SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) September 1, 1999
Paine Webber Income Properties Seven Limited Partnership
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-15037 04-2870345
- --------------------------------------------------------------------------------
(State or other jurisdiction) (Commission (IRS Employer
of incorporation File Number) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
(Former name or address, if changed since last report)
<PAGE>
FORM 8-K
CURRENT REPORT
PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
ITEM 2 - Disposition of Assets
Colony Apartments - Mount Prospect, Illinois
Disposition Date - September 1, 1999
On September 1, 1999, Chicago Colony Apartments Associates, a joint venture
in which the Partnership has an interest, sold its operating investment
property, the Colony Apartments, located in Mount Prospect, Illinois, to an
unrelated party for $41.5 million. The sale generated net proceeds to the
Partnership of approximately $18,343,000, after the repayment of the outstanding
first mortgage loan of approximately $16,309,000, accrued interest of
approximately $107,000, closing proration adjustments of approximately
$1,064,000, closing costs of approximately $367,000 and a payment of
approximately $5,310,000 to the Partnership's non-affiliated co-venturer partner
for its share of the net proceeds in accordance with the terms of the joint
venture agreement. The Partnership will make a special distribution of
$19,440,128, or $512.00 per original $1,000 investment, to the Limited Partners
on September 15, 1999. Of the $512.00 total, $483.10, is from the sale of Colony
Apartments and $28.90 is from Partnership reserves that exceed future
requirements.
As previously reported, with the improvements in the apartment segment of
the real estate market and the strong local job market in this northwest Chicago
suburb, the Partnership and its co-venture partner had decided to market Colony
Apartments for sale during fiscal 1998. A national real estate firm was selected
to market the property and comprehensive sale efforts began in June 1998. As a
result of these sale efforts, ten offers were received. These prospective
purchasers were then requested to submit best and final offers. After completing
an evaluation of the best and final offers, the Partnership and its co-venture
partner selected an offer. However, after protracted negotiations, the
Parntership ard its co-venture partner were unable to finalize a purchase and
sale agreement with this prospective buyer. In November 1998, the Partnership
and its co-venture partner then re-opened discussions with the other prospective
buyers who had previously submitted best and final offers. Two of these
prospective buyers expressed interest. Again, however, after extensive
discussions with them, neither prospect wanted to acquire the property on terms
acceptable to the Partnership and its co-venture partner.
Subsequent to calendar year-end, the Partnership and the co-venture
partner decided to re-market the property for sale. However, after initial
re-marketing efforts, the Partnership and its co-venture partner decided to
defer new sale efforts until the Spring. In the meantime, a new real estate firm
with a strong background in selling apartment properties was selected and new
sales materials were prepared. The new marketing campaign was undertaken on
April 21, 1999. Colony Apartments was then widely marketed to over 200
prospective purchasers. Of these prospects, approximately 61 requested and
received the complete marketing package. Seventeen offers were subsequently
received from these prospective buyers of which five submitted best and final
offers. After interviewing each prospective buyer and conducting a review of
their financial capabilities and previous acquisitions, the Partnership and its
co-venture partner selected an offer. A purchase and sale contract was
subsequently negotiated with this unrelated third-party prospective purchaser
and an agreement was signed on June 28, 1999. In accordance with the provisions
of the purchase and sale agreement, the prospective buyer completed its due
diligence work within 15 days and made a non-refundable deposit of $500,000. The
only contingency was for approval by the lender for an assumption of the first
mortgage loan as part of the sale transaction. The lender subsequently gave its
approval, and the sale closed on September 1, 1999.
<PAGE>
FORM 8-K
CURRENT REPORT
PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
As discussed further in the Partnership's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999, the Partnership has been focusing on a sale
of Colony Apartments, its remaining real estate investment, and a liquidation of
the Partnership. With the sale of the Colony Apartments property completed, a
formal liquidation of the Partnership has been undertaken. This liquidation is
being finalized and is expected to be completed by the end of calendar year
1999. As part of the liquidation, a final distribution of approximately $20.00
per original $1,000 investment, or approximately $760,000, is expected to be
made by early December 1999. This distribution will represent the Partnership's
remaining reserves after paying final operating expenses and liquidation related
costs as well as the Partnership's share of Colony's property operations through
the September 1, 1999 date of sale. A post-closing reconciliation of Colony's
property operations is currently underway.
ITEM 7 - Financial Statements and Exhibits
(a) Financial Statements: None
(b) Exhibits:
(1) Purchase and Sale Agreement by and between Chicago Colony Apartments
Associates and Home Properties of New York, L.P., dated June 28,
1999.
(2) Special Warranty Deed by Chicago Colony Apartments Associates to The
Colony of Home Properties, L.L.C., dated September 1, 1999.
(3) Quitclaim Bill of Sale from Chicago Colony Apartments Associates to
The Colony of Home Properties, L.L.C., dated September 1, 1999.
(4) Assignment and Assumption of Tenant Leases and Security Deposits by
and between Chicago Colony Apartments Associates and The Colony of
Home Properties, L.L.C., dated September 1, 1999.
(5) Assignment and Assumption of Contracts and Intangibles by and
between Chicago Colony Apartments Associates and The Colony of Home
Properties, L.L.C., dated September 1, 1999.
(6) Assignment, Assumption and Release Agreement between and among
Chicago Colony Apartments Associates, The Colony of Home Properties,
L.L.C. and John Hancock Mutual Life Insurance Company, dated August
1, 1999.
(7) Indemnification Agreement by The Colony of Home Properties, L.L.C.
for the benefit of Chicago Colony Apartments Associates, Paine
Webber Income Properties Seven Limited Partnership and Chicago
Colony Apartments Company, L.P., dated August 1, 1999.
(8) Closing Statement between Chicago Colony Apartments Associates and
The Colony of Home Properties, L.L.C., dated September 1, 1999.
<PAGE>
FORM 8-K
CURRENT REPORT
PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
--------------------------------------------------------
(Registrant)
By: SEVENTH INCOME PROPERTIES FUND, INC.
------------------------------------
(General Partner)
By: /s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: September 10, 1999
<PAGE>
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
CHICAGO COLONY APARTMENTS ASSOCIATES (SELLER)
AND
HOME PROPERTIES OF NEW YORK, L.P. (BUYER)
COLONY APARTMENTS
MT. PROSPECT, ILLINOIS
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 2
DEFINITIONS 2
ARTICLE 2 4
PURCHASE AND SALE 4
ARTICLE 3 5
PURCHASE PRICE; DEPOSIT; ADJUSTMENTS 5
ARTICLE 4 8
PRECLOSING OPERATION 8
ARTICLE 5 9
ACCESS, INSPECTION, DILIGENCE 9
ARTICLE 6 14
TITLE AND SURVEY 14
ARTICLE 7 17
CONDITIONS PRECEDENT AND CLOSING 17
ARTICLE 8 21
CASUALTY AND CONDEMNATION 21
ARTICLE 9 22
BROKERAGE COMMISSIONS 22
ARTICLE 10 23
DEFAULT, TERMINATION AND REMEDIES 23
ARTICLE 11 23
REPRESENTATIONS AND WARRANTIES 24
ARTICLE 12 28
MISCELLANEOUS 28
ARTICLE 13 32
IRS FORM 1099-S DESIGNATION 32
LIST OF EXHIBITS
EXHIBIT A - THE LAND
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - EARNEST MONEY ESCROW INSTRUCTIONS
EXHIBIT D - RENT ROLL
EXHIBIT E- EXISTING LOAN DOCUMENTS
EXHIBIT F - FORM OF SPECIAL WARRANTY DEED
EXHIBIT G - FORM OF BILL OF SALE
EXHIBIT H - FORM OF ASSIGNMENT OF LEASES
EXHIBIT I - FORM OF ASSIGNMENT OF CONTRACTS AND INTANGIBLES
EXHIBIT J - FORM OF NON-FOREIGN AFFIDAVIT
EXHIBIT K - FORM OF 1099-S DESIGNATION AGREEMENT
<PAGE>
PURCHASE AND SALE AGREEMENT
Colony Apartments
THIS PURCHASE AND SALE AGREEMENT (this Agreement) is entered into as of
the 28th day of June, 1999 by and between Seller and Buyer, upon the following
terms and conditions:
WHEREAS, Seller desires to sell and Buyer desires to purchase, the
Property (hereinafter defined) on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual undertakings, covenants and
agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
References in this Agreement to the following terms shall have the
following meanings:
Buyer: Home Properties of New York, L.P., a New York limited
- ----- partnership
Deposit: See Section 3.1
- -------
Documents: all books, records, plans, studies, site analyses,
- --------- certificates of occupancy, property tax information,
permits, existing title insurance policies, existing
surveys, existing zoning analyses, existing engineering
reports, existing code compliance reports, building
specifications, Property Contracts, Leases, agreements
or other instruments or documents contained in Seller's
files relating to the construction, operation and
maintenance of the Property in each case, to the extent
the same are in Seller's possession or control.
Environmental
Requirements: All laws, ordinances, statutes, codes, rules,
- ------------ regulations, agreements, judgments, orders and decrees
now or hereafter enacted, promulgated, or amended, of
the United States, the states, the counties, the cities
or any other political subdivisions in which the Real
Property is located and any other political subdivision,
agency or instrumentality exercising jurisdiction over
the owner of the Real Property, the Real Property or the
use of the Real Property relating to pollution, the
protection or regulation of human health, natural
resources or the environment, or the emission,
discharge, release or threatened release of pollutants,
contaminants, chemicals or industrial, toxic or
hazardous substances or waste or Hazardous Materials
into the environment (including, without limitation,
ambient air, surface water, ground water or land or
soil).
Escrowed Amount: See Section 3.1
- ---------------
Existing Loan: That certain loan in the original principal amount of
- ------------- $17,4000,000.00 from Lender to Seller, evidenced by the
Note and secured by the Mortgage and the Existing Loan
Documents.
Existing Loan
Documents: That certain Promissory Note (the Note) in the original
- ---------- principal amount of $17,400,000, dated as of July 31,
1995 made by Seller in favor of Lender secured by: (y)
that certain Mortgage, Security Agreement and Financing
Statement (the Mortgage) dated as of even date therewith
encumbering the Real Property, and (z) any and all other
documents and instruments evidencing, security or
relating to the Existing Loan from Lender to Seller
executed in connection therewith, listed on Exhibit E
attached hereto and incorporated herein by reference.
Hazardous Substances: Any substance which is or contains: (i) any hazardous
- -------------------- substance as now or hereafter defined in Section 101(14)
of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.) or any regulations
promulgated under CERCLA; (ii) any hazardous waste as
now or hereafter defined in the Recourse Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.) or
regulations promulgated under RCRA; (iii) any substance
regulated by the Toxic Substances Control Act (15 U.S.C.
Section 2601 et. seq.); (iv) gasoline, diesel fuel or
other petroleum hydrocarbons; (v) asbestos and asbestos
containing materials, in any form, whether friable or
nonfriable; (vi) polychlorinated biphenyls; (vii) radon
gas; and (viii) any additional substances or materials
which are now or hereafter classified or considered to
be hazardous or toxic under Environmental Requirements
or the common law, or any other applicable law related
to the Property. Hazardous Materials shall include,
without limitation, any substance, the presence of which
on the Real Property: (A) requires reporting,
investigation or remediation under Environmental
Requirements; (B) causes or threatens to cause a
nuisance on the Real Property or adjacent property or
poses or threatens to pose a hazard to the health or
safety of persons on the Real Property or adjacent
property; or (C) if emanated or migrated from the Real
Property, could constitute a trespass.
Improvements: All buildings, structures and other improvements
- ------------ situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land.
Intangible Property: All of Seller's right, title and interest, if any, in
- -------------------- all intangible assets of any nature relating to the
Land, the Improvements or the Personal Property,
including, without limitation, all of Seller's right,
title and interest in all (i) warranties relating to the
Improvements or Personal Property in the possession of
Seller, (ii) all licenses, permits and approvals
relating to the Real Property, (iii) the use of the name
Colony Apartments, and (iv) all plans and
specifications, in each case to the extent that Seller
may legally transfer the same.
Land: All of the land described on Exhibit A attached hereto
- ---- located at 475 Enterprise Drive, Mt. Prospect, IL,
together with all privileges, rights, easements, and
appurtenances belonging to such land and all right,
title and interest (if any) of Seller in and to any
streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in
connection with such land and all right, title and
interest (if any) of Seller in all mineral and
development rights appurtenant to such land.
Leases: All of Seller's rights in all leases and other occupancy
- ------ agreements covering any portion of the Land or
Improvements.
Lender: John Hancock Mutual Life Insurance Company, a
- ------ Massachusetts corporation.
Personal Property: All furniture, carpeting, appliances, equipment,
- ----------------- machinery, inventories, supplies, signs and other
tangible personal property of every kind and nature, if
any, owned by Seller and installed, located at and used
in connection with the ownership, occupation and
operation of the Real Property, including, without
limitation, the Personal Property listed on Exhibit B
attached hereto. Personal Property specifically
excludes: (i) any items of personal property owned by
tenants at or on the Real Property, and (ii) any items
of personal property owned by third parties and leased
to Seller.
Property: The Real Property, the Personal Property, the Leases,
- -------- the Tenant Deposits, the Intangible Property and the
Property Contracts known as Colony Apartments, located
at 475 Enterprise Drive, Mount Prospect, Illinois.
Property Contracts: All of Seller's rights, if any, in all service, supply
- ------------------ and equipment rental, management, operating and leasing
contracts affecting the Property, to the extent that (i)
Seller is entitled to transfer the same to Buyer, and
(ii) Buyer does not elect to have Seller terminate them
in accordance with Section 4.3 below.
Purchase Price: $41,500,000.00
- ---------------
Real Property: The Land and the Improvements.
- -------------
Seller: Chicago Colony Apartments Associates, an Illinois
- ------ general partnership.
Tenant Deposits: Seller's rights to unapplied security deposits under the
- --------------- Leases.
Title Company: Ticor Title Insurance Company
- ------------- 203 North LaSalle Street
Suite 1390
Chicago, IL 60601
ARTICLE 2
PURCHASE AND SALE
2.1 Seller hereby agrees to sell and convey the Property to Buyer and
Buyer hereby agrees to buy the Property from Seller for the Purchase Price and
otherwise subject to the covenants, provisions, terms and conditions contained
herein.
ARTICLE 3
PURCHASE PRICE; DEPOSIT; ADJUSTMENTS
3.1 Deposit. Contemporaneously with the execution and delivery of this
Agreement (and as a condition precedent to the effectiveness of this Agreement),
Buyer shall deposit immediately available funds with the Title Company
(hereinafter the Escrow Agent) the sum of Five Hundred Thousand and 00/100
Dollars ($500,000) (the Deposit) to secure Buyer's obligations under this
Agreement. The Escrow Agent shall hold the Deposit in a segregated interest
bearing money market account with an FDIC insured bank reasonably acceptable to
Buyer and Seller. The Deposit and all interest accrued on the Deposit
(collectively, the Escrowed Amount) shall be maintained by the Escrow Agent in
such account or accounts until the Escrow Agent is required to cause the
Escrowed Amount to be disbursed pursuant to the terms and conditions of this
Agreement and the Earnest Money Escrow Instructions attached hereto as Exhibit
C. The Escrowed Amount shall be applied to the Purchase Price if the Closing
occurs, as provided in Section 3.2(c) below.
3.2 Purchase Price. The Purchase Price, subject to adjustment as provided
herein, shall be as specified in Article 1 above and shall be paid on the
Closing Date (as hereinafter defined) in the following manner:
(a) Buyer shall assume the payment of the existing principal balance
of the Existing Loan as of the Closing Date (the Loan Principal Balance),
and the payment of interest accruing thereon from and after the Closing
Date and shall agree to perform, assume and observe all obligations of the
Seller under the Existing Loan Documents evidencing, relating to or
securing the Existing Loan.
(b) Buyer shall pay to Seller in United States dollars by wire
transfer of federal funds, the Purchase Price less the Loan Principal
Balance (the Cash Balance).
(c) The Escrowed Amount shall be applied towards the Cash Balance.
3.3 Tax Proration. All due and payable real estate taxes, all general and
special assessments on the Land and ad valorem taxes, if any, on the Personal
Property (based on the most recent ascertainable taxes) attributable to the
Property through the Closing Date shall be prorated and adjusted as of the
Closing Date. In no event shall Seller be charged with or be responsible for any
increase in the taxes on the Property resulting from the sale of the Property or
from any improvements made or leases entered into on or after the Closing Date.
If the tax statements for the fiscal year during which the Closing Date occurs
are not finally determined, then the tax figures for the immediately prior
fiscal year shall be used for the purposes of prorating taxes on the Closing
Date, provided that there shall be no further adjustment to be made after the
Closing Date. Any tax refunds or proceeds (including interest thereon) on
account of a favorable determination resulting from a challenge, protest, appeal
or similar proceeding relating to taxes and assessments relating to the Property
(i) for all tax periods occurring prior to the applicable tax period in which
the Closing occurs shall be retained by and paid exclusively to Seller and (ii)
for the applicable tax period in which the Closing occurs shall be prorated as
of the Closing Date after reimbursement to Seller and Buyer, as applicable, for
all fees, costs and expenses (including reasonable attorneys' and consultants'
fees) incurred by Seller or Buyer, as applicable, in connection with such
proceedings such that Seller shall retain and be paid that portion of such tax
refunds or proceeds as is applicable to the portion of the applicable tax period
prior to the Closing Date and Buyer shall retain and be paid that portion of
such tax refunds or proceeds as is applicable to the portion of the applicable
tax period from and after the Closing Date. Neither Seller nor Buyer shall
settle any tax protests or proceedings in which taxes for the tax period for
which the other party is responsible are being adjudicated without the consent
of such party, which consent shall not be unreasonably withheld, conditioned or
delayed. After the Closing, Buyer shall be responsible for and control any tax
protests or proceedings for any period for which taxes are adjusted between the
parties under this Agreement and for any later period. Buyer and Seller shall
cooperate in pursuit of any such proceedings and in responding to reasonable
requests of the other for information concerning the status of and otherwise
relating to such proceedings; provided, however, that neither party shall be
obligated to incur any out-of-pocket fees, costs or expenses in responding to
the requests of the other.
3.4 Contract Proration. To the extent Property Contracts are not
terminated pursuant to Section 4.3, prepaid or past due amounts under any
Property Contracts which are assigned to Buyer at Closing shall be prorated and
adjusted as of the Closing Date.
3.5 Utility Proration. To the extent reasonably feasible, the Seller shall
cause all meters for electricity, gas, water, sewer or other public utility
usage at the Property to be read as of the day immediately preceding the Closing
Date, and the Seller shall pay all charges for such utilities which have accrued
on or prior to the Closing Date; provided, however, that if and to the extent
such charges are paid directly by tenants, no such reading or payment shall be
required. If the utility companies are unable or refuse to read meters for which
payment by the Seller is required, all charges for such utilities to the extent
unpaid shall be prorated and adjusted as of the Closing Date based on the most
recent bills therefor and no further adjustment shall be made. The Seller shall
provide notice to the Buyer within five (5) days of the Closing Date setting
forth (i) whether utility meters will be read as of the Closing Date and (ii) a
copy of the most recent bill for any utility charges which are to be prorated
and adjusted as of the Closing Date.
3.6 Income and Expense Proration. Collected rents for the then current and
any future period, security deposits which have not been previously applied by
Seller, prepaid rentals, interest under the Existing Loan Documents, and all
expenses and other charges in connection with the operation of the Property
shall be apportioned and shall be adjusted as of the Closing Date, and the net
amount thereof, if in favor of Seller, shall be added to the Purchase Price, or
if in favor of Buyer, shall be deducted from the Purchase Price. From and after
Closing all security deposits credited to Buyer shall thereafter be deemed
transferred to Buyer and Buyer shall assume and be solely responsible for the
payments of security deposits to tenants in accordance with the Leases and
applicable law. Seller shall be entitled to retain or if transferred to Buyer
receive a credit for any utility deposits and any deposits for third parties
under any of the Property Contracts. Seller shall receive a credit for the full
amount of any escrows or reserves held by or on behalf of Lender. In addition to
the foregoing, at Closing the Purchase Price shall be increased by the amount of
uncollected or past due rent; provided, however, that no adjustment shall be
made for rent which is more than two (2) months past due. Seller shall be
entitled to attempt to collect all rents and other charges which are more than
two (2) months past due but shall not be entitled to pursue eviction proceedings
in connection with such collection efforts.
3.7 Prorations Generally. A statement of prorations and other adjustments
shall be prepared by Seller in conformity with the provisions of this Article 3
and submitted to Buyer for review and approval not less than two (2) business
days prior to the Closing Date. For purposes of making prorations, Buyer shall
be deemed to be in title to the Property and entitled to the income from and
responsible for the expenses thereof, on the Closing Date.
3.8 Closing Costs.
-------------
(a) Seller shall pay: (i) state and county transfer tax imposed in
connection with the consummation of the transaction contemplated hereby
(the State Transfer Tax), (ii) recording charges for documents to clear
title, evidence Seller's authority or enable Seller to convey, (iii) the
costs of a standard owners title policy, (iv) the costs of an ALTA
As-Built Survey per ALTA/ACSM 1997 Minimum Standard Detail Requirements
(v) its legal fees and expenses related to the negotiation and preparation
of this Agreement and all documents required to close the transaction
contemplated hereby, and (vi) 50% of the escrow fees of the Escrow Agent.
(b) Buyer shall pay: (i) 50% of the escrow fees of the Escrow Agent,
(ii) charges to record the deed, and evidence of Buyer's existence or
authority, (iii) Buyer's legal fees and expenses related to the
negotiation of this Agreement and all documents required to close the
transaction contemplated hereby, (iv) all costs related to the Buyer's
inspection and due diligence, including, without limitation, the cost of
appraisals, architectural, engineering, credit and environmental reports,
(v) all costs associated with additional title insurance coverages or
endorsements as well as the cost of a new lenders title policy or any
required endorsements to the Lenders existing policy, (vi) all costs and
expenses in connection with the assumption of the Existing Loan
(including, but not limited to application fee, the assumption fee, title
costs and legal costs), and (vii) any local transfer tax imposed by the
Village of Mt. Prospect or mortgage tax other than the State Transfer Tax
and other taxes associated with the assumption of the Existing Loan
Documents.
(c) All other closing costs shall be paid by Seller or Buyer in
accordance with the custom in the jurisdiction where the Property is
located.
ARTICLE 4
PRECLOSING OPERATION
4.1 Leases. A rent roll (the Rent Roll) containing a list of all occupants
of the Property and all Tenant Deposits held pursuant to the Leases as of the
date hereof is attached hereto as Exhibit D. During the pendency of this
Agreement, Seller may enter into Leases with new tenants or modifications of
Leases with existing tenants substantially in accordance with Seller's existing
leasing practices, provided that in all events any new or modified Leases shall
(i) be at or near market rent, (ii) be for a term of not more than one (1) year
(with respect to residential Leases only), and (iii) on the Seller's current
standard form of lease. Notwithstanding the foregoing, Seller agrees to obtain
Buyer's prior written consent to any Leases that provide for a term in excess of
one (1) year, which consent Buyer agrees shall not be unreasonably withheld, and
Buyer's consent shall be deemed to have been granted if Buyer has not responded
within five (5) Business Days following the submission of a proposed Lease to
Buyer for approval.
4.2 Conduct of Business. At all times prior to Closing, Seller shall
continue (a) to conduct business with respect to the Property in the same manner
in which said business has been heretofore conducted, (b) to insure the Property
substantially as currently insured, and (c) maintain the Property in its current
condition, reasonable wear and tear and damage by casualty excepted, including
ordinary preparation for occupancy of residential units vacated prior to
Closing.
4.3 Property Contracts. Seller shall make copies of all Property Contracts
available for Buyer to review promptly after the date hereof. On or before the
Diligence Date (as defined below), unless Buyer has provided written notice to
Seller of Buyer's election to terminate this Agreement, Buyer shall provide
written notice to Seller of the Property Contracts that Buyer desires to have
terminated by Seller, and Seller will terminate the Property Contracts so
identified at or before Closing, provided that such Property Contracts may be
terminated without cost or liability to Seller and if there is cost or liability
to Seller, Buyer shall be responsible for any such liability. At Closing, Seller
shall assign and Buyer shall assume the Property Contracts, except those
Property Contracts which Seller has agreed to terminate. Buyer and Seller shall
indemnify, defend and hold the other harmless from and against any and all
claims under the Property Contracts which relate to its respective period of
ownership. Notwithstanding the foregoing, Seller's existing management contract
and exclusive brokerage contract for the Property shall be terminated by Seller
effective as of the Closing Date. Seller shall not, during the pendency of this
Agreement, enter into any Property Contracts or modifications, renewals or
terminations of any existing Property Contracts, in each case that would be
binding upon Buyer or the Property after Closing, without the written consent of
Buyer, which consent Buyer agrees shall not be unreasonably withheld. If Buyer
disapproves any such request, then Buyer's notice shall specify the reasons for
such disapproval.
ARTICLE 5
ACCESS, INSPECTION, DILIGENCE
5.1 Access/Purchaser's Responsibilities/Purchaser's Indemnity.
(a) From the date hereof through the Diligence Date (hereinafter
defined), Seller agrees that Buyer and its authorized agents or
representatives shall be entitled to enter upon the Real Property during
normal business hours upon advance written notice to Seller and make such
reasonable, nondestructive investigations, studies and tests including,
without limitation, surveys and engineering studies as Buyer deems
necessary or advisable, provided, however, that Buyer shall not be
permitted to conduct physical testing without Seller's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Seller's prior written consent for physical inspections or
testing may be conditioned upon receipt of a detailed description of the
proposed physical inspection or testing, a list of contractors who will be
performing the physical inspection or testing, evidence of insurance
satisfactory to Seller, and such other information as Seller reasonably
requires in connection with such proposed inspection or testing. Seller
also agrees to make all Documents not previously delivered to Buyer
available to Buyer or Buyer's agents during normal business hours for
review and copying at Buyer's expense upon advance written notice to
Seller from the date hereof through the Diligence Date.
(b) Buyer agrees that in conducting any inspections, investigations
or tests of the Property and/or the Documents, Buyer and its agents and
representatives shall (i) not unreasonably interfere with the operation
and maintenance of the Property, (ii) not unreasonably disturb the tenants
under the Leases or unreasonably interfere with their use of the Property
pursuant to their respective Leases, (iii) not damage any part of the
Property or any personal property owned or held by any tenant or third
party, (iv) not injure or otherwise cause bodily harm to Seller, the
property manager, or their respective guests, agents, invitees,
contractors and employees or any tenant or their guests or invitees, (v)
maintain comprehensive general liability insurance in terms and amounts
reasonably acceptable to Seller covering any accident arising in
connection with the presence of Buyer, its agents and representatives on
the Property, and deliver a certificate of insurance verifying such
coverage to Seller prior to entry upon the Property; (vi) promptly pay
when due the costs of all tests, investigations and examinations done with
regard to the Property; (vii) not permit any liens to attach to the Real
Property by reason of the exercise of Buyer's rights hereunder, (viii)
fully restore the Property to the condition in which the same was found
before any such inspection or tests were undertaken; and (ix) not reveal
or disclose any information obtained during the due diligence period
concerning the Property and the Documents to anyone outside Buyer's
organization, except in accordance with the confidentiality standards set
forth in Section 5.5 herein.
(c) Buyer will indemnify, defend, and hold Seller and its property
manager harmless from all losses, costs, liens, claims, causes of action,
liability, damages and out-of pocket expenses, including, without
limitation, reasonable attorneys' fees incurred by Seller as a result of
the entry upon or inspections, tests or investigations of the Property
conducted by or on behalf of Buyer. This indemnity obligation of Buyer
shall survive the termination of this Agreement for any reason.
(d) Buyer acknowledges and agrees that the Documents including,
without limitation, the documents listed in Section 5.2 below are provided
to Buyer for informational purposes only and do not constitute
representations or warranties of Seller or its agents, employees or
representatives of any kind as to the truth, accuracy or completeness of
the Documents or the source(s) thereof. Seller has not undertaken any
independent investigation as to the truth, accuracy or completeness of the
Documents, and is providing the Documents solely as an accommodation to
Buyer.
5.2 Diligence. Subject to Section 5.1, above, Buyer shall promptly
commence and actively pursue the following due diligence items:
(a) Review title and survey matters;
(b) Review Property Contracts;
(c) Obtain and review engineering reports;
(d) Obtain and review environmental reports on oil, hazardous waste,
and asbestos;
(e) Review applicable zoning and other land use controls, and other
permits, licenses, permissions, approvals and consents;
(f) Review all Leases affecting the Property; and
(g) Review the Existing Loan Documents.
Buyer shall complete its due diligence on or before the date which is
fifteen (15) days from the date hereof (the Diligence Date). Notwithstanding any
other term or provision herein to the contrary, but subject to provisions of
Section 5.1(e) above, in the event that Buyer's due diligence shall reveal any
matters which are not acceptable to Buyer, in Buyer's sole discretion, Buyer may
elect, by written notice to Seller received by Seller on or before the Diligence
Date, not to proceed with this purchase, in which event this Agreement shall
terminate, the Escrow Agent shall return the Escrowed Amount to the Buyer and
this Agreement shall be null and void without recourse to either party hereto
(except to the extent such recourse arises in connection with a provision of
this Agreement which is intended to survive termination). BUYER ACKNOWLEDGES
THAT, PURSUANT TO THE TERMS OF THIS AGREEMENT, BUYER SHALL BE AFFORDED A FULL
OPPORTUNITY TO INSPECT THE PROPERTY, OBSERVE ITS PHYSICAL CHARACTERISTICS AND
EXISTING CONDITIONS AND CONDUCT SUCH INVESTIGATIONS AND STUDIES ON AND OF SAID
PROPERTY AS IT DEEMS NECESSARY AND THAT, UNLESS BUYER TERMINATES THIS AGREEMENT
PURSUANT TO THIS SECTION 5.3 BUYER SHALL BE DEEMED TO HAVE WAIVED ON THE
DILIGENCE DATE ANY AND ALL OBJECTIONS TO OR COMPLAINTS REGARDING (INCLUDING, BUT
NOT LIMITED TO, FEDERAL, STATE OR COMMON LAW BASED ACTIONS AND ANY PRIVATE RIGHT
OF ACTION UNDER STATE AND FEDERAL LAW TO WHICH THE PROPERTY IS OR MAY BE
SUBJECT, INCLUDING BUT NOT LIMITED TO, CERCLA AND RCRA) PHYSICAL CHARACTERISTICS
AND EXISTING CONDITIONS, INCLUDING, WITHOUT LIMITATION, STRUCTURAL AND GEOLOGIC
CONDITIONS, SUBSURFACE SOIL AND WATER CONDITIONS AND SOLID AND HAZARDOUS WASTE
AND HAZARDOUS SUBSTANCES ON, UNDER, ADJACENT TO OR OTHERWISE AFFECTING THE
PROPERTY. BUYER FURTHER HEREBY ASSUMES THE RISK OF CHANGES IN APPLICABLE LAWS
AND REGULATIONS RELATING TO PAST, PRESENT AND FUTURE ENVIRONMENTAL CONDITIONS ON
THE PROPERTY AND THE RISK THAT ADVERSE PHYSICAL CHARACTERISTICS AND CONDITIONS,
INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF HAZARDOUS SUBSTANCES OR OTHER
CONTAMINANTS, MAY NOT HAVE BEEN REVEALED BY ITS INVESTIGATION.
5.3 Copies of Reports/Return of Documents.
-------------------------------------
(a) As additional consideration for the transaction contemplated
herein, Buyer shall promptly deliver to Seller copies of any and all
reports, tests or studies involving structural or geologic conditions,
environmental, hazardous waste or Hazardous Substances contamination of
the Property and all other materials obtained in connection with Buyer's
diligence, which reports, tests and studies shall be addressed to both
Buyer and Seller at no cost to Seller, provided, however, that Buyer shall
have no obligation to cause any such tests or studies to be performed on
the Property. If such reports, tests or studies indicate the existence or
reasonable potential existence of any environmental, hazardous waste or
Hazardous Substance contamination of any portion of the Property, Seller
may terminate this Agreement by giving written notice to Buyer within ten
(10) business days after Buyer provides Seller with copies of such
reports, tests or studies. Upon such termination, in accordance with
paragraphs (b) and (c) below, the Escrowed Amount shall be promptly
returned to Buyer and neither Buyer nor Seller shall have any further
obligation or liability to the other hereunder, except those obligations
arising under provisions of this Agreement which are expressly intended to
survive termination.
(b) If this Agreement is terminated for any reason whatsoever, Buyer
shall promptly deliver to Seller all Documents delivered to Buyer or
Buyer's agents, representatives or designees by Seller or Seller's agents,
representatives or employees pursuant to this Agreement.
(c) The return of the Escrowed Amount to Buyer under this Agreement
shall be contingent upon Buyer's fulfillment of its obligations under
Section 5.3(a) and (b).
5.4 Confidentiality. Buyer acknowledges and agrees that any and all of the
Documents are proprietary and confidential in nature and will be delivered to
Buyer solely to assist Buyer in determining the feasibility of purchasing the
Property. Further, each party hereto agrees to maintain in confidence, and not
to discuss with or to disclose to any person or entity who is not a party to
this Agreement, any material term of this Agreement or any aspect of the
transactions contemplated hereby, except as provided in this Section. Seller may
publicly disclose the existence of this Agreement provided that the identity of
Buyer is not disclosed. Buyer shall not disclose to anyone other than its
partners and financiers the Documents and/or any information disclosed by Seller
to Buyer which is not generally known by the public regarding Seller's
operations and/or the Property. Each party hereto may discuss with and disclose
to its accountants, attorneys, existing or prospective lenders, investment
bankers, underwriters, rating agencies, partners, consultants and other advisors
to the extent such parties reasonably need to know such information and are
bound by a confidentiality obligation identical in all material respects to the
one created by this Section. Additionally, each party may discuss and disclose
such matters to the extent necessary to comply with any requirements of the
Securities and Exchange Commission or in order to comply with any law or
interpretation thereof or court order. This provision shall survive termination
of this Agreement but shall terminate upon the Closing. Any press release to be
made regarding any matter which is the subject of the confidentiality obligation
created in this Section shall be subject to the reasonable approval of Buyer and
the Seller, respectively both as to timing and content.
5.5 Buyer's Acknowledgment. BUYER ACKNOWLEDGES THAT AS OF THE DILIGENCE
DATE IT HAS HAD AN OPPORTUNITY TO CONDUCT DILIGENCE ON THE PROPERTY AND IS
ACQUIRING THE PROPERTY IN ITS CURRENT CONDITION BASED ON ITS DILIGENCE. BUYER
FURTHER ACKNOWLEDGES THAT NEITHER SELLER NOR ITS EMPLOYEES, AGENTS OR
REPRESENTATIVES HAVE MADE ANY REPRESENTATION OR WARRANTY AS TO THE CONDITION OF
THE PROPERTY OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS ON, IN, UNDER
OR WITHIN THE PROPERTY OR A PORTION THEREOF WHICH SURVIVE CLOSING HEREUNDER. THE
BUYER ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS TO BE CONVEYED BY THE SELLER
TO THE BUYER AS IS, WITH ALL FAULTS, AND SUBSTANTIALLY IN ITS CURRENT CONDITION.
THE BUYER FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY CONTAINED
HEREIN, NEITHER THE SELLER NOR ANY AGENT, EMPLOYEE OR OTHER REPRESENTATIVE OF
THE SELLER (OR PURPORTED AGENT, EMPLOYEE OR OTHER REPRESENTATIVE OF THE SELLER)
HAS MADE ANY GUARANTEE, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED (AND THE
SELLER SHALL NOT HAVE ANY LIABILITY WHATSOEVER) AS TO THE VALUE, USES,
HABITABILITY, CONDITION, DESIGN, OPERATION, FINANCIAL CONDITION OR PROSPECTS, OR
FITNESS FOR PURPOSE OR USE OF THE PROPERTY (OR ANY PART THEREOF) OR ANY OTHER
GUARANTEE, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROPERTY (OR ANY PART THEREOF) OR INFORMATION SUPPLIED TO BUYER
WITH RESPECT THERETO. FURTHER, THE SELLER SHALL HAVE NO LIABILITY FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT AS TO THE PROPERTY OR THE FAILURE OF THE
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS AND
REGULATIONS. IN PARTICULAR, THE BUYER ACKNOWLEDGES AND AGREES THAT ANY
INFORMATION PROVIDED TO BUYER BY SELLER WITH RESPECT TO THE PROPERTY UNDER THIS
AGREEMENT (AND ANY OTHER INFORMATION THE BUYER MAY HAVE OBTAINED REGARDING IN
ANY WAY ANY OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, ITS OPERATIONS OR ITS
FINANCIAL HISTORY OR PROSPECTS FROM THE SELLER OR ITS AGENTS, EMPLOYEES OR OTHER
REPRESENTATIVES) IS DELIVERED TO THE BUYER AS A COURTESY, WITHOUT REPRESENTATION
OR WARRANTY AS TO ITS ACCURACY OR COMPLETENESS, AND NOT AS AN INDUCEMENT TO
ACQUIRE THE PROPERTY; THAT NOTHING CONTAINED IN SUCH DELIVERIES SHALL CONSTITUTE
OR BE DEEMED TO BE A GUARANTEE, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
IN ANY REGARD AS TO ANY OF THE PROPERTY (EXCEPT AS EXPRESSLY PROVIDED HEREIN);
AND THAT THE BUYER IS RELYING ONLY UPON THE PROVISIONS OF THIS AGREEMENT AND ITS
OWN INDEPENDENT ASSESSMENT OF THE PROPERTY AND ITS PROSPECTS IN DETERMINING
WHETHER TO ACQUIRE THE PROPERTY. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE
CLOSING.
5.6 Buyer's Release of Seller. SELLER AND ITS PROPERTY MANAGER ARE HEREBY
RELEASED FROM ALL RESPONSIBILITY AND LIABILITY REGARDING THE CONDITION
(INCLUDING THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND SURFACE AND SUBSURFACE
WATERS, OF MATERIALS OR SUBSTANCES THAT HAVE BEEN OR MAY BE IN THE FUTURE
DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR SUBJECT TO REGULATION AND THAT
MAY NEED TO BE SPECIALLY TREATED, HANDLED AND/OR REMOVED FROM THE PROPERTY UNDER
CURRENT OR FUTURE FEDERAL, STATE AND LOCAL LAWS, REGULATIONS OR GUIDELINES),
VALUATION, SALABILITY OR UTILITY OF THE PROPERTY, OR ITS SUITABILITY FOR ANY
PURPOSE WHATSOEVER. BUYER ACKNOWLEDGES THAT ANY INFORMATION OF ANY TYPE WHICH
BUYER HAS RECEIVED OR MAY RECEIVE FROM SELLER, ITS PROPERTY MANAGER OR THEIR
RESPECTIVE AGENTS, INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL REPORTS AND
SURVEYS, IS FURNISHED ON THE EXPRESS CONDITION THAT BUYER SHALL MAKE AN
INDEPENDENT VERIFICATION OF THE ACCURACY OF SUCH INFORMATION, ALL SUCH
INFORMATION BEING FURNISHED WITHOUT ANY WARRANTY WHATSOEVER.
ARTICLE 6
TITLE AND SURVEY
6.1 Title and Survey. Not more than five (5) days after Seller's execution
of this Agreement, Seller shall deliver to Buyer: (a) a current ALTA Urban
As-Built Survey of the Real Property per ALTA/ACSM 1997 Minimum Standard Detail
Requirements (the Survey); (b) a commitment for an ALTA Owners Policy of Title
Insurance from the Escrow Agent (the Title Commitment); and (c) a Phase I
Environmental Inspection Report prepared by Dames & Moore (the Phase I)
If (i) the Survey, (ii) matters listed as exceptions in the Title
Commitment, or (iii) matters disclosed in the Phase I Report are not
satisfactory to Buyer, Buyer shall, no less than five (5) business days before
the Diligence Date, provide Seller with written notice of such objections (the
Title Objections). Seller, at its sole cost and expense shall have the right,
but not the obligation, to cure or remove any Title Objections and shall give
Buyer written notice on or prior to the Diligence Date, identifying those Title
Objections, if any, that Seller agrees to use reasonable efforts to cure;
provided, however, that Seller shall not be obligated to incur any costs or
expenses in excess of $10,000 in connection with any such cure undertaken by
Seller. If there are Title Objections which Seller is unable or unwilling to
cure by the Diligence Date, Buyer may terminate this Agreement as provided in
Section 5.2, above or waive such objections which Seller is not willing or able
to cure and proceed to closing. Those exceptions or title deficiencies which (i)
Buyer does not object to pursuant to this Section 6.1 or (ii) are waived because
Seller is unwilling or unable to cure shall be the Permitted Exceptions.
6.2 Deed. On the Closing Date, Seller shall convey by good and sufficient
special warranty deed to Buyer good and clear record and marketable fee simple
title to all of the Real Property free and clear of all liens, encumbrances,
conditions, easements, assessments, restrictions and other conditions, except
for the following:
(a) All Leases;
(b) All zoning, building and other laws applicable to the Property;
(c) All matters which arise after the Diligence Date which are
agreed upon or consented to by Buyer;
(d) The Existing Loan Documents;
(e) The lien, if any, for real estate taxes for current year not due
and payable prior to the Closing Date (subject to proration in accordance
with Section 3.3 herein);
(f) All matters shown on Schedule B of the Title Commitment or of
public record as of the effective date of the Title Commitment and which
Seller has not agreed to (or is not obligated to) cure pursuant to Section
6.1, above;
(g) The Permitted Exceptions;
(h) Any matters shown on the Survey; and
(i) All matters, whether or not of record, to the extent caused by
Buyer or its agents, representatives or contractors.
6.3 Lease Assignment. At the Closing, Seller shall assign the Leases to
Buyer and Buyer shall assume Seller's obligations thereunder and Seller shall
convey the Personal Property to Buyer by quitclaim bill of sale.
6.4 Existing Loan.
-------------
(a) The obligations of Seller under this Agreement are contingent
and conditioned upon the following:
i. Lenders approval of the assignment to Buyer of the
Existing Loan; and
ii. Receipt by Seller from Lender at Closing of a release of
all of its obligations as borrower under the Loan
Documents, including, without limitation, a release by
Lender of Seller from its obligations under the
Certificate and Indemnity Agreement listed on Exhibit E;
provided however, that, at its option, Seller may waive
the condition set forth in this Section 6.4(a)(ii).
(b) Within three (3) days of the date hereof, Seller shall provide
Buyer with a true, correct and complete copy of all Loan Documents
executed in connection with the Existing Loan, which documents are listed
on Exhibit E attached hereto.
(c) Buyer shall, at its sole cost and expense, simultaneously with
the execution of this Agreement, deliver to Seller a check payable to
Seller in the amount of $5,000.00 (the Application Fee) to reimburse
Seller for the fee charged to Seller by Lender for applying for its
consent to the assignment and assumption of the Existing Loan. In the
event Purchaser does not deliver the Application Fee to Seller as provided
in the immediately preceding sentence, Seller may offset the Application
Fee against the Earnest Money without further action or consent by Buyer.
Buyer and Seller agree to diligently pursue such application until Lender
grants its approval of the assignment and assumption of the Existing Loan
to Buyer. In the event that Lender has not granted its approval of the
assignment and assumption of the Existing Loan to Buyer within thirty (30)
days from the expiration of the Diligence Date, then either Buyer or
Seller may elect to terminate this Agreement by written notice to the
other party, and the Escrowed Amount shall be returned to Buyer and this
Agreement shall thereupon terminate and be of no further force and effect.
In connection with such application, Buyer agrees to simultaneously
provide Seller with copies of all materials submitted to Lender and Buyer
agrees that it shall not withdraw or amend its application without
Seller's prior written consent.
(d) Buyer agrees to submit all materials requested by Lender and/or
those documents required to be submitted to Lender pursuant to the
applicable provisions of the Loan Documents on or before expiration of the
Diligence Date. Buyer acknowledges that such application documents
include, without limitation, the following:
(i) information regarding Buyer's finances and credit;
(ii) information regarding Buyer's management experience and
general reputation in the community; and
(iii) information regarding the ownership structure of Buyer,
including a list of all persons having or proposing to
have more than a ten percent (10%) ownership interest in
Buyer.
(e) Buyer shall pay all fees and costs, if any, charged by the
Lender relating to the assignment and assumption of the Existing Loan.
(f) Buyer and Seller agree to cooperate with Buyer's efforts to
obtain Lenders consent. Subject to the other provisions of this Agreement,
Buyer and Seller each agree to execute and deliver any and all documents
or instruments or take such other action as may be necessary or proper to
effectuate, confirm, perform or carry out the assignment and assumption of
the Existing Loan.
ARTICLE 7
CONDITIONS PRECEDENT AND CLOSING
7.1 Buyer's Conditions Precedent. In addition to any other conditions
precedent in favor of Buyer as may be set forth elsewhere in this Agreement,
Buyer's obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.1 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may be
waived in whole or in part only by written notice of such waiver from Buyer to
Seller.
(a) Seller performing and complying in all material respects with
all of the terms of this Agreement to be performed and complied with by
Seller prior to or at the Closing;
(b) Buyer shall have received approval of the Board of Directors of
Home Properties of New York, Inc., provided that if Buyer has not
terminated this Agreement for failure to obtain such approval on or before
the Diligence Date, then Buyer shall be deemed to have waived this
condition to Closing; and
(c) Satisfaction in full of the requirements of Section 6.4 with
respect to the Existing Loan.
Notwithstanding the foregoing, if the conditions set forth in Sections
7.1(a)-(c) or any other condition of Closing (other than an obligation of Buyer
under Section 7.2 below) shall not have been fulfilled on or before the Closing
Date, Seller shall have the right (in its sole discretion), exercisable by
written notice to Buyer at or before the Closing, to extend the Closing Date for
a period of up to thirty (30) days to provide additional time for the
fulfillment of such conditions. Upon any such extension, the term Closing Date
as used herein shall mean the date set forth in such written notice from Seller.
If Buyer's conditions as set forth in this Section 7.1 have not been met as of
the Closing Date (as the same may be extended as aforesaid) then Buyer shall
have the right to terminate this Agreement by written notice to Seller, and upon
receipt of such notice Seller shall direct the Escrow Agent to return the
Escrowed Amount to Buyer and this Agreement shall thereupon terminate and be of
no further force or effect.
7.2 Seller's Conditions Precedent. In addition to any other conditions
precedent in favor of Seller as may be set forth elsewhere in this Agreement,
Seller's obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.2 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may be
waived in whole or part only by written notice of such waiver from Seller to
Buyer.
(a) Buyer performing and complying in all material respects with all
of the terms of this Agreement to be performed and complied with by Buyer
prior to or at the Closing, including, without limitation, payment by the
Buyer of the Purchase Price (as adjusted as otherwise provided herein);.
(b) On the Closing Date, all of the representations of Buyer set
forth in this Agreement shall continue to be true, accurate and complete.
(c) Satisfaction of the requirements of Section 6.4 with respect to
the Existing Loan.
(d) The release by Lender of Seller from any and all obligations and
liability under the Existing Loan Documents and the form of the assumption
and release documents being satisfactory to Seller in their sole, but
reasonable discretion.
7.3 Closing Date. Subject to Seller's right to extend the Closing Date as
provided in Section 7.1, the consummation of the purchase and sale contemplated
in this Agreement (the Closing) shall occur through an escrow closing
arrangement on the date that is fifteen (15) days from the Diligence Date (the
Closing Date), at the office of the Escrow Agent or through the escrow closing
arrangements. It is agreed that time is of the essence in this Agreement.
7.4 Closing Deliveries. On the Closing Date, Seller shall deliver or
cause to be delivered:
(a) A duly executed and acknowledged special warranty deed conveying
the Land and the Improvements to Buyer in the form attached hereto as
Exhibit F;
(b) A duly executed quitclaim bill of sale conveying the Personal
Property to Buyer in the form attached hereto as Exhibit G;
(c) A duly executed assignment and assumption of the Leases and
Tenant Deposits (the Assignment of Leases) in the form attached hereto as
Exhibit H;
(d) A duly executed assignment and assumption of contracts and
intangibles (the Assignment of Contracts) conveying the Property Contracts
and the Intangible Property, in the form attached hereto as Exhibit I;
(e) A certificate or certificates of non-foreign status from Seller
in the form attached hereto as Exhibit J;
(f) Customary affidavits sufficient for the Escrow Agent to delete
any exceptions for mechanics or materialmen's liens and parties in
possession from Buyer's title policy and such other affidavits relating to
such title policy as the Escrow Agent may reasonably request including
lien waivers from the Broker (as hereinafter defined) and the property
manager;
(g) An updated Rent Roll (including a list of all delinquent,
prepaid rents and Tenant Deposits) certified by the Seller as true and
correct as of the Closing Date;
(h) Such other instruments as Buyer, Lender or the Escrow Agent may
reasonably request to effectuate the transactions contemplated by this
Agreement including a duly executed Transfer Tax Declaration form;
(i) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of the Purchase Price as adjusted;
(j) Evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Seller to sell the
Property and the authority of the person or persons executing the various
documents on behalf of Seller in connection with the sale of the Property;
(k) Originals, or where unavailable, copies of all Property
Contracts, Leases (with all amendments and modifications thereto),
operating information, permits, warranties and financial information about
the Property in Seller's possession or control relating to the Property;
(l) All keys to all locks on the Property and similar items, to the
extent in Seller's possession; and
(m) The following documents with respect to the assignment and
assumption of the Existing Loan:
(i) Assignment and Assumption of the Mortgage;
(ii) Assignment of Assignment of Leases and Rents;
(iii) UCC-3 Assignments of Financing Statements; and
(iv) Written approval of Lender to the assignment to Buyer of
the Existing Loan to Buyer.
7.5 Buyer's Deliveries. On the Closing Date, Buyer shall deliver or cause
to be delivered at its expense each of the following to Seller:
(a) The Purchase Price for the Property, as such Purchase Price may
have been adjusted pursuant to the provisions of this Agreement and
credited for any portion of the Escrowed Amount paid to Seller, in the
manner provided for in Article 3;
(b) Evidence in form and substance reasonably satisfactory to Escrow
Agent and Seller of Buyer's authority to purchase the Property;
(c) The Assignment of Leases;
(d) The Assignment of Contracts;
(e) Duly executed assumption agreement regarding the Existing Loan
Documents and such other instruments as Lender may require in connection
with and to evidence the assumption of the Existing Loan Documents by
Buyer;
(f) Such other instruments as Seller or Escrow Agent may reasonably
request to effectuate the transactions contemplated by this Agreement;
(g) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of such amounts;
(h) Such evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Buyer and the authority
of the person or persons who are executing the various documents on behalf
of Buyer in connection with the purchase of the Property;
(i) Acknowledgment by Buyer of Buyer's receipt from Seller of the
Tenant Deposits; and
(j) The following documents with respect to the assignment and
assumption of the Existing Loan:
(i) Written approval of Lender to the assignment to Buyer of
the Existing Loan;
(ii) Assignment and Assumption of the Mortgage;
(iii) Assignment of Assignment of Leases and Rents;
(iv) UCC-3 Assignments of Financing Statements; and
(v) Release of Seller's obligations under the Loan Documents
(hereinafter defined), including, without limitation, a release of
Seller from its obligations pursuant to the Certificate and
Indemnity Agreement executed in connection with the Existing Loan,
all in forms reasonably satisfactory to Seller; and
(vi) Such other documents as may be reasonably requested by
Lender in connection with the assignment of the Existing Loan to
Purchaser and the assumption of the obligations under the Existing
Loan by Purchaser, including, without limitation, an Environmental
Indemnity Agreement.
(k) Executed counterparts of any other documents listed in Section
7.4 required to be signed by Buyer.
7.6 Possession. Possession of the Property shall be delivered to Buyer by
Seller at the Closing, subject only to those items listed in Section 6.2 of this
Agreement and rights arising under any Property Contracts not terminated by
Buyer pursuant to Section 4.3. Seller and Buyer covenant and agree to execute,
at Closing, a written notice of the acquisition of the Property by Buyer, for
duplication and transmittal to all tenants affected by the sale and purchase of
the Property (or otherwise in such manner as will comply with applicable law
respecting notification of tenants). Such notice shall be prepared by Buyer and
approved by Seller, shall notify the tenants of the sale and transfer and shall
contain appropriate instructions relating to the payment of future rentals, the
giving of future notices, and other matters reasonably required by Buyer or
required by law. Unless a different procedure is required by applicable law, in
which event such laws shall be controlling, Buyer agrees to transmit or
otherwise deliver such letters to the tenants promptly after the Closing.
<PAGE>
ARTICLE 8
CASUALTY AND CONDEMNATION
8.1 Casualty. If the Improvements are materially damaged by fire or any
other casualty and are not substantially restored to the condition immediately
prior to such casualty before the Closing Date, Buyer shall have the following
elections:
(a) to purchase the Property in its then condition and pay the
Purchase Price, in which event Seller shall pay over or assign to Buyer as
the case may be, on the Closing Date, amounts recovered or recoverable by
Seller on account of any insurance as a result of such casualty up to the
amount of the Purchase Price, less any amounts reasonably expended by
Seller for partial restoration; or
(b) if any portion of the Improvements suffers damage in excess of
$1,500,000 from fire or any other casualty which Seller, in its sole
option, elects not to repair, to terminate this Agreement by giving notice
of termination to Seller on or before that date which is thirty (30) days
after the occurrence of the fire or other casualty or on the Closing Date,
whichever occurs first, in which event the Escrow Agent shall return the
Escrowed Amount to Buyer, this Agreement shall terminate and neither
Seller nor Buyer shall have any recourse against the other (except to the
extent such recourse arises in connection with a provision of this
Agreement which is intended to survive termination).
8.2 Condemnation. If any substantial portion of or interest in the
Property shall be taken or is in the process of being taken by exercise of the
power of eminent domain or if any governmental authority notifies Seller prior
to the Closing Date of its intent to take or acquire any portion of or interest
in the Property (each an Eminent Domain Taking), Seller shall give notice
promptly to Buyer of such event and Buyer shall have the option to terminate
this Agreement by providing notice to Seller to such effect on or before the
date which is ten (10) days from Seller's notice to Buyer of such Eminent Domain
Taking or on the Closing Date, whichever occurs first, in which event the Escrow
Agent shall return the Escrowed Amount to Buyer, this Agreement shall terminate,
and neither Seller nor Buyer shall have any recourse against the other (except
to the extent such recourse arises in connection with a provision of this
Agreement which is intended to survive termination). If Buyer does not timely
notify Seller of its election to terminate this Agreement, Buyer shall purchase
the Property and pay the Purchase Price, and Seller shall pay over or assign to
Buyer on delivery of the deed awards recovered or recoverable by Seller on
account of such Eminent Domain Taking up to the amount of the Purchase Price,
less any amounts reasonably expended by Seller in obtaining such award.
ARTICLE 9
BROKERAGE COMMISSIONS
Seller and Buyer each mutually represent and warrant to the other that
they have not dealt with, and are not obligated to pay, any fees or commissions
to any broker in connection with the transaction contemplated by this Agreement
other than William E. Montana of Draper and Kramer (the Broker). Seller agrees
to pay all commissions, payments and fees due to the Broker at the Closing.
Buyer agrees to indemnify, defend and hold Seller harmless from and against all
loss, liabilities, costs, damages and expenses (including reasonable attorneys'
fees) arising from any claims for brokerage or finders fees, commissions or
other similar fees in connection with the transaction covered by this Agreement
insofar as such claims shall be based upon alleged arrangements or agreements
made by Buyer or on Buyer's behalf. Seller hereby agrees to indemnify, defend
and hold Buyer harmless from and against all loss, liabilities, costs, damages
and expenses (including reasonable attorneys' fees) arising from any claims for
brokerage or finders fees, commissions or other similar fees, including any
claim made by the Broker, in connection with the transaction covered by this
Agreement as such claims shall be based upon alleged arrangements or agreements
made by Seller or on Seller's behalf.
ARTICLE 10
DEFAULT, TERMINATION AND REMEDIES
10.1 Seller's Default. In the event that Seller shall have failed in any
material respect adverse to Buyer as of the Closing Date to have performed any
of the covenants and agreements contained in this Agreement which are to be
performed by Seller on or before the Closing Date or Seller defaults in its
obligation to close hereunder, Buyer shall have the right to terminate this
Agreement and receive the Escrowed Amount and may bring an action against Seller
to recover its actual costs incurred to third parties in connection with its
examination of the Property prior to Closing in an amount not to exceed $25,000,
whereupon this Agreement shall terminate without further recourse. Except as
otherwise provided in this Section 10.1, Buyer hereby waives and relinquishes
any right to sue Seller for any reason whatsoever, and agrees that Seller shall
not be liable to Buyer for any actual, punitive, speculative, consequential or
other damages for breach by Seller prior to the Closing, except for payment of
the Escrowed Amount. IN NO EVENT SHALL SELLER, ITS DIRECT OR INDIRECT PARTNERS,
SHAREHOLDERS, OWNERS OR AFFILIATES, ANY OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF
THE FOREGOING, OR ANY AFFILIATE OR CONTROLLING PERSON THEREOF, HAVE ANY
LIABILITY BEYOND ITS INTEREST IN THE PROPERTY FOR ANY CLAIM, CAUSE OF ACTION OR
OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY,
WHETHER BASED ON COMMON LAW, CONTRACT, STATUTE, EQUITY OR OTHERWISE.
10.2 Buyer's Default. In the event that Buyer shall have failed in any
material respect adverse to Seller as of the Closing Date to have performed any
of the covenants and agreements contained in this Agreement which are to be
performed by Buyer on or before the Closing Date, or if Buyer defaults in its
obligation to close hereunder, Seller shall be entitled to receive the Escrowed
Amount as liquidated damages, in lieu of all other remedies available to Seller
at law or in equity for such default, and Buyer shall direct the Escrow Agent to
release the Escrowed Amount to Seller. Seller and Buyer agree that the damages
resulting to Seller as a result of such default by Buyer as of the date of this
Agreement are difficult or impossible to ascertain and the liquidated damages
set forth in the preceding sentence constitute Buyer's and Seller's reasonable
estimate of such damages. Notwithstanding the foregoing, in the event of Buyer's
default or a termination of this Agreement, Seller shall have all remedies
available at law or in equity in the event Buyer or any party related to or
affiliated with Buyer asserts any claims or rights to the Property that would
otherwise delay or prevent Seller from having clear, indefeasible and marketable
title to the Property.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 Buyer's Representations and Warranties. Buyer represents and warrants
to Seller that:
(a) Buyer is a limited partnership, duly organized and in good
standing under the laws of the State of New York, is qualified to do
business in the State of Illinois and has the power and authority to enter
into this Agreement and to execute and deliver this Agreement and to
perform all duties and obligations imposed upon it hereunder. As of the
date of this Agreement, except for the approval described in Section
7.1(b), Buyer has obtained all necessary corporate, partnership or other
organizational authorizations required in connection with the execution
and delivery of this Agreement. Each of the individuals executing this
Agreement on Buyer's behalf is authorized to do so. Buyer has the
financial ability to pay the Purchase Price by (i) tendering the Cash
Balance, and (ii) assuming the Existing Loan, and to perform the other
covenants of Buyer set forth in this Agreement.
(b) Neither the execution nor the delivery of this Agreement, nor
the consummation of the purchase and sale transaction contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement conflict with or will result in the breach of any of the terms,
conditions or provisions of any agreement or instrument to which Buyer is
a party or by which Buyer or any of Buyer's assets is bound;
(c) Buyer is not in any way affiliated with Seller;
(d) Except for the approval by Lender of Buyer's assumption of the
Existing Loan as described in Section 6.4, no approval, consent, order or
authorization of, or designation, registration or declaration with, any of
the United States, the State of Illinois, any department, board, agency,
office, commission or other subdivisions thereof, or any official thereof
or any third party is required in connection with the valid execution and
delivery of, and performance of the covenants of, this Agreement by Buyer.
(e) There are no actions, suits or proceedings pending or, to the
knowledge of Buyer, threatened, against or affecting Buyer which, if
determined adversely to Buyer, would adversely affect its ability to
perform its obligations hereunder.
As a condition precedent to Seller's obligation to close the purchase and
sale transaction contemplated in this Agreement, Buyer's representations and
warranties contained herein must remain and be true and correct as of the
Closing Date. Prior to the Closing Date, Buyer shall notify Seller in writing of
any facts, conditions or circumstances which render any of the representations
and warranties set forth in this Section 11.1 in any way inaccurate, incomplete,
incorrect or misleading.
11.2 Seller's Representations and Warranties. Seller is a general
partnership existing under the laws of the State of Illinois.
(a) Seller has full right, power and authority and is duly
authorized to enter into this Agreement, to perform each of the covenants
on its part to be performed hereunder and to execute and deliver, and to
perform its obligations under all documents required to be executed and
delivered by it pursuant to this Agreement and this Agreement constitutes
the valid and binding obligation of Seller enforceable in accordance with
its terms.
(b) A list of all notes, mortgages loan agreements and other
financing documents relating to the Existing Loan is attached to this
Agreement as Exhibit E. To Seller's knowledge, no default exists or is
claimed to exist on the part of the borrower under the Existing Loan, and
to Seller's knowledge, no event or condition exists which, with the giving
of notice, passage of time or both could constitute such a default.
(c) Seller has directed its property manager to deliver or to make
available to Buyer (i) complete copies of all Leases and (ii) the Rent
Roll.
(d) Seller has directed its property manager to deliver or to make
available to Buyer copies of all Property Contracts.
(e) To Seller's knowledge, Seller has not been served with notice of
any actions, suits, or proceedings against or affecting the Seller or the
Property that either (i) are not covered by applicable insurance or (ii)
if determined adversely to Seller would materially affect the ownership or
operation of the Property or Seller's ability to perform its obligations
under this Agreement.
Seller reserves the right to update the representations and warranties
made by it herein. All of Seller's representations and warranties shall be
deemed to be updated by information disclosed to or obtained by Purchaser in
connection with its due diligence investigations. As a condition precedent to
Buyer's obligation to close the purchase and sale transaction contemplated in
this Agreement, Seller's representations and warranties contained herein shall
be true and correct as of the Closing Date.
11.3 Seller; Seller's Knowledge. Whenever a representation is made to
Seller's knowledge, or a term of similar import, the accuracy of such
representation shall be based solely on the actual knowledge of Rock D'Errico,
without independent investigation or inquiry except for inquiry of Seller's
property manager for the Property. Notwithstanding the foregoing, if, prior to
the Closing, Buyer obtains actual knowledge that any representation or warranty
of Seller is inaccurate and Buyer nonetheless proceeds with the Closing, Seller
shall have no liability for any such matter regarding which Buyer had actual
knowledge prior to Closing.
11.4 Property Conveyed AS IS. (a) NOTWITHSTANDING ANYTHING CONTAINED
HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT, EXCEPT AS EXPRESSLY
SET FORTH HEREIN, SELLER AND ITS PROPERTY MANAGER HAVE NOT MADE AND ARE NOT NOW
MAKING, AND THEY SPECIFICALLY DISCLAIM, ANY OTHER WARRANTIES, REPRESENTATIONS OR
GUARANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF TITLE (OTHER THAN
SELLER'S WARRANTY OF TITLE SET FORTH IN THE DEED (HEREINAFTER DEFINED) TO BE
DELIVERED AT CLOSING), (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR
ANY PORTION THEREOF, (III) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION,
SUBSIDENCE, SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER RESERVOIRS,
LIMITATIONS REGARDING THE WITHDRAWAL OF WATER, AND EARTHQUAKE FAULTS AND THE
RESULTING DAMAGE OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND TO THE
EXTENT TO WHICH THE PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM
(SURFACE OR UNDERGROUND), BODY OF WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY
OR SPECIAL FLOOD HAZARD, (V) DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE
EXISTENCE OF INSTABILITY, PAST SOLID REPAIRS, SOIL ADDITIONS OR CONDITIONS OF
SOIL FILL, OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY
UNDERSHORING, (VII) ZONING TO WHICH THE PROPERTY OR ANY PORTION THEREOF MAY BE
SUBJECT, (VIII) THE AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION
THEREOF INCLUDING, WITHOUT LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (IX)
USAGES OF ADJOINING PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF,
(XI) THE VALUE, COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION,
AGE, USE, DESIGN, QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY,
OPERATION, TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY
PORTION THEREOF, OR ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS
OR CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, OR
ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR
AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, (XII) THE PRESENCE
OF HAZARDOUS SUBSTANCES IN OR ON, UNDER OR IN THE VICINITY OF THE PROPERTY,
(XIII) THE CONDITION OR USE OF THE PROPERTY OR COMPLIANCE OF THE PROPERTY WITH
ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR LOCAL ORDINANCES, RULES,
REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES, CODES OR OTHER SIMILAR
LAWS, (XIV) THE EXISTENCE OR NON-EXISTENCE OF UNDERGROUND STORAGE TANKS, (XV)
ANY OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE REAL PROPERTY,
(XVI) THE POTENTIAL FOR FURTHER DEVELOPMENT OF THE PROPERTY, (XVII) THE
EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE
PROPERTY, (XVIII) THE MERCHANTABILITY OF THE PROPERTY OR FITNESS OF THAT
PROPERTY FOR ANY PARTICULAR PURPOSE (BUYER AFFIRMING THAT BUYER HAS NOT RELIED
ON SELLER'S OR ITS PROPERTY MANAGERS SKILL OR JUDGMENT TO SELECT OR FURNISH THE
PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT SELLER MAKES NO WARRANTY THAT THE
PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE), OR (XIX) TAX CONSEQUENCES.
(b) BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER
DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ITS PROPERTY
MANAGER OR ANY OF THEIR RESPECTIVE AGENTS, EXPECT AS EXPRESSLY SET FORTH HEREIN,
AND ACKNOWLEDGES THAT NO OTHER SUCH REPRESENTATIONS HAVE BEEN MADE. BUYER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF
REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
BUYER'S CONSULTANTS IN PURCHASING THE PROPERTY. BUYER WILL CONDUCT SUCH
INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY AS BUYER DEEMS NECESSARY,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF, AND SHALL RELY UPON SAME. UPON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND
INVESTIGATIONS. BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER SHALL
SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY AS IS, WHERE IS,
WITH ALL FAULTS. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE
PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. THE TERMS AND
CONDITIONS OF THIS SECTION 11.4(B) SHALL EXPRESSLY SURVIVE THE CLOSING, NOT
MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE INCORPORATED
INTO THE DEED. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. BUYER
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE AS IS NATURE OF THIS SALE AND
ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED
WITH THE PROPERTY. BUYER HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET
FORTH IN THIS AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE SIGNIFICANCE AND
EFFECT THEREOF.
--------------
Buyer's Initials
ARTICLE 12
MISCELLANEOUS
12.1 Successors and Assigns. Without the prior written consent of Seller,
Buyer shall not, directly or indirectly, assign this Agreement or any of its
rights hereunder. Any attempted assignment in violation hereof shall, at the
election of Seller in its sole discretion, be of no force or effect and shall
constitute a default by Buyer. Notwithstanding the foregoing and so long as it
will not affect the Lenders consent to or the timing of the Closing, Buyer may
elect to have a nominee entity accept title to the Property at Closing, provided
that any such nominee must be an affiliated entity controlled by or under common
control with Buyer, and Buyer shall give written notice of such nominee to
Seller, together with any reasonable evidence of affiliation requested by
Seller, a minimum of fifteen (15) days prior to Closing. No designation of a
nominee to receive title shall release Buyer from its obligations under this
Agreement.
12.2 Notices. Except as otherwise specifically provided herein, any notice
required or permitted to be delivered under this Agreement shall be in writing
and shall be deemed given (i) when delivered or refused if sent by hand during
regular business hours, (ii) three (3) days after being sent by United States
Postal Service, registered or certified mail, postage prepaid, return receipt
requested, (iii) on the next business day when sent by a reputable overnight
express mail service that provides tracing and proof of receipt or refusal of
items mailed, or (iv) when received by the addressee if by telecopier
transmission addressed to Seller or Buyer, as the case may be, at the address or
addresses set forth below or such other addresses as the parties may designate
in a notice similarly sent. Any notice given by a party to Escrow Agent shall be
simultaneously given to the other party. Any notice given by a party to the
other party relating to its entitlement to the Escrowed Amount shall be
simultaneously given to the Escrow Agent.
(1) If to Seller:
Paine Webber Properties Incorporated
265 Franklin Street - 16th Floor
Boston, MA 02110
Attn: Mr. Rock M. D'Errico
and
Chicago Colony Apartments Company, L.P.
1401 South Brentwood Boulevard
St. Louis, MO 63144
Attn: Mr. Lewis A. Levey
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Andrew C. Sucoff, Esq.
(2) If to Buyer:
Home Properties
300 South Saint Louis Blvd., Suite 202
South Bend, Indiana 46617
Attn: Donald H. Schefmeyer
with a copy to:
Home Properties
850 Clinton Square
Rochester, NY 14604
Attn: Ann McCormick, Esq.
(3) If to the Escrow Agent:
Victoria C. Bresnahan, Escrow Officer
Ticor Title Insurance Company
203 No. LaSalle Street, Suite 1390
Chicago, IL 60601
12.3 Construction. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words of a singular number
shall be held to include the plural and vice versa, unless the context requires
otherwise.
12.4 Captions. The captions used in connection with the Articles of this
Agreement are for convenience only and shall not be deemed to extend, limit or
otherwise define or construe the meaning of the language of this Agreement.
12.5 No Other Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
12.6 Amendments. This Agreement may be amended only by a written
instrument executed by Seller and Buyer (or Buyer's assignee or transferee).
12.7 Severability. If any provision of this Agreement or application to
any party or circumstance shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law.
12.8 Applicable Law. This Agreement shall be construed under and in
accordance with the laws of state in which the Property is located.
12.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original but such counterparts together
shall constitute one and the same instrument notwithstanding that both Buyer and
Seller are not signatory to the same counterpart.
12.10 Time of the Essence. Time is expressly declared to be of the essence
of this Agreement, provided, however that in the event any date hereunder falls
on a Saturday, Sunday or legal holiday, the date applicable shall be the next
business day.
12.11 No Personal Liability. The obligations of Seller hereunder shall be
binding only on the Property and neither Buyer nor anyone claiming by, through
or under Buyer shall be entitled to obtain any judgment extending liability
beyond the Property or creating personal liability on the part of the partners
of the Seller or of the officers, directors, shareholders, advisors or agents of
Seller or Seller's partners or any of their successors.
12.12 No Recordation. Without the prior written consent of Seller, there
shall be no recordation of either this Agreement or any memorandum hereof, or
any affidavit pertaining hereto, and any such recordation of this Agreement or
memorandum hereto by Purchaser without the prior written consent of Seller shall
constitute a default hereunder by Buyer, whereupon this Agreement shall, at the
option of Seller, terminate and be of no further force and effect. Upon
termination, the Escrowed Amount shall be immediately delivered to Seller,
whereupon the parties shall have no further duties or obligations to one another
except as otherwise specifically provided herein.
12.13 Waiver. The excuse or waiver of the performance by a party of any
obligation of the other party under this Agreement shall only be effective if
evidenced by a written statement signed by the party so excusing or waiving. No
delay in exercising any right or remedy shall constitute a waiver thereof, and
no waiver by Seller or Buyer of the breach of any covenant of this Agreement
shall be construed as a waiver of any preceding or succeeding breach of the same
or any other covenant or condition of this Agreement.
12.14 Binding On Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
12.15 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. All Exhibits and Schedules attached hereto are a part of this
Agreement and are incorporated herein by reference.
12.16 Construction of Agreement. This Agreement shall not be construed
more strictly against one party than against the other merely by virtue of the
fact that it may have been prepared primarily by counsel for one of the parties,
it being recognized that both Buyer and Seller have contributed substantially
and materially to the preparation of this Agreement.
12.17 Further Instruments. Each party, promptly upon the request of the
other, shall execute and have acknowledged and delivered to the other or to
Escrow Agent, as may be appropriate, any and all further instruments reasonably
requested or appropriate to evidence or give effect to the provisions of this
Agreement and which are consistent with the provisions of this Agreement.
12.18 Buyer Represented by Counsel. Buyer hereby represents and warrants
to Seller that (i) Buyer is not in a significantly disparate bargaining position
in relation to Seller, (ii) Buyer is represented by legal counsel in connection
with the transaction contemplated by this Agreement, and (iii) Buyer is buying
the Property for business, commercial, investment or other similar purpose and
not for use as Buyer's residence.
12.19 Preparation of Documents. All of the documents to be executed at the
Closing shall be in the form prepared to the reasonable satisfaction of Seller's
and Buyer's counsel and delivered to Buyer on or before five (5) business days
prior to the Closing Date, provided that the failure to timely deliver such
documents shall not constitute a default by Seller hereunder.
ARTICLE 13
IRS FORM 1099-S DESIGNATION
In order to comply with information reporting requirements of Section
6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder, the parties agree (1) to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as Exhibit K at or prior to
the Closing to designate the Escrow Agent (the Designee) as the party who shall
be responsible for reporting the contemplated sale of the Property to the
Internal Revenue Service (the IRS) on IRS Form 1099-S; (2) to provide the
Designee with the information necessary to complete Form 1099-S; (3) that the
Designee shall not be liable for the actions taken under this Agreement, or for
the consequences of those actions, except as they may be the result of gross
negligence or willful misconduct on the part of the Designee; and (4) that the
Designee shall be indemnified by the parties for any costs or expenses incurred
as a result of the actions taken hereunder, except as they may be the result of
gross negligence or willful misconduct on the part of the Designee. The Designee
shall provide all parties to this transaction with copies of the IRS Forms
1099-S filed with the IRS and with any other documents used to complete IRS Form
1099-S.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
SELLER:
CHICAGO COLONY APARTMENTS ASSOCIATES
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc.,
managing general partner
By: /s/Rock M. D'Errico
-------------------
Name: Rock M. D'Errico
Title: Vice President
BUYER:
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc., General
Partner
By: /s/ Donald H. Schefmeyer
------------------------
Name: Donald H. Schefmeyer
Title: Vice President
ESCROW AGENT:
TICOR TITLE INSURANCE COMPANY
By: /s/ Victoria C. Bresnahan
-------------------------
Name: Victoria C. Bresnahan
Title: Escrow Officer
<PAGE>
Special Warranty Deed
Know all men by these presents that, Chicago Colony Apartments Associates
(Grantor), an Illinois general partnership, for and in consideration of
Forty-One Million Five Hundred Thousand Dollars ($41,500,000.00), in hand paid
does remise, release, alien and convey to The Colony of Home Properties, LLC, a
New York limited liability company with an address c/o Home Properties of New
York, Inc., 850 Clinton Square, Rochester, NY 14604 (Grantee), the land and
improvements legally described in Exhibit A attached hereto and incorporated
herein subject to and excepting all encumbrances and restrictions of record.
TO HAVE AND TO HOLD, the above-described property, unto Grantee and
Grantees successors and assigns forever; and Grantor does hereby bind itself and
its successors and assigns to warrant and forever defend the premises unto
Grantee and Grantees successors and assigns against every persons whomsoever
lawfully claiming the same or any part thereof by, through or under Grantor but
not otherwise.
WITNESS my hand and seal this 1st day of September, 1999.
GRANTOR:
CHICAGO COLONY APARTMENTS ASSOCIATES
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc.,
its managing general partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
<PAGE>
Quitclaim Bill of Sale
This Quitclaim Bill of Sale is made as of this 1st day of September, 1999
from Chicago Colony Apartments Associates, an Illinois general partnership,
having an office c/o PaineWebber Properties, Incorporated, 265 Franklin Street,
Boston, Massachusetts 02110 (the Seller) to The Colony of Home Properties, LLC,
a New York limited liability company, having an office c/o Home Properties of
New York, Inc. 850 Clinton Square, Rochester, New York 14604 (the Purchaser).
WHEREAS, in connection with the conveyance of the real property commonly
known as The Colony Apartments, Mount Prospect, Illinois, (the Real Property),
Seller is obligated to convey, transfer, set over and assign to Purchaser all of
the Seller's right, title and interest, if any, in and to all personal property
owned by Seller located at the Real Property, including all furniture,
carpeting, appliances, equipment, machinery, inventories, supplies, signs and
other tangible personal property of every kind and nature, if any, owned by
Seller and installed, located at and used in connection with the ownership,
occupation and operation of the Real Property, including, without limitation,
the personal property listed on Schedule A attached hereto, but specifically
excluding (i) any items of personal property owned by tenants at or on the Real
Property, and (ii) any items of personal property owned by third parties and
leased to Seller (collectively Personal Property).
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller does hereby sell, deliver,
transfer, set over and assign unto Purchaser the Personal Property in its as is
condition without express or implied warranty of any kind or nature except as
expressly set forth in the Purchase and Sale Agreement by and between Seller and
Purchaser, to have and to hold the same unto Purchaser and the Purchaser's
successors and assigns, forever.
[Document Continues on Next Page]
<PAGE>
EXECUTED UNDER SEAL as of the date first written above.
CHICAGO COLONY APARTMENTS ASSOCIATES
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc., its
managing general partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
<PAGE>
Assignment of Tenant Leases and Security Deposits
THIS ASSIGNMENT OF TENANT LEASES AND SECURITY DEPOSITS (Assignment)
is made and entered into effective this 1st day of September, 1999, by and
between CHICAGO COLONY APARTMENTS ASSOCIATES, an Illinois general partnership
(Assignor) and THE COLONY OF HOME PROPERTIES, LLC, a New York limited liability
company (Assignee).
The parties enter into this Assignment on the basis of and in
reliance upon the following facts:
A. Assignor has conveyed contemporaneously herewith to Assignee that
certain improved parcel of land located in the Mt. Prospect, Illinois, more
particularly described on EXHIBIT A attached hereto and by this reference
incorporated herewith (the Property).
B. Assignor has previously, in its capacity as owner of the Property,
entered into certain occupancy leases at the Property, which are currently in
force and effect, as described in EXHIBIT B attached hereto and by this
reference incorporated herewith (Leases).
C. Assignor now desires to assign and transfer to Assignee all of the
Leases, together with any security deposits paid pursuant to the terms thereof
and listed on EXHIBIT B attached hereto and made a part hereof for all purposes,
and Assignee desires to accept the Leases and all of Assignors right, title,
interest and obligations in, to and under the Leases, as set forth herein.
NOW, THEREFORE, in consideration of (i) Ten Dollars ($10.00) and
other good and valuable cash consideration and (ii) the mutual covenants and
promises of the parties provided for herein, Assignor and Assignee agree as
follows:
1. Assignment. Assignor hereby assigns all of its right, title and
interest in, to and under the Leases and any security deposits paid pursuant
thereto as set forth on EXHIBIT B to Assignee.
2. Assumption. Assignee hereby accepts said assignment and assumes all of
the obligations of Assignor under the Leases from and after the date hereof.
3. Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of such
counterparts, taken together, shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Assignment
effective as of the 1st day of September, 1999.
ASSIGNOR:
CHICAGO COLONY APARTMENTS ASSOCIATES
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc., its
managing general partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
ASSIGNEE:
THE COLONY OF HOME PROPERTIES, LLC
By: Home Properties of New York, L.P., its sole
member
By: Home Properties of New York, Inc., its
general partner
By: /s/ Donald H. Schefmeyer
------------------------
Name: Donald H. Schefmeyer
Title: Vice President
<PAGE>
Assignment and Assumption of Contracts and Intangibles
This Assignment and Assumption of Contracts and Intangibles (this
Assignment) is made and entered into as of this 1st day of September, 1999, by
and between Chicago Colony Apartments Associates, an Illinois general
partnership (Assignor), and The Colony of Home Properties, LLC, a New York
limited liability company (Assignee).
WITNESSETH:
Assignor hereby assigns, sells, transfers, sets over and delivers unto
Assignee all of Assignors estate, right, title and interest in and to the
following:
1. all licenses, permits, certificates of occupancy, approvals,
entitlement, dedications, and subdivision maps issued, approved or granted by
any governmental authorities or otherwise in connection with the real property
known as the Colony Apartments (Property) described in Exhibit A attached
hereto; the use of the name Colony Apartments and any other trade names,
trademarks, and logos used by Assignor in the operation and identification of
the Property; all development rights and other intangible rights, titles,
interests, privileges and appurtenances of Assignor related to or used in
connection with the Property and its operation; and all licenses, consents,
easements, rights of way and approvals issued, approved or granted by any
private parties to make use of utilities and to insure vehicular and pedestrian
ingress and egress to the Property (collectively, Licenses and Permits);
2. all plans and specifications respecting any buildings or improvements
located on the Property; and all building inspection reports pertaining to the
Property which are owned by and within the possession or control of Assignor
(collectively, Records and Plans);
3. all warranties and guaranties in effect with respect to the Property
and all contracts for services and all operating agreements currently in effect
with respect to the Property (the Contracts); and
4. the interest of Assignor in all other intangible personalty relating to
the use and operation of the Property including good will if any (the
Intangibles).
Assignor makes no warranties of any kind or nature, express or implied,
regarding the Licenses and Permits, Records and Plans and Contracts and
Intangibles.
Assignee hereby assumes the performance of all of the terms, convents and
conditions imposed upon Assignor under the Licenses and Permits, Records and
Plans and Contracts arising on or after the date of delivery of this Assignment.
Assignor shall be responsible for the performance of all of the terms, covenants
and conditions imposed upon Assignor under the Licenses and Permits, Records and
Plans and Contracts arising prior to the date of delivery of this Assignment.
This Assignment may be executed in one or more counterparts, each of which
shall be deemed an original, and all of such counterparts, taken together, shall
constitute one and the same instrument.
The terms and provisions of this Assignment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
<PAGE>
IN WITNESS WHEREOF this Assignment and Assumption of Contracts and Intangibles
has been executed as of the date first above written.
ASSIGNOR:
CHICAGO COLONY APARTMENTS ASSOCIATES
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc., its
managing general partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
ASSIGNEE:
THE COLONY OF HOME PROPERTIES, LLC
By: Home Properties of New York, L.P., its sole
member
By: Home Properties of New York, Inc., its
general partner
By: /s/ Donald H. Schefmeyer
------------------------
Name: Donald H. Schefmeyer
Title: Vice President
<PAGE>
Loan No. 6516584
ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT
This ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT (Agreement) is made as of
the 1st day of August, 1999 between and among (a) CHICAGO COLONY APARTMENTS
ASSOCIATES, an Illinois general partnership (Borrower), (b) THE COLONY OF HOME
PROPERTIES, LLC, a New York limited liability company (Transferee), and (c) JOHN
HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation (the Lender).
A. RECITALS
The Lender is the holder of a loan (the Loan) to Borrower evidenced by a
Promissory Note dated July 31, 1995 (the Note) in the original principal amount
of $17,400,000.00 from Borrower to Lender (Hancock).
Borrowers obligations under the Note are further evidenced and secured by the
documents set forth on Exhibit A attached hereto and incorporated herein (the
Security Documents). The Note, the Security Documents, and a certain Certificate
and Indemnity Agreement dated as of July 31, 1995, from Borrower in favor of
Lender (the Indemnity Agreement) and all other documents executed and delivered
in connection with the Loan, are herein collectively, referred to as the Loan
Documents.
The real property owned by Borrower (1) is located at 475 Enterprise Drive,
in Cook County, Mount Prospect, Illinois, (2) is more particularly described in
the Mortgage (as defined in Exhibit A), (3) is encumbered by the Security
Documents and (4) together with all other property encumbered by the Security
Documents, is referred to in this Agreement as the Property.
Borrower wishes to convey its interest in the Property and to assign the Loan
Documents to Transferee. Transferee desires to purchase the Property and to
assume liability for the payment and performance of the obligations under the
Loan Documents. Lender has agreed to consent to such assignment and assumption
upon the terms and conditions of this Agreement. Subject to the terms hereof,
Lender has agreed to release Borrower from its liabilities and obligations under
the Loan Documents accruing from and after the date hereof.
B. AGREEMENTS
1. Representations Accurate. Borrower represents and warrants that the above
statements in the Recitals are true and accurate. Transferee represents and
warrants that the above statements in Recital 4 are true and accurate. The
foregoing Recitals are incorporated herein by reference.
2. Status of Loan.
a. Borrower, Lender and Transferee confirm and agree that as of August 1,
1999, the outstanding principal balance under the Loan is
$16,309,115.12.
b. Borrower and Transferee confirm and agree that monthly payments in the
amount of $129,718.40 are due and owing under the Note, and Borrower
and Lender confirm and agree that Borrower has paid principal and
interest under the Note through July 31, 1999.
c. Borrower confirms that to the best of its knowledge no event of
default has occurred under the Loan, and to the best of its knowledge
no event has occurred or condition exists that, with notice and/or the
passage of time, would constitute an event of default under the Loan.
d. Lender confirms that as of the date of this Agreement no current
default in payment of principal or interest exists under the Loan, and
to the best of its knowledge no other event of default exists under
the Loan Documents.
<PAGE>
Loan No. 6516584
e. Borrower and Transferee ratify, affirm and acknowledge that the Note
and the other Loan Documents represent their valid and enforceable and
collectible obligations, and that there are no existing claims,
defenses (personal or otherwise) or rights of setoff with respect
thereto.
f. Borrower and Transferee acknowledge and agree that except as provided
in Paragraph 5(b) of this Agreement, this Agreement in no way
releases, relinquishes or otherwise affects the liens, security
interests and rights created by or arising under the Loan Documents or
the priority thereof or Borrowers primary liability thereunder.
Subject to Paragraph 5(b) of this Agreement, such liens, security
interests and rights are hereby ratified, confirmed, renewed and
extended in all respects.
g. Borrower acknowledges and confirms that there are no subordinate liens
of any kind covering or related to the Property, nor are there any
mechanics liens or liens or unpaid taxes or assessments encumbering
the Property, nor has notice of a lien or notice of intent to file a
lien been received by Borrower.
3. Assignment. In consideration of the foregoing, the mutual promises,
undertakings, representations and covenants herein set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower hereby assigns, transfers, conveys and sets over to
Transferee, all right, title and interest of Borrower in and to the Loan
Documents.
4. Assumption. In consideration of the foregoing, the mutual promises,
undertakings, representations and covenants herein set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Transferee hereby assumes primary liability for the obligations to
pay the indebtedness evidenced by the Note and the Security Documents and to
perform all covenants, agreements and obligations under the Note and the other
Loan Documents (including without limitation the Indemnity Agreement). Without
limiting the foregoing or any of the obligations in the Loan Documents,
Transferee hereby covenants, promises and agrees: (a) to pay the Note at the
times, in the manner and in all other respects as provided therein; (b) to
perform each and all of the covenants, agreements and obligations in the Loan
Documents to be performed by Borrower at the time, in the manner and in all
other respects as provided therein; and (c) to be bound by each and every term
and provision of the Loan Documents, as though such documents had originally
been made, executed and delivered by Transferee.
5. Consent and Acknowledgement; and Release of Borrower.
a. Lender hereby consents to and approves the conveyance and transfer of
the Property from Borrower to Transferee and the assumption by
Transferee of the obligations of Borrower under the Loan Documents,
subject to the terms hereof and provided, further, that such consent
shall not be deemed or construed as (x) a waiver of any provision
requiring Lenders consent under the Loan Documents; (y) a consent to
any amendment or extension of the Loan Documents or any subsequent
assignment or transfer of any of the Loan Documents or the Property or
any portion thereof or (z) a waiver, release, diminishing or
derogation of Borrowers primary liability under the Loan Documents
except as specifically provided in subparagraph (b) of this section.
b. Lender hereby releases Borrower from all obligations and liabilities
under the Note and the Loan Documents (including the Indemnity
Agreement) which shall accrue from and after the date hereof.
Notwithstanding the foregoing, Borrower shall remain liable for all
obligations under the Loan documents prior to the date of this
Agreement and shall have the burden of proving by clear and convincing
evidence that any obligation for which it disclaims liability first
occurred after the date of this Agreement and shall retain its
obligations with respect to any such matter unless and until a court
of competent jurisdiction finds that Borrower has met such burden.
<PAGE>
Loan No. 6516584
c. Lender acknowledges that following the conveyance of the Property to
Transferee and the execution and delivery of this Agreement, Borrower
intends to dissolve the organizational status of Borrower as a general
partnership; provided, however, Borrower agrees, and PaineWebber
Income Properties Seven Limited Partnership, a Delaware limited
partnership and Chicago Colony Apartments Company, L.P., a Missouri
limited partnership (the General Partners), the general partners of
Borrower by their execution of this Agreement as the general partners
of Borrower agree, with Lender that (i) neither such acknowledgment by
Lender nor this Agreement constitutes the release by Lender of
Borrower and of the General Partners, or an ageement by Lender to
release Borrower and the General Partners, from any of the liabilities
and obligations of Borrower and the General Partners under the Loan
Documents (including the Indemnity Agreement), except as specifically
provided in subparagraph (b) above of this paragraph; and (ii) no such
agreement or release of Borrower and of the General Partners by Lender
other than as specified in subparagraph (b) above of this paragraph
shall be inferred by reason of any course of dealing by Lender with
Borrower with knowledge that Borrower so intends to dissolve its
organizational status as a general partnership.
6. Lender Fees and Expenses. Prior to recordation of this Agreement, Borrower
and Transferee agree to pay all costs and fees, including without limitation
attorneys' fees, title insurance fees, any administrative fees or charges,
recording or transfer fees, in connection with this Agreement, the drafting of
this Agreement and Lenders review of the request for the consent granted herein.
If Lender retains counsel for advice or other representation (a) in any
litigation, contest, dispute, suit or proceeding (whether instituted by Lender
or any other party) relating in any way to this Agreement or (b) to enforce any
party's obligations hereunder, the reasonable attorney's and parallel's fees
arising from such services and all related expenses and court costs shall be
paid by Borrower and Transferee upon demand of Lender.
7. Release of Lender by Borrower. Borrower hereby irrevocably and
unconditionally waives, releases and forever discharges any and all claims,
demands, actions, causes of action, suits, debts, accounts, covenants,
obligations, and liabilities of every nature (collectively, the Claims), which
Borrower, its predecessors, successors, assigns, agents, attorneys, partners,
subsidiaries, beneficiaries, officers, directors, employees, or any entity
controlling or under common control with Borrower have or might have had against
Lender, its predecessors, successors, assigns, agents, attorneys, partners,
subsidiaries, beneficiaries, officers, directors, employees, or any entity
controlling or under common control with Lender, existing on or before the date
of the recording of this Agreement in connection with (a) the Loan, (b) the Loan
Documents, or (c) the Property. Borrower hereby agrees never to commence,
voluntarily aid in any way, prosecute or cause to be commenced or prosecuted
against Lender any action or other proceeding based upon any of the Claims.
8. Integration. Borrower, Transferee and Lender acknowledge that there are
and were no oral or written representations, warranties, understandings,
stipulations, agreements or promises made by any party or by any agent, employee
or other representative of any party, pertaining to the subject matter of this
Agreement which have not been incorporated into this Agreement. No express or
implied consent to any further modifications involving any of the matters set
forth in the Loan Documents or this Agreement shall be inferred or implied by
Lenders execution of this Agreement. Any further modification of the Loan or of
any Loan Document shall require the express written approval of Lender. No
provision hereof shall be modified or limited except by a written instrument
signed by the parties hereto, expressly referring hereto and to the provision so
modified or limited.
9. No Prejudice. Execution of this Agreement by Lender shall be without
prejudice to Lenders rights at any time in the future, to exercise any and all
rights conferred upon Lender by any of the Loan Documents in accordance with
their original terms or as the same are hereby amended.
10. Authority. Borrower and Transferee hereby warrant and represent that the
persons executing this Agreement have full authority to execute this Agreement
on their respective behalves and to bind Borrower and Transferee. In addition,
Borrower and Transferee warrant and represent to Lender that the execution and
delivery by them of this Agreement and the performance hereunder has not and
will not result in a breach of, or constitute a default under, any deed of
trust, mortgage deed, lease, bank loan, credit arrangement, or other instrument
or agreement to which Borrower and/or Transferee are parties or by which
Borrower, the Transferee or the Property may be bound or affected.
<PAGE>
Loan No. 6516584
11. No Relationship Between Parties. Nothing contained in this Agreement or
in any of the other Loan Documents shall be construed as creating a joint
venture or partnership between Borrower, Transferee and Lender; and Lender shall
have no right or control or supervision, except as it may exercise under the
rights and remedies provided in the Loan Documents.
12. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Lender, Borrower and Transferee and their respective heirs, legal
representatives, successors and assigns.
13. Governing Law. This Agreement is delivered in, relates to real and
personal property located in, and shall be governed by and construed according
to the substantive laws and judicial decisions of Illinois (regardless of the
place of business, residence, location or domicile of the parties hereto or any
of their constituent partners or principals). Each party hereby submits to
personal jurisdiction in the State of Illinois for the enforcement of this
Agreement and hereby waives any claim or right under the laws of any other state
or of the United States to object to such jurisdiction. If such litigation is
commenced, each party agrees that service of process may be made by serving a
copy of the summons and compliant upon each party, through any lawful means,
including upon its registered agent within the State of Illinois, whom each
party hereby appoints as its agent for this purpose. Nothing contained herein
shall prevent Lenders bringing any action or exercising any rights against each
party personally or against any property of each party within any other county,
state or country. The means of obtaining personal jurisdiction and perfecting
service of process set forth above are not intended to be exclusive but are in
addition to all other means of obtaining personal jurisdiction and perfecting
service of process now or hereafter provided by applicable law.
14. Notices. Borrower and Transferee hereby notify and direct Lender to send
all notices to be sent under the Loan Documents to Transferee rather than to
Borrower, at the following address:
The Colony of Home Properties, LLC
850 Clinton Square
Rochester, New York 14604
Attn: Gerald B. Korn
Telephone:716-546-4900
Telecopier:716-546-5433
15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original when executed and delivered, but all
of which taken together shall constitute one and the same instrument.
16. Headings. Headings are for convenience and reference only and in no way
define or limit the provisions of this Agreement.
17. Severability. All provisions contained in this Agreement are severable
and the invalidity or unenforceability of any provision shall not affect or
impair the validity or enforceability of the remaining provisions of this
Agreement.
<PAGE>
IN WITNESS WHEREOF the undersigned have executed this Agreement as of the date
first set forth above.
LENDER JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation
/s/ Ronald E. Poch
------------------
Name: Ronald E. Poch
Title: Assistant Treasurer
BORROWER CHICAGO COLONY APARTMENTS ASSOCIATES
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc., its
managing general partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
TRANSFEREE THE COLONY OF HOME PROPERTIES, LLC
By: Home Properties of New York, L.P., its sole
member
By: Home Properties of New York, Inc., its general
partner
By: /s/ Donald H. Schefmeyer
------------------------
Name: Donald H. Schefmeyer
Title: Vice President
<PAGE>
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this Agreement) is given as of this 1st
day of August, 1999, by The Colony of Home Properties, LLC (Indemnitor), for the
benefit of Chicago Colony Apartments Associates (Seller), PaineWebber Income
Properties Seven Limited Partnership (PWIP7) and Chicago Colony Apartments
Company, L.P. (CCAC) (Seller, PWIP7, CCAC and any partners of Seller, PWIP7 and
CCAC are known hereafter collectively as the Indemnified Party).
WHEREAS, Seller and Indemnitor, as Purchaser entered into that certain
Purchase and Sale Agreement (the Purchase Agreement), dated as of June 28, 1999,
concerning the sale and acquisition of certain property commonly referred to as
Colony Apartments, located in Mount Prospect, Illinois and more particularly
described on Exhibit A attached hereto and incorporated herein by reference (the
Property); and
WHEREAS, the Property is being sold to Indemnitor subject to that certain
loan in the original principal amount of $17,400,000 from John Hancock Mutual
Life Insurance Company (Lender) to Seller, as Borrower (the Loan);
WHEREAS, on the Closing Date (as defined in the Purchase Agreement) the
Loan is being assigned to and assumed by Indemnitor on the terms and provisions
set forth in that certain Assignment, Assumption and Release Agreement (the
Assignment and Assumption Agreement), dated of even date herewith, among Seller,
Indemnitor and Lender;
WHEREAS, the Assignment and Assumption Agreement provides that Lender
releases the Indemnified Party from all obligations and liabilities under the
Note and the Loan Documents (as such terms are defined in the Assignment and
Assumption Agreement) which accrue from and after the date of the Assignment and
Assumption Agreement;
WHEREAS, pursuant to Section 7.2 of the Purchase Agreement, the obligation
of the Indemnified Party to close on the Closing Date and the other obligations
of the Indemnified Party under the Purchase Agreement are conditioned and
contingent upon receipt by the Indemnified Party of a release of all of its
obligations as borrower under the Loan Documents, including obligations and
liabilities arising and accruing prior to the date of the Assignment and
Assumption Agreement.
NOW THEREFORE, as a material inducement to the Indemnified Party and as a
condition of the acquisition by Indemnitor of the Property, the undersigned
agree as follows:
1. Indemnification. From and after the date hereof, Indemnitor agrees to
indemnify, defend, and hold harmless Indemnified Party from and against all
liabilities, claims, actions, losses, damages, costs and expenses, including,
without limitation, attorneys' fees, and expenses (including costs and fees
associated with any appeals) (collectively, Losses) which Losses are threatened,
incurred or suffered by Indemnified Party, or any Indemnified Party, based upon,
arising out of, in connection with or by reason of any liability or obligation
relating to the Loan Documents, arising or accruing with respect to any period
prior to or after the date of the Assignment and Assumption Agreement; excepting
only for such liabilities or obligations arising from or in relation to a breach
of any of the representations or warranties contained in Paragraph 2 hereof.
2. Representations and Warranties. As of the date hereof, Indemnified
Party, and each partner of Indemnified Party, hereby represents and warrants to
Indemnitor, without further investigation, that neither Indemnified Party nor
any partner of Indemnified Party, is aware of any violation of, or default
under, the Loan Documents.
3. Binding. This Agreement shall be binding and inures to the benefit of
the parties hereto and their respective successors and assigns.
4. Counterparts. This Agreement may be executed in more than one
counterpart, all of which shall constitute one document.
DOCUMENT CONTINUES ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the day and year first above written.
The Colony of Home Properties, LLC
By: Home Properties of New York, L.P., its sole
member
By: Home Properties of New York, Inc.
By: /s/ Donald H. Schefmeyer
------------------------
Name: Donald H. Schefmeyer
Title: Vice President
Chicago Colony Apartments Associates
By: PaineWebber Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc., its
managing general partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: Chicago Colony Apartments Company, L.P.,
general partner
By: /s/ Lewis A. Levey
------------------
Name: Lewis A. Levey
Title: President
<PAGE>
<TABLE>
CLOSING STATEMENT Home
Properties of NY, Inc.
9/1/99
<CAPTION>
Seller's Debits Seller's Credits
--------------- ----------------
<S> <C> <C>
Purchase price $41,500,000.00
Earnest money deposit
Mortgage assumed $16,309,115.12
August mortgage interest $106,734.10
1998 Tax credit $689,137.03
1999 Tax proration $917,589.87
Rent credit $0.00
Prepaid rent $11,980.16
Security deposit $265,689.00
Interest on Security deposit $10,627.56
Utility credit:
ComEd $2,966.28
Santana natural gas $3,695.56
NIGAS $5,203.44
Water & Sewer $1,488.40 $13,353.68
---------
Contracts:
Refuse $4,105.93
Laundry $0.00 $4,105.93
---------
Owner's Title Policy $16,600.00
Illinois Transfer Tax $25,191.00
Cook Co. Transfer Taxes $12,595.50
1/2 Escrow fees $1,250.00
Survey POC
Brokerage Commission $311,250.00
Interest on earnest money deposit post closing adjustment with title company
Mortgage - tax escrow $669,232.70
Mortgage - replacement reserve $178,781.62
-----------
Totals $18,695,218.95 $42,348,014.32
Cash to close $23,652,795.37
Approved By: Approved By:
- ------------ ------------
Chicago Colony Apartments Associates The Colony of Home Properties, LLC
By: Chicago Colony Apartments Company, L.P. By: Home Properties of New York, LP
By: /s/ Lewis A. Levey By: /s/ Donald H. Schefmeyer
------------------ ------------------------
Title: Managing General Partner Title: Vice President
By: Paine Webber Income Properties Seven LP TICOR TITLE INSURANCE
By: /s/ Rock M. D'Errico By: /s/ C. Hathaway
-------------------- ---------------
Title: Vice President
Note: Buyer to reimburse the seller for one weeks salary and benefits to Dan Chaifoux upon receipt of invoice for same.
</TABLE>
