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 12, 1996
BALCOR PENSION INVESTORS - VI
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Exact Name of Registrant
Illinois 0-14332
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3319330
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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
<PAGE>
ITEM 5. OTHER INFORMATION
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a) 45 West 45th Street
As previously reported, on July 29, 1996, a limited partnership ("Limited
Partnership") in which the Partnership and three affiliates hold interests
which owns the 45 West 45th Street Office Building, New York City, New York,
contracted to sell the property to an unaffiliated party, Olmstead Properties,
Inc., a New York corporation, for a sale price of $10,300,000. Pursuant to a
First Amendment to the Agreement of Sale dated as of August 12, 1996, the
closing date has been extended from October 25, 1996 to November 12, 1996. The
purchaser has the option to further extend the closing to a date no later than
December 12, 1996 upon written notice to the Limited Partnership no later than
October 26, 1996 and the deposit of an additional $200,000 in earnest money no
later than November 8, 1996.
b) Noland Fashion Square loan
In 1989, the Partnership and two affiliates (together, the "Participants")
funded a $23,300,000 first mortgage loan (the "Loan") collateralized by the
Noland Fashion Square, Independence, Missouri. The Partnership's participating
percentage in the Loan is approximately 21%. As previously reported, the
Participants contracted to sell the Loan to an unaffiliated party, CS First
Boston Mortgage Capital Corp., for a sale price equal to 79.28% of the
principal balance of the Loan as of the closing date. The sale of the Loan
closed on August 22, 1996. The principal balance of the Loan at closing was
$22,356,107 and the sale price was $17,700,000. The Participants additionally
received a $25,000 premium from the purchaser.
From the proceeds of the sale, the Participants paid closing costs of $50,000
and $197,250 to an unaffiliated party as a commission. The Participants
received the remaining proceeds of $17,477,750 of which $250,000 will not be
available for use or distribution by the Participants until November 22, 1996.
The Partnership's share of the total net proceeds is approximately $3,751,000.
c) Woodscape Apartments
As previously reported, on July 15, 1996, the Partnership contracted to sell
Woodscape Apartments, Raleigh, North Carolina, for a sale price of $9,550,000
to an unaffiliated party, ERP Operating Limited Partnership, an Illinois
limited partnership. The sale closed on August 30, 1996. From the proceeds of
the sale, the Partnership paid $167,125 to an unaffiliated party as a brokerage
commission and $36,796 in closing costs. An affiliate of the third party
providing property management services for the property received a fee for
services rendered in connection with the sale of the property of $95,500. The
Partnership received the remaining proceeds of approximately $9,251,000. Of
such proceeds, $500,000 is being retained by the Partnership and will not be
available for use or distribution by the Partnership until 120 days after the
closing.
<PAGE>
d) Jonathan's Landing Apartments
In 1987, the Partnership and an affiliate (the "Participants") funded a
$23,500,000 first mortgage loan collateralized by the Jonathan's Landing
Apartments, Kent, Washington. The Partnership's share of the loan was
$11,045,000 for a participating percentage of 47%. In 1990, the original
borrower sold the property and the Participants received $3,000,000 which was
applied to the principal amount of the loan and $2,035,000 in participation
income. The Partnership's share of such amounts were $1,410,000 and $956,450.
The new owner executed a new $20,500,000 first mortgage note in favor of the
Participants. In 1995, a limited partnership (the "Limited Partnership") in
which each Participant holds an interest equal to its participating percentage
in the loan obtained title to the property through foreclosure.
On August 30, 1996, the Limited Partnership contracted to sell the property for
a sale price of $22,000,000 to an unaffiliated party, Commercial Ventures,
Inc., a Delaware corporation. The purchaser has deposited $200,000 into an
escrow account as earnest money. The remainder of the sale price will be
payable in cash at closing, scheduled for October 12, 1996. From the
proceeds of the sale, the Limited Partnership will pay $275,000 to an
unaffiliated party as a brokerage commission and $165,000 to an affiliate of
the third party providing property management services for the property as a
fee for services rendered in connection with the sale of the property. The
Limited Partnership will receive the remaining proceeds of approximately
$21,560,000, less closing costs, of which the Partnership's share will be
approximately $10,133,000, less the Partnership's share of 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 its 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 that the sale of the property may not
occur.
e) Shoal Run Apartments
In 1987, the Partnership funded a $9,450,000 loan collateralized by a first
mortgage on the Shoal Run Apartments, Birmingham, Alabama. The Partnership
obtained title to the property through foreclosure in 1993.
On September 5, 1996, the Partnership contracted to sell the property for a
sale price of $10,800,000 to an unaffiliated party, Merry Land & Investment
Company, Inc., a Georgia corporation. The sale closed on September 13, 1996.
From the proceeds of the sale, the Partnership paid $162,000 to an unaffiliated
party as a brokerage commission, $108,000 to an affiliate of the third party
providing property management services for the property as a fee for services
rendered in connection with the sale of the property and $20,800 in closing
costs. The Partnership received the remaining proceeds of $10,509,200. Neither
the General Partner nor any affiliate will receive a brokerage commission in
connection with the sale of the property. The General Partner will be
reimbursed by the Partnership for its actual expenses incurred in connection
with the sale.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(99) (a) First Amendment to Agreement of Sale relating to the
sale of 45 West 45th Office Building, New York City,
New York.
(b) Agreement of Sale and attachment thereto relating to the
sale of Jonathan's Landing Apartments, Kent, Washington.
(c) Agreement of Sale and attachment thereto relating to the
sale of Shoal Run Apartments, Birmingham, Alabama.
No information is required under Items 1, 2, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
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 PENSION INVESTORS-VI
By: Balcor Mortgage Advisors-VI, an
Illinois general partnership, its
general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: September 18, 1996
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is entered
into as of the 12th day of August, 1996, by and between Olmstead Properties,
Inc., a New York corporation ("Purchaser"), 45 West 45th Street Limited
Partnership, an Illinois limited partnership ("Seller") and The Balcor Company,
a Delaware corporation.
R E C I T A L S:
A. Purchaser, Seller and Balcor have entered into that certain Agreement
of Sale dated as of July 29, 1996 ("Purchase Agreement") with respect to the
purchase and sale of 45 West 45th Street, New York, New York.
B. Purchaser, Seller and Balcor desire to amend the Purchase Agreement
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Purchaser and Seller hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Purchase Agreement.
2. In the event of any inconsistency between the terms and the
provisions of the Purchase Agreement and the terms and provisions of this
Amendment, the terms and provisions of this Amendment shall govern and control.
3. Paragraph 3A(e) of the Purchase Agreement is amended by inserting the
phrase "based on the Existing Survey" immediately after the phrase "survey
reading" and before the close parenthesis and by deleting exception number 4.
4. Notwithstanding the provisions of Section 4A of the Purchase
Agreement, Seller, rather than Purchaser, shall pay for the cost of the
documentary or transfer stamps and other costs and transfer taxes described in
said Paragraph 4A, other than charges of the Title Insurer which are to be paid
by Purchaser.
5. The Title Commitment and other due diligence materials and
investigations disclose various alleged violations with respect to the
Property.
(a) With respect to the alleged May 8, 1990 elevator violation and
June 16, 1988 ECB Violation with respect to bathroom renovations, Seller shall
either cause such violations to be remedied and discharged of record or at
Closing Purchaser shall receive a credit in the amount of $2,000 with respect
to the May 8, 1990 elevator violation and a credit in the amount of $10,000
with respect to the June 16, 1988 ECB Violation, in each case, in the event not
remedied and discharged of record.
<PAGE>
(b) Purchaser and Seller acknowledge that a current environmental
report for the property will not be available for another week to ten days.
Purchaser agrees to deliver to Seller a copy of the report in the event the
report reveals remediation for which Purchaser requests Seller to contribute to
the cost thereof. In the event the environmental report discloses
environmental conditions with respect to which the engineer recommends
remediation and which were not disclosed in the Existing Report, and the cost
to perform such remediation, as reasonably determined by Purchaser and Seller,
is not greater than $50,000, then (a) Closing shall occur as provided in the
Purchase Agreement, as amended hereby, and (b) Purchaser shall be responsible
for the first $25,000 of such costs and Seller agrees to provide to Purchaser a
credit at closing equal to the amount by which the estimated cost of
remediation exceeds $25,000, said credit not to exceed $25,000. In the event
the reasonably estimated cost to remediate conditions not disclosed in the
Existing Report exceeds $50,000, then Purchaser shall have the right either to
terminate the Agreement by written notice to Seller given no later than three
business days after Purchaser has received the new environmental report or to
acquire the Property subject to such conditions with a credit against the
Purchase Price of $25,000.
(c) Seller agrees to use its commercially reasonable efforts to
remove all other violations disclosed in writing to Seller prior to Closing
provided Seller shall not be obligated to expend any funds or incur liability
in an amount in excess of $5,000 in the aggregate in connection therewith.
(d) With respect to the Local Law 10 Filing and the Class E system
approval, Seller agrees to cause the filing to be made and approval obtained
and, subject to the following sentence with respect to the Local Law 10 Filing,
to correct any hazardous conditions identified in the filing or in the
approval. Notwithstanding the foregoing, with respect to any hazardous
condition disclosed in the Local Law 10 Filing, Seller shall not be obligated
to expend any funds or incur any liability in an amount in excess of $10,000 in
the aggregate. It shall be a condition to Purchaser's obligation to close that
the Class E system approval has been issued and delivered to Purchaser and the
Local Law 10 Filing filed (with evidence thereof furnished to Purchaser) and
all material hazardous conditions corrected.
(e) Seller's sole liability, and Purchaser's sole remedies, with
respect to the violations described above and all other violations of which
Purchaser has knowledge as of the date hereof, shall be as set forth in clauses
(a), (b), (c) and (d) above.
6. The Closing Date shall be November 12, 1996 provided Purchaser shall
have the right to extend the Closing Date to a date no later than December 12,
1996 provided Purchaser delivers to Seller written notice no later than October
26, 1996 and pays to Seller, on or before November 8, 1996, the amount of
$200,000 which shall be applied toward the Purchase Price and which amount
shall be deemed "Additional Earnest Money".
<PAGE>
7. No later than fourteen (14) days prior to the Closing Date, Seller
agrees to deliver notice of cancellation to the parties to the Service
Contracts identified on Exhibit G which are cancelable on 30 day's notice or
less and which are identified in writing by Purchaser to Seller. In addition,
Seller agrees not to enter into any new service contracts or except as provided
in the preceding sentence with respect to termination, modify any existing
service contracts, which new service contract or amendment would be binding on
Purchaser.
8. (a) Paragraph 16.B(vi) is deleted in its entirety and the following
is substituted therefor:
"Seller has not either directly or through its agents, and other third
parties, entered into any contract with any labor organization or service
provider (other than those listed on Exhibit G) regarding the Property, nor is
it permitted to do so through the Closing Date"; and
(b) Paragraph 16.B(vii) is amended by deleting the phrase "and
updated as of the Closing Date".
9. On the Closing Date, Seller shall assign to Purchaser all of Seller's
right, title and interest if any, in and to all tax certiorari proceedings and
the right to receive payment as a result thereof. Purchaser agrees to
indemnify, defend and hold Seller and all Affiliates of Seller harmless from
any and all liability, costs, and expense (including without limitation
reasonable attorney's fees, court costs and costs of appeal), suffered or
incurred by Seller or Affiliates of Seller as a result thereof, including,
without limitation, claims of current and prior tenants of the Property.
Seller agrees to cooperate, at no cost, expense or liability to Seller, with
Purchaser in connection with the tax certiorari proceedings, if any, including,
without limitation, making the books and records relating to the tax certiorari
proceedings available to the New York City Law Department should they request
an examination of the same.
10. Seller agrees to cooperate with Purchaser in Purchaser's effort to
obtain financing for the Property provided in no event shall Seller be
obligated to incur any liability or expend any funds in connection therewith.
Without limiting the generality of the foregoing, Seller agrees to cooperate in
an effort to obtain non-disturbance agreements from tenants of the Property
including, without limitation, First Dept., Leo Wolleman and Steve
Schwartzapfel. It shall not be a condition to Purchaser's obligation to close
the transaction that non-disturbance agreements are obtained.
11. This Amendment 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.
12. Exhibit K is modified to reflect that the reference to "Service
Contracts" as defined therein shall be limited to only those Service Contracts
set forth on Exhibit G which have not been cancelled on or before the Closing
Date as provided in Paragraph 7 hereof and those service contracts entered into
after the date hereof with Purchaser's consent as provided in Paragraph 7
hereof.
<PAGE>
13. Supplementing Paragraph 18 of the Purchase Agreement and without
limiting the provisions contained therein, Seller agrees to use commercially
reasonable efforts (but without any obligation to expend any funds or incur any
liability) to obtain Tenant Certificates from all of the tenants of the
Property.
14. Except as amended hereby, the Purchase Agreement remains unmodified
and in full force and effect, including, without limitation, Paragraphs 2, 7
and 10 thereof.
Seller shall give purchaser a credit against the Purchase Price at closing of
$75,000.00 representing rent credits due Weber's, Buller Owens and First Dept.,
as well as a construction credit due Weber's.
PURCHASER:
OLMSTEAD PROPERTIES, INC., a New York corporation
By: /s/ Samuel Rosenblatt
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Name: Samuel Rosenblatt
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Its: President
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SELLER:
45 W. 45TH STREET LIMITED PARTNERSHIP,
an Illinois limited partnership
By: 45 W. 45TH Street Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
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Name: James E. Mendelson
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Its: Authorized Rep.
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BALCOR:
THE BALCOR COMPANY, a Delaware corporation
By: /s/ James E. Mendelson
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Name: James E. Mendelson
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Its: Authorized Rep.
--------------------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 30th
day of August, 1996, by and between COMMERCIAL VENTURES, INC., a Delaware
corporation ("Purchaser"), and JONATHONS LANDING 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 Twenty Two Million and No/100 Dollars ($22,000,000.00) (the
"Purchase Price"), that certain property commonly known as Jonathans Landing,
Kent, Washington 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 Two Hundred
Thousand Dollars ($200,000.00) (the "Earnest Money") to be held in escrow by
and in accordance with the provisions of the Escrow Agreement ("Escrow
Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Evergreen Title Company, Inc.
for Lawyers Title Insurance Corporation dated April 1, 1996 for the Property
(the "Original 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 (as defined below) based on
the Title Commitment (as defined below); (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 "Survey"
(hereinafter defined); (d) matters caused by the actions of Purchaser; and (e)
the title exceptions set forth in Schedule B of the Original Title Commitment
as in Schedule "B" - Section 1 II C. Numbers 1 through 20, inclusive, (except
that Numbers 1-12, and 15-18 do not interfere with the operation of buildings),
21 (to the extent not due and payable), 23 and 27 to the extent that same
affect the Property. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". Purchaser shall obtain an updated title commitment
(the "Title Commitment") from Old Republic Title Insurance Company (the "Title
Insurer"). 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 shall pay for the
costs of the Title Commitment and Title Policy (in an amount no greater than
$19,930.00), and Purchaser shall pay for the cost of any endorsements to the
Title Policy which Purchaser or its lender require and all escrow charges.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by
Smith-Roberts National Corporation (the "Survey"). The Survey will be
certified to Purchaser, Purchaser's lender and the Title Insurer. Seller will
pay the costs of updating the Survey. However, if Purchaser requires any
additional survey work over and above that required by the Title Insurer in
order to issue the Title Policy, Purchaser shall pay for the cost of such
additional work. Purchaser hereby acknowledges that all matters disclosed by
the 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, Seller
shall pay for costs of the documentary or transfer stamps to be paid with
reference to the "Deed" (hereinafter defined), and Seller shall pay the cost of
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 closing
costs and charges of the Title Insurer in connection with this transaction.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the 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 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 $200,000.00, 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 $200,000.00, 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. Seller shall maintain casualty and rent loss insurance on the
Property in accordance with its current practices. 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, including rent
loss proceeds for the period following closing, if any, 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 10, 1996 and ending at 5:00
p.m. Chicago time on August 23, 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. 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, unaudited year end 1995 and 1996 year to date
operating statements. Furthermore, if the following are reasonably available
to Seller, Seller shall deliver to Purchaser plans and specifications.
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.
Purchaser acknowledges the Inspection Period has terminated and that
Purchaser no longer has any right to terminate this Agreement under this
Paragraph 7.1.
7.2. Seller (or its predecessor) acquired title to the Property by
foreclosure or deed-in-lieu thereof. 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 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
<PAGE>
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. Such financial information is the
financial information relied upon by Seller for reporting purposes to Seller's
partners and in preparation of Seller's tax returns. Seller and Purchaser
hereby acknowledge that such information has been provided to Purchaser at
Purchaser's request. Seller makes no representation or warranty that such
material is complete or, except with respect to financial information prepared
by Seller which relates to prior periods and not projections, budgets, or the
like, 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.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment Report, Chandler's Bay Apartment Complex, 1024
North Central Avenue, Kent, Washington 98032 dated May 8, 1992 and an Updated
Phase I Environmental Site Assessment Report, Chandler's Bay Apartment Complex,
1024 North Central Avenue, Kent, Washington 98032 dated July 5, 1995 (together,
the "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.
<PAGE>
8. CLOSING. The closing of this transaction (the "Closing") shall on October
12 (the "Closing Date"), at the office of First City Escrow, 4221 Wilshire
Blvd., #388, Los Angeles, California, 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 Washington 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. FINANCING CONTINGENCY. Purchaser's and Seller's obligations under this
Agreement are contingent upon Purchaser's ability to procure a commitment for
first mortgage financing for the acquisition of the Property in an amount of
not less than that proposed by Lehman Brothers on terms proposed by Lehman
Brothers (the "Financing Contingency") on or before September 25, 1996.
Purchaser acknowledges and agrees that it shall submit its application (or
equivalent) for a commitment for such financing in accordance with the
provisions set forth above by September 9, 1996 and pay all application and
other fees associated therewith. Purchaser shall provide Seller with a letter
from Lehman Brothers evidencing that said application (or equivalent) has been
received and completed by September 12, 1996. In the event Purchaser has
complied with the requirements set forth in the preceding sentence, but is
unable to satisfy the Financing Contingency on or before September 25, 1996,
then Purchaser shall have the option, upon written notice to Seller, exercised
no later than September 25, 1996, to terminate this Agreement, in which case
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 delivered to Purchaser,
and neither party shall have any further liability to the other, except for
those covenants and obligations hereunder which expressly survive the
termination of this Agreement. In the event Purchaser fails to deliver such
notice to Seller, the Financing Contingency shall be deemed satisfied and the
parties hereto shall proceed to Closing.
10. CLOSING DOCUMENTS.
10.1. 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.
10.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
<PAGE>
10.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
10.2.2. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
10.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
10.2.4. an assignment and assumption of leases and security
deposits (in the form attached hereto as Exhibit I);
10.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
10.2.6. original, and/or copies of, leases affecting the Property
in Seller's possession, which shall be delivered at the Property;
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
10.2.8. possession of the Property to Purchaser, subject to the
terms of leases;
10.2.9. evidence of the termination of the management agreement;
10.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
and
10.2.11. an updated rent roll.
11. 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.
12. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
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
<PAGE>
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS (i) 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 HEREOF; (ii) ITS FAILURE TO EXPEND UP TO
$200,000 IF (A) SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED
EXCEPTION FOR A COST NOT TO EXCEED $200,000 OR (B) THE TITLE INSURER IS WILLING
TO INSURE OVER A MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $200,000
IN ACCORDANCE WITH THE TERMS HEREOF WITH THE TERMS HEREOF OR (iii) ITS WILLFUL
REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
13. PRORATIONS.
13.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); water and
other utility charges; fuels; prepaid operating expenses; real and personal
property taxes and other similar items shall be adjusted ratably as of 11:59
p.m. on the 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.
13.2. All rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date shall be deemed a "Post-Closing Receipt" until
such time as all such indebtedness is paid in full. If on the Closing Date
rent is in arrears only for the calendar month in which the Closing occurs,
then the first rent collected by Purchaser shall be apportioned between Seller
and Purchaser. All other rent received by Purchaser after the Closing Date
shall be applied first to current rental obligations and thereafter as a
Post-Closing Receipt. 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.
<PAGE>
14. 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.
15. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 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 Assignee is
adjudicated as a bankrupt or insolvent, or Assignee files any petition,
application for relief or answer-seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law, code or regulation relating to bankruptcy, insolvency, or other relief for
debtors (collectively, a "Bankruptcy Filing") on or before the Closing Date,
said Bankruptcy Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Earnest Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
16. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Pinnacle Realty Management Company ("Pinnacle") (to be paid by
Seller). Any commission due MJ Realty Group will be paid by Pinnacle in
accordance with Seller's agreement with Pinnacle. Seller's commission to
Pinnacle 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 Pinnacle and MJ
Realty Group. The indemnifying party shall undertake its obligations set forth
in this Paragraph 16 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this
Paragraph 16 will survive the Closing and delivery of the Deed.
17. REPRESENTATIONS AND WARRANTIES.
17.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Mark A. Saturno or Michael Becker (together, "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.
Seller's Representatives shall deliver a copy of the representations and
warranties contained in Section 17.2 below to the existing on-site property
<PAGE>
manager, for its review, and request the on-site property manager to inform
Seller's Representatives of any inaccuracies contained in such representations
and warranties. Any knowledge or notice given, had or received by any of
Seller's agents, servants or employees shall not be imputed to Seller, the
general partner or limited partners of Seller, the subpartners of the general
partner or limited partners of Seller or Seller's Representative.
17.2. Subject to the limitations set forth in Paragraph 17.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing:
(i) Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the Property;
(ii) Seller has the power to execute 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 date set forth thereon; and
(iv) Seller has not received written notice of default under Title IX of
the Americans with Disabilities Act, any fire code or building code that have
not been previously corrected.
17.3. 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.
18. LIMITATION OF LIABILITY.
18.1. 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.
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered 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
<PAGE>
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: Commercial Ventures, Inc.
500 South Sepulveda
Suite 303
Los Angeles, CA 90049
Attention: Joseph F. Ruvolo and Roy Allenstein, Esq.
(310) 471-0206
(310) 471-6770 (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.
21. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
<PAGE>
22. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Washington, except that with respect to the retainage of
the Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
23. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
24. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
25. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
COMMERCIAL VENTURES, INC., a Delaware corporation
By: /s/ Richard J. Nathan
-----------------------------------
Name: Richard J. Nathan
Its: President
SELLER:
JONATHONS LANDING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Jonathons Landing, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
------------------------------------
Name: James E. Mendelson
------------------------------------
Its: Authorized Rep.
------------------------------------
<PAGE>
Pinnacle Realty Management Company ("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 _____, 1996
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.
Pinnacle Realty Management Company
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
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 5th
day of September, 1996, by and between MERRY LAND & INVESTMENT COMPANY, INC., a
Georgia corporation ("Purchaser"), and BALCOR PENSION INVESTORS-VI, 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 Ten Million Eight Hundred Thousand And No/100 Dollars
($10,800,000.00) (the "Purchase Price"), that certain property commonly known
as Shoal Run Apartments, Birmingham, Alabama 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 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. 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 Chicago Title Insurance
Company (hereinafter referred to as "Title Insurer") dated August 27, 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; (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 "Updated Survey" (hereinafter defined); (d)
matters caused by the actions of Purchaser; and (e) the title exceptions set
forth in Schedule B - Section 2 of the Title Commitment as Numbers 4 through 8
inclusive, to the extent that same affect the Property and association dues not
yet due to North Shelby County Library District and rights of tenants under
leases. 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"). Purchaser
shall pay for the costs of the Title Commitment, Title Policy and any
endorsements to, or extended coverage on, the Title Policy.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by Jay &
Powell dated June 12, 1996 (the "Updated Survey"). Seller shall cause the
Updated Survey to be certified to Purchaser prior to Closing. Seller shall pay
for the costs of the Updated Survey and certification thereto. Purchaser
hereby acknowledges that all matters disclosed by the Updated 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.
In addition to the costs set forth in Paragraphs 3.1 and 3.2, Seller 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, 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.
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 within
thirty (30) days from the date of the date-down to the Title Commitment at
Seller's expense, (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 either
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.
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.
<PAGE>
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, but in no event more than sixty
(60) days) 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, in the event of such
assignment Seller will provide a credit to Purchaser in the amount of the
applicable 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 will provide a credit to Purchaser in the amount of the
applicable 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 August 12, 1996 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,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills for 1995, utility
account numbers, service contracts, and unaudited year-end 1995 and
year-to-date 1996 operating statements. Furthermore, if the following are
reasonably available to Seller, Seller shall deliver to Purchaser plans and
specifications.
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,
subject to Purchaser's reasonable approval of the attorneys.
<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, 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 acquired title to the Property by foreclosure (or
deed-in-lieu thereof) and, therefore, 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
<PAGE>
with any claims which Purchaser may have against Seller or the Affiliates of
Seller, and Purchaser hereby agrees not to assert any claims for contribution,
cost recovery or otherwise, against Seller or the Affiliates of Seller,
relating directly or indirectly to the existence of asbestos or Hazardous
Materials on, or environmental conditions of, the Property, whether known or
unknown. As used herein, "Environmental Laws" means all federal, state and
local statutes, codes, regulations, rules, ordinances, orders, standards,
permits, licenses, policies and requirements (including consent decrees,
judicial decisions and administrative orders) relating to the protection,
preservation, remediation or conservation of the environment or worker health
or safety, all as amended or reauthorized, or as hereafter amended or
reauthorized, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601
et seq., the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
Section 6901 et seq., the Emergency Planning and Community Right-to-Know Act
("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the Clean Air Act
("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water Pollution Control
Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the Toxic Substances
Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe Drinking Water
Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq., the Atomic
Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational Safety and
Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the Hazardous Materials
Transportation Act (the "Transportation Act"), 49 U.S.C. Section 1802 et seq.
As used herein, "Hazardous Materials" means: (1) "hazardous substances," as
defined by CERCLA; (2) "hazardous wastes," as defined by RCRA; (3) any
radioactive material including, without limitation, any source, special nuclear
or by-product material, as defined by AEA; (4) asbestos in any form or
condition; (5) polychlorinated biphenyls; 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" prepared by Environmental Management
Group, Inc. (EMG Project No. 94-0450-09C), dated April 15, 1994 ("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 take place
on October 10, 1996, or at Purchaser's option, prior to October 10, 1996, upon
five (5) business days prior notice to Seller (the "Closing Date"), at the
office of Title Insurer, Birmingham, Alabama, 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 Alabama, 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) and, if required by applicable law any state withholding tax affidavit;
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 as of
the Closing;
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 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, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
refundable security deposits (which will be assigned to and assumed by
Purchaser and credited to Purchaser at Closing); water and other utility
<PAGE>
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 the Closing Date, and credited against the balance of the cash due at
Closing with the Purchaser responsible for all expenses and entitled to all
income for the Closing Date. Assessments payable in installments which are due
subsequent to the Closing Date shall be paid by Purchaser. If the amount of
any of the items to be prorated is not then ascertainable, the adjustments
thereof shall be on the basis of the most recent ascertainable data. All
prorations will be final except as to delinquent rent referred to in Paragraph
12.2 below.
12.2. All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
the Closing Date shall be deemed a "Post-Closing Receipt" until such time as
all such indebtedness is paid in full. Any Post-Closing Receipt shall be first
applied to basic rent for the period following the Closing. If after such
application, unapplied funds remain from such Post-Closing Receipt, then,
within ten (10) days following each receipt by Purchaser of a Post-Closing
Receipt, Purchaser shall pay the remainder of such Post-Closing Receipt to
Seller. Purchaser shall not be required to make any extraordinary efforts to
collect any 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 exceeding $5,000 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 except to a
wholly-owned subsidiary corporation or partnership (but any such assignment
shall not release Purchaser from its obligations under this Agreement). Any
other 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.
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 (to be paid by Seller). Seller's commission to CB
Commercial 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
<PAGE>
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. 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 James Mendelson (the "Seller's Representative"), and any
representation or warranty of the Seller is based upon those matters of which
the Seller's Representative has actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or employees shall
not be imputed to Seller, the general partner or limited partners of Seller,
the subpartners of the general partner or limited partners of Seller or
Seller's Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property or Seller which would affect Seller's ability to convey the Property
to Purchaser; (ii) Seller has the power to execute and deliver this Agreement
and consummate the transactions contemplated herein; and (iii) the rent roll
attached hereto as Exhibit L which Seller will update as of the Closing Date is
accurate as of the date set forth thereon.
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.
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 nor shall Purchaser have the right to
receive any judgment in or otherwise recover against the assets of the
aforesaid 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 or to receive any
judgment in or otherwise recover against the assets of Seller, the Affiliates
of Seller or their respective beneficiaries, affiliates, shareholders,
partners, officers, agents or employees, heirs, successors or assigns.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, 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
(847) 317-4462 (FAX)
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4367
(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: Merry Land & Investment Company, Inc.
624 Ellis Street
Augusta, Georgia 30901
Attention: Michael N. Thompson
(706) 722-6756
(706) 722-744 (FAX)
and one copy to: Hull, Towill, Norman and Barrett
801 Broad Street
Augusta, Georgia 30901
Attention: John Gibson, Esq.
(706) 722-4481
(706) 722-9779 (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 6:00 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
<PAGE>
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.
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 Alabama, 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. OTHER. During the period ending on the sixtieth (60th) day following
the Closing Date, Seller will, at reasonable times and upon reasonable advance
notice, make available to Purchaser's representatives such books, accounts and
records necessary for Purchaser to conduct an audit of the Property's prior
fiscal year. Such audit and inspection will be conducted at Purchaser' sole
cost and expense for the purpose of satisfying Purchaser's requirements as a
publicly-held entity.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
MERRY LAND & INVESTMENT COMPANY, INC.
By: /s/ Michael N. Thompson
-----------------------------------
Name: Michael N. Thompson
-----------------------------------
Its: Vice President
-----------------------------------
SELLER:
BALCOR PENSION INVESTORS-VI, an Illinois
limited partnership
By: Balcor Mortgage Advisors-VI, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ James E. Mendelson
---------------------------------
Name: James E. Mendelson
---------------------------------
Its: Authorized Rep.
---------------------------------
<PAGE>
_________________ of CB Commercial ("Seller's Broker") executes 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
_________________, 1996 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.
CB Commercial
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
<PAGE>
