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) May 20, 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
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ITEM 5. OTHER INFORMATION
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a) Hawthorne Heights Apartments
In 1985, the Partnership funded a $6,000,000 loan collateralized by a first
mortgage on the Hawthorne Heights Apartments, Indianapolis, Indiana. The
Partnership obtained title to the property through foreclosure in 1990.
On May 20, 1996, the Partnership contracted to sell the property for a sale
price of $8,300,000 to an unaffiliated entity, New Plan Realty Trust, a
Massachusetts business trust. The purchaser has deposited $250,000 into an
escrow account as earnest money and will pay the remaining $8,050,000 at
closing, scheduled for June 18, 1996. From the proceeds of the sale, the
Partnership will pay closing costs and $207,500 to an unaffiliated party as a
brokerage commission. 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. In addition, an amount not to
exceed $250,000 will be retained by the Partnership and will not be available
until 120 days after closing.
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, its possible the sale of the property may not occur.
b) 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 May 31, 1996, the Partnership contracted to sell the property for a sale
price of $12,000,000 to an unaffiliated party, Mid-America Apartments, L.P., a
Tennessee limited partnership. The purchaser has deposited $120,000 into an
escrow account as earnest money and will pay the remaining $11,880,000 at
closing, scheduled for July 31, 1996. The purchaser will pay all closing costs
relating to the sale, except that the Partnership will pay one-half of the
closing escrow fee and specified title costs. From the proceeds of the sale,
the Partnership will pay $180,000 to an unaffiliated third party as a brokerage
commission. An affiliate of the third party providing property management
services for the Partnership and certain affiliates will receive a fee for
services in connection with the sale of the property of $120,000. In addition,
an amount not to exceed $120,000 will be retained by the Partnership and not be
available until 60 days after the closing. Neither the General Partner nor any
affiliate will receive a brokerage commission in connection with the sale of
the property. The General Partner will be reimbursed by the Partnership for
its actual expenses incurred in connection with the sale, including legal fees.
Affiliates of the General Partner have simultaneously contracted to sell 8
other properties to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible that the sale of the property may not
occur.
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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) Agreement of Sale and attachment thereto relating to the
sale of Hawthorne Heights Apartments, Indianapolis,
Indiana.
(b) (1) Agreement of Sale relating to the sale
of Shoal Run Apartments, Birmingham, Alabama.
(b) (2) First Amendment to Agreement of Sale and Escrow
Agreement 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.
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: June 18, 1996
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AGREEMENT OF SALE
THIS AGREEMENT is entered into as of the 20th day of May, 1996, by and
between NEW PLAN REALTY TRUST, a Massachusetts business trust ("Purchaser") and
HAWTHORNE HEIGHTS LIMITED PARTNERSHIP, an Illinois Limited Partnership
("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Eight Million Three Hundred Thousand and No/100 Dollars
($8,300,000.00) ("Purchase Price"), that certain property ("Property") in
Indianapolis, Indiana, more particularly described on Exhibit A attached
hereto, which Property is known as Hawthorne Heights Apartments, including all
easements, tenements, hereditaments, rights, licenses, privileges and
appurtenances, whether or not of record, in any way belonging or relating
thereto and all mineral, oil, gas and other hydrocarbon substances on or under
the land and all development, air, water and other rights in any way belonging
or relating to the land or the improvements thereon, all right, title and
interest in and to any streets, roads, alleys or other public ways adjoining or
serving the land, including any land lying in the bed of any street, road,
alley or other public way, open or proposed, and any strips, gores, culverts
and rights-of-way adjoining or serving the land (including all riparian and
other rights in and to submerged lands). Included in the Purchase Price is all
of the personal property owned by Seller and used in connection with or located
on the Property, including but not limited to all lease files and copies of all
books, records and other files which are used in connection with the ownership
or operation of the Property and the personal property which is set forth on
Exhibit B, which shall be transferred to Purchaser at Closing (as hereinafter
defined) by a Bill of Sale.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $250,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term
is defined in the Escrow Agreement), by and in accordance with the
provisions of the Escrow Agreement ("Escrow Agreement") attached hereto as
Exhibit C;
b. On the Closing Date (as hereinafter defined), $8,300,000.00
(inclusive of all Earnest Money) adjusted in accordance with the
prorations by federally wired "immediately available" funds delivered to
the Title Insurer (as hereinafter defined) no later than 1:00 P.M. Central
Time on the Closing Date. If the funds are not received by the Title
Insurer by 1:00 P.M. Central Time, then $2,000.00 shall be added to the
cash due at Closing.
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment dated March
20, 1996 ("Title Commitment") for an owner's standard coverage title insurance
policy 1992 Form B ("Title Policy") issued by Lawyers Title Insurance Company
("Title Insurer"). The owner's Title Policy issued at Closing will be in the
amount of the Purchase Price subject only to real estate taxes not yet due and
payable, and the special title exceptions set forth in Schedule B-Section 2,
Numbers 7 through 10 and 12 of the Title Commitment. Exceptions 7 through 10
and 12 are hereinafter referred to as the "Permitted Exceptions". The Title
<PAGE>
Commitment shall be conclusive evidence of good title as therein shown as to
all matters insured by the policy, subject only to the exceptions therein
stated. On the Closing Date, Seller shall cause the Title Insurer to issue the
Title Policy or a "marked up" commitment in favor of Purchaser containing only
the Permitted Exceptions and the "extended coverage", and the special
endorsements requested by Purchaser. Seller shall pay the costs of the Title
Policy; however, Purchaser shall pay the costs of "extended coverage" or any
special endorsements which Purchaser requires.
b. Purchaser acknowledges receipt of a survey ("Survey") of the
Property prepared by MSE Surveying dated April 12, 1996. Prior to the Closing,
Seller will have the Survey certified to the Purchaser. However, if Purchaser
requires any additional survey work, Purchaser shall pay for the cost of such
additional work.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed ("Deed") in recordable form
subject only to the Permitted Exceptions. If Seller is unable to convey title
to the Property subject only to the Permitted Exceptions because of the
existence of an additional title exception ("Unpermitted Exception"), then
Seller shall make all reasonable efforts to remove the Unpermitted Exception
and shall remove any Unpermitted Exception caused by Seller subsequent to March
20, 1996 with the intention to prevent the consummation of this Agreement. If
Seller is unable to remove the Unpermitted Exception, then Seller shall so
notify Purchaser and Purchaser can elect to take title to the Property subject
to the Unpermitted Exception or terminate this Agreement. If Purchaser elects
to terminate this Agreement, then the Earnest Money plus all accrued interest
shall be delivered to the Purchaser and, subject to the survival provisions of
Paragraph herein, neither party shall have any further liability hereunder.
Notwithstanding the aforesaid, Seller shall be obligated to remove all liens
which are of a definite or ascertainable amount.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share
the costs of the recording of the Deed.
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $200,000.00 or less, or in the case of Personal Property, for
$10,000.00 or less, Purchaser shall proceed with the Closing and accept the
Property in its damaged condition together with an assignment from Seller of
all insurance proceeds and receive a credit at Closing in the amount of the
deductible. In such event, Purchaser shall have the right to negotiate the
settlement of the insurance claim with the insurance carrier. Seller shall
execute whatever documents are reasonably required in order to enable Purchaser
to conduct those negotiations. If the cost of repair or restoration exceeds
those amounts, then Purchaser, upon notice to Seller served within twenty (20)
days of receipt of notice from Seller of the casualty, can elect to either:
(a) terminate this Agreement or (b) accept the Property in its damaged
condition together with an assignment from Seller of all insurance proceeds and
receive a credit at Closing in the amount of the deductible. In such event,
Purchaser shall have the right to negotiate the settlement of the insurance
claim with the insurance carrier and Seller shall execute whatever documents
are reasonably required in order to enable Purchaser to conduct those
negotiations. If Purchaser has not given its notice prior to the Closing Date
because the twenty (20) day period has not expired, then the Closing Date shall
<PAGE>
be extended until one (1) business day after Purchaser is required to give its
notice.
b. If condemnation proceedings ("Proceedings") are instituted
against the Property, or if Seller receives notice that Proceedings are going
to be commenced, then Purchaser can elect to either take the Property subject
to the Proceedings and receive from Seller an assignment of Seller's interest
in the Proceedings and any award pursuant to the Proceedings or terminate this
Agreement. If Purchaser elects to terminate this Agreement, it shall be by
notice to the Seller within five (5) days after Seller notifies Purchaser of
the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
7. AS-IS CONDITION.
a. Seller acquired title to the Property by virtue of a deed in
lieu of foreclosure, and therefore, except as may otherwise be specifically set
forth elsewhere in this Agreement, Seller cannot make any representations as to
the condition of the Property upon which Purchaser can rely. Any information
which Seller has as to the leases is based solely upon information which Seller
obtained subsequent to its acquisition of the Property. Purchaser is not
relying on Seller having made any inquiry as to the condition of the Property
or the leases. Purchaser acknowledges and agrees that it will be purchasing
the Property based solely upon its inspection and investigations of the
Property and that, except as may otherwise be specifically set forth elsewhere
in this Agreement, Purchaser will be purchasing the Property "AS IS" and "WITH
ALL FAULTS" based upon the condition of the Property as of the date of this
Agreement, subject to reasonable wear and tear and loss (subject to Paragraph )
by fire or other casualty or condemnation from the date of this Agreement until
the Closing Date. Without limiting the foregoing, Purchaser acknowledges that,
except as may otherwise be specifically set forth elsewhere in this Agreement,
neither Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any Hazardous Materials or Hazardous
Substances (as such terms are defined below), the tenants of the Property or
the leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning, environmental or building laws, rules or regulations
affecting the Property. Seller makes no representation that the Property
complies with Title III of the Americans With Disabilities Act or, except as
may be specifically set forth elsewhere in this Agreement, any fire codes or
building codes. Except for the breach of the representation set forth in
Paragraph b.ix., Purchaser hereby releases Seller from any and all liability in
connection with any claims which Purchaser may have against Seller, and except
for the breach of the representation set forth in Paragraph b.ix., Purchaser
hereby agrees not to assert any claims, for damage, loss, compensation,
contribution, cost recovery or otherwise, against Seller, whether in tort,
contract, or otherwise, relating directly or indirectly to the existence of
asbestos or Hazardous Materials or Hazardous Substances on, or environmental
<PAGE>
conditions of, the Property, or arising under the Environmental Laws (as such
term is hereinafter defined), or relating in any way to the quality of the
indoor or outdoor environment at the Property. This release shall survive the
Closing. As used herein, the term "Hazardous Materials" or "Hazardous
Substances" means (i) hazardous wastes, hazardous materials, hazardous
substances, hazardous constituents, toxic substances or related materials,
whether solids, liquids or gases, including but not limited to substances
defined as "hazardous wastes," "hazardous materials," "hazardous substances,"
"toxic substances," "pollutants," "contaminants," "radioactive materials," or
other similar designations in, or otherwise subject to regulation under, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substance
Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802; the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 1101 et seq.; the Atomic Energy
Act ("AEA"), 42 U.S.C. Section 2011 et seq.; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the Clean Water Act
("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401
et seq.; and in any permits, licenses, approvals, plans, rules, regulations or
ordinances adopted, or other criteria and guidelines promulgated pursuant to
the preceding laws or other similar federal, state or local laws, regulations,
rules or ordinance now or hereafter in effect relating to environmental matters
(collectively the "Environmental Laws"); and (ii) any other substances,
constituents or wastes subject to any applicable federal, state or local law,
regulation or ordinance, including any Environmental Law, now or hereafter in
effect, including but not limited to (A) petroleum, (B) refined petroleum
products, (C) waste oil, (D) waste aviation or motor vehicle fuel,
(E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as may be specifically set
forth elsewhere in this Agreement, 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, except as may be specifically set forth
elsewhere in this Agreement, releases Seller from any liability with respect to
such historical financial information.
8. CLOSING. The closing ("Closing") of this transaction shall be on
June 18, 1996 ("Closing Date"), at the office of the Seller's attorney, at
which time Seller shall deliver possession of the Property to Purchaser. The
Closing Date may be extended by Purchaser for two days because of a "force
majeure". The Closing Date is also subject to extension pursuant to Paragraph
and of this Agreement.
<PAGE>
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement and to the Title Insurer the balance of the Purchase
Price, and such other documents as may be reasonably required by the Title
Insurer in order to consummate the transaction as set forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed (in the form of Exhibit E attached hereto)
subject to the Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser; an inventory of the Personal Property and a Bill of Sale for the
same (in the form of Exhibit F attached hereto); an executed closing statement;
an executed assignment and assumption of all service contracts (in the form of
Exhibit G attached hereto); an executed assignment and assumption of all leases
and security deposits (in the form of Exhibit H attached hereto); the tenant
leases which shall be available at the Property; all assignable licenses and
permits relating to the use, occupancy or operation of the Property, together
with an assignment thereof (in the form of Exhibit I attached hereto); updated
Rent Roll (as hereinafter defined) with a list attached of all tenant
concessions and allowances and rental commissions owed; a notice to the tenants
of the transfer of title and the assumption by Purchaser of the landlord's
obligations under the leases and the obligation to refund the security deposits
which have been assigned or credited to Purchaser (in the form of Exhibit J
attached hereto); a non-foreign affidavit (in the form of Exhibit K attached
hereto); an assignment of intangibles (in the form of Exhibit L attached
hereto); a copy of the notice terminating the management agreement effective as
of the Closing Date; 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. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT OF ANY 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 AND EXCLUSIVE RIGHT
TO DAMAGES OR ANY OTHER REMEDY. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL
DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
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 PLUS THE RIGHT TO RECOVER THIRD
PARTY EXPENSES IN AN AMOUNT NOT TO EXCEED $100,000.00, AND THIS AGREEMENT SHALL
TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW
OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED AND THE DOCUMENTS WHICH
SELLER IS REQUIRED TO DELIVER AT CLOSING, THEN PURCHASER WILL BE ENTITLED TO
SUE FOR SPECIFIC PERFORMANCE OR ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF
$250,000.00. THE PARTIES AGREE THAT PURCHASER'S ACTUAL DAMAGES IN THE EVENT OF
A SELLER'S REFUSAL TO DELIVER THE DEED AND THE DOCUMENTS WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT $250,000.00 HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF PURCHASER'S DAMAGES.
<PAGE>
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents) and other income; refundable security and other deposits (which
will be assigned to and assumed by Purchaser and a check in the amount of the
security and other deposits will be given to Purchaser at Closing); water and
other utility charges; fuels; prepaid and unpaid operating expenses; real and
personal property taxes with 1996 taxes payable in 1997 prorated on 102% of the
1995 taxes which are payable in 1996; and other similar items shall be adjusted
ratably as of 11:59 P.M. on the day preceding the Closing Date ("Proration
Date"), and credited or debited to the balance of the cash due at Closing.
Tenant allowances and concessions and unpaid leasing commissions for leases
entered into prior to the Closing Date will be adjusted and prorated so as to
provide that Seller is responsible for all such matters. If the amount of any
of the items to be prorated is not then ascertainable, the adjustment thereof
shall be on the basis of the most recent ascertainable data. All prorations
will be final except as to Delinquent Rents referred to in b below. If special
assessments have been levied against the Property for completed improvements,
then they shall be paid by the Seller whether the bills are payable prior to or
after the Closing Date. All assessments first coming due after the Closing for
incomplete improvements shall be paid by Purchaser.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears ("Delinquent Rent") for the calendar month in which the Closing occurs,
then Seller's prorata share of such Delinquent Rent collected during the month
of Closing will be delivered to Seller. If any Delinquent Rent is collected by
either Purchaser or Seller after the month in which the Closing occurs, then
such rents so collected shall first be applied to current rent and then to
Delinquent Rent in the inverse order of its maturity. Purchaser and Seller
shall deliver to the other party its pro rata share within 10 days of
Purchaser's receipt of that Delinquent Rent. This subparagraph of this
Agreement shall survive the Closing and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph 10.
14. ASSIGNMENT. 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 . Seller hereby consents to an
assignment to any corporation which is a wholly owned subsidiary of Purchaser,
provided such assignment is effected at least ten (10) days prior to the
Closing Date. However, Purchaser shall remain liable for all of the
Purchaser's obligations and undertakings set forth in this Agreement and the
exhibits attached hereto.
15. BROKER. The parties hereto acknowledge that CB Commercial Real
Estate Group, Inc. ("Broker") is the only real estate broker involved in this
transaction. Seller agrees to pay Broker a commission or fee ("Fee") pursuant
to a listing agreement between Seller and Broker. However, this Fee is due and
payable only from the proceeds of the Purchase Price received by Seller.
Purchaser agrees to indemnify, defend and hold harmless the Seller and any
partner, affiliate, parent of Seller, and all shareholders, employees, officers
and directors of Seller or Seller's partner, parent or affiliate (each of the
above is individually referred to as a "Seller Indemnitee") from all claims,
including attorneys' fees and costs incurred by a Seller Indemnitee as a result
of anyone's (except Broker) claiming by or through Purchaser any brokerage fee,
<PAGE>
commission or compensation on account of this Agreement, its negotiation or the
sale hereby contemplated. Seller agrees to indemnify, defend and hold harmless
the Purchaser and all shareholders, employees, trustees, officers and directors
of Purchaser or Purchaser's parent or affiliate (each of the above is
individually referred to as a "Purchaser Indemnitee") from all claims,
including attorneys' fees and costs incurred by a Purchaser Indemnitee as a
result of anyone's claiming by or through Seller any brokerage fee, commission
or compensation (including the Broker) on account of this Agreement, its
negotiation or the sale hereby contemplated.
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered to Purchaser copies of the most recent
available tax bills, rent rolls, insurance premiums, and service contracts
(collectively the "Documents"). All of the Documents and other matters to be
reviewed by Purchaser shall be subject to review by Purchaser by the close of
business (5:00 P.M. Central Daylight Time) on June 11, 1996 ("Approval
Period"). During the Approval Period, upon reasonable notice (which may be
given verbally no later than 24 hours prior thereto unless the law requires
longer notice with respect to inspection of the interior of the apartments) to
the Seller, the Purchaser shall have the right to inspect the Property
including the interior of the apartments and Seller's books and records, leases
and other files pertaining to the Property and the environmental condition of
the Property, during normal business hours. During Purchaser's inspection of
the books and records and other files pertaining to the operation, maintenance
and leasing of the Property, Seller will provide Purchaser with copies of those
documents which are specifically requested by Purchaser. Purchaser agrees to
indemnify, defend, protect and hold Seller harmless from any and all claims for
personal injury and property damage and mechanic lien claims which Seller may
incur or suffer as a result of Purchaser's conducting its inspection and
investigation of the Property including the entry of Purchaser, its employees
or agents and its lender onto the Property, including without limitation,
liability for mechanics' lien claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
c. On or prior to the expiration of the Approval Period, Purchaser
shall have the right to terminate this Agreement for any reason or no reason in
Purchaser's sole and exclusive discretion by serving a notice ("Notice of
Disapproval") delivered to Seller and the Escrow Agent prior to the expiration
of the Approval Period. Upon receipt of the Notice of Disapproval, the Earnest
Money plus the interest accrued thereon shall be returned to the Purchaser and
this Agreement shall be terminated. If Purchaser does not deliver a Notice of
Disapproval to Seller, then it shall be conclusively presumed that Purchaser
has waived its right to terminate this Agreement with respect to the provisions
of this Paragraph 16.
17. SELLER'S RIGHT TO CURE.
a. If on or prior to the Closing Date, Deborah Hartigan, Steve
Siegel or Tom Farrell discover that any representation or warranty of Seller is
untrue in any material respect or that Seller is in default under this
Agreement or that Seller has failed to perform a required covenant
<PAGE>
(individually or collectively, a "Breach"), then Purchaser may waive such
Breach or give Seller notice of such Breach. Upon receipt of notice from
Purchaser, Seller shall have ten (10) days in order to cure such Breach and, if
necessary, the Closing Date shall be extended until the second business day
after the Breach has been cured. If, after making all reasonable efforts,
Seller is unable to cure the Breach within such ten (10) day period, then
Purchaser shall elect by notice to Seller to either (i) waive the Breach or
(ii) terminate this Agreement, in which case, Purchaser shall have a right to
recover actual third party expenses in an amount not to exceed $100,000.00 as
provided in Paragraph 11 of this Agreement. In the event of termination, all
Earnest Money plus the interest accrued thereon shall be returned to Purchaser.
If Purchaser fails to give Seller notice of a Breach, then Purchaser shall have
waived its rights to assert any claims for such Breach.
b. Notwithstanding anything to the contrary contained in the
Section 17 or elsewhere in this Agreement, it is understood and agreed that to
the extent any representation or warranty made by Seller in this Agreement is
made to the knowledge of Seller or is based on the receipt of notice by Seller,
in the event that Seller first acquires such knowledge or first receives such
notice after the date of this Agreement and as a result thereof, Seller is
unable to reaffirm and restate the accuracy of such representation and
warranty, such failure shall not constitute a default by Seller under this
Agreement, but Purchaser shall nonetheless have the right to either (i) waive
such ability to reaffirm and restate said representation and warranty, or (ii)
terminate this Agreement and receive all Earnest Money plus the interest
accrued thereon (said return of the Earnest Money and interest thereon being
Purchaser's sole remedy in such event).
18. SURVIVAL OF INDEMNITIES. Notwithstanding anything in this Agreement
to the contrary, the parties' obligations to indemnify, defend and hold each
other harmless under various provisions of this Agreement shall survive the
termination of this Agreement or the Closing and delivery and recording of the
Deed.
19. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, or notice of any
matter or thing, shall only mean such knowledge or notice that has actually
been received by Phillip Schechter or Gregg Handrich (the asset manager), and
any representation or warranty of the Seller is based upon those matters of
which Phillip Schechter or Gregg Handrich (the asset manager) has actual
knowledge. Any knowledge or notice given, had or received by any of Seller's
agents, servants or employees (other than Phillip Schechter or Gregg Handrich)
shall not be imputed to Seller or the individual partners or the general
partner of Seller.
b. Subject to the limitations set forth in subparagraph a above,
Seller hereby makes the following representations, warranties and covenants,
all of which are made to the best of Seller's knowledge, and all of which shall
be reaffirmed and restated on and as of the Closing Date subject to Insert 17A
and which shall survive the Closing and delivery of the Deed for a period of
one hundred twenty (120) days:
i. The present use and occupancy of the Property conform with
applicable building and zoning laws, rules and regulations and Seller has
received no written notice that any such laws, rules or regulations are
being violated.
<PAGE>
ii. The rent roll ("Rent Roll") attached hereto as Exhibit M is
true and accurate and neither party to the leases is in default thereunder
except as noted on the delinquency report attached to the Rent Roll. An
updated Rent Roll will be delivered at Closing and will be true and
accurate.
iii. There are no pending or threatened litigation, claims,
causes of action or administrative proceedings concerning the Property nor
does Seller have any knowledge for the basis for such litigation, claims,
causes of action or administrative proceedings.
iv. This Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of Seller and, upon the assumption that this Agreement
constitutes a legal, valid and binding obligation of Purchaser, this
Agreement constitutes a legal, valid and binding obligation of Seller.
v. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Seller do not and
will not (a) violate or conflict with the organizational documents of
Seller, (b) violate or conflict with any judgment, decree or order of any
court applicable to or affecting Seller, (c) breach the provisions of, or
constitute a default under, any contract, agreement, instrument or
obligation to which Seller is a party or by which Seller is bound, or (d)
violate or conflict with any law or governmental regulation or permit
applicable to Seller.
vi. Seller has not received written notice of any pending or
threatened condemnation of all or any portion of the Property.
vii. Attached hereto as Exhibit O is a list of all service,
maintenance and supply contracts affecting the Property in effect on the
date hereof and which shall survive Closing (the "Service Contracts"), and
except as set forth on Exhibit O, neither party to any service contract is
in default thereunder.
viii. Seller is not a "foreign person" as defined in the
Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984
Tax Reform Act, as amended.
ix. Seller has not received written notice from any
governmental authority that the Property contains Hazardous Substances or
Hazardous Materials or is in violation of any Environmental Laws.
x. Seller has not executed and to Seller's actual knowledge,
without inquiry, no agreement exists involving the Property with any
governmental authority for or in respect of subsidized tenants or housing
rents.
xi. Seller does not own, directly or indirectly, any other real
estate which is contiguous to or is located within a one mile radius of
the Property.
xii. Seller has not received written notice from a governmental
authority or any public utility that the water supply or sewage disposal
systems presently servicing the Property are inadequate to distribute the
water supply and dispose of the sewage for the Property.
<PAGE>
xiii. The unaudited operating statements for 1995 and 1996
to date which Seller has delivered to Purchaser is the same information
which Seller relies upon in making reports to its limited partners and in
filing its federal income tax returns.
c. Seller covenants that:
i. The management, operation, leasing and maintenance of the
Property, as conducted by the Seller during the past three (3) months,
shall continue until the Closing Date.
ii. The management agreement pertaining to the leasing of
apartments will be terminated as of the Closing Date. Seller will request
a release in favor of the Purchaser from the management company.
iii. For the period commencing from the date of execution of
this Agreement until the Closing Date, Seller will not terminate more than
ten (10) tenant leases because of a default by any tenant under any such
lease without Purchaser's prior written consent, which consent will not be
unreasonably withheld or delayed.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit N is a
report of Preliminary Environmental Site Assessment and Limited Asbestos Survey
dated July 2, 1990 prepared by Law Associates, Inc. ("Environmental Report") of
the Property, which Seller is delivering to Purchaser, at Purchaser's request.
Seller makes no representation or warranty that the Environmental Report is
accurate or complete. Purchaser hereby releases Seller from any liability
whatsoever with respect to the Environmental Report, including, without
limitation, the matters set forth in the Environmental Report or the accuracy
and/or completeness of the Environmental Report.
21. LIMITATION OF LIABILITY.
a. No general or limited partner of Seller, nor any of its
respective beneficiaries, shareholders, partners, officers, agents, employees,
heirs, successors or assigns shall have any personal liability of any kind or
nature for or by reason of any matter or thing whatsoever under, in connection
with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
b. This Agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Purchaser by the trustees or officers thereof in their
representative capacity under the Amended and Restated Declaration of Trust of
New Plan Realty Trust dated as of January 15, 1996 and not individually, and
bind only the trust estate of Purchaser, and no trustee, officer, employee,
agent or shareholder of Purchaser shall be bound or held to any personal
liability or responsibility in connection with the agreements, obligations and
undertakings of Purchaser thereunder, and any person or entity dealing with
Purchaser in connection therewith shall look solely to the trust estate for the
payment of any claim or for the performance of any agreement, obligation or
undertaking thereunder. Seller acknowledges and agrees that each agreement and
other document executed by Purchaser in accordance with or in respect of this
<PAGE>
transaction shall be deemed and treated to include in all respects and for all
purposes the foregoing exculpatory provision.
22. RIGHT TO AUDIT. Without limiting any other rights or remedies of
Purchaser, Purchaser shall have the right after the Closing to audit the books
and records of Seller in respect of the Property for those last two entire
fiscal years of Seller's ownership of the Property ending immediately preceding
the Closing plus any "stub" period thereafter to such Closing; provided,
however, any matters disclosed by such audit (other than fraud) shall not be
the basis or the foundation for a claim of a breach of a representation or
warranty by the Seller.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
24. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or made by United States registered or certified mail
addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
847/267-1600
847/317-4462 (FAX)
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
847/267-1600
847/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: New Plan Realty Trust
1120 Avenue of the Americas
New York, New York 10036
Attn: Deborah Hartigan
Thomas Farrell
212/869-3000
212/302-4776 (FAX)
<PAGE>
with a copy to: Robert Horwitch
Altheimer & Gray
10 S. Wacker Drive
Suite 4000
Chicago, Illinois 60606
312/715-4000
312/715-4800 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the 4th business day after the same is deposited in the United
States Mail as registered or certified matter, addressed as above provided,
with postage thereon fully prepaid. Any such notice, demand or document not
given, delivered or made by registered or certified mail or by overnight
courier as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Any party's above named attorney may give an effective and binding
notice in accordance with this Paragraph on behalf of such party.
25. DISTRIBUTIONS. For a period of one hundred and twenty (120) days
after the Closing Date, Seller shall not distribute $250,000.00 from the
proceeds of the net cash received from the Purchaser at the Closing. If
Purchaser alleges a claim for damages against Seller after the Closing Date,
but prior to the expiration of the aforesaid one hundred twenty (120) day
period ("Claim"), then the Seller shall continue to withhold distribution of
the funds in an amount equal to the lesser of (i) the amount of the Claim, or
(ii) $250,000.00, until the Claim is resolved. The Claim shall specify the
exact representation or warranty which was breached and the amount of damages
the Purchaser alleges it has sustained.
26. EXECUTION BY THE BALCOR COMPANY. The Balcor Company executes this
Agreement solely for the purpose of assuring to Purchaser that if the Seller
fails to withhold or pay the sums required pursuant to Paragraph above and if
Purchaser is successful in any claim asserted against the Seller for a breach
of a representation or warranty, then The Balcor Company shall pay the amount
of such claim(s), the total of which shall not exceed $250,000.00.
27. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) 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. 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 after
receipt of the Earnest Money and deliver a fully executed copy to the Purchaser
and the Seller.
<PAGE>
28. GOVERNING LAW. The provision contained herein with reference to
retention of the Earnest Money in the event of Purchaser's default shall be
governed by the laws of the State of Illinois. The remaining provisions of
this Agreement shall be governed by the laws of the State of Indiana.
29. FURTHER ASSURANCES. In addition to the obligations required to be
performed under this Agreement by Seller on the Closing Date, from time to time
subsequent to such Closing Date, Seller shall perform such other acts and shall
execute and deliver such other agreements and documents as Purchaser reasonably
may request in order to effectuate the consummation of this transaction.
Likewise, in addition to the obligations required to be performed under this
Agreement by Purchaser on the Closing Date, from time to time subsequent to
such Closing Date, Purchaser shall perform such other acts and shall execute
and deliver such other agreements and documents as Seller reasonably may
request in order to effectuate the consummation of this transaction.
30. 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.
31. 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.
32. 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 set forth above.
Executed by Purchaser on PURCHASER:
May 20, 1996.
NEW PLAN REALTY TRUST, a Massachusetts
business trust
By: /s/James M. Steuterman
------------------------------
Executive Vice President
<PAGE>
Executed by Seller on SELLER:
May 22, 1996.
HAWTHORNE HEIGHTS LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Hawthorne Heights Partners, Inc., an
Illinois corporation, its general partner
By: /s/Phillip Schechter
----------------------------------
Authorized agent
ACCEPTED AND AGREED TO SOLELY AS TO PARAGRAPH 26
OF THIS AGREEMENT.
THE BALCOR COMPANY
By: /s/Phillip Schechter
----------------------------------
Its: Authorized agent
----------------------------------
Hawthorne Heights
CB Commercial Real Estate Group, Inc. ("Broker") executes this Agreement in its
capacity as a real estate broker and acknowledges that the fee or commission
("Fee") due to it as a result of the transaction described in this Agreement is
the amount as set forth in the listing agreement between Broker and Seller and
Purchaser has no liability or responsibility whatsoever for such Fee. Broker
also acknowledges that payment of the aforesaid Fee is conditioned upon the
Closing and the receipt of the Purchase Price by the Seller. Broker agrees to
deliver a receipt to the Seller and Purchaser at the Closing for the Fee and a
release stating that no other fees or commissions are due to Broker from Seller
or Purchaser.
CB COMMERCIAL REAL ESTATE GROUP,INC.
By:
-----------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Assignment of Licenses and Permits
J - Notice to Tenants
K - Non-Foreign Affidavit
L - Assignment of Intangibles
M - Rent Roll
N - Environmental Report
O - Service Contracts
<PAGE>
Shoal Run Apartments
Birmingham, Alabama
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement") is entered into as of the 31st
day of May, 1996, by and between MID-AMERICA APARTMENTS, L.P., a Tennessee
limited partnership ("Purchaser"), and BALCOR PENSION INVESTORS-VI, an Illinois
limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Twelve Million And No/100 Dollars ($12,000,000.00) (the
"Purchase Price"), that certain property commonly known as Shoal Run
Apartments, located in the City of Birmingham, State of Alabama and legally
described and depicted on Exhibit A attached hereto (the "Property"). Included
in the Purchase Price is all of the personal property set forth in Exhibit B
(the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as
follows:
(a) Upon the execution of this Agreement, the sum of One Hundred
Twenty Thousand And No/100 Dollars ($120,000.00) (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
(b) On the "Closing Date" (as hereinafter defined), the balance of
the Purchase Price, adjusted in accordance with the prorations, by
federally wired "immediately available" funds, on or before 11:00 a.m
Chicago time.
3. TITLE COMMITMENT AND SURVEY.
A. Purchaser shall obtain, as soon as is reasonably possible, at
Purchaser's sole cost and expense, a title commitment (the "Title Commitment")
for an owner's standard title insurance policy for the Property issued by
Lawyers Title Insurance Corporation (the "Title Insurer"). Seller shall
obtain, at Seller's sole cost and expense, an ALTA survey for the Property (the
"Survey") and shall deliver the same to Purchaser as soon as is reasonably
possible. For purposes of this Agreement, "Permitted Exceptions" shall mean:
(a) general real estate taxes and assessments, association assessments, special
district taxes and assessments and related charges not yet due and payable; (b)
matters caused by or through the actions of Purchaser or its agents,
contractors or representatives; and (c) those title exceptions deemed Permitted
Exceptions pursuant to Paragraph 3.B below. All other exceptions to title
shall be referred to as "Unpermitted Exceptions."
B. If the Title Commitment or the Survey discloses any exceptions
to title other than the Permitted Exceptions, Purchaser may give written notice
to Seller (the "Title Notice") of Purchaser's disapproval of any such
exceptions (a "Disapproved Title Exception") on or before the expiration of the
Inspection Period. Any title exceptions which are set forth in the Title
Commitment or on the Survey to which Purchaser does not object in accordance
with the immediately preceding sentence shall be deemed additional Permitted
<PAGE>
Exceptions. With regard to a Disapproved Title Exception for which Purchaser
gives Seller a Title Notice, Seller may but shall not have the obligation to
notify Purchaser within five (5) business days of receipt of the Title Notice
(the "Response Notice") whether Seller shall cause the Title Insurer to remove
or to insure over such Disapproved Title Exception from the Title Commitment
(together with a commitment to reissue the appropriate endorsement for the
benefit of Purchaser's financings and sale at no cost to Purchaser). Any such
Disapproved Title Exception which Seller elects to cause the Title Insurer to
remove or to insure over shall be additional Permitted Exceptions. If Seller
does not so notify Purchaser of its election to cause the Title Insurer to
remove or to insure over all Disapproved Title Exceptions in accordance with
this Paragraph 3.B, then unless Purchaser waives in writing its objection to
such Disapproved Title Exception on or before the expiration of the Inspection
Period and proceeds towards Closing, then this Agreement shall be terminated;
provided, however, if the Response Notice was delivered to Purchaser less than
three (3) business days prior to the expiration of the Inspection Period,
Purchaser shall have three (3) business days from receipt of the Response
Notice to notify Seller or Purchaser waives its objection to such Disapproved
Title Exception. If this Agreement is terminated pursuant to the terms of this
Paragraph 3.B, (i) Purchaser shall promptly deliver to Seller copies of all
studies, reports and other investigations obtained by Purchaser in connection
with its due diligence of the Property, (ii) the Earnest Money deposited by
Purchaser shall be immediately paid to Purchaser, together with any interest
earned thereon and (iii) neither Purchaser nor Seller shall have any right,
obligation or liability under this Agreement, except for Purchaser's obligation
to indemnify Seller and restore the Property, as more fully set forth in
Paragraph 7.
C. The Title Commitment and the Survey 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 only the Permitted
Exceptions, Disapproved Title Exceptions waived by Purchaser and Unpermitted
Exceptions waived by Purchaser (the "Title Policy"). Purchaser shall pay for
the costs of the Title Commitment and Title Policy, including, without
limitation, the costs of any endorsements to, or extended coverage on, the
Title Policy which shall be paid by Purchaser.
4. PAYMENT OF CLOSING COSTS. In addition to the costs set forth in
Paragraphs 3 above, Purchaser shall pay the costs of the documentary or
transfer stamps to be paid with reference to the "Deed" (hereinafter defined)
and all other stamps, intangible, transfer, documentary, recording, sales tax
and surtax imposed by law with reference to any other sale documents delivered
in connection with the sale of the Property and all other closing charges and
expenses of the Title Insurer in connection with this transaction.
Notwithstanding the foregoing to the contrary, Seller and Purchaser shall each
pay one-half (1/2) of all escrow fees in connection with the Closing.
<PAGE>
5. CONDITION OF TITLE.
A. If after delivery of the Title Notice to Seller, but prior to
Closing, a date-down to the Title Commitment discloses an Unpermitted Exception
(other than the current financing secured by the Property, which will be
satisfied by Seller at Closing or assumed by Purchaser at Closing pursuant to
the terms hereof), Seller shall have thirty (30) days from the date of the
date-down to the Title Commitment, to (i) have any Unpermitted Exceptions
which, in the aggregate, do not exceed $50,000.00 (a "Minor Unpermitted
Exception"), removed from the Title Commitment or to have the Title Insurer
commit to insure against loss or damage (together with the commitment to
reissue the appropriate endorsement for the benefit of Purchaser's financings
and sale at no cost to Purchaser) that may be occasioned by such Minor
Unpermitted Exceptions at no additional premium to Purchaser, or (ii) have the
right, but not the obligation, to have any Unpermitted Exceptions which, in the
aggregate, equals or exceeds $50,000.00, removed from the Title Commitment or
to have the Title Insurer commit to insure against loss or damage (together
with the commitment to reissue the appropriate endorsement for the benefit of
Purchaser's financings and sale at no cost to Purchaser) that may be occasioned
by such Unpermitted Exceptions at no additional premium to Purchaser. 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 of this Paragraph 5A, Purchaser may
terminate this Agreement upon notice to Seller within five (5) days after the
expiration of said thirty (30) day period; provided, however, and
notwithstanding anything contained herein to the contrary, if the Unpermitted
Exception which gives rise to Purchaser's right to terminate was recorded
against the Property as a result of the affirmative, willful action of Seller
(and not by any unrelated third party) with the intention to prevent the sale
of the Property in accordance with the terms hereof or if Seller is able to
bond over, cure or remove a Minor Unpermitted Exception for a cost not to
exceed $50,000 or the Title Insurer is willing to insure over a Minor
Unpermitted Exception for a cost not to exceed $50,000 in accordance with the
terms hereof and Seller fails to expend said funds in either case, then
Purchaser shall have the additional rights contained in Paragraph 11 herein.
Absent notice from Purchaser to Seller in accordance with the immediately
preceding sentence, Purchaser shall be deemed to have elected to terminate this
Agreement. If Purchaser terminates this Agreement in accordance with the terms
of this Paragraph 5A, 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.
B. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed ("Deed") in recordable form subject only to
the Permitted Exceptions, Disapproved Title Exceptions waived by Purchaser and
Unpermitted Exceptions waived by Purchaser.
<PAGE>
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
A. Except as provided in any indemnity provisions of this
Agreement, Seller shall bear all risk of loss with respect to the Property up
to the earlier of the dates upon which either possession or title is
transferred to Purchaser in accordance with this Agreement. Notwithstanding
the foregoing, in the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost less than or equal to
$100,000.00 (as determined by Seller in good faith) Purchaser shall not have
the right to terminate its obligations under this Agreement by reason thereof,
but Seller shall have the right to elect to either repair and restore the
Property (in which case the Closing Date shall be extended until completion of
such restoration) or to assign and transfer to Purchaser on the Closing Date
all of Seller's right, title and interest in and to all insurance proceeds paid
or payable to Seller on account of such fire or casualty, including, without
limitation, proceeds of lost rental insurance for the period commencing with
the Closing Date through the period of Purchaser's repair, to the extent said
lost rental insurance covers Purchaser's loss in rental insurance 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 except for Purchaser's obligations to indemnify Seller
and restore the Property, as set forth more fully in Paragraph 7. 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, without limitation, proceeds of
lost rental insurance for the period commencing with the Closing Date through
the period of Purchaser's repair, to the extent said lost rental insurance
covers Purchaser's loss in rental insurance and Seller shall pay to Purchaser
at the Closing the amount of Seller's insurance deductible.
B. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impairs the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
<PAGE>
(a) terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with
interest thereon, shall be returned to Purchaser and all rights and
obligations of the parties hereunder with respect to the closing of this
transaction will cease, except for Purchaser's obligations to indemnify
Seller and restore the Property, as set forth more fully in Paragraph 7;
or
(b) 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 and give Purchaser the right of approval as to the amount of
any award.
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 subparagraph (a) or subparagraph (b) of this
Paragraph 6B. 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 subparagraph (b).
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 and give Purchaser the right of
approval as to the amount of any award.
7. INSPECTION AND AS-IS CONDITION.
A. During the period commencing on May 8, 1996 and ending at 5:00
p.m. Chicago time on June 24, 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 the leases located at the Property, and to
conduct and prepare such studies, tests and surveys as Purchaser may deem
reasonably necessary and appropriate. In connection with Purchaser's review of
the Property, Seller agrees to deliver to Purchaser copies of the current rent
roll for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, and unaudited year end 1994 and 1995 operating
statements.
B. All of the foregoing tests, investigations and studies to be
conducted under this Paragraph 7 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
<PAGE>
defend set forth in the preceding sentence using attorneys selected by
Purchaser and reasonably acceptable to Seller.
C. If Purchaser is dissatisfied with the results of the tests,
studies or investigations performed or information received pursuant to this
Paragraph 7 or if Purchaser is not satisfied with the Title Commitment and the
Survey, Purchaser shall have the right to terminate this Agreement by giving
written notice of such termination to Seller at any time prior to the
expiration of the Inspection Period. If written notice is not given by
Purchaser pursuant to this Paragraph 7 prior to the expiration of the
Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 7 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; (ii) the Earnest Money deposited by
Purchaser shall be immediately paid to Purchaser, together with any interest
earned thereon and (iii) 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. Notwithstanding anything contained herein to the contrary,
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in this Paragraph 7, shall survive the Closing, the delivery of
the Deed and the termination of this Agreement.
D. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspections and investigations of the Property,
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the Property as of the date of this
Agreement, wear and tear and loss by fire or other casualty or condemnation
excepted. Without limiting the foregoing, Purchaser acknowledges that, except
as may otherwise be specifically set forth elsewhere in this Agreement, neither
Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements comprising the Property, the
existence or non-existence of any hazardous materials or substances, economic
projections or market studies concerning the Property, any development rights,
taxes, bonds, covenants, conditions and restrictions affecting the Property,
water or water rights, topography, drainage, soil, subsoil of the Property, the
utilities serving the Property or any zoning, environmental or building laws,
rules or regulations affecting the Property. Seller makes no representation or
warranty that the Property complies with Title III of the Americans with
Disabilities Act or any fire code or building code. Except with respect to a
breach by Seller of any representation or warranty expressly contained herein,
Purchaser hereby releases Seller and the Affiliates of Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and except with respect to a breach by Seller of any representation or
warranty expressly contained herein, Purchaser hereby agrees not to assert any
claims for contribution, cost recovery or otherwise, against Seller, relating
directly or indirectly to the existence of asbestos or hazardous materials or
substances on, or environmental conditions of, the Property, whether known or
unknown. As used herein, the term "hazardous materials or substances" means
(i) hazardous wastes, hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including
but not limited to substances defined as "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
<PAGE>
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C.Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C.Section 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601. et seq.; the
Clear Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"),
42 U.S.C. Section 7401 et seq.; and in any permits, licenses, approvals,
plans, rules, regulations or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws or other similar
federal, state or local laws, regulations, rules or ordinance now or
hereafter in effect relating to environmental matters (collectively the
"Environmental Laws"); and (ii) any other substances, constituents or wastes
subject to any applicable federal, state or local law, regulator or ordinance,
including any Environmental Law, now or hereafter in effect, including but not
limited to (A) petroleum, (B) refined petroleum products, (C) waste oil, (D)
waste aviation or motor vehicle fuel and (E) asbestos.
E. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as expressly set forth herein,
Seller makes no representation or warranty that such material is complete or
accurate or that Purchaser will achieve similar financial or other results with
respect to the operations of the Property, it being acknowledged by Purchaser
that Seller's operation of the Property and allocations of revenues or expenses
may be vastly different than Purchaser may be able to attain. Purchaser
acknowledges that it is a sophisticated and experienced purchaser of real
estate and further that Purchaser has relied upon its own investigation and
inquiry with respect to the operation of the Property and the representations
and warranties of Seller expressly contained herein and releases Seller from
any liability with respect to such historical information, except with respect
to a breach of a representation or warranty of Seller contained herein.
F. Seller has provided to Purchaser the following existing report
prepared by Law Associates, Inc., dated April 16, 1992 (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.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
July 24, 1996, at which time Seller shall deliver possession of the Property to
Purchaser. If the Closing occurs simultaneously with a closing under one or
more of the "Other Agreements" (as hereinafter defined), then the Closing shall
occur at the offices of Apperson, Crump, Duzane & Maxwell, 1755 Kirby Parkway,
Suite 100, Memphis Tennessee. Otherwise, the Closing shall occur by mail
through an escrow established at the Title Insurer. This transaction shall be
closed 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,
<PAGE>
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. Purchaser shall pay all closing and escrow fees.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller (or to
Title Insurer if the Closing occurs through escrow) an executed closing
statement, the balance of the Purchase Price, an assumption of the documents
set forth in Paragraph 9.B.(iii) and (iv) and such other documents as may be
reasonably required by the Title Insurer in order to consummate the transaction
as set forth in this Agreement.
B. On the Closing Date, Seller shall deliver to Purchaser (or to
Title Insurer if the Closing occurs through escrow) the following:
(i) the Deed (in the form of Exhibit E attached hereto as the same
may need to be modified to satisfy the Title Insurer), subject
to Permitted Exceptions, Disapproved Title Exceptions waived by
Purchaser and Unpermitted Exceptions waived by Purchaser;
(ii) a special warranty bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
(iii) assignment and assumption of intangible property (in the form
attached hereto as Exhibit G);
(iv) an assignment and assumption of leases and security deposits (in
the form attached hereto as Exhibit H);
(v) non-foreign affidavit (in the form of Exhibit I attached
hereto);
(vi) original, and/or copies of, leases affecting the Property in
Seller's possession;
(vii) all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
(viii) possession of the Property to Purchaser;
(ix) an executed closing statement;
(x) 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 J); and
(xi) an updated rent roll.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER
UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST
MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER
<PAGE>
REMEDY, EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER PURSUANT TO
PARAGRAPH 7 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.
PURCHASER AND SELLER AGREE THAT A DEFAULT BY PURCHASER UNDER ANY OF THE
TERMS OR CONDITIONS OF ANY OF THOSE CERTAIN AGREEMENTS OF SALE LISTED ON
EXHIBIT O ATTACHED HERETO (THE "OTHER AGREEMENTS") SHALL BE DEEMED A DEFAULT OF
PURCHASER UNDER THIS AGREEMENT. IN ADDITION, PURCHASER AND SELLER AGREE THAT A
DEFAULT BY PURCHASER UNDER THIS AGREEMENT SHALL BE DEEMED A DEFAULT UNDER EACH
OF THE OTHER AGREEMENTS. IF ANY TRANSACTION CONTEMPLATED BY THE OTHER
AGREEMENTS FAIL TO CLOSE FOR ANY REASON WHATSOEVER, PURCHASER SHALL NOT BE
ENTITLED TO ANY RIGHTS OF SETOFF UNDER THIS AGREEMENT IN CONNECTION WITH ANY
LIABILITY ARISING UNDER THE OTHER AGREEMENTS.
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 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER ITS ACTUAL, DOCUMENTED
THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE DILIGENCE HEREUNDER
AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED $120,000.00 IN THE
AGGREGATE. 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
$50,000 IF (a) SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED
EXCEPTION FOR A COST NOT TO EXCEED $50,000 OR (b) THE TITLE INSURER IS WILLING
TO INSURE OVER A MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $50,000
IN ACCORDANCE WITH THE TERMS HEREOF OR (iii) ITS REFUSAL TO DELIVER THE DEED,
THEN PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
A. 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
charges; accrued but unpaid interest on the Note; fuels; prepaid operating
expenses; 1995 (if not paid) and 1996 real and personal property taxes; and
other similar items shall be adjusted ratably as of 12:01 a.m. on the Closing
Date. Assessments of record (other than ad valorem taxes) payable in
installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. The parties agree to re-prorate the proration items within
forty-five (45) days after the date of Closing, except as to delinquent rent
referred to in Paragraph 12B below.
<PAGE>
B. All sums paid following the Closing Date by any tenant of the
Property who is indebted under a lease for any period prior to and including
the Closing Date after the payment to Purchaser of all then current basic rent
shall be deemed a "Post-Closing Receipt" until such time as all such
indebtedness is paid in full. Within ten (10) days following each receipt by
Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-Closing
Receipt to Seller. For a period of sixty days following Closing, Purchaser
shall send monthly collection notices to tenants residing at the Property owing
Post-Closing Receipts. Within 90 days after the Closing Date, Purchaser shall
deliver to Seller a reconciliation statement of Post-Closing Receipts through
the first 60 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. At Seller's expense, 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. Seller shall deliver to Purchaser any sums received by Seller after
the Closing Date which relate to the period of time after the Closing Date,
along with an accounting identifying any such sums. Paragraph 12B of this
Agreement shall survive the Closing and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
subject to the provisions of Paragraph 10.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller.
Any assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10.
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: (i) CB Commercial ("CB"); and (ii) Memphis Commercial Group
("MC"), both to be paid by Seller. Seller's commissions to CB and MC shall
only be payable out of the proceeds of the sale of the Property in the event
the transaction set forth herein closes. Purchaser hereby agrees to indemnify,
defend and hold Seller harmless from any claim whatsoever (including without
limitation, reasonable attorney's fees, court costs and costs of appeal) from
anyone claiming by or through Purchaser for any fee, commission or compensation
on account of this Agreement, its negotiation or the sale hereby contemplated
other than claims of CB (or anyone claiming by, through or under CB). Seller
hereby agrees to indemnify, defend and hold Purchaser harmless from any claim
whatsoever (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) from anyone claiming by or through Seller for any
fee, commission or compensation on account of this Agreement, its negotiation
or the sale hereby contemplated other than claims of MC (or anyone claiming by,
through or under MC). The indemnifying party shall undertake its obligations
set forth in this Paragraph 15 using attorneys selected by the indemnifying
party and reasonably acceptable to the indemnified party. The provisions of
this Paragraph 15 will survive the Closing and delivery of the Deed.
<PAGE>
16. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing shall only mean such knowledge or
notice that has actually been received by Phillip Schechter or Michael Becker
(asset manager of the Property and who is in a position to have a basis for
having knowledge with respect to the Property) (hereinafter collectively
referred to as the "Seller's Representatives"), and any representation or
warranty of the Seller is based upon those matters of which the Seller's
Representatives have actual knowledge. Any knowledge or notice given, had or
received by any of Seller's agents, servants or employees (other than Seller's
Representatives) shall not be imputed to Seller, the general partner or limited
partners of Seller, the subpartners of the general partner or limited partners
of Seller or Seller's Representatives.
B. Subject to the limitations set forth in Paragraph A of this
Paragraph 16, Seller hereby makes the following representations and warranties,
which representations and warranties are made to the Seller's knowledge and
which shall, subject to Paragraph 16C, be remade at Closing:
(i) Except for the matter disclosed on Exhibit N, Seller has no
knowledge of any pending or threatened litigation, claim, cause of action
or administrative proceeding concerning the Property;
(ii) The rent roll attached hereto as Exhibit L and which shall be
updated as of the Closing Date accurately sets forth the number of tenants
then in possession of the Property as of the date of said rent roll,
contains an accurate summary of the rental obligations, the expiration
date, the security deposit and the delinquencies of each such tenancy as
of the date of said rent roll;
(iii) That the tenant leases evidencing such tenancies referred to in
the rent roll are in full force and effect and have not been amended or
modified except as set forth in the rent roll or in the leases made
available to Purchaser for Purchaser's review;
(iv) Seller has received no notice of any material default on the
part of Seller under any said tenant leases;
(v) Except as set forth in the rent roll, no tenant under the leases
as of the date of the rent roll is in material default of the payment of
rent;
(vi) That Seller will not collect any of the rent or other sums
arising or accruing under any of the said tenant leases in advance of the
time when they come due except for the benefit of Purchaser (and Seller
retains ownership of all accounts receivable for rents due for periods of
time prior to the Closing);
(viii) The Seller has not given or suffered any assignment, pledge or
encumbrance with respect to any of the tenant leases or its interests
thereunder except as additional collateral for the existing loan secured
by the Property;
(ix) Pending the Closing, Seller will not without the prior consent
of Purchaser convey all or any portion of the Property;
<PAGE>
(x) Except as shown on Exhibit M, there are no service contracts
which in any manner affect or otherwise relate to the Property or the
tenant leases;
(xi) Seller has full right, power and authority to enter into this
Agreement and consummate the transaction contemplated hereby;
(xii) Seller and all persons or entities having beneficial interests
in the Property are "United States Persons," as defined in
Section 1445(f)(3) and Section 7701(g) of the Internal Revenue Code of
1986, as amended, and the purchase of the Property by Purchaser as
contemplated herein will not be subject to the withholding requirements of
Section 1445(a) of the Code;
(xiii) Except as set forth in the Existing Report, Seller has not
received any notice from any governmental authority having jurisdiction
over the Property of any uncured violation of any Environmental Law with
respect to the Property. Seller has not commissioned any environmental
report with respect to the Property other than the Existing Report; and
(xiv) Seller has not received written notice from any third party of
any structural defects that would render the Property unusable as an
apartment complex.
C. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement untrue in any material respect, said
party shall promptly disclose said information to the other party hereto.
Provided the party making the representation or warranty did not take any
deliberate actions to cause the representation or warranty in question to be or
become untrue in any material respect, said party shall not be in default under
this Agreement and the sole remedy of the other party shall be to terminate
this Agreement. Notwithstanding anything contained herein to the contrary, if
the status of any of the tenancies changes from the date of the rent roll
attached hereto and the date of the rent roll delivered at Closing, provided
the change in status is not caused by a breach of Seller's covenants contained
in Paragraph 16D herein, then Purchaser shall not have the right to terminate
this Agreement or make any claim for a breach of a representation or warranty
hereunder involving the rent roll or tenancies thereunder. Purchaser and
Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing. The parties agree that the
representations contained herein shall survive Closing for a period of sixty
(60) days (i.e., the claiming party shall have no right to make any claims
against the other party for a breach of a representation or warranty after the
expiration of sixty (60) days immediately following Closing).
D. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained and operated the Property during the
period of Seller's ownership, subject to reasonable wear and tear and casualty.
17. LIMITATION OF LIABILITY. Neither any of Seller's respective partners
(whether general partners, limited partners or any level of sub-partner) nor
any beneficiaries, shareholders, officers, agents or employees, heirs,
successors or assigns shall have any personal liability of any kind or nature
for or by reason of any matter or thing whatsoever under, in connection with,
<PAGE>
arising out of or in any way related to this Agreement and the transactions
contemplated herein, and Purchaser hereby waives for itself and anyone who may
claim by, through or under Purchaser any and all rights to sue or recover on
account of any such alleged personal liability. Notwithstanding anything
contained herein to the contrary, Purchaser hereby agrees that the maximum
aggregate liability of Seller, in connection with, arising out of or in any way
related to a breach by Seller under this Agreement or any document or
conveyance agreement in connection with the transaction set forth herein shall
be $120,000.00; provided, however, in no way shall this sentence or the
following sentence preclude Purchaser's right of specific performance contained
in Paragraph 11 herein. Purchaser hereby waives for itself and anyone who may
claim by, through or under Purchaser any and all rights to sue or recover from
Seller any amount greater than said limit. Seller further agrees not to
distribute $120,000.00 of the proceeds of the Purchase Price to its partners
for the longer of (i) sixty (60) days after the Closing and (ii) final
resolution of any claims by Purchaser and asserted in writing against Seller
prior to the expiration of the sixtieth (60th) day after the Closing in
accordance with the terms of this Agreement ("Claims"); provided, however, that
if any Claims are disputed by Seller, Seller shall have the right, by written
notice to Purchaser, to require Purchaser to file suit in a court of competent
jurisdiction within thirty (30) days after such notice to Purchaser; otherwise
said notice with respect to the Claim in question shall no longer prevent
Seller from distributing the proceeds.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered, facsimile delivered or given or made
by overnight courier such as Federal Express or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: 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)
<PAGE>
TO PURCHASER: c/o Mid-America Apartment Communities, Inc.
6584 Poplar Avenue
Suite 340
Memphis, Tennessee 38138
Attention: Donald Aldridge
(901) 682-6600
(901) 682-6667 (FAX)
and one copy to: Apperson, Crump, Duzane & Maxwell
1755 Kirby Parkway
Suite 100
Memphis, Tennessee 38120
Attention: John Maxwell
(901) 756-6300
(901) 757-1296 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, on the same day if sent by facsimile transmission prior to 5:00 p.m.
Chicago time (provided, however, if the notice or demand is not accepted by the
recipient's fax machine after 10 attempts by the sender to fax the notice or
demand and the sender advises the recipient by phone of the specific nature of
the notice or demand prior to 5:00 p.m. Chicago time on the same day the sender
is attempting to send its notice or demand by facsimile and if the sender sends
the notice or demand to the recipient by overnight courier to be delivered on
the first business day following the day that the notice or demand was
attempted to be given by fax, then the notice or demand shall be deemed given
on the date the sender attempted to send the facsimile) or on the 4th business
day after the same is deposited in the United States Mail as registered or
certified matter, addressed as above provided, with postage thereon fully
prepaid. Any such notice, demand or document not given, delivered or made by
registered or certified mail or by overnight courier as aforesaid shall be
deemed to be given, delivered or made upon receipt of the same by the party to
whom the same is to be given, delivered or made. Copies of all notices shall
be served upon the Escrow Agent.
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:
(1) Purchaser's check for the Earnest Money;
(2) One (1) fully executed copy of this Agreement; and
(3) 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 Virginia
shall apply.
<PAGE>
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. SERVICE CONTRACTS. Attached hereto as Exhibit M is a list of service
contracts affecting the Property. Seller shall assign the service contracts to
Purchaser at Closing, and Purchaser shall assume responsibility and obligations
under the service contracts. Seller agrees not to enter into any other service
contracts affecting the Property. Seller agrees to terminate any and all
management agreements affecting the Property as of the Closing Date.
26. AUDIT. Seller will make available to Purchaser's representatives
such books, accounts and records necessary for Purchaser to conduct an audit of
the Property's preceding fiscal year. This audit will be conducted solely at
Purchaser's expense for the purpose of satisfying its requirements as a
publicly held entity. Seller agrees to execute and deliver a disclosure letter
prepared by the auditors of Purchaser in the form attached hereto as Exhibit K.
The terms of this Paragraph 26 shall survive the Closing for a period of one
(1) year after the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the 31st day of May, 1996.
PURCHASER:
MID-AMERICA APARTMENTS, L.P., a Tennessee limited
partnership
By:MID-AMERICA APARTMENT COMMUNITIES, INC., a
Tennessee corporation, its general partner
By: /s/Simon R.C. Wadsworth
-----------------------------------
Simon R.C. Wadsworth,
Executive 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/Phillip Schechter
--------------------------------
Name: Phillip Schechter
--------------------------------
Its: Authorized Agent
--------------------------------
<PAGE>
_________________ of CB Commercial ("CB") 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 April 12, 1996 between
Seller and CB (the "Listing Agreement"). CB acknowledges that it is paying a
portion of such commission in the amount of .25% of the Purchase Price to
Memphis Commercial Group. CB 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. CB agrees to deliver a receipt to the Seller at
the Closing for the fee or commission due CB and a release stating that no
other fees or commissions are due to it from Seller or Purchaser.
CB COMMERCIAL
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
_________________ of Memphis Commercial Group ("MC") executed this Agreement in
its capacity as a real estate broker and acknowledges that the fee or
commission due it from Purchaser as a result of the transaction described in
this Agreement is .25% of the Purchase Price. MC acknowledges that it will be
receiving such commission from CB Commercial. MC 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. MC agrees to deliver a
receipt to the Seller at the Closing for the fee or commission due MC and a
release stating that no other fees or commissions are due to it from Seller or
Purchaser.
MEMPHIS COMMERCIAL GROUP
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Intentionally Deleted
E - Special Warranty Deed
F - Special Warranty Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Assignment and Assumption of Leases and Security Deposits
I - Non-Foreign Affidavit (FIRPTA Statement)
J - Notice to Tenants
K - Auditor's Disclosure Letter
L - Rent Roll
M - List of Service Contracts
N - Litigation
O - Other Agreements
<PAGE>
FIRST AMENDMENT TO
AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS FIRST AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is entered into as of this 6th day of June, 1996 by and between
BALCOR PENSION INVESTORS-VI, an Illinois limited partnership ("Seller") and
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership ("Purchaser").
RECITALS:
WHEREAS, Seller and Purchaser have entered into an Agreement of Sale dated
May 31, 1996 (the "Original Agreement") for that certain property commonly know
as the Shoal Run Apartments, Birmingham, Alabama, and more particularly
described therein (the "Property"). All capitalized terms which are used but
not defined herein shall have the meanings ascribed to such terms in the
Original Agreement;
WHEREAS, in accordance with the Original Agreement, Seller, Purchaser and
Title Insurer entered into an Escrow Agreement dated May 31, 1996 (the "Escrow
Agreement"); and
WHEREAS, the parties desire to amend the Original Agreement and the Escrow
Agreement on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT:
1. Closing Date. The references to "July 24, 1996" in Section 8 of the
Original Agreement and Section 2 of the Escrow Agreement are hereby deleted and
"July 31, 1996" is hereby substituted in their places.
2. Rent Roll. The Original Agreement is hereby amended by adding to
Exhibit L the delinquency report attached hereto as Exhibit L-1.
3. Structural Defects. The Original Agreement is hereby amended by
adding the following at the end of the sentence in Paragraph 16.B.(xiv): other
than (i) that certain Letter from Durham & Associates, dated January 20, 1993;
(ii) that certain Letter from Bob Barnett, PE, dated January 29, 1993 and (iii)
that certain report by Heery International, Inc., dated February 12, 1993."
4. Modification. Except as amended and modified hereby, the Original
Agreement and the Escrow Agreement shall be and remain unchanged and in full
force and effect in accordance with their terms and they are hereby ratified
and confirmed. In the event of any inconsistencies between the terms of the
Original Agreement or the Escrow Agreement and this Amendment, the terms of
this Amendment shall control.
5. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
SELLER:
BALCOR PENSION INVESTORS-VI,
an Illinois limited partnership
By: Balcor Mortgage Advisor-VI,
an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Phillip Schechter
----------------------------
Name: Phillip Schechter
----------------------------
Its: Authorized Agent
----------------------------
PURCHASER:
MID-AMERICA APARTMENTS, L.P., a Tennessee
limited partnership
By: Mid-America Apartment Communities,
Inc., a Tennessee corporation,
its general partner
By: /s/Simon R.C. Wadsworth
--------------------------------
Name: Simon R.C. Wadsworth
--------------------------------
Title: Executive Vice President
--------------------------------
<PAGE>
