SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) September 26, 1996
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-14352
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3344227
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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Providence Square Apartments
In 1985, the Partnership acquired the Providence Square Apartments, Charlotte,
North Carolina (the "Complex"), utilizing approximately $8,801,000 in offering
proceeds. The Partnership acquired the Complex subject to mortgage financing
of $11,300,000 (the "Providence Loan"). In September 1992, the Partnership
used cash reserves to make a $1,000,000 principal paydown on the Providence
Loan. In December 1992, the Partnership obtained a $14,100,000 mortgage loan
from a third party, $2,000,000 of which was used to purchase the land
underneath the Complex (the land and the Complex are defined as the
"Property"). The loan was collateralized by three of the Partnership's
properties, including the Property. A portion of the proceeds was also used to
repay the Providence Loan at a discount of $560,000 and a mortgage loan
collateralized by another Partnership property, and to pay refinancing costs.
The remaining proceeds of the loan were used to fund improvements at the
Property and for other Partnership purposes. In 1995, the loan was refinanced
with a new $17,000,000 first mortgage loan from a third party collateralized
solely by the Property. The Partnership received approximately $3,066,000 in
excess proceeds.
On October 17, 1996, the Partnership contracted to sell the Property for a sale
price of $20,510,000 to an unaffiliated party, Group One Investments, Inc., an
Illinois corporation. In addition, the Partnership has executed an agreement
to sell to the purchaser the personal property located at the Property for a
net sale price of $4,500,000. The purchaser has deposited $150,000 into an
escrow account as earnest money and is obligated to deposit an additional
$100,000 upon the completion of the purchaser's due diligence review. The
purchaser is expected to purchase the Property subject to the existing first
mortgage loan which is estimated to have an outstanding principal balance of
approximately $16,817,000 at closing, scheduled for December 2, 1996. The
Partnership and the purchaser each have the option to extend the closing for up
to 30 days upon written notice to the other party in order to obtain the
lender's consent for the assumption of the loan by the purchaser.
From the proceeds of the sale, the Partnership will pay $205,100 to an
unaffiliated party as a brokerage commission and up to $153,825 to an affiliate
of the third party providing property management services for the Property as a
fee for services rendered in connection with the sale of the Property. The
Partnership will receive the remaining proceeds of approximately $7,834,000,
less closing costs, which includes certain fees relating to the purchaser's
assumption of the mortgage loan. Of such proceeds, $250,000 will not be
available for use or distribution by the Partnership until 90 days after
closing. Neither the General Partner nor any affiliate will receive a
brokerage commission in connection with the sale of the Property. The General
Partner will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions,
including the consent of the holder of the first mortgage loan. There can be
no assurance that all of the terms and conditions will be complied with and,
therefore, it is possible that the sale of the property may not occur.
<PAGE>
ITEM 5. OTHER EVENTS
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a) Storage USA of Norcross
In 1986, the Partnership acquired Storage USA of Norcross (formerly known as
Jones Mill Road Mini-Warehouse), Norcross, Georgia (the "Property"), utilizing
approximately $3,032,000 in offering proceeds. In 1992, the Partnership
obtained a $14,100,000 mortgage loan collateralized by three of its properties,
including the Property, the proceeds of which were used to repay mortgage loans
collateralized by two of the Partnership's other properties, pay refinancing
costs and for other Partnership purposes. In 1995, the loan was refinanced and
the new loan is collateralized only by another Partnership property. The
Property currently has no underlying debt.
On September 26, 1996, the Partnership contracted to sell the Property for a
sale price of $3,300,000 to an unaffiliated party, Storage Trust Properties,
L.P., a Delaware limited partnership. The purchaser has deposited $50,000 into
an escrow account as earnest money. The remainder of the sale price will be
payable in cash at closing, scheduled for November 15, 1996. The Partnership
will receive all sale proceeds after the payment of closing costs. Neither the
General Partner, any affiliate or any third party will receive a brokerage
commission in connection with the sale of the Property. The General Partner
will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
Affiliates of the General Partner have previously sold or have contracted to
sell other assets to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
b) American Way Mall
As previously reported, on June 7, 1996, the Partnership contracted to sell
American Way Mall, Fairfield, New Jersey, to an unaffiliated party, Robert
Heidenberg, for a sale price of $5,200,000. The purchaser and the Partnership
have agreed to extend the closing of the sale to no later than January 25,
1997. The sale price will be increased if the closing occurs as follows: (i)
on or before November 1, 1996, the sale price will be $5,300,000; (ii) from
November 2, 1996 through December 15, 1996, the sale price will be $5,400,000;
and (iii) after December 16, 1996, the sale price will be $5,500,000. The
purchaser has deposited with the Partnership an additional $50,000 as earnest
money for a total of $150,000.
The agreement of sale previously required that, in the event the purchaser or
any affiliate thereof transfers any portion of the property to a third party
specified in the agreement of sale prior to October 25, 1996, the Partnership
is entitled to a specified portion of the proceeds from such transfer. The
purchaser and the Partnership have agreed to extend this date to February 25,
1997.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) (a) Agreement of Sale and attachment thereto relating to the
sale of Providence Square Apartments, Charlotte, North
Carolina.
(b) Agreement relating to the sale of Providence Square
Apartments, Charlotte, North Carolina.
(c) Amendment No. 1 to Agreement of Sale relating to the sale
of Providence Square Apartments, Charlotte, North Carolina.
(d) Letter Agreement relating to the sale of Providence Square
Apartments, Charlotte, North Carolina.
(99) (a) (i) Agreement of Sale and attachment thereto relating to
the sale of Storage USA of Norcross, Norcross,
Georgia.
(ii) Amendment to Agreement of Sale relating to the sale of
Storage USA of Norcross, Norcross, Georgia.
(b) Second Amendment to Agreement of Sale relating to the sale
of American Way Mall, Fairfield, New Jersey.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Current Income Partners-85, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: November 1, 1996
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 17th
day of October, 1996, by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 100 PROVIDENCE SQUARE LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Twenty Million, Five Hundred Ten Thousand And No/100 Dollars
($20,510,000.00) (the "Purchase Price"), that certain property commonly known
as Providence Square Apartments, Charlotte, North Carolina, legally described
on Exhibit A attached hereto (the "Property").
The Purchase Price shall also include all of Seller's right, title and
interest in and to the following: (a) intangible property, whether enumerated
in this Agreement or not, now or subsequently used in connection with the
operation or maintenance of the Property, other than any computer software,
including but not limited to all leases, licenses and other agreements to
occupy all or any part of the Property; (b) tenant security deposits; (c) all
unexpired claims, warranties, guarantees and sureties, if any, given in
connection with the construction, improvement or equipment of or on the
Property; (d) all service contracts and management agreements for the benefit
of the Property which Purchaser agrees to assume; (e) all rights to use any
name by which the Property may be commonly called; and (f) all architectural,
engineering and construction plans, tests, reports, drawings and
specifications, if any (collectively the "Intangible Property").
The Purchase Price shall also include all right, title and interest of
Seller (a) to land, if any, lying in the bed of any street, road or avenue,
open or proposed, at the foot of or adjoining the Property to the center line
of such street, road or avenue, (b) to the use of all easements, if any,
whether of record or not, appurtenant to the Property and (c) the use of all
strips and rights-of-way, if any, abutting, adjacent to, contiguous to or
adjoining the Property (collectively the "Appurtenant Rights").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) (the "Initial Earnest Money") to be
held in escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. Upon the expiration of the "Inspection Period" (as hereinafter
defined), the sum of One Hundred Thousand and No/100 Dollars ($100,000.00) (the
"Additional Earnest Money", and, collectively with the Initial Earnest Money,
the "Earnest Money") to be held in escrow by and in accordance with the
provisions of the Escrow Agreement; and
2.3 The assumption by Purchaser of Seller's obligations under the "Loan
Documents" (as hereinafter defined), being an amount equal to the outstanding
principal balance of and all accrued and unpaid interest on the "Note" (as
hereinafter defined) as of the "Closing Date" (as hereinafter defined); and
<PAGE>
2.4 On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 3:00 p.m. Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's ALTA title insurance policy issued by Chicago Title Insurance Company
(hereinafter referred to as "Title Insurer") dated August 29, 1996 for the
Property (the "Title Commitment"), along with copies of each of the documents
referred to as numbers 5-15, inclusive, in Schedule B - Section 2 of the Title
Commitment (collectively, the "Title Exceptions"). For purposes of this
Agreement, but subject to the terms and conditions hereinafter set forth,
"Permitted Exceptions" shall mean: (a) the Title Exceptions; (b) matters shown
on the "Existing Survey" (hereinafter defined); (c) matters caused by the
actions of Purchaser; (d) the Loan Documents; and (e) the title exceptions set
forth in Schedule B - Section 2 of the Title Commitment as Numbers 3 and 4.
All other exceptions to title shall be referred to as "Unpermitted Exceptions".
Notwithstanding anything to the contrary contained herein, Purchaser shall have
ten (10) days after its receipt of a signed counterpart of this Agreement from
Seller in which to review the Title Commitment, the Title Exceptions and the
Existing Survey, and to confirm the availability of such title endorsements as
Purchaser shall require (the "Endorsements"), and to notify Seller of any
objections thereto, and the reasons for Purchaser's objection. In the event
that Purchaser fails to notify Seller of any objections thereto within the
aforesaid ten (10) day period, Purchaser shall be deemed to have approved the
Permitted Exceptions, including the Existing Survey and the Endorsements. In
the event that Purchaser does notify Seller of one or more objections to the
Title Commitment, the Title Exception, the Existing Survey and/or the
Endorsements, and the reasons for Purchaser's objection, within the aforesaid
ten (10) day period, Seller shall have ten (10) days from its receipt of
Purchaser's objection to, at its option, either (i) accept the objections, in
which case the objections shall become Unpermitted Exceptions, or (ii) reject
the objection, in which case, subject to the provisions of the immediately
following sentence, this Agreement shall become null and void without further
action of the parties, and all Earnest Money theretofore deposited into the
escrow by Purchaser, together with any interest accrued thereon, shall be
returned to Purchaser, and neither party shall have any further liability to
the other, except for Purchaser's obligation to indemnify Seller and restore
the Property, as more fully set forth in Paragraph 7. Notwithstanding the
foregoing, if Seller rejects the Purchaser's objection within the aforesaid ten
(10) day period, Purchaser shall have ten (10) days from its receipt of
Seller's rejection to withdraw its objection to the Permitted Exceptions, and
to approve the Permitted Exceptions. Absent notice from Seller that Seller is
terminating this Agreement as a result of Purchaser's objections, Seller shall
be deemed to have accepted the Purchaser's objections, and the objections shall
be deemed Unpermitted Exceptions. The Title Commitment shall be conclusive
evidence of good title as therein shown as to all matters to be insured by the
title policy, subject only to the exceptions therein stated. On the Closing
Date, Title Insurer shall deliver to Purchaser an ALTA title policy in
conformance with the previously delivered Title Commitment, with extended
coverage and including the Endorsements, subject to the Permitted Exceptions
and Unpermitted Exceptions waived by Purchaser (the "Title Policy"). Purchaser
shall pay for all of the costs of the Title Commitment and Title Policy,
including, but not limited to, any fees paid to a North Carolina attorney for
<PAGE>
an opinion of counsel required for the Title Insurer to issue the Title Policy.
Purchaser shall also pay for all of the costs of the Endorsements, including,
but not limited to, any fees paid to a North Carolina attorney for an opinion
of counsel required for the Title Insurer to issue the Endorsements.
3.2. Purchaser has received a survey of the Property prepared by Bobby J.
Raye, dated October 30, 1985, and last revised on September 11, 1995, (the
"Existing Survey"). Purchaser shall pay for all of the costs of updating the
Existing Survey, and Seller shall deliver the updated survey (the "Updated
Survey") to Purchaser within 30 days after the date hereof. The Updated Survey
shall be certified to Purchaser and the Title Insurer, shall be prepared in
accordance with the Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys, jointly established and adopted by ALTA and ACSM in 1992, and
shall include the following item numbers from Table A thereof: 1, 2, 3, 4, 6,
7(a) and (c), 8, 9, 10 and 11(a) - (d), or such other lesser standards
acceptable to Purchaser. The Updated Survey shall also (a) depict the location
and the dimensions of the Property and all of the improvements thereon; (b)
indicate the street address and legal description of the Property, the square
footage of the Property and all of the improvements and the number of parking
spaces, if any; (c) show all curb cuts, driveways, parking spaces, if any,
streets and alleys adjacent to the Property, and vehicular access from the
Property to said streets and alleys; (d) show the present location of all
recorded easements, visible easements, utility lines and building lines on the
Property and the location of any encroachments onto or over easements, building
lines, rights of way or any adjoining property, or onto the Property by any
adjoining property; and (e) certify whether the Property is located in an area
identified by an agency or department of the federal government as having
special flood or mudslide hazards which would require flood insurance under the
Flood Insurance Act of 1968, as amended from time to time, or under any other
applicable law or regulation. The parties agree that Purchaser shall not be
obligated to consummate the purchase of the Property unless the Updated Survey
is sufficient to enable the Title Insurer to delete the general survey
exception and to issue the Title Policy free from any survey matters, other
than those shown in the Existing Survey.
3.3. The obligation of Purchaser to pay the various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF TRANSFER TAXES AND CLOSING COSTS.
4.1. Seller shall pay for all of the costs of the documentary or transfer
stamps to be paid with reference to the "Deed" (hereinafter defined) and all
other stamps, intangible, transfer, documentary, recording, sales tax and
surtax imposed by law with reference to any other sale documents delivered in
connection with the sale of the Property to Purchaser, other than those
pertaining to the Loan Documents. Costs relating to the Loan Documents shall
be deemed to be "Lender Consent Costs" (as hereinafter defined), and shall be
governed by the provision set forth in Paragraph 25.
4.2. Purchaser and Seller shall each pay for one-half of all escrow and
other closing fees charged by the Title Insurer in connection with closing the
subject transaction, other than those costs set forth in Paragraph 3.1 and 4.1.
<PAGE>
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the delivery of the Updated Survey discloses any new
Unpermitted Exception, Seller shall have thirty (30) days from the date of the
date-down to the Title Commitment or the delivery of the Updated Survey, as
applicable, at Seller's expense, to bond over, cure and/or have any Unpermitted
Exceptions removed from the Title Commitment or to have the Title Insurer
commit to insure against loss or damage that may be occasioned by such
Unpermitted Exceptions. In such event, the time of Closing shall be delayed,
if necessary, to give effect to said aforementioned time period, it being
understood that Purchaser shall not be obligated to close prior to the
expiration of the aforementioned time period, unless Seller has bonded over,
cured and or had the Unpermitted Exceptions removed from the Title Commitment
or had the Title Insurer commit to insure against loss or damage that may be
accessed by such Unpermitted Exceptions. If Seller fails to cure or have said
Unpermitted Exceptions removed or have the Title Insurer commit to insure as
specified above within said thirty (30) day period, Purchaser may, at its
option, either (a) terminate this Agreement upon notice to Seller within five
(5) days after the expiration of said thirty (30) day period; or (b) consummate
the subject transaction, in which case Purchaser shall be entitled to a credit
at closing equal to the sum of all Unpermitted Exceptions of a definite or
ascertainable amount. Absent notice from Purchaser to Seller that it has
elected to terminate this Agreement, Purchaser shall be deemed to have elected
to take title subject to said Unpermitted Exceptions, and shall be entitled to
the aforesaid credit at closing. If Purchaser terminates this Agreement in
accordance with the terms of this Paragraph 5.1, this Agreement shall become
null and void without further action of the parties, and all Earnest Money
theretofore deposited into the escrow by Purchaser, together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for Purchaser's obligation to
indemnify Seller and restore the Property, as more fully set forth in Paragraph
7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser or its nominee by special warranty deed (the "Deed") in recordable
form subject only to the Permitted Exceptions and any Unpermitted Exceptions
waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty. Seller shall promptly notify Purchaser in writing of any such fire
<PAGE>
or other casualty and Seller's determination of the cost to repair the damage
caused thereby. In the event of damage to the Property by fire or other
casualty prior to the Closing Date, repair of which would cost in excess of
$100,000.00 (as determined by Seller in good faith), then this Agreement may be
terminated at the option of Purchaser, which option shall be exercised, if at
all, by Purchaser's written notice thereof to Seller within five (5) business
days after Purchaser receives written notice of such fire or other casualty and
Seller's determination of the amount of such damages, and upon the exercise of
such option by Purchaser this Agreement shall become null and void, the Earnest
Money deposited by Purchaser shall be returned to Purchaser together with
interest thereon, and neither party shall have any further liability or
obligations hereunder. In the event that Purchaser does not exercise the
option set forth in the preceding sentence, the Closing shall take place on the
Closing Date and Seller shall assign and transfer to Purchaser on the Closing
Date all of Seller's right, title and interest in and to all insurance proceeds
paid or payable to Seller on account of the fire or casualty.
6.2. Subject to the provisions hereinafter set forth in this Section 6.2,
if between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which might result in the taking of
any part of the Property or the taking or closing of any right of access to the
Property, Seller shall immediately notify Purchaser of such occurrence, and
provide Purchaser with copies of any documentation received by Seller in
connection therewith (collectively, the "Condemnation Notice"). In the event
that the taking of any part of the Property shall: (a) materially impair access
to the Property; (b) cause any material non-compliance with any applicable law,
ordinance, rule or regulation of any federal, state or local authority or
governmental agencies having jurisdiction over the Property or any portion
thereof; or (c) materially and adversely impair the use of the Property as it
is currently being operated (hereinafter collectively referred to as a
"Material Event"), Purchaser may:
(i) terminate this Agreement by written notice to Seller, in which
event the Earnest Money deposited by Purchaser, together with interest thereon,
shall be returned to Purchaser and all rights and obligations of the parties
hereunder with respect to the closing of this transaction will cease; or
(ii) proceed with the Closing, in which event Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any award made in
connection with such condemnation or eminent domain proceedings.
Notwithstanding anything to the contrary contained in this Section 6.2,
the parties hereto acknowledge that the Department of Transportation of
Mecklenburg County, North Carolina, Case 96-CVS 6875 seeks to condemn a portion
of the Property for the widening of Providence Road (the "Providence Road
Condemnation"), and agree that (a) any condemnation award relating to the
Providence Road Condemnation shall be credited to Purchaser by Seller at
closing, if Seller has already received the benefit of such award, or (b)
Seller shall assign to Purchaser at closing all of Seller's right, title and
interest in and to the condemnation award relating to the Providence Road
Condemnation.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of the Condemnation Notice, whether Purchaser elects
to exercise its rights under Paragraph 6.2(i) or Paragraph 6.2(ii). Closing
<PAGE>
shall be delayed, if necessary, until Purchaser makes such election. If
Purchaser fails to make an election within such five (5) business day period,
Purchaser shall be deemed to have elected to exercise its rights under
Paragraph 6.2(ii). If between the date of this Agreement and the Closing Date,
any condemnation or eminent domain proceedings are initiated which do not
constitute a Material Event, Purchaser shall be required to proceed with the
Closing, in which event Seller shall assign to Purchaser all of Seller's right,
title and interest in and to any award made in connection with such
condemnation or eminent domain proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on October 30, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate, including, but not limited to, any appraisals,
engineering, environmental and other due diligence studies, tests and surveys.
In connection with Purchaser's review of the Property, Seller agrees to deliver
to Purchaser actual and complete copies of the current rent roll for the
Property, the most recent tax and insurance bills, utility account numbers,
service contracts, the Existing Survey, and unaudited year end 1995 and year to
date (through August 30, 1996) operating statements. Furthermore, to the
extent that any of the following items are (a) in the possession of Seller or
the "Asset Manager" (as hereinafter defined), or (b) readily available to
Seller or the Asset Manager, Seller shall deliver to Purchaser actual and
complete copies of the following:
(i) unaudited year end 1993 and 1994 operating statements;
(ii) all licenses, permits, authorizations and approvals issued to Seller
by all governmental authorities having jurisdiction over the Property;
(iii) the most recent bills for water charges and other utilities,
together with proof of payment;
(iv) the insurance loss history report, including all insurance claims and
settlements relating to the Property within the past three (3) years;
(v) petitions for appeal of property taxes and/or assessments for the
Property which have been contested by Seller over the immediately preceding
three (3) year period and the results thereof;
(vi) all "as built" plans and specifications for the improvements and
copies of all reports or studies relating to the engineering, environmental
conditions, physical conditions and/or operation of the Property;
(vii) the most recent termite report for the Property;
(viii) any operations and maintenance plan or plans implemented for the
Property by Seller; and
<PAGE>
(ix) any other information that Purchaser shall reasonably request.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense, and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys (x) selected by
Purchaser, and (y) reasonably acceptable to Seller.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If, for any reason, Purchaser is dissatisfied with the results of the
tests, studies or investigations performed or information received pursuant to
this Paragraph 7.1, Purchaser shall have the right to terminate this Agreement
by giving written notice of such termination to Seller at any time prior to the
expiration of the Inspection Period. If written notice is not received by
Seller pursuant to this Paragraph 7.1 prior to the expiration of the Inspection
Period, then the right of Purchaser to terminate this Agreement pursuant to
this Paragraph 7.1 shall be waived. If Purchaser terminates this Agreement by
written notice to Seller prior to the expiration of the Inspection Period, (i)
Purchaser shall promptly deliver to Seller copies of all studies, reports and
other investigations obtained by Purchaser in connection with its due diligence
during the Inspection Period; and (ii) the Initial Earnest Money deposited by
Purchaser shall be immediately paid to Purchaser, together with any interest
earned thereon, and neither Purchaser nor Seller shall have any right,
obligation or liability under this Agreement, except for Purchaser's obligation
to indemnify Seller and restore the Property, as more fully set forth in this
Paragraph 7.1. Notwithstanding anything contained herein to the contrary, the
terms of this Paragraph 7.1, shall survive the Closing and the delivery of the
Deed and termination of this Agreement.
Upon the expiration of the Inspection Period, unless Purchaser has elected
to terminate this Agreement in accordance with the provisions of the Escrow
Agreement, Purchaser shall deposit the Additional Earnest Money with Title
Insurer.
7.2. Seller or Seller's predecessor-in-interest acquired title to the
Property by foreclosure (or deed-in-lieu thereof) and, therefore, Seller can
make no representations or warranties relating to the condition of the Property
except as may otherwise be specifically set forth in this Agreement. Purchaser
acknowledges and agrees that, except with respect to the representations and
warranties contained herein, it will be purchasing the Property based solely
upon its inspections and investigations of the Property, and that Purchaser
<PAGE>
will be purchasing the Property "AS IS" and "WITH ALL FAULTS", based upon the
condition of the Property as of the date of this Agreement, wear and tear and
loss by fire or other casualty or condemnation excepted. Without limiting the
foregoing, Purchaser acknowledges that, except as may otherwise be specifically
set forth elsewhere in this Agreement, neither Seller nor its consultants,
brokers or agents have made any representations or warranties of any kind upon
which Purchaser is relying as to any matters concerning the Property,
including, but not limited to, the condition of the land or any improvements
comprising the Property, the existence or non-existence of "Hazardous
Materials" (as hereinafter defined), economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning or building laws, rules or regulations or "Environmental
Laws" (hereinafter defined) affecting the Property. Seller makes no
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Except with
respect to a breach by Seller of any representation or warranty expressly
contained herein, Purchaser hereby releases Seller and the Affiliates of Seller
from any and all liability in connection with any claims which Purchaser may
have against Seller or the Affiliates of Seller, and Purchaser hereby agrees
not to assert any claims for contribution, cost recovery or otherwise, against
Seller or the Affiliates of Seller, relating directly or indirectly to the
existence of asbestos or Hazardous Materials on, or environmental conditions
of, the Property, whether known or unknown. As used herein, "Environmental
Laws" means all federal, state and local statutes, codes, regulations, rules,
ordinances, orders, standards, permits, licenses, policies and requirements
(including consent decrees, judicial decisions and administrative orders)
relating to the protection, preservation, remediation or conservation of the
environment or worker health or safety, all as amended or reauthorized, or as
hereafter amended or reauthorized, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency
Planning and Community Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C.
Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Section 7401
et seq., the Federal Water Pollution Control Act ("Clean Water Act"), 33 U.S.C.
Section 1251 et seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
Section 2601 et seq., the Safe Drinking Water Act ("Safe Drinking Water Act"),
42 U.S.C. Section 300f et seq., the Atomic Energy Act ("AEA"), 42 U.S.C.
Section 2011 et seq., the Occupational Safety and Health Act ("OSHA"),
29 U.S.C. Section 651 et seq., and the Hazardous Materials Transportation Act
(the "Transportation Act"), 49 U.S.C. Section 1802 et seq. As used herein,
"Hazardous Materials" means: (1) "hazardous substances," as defined by CERCLA;
(2) "hazardous wastes," as defined by RCRA; (3) any radioactive material
including, without limitation, any source, special nuclear or by-product
material, as defined by AEA; (4) asbestos in any form or condition; (5)
polychlorinated biphenyls; and (6) any other material, substance or waste to
which liability or standards of conduct may be imposed under any Environmental
Laws. Notwithstanding anything contained herein to the contrary, the terms of
this Paragraph 7.2 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
<PAGE>
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and the representations and warranties of Seller
expressly contained herein, and releases Seller and the Affiliates of Seller
from any liability with respect to such historical information, except with
respect to a breach of a representation or warranty of Seller contained herein.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.3 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.4. Seller has provided to Purchaser the following existing reports: (a)
Construction Acquisitions Report dated July 30, 1985, (b) the Environmental
Site Evaluation dated August 14, 1990 prepared by Environmental Risk
Consultants, Inc., (c) the Update Phase I Environmental Site Assessment dated
December 10, 1992 prepared by Law Engineering, Inc. and Law Environmental, and
(d) the Architectural/Engineering Assessment Phase One Environmental Assessment
dated July 17, 1995 prepared by Omni Associates, Inc. (collectively, the
"Existing Report"). Except as expressly set forth herein, Seller makes no
representation or warranty concerning the accuracy or completeness of the
Existing Report. Purchaser hereby releases Seller and the Affiliates of Seller
from any liability whatsoever with respect to the Existing Report, including,
without limitation, the matters set forth in the Existing Report, and the
accuracy and/or completeness of the Existing Report, except with respect to a
breach of a representation or warranty of Seller contained herein.
Furthermore, Purchaser acknowledges that it will be purchasing the Property
with all faults disclosed in the Existing Report. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.4 shall survive
the Closing and the delivery of the Deeds and termination of this Agreement.
8. CLOSING. Subject to the provisions set forth below and subject to the
provisions of Paragraph 25 below, the closing of this transaction (the
"Closing") shall be on December 2, 1996 (the "Closing Date"), at the loop
office of Title Insurer, Chicago, Illinois, at which time Seller shall deliver
possession of the Property to Purchaser. This transaction shall be closed
through an escrow with Title Insurer, in accordance with the general provisions
of the usual and customary form of deed and money escrow for similar
transactions in Chicago, Illinois, or at the option of either party, the
Closing shall be a "New York style" closing at which the Purchaser shall wire
the Purchase Price to Title Insurer on the Closing Date and prior to the
release of the Purchase Price to Seller, Purchaser shall receive the Title
Policy or marked up commitment dated the date of the Closing Date. In the
event of a New York style closing, Seller shall deliver to Title Insurer any
customary affidavit in connection with a New York style closing. All closing
and escrow fees shall be divided equally between the parties hereto.
<PAGE>
Simultaneously with the execution of this Agreement, Seller and Purchaser
have entered into a separate agreement for the sale of certain other property
(the "Other Property"). The conveyance of the Other Property shall occur
simultaneously with the Closing on the Closing Date through an escrow with
Title Insurer, and neither party shall be obligated to consummate the closing
if the closing on the Other Property does not occur simultaneously.
9. CLOSING DOCUMENTS.
9.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, (a)
Purchaser shall deliver in Escrow to Title Insurer the balance of the Purchase
Price and an assumption of the documents set forth in Paragraph 9.2.3 and 9.2.4
hereof, and (b) Purchaser and Seller shall each execute and deliver in Escrow
to the Title Insurer such other documents as may be reasonably required by the
Title Insurer in order to consummate the transaction as set forth in this
Agreement and allow the Title Insurer to issue the Endorsements, including, but
not limited to: (i) an ALTA Statement; (ii) a GAP Undertaking; (iii) complete
state, county and local transfer tax declarations, to the extent applicable;
and (iv) all applicable partnership and corporate resolutions and/or
certificates of existence.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. Intentionally Deleted;
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, any warranties,
certificates, licenses, permits and existing termite bonds and the service
contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
9.2.7. keys to the improvements;
9.2.8. possession of the Property to Purchaser, subject to the terms
of leases;
9.2.9. evidence of the termination of the management agreement;
9.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
<PAGE>
and the obligation to refund the security deposits (in the form of Exhibit K);
and
9.2.11. an updated rent roll, certified by Seller as being actual
and complete.
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY,
TOGETHER WITH ANY INTEREST ACCRUED THEREON, PLUS ACTUAL DOCUMENTED THIRD PARTY
EXPENSES PAID OR INCURRED BY PURCHASER IN CONNECTION WITH THIS AGREEMENT, BUT
NOT TO EXCEED THE AMOUNT OF THE EARNEST MONEY ON DEPOSIT WITH THE ESCROW AGENT
AT THE TIME OF DEFAULT, AND THIS AGREEMENT SHALL THEN BECOME NULL AND VOID AND
OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT
LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND
RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN PARAGRAPH 7. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT IS ITS WILLFUL
REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
refundable security deposits and, if applicable under the laws of the State of
North Carolina, interest thereon (which will be assigned to and assumed by
Purchaser and credited to Purchaser at Closing); water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes,
operating expenses which are reimbursable by the tenants for the period prior
to the Closing Date less any amount previously paid by the Tenants shall be
credited to Seller; and other similar items shall be adjusted ratably as of
11:59 p.m. on the Closing Date, and credited against the balance of the cash
due at Closing. Assessments payable in installments which are due subsequent
to the Closing Date shall be paid by Purchaser. If the amount of any of the
items to be prorated is not then ascertainable, the adjustments thereof shall
be on the basis of the most recent ascertainable data. In addition, subject to
the provisions of Paragraph 25 below, Purchaser shall give Seller a credit at
closing for all escrows, reserves and holdbacks held by the lender under the
Loan Documents, which escrows, reserves and holdbacks shall be assigned to
Purchaser. All prorations will be final except as to delinquent rent referred
to in Paragraph 12.2 below.
12.2. All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date, after the payment to Purchaser of all current
<PAGE>
basic rent, shall be deemed a "Post-Closing Receipt" until such time as all
such indebtedness is paid in full. Within ten (10) days following each receipt
by Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-Closing
Receipt to Seller. Purchaser shall use its best efforts to collect all amounts
which, upon collection, would constitute Post-Closing Receipts hereunder.
Within 120 days after the Closing Date, Purchaser shall deliver to Seller a
reconciliation statement of Post-Closing Receipts through the first 90 days
after the Closing Date. Upon the delivery of the Post-Closing Receipts
reconciliation, Purchaser shall deliver to Seller any Post-Closing Receipts
owing to Seller and not previously delivered to Seller in accordance with the
terms hereof. Seller retains the right to conduct an audit, at reasonable
times and upon reasonable notice, of Purchaser's books and records to verify
the accuracy of the Post-Closing Receipts reconciliation statement and upon the
verification of additional funds owing to Seller, Purchaser shall pay to Seller
said additional Post-Closing Receipts and the cost of performing Seller's
audit. Paragraph 12.2 of this Agreement shall survive the Closing and the
delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser's principals or Purchaser's
nominee owns a controlling interest, provided that Purchaser remains liable for
and the assignee assumes the obligations of Purchaser hereunder.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to (a) CB Commercial Real Estate Group ("Seller's Broker") (to be
paid by Seller) and (b) to First Group Properties ("Purchaser's Broker") (to be
paid by Purchaser). Seller's commission to Seller's Broker shall only be
payable out of the proceeds of the sale of the Property in the event the
transaction set forth herein closes, and Purchaser's commission to Purchaser's
Broker shall only be payable in the event that the transaction set forth herein
closes. Purchaser and Seller shall indemnify, defend and hold the other party
hereto harmless from any claim whatsoever (including without limitation,
reasonable attorney's fees, court costs and costs of appeal) from anyone
claiming by or through the indemnifying party any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated, other than to Seller's Broker or to Purchaser's Broker. The
indemnifying party shall undertake its obligations set forth in this Paragraph
15 using attorneys selected by the indemnifying party and reasonably acceptable
to the indemnified party. The provisions of this Paragraph 15 will survive the
Closing and delivery of the Deed.
<PAGE>
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by James Mendelson or Michael Becker, the manager of the Property (the
"Asset Manager", and James Mendelson and the Asset Manager are collectively
referred to as the "Seller's Representative"), and any representation or
warranty of the Seller is based upon those matters of which the Seller's
Representative has actual knowledge. Any knowledge or notice given, had or
received by any of Seller's agents, servants or employees shall not be imputed
to Seller, the general partner or limited partners of Seller, the subpartners
of the general partner or limited partners of Seller or Seller's
Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
be remade at Closing, subject to Paragraph 16.5: (a) Seller has no knowledge
of any pending or threatened litigation, claim, cause of action or
administrative proceeding concerning the Property; (b) Seller has the power to
execute and deliver this Agreement and consummate the transactions contemplated
herein; (c) the rent roll attached hereto as Exhibit M, which Seller will
update as of the Closing Date, is actual and complete as of the date set forth
thereon, (d) the Seller has not given or suffered any assignment, pledge or
encumbrance with respect to any of the tenant leases or its interests
thereunder except as additional collateral for the existing loan secured by the
Property; (e) except as may be set forth in the Existing Report, Seller has not
received any notice from any governmental authority having jurisdiction over
the Property of any uncured violation of any building, zoning or Environmental
Law with respect to the Property, Seller has no knowledge of the existence of
any environmental or engineering reports, other than the Existing Report; (f)
there are and shall be no liens, claims or unpaid taxes against Seller and/or
applicable to the Property for federal withholding taxes or state sales,
retailor occupation or unemployment taxes, or any other taxes or charges
whatsoever, except general real estate taxes and special assessments, if any,
which are not yet due and payable, and Seller shall obtain all appropriate
releases and make all necessary filings required under applicable law; (g)
Seller's Representative has not received any notice from any insurance company
of any defects or inadequacies in the Property which might adversely affect the
insurability of the Property; (h) no fact or condition exists to Seller's
knowledge which would result in the termination of access to the Property from
any adjoining public or private streets or ways or which would result in
discontinuation of adequate sewer, water, gas, electric, telephone or other
utility service; (i) Seller has no knowledge of any pending or threatened
special taxes or assessments with respect to the Property, or any proposed
increase in the assessed valuation of the Property for real estate tax
purposes; (j) Seller has no knowledge of any representations made to the
tenants of the Property relating to repairs, alterations and/or other matters
which will not have been performed or otherwise satisfied to Purchaser's
reasonable satisfaction prior to the Closing Date; (k) neither this Agreement,
nor anything required to be done under this Agreement, violates or shall
violate any contract, agreement or instrument to which Seller is a party or
which affects the Property or any part thereof, and the sale, conveyance or
assignment of the Property contemplated under this Agreement does not require
the consent of any party, other than Lender, which has not been obtained, and
<PAGE>
(l) there are no contracts that Purchaser must assume, other than the Service
Contracts.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
16.4. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate actions to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement, and the sole remedy of the other party shall be to terminate
this Agreement. Notwithstanding anything contained herein to the contrary, if
the status of any of the tenancies changes from the date of the rent roll
attached hereto and the date of the rent roll delivered at Closing, provided
the change in status is not caused by a breach of Seller's covenants contained
in Paragraph 16.6 herein, then Purchaser shall not have the right to terminate
this Agreement or make any claim for a breach of a representation or warranty
hereunder involving the rent roll or tenancies thereunder. Purchaser and
Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing.
16.5. The parties agree that the representations and warranties
contained herein shall survive Closing for a period of ninety (90) days (i.e.,
the claiming party shall have no right to make any claims against the other
party for a breach of a representation or warranty after the expiration of
ninety (90) days immediately following Closing).
16.6. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained and operated the Property during the
period of Seller's ownership, including the maintenance of the current tenant
rental qualification standards, subject to reasonable wear and tear and
casualty. Seller further covenants that with respect to security deposits and
delinquent rents, after the date of this Agreement, none of the security
deposits shall be applied by Seller to delinquent rents, unless such tenant
shall have vacated the Property or been evicted from the Property prior to the
Closing Date.
17. LIMITATION OF LIABILITY.
17.1. Neither Seller nor Affiliate of Seller, nor any of their
respective beneficiaries, shareholders, partners, officers, directors, agents
or employees, heirs, successors or assigns shall have any personal liability of
any kind or nature for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
<PAGE>
17.2. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum aggregate liability of Seller, in
connection with, arising out of or in any way related to a breach by Seller
under this Agreement or any document or conveyance agreement in connection with
the transaction set forth herein after the Closing, shall be $150,000 (or
$250,000, if Purchaser has made the Additional Earnest Money Deposit).
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover from Seller any amount
greater than $150,000 (or $250,000, if Purchaser has made the Additional
Earnest Money Deposit).
17.3. Seller further agrees not to distribute $250,000 of the proceeds
of the Purchase Price to its partners for the longer of (a) ninety (90) days
after the Closing and (b) final resolution of any claims by Purchaser and
asserted in writing against Seller prior to the expiration of the ninety (90)
days after the Closing in accordance with the terms of this Agreement
("Claims"); provided, however, that if any Claims are disputed by Seller,
Seller shall have the right, by written notice to Purchaser, to require
Purchaser to file suit in a court of competent jurisdiction within thirty (30)
days after such notice to Purchaser; otherwise said notice with respect to the
Claim in question shall no longer prevent Seller from distributing the
proceeds, and further provided that, at the end of the ninety (90) day period,
Seller shall be entitled to distribute all proceeds of the Purchase Price in
excess of the aggregate amount of the Claims theretofore made in writing by
Purchaser.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 267-1600
(847) 317-4462 (FAX)
<PAGE>
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: Group One Investments, Inc.
77 West Washington Street
Suite 1005
Chicago, Illinois 60602
Attention: Robert Weitzman
(312) 346-3434
(312) 346-2382 (FAX)
and one copy to: Much, Shelist, Freed, Denenberg
Ament, Bell & Rubenstein, P.C.
200 N. LaSalle Street
Suite 2100
Chicago, Illinois 60601
Attention: Michael Sadoff, Esq.
(312) 621-1494
(312) 621-1750 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Initial Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
<PAGE>
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of North Carolina, except that with respect to the retainage
of the Earnest Money as liquidated damages the laws of the State of Illinois
shall govern.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
25. ASSUMPTION OF LOAN. The Property is currently encumbered by that certain
Multifamily Deed of Trust, Assignment of Rents and Security Agreement (the
"Mortgage") by Seller to Berkshire Mortgage Finance Limited Partnership (the
"Lender"), dated as of September 15, 1995, which secures that certain
Multifamily Note (the "Note") made by Seller in favor of Lender in the original
principal amount of Seventeen Million Dollars ($17,000,000.00), that certain
Replacement Reserve and Security Agreement by and between Lender and Seller,
dated September 15, 1995 (the "Replacement Reserve Agreement"), and that
certain Completion/ Repair and Security Agreement by and between Lender and
Seller, dated September 15, 1995 (the "Completion Reserve Agreement", and the
Mortgage, the Note, the Replacement Reserve Agreement, the Completion Reserve
Agreement, together with all other documents or instruments entered into in
connection with the Mortgage and the Note, are hereinafter referred to as the
"Loan Documents"). Seller has delivered to Purchaser copies of the Note, the
Mortgage, the Replacement Reserve Agreement and the Completion Reserve
Agreement. In addition, within ten (10) business days of the date hereof,
Seller shall provide Purchaser with a list of all escrows, reserves and
holdbacks held by Lender under the Loan Documents.
The parties acknowledge that, in accordance with the terms of the
Completion Reserve Agreement, as heretofore amended, Seller is obligated to
complete the repairs described on Exhibit N attached hereto (the "Repairs") on
or before October 31, 1996 (the "Deadline"). Seller covenants and agrees that
it shall diligently pursue the completion of the Repairs at all times after the
execution of this Agreement and that it shall use its best efforts to complete
the Repairs prior to the Closing. In the event that Seller completes the
Repairs to the satisfaction of Lender prior to the Closing, Seller shall be
entitled to receive all remaining "Collateral Account Funds" (as defined in the
Completion Reserve Agreement). In the event that a portion, but not all, of
the Repairs have been completed prior to Closing (a) Seller shall use its best
efforts to have Lender extend the Deadline to a date that is acceptable to
Purchaser, (b) Seller shall be entitled to receive that portion of the
Collateral Account Funds attributable to the Repairs that have been completed,
as determined by Lender, (c) Seller shall assign all of its right, title and
interest in the remaining Collateral Account Funds (after its receipt of the
funds described in (b) above) (the "Remaining Collateral Funds"), to Purchaser
at the time of Closing, without any credit to the Purchase Price, and (d)
<PAGE>
Purchaser shall assume the obligation of completing the Repairs, as required by
the Loan Documents. Purchaser and Seller agree to "reprorate" the cost of
completing the Repairs within thirty (30) days of the completion of the
Repairs, as follows. Upon the completion of the Repairs, Purchaser shall
advise Seller in writing of (a) the actual amount spent by Purchaser to
complete the Repairs (the "Repair Cost"), and (b) the amount of the Remaining
Collateral Funds disbursed to Purchaser pursuant to the Completion Reserve
Agreement, and shall provide evidence of same to Seller. In the event that the
Repair Cost exceeds the Remaining Collateral Funds, Seller shall pay said
excess amount to Purchaser, and in the event that the Remaining Collateral
Funds exceed the Repair Cost, Purchaser shall pay said excess amount to Seller,
in either event, within thirty (30) days after the aforesaid notice is sent by
Purchaser to Seller. The parties' agreement to reprorate as set forth in this
paragraph shall survive closing.
Notwithstanding anything contained in this Agreement to the contrary,
Purchaser and Seller agree that the obligation of each party to consummate the
transactions contemplated by this Agreement are contingent upon the occurrence
of the following on or before the Closing Date (collectively, the "Lender's
Conditions Precedent"): (a) Lender consenting, in writing, to (i) the
assumption by Purchaser of Seller's obligations under the Loan Documents on
terms reasonably acceptable to Purchaser and (ii) a release by Lender of Seller
from any liability under the Loan Documents (together, the "Lender Consent"),
and (b) Lender's executing and delivering to Seller and Purchaser an estoppel
letter stating that there are no defaults under the Loan Documents, and listing
all escrows, reserves and holdbacks held by Lender under the Loan Documents
(the "Estoppel"), which Estoppel may, at Lender's option, be incorporated into
the terms of the Lender Consent. Purchaser acknowledges that for purposes of
this Agreement, the Lender Consent shall be deemed reasonable if it provides
(x) for the assumption by Purchaser of Seller's obligations under the Loan
Documents on terms and conditions which do not expand the existing obligations
under the Loan Documents, and (y) the aggregate costs charged by Lender for
giving the Lender consent do not exceed the sum of (i) an assumption fee in a
maximum amount of one percent (1%) of the outstanding principal balance of the
Note (the "Assumption Fee"), (ii) a $3,000 non-refundable application fee, and
(iii) the reasonable out-of-pocket costs and expenses of the Lender incurred in
connection with the assumption, to the extent such costs and expenses exceed
$3,000 (said costs are hereinafter collectively referred to as the "Lender
Consent Costs"). The Lender Consent Costs shall be apportioned between Seller
and Purchaser as follows: (1) Seller shall pay the Assumption Fee; (2)
Purchaser shall pay the next $3,000 of the Lender Consent Costs; (3) Seller
shall pay the next $3,000 of the Lender Consent Costs after the payment
described in (2) above; and (4) all other Lender Consent Costs shall be shared
equally between Seller and Purchaser. Purchaser agrees to promptly commence
and diligently pursue obtaining the Lender Consent and the Estoppel. Purchaser
shall keep Seller advised of and allow Seller to participate in the process of
obtaining the Lender Consent and the Estoppel, and Seller agrees to cooperate
with Purchaser in Purchaser's efforts to obtain the Lender Consent and the
Estoppel.
Purchaser shall immediately notify Seller upon the satisfaction of the
Lender's Conditions Precedent. Subject to the provisions of the last sentence
of this paragraph, if Purchaser is unable to satisfy the Lender's Conditions
Precedent on or before the Closing Date, then this Agreement shall be
terminated. If this Agreement is terminated in accordance with the immediately
<PAGE>
preceding sentence, then (i) Purchaser shall promptly deliver to Seller copies
of all studies, reports and other investigations obtained by Purchaser in
connection with its due diligence during the Inspection Period; (ii) the
Earnest Money deposited by Purchaser shall be immediately paid to Purchaser,
together with any interest earned thereon, and (iii) neither Purchaser nor
Seller shall have any right, obligation or liability under this Agreement,
except for Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in Paragraph 7. Notwithstanding anything to the
contrary contained herein, either party shall have the right to extend the
Closing Date for up to an additional thirty (30) days, if necessary, in order
to satisfy the Lender's Conditions Precedent, which right shall be exercised by
providing written notice of same to the other prior to the Closing Date.
Provided that the Lender's Conditions Precedent are satisfied, at the
Closing (a) Purchaser shall assume all of Seller's obligations under the Loan
Documents and (b) Seller shall be released from any liability under the Loan
Documents. In connection therewith, Purchaser and Seller agree to execute
customary and necessary documents reflecting such assumption and such release
reasonably required by the Lender and reasonably acceptable to Purchaser and
Seller.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC., an Illinois
corporation
By: /s/ Robert H. Weitzman
-----------------------------------
Name:
-----------------------------------
Its: President
-----------------------------------
SELLER:
100 PROVIDENCE SQUARE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Current Income Partners-85, Inc., an
Illinois corporation, its general partner
By: /s/ John K. Powell, Jr.
------------------------------------
Name:
------------------------------------
Its: President
------------------------------------
<PAGE>
Providence Square
of CB Commercial Real Estate ("Seller's Broker") executed
this Agreement in its capacity as a real estate broker and acknowledges that
the fee or commission due it from Seller as a result of the transaction
described in this Agreement is as set forth in that certain Listing Agreement,
dated __, 199_ between Seller and Seller's Broker (the "Listing Agreement").
Seller's Broker also acknowledges that payment of the aforesaid fee or
commission is conditioned upon the Closing and the receipt of the Purchase
Price by the Seller. Seller's Broker agrees to deliver a receipt to the Seller
at the Closing for the fee or commission due Seller's Broker and a release, in
the appropriate form, stating that no other fees or commissions are due to it
from Seller or Purchaser.
CB COMMERCIAL GROUP REAL ESTATE
By:
-----------------------------------
<PAGE>
Providence Square
of First Group Properties ("Purchaser's Broker")
executed this Agreement in its capacity as a real estate broker and
acknowledges that the fee or commission due it from Purchaser as a result of
the transaction described in this Agreement is as set forth in that certain
__________________, dated __, 199_ between Purchaser and Purchaser's Broker.
Purchaser's Broker also acknowledges that payment of the aforesaid fee or
commission is conditioned upon the Closing and the receipt of the Purchase
Price by the Seller. Purchaser's Broker agrees to deliver a receipt to the
Purchaser at the Closing for the fee or commission due Purchaser's Broker and a
release, in the appropriate form, stating that no other fees or commissions are
due to it from Seller or Purchaser.
FIRST GROUP PROPERTIES
By:
------------------------------------
<PAGE>
Exhibits
A - Legal
B - Intentionally Deleted
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Intentionally Deleted
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Intentionally Deleted
M - Rent Roll
N - Repair Items
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of this 17th
day of October, 1996 by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 100 PROVIDENCE SQUARE LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
RECITALS:
A. Seller and Purchaser have entered into a certain Agreement of Sale
dated as of the date of this Agreement (the "Sale Agreement") relating to the
property commonly known as the Providence Square Apartments located in
Charlotte, North Carolina (the "Property").
B. Seller desires to sell, convey and transfer to Purchaser all of
Seller's right, title and interest in, to and under all of the personal
property owned by Seller currently located on the Property and described on
Exhibit A attached hereto (collectively the "Personalty"), and in consideration
therefor, Purchaser has agreed to pay a certain sum to Seller as set forth
below.
C. The parties have agreed that for purposes of the Agreement, the
purchase price for the Personalty is Five Million and 00/100 Dollars
($5,000,000.00) (the "Purchase Price").
NOW, THEREFORE, in consideration of the mutual covenants set forth below,
and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Seller and Purchaser covenant and
agree as follows:
1. The foregoing recitals are incorporated herein and made a part of
this Agreement as though fully set forth herein.
2. In consideration for the Purchase Price, Seller shall sell, assign,
transfer and convey to Purchaser by a special warranty bill of sale in the form
of Exhibit B attached hereto all of Seller's right, title and interest in, to
and under the Personalty. Simultaneously therewith, Purchaser shall pay to
Seller the Purchase Price by federally wired "immediately available" funds.
3. Purchaser acknowledges and agrees that except with respect to the
representations and warranties contained herein, it will be purchasing the
Personalty based solely upon its inspections and investigations of the
Personalty, and that Purchaser will be purchasing the Personalty "AS IS" and
"WITH ALL FAULTS", based upon the condition of the Personalty as of the date of
this Agreement, wear and tear and loss by fire or other casualty or
condemnation excepted. Without limiting the foregoing, Purchaser acknowledges
that except as may otherwise be specifically set forth elsewhere in this
Agreement, neither Seller nor its consultants, brokers or agents have made any
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Personalty.
4. In order to induce Purchaser to purchase the Personalty, Seller
hereby represents and warrants to Purchaser as follows:
<PAGE>
a. Seller is an Illinois limited partnership duly organized,
validly existing and in good standing under the laws of the State of Illinois,
and has all requisite corporate power and authority to enter into this
Agreement, to carry out its terms and to sell and convey the Personalty to
Purchaser.
b. On or before the closing date, all corporate and other action
required to be taken by Seller to authorize the execution and delivery of this
Agreement and to carry out the transaction contemplated hereunder will have
been duly and properly taken.
c. The execution, delivery and performance of this Agreement will
not violate any order of any court or other governmental agency by which Seller
is bound nor any other agreement to which Seller is a party or by which the
Personalty is bound.
d. As of the date of this Agreement, Seller is not obligated under
any other agreement or commitment to sell the Personalty to any third party.
5. The conveyance of the Personalty as described above shall occur
through the "Title Insurer" on the "Closing Date" as said terms are defined in
the Sale Agreement simultaneously with the closing under the Sale Agreement.
In the event that the Sale Agreement is terminated in accordance with the terms
thereof, this Agreement shall become null and void and of no effect and the
parties shall have no further liability to each other at law or in equity,
except as otherwise provided in the Sale Agreement.
6. Any reference herein to Seller's knowledge or notice of any matter or
thing shall only mean such knowledge or notice that has actually been received
by James Mendelson or Michael Becker (collectively "Seller's Representative"),
and any representation or warranty of Seller is based upon those matters of
which Seller's Representative has actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or employees shall
not be imputed to Seller, the general partner or limited partners of Seller,
the subpartners of the general partner or limited partners of Seller or
Seller's Representative.
7. Except as otherwise set forth in the Sale Agreement and in this
Agreement, Seller makes no representation or warranty, either express or
implied, with respect to the condition of the Personalty.
8. This Agreement shall be binding upon the parties hereto and their
respective officers, directors, partners, heirs, successors and assigns.
9. This Agreement shall be governed by and construed under the laws of
the State of Illinois.
10. This Agreement and the Sale Agreement, the terms of which are
incorporated herein by reference, embody the entire understanding of the
parties, and all other representations and agreements with respect to the
Personalty, whether oral or in writing, have been merged into and replaced by
this Agreement.
<PAGE>
11. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed as of the date and place first above written.
PURCHASER SELLER
GROUP ONE INVESTMENTS, INC., 100 PROVIDENCE SQUARE LIMITED
an Illinois corporation PARTNERSHIP, an Illinois limited
partnership
By: /s/ Robert H. Weitzman By: /s/ John K. Powell, Jr.
---------------------------- ------------------------------
Name: Robert H. Weitzman Name:
---------------------------- ------------------------------
Its: President Its:
---------------------------- ------------------------------
<PAGE>
AMENDMENT NO. 1 TO AGREEMENT OF SALE
THIS AMENDMENT NO. 1 TO AGREEMENT OF SALE (this "Amendment") is dated as
of October 17, 1996, by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser") and 100 PROVIDENCE SQUARE LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
W I T N E S S E T H:
A. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement of Sale dated as of October 17, 1996, providing for the sale
by Seller to Purchaser of certain real property and other related property
located in Charlotte, North Carolina, and known as Providence Square Apartments
(the "Property") (said Agreement of Sale is hereinafter referred to as the
"Agreement"); and
B. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement dated as of October 17, 1996, providing for the sale by
Seller to Purchaser of certain personal property located at the Property (the
"Personal Property") (said Agreement is hereinafter referred to as the
"Personal Property Agreement"); and
C. WHEREAS, the parties heretofore desire to amend the terms and
conditions of the Agreement in certain respects, in accordance with the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the recitals set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties, Purchaser and Seller hereby agree as follows:
1. Preambles. The Preambles to this Amendment are fully incorporated
herein by this reference thereto with the same force and effect as through
restated herein.
2. Defined Terms. To the extent not otherwise defined herein to the
contrary, all capitalized terms and/or phrases used in this Amendment shall
have the respective meanings ascribed to them in the Agreement, as modified
hereby.
3. Closing/Event of Default. Notwithstanding anything to the contrary
contained in the Agreement or the Personal Property Agreement, the conveyance
of the Personal Property shall occur simultaneously with the Closing on the
Closing Date through an Escrow with Title Insurer. In the event that Seller
fails to deliver a Special Warranty Bill of Sale to the Purchaser conveying the
Personal Property to Purchaser on the Closing Date, in accordance with the
provisions of the Personal Property Agreement, said failure shall be deemed a
"Seller's Default", and the provisions of paragraph 11 of this Agreement shall
apply. In the event that Purchaser fails to deliver the purchase price for the
Personal Property to Seller on the Closing Date in accordance with the
provisions of the Personal Property Agreement, said failure shall be deemed a
"Purchaser's Default", and the provisions of paragraph 10 of this Agreement
shall apply.
<PAGE>
4. Miscellaneous. (a) Except as may be expressly set forth herein to
the contrary, the Agreement remains unmodified and all of the terms and
conditions of the Agreement shall remain in full force and effect.
Notwithstanding anything to the contrary contained herein, to the extent that
the terms and conditions of this Amendment conflict with the terms and
conditions of the Agreement, this Amendment shall control.
b. This Amendment shall be governed and construed under the laws of the
State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC., an Illinois
corporation
By: /s/ Robert H. Weitzman
--------------------------------------
Name: Robert H. Weitzman
--------------------------------------
Its: President
--------------------------------------
SELLER:
100 PROVIDENCE SQUARE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Current Income Partners-85, Inc., an
Illinois corporation, its general partner
By: /s/ John K. Powell, Jr.
---------------------------------------
Name:
---------------------------------------
Its: President
---------------------------------------
<PAGE>
BY FACSIMILE
October 30, 1996
100 Providence Square Limited Partnership
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Daniel J. Perlman, Esq.
Re: Providence Square Apartments
Charlotte, North Carolina
Ladies and Gentlemen:
Reference is made to that certain Agreement of Sale dated as of October
17, 1996 by and between Group One Investments, Inc., an Illinois corporation
("Purchaser"), and 100 Providence Square Limited Partnership, an Illinois
limited partnership ("Seller"), as amended by that certain Amendment No. 1 to
Agreement of Sale dated as of October 17, 1996 by and between Purchaser and
Seller (collectively the "Agreement"), pertaining to the purchase and sale of
the captioned property.
This letter will confirm the agreement between Purchaser and Seller that
Purchaser will (i) waive its right to terminate the Agreement pursuant to
paragraph 7.1 of the Agreement, and (ii) deposit the Additional Earnest Money
of $100,000.00 as required under paragraph 2.2 of the Agreement on the
condition that Seller agrees to perform the following.
1. Seller will afford Purchaser a credit in the amount of $500,000.00 at
closing against the personal property purchase price due from Purchaser.
2. Deleted.
3. Deleted.
<PAGE>
4. Because Purchaser recently learned of the existence of a certain Cable
Television Agreement dated May 6, 1996 (the "Cable TV Agreement") by and
between Time Warner Entertainment Advance Newhouse Partnership, as
Operator, and Seller, as Owner, which Cable TV Agreement contains economic
terms substainially different from the terms of the prior agreement with
Private Satellite Television which has since expired or been terminated,
Seller shall afford Purchaser an additional credit in the amount of
$23,700.00 at closing against the purchase price due from Purchaser.
If the terms of this letter agreement are acceptable to Seller, kindly
arranage for both originals of this letter agreement to be executed on behalf
of Seller and return one fully executed original to us at your earliest
convenience. Unless we receive a fully executed original of this letter by
5:00 p.m. CST today, this letter shall constitute notice from Purchaser
pursuant to paragraph 7.1 of the Agreement that the Agreement is deemed
terminated and the Initial Earnest Money should be returned to Purchaser.
We look forward to your prompt response.
Very truly yours,
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
---------------------------------
Name: Robert H. Weitzman
---------------------------------
Its: President
---------------------------------
Accepted and Agreed to
30th day of October, 1996
100 PROVIDENCE SQUARE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Current Income Partners-85, Inc.,
an Illinois corporation, its general partner
By: /s/ James E. Mendelson
-------------------------------
Name:
-------------------------------
Its:
-------------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 26th
day of September, 1996, by and between STORAGE TRUST PROPERTIES, L.P.
("Purchaser"), and JONES MILL ROAD PARTNERS, an Illinois limited partnership
("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Three Million Three Hundred Thousand And No/100 Dollars
($3,300,000.00) (the "Purchase Price"), that certain property commonly known as
Storage USA of Norcross, Norcross, Georgia legally described on Exhibit A
attached hereto (the "Property"). Included in the Purchase Price is all of the
personal property set forth on Exhibit B attached hereto (the "Personal
Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of Fifty Thousand and
No/100 Dollars ($50,000.00) (the "Earnest Money") to be held in escrow by and
in accordance with the provisions of the Escrow Agreement ("Escrow Agreement")
attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Charter Title Fort Bend as
agent for Chicago Title Insurance Company (hereinafter referred to as "Title
Insurer") dated August 23, 1996 for the Property (the "Title Commitment"). For
purposes of this Agreement, "Permitted Exceptions" shall mean: (a) the general
printed exceptions contained in the standard title policy to be issued by Title
Insurer based on the Title Commitment; (b) general real estate taxes,
association assessments, special district taxes and related charges not yet due
and payable; (c) matters shown on the "Existing Survey" (hereinafter defined);
(d) matters caused by the actions of Purchaser; (e) the title exceptions set
forth in Schedule B of the Title Commitment as Numbers 2 through 14 inclusive,
to the extent that same effect the Property; and (f) all current and future
rights of Gwinnett County in connection with Gwinnett County Project #7112 as
further described in Paragraph 26 hereof. All other exceptions to title shall
be referred to as "Unpermitted Exceptions". The Title Commitment shall be
conclusive evidence of good title as therein shown as to all matters to be
insured by the title policy, subject only to the exceptions therein stated. On
the Closing Date, Title Insurer shall deliver to Purchaser a standard title
policy in conformance with the previously delivered Title Commitment, subject
to Permitted Exceptions and Unpermitted Exceptions waived by Purchaser (the
"Title Policy"). Seller and Purchaser shall each pay for one-half of the costs
of the Title Commitment and Title Policy and Purchaser shall pay for the cost
of any endorsements to, or extended coverage on, the Title Policy.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by Carlton
Rakestraw & Associates dated December 15, 1992 (the "Existing Survey"). Seller
and Purchaser shall each pay for one-half of the costs of updating the Existing
Survey and Seller shall deliver the updated survey (the "Updated Survey") to
Purchaser within 14 days after the date hereof. Purchaser hereby acknowledges
that all matters disclosed by the Existing Survey are acceptable to Purchaser.
Purchaser's obligation to pay for a portion of the cost of the Updated Survey
shall only arise in the event that the Closing occurs.
3.3. The obligation of Purchaser and Seller to pay various costs set forth
in Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS. In addition to the costs set forth in
Paragraphs 3.1 and 3.2, Purchaser and Seller shall each pay for one-half of the
costs of the documentary or transfer stamps to be paid with reference to the
"Deed" (hereinafter defined) and all other stamps, intangible, transfer,
documentary, recording, sales tax and surtax imposed by law with reference to
any other sale documents delivered in connection with the sale of the Property
to Purchaser and all other charges of the Title Insurer in connection with this
transaction.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the Updated Survey discloses any new Unpermitted Exception,
Seller shall have thirty (30) days from the date of the date-down to the Title
Commitment or the Updated Survey, as applicable, at Seller's expense, to (i)
bond over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
do not exceed $50,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions, or (ii) have the right, but not the obligation, to
bond over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
equal or exceed $50,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions. In such event, the time of Closing shall be
delayed, if necessary, to give effect to said aforementioned time periods. If
Seller fails to cure or have said Unpermitted Exception removed or have the
Title Insurer commit to insure as specified above within said thirty (30) day
period or if Seller elects not to exercise its rights under (ii) in the
preceding sentence, Purchaser may terminate this Agreement upon notice to
Seller within five (5) days after the expiration of said thirty (30) day
period; provided, however, and notwithstanding anything contained herein to the
contrary, if the Unpermitted Exception which gives rise to Purchaser's right to
terminate was recorded against the Property as a result of the affirmative,
willful action of Seller (and not by any unrelated third party) with the
intention to prevent the sale of the Property in accordance with the terms
hereof, then Seller shall reimburse Purchaser for Purchaser's verifiable
third-party out-of-pocket expenses in an amount not to exceed $50,000. Absent
notice from Purchaser to Seller in accordance with the preceding sentence,
Purchaser shall be deemed to have elected to take title subject to said
Unpermitted Exception. If Purchaser terminates this Agreement in accordance
with the terms of this Paragraph 5.1, this Agreement shall become null and void
without further action of the parties and all Earnest Money theretofore
deposited into the escrow by Purchaser together with any interest accrued
thereon, shall be returned to Purchaser, and neither party shall have any
<PAGE>
further liability to the other, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in Paragraph 7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by limited warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty and grant Purchaser a credit at Closing for the amount of the
deductible under Seller's insurance. Seller shall promptly notify Purchaser in
writing of any such fire or other casualty and Seller's determination of the
cost to repair the damage caused thereby. In the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost in excess of $100,000.00 (as determined by Seller in good faith),
then this Agreement may be terminated at the option of Purchaser, which option
shall be exercised, if at all, by Purchaser's written notice thereof to Seller
within five (5) business days after Purchaser receives written notice of such
fire or other casualty and Seller's determination of the amount of such
damages, and upon the exercise of such option by Purchaser this Agreement shall
become null and void, the Earnest Money deposited by Purchaser shall be
returned to Purchaser together with interest thereon, and neither party shall
have any further liability or obligations hereunder. In the event that
Purchaser does not exercise the option set forth in the preceding sentence, the
Closing shall take place on the Closing Date and Seller shall assign and
transfer to Purchaser on the Closing Date all of Seller's right, title and
interest in and to all insurance proceeds paid or payable to Seller on account
of the fire or casualty and grant Purchaser a credit at Closing for the amount
of the deductible under Seller's insurance.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
<PAGE>
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on July 29, 1996 and ending at 5:00
p.m. Chicago time on October 10, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, and unaudited year end 1995 and year-to-date 1996
operating statements.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion.
<PAGE>
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph
7.1, or if Purchaser has not received approval of the transaction contemplated
hereby from its Board of Trustees, Purchaser shall have the right to terminate
this Agreement by giving written notice of such termination to Seller at any
time prior to the expiration of the Inspection Period. If written notice is
not given by Purchaser pursuant to this Paragraph 7.1 prior to the expiration
of the Inspection Period, then the right of Purchaser to terminate this
Agreement pursuant to this Paragraph 7.1 shall be waived. If Purchaser
terminates this Agreement by written notice to Seller prior to the expiration
of the Inspection Period: (i) Purchaser shall promptly deliver to Seller copies
of all studies, reports and other investigations obtained by Purchaser in
connection with its due diligence during the Inspection Period; and (ii) the
Earnest Money deposited by Purchaser shall be immediately paid to Purchaser,
together with any interest earned thereon, and neither Purchaser nor Seller
shall have any right, obligation or liability under this Agreement, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in this Paragraph 7.1. Notwithstanding anything contained
herein to the contrary, Purchaser's obligation to indemnify Seller and restore
the Property, as more fully set forth in this Paragraph 7.1, shall survive the
Closing and the delivery of the Deed and termination of this Agreement.
7.2. Purchaser acknowledges and agrees that it will be purchasing the
Property and the Personal Property based solely upon its inspections and
investigations of the Property and the Personal Property, and that Purchaser
will be purchasing the Property and the Personal Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the Property and the Personal Property as
of the date of this Agreement, wear and tear and loss by fire or other casualty
or condemnation excepted. Without limiting the foregoing, Purchaser
acknowledges that, except as may otherwise be specifically set forth elsewhere
in this Agreement, neither Seller nor its consultants, brokers or agents have
made any representations or warranties of any kind upon which Purchaser is
relying as to any matters concerning the Property or the Personal Property,
including, but not limited to, the condition of the land or any improvements
comprising the Property, the existence or non-existence of "Hazardous
Materials" (as hereinafter defined), economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning or building laws, rules or regulations or "Environmental
Laws" (hereinafter defined) affecting the Property. Seller makes no
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Purchaser
hereby releases Seller and the Affiliates of Seller from any and all liability
in connection with any claims which Purchaser may have against Seller or the
Affiliates of Seller, and Purchaser hereby agrees not to assert any claims for
contribution, cost recovery or otherwise, against Seller or the Affiliates of
Seller, relating directly or indirectly to the existence of asbestos or
Hazardous Materials on, or environmental conditions of, the Property, whether
<PAGE>
known or unknown. As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means:
(1) "hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA; (4)
asbestos in any form or condition; (5) polychlorinated biphenyls; and (6) any
other material, substance or waste to which liability or standards of conduct
may be imposed under any Environmental Laws.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller and the Affiliates of Seller from
any liability with respect to such historical information.
7.4. Seller has provided to Purchaser the following existing report:
Report of Phase I Environmental Site Assessment and Limited Asbestos Survey
prepared by Law Engineering, dated December 10, 1992 ("Existing Report").
Seller makes no representation or warranty concerning the accuracy or
completeness of the Existing Report. Purchaser hereby releases Seller and the
Affiliates of Seller from any liability whatsoever with respect to the Existing
Report, or, including, without limitation, the matters set forth in the
Existing Report, and the accuracy and/or completeness of the Existing Report.
Furthermore, Purchaser acknowledges that it will be purchasing the Property
with all faults disclosed in the Existing Report.
<PAGE>
8. CLOSING. The closing of this transaction (the "Closing") shall be on
October 15, 1996 (the "Closing Date"), at the office of Title Insurer, Atlanta,
Georgia at which time Seller shall deliver possession of the Property to
Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in Georgia, or at the
option of either party, the Closing shall be a "New York style" closing at
which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. All closing and escrow fees shall be divided equally between
the parties hereto.
9. CLOSING DOCUMENTS.
9.1. On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3 and 9.2.4 and such other documents as may be
reasonably required by the Title Insurer in order to consummate the transaction
as set forth in this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
9.2.2. a quit claim bill of sale conveying the Personal Property (in
the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession;
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
9.2.8. possession of the Property to Purchaser;
9.2.9. evidence of the termination of the management agreement;
<PAGE>
9.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
and
9.2.11. an updated rent roll.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents except as set forth below, but
including prepaid rents); refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); water and
other utility charges; fuels; prepaid operating expenses; real and personal
property taxes prorated on a "net" basis (i.e. adjusted for all tenants'
liability, if any, for such items); operating expenses which are reimbursable
by the tenants for the period prior to the Closing Date less any amount
previously paid by the Tenants shall be credited to Seller; and other similar
items shall be adjusted ratably as of 11:59 p.m. on the Closing Date, and
credited to the balance of the cash due at Closing. Assessments payable in
installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. All prorations will be final except as to delinquent rent
referred to in Paragraph 12.2 below.
12.2. Seller shall receive a credit at Closing for an amount equal to 50%
of all Rents which are delinquent for not more than 30 days at Closing. All
other Rents which are delinquent as of the Closing Date shall not be prorated.
Instead, to the extent that the Purchaser is able to collect said
delinquencies, the Purchaser shall be entitled to receive such delinquent rent
free from any claim thereon by the Seller. Seller may use whatever lawful
means are available to Seller to collect any delinquencies up to and until the
day prior to the Closing Date, provided that Seller shall not agree to reduce
<PAGE>
rents for any period of time after Closing in order to induce any tenants to
pay delinquent rents. Seller shall not have the right subsequent to Closing to
seek (by legal action or otherwise) the collection of any rents delinquent for
any period prior to Closing unless the tenant has vacated the premises under
the pertinent Lease before the Closing Date and said Lease is not assigned to
the Purchaser. Furthermore, the Seller shall not have the right to retain any
portion of any security deposit held by Seller (if any) with respect to any
Lease which will remain effective subsequent to Closing, even though the tenant
is delinquent in paying rent as of the Closing Date. Paragraph 12.2 of this
Agreement shall survive the Closing and the delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this
transaction. Purchaser and Seller shall indemnify, defend and hold the other
party hereto harmless from any claim whatsoever (including without limitation,
reasonable attorney's fees, court costs and costs of appeal) from anyone
claiming by or through the indemnifying party any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated. The indemnifying party shall undertake its obligations set forth
in this Paragraph 15 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this
Paragraph 15 will survive the Closing and delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Phillip Schechter (the "Seller's Representative"), and any
representation or warranty of the Seller is based upon those matters of which
the Seller's Representative has actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or employees shall
not be imputed to Seller, the general partner or limited partners of Seller,
the subpartners of the general partner or limited partners of Seller or
Seller's Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property; (ii) the rent rolls which Seller has submitted to the Purchaser and
updated as of the Closing Date are accurate as of the date set forth thereon;
and (iii) except as set forth in the Existing Report, Seller has not received
any notice from any governmental authority having jurisdiction over the
<PAGE>
Property of any uncured violation of any Environmental Law with respect to the
Property.
16.3. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representation and warranty, which representation
and warranty is made to Seller's knowledge and which shall survive Closing:
Seller has the power to execute this Agreement and consummate the transactions
contemplated herein.
16.4. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute this Agreement and
consummate the transactions contemplated herein.
17. LIMITATION OF LIABILITY. Neither Seller, nor any of its respective
beneficiaries, shareholders, partners, officers, agents or employees, heirs,
successors or assigns shall have any personal liability of any kind or nature
for or by reason of any matter or thing whatsoever under, in connection with,
arising out of or in any way related to this Agreement and the transactions
contemplated herein, and Purchaser hereby waives for itself and anyone who may
claim by, through or under Purchaser any and all rights to sue or recover on
account of any such alleged personal liability.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James E. Merrelson
(708) 317-4360
(708) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
<PAGE>
TO PURCHASER: Storage Trust Properties, L.P.
2407 Rangeline Road
Suite 100
Columbia, Missouri 65202
Attention: Aaron A. Swerdin
(573) 499-4799
(573) 442-5554 (FAX)
and one copy to: Craig A. Van Matre, P.C.
1101 East Broadway
Suite 101, P.O. Box 1017
Columbia, Missouri 65205
Attention: Craig Van Matre, P.C.
(573) 874-7777
(573) 875-0017 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the Georgia, except that with respect to the retainage of the Earnest
Money as liquidated damages the laws of the State of Illinois shall govern.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
<PAGE>
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
25. LIMITATION OF LIABILITY OF TRUSTEES, SHAREHOLDERS AND OFFICERS OF
PARTNERSHIP. Any obligation or liability whatsoever of Purchaser which may
arise any time under this contract or any obligation or liability which may be
incurred by it pursuant to any other instrument, transaction or undertaking
contemplated hereby, shall be satisfied, if at all, out of Purchaser's assets
only. No such obligation or liability shall be personally binding upon, nor
shall resort for the enforcement thereof, be had to the property of any of its
partners, officers, employees, or agents or of the trustees, directors,
shareholders, officers, employees or agents of purchaser, regardless of whether
such obligation or liability is in the nature of contract, tort, or otherwise.
26. EXISTING CONDEMNATION PROCEEDINGS. Purchaser hereby acknowledges that a
portion of the Property is subject to Gwinnett County Project #7112, which
consists of the widening and relocation of Jones Mill Road. In the event that
Purchaser completes the transaction contemplated by this Agreement, Purchaser
agrees to take title to the Property subject to all current and future rights
of Gwinnett County in connection with such project.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
STORAGE TRUST PROPERTIES, L.P., a Delaware
limited partnership
By: Storage Trust Realty, a Maryland Real Estate
Investment Trust, sole general partner
By: /s/ Mike Burnam
--------------------------------------
Name: Mike Buram
--------------------------------------
Its: CEO
--------------------------------------
SELLER:
JONES MILL ROAD PARTNERS, an Illinois limited
partnership
By: Balcor Current Income Partners-85, an
Illinois general partnership, its general
partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/ James E. Mendelson
----------------------------------
Name: James E. Mendelson
----------------------------------
Its: Authorized Rep.
----------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
<PAGE>
AMENDMENT TO AGREEMENT OF SALE
This Amendment to Agreement of Sale (this "Amendment") is made and entered
into on this 9th day of October, 1996, by and between Storage Trust Properties,
L.P., a Delaware limited partnership ("Purchaser"), and Jones Mill Road
Partners, an Illinois limited partnership ("Seller"). This Amendment is made
in view of the following facts:
A. The Purchaser and the Seller previously entered into that certain
Agreement of Sale entered into as of the 26th day of September, 1996 (the
"Agreement").
B. The Purchaser and the Seller desire to amend the Agreement in order to
extend the Agreement and to alter certain dates contained within the Agreement.
NOW, THEREFORE, in consideration of the promises and conditions herein
contained, and in view of the foregoing recital of facts, the parties hereto
agree as follows:
1. Capitalized Terms: Unless otherwise defined herein, capitalized terms
shall have the same meanings ascribed to them within the Agreement.
2. Inspection and As-Is Condition: The first paragraph within Paragraph
7.1 of the Agreement is hereby deleted in its entirety and the following
provision is substituted in its place:
"7.1 During the period commencing on July 29, 1996, and ending at 5:00 p.m.
Chicago time on November 10, 1996 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, and unaudited year-end 1995 and year-to-date 1996
operating statements."
3. Closing: Paragraph 8 of the Agreement is hereby deleted in its
entirety and the following provision is substituted in its place:
"The closing of this transaction (the "Closing") shall be on November
15, 1996 (the "Closing Date"), at the office of Title Insurer, Atlanta,
Georgia, at which time Seller shall deliver possession of the Property to
Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in Georgia, or at the
option or either party, the Closing shall be a "New York style" closing at
which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
<PAGE>
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. All closing and escrow fees shall be divided equally between
the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
Storage Trust Properties, L.P.,
a Delaware limited partnership, ("Purchaser")
By: Storage Trust Realty,
a Maryland real estate investment trust,
its sole general partner
By: /s/ A. A. Swerdlin
--------------------------------------
Name: A. A. Swerdlin
--------------------------------------
Its: V. P. Acquisitions
--------------------------------------
Jones Mill Road Partners,
an Illinois limited partnership, ("Seller")
By: Balcor Current Income Partners-85,
an Illinois general partnership,
its general partner
By: The Balcor Company
a Delaware corporation, a partner
By: /s/ James E. Mendelson
----------------------------------
Name: James E. Mendelson
----------------------------------
Its: Authorized Representative
----------------------------------
<PAGE>
SECOND AMENDMENT
TO AGREEMENT OF SALE
This Second Amendment (the "Amendment") is entered into as of September
24, 1996 between ROBERT HEIDENBERG ("Purchaser") and AMERICAN WAY PARTNERS, an
Illinois limited partnership ("Seller").
RECITALS
Purchaser and Seller have entered into a certain Agreement of Sale dated
as of June 6, 1996 as amended pursuant to that certain First Amendment to
Agreement of Sale dated June 26, 1996 (the "Agreement") with respect to certain
property commonly known as American Way Mall located in Fairfield, New Jersey
(the "Property").
The Closing Date under the Agreement is presently scheduled for September
25, 1996 and Purchaser has requested that Seller extend the Closing Date to
January 25, 1997 in order to allow Purchaser additional time to negotiate the
possible purchase of a parcel of land adjacent to the Property (the "Adjacent
Parcel") and Seller is willing to so extend such Closing Date in accordance
with the terms of this Amendment.
NOW THEREFORE, in consideration of the above recitals and the covenants
contained herein, the parties hereby amend the Agreement, effective as of the
date hereof as follows:
1. Incorporation. The above recitals are incorporated into the
Agreement as though fully set forth herein.
2. Definitions. All capitalized terms not otherwise defined herein or
modified hereby shall have the same meanings as ascribed to them in the
Agreement.
3. Closing Date. Paragraph 9 of the Agreement is amended by
substituting "January 25, 1997" for "September 25, 1996" and all references to
as the Closing Date shall hereafter mean January 25, 1997.
4. Target Transfer. Paragraph 25 of the Agreement is amended by
substituting the date "February 25, 1997" in each place that "October 25, 1996"
appears.
5. Additional Consideration. In consideration of Seller extending the
Closing Date and executing the present Amendment, Purchaser further agrees with
Seller that:
(a) The Purchase Price for the Property is hereby increased as
follows; (i) if the closing occurs on or before November 1, 1996 the Purchase
Price shall be Five Million Three Hundred Thousand and no/100 Dollars
($5,300,000.00), (ii) if the closing occurs after November 1, 1996 but on or
before December 15, 1996 the Purchase Price shall be Five Million Four Hundred
Thousand and no/100 Dollars ($5,400,000.00), and (iii) if the closing occurs
after December 15, 1996 the Purchase Price shall be Five Million Five Hundred
<PAGE>
Thousand and no\100 Dollars ($5,500,000.00). Contemporaneously with the
execution of this Amendment Purchaser shall pay and deliver to Seller by wire
transfer as additional Earnest Money the sum of Fifty Thousand and No/100
Dollars ($50,000.00). Said additional Earnest Money shall also be retained by
Seller following a default by Purchaser as provided under Paragraph 11 of the
Agreement and Seller acknowledges that the retention of the additional Earnest
Money and the Earnest Money and interest to be delivered to Seller pursuant to
Paragraph 5 of this Amendment constitutes Seller's sole remedy as to damages or
any other remedy as set forth in said Paragraph 11.
(b) Purchaser shall not be entitled to any credit to be deducted
from the Purchase Price as a result of the prepayment of rent by Steak & Ale of
New Jersey, Inc. as set forth at paragraph 3(a) of the Lease executed by Steak
& Ale of New Jersey, Inc. dated February 15, 1984.
(c) Seller shall not be required to obtain the consent of the New
Jersey Department of Transportation to the assignment of the Lease between
Seller and said party as Lessor, a copy of which has been attached to the
Agreement and Purchaser agrees to accept said Assignment without said consent
and in connection with the assignment of the Lease between Seller and VSH
Realty, a copy of which has been attached to the Agreement, Seller's only
obligation shall be to request the consent of VSH to said Assignment and in the
event said consent is not obtained, Purchaser shall accept the Assignment of
said Lease without said consent of VSH Realty.
(d) Purchaser acknowledges that it has received a survey dated June
21, 1996 of the Property and that it has accepted and approved all matters as
shown therein.
(e) Purchaser acknowledges that it has received First American Title
Insurance Commitment No. 101-ATA-5326 dated May 30, 1996 and that the title to
the Property shall be conveyed to Purchaser subject to Schedule B, Section II,
Exceptions 10 through 20 as described therein as Permitted Exceptions provided
that in connection with exception 20 same shall only apply to tenants under
existing leases or under New Leases as defined in the Agreement. Seller agrees
that it will also request the Title Insurer to also insure, at the expense of
Purchaser, the easement recorded in Book 5069 page 936 for the benefit of
Purchaser. If the Title Insurer is unable to insure said easement, Purchaser
acknowledges and agrees that said inability will not be a ground for delaying
or changing the Closing Date and Purchaser will complete the sale and transfer
of the Property without the benefit of said title insurance. Any additional
title exceptions raised by the Title Insurer in connection with insuring said
easement shall be considered Permitted Exceptions.
(f) Purchaser acknowledges that the conditions concerning a
contiguity endorsement and 3.1 zoning endorsement set forth in paragraph 33 of
the Agreement have been waived by Purchaser.
(g) Nothing contained in this Amendment shall be construed as
allowing Purchaser to any further extension of the Closing Date including but
not limited to Purchaser's inability to consummate the acquisition of the
Adjacent Parcel on or before the Closing Date as set forth herein.
<PAGE>
5. Escrow Agreement. In addition, Purchaser and Seller agree that by
their execution of the present Amendment, a copy of which shall be delivered by
Seller after its execution to the Escrow Agent, that the Escrow Agent is hereby
empowered and directed to deliver to Seller immediately all Earnest Money,
together with interest accrued thereon being held by Escrow Agent under the
Escrow Agreement to be applied against the Purchase Price at closing or
retained by Seller pursuant to Paragraph 11 of the Agreement.
6. Continuation. Except as expressly set forth herein, the Agreement
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
Executed by Purchaser on PURCHASER:
, 1996
- ------------------
/s/ Robert Heidenberg
------------------------------------
Robert Heidenberg
Executed by Seller on SELLER:
9/26 , 1996
- ------------------ AMERICAN WAY PARTNERS, an Illinois
limited partnership
By: BALCOR CURRENT INCOME PARTNERS-85,
an Illinois general partnership
By: THE BALCOR COMPANY, a Delaware
corporation, Its General Partner
By: /s/ James E. Mendelson
--------------------------------------
James E. Mendelson
Authorized Representative
<PAGE>
