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) September 16, 1996
BALCOR REALTY INVESTORS 85 - SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-14351
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3327917
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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Park Crossing Apartments
In 1984, the Partnership acquired Park Crossing Apartments, Gwinnett County,
Georgia, utilizing approximately $5,556,000 of offering proceeds. The property
was acquired subject to first mortgage financing of $9,683,000. In 1988, the
property was refinanced with a $7,815,000 first mortgage loan from an
unaffiliated party. The General Partner loaned the Partnership $2,340,000 in
order to complete the refinancing. In 1992, the Partnership used proceeds
from the release of a $728,000 cash collateral pledge to pay down a portion of
the principal balance of the first mortgage loan. The loan was refinanced
again in 1993 with a $7,341,121 first mortgage loan from an unaffiliated party.
The Partnership received $217,000 of excess refinancing proceeds.
On September 16, 1996, the Partnership contracted to sell the property for a
sale price of $11,350,000 to an unaffiliated party, EEA Development, Inc., a
Delaware corporation. The purchaser has deposited $250,000 into an escrow
account as earnest money. The remaining portion of the sale price will be
payable in cash at closing, which is scheduled to occur on November 7, 1996.
From the proceeds of the sale, the Partnership will repay the outstanding
principal balance of the first mortgage loan which is expected to be
approximately $7,138,000 at closing and $170,250 to an unaffiliated party as a
brokerage commission. The Partnership will receive the remaining proceeds of
approximately $4,042,000, less closing costs. Neither the General Partner nor
any affiliate will receive a brokerage commission in connection with the sale
of the property. The General Partner will be reimbursed by the Partnership for
actual expenses incurred in connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) (a) Agreement of Sale and attachment thereto relating to the
sale of Park Crossing Apartments, Gwinnett County, Georgia.
(b) First Amendment to Agreement of Sale relating to the
sale of Park Crossing Apartments, Gwinnett County, Georgia.
(c) Letter relating to the sale of Park Crossing Apartments,
Gwintett County, Georgia.
No information is required under Items 1, 3, 4, 5, 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 REALTY INVESTORS 85 -SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Partners-XVII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: September 30, 1996
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 16th
day of September, 1996, by and between EEA Development, Inc., a Delaware
corporation ("Purchaser"), and Park Crossing Partners Limited Partnership, an
Illinois limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Eleven Million Three Hundred Fifty Thousand And No/100 Dollars
($11,350,000.00) (the "Purchase Price"), that certain property commonly known
as Park Crossing, Lilburn, Georgia, legally described on Exhibit A attached
hereto (the "Property"). Included in the Purchase Price is all of the personal
property set forth on Exhibit B attached hereto (the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of Two Hundred
Thousand and No/100 Dollars ($200,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, to the appropriate escrow agent, on or before
11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Chicago Title Insurance
Company (hereinafter referred to as "Title Insurer") dated August 2, 1996 for
the Property (the "Title Commitment"). For purposes of this Agreement,
"Permitted Exceptions" shall mean: (a) general real estate taxes, association
assessments, special assessments, special district taxes and related charges
not yet due and payable; (b) matters shown on the "Survey" (hereinafter
defined); (c) matters caused by the actions of Purchaser; and (d) the title
exceptions set forth in Schedule B of the Title Commitment as Numbers 3(a)
(prorated at Closing), 3(c) and 3(h) to the extent that same affect the
Property. All other exceptions to title shall be referred to as "Unpermitted
Exceptions". The Title Commitment shall be conclusive evidence of good title
as therein shown as to all matters to be insured by the title policy, subject
only to the exceptions therein stated. On the Closing Date, Title Insurer
shall deliver to Purchaser a standard title policy in conformance with the
previously delivered Title Commitment, subject only to Permitted Exceptions and
Unpermitted Exceptions waived by Purchaser (the "Title Policy"). Purchaser
shall pay for the costs of the Title Commitment and Title Policy and Purchaser
shall pay for the cost of any endorsements to, or extended coverage on, the
Title Policy.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by H. E.
Harper, recertified March 19, 1996 (the "Survey"). Purchaser shall update the
survey and pay for the costs of the Survey (not to exceed $2300.00) and the
costs of updating the Survey of the Property. Purchaser hereby acknowledges
that all matters disclosed by the Survey are acceptable to Purchaser.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS. Seller shall pay for the costs of the transfer
tax to be paid with reference to the "Deed" (hereinafter defined). In addition
to the costs set forth in Paragraphs 3.1 and 3.2, Purchaser shall pay for the
costs of all other stamps, intangible, transfer, documentary, recording, sales
tax and surtax imposed by law with reference to any other sale documents
delivered in connection with the sale of the Property to Purchaser and all
other charges of the Title Insurer in connection with this transaction. Each
party shall pay for its respective attorney's fees.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the Updated Survey discloses any new Unpermitted Exception,
Seller shall have thirty (30) days from the date of the date-down to the Title
Commitment or the Updated Survey, as applicable, at Seller's expense, to (i)
bond over, cure and/or have any Unpermitted Exceptions which in the aggregate,
do not exceed $25,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions, or (ii) have the right, but not the obligation, to
bond over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
equal or exceed $25,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions. In such event, the time of Closing shall be
delayed, if necessary, to give effect to said aforementioned time periods. If
Seller fails to cure or have said Unpermitted Exception removed or have the
Title Insurer commit to insure as specified in (i) in the preceeding sentence
above within said thirty (30) day period or if Seller elects not to exercise
its rights under (ii) in the preceding sentence and notifies purchaser of same,
Purchaser may either (x) proceed to Closing and receive a credit of up to
$25,000.00 against the Purchase Price or (y) terminate this Agreement upon
notice to Seller within ten (10) days after receipt of notice from Seller
stating its election not to cure said Unpermitted Exception or, if notice is
not delivered, 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 Purchasers 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 intention to prevent the
sale of the Property in accordance with the terms hereof, then Purchaser shall
have the additional rights contained in Paragraph 11 herein. Absent notice
from Purchaser to Seller in accordance with the preceding sentence, Purchaser
shall be deemed to have elected to take title subject to said Unpermitted
Exception. If Purchaser terminates this Agreement in accordance with the terms
<PAGE>
of this Paragraph 5.1, this Agreement shall become null and void without
further action of the parties and all Earnest Money theretofore deposited into
the escrow by Purchaser together with any interest accrued thereon, shall be
returned to Purchaser, and neither party shall have any further liability to
the other, except for Purchaser's obligation to indemnify Seller and restore
the Property, as more fully set forth in Paragraph 7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by limited warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty, together with a credit for any deductible applicable to the claim
relating to such insurance proceeds. 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
based on initial estimates of repair from one or more independent contractors),
then this Agreement may be terminated at the option of Purchaser, which option
shall be exercised, if at all, by Purchaser's written notice thereof to Seller
within ten (10) business days after Purchaser receives written notice of such
fire or other casualty and Seller's determination of the amount of such
damages, and upon the exercise of such option by Purchaser this Agreement shall
become null and void, the Earnest Money deposited by Purchaser shall be
returned to Purchaser together with interest thereon, and neither party shall
have any further liability or obligations hereunder. In the event that
Purchaser does not exercise the option set forth in the preceding sentence, the
Closing shall take place on the Closing Date and Seller shall assign and
transfer to Purchaser on the Closing Date all of Seller's right, title and
interest in and to all insurance proceeds paid or payable to Seller on account
of the fire or casualty, together with a credit for any deductible applicable
to the claim relating to such insurance proceeds.
<PAGE>
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within ten (10) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such ten (10) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. Purchaser and the agents, engineers, employees, contractors and
surveyors retained by Purchaser have entered upon the Property, at reasonable
times and upon reasonable prior notice to Seller, to inspect the Property,
including a review of leases located at the Property, and to conduct and
prepare such studies, tests and surveys as Purchaser has deemed reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller delivered to Purchaser copies of the current rent roll for the
Property, the most recent tax and insurance bills, utility account numbers,
service contracts, and unaudited year end 1995 and year-to-date 1996 operating
statements, and other documents as agreed to by Purchaser and Seller.
All of the foregoing tests, investigations and studies conducted under
this Paragraph 7.1 by Purchaser have been 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.
<PAGE>
Purchaser shall defend, indemnify and hold Seller and any affiliate, parent of
Seller, and all shareholders, employees, officers and directors of Seller or
Seller's affiliate or parent (hereinafter collectively referred to as
"Affiliate of Seller") harmless from any and all liability, cost and expense
(including without limitation, reasonable attorney's fees, court costs and
costs of appeal) suffered or incurred by Seller or Affiliates of Seller for
injury to persons or property caused solely by Purchaser's, its agents',
engineers', employees', contractors' and surveyors' investigations and
inspection of the Property. Purchaser shall undertake its obligation to defend
set forth in the preceding sentence using attorneys selected by Seller, in
Seller's sole discretion.
Prior to commencing any such tests, studies and investigations, Purchaser
has furnished to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
During the period commencing on the date of this Agreement and ending at
5:00 p.m. Chicago time on September 24, 1996 (set period being herein referred
to as the "Lender Inspection Period"), if Purchaser's lender declines to make a
loan on the Property based upon the results of the environmental studies or
investigations performed in connection with Purchaser's lender's review of the
Property, 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 Lender Inspection Period. If written notice is not received
by Seller pursuant to this Paragraph 7.1 prior to the expiration of the Lender
Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 7.1 shall be waived. If Purchaser terminates this
Agreement by written notice to Seller prior to the expiration of the Lender
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 Lender Inspection Period as partial
consideration for the Lender Inspection Period; and (ii) the Earnest Money
deposited by Purchaser shall be immediately paid to Purchaser, together with
any interest earned thereon, less $100 which shall be paid to Seller as further
consideration for the Lender Inspection Period and neither Purchaser nor Seller
shall have any right, obligation or liability under this Agreement, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in this Paragraph 7.1. Notwithstanding anything contained
herein to the contrary, the terms of this Paragraph 7.1 shall survive the
Closing and the delivery of the Deed and termination of this Agreement.
7.2. Seller makes no representations or warranties relating to the
condition of the Property or the Personal Property, except as specifically set
forth herein. Purchaser acknowledges and agrees that it will be purchasing the
Property and the Personal Property based solely upon its inspections and
investigations of the Property and the Personal Property, and that Purchaser
will be purchasing the Property and the Personal Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the Property and the Personal Property as
of the date of this Agreement, wear and tear and loss by fire or other casualty
<PAGE>
or condemnation excepted. Without limiting the foregoing, Purchaser
acknowledges that, except as may otherwise be specifically set forth elsewhere
in this Agreement, neither Seller nor its consultants, brokers or agents have
made any representations or warranties of any kind upon which Purchaser is
relying as to any matters concerning the Property or the Personal Property,
including, but not limited to, the condition of the land or any improvements
comprising the Property, the existence or non-existence of "Hazardous
Materials" (as hereinafter defined), economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning or building laws, rules or regulations or "Environmental
Laws" (hereinafter defined) affecting the Property. Seller makes no
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Purchaser
hereby releases Seller and the Affiliates of Seller from any and all liability
in connection with any claims which Purchaser may have against Seller or the
Affiliates of Seller, and Purchaser hereby agrees not to assert any claims for
contribution, cost recovery or otherwise, against Seller or the Affiliates of
Seller, relating directly or indirectly to the existence of asbestos or
Hazardous Materials on, or environmental conditions of, the Property, whether
known or unknown. As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means:
(1) "hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA; (4)
asbestos in any form or condition; (5) polychlorinated biphenyls; and (6) any
other material, substance or waste to which liability or standards of conduct
may be imposed under any Environmental Laws. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.2 shall survive
the Closing and the delivery of the Deed and termination of this Agreement.
<PAGE>
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller and the Affiliates of Seller from
any liability with respect to such historical information. Notwithstanding
anything contained herein to the contrary, the terms of this Paragraph 7.3
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.4. Seller has provided to Purchaser the following existing report:
Phase I Site Assessment Report prepared by H+GCL, dated April 30, 1993
("Existing Report"). Seller makes no representation or warranty concerning
the accuracy or completeness of the Existing Report. Purchaser hereby releases
Seller and the Affiliates of Seller from any liability whatsoever with respect
to the Existing Report, or, including, without limitation, the matters set
forth in the Existing Report, and the accuracy and/or completeness of the
Existing Report. Furthermore, Purchaser acknowledges that it will be
purchasing the Property with all faults disclosed in the Existing Report.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.4 shall survive the Closing and the delivery of the Deeds and
termination of this Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
October 7, 1996 (the "Closing Date"), at the office of Title Insurer, Atlanta,
Georgia, at which time Seller shall deliver possession of the Property to
Purchaser. The Closing Date may be extended by Purchaser until November 7,
1996 by notice from Purchaser to Seller to be received by Seller on or before
October 1, 1996 and payment by Purchaser to Escrow Agent of an additional
$50,000 Earnest Money. This transaction shall be closed through an escrow with
Title Insurer, in accordance with the general provisions of the usual and
customary form of deed and money escrow for similar transactions in Georgia, or
at the option of either party, the Closing shall be a "New York style" closing
at which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing.
<PAGE>
9. CLOSING DOCUMENTS.
9.1. On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3 and 9.2.4 and such other documents as may be
reasonably required by the Title Insurer in order to consummate the transaction
as set forth in this Agreement.
9.2. On or prior to the Closing Date, Seller shall deliver to Purchaser
the following:
9.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a limited warranty bill of sale conveying the Personal
Property (in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H, and if required by the company providing
telephone service, the form provided by said company for the transfer of such
service;
9.2.4. an assignment and assumption of leases and security
deposits (in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, or if not available, copies of, leases affecting
the Property in Seller's possession to be delivered at the Property;
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy including those necessary to delete the
standard exceptions which do not relate to survey matters;
9.2.8. possession of the Property to Purchaser subject to terms of
the leases;
9.2.9. evidence of the termination of the management agreement;
9.2.10.notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
9.2.11.an updated rent roll;
9.2.12.property files and keys to be delivered at the Property.
<PAGE>
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED OR ANY OTHER
CONVEYANCE DOCUMENT REFERENCED IN PARAGRAPH 9, OR SELLER'S (AND NOT AN
UNRELATED THIRD PARTIES) 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 THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); water and
other utility charges; fuels; prepaid operating expenses; management fees in
the amount of 5%; real and personal property taxes; and other similar items
shall be adjusted ratably as of 12:01 a.m. on the Closing Date, and credited
against the balance of the cash due at Closing. Assessments payable in
installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. All prorations will be final except as to delinquent rent
referred to in Paragraph 12.2 below.
12.2. All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date after the payment to Purchaser of all current
basic rent shall be deemed a "Post-Closing Receipt" until such time as all such
indebtedness is paid in full. Within ten (10) days following each receipt by
Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-Closing
Receipt to Seller, Purchaser shall use reasonable efforts to collect all
amounts which, upon collection, would constitute Post-Closing Receipts
hereunder, but shall not be liable to Seller for its failure to collect same.
Within 120 days after the Closing Date, Purchaser shall deliver to Seller a
<PAGE>
reconciliation statement of Post-Closing Receipts through the first 90 days
after the Closing Date. Upon the delivery of the Post-Closing Receipts
reconciliation, Purchaser shall deliver to Seller any Post-Closing Receipts
owing to Seller and not previously delivered to Seller in accordance with the
terms hereof. Seller retains the right to conduct an audit, at the expense of
Seller at reasonable times and upon reasonable notice, of Purchaser's books and
records to verify the accuracy of the Post-Closing Receipts reconciliation
statement and upon the verification of additional funds owing to Seller,
Purchaser shall pay to Seller said additional Post-Closing Receipts, and in the
event Seller's audit discovers additional Post-Closing Receipts greater than
$5,000,00, Purchaser shall pay the cost of performing Seller's audit.
Paragraph 12.2 of this Agreement shall survive the Closing and the delivery and
recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest,
provided that Purchaser remains liable for and the assignee assumes the
obligations of Purchaser hereunder.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Apartment Realty Advisors ("ARA") (to be paid by Seller).
Seller's commission to ARA shall only be payable out of the proceeds of the
sale of the Property in the event the transaction set forth herein closes.
Purchaser and Seller shall indemnify, defend and hold the other party hereto
harmless from any claim whatsoever (including without limitation, reasonable
attorney's fees, court costs and costs of appeal) from anyone claiming by or
through the indemnifying party any fee, commission or compensation on account
of this Agreement, its negotiation or the sale hereby contemplated other than
to ARA. The indemnifying party shall undertake its obligations set forth in
this Paragraph 15 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this
Paragraph 15 will survive the Closing and delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Daniel Charleston or Mike Becker (together, the "Seller's
Representatives"), and any representation or warranty of the Seller is based
upon those matters of which the Seller's Representatives have actual knowledge.
Any knowledge or notice given, had or received by any of Seller's agents,
servants or employees shall not be imputed to Seller, the general partner or
limited partners of Seller, the subpartners of the general partner or limited
partners of Seller or Seller's Representatives.
<PAGE>
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property; (ii) Seller has the power to execute and deliver this Agreement and
consummate the transactions contemplated herein; (iii) the rent roll attached
hereto as Exhibit L which Seller will update as of the Closing Date is accurate
as of the date set forth thereon; (iv) there are no other leases or occupancy
agreements affecting the Property other than as shown on Exhibit L and
Exhibit H; (v) there are no service or maintenance contracts or other contracts
or agreements affecting the operation of the Property after the Closing now in
force between Seller and nay other party with respect to or affecting the
Property, except for the contracts set forth on Exhibit M attached hereto and by
reference incorporated herein, and Seller has delivered to Purchaser true,
correct and complete copies of all of the contracts and all amendments thereto
set forth on Exhibit M; (vi) Seller has not received any written notice or
written request of any municipal department, insurance company or board of fire
underwriters (or organization exercising functions similar thereto) requesting
the performance of any work or alteration with respect to the Property which has
not been satisfied; and (vii) except as may be set forth in the Existing Report,
Seller has not received any notice from any governmental authority having
jurisdiction over the Property of any uncured violation of any Environmental Law
with respect to the Property.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
16.4. The Parties agree that the representations and warranties
contained herein shall survive Closing for a period of ninety (90) days (i.e.,
the claiming party shall have no right to make any claims against the other
party for a breach of other representation or warranty after the expiration of
ninety (90) days immediately following the Closing).
16.5. 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 Seller, nor any Affiliate of Seller, nor
any of their respective beneficiaries, shareholders, partners, directors,
officers, agents or employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: Park Crossing Partners Limited Partnership
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(847) 317-4360
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: EEA Development, Inc.
1925 N. Lynn Street
Suite 901
Arlington, Virginia 22209
Attention: Mr. R. Stewart Bartley
(703) 525-1600
(703) 525-1609 (FAX)
and one copy to: Hunton & Williams
Nations Bank Plaza, Suite 4100
600 Peachtree Street
Atlanta, GA 30308
Attention: Alexander W. Suto, Esq.
(404) 888-4028
(404) 888-4190 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
<PAGE>
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Georgia.
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 H is a list of service
contracts ("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, except for
service contracts which are terminable of not more the thirty (30) days notice.
Seller agrees to terminate any and all management agreements affecting the
Property as of Closing Date. Prior to Closing, Seller agrees to deliver a
notice of termination to both the servicer of the laundry contract and the
servicer of the uniform contract.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
EEA DEVELOPMENT, INC., a Delaware corporation
By: /s/ R. Stewart Bartley
-------------------------------------
Name: R. Stewart Bartley
-------------------------------------
Its: Vice President
-------------------------------------
SELLER:
PARK CROSSING PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: PARK CROSSING PARTNERS, INC., an Illinois
corporation, its general partner
By: /s/ Daniel L. Charleston
------------------------------------
Name: Daniel L. Charleston
------------------------------------
Its: Authorized Agent
------------------------------------
<PAGE>
of Apartment Realty Advisors ("Seller's Broker") executed
this Agreement in its capacity as a real estate broker and acknowledges that
the fee or commission due it from Seller as a result of the transaction
described in this Agreement is as set forth in that certain Listing Agreement,
dated December 5, 1995 between Seller and Seller's Broker (the "Listing
Agreement"). Seller's Broker also acknowledges that payment of the aforesaid
fee or commission is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt to
the Seller at the Closing for the fee or commission due Seller's Broker and a
release in the appropriate form stating that no other fees or commissions are
due to it from Seller or Purchaser.
APARTMENT REALTY ADVISORS
By: /s/ Jay T. Clark
-----------------------------------
Name: Jay T. Clark
-----------------------------------
Its: President
-----------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - FIRPTA Statement
K - Notice to Tenants
L - Rent Roll
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 24th day of September, 1996, by and between Park
Crossing Partners Limited Partnership, an Illinois limited partnership
("Seller") and EEA Development, Inc., a corporation ("Purchaser").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated September 16, 1996 ("Agreement"), pursuant to which Purchaser has agreed
to purchase and Seller has agreed to sell certain Property (as defined in the
Agreement) legally described and depicted on Exhibit A attached to the
Agreement.
B. Seller and Purchaser desire to amend the Agreement in accordance with
the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The "Lender Inspection Period" as defined in Paragraph 7.1 of the
Agreement shall be extended until September 30, 1996.
3. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
4. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
EEA Development, Inc., a corporation
By: /s/ Alexander Suto attorney at law
----------------------------------
Name: for purchaser
----------------------------------
Its:
----------------------------------
SELLER:
PARK CROSSING PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Park Crossing Partners, Inc., an Illinois
corporation, its general partner
By: /s/ Daniel L. Charleston
-----------------------------------
Name: Daniel L. Charleston
-----------------------------------
Its: Authorized Agent
-----------------------------------
<PAGE>
EEA DEVELOPMENT, INC.
1925 N. LYNN STREET
SUITE 901
ARLINGTON, VA 22209
TEL. (703) 525-1600 FAX (703) 525-1609
Via Facsimile and Express Mail
September 24, 1996
Park Crossing Partners Limited Partnership,
an Illinois Limited Partnership
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Rd., Suite A-200
Bannockburn, IL 60015
Attention: Ilona Adams
Re: Agreement of Sale dated September 16, 1996 by and between EEA Development,
Inc. ("Purchaser") and Park Crossing Limited Partnership ("Seller")
Dear Ms. Adams:
Please be advised that EEA Development, Inc. wishes to extend the closing date
pursuant to paragraph 8 of the above referenced Agreement of Sale from October
7, 1996 to November 7, 1996. Today we have delivered the additional deposit in
the amount of Fifty Thousand Dollars ($50,000) to Chicago Title Insurance as
required.
Thank you for your attention to this matter. I would appreciate it if you
would acknowledge the receipt of this notice by signing in the space provided
below and returning a copy for my files.
Sincerely,
/s/ R. Stewart Bartley
R. Stewart Bartley, VP
Finance and Acquisitions
RECEIVED BY:
/s/ Daniel L. Charleston
- ----------------------------
Daniel L. Charleston
Date 9/26/96
cc: Dan Charleston, The Balcor Company
Alan Lieberman, The Balcor Company
Daniel J. Perlman, Katten Muchin & Zavis
Alexander W. Suto, Hunton & Williams
Chicago Title Insurance Company
<PAGE>
