SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) August 8, 1996
BALCOR REALTY INVESTORS 85 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-14353
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3244978
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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a) Boulder Springs Apartments
In 1984, the Partnership acquired the Boulder Springs Apartments, Chesterfield
County, Virginia, utilizing approximately $4,943,220 in offering proceeds. The
property was acquired subject to first mortgage financing of approximately
$8,200,000. In 1995, the mortgage loan was refinanced with a new mortgage loan
in the amount of $8,140,000.
On August 8, 1996, the Partnership contracted to sell the property for a sale
price of $15,600,000 to an unaffiliated party, Avalon Properties, Inc., a
Maryland corporation. The purchaser has deposited $250,000 into an escrow
account as earnest money and will pay the remaining $15,350,000 in cash at
closing, expected to be September 24, 1996. From the proceeds of the sale, the
Partnership will repay the outstanding balance of the first mortgage loan,
which is expected to be approximately $8,047,000 at closing, and $312,000 to a
third party as a brokerage commission. The purchaser will pay all penalties
associated with the prepayment of the loan. The Partnership will also pay a
fee of $117,000 to an affiliate of the third party providing property
management services for the property for services rendered in connection with
the sale and will receive the remaining proceeds of approximately $7,124,000,
less closing costs. Of the net sale proceeds, $500,000 will be retained by the
Partnership and will not be available for use or distribution by the
Partnership until 270 days after the closing. Neither the General Partner nor
any affiliate will receive a brokerage commission in connection with the sale
of the property. The General Partner will be reimbursed by the Partnership for
actual expenses incurred in connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
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.
b) Timberlake Apartments, Phase I
In 1983, the Partnership acquired the Timberlake Apartments, Phase I, Altamonte
Springs, Florida, utilizing approximately $7,372,085 in offering proceeds. The
property was acquired subject to first mortgage financing of approximately
$13,778,000. In 1987, the mortgage loan was refinanced with a new mortgage loan
in the amount of approximately $12,700,000. In 1993, the mortgage loan was
refinanced again with a new mortgage loan in the amount of $11,700,000. The
Partnership contributed a total of approximately $1,591,000 from its funds
towards the two refinancings.
On August 8, 1996 the Partnership contracted to sell the property for a sale
price of $18,234,637 to an unaffiliated party, TGM Realty Corp. #5, a Delaware
corporation. The purchaser has deposited $150,000 into an escrow account as
earnest money and will pay the remaining $18,084,637 in cash at closing, which
is scheduled for September 30, 1996. From the proceeds of the sale, the
Partnership will repay the outstanding balance of the first mortgage loan,
which is expected to be approximately $11,377,000 at closing, and $182,346 to
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a third party as a brokerage commission. An affiliate of the third party
providing property management services for the property will receive a fee for
services rendered in connection with the sale of the property of $136,760. The
Partnership will receive the remaining proceeds of approximately $6,539,000,
less closing costs. Of the net sale proceeds, $250,000 will be retained by the
Partnership and will not be available for use or distribution by the
Partnership until 90 days after the closing. Neither the General Partner nor
any affiliate will receive a brokerage commission in connection with the sale
of the property. The General Partner will be reimbursed by the Partnership for
actual expenses incurred in connection with the sale.
An affiliate of the General Partner has simultaneously contracted to sell Phase
II of Timberlake Apartments to the purchaser. In the event that the agreement
of sale for either phase is terminated, the agreement of sale for the other
phase will be deemed terminated. Affiliates of the General Partner have
recently sold or contracted to sell 6 other properties 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.
ITEM 5. OTHER EVENTS
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a) Heather Ridge Apartments
In 1983, the Partnership acquired the Heather Ridge Apartments, Oklahoma City,
Oklahoma, utilizing approximately $7,048,000 in offering proceeds. The
property was acquired subject to first mortgage financing of approximately
$9,803,000. In 1989, the mortgage loan was repaid from Partnership funds in the
amount of $4,750,000, representing a discount of approximately $5,801,000, and
subsequently, a new first mortgage loan was obtained in the amount of
$3,822,000. In 1994, the mortgage loan was refinanced again with a new
mortgage loan in the amount of $5,200,000. The Partnership received
approximately $1,200,000 in excess refinancing proceeds.
On August 19, 1996 the Partnership contracted to sell the property for a sale
price of $9,050,000 to an unaffiliated party, Fowlershore & Flanagan, a
California general partnership. The purchaser has deposited $100,000 into an
escrow account as earnest money and will pay the remaining $8,950,000 in cash
at closing, scheduled for 15 days after the date the purchaser obtains a
financing commitment, which the purchaser has until September 20, 1996 to
obtain. From the proceeds of the sale, the Partnership will repay the
outstanding balance of the first mortgage loan, which is expected to be
approximately $5,118,000 at closing, and $203,625 to a third party as a
brokerage commission. An affiliate of the third party providing property
management services for the property will receive a fee for services rendered
in connection with the sale of the property of $90,500. The Partnership will
receive the remaining proceeds of approximately $3,638,000, less closing costs.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the property. The General Partner
will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
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An affiliate of the General Partner has simultaneously contracted to sell an
adjacent 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.
(b) Forestwood Apartments
As previously reported, on June 28, 1996, the Partnership contracted to sell
Forestwood Apartments, East Baton Rouge, Louisiana, to an unaffiliated party,
BH TFL, Inc., for a sale price of $10,558,000. On August 16, 1996, the
purchaser exercised its option to terminate the agreement of sale and a
closing of the sale will not occur.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) (a) (i) Agreement of Sale and attachment thereto relating
to the sale of Boulder Springs Apartments,
Chesterfield County, Virginia.
(ii) Letter dated August 19, 1996 relating to the sale of
Boulder Springs Apartments, Chesterfield County,
Virginia.
(b) Agreement of Sale and attachment thereto relating
to the sale of Timberlake Apartments, Phase I,
Altamonte Springs, Florida.
(99) (a) Agreement of Sale and attachment thereto relating
to the sale of Heather Ridge Apartments, Oklahoma
City, Oklahoma.
(b) Letter of Termination relating to the sale of Forestwood
Apartments, East Baton Rouge Parish, Louisiana.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
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Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR REALTY INVESTORS 85 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Partners-XVI, an Illinois
general partnership, its general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a partner
By: The Balcor Company,
a Delaware corporation, a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: August 23, 1996
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AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 8th
day of August, 1996, by and between AVALON PROPERTIES, INC., a Maryland
corporation ("Purchaser"), and BOULDER SPRINGS 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 Fifteen Million Six Hundred Thousand And No/100 Dollars
($15,600,000.00) (the "Purchase Price"), that certain property commonly known
as Boulder Springs Apartments, Richmond, Virginia legally described on
Exhibit A attached hereto (the "Property"). Included in the Purchase Price is
all of the personal property owned by Seller and used in connection with the
operation of the Property, including, without limitation, those items set forth
on Exhibit B attached hereto (the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) (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. If Purchaser assumes the loan (the "Loan") encumbering the Property
evidenced by the "Loan Documents"(as hereinafter defined) as provided in
Paragraph 25 hereof, the assumption by Purchaser of Seller's obligations under
the Loan Documents being an amount equal to the outstanding principal balance
of the "Note" (as hereinafter defined) as of the "Closing Date" (as hereinafter
defined).
2.3. On the "Closing Date", the balance of the Purchase Price (i.e.,
$15,600,000.00 less the outstanding principal balance of the Note if the Loan
as assumed by the Purchaser), 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 Lawyers Title Insurance
Corporation (hereinafter referred to as "Title Insurer") dated June 19, 1996
for the Property (the "Title Commitment"). For purposes of this Agreement,
"Permitted Exceptions" shall mean: (a) the general printed exceptions contained
in the standard title policy to be issued by Title Insurer based on the Title
Commitment which are not deleted by "extended coverage"; (b) general real
estate taxes, association assessments, special district taxes and related
charges not yet due and payable; (c) matters shown on the "Existing Survey"
(hereinafter defined); (d) matters caused by the actions of Purchaser; (e) the
Loan Documents, if Purchaser assumes the Loan; and (f) the title exceptions set
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forth in Schedule B - Section 2 of the Title Commitment as Numbers 2 through 13
inclusive, and Numbers 17 through 25 inclusive, to the extent that same effect
the Property. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". The Title Commitment shall be conclusive evidence of
good title as therein shown as to all matters to be insured by the title
policy, subject only to the exceptions therein stated. On the Closing Date,
Title Insurer shall deliver to Purchaser a standard title policy in conformance
with the previously delivered Title Commitment, subject to Permitted Exceptions
and Unpermitted Exceptions waived by Purchaser (the "Title Policy"). Seller
and Purchaser shall each pay for one-half of the costs of the Title Commitment
and Title Policy and Purchaser shall pay for the cost of any endorsements to,
or extended coverage on, the Title Policy.
3.2. Purchaser has received a survey of the Property dated May 5, 1995,
prepared by Gene Watson & Associates (the "Existing Survey"). Seller shall pay
for 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. Purchaser hereby acknowledges that all matters disclosed by the
Existing Survey are acceptable to Purchaser.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser and Seller shall each pay for one-half of the costs of the
documentary or transfer stamps to be paid with reference to the "Deed"
(hereinafter defined) and all other stamps, intangible, transfer, documentary,
recording, sales tax and surtax imposed by law with reference to any other sale
documents delivered in connection with the sale of the Property to Purchaser
and all other charges of the Title Insurer in connection with this transaction.
Each party shall pay its own attorney's fees.
4.2. Purchaser shall pay all prepayment premiums payable under the Loan
Documents if Purchaser does not assume the Loan.
5. CONDITION OF TITLE.
5.1. If, at or prior to "Closing" (as hereinafter defined), a date-down
to the Title Commitment or the Updated Survey discloses any new Unpermitted
Exception, Seller shall have thirty (30) days from the date of the date-down to
the Title Commitment or the Updated Survey, as applicable, at Seller's expense,
to (i) bond over, cure and/or have any Unpermitted Exceptions which, in the
aggregate, do not exceed $50,000.00 (a "Minor Unpermitted Exception"), removed
from the Title Commitment or to have the Title Insurer commit to insure against
loss or damage that may be occasioned by such Unpermitted Exceptions, or (ii)
have the right, but not the obligation, to bond over, cure and/or have any
Unpermitted Exceptions which, in the aggregate, exceed $50,000.00, removed from
the Title Commitment. In such event, the time of Closing shall be delayed, if
necessary, to give effect to said aforementioned time periods. If Seller fails
to cure or have said Unpermitted Exception removed or, with respect to a Minor
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Unpermitted Exception, 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 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, willful action of Seller (and not by any unrelated third
party) with the intention to prevent the sale of the Property in accordance
with the terms hereof or if Seller is able to bond over, cure or remove a Minor
Unpermitted Exception for a cost not to exceed $50,000 or the Title Insurer is
willing to insure over a Minor Unpermitted Exception for a cost not to exceed
$50,000 in accordance with the terms hereof and Seller fails to expend said
funds in either case, then Purchaser shall have the additional rights contained
in Paragraph 11 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. If Purchaser terminates this
Agreement in accordance with the terms of this Paragraph 5.1, this Agreement
shall become null and void without further action of the parties and all
Earnest Money theretofore deposited into the escrow by Purchaser together with
any interest accrued thereon, shall be returned to Purchaser, and neither party
shall have any further liability to the other, except for Purchaser's
obligation to indemnify Seller and restore the Property, as more fully set
forth in Paragraph 7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 Purchaser shall not have the right
to terminate its obligations under this Agreement by reason thereof, but Seller
shall have the right to elect to either repair and restore the Property (in
which case the Closing Date shall be extended until completion of such
restoration) or to assign and transfer to Purchaser on the Closing Date all of
Seller's right, title and interest in and to all insurance proceeds paid or
payable to Seller on account of such fire or casualty, and Seller shall pay to
Purchaser at the Closing the amount of Seller's insurance deductible or, to the
extent any such casualty is not covered by insurance, Seller shall pay to
Purchaser at Closing the cost to repair the Property. Seller shall promptly
notify Purchaser in writing of any such fire or other casualty and Seller's
good faith 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 $100,000.00, then this Agreement
may be terminated at the option of Purchaser, which option shall be exercised,
<PAGE>
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 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.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on September 23, 1996 (said period being herein referred to
as the "Inspection Period"), Purchaser and the agents, engineers, employees,
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contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of all leases (which leases are located at the
Property), and to conduct and prepare such studies, tests and surveys as
Purchaser may deem reasonably necessary and appropriate. In connection with
Purchaser's review of the Property, Seller agrees to deliver to Purchaser
copies of the current rent roll for the Property, the most recent tax and
insurance bills, insurance policies, utility account numbers, service
contracts, and unaudited year end 1995 and year-to-date operating statements
and such other documents reasonably requested by Purchaser which are reasonably
available to Seller. Furthermore, if the following are reasonably available to
Seller, Seller shall deliver to Purchaser as-built plans and specifications,
occupancy permits, operating licenses, engineering reports, soil tests and
reports and capital expenditure records.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property, including the entry of Purchaser, its employees
or agents and its lender onto the Property and including, without limitation,
liability for mechanics' lien claims. 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, upon request of Seller, furnish to Seller a certificate of insurance
evidencing comprehensive general public liability insurance insuring the
person, firm or entity performing such tests, studies and investigations and
listing Seller and Purchaser as additional insureds thereunder.
If Purchaser is dissatisfied in its sole and absolute discretion with the
results of the tests, studies or investigations performed or information
received pursuant to this Paragraph 7.1, Purchaser shall have the right to
terminate this Agreement. If Purchaser fails to give Seller written notice
prior to the expiration of the Inspection Period that it elects to proceed with
this transaction, this Agreement will terminate. In the event of such
termination: (i) Purchaser, at Seller's request, 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,
provided Seller reimburses Purchaser one-half the cost of any such studies,
reports and other investigations requested by Seller; and
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(ii) the Earnest Money deposited by Purchaser shall be immediately paid to
Purchaser, together with any interest earned thereon, and neither Purchaser nor
Seller shall have any right, obligation or liability under this Agreement,
except for Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in this Paragraph 7.1. Notwithstanding anything
contained herein to the contrary, Purchaser's obligation to indemnify Seller
and restore the Property, as more fully set forth in this Paragraph 7.1, shall
survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.2. Except with respect to the representations and warranties contained
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, 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 or a third party claim or governmental claim made against
Purchaser arising out of Hazardous Materials which were present at the Property
prior to Closing, 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, except with respect to a
breach by Seller of any representation or warranty expressly contained herein
or such third party or governmental claims, 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
<PAGE>
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means:
(1) "hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA; (4)
asbestos in any form or condition; (5) polychlorinated biphenyls; and (6) any
other material, substance or waste to which liability or standards of conduct
may be imposed under any Environmental Laws. Notwithstanding anything
contained herein to the contrary, this Paragraph 7.2 shall survive the Closing
and the delivery of the Deed and termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as 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.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Assessment, dated April 2, 1996, prepared by EMG (Project No.
04501059.96B) ("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.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
October 8, 1996 (the "Closing Date"), at the office of Title Insurer, Richmond,
Virginia at which time Seller shall deliver possession of the Property to
Purchaser. Notwithstanding the foregoing, if on or before the last day of the
Inspection Period, Purchaser notifies Seller in writing that Purchaser intends
to assume the Loan as provided in Paragraph 25 hereof, the Closing Date shall
be extended to the earlier to occur of: (a) November 7, 1996, and (b) the date
which is the later to occur of (i) five (5) business days after the date on
which Purchaser and Seller have received all documents evidencing the consent
of "Lender" (as hereinafter defined) to the assumption of the Loan by
<PAGE>
Purchaser, and (ii) the original Closing Date. 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 the State of Virginia, or at the option of either party, the
Closing shall be a "New York style" closing at which the Purchaser shall wire
the Purchase Price to Title Insurer on the Closing Date and prior to the
release of the Purchase Price to Seller, Purchaser shall receive the Title
Policy or marked up commitment dated the date of the Closing Date. In the
event of a New York style closing, Seller shall deliver to Title Insurer any
customary affidavit in connection with a New York style closing. All closing
and escrow fees shall be divided equally between the parties hereto.
9. CLOSING DOCUMENTS.
9.1. On 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 quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H which Purchaser has elected to take an assignment
of pursuant to Paragraph 26;
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 and
all records and correspondence related thereto 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;
9.2.8. possession of the Property to Purchaser;
9.2.9. evidence of the termination of the management agreement;
<PAGE>
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 or
such other form requested by Purchaser and approved by Seller);
9.2.11. an updated rent roll and delinquency report;
9.2.12. originals or copies of all warranties, guarantees and
operating manuals in Seller's possession (which shall be delivered at the
Property);
9.2.13. all keys in Seller's possession (which shall be delivered at
the Property); and
9.2.14. evidence of the payment of broker's commissions to PW Real
Estate Group.
10. 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 AND THE TERMINATION OF THIS AGREEMENT BY SELLER,
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. IN THE EVENT OF A DEFAULT OF THE SELLER UNDER THE
PROVISIONS OF THIS AGREEMENT, 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, (A) PURCHASER SHALL HAVE THE RIGHT TO WAIVE THE DEFAULT AND
PROCEED TO CLOSING, AND (B) IF SELLER'S DEFAULT IS (1) ITS (AND NOT AN
UNRELATED THIRD PARTY'S) AFFIRMATIVE, WILLFUL ACTION WHICH RESULTS IN THE
RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY WITH THE INTENTION TO PREVENT
THE SALE OF THE PROPERTY IN ACCORDANCE WITH THE TERMS HEREOF AND WHICH GIVES
RISE TO PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO PARAGRAPH 5.1
HEREOF; (2) ITS FAILURE TO EXPEND UP TO $50,000 IF (I) SELLER IS ABLE TO BOND
OVER, CURE OR REMOVE A MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED
$50,000 OR (II) THE TITLE INSURER IS WILLING TO INSURE OVER A MINOR UNPERMITTED
EXCEPTION FOR A COST NOT TO EXCEED $50,000 IN ACCORDANCE WITH THE TERMS HEREOF
OR (3) ITS WILLFUL REFUSAL TO CLOSE THE TRANSACTION, THEN PURCHASER WILL BE
ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
<PAGE>
12. PRORATIONS.
12.1. All normal and customarily proratable items, including, without
limitation, real estate and personal property taxes and assessments, utility
bills (except as hereinafter provided), collected rents and other income, and
payments under service contracts assigned to Purchaser, shall be prorated in
escrow as of the Closing Date, Seller being charged and credited for all of the
same relating to the period up to the Closing Date and Purchaser being charged
and credited for all of the same relating to the period on and after the
Closing Date. No proration will be made in relation to insurance premiums and
the insurance policies will not be assigned to Purchaser. 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. In addition, if Purchaser assumes the Loan, Purchaser
shall give Seller a credit at Closing for all escrows, reserves and holdbacks
held by Lender under the Loan Documents.
12.2. No proration shall be made in relation to delinquent rents
existing, if any, as of the Closing Date. In adjusting for uncollected rents,
no adjustment shall be made in Seller's favor for rents which have accrued and
are unpaid as of Closing, but Purchaser shall pay Seller such accrued and
unpaid rents, as and when collected by Purchaser, it being agreed that
Purchaser shall not be deemed to have collected any such arrearages
attributable to the period prior to Closing until such time as the tenant is
current in the payment of all rents accruing in the month of and after the
Closing. Purchaser agrees to bill tenants of the Property for all past due
rents and to take any additional reasonable actions requested by Seller to
collect rents that are accrued but unpaid as of the Closing, provided that
Purchaser shall not be obligated to incur any out-of-pocket third party expense
in connection with such actions and Purchaser shall not be obligated to take
any action to terminate a tenancy. Seller reserves the right to bring suit
against tenants of the Property to collect for accrued but unpaid rents owed
Seller as of the Closing Date, but Seller may not, subsequent to Closing, bring
suit for possession of the premises occupied by such tenants.
12.3. Final readings and final billings for utilities will be made if
possible as of the Closing Date, in which event no proration shall be made at
the Closing with respect to utility bills. Otherwise a proration shall be made
based upon the parties' reasonable good faith estimate and a readjustment made
within ninety (90) days after Closing. Seller shall be entitled to receive a
return of all deposits presently in effect with the utility providers, and
Purchaser shall be obligated to make its own arrangements for deposits with the
utility providers.
12.4. Purchaser shall receive a credit for all refundable security
deposits, with any interest thereon required by the leases or by applicable law
(if not transferred separately). If interest is due on a security deposit only
if the tenant is in possession for a stated period of time which has not
elapsed as of Closing, the credit shall be given as if the tenant will be in
possession for the required period and there shall be no post-closing
adjustment.
<PAGE>
12.5. With respect to each apartment which has been vacant for at
least ten (10) business days prior to Closing and which is not in "rent ready"
condition at Closing, Purchaser shall receive a credit of $250.
12.6. The provisions of this Paragraph 12 shall survive the Closing
for a period of ninety (90) days at which time there will be a one time
readjustment, if necessary.
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,
provided that Purchaser remains liable for and the assignee assumes the
obligations of Purchaser hereunder. If any assignee of Purchaser under this
Agreement petitions or applies for relief in bankruptcy or such assignee is
adjudicated as a bankrupt or insolvent, or such 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, 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.
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 PW Real Estate Group (to be paid by Seller). Seller's commission
to PW Real Estate Group 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 PW Real Estate Group. 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.
<PAGE>
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Alan G. Lieberman and Reid Reynolds, or Shawn Bottoms (the on-site
property manager) and Dawn Josemans (the district manager of the property
manager) (collectively referred to as the "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. Except as set forth above,
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 (other than the representations and warranties
contained in Paragraphs 16.2.2, 16.2.3 and 16.2.8) are made to Seller's
knowledge and which shall, subject to Paragraph 16.3, be remade at Closing:
16.2.1. Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property other than slip and fall matters covered by insurance;
16.2.2. Seller has the power to execute this Agreement and
consummate the transactions contemplated herein and all necessary consents
(other than the Lender's consent to Purchaser's assumption of the Loan
Documents) have been obtained;
16.2.3. the rent roll and delinquency report attached hereto as
Exhibit L and the rent roll and delinquency report updated as of the Closing
Date are accurate as of the date set forth thereon and sets forth: (a) the
total number of apartments at the Property, (b) the name of each existing
tenant residing in each number designation, (c) apartment number designation,
(d) all arrearages owing from said tenant, (e) the expiration date or status of
the term of the lease (including all rights or options to renew), (f) the
current rent and other payments actually being collected and which the tenant
is obligated to make under the lease, and (g) the current outstanding balance
of all refundable security deposits held thereunder, including accrued
interest, and prepaid rents, if any.
16.2.4. Seller has delivered or made available to Purchaser true and
complete copies of the leases affecting the Property, and all extensions,
renewals and amendments thereto. No brokerage commission or compensation is
payable in respect of the leases. There are no parties in possession of the
Property other than those persons shown on the rent roll or pursuant to leases
executed between the date of the rent roll and the Closing Date or persons
claiming through them.
16.2.5. No tenant is entitled to rental concessions or abatements
for any period subsequent to the Closing Date.
<PAGE>
16.2.6. All work required to be performed by Seller in the ordinary
course of business under the leases has been completed, or will be completed
prior to the Closing Date, in a workmanlike manner and in accordance with the
leases and all applicable law and regulations.
16.2.7. Seller has not received any notice of proceedings relating
to the revocation or modification of any license relating to the operation of
the Property which would have a material adverse effect on the Property.
16.2.8. Seller has delivered to Purchaser copies of all reports in
its possession with respect to the Property relating to Hazardous Materials.
16.2.9. Except as may be set forth in the Existing Report, Seller
has not received any notice from any governmental authority having jurisdiction
over the Property of any uncured violation of any Environmental Law with
respect to the Property.
16.2.10. The unaudited historical financial information regarding the
Property delivered to Purchaser is accurate and complete in all material
respects.
16.2.11. No employees of Seller are engaged in the operation or
maintenance of the Property.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute this Agreement
and, subject to final approval by Purchaser's Board of Directors prior to the
expiration of the Inspection Period, consummate the transactions contemplated
herein.
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
thereof. 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. 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 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.
<PAGE>
16.5. The parties agree that the representations contained herein
shall survive Closing for a period of two hundred seventy (270) days (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 two
hundred seventy (270) days immediately following Closing).
16.6. Seller covenants to lease, operate and manage the Property in
the same manner that it has leased, managed, maintained and operated the
Property during the period of Seller's ownership, subject to reasonable wear
and tear and casualty. Seller shall not enter into any lease for a term
exceeding thirteen (13) months.
17. LIMITATION OF LIABILITY.
17.1. Except to the extent of distributions received which would
result in a breach of the covenant of Seller set forth in Paragraph 17.3, none
of Seller's beneficiaries, shareholders, partners, officers, agents or
employees, heirs, successors or assigns shall have any personal liability of
any kind or nature for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
17.2. 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 $500,000. 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.
17.3. Seller further agrees not to distribute $500,000 of the proceeds
of the Purchase Price to its partners for the longer of (i) two hundred seventy
(270) days after the Closing and (ii) final resolution of any claims by
Purchaser and asserted in writing against Seller prior to the expiration of the
two hundred seventy (270) days after the Closing in accordance with the terms
of this Agreement ("Claims"); provided, however, that if any Claims are
disputed by Seller, Seller shall have the right, by written notice to
Purchaser, to require Purchaser to file suit in a court of competent
jurisdiction within two hundred seventy (270) days after such notice to
Purchaser; otherwise said notice with respect to the Claim in question shall no
longer prevent Seller from distributing the proceeds.
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:
<PAGE>
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: Avalon Properties
5904 Richmond Highway
Suite 300
Alexandria, Virginia 22303
Attention: Lili Dunn
(703) 329-3593
(703) 329-9130 (FAX)
and one copy to: Goulston & Storrs
400 Atlantic Avenue
Boston, Massachusetts 02110
Attention: Jordan Krasnow, Esq.
(617) 574-4081
(617) 574-4112 (FAX)
and a second copy to: Avalon Properties
15 River Road, Suite 210
Wilton, CT 06897-4064
(203) 761-6543
(203) 761-6555 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
<PAGE>
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Virginia, except that with respect to the retainage of the
Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
25. ASSUMPTION OF LOAN. The Property is currently encumbered by that certain
Multifamily Deed of Trust, Assignment of Rents and Security Agreement (the
"Mortgage") by Seller for the benefit of Berkshire Mortgage Finance Limited
Partnership, a Massachusetts limited partnership and assigned to Federal
National Mortgage Corporation (the "Lender"), dated May 31, 1995, which secures
that certain Multifamily Note (the "Note") made by Seller and payable to Lender
in the original principal amount of Eight Million One Hundred Forty Thousand
And No/100 ($8,140,000.00) (the Mortgage and the Note, together with all other
documents or instruments entered into in connection with the Mortgage and the
Note, are hereinafter referred to as the "Loan Documents"). Seller has
delivered to Purchaser copies of those Loan Documents set forth on Exhibit M.
In addition, within ten (10) business days of the date hereof, Seller shall
provide Purchaser with a list of all escrows, reserves and holdbacks held by
Lender under the Loan Documents.
Purchaser has advised Seller that Purchaser is considering assuming the
Loan and all of the Loan Documents. Although Seller agrees to cooperate in
good faith with Purchaser in connection with Purchaser's potential assumption
of the Loan and the Loan Documents, Purchaser acknowledges and agrees that
Purchaser's assumption of the Loan and the Loan Documents is not a condition
<PAGE>
precedent to Purchaser's obligations hereunder. Any such assumption of the
Loan by Purchaser shall contain a complete release of Seller for all liability
under the Loan and the Loan Documents. Purchaser further acknowledges and
agrees that Seller will be requesting from the Lender the amount necessary to
prepay the Loan on the Closing Date. Seller agrees to make such request at
least sixty (60) days prior to the Closing Date. Purchaser will advise Seller,
in writing, whether or not Purchaser intends to assume the Loan prior to the
last day of the Inspection Period. Purchaser shall be deemed to have elected
not to assume the Loan if Purchaser fails to so advise Seller on the last day
of the Inspection Period.
If Purchaser elects to assume the Loan and the Loan Documents, Purchaser
shall pay all application fees, transfer fees (up to a maximum amount of one
percent (1%) of the outstanding principal balance of the Note) and the costs
and expenses of Lender incurred in connection with such assumption as and to
the extent provided in the Loan Documents.
26. SERVICE CONTRACTS. Attached hereto as Exhibit H is a list of service
contracts affecting the Property. Seller has delivered to Purchaser a copy of
each such service contract. Within fifteen (15) days following the date
hereof, Purchaser shall notify Seller as to which service contracts Seller
shall assign to Purchaser. If Purchaser fails to so notify Seller within said
fifteen (15) day period, Purchaser shall be deemed to have elected to have
Seller assign all said service contracts to Purchaser. Seller shall assign all
such service contracts to Purchaser at Closing, and Purchaser shall assume
responsibility and obligations under said service contracts. Notwithstanding
the foregoing, Purchaser shall assume the following service contracts: TCI
Cable. Seller agrees not to enter into any other service contracts affecting
the Property. Seller agrees to terminate any and all management agreements
affecting the Property as of the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
AVALON PROPERTIES, INC., a Maryland corporation
By: /s/ Lili F. Dunn
---------------------------------------
Name: Lili F. Dunn
---------------------------------------
Its: Vice President
---------------------------------------
SELLER:
BOULDER SPRINGS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Boulder Springs, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
---------------------------------------
Name: James E. Mendelson
---------------------------------------
Its: Authorized Representative
---------------------------------------
<PAGE>
of PW Real Estate Group ("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 stating
that no other fees or commissions are due to it from Seller or Purchaser.
PW Real Estate Group
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 - Rent Roll and Delinquency Report
M - Loan Documents
<PAGE>
GOULSTON & STORRS
A PROFESSIONAL CORPORATION
COUNSELLORS AT LAW
400 ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02110-3333
(617) 482-1776
TELECOPY/FAX (617) 574-4112
August 19, 1996
Ira Swidler
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, IL 60661-3693
Re: Boulder Springs
Dear Ira:
In connection with Avalon's diligence on Boulder Springs, I want to advise
you of the following:
1. Avalon intends to pay off, and not assume, the existing debt on the
property. Please note that there may be a notice period to the lender in order
to prepay the loan.
2. Avalon intends to assume the following contracts only: (a) Showcase, (2)
Haas and (3) Intelligent Answering.
3. We have yet to see a full copy of the cable television contract. We have
been furnished with a preliminary memorandum which contemplated a further
contract. Please ask you clients to search their records or seek a copy from
the cable company.
4. As a part of its diligence, Avalon has discovered that there is a Terminex
contract that was not listed on the service contract schedule. We have not
seen the contract itself, however, and would like a copy.
5. Finally, without waiting any and all rights with respect to or to terminate
this agreement during the Inspection Period, we are aiming for a closing on
September 24, 1996.
Sincerely,
/s/ Jordan
Jordan P. Krasnow
JPK/ba
Enclosure
cc: Ms. Ilona Adams
Mr. Alan Lieberman
Daniel J. Perlman, Esq.
Ms. Lilli Dunn
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 5th day of August, 1996, by and
between TGM Realty Corp. #5, a Delaware corporation ("Purchaser"), and City
National Bank of Florida, a national banking association organized under the
statutes of the United States, not personally but solely as successor Trustee
under Trust Agreement dated September 15, 1983, known as Trust No. 101, as
amended and restated pursuant to Amended and Restated Trust Agreement dated
September 7, 1993 and known as trust number 2401-0075-00 ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price (the "Purchase Price") of Eighteen Million Two Hundred
Thirty-Four Thousand Six Hundred Thirty-Seven and No/100 Dollars
($18,234,637.00), all of the following property (collectively, the "Property"):
A. That certain parcel of real property commonly known as
Timberlake I Apartments, Altamonte Springs, Florida, more particularly
described on Exhibit A attached hereto (the "Land");
B. All equipment, furnishings and other tangible personal property
owned by Seller placed or installed on or about the Land or Improvements now or
prior to "Closing" (as such term is defined in Section 8 hereof) and used as
part of or in connection with the Land and Improvements, including, the
personal property set forth on Exhibit B but excluding any computer hardware
and software (other than computer discs containing data files) (collectively,
the "Personal Property"), which Personal Property shall be transferred to
Purchaser at Closing by a Bill of Sale in the form of Exhibit F attached
hereto;
C. All rights and appurtenances pertaining to the Land, including,
without limitation, any and all rights of Seller in and to all air and
development rights, roads, alleys, easements, streets and ways adjacent to the
Land, rights of ingress and egress thereto, any strips and gores within or
bounding the Land and profits or rights or appurtenances pertaining to the
Land;
D. The buildings and all other improvements, structures and
fixtures placed, constructed or installed on the Land (collectively, the
"Improvements");
E. All leases, licenses and other occupancy agreements
(collectively, the "Leases") covering space situate at or within the Land and
Improvements and any claim or right to claim against a tenant or occupant
(collectively, the "Tenants") under any existing Lease and
all security deposits paid or deposited by Tenants in respect of the Leases;
F. All of Seller's rights in and contractual rights and intangibles
with respect to the operation, maintenance and repair of the Land and
Improvements, including service and maintenance agreements, construction,
material and labor contracts, utility agreements and other contractual
<PAGE>
arrangements, all to the extent designated by the provisions of this Agreement
(collectively, the "Contracts"); assignable governmental permits, licenses,
certificates and approvals in connection with the ownership of the Property
(collectively, the "Licenses") and warranties of any contractor, manufacturer
or materialman;
G. Seller's right, if any, to the use of the trade names
"Timberlake Apartments" and "Timberlake I Apartments" (together, the "Trade
Name") in connection with the Property;
H. The right, if assignable, to the use of all telephone numbers
used by Seller at the Property; and
I. All rights to any award made or to be made or settlement in lieu
thereof for damage to the Land or Improvements by reason of condemnation,
eminent domain, exercise of police power or change of grade of any street in
accordance with the terms herein.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
A. Within one (1) "Business Day" (as hereinafter defined) following
the Purchaser's execution of this Agreement, the sum of $150,000 (said sum,
together with all interest accrued thereon, is herein called the "Earnest
Money") payable to the "Escrow Agent" (as defined in the Escrow Agreement) to
be held in escrow by and in accordance with the provisions of the Escrow
Agreement ("Escrow Agreement") attached hereto as Exhibit C;
B. 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 to the Escrow Agent's account prior to
11:00 A.M. Eastern Time.
3. TITLE COMMITMENT AND SURVEY.
A. Seller has delivered to Purchaser a title commitment ("Title
Commitment") for an ALTA Owner's Policy (10/17/92) with extended coverage
("Title Policy") issued by Lawyer's Title Insurance Corporation ("Title
Insurer"). In addition, Seller has delivered to Purchaser copies of all items
and documents referred to in the Title Commitment (collectively, the "Backup
Documents"). The Title Policy issued to Purchaser at Closing will be in the
amount of the Purchase Price subject only to the "Permitted Exceptions" (as
hereinafter defined). On the Closing Date, Seller shall cause the Title
Insurer to issue to Purchaser the Title Policy or a "marked up" commitment in
conformity with the requirements in this Agreement for the Title Policy. The
costs of the Title Policy will be paid pursuant to Paragraph 5 of this
Agreement.
B. Seller has ordered a survey of the Property (the "Survey") of
the Property. Seller will deliver the Survey to Purchaser promptly following
its receipt by Seller. Prior to the Closing, Seller will have the Survey
certified to Purchaser or its designee and the Title Insurer, which certificate
shall be in a form agreed to by Purchaser and the Surveyor prior to the
expiration of the Inspection Period. All costs relating to the Survey will be
paid pursuant to Paragraph 5 of this Agreement.
<PAGE>
C. Purchaser shall have until the "Inspection Period Expiration
Date" (as hereinafter defined) to examine the condition of title and the Survey
and to approve or disapprove the same, including, without limitation,
determining whether Purchaser is satisfied with: (a) the title endorsements
which the Title Insurer will make available to Purchaser; and (b) the
certificate from the surveyor (the "Surveyor") on the Survey. If Purchaser
shall disapprove the condition of title or the Survey, such disapproval shall
be set forth in one or more notices (each, a "Disapproval Notice") given to
Seller not later than the Inspection Period Expiration Date stating that the
condition of title to the Property or of the Survey or any of the terms,
provisions or contents of the items and documents described in Paragraphs 3A
and 3B hereto are disapproved by Purchaser. If Purchaser fails to deliver a
Disapproval Notice, Purchaser shall be presumed to have accepted the condition
of title and the Survey in the condition set forth in the most recent Title
Commitment and Survey that shall have been delivered to Alan Linder on or
before the date which is three (3) Business Days before the Inspection Period
Expiration Date. Notwithstanding the foregoing, Purchaser may deliver one or
more additional Disapproval Notices after the Inspection Period Expiration
Date, if at any time after the date which is three (3) Business Days prior to
the Inspection Period Expiration Date, Alan Linder receives (i) an amendment or
revision to the Title Commitment or the Survey containing any exception or
Survey item not set forth in a previous Title Commitment or Survey, or (ii) a
Backup Document not previously delivered to Alan Linder, provided that any such
additional Disapproval Notice shall be given, if at all, within three (3)
Business Days after Alan Linder receives such amendment, revision or additional
Backup Document, as the case may be. If necessary, the Closing shall be
adjourned to provide Purchaser such three (3) Business Day period. Seller
shall have until the date which is five (5) Business Days after the date of the
Disapproval Notice (the "Title Cure Expiration Date") in which to cure,
eliminate or agree to cure or eliminate all items which Purchaser disapproves
in the Disapproval Notice, and to furnish evidence satisfactory to Purchaser
and the Title Insurer or the Surveyor, respectively, that all such items have
been cured or eliminated or that arrangements have been made with the Title
Insurer or the Surveyor, respectively, and any parties in interest to cure or
eliminate the same at or prior to the later of: (a) Closing, or (b) five (5)
Business Days following the Title Cure Expiration Date, in which case, if
necessary, the Closing Date shall be extended to the first date on which the
lender financing the Property will accept a prepayment of the loan secured by
the Property, but in no event shall the Closing Date be extended by more than
thirty (30) days therefor. If such evidence is not received by Purchaser and
the Title Insurer or the Surveyor, respectively, on or before the Title Cure
Expiration Date (all exceptions to title or Survey items set forth in any and
all Disapproval Notices are herein called "Unpermitted Exceptions", and all
exceptions to title and all Survey items that are not Unpermitted Exceptions
are herein called "Permitted Exceptions"), then Purchaser shall have the right
to elect to terminate this Agreement, by written notice delivered on or before
the Closing (the "Termination Notice") and, upon such election, all Earnest
Money shall be immediately refunded to Purchaser, and thereupon the parties
hereto shall have no further obligations one to the other under this Agreement.
If Purchaser fails to deliver the Termination Notice as described above, the
Purchaser shall be deemed to have accepted title and Survey subject to the
Unpermitted Exceptions.
<PAGE>
Notwithstanding anything contained herein to the contrary, if there shall be
any Unpermitted Exceptions which (i) are, or were caused by, resulted from or
arose out of (a) a default by Seller of any of its obligations under this
Agreement, including but not limited to Seller's failure to pay real estate
taxes, or (b) any debt of Seller secured by the Property including, but not
limited to the grant by Seller to any person or entity of a mortgage, deed of
trust or other security interest affecting the Property; (c) any judgments
which are a lien against the Property; (d) any materialman's or mechanic's lien
(or similar lien) recorded against the Property, then, for a period of sixty
(60) days, Seller shall take all such actions as may be necessary (including,
without limitation, the commencement of and the diligent prosecution of legal
proceedings and the payment of money) to remove such Unpermitted Exceptions, or
cause the Title Insurer to issue a title indemnity to Purchaser in form and
substance reasonably satisfactory to Purchaser, insuring against loss or
damage; or (ii) are not of the type described in clause (i) of this sentence,
but are removable by the payment of a definite or ascertainable sum not to
exceed, in the aggregate, $25,000.00 (hereinafter referred to as the "Maximum
Amount"), then Seller shall cause such Unpermitted Exceptions to be removed
from the Title Commitment and the Title Policy, or cause the Title Insurer to
issue a title indemnity to Purchaser in form and substance reasonably
satisfactory to Purchaser, insuring against loss or damage. If Seller fails to
remove any Unpermitted Exceptions in accordance with the provisions of this
paragraph or if there exists any Unpermitted Exception which Seller is not
obligated to remove pursuant to clause (ii) above because payment of funds in
excess of the Maximum Amount would be required to cure the same, Purchaser,
nevertheless, may elect (at or prior to the Closing) to consummate the
transaction provided for herein subject to any such Unpermitted Exception as
may exist as of the Closing with a credit against the Purchase Price equal to
(a) the sum necessary to remove such Unpermitted Exceptions which can be
satisfied by a liquidated amount, and (b) the reasonably estimated reduction in
the fair market value of the Property resulting from any Unpermitted Exceptions
which cannot be satisfied by the payment of a liquidated amount (not to exceed
the Maximum Amount solely for Unpermitted Exceptions of the type described in
clause (ii) above; provided, however, if Purchaser makes such election,
Purchaser shall not be entitled to any other credit, nor shall Seller bear any
further liability, with respect to any Unpermitted Exceptions of the type
described in clause (ii) above). If Purchaser shall not so elect, Purchaser
shall be deemed to have elected to terminate this Agreement, in which case, the
Earnest Money plus all accrued interest shall be delivered to Purchaser and,
subject to the survival provisions of Paragraphs 15 and 16 herein, neither
party shall have any further liability hereunder.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed ("Deed") in the form of Exhibit
D attached hereto and in recordable form subject only to the Permitted
Exceptions.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall each pay
one-half (1/2) of all costs related to the Title Commitment and the Title
Policy (including without limitation premium, title search fees, the costs of
extended coverage on the Title Policy and the costs of those endorsements
identified on Exhibit E attached hereto [Purchaser shall be responsible to pay
<PAGE>
for any additional endorsements]), the Survey (including the recertifying of
the Survey), the Title Insurer's escrow fees not to exceed $550, transfer
taxes, if any, recording charges for the Deed, and the cost of the "UCC Search"
(as hereinafter defined) (collectively, "Closing Costs"). Notwithstanding the
aforesaid, each party hereunder shall pay its own attorneys' fees.
6. DAMAGE, CASUALTY AND CONDEMNATION.
A. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored for $200,000 or less, then
Purchaser shall accept the Property in its damaged condition together with a
credit at Closing in the amount of the damaged Property. If the Property
suffers damage as a result of any casualty prior to the Closing Date and cannot
be repaired or restored for $200,000 or less, then, at Purchaser's election to
be exercised within ten (10) days after Purchaser is notified of such casualty,
this Agreement shall be terminated.
B. If condemnation proceedings ("Proceedings") have been instituted
against the Property or any governmental authority shall take any steps
preliminary thereto (by the giving of a written notice of intent to institute
such proceedings), then Purchaser can elect to either take the Property subject
to the Proceedings and an assignment of Seller's interest in the Proceedings or
terminate this Agreement. If Purchaser elects to terminate this Agreement, it
shall be by notice to Seller within ten (10) days after Seller notifies
Purchaser of the Proceedings.
C. If this Agreement is terminated pursuant to Paragraphs 6a or 6b
hereof, then all Earnest Money plus the interest accrued thereon shall be
returned to Purchaser and, subject to the survival provisions of Paragraphs 15
and 16 herein, neither party shall have any further liability hereunder.
7. AS-IS CONDITION.
A. Except as specifically set forth otherwise in this Agreement,
Purchaser acknowledges and agrees that it will be purchasing the Property based
solely upon its inspection and investigations of the Property and that
Purchaser will be purchasing the Property "AS IS" and "WITH ALL FAULTS" based
upon the condition of the Property as of the last day of Purchaser's inspection
of the Property, subject to reasonable wear and tear from such date until the
Closing Date. Without limiting the foregoing, Purchaser acknowledges that,
except as may otherwise be specifically set forth elsewhere in this Agreement,
neither Seller nor its consultants or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the Land or any Improvements, the existence or nonexistence of
asbestos, toxic waste or any hazardous material, the Tenants of the Property or
the Leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning, environmental or building laws, rules or regulations
affecting the Property. Seller makes no representation that the Property
complies with Title III of the Americans With Disabilities Act or any fire
<PAGE>
codes or building codes. Purchaser hereby releases Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for contribution,
cost recovery or otherwise, against Seller, relating directly or indirectly to
the existence of asbestos or hazardous materials or substances on, or
environmental conditions of, the Property, provided that nothing in this
Section 7 shall constitute a release of Seller with respect to any
representations or warranties expressly set forth in this Agreement. As used
herein, the term "Hazardous Materials" or "Hazardous Substances" means (i)
hazardous wastes, hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including
but not limited to substances defined as "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, 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. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
the county public health unit. Seller makes no representation regarding the
levels of radon at the Property.
B. If the Property suffers damage from a casualty prior to the
Closing Date, but is discovered by Purchaser within 90 days after the Closing
Date, then Seller shall promptly file a claim with its insurance carrier and
will assign the proceeds of that claim to Purchaser and pay Purchaser the
amount of the deductible on its policy.
C. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
<PAGE>
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser will rely upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
8. CLOSING. The closing ("Closing") of this transaction shall be on
September 30, 1996 or on such other date mutually agreed upon by the parties
("Closing Date"), at which time Seller shall deliver possession of the Property
to Purchaser in accordance with this Agreement. Closing shall occur at the
offices of Purchaser's counsel. The parties acknowledge and agree the Closing
will be a "New York Style" Closing such that Seller will receive the Purchase
Price on the Closing Date upon (i) Seller's unconditional delivery of the
documents set forth in Paragraph 9(b) herein, and (ii) the Title Insurer's
delivery to Purchaser of the Title Policy or a "marked-up" commitment in
conformity with the requirements in this Agreement for the Title Policy.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement prepared by the Title Insurer and approved by
Purchaser, the Assignment and Assumption of Service Contracts in the form of
Exhibit G attached hereto, the Assignment and Assumption of Leases in the form
of Exhibit H attached hereto, the notice to the Tenants in the form of Exhibit
I attached hereto, the Post-Closing Adjustment Letter in the form of Exhibit J
attached hereto, the balance of the Purchase Price (after crediting the Earnest
Money), 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.
B. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property in accordance with this Agreement; and duplicate
originals of all of the following: the Deed (in the form of Exhibit D attached
hereto) subject only to the Permitted Exceptions and those Unpermitted
Exceptions waived in writing by Purchaser, if any, which Deed shall contain the
legal description in conformity with the legal description shown on the final
Survey; an inventory of the Personal Property which shall include all Personal
Property set forth on Exhibit B and a Bill of Sale for the same (in the form of
Exhibit F attached hereto); an executed closing statement prepared by the Title
Insurer and approved by Purchaser; an executed Assignment and Assumption of
Service Contracts (in the form of Exhibit G attached hereto) together with
originals (or copies if originals are not in Seller's possession) of all
instruments evidencing the rights assigned; an executed Assignment and
Assumption of Leases (in the form of Exhibit H attached hereto) together with
originals of all Leases assigned (which Leases will be at the managing agent's
office at the Property); an updated rent roll certified by Seller to be
correct; a notice to the Tenants of the transfer of title (in the form of
Exhibit I attached hereto, which notice shall be delivered to the Tenants by
Purchaser); a non-foreign affidavit (in the form of Exhibit K attached hereto);
the Post-Closing Adjustment Letter dated as of the Closing Date (in the form of
Exhibit J annexed hereto); an assignment of intangibles (in the form of Exhibit
L annexed hereto); an assignment of the Licenses (in the form of Exhibit M
annexed hereto), together with originals or copies of originals which are not
<PAGE>
in Seller's possession, of all instruments evidencing the rights assigned; an
assignment of all existing assignable warranties and guarantees (the
"Assignment of Warranties and Guarantees") relating to the Property dated as of
the Closing Date (in the form of Exhibit N annexed hereto), together with
available originals or copies if originals are not in Seller's possession, of
all instruments evidencing the rights assigned, the Information for Real Estate
1099-S Report Filing (in the form of Exhibit O annexed hereto); an
acknowledgement of receipt of the Information for Real Estate 1099-S Report
Filing by the Title Insurer (in the form of Exhibit P attached hereto);
evidence acceptable to the Title Insurer, authorizing the consummation by
Seller of the transaction which is the subject of this Agreement and the
execution and delivery of all documents on behalf of Seller; all keys and
combinations to all locks on the Improvements which will be at the Property;
all plans, specifications, mechanical, electrical and plumbing layouts,
operating manuals, purchase orders, brochures, marketing materials and
advertisements which are owned by Seller and are located at the Property,
Tenant lease files, and other files and records in the possession of Seller at
the leasing office at the Property and Seller's managing agent (including,
without limitation, hard copy print outs of the information contained on the
computer data discs delivered to Purchaser at Closing) and utilized in
connection with the operation and maintenance of the Land and Improvements;
current tax bills and, if available, to the extent in Seller's possession, tax
bills for each of the years of Seller's ownership of the Property; a
certificate from Seller that no proceeding for the reduction of real or
personal property taxes is ongoing as of the Closing Date; affidavits and
certificates as to facts within the knowledge of Seller as required by the
Title Insurer as to the condition of title or the due performance by Seller of
its obligations under this Agreement, the Title Policy or the "marked-up"
commitment for the Title Policy in conformity with the requirements in this
Agreement; UCC searches conducted by a UCC search company reasonably acceptable
to Purchaser at the County and State level, searching Seller's name, the name
of any other entity which may have owned the Property during the past five (5)
years and the Trade Name, dated to a date not more than thirty (30) days prior
to the Closing evidencing that no portion of the Personal Property is subject
to any UCC filing (the "UCC Search") unless a UCC-3 Termination Statement for
same has been provided for at the Closing; telephone transfer form; 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.
C. Seller shall deliver to Alan Linder, not less than five (5) days
prior to the Closing Date, execution originals of all of the conveyance
documents which are to be executed by Purchaser.
10. 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, INCLUDING ITS OBLIGATIONS TO MAKE ALL
DEPOSITS ON OR BEFORE THE DATES PROVIDED FOR HEREIN. IN THE EVENT THE CLOSING
DOES NOT OCCUR AS A RESULT OF ANY DEFAULT OF PURCHASER UNDER THE PROVISIONS OF
THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST
THEREON AS LIQUIDATED DAMAGES, AND AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY
OTHER REMEDY. 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.
<PAGE>
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
INABILITY TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT, PURCHASER' S SOLE
REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST
ACCRUED THEREON, PLUS ACTUAL DAMAGES NOT TO EXCEED $150,000.00, AND, SUBJECT TO
THE SURVIVAL PROVISIONS OF PARAGRAPHS 15 AND 16 HEREIN, THIS AGREEMENT SHALL
TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW
OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED OR ANY OF THE OTHER
DOCUMENTS ENUMERATED IN PARAGRAPH 9(b) OF THIS AGREEMENT, THEN PURCHASER WILL
BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS. The following are to be prorated or adjusted (as
appropriate), as of 11:59 P.M. on the day preceding the Closing Date (the
"Proration Date"):
A. Rents, as and when collected. If as of the Proration Date there
are rents owed by Tenants for the month in which the Closing occurs, then the
first monies received from said Tenant or Tenants shall be received on account
of or in payment of such past due rents and (i) if Purchaser receives said past
due rents, Seller's aforesaid share thereof shall be remitted by Purchaser to
Seller within three (3) Business Days, and (ii) if Seller receives such past
due rents, Purchaser's aforesaid share thereof shall be remitted by Seller to
Purchaser within three (3) Business Days. With respect to any arrears for
periods prior to the month in which the Closing occurs, Purchaser shall pay
such arrears to Seller as and when collected from the monies received from such
Tenant provided such Tenant is otherwise current in its rent. With respect to
rents for any period subsequent to the month in which the Closing occurs that
may be received by Seller, Seller shall promptly remit such rents to Purchaser.
B. Real estate and personal property taxes, if any, on the basis of
the fiscal year for which assessed and in which the Proration Date occurs. If
the Closing shall occur before the tax rate or assessment is fixed for the
fiscal year in which the Closing occurs, then the apportionment of such real
estate and personal property taxes at the Closing shall be upon the basis of an
assessed valuation of $14,554,758 and a tax rate of 101.5% of the 1995 tax
year.
C. Water, sewer charges, electricity and gas on the basis of the
most recent bills available, but if there are meters on the Property, Seller,
to the extent the same is obtainable, shall obtain a reading effective as of
the Proration Date.
D. Tax and utility company deposits, if any, and if assignable and
assigned.
E. Fuel, if any, based on a fuel company letter showing measurement
no more than two (2) days prior to Closing and valued at current prices.
F. Amounts paid or payable in respect of any Contracts assigned to
Purchaser, including, but not limited to, any up-front "bonus" payments made in
consideration of entering into any Contract, net of any commissions paid by
Seller (which up-front "bonus" payments, if any, shall be prorated based upon
the unexpired term of the Contract; provided, however, such bonus payments
shall only be prorated if actually received by Seller and only to the extent
any fee was not used to improve the applicable facilities at the Property
related to the applicable contract);
<PAGE>
G. Purchaser shall receive a credit against the cash due at Closing
in an amount equal to all refundable Tenants security deposits and accrued
interest to which Tenants may be entitled pursuant to the Leases which are to
be assigned to Purchaser at the time of Closing.
H. If, at Closing, the Property or any part thereof shall be or
shall have been affected by an assessment or assessments which are or may
become payable in installments, then for purposes of this Agreement, all unpaid
installments of any such assessment, including those which are to become due
and payable and to be liens upon the Property shall be paid and discharged by
Purchaser. In addition, the parties agree to prorate any prepaid assessments
at Closing.
I. If such prorations result in a payment due Purchaser, then the
portion of the Purchase Price payable at Closing shall be reduced by such sum.
J. If such prorations result in a payment due Seller, then the same
shall be paid to Seller in addition to the portion of the Purchase Price
payable at Closing.
K. The parties hereto shall endeavor to prepare a schedule of
prorations no less than one (1) Business Day prior to Closing.
L. The parties hereto shall correct any arithmetic errors in
prorations as soon after the Closing as amounts are finally determined. The
parties hereto shall enter into the Post-Closing Adjustment Letter at the
Closing in the form of Exhibit J annexed hereto.
M. If the amount of any of the items to be prorated is not then
ascertainable, the adjustment thereof shall be on the basis of the most recent
ascertainable data. Except with reference to arithmetic errors, all prorations
will be final.
N. The provisions of this Paragraph 12 shall survive the Closing.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph 10.
14. ASSIGNMENT. Purchaser shall have the right to assign its interest in
this Agreement, provided such assignment is effected at least five (5) days
prior to the Closing Date. In the event of any such assignment, Seller agrees
to deliver any documents referred to in this Agreement to Purchaser's designee
and agrees that all surviving representations and warranties of Seller
hereunder shall be deemed to run in favor of, and be enforceable by said
designee as if it were Purchaser hereunder. Upon any assignment, Purchaser
agrees that it shall continue to be bound by all of Purchaser's indemnities
under this Agreement. The provisions of this Paragraph shall survive the
Closing.
15. BROKER. The parties hereto acknowledge that CB Commercial Real
Estate Group, Inc. ("Broker") is the only real estate broker involved in this
transaction. Purchaser has not paid and will not pay at any time before, at or
<PAGE>
after the Closing, any fee, commission or compensation whatsoever to any person
whomsoever directly or indirectly on account of this Agreement, its
negotiation, or the sale hereby contemplated. Seller agrees to pay Broker a
commission or fee ("Fee") pursuant to a listing agreement between Seller and
Broker. Seller represents that this Fee is due and payable only from the
proceeds of the Purchase Price received by Seller. Purchaser agrees to
indemnify, defend and hold harmless Seller and any partner, affiliate, parent
of Seller, and all shareholders, employees, officers and directors of Seller or
Seller's partner, parent or affiliate (each of the above is individually
referred to as a "Seller Indemnitee") from all claims, including attorneys'
fees and costs incurred by a Seller Indemnitee as a result of anyone (other
than Broker) claiming by or through Purchaser, as a result of Purchaser's
actions, any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated. Purchaser does now and shall at
all times consent to a Seller Indemnitee's reasonable approval of defense
counsel selected by Purchaser. Seller agrees to indemnify, defend and hold
harmless Purchaser and all shareholders, employees, officers and directors of
Purchaser or Purchaser's parent or affiliate (each of the above is individually
referred to as a "Purchaser Indemnitee") from all claims, including attorneys'
fees and costs incurred by a Purchaser Indemnitee as a result of anyone
claiming by or through Seller, as a result of Seller's actions, including but
not limited to Broker, any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated. Seller does now
and shall at all times consent to a Purchaser Indemnitee's reasonable selection
of defense counsel. The provisions of this Paragraph will survive the Closing
and delivery of the Deed and any prior termination of this Agreement.
16. INSPECTION OF PROPERTY.
A. During the period (the "Inspection Period") commencing on the
date hereof and ending at 5:00 p.m. Chicago time on the later to occur of:
August 26, 1996, or (b) ten (10) days following Purchaser's receipt of the
Survey (said date of expiration of the Inspection Period being referred to
herein as the "Inspection Period Expiration Date"), Purchaser and the agents,
engineers, employees, contractors and surveyors retained by Purchaser may enter
upon the Property, at any reasonable time and upon reasonable prior notice to
Seller, to inspect the Property, including a review at the Property of the
Leases and to conduct and prepare such studies, tests and surveys as Purchaser
may deem reasonably necessary and appropriate. In connection with Purchaser's
review of the Property, Seller agrees to deliver to Purchaser copies of the
current rent roll for the Property, the most recent tax and insurance bills,
utility account numbers, service contracts and unaudited year end 1994 and 1995
operating statements. During the Inspection Period, Seller will reasonably
cooperate with Purchaser in its inspection of the Property including, but not
limited to, furnishing (or making available) to Purchaser such information,
materials and documents which Purchaser may reasonably request and which are in
Seller's possession.
B. Except as set forth in Section 5 hereof, all of the foregoing
tests, investigations and studies to be conducted under this Paragraph 16 by
Purchaser shall be at Purchaser's sole cost and expense, and Purchaser shall
restore the Property substantially to the condition existing prior to the
performance of such tests or investigations by or on behalf of Purchaser.
<PAGE>
Purchaser shall defend, indemnify and hold Seller and any affiliate, parent of
Seller, and all shareholders, employees, officers and directors of Seller or
Seller's affiliate or parent (hereinafter collectively referred to as
"Affiliate of Seller") harmless from any and all liability, cost and expense
(including without limitation, reasonable attorney's fees, court costs and
costs of appeal) suffered or incurred by Seller or Affiliates of Seller for
injury to persons or property to the extent caused by Purchaser's
investigations and inspection of the Property. Purchaser shall undertake its
obligation to defend set forth in the preceding sentence using attorneys
selected by Purchaser and reasonably acceptable to Seller.
C. If Purchaser is dissatisfied with the results of the tests,
studies or investigations performed or information received pursuant to this
Paragraph 16, in Purchaser's sole judgment for any reason or for no reason,
Purchaser shall have the right to terminate this Agreement by giving written
notice of such termination to Seller at any time prior to the expiration of the
Inspection Period. If written notice is not given by Purchaser pursuant to
this Paragraph 16 prior to the expiration of the Inspection Period, then the
right of Purchaser to terminate this Agreement pursuant to this Paragraph 16
shall be waived. If Purchaser terminates this Agreement by written notice to
Seller prior to the expiration of the Inspection Period: (i) Purchaser shall
promptly deliver to Seller copies of all studies, reports and other
investigations obtained by Purchaser and prepared by third parties (to the
extent that such delivery shall not constitute a breach of contract) in
connection with its due diligence during the Inspection Period; (ii) the
Earnest Money deposited by Purchaser shall be immediately paid to Purchaser,
together with any interest earned thereon and (iii) this Agreement shall
terminate 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 16.
Notwithstanding anything contained herein to the contrary, Purchaser's
obligation to indemnify Seller and restore the Property, as more fully set
forth in this Paragraph 16, shall survive the Closing, the delivery of the Deed
and the termination of this Agreement.
17. SELLER'S REPRESENTATIONS AND WARRANTIES AND LIABILITY.
A. Any reference herein to Seller's knowledge or to the best of
Seller's knowledge or to any representation, warranty or notice of any matter
or thing, shall only mean such knowledge or notice that has actually been
received by Phillip Schechter, and any representation or warranty of the Seller
is based upon those matters of which Phillip Schechter has actual knowledge,
provided that the representations and warranties made in (vi) and (vii) of
Paragraph 17B hereof are not so limited to Phillip Schechter's knowledge except
where specifically noted in subsection (vii) of Paragraph 17B. Any knowledge
or notice given, had or received by any of Seller's agents, servants or
employees shall not be imputed to Seller or the individual partners or the
general partner of Seller.
B. Subject to the limitations set forth in Paragraph 17a above,
Seller hereby makes the following representations and warranties, all of which
are made to the best of Seller's knowledge, each of which shall be deemed made
as of the Closing and survive the Closing and delivery of the Deed for ninety
(90) days except for subparagraphs (vi) and (vii) which shall survive for the
statutory period:
<PAGE>
(i) The present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no notice that
any such laws, rules or regulations are being violated.
(ii) The rent rolls which Seller has submitted to Purchaser and
updated as of the Closing Date are true and accurate.
(iii) Except as set forth on Exhibit Q, Seller has no knowledge
of any pending or threatened litigation, claim, cause of action or
administrative proceeding concerning the Property.
(iv) Except as set forth in Paragraph 12B hereof, there are no
real estate tax protests or proceedings affecting the Property.
(v) Seller has received no written notice of any pending or
threatened condemnation or similar proceeding or pending public
improvements in or adjoining the Land which will in any manner affect the
Property.
(vi) Each person executing and delivering this Agreement and all
documents to be executed and delivered in regard to the consummation of
the transaction which is the subject of this Agreement on behalf of Seller
represents to Purchaser that he has due and proper authority to execute
and deliver same. Seller has the full right, power and authority to sell
and convey the Property to Purchaser as provided herein and to carry out
its obligations hereunder. The consummation by Seller of the transaction
which is the subject of this Agreement will not conflict with or result in
a breach of any of the terms of any agreement or instrument to which
Seller is a party or by which Seller is bound or constitute a default
thereunder. No other party has any right to purchase the Property, or any
part thereof.
(vii) Neither Seller, its beneficiary nor any of Seller's
beneficiary's general partners is the subject of any existing or pending or
to the actual knowledge of Phillip Schechter threatened or contemplated
bankruptcy, solvency or other debtor's relief proceeding.
(viii) Seller does not have any employees at the Property.
C. As a condition precedent to Purchaser's obligations at Closing
and regardless of the provisions of Paragraph 17A hereof , all representations
and warranties provided in this Agreement to be made by Seller as of the
Closing shall be true as of the Closing, whether or not Phillip Schechter has
actual knowledge that any representation or warranty is not true.
18. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller's beneficiary, nor any of such beneficiary's 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 transaction 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
<PAGE>
alleged personal liability. This provision shall not preclude Purchaser from
instituting and maintaining any legal action against Seller or Seller's
beneficiary; provided, however, notwithstanding the foregoing to the contrary,
the maximum cumulative liability of Seller and Seller's beneficiary hereunder
is $250,000. Seller's beneficiary shall not distribute $250,000 of the net
proceeds of the Purchase Price to its partners until ninety (90) days after the
Closing Date.
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing signed by the party giving the same or by its attorneys and may be
personally delivered or given or made by overnight courier such as Federal
Express or by facsimile 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
Attn: Ilona Adams
847/267-1600
847/317-4462 (FAX)
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
847/317-4360
847/317-4462 (FAX)
and
Andrew D. Small Esq.
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661
312/902-5489
312/902-1061 (FAX)
TO PURCHASER: Mr. Thomas Gochberg
c/o TGM Associates L.P.
650 Fifth Avenue
28th Floor
New York, New York 10019
212/830-9300
212/399-6310 (FAX)
<PAGE>
with a copy to: Alan E. Linder, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
212/503-2090
212/682-5729 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be deemed
to be delivered or made on the next Business Day if sent by overnight courier,
or on the same day if sent by facsimile or on the 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 or by facsimile as aforesaid shall be
deemed to be given, delivered or made upon receipt of the same by the party to
whom the same is to be given, delivered or made. Copies of all notices shall
be served upon the Escrow Agent.
21. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) counterparts of this Agreement and three (3) counterparts of the
Escrow Agreement and forward them to Seller for Seller's execution. Seller
will forward one (1) fully executed counterpart of the executed Agreement to
Purchaser's attorneys 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) counterparts of the Escrow Agreement and
deliver a fully executed counterpart to Purchaser's attorneys and Seller.
Purchaser shall deliver the Earnest Money to Escrow Agent on the same day
that Purchaser executes the Escrow Agreement. If Purchaser's attorney has not
received one fully executed counterpart of this Agreement and the Escrow
Agreement within four (4) Business Days after Purchaser delivers the Earnest
Money to Escrow Agent, then at Purchaser's election, the Earnest Money and the
executed counterparts of this Agreement shall be returned to Purchaser.
22. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of the State of Florida.
23. ENTIRE AGREEMENT. This Agreement and the attached Exhibits
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
24. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
25. CAPTIONS. Paragraph or Exhibit 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>
26. MODIFICATIONS. This Agreement cannot be changed, modified,
discharged or terminated by any oral agreement or any other agreement and there
cannot be any waiver of the warranties, representations and covenants expressly
contained in this Agreement unless the same is in writing and signed by the
party against whom enforcement of the change, modification, discharge,
termination or waiver is sought.
27. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on, and the
benefits hereof shall inure to, the successors and assigns of the parties
hereto.
28. INVALIDITY. If any term or provision of this Agreement, or any part
of such term or provision, or the application thereof to any person or
circumstance shall to any extent be held invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision or
remainder thereof to persons or circumstances other than those as to which it
is held invalid and unenforceable shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
29. EXHIBITS. All Exhibits which are annexed to this Agreement are part
of this Agreement and are incorporated herein by reference.
30. NO THIRD PARTY BENEFICIARY. The provisions of this Agreement are for
the sole benefit of the parties to this Agreement and their successors and
assigns and shall not give rise to any rights by or on behalf of anyone other
than such parties.
31. ATTORNEYS' FEES. In the event that any litigation arises under this
Agreement, the prevailing party shall be entitled to recover, as a part of its
judgment, reasonable attorneys' fees.
32. CORRECTION DEED. Seller will, whenever reasonably requested so to do
by Purchaser, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, a correction deed as may be reasonably necessary in
order to complete the transaction which is the subject of this Agreement and to
carry out the intent and purposes of this Agreement. Such correction deed
shall be satisfactory to the attorneys for Purchaser. The provisions of this
Paragraph shall survive the Closing.
33. BUSINESS DAYS. If the date for performance of any act pursuant to
the Agreement is not a Business Day, then such act shall be performed on the
next succeeding Business Day. The term "Business Days" shall mean all days,
except Saturdays, Sundays and all days observed by the Federal Government as
legal holidays.
34. OPERATIONS PRIOR TO CLOSING. Seller agrees that between the date
hereof and the Closing Date, Seller will:
A. continue to operate the Property as heretofore operated;
B. afford Purchaser and its representatives full access to the
Property and to Seller's books, records and files relating to and maintained at
the Property, at reasonable times, upon forty- eight (48) hours prior notice
and during normal business hours, including but not limited to the date of the
Closing;
<PAGE>
C. not enter into any new Lease, nor amend, modify or terminate
any existing Lease without having obtained the prior written consent of
Purchaser in each such instance; notwithstanding the foregoing, Seller may
enter into Leases of not more than one year upon market rents and upon
commercially reasonable terms;
D. not apply any Tenant's security deposits to the discharge of
such Tenant's obligations unless such Tenant has vacated or been evicted from
such Tenant's demised premises;
E. advise Purchaser promptly of any litigation or governmental
proceeding to which Seller becomes a party affecting the Property (it shall be
a condition precedent to Purchaser's obligation to accept title, that there
shall be no such litigation or proceeding pending at Closing having a potential
adverse effect upon the Property or Seller's ability to convey the Property to
Purchaser);
F. not permit any alteration, structural modification or additions
to the Property;
G. not create (or agree to create) any exception to or covenant,
restriction, easement or other lien on the Property; and
H. not enter into any new Contract, nor amend, modify or terminate
any existing Contract.
35. CONDITION PRECEDENT. It is a condition precedent to Seller's and
Purchaser's obligations to close the transaction which is the subject of this
Agreement that City National Bank of Florida, a national banking association
organized under the statutes of the United States, as trustee, under trust
agreement dated September 7, 1993 and known as trust number 2401-0088-00 (the
"Other Property Seller") simultaneously therewith convey and Purchaser or its
designee acquire that certain property commonly known as Timberlake II
Apartments (the "Other Property") in accordance with the terms of the Agreement
of Sale (the "Other Property Contract") between the Other Property Seller and
Purchaser of even date herewith for the sale of the Other Property to
Purchaser. The purchase and sale of the Property and the purchase and sale of
the Other Property shall occur, if at all, simultaneously. Without limitation
to the generality of the foregoing sentence, any extension, delay or
adjournment of or in the closing under the Other Property Contract shall also
cause and constitute a matching extension, delay or adjournment of or in the
Closing under this Agreement.
If the Other Property Seller has the right to, and does, retain the
earnest money under Paragraph 10 of the Other Property Contract because the
closing thereunder has not occurred as the result of a default by Purchaser
thereunder, then Seller shall also have the right to retain the Earnest Money
under Paragraph 10 of this Agreement as if the Closing did not occur hereunder
as the result of a default by Purchaser hereunder.
A termination of the Other Property Contract pursuant to the provisions
thereof or applicable law shall also cause and constitute a termination of this
Agreement under the same provisions or law.
<PAGE>
36. TRUSTEE EXCULPATION. This Agreement is executed by the undersigned
Trustee, not personally but solely as successor Trustee under Trust Agreement
dated September 15, 1983, known as Trust No. 101, as amended and restated
pursuant to Amended and Restated Trust Agreement dated September 7, 1993 and
known as trust number 2401-0075-00, and it is expressly understood and agreed
by the parties hereto, anything herein to the contrary notwithstanding, that
each and all of the covenants, undertakings, representation and agreements
herein made are made and intended, not as personal covenants, undertakings,
representations and agreements of the Trustee, individually or for the purpose
of binding it personally, but this Agreement is executed and delivered by the
City National Bank of Florida, as Trustee, solely in the exercise of the powers
conferred upon it as such Trustee under said agreement and no personal
liability or personal responsibility is assumed by, nor shall at any time be
asserted or enforced against the City National Bank of Florida on account
hereof, or on account of any covenant, undertaking, representation or agreement
herein contained, either expressed or implied, all such personal liability, if
any, being hereby expressly waived and released by the parties hereto or holder
hereof, and by all persons claiming by or through or under said parties or
holder hereof. Notwithstanding the foregoing provisions to the contrary, in
any action upon or in connection with this Agreement or any of the instruments
to be delivered by Seller at the Closing, Seller may be named as a party
defendant solely in Seller's capacity as trustee, and Seller (solely in its
capacity as trustee), said trust and any and all of the assets of said trust
(including, without limitation, the Property), but not the personal assets of
City National Bank of Florida, shall be subject to the jurisdiction and
decision of the court therein. Purchaser agrees that the foregoing exculpation
(as may be modified as necessary to reflect the instrument to which it is to be
added) may be added to each of the instruments to be executed by Seller at the
Closing. The provisions of this Paragraph 36 shall survive the Closing.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
Executed by Purchaser on PURCHASER:
August 2, 1996.
TGM REALTY CORP. #5, a Delaware corporation
By: /s/ Thomas Gochberg
--------------------------------------
Name: Thomas Gochberg
--------------------------------------
Title:
--------------------------------------
Executed by Seller on SELLER:
August 8, 1996.
City National Bank of Florida, a national banking
association organized under the statutes of the
United States, not personally but solely as
successor Trustee under Trust Agreement dated
September 15, 1983, known as Trust No. 101, as
amended and restated pursuant to Amended and
Restated Trust Agreement dated September 7, 1993
and known as trust number 2401-0075-00
By: /s/ Irving J. Lehrer
---------------------------------------
Name: Irving J. Lehrer
---------------------------------------
Title: Vice President & Trust Officer
---------------------------------------
<PAGE>
JOINDER
The undersigned, as Seller's sole beneficiary, executes this Agreement of
Sale solely to affirm the undersigned's liabilities under Paragraph 18 hereof
and similar provisions contained in certain of the closing documents.
Furthermore, the undersigned hereby guarantees payment of the liabilities of
Seller under: (i) this Agreement, subject to any applicable limitations to such
liabilities contained in this Agreement (including, without limitation, the
terms of Paragraph 18 herein); and (ii) the instruments to be executed by
Seller at the Closing, subject to any applicable limitations to such
liabilities contained in such instruments, in either case (i) or (ii) as if the
exculpation of the Seller contained in Paragraph 36 of this Agreement and
similar provisions in such closing instruments were deleted. The terms and
provisions of this joinder shall survive the Closing and the delivery of the
Deed.
Timberlake Investors, an Illinois limited
partnership,
By: Timber of Illinois, Inc., an Illinois
corporation, its general partner
By: /s/ Phillip A. Schechter
-------------------------------------
Name: Phillip A. Schechter
-------------------------------------
Title: Authorized Agent
-------------------------------------
<PAGE>
Jeffery S. Barrett, Senior Vice President of CB Commercial Real Estate Group,
Inc. ("Broker") executes this Agreement in its capacity as a real estate
broker and acknowledges that the fee or commission ("Fee") due it as a result
of the transaction described in this Agreement is the amount as set forth in
the listing agreement between Broker and Seller. Such Fee and any other
amounts due Broker shall be paid solely by Seller, and Purchaser shall have
no liability whatsoever to Broker under any circumstances, whether or not the
Closing occurs. Broker also acknowledges that payment of the aforesaid Fee
is conditioned upon the Closing and the receipt of the Purchase Price by
Seller. Broker agrees to deliver a receipt to Seller at the Closing for the
Fee and a release stating that no other fees or commissions are due to
Listing Broker from Seller or Purchaser. A copy of broker's receipt and
release will be delivered to Purchaser at the Closing.
CB COMMERCIAL REAL ESTATE GROUP, INC.
By: /s/ Jeffery S. Barrett
----------------------------------------------
Senior Vice President
Tax I.D. Number 95-2743174
---------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Deed
E - Endorsements
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Post-Closing Adjustment Letter
K - Non-Foreign Affidavit
L - Assignment of Intangibles
M - Assignment of Licenses and/or Permits
N - Assignment of Warranties and Guarantees
O - Information for Real Estate 1099-S Report Filing
P - Acknowledgment of Title Insurer with regard to Real Estate 1099-S
Report Filing
Q - Litigation
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 19th
day of August, 1996, by and between FOWLERSHORE & FLANAGAN, a California
general partnership ("Purchaser"), and HEATHER RIDGE 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 Fifty Thousand And No/100 Dollars ($9,050,000.00)
(the "Purchase Price"), that certain property commonly known as Heather Ridge
Apartments, Oklahoma City, Oklahoma 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").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of One Hundred
Thousand and No/100 Dollars ($100,000.00) (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 1:00 p.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 Lawyers Title Insurance
Company (hereinafter referred to as "Title Insurer") dated May 24, 1996 for the
Property (the "Title Commitment"). For purposes of this Agreement, "Permitted
Exceptions" shall mean: (a) the general printed exceptions contained in the
extended coverage title policy to be issued by Title Insurer based on the Title
Commitment; (b) general real estate taxes, association assessments, special
assessments, special district taxes and related charges not yet due and
payable; (c) matters shown on the "Existing Survey" (hereinafter defined); (d)
matters caused by the actions of Purchaser; and (e) the title exceptions set
forth in Schedule B of the Title Commitment as Numbers 2 through 13 inclusive,
to the extent that same affect the Property. All other exceptions to title
shall be referred to as "Unpermitted Exceptions". The Title Commitment shall
be conclusive evidence of good title as therein shown as to all matters to be
insured by the title policy, subject only to the exceptions therein stated. On
the Closing Date, Title Insurer shall deliver to Purchaser an extended coverage
title policy in conformance with the previously delivered Title Commitment,
subject to Permitted Exceptions and Unpermitted Exceptions waived by Purchaser
(the "Title Policy"). Seller shall pay for the costs of the Title Commitment
and the Title Policy, and Purchaser shall pay the cost of any endorsements to,
or extended coverage on, the Title Policy.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by
Smith-Roberts and Associates, Inc., dated October 30, 1989, updated May 21,
1996 (the "Existing Survey"). Purchaser hereby acknowledges that all matters
disclosed by the Existing Survey are acceptable to Purchaser.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser shall pay for 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, sales tax and surtax imposed by law with
reference to any other sale documents delivered in connection with the sale of
the Property to Purchaser and all other charges of the Title Insurer in
connection with this transaction. Seller shall pay all recording costs
associated with the recording of the Deed.
4.2. Purchaser shall pay for all other costs associated with the Closing
of the sale of the Property, including, without limitation, recording fees
associated with Purchaser's financing of the transaction contemplated herein.
The parties shall equally share escrow fees in connection with the closing of
this transaction and each party shall pay its own attorney's fees.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment discloses any new Unpermitted Exception, Seller shall have
thirty (30) days from the date of the date-down to the Title Commitment, at
Seller's expense, to (i) bond over, cure and/or have any Unpermitted Exceptions
which, in the aggregate, do not exceed $25,000.00, removed from the Title
Commitment or to have the Title Insurer commit to insure against loss or damage
that may be occasioned by such Unpermitted Exceptions, or (ii) have the right,
but not the obligation, to bond over, cure and/or have any Unpermitted
Exceptions which, in the aggregate, equal or exceed $25,000.00, removed from
the Title Commitment or to have the Title Insurer commit to insure against loss
or damage that may be occasioned by such Unpermitted Exceptions. 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. If Purchaser
terminates this Agreement in accordance with the terms of this Paragraph 5.1,
this Agreement shall become null and void without further action of the parties
and all Earnest Money theretofore deposited into the escrow by Purchaser
together with any interest accrued thereon, shall be returned to Purchaser, and
neither party shall have any further liability to the other, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7.
<PAGE>
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty, and Seller shall pay to Purchaser at the Closing the amount of
Seller's insurance deductible. Seller shall promptly notify Purchaser in
writing of any such fire or other casualty and Seller's determination of the
cost to repair the damage caused thereby. In the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost in excess of $100,000.00 (as determined by Seller in good faith),
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.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
<PAGE>
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
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 22, 1996 and ending at 5:00
p.m. Chicago time on August 27, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate, including Purchaser's own environmental report. In
connection with Purchaser's review of the Property, Seller agrees to deliver to
Purchaser copies of the current rent roll for the Property, the most recent tax
and insurance bills, utility account numbers, service contracts, and unaudited
year end 1995 and year to date 1996 operating statements.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion.
<PAGE>
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph
7.1, or if Purchaser is dissatisfied for any other reason whatsoever, Purchaser
shall have the right to terminate this Agreement by giving written notice of
such termination to Seller at any time prior to the expiration of the
Inspection Period. If written notice is not received by Seller pursuant to
this Paragraph 7.1 prior to the expiration of the Inspection Period, then the
right of Purchaser to terminate this Agreement pursuant to this Paragraph 7.1
shall be waived. If Purchaser terminates this Agreement by written notice to
Seller prior to the expiration of the Inspection Period: (i) Purchaser shall
promptly deliver to Seller copies of all studies, reports and other
investigations obtained by Purchaser in connection with its due diligence
during the Inspection Period; and (ii) the Earnest Money deposited by Purchaser
shall be immediately paid to Purchaser, together with any interest earned
thereon, and neither Purchaser nor Seller shall have any right, obligation or
liability under this Agreement, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in this Paragraph 7.1.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.1, shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.2. Seller can make no representations or warranties relating to the
condition of the Property or the Personal Property. Purchaser acknowledges and
agrees that it will be purchasing the Property and the Personal Property based
solely upon its inspections and investigations of the Property and the Personal
Property, and that Purchaser will be purchasing the Property and the Personal
Property "AS IS" and "WITH ALL FAULTS", based upon the condition of the
Property and the Personal Property as of the date of this Agreement, wear and
tear and loss by fire or other casualty or condemnation excepted. Without
limiting the foregoing, Purchaser acknowledges that, except as may otherwise be
specifically set forth elsewhere in this Agreement, neither Seller nor its
consultants, brokers or agents have made any representations or warranties of
any kind upon which Purchaser is relying as to any matters concerning the
Property or the Personal Property, including, but not limited to, the condition
of the land or any improvements comprising the Property, the existence or
non-existence of "Hazardous Materials" (as hereinafter defined), economic
projections or market studies concerning the Property, any development rights,
taxes, bonds, covenants, conditions and restrictions affecting the Property,
water or water rights, topography, drainage, soil, subsoil of the Property, the
utilities serving the Property or any zoning or building laws, rules or
regulations or "Environmental Laws" (hereinafter defined) affecting the
Property. Seller makes no representation or warranty that the Property
complies with Title III of the Americans with Disabilities Act or any fire code
or building code. Purchaser hereby releases Seller and the Affiliates of
Seller from any and all liability in connection with any claims which Purchaser
may have against Seller or the Affiliates of Seller, and Purchaser hereby
<PAGE>
agrees not to assert any claims for contribution, cost recovery or otherwise,
against Seller or the Affiliates of Seller, relating directly or indirectly to
the existence of asbestos or Hazardous Materials on, or environmental
conditions of, the Property, whether known or unknown. As used herein,
"Environmental Laws" means all federal, state and local statutes, codes,
regulations, rules, ordinances, orders, standards, permits, licenses, policies
and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation or
conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.,
the Emergency Planning and Community Right-to-Know Act ("Right-to-Know Act"),
42 U.S.C. Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act ("Clean Water Act"), 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe Drinking Water
Act"), 42 U.S.C. Section 300f et seq., the Atomic Energy Act ("AEA"), 42 U.S.C.
Section 2011 et seq., the Occupational Safety and Health Act ("OSHA"),
29 U.S.C. Section 651 et seq., and the Hazardous Materials Transportation Act
(the "Transportation Act"), 49 U.S.C. Section 1802 et seq. As used herein,
"Hazardous Materials" means: (1) "hazardous substances," as defined by CERCLA;
(2) "hazardous wastes," as defined by RCRA; (3) any radioactive material
including, without limitation, any source, special nuclear or by-product
material, as defined by AEA; (4) asbestos in any form or condition; (5)
polychlorinated biphenyls; and (6) any other material, substance or waste to
which liability or standards of conduct may be imposed under any Environmental
Laws. Notwithstanding anything contained herein to the contrary, the terms of
this Paragraph 7.2 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. 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. 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.
<PAGE>
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment of Heather Ridge Apartments prepared by EGM as
project number 04501042.96B, dated April 6, 1996 ("Existing Report"). Seller
makes no representation or warranty concerning the accuracy or completeness of
the Existing Report. Purchaser hereby releases Seller and the Affiliates of
Seller from any liability whatsoever with respect to the Existing Report, or,
including, without limitation, the matters set forth in the Existing Report,
and the accuracy and/or completeness of the Existing Report. Furthermore,
Purchaser acknowledges that it will be purchasing the Property with all faults
disclosed in the Existing Report. Notwithstanding anything contained herein to
the contrary, the terms of this Paragraph 7.4 shall survive the Closing and the
delivery of the Deeds and termination of this Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall be on the
date which is fifteen (15) days following the Financing Contingency Date (as
hereinafter defined) (the "Closing Date"), at the office of Title Insurer,
Oklahoma City, Oklahoma 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 Oklahoma,
or at the option of either party, the Closing shall be a "New York style"
closing at which the Purchaser shall wire the Purchase Price to Title Insurer
on the Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. All closing and escrow fees shall be divided equally between
the parties hereto.
9. CLOSING DOCUMENTS.
9.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
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;
<PAGE>
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;
9.2.8. possession of the Property to Purchaser, subject to the terms
of leases;
9.2.9. evidence of the termination of the management agreement;
9.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
and
9.2.11. an updated and certified rent roll.
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
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 OR ANY OTHER
CLOSING DOCUMENTS REQUIRED PURSUANT TO PARAGRAPH 9.2 HEREOF, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
<PAGE>
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid association dues, if any; 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 day preceding Closing Date, and credited against the balance
of the cash due at Closing. Assessments payable in installments which are due
subsequent to the Closing Date shall be paid by Purchaser. If the amount of
any of the items to be prorated is not then ascertainable, the adjustments
thereof shall be on the basis of the most recent ascertainable data. All
prorations will be final except as to delinquent rent referred to in Paragraph
12.2 below.
12.2. All rent paid on and following the Closing Date by any tenant of
the Property who is indebted under a lease for rent for any period prior to and
including the Closing Date after the payment to Purchaser of all current basic
rent 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.
Within 120 days after the Closing Date, Purchaser shall deliver to Seller a
reconciliation statement of Post-Closing Receipts through the first 90 days
after the Closing Date. Upon the delivery of the Post-Closing Receipts
reconciliation, Purchaser shall deliver to Seller any Post-Closing Receipts
owing to Seller and not previously delivered to Seller in accordance with the
terms hereof. Seller retains the right to conduct an audit, at reasonable
times and upon reasonable notice, of Purchaser's books and records to verify
the accuracy of the Post-Closing Receipts reconciliation statement and upon the
verification of additional funds owing to Seller, Purchaser shall pay to Seller
said additional Post-Closing Receipts and the cost of performing Seller's
audit. Paragraph 12.2 of this Agreement shall survive the Closing and the
delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest
provided that Purchaser remains liable for and the assignee assumes the
obligations of Purchaser hereunder.
<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 CB Commercial Real Estate Group, Inc. (to be paid by Seller).
Seller's commission to CB Commercial Real Estate Group, Inc. 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 CB Commercial Real Estate Group,
Inc. The indemnifying party shall undertake its obligations set forth in this
Paragraph 15 using attorneys selected by the indemnifying party and reasonably
acceptable to the indemnified party. The provisions of this Paragraph 15 will
survive the Closing and delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Phillip Schechter or Beth Goldstein, the asset manager of the
Property (the "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 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
not survive Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property; (ii) Seller has the power to execute and deliver this Agreement and
consummate the transactions contemplated herein; (iii) the rent roll attached
hereto as Exhibit L which Seller will update as of the Closing Date is accurate
as of the dates set forth thereon; (iv) Seller will continue to lease, manage
and maintain the Property in the same manner as the Property is leased, managed
and maintained as of the date of this Agreement; (iv) Seller will not enter
into any new service contracts not cancelable on thirty (30) days' notice
without the prior consent of the Purchaser which consent shall not be
unreasonably withheld; and (v) the unaudited operating statements furnished to
Purchaser are the same unaudited operating statements as Seller relies upon for
filing tax returns and reporting to Seller's investors.
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.
<PAGE>
17. LIMITATION OF LIABILITY. Neither Seller, nor any Affiliate of Seller, nor
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.
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
(708) 317-4360
(708) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: Fowlershore & Flanagan
1 Harbor Drive, Suite 200
Sausalito, California 94965
Attention: Ms. Darla T. Flanagan
(415) 332-8900
(415) 332-8992 (FAX)
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and one copy to: Ellman Burke Hoffman & Johnson
1 Ecker Building, Suite 200
San Francisco, California 94105
Attention: Leslie Browne, Esq.
(415) 777-2727
(415) 495-7587 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the Oklahoma.
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.
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25. FINANCING CONTINGENCY. Purchaser shall have until 5:00 p.m. Chicago time
on September 20, 1996 (the "Financing Period") to obtain a commitment for
financing in an amount not to exceed Six Million Seven Hundred Eighty Seven
Thousand Five Hundred and No/100 Dollars ($6,787,500.00) from an institutional
lender at an interest rate not to exceed the sum of (a) the yield for a
treasury note with a term equal to the term of the loan, plus (b) one hundred
eighty basis points or 1.8%. Purchaser agrees to (i) diligently pursue and use
good faith in obtaining such financing, (ii) deliver to Seller prior to the
expiration of the Inspection Period, its application for said financing, and
(iii) keep Seller advised of the status of obtaining said financing. The date
on which Purchaser obtains such a financing commitment shall be the "Financing
Contingency Date". If Purchaser is unable to obtain a financing commitment as
referenced in this Paragraph 25, Purchaser shall have the right to terminate
this Agreement by giving written notice of such termination to Seller at any
time prior to the expiration of the Financing Period. If written notice is not
given by Purchaser pursuant to this Paragraph 25 prior to the expiration of the
Financing Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 25 shall be waived and Purchaser shall be deemed to
have obtained such financing on the last day of the Financing Period. If
Purchaser terminates this Agreement by written notice to Seller prior to the
expiration of the Financing Period, the Earnest Money theretofore deposited by
Purchaser shall be immediately paid to Purchaser, together with any interest
earned thereon, and neither Purchaser nor Seller shall have any right,
obligation or liability under this Agreement, except for Purchaser's obligation
to indemnify Seller and restore the Property, as more fully set forth in
Paragraph 7.1.
26. TAX FREE EXCHANGE. Seller hereby agrees to cooperate with Purchaser in
the event that Purchaser desires to conduct a tax free exchange in a manner
which would cause the transaction contemplated hereby to qualify as a like-kind
exchange under Section 1031 of the Internal Revenue Code of 1986, as amended.
Notwithstanding anything contained in this Section 26 to the contrary, it is
understood and agreed that Seller shall not incur or be responsible for any
expenses related to said tax free exchange. Additionally, it is understood and
agreed that Purchaser's ability or inability to enter into a tax free exchange
shall in no way alter the terms of this Agreement or release Purchaser from any
obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
FOWLERSHORE & FLANAGAN, a California general
partnership
By: /s/ Darla L. Flanagan
------------------------------
Name: Darla L. Flanagan
Its: General Partner
SELLER:
HEATHER RIDGE LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Heather Ridge, Inc., an Illinois
corporation, its general partner
By: /s/ Jerry M. Ogle
--------------------------------
Name: Jerry M. Olge
--------------------------------
Its: Vice President & Secretary
--------------------------------
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Heather Ridge Apartments, Oklahoma City, Oklahoma
_________________ of CB Commercial Real Estate Group, Inc. ("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.
By:
------------------------------------
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Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Rent Roll
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August 16, 1996
Mr. Al Liberman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, IL 60015
Re: Forest Wood Apartments
Sherwood Apartments
Summit Ridge Apartments
Walnut Ridge Apartments
Willow Bend Lake Apartments
Wood Bridge Apartments
Dear Al:
This letter is confirm that the contracts for the above properties are
terminated and will not be reinstated until which time the non-refundable
earnest money can be wired and we are otherwise in agreement on all terms.
Very truly yours,
/s/ Harry Bookey
Harry Bookey
By:
--------------------------------
For Sellers
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