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) June 28, 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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a) Hunter's Glen Apartments
In 1984, the Partnership acquired Hunter's Glen Apartments, St. Louis County,
Missouri, utilizing approximately $3,400,000 of offering proceeds. The
property was acquired subject to first mortgage financing of $6,066,000. In
1988, the property was refinanced with a $5,340,000 first mortgage loan from a
third party and a $902,800 second mortgage loan from an affiliate of the
General Partner. In 1992, the holder of the first mortgage loan applied
against the principal amount of the loan $945,000 previously pledged by the
Partnership as additional collateral. The second mortgage loan was repaid in
1993. The first mortgage loan was refinanced in 1993 with a $4,650,000 first
mortgage loan from a third party. The Partnership received approximately
$200,000 in excess refinancing proceeds.
On June 30, 1996, the Partnership contracted to sell the property for a sale
price of $9,100,000 to an unaffiliated party, ERP Operating Limited
Partnership, an Illinois limited partnership. The purchaser has deposited
$300,000 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 close on
August 1, 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 $4,550,000 at closing and $159,250 to an unaffiliated party as
a brokerage commission. An affiliate of the third party providing property
management services for the property will receive a fee for services rendered
in connection with the sale of the property of $91,000. The Partnership will
receive the remaining proceeds of approximately $4,298,750, less closing costs.
Of such proceeds, an amount not to exceed $500,000 will be retained by the
Partnership and will not be available for use or distribution by the
Partnership until 120 days after closing. Neither the General Partner nor any
affiliate will receive a brokerage commission in connection with the sale of
the property. The General Partner will be reimbursed by the Partnership for
actual expenses incurred in connection with the sale.
The Partnership and affiliates of the General Partner have recently sold or
contracted to sell 19 other properties to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
b) Willow Bend Lake Apartments
In 1984, the Partnership acquired the Willow Bend Lake Apartments, East Baton
Rouge Parish, Louisiana, utilizing approximately $5,796,335 of offering
proceeds. The property was acquired subject to first mortgage financing of
$10,655,000. In 1987, the mortgage loan was refinanced with a new mortgage
loan from a third party of approximately $8,000,000. In connection with the
refinancing, the Partnership prepaid approximately $2,659,000 of the loan
balance utilizing funds borrowed from the General Partner. The mortgage loan
was refinanced again in 1993 with a new $9,975,000 mortgage loan from a third
party. The Partnership received excess refinancing proceeds of approximately
$1,900,000.
<PAGE>
On June 28, 1996, the Partnership contracted to sell the property for a sale
price of $14,853,000 to an unaffiliated party, BH TFL, Inc. On or before July
23, 1996, upon completion of the purchaser's due diligence review, the
purchaser will deposit $148,530 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 August 15, 1996. From the proceeds of the sale, the
Partnership will pay the outstanding balance of the first mortgage loan which
is expected to have an outstanding principal balance of approximately
$9,758,000 at closing and $222,795 to an unaffiliated party as a brokerage
commission. An affiliate of the third party providing property management
services for the property will receive a fee for services rendered in
connection with the sale of the property of $111,398. The Partnership will
receive the remaining proceeds of approximately $4,760,800, 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.
Affiliates of the General Partner have simultaneously contracted to sell 5
other properties to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
<PAGE>
ITEM 5. OTHER INFORMATION
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a) Country Oaks Apartments
In 1985, the Partnership acquired the Country Oaks Apartments, Memphis,
Tennessee, utilizing approximately $3,200,000 of offering proceeds. The
property was acquired subject to first mortgage financing of $5,518,000. The
loan was refinanced in 1988 with a new $5,715,000 mortgage loan and was
refinanced again in 1995 with a new $6,010,000 mortgage loan, with both loans
obtained from third parties. The Partnership received excess proceeds of
approximately $350,000 in connection with the 1995 refinancing.
On June 25, 1996, the Partnership contracted to sell the property for a sale
price of $8,250,000 to an unaffiliated party, SCA North Carolina Limited
Partnership, a Delaware limited partnership. The purchaser has deposited
$250,000 into an escrow account as earnest money. The purchaser is expected to
take title to the property subject to the existing first mortgage loan which is
expected to have an outstanding principal balance of approximately $5,950,000
at closing, scheduled to occur no later than August 14, 1996. From the
proceeds of the sale, the Partnership will pay $123,750 as a brokerage
commission to an affiliate of the third party providing property management
services for the property. The Partnership will receive the remaining proceeds
of approximately $2,176,250, 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,
including receipt of the lender's consent. There can be no assurance that all
of the terms and conditions will be complied with and, therefore, it is
possible the sale of the property may not occur.
b) Marbrisa Apartments
As previously reported, on May 31, 1996, the joint venture which owned Marbrisa
Apartments, Hillsborough County, Florida, contracted to sell the property for a
sale price of $8,100,000. On June 18, 1996, the purchaser exercised its option
to terminate the agreement of sale and a closing of the sale will not occur.
Pursuant to the agreement of sale, $81,000 in earnest money previously
deposited and interest accrued thereon will be returned to the purchaser.
c) Steeplechase Apartments
As previously reported, on May 31, 1996, the Partnership contracted to sell
Steeplechase Apartments, Lexington-Fayette, Kentucky, for a sale price of
$11,500,000. On June 18, 1996, the purchaser exercised its option to terminate
the agreement of sale and a closing of the sale will not occur. Pursuant to
the agreement of sale, $115,000 in earnest money previously deposited and
interest accrued thereon will be returned to the purchaser.
<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 relating to the sale of Hunter's Glen
Apartments, St. Louis County, Missouri.
(b)(i) Agreement of Sale and attachment thereto relating
to the sale of Willow Bend Lake Apartments, East
Baton Rouge Parish, Louisiana.
(ii) Amendment to Agreement of Sale and Escrow
Agreement relating to the sale of Willow Bend
Lake Apartments, East Baton Rouge Parish, Louisiana.
(99) (a) Agreement of Sale and attachment thereto and letter
agreements dated June 25, 1996 and July 8, 1996 relating
to the sale of Country Oaks Apartments, Memphis, Tennessee.
(b) Letter of Termination dated June 18, 1996 relating to the
sale of Marbrisa Apartments, Hillsborough County, Florida,
and Steeplechase Apartments, Lexington-Fayette, Kentucky.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR 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: July 12, 1996
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 25 day of June, 1996, by and
between ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership
("Purchaser") and HUNTERS PARTNERS 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 Nine Million One Hundred Thousand and No/100 Dollars
($9,100,000.00), that certain property ("Property") in City of Chesterfield,
St. Louis County, Missouri, more particularly described on Exhibit A attached
hereto, which Property is known as Hunter's Glen Apartments and contains 192
units and approximately 10 acres. Included in the "Purchase Price" (as
hereinafter defined) is all of Seller's right, title and interest in the
personal property set forth on Exhibit B, which shall be transferred to
Purchaser at "Closing" (as hereinafter defined) by a Bill of Sale; and all
right, title and interest of Seller (whether now or hereafter existing) in and
to any land lying in the bed of any street, alley, road or avenue (whether
open, closed or proposed) within, in front of, behind or otherwise adjoining
the Property or any of it; and all right, title and interest of Seller (whether
now or hereafter existing) in and to any award made or to be made as a result
of or in lieu of condemnation, and in and to any award for damage to the
Property or any part thereof by reason of casualty (all of the foregoing being
included within the term "Property"); and all of the building, structures,
fixtures, facilities, installations and all of Seller's right, title and
interest in other improvements of every kind and description now or hereafter
in, on, over and under the land, including, without limitation, any and all
recreational buildings, structures and facilities, plumbing, air conditioning,
heating, ventilating, mechanical, electrical and other utility systems, parking
lots, landscaping, sidewalks, swimming pools, signs and light fixtures which
are not owned by tenants under leases (all of the foregoing being included
within the term "Property"); and all of Seller's right, title and interest in
all of the following which are in Seller's possession: existing surveys, blue
prints, drawings, plans and specifications (including, without limitation,
structural, HVAC, mechanical and plumbing, water and sewer plans and
specifications); all available tenant lists and data, correspondence with
present and prospective tenants, vendors, suppliers, utility companies and
other third parties, booklets, manuals and promotional and advertising
materials concerning the Property or any part thereof (all of the foregoing
being included within the term "Property"); and all right, title and interest
of Seller in and to the intangible personal property now or hereafter owned by
Seller and used in connection with or arising from the business now or
hereafter conducted on or from the Property or any part thereof, including,
without limitation, claims, choses in action, lease and other contract rights,
names and telephone exchange numbers (all of the foregoing being included
within the term "Property"). The computer software located at the Property is
not included in the conveyance to Purchaser.
<PAGE>
2. PURCHASE PRICE. The purchase price (the "Purchase Price") shall be
paid as follows:
A. Upon the execution of this Agreement, the sum of $300,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term is
defined in the "Escrow Agreement" [as hereinafter defined]) by and in
accordance with the provisions of the Escrow Agreement ("Escrow Agreement")
attached hereto as Exhibit C;
B. On the "Closing Date" (as hereinafter defined), the balance of
the Purchase Price adjusted in accordance with the prorations by federally
wired "immediately available" funds delivered to the "Title Insurer" (as
hereinafter defined) no later than 12:00 Noon on the Closing Date. If the
funds are not received by 12:00 Noon, then, on the Closing Date, Purchaser
shall pay Seller an amount equal to any additional mortgage per diem interest
costs incurred by the Seller.
3. TITLE COMMITMENT AND SURVEY.
A. At Purchaser's request, Seller has ordered a title commitment
(the "Title Commitment") for an ALTA Owner's Policy of Title Insurance ("Title
Policy") issued by Commonwealth Land Title Insurance Company (the "Title
Insurer") along with copies of all of the underlying Schedule B documents.
Seller will deliver the Title Commitment and copies of the underlying Schedule
B documents to Purchaser promptly following their receipt by Seller. During
the "Approval Period" (as hereinafter defined) Purchaser shall have the right
to review the status of title of the Property (including, determining what
endorsements, if any, the Title Insurer will make available to Purchaser). If,
prior to the expiration of the Approval Period, Purchaser notifies Seller that
Purchaser objects to the status of title, then Seller shall have five (5)
business days thereafter to elect to (i) terminate this Agreement, in which
case the Earnest Money, including interest thereon, shall be returned to
Purchaser immediately following Seller's receipt of the "Reports" (as
hereinafter defined) or (ii) agree to cure the title objections identified by
Purchaser, which cure may be effectuated by causing the Title Insurer, at
Seller's expense, to insure over any title objection, if applicable. If this
Agreement has not been theretofore terminated, then promptly following the
Approval Period, Purchaser and Seller will identify the exceptions to title
which have been agreed to by Purchaser and Seller. Said exceptions to title
are hereinafter referred to as the "Permitted Exceptions". On the Closing
Date, Seller shall cause the Title Insurer to issue the Title Policy or a
"marked up" commitment in conformity with the Title Commitment subject only to
Permitted Exceptions or "Unpermitted Exceptions" (as hereinafter defined) which
have been waived by Purchaser. If the Title Policy or marked-up commitment
delivered at Closing discloses exceptions to title other than Permitted
Exceptions, then Purchaser may terminate this Agreement and obtain a return of
its Earnest Money, including interest thereon. Seller and Purchaser shall each
pay for one-half of the costs of the Title Commitment and Title Policy
(including the costs of any endorsements to, or extended coverage on, the Title
Policy).
<PAGE>
B. Purchaser acknowledges receipt of a survey ("Survey") of the
Property dated April 17, 1993 prepared by Sterling Engineers, Surveyors and
Planners, Co. Seller has ordered an updated Survey ("Updated Survey").
Purchaser shall have ten (10) days from the date of receipt of the Updated
Survey to approve the Updated Survey. If Purchaser disapproves the Updated
Survey because it contains matters which are not acceptable to Purchaser
("Survey Defects"), then upon notice delivered to Seller by Purchaser within
ten (10) days from the date of receipt of the Updated Survey, Seller shall have
five (5) days to either: (i) cause the Survey Defects to be removed from the
Updated Survey or (ii) cause the title Insurer to insure against loss or damage
resulting from the Survey Defects ("Title Indemnity"). If Seller is unwilling
to do either (i) or (ii) above, then Purchaser shall have the right to elect to
terminate this Agreement. Purchaser shall notify Seller of its election within
five (5) days after receipt of notice from Seller that the Survey Defects will
not be removed or that the Title Insurer will not issue the Title Indemnity.
If Purchaser fails to make the election within the aforesaid five (5) days,
then it shall be conclusively presumed that Purchaser has elected to take title
to the Property subject to the Survey Defects. If Purchaser elects to
terminate this Agreement pursuant to this Paragraph, then the Earnest Money
plus all accrued interest shall be delivered to Purchaser immediately following
Seller's receipt of the Reports.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed in the form of Exhibit D
attached hereto (the "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 Purchaser can elect to take title to
the Property subject to the Unpermitted Exception or terminate this Agreement.
Notwithstanding the aforesaid, Seller shall be required to remove all
Unpermitted Exceptions which are liens of a definite or ascertainable amount.
If Purchaser elects to terminate this Agreement, then the Earnest Money plus
all accrued interest shall be delivered to the Purchaser.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller hereby agree to
divide evenly the costs of the documentary stamps (if any) to be paid with
reference to the Deed and all other stamps, intangible, documentary, recording,
sales tax and surtax imposed by law with reference to any other documents
delivered in connection with this Agreement as well as for all costs of the
Title Commitment, Title Policy, the Updated Survey (subject to the last
sentence of this paragraph), escrow charges and all other charges of the Title
Insurer in connection with this transaction. Purchaser and Seller shall each
pay one-half of any fees and charges payable in connection with paying off the
loan currently encumbering the property (the "Loan") and causing the release of
the related loan documents, including, without limitation, any applicable
prepayment fees and charges. Purchaser and Seller shall be responsible for the
costs of their respective attorneys. Notwithstanding the foregoing to the
contrary, if Purchaser elects to terminate this Agreement and as a consequence
of such termination Purchaser is entitled to receive the Earnest Money,
including interest thereon, following Seller's receipt of the Reports, then so
long as Purchaser delivers the Reports to Seller, Seller shall be responsible
to pay for the Updated Survey.
<PAGE>
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 $91,000.00 or less, or in the case of Personal Property, for
$25,000.00 or less, as determined by Seller in good faith, then Seller shall
either repair such damage prior to Closing or, at Purchaser's option (which
shall be exercised by Purchaser within ten (10) days after notice of such
casualty), allow Purchaser a credit against the Purchase Price in an amount
equal to the reasonably estimated cost of repair. Seller shall retain all
insurance proceeds. If the cost of repair or restoration exceeds the aforesaid
amounts (as determined by Seller in good faith), then Purchaser can, upon
notice to Seller within ten (10) days after notice of such casualty, elect to
either: (a) cause Seller to repair and restore same, in which event the Closing
Date will be extended until such date as may reasonably be required to complete
the repair or restoration; or (b) terminate this Agreement upon notice to
Seller served within ten (10) days of notice of such casualty or (c) 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.
B. If condemnation proceedings ("Proceedings") have been instituted
against the Property and such Proceedings are in an amount less than $100,000,
then Purchaser shall take the Property subject to the Proceedings and an
assignment of Seller's interest in the Proceedings. If the Proceedings are in
excess of $100,000.00, then Purchaser can elect to either take the Property
subject to the Proceedings and an assignment of Seller's interest in the
Proceedings or terminate this Agreement. If Purchaser elects to terminate this
Agreement, it shall be by notice to 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. Except as may hereinafter be specifically set forth in this
Agreement, 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, except as may hereinafter be specifically set forth in this Agreement, it
will be purchasing the Property based solely upon its inspection and
investigations of the Property and that Purchaser will be purchasing the
Property "AS IS" and "WITH ALL FAULTS" based upon the condition of the Property
as of the date of this Agreement, subject to reasonable wear and tear and loss
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,
<PAGE>
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 and,
except as may hereinafter be specifically set forth in this Agreement, Seller
makes no representation that the Property complies with any fire codes or
building codes. Purchaser hereby releases Seller from any and all liability in
connection with any claims which Purchaser may have against Seller, and
Purchaser hereby agrees not to assert any claims, for 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 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 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 hereinafter be
specifically set forth 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 releases Seller from any liability with respect
to such historical information.
<PAGE>
8. CLOSING. The closing ("Closing") of this transaction shall be on
August 1, 1996 ("Closing Date"), at the office of the Seller's attorney, at
which time Seller shall deliver possession of the Property to Purchaser.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required 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 subject to the Permitted Exceptions and
those Unpermitted Exceptions waived by Purchaser; a UCC search from appropriate
jurisdictions reflecting no liens against Seller, or a termination statement as
to any lien secured by a UCC filing; an inventory of the Personal Property and
a Bill of Sale for the same (in the form of Exhibit E attached hereto); an
executed closing statement; an executed assignment and assumption of all
service contracts (in the form of Exhibit F attached hereto); an executed
assignment and assumption of all leases and security deposits (in the form of
Exhibit G attached hereto); updated rent roll; 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 (in the
form of Exhibit H attached hereto), the original leases to be delivered to
Purchaser at the Property; a non-foreign affidavit (in the form of Exhibit I
attached hereto) 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 and shall cause the Title Company to deliver the Title Policy subject
only to Permitted Exceptions and Unpermitted Exceptions waived by Purchaser.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT THIS TRANSACTION FAILS TO
CLOSE DUE TO THE 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. 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 ACTUAL DAMAGES NOT TO EXCEED THE
AMOUNT OF THE EARNEST MONEY THEN ON DEPOSIT WITH THE ESCROW AGENT, PLUS THE
RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, 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, THEN
PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
<PAGE>
12.
A. PRORATIONS. Rents for the month of the Closing (exclusive of
delinquent rents, but including prepaid rents); any previously paid signing
bonus or similar payment relating to any laundry room, cable, telephone or
similar agreement in effect as of the Closing, refundable security deposits
with interest if required by local law (which will be assigned to and assumed
by Purchaser and credited to Purchaser at Closing); refundable and
non-refundable pet and cleaning fees and deposits, water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes
(as provided for in the next following sentence); and other similar items shall
be adjusted ratably as of 12:01 A.M. on the Closing Date ("Proration Date"),
and credited or debited to the balance of the cash due at Closing. Real
property taxes shall be prorated based on the following information in the
following circumstances: (i) if the current tax bill is available, real
property taxes shall be prorated based on that tax bill; (ii) if the tax bill
for the current tax year is not available and the assessed valuation for the
Property for the current tax year is not available, real property taxes shall
be prorated based on 105% of the most recently available tax bill; and (iii) if
the tax bill for the current tax bill is not available but the assessed
valuation for the Property for the current tax year is available, real property
taxes shall be prorated based on 105% of the tax rate for the prior tax year
multiplied by the equalization factor for the prior tax year, if applicable,
multiplied by the current assessed valuation for the Property. 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 12B
below, and errors in calculation on the closing statement. If special
assessments have been levied against the Property for completed improvements,
then the amount of any installments which are due prior to the Closing Date
shall be paid by the Seller; and the amount of installments which are due after
the Closing Date shall be paid by the Purchaser. All assessments 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 thirty (30) days or less, then the first rent
collected by Purchaser will be delivered to Seller for the Delinquent Rent. If
Delinquent Rent is in arrears for more than thirty (30) days, then rents
collected by Purchaser shall first be applied to current rent and then to
Delinquent Rent. Purchaser shall deliver Seller's pro rata share within 10
days of Purchaser's receipt of that Delinquent Rent. Within 120 days after the
Closing Date, Purchaser shall deliver to Seller a reconciliation statement of
rents collected by Purchaser through the first 90 days after the Closing Date.
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 reconciliation statement and if such audit discloses that additional funds
are owing , then the party owing such funds shall promptly pay such sums to the
party so owed. 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.
<PAGE>
14. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller,
except to an entity directly or indirectly controlled by Purchaser. Any
non-permitted 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. Seller hereby
consents to an assignment to an entity which is an affiliate of Purchaser,
provided Purchaser notifies Seller of the assignment at least five (5) business
days prior to the Closing Date.
15. BROKER. The parties hereto hereby each represent and warrant to
the other that no broker commission or finder fee is due and payable in
connection with this transaction other than to CB Commercial (to be paid by
Seller). Seller's commission to CB Commercial shall only be payable out of the
proceeds of the sale of the Property in the event the transaction set forth
herein closes. Purchaser 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 claiming by or through Purchaser any
fee, 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 any partner, affiliate, parent of Purchaser and all
shareholders, employees, officers and directors of Purchaser or Purchaser's
parent or affiliate (each of the above is individually referred to as a
"Purchaser Indemnitee") from all claims, including attorneys' fees and costs
incurred by a Purchaser Indemnitee as a result of anyone's claiming by or
through Seller any fee, commission or compensation 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, service contracts, utility
account numbers, year-end 1995 and year-to-date 1996 operating statements
(collectively the "Documents"). All of the Documents shall be subject to
approval by Purchaser by the close of business (5:00 P.M. Central Daylight
Time) on July 24, 1996 ("Approval Period"). During the Approval Period, upon
reasonable notice to the Seller, the Purchaser shall have the right to inspect
and approve the condition of the Property including the interior of the
apartments, during normal business hours. Purchaser shall maintain public
liability insurance policies insuring against claims arising as a result of the
inspections of the Property being conducted by Purchaser. Purchaser agrees to
indemnify, defend, protect and hold Seller harmless from any and all loss,
costs, including attorneys' fees, liability or damages 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.
<PAGE>
C. If Purchaser disapproves the Documents or the condition of the
Property, in its sole and absolute discretion, it must be by a notice ("Notice
of Disapproval") delivered to Seller and the Escrow Agent prior to the
expiration of the Approval Period. The Notice of Disapproval delivered to
Seller shall be accompanied by copies of all third-party reports ("Reports")
which Purchaser has received during the Approval Period. Upon receipt of the
Notice of Disapproval and copies of the Reports, the Earnest Money plus the
interest accrued thereon shall be returned to the Purchaser. If Purchaser does
not timely deliver a Notice of Disapproval and copies of the Reports to Seller,
then it shall be conclusively presumed that Purchaser has approved the
Documents and the condition of the Property and all Earnest Money plus the
interest accrued thereon shall belong to Seller unless Seller is in default
hereunder.
17. SURVIVAL OF INDEMNITY. 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 forever survive the
termination of this Agreement or the Closing and delivery and recording of the
Deed.
18. 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 Al Lieberman and Phillip Schechter,
and any representation or warranty of the Seller is based upon those matters of
which Al Lieberman and Phillip Schechter have actual knowledge. A copy of this
Paragraph 19 shall be delivered to the resident manager of the Property within
two (2) days after the execution by Seller of this Agreement, with a request to
advise Al Lieberman within five (5) business days after receipt by the resident
manager as to the accuracy and truthfulness of the representations and
warranties. Al Lieberman shall notify Purchaser as to the response of the
resident manager by July 3, 1996 if the resident manager indicated that any of
the representations or warranties were incorrect. If Mr. Lieberman fails to so
notify Purchaser, Purchaser shall be entitled to conclude that the resident
manager reviewed the representations and warranties and that they are correct.
Any knowledge or notice given, had or received by any of Seller's agents,
servants or employees shall not be imputed to Seller or the individual partners
or the general partner of Seller.
B. Subject to the limitations set forth in subparagraph "A" above,
Seller hereby makes the following representations and warranties, all of which
are made to the Seller's knowledge. The parties agree that the representations
contained herein shall survive Closing for a period of 120 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 120 days
immediately following Closing.)
(1) Except as set forth on Exhibit J attached hereto, the
present use and occupancy of the Property conform with applicable building and
zoning laws and Seller has received no written notice that any such laws, rules
or regulations are being violated.
<PAGE>
(2) The rent roll attached hereto as Exhibit K and which shall
be updated as of the Closing Date is true and accurate. No tenant under any
lease has any option or right of first refusal to acquire any ownership
interest in the Property or any right to terminate its lease or is entitled to
any rebate or concession except as set forth in its lease or on Exhibit K.
(3) Except as set forth on Exhibit J attached hereto, Seller
has no knowledge of any pending or threatened litigation, claim, cause of
action or administrative proceeding concerning the Property.
(4) Attached hereto as Exhibit L are copies of all licenses and
permits which are in Seller's possession and all service contracts affecting
the Property (none of which is in default), except for the management agreement
which shall be terminated as of the Closing Date; and Seller shall not enter
into any new service contracts which cannot be terminated within 30 days
written notice or modify or extend any existing service contracts without the
prior consent of Purchaser which consent shall not be unreasonably withheld or
delayed.
(5) Seller has not received any written notice from any tenant
occupying the Property that Seller is in default under that tenant's lease.
(6) Except as set forth on Exhibit J attached hereto, Seller
has not received from any governmental authority, any written notice of zoning,
building, fire, health code or other violations with respect to the Property,
or any part thereof, that will not have been corrected prior to Closing solely
at Seller's expense.
(7) Seller is duly organized, validly existing, qualified and
empowered to conduct its business, and has full power and authority to perform
and comply with the terms of this Agreement. Neither the execution and
delivery of this Agreement nor its performance will conflict with or result in
the breach of Seller's partnership agreement or any contract or agreement to
which Seller is a party or by which Seller is bound.
(8) This Agreement is valid and enforceable against Seller in
accordance with its terms and each instrument to be executed by Seller pursuant
to this Agreement or in connection herewith will, when executed and delivered,
be valid and enforceable against Seller in accordance with its terms.
(9) Seller has not received written notice from any
governmental authority alleging that the Property presently contains Hazardous
Materials or Hazardous Substances.
(10) As of the Closing Date, no leasing commissions will be due
subsequent to the Closing Date.
(11) None of the on-site employees is employed by the Seller.
(12) Through the Closing Date, Seller shall continue to operate,
manage and maintain the Property in the same manner as prior to the execution
of this Agreement.
<PAGE>
(13) Seller shall not extend or otherwise renew any lease
without the prior written consent of Purchaser, except for any renewal or other
extension of a lease providing for a monthly rental of not less than the
monthly rental being presently charged for a similar apartment and for a period
of time not to exceed twelve (12) months.
(14) Seller agrees not to distribute the net proceeds of the
Purchase Price up to a maximum amount of $500,000 to its partners for one
hundred twenty (120) days after the Closing Date.
(15) Exhibit B attached hereto is a list of all the personal
property owned by Seller and used in the operation of the Property. The
computer software used at the Property will not be transferred to the
Purchaser.
(16) The unaudited operating statements heretofore or hereafter
delivered to Purchaser by Seller are and shall be true, complete and correct in
all material respects.
(17) Seller has previously delivered to Purchaser a true,
correct and complete copy of the material Loan Documents. Furthermore, except
as disclosed by Seller to Purchaser, Seller has not received notice from the
lender that the Loan is in default. Seller has not entered into any written
modifications of the Loan since January 1, 1996 which have not been delivered
to Purchaser.
C. For the period commencing with the execution of this Agreement,
and expiring at the earlier of a termination of this Agreement or the Closing
Date, Seller will not offer the Property for sale to any other third party.
D. Seller shall furnish to Purchaser unaudited operating
statements, rent rolls and a leasing status report on a monthly basis.
E. Upon at least two (2) days' prior notice, Purchaser shall have
the right, during normal business hours, to visit the Property and the
interiors of the apartments.
F. Seller shall not apply security deposits towards delinquent rent
except for (i) those tenants who have vacated their apartments or (ii) tenants
who are in arrears for rent for more than thirty (30) days and Seller has
commenced the process of evicting the tenant.
G. Seller hereby agrees to remake the aforesaid representations and
warranties at Closing. If at any time after the execution of this Agreement,
Seller becomes aware of information which makes a representation or warranty
contained in this Agreement to become untrue in any material respect, Seller
shall promptly disclose said information to Purchaser. Provided the
representation or warranty was true when made and further provided that Seller
did not take any deliberate actions to cause the representation or warranty in
question to become untrue in any material respect, Seller shall not be in
default under this Agreement and the sole remedy of Purchaser 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 herein, then Purchaser shall not have the right to terminate this
Agreement or make any claim for a breach of a representation or warranty
<PAGE>
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 had actual knowledge of prior to Closing.
19. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
represents and warrants to Seller that Purchaser has the full right, power and
authority to execute this Agreement and consummate the transactions
contemplated herein.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit M is the
following report (the "Report") of the Property, which Seller is delivering to
Purchaser, at Purchaser's request: Phase I Environmental Site Assessment Report
prepared by H+GCL Environmental Scientists and Engineers dated April 30, 1993.
Seller makes no representation or warranty that the Report is accurate or
complete. Purchaser hereby releases Seller from any liability whatsoever with
respect to the Report or, including, without limitation, the matters set forth
in the Report, the accuracy and/or completeness of the Report.
21. LIMITATION OF SELLER'S LIABILITY. 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. Notwithstanding the foregoing to the contrary, for
any claims against Seller following Closing, if Seller fails to retain the net
proceeds of the Purchase Price up to a maximum amount of $500,000 (the "Cap")
for 120 days after the Closing Date, then the general partner of Seller shall
be liable for actual damages sustained by Purchaser as a result of Seller's
breach of a representation or warranty contained in Paragraph 18 of this
Agreement in an amount not to exceed the Cap. The foregoing Cap on liability
for a claim against the Seller following Closing shall not apply, and Seller's
general partner shall be liable, if Seller has entered into leases at the
Property for more than one year in breach of the representation identified in
Paragraph 18(B)(2) hereof and Purchaser makes a claim against Seller for a
breach of said representation within 120 days immediately following Closing.
22. ORGANIZATIONAL DOCUMENTS.
A. On or before the Closing Date, Purchaser will provide Seller's
attorney with copies of its organizational documents, including a certified
copy of its recorded certificate of limited partnership and a true copy of its
Partnership Agreement or a certified copy of its Articles of Incorporation,
corporate resolutions authorizing the transaction, and an incumbency
certificate, whichever is applicable.
B. On or before the Closing Date, Seller will deliver copies of its
partnership agreement and appropriate certificates of authority to the
Purchaser.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
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 by facsimile 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
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
708/267-1600
708/317-4462 (FAX)
and
Daniel J. Perlman, Esq.
Katten Muchin & Zavis
Suite 2100
525 W. Monroe Street
Chicago, Illinois 60661
312/902-5532
312/222-1061 (FAX)
TO PURCHASER: Alan George
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3932
312/454-9678 (FAX)
with a copy to: Bruce Strohm
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3624
312/454-0434 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, 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 or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
<PAGE>
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.
25. 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. Seller will forward one (1) copy of
the executed Agreement to Purchaser and will forward the following to the
Escrow Agent:
A. One (1) fully executed copy of this Agreement, and
B. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller. Purchaser shall deposit
the Earnest Money immediately following receipt by Purchaser of a fully
executed Purchase Agreement and Escrow Agreement.
26. 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 Missouri.
27. 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.
28. 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.
29. 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.
30. FINANCIAL STATEMENTS. Seller acknowledges that audited financial
statements pertaining to the Property for one prior calendar year of operation
and the portion of the calendar year in which the Closing occurs up to the
Closing Date are required to be filed by the Purchaser with the Securities and
Exchange Commission after the Closing. Accordingly, Seller agrees that for a
period of six (6) months after the Closing Date it shall provide Purchaser and
its representatives with access to Seller's books and records after the Closing
upon reasonable advance notice in order to conduct the required audit, which
shall be done at Purchaser's cost and expense.
<PAGE>
31. CONVEYANCE OF PARTNERSHIP INTERESTS. If requested to do so by
Purchaser, Seller hereby agrees, at no cost or expense to Seller, to cooperate
in good faith with Purchaser in structuring the conveyance of Property by the
Seller to Purchaser as a conveyance of title to such Property by the Seller
into a partnership or limited liability company having the Seller and/or
affiliates of Seller as its sole partners (or members) and then, at Closing,
assigning to Purchaser the partnership (or membership) interests in the
partnership (or limited liability company). In such case, the Purchaser hereby
agrees to indemnify and hold the Seller harmless from and against any and all
loss, cost, expense, liability or damage (including reasonable attorneys fees)
incurred by Seller arising out of Seller's conveyance in and out of such
partnership (or limited liability company) provided that such loss, cost,
expense, liability or damage (including reasonable attorneys fees) would not
have been suffered or incurred by such Seller if such Property had been
conveyed directly by Seller to Purchaser. The provisions of this Paragraph 31
shall survive the Closing and delivery of the Deed.
[Signatures On Following Page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
June 25, 1996.
ERP OPERATING LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Equity Residential Properties Trust, a
Maryland real estate investment trust
By: /s/Bruce C. Stromm
---------------------------------
Name: Bruce C. Stromm
-------------------------------
Title: EVP
------------------------------
Executed by Seller on SELLER:
June 30, 1996
HUNTERS PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Hunters Partners, Inc., an Illinois
corporation, its General Partner
By: /s/Phillip A. Schechter
-----------------------------
Name: Phillip A. Schechter
---------------------------
Its: Authorized Agent
----------------------------
<PAGE>
____________________ of CB Commercial ("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 as of
April 1, 1996 between Seller and Seller's Broker (the "listing Agreement").
Seller's Broker also acknowledges that payment of the aforesaid fee or
commission is conditioned upon the Closing and 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 it from
Seller or Purchaser.
CB COMMERCIAL
By:___________________________
Name:_________________________
Its:__________________________
<PAGE>
EXHIBITS
A - Legal Description
B - Personal Property
C - Escrow Agreement
D - Deed
E - Bill of Sale
F - Assignment of Service Contracts
G - Assignment of Leases and Security Deposits
H - Notice to Tenants
I - Non-Foreign Affidavit
J - Compliance with Laws and Notice of Litigation
K - Rent Roll
L - Licenses, Permits and Service Contracts
M - Environmental Report
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 28 day of June, 1996, by and
between BH TFL, INC. ("Purchaser") and WILLOW BEND LAKE PARTNERS 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 Fourteen Million Eight Hundred Fifty-Three Thousand and
No/100 Dollars ($14,853,000.00), that certain property ("Property") in Baton
Rouge, Louisiana, more particularly described on Exhibit A attached hereto,
which Property is known as Willow Bend Lake Apartments. Included in the
Purchase Price is all of the personal property 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 $148,530.00
("Deposit") to be held in escrow by and in accordance with the provisions of
the Escrow Agreement ("Escrow Agreement") among Seller, Purchaser and Ticor
Title Services ("Escrow Agent") attached hereto as Exhibit C;
b. On the Closing Date (as hereinafter defined), $14,853,000.00
(inclusive of the Deposit) adjusted in accordance with the prorations by
federally wired "immediately available" funds delivered to the Title Insurer no
later than 12:00 Noon on the Closing Date.
3. TITLE COMMITMENT AND SURVEY.
a. Seller shall obtain and deliver to Purchaser a title commitment
(the "Title Commitment") for an owner's standard title insurance policy (the
"Title Policy") for the Property issued by Chicago Title and Trust Company (the
"Title Insurer") together with copies of all documents of record shown thereon
(the "Title Documents"). In addition, Seller shall obtain and deliver to
Purchaser a survey of the Property (the "Survey"). For purposes of this
Agreement, "Permitted Exceptions" shall mean: (a) real estate taxes and
special assessments not yet due and payable; (b) matters caused by or through
the actions of Purchaser, and (c) those title and survey exceptions deemed
Permitted Exceptions pursuant to Paragraph 3.b below. 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
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 conformity with the Title Commitment. Purchaser
and Seller shall equally share the costs of the Title Policy; however,
Purchaser shall pay for "extended coverage" and any special endorsements which
Purchaser requires.
<PAGE>
b. If the Title Commitment or the Survey discloses any exceptions
to title not acceptable to Purchaser, 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") within ten
(10) days following receipt by Purchaser of the Title Commitment, Title
Documents and Survey. 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 Permitted 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, bond over, cure
or cause the Title Insurer to remove such Disapproved Title Exception from the
Title Commitment and Seller shall give written notice to Purchaser of its
election within seven (7) days of receipt of the Title Notice. Any such
Disapproved Title Exception which Seller elects to bond over, cure or cause the
Title Insurer to remove shall be Permitted Exceptions. If Seller does not
elect to bond over, cure or cause the Title Insurer to remove any Disapproved
Title Exception, Purchaser may either waive its objection or terminate this
Agreement by giving written notice to Seller of its election within three (3)
days after receipt of Seller's notice. If Purchaser does not give such written
notice within such three (3) day period: (i) Purchaser shall have waived its
right to terminate this Agreement pursuant to this Paragraph 3.b.; and (ii)
such Disapproved Title Exception shall be deemed a Permitted Exception. If
Purchaser terminates this Agreement by written notice to Seller within such
three (3) day 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 of the Property, (ii) the Deposit 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 7a.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Act of Cash Sale ("Sale") in recordable form subject
only to the Permitted Exceptions. The Sale shall be made by Seller with no
warranty of title except for claims arising by, through or under Seller. 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 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 Deposit plus all accrued
interest shall be delivered to the Purchaser and, except for Purchaser's
obligation to indemnify Seller and restore the Property as set forth in
Paragraph 7a., neither party shall have any further liability hereunder.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share
the costs of the documentary stamps with reference to the Sale and all other
stamps, intangible, documentary, recording, sales tax and surtax imposed by law
with reference to any other documents delivered in connection with this
Agreement. However, Purchaser shall pay for all costs in connection with any
mortgage Purchaser obtains.
<PAGE>
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 $100,000 or less, or in the case of Personal Property, for $10,000
or less, then Seller shall commence the repair or restoration in an expeditious
manner. Seller shall retain all insurance proceeds. If the cost of repair and
restoration exceeds those amounts, then Seller can elect to either: (a) repair
and restore same, in which event the Closing Date will be extended until such
date as may reasonably be required to complete the repair or restoration; or
(b) terminate this Agreement upon notice to Purchaser served within twenty (20)
business days of such casualty. If Seller elects to terminate this Agreement
pursuant to this Paragraph, then Purchaser will have the option to 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, provided Purchaser notifies Seller by notice served within twenty
(20) days after receipt of Seller's notice of election to terminate.
b. If condemnation proceedings ("Proceedings") have been instituted
against the Property and such Proceedings are in an amount in excess of
$100,000.00, then Purchaser can elect to either take the Property subject to
the Proceedings and an assignment of Seller's interest in the Proceedings or
terminate this Agreement. If Purchaser elects to terminate this Agreement, it
shall be by notice to 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 Deposit plus the interest accrued thereon shall be returned to the
Purchaser and, except for Purchaser's obligation to indemnify Seller and
restore the Property as set forth in Paragraph 7a., neither party shall have
any further liability hereunder.
7. INSPECTION AND AS-IS CONDITION.
a. (i) During the period commencing on May 10, 1996 and
ending at 5:00 p.m. Chicago time on July 19, 1996 (said period being herein
referred to as the "Inspection Period"), Purchaser and the agents, engineers,
employees, contractors and surveyors retained by Purchaser may enter upon the
Property, at any reasonable time and upon reasonable prior notice to Seller, to
inspect the Property, including a review of leases located at the Property, and
to conduct and prepare such studies, tests and surveys as Purchaser may deem
reasonably necessary and appropriate. In connection with Purchaser's review of
the Property, Seller has 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 1994 and 1995 and unaudited
year to date 1996 operating statements.
(ii) All of the foregoing tests, investigations and studies to
be conducted under this Paragraph 7a. 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
<PAGE>
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion. Prior to commencing any such tests, studies and
investigations, Purchaser shall furnish to Seller a certificate of insurance
evidencing comprehensive general public liability insurance insuring the
person, firm or entity performing such tests, studies and investigations and
listing Seller and Purchaser as additional insureds.
(iii) If Purchaser is dissatisfied with the results of the
tests, studies or investigations performed or information received pursuant to
this Paragraph 7a., 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 7a. prior to the expiration of the
Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this paragraph 7a. shall be waived. If Purchaser terminates this
Agreement by written notice to Seller prior to the expiration of the Inspection
Period: (i) Purchaser shall promptly deliver to Seller copies of all studies,
reports and other investigations obtained by Purchaser in connection with its
due diligence during the Inspection Period; and (ii) the Deposit deposited by
Purchaser shall be immediately paid to Purchaser, together with any interest
earned thereon, and neither Purchaser nor Seller shall have any right,
obligation or liability under this Agreement, except for Purchaser's
obligation to indemnify Seller and restore the Property, as more fully set
forth in this Paragraph 7a. 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 7a., shall survive the termination of
this Agreement.
b. 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 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 toss
by fire or other casualty or condemnation from the date of this Agreement until
the Closing Date. Purchaser expressly waives the warranty of fitness and the
guarantee against hidden or latent vices (defects in the Property sold which
render it useless or render its use so inconvenient or imperfect that Purchaser
would not have purchased it had it known of the vice or defect) provided by law
in Louisiana, more specifically, that warranty imposed by Louisiana Civil Code
2520 et seq with respect to Seller's warranty against latent or hidden defects
of the property sold, or any other applicable law, not even for a return of the
purchase price. Purchaser forfeits the right to avoid the sale or reduce the
purchase price on account of a hidden or latent vice or defect in the Property.
This provision has been specifically called to the attention of the Purchaser
and fully explained to the Purchaser, and the Purchaser acknowledges that it
has read and understands this waiver of all express or implied warranties and
accepts the Property without any express or implied warranties. 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,
<PAGE>
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 any fire codes or building codes.
Purchaser hereby releases Seller from any and all liability in connection with
any claims which Purchaser may have against Seller, and Purchaser hereby agrees
not to assert any claims, for 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 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 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.
c. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
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
<PAGE>
operation of the Property and releases Seller from any liability with respect
to such historical information.
8. CLOSING. The closing ("Closing") of this transaction shall be on
August 15, 1996 ("Closing Date"), at the office of the Title Insurer, at which
time Seller shall deliver possession of the Property to Purchaser.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required 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 Sale (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); updated rent
roll; 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 (in the form of Exhibit I attached hereto); a
non-foreign affidavit (in the form of Exhibit J attached hereto) 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. THE DEPOSIT 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 THE DEPOSIT AND THE INTEREST
THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY. THE PARTIES
HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY
PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE.
THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE
DEPOSIT 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 THE DEPOSIT THEN ON
DEPOSIT WITH THE ESCROW AGENT, TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL TERMINATE AND, EXCEPT FOR PURCHASER'S OBLIGATION TO
INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH IN PARAGRAPH 7a.,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 SALE, THEN PURCHASER WELL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE, PROVIDED THAT AT THE TIME OF THE FILING OF THE COMPLAINT,
PURCHASER SHALL DEPOSIT WITH THE ESCROW AGENT THE AMOUNT OF THE PURCHASE
INCLUSIVE OF THE DEPOSIT.
<PAGE>
12. a. PRORATIONS. 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; fuels; prepaid operating expenses; management fees in the
amount of 5% of collections; real and personal property taxes; and other
similar items shall be adjusted ratably as of 12:01 a.m. on the Closing Date
("Proration Date"), and credited or debited to the balance of the cash due at
Closing. If the Title Company has not received the cash due to Seller by 12:00
Noon on the Closing Date, then the Proration Date shall be extended to 11:59
P.M. on the Closing Date. If for any reason the Proration Date is earlier than
the Closing Date, then for the period from the Proration Date through the
Closing Date, Purchaser shall be entitled to the benefit of all of the income
from the Property and shall bear the burden of all of the operating expenses of
the Property, including, but not limited to, insurance, service contracts,
employee wages and benefits, management fees, utility costs and interest on the
existing mortgages encumbering the Property (if any). 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 12b. below.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears for thirty (30) days or less, then the first rent collected by
Purchaser will be delivered to Seller for the Delinquent Rent. If rent is in
arrears for more than thirty (30) days, then rents collected by Purchaser shall
first be applied to current rent and then to Delinquent Rent. Any amounts
shall be paid by Purchaser to Seller within 10 days of receipt of such amounts.
This subparagraph of this Agreement shall survive the Closing and the delivery
and recording of the Sale.
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. In the event this
Agreement is recorded in default of this Agreement, it shall not be deemed to
affect or encumber title to the Property, and it shall not be deemed to create
or establish any right, claim, interest or privilege in the Property in favor
of Purchaser.
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. Seller hereby consents to an
assignment to any partnership in which the Purchaser is a general partner,
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 represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Sage Properties (to be paid by Seller). Seller's commission to
Sage Properties shall only be payable out of the proceeds of the sale of the
Property in the event the transaction set forth herein closes. 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,
<PAGE>
including attorneys' fees and costs incurred by a Seller Indemnitee as a result
of anyone's claiming by or through Purchaser any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated, other than Sage Properties. Purchaser does now and shall at all
times consent to a Seller Indemnitee's selection of defense counsel. Seller
agrees to indemnify, defend and hold harmless the Purchaser and all
shareholders, employees, officers and directors of Purchaser or Purchaser's
parent or affiliate (each of the above is individually referred to as a
"Purchaser lndemnitee") 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 fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated, other than Sage
Properties. Seller does now and shall at all times consent to a Purchaser
Indemnitee's selection of defense counsel.
16. SELLER'S REPRESENTATIONS AND WARRANTIES AND LIABILITY.
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 Reid Reynolds,
the asset manager of the Property, and any representation or warranty of the
Seller is based upon those matters of which Phillip Schechter or Reid Reynolds
has actual knowledge. Any knowledge or notice given, had or received by any of
Seller's agents, servants or employees shall not be imputed to Seller 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 and warranties, all of which
are made to the best of Seller's knowledge, none of which shall survive the
Closing and delivery of the Sale:
i. The present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no notice that any
such laws, rules or regulations are being violated.
ii. The rent rolls which Seller has submitted to the Purchaser
and updated as of the Closing Date are true and accurate.
iii. Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property, except as set forth on Exhibit D attached hereto.
iv. As of the Closing Date the management agreement with the
manager of the Property will have been terminated, and all employment
contracts, if any, will have been terminated.
17. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit K is the
following report (the "Report") of the Property, which Seller is delivering to
Purchaser, at Purchaser's request: Phase I Environmental Site Assessment
Report, dated April 30, 1993, prepared by H+CGL Albuquerque Office, designated
as Job No. 45004.15. Seller makes no representation or warranty that the
Report is accurate or complete. Purchaser hereby releases Seller from any
liability whatsoever with respect to the Report, including, without limitation,
the matters set forth in the Report, the accuracy and/or completeness of the
Report.
<PAGE>
18. LIMITATION OF SELLER'S LIABILITY. 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.
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Complex
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Complex
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
847/677-2900
847/982-4027 (FAX)
and
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attn.: Daniel J. Perlman, Esq.
312/902-5532
312/902-1061 (FAX)
<PAGE>
TO PURCHASER: BH TFL, Inc.
400 Locust Street
Suite 690
Des Moines, Iowa 50309
Attn: Harry Bookey
515/244-2622
515/244-2742 (FAX)
with a copy to: Mr. Gary Myers
c/o Davis, Hockenberg
666 Walnut
Suite 2500
Des Moines, Iowa 50309
515/288-2500
515/243-0654 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, 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 or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
21. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution, accompanied with the Deposit 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. Deposit;
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 the Purchaser and the Seller.
22. GOVERNING LAW. The provision contained herein with reference to
retention of the Deposit 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 Louisiana.
23. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
<PAGE>
24. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
25. CAPTIONS. Paragraph titles or captions contained herein are inserted
as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or any provision hereof.
[EXECUTION PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
BH TFL, INC.
By: /s/Harry Bookey
---------------------
Name: Harry Bookey
Its: President
SELLER:
WILLOW BEND LAKE PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Willow Bend Lake Partners, Inc., an Illinois
corporation, its general partner
By: /s/Phillip A. Schechter
--------------------------------
Name: Phillip A. Schechter
------------------------------
Its: Authorized Agent
-------------------------------
<PAGE>
Jim Charnquist of Sage Properties ("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 as of April 12, 1996
between Seller and Broker (the "Listing Agreement"). 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. Broker agrees to deliver
a receipt to the Seller at the Closing for the fee or commission due Broker and
a release stating that no other fees or commissions are due to it from Seller
or Purchaser.
SAGE PROPERTIES
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Litigation
E - Act of Cash Sale
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Phase I Environmental Report
<PAGE>
AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of the 2nd day of July, 1996, by and
among WILLOW BEND LAKE PARTNERS LIMITED PARTNERSHIP, an Illinois Limited
Partnership ("Seller"), BH TFL, INC. ("Purchaser") and TICOR TITLE SERVICES
("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of June 28, 1996 (the "Original Agreement"), pursuant to
which Seller agreed to sell to Purchaser, and Purchaser agreed to purchase from
Seller, the "Property" (as defined in the Original Agreement);
WHEREAS, pursuant to the Original Agreement Seller, Purchaser and Escrow
Agent entered into that certain Escrow Agreement, dated June 28, 1996 (the
"Escrow Agreement"); and
WHEREAS, Seller and Purchaser now desire to amend the Original Agreement
and the Escrow Agreement pursuant to the terms and provisions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller, Purchaser and Escrow Agent agree that the Original
Agreement and the Escrow Agreement are amended as follows:
1. All capitalized terms used in this Amendment, to the extent not
otherwise expressly defined herein, shall have the same meanings ascribed to
such terms in the Original Agreement.
2. The reference to July 8, 1996 in Paragraph 7a(i) of the Original
Agreement and Paragraph 2 of the Escrow Agreement are hereby deleted and "July
23, 1996" is hereby substituted in their place.
3. Notwithstanding anything to the contrary contained in the Original
Agreement and the Escrow Agreement, the Deposit shall be delivered by Purchaser
to Escrow Agent on or before July 23, 1996 in the event Purchaser does not
elect to terminate the Agreement pursuant to Paragraph 7a. of the Agreement and
Paragraph 2 of the Escrow Agreement.
4 Except as amended herein, the terms and conditions of the Original
Agreement and the Escrow Agreement shall continue in full force and effect and
are hereby ratified in their entirety.
5. 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.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
Executed as of the date first written above.
SELLER:
WILLOW BEND LAKE PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Willow Bend Lake Partners, Inc., an Illinois
corporation, its general partner
By: /s/Phillip A. Schechter
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Name: Phillip A. Schechter
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Its: Authorized Agent
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PURCHASER:
BH TFL, INC.
By: /s/Harry Bookey
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Harry Bookey
President
ESCROW AGENT:
TICOR TITLE SERVICES
By: /s/R. W. Vaughan
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Its: Chairman - Commercial Division
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<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 25
day of June, 1996, by and between SCA NORTH CAROLINA LIMITED PARTNERSHIP, a
Delaware limited partnership ("Purchaser"), and 6555 COUNTRY OAKS CIRCLE
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 Eight Million Two Hundred Fifty Thousand And No/100 Dollars
($8,250,000.00) (the "Purchase Price"), that certain property commonly known as
Country Oaks, Memphis, Tennessee, a 200 unit apartment complex legally
described on Exhibit A attached hereto, together with all improvements thereon
and appurtenances thereto belonging (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. Within three (3) business days following the execution of this
Agreement, the sum of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) (the "Earnest Money") to be held in escrow by and in accordance
with the provisions of the Escrow Agreement ("Escrow Agreement") attached
hereto as Exhibit C; and
2.2. A portion of the Purchase Price shall be satisfied through the
assumption by Purchaser of all of Seller's obligations under the Existing Loan
Documents (as hereinafter defined); and
2.3. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price (i.e., $8,250,000.00 less (a) the then outstanding principal
balance of the "Loan" (hereinafter defined) and (b) the amount of the Earnest
Money), adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
Except as expressly set forth herein or in the event of Seller's default
hereunder, upon expiration of the Inspection Period (hereinafter defined), all
of the Earnest Money and the interest thereon shall be nonrefundable.
<PAGE>
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of an owner's title insurance
policy issued by Chicago Title Insurance Company (hereinafter referred to as
"Title Insurer") dated June 28, 1995 for the Property. Seller shall obtain and
deliver to Purchaser an updated title commitment for an owner's standard title
insurance policy issued by Title Insurer for the Property within fifteen (15)
days of the date hereof (the "Title Commitment"). In addition, Purchaser has
received a survey of the Property prepared by Ollar Surveying Co. dated
August 26, 1985. Seller shall obtain an updated survey of the Property
prepared by Ollar Surveying Co. (the "Updated Survey") and shall deliver same
to Purchaser within fifteen (15) days of the date hereof. Purchaser and Seller
shall equally share the costs relating to the Updated Survey. 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 shown on
the Updated Survey; (c) matters caused by or through the actions of Purchaser
or its agents, contractors or representatives; (c) those title exceptions
deemed Permitted Exceptions pursuant to Paragraph 3.2 below; and (d) matters
relating to the liens and security interests granted to secure the indebtedness
evidenced by the "Note" (hereinafter defined). All other exceptions to title
shall be referred to as "Unpermitted Exceptions".
3.2. If the Title Commitment or the Updated 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 date five
(5) business days after the date Purchaser's counsel receives the last of the
Title Commitment or the Updated Survey. Any title exceptions which are set
forth in the Title Commitment or on the Updated Survey to which Purchaser does
not object in accordance with the immediately preceding sentence shall be
deemed additional Permitted 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 (the "Response Notice") within
three (3) business days of receipt of the Title Notice whether Seller shall
bond over, cure or cause the Title Insurer to remove such Disapproved Title
Exception from the Title Commitment. Any such Disapproved Title Exception
which Seller elects to bond over, cure or cause the Title Insurer to remove
shall be additional Permitted Exceptions. If Seller does not so notify
Purchaser, with respect to any Disapproved Title Exception, Purchaser may
either waive its objection and proceed towards closing or terminate this
Agreement by giving written notice to Seller of its election within three (3)
additional business days of the earlier to occur of (a) receipt by Purchaser of
the Response Notice and (b) expiration of the three (3) business day period in
which Seller may deliver the Response Notice. If Purchaser does not give such
written notice within such three (3) additional business days, (i) Purchaser
shall have waived its right to terminate this Agreement pursuant to this
Paragraph 3.2; (ii) such Disapproved Title Exception shall be deemed an
additional Permitted Exception; and (iii) the parties shall proceed to Closing.
If Purchaser terminates this Agreement by written notice to Seller within such
three (3) additional business days: (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.
<PAGE>
3.3. The Title Commitment and the Updated 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 1992 ALTA Form 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"). Seller and
Purchaser shall equally share the costs of the Title Commitment and Title
Policy. Purchaser shall pay the cost of any endorsements to, and the extended
coverage on, the Title Policy.
3.4. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.3 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS. In addition to the costs set forth in
Paragraphs 3.1 and 3.3, Seller and Purchaser shall equally share the costs of
the transfer taxes, if any, to be paid with reference to the recording of the
"Deed" (hereinafter defined), together with 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. 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 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 above within said thirty (30) day
period or if Seller elects not to exercise its rights under (ii) in the first
sentence of this Paragraph 5.1, Purchaser may terminate this Agreement upon
notice to Seller within five (5) days after the expiration of said thirty (30)
day period. Absent notice from Purchaser to Seller in accordance with the
preceding sentence, Purchaser shall be deemed to have elected to take title
subject to said Unpermitted Exception. If Purchaser terminates this Agreement
in accordance with the terms of this Paragraph 5.1, this Agreement shall become
null and void without further action of the parties and all Earnest Money
theretofore deposited into the escrow by Purchaser together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for Purchaser's obligation to
indemnify Seller and restore the Property, as more fully set forth in Paragraph
7.
<PAGE>
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions, Disapproved Title Exceptions waived by Purchaser
and 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 both Seller and Purchaser
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 obligation to indemnify Seller and restore the Property, as more
fully set forth 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 together
with a credit for any deductible applicable to the claim relating to such
insurance proceeds.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated or threatened in
writing which might result in the taking of any part of the Property or the
taking or closing of any right of access to the Property, Seller shall
immediately notify Purchaser of such occurrence. In the event that the taking
of any part of the Property shall: (i) materially impair access to the
Property; (ii) cause any material non-compliance with any applicable law,
ordinance, rule or regulation of any federal, state or local authority or
governmental agencies having jurisdiction over the Property or any portion
thereof; or (iii) materially and adversely impair the use of the Property as it
is currently being operated (hereinafter collectively referred to as a
"Material Event"), Purchaser may:
<PAGE>
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall notify Seller, within five (5) business days after
Purchaser's receipt of Seller's notice, whether Purchaser elects to exercise
its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be delayed,
if necessary, until Purchaser makes such election. If Purchaser fails to make
an election within such five (5) business day period, Purchaser shall be deemed
to have elected to exercise its rights under Paragraph 6.2.2. If between the
date of this Agreement and the Closing Date, any condemnation or eminent domain
proceedings are initiated which do not constitute a Material Event, Purchaser
shall be required to proceed with the Closing, in which event Seller shall
assign to Purchaser all of Seller's right, title and interest in and to any
award made in connection with such condemnation or eminent domain proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on June 3, 1996 and ending at 5:00 p.m.
Chicago time on July 3, 1996 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, copies of the Existing Loan Documents in Seller's possession,
the most recent tax and insurance bills, utility account numbers, service
contracts, and unaudited year end 1995 and year-to-date 1996 operating
statements. Seller agrees to make all existing leases for the Property or any
portion thereof available for review by the Purchaser at the Property. The
foregoing due diligence documents are hereinafter collectively referred to as
the "Property Documents".
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any affiliate
or 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, loss, cost and
expense (including without limitation, attorney's fees, court costs and costs
of appeal) suffered or incurred by Seller or Affiliates of Seller for claims
arising or injury to persons or property caused by Purchaser's investigations
and inspection of the Property, including, without limitation, the entry of
Purchaser, its employees, agents or lender onto the Property or liability for
mechanics' liens claims. Purchaser shall undertake its obligation to defend
set forth in the preceding sentence using attorneys selected by Purchaser,
subject to Seller's reasonable approval.
<PAGE>
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser, in Purchaser's sole discretion, is dissatisfied with their
review of the Property, any of the Existing Loan Documents or any of the
Property Documents in any way, 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 7.1 prior to the expiration of
the Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 7.1 shall be waived. If Purchaser terminates this
Agreement by written notice to Seller prior to the expiration of the Inspection
Period: (i) Purchaser shall promptly deliver to Seller copies of all studies,
reports and other investigations obtained by Purchaser in connection with its
due diligence during the Inspection Period; and (ii) the Earnest Money
deposited by Purchaser shall be immediately paid to Purchaser, together with
any interest earned thereon, and neither Purchaser nor Seller shall have any
right, obligation or liability under this Agreement, except for Purchaser's
obligation to indemnify Seller and restore the Property, as more fully set
forth in this Paragraph 7.1. Notwithstanding anything contained herein to the
contrary, Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in this Paragraph 7.1, shall survive the Closing and
the delivery of the Deed and termination of this Agreement.
7.2. 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
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. The provisions of this Paragraph 7.2 shall in no event be
<PAGE>
construed as providing Seller with any rights to indemnification from Purchaser
in connection with the existence of asbestos or Hazardous Materials on, or
environmental condition 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, Purchaser's
obligations, as more fully set forth in this Paragraph 7.2. shall survive the
Closing and the delivery of the Deed and termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller and the Affiliates of Seller from
any liability with respect to such historical information. Notwithstanding
anything contained herein to the contrary, Purchaser's obligations, as more
fully set forth in this Paragraph 7.3. shall survive the Closing and the
delivery of the Deed and termination of this Agreement.
<PAGE>
7.4. Seller has provided to Purchaser the following existing report:
Phase I Environmental Site Assessment and Limited Asbestos Survey, prepared by
Astex Environmental Services, Inc., dated May 31, 1995 (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.
8.1. The closing of this transaction (the "Closing") shall be on July 18,
1996 (the "Closing Date"), at the office of Title Insurer, Memphis, Tennessee,
at which time Seller shall deliver possession of the Property to Purchaser.
This transaction shall be closed through an escrow with Title Insurer, in
accordance with the general provisions of the usual and customary form of deed
and money escrow for similar transactions in Tennessee, provided, however, that
in any instance, the sale proceeds shall not be disbursed from such escrow
unless and until the Title Insurer shall be unconditionally committed to
issuing the Title Policy. All closing and escrow fees shall be divided equally
between the parties hereto.
8.2. On the Closing Date, provided all conditions precedent to
Purchaser's obligations hereunder have been satisfied, the Purchaser shall
assume all of Seller's obligations under the Existing Loan Documents,
including, without limitation, that Note (hereinafter defined), which Note has
an outstanding principal balance of approximately $5,950,000.00.
8.3. In addition to all other conditions set forth herein, the obligation
of Seller, on the one hand, and Purchaser, on the other hand, to consummate the
transaction contemplated hereunder shall be contingent upon the following:
8.3.1. The other party's representations and warranties contained
herein shall be true and correct as of the date of this Agreement and the
Closing Date, and each party shall have the right to update their respective
representations and warranties prior to Closing; and
8.3.2. As of the Closing Date, the other party shall have performed
its obligations and covenants hereunder and all deliveries to be made at
Closing have been tendered.
9. CLOSING DOCUMENTS.
9.1. Not less than one (1) business day prior to the Closing Date, Seller
shall prepare, subject to Purchaser's reasonable approval, a joint closing
statement which shall be executed and delivered by both Seller and Purchaser to
one another on the Closing Date. In addition, on the Closing Date, and
provided that all conditions precedent to Purchaser's obligations to acquire
the Property have been fully satisfied, Purchaser shall deliver to Seller the
balance of the Purchase Price, an assumption of the documents set forth in
Paragraph 9.2.3, 9.2.4 and 9.2.12 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.
<PAGE>
9.2. On or before 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 special 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 Seller's interest, if any, in the name
"Country Oaks";
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession, to be delivered at the Property;
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
9.2.8. possession of the Property to Purchaser;
9.2.9. evidence of the termination of the management agreement as of
the Closing Date;
9.2.10. notice to the tenants of the Property (in the form of
Exhibit K) 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 for which Purchaser receives a credit at closing;
9.2.11. an updated rent roll; and
9.2.12. an assignment and assumption of Existing Loan Documents (in
the form of Exhibit L) [to be inserted after execution].
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 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.
<PAGE>
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 IN THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED $50,000 IN THE
AGGREGATE. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits as shown on the updated
rent roll (which will be assigned to and assumed by Purchaser and credited to
Purchaser at Closing); interest under the Loan, water and other utility
charges; fuels; prepaid operating expenses; management fees if and to the
extent payable to the existing property manager for rent received and prorated
for the month of Closing; 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 to the balance of the cash due at Closing. To the extent any escrows,
reserves or holdbacks established in connection with the Loan or the Existing
Loan Documents are not refunded to Seller at Closing, the Seller's interest in
the proceeds of said escrows shall be assigned to Purchaser and the amounts
thereof shall be a credit to Seller 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 its best efforts to collect all amounts
which, upon collection, would constitute Post-Closing Receipts hereunder.
Within one hundred twenty (120) days after the Closing Date, Purchaser shall
deliver to Seller a reconciliation statement of Post-Closing Receipts through
the first ninety (90) days after the Closing Date. Upon the delivery of the
Post-Closing Receipts reconciliation, Purchaser shall deliver to Seller any
Post-Closing Receipts owing to Seller and not previously delivered to Seller in
accordance with the terms hereof. Seller retains the right to conduct an
audit, at reasonable times and upon reasonable notice, of Purchaser's books and
records to verify the accuracy of the Post-Closing Receipts reconciliation
statement and upon the verification of additional funds owing to Seller in an
amount greater than $5,000.00, Purchaser shall pay to Seller said additional
Post-Closing Receipts and the cost of performing Seller's audit. Paragraph
12.2 of this Agreement shall survive the Closing and the delivery and recording
of the Deed.
<PAGE>
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 and Lender
(hereinafter defined). 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 and which assumes in writing the obligations of Purchaser
hereunder. If any such assignment occurs, Purchaser shall nonetheless remain
liable for all 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 Insignia Mortgage & Investment Company ("Insignia"), to be paid
by Seller in accordance with Seller's listing agreement with Insignia.
Seller's commission to Insignia shall only be payable out of the proceeds of
the sale of the Property in the event the transaction set forth herein closes.
Purchaser and Seller shall indemnify, defend and hold the other party hereto
harmless from any claim whatsoever (including without limitation, reasonable
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 Insignia. The indemnifying party shall undertake its obligations set forth
in this Paragraph 15 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this
Paragraph 15 will survive the Closing and delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Phillip Schechter or Gregg Handrich (together referred to as the
"Seller's Representative"), and any representation or warranty of the Seller is
based upon those matters of which the Seller's Representative has actual
knowledge. Seller's Representative shall deliver a copy of the representations
contained in Paragraph 16.2 below to the existing property manager for its
review and request the property manager to inform Seller's Representative of
any inaccuracies contained in such representations. Except as set forth in the
previous two sentences, any knowledge or notice given, had or received by any
of Seller's agents, servants or employees shall not be imputed to Seller, the
general partner or limited partners of Seller, the subpartners of the general
partner or limited partners of Seller or Seller's Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall,
subject to Paragraph 16.4, survive Closing: (i) Seller has no knowledge of any
pending or threatened litigation, claim, cause of action or administrative
proceeding concerning the Property; (ii) the rent rolls attached hereto as
Exhibit M which Seller has submitted to the Purchaser and updated as of the
Closing Date are accurate as of the dates set forth thereon; (iii) Seller has
no knowledge of any additional environmental reports of the Property
commissioned by Seller since May 31, 1995 other than the Existing Report; (iv)
<PAGE>
Seller has no knowledge of any due and unpaid leasing commission; (v) Seller
has no knowledge of a material default by Seller under any lease for the
Property; and (vi) the list of Service Contracts attached hereto as Exhibit H
is complete and Seller has no knowledge of any material default by Seller under
the terms of any said Service Contracts. Seller hereby represents and warrants
to Purchaser the following: (i) Seller has the power to execute this Agreement
and consummate the transactions contemplated herein; and (ii) Seller has not
entered into any agreement concerning the sale of the Property which conflicts
with the terms of this Agreement.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute this Agreement and
consummate the transactions contemplated herein.
16.4. The parties agree that the representations 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 a representation or warranty after the expiration of ninety (90) days
immediately following 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.
17.1. None of Seller's beneficiaries, shareholders, partners,
officers, agents or employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
17.2. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum aggregate liability of Seller, in
connection with, arising out of or in any way related to a breach by Seller
under this Agreement after the Closing shall be $200,000. Purchaser hereby
waives for itself and anyone who may claim by, through or under Purchaser any
and all rights to sue or recover from Seller any amount greater than said
limit.
18. CONDITIONS PRECEDENT.
18.1. Berkshire Mortgage Finance Limited Partnership, a Massachusetts
limited partnership (the "Lender"), made a loan to Seller on June 28, 1995 in
the original principal amount of $6,010,000.00 (the "Loan"), evidenced by that
certain Multifamily Note made by Seller in favor of Lender dated June 28, 1995
(the "Note"). The Loan is secured by, among other things, that certain
Multifamily Deed of Trust, Assignment of Rents and Security Agreement made by
Seller in favor of Lender, dated as of June 28, 1995 (the "Deed of Trust")
which encumbers the Property (the Note, the Deed of Trust and all other
documents evidencing and/or securing the Loan, are hereinafter collectively
referred to as the "Existing Loan Documents").
<PAGE>
18.2. Purchaser and Seller agree that the performance of their
respective obligations under this Agreement shall each be subject to the
satisfaction of the following, on or before the Closing Date:
18.2.1. Seller and Purchaser obtaining, on terms reasonably
acceptable to Seller and Purchaser, the written consent of Lender and any other
applicable party to (a) the assignment to and assumption by Purchaser of the
Loan and the Existing Loan Documents (on terms acceptable to Purchaser in its
reasonable discretion, Purchaser acknowledging that for purposes of this
Agreement such terms shall be reasonable so long as they (i) do not expand in
any material respect the existing obligations under the Existing Loan
Documents, and (ii) do not require Purchaser to pay to Lender (A) an assumption
fee in excess of one percent (1%) of the outstanding principal balance of the
Note, (B) an application fee in excess of $3000.00, and (C) more than all
reasonable costs and expenses of Lender in connection with the assumption) and
(b) the sale of the Property to Purchaser;
18.2.2. Purchaser and Seller satisfying all other conditions to the
transfer of the Loan arising under any of the Existing Loan Documents upon
terms reasonably acceptable to Purchaser and Seller; and
18.2.3. Seller obtaining, on terms acceptable to Seller in Seller's
sole and absolute discretion, the written acknowledgment of Lender to the
release of Seller and Seller's affiliated entities from any and all liabilities
and obligations arising out of the Loan and Existing Loan Documents following
the Closing.
The foregoing conditions 18.2.1, 18.2.2 and 18.2.3 shall hereinafter be
referred to as the "Conditions Precedent". Both Seller and Purchaser shall
fully cooperate with each other and use good faith efforts to satisfy the
Conditions Precedent, including, but not limited to, Purchaser submitting to
Lender all reasonably requested financial and other information.
18.3. In the event any of the Conditions Precedent are not satisfied
on or before July 8, 1996, then this Agreement shall be terminated, and the
Earnest Money shall be immediately paid to Purchaser, together with any
interest earned thereon, and neither Seller nor Purchaser shall have any right,
obligation or liability under this Agreement, except for the indemnities set
forth in Paragraphs 7 and 15 of this Agreement.
19. INFORMATION AND AUDIT COOPERATION. At Purchaser's request, at any time
before or within one (1) year after the Closing, Seller shall provide to
Purchaser's designated independent auditor access to all of the books and
records of the Property, and all related information regarding the period for
which Purchaser is required to have the Property audited under the regulations
of the Securities and Exchange Commission. The Purchaser agrees to indemnify
and hold harmless the Seller from any claim, damage, loss, or liability to
which Seller is at any time subjected by any person who is not a party to this
Agreement as a result of Seller's compliance with this paragraph.
20. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
21. 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 messenger (hand
delivery), by overnight courier such as Federal Express, by facsimile
transmission or made by United States registered or certified mail addressed as
follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
(847) 317-4360
(847) 317-4462 (FAX)
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: SCA North Carolina Limited Partnership
c/o Security Capital Atlantic Incorporated
Six Piedmont Center
Sixth Floor
Atlanta, Georgia 30335
Attention: Raymond Barrows
(404) 239-1139
(404) 233-2379 (FAX)
with copy to: Mayer Brown & Platt
141 E. Palace Avenue
Santa Fe, New Mexico 87501
Attention: Carrie Brower, Esq.
(505) 820-8186
(505) 820-7334 (FAX)
<PAGE>
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
22. 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. Purchaser shall forward the Earnest
Money payable to the Escrow Agent as set forth in the Escrow Agreement and this
Agreement. Seller will forward one (1) copy of the executed Agreement to
Purchaser and will forward the following to the Escrow Agent:
(A) One (1) fully executed copy of this Agreement; and
(B) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
23. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the Tennessee, except that with respect to the retainage of the Earnest
Money as liquidated damages, the laws of the State of Illinois shall govern.
24. 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.
25. 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.
26. 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.
27. CONFIDENTIALITY. Neither Seller nor Purchaser shall make any public
announcement or disclosure of any information related to this Agreement to
outside brokers or third parties, before or after the Closing, without the
prior written specific consent of the other party; provided, however, that
Purchaser or Seller may make disclosure of this Agreement to (a) its lenders,
creditors, investors, beneficiaries, officers, employees and agents as
necessary to perform its obligations hereunder and to be in compliance with
applicable Securities and Exchange Commission filing requirements, and (b)
third parties, to the extent the content of the information being disclosed is
already public knowledge.
<PAGE>
28. LIMITATION OF PURCHASER'S LIABILITY. Seller shall look to the assets of
Purchaser for the enforcement of any claim against Purchaser, as none of the
trustees, officers, employees and shareholders of Purchaser assume any personal
liability for obligations entered into by or on behalf of Purchaser.
29. SERVICE CONTRACTS. Attached hereto as Exhibit H 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, except for service contracts which are
terminable on not more than thirty (30) days notice. Seller agrees to
terminate any and all management agreements affecting the Property as of the
Closing Date.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
SCA NORTH CAROLINA LIMITED PARTNERSHIP, a
Delaware limited partnership
By: SCA-North Carolina (1) Incorporated, a
Maryland corporation, general partner
By: /s/Raymond D. Barrows
-------------------------------
Name: Raymond D. Barrows
-----------------------------
Its: Vice President
------------------------------
SELLER:
6555 COUNTRY OAKS CIRCLE LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Balcor Partners 85II, Inc., an Illinois
corporation, its general partner
By: /s/Phillip A. Schechter
--------------------------------
Phillip A. Schechter
Authorized Agent
<PAGE>
Rick Scarola of Insignia Mortgage & Investment Company ("Seller's Broker")
executed this Agreement in its capacity as a real estate broker and
acknowledges that the fee or commission due it from Seller as a result of the
transaction described in this Agreement is as set forth in that certain Listing
Agreement, dated as of March 15, 1996, between Seller and Seller's Broker (the
"Listing Agreement"). Seller's Broker also acknowledges that payment of the
aforesaid fee or commission is conditioned upon the Closing and the receipt of
the Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt
to the Seller at the Closing for the fee or commission due Seller's Broker and
a release stating that no other fees or commissions are due to it from Seller
or Purchaser.
By: INSIGNIA MORTGAGE & INVESTMENT COMPANY
By:___________________________
Name:_________________________
Its:__________________________
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Special Warranty Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Assignment and Assumption of Existing Loan Documents
M - Rent Roll
<PAGE>
6555 COUNTRY OAKS CIRCLE LIMITED PARTNERSHIP
June 25, 1996
SCA North Carolina Limited Partnership
Six Piedmont Center
Sixth Floor
Atlanta, Georgia 30335
Attention: Raymond Barrows
Re: Country Oaks, Memphis, Tennessee
Dear Mr. Barrows:
Reference is hereby made to that certain Agreement of Sale (the
"Agreement") dated June 25, 1996 by and between 6555 Country Oaks Circle
Limited Partnership, an Illinois limited partnership ("Seller") and SCA North
Carolina Limited Partnership, a Delaware limited partnership ("Purchaser").
All capitalized terms which are used herein but which are not otherwise defined
herein shall have the meanings ascribed to such terms in the Agreement.
Paragraph 18 of the Agreement provides that the performance of Purchaser's
and Seller's obligations under the Agreement shall be subject to the parties
having satisfied the Conditions Precedent on or before the Closing Date. If
any Conditions Precedent has not been satisfied in accordance with the terms of
Paragraph 18.2, then Seller or Purchaser may deliver notice ("Extension
Notice") to the other party on or before July 8, 1996 extending the date for
the satisfaction of the Conditions Precedent until August 7, 1996, in which
event the Closing of this transaction shall be extended to the date which is
five (5) business days after either party receives notice from the other party
of the satisfaction of the Conditions Precedent, but in no event later than
August 14, 1996. The receiving party shall acknowledge the Extension Notice
and forward a copy of the acknowledged Extension Notice to the Title Company as
evidence of the parties' intent to extend the Closing Date. In the event any
of the Conditions Precedent are not satisfied on or before July 8, 1996, and
Seller or Purchaser does not deliver an Extension Notice in accordance with the
terms hereof, then the Agreement shall be terminated, and the Earnest Money
shall be immediately paid to Purchaser, together with any interest earned
thereon, and neither Seller nor Purchaser shall have any right, obligation or
liability under the Agreement except for the indemnities set forth in
Paragraphs 7 and 15 of the Agreement. In the event Seller or Purchaser elects
to extend the date for satisfying the Conditions Precedent in accordance with
the terms of this letter and the Conditions Precedent have not bee satisfied on
or before August 7, 1996, then the Agreement shall be terminated, and the
Earnest Money shall be immediately paid to Purchaser, together with any
interest earned thereon, and neither Seller nor Purchaser shall have any right,
obligation or liability under the Agreement, except for the indemnity set forth
herein in Paragraphs 7 and 15 of the Agreement.
Purchaser shall bear all costs and expenses of Lender associated with
procuring and satisfying the Conditions Precedent, including, but not limited
to, any assumption or transfer fee or related fees due to, legal fees and
expenses incurred by, Lender in connection with the sale of the Property to
Purchaser or the assignment to and assumption of the Existing Loan Documents by
Purchase.
<PAGE>
In the event of an inconsistency between the terms of this letter and the
terms of the Agreement, the terms of this letter shall govern and control.
Please acknowledge your agreement to the foregoing by executing a copy of
this letter and returning it to the undersigned.
Very truly yours,
6555 COUNTRY OAKS CIRCLE
LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Balcor Partners 85II, Inc., an
Illinois corporation, its
general partner
By: /s/ Phillip Schechter
------------------------------
Name: Phillip A. Schechter
Its: Authorized Agent
ACCEPTED AND AGREED TO THIS DAY
OF JUNE, 1996
SCA NORTH CAROLINA LIMITED PARTNERSHIP,
a Delaware limited partnership
By: SCA-North Carolina (l) Incorporated, a
Delaware limited partnership
By: /s/ Raymond D. Barrows
-------------------------------
Name: Raymond D. Barrows
Its. Vice President
<PAGE>
SECURITY CAPITAL ATLANTIC
Incorporated
July 8, 1996
6555 Country Oaks Circle Limited Partnership
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
Re: Country Oaks, Memphis, Tennessee
Dear Ms. Adams:
Reference is hereby made to that certain Agreement of Sale dated as of
June 25, 1996, between 6555 Country Oaks Circle Limited Partnership, an
Illinois limited partnership ("Seller"), and SCA North Carolina Limited
Partnership, a Delaware limited partnership ("Purchaser"), as amended by that
certain Letter Agreement (the "Side Letter") dated as of June 25, 1996, between
Seller and Purchaser, (as amended, the "Agreement"). All capitalized terms
which are used herein but which are not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
Pursuant to the Side Letter, this letter shall serve as Purchaser's
Extension Notice (as Defined in the Side Letter) extending the date for the
satisfaction of the Conditions Precedent until August 7, 1996, and extending
the Closing Date to the date which is five (5) business days after either party
receives notice for the other party of the satisfaction of the Conditions
Precedent, but in no event later than August 14, 1996.
In the event of an inconsistency between the terms of this letter and the
terms of the Agreement, the terms of this letter shall govern and control.
Please acknowledge your agreement to the foregoing by executing a copy of
this letter and returning it to the undersigned and sending a copy to the Title
Company as provided in the Side Letter to evidence the parties intent to extend
the Closing Date.
Sincerely,
SCA NORTH CAROLINA LIMITED
PARTNERSHIP
By: SCA-North Carolina(l) Incorporated,
a Maryland corporation, general
partner
By: /s/ Raymond D. Barrows
--------------------------------
Name: Raymond D. Barrows
Title: Vice President
<PAGE>
ACCEPTED AND AGREED TO as of
July 10, 1996.
6555 COUNTRY OAKS CIRCLE
LIMITED PARTNERSHIP
By: Balcor Partners 85II, Inc., an
Illinois corporation, general partner
By: /s/ Phillip A. Schechter
-------------------------------
Name: Phillip A. Schechter
Title: Authorized Agent
<PAGE>
LAW OFFICES
APPERSON, CRUMP, DUZANE & MAXWELL, PLC
1755 KIRBY PARKWAY, SUITE 100
MEMPHIS, TENNESSEE 38120-4376
901/756-6300
June 18, 1996
VIA FACSIMILE (847) 317-4482
AND CERTIFIED MAIL
Ilona Adams
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, IL 60015
Re: The Balcor Company and Related Entities Agreements of Sale to Mid-
America Apartments, L.P.
Dear Ms. Adams:
This will advise you that pursuant to paragraph 7(c) of the Agreements of Sale
dated as of May 31, 1996 relating to the properties listed on the attached
schedule ("Contracts"), Mid-America Apartments, L.P. hereby exercises its right
to terminate the Contracts effective immediately. On behalf of my client, I
have requested from Lawyers Title Insurance Corporation a return of the Earnest
Money deposited therewith and any interest earned thereon.
If anything remains to be done or if you have any questions, please do not
hesitate to give me a call.
Yours sincerely,
/s/John B. Maxwell
John B. Maxwell, Jr.
JBM/sh
Enclosure
cc: Don Aldridge (via facsimile and hand delivery)
Alan Lieberman (via facsimile and certified U.S. Mail)
Daniel J. Perlman (via facsimile and certified U.S. Mail)
Kathleen S. Campbell (via facsimile and certified U.S. Mail)
<PAGE>
BALCOR PROPERTIES
1. Sun Ridge Apartments, Oklahoma City, Oklahoma
2. Heather Ridge Apartments, Oklahoma City, Oklahoma
3. Creekwood I Apartments, Tulsa, Oklahoma
4. Creekwood II Apartments, Tulsa, Oklahoma
5. Steeplechase Apartments, Lexington, Kentucky
6. Quail Lakes Apartments, Oklahoma City, Oklahoma
7. Marbrisa Apartments, Tampa, Florida
8. Shoal Run Apartments, Birmingham, Alabama
<PAGE>
