SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13348
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BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3314331
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 29,466,364 $ 24,596,293
Accounts and accrued interest receivable 558,363 538,041
Prepaid expenses 559,078 213,241
Deferred expenses, net of accumulated
amortization of $1,176,850 in 1996 and
$989,273 in 1995 766,440 740,093
Investment in joint venture with an affiliate 1,413,158 1,336,859
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32,763,403 27,424,527
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Investment in real estate
Land 25,856,876 26,808,775
Buildings and improvements 100,134,625 108,826,412
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125,991,501 135,635,187
Less accumulated depreciation 41,018,757 42,404,072
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Investment in real estate, net of
accumulated depreciation 84,972,744 93,231,115
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$ 117,736,147 $ 120,655,642
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 284,254 $ 282,014
Due to affiliates 85,510 33,578
Accrued real estate taxes 433,067 448,030
Security deposits 468,452 467,600
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Total liabilities 1,271,283 1,231,222
Affiliates' participation in joint ventures 16,793,963 16,983,307
Limited Partners' capital (939,587 Interests
issued and outstanding) 100,025,848 102,429,946
General Partner's (deficit) capital (354,947) 11,167
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Total partners' capital 99,670,901 102,441,113
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$ 117,736,147 $ 120,655,642
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Rental income $ 14,453,352 $ 13,417,322
Service income 1,490,164 1,508,946
Interest on short-term investments 867,598 823,795
Interest on loan receivable - first mortgage,
net of amortization of $50,232 in 1995 392,298
Participation in income of joint venture
with an affiliate 93,398 70,555
-------------------------------
Total income 16,904,512 16,212,916
-------------------------------
Expenses:
Depreciation 2,445,941 2,424,626
Amortization of deferred expenses 187,577 180,926
Property operating 5,806,348 5,103,101
Real estate taxes 1,545,081 1,534,999
Property management fees 534,580 517,056
Administrative 844,161 739,346
Provision for loan receivable writedown 768,066
-------------------------------
Total expenses 11,363,688 11,268,120
-------------------------------
Income before gain on sale of property and
affiliates' participation in joint ventures 5,540,824 4,944,796
Gain on sale of property 3,282,612
Affiliates' participation in income from
joint ventures (1,079,747) (949,199)
-------------------------------
Net income $ 7,743,689 $ 3,995,597
============= =============
Net income allocated to General Partner $ 685,277 $ 672,349
============= =============
Net income allocated to Limited Partners $ 7,058,412 $ 3,323,248
============= =============
Net income per Limited Partnership Interest
(939,587 issued and outstanding) $ 7.51 $ 3.54
============= =============
Distributions to General Partner $ 1,051,391 $ 525,696
============= =============
Distributions to Limited Partners $ 9,462,510 $ 4,731,255
============= =============
Distributions per Limited Partnership Interest:
Taxable $ 7.80 $ 3.90
============= =============
Tax - exempt $ 10.38 $ 5.19
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
1996 1995
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Income:
Rental income $ 4,842,705 $ 4,552,017
Service income 407,838 477,498
Interest on short-term investments 284,452 289,217
Interest on loan receivable - first mortgage,
net of amortization of $37,127 in 1995 86,368
Participation in income of joint venture
with an affiliate 33,289 16,354
-------------------------------
Total income 5,568,284 5,421,454
-------------------------------
Expenses:
Depreciation 812,901 808,208
Amortization of deferred expenses 62,002 65,801
Property operating 1,977,247 1,924,780
Real estate taxes 515,422 461,480
Property management fees 171,699 170,127
Administrative 313,685 238,510
Provision for loan receivable writedown 768,066
-------------------------------
Total expenses 3,852,956 4,436,972
-------------------------------
Income before gain on sale of property and
affiliates' participation in joint ventures 1,715,328 984,482
Gain on sale of property 3,282,612
Affiliates' participation in income from
joint ventures (385,207) (269,873)
-------------------------------
Net income $ 4,612,733 $ 714,609
============= =============
Net income allocated to General Partner $ 235,709 $ 208,842
============= =============
Net income allocated to Limited Partners $ 4,377,024 $ 505,767
============= =============
Net income per Limited Partnership Interest
(939,587 issued and outstanding) $ 4.66 $ 0.54
============= =============
Distribution to General Partner $ 350,463 $ 175,232
============= =============
Distribution to Limited Partners $ 3,154,170 $ 1,577,085
============= =============
Distribution per Limited Partnership Interest:
Taxable $ 2.60 $ 1.30
============= =============
Tax - exempt $ 3.46 $ 1.73
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
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Operating activities:
Net Income $ 7,743,689 $ 3,995,597
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of property (3,282,612)
Affiliates' participation in income from
joint ventures 1,079,747 949,199
Participation in income of joint venture
with an affiliate (93,398) (70,555)
Depreciation of properties 2,445,941 2,424,626
Amortization of deferred expenses 187,577 180,926
Amortization of loan application and
processing fees 50,232
Provision for loan receivable writedown 768,066
Payment of leasing commissions (213,924) (185,702)
Net change in:
Accounts and accrued interest
receivable (20,322) 66,579
Prepaid expenses (345,837) (494,744)
Accounts payable 2,240 (175,934)
Due to affiliates 51,932 (89,365)
Accrued real estate taxes (14,963) 66,100
Security deposits 852 37,287
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Net cash provided by operating activities 7,540,922 7,522,312
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Investing activities:
Proceeds from sale of property 9,872,500
Payment of selling costs (346,860)
Capital contribution to joint venture
with an affiliate (45,552)
Distributions from joint venture with an
affiliate 62,651 99,615
Collection of principal payment on loan
receivable 6,772,920
Improvements and additions to properties (430,598) (191,404)
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Net cash provided by investing activities 9,112,141 6,681,131
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Financing activities:
Distributions to Limited Partners (9,462,510) (4,731,255)
Distributions to General Partner (1,051,391) (525,696)
Distributions to joint venture partners -
affiliates (1,269,091) (1,244,986)
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Cash used in financing activites (11,782,992) (6,501,937)
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Net change in cash and cash equivalents 4,870,071 7,701,506
Cash and cash equivalents at beginning of
period 24,596,293 17,106,496
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Cash and cash equivalents at end of period $ 29,466,364 $ 24,808,002
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $119,074 $42,851 $85,510
3. Property Sale:
In September 1996, the Partnership sold the Spalding Bridge Apartments in an
all cash sale for $9,872,500. From the proceeds of the sale, the Partnership
paid $346,860 in selling costs. The basis of the property was $6,243,028 which
is net of accumulated depreciation of $3,831,256. For financial statement
purposes, the Partnership recognized a gain of $3,282,612 from the sale of the
property.
4. Subsequent Event:
In October 1996, the Partnership made a distribution of $9,919,256 ($2.60 per
Taxable Interest and $11.64 per Tax-exempt Interest) to the holders of Limited
Partnership Interests for the third quarter of 1996. Of this amount,
$3,154,170 ($2.60 per Taxable Interest and $3.46 per Tax-exempt Interest)
represents the regular quarterly distribution of Net Cash Receipts for the
third quarter of 1996. In addition, $6,765,086 ($8.18 per Tax-exempt Interest)
of the distribution represents a special distribution of Net Cash Proceeds from
the Colonial Coach and Castlewood West loan prepayment in 1995.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Pension Investors-II A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1984 to make first mortgage
loans and to invest in and operate income-producing real property. The
Partnership raised $234,896,750 through the sale of Limited Partnership
Interests and utilized these proceeds to fund seven loans and acquire five real
property investments and a minority joint venture interest in one additional
real property. Subsequently, the Partnership acquired three properties through
foreclosure on loans and accepted prepayments on four additional loans. The
Partnership sold one property in September 1996. As of September 30, 1996, the
Partnership operates seven properties and holds a minority joint venture
interest in one additional property.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership recognized a gain related to the sale of Spalding Bridge
Apartments in September 1996, which was the primary reason for the increase in
net income during the nine months and quarter ended September 30, 1996 as
compared to the same periods in 1995. Further discussion of the Partnership's
operations is summarized below.
1996 Compared to 1995
- ---------------------
Discussions of fluctuations between 1996 and 1995 refer to the nine months and
quarters ended September 30, 1996 and 1995, unless otherwise mentioned.
Primarily as a result of higher average occupancy and rental rates at the 1275
K Street office building, higher rental rates at the Westech 360 office
building, and higher percentage rents at the Ross Plaza shopping center, rental
income increased during 1996 as compared to 1995.
As a result of lower reimbursements for property operating expenses from the
tenants at the Partnership's commercial properties, service income decreased
during the quarter ended September 30, 1996 as compared to the same period in
1995.
In September 1995, the Partnership accepted a discounted prepayment on the
Colonial Coach and Castlewood West loan receivable. The Partnership recognized
interest income on this loan receivable prior to prepayment during 1995 and
also recognized a provision of $768,066 for loan receivable write-down in the
quarter ended September 30, 1995.
<PAGE>
Primarily as a result of higher rental income due to increased occupancy at the
Pacific Center office building, in which the Partnership holds a joint venture
interest, participation in income of joint venture with an affiliate increased
during 1996 as compared to 1995.
Primarily as a result of higher leasing costs due to increased leasing activity
at the 1275 K Street, Ammendale Technology Park - Phase I, Denver Centerpoint
and Westech 360 office buildings and higher repairs and maintenance at the 1275
K Street, Ammendale Technology Park - Phase I, and Denver Centerpoint office
buildings, property operating expenses increased during 1996 as compared to
1995.
As a result of higher 1996 real estate taxes at Spalding Bridge Apartments due
to a higher assessed value, real estate tax expense increased during the
quarter ended September 30, 1996 as compared to the same period in 1995.
The Partnership incurred higher consulting, printing, legal and postage costs
in connection with its response to a tender offer and related litigation during
1996. As a result, administrative expenses increased during 1996 as compared
to 1995. This increase was partially offset by lower accounting fees.
The Partnership sold Spalding Bridge Apartments in September 1996 and
recognized a gain on the sale of $3,282,612. See Note 3 of Notes to Financial
Statements for additional information.
The 1275 K Street and Westech 360 office buildings are owned through joint
ventures with affiliates. Primarily as a result of higher rental income due to
higher average occupancy and rental rates at the 1275 K Street office building
and higher rental income due to higher rental rates at the Westech 360 office
building, affiliates' participation in income from joint ventures increased
during 1996 as compared to 1995. The increases in income at these properties
were partially offset by higher leasing costs at both of these properties.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $4,870,000 as
of September 30, 1996 as compared to December 31, 1995. Cash flow of
approximately $7,541,000 provided by the Partnership's operating activities
includes cash flow from the operations of the properties and interest income on
short-term investments, which were partially offset by the payment of
administrative expenses. Investing activities consisted of net proceeds
received from the sale the Spalding Bridge Apartments of approximately
$9,526,000, a net distribution received from the joint venture with an
affiliate of approximately $17,000 and improvements to certain of the
Partnership's properties of approximately $431,000. Financing activities
consisted of distributions to the Partners of approximately $10,514,000 and to
the affiliated joint venture partners of approximately $1,269,000.
The Partnership defines cash flow generated from its properties as an amount
equal to the property's revenue receipts less property related expenditures.
During the nine months ended September 30, 1996 and 1995, all of the remaining
properties, including the Pacific Center Office Buildings in which the
Partnership holds a minority joint venture interest, generated positive cash
flow. Spalding Bridge Apartments, which was sold in September 1996, generated
positive cash flow during 1995 and prior to its sale in 1996.
<PAGE>
As of September 30, 1996, occupancy rates at the Partnership's commercial
properties ranged from 91% to 100%. Many rental markets continue to remain
extremely competitive; therefore, the General Partner's goals are to maintain
high occupancy levels while increasing rents where possible and to monitor and
control operating expenses and capital improvement requirements at the
properties.
In October 1996, the Partnership paid $9,919,256 ($2.60 per Taxable Interest
and $11.64 per Tax-exempt Interest) to Limited Partners. Of this amount,
$3,154,170 ($2.60 per Taxable Interest and $3.46 per Tax-exempt Interest)
represents the regular quarterly distribution of Net Cash Receipts for the
third quarter of 1996. The level of the regular quarterly distribution was
consistent with the amount distributed to Limited Partners for the previous
quarter. In addition, $6,765,086 ($8.18 per Tax-exempt Interest) of the
distribution represents a special distribution of Net Cash Proceeds to
Tax-exempt Limited Partners pursuant to the Partnership Agreement from the
Colonial Coach and Castlewood West loan prepayment in 1995. During October
1996, the Partnership paid $262,847 to the General Partner, representing its
quarterly distribution for the third quarter of 1996 and made a contribution of
$87,616 to the Repurchase Fund. To date, including the October 1996
distribution, Limited Partners have received distributions aggregating
approximately $114 per $250 Taxable Interest, of which $88 represents Net Cash
Receipts and $26 represents Net Cash Proceeds, and $152 per $250 Tax-exempt
Interest, of which $118 represents Net Cash Receipts and $34 represents Net
Cash Proceeds. The General Partner expects that the cash flow from property
operations should enable the Partnership to continue making quarterly
distributions to Limited Partners. However, the level of future distributions
will be dependent on the amount of cash flow generated from property operations
and property sales, as to which there can be no assurances.
The General Partner believes that the market for multifamily housing and office
properties has become increasingly favorable to sellers of these properties.
During September 1996, the Partnership sold the Spalding Bridge Apartments, and
in October 1996, the joint venture consisting of the Partnership and an
affiliate contracted to sell the Pacific Center office buildings for a sale
price of $16,750,000. The Partnership is actively marketing five of the
remaining properties in its portfolio. The General Partner examines each
property individually by property type and market in determining the optimal
time to sell each property.
In September 1996, the Partnership sold the Spalding Bridge Apartments in an
all cash sale for $9,872,500. From the proceeds of the sale, the Partnership
paid $346,859 in selling costs. In accordance with the Partnership Agreement,
the Partnership expects to distribute the proceeds to the Tax-exempt Limited
Partners in January 1997. See Note 3 of Notes to Financial Statements for
additional information.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
<PAGE>
During the nine months ended September 30, 1996, the General Partner, on behalf
of the Partnership, used amounts placed in the Repurchase Fund to repurchase
1,647 interests from Limited Partners at a cost of $205,302.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Proposed Class and Derivative Action Lawsuits
- ---------------------------------------------
On June 14, 1996, a proposed class and derivative action complaint was filed,
Dee vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 06283) (the "Dee Case"), naming the General Partner and the general
partners (the "Balcor Defendants") of nine other limited partnerships sponsored
by The Balcor Company (together with the Partnership, the "Affiliated
Partnerships"), as well as the Affiliated Partnerships, as defendants.
Additional defendants were Insignia Management Group ("Insignia") and Walton
Street Capital Acquisition II, LLC ("Walton") and certain of their affiliates
and principals (collectively, the "Walton and Insignia Defendants"). The
complaint alleged, among other things, that the tender offers for the purchase
of limited partnership interests in the Affiliated Partnerships made by a joint
venture consisting of affiliates of Insignia and Walton were coercive and
unfair.
On July 1, 1996, another proposed class action complaint was filed in the same
court, Anderson vs. Balcor Mortgage Advisors (Case No. 96 CH 06884) (the
"Anderson Case"). An amended complaint consolidating the Dee and Anderson
Cases (the "Dee/Anderson Case") was filed on July 25, 1996.
The complaint seeks to assert class and derivative claims again the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the Balcor Defendants' and Insignia's
fiduciary positions and knowledge in breach of the Walton and Insignia
Defendants' fiduciary duty and in violation of the Illinois Securities and
Consumer Fraud Acts. The plaintiffs amended their complaint on October 8, 1996,
adding additional claims. The plaintiffs request certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers. Each of the defendants have filed motions to dismiss the
complaint. The court has not yet ruled on these motions.
The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. Management of each of the Balcor Defendants
believes they have meritorious defenses to contest the claims. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the Partnership.
<PAGE>
Proposed class action
- ---------------------
On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al. (Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Partnership and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnerships by the proposed class plus interest accrued thereon;
general damages for injuries arising from the defendants' actions; equitable
relief, including rescission, on certain counts; punitive damages; treble
damages on certain counts; recovery from the defendants of all profits received
by them as a result of their actions relating to the Defendant Partnerships;
attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Partnership.
Item 5. Other Information
- --------------------------
Spalding Bridge Apartments
- --------------------------
In 1985, the Partnership acquired the Spalding Bridge Apartments, Atlanta,
Georgia, utilizing approximately $10,074,000 of offering proceeds. On August
26, 1996, the Partnership contracted to sell the property for a sale price of
$9,872,500 to RREEF America L.L.C., a Delaware limited liability company, an
unaffiliated party. The purchaser subsequently assigned its rights under the
contract to an affiliate, TMT Spalding Bridge Inc., and the sale closed on
September 25, 1996. From the proceeds of the sale, the Partnership paid
$100,047 in closing costs, $148,088 to an unaffiliated party as a brokerage
commission and $98,725 to an affiliate of the third party providing property
management services for the property as a fee for services in connection with
the sale of the property. The Partnership received the remaining proceeds of
$9,525,640. Neither the General Partner nor any affiliate will receive a
brokerage commission in connection with the sale of the property. The General
Partner will be reimbursed by the Partnership for its actual expenses incurred
in connection with the sale.
An affiliate of the Partnership has recently sold one other property to an
affiliate of the purchaser.
<PAGE>
Pacific Center Office Buildings
- -------------------------------
In 1984, the Pacific Center Office Buildings, Dallas, Texas, were acquired by a
joint venture (the "Joint Venture") in which the Partnership and an affiliate
held joint venture interests of 22.91% and 77.09%, respectively. The
Partnership contributed approximately $8,593,000 and the affiliate contributed
approximately $28,907,000 from their respective offering proceeds towards the
purchase of the property.
On October 10, 1996, the Joint Venture contracted to sell the property for a
sale price of $16,750,000 to an unaffiliated party, Transwestern Investment
Company, L.L.C. The purchaser has deposited $160,000 into an escrow account as
earnest money. The remainder of the sale price will be payable in cash at
closing, scheduled to occur December 16, 1996. From the proceeds of the sale,
the Joint Venture will pay $335,000 as a brokerage commission to an affiliate
of the third party providing property management services for the property. The
Joint Venture will receive the remaining proceeds of approximately $16,415,000,
of which the Partnership_s share will be approximately $3,761,000, less the
Partnership's share of closing costs.
An affiliate of the Partnership has simultaneously contracted to sell another
property to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Forms of Subscription Agreements, previously filed as Exhibits 4.1.1 and
4.1.2 to Amendment No. 2 dated September 20, 1984 to the Registrant's
Registration Statement (Registration No. 2-91810) and to Amendment No. 1 dated
January 25, 1985 to the Registrant's Registration Statement (Registration No.
2-95409) and Form of Confirmation regarding Interests in the Registrant set
forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1992 (Commission File No. 0-13348) are incorporated herein
by reference.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1996 is attached hereto.
(99) Additional Exhibits:
(i) Agreement of Sale relating to the sale of Spalding Bridge Apartments,
Atlanta, Georgia, is attached hereto.
(ii)(a) Agreement of Sale relating to the sale of the Pacific Center office
buildings, Dallas, Texas, is attached hereto.
(ii)(b) First Amendment to Agreement of Sale relating to the sale of the
Pacific Center office buildings, Dallas, Texas, is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Equity Partners-II, the General Partner
By: /s/Jayne A. Kosik
------------------------------
Jayne A. Kosik
Vice President, and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Equity Partners-II, the General
Partner
Date: November 14, 1996
-------------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 26th
day of August 1996, by and between RREEF AMERICA L.L.C., a Delaware limited
liability company ("Purchaser"), and BALCOR EQUITY PENSION INVESTORS-II A REAL
ESTATE 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 Nine Million Eight Hundred Seventy Two Thousand Five Hundred
And No/100 Dollars ($9,872,500.00) (the "Purchase Price"), that certain
property commonly known as Spalding Bridge Apartments, Dunwoody, Georgia,
legally described on Exhibit_A attached hereto (the "Property"). Included in
the Purchase Price is all of the personal property set forth on Exhibit B
attached hereto (the "Personal Property"), all of the buildings located on the
Property, all right, title and interest of Seller, if any, in and to (a) all
open or proposed highways, streets, roads, avenues, alleys, easements, strips,
gores and rights-of-way in, on, across, in front of, contiguous to, abutting or
adjoining the Property, (b) the name "Spalding Bridge Apartments", (c) all
plans and specifications, (c) all transferable licenses, permits, guaranties
and warranties relating to the zoning, land use, ownership, operation,
occupancy, construction or maintenance of the Premises and buildings thereon,
(d) all fixtures, equipment and supplies owned by Seller located on the
Property, and (e) all Leases (hereinafter defined), rights and privileges of
Seller pertaining to the Property.
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement by both parties, the sum of
Three Hundred Thousand and No/100 Dollars ($300,000.00) (the "Earnest Money")
to be held in escrow by and in accordance with the provisions of the Escrow
Agreement ("Escrow Agreement") attached hereto as Exhibit_C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit_D is a copy of a title commitment for an
owner's standard title insurance policy issued by Slotzky, Wolfe & Bailey, as
agent for Chicago Title Insurance Corporation (hereinafter referred to as
"Title Insurer") dated June 14, 1996 for the Property (the "Title Commitment").
The Title Commitment shall be conclusive evidence of good title as therein
shown as to all matters to be insured by the title policy, subject only to the
exceptions therein stated. On the Closing Date, Title Insurer shall deliver to
Purchaser a standard title policy (1970, if available) in conformance with the
previously delivered Title Commitment, subject to Permitted Exceptions and
Unpermitted Exceptions (as said terms are defined below) waived by Purchaser
(the "Title Policy"). Purchaser shall pay the costs of the Title Commitment
and Title Policy and the cost of any endorsements (other than endorsements
obtained by Seller in order to insure over Unpermitted Exceptions) to, or
extended coverage on, the Title Policy.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by
Construction Engineering Associates dated October 29, 1984, revised September
16, 1985 (the "Existing Survey"). Purchaser shall pay the costs of updating
the Existing Survey and Seller shall deliver the updated survey (the "Updated
Survey") to Purchaser within 20 days after the date hereof. The Updated Survey
shall be made in accordance with Purchaser's survey standards furnished to
Seller.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
3.4. On or before the date five (5) business days after Purchaser shall
have received from Seller the Updated Survey (the "Title Date"), Purchaser
shall advise Seller in writing if any exceptions to title shown on the Title
Commitment are disapproved by Purchaser or any matters on the Updated Survey
are unacceptable to Purchaser. If Purchaser does not so advise Seller on or
before the Title Date, all exceptions to title shown on the Title Commitment
shall be deemed Permitted Exceptions and all matters shown on the Existing
Survey shall be deemed acceptable to Purchaser. For purposes of this
Agreement, "Permitted Exceptions" shall mean: (a) general real estate taxes,
association assessments, special assessments, special district taxes and
related charges not yet due and payable; (b) matters shown on the Updated
Survey not disapproved by Purchaser in writing as provided above; (c) matters
caused by the actions of Purchaser; and (d) the title exceptions set forth in
the Title Commitment not disapproved in writing by Purchaser as provided above,
to the extent that same affect the Property. Purchaser agrees to use diligent
efforts to cause the Title Insurer to remove the general printed
exceptions contained in the standard title policy to be issued by Title
Insurer, including, without limitation, paying the cost thereof, and Seller
agrees to execute a standard Chicago Title Owner's statement in the form
customarily used in Georgia in order to assist Purchaser in obtaining extended
coverage but shall not be obligated to incur any cost or liability (other than
on account of the Owner's statement) in providing such assistance. If
Purchaser fails to use such diligent efforts, the general printed exceptions
will constitute Permitted Exceptions. All exceptions to title other than those
described above in this Paragraph as Permitted Exceptions shall be referred to
as "Unpermitted Exceptions". With respect to Unpermitted Exceptions for liens
and encumbrances of a definite or ascertainable amount securing borrowed money,
mechanics liens or for unpaid real estate taxes and assessments ("Monetary
Unpermitted Exceptions"), the indebtedness giving rise to such Monetary
Unpermitted Exceptions will be paid at the Closing and the lien thereby
released and removed. Seller's obligations under the preceding sentence shall
be limited to Monetary Unpermitted Exceptions arising out of an affirmative
action of Seller (such as execution of a mortgage, entering into a contract for
construction work on the Property or non-payment of real estate taxes). Any
Unpermitted Exceptions to title which are insured over by the Title Insurer and
reasonably approved as such by Purchaser, as provided herein, shall be deemed
Permitted Exceptions. If Seller fails to have any Unpermitted Exceptions
(other than a Monetary Unpermitted Exception) removed or insured over prior to
the date thirty (30) days after Seller's receipt of Purchaser's notice of
Unpermitted Exceptions, Purchaser may elect, by written notice to Seller given
five (5) days after the end of such 30 day period, (i) to accept title as it
then is (in which case such exceptions shall be deemed "Permitted Exceptions"),
or (ii) to terminate this Agreement, and all of the rights and remedies of the
parties hereto, except for Purchaser's obligation to indemnify Seller and
restore the Property, as more fully set forth in Paragraph 7. In the event
Seller fails to have any Unpermitted Exception (other than a Monetary
<PAGE>
Unpermitted Exception) removed or insured over prior to the Closing, the time
of the Closing shall be delayed to give effect to said aforementioned time
periods. Purchaser shall have the right to pay Monetary Unpermitted Exceptions
at Closing, if Seller fails to do so, at no liability or cost to Seller and no
adjustment to the Purchase Price.
4. PAYMENT OF CLOSING COSTS.
In addition to the costs set forth in Paragraphs 3.1 and 3.2, Seller shall
pay 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. Except as otherwise provided in Paragraph 8, Purchaser shall pay
all other charges of the Title Insurer in connection with this transaction.
Seller and Purchaser shall also pay closing costs as described in Paragraph 8.
Purchaser shall not be required to incur title charges or escrow fees in excess
of those that would be charged by Chicago Title Company on account of using
Charter Title Company.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the Updated Survey discloses any new Unpermitted Exception,
Seller shall have thirty (30) days from the date of Purchaser's notification to
Seller of such new Unpermitted Exception (which will be given by Purchaser, if
at all, not later than five (5) business days after Purchaser's receipt of the
date-down to the Title Commitment or the Updated Survey, as applicable), at
Seller's expense, to (i) bond over with a bonding company reasonably
satisfactory to Purchaser, cure and/or have any Unpermitted Exceptions which,
in the aggregate, do not exceed $25,000.00, removed from the Title Commitment
or to have the Title Insurer commit to insure against loss or damage that may
be occasioned by such Unpermitted Exceptions on the condition that the form of
endorsement shall be reasonably satisfactory to Purchaser, or (ii) have the
right, but not the obligation, to bond over (with a bonding company reasonably
satisfactory to Purchaser), cure and/or have any Unpermitted Exceptions which,
in the aggregate, equal or exceed $25,000.00, removed from the Title Commitment
or to have the Title Insurer commit to insure against loss or damage that may
be occasioned by such Unpermitted Exceptions on the condition that the form of
endorsement shall be reasonably satisfactory to Purchaser. In such event, the
time of Closing shall be delayed, if necessary, to give effect to said
aforementioned time periods. If Seller fails to cure or have said Unpermitted
Exception removed or have the Title Insurer commit to insure as specified above
within said thirty (30) day period or if Seller elects not to exercise its
rights under (ii) in the preceding sentence, Purchaser may terminate this
Agreement upon notice to Seller within five (5) days after the expiration of
said thirty (30) day period. Absent notice from Purchaser to Seller in
accordance with the preceding sentence, Purchaser shall be deemed to have
elected to take title subject to said Unpermitted Exception. Purchaser may, at
Purchaser's sole cost and expense, and without any liability to Seller, bond
over any Unpermitted Exception. If Purchaser terminates this Agreement in
accordance with the terms of this Paragraph 5.1, this Agreement shall become
null and void without further action of the parties and all Earnest Money
theretofore deposited into the escrow by Purchaser together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for Purchaser's obligation to
<PAGE>
indemnify Seller and restore the Property, as more fully set forth in Paragraph
7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by limited warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
5.3. Seller agrees that if a special assessment is enacted prior to the
Closing Date, notwithstanding Section 3.4(b), Purchaser shall have the right to
terminate this Agreement by written notice to Seller within five (5) days after
Purchaser has actual notice of such enactment.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property to Purchaser's reasonable satisfaction
(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), then this Agreement may be terminated at
the option of Purchaser, which option shall be exercised, if at all, by
Purchaser's written notice thereof to Seller within five (5) business days
after Purchaser receives written notice of such fire or other casualty and
Seller's determination of the amount of such damages, and upon the exercise of
such option by Purchaser this Agreement shall become null and void, the Earnest
Money deposited by Purchaser shall be returned to Purchaser together with
interest thereon, and neither party shall have any further liability or
obligations hereunder. In the event that Purchaser does not exercise the
option set forth in the preceding sentence, the Closing shall take place on the
Closing Date and Seller shall assign and transfer to Purchaser on the Closing
Date all of Seller's right, title and interest in and to all insurance proceeds
paid or payable to Seller on account of the fire or casualty, and Seller shall
pay to Purchaser at the Closing the amount of Seller's insurance deductible.
<PAGE>
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated or threatened by a
notice to Seller from a governmental authority 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 cause the property to be a non-conforming use or structure;
(iii) materially and adversely impair the use of the Property as it is
currently being operated, or (iv) result in the loss of a portion of a
building, parking spaces or improvements constituting an amenity (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on July 1, 1996 and ending at 5:00 p.m.
Chicago time on August 15, 1996 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser have entered and may continue
to 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 current delinquency
report for the Property, the most recent real estate tax and insurance bills,
utility account numbers, service contracts, and unaudited year end 1995 and
year-to-date (through June 30, 1996) operating statements.
<PAGE>
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense, and if as a result of Purchaser's investigations and inspections of
the Property there is damage or injury to persons or property, 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 not
allow or permit any liens or encumbrances to arise or exist against the
Property or any part thereof as a result of its inspections. Purchaser shall
defend, protect, 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 actual loss, liability or damages (including
without limitation, reasonable attorney's fees, court costs and costs of appeal
but excluding consequential damages) suffered or incurred by Seller or
Affiliates of Seller for injury to persons or property caused by Purchaser or
Purchaser's agents entry on the Property in the course of performing any test
or inspection on the Property, including, without limitation, mechanics liens,
provided that Purchaser also agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature which Purchaser's servants, agents or
employees may have suffered as a result of Purchaser's 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 not less than
$1,000,000 of 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.
Purchaser has approved all of its inspections, testing, studies and
investigations of the Property except its review of the Title Commitment and
Survey, as provided in Section 3.4, and its review of zoning matters and
resolution of service contract issues. If Purchaser is dissatisfied with the
results of the tests, studies or investigations performed or information
received pursuant to this Paragraph 7.1 with respect to zoning and service
contracts, Purchaser shall have the right to terminate this Agreement by giving
written notice of such termination to Seller at any time prior to the Title
Date. If written notice is not received by Seller pursuant to this Paragraph
7.1 prior to the Title Date, then the right of Purchaser to terminate this
Agreement pursuant to this Paragraph 7.1 shall be waived. If Purchaser
terminates this Agreement by written notice to Seller prior to the Title Date
as provided above or if Purchaser shall terminate this Agreement pursuant to
Paragraph 3.4: (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 (other than information
which is the subject of a confidentiality agreement); and (ii) the Earnest
Money less $100.00 shall be immediately paid to Purchaser, together with any
interest earned thereon, and neither Purchaser nor Seller shall have any right,
obligation or liability under this Agreement, except for Purchaser's obligation
to indemnify Seller and restore the Property, as more fully set forth in this
Paragraph 7.1. Notwithstanding anything contained herein to the contrary, the
terms of this Paragraph 7.1, shall survive the Closing and the delivery of the
Deed and termination of this Agreement.
<PAGE>
7.2. Except with respect to the representations and warranties contained
herein, Purchaser acknowledges and agrees (a) that it will be purchasing the
Property and the Personal Property based solely upon its inspections and
investigations of the Property and the Personal Property, and (b) that
Purchaser will be purchasing the Property and the Personal Property "AS IS" and
"WITH ALL FAULTS", based upon the condition of the Property and the Personal
Property as of the date of this Agreement, wear and tear and loss by fire or
other casualty or condemnation excepted. Without limiting the foregoing,
Purchaser acknowledges that, except as may otherwise be specifically set forth
elsewhere in this Agreement, neither Seller nor its consultants, brokers or
agents have made any representations or warranties of any kind upon which
Purchaser is relying as to any matters concerning the Property or the Personal
Property, including, but not limited to, the condition of the land or any
improvements comprising the Property, the existence or non-existence of
"Hazardous Materials" (as hereinafter defined), economic projections or market
studies concerning the Property, any development rights, taxes, bonds,
covenants, conditions and restrictions affecting the Property, water or water
rights, topography, drainage, soil, subsoil of the Property, the utilities
serving the Property or any zoning or building laws, rules or regulations or
"Environmental Laws" (hereinafter defined) affecting the Property. Seller
makes no representation or warranty that the Property complies with Title III
of the Americans with Disabilities Act or any fire code or building code.
Except with respect to a breach by Seller of any representation or warranty
expressly contained herein relating to Environmental Laws or Hazardous
Materials, Purchaser hereby releases Seller and the Affiliates of Seller from
any and all liability in connection with any claims which Purchaser may have
against Seller or the Affiliates of Seller, and Purchaser hereby agrees not to
assert any claims for contribution, cost recovery or otherwise, against Seller
or the Affiliates of Seller, relating directly or indirectly to the existence
of asbestos or Hazardous Materials on, or environmental conditions of, the
Property, whether known or unknown. As used herein, "Environmental Laws" means
all federal, state and local statutes, codes, regulations, rules, ordinances,
orders, standards, permits, licenses, policies and requirements (including
consent decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et_seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know_Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means:
(1)_"hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA; (4)
asbestos in any form or condition; (5) polychlorinated biphenyls; (6)
petroleum, crude oil or any fraction or derivative of petroleum or crude oil;
and (7) any other material, substance or waste to which liability or standards
of conduct may be imposed under any Environmental Laws. Notwithstanding
anything contained herein to the contrary, the terms of this Paragraph 7.2
<PAGE>
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as expressly set forth herein,
Seller makes no representation or warranty that such material is complete or
accurate or that Purchaser will achieve similar financial or other results with
respect to the operations of the Property, it being acknowledged by Purchaser
that Seller's operation of the Property and allocations of revenues or expenses
may be vastly different than Purchaser may be able to attain. Purchaser
acknowledges that it is a sophisticated and experienced purchaser of real
estate and further that Purchaser has relied upon its own investigation and
inquiry with respect to the operation of the Property, except with respect to
the representations and warranties of Seller expressly contained herein and
releases Seller and the Affiliates of Seller from any liability with respect to
such historical information, except with respect to a breach of a
representation or warranty of Seller contained herein. Notwithstanding
anything contained herein to the contrary, the terms of this Paragraph 7.3
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment prepared by EMG dated May 7, 1996 ("Existing
Report"). Seller makes no representation or warranty concerning the accuracy
or completeness of the Existing Report. Purchaser hereby releases Seller and
the Affiliates of Seller from any liability whatsoever with respect to the
Existing Report, or, including, without limitation, the matters set forth in
the Existing Report, and the accuracy and/or completeness of the Existing
Report. Furthermore, Purchaser acknowledges that it will be purchasing the
Property with all faults disclosed in the Existing Report. Notwithstanding
anything contained herein to the contrary, the terms of this Paragraph 7.4
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
September 17, 1996 (the "Closing Date"), at the office of Title Insurer, Sugar
Land, 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 Georgia, 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.
<PAGE>
9. CLOSING DOCUMENTS.
9.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
9.2.2. a bill of sale conveying the Personal Property (in the form
of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H (the "Service Contracts");
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy, including the Owners statement
referred to in Paragraph 3.4;
9.2.8. possession of the Property to Purchaser, subject to the terms
of leases;
9.2.9. evidence of the termination of the management agreement;
9.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
9.2.11. an updated rent roll;
9.2.12. a letter from the Owner's association or other authority
authorized to bind the Owner's association indicating payment of all
association dues due under recorded declarations or covenants and the amount
thereof;
9.2.13. an insured closing letter;
9.2.14. State of Georgia Real Estate Transfer Declaration;
<PAGE>
9.2.15. A certificate of Seller, dated as of the Closing Date,
reaffirming that all representations and warranties of Seller under this
Agreement are true, correct and complete as of the Closing Date in all material
respects;
9.2.16. An Affidavit of Seller's Residence in the form attached as
Exhibit L hereto; and
9.2.17. A Broker's Final and Unconditional Waiver and Release of
Lien executed by Broker in the form attached hereto as Exhibit M hereto, and
such other documents reasonably requested by the Title Insurer relating to
brokers' commissions.
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents [i.e. unpaid on the Closing
Date], but including prepaid rents); prepaid associations dues, refundable
security deposits (which will be assigned to and assumed by Purchaser and
credited to Purchaser at Closing); water and other utility charges; fuels;
prepaid operating expenses; real and personal property taxes; and other similar
items shall be adjusted ratably as of 11:59 p.m. on the date prior to the
Closing Date, and credited against the balance of the cash due at Closing.
Seller shall receive a credit for the compensation payable to its manager on
the Closing Date. Assessments payable in installments which are due subsequent
to the Closing Date shall be paid by Purchaser. If the amount of any of the
items to be prorated is not then ascertainable, the adjustments thereof shall
be on the basis of the most recent ascertainable data. All prorations will be
final except as to delinquent rent referred to in Paragraph 12.2 below, and
except as provided in the last sentence of this section. The parties agree to
make such post-closing and readjustments as may be required due to errors and
omissions in the prorations or due to obtaining actual amounts for items which
were prorated based on estimates within thirty (30) days after the Closing
Date.
<PAGE>
12.2. All rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date after the payment to Purchaser of all current
rent and any past due rent owed to Purchaser shall be deemed a "Post-Closing
Receipt" until such time as all such indebtedness is paid in full. Within ten
(10) days following each receipt by Purchaser of a Post-Closing Receipt,
Purchaser shall pay such Post-Closing Receipt to Seller. Purchaser shall use
its best efforts to collect all amounts which, upon collection, would
constitute Post-Closing Receipts hereunder but shall have no obligation to
bring legal action. If Purchaser expends funds to collect rent due prior to
the Closing Date, Purchaser shall be reimbursed its collection expenses from
any delinquent rent collected. Within 120 days after the Closing Date,
Purchaser shall deliver to Seller a reconciliation statement of Post-Closing
Receipts through the first 90 days after the Closing Date. Upon the delivery
of the Post-Closing Receipts reconciliation, Purchaser shall deliver to Seller
any Post-Closing Receipts owing to Seller and not previously delivered to
Seller in accordance with the terms hereof. Seller retains the right to
conduct an audit, at reasonable times and upon reasonable notice, of
Purchaser's books and records to verify the accuracy of the Post-Closing
Receipts reconciliation statement and upon the verification of additional funds
owing to Seller, Purchaser shall pay to Seller said additional Post-Closing
Receipts and the cost of performing Seller's audit. Paragraph 12 of this
Agreement shall survive the Closing and the delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest
or for which Purchaser is the investment advisor provided that Purchaser
remains liable for and the assignee assumes the obligations of Purchaser
hereunder with respect to indemnifications and amounts payable in the event of
a termination of this Agreement, including, without limitation, damages. Upon
such assignment, Purchaser (but not the assignee) shall be released from all
other liabilities and obligations hereunder. If any assignee of Purchaser
under this Agreement petitions or applies for relief in bankruptcy or Assignee
is adjudicated as a bankrupt or insolvent, or Assignee files any petition,
application for relief or answer-seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law, code or regulation relating to bankruptcy, insolvency, or other relief for
debtors (collectively, a "Bankruptcy Filing") on or before the Closing Date,
said Bankruptcy Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Earnest Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
<PAGE>
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Apartment Realty Advisors ("Seller's Broker") (to be paid by
Seller). Seller's commission to Seller's Broker 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 Seller's Broker. The indemnifying party shall
undertake its obligations set forth in this Paragraph 15 using attorneys
selected by the indemnifying party and reasonably acceptable to the indemnified
party. The provisions of this Paragraph 15 will survive the Closing and
delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such actual knowledge of Daniel Charleston or Mike
Becker (asset manager) ("Seller's Representatives") or notice that has actually
been received or sent by Seller's Representatives, and any representation or
warranty of the Seller is based upon those matters of which the Seller's
Representatives has actual knowledge or receipt. Seller's Representatives
shall deliver a copy of the representations and warranties contained in
Paragraph 16.2 below to the existing property manager, James Smoot, for its
review and request the property manager inform Seller's Representative of any
inaccuracies contained in such representations and warranties. Except as set
forth in the previous two sentences, 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
Representatives.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall,
subject to Paragraph 16.4, be remade at Closing, and shall survive Closing to
the extent set forth in Paragraph 16.5:
(i) Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the Property,
including, without limitation, against Seller under the Fair Housing Act (42
U.S.C. Sec. 3601 et.seq., as amended); except as discribed by Seller to
Purchaser in writing.
(ii) Seller has the full right, power and authority to execute and deliver
this Agreement (and the documents and instruments to be executed and delivered
by Seller pursuant hereto) and consummate the transactions contemplated herein,
and this Agreement (and the documents and instruments to be executed and
delivered by Seller pursuant hereto) is the legal, valid and binding obligation
of Seller, enforceable in accordance with its terms, and does not and will not
at Closing violate or conflict with any provisions of any agreement to which
Seller is a party;
<PAGE>
(iii) the rent roll attached hereto as Exhibit L (the "Rent Roll")
which Seller will update as of the Closing Date is accurate and complete (but
only as to the information contained thereon) as of the date set forth thereon;
(iv) Seller has not received written notice of any material default or
material breach on the part of the landlord under any lease shown on the Rent
Roll; except as discribed bySeller to Purchaser in writing.
(v) Seller has not received written notice from any governmental
authority that the use and operation of the Property is in violation of
applicable building codes, zoning or land use laws which has not previously
been corrected;
(vi) Seller is not a "foreign person" within the meaning of section
1445(f)(3) of the Internal Revenue Code of 1986, as amended and that Seller
will furnish to Purchaser, at or prior to Closing, an affidavit in form
satisfactory to Purchaser confirming the same and Seller is, will be, is deemed
to be or will be deemed to be, a Georgia resident pursuant to O.C.G.A.
e48-7-128;
(vii) Seller has no employees working at the Property;
(viii) There are no service contracts affecting the Property, other
than the Service Contracts listed in Exhibit H and Seller has received no
written notice of default with respect to any of the Service Contracts;
(ix) Except as may be set forth in the Existing Report, Seller has not
received any written notice from any governmental authority having jurisdiction
over the Property of any uncured violation of any Environmental Law with
respect to the Property; and
(x) The Existing Report is the only environmental report of the Property
provided to or obtained by Seller since May 9, 1993.
16.3. Purchaser hereby represents and warrants to Seller that Purchaser
has the full right, power and authority to execute and deliver this Agreement
and consummate the transactions contemplated herein (and the documents and
instruments to be executed and delivered by Purchaser pursuant hereto), and
this Agreement is the legal, valid and binding obligation of Purchaser,
enforceable with its terms, and does not and will not at Closing violate or
conflict with any provisions of any agreement to which Purchaser is a party.
16.4. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate actions to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement and the sole remedy of the other party shall be to terminate
this Agreement, except for Purchaser's obligation to indemnify Seller and
restore the Property, as more fully set forth in Paragraph 7. Notwithstanding
anything contained herein to the contrary, if the status of any of the
tenancies changes from the date of the rent roll attached hereto and the date
of the rent roll delivered at Closing, provided the change in status is not
caused by a breach of Seller's covenants contained in Paragraph 16.6 herein,
then Purchaser shall not have the right to terminate this Agreement or make any
<PAGE>
claim for a breach of a representation or warranty hereunder involving the rent
roll or tenancies thereunder. Purchaser and Seller are prohibited from making
any claims against the other party hereto after the Closing with respect to any
breaches of the other party's representations and warranties contained in this
Agreement that the claiming party has actual knowledge of prior to the Closing.
16.5. The parties agree that the representations contained herein
shall survive Closing for a period of four (4) months (i.e., the claiming party
shall have no right to make any claims against the other party for a breach of
a representation or warranty after the expiration of four (4) months
immediately following Closing).
16.6. Seller covenants to operate, lease, maintain and manage the
Property in the same manner that it has managed, maintained, leased and
operated the Property during the period of Seller's ownership, subject to
reasonable wear and tear and casualty. Without limitation of the foregoing, so
long as this Agreement shall remain in effect: Seller shall maintain Seller's
current insurance coverage presently in effect; Seller shall not enter into any
letter of intent or contract to sell the Property with any third party; Seller
shall furnish Purchaser with monthly rent rolls, delinquency reports and
operating statements as they become available; Seller agrees not to enter into
any other service contracts affecting the Property which cannot be terminated
without cause on 30 days notice, without penalty; commencing five (5) days
prior to Closing, Seller shall cooperate with Purchaser's management personnel
in arranging for a management transition; and Seller agrees to terminate any
and all management agreements affecting the Property as of the Closing Date.
16.7. The continued accuracy in all material respects of the aforesaid
representations and warranties shall be a condition precedent to Purchaser's
obligation to close. If at Closing any of said representations and warranties
shall not be correct at the time the same is made in any material respect,
Purchaser may, as its sole and exclusive remedy, terminate this Agreement, and
there shall be no further liability of either party to the other, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7.
17. LIMITATION OF LIABILITY. None of any partners of Seller, Affiliate of
Seller or any of their respective beneficiaries, shareholders, partners,
officers, directors, agents or employees, heirs, successors or assigns shall
have any personal liability of any kind or nature for or by reason of any
matter or thing whatsoever under, in connection with, arising out of or in any
way related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
Notwithstanding anything contained herein to the contrary, Purchaser
hereby agrees that the maximum aggregate liability of Seller, in connection
with, arising out of or in any way related to a breach by Seller under this
Agreement or any document or conveyance agreement in connection with the
transaction set forth herein after the Closing shall be $200,000. Purchaser
hereby waives for itself and anyone who may claim by, through or under
Purchaser any and all rights to sue or recover from Seller any amount greater
than said limit.
<PAGE>
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(847) 317-4360
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: RREEF Funds
875 North Michigan Avenue
Suite 4114
Chicago, Illinois 60611
Attention: Mr. Stephen L. Grant
(312) 266-9300
(312) 266-9346 (FAX)
and one copy to: D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attention: Joel D. Rubin, Esq.
(312) 580-2000
(312) 580-0923 (FAX)
<PAGE>
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, received or made on the next business day if sent by
overnight courier, or the same day as given if sent by facsimile transmission
and received by 5:00 p.m. Chicago time or on the 4th business day after the
same is deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution. Within one (1) business day of receipt
of a fully executed copy (which may be transmitted by telecopy or to
Purchaser's attorney) of this Agreement, Purchaser shall wire transfer the
Earnest Money 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) One (1) fully executed copy of this Agreement; and
(B) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the Georgia, except that with respect to the retainage of the Earnest
Money as liquidated damages the laws of the State of Illinois shall govern.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
RREEF AMERICA L.L.C., a Delaware limited
liability company
By: /s/Stephen L. Grant
----------------------------------
Name: Stephen L. Grant
----------------------------------
Its: Authorized Representative
----------------------------------
SELLER:
BALCOR EQUITY PENSION INVESTORS-II A_REAL ESTATE
LIMITED PARTNERSHIP, an Illinois limited
partnership
By: Balcor Equity Partners-II, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Daniel L. Charleston
-------------------------------
Name: Daniel L. Charleston
-------------------------------
Its: Authorized Agent
-------------------------------
<PAGE>
Spalding Bridge
_________________ of Apartment Realty Advisors ("Seller's Broker") executed
this Agreement in its capacity as a real estate broker and acknowledges that
the fee or commission due it from Seller as a result of the transaction
described in this Agreement is as set forth in that certain Listing Agreement,
dated __, 199_ between Seller and Seller's Broker (the "Listing Agreement").
Seller's Broker also acknowledges that payment of the aforesaid fee or
commission is conditioned upon the Closing and the receipt of the Purchase
Price by the Seller. Seller's Broker agrees to deliver a receipt to the Seller
at the Closing for the fee or commission due Seller's Broker and a release, in
the appropriate form, stating that no other fees or commissions are due to it
from Seller or Purchaser.
Apartment Realty Advisors
By:___________________________
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Affidavit of Seller's Residence
M - Broker's Final and Unconditional Waiver and Release of Liens
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 10th
day of October, 1996, by and between Transwestern Investment Company, L.L.C.,
("Purchaser"), and Pacific Center Investors, a joint venture ("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 Sixteen Million Seven Hundred Fifty Thousand Dollars
($16,750,000) ("Purchase Price"), and on the terms and conditions hereinafter
set forth, the property commonly known as Pacific Center I and Pacific Center
II, located in Dallas, Texas, consisting of the following:
1.1 All of Seller's right, title and interest in the real property
("Land") and all buildings and other improvements ("Improvements") situated on
the Land, as more particularly described on Exhibit A attached hereto and made
a part hereof (the Land and the Improvements are sometimes referred to herein
together as the "Property"), together with all easements and appurtenances
thereunto belonging and all of Seller's right, title and interest in and to all
streets, alleys and public ways adjacent thereto, if any, and together with all
of Seller's right, title and interest in and to all strips and gores located on
or adjacent to the Property or located between any parcels constituting the
Land, if any;
1.2 The personal property set forth on Exhibit B attached hereto
("Personal Property"), but shall in all events excluding the personal property
described on Exhibit B under the heading "Excluded Personal Property";
1.3 The tenant leases described in Exhibit C attached hereto and made a
part hereof together with such other tenant leases of the Property as may be
made prior to Closing (as hereinafter defined) in accordance with the terms of
this Agreement ("Leases"), along with all security deposits held by Seller as
landlord under the Leases;
1.4 If and to the extent assignable and to the extent of Seller's
interest therein, if any: (a) all guarantees, warranties and indemnifications,
if any, received from suppliers, contractors, materialmen or subcontractors
arising out of, or in connection with, the installation, construction or
maintenance of the Property including, without limitation, the right to sue any
obligor for any breach of any covenant, agreement, representation, warranty or
guarantee contained therein; (b) all licenses, permits, certificates of
occupancy and franchises issued by any federal, state, county or municipal
authority relating to the use, maintenance or operation of the Property running
to or in favor of Seller or pertaining to the Property; (c) all trade styles,
and trade names, including, without limitation, the names "Pacific Center I"
and "Pacific Center II", and all contract rights, brochures, manuals, lists of
prospective tenants, advertising material, books and records, utility contracts
and telephone numbers; (d) the plans and specifications for the Improvements
and all unexpired claims and sureties, if any, received in connection with the
construction, improvement or equipment of the Improvements; and (e) those
service and maintenance contracts set forth in Exhibit D except any such
contracts which Purchaser elects not to assume by notice to Seller on or prior
to the termination of the Inspection Period ("Service Contracts").
<PAGE>
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1 Upon the execution of this Agreement by Seller, the sum of One
Hundred Sixty Thousand Dollars ($160,000) ("Earnest Money"), by wire transfer
to the escrow agent, to be held in escrow by and in accordance with the
provisions of the Escrow Agreement ("Escrow Agreement") attached hereto as
Exhibit E; and
2.2 On the Closing Date (as hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 2:00 p.m. Chicago time. Any
provisions herein providing for the delivery of the Earnest Money to either
party hereof are intended to mean the Earnest Money plus any interest earned
thereon.
3. TITLE COMMITMENT AND SURVEY.
3.1 Attached hereto as Exhibit F is a copy of a title commitment for an
owner's standard title insurance policy issued by Charter Title Company, as
agent for Lawyers Title Insurance Corporation, (hereinafter referred to as
"Title Insurer"), dated September 17, 1996 for the Property ("Title
Commitment"). For purposes of this Agreement, "Permitted Exceptions" shall
mean: (a) general ad valorem real estate taxes for the year 1996 and
subsequent years not yet due and payable; (b) association assessments, special
district taxes and related charges not yet due and payable; (c) matters shown
on the Existing Survey (as hereinafter defined); (d) matters caused by the
action or inaction of Purchaser or its agents; (g) the title exceptions set
forth in Schedule B of the Title Commitment as Numbers 1, 2, 4, 5, 9-24 and
27-33; (h) the rights of tenants under leases; and (i) liens or encumbrances of
a definite or ascertainable amount which may be removed or insured over by the
payment of money or other security at the Closing Date, and which Seller
removes or causes to be insured over at the Closing Date in accordance with
Paragraph 5 hereof. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". 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 (excluding, however, the
Permitted Exceptions described in subclause (i) above) and Unpermitted
Exceptions waived in writing by Purchaser ("Title Policy"). The Title Policy
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 and
requirements therein stated. Seller shall pay for the costs of the Title
Commitment and Title Policy (including extended coverage over the standard,
pre-printed exceptions, if available and reasonable endorsements (including an
endorsement over the standard survey exception) requested by Purchaser on the
Title Policy).
3.2 Purchaser has received a survey of the Property prepared by
Redd-Young Engineering & Surveying dated May 6, 1983 ("Existing Survey").
Purchaser hereby acknowledges that all matters disclosed by the Existing Survey
are acceptable to Purchaser and are Permitted Exceptions for purposes of
Paragraph 3.1 above. Prior to Closing, Seller shall furnish Purchaser, at
Seller's expense, with a current survey of the Property certified to Purchaser,
Title Company and Purchaser's lender as having been prepared in accordance with
the minimum standard detail requirements for land title surveys jointly
<PAGE>
established and adopted in 1992 by the American Land Title Association and the
American Congress of Surveying and Mapping ("Survey").
3.3 The obligations of Purchaser and Seller to pay various costs set
forth in Paragraphs 3.1 and 3.2 shall survive the termination of this
Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1 In addition to the costs set forth in Paragraphs 3.1 and 3.2, Seller
shall pay the costs of the documentary or transfer stamps to be paid with
reference to the Deed (as 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.
5. CONDITION OF TITLE.
5.1 If, prior to Closing (as hereinafter defined), a date-down to the
Title Commitment discloses any new Unpermitted Exceptions which, in the
aggregate, do not exceed $25,000 (each, a "Minor Unpermitted Exception"),
Seller shall, at Seller's expense, bond over, cure and/or have such Minor
Unpermitted Exceptions removed from the Title Commitment or have the Title
Insurer commit to insure against loss or damage that may be occasioned by such
Minor Unpermitted Exceptions. Notwithstanding the foregoing, if such date down
to the Title Commitment discloses any new Unpermitted Exceptions which, in the
aggregate, equal or exceed $25,000, Seller shall have the right, but not the
obligation, to bond over, cure and/or have such exceptions 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 fails
to bond over, cure or have any Unpermitted Exception removed or have the Title
Insurer commit to insure as specified above within five (5) business days from
the date of the date down to the Title Commitment, Purchaser may terminate this
Agreement upon written notice to Seller within three (3) days after the
expiration of such five (5) business day period; provided, however, and
notwithstanding anything contained herein to the contrary, if the Unpermitted
Exception which gives rise to Purchaser's right to terminate was recorded
against the Property as a result of the affirmative action of Seller (and not
by any unrelated third party) or if Seller is able to bond over, cure or remove
a Minor Unpermitted Exception for a cost not to exceed $25,000 or the Title
Insurer is willing to insure over a Minor Unpermitted Exception for a cost not
to exceed $25,000 in accordance with the terms hereof and Seller fails to
expend such funds in either case, then Purchaser shall have the additional
rights contained in Paragraph 14 herein. Absent notice from Purchaser to Seller
in accordance with the preceding sentence, Purchaser shall be deemed to have
elected to take title subject to said Unpermitted Exception, without any
reduction in or setoff against the Purchase Price as a result thereof. If
Purchaser terminates this Agreement in accordance with the terms of this
Paragraph 5.1, this Agreement shall terminate 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 those covenants and obligations that specifically survive
termination of this Agreement.
<PAGE>
5.2 Seller agrees to convey fee simple title to the Property to Purchaser
by special warranty deed ("Deed") (in the form attached hereto as Exhibit G) in
recordable form subject only to the Permitted Exceptions and any Unpermitted
Exceptions not objected to by Purchaser in accordance with Paragraph 5.1 above.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1 Except as provided in the indemnity provisions contained in Paragraph
7.1 of this Agreement, Seller shall bear all risk of loss with respect to the
Property through the Closing. Seller agrees to maintain its existing "all risk"
replacement cost casualty insurance and rent loss insurance in place until the
Closing Date. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $150,000 (as determined by Seller in good
faith), Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property if such repair or restoration may be
completed prior to the Closing Date 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 plus the amount of Seller's insurance deductible. Seller shall
promptly notify Purchaser in writing of any such fire or other casualty and
Seller's estimate 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 $150,000 (as determined by Seller in
good faith), then this Agreement may be terminated at the option of Purchaser,
which option shall be exercised, if at all, by Purchaser's written notice
thereof to Seller within ten (10) business days after Purchaser receives
written notice of such fire or other casualty from Seller and Seller and
Purchaser agree upon the amount of such damages, and upon the exercise of such
option by Purchaser this Agreement shall terminate without further action by
the parties, 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 those covenants and
obligations which expressly survive termination of this Agreement. In the
event that Purchaser does not exercise the option to terminate in accordance
with this Paragraph 6.1, the Closing shall take place on the Closing Date
(which date shall be extended by the parties as necessary if the Closing Date
was scheduled to occur within Purchaser's 10-day election period as provided
above) 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 shall pay to
Purchaser the amount of Seller's insurance deductible. Notwithstanding anything
contained herein to the contrary, Seller's obligation to transfer all insurance
proceeds paid to Seller and the amount of Seller's insurance deductible as set
forth more fully in this Paragraph 6.1 shall survive the Closing and the
recording of the Deed.
6.2 If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall, in
Purchaser's reasonable judgment: (i) impair access to the Property; (ii) cause
any non-compliance with any applicable law, ordinance, rule or regulation of
<PAGE>
any federal, state or local authority or governmental agencies having
jurisdiction over the Property or any portion thereof; or (iii) adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1 terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease,
except for those covenants and obligations hereunder which expressly survive
termination of this Agreement; or
6.2.2 proceed with the Closing, in which event Seller shall
assign to Purchaser all of Seller's right, title and interest in and to any
award made or to be made in connection with such condemnation or eminent domain
proceedings. Notwithstanding anything contained herein to the contrary,
Seller's obligation to transfer Seller's interest in such award as set forth
more fully in this Paragraph 6.2.2 shall survive the Closing and the recording
of the Deed.
Purchaser shall then notify Seller, within five (5) business days after
Purchaser's receipt of Seller's notice, whether Purchaser elects to exercise
its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be delayed,
if necessary, until Purchaser makes such election. If Purchaser fails to make
an election within such five (5) business day period, Purchaser shall be deemed
to have elected to proceed with Closing in accordance with Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1 During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on November 10, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property to
inspect the Property and to conduct and prepare such studies, tests and surveys
as Purchaser may deem reasonably necessary and appropriate, including, without
limitation, a review of the Leases, the Lease files, and other relevant
contracts and materials located at the Property. In connection with
Purchaser's review of the Property, Seller has delivered to Purchaser copies of
the current rent roll for the Property, the most recent tax and insurance
bills, copies of the Leases, utility account numbers, a personal property
inventory, the Service Contracts, unaudited annual operating statements for the
period ending December 1995 and monthly unaudited operating statements for July
1996.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be subject to the following:
<PAGE>
(i) Such tests, inspections and investigations shall take place
during normal business hours upon reasonable notice to Seller or its designated
agents;
(ii) Except as may be required by Purchaser to complete its due
diligence during the Inspection Period, to obtain financing in order to close
this transaction or to comply with any requirements of any governmental agency
having jurisdiction over Purchaser, Purchaser's members or Purchaser's lender,
all information set forth in the documents to be reviewed hereunder by
Purchaser, its employees and agents shall be held in strict confidence until
Closing and thereafter for a period of 24 months from the date this Agreement
is terminated in the event that the Closing does not occur;
(iii) In the event the Closing does not occur, Purchaser shall
promptly return to Seller or destroy any documents obtained from Seller or
Seller's agents;
(iv) Purchaser shall not suffer or permit any lien, claim or
charge of any kind whatsoever to attach to the Property or any part thereof;
and
(v) such tests, investigations and studies shall be at
Purchaser's sole cost and expense, and in the event of any damage to the
Property caused by Purchaser, its agents, engineers, employees, contractors or
surveyors (including, without limitation, pavement, landscaping and surface
damage), Purchaser shall pay the reasonable cost incurred by Seller to repair
said damage.
Purchaser shall defend, indemnify and hold Seller and any affiliate or parent
of Seller, and all shareholders, employees, officers, directors and partners of
Seller or Seller's affiliate or parent (hereinafter collectively referred to as
"Affiliates of Seller") harmless from any and all liability, cost and expense
(including without limitation, reasonable attorneys' 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, tests,
studies and inspections of the Property. Purchaser shall undertake its
obligation to defend set forth in the preceding sentence using attorneys
selected by Purchaser and reasonably acceptable to Seller. 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.
Purchaser, in its sole discretion, shall have the right to terminate this
Agreement by giving written notice of such termination to Seller at any time
prior to the expiration of the Inspection Period. If written notice is not
given by Purchaser pursuant to this Paragraph 7.1 prior to the expiration of
the Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 7.1 shall be waived and Purchaser shall deposit the
Additional Earnest Money in accordance with the Escrow Agreement on or before
the expiration of the Inspection Period. If Purchaser terminates this
Agreement by written notice to Seller prior to the expiration of the Inspection
Period: (i) Purchaser shall promptly deliver to Seller copies of all studies,
reports and other investigations obtained by Purchaser from outside contractors
<PAGE>
or consultants 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, less the sum of
One Hundred and No/100 Dollars ($100.00), which shall be paid to Seller in
consideration for such period of inspection, and neither Purchaser nor Seller
shall have any right, obligation or liability under this Agreement, except for
those covenants and obligations which expressly survive the termination of this
Agreement. Notwithstanding anything contained herein to the contrary,
Purchaser's obligation to indemnify Seller, as more fully set forth in this
Paragraph 7.1, shall survive Closing and recording of the Deed and the
termination of this Agreement, as applicable.
7.2 Except for the express representations and warranties of Seller set
forth herein, Purchaser acknowledges and agrees that it will be purchasing the
Property and the Personal Property based solely upon its inspections and
investigations of the Property and the Personal Property, and that Purchaser
will be purchasing the Property and the Personal Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the Property and the Personal Property as
of the date of this Agreement, ordinary wear and tear and loss by fire or other
casualty or condemnation excepted and that Seller makes no warranty or
representation, express or implied, or arising by operation of law, including,
but not limited to, any warranty of condition, habitability, merchantability or
fitness for a particular purpose, in respect of the Property. Without limiting
the foregoing, Purchaser acknowledges that, except as may otherwise be
specifically set forth elsewhere in this Agreement, neither Seller nor its
consultants, brokers or agents have made any representations or warranties of
any kind upon which Purchaser is relying as to any matters concerning the
Property or the Personal Property, including, but not limited to: (i) the
condition of the Land or any improvements comprising the Property; (ii) the
existence or non-existence of any pollutant, toxic waste and/or any hazardous
materials or substances; (iii) economic projections or market studies
concerning the Property, or the income to be derived from the Property;
(iv) any development rights, taxes, bonds, covenants, conditions and
restrictions affecting the Property; (v) the nature and extent of any right of
way, lease, lien, encumbrance, license, reservation or other title matter;
(vi) water or water rights, topography, geology, drainage, soil or subsoil of
the Property; (vii) the utilities serving the Property; (viii) the suitability
of the Property for any and all activities and uses which Purchaser may elect
to conduct thereon; or (ix) the compliance of the Property with any zoning,
environmental, building or other laws, rules or regulations affecting the
Property. Nothing herein is intended to waive any rights Purchaser may have
against the Title Insurer or the surveyor providing the Survey, or to imply
that Purchaser is not relying on the information provided by the Title Insurer
or such surveyor. Seller makes no representation or warranty that the Property
complies with the Americans with Disabilities Act or any fire code or building
code. With the exception of any breach by Seller of a specific representation
provided in this Agreement, Purchaser hereby releases Seller and the Affiliates
of Seller from any and all liability in connection with any claims which
Purchaser may have against Seller or the Affiliates of Seller, and Purchaser
hereby agrees not to assert any claims for contribution, cost recovery or
otherwise, against Seller or the Affiliates of Seller, relating directly or
indirectly to the existence of asbestos or hazardous materials 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
<PAGE>
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, 42 U.S.C. Section 9601 et seq.; the Toxic Substance Control Act, 15
U.S.C. Section 2601 et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1802; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 9601. et seq.; the Clean Water Act, 33 U.S.C. Section 1251; the Safe
Drinking Water Act, 42 U.S.C. Section 30Of et seq; the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively, "Environmental Laws"); and (ii) any other
substances, constituents or wastes subject to any applicable federal, state or
local law, regulation 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. Purchaser acknowledges that having been given the opportunity to
inspect the Property, Purchaser is relying solely on its own investigation of
the Property and the information obtained in the Title Commitment and the
Survey and not on any information provided or to be provided by Seller.
Purchaser further acknowledges that the information provided and to be provided
with respect to the Property was obtained from a variety of sources, and that
Seller (x) has not made any independent investigation or verification of such
information and (y) makes no representations as to the accuracy or completeness
of such information, except as provided herein.
7.3 Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except for the express representations
and warranties of Seller set forth herein, Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller and the Affiliates of Seller from
any liability with respect to such historical information.
7.4 Seller has provided to Purchaser the ACM Survey dated September 1992
prepared by Law Engineering ("Existing Reports"). Seller makes no
representation or warranty concerning the accuracy or completeness of the
Existing Reports. Purchaser hereby releases Seller and the Affiliates of
Seller from any liability whatsoever with respect to the Existing Reports,
including, without limitation, the matters set forth in the Existing Reports,
and the accuracy and/or completeness of the Existing Reports. Furthermore,
Purchaser acknowledges that it will be purchasing the Property with all faults
disclosed in the Existing Reports.
<PAGE>
7.5 Notwithstanding anything contained herein to the contrary, the
acknowledgements, agreements, waivers and releases of Purchaser set forth in
this Paragraph 7 shall survive Closing and recording of the Deed and the
termination of this Agreement as applicable.
8. CLOSING. The closing of this transaction ("Closing") shall take place on
the date which is forty-five (45) days after the end of the Inspection Period,
or such earlier date as may be agreed upon by Seller and Purchaser ("Closing
Date"), at the office of Seller's attorneys, Hopkins & Sutter, Three First
National Plaza, Suite 4300, Chicago, Illinois 60602, or at Seller's option, at
the office of the Title Insurer in Chicago, Illinois, at which time Seller
shall deliver possession of the Property to Purchaser. This transaction shall
be closed in accordance with escrow instructions provided by the parties hereto
to the escrow closing agent for the Title Insurer. All deed and money escrow
fees shall be paid one-half by Seller and one-half by Purchaser. Seller shall
pay any gap endorsement charges and "New york style" closing fees.
9. CLOSING DOCUMENTS.
9.1 On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3 and 9.2.4, counterparts of any transfer tax
declarations and such other documents as may be reasonably required by the
Title Insurer and not inconsistent with the terms of this Agreement in order to
consummate the transaction as set forth in this Agreement.
9.2 On the Closing Date, Seller shall deliver to Purchaser the following:
9.2.1 the Deed, subject to Permitted Exceptions and those Unpermitted
Exceptions waived by Purchaser in writing or not objected to by Purchaser in
accordance with Paragraph 5.1 hereof;
9.2.2 a special warranty bill of sale conveying the Personal Property
(in the form of Exhibit H attached hereto);
9.2.3 assignment and assumption (with respect to periods from and
after the Closing) of intangible property (in the form attached hereto as
Exhibit I);
9.2.4 an assignment and assumption (with respect to periods from and
after the Closing) of Leases and security deposits (in the form attached hereto
as Exhibit J);
9.2.5 non-foreign affidavit (in the form of Exhibit K attached
hereto);
9.2.6 originals, and/or copies of, the Leases in Seller's possession
(unless Seller elects to leave such documents in the on-site management
office);
9.2.7 all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
<PAGE>
9.2.8 possession of the Property to Purchaser, subject to the Leases
and the Permitted Exceptions;
9.2.9 evidence of the termination of the management agreement, along
with a lien waiver executed by the property manger, if applicable;
9.2.10 notice to the tenants of the Property of the transfer of title
and assumption by Purchaser of the landlord's obligation under the Leases and
the obligation to refund the refundable security deposits (in the form of
Exhibit L);
9.2.11 an updated rent roll certified by Seller to be true and
correct, subject to the provisions of Paragraph 17.1 and Paragraph 19 hereof;
9.2.12 a Broker's Lien Waiver signed by Insignia Mortgage and
Investment Company ("Insignia");
9.2.13 an Owner's Title Affidavit or ALTA extended coverage statement
in form reasonably acceptable to Seller and Title Insurer;
9.2.14 such formative and authorization documents of Seller as may be
reasonably required by Title Insurer;
9.2.15 copies of all books and records as may be necessary to
calculate tenant escalations and reconciliations (unless Seller elects to leave
such documents in the on-site management office);
9.2.16 certification from Seller that the representations made in
Section 17.2 of this Agreement is true and correct as of the Closing Date; and
9.2.17 certificates of insurance from Seller's insurance carrier
indicating the Purchaser has been named as an additional insured on Seller's
comprehensive general liability policy with respect to occurrences on or prior
to the Closing Date.
10. ESTOPPEL CERTIFICATES.
10.1 Seller agrees to use reasonable efforts to obtain tenant estoppel
certificates in the form of Exhibit M ("Tenant Certificates") for tenants
listed on the rent roll attached hereto as Exhibit N. Seller shall attempt to
deliver to Purchaser prior to Closing, Tenant Certificates for tenants at the
Property (and Purchaser hereby acknowledges that a Tenant may respond on the
form of certificate, if any, required under its Lease) which equal 75% of all
leased office space at the Property ("Required Amount"). If Seller is unable
to obtain the Required Amount of Tenant Certificates, Seller shall be obligated
to deliver to Purchaser a Seller Tenant Certificate for those tenants who fail
to execute and return a Tenant Certificate, to the extent necessary to achieve
the Required Amount. As used herein, "Seller Tenant Certificate" shall mean a
Tenant Certificate signed by Seller with respect to a particular tenant which
failed to execute and deliver a Tenant Certificate.
10.2 Notwithstanding anything contained herein to the contrary, the
representations and warranties contained in any Seller Tenant Certificate
executed by Seller (i) shall be made only to the knowledge of Seller as set
<PAGE>
forth in Paragraph 17 hereof, and (ii) shall be subject to the provisions of
Paragraph 18 hereof.
10.3 Upon receipt after Closing by Purchaser of a Tenant Certificate
containing the information herein required from a tenant under a Lease for whom
Seller has executed and delivered a Seller Tenant Certificate at Closing, or
from any other tenant or tenants which would, in computing the Required Amount,
negate the need for any or all of the Seller Tenant Certificates, any Seller
Tenant Certificate executed and delivered by Seller at Closing which is no
longer needed in achieving the Required Amount shall become null and void, and
the Tenant Certificates received from the tenant or tenants shall be
substituted therefor.
11. SERVICE CONTRACTS. On the Closing Date, Seller shall assign the Service
Contracts to Purchaser, and Purchaser shall assume in writing responsibility of
the obligations arising from and after the Closing Date under the Service
Contracts. Seller shall use reasonable efforts to obtain any required consent
with respect to the assignment of the Service Contracts; provided, however,
that Seller's inability to obtain such approval shall not be a default
hereunder or a condition precedent to Purchaser's obligations to close
hereunder. Purchaser may, however, decline to accept an assignment of any
Service Contract for which Seller fails to obtain any such required consent.
12. LEASING OF PROPERTY. Prior to the expiration of the Inspection Period,
Seller shall deliver to Purchaser a copy of any new leases or modifications or
extensions executed by Seller from and including the date hereof through the
end of the Inspection Period, together with information as to any tenant
improvement obligations and leasing commissions, and such other information as
Purchaser may reasonably require. Such new leases or lease modifications and
extensions shall be included in the definition of Leases and Purchaser shall be
responsible to pay for all leasing commissions, tenant improvement costs or
other costs and expenses (including reasonable attorneys' fees) incurred by
Seller with respect to such leases except that Seller shall pay a portion of
such costs equal to the amount obtained by multiplying such costs by a
fraction, the numerator of which is the number of days from the date the tenant
under any such lease is obligated to commence rent payments through the Closing
Date, and the denominator of which is the number of days in the term of such
lease. After the expiration of the Inspection Period, Seller shall not enter
into any lease for any portion of the Property or any cancellation,
modification, extension or amendment to any Lease without first obtaining the
prior consent of Purchaser, which consent shall not be unreasonably withheld.
If Purchaser has not responded within five (5) business days of receipt of a
written request by Seller, Purchaser's consent shall be deemed given. If
Purchaser closes the transaction contemplated by this Agreement, Purchaser
shall be responsible to pay for all leasing commission, tenant improvement
costs or other costs and expenses (including reasonable attorneys' fees)
incurred by Seller with respect to any such lease approved by Purchaser.
Seller agrees to pay any outstanding brokerage commissions now or hereafter due
or payable with respect to the existing term of any Lease. Seller does not
represent or warrant that any particular Lease will be in effect at Closing or
that the tenant will have performed the tenant's obligations thereunder. The
termination of any Lease prior to Closing by reason of a tenant's default will
not affect the obligations of Purchaser under this Agreement in any manner, or
entitle Purchaser to an abatement of or credit against the Purchase Price, or
give rise to any other claim by Purchaser, and if any space in the Improvements
<PAGE>
is vacant on the Closing Date, Purchaser will accept the Premises subject to
the vacancy.
13. 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 WITH RESPECT TO DAMAGES OR ANY
OTHER REMEDY, EXCEPT FOR THOSE COVENANTS AND OBLIGATIONS OF PURCHASER WHICH
EXPRESSLY SURVIVE TERMINATION OF THIS AGREEMENT. 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.
14. 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, EXCEPT THAT PURCHASER SHALL ALSO
HAVE THE RIGHT TO RECEIVE FROM SELLER ITS ACTUAL, DOCUMENTED THIRD PARTY
EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE DILIGENCE HEREUNDER (NOT TO
EXCEED $50,000 IN ANY EVENT) AND UPON THE RETURN OF THE EARNEST MONEY AND THE
REIMBURSEMENT BY SELLER OF PURCHASER'S DUE DILIGENCE COSTS AS PROVIDED ABOVE,
THIS AGREEMENT SHALL TERMINATE WITHOUT FURTHER ACTION OF THE PARTIES AND THE
PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY,
EXCEPT FOR THOSE COVENANTS AND OBLIGATIONS WHICH EXPRESSLY SURVIVE TERMINATION
OF THIS AGREEMENT. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY,
IF SELLER'S DEFAULT RESULTS FROM (i) ITS (AND NOT AN UNRELATED THIRD PARTY'S)
AFFIRMATIVE ACTION (OR SELLER'S FAILURE TO ACT WHERE IT HAS AN OBLIGATION TO
ACT) WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY AND
WHICH GIVES RISE TO PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO
PARAGRAPH 5 HEREOF; (ii) ITS FAILURE TO EXPEND UP TO $25,000 IF (a) SELLER IS
ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED EXCEPTION FOR A COST NOT
TO EXCEED $25,000 OR (b) THE TITLE INSURER IS WILLING TO INSURE OVER A MINOR
UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $25,000 IN ACCORDANCE WITH THE
TERMS HEREOF OR (iii) ITS REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE
ENTITLED TO SUE FOR SPECIFIC PERFORMANCE. IN NO EVENT SHALL SELLER BE LIABLE
FOR ANY ACTUAL, PUNITIVE, SPECULATIVE OR CONSEQUENTIAL DAMAGES RESULTING FROM
ANY DEFAULT BY SELLER.
15. PRORATIONS.
15.1 Water and other utility charges; fuels; prepaid operating expenses;
real and personal property taxes prorated on a "net" basis (i.e. adjusted for
all tenants' liabilities, if any, for such items); operating expenses paid by
Seller which are reimbursable by the tenants for the period prior to the
Closing Date, less any amount previously paid by the tenants; unpaid operating
expenses for the period prior to the Closing Date prorated on a "net" basis, as
set forth above; and all other items of expense and income shall be adjusted
ratably as of 12:01 a.m. on the Closing Date ("Proration Date"). Seller shall
be entitled to a credit for all transferable utility deposits transferred
hereunder, if any, and all other utility deposits, if any, may be withdrawn by
and refunded to Seller and Purchaser shall make its own replacement deposits
for utilities as may be required by the respective utilities involved.
Assessments, excluding regular ad valorem real estate taxes, payable in
<PAGE>
installments which are due prior to the Closing Date shall be paid by Seller.
Assessments, excluding regular ad valorem real estate taxes, 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, except that if the amount of any real estate taxes to be
prorated is not then ascertainable, the adjustment shall be on the basis of
105% of the most recent ascertainable data and shall take into account any
assessment reductions obtained by Seller for the Property. All prorations will
be final except as to delinquent rent referred to in Paragraph 15.2 below and
as provided in Paragraphs 15.2 and 15.3.
15.2 All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a Lease for basic rent for any period prior to
the Proration Date in an amount greater than the amount of all current basic
rent owed by said tenant to Purchaser shall be deemed a "Post-Closing Receipt"
until the earlier to occur of (i) one year after the Closing Date, or (ii) such
time as all such indebtedness is paid in full. Within ten (10) days following
the end of each calendar month, Purchaser shall pay to Seller Post-Closing
Receipts collected in the previous month. Purchaser shall use its reasonable,
good faith efforts, at no additional cost or expense to Purchaser, to collect
all amounts which, upon collection, would constitute Post-Closing Receipts
hereunder. Within 30 days after the one-year anniversary of the Closing Date,
upon the written request of Seller, Purchaser shall deliver to Seller a
reconciliation statement of Post-Closing Receipts through the first year 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. Purchaser shall provide Seller with any information reasonably
necessary 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.
Purchaser's obligations to attempt to collect Post- Closing Receipts shall
expire one year from the Closing Date. Seller shall retain the right to sue
any tenant for rent owed to Seller for any period prior to the Proration Date.
This Paragraph 15.2 of this Agreement shall survive the Closing and the
delivery and recording of the Deed.
15.3 Seller covenants to operate, maintain and manage the Property in the
same manner that it has managed, maintained and operated the Property during
the period of Seller's ownership, subject to reasonable wear and tear and
casualty.
16. BROKER. The parties hereto represent and warrant that no broker commission
or finder fee is due and payable in connection with this transaction, by reason
of their respective actions, other than to 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
attorneys' 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. Seller shall indemnify, defend and hold Purchaser harmless from
any claim (including, without limitation, reasonable attorneys' fees, court
<PAGE>
costs and costs of appeal) for any claim by Insignia for any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated, other than any claim by Insignia on account of any agreement or
negotiations between Insignia and Purchaser. 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. REPRESENTATIONS AND WARRANTIES.
17.1 Any reference herein to Seller's knowledge or notice of any matter or
thing shall only mean such knowledge or notice that has actually been received
by James Mendelson or Thomas Molina ("Seller's Representatives"), and any
representation or warranty of the Seller is based upon those matters of which
the Seller's Representatives have actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or employees (other
than Seller's Representatives) 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 Representatives.
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; (ii)
Seller has the power to execute this Agreement and consummate the transactions
contemplated herein; (iii) the rent rolls attached hereto as Exhibit N and
updated as of the Closing Date are accurate in all material respects as of the
date set forth therein; (iv) the Seller has not given or suffered any
assignment, pledge or encumbrance with respect to any of the Leases or its
interests thereunder; (v) the list of Service Contracts attached hereto as
Exhibit D is accurate as of the date hereof; (vi) Seller has received no
written notice or claim from any governmental authority having jurisdiction
over the Property relating to an uncured breach or violation of the Americans
With Disabilities Act or any Environmental Laws or any other laws in connection
with the Property; (vii) Seller has no knowledge of any uncured landlord
default in connection with any Lease; (viii) to Seller's knowledge, the
materials delivered to Purchaser in accordance with Section 7 hereof are
correct and complete in all material respects; and (ix) to Seller's knowledge
there are no environmental reports in Seller's possession or control with
respect to the Property other than the Existing Reports provided to Purchaser.
17.3 Purchaser hereby represents and warrants to Seller that Purchaser has
the full right, power and authority to execute this Agreement and consummate
the transactions contemplated herein.
18. LIMITATION OF LIABILITY. None of Seller's beneficiaries, shareholders,
partners, officers, agents, 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.
<PAGE>
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or made by United States registered or certified mail
addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: James Mendelson
TO PURCHASER: Transwestern Investment Company, L.L.C.
Three First National Plaza
Suite 3750
Chicago, Illinois 60602
Attention: Randy Bessolo
with copies to: Catherine Young
Assistant General Counsel
The Northwestern Mutual Life Insurance Company
720 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be deemed
to be delivered or made on the next business day if sent by overnight courier,
or on the fourth (4th) business day after the same is deposited in the United
States Mail as registered or certified mail, 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. All time
periods for responses by either party set forth in this Agreement shall
commence upon the receipt of notice as set forth hereinabove.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution. Seller will forward one (1) copy of the
executed Agreement to Purchaser and will forward to the Escrow Agent the three
(3) copies of the Escrow Agreement signed by the parties with a direction to
execute two (2) copies of the Escrow Agreement and deliver a fully executed
copy to each of the Purchaser and the Seller.
<PAGE>
21. JURISDICTION AND VENUE
Seller and Purchaser each hereby irrevocably submits to the jurisdiction
of any State or Federal court sitting in the County of Cook and State of
Illinois over any action or proceeding arising out of or relating to this
Agreement, and Seller and Purchaser each hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard or determined in
any such State or Federal court except that Purchaser reserves the right to
seek to remove any such action brought in such State court to such Federal
court. Seller and Purchaser each hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. Seller and Purchaser each
irrevocably consents to the service of any and all process in any such action
or proceeding by the mailing of copies of such process to Seller or Purchaser,
as the case may be, at its respective address specified in Paragraph 19 hereof.
Seller and Purchaser each hereby agrees that the final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other matter provided by law.
Nothing in this paragraph shall affect the right of Seller or Purchaser, as the
case may be, to serve legal process in any other manner permitted by law or
affect the right of Seller or Purchaser, the case may be, to bring any action
or proceeding against the other in the courts of any other jurisdiction.
22. MISCELLANEOUS
(a) Time is of the essence of each provision of this Agreement.
(b) This Agreement and all provisions hereof shall extend to and be
obligatory upon and inure to the benefit of the respective heirs, legatees,
legal representatives, successors and assigns of the parties hereto. Purchaser
may assign its rights under this Agreement to an affiliate, provided that
Purchaser shall not be released from any liability incurred hereunder prior to
the date of such assignment.
(c) The section and paragraph headings of this Agreement are for
convenience only and in no way define, limit or enlarge the scope or meaning of
the language hereof. The terms "hereby," "herein," "hereof," "hereto,"
"hereunder" and any similar terms used in this Agreement refer to this
Agreement. The term "including" shall not be construed in a limiting nature,
but shall be construed to mean "including, without limitation." Words
importing persons shall include firms, associations, partnerships, trusts,
corporations and other legal entities, including public bodies, as well as
natural persons. Words importing the singular shall include the plural and
vice versa. Words of the masculine gender shall be deemed to include
correlative words of the feminine and neuter genders.
(d) This Agreement contains the entire agreement between the parties
relating to the transactions contemplated hereby, and all prior or
contemporaneous agreements, understandings, representations and statements,
oral or written, are merged herein. No representations, warranties,
undertakings or promises (whether oral or written, express or implied), can be
made or have been made by Seller or its agents, representatives or brokers to
Purchaser or any other person unless expressly stated herein. No modification
or amendment of this Agreement or any waiver of any provision hereof shall be
<PAGE>
effective unless the same is in writing signed by the party against whom
enforcement of such modification, amendment or waiver is sought.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas. If any of the provisions of this
Agreement or the application thereof to any persons or circumstances shall, to
any extent, be deemed invalid or unenforceable, the remainder of this Agreement
and the application of such provisions to persons or circumstances other than
those as to whom or which it is held invalid or unenforceable shall not be
affected thereby, and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
(f) This Agreement and any document or instrument executed pursuant
hereto may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(g) The submission by Seller of this Agreement to Purchaser for
examination does not constitute an offer by Seller to sell, or a reservation of
or option to purchase the Property. This Agreement shall not become a contract
until executed and delivered by Purchaser and Seller in the manner set forth
herein.
(h) If Purchaser consists of more than one person or entity, then
each such person or entity executing this Agreement as Purchaser shall be
jointly and severally liable for the obligations of Purchaser hereunder.
(i) Purchaser shall not record this Agreement or any memorandum
hereof, and any such recording shall be a default hereunder.
(j) Prior to the Closing Date, Purchaser and Seller shall jointly
prepare and issue all releases of information relating to the sale of the
Property, and any inquiries regarding the transaction contemplated hereby shall
be responded to only after consultation with the other party hereto.
(k) If either party institutes a legal action against the other
relating to this Agreement or any default hereunder, the unsuccessful party to
such action will reimburse the successful party for the reasonable expenses of
prosecuting or defending such action, including without limitation, the costs
of prosecuting or defending all appeals thereof, and attorneys fees and
disbursements and court costs.
(l) This Agreement shall not be construed more strictly against one
party than against the other merely by virtue of the fact that the Agreement
may have been prepared primarily by counsel for one of the parties, it being
recognized that both Purchaser and Seller have contributed substantially and
materially to the preparation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
PURCHASER:
TRANSWESTERN INVESTMENT COMPANY, L.L.C.
By: /s/ Randal Ressolo
---------------------------------
Name: Randal Ressolo
---------------------------------
Its: Managing Director
---------------------------------
SELLER:
PACIFIC CENTER INVESTORS, a joint venture
By: Labroc I Limited Partnership, an Illinois
limited partnership
By: Balcor Equity Partners-I, an Illinois
general partnership, its general
partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/ James E. Mendelson
-------------------------------
Name: James E. Mendelson
-------------------------------
Its: Authorized Representative
-------------------------------
By: Labroc II Limited Partnership, an Illinois
limited partnership
By: Balcor Equity Partners-II,
an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/ James E. Mendelson
-------------------------------
Name: James E. Mendelson
-------------------------------
Its: Authorized Representative
-------------------------------
<PAGE>
LIST OF EXHIBITS
A. Legal Description
B. Personal Property
C. Leases
D. Service and Maintenance Contracts
E. Escrow Agreement
F. Copy of Title Commitment
G. Limited Warranty Deed
H. Special Warranty Bill of Sale
I. Assignment and Assumption of Intangible Property
J. Assignment and Assumption of Leases and Security Deposits
K. FIRPTA
L. Tenant Notice Letter
M. Tenant Estoppel Certificate
N. Rent Roll
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE (this "Amendment"), is entered
into as of the 8th day of November, 1996, by and between Transwestern
Investment Company, L.L.C., ("Purchaser"), and Pacific Center Investors, a
joint venture ("Seller").
WITNESSETH:
A. Purchaser and Seller have heretofore entered into a certain Agreement
of Sale dated October 10, 1996 ("Agreement") for the purchase and sale of the
property commonly known as Pacific Center I and Pacific Center II, located in
Dallas, Texas.
B. Purchaser and Seller now desire to amend the Agreement to change the
Closing Date and extend the Inspection Period (as those terms are defined in
the Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. The Closing Date, as defined in Paragraph 8 of the Agreement, is
hereby changed to December 16, 1996.
2. The expiration of the Insepction Period (as defined in Paragraph
7.1 of the Agreement) is hereby extended to 2:00 p.m. Chicago time on November
15, 1996.
3. Except as specifically modified herein, the terms and conditions
of the Agreement shall remain unchanged and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first set forth above.
PURCHASER:
TRANSWESTERN INVESTMENT COMPANY, L. L. C.
By: /s/ Stephen R. Quazzo
-------------------------------------------------
Name: Stephen R. Quazzo
---------------------------------------------
Its: Managing Director
------------------------------------------
SELLER:
PACIFIC CENTER INVESTORS, a joint venture
By: Labroc I Limited Partnership, an Illinois
Limited Partnership
By: Balcor Equity Partners-I, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/ James E. Mendelson
----------------------------------------
Name:
--------------------------------------
Its:
--------------------------------------
By: Labroc II Limited Partnership, an Illinois
limited partnership
By: Balcor Equity Partners-II, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/ James E. Mendelson
----------------------------------
Name:
--------------------------------
Its:
--------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 29466
<SECURITIES> 0
<RECEIVABLES> 558
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30584
<PP&E> 125992
<DEPRECIATION> 41019
<TOTAL-ASSETS> 117736
<CURRENT-LIABILITIES> 1271
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 99671
<TOTAL-LIABILITY-AND-EQUITY> 117736
<SALES> 0
<TOTAL-REVENUES> 19107
<CGS> 0
<TOTAL-COSTS> 7886
<OTHER-EXPENSES> 3478
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7744
<INCOME-TAX> 0
<INCOME-CONTINUING> 7744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7744
<EPS-PRIMARY> 7.51
<EPS-DILUTED> 7.51
</TABLE>
