was
unsatisfactory, terminate this Agreement by providing a written notice to Seller
so providing. Upon receipt of such notice, this Agreement shall terminate and
the Title Company shall return the Deposit to Purchaser, and thereupon neither
party shall have any obligation to the other, except for the Surviving
Covenants. If Purchaser delivers no notice of termination as provided herein on
or before the end of the Feasibility Period, Purchaser shall be deemed to have
waived its right to terminate this Agreement pursuant to Section 6.3, and this
Agreement shall continue unmodified and in full force and effect.
6.4. Survey Contingency. Purchaser's obligation to purchase the
Property is subject to its receipt, on or before October 1, 1997, of a survey of
the Real Property by a registered surveyor (the "Survey"). The Survey shall show
the location of all improvements, structures, driveways, parking areas,
easements, rights of way, and any encroachments and shall specify whether the
Property is within the 100 year flood plain or flood way. The Survey shall
further set forth a legal description of the boundaries of the Real Property in
accordance with local practices.
<PAGE>
Notwithstanding the immediately following paragraph or any other
provision in this Agreement to the contrary, if Purchaser, in Purchaser's sole
and exclusive determination, is dissatisfied with the Survey or the matters
disclosed thereby, Purchaser may, by notice given to Seller at any time or
before October 23, 1997, which notice need not specify the particularities of
such dissatisfaction, elect to terminate this Agreement, in which event the
Deposit shall be promptly returned to Purchaser and thereupon, the parties
hereto shall have no further liabilities to each other except for the Surviving
Covenants.
In addition to and not in limitation of the preceding sentence,
Purchaser shall have until October 23, 1997 to object in writing to the Survey,
including any objection to the boundaries set forth in the Survey and to the
legal description. This contingency shall be deemed waived if Purchaser does not
give written notice of Purchaser's objection on or before such date. Any such
written notice shall state all of Purchaser's objections with specificity. If
within five (5) days after receipt of such notice, Seller fails to give written
notice to Purchaser in which Seller agrees to cure and remedy all such
objections before Closing, then Purchaser may either (i) terminate this
Agreement by giving written notice thereof to Seller within five (5) additional
days, in which event the Deposit shall be promptly returned to Purchaser, and,
thereupon, the parties shall have no further liabilities to each other except
for the Surviving Covenants, or (ii) waive any such objection(s)(other than
objections Seller is required to cure pursuant to Section 4.2 (a) hereof), in
which event this Agreement shall remain in full force and effect.
Notwithstanding the foregoing, if Purchaser fails to do either (i) or (ii) above
within said five (5) additional days, then this Agreement will automatically
terminate, in which event the Deposit
<PAGE>
will be promptly returned to Purchaser and thereupon the parties will have no
further obligations hereunder except for the Surviving Covenants. If Seller
gives such notice agreeing to cure (it being acknowledged that Seller has no
duty to cure such objections, except as set forth in Section 4.2(a) hereof) and
if Seller cures such objections on or before October 23, 1997, or, if such
objections are such that they cannot be cured before such date and Seller has
commenced curing such objections and thereafter diligently proceeds to perfect
such cure (but in no event beyond forty-five (45) days unless agreed to by
Purchaser), then this Agreement shall continue in force and effect, and the
Closing Date shall be adjusted accordingly. If Seller is unable to, or chooses
not to, cure such objections within the time permitted (except for objections
Seller is obligated to cure under Section 4.2 hereof), then Purchaser may elect
to terminate this Agreement, in which event the Deposit shall be promptly
returned to Purchaser, and, thereupon, neither party shall have any further
obligations hereunder except for the Surviving Covenants. Notwithstanding the
foregoing, however, Purchaser may waive any and all such objections that Seller
is unable to or chooses not to cure, and upon receipt by Seller of such waiver
from Purchaser within ten (10) days of notice from Seller that it is unable or
chooses not to cure such objections, this Agreement shall remain in full force
and effect with no reduction in the Purchase Price as to such waived objections.
If requested by Seller, Purchaser will confirm in writing whether
Purchaser has waived its rights to terminate this Agreement pursuant to this
Section 6.4.
6.5. Title Contingency. Notwithstanding the following
provisions of this Section 6.5 or any other provision in this Agreement to the
<PAGE>
contrary, if Purchaser, in Purchaser's sole and exclusive determination, is
dissatisfied with the title insurance commitment described in Section 4.2 hereof
or any revision thereto (the "Title Commitment"), Purchaser may, by notice given
to Seller at any time on or before October 23, 1997, which notice need not
specify the particularities of such dissatisfaction, elect to terminate this
Agreement, in which event the Deposit shall be promptly returned to Purchaser
and, thereupon, the parties hereto shall have no further liabilities to each
other except for the Surviving Covenants. In addition to and not in limitation
of the preceding sentence, Purchaser shall have until October 23, 1997 to state
any objections in writing. This contingency shall be deemed waived if Purchaser
does not give such written notice of objection on or before such date. Such
written notice of objection shall state all of Purchaser's objections with
specificity. If, within five (5) days after receipt of such Notice, Seller fails
to give written notice to Purchaser in which Seller agrees to cure and remedy
all such objections before Closing, then Purchaser may either (i) terminate this
Agreement by giving notice thereof to Seller within five (5) additional days, in
which event the Deposit shall be promptly returned to Purchaser and, thereupon,
the parties shall have no further liabilities to each other except for the
Surviving Covenants, or (ii) waive any such objection(s) (other than objections
Seller is required to cure pursuant to Section 4.2 (a) hereof), in which event
this Agreement shall remain in full force and effect. Notwithstanding the
foregoing, if Purchaser fails to do either (i) or (i) above within said five (5)
additional days, then
<PAGE>
this Agreement will automatically terminate and the parties shall have no
further obligations to one another except for the Surviving Covenants. If Seller
gives such notice agreeing to cure (it being acknowledged that Seller has no
duty to cure such objections, except as set forth in Section 4.2(a) hereof), and
if Seller cures such objections on or before October 23, 1997, or, if such
objections are such that they cannot be cured before such date and Seller has
commenced curing such objections and thereafter diligently proceeds to perfect
such cure (but in no event beyond 45 days), then this Agreement shall continue
in full force and effect and the Closing Date shall be adjusted accordingly. If
(except for objections Seller is obliged to cure under Section 4.2 hereof)
Seller is unable or chooses not to cure such objections within the time
permitted, then Purchaser may elect to terminate this Agreement, in which event
the Deposit shall be promptly returned to Purchaser, and thereupon, neither
party shall have any further obligations hereunder except for the Surviving
Covenants. Notwithstanding the foregoing, however, Purchaser may waive any or
all such objections that Seller is unable or chooses not to cure, and upon
receipt by Seller of such waiver from Purchaser within ten (10) days after
receipt of a notice that Seller is unable or chooses not to cure such
objections, this Agreement shall remain in full force and effect with no
reduction in the Purchase Price as to such waived objections.
If requested by Seller, Purchaser will confirm in writing whether
Purchaser has waived its rights to terminate this Agreement pursuant to this
Section 6.5.
6.6 Same Condition at Closing. It shall be a condition
precedent to Purchaser's obligations to close the transaction which is the
subject of this Agreement that the Improvements be in substantially the same
<PAGE>
physical condition at Closing as they are at the end of the Feasibility Period,
subject to Article VII and Article VIII hereof, and subject to reasonable wear
and tear.
Article VII.
Loss due to Casualty or Condemnation
7.1 Loss due to Condemnation. If, prior to Closing, any governmental
authority or other entity having condemnation authority shall institute an
eminent domain proceeding or give any notice of intent to institute such
proceeding with regard to the Land or Improvements, and the same is not
dismissed in a final determination for which all appeal periods have passed on
or before ten (10) days prior to the Closing Date set forth in this Agreement,
then Seller shall, upon becoming aware of same, promptly notify Purchaser
thereof and Purchaser shall, for a period of five (5) business days following
receipt of such notice from Purchaser or otherwise becoming aware of such
proceeding or intended proceeding, be entitled to terminate this Agreement, in
which event the Deposit shall be immediately refunded to Purchaser, and
thereupon this Agreement shall be terminated, and the parties hereto shall be
relieved of all further obligations and liability under this Agreement (other
than the Surviving Covenants). In the event that Purchaser does not elect to
terminate this Agreement, then this Agreement shall remain in full force and
effect, and Seller shall be entitled to all monies received or collected by
reason of such condemnation prior to Closing. In such event, the transaction
hereby contemplated shall close in accordance with the terms and conditions of
this Agreement, except that there will be an abatement of the Purchase Price
equal to the amount of the net proceeds, less costs and attorney's fees, which
are received by Seller by reason of such condemnation prior to Closing. If the
condemnation proceeding shall not have
<PAGE>
been concluded prior to the Closing, then there shall be no abatement of the
Purchase Price and Seller shall assign any interest it has in the pending award
to Purchaser.
7.2 Loss due to Casualty.
(a) The risk of loss or damage to the Property by fire or other
casualty shall be borne by Seller. If damage, loss or destruction of the
Property or any part thereof, by fire or other casualty, occurs prior to
Closing, Seller shall promptly notify Purchaser of such damage, loss or
destruction.
(b) If the Property is so damaged and the cost to repair such damage,
loss or destruction shall be estimated to be less than $250,000, as mutually
agreed upon by Purchaser and Seller, then Purchaser shall close the transaction
which is the subject of this Agreement with a credit against the Purchase Price
equal to the cost of repairing such damage as mutually agreed upon by Seller and
Purchaser and Seller shall retain any and all insurance proceeds in connection
with such loss or destruction; provided, however, Purchaser shall have the right
to elect to terminate this Agreement if, as a result of the damage by fire or
other casualty, (i) the Property may not, as a matter of applicable law, be
rebuilt substantially as it currently exists and with at least (x) the same
number of apartments and (y) the same square footage of floor area of
apartments, or (ii) access to the Property from a publicly dedicated street is
prevented, and if Purchaser so elects, the Deposit shall be immediately refunded
to Purchaser, and thereupon this Agreement shall be terminated and the parties
shall hereto shall be relieved of all further obligations and liability under
this Agreement (except for the Surviving Covenants).
<PAGE>
(c) If the Property is so damaged and the cost to repair such damage,
loss or destruction shall be estimated to be $250,000 or more, as mutually
agreed upon by Purchase and Seller, then Seller shall, promptly after
Purchaser's request therefor, deliver to Purchaser a copy of each of the
applicable insurance policies covering such fire or other casualty, and
Purchaser shall, at its option, elect one of the following:
(i) To terminate this Agreement, in which event the Deposit shall
be returned promptly to Purchaser, and thereupon this Agreement
shall terminate, and the parties hereto shall have no further
obligations or liability under this Agreement (except for the
Surviving Covenants); or
(ii) To proceed with the Closing and receive (w) a credit against
the Purchase Price payable at Closing to the extent of payments
received by or on behalf of Seller prior to the Closing under any
applicable hazard or other insurance policy in effect with respect
to the Property, (x) an assignment of Seller's rights to any
payments which may be payable subsequent to the Closing Date under
any applicable hazard or other insurance policies in effect with
respect to the Property and applicable to the casualty, (y) an
assignment of Seller's rights (if any) to payments with respect to
rents due subsequent to the Closing Date under any rental
insurance policy or policies with respect to the Property, and (z)
a credit against the cash balance of the Purchase Price payable at
the Closing in an amount equal to the aggregate amount of the
deductibles with respect to all hazard or other insurance policies
the proceeds of which are being assigned to Purchaser pursuant to
the above; provided that the credit given to Purchaser in this
Section 7.2(c)(ii) shall
<PAGE>
be reduced to the extent Seller has expended any funds for the
reasonable costs of repair or restoration of the damage caused by
the fire or other casualty; or
(iii) To close the transaction which is the subject of this
Agreement and receive a credit against the Purchase Price in an
amount equal to $250,000.
If the Purchaser elects to exercise the option set forth in 7.2(c)(ii)
hereof, then, pending the Closing, any adjustment, compromise or settlement with
any insurance company with respect to the casualty shall only be with the joint
consent of Purchaser and Seller, and each party agrees to cooperate with the
other, without any obligation to initiate any lawsuit, with respect to any
payments or awards or rights to payments or awards so assigned to Purchaser.
(d) If the Property is damaged by fire or other casualty prior to the
Closing and Purchaser is not notified by Seller of such damage prior to the
Closing, then to the extent that, subsequent to the Closing, Purchaser notifies
Seller of such damage, Seller shall, to the extent of the loss of value to the
Improvements as a result thereof, (y) promptly deliver to Purchaser a sum equal
to the payments theretofore received by or on behalf of Seller under any
applicable insurance policy, and (z) assign to Purchaser Seller's rights to any
payments which may be payable under any applicable insurance policy and
cooperate with Purchaser in connection with any dealings between Purchaser and
any applicable insurance company in connection therewith.
(e) The provisions of this Section 7.2 shall survive the
Closing.
<PAGE>
Article VIII.
Maintenance of the Property, Etc.
8.1 Maintenance of Property. Between the time of execution of this
Agreement and the Closing, Seller shall maintain the Property in good repair,
reasonable wear and tear excepted, shall perform all work required to be done
under the terms of any Lease or agreement relating to the Property, and shall
timely make all repairs, maintenance and replacements of equipment or
improvements, the same as though Seller were retaining the Property; except that
in the event of a fire or other casualty, damage or loss, Seller shall have no
duty to repair said damage. However, Seller may repair any such damage with
Purchaser's prior, written approval and may, without Purchaser's approval,
repair damage where such repair is necessary in Seller's reasonable opinion to
preserve and protect the health and safety of Tenants of the Property or to
preserve the Property from imminent risk of further damage or if required to do
so by Seller's insurance carrier. Any such emergency repairs shall be reported
to Purchaser within forty-eight (48) hours of their completion. During the
period prior to the Closing and after the expiration of the Feasibility Period,
Seller shall continue to lease the Property in the ordinary course of business,
which leases shall be on Seller's standard form lease and for a term of not more
than one year or less than six (6) months and otherwise on commercially
reasonable terms. Any leases to be entered into other than those within the
above parameters shall require Purchaser's prior written consent, not to be
unreasonably withheld or delayed.
8.2 Operations Prior to Closing. Seller agrees that between
the expiration of the Feasibility Period and the Closing Date, Seller shall:
<PAGE>
(a) Place any apartments now vacant or becoming vacant at any time
on or before the seventh (7th) day before Closing into rentable
condition ready for occupancy.
(b) Afford Purchaser and its representatives full access to the
Property and to Seller's books, records and files relating exclusively
to the Property, at reasonable times and upon reasonable oral notice,
and Seller or its designee shall have the right to accompany Purchaser
at such times, which shall include, but not be limited to, the date of
the Closing.
(c) Pay, in the normal course of business, and, in any event, at
or prior to Closing, any and all sums due for work, materials or
services furnished or otherwise incurred in the ownership and operation
of the Property up to the Closing.
(d) Not grant or transfer or permit the grant or transfer of any
interest in the Property including any air and development rights, or
any mineral leases or executive rights in connection therewith or any
water rights in connection therewith.
(e) Comply with all governmental requirements applicable to
the Property which are being complied with as of the last day of the
Feasibility Period;
(f) Not apply any Tenant's security to the discharge of such
Tenant's obligations unless such Tenant has vacated such Tenant's
demised premises.
<PAGE>
(g) Promptly advise Purchaser of any litigation or governmental
proceeding to which Seller becomes a party affecting the Property. It
shall be a condition precedent to Purchaser's obligation to accept
title that there shall be no such litigation or proceeding pending at
Closing having a potential adverse effect upon the Property or Seller's
ability to convey the Property to Purchaser.
(h) Not permit any alteration, structural modification or
additions to the Property, except in the nature of ordinary maintenance
and repair, or except as permitted or required under Article VII or
Section 8.1 above.
(i) Not create (or agree to create) any exception to or
covenant, restriction, easement or other lien on or affecting the
Property.
(j) Terminate, effective prior to the Closing, Seller's
property management agreement for the Property.
(k) Not, without the prior consent of Purchaser, enter into any
new Contract, nor amend, modify or terminate any existing Contract,
unless on commercially reasonable terms and expressly terminable on 30
days' written notice without penalty.
(l) Not remove from the Improvements any of the Personal Property
listed on Exhibit J annexed hereto, unless same is replaced by Personal
Property of a like kind and of equal or higher value.
<PAGE>
8.3 Condition to Closing. As a condition precedent to Purchaser's
obligations at Closing, Seller shall have duly performed all covenants and other
obligations to be performed by Seller under this Agreement. As a condition
precedent to Seller's obligations at Closing, Purchaser shall tender payment of
the balance of the Purchase Price pursuant to Article II hereof and execute and
deliver those closing documents requiring Purchaser's execution, as set forth
herein.
Article IX.
Broker
Purchaser and Seller represent to each other that they have dealt with
no agent or broker who in any way has participated as a procuring cause of the
sale of the Property other than Property One, Inc. and CB Commercial
(collectively, the "Brokers"). Seller shall pay the commissions of the Brokers
in connection herewith. Purchaser and Seller each agree to defend, indemnify and
hold harmless the other for any and all judgments, real estate commissions,
claims for such commissions, costs of suit, attorneys' fees, and other
reasonable expenses which the other may incur by reason of any action or claim
against the other by any broker, agent, or finder with whom the indemnifying
party has dealt arising out of this Agreement or any subsequent sale of the
Property to Purchaser, except for the above-described commissions, which shall
be paid by Seller. The provisions of this Article IX shall survive the Closing
or any termination of this Agreement.
<PAGE>
Article X.
Representations and Warranties
10.1 Limitations on Representations and Warranties. Purchaser hereby
agrees and acknowledges as follows, subject to and except for the
representations and warranties of Seller set forth in Section 10.2 below:
Neither Seller nor any agent, attorney, employee or representative of Seller has
made any representation whatsoever regarding the subject matter of this sale, or
any part thereof, including (without limiting the generality of the foregoing)
representations as to the physical nature or condition of the Property or the
capabilities thereof, and that Purchaser, in executing, delivering and/or
performing this Agreement, does not rely upon any statement and/or information
to whomever made or given, directly or indirectly, orally or in writing, by any
individual, firm or corporation. Purchaser agrees to take the Real Property and
the Personal Property "as is," as of the date hereof, reasonable wear and tear,
and minor damage caused by the removal of any personal property or fixtures not
included in this sale, excepted. SELLER MAKES NO REPRESENTATIONS OR WARRANTIES
AS TO THE PHYSICAL CONDITION OF THE PROPERTY OR THE SUITABILITY THEREOF FOR ANY
PURPOSE FOR WHICH PURCHASER MAY DESIRE TO USE IT. SELLER HEREBY EXPRESSLY
DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR
PURPOSE AND ANY OTHER WARRANTIES OR REPRESENTATIONS AS TO THE PHYSICAL CONDITION
OF THE PROPERTY. PURCHASER, BY ACCEPTANCE OF THE DEED, AGREES THAT IT HAS
INSPECTED THE PROPERTY AND ACCEPTS SAME "AS IS" AND "WITH ALL FAULTS".
Purchaser understands that any financial statements and data,
including, without limitation, gross rental income, operating expenses and cash
flow statements, to be made available by Seller to Purchaser, will be unaudited
financial statements and data not prepared or reviewed by independent public
<PAGE>
accountants, and that, subject to and except as may be expressly set forth in
Section 10.2 below, Seller makes no representation as to the accuracy or
completeness thereof.
10.2 Representations and Warranties of Seller. In addition to the
representations, warranties and covenants contained elsewhere in this Agreement,
and notwithstanding the provisions of Section 10.1 hereof, Seller makes the
following representations and warranties and covenants and agrees that
Purchaser's obligations under this Agreement are conditioned upon the truth and
accuracy of such representations and warranties, both as of the date of Seller's
execution of this Agreement and as of the date of the Closing:
(a) Seller and Seller's general partner (in its capacity as such
general partner) have the right, power and authority to enter into this
Agreement, convey the Property to Purchaser and carry out Seller's obligations
hereunder. Each person executing and delivering this Agreement and all documents
to be executed and delivered by Seller at the Closing represents and warrants to
Purchaser that he has due and proper authority to execute and deliver same. The
consummation by Seller of the transaction which is the subject of this Agreement
will not conflict with or result in a breach of any of the terms of any
agreement or instrument to which Seller is a party or by which Seller is bound
or constitute a default thereunder. The Board of Directors of Seller's corporate
general partner has authorized and approved of the execution and delivery of
this Agreement, the transaction which is the subject of this Agreement, and all
documents to be executed and delivered by Seller at the Closing, and no other
person's consent is required therefor. No other party has any right to purchase
the Property, or any part thereof.
Unlimited survival.
<PAGE>
(b) Seller has received no notice of any existing, pending or, to the
best of Seller's knowledge, threatened litigation, administrative proceeding or
condemnation or sale in lieu thereof, with respect to Seller or any portion of
the Real Property, except as noted on Exhibit G attached hereto.
(c) Except for those residential Tenants and licensees in possession of
the Real Property under written Leases, as shown in the Rent Roll attached
hereto as Exhibit H (the "Rent Roll") or (for new Leases entered into after the
date of this Agreement) as otherwise permitted under Article VIII of this
Agreement, to the best of Seller's knowledge, there are no parties in possession
of, or claiming any possession to, any portion of the Real Property as lessees,
Tenants at sufferance, licensees, trespassers or otherwise. The Rent Roll is
true and accurate as of the date indicated thereon.
(d) Except for the Hibernia Security Documents (which shall be
discharged at the Closing), no rents due under any of the Leases will have been
assigned, hypothecated, or encumbered, to any party except to Purchaser pursuant
to documents to be released at Closing.
(e) There are no attachments or executions affecting the Property,
general assignments for the benefit of creditors, or voluntary or involuntary
bankruptcy, solvency or other debtor's relief proceedings pending or, to the
best of Seller's knowledge, threatened against Seller or Seller's general
partner. Unlimited survival.
(f) To the best of Seller's knowledge, the Property does not
contain any Hazardous Materials (as hereinafter defined) in violation of any
<PAGE>
Environmental Laws (as hereinafter defined) other than as set forth in the
reports delivered by Seller to Purchaser pursuant to the provisions of Section
6.1 hereof and any environmental surveys or reports obtained by Purchaser
relating to the Property. Further, during the period of Seller's ownership of
the Property, Seller has not itself, and, to the best of Seller's knowledge, no
prior owner or current or prior tenant or other occupant of all or any part of
the Property at any time has, used Hazardous Materials on, from, or affecting
the Property in any manner that violates federal, state, or local laws,
ordinances, rules, or regulations governing the use, storage, treatment,
transportation, generation, or disposal of Hazardous Materials (collectively,
the "Environmental Laws"), and to the best of Seller's knowledge no Hazardous
Materials have been disposed of on the Property. "Hazardous Materials" shall
mean any flammable substances, explosives, radioactive materials, hazardous
wastes, toxic substances, pollutants, pollution, or related materials regulated
under any of the Environmental Laws.
(g) All of Seller's work or other obligations as landlord to be
performed pursuant to Leases will be fully performed and paid for before the
Closing, other than ordinary apartment maintenance obligations that arise
initially on or after the third (3rd) day before the Closing, on condition that
the same shall not, in the aggregate, result in a material expense. Nothing in
this Section 10.2(g) shall be construed to extend Purchaser's Due Diligence
Period with respect to the physical condition of the Property.
(h) All existing lease commissions incurred by Seller, including
commissions with respect to renewals or extensions (whether previously exercised
or which may be exercised in the future) or other present or future rental
agreements affecting the Property, will be paid in full on or before the
Closing. There are no lease commissions which are or may become
<PAGE>
payable subsequent to the Closing Date by Seller with respect to any leases as a
result of the exercise of any option by a Tenant (whether previously exercised
or which may be exercised in the future) with respect to any renewal term or for
any other reason whatsoever. There are no exclusive or continuing brokerage
agreements as to the Property or any of the space at the Property.
(i) To the best of Seller's knowledge, all of the Contracts which
affect the Property are set forth on Exhibit I annexed hereto. None of the
Contracts referred to on Exhibit I annexed hereto and as delivered to Purchaser
pursuant to the provisions of Section 6.1 hereof have been terminated (except
for a Contract which has expired by its terms, if any).
(j) Seller has no tradenames, trademarks or copyrights used exclusively
in connection with or applicable to the Property, other than the Trade Name.
(k) Seller has initiated no real estate tax protests or proceedings
currently affecting the Property, and, to the best of Seller's knowledge, there
are no such protests or proceedings initiated by any other party.
(l) The schedule of Personal Property annexed hereto as Exhibit J
contains a correct and complete list of all material Personal Property owned by
Seller and located at or used in connection with the operation of the Property.
Except for the Hibernia Security Documents (which shall be released as of the
Closing), all Personal Property is, and as of the Closing will be, owned by
Seller free from encumbrances or liens.
<PAGE>
(m) All work performed or materials furnished up to Closing which are
or might become a lien against the Property shall be paid for at or prior to the
Closing.
(n) Seller has not received any written notice which remains
outstanding from any governmental body having jurisdiction over the Property as
to any violation of any building, fire, environmental, health or other
governmental law or ordinance affecting the Property, or any written notice
which remains outstanding from any insurance company or inspection or rating
bureau stating the existence of any unsatisfied requirements which are a
condition to the continuation to any insurance coverage on or with respect to
the Property or the continuation thereof at the existing premium rates.
(o) Seller is not a "foreign person" as such term is defined in Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
Unlimited survival.
(p) Seller has not received any notice of any pending or threatened
condemnation or similar proceeding or pending public improvements in or
adjoining the Property which will in any manner affect the Property.
(q) Seller has no employees at the Property.
10.3 Seller's Knowledge. Whenever the term "to the best of
Seller's knowledge" is used in this Agreement or in any representations and
warranties given to Purchaser at Closing, (a) such knowledge shall be the
actual knowledge of Julia B. Bazenas, John D. Carey and Steven Jacobs (the
"Key Personnel"), the persons responsible for the asset management of the
Property and/or the representatives of Seller's general partner after review
<PAGE>
of the files of CIGNA Investments, Inc., asset manager of the Property, and
inquiry of Seller's on-site property manager, and (b) Seller shall have no duty
to conduct any further inquiry in making any such representations and
warranties, and no knowledge of any other person shall be imputed to the Key
Personnel.
10.4 Survival. All representations and warranties contained in Section
10.2 will survive the Closing of this transaction (but only as to the status of
facts as they exist as of the Closing, it being understood that Seller makes no
representations or warranties which would apply to changes or other matters
occurring after the Closing), but shall expire (except for those representations
or warranties for which "Unlimited Survival" is expressly stated in Section
10.2) on the date one year from the date of Closing, and no action on such
representations and warranties may be commenced after any such expiration.
Article XI.
Liability of Seller
Except as may be provided otherwise in this Agreement, including
without limitation (a) the express representations, warranties and covenants of
Seller that are provided herein to survive the Closing and (b) the express
representations, warranties, covenants and indemnities of Seller provided in the
Closing documents (if and when delivered by Seller at Closing), neither Seller
nor any independent property manager which Seller has hired to manage the
Property shall, by entering into this Agreement, become liable for any costs or
expenses incurred by Purchaser subsequent to the date of Closing, including any
labor performed on, or materials furnished to, the Real Property, or for any
leasing commissions or other fees or commissions due for
<PAGE>
renewals or extensions of existing leases or otherwise, or for compliance with
any laws, requirements or regulations of, or taxes, assessments or other charges
thereafter due to any governmental authority, or for any other charges or
expenses whatsoever pertaining to the Property or to the ownership, title,
possession, use, or occupancy of the Property, whether or not such costs and
expenses were incurred pursuant to obligations of Purchaser under this Agreement
(including, without limitation, any costs of compliance with presently-existing
and future environmental laws, any environmental remediation costs, and any
costs of, or awards of damages for, damage to the environment, to natural
resources, or to any third party, it being the intent of this Agreement, as
between Purchaser and Seller, to shift all such liability to Purchaser, except
for any liability of Seller under the provisions of Article X hereof). The
provisions of this Article XI shall survive closing.
Article XII.
Assignment
This Agreement may not be assigned or transferred by Purchaser without
prior written consent of Seller, except that Purchaser may assign this Agreement
to a wholly-owned subsidiary of the Public Employees Retirement System of Ohio
(which subsidiary shall not further assign this Agreement) with notice to, but
not the additional consent of, Seller. No assignment shall relieve Purchaser of
any of its obligations under this Agreement. In the event of any such permitted
assignment, Seller agrees to execute any documents specified by Purchaser to or
in the name of Purchaser's assignee and agrees that all surviving
representations and warranties of Seller hereunder shall be deemed to run in
favor of, and be enforceable by, said assignee as if it were the Purchaser
hereunder. Purchaser hereby agrees, for itself and such
<PAGE>
assignee, that any such assignee shall also be bound to the same extent by all
of the surviving obligations, representations, warranties and covenants of
Purchaser. The provisions of this Article XII shall survive the Closing.
Article XIII.
Notices
Except as otherwise provided in this Agreement, any and all notices,
elections, demands, requests and responses thereto permitted or required to be
given under this Agreement shall be in writing, signed by the party giving the
same or by its attorneys, and shall be deemed to have been properly given and
shall be deemed effective upon being (i) personally delivered, or (ii) delivered
to a reputable express overnight delivery service with receipt for delivery,
with delivery to occur only on a Business Day (as hereinafter defined), or (iii)
deposited in the United States mail, postage prepaid, certified with return
receipt requested, or (iv) transmitted by facsimile, provided that such
facsimile transmission is confirmed within one Business Day thereafter in the
manner set forth in either clause (i) or (ii) of this sentence, to the other
party at the address of such other party set forth below or at such other
address within the continental United States as such other party may designate
by notice specifically designated as a notice of change of address and given in
accordance herewith; provided, however, that the time period in which a response
to any such notice, election, demand or request must be given, including without
limitation, any applicable cure periods, shall commence on the date of actual
receipt thereof. Rejection or other refusal to accept or inability to deliver
because of changed address of which no notice has been received shall also
constitute receipt, provided that any such attempted delivery occurs on a
Business Day. Any such notice, election, demand, request or response shall be
addressed as follows:
<PAGE>
PURCHASER:TGM Realty Corp. #6
c/o TGM Associates L.P.
28th Floor
650 Fifth Avenue
New York, NY 10019-6108
Attn: Thomas Gochberg
Facsimile No.: (212) 399-6310
with a simultaneous copy to:
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, NY 10011-2590
Attn: Alan E. Linder, Esq.
Facsimile No.: (212) 682-5729
<PAGE>
SELLER: Connecticut General Realty Investors III
Limited Partnership
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2311
Attn: Steven Jacobs and Julia Bazenas
Asset Management, S-311
Facsimile No.: (860) 726-4166
<PAGE>
with a simultaneous copy to:
CIGNA Corporation
Investment Law Department
Mortgage and Real Estate Group, S-215A
900 Cottage Grove Road
Hartford, CT
06152-2215
Attn:Maribeth P. Welch, Esq.and Denise Sabotka
Facsimile No.: (860) 726-8446
TITLE COMPANY:
Chicago Title Insurance Company
1211 Avenue of the Americas
New York, New York 10036
Attn: Kevin Campbell
Facsimile No.: (212) 840-9425
Article XIV.
Expenses
Seller shall pay its own attorney's fees, the cost of the Survey, and
one-half of the Title Company's escrow fee (if any, subject to 15.6 hereof),
notwithstanding any local practice to the contrary. Purchaser shall pay
Purchaser's attorneys' fees and expenses, the cost of the Title Policy,
recording charges, sales or conveyance taxes, and one-half of the Title
Company's escrow fee (if any, subject to 15.6 hereof), notwithstanding any
<PAGE>
local practice to the contrary. All other escrow and closing costs shall be
allocated to and paid by Seller and Purchaser in accordance with the manner in
which such costs are customarily borne by such parties in sales of similar
property in the Parish in which the Property is located.
Article XV
Escrow
15.1 The Title Company hereby confirms that its wire transfer
instructions are as follows:
Citibank, N.A.
399 Park Avenue
New York, NY 10022
ABA# 021-000-089
Chicago Title Insurance Company
1211 Avenue of the Americas
New York, NY 10036
National Special Deposit
Account #4054-9188
Telephone Advise Upon Receipt
Kevin Campbell
(212) 789-6618
15.2 The parties hereto have mutually requested that the Title
Company act as escrow agent for the purpose of holding the Deposit in accordance
with the terms of this Agreement. The Deposit shall be held by the Title Company
until the earlier of (y) the Closing, or (z) such time as Seller
<PAGE>
or Purchaser may be entitled to the Deposit in accordance with this Agreement,
at which time the Title Company shall remit the Deposit to the party entitled
thereto in accordance with this Agreement.
15.3 The Deposit shall be deposited by the Title Company in
an interest-bearing account with Citibank N.A.
15.4 The Deposit shall be released or delivered to the party
entitled thereto pursuant to this Agreement at the earlier to occur of the
following events: (i) to Purchaser if Purchaser elects to terminate this
Agreement pursuant to any rights of Purchaser to do so as set forth in this
Agreement; (ii) with reasonable promptness after the Title Company shall have
received notice from Seller and Purchaser, according to such notice (and Seller
and Purchaser hereby agree to act in good faith in authorizing such release to
the appropriate party as provided by this Agreement); (iii) at the Closing, at
which time the Deposit shall be paid to Seller and applied to the Purchase Price
as provided herein; or (iv) the receipt by the Title Company of a written notice
from either Seller or Purchaser stating that an event has occurred under this
Agreement entitling the party delivering such notice to the Deposit, whereupon
the Title Company shall deliver written notice (the "Default Notice") thereof to
the other party and, unless such other party shall have delivered a written
notice of objection to the Title Company within ten (10) days following receipt
by such other party of the Default Notice, the Title Company shall deliver the
Deposit to the party initially requesting the Deposit. .
15.5 (a) The Title Company is to be considered as a depository
only, shall not be deemed to be a party to any document other than this
Agreement, and shall not be
<PAGE>
responsible or liable in any manner whatsoever for the sufficiency, manner of
execution, or validity of any written instructions, certificates or any other
documents received by it, nor as to the identity, authority or rights of any
persons executing the same. The Title Company shall be entitled to rely at all
times on instructions given by Seller and/or Purchaser, as the case may be and
as required hereunder, without any necessity of verifying the authority
therefor. For purposes of this Article XV, (i) notices given by Alan E. Linder,
Esq. of Bachner, Tally, Polevoy & Misher LLP, as counsel to and on behalf of
Purchaser, shall be deemed given by Purchaser, and (ii) notices given by an
officer of CIGNA Investments, Inc., a staff attorney for CIGNA Corporation, or
by Julian Good, Esq. Of Lemle & Kelleher, as counsel of Seller, shall be deemed
given by Seller.
(b) The Title Company shall not at any time be held liable
for actions taken or omitted to be taken in good faith and without negligence.
Seller and Purchaser agree to save and hold the Title Company harmless and
indemnify the Title Company from any loss and from any claims or demands arising
out of its actions hereunder other than any claims or demands arising from the
Title Company's negligence.
(c) It is further understood by Seller and Purchaser
that if, as a result of any disagreement between them or adverse demands and
claims being made by any of them upon the Title Company, or if the Title Company
otherwise shall become involved in litigation with respect to this Agreement,
the Title Company may deposit the Deposit with a court of competent jurisdiction
and/or in accordance with the order of a court of competent jurisdiction and in
any such event, Seller and Purchaser agree that they, jointly and severally, are
and
<PAGE>
shall be liable to the Title Company and shall reimburse the Title Company on
demand for all costs, expenses and reasonable counsel fees it shall incur or be
compelled to pay by reason of any such litigation. Seller and Purchaser agree
between themselves that each shall be responsible to advance one-half of all
amounts due the Title Company hereunder, provided that any such advance by
Seller or Purchaser as a result of any dispute or litigation between them shall
be without prejudice to its right to recover such amount as damages from the
breaching party.
(d) In taking or omitting to take any action whatsoever hereunder,
the Title Company shall be protected in relying upon any notice, paper, or other
document believed by it to be genuine, or upon evidence deemed by it to be
sufficient, and in no event shall the Title Company be liable hereunder for any
act performed or omitted to be performed by it hereunder in the absence of
negligence or bad faith. The Title Company may consult with counsel in
connection with its duties hereunder and shall be fully protected in any act
taken, suffered or permitted by it in good faith and without negligence in
accordance with the advice of such counsel.
15.6 The Title Company hereby agrees to charge a premium of
$14,087.40 for the Title Policy for a purchase price of $9,800,000 without
additional charges for the endorsements attached thereto or otherwise. The Title
Company shall not charge any title search or examination fees or fees in
connection with its duties as escrow agent in connection with this Agreement.
15.7 Upon the satisfaction of the mutual obligations of the
parties hereunder, the Title Company shall record all appropriate instruments
delivered to it at the Closing.
<PAGE>
15.8 The Title Company hereby agrees to serve as. the "real estate
reporting person" (as such term is defined in Section 6045(e) of the Code). This
Agreement shall constitute a designation agreement, the name and address of the
transferor and transferee of the transaction contemplated hereby as well as the
name and address of the Title Company appear in Article XIII hereof, and Seller,
Purchaser and the Title Company agree to retain a copy of this Agreement for a
period of four (4) years following the end of the calendar year in which the
Closing occurs. The provisions of this Section 15.8 shall survive the Closing or
the termination of this Agreement.
Article XVI.
Miscellaneous
16.1 Successors and Assigns. All the terms and conditions of this
Agreement shall also inure to the benefit of and are hereby made binding upon
the successors and permitted assigns of both parties hereto.
16.2 Gender. Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
16.3 Captions; References to Article, Etc. The captions in this
Agreement are inserted only for the purpose of convenient reference and in no
way define, limit or prescribe the scope or intent of this Agreement or any part
hereof. References in this Agreement to "Article", "Section", "Exhibit" and the
like shall, unless provided otherwise, be deemed to be references to such
Article, Section, Exhibit or the like in this Agreement.
<PAGE>
16.4 Construction. No provision of this Agreement shall be construed by
any Court or other judicial authority against any party hereto by reason of such
party's being deemed to have drafted or structured such provisions.
16.5 Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto and there are no other oral or written promises,
conditions, representations, understandings or terms of any kind as conditions
or inducements to the execution hereof and none have been relied upon by either
party. Without limitation to the generality of the preceding sentence, that
certain letter of intent dated August 27, 1997, as amended by letter dated
September 26, 1997, between Seller and Purchaser is superseded and replaced in
its entirety by this Agreement and is of no further force or effect.
16.6 Recording. The parties agree that this Agreement shall not be
recorded. If Purchaser causes this Agreement or any notice or memorandum thereof
to be recorded, this Agreement shall be null and void at the option of the
Seller.
16.7 No Continuance. Purchaser acknowledges that there shall be no
assignment, transfer or continuance of any of Seller's insurance coverage or
of the property management contract.
16.8 Time of Essence. Time is of the essence in this transaction.
16.9 Original Document. This Agreement may be executed by both parties
in counterparts in which event each shall be deemed an original and all shall
be deemed to be one and the same instrument.
<PAGE>
16.10 Governing Law. This Agreement shall be construed, and the rights
and obligations of Seller and Purchaser hereunder, shall be determined and
enforced in accordance with the laws of the State of Louisiana.
16.11 Acceptance of Offer. This Agreement constitutes Seller's offer to
sell to Purchaser on the terms set forth herein and must be accepted by
Purchaser by signing five (5) copies hereof, and by delivering two (2) copies,
fully executed by Purchaser and the Title Company, to Seller on or before 5:00
p.m. EST on October 23, 1997, together with the Title Company's written
acknowledgment (which may be by fax to Seller) of receipt of the Additional
Deposit. If Purchaser has not so accepted this Agreement by such date, then this
Agreement and the offer represented hereby shall automatically be revoked and
shall be of no further force or effect.
16.12 Confidentiality. Purchaser and Seller agree that all documents
and information concerning the Property delivered to Purchaser, the subject
matter of this Agreement, and all negotiations will remain confidential.
Purchaser and Seller will disclose such information only to those parties
required to know it, including, without limitation, employees of either of the
parties, consultants and attorneys engaged by either of the parties, and
prospective or existing investors and lenders.
16.13 Surviving Covenants. Notwithstanding any provisions hereof to the
contrary, the provisions of the second paragraph of Section 6.2, Article IX,
Section 3.2, and Section 16.12 hereof and any other provision hereof which
expressly states that it shall survive the termination of this Agreement
(collectively, the "Surviving Covenants") shall survive, as applicable, any
termination of this Agreement.
<PAGE>
16.14 No Oral Modification or Waiver. This Agreement cannot be changed,
modified, discharged or terminated by any oral agreement or any other agreement
and there cannot be any waiver of the warranties, representations and covenants
expressly contained in this Agreement (except to the extent, if any, that this
Agreement expressly provides that a warranty, representation or covenant shall
be deemed waived), unless the same is in writing and signed by the party against
whom enforcement of the change, modification, discharge, termination or waiver
is sought.
16.15 Invalidity of Part Does Not Impair Whole. If any term or
provision of this Agreement, or any part of such term or provision, or the
application thereof to any person or circumstance shall to any extent be held
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision or remainder thereof to persons or circumstances other
than those as to which it is held invalid and unenforceable shall not be
affected thereby and each term and provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
16.16 Exhibits. All Exhibits which are annexed to this Agreement are
part of this Agreement and are incorporated herein by reference.
16.17 No Third-Party Beneficiaries. The provisions of this Agreement
are for the sole benefit of the parties to this Agreement and their permitted
successors and assigns and shall not give rise to any rights by or on behalf of
anyone other than such parties.
16.18 Litigation. If any litigation arises under this Agreement, the
prevailing party (which term shall mean the party which obtains substantially
all of the relief sought by such party) shall be entitled to recover, as a
<PAGE>
part of its judgment, reasonable attorneys' fees, court costs and expert witness
fees.
16.19 Further Assurances. Seller will, whenever and as often as it
shall be reasonably requested so to do by Purchaser, and Purchaser will,
whenever and as often as it shall be reasonably requested so to do by Seller,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such conveyances, assignments, correction instruments and all other
instruments and documents as may be reasonably necessary in order to complete
the transaction which is the subject of this Agreement, in accordance with this
Agreement. All such documents and instruments shall be satisfactory to the
respective attorneys for Purchaser and Seller. The provisions of this Section
shall survive the Closing.
16.20 Business Days. If the date for performance of any act pursuant to
this Agreement is not a Business Day, then such act shall be performed on the
next succeeding Business Day. The term "Business Days' shall mean all days,
except Saturdays, Sundays and all days observed by the Federal Government as
legal holidays and shall also exclude October 2, 1997.
<PAGE>
This Agreement is executed on the dates indicated below and effective
as of the date first written above.
PURCHASER:
TGM REALTY CORP. #6, a Delaware
corporation
Date: October 22, 1997 By: /s/ Thomas Gochberg
--------------------- -------------------
Name: Thomas Gochberg
Title: President
SELLER:
CONNECTICUT GENERAL REALTY INVESTORS III
LIMITED PARTNERSHIP, a Connecticut limited
partnership
By: CIGNA Realty Resources, Inc. - Fifth,
general partner
Date: October 21, 1997 By: /s/ John D. Carey
--------------------- -----------------
Name: John D. Carey
Title: President
TITLE COMPANY:
CHICAGO TITLE INSURANCE COMPANY
Date: October 22, 1997 By: /s/ Kevin Campbell
--------------------- ------------------
Name: Kevin Campbell
Title: Authorized Signatory
<PAGE>
