SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) June 7, 1996
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 2-95910
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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
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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a) El Dorado Hills Apartments
In 1985, the Partnership acquired the El Dorado Apartments, San Diego,
California, utilizing approximately $3,514,620 in offering proceeds. The
property was acquired subject to first mortgage financing of approximately
$17,659,805. In 1995, the mortgage loan was refinanced with a new mortgage
loan in the amount of $16,900,000. The Partnership received excess proceeds of
approximately $257,000.
On June 12, 1996, the Partnership contracted to sell the property for a sale
price of $29,600,000 to an unaffiliated party, Security Capital Pacific Trust,
a Maryland real estate investment trust. The purchaser has deposited $300,000
into an escrow account as earnest money. The purchaser is expected to take
title to the property subject to the existing first mortgage loan which is
expected to have an outstanding loan balance of $16,784,938 at closing. The
remaining portion of the sale price will be payable in cash at closing, which
is scheduled for July 9, 1996. If the purchaser is unable to obtain the consent
of the holder of the loan to the assumption on or before July 2, 1996, the
closing may be extended to a date no later than August 8, 1996. From the
proceeds of the sale, the Partnership will pay $370,000 to an unaffiliated
party as a brokerage commission. An affiliate of the third party providing
property management services for the property will receive a fee of $222,000
for services in connection with the sale. 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 lender's consent. There can be no assurance that all of the
terms and conditions will be complied with and, therefore, it is possible the
sale of the property may not occur.
b) American Way Mall
In 1986, the Partnership acquired the American Way Mall, Fairfield, New Jersey,
utilizing approximately $17,444,000 in offering proceeds. The property has no
underlying debt.
On June 7, 1996, the Partnership contracted to sell the property for a sale
price of $5,200,000 to an unaffiliated person, Robert Heidenberg. The
purchaser has deposited $100,000 into an escrow account as earnest money and
will pay the remaining $5,100,000 at closing, scheduled for July 22, 1996.
From the proceeds of the sale, the Partnership will pay closing costs and
$156,000 to an unaffiliated party as a brokerage commission. Neither the
General Partner nor any affiliate will receive a brokerage commission in
connection with the sale of the property. The General Partner will be
reimbursed by the Partnership for its actual expenses incurred in connection
with the sale.
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In the event that, prior to August 22, 1996 the purchaser or any affiliate
thereof transfers any portion of the property to a third party specified in the
agreement of sale, the Partnership will be entitled to 25% of the net sale
proceeds in excess of $5,200,000 in connection with such sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, its possible the sale of the property may not occur.
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 El Dorado Hills, San Diego, California.
(b) Agreement of Sale and attachment thereto relating to the
sale of American Way Mall, Fairfield, New Jersey.
No information is required under Items 1, 3, 4, 5, 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: June 18, 1996
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 12th
day of June, 1996, by and between SECURITY CAPITAL PACIFIC TRUST, a Maryland
real estate investment trust ("Purchaser"), and ELDORITO 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-Nine Million Six Hundred Thousand And No/100 Dollars
($29,600,000.00) (the "Purchase Price"), that certain property commonly known
as El Dorado Hills, San Diego, California, a 448 unit apartment complex legally
described on Exhibit A attached hereto, together with all improvements thereon
and appurtenances thereto belonging (the "Property"). Included in the Purchase
Price is all of the personal property set forth on Exhibit B attached hereto
(the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Within three (3) business days following the execution of this
Agreement, the sum of Three Hundred Thousand and No/100 Dollars ($300,000.00)
(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;
2.2. A portion of the Purchase Price shall be satisfied through the
assumption by Purchaser of all of Seller's obligations under the Existing Loan
Documents (as hereinafter defined); and
2.3. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price (i.e., $29,600,000.00 less (a) the then outstanding principal
balance of the "Loan" (hereinafter defined) and (b) the amount of the Earnest
Money), adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Chicago Title Insurance
Company (hereinafter referred to as "Title Insurer") dated May 15, 1996 for the
Property (the "Title Commitment"). In addition, Purchaser has received a
survey of the Property prepared by Leppert Engineering Corporation dated August
31, 1995 (the "Existing Survey"). Seller shall obtain an updated survey for
the Property (the "Updated Survey") and shall deliver the same to Purchaser
within fifteen (15) days after the date hereof. Purchaser and Seller shall
equally share the costs of updating the Existing Survey. For purposes of this
Agreement, "Permitted Exceptions" shall mean: (a) general real estate taxes and
assessments, association assessments, special district taxes and assessments
and related charges not yet due and payable; (b) matters caused by or through
the actions of Purchaser or its agents, contractors or representatives; (c)
those title exceptions deemed Permitted Exceptions pursuant to Paragraph 3.2
below; and (d) matters relating to the liens and security interests granted to
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secure the indebtedness evidenced by the "Note" (hereinafter defined). All
other exceptions to title shall be referred to as "Unpermitted Exceptions."
3.2. If the Title Commitment or the Updated Survey discloses any
exceptions to title other than the Permitted Exceptions, Purchaser may give
written notice to Seller (the "Title Notice") of Purchaser's disapproval of any
such exceptions (a "Disapproved Title Exception") on or before the date five
(5) business days after the date Purchaser's counsel receives the Updated
Survey. Any title exceptions which are set forth in the Title Commitment or on
the Updated Survey to which Purchaser does not object in accordance with the
immediately preceding sentence shall be deemed additional Permitted Exceptions.
With regard to a Disapproved Title Exception for which Purchaser gives Seller a
Title Notice, Seller may but shall not have the obligation to notify Purchaser
(the "Response Notice") within three (3) business days of receipt of the Title
Notice whether Seller shall bond over, cure or cause the Title Insurer to
remove such Disapproved Title Exception from the Title Commitment. Any such
Disapproved Title Exception which Seller elects to bond over, cure or cause the
Title Insurer to remove shall be additional Permitted Exceptions. If Seller
does not so notify Purchaser, with respect to any Disapproved Title Exception,
Purchaser may either waive its objection and proceed towards closing or
terminate this Agreement by giving written notice to Seller of its election
within three (3) additional business days of the earlier to occur of (a)
receipt by Purchaser of the Response Notice and (b) expiration of the three (3)
business day period in which Seller may deliver the Response Notice. If
Purchaser does not give such written notice within such three (3) additional
business days, (i) Purchaser shall have waived its right to terminate this
Agreement pursuant to this Paragraph 3.2; (ii) such Disapproved Title Exception
shall be deemed an additional Permitted Exception; and (iii) the parties shall
proceed to Closing. If Purchaser terminates this Agreement by written notice
to Seller within such three (3) additional business days: (i) Purchaser shall
promptly deliver to Seller copies of all studies, reports and other
investigations obtained by Purchaser in connection with its due diligence of
the Property, (ii) the Earnest Money deposited by Purchaser shall be
immediately paid to Purchaser, together with any interest earned thereon and
(iii) neither Purchaser nor Seller shall have any right, obligation or
liability under this Agreement, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in Paragraph 7.
3.3. The Title Commitment and the Updated Survey shall be conclusive
evidence of good title as therein shown as to all matters to be insured by the
title policy, subject only to the exceptions therein stated. On the Closing
Date, Title Insurer shall deliver to Purchaser a ALTA 1992 Form Title Policy in
conformance with the previously delivered Title Commitment, subject to only the
Permitted Exceptions, Disapproved Title Exceptions waived by Purchaser and
Unpermitted Exceptions waived by Purchaser (the "Title Policy"). Seller and
Purchaser shall equally share the costs of the Title Commitment and Title
Policy. Purchaser shall pay the cost of any endorsements to, and the extended
coverage on, the Title Policy.
3.4. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.3 shall survive the termination of this Agreement.
<PAGE>
4. PAYMENT OF CLOSING COSTS. In addition to the costs set forth in
Paragraphs 3.1 and 3.3, Seller and Purchaser shall equally share the costs of
the transfer taxes, if any, to be paid with reference to the recording of the
"Deed" (hereinafter defined), together with the costs of all other stamps,
intangible, transfer, documentary, recording, sales tax and surtax imposed by
law with reference to any other sale documents delivered in connection with the
sale of the Property to Purchaser. Each party shall pay for its respective
attorney's fees.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment discloses any new Unpermitted Exception, Seller shall have
thirty (30) days from the date of the date-down to the Title Commitment or the
Updated Survey, as applicable, at Seller's expense, to (i) bond over, cure
and/or have any Unpermitted Exceptions which, in the aggregate, do not exceed
$25,000.00, removed from the Title Commitment or to have the Title Insurer
commit to insure against loss or damage that may be occasioned by such
Unpermitted Exceptions, or (ii) have the right, but not the obligation, to bond
over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
equal or exceed $25,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions. In such event, the time of Closing shall be
delayed, if necessary, to give effect to said aforementioned time periods. If
Seller fails to cure or have said Unpermitted Exception removed or have the
Title Insurer commit to insure as specified above within said thirty (30) day
period or if Seller elects not to exercise its rights under (ii) in the first
sentence of this Paragraph 5.1, Purchaser may terminate this Agreement upon
notice to Seller within five (5) days after the expiration of said thirty (30)
day period. Absent notice from Purchaser to Seller in accordance with the
preceding sentence, Purchaser shall be deemed to have elected to take title
subject to said Unpermitted Exception. If Purchaser terminates this Agreement
in accordance with the terms of this Paragraph 5.1, this Agreement shall become
null and void without further action of the parties and all Earnest Money
theretofore deposited into the escrow by Purchaser together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for Purchaser's obligation to
indemnify Seller and restore the Property, as more fully set forth in Paragraph
7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by grant deed (the "Deed") in recordable form subject only to the
Permitted Exceptions, Disapproved Title Exceptions waived by Purchaser and
Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith), Purchaser shall not have the right to terminate its obligations under
<PAGE>
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty together with a credit for any deductible applicable to the claim
relating to such insurance proceeds. Seller shall promptly notify Purchaser in
writing of any such fire or other casualty and Seller's determination of the
cost to repair the damage caused thereby. In the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost in excess of $100,000.00 (as determined by both Seller and Purchaser
in good faith), then this Agreement may be terminated at the option of
Purchaser, which option shall be exercised, if at all, by Purchaser's written
notice thereof to Seller within five (5) business days after Purchaser receives
written notice of such fire or other casualty and Seller's determination of the
amount of such damages, and upon the exercise of such option by Purchaser this
Agreement shall become null and void, the Earnest Money deposited by Purchaser
shall be returned to Purchaser together with interest thereon, and neither
party shall have any further liability or obligations hereunder, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7. In the event that Purchaser does not exercise
the option set forth in the preceding sentence, the Closing shall take place on
the Closing Date, and Seller shall assign and transfer to Purchaser on the
Closing Date all of Seller's right, title and interest in and to all insurance
proceeds paid or payable to Seller on account of the fire or casualty together
with a credit for any deductible applicable to the claim relating to such
insurance proceeds.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated or threatened in
writing which might result in the taking of any part of the Property or the
taking or closing of any right of access to the Property, Seller shall
immediately notify Purchaser of such occurrence. In the event that the taking
of any part of the Property shall: (i) materially impair access to the
Property; (ii) cause any material non-compliance with any applicable law,
ordinance, rule or regulation of any federal, state or local authority or
governmental agencies having jurisdiction over the Property or any portion
thereof; or (iii) materially and adversely impair the use of the Property as it
is currently being operated (hereinafter collectively referred to as a
"Material Event"), Purchaser may:
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
<PAGE>
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 May 13, 1996 and ending at 5:00 p.m.
Chicago time on June 24, 1996 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of 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, unaudited year end 1995 and year-to-date 1996
operating statements, and copies of the Existing Loan Documents in Seller's
possession. Seller agrees to make all existing leases for the Property or any
portion thereof available for review by the Purchaser at the Property. The
foregoing due diligence documents are hereinafter collectively referred to as
the "Property Documents".
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any affiliate
or parent of Seller, and all shareholders, employees, officers and directors of
Seller or Seller's affiliate or parent (hereinafter collectively referred to as
"Affiliate of Seller") harmless from any and all liability, 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 Purchaser,
subject to Seller's reasonable approval.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser, in Purchaser's sole discretion, is dissatisfied with their
review of the Property, any of the Existing Loan Documents, or any of the
Property Documents in any way, Purchaser shall have the right to terminate this
Agreement by giving written notice of such termination to Seller at any time
<PAGE>
prior to the expiration of the Inspection Period. If written notice is not
given by Purchaser pursuant to this Paragraph 7.1 prior to the expiration of
the Inspection Period, then the right of Purchaser to terminate this Agreement
pursuant to this Paragraph 7.1 shall be waived. If Purchaser terminates this
Agreement by written notice to Seller prior to the expiration of the Inspection
Period: (i) Purchaser shall promptly deliver to Seller copies of all studies,
reports and other investigations obtained by Purchaser in connection with its
due diligence during the Inspection Period; and (ii) the Earnest Money
deposited by Purchaser shall be immediately paid to Purchaser, together with
any interest earned thereon, and neither Purchaser nor Seller shall have any
right, obligation or liability under this Agreement, except for Purchaser's
obligation to indemnify Seller and restore the Property, as more fully set
forth in this Paragraph 7.1. Notwithstanding anything contained herein to the
contrary, Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in this Paragraph 7.1, shall survive the Closing and
the delivery of the Deed and termination of this Agreement.
7.2. Seller makes no representations or warranties relating to the
condition of the Property or the Personal Property, except as specifically set
forth herein. Purchaser acknowledges and agrees that it will be purchasing the
Property and the Personal Property based solely upon its inspections and
investigations of the Property and the Personal Property, and that Purchaser
will be purchasing the Property and the Personal Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the Property and the Personal Property as
of the date of this Agreement, wear and tear and loss by fire or other casualty
or condemnation excepted. Without limiting the foregoing, Purchaser
acknowledges that, except as may otherwise be specifically set forth elsewhere
in this Agreement, neither Seller nor its consultants, brokers or agents have
made any representations or warranties of any kind upon which Purchaser is
relying as to any matters concerning the Property or the Personal Property,
including, but not limited to, the condition of the land or any improvements
comprising the Property, the existence or non-existence of "Hazardous
Materials" (as hereinafter defined), economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning or building laws, rules or regulations or "Environmental
Laws" (hereinafter defined) affecting the Property. Seller makes no
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Purchaser
hereby releases Seller and the Affiliates of Seller from any and all liability
in connection with any claims which Purchaser may have against Seller or the
Affiliates of Seller, and Purchaser hereby agrees not to assert any claims for
contribution, cost recovery or otherwise, against Seller or the Affiliates of
Seller, relating directly or indirectly to the existence of asbestos or
Hazardous Materials on, or environmental conditions of, the Property, whether
known or unknown. The provisions of this Paragraph 7.2 shall in no event be
construed as providing Seller with any rights to indemnification from Purchaser
in connection with the existence of asbestos or Hazardous Materials on, or
environmental condition of, the Property, whether known or unknown. As used
herein, "Environmental Laws" means all federal, state and local statutes,
codes, regulations, rules, ordinances, orders, standards, permits, licenses,
policies and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation or
<PAGE>
conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C.Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et
seq., the Emergency Planning and Community Right-to-Know Act ("Right-to-Know
Act"), 42 U.S.C. Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq., the Federal Water Pollution Control Act ("Clean Water
Act"), 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act
("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq., the Atomic
Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means: (1)
"hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA;
(4) asbestos in any form or condition; (5) polychlorinated biphenyls; and
(6) any other material, substance or waste to which liability or standards of
conduct may be imposed under any Environmental Laws. Notwithstanding
anything contained herein to the contrary, Purchaser's obligations, as more
fully set forth in this Paragraph 7.2. shall survive the Closing and the
delivery of the Deed and termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller and the Affiliates of Seller from
any liability with respect to such historical information. Notwithstanding
anything contained herein to the contrary, Purchaser's obligations, as more
fully set forth in this Paragraph 7.3. shall survive the Closing and the
delivery of the Deed and termination of this Agreement.
7.4. Seller has provided to Purchaser the following existing report:
Preliminary Environmental Site Assessment prepared by Environmental Risk
Consultants, Inc. dated December 7, 1992 (the "Existing Report"); and Limited
Phase I Environmental Site Assessment prepared by ASTEX for Berkshire Mortgage
Finance Company dated July 24, 1995. 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.
8.1. The closing of this transaction (the "Closing") shall be on July 9,
1996 (the "Closing Date"), at the office of Title Insurer, San Diego,
California, 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 California, provided,
however, that in any instance, the sale proceeds shall not be disbursed from
such escrow unless and until the Title Insurer shall be unconditionally
committed to issuing the Title Policy. All closing and escrow fees shall be
divided equally between the parties hereto.
8.2. On the Closing Date, provided all conditions precedent to Purchaser's
obligations hereunder have been satisfied, the Purchaser shall assume all of
Seller's obligations under the Existing Loan Documents, including, without
limitation, that Note (hereinafter defined), which Note has an outstanding
principal balance of approximately $16,800,000.00.
8.3. In addition to all other conditions set forth herein, the obligation
of Seller, on the one hand, and Purchaser, on the other hand, to consummate the
transaction contemplated hereunder shall be contingent upon the following:
8.3.1. The other party's representations and warranties contained
herein shall be true and correct as of the date of this Agreement and the
Closing Date, and each party shall have the right to update their respective
representations and warranties prior to Closing; and
8.3.2. As of the Closing Date, the other party shall have
performed its obligations and covenants hereunder and all deliveries to be made
at Closing have been tendered.
9. CLOSING DOCUMENTS.
9.1. Not less than three (3) business days prior to the Closing Date,
Seller shall prepare, subject to Purchaser's reasonable approval, a joint
closing statement which shall be executed and delivered by both Seller and
Purchaser to one another. In addition, on the Closing Date, and provided that
all conditions precedent to Purchaser's obligations to acquire the Property
have been fully satisfied, Purchaser shall deliver to Seller the balance of the
Purchase Price, an assumption of the documents set forth in Paragraph 9.2.3,
9.2.4 and 9.2.12 and such other documents as may be reasonably required by the
Title Insurer in order to consummate the transaction as set forth in this
Agreement.
9.2. On or before the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a special warranty bill of sale conveying the Personal
Property (in the form of Exhibit F attached hereto);
<PAGE>
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H and Seller's interest, if any, in the name
"El Dorado Hills";
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession, to be delivered at the Property;
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
9.2.8. possession of the Property to Purchaser;
9.2.9. evidence of the termination of the management agreement as of
the Closing Date;
9.2.10. notice to the tenants of the Property (in the form of
Exhibit K) of the transfer of title and assumption by Purchaser of the
landlord's obligation under the leases and the obligation to refund the
security deposits for which Purchaser receives a credit at closing;
9.2.11. an updated rent roll; and
9.2.12. an assignment and assumption of Existing Loan Documents (in
the form of Exhibit L) [to be inserted after execution].
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER ITS ACTUAL, DOCUMENTED
THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE DILIGENCE HEREUNDER
AND IN THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED $50,000 IN THE
AGGREGATE. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
<PAGE>
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits as shown on the updated
rent roll (which will be assigned to and assumed by Purchaser and credited to
Purchaser at Closing); interest under the Loan; water and other utility
charges; fuels; prepaid operating expenses; management fees if and to the
extent payable to the existing property manager for rent received and prorated
for the month of Closing; real and personal property taxes; and other similar
items shall be adjusted ratably as of 12:01 a.m. on the Closing Date, and
credited to the balance of the cash due at Closing. To the extent any escrows,
reserves or holdbacks established in connection with the Loan or the Existing
Loan Documents are not refunded to Seller at Closing, the Seller's interest in
the proceeds of said escrows shall be assigned to Purchaser and the amounts
thereof shall be a credit to Seller at Closing. Assessments payable in
installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. All prorations will be final except as to delinquent rent
referred to in Paragraph 12.2 below.
12.2. All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date after the payment to Purchaser of all current
basic rent shall be deemed a "Post-Closing Receipt" until such time as all such
indebtedness is paid in full. Within ten (10) days following each receipt by
Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-Closing
Receipt to Seller. Purchaser shall use its best efforts to collect all amounts
which, upon collection, would constitute Post-Closing Receipts hereunder.
Within 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 in an amount greater than
$5,000.00, Purchaser shall pay to Seller said additional Post-Closing Receipts
and the cost of performing Seller's audit. Paragraph 12.2 of this Agreement
shall survive the Closing and the delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest
and which assumes in writing the obligations of Purchaser hereunder. If any
<PAGE>
such assignment occurs, Purchaser shall nonetheless remain liable for all
obligations of Purchaser hereunder
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to CB Commercial Real Estate Group, Inc. ("CB"), to be paid by
Seller in accordance with Seller's listing agreement with CB. Seller's
commission to CB shall only be payable out of the proceeds of the sale of the
Property in the event the transaction set forth herein closes. Purchaser and
Seller shall indemnify, defend and hold the other party hereto harmless from
any claim whatsoever (including without limitation, reasonable attorney's fees,
court costs and costs of appeal) from anyone claiming by or through the
indemnifying party any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated other than to CB.
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 Mark Saturno or Reid Reynolds (together referred to as the
"Seller's Representative"), and any representation or warranty of the Seller is
based upon those matters of which the Seller's Representative has actual
knowledge. Seller's Representative shall deliver a copy of the representations
contained in Paragraph 16.2 below to the existing property manager for its
review and request the property manager to inform Seller's Representative of
any inaccuracies contained in such representations. Except as set forth in the
previous two sentences, any knowledge or notice given, had or received by any
of Seller's agents, servants or employees shall not be imputed to Seller, the
general partner or limited partners of Seller, the subpartners of the general
partner or limited partners of Seller or Seller's Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall,
subject to Paragraph 16.4, survive Closing: (i) Seller has no knowledge of any
pending or threatened litigation, claim, cause of action or administrative
proceeding concerning the Property; (ii) the rent rolls attached hereto as
Exhibit M which Seller has submitted to the Purchaser and updated as of the
Closing Date are accurate as of the dates set forth thereon; (iii) Seller has
no knowledge of any additional environmental reports of the Property
commissioned by Seller since May 1, 1994 other than the Existing Reports; (iv)
Seller has no knowledge of any due and unpaid leasing commission; (v) Seller
has no knowledge of a material default by Seller under any lease for the
Property; and (vi) the list of Service Contracts attached hereto as Exhibit H
is complete and Seller has no knowledge of any material default by Seller under
the terms of any said Service Contracts. Seller hereby represents and warrants
to Purchaser the following: (i) Seller has the power to execute this Agreement
and consummate the transactions contemplated herein; and (ii) Seller has not
entered into any agreement concerning the sale of the Property which conflicts
with the terms of this Agreement.
<PAGE>
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute this Agreement and
consummate the transactions contemplated herein.
16.4. The parties agree that the representations contained herein
shall survive Closing for a period of ninety (90) days (i.e., the claiming
party shall have no right to make any claims against the other party for a
breach of a representation or warranty after the expiration of ninety (90) days
immediately following Closing).
16.5. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained and operated the Property during the
period of Seller's ownership, subject to reasonable wear and tear and casualty.
17. LIMITATION OF LIABILITY.
17.1. None of Seller's beneficiaries, shareholders, partners,
officers, agents or employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
17.2. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum aggregate liability of Seller, in
connection with, arising out of or in any way related to a breach by Seller
under this Agreement after the Closing shall be $200,000. Purchaser hereby
waives for itself and anyone who may claim by, through or under Purchaser any
and all rights to sue or recover from Seller any amount greater than said
limit.
18. CONDITIONS PRECEDENT.
18.1. Berkshire Mortgage Finance Limited Partnership, a Massachusetts
limited partnership (the "Lender"), made a loan to Seller on September 15, 1995
in the original principal amount of $16,900,000.00 (the "Loan"), evidenced by
that certain Multifamily Note made by Seller in favor of Lender dated September
15, 1995 (the "Note"). The Loan is secured by, among other things, that
certain Multifamily Deed of Trust, Assignment of Rents and Security Agreement
made by Seller in favor of Lender, dated September 15, 1995 (the "Deed of
Trust") which encumbers the Property (the Note, the Deed of Trust and all other
documents evidencing and/or securing the Loan, are hereinafter collectively
referred to as the "Existing Loan Documents").
18.2. Purchaser and Seller agree that the performance of their
respective obligations under this Agreement shall each be subject to the
satisfaction of the following, on or before the Closing Date the following:
18.2.1. Seller and Purchaser obtaining, on terms reasonably
acceptable to Seller and Purchaser, the written consent of Lender and any
other applicable party to (a) the assignment to and assumption by
Purchaser of the Loan and the Existing Loan Documents (on terms acceptable
<PAGE>
to Purchaser in its reasonable discretion, Purchaser acknowledging that
for purposes of this Agreement such terms shall be reasonable so long as
they (i) do not expand in any material respect the existing obligations
under the Existing Loan Documents, and (ii) do not require Purchaser to
pay to Lender (A) an assumption fee in excess of one percent (1%) of the
outstanding principal balance of the Note, (B) an application fee in
excess of $3000.00, and (C) more than all reasonable costs and expenses of
Lender in connection with the assumption) and (b) the sale of the Property
to Purchaser;
18.2.2. Purchaser and Seller satisfying all other conditions to the
transfer of the Loan arising under of the Existing Loan Documents upon
terms reasonably acceptable to Purchaser and Seller; and
18.2.3. Seller obtaining, on terms acceptable to Seller in Seller's
sole and absolute discretion, the written acknowledgment of Lender to the
release of Seller and Seller's affiliated entities from any and all
liabilities and obligations arising out of the Loan and Existing Loan
Documents following the Closing.
The foregoing conditions 18.2.1, 18.2.2 and 18.2.3 shall hereinafter be
referred to as the "Conditions Precedent". Both Seller and Purchaser shall
fully cooperate with each other and use good faith efforts to satisfy the
Conditions Precedent, including, but not limited to, Purchaser submitting to
Lender all reasonably requested financial and other information.
18.3. In the event any of the Conditions Precedent are not satisfied
on or before July 2, 1996, then this Agreement shall be terminated, and the
Earnest Money shall be immediately paid to Purchaser, together with any
interest earned thereon, and neither Seller nor Purchaser shall have any right,
obligation or liability under this Agreement, except for the indemnities set
forth in Paragraphs 7 and 15 of this Agreement.
19. INFORMATION AND AUDIT COOPERATION. At Purchaser's request, at any time
before or after the Closing, Seller shall provide to Purchaser's designated
independent auditor access to all of the books and records of the Property, and
all related information regarding the period for which Purchaser is required to
have the Property audited under the regulations of the Securities and Exchange
Commission. The Purchaser agrees to indemnify and hold harmless the Seller
from any claim, damage, loss, or liability to which Seller is at any time
subjected by any person who is not a party to this Agreement as a result of
Seller's compliance with this paragraph.
20. TIME OF ESSENCE. Time is of the essence of this Agreement.
21. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by messenger (hand
delivery), by overnight courier such as Federal Express, by facsimile
transmission or made by United States registered or certified mail addressed as
follows:
<PAGE>
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: Alan Lieberman
(847) 317-4360
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: Security Capital Group
125 Lincoln Avenue
3rd Floor
Sante Fe, New Mexico
Attention: Mr. Tony Arnest
(505) 820-8258
(505) 820-0643 (FAX)
with copies to: Security Capital Pacific Trust
25B Technology Drive
Suite 210
Irvine, California 92718
Attention: Mr. Larry Levitt
(714) 789-1589
(714) 453-9294 (FAX)
and to: Mayer Brown & Platt
350 South Grand
25th Floor
Los Angeles, California 90071
Attention: L. Bruce Fisher, Esq.
(213) 229-5125
(213) 625-0248 (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,
<PAGE>
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
22. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution. Purchaser shall forward the Earnest
Money payable to the Escrow Agent as set forth in the Escrow Agreement and this
Agreement. Seller will forward one (1) copy of the executed Agreement to
Purchaser and will forward the following to the Escrow Agent:
(A) One (1) fully executed copy of this Agreement; and
(B) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
23. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the California, except that with respect to the retainage of the
Earnest Money as liquidated damages, the laws of the State of Illinois shall
govern.
24. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
25. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
26. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
27. CONFIDENTIALITY. Neither Seller nor Purchaser shall make any public
announcement or disclosure of any information related to this Agreement to
outside brokers or third parties, before or after the Closing, without the
prior written specific consent of the other party; provided, however, that
Purchaser or Seller may make disclosure of this Agreement to (a) its lenders,
creditors, investors, beneficiaries, officers, employees and agents as
necessary to perform its obligations hereunder and to be in compliance with
applicable Securities and Exchange Commission filing requirements, and (b)
third parties to the extent the content of the information being disclosed is
already public knowledge.
28. LIMITATION OF PURCHASER'S LIABILITY. Seller shall look to the assets of
Purchaser for the enforcement of any claim against Purchaser, as none of the
trustees, officers, employees and shareholders of Purchaser assume any personal
liability for obligations entered into by or on behalf of Purchaser.
<PAGE>
29. SERVICE CONTRACTS. Attached hereto as Exhibit H is a list of service
contracts affecting the Property. Seller shall assign the service contracts to
Purchaser at Closing, and Purchaser shall assume responsibility and obligations
under the service contracts. Seller agrees not to enter into any other service
contracts affecting the Property, except for service contracts which are
terminable on not more than thirty (30) days notice. Seller agrees to
terminate any and all management agreements affecting the Property as of the
Closing Date.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
SECURITY CAPITAL PACIFIC TRUST, a Maryland real
estate investment trust
By: /s/Anthony R. Arnest
---------------------------------
Name: Anthony R. Arnest
---------------------------------
Its: Vice President
---------------------------------
SELLER:
ELDORITO LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Balcor Current Income Partners-85, Inc.,
an Illinois corporation, its general partner
By: /s/Al Lieberman
----------------------------
Name: Al Lieberman
----------------------------
Its: Senior Vice President
----------------------------
<PAGE>
___________________ of CB Commercial Real Estate Group, Inc. ("Seller's
Broker") executed this Agreement in its capacity as a real estate broker and
acknowledges that the fee or commission due it from Seller as a result of the
transaction described in this Agreement is as set forth in that certain Listing
Agreement, dated as of ______________, between Seller and Seller's Broker (the
"Listing Agreement"). Seller's Broker also acknowledges that payment of the
aforesaid fee or commission is conditioned upon the Closing and the receipt of
the Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt
to the Seller at the Closing for the fee or commission due Seller's Broker and
a release stating that no other fees or commissions are due to it from Seller
or Purchaser.
By: CB COMMERCIAL REAL ESTATE
GROUP, INC.
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Special Warranty Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Assignment and Assumption of Existing Loan Documents
M - Rent Roll
<PAGE>
ELDORITO LIMITED PARTNERSHIP
June 12, 1996
Security Capital Pacific Trust
330 - 112th Avenue, N.E.
Bellevue, Washington 98004
Attention: Larry Levitt
Re: El Dorado Hills, San Diego, California
Dear Mr. Levitt:
Reference is hereby made to that certain Agreement of Sale (the
"Agreement") dated June 12, 1996 by and between Eldorito Limited Partnership,
an Illinois limited partnership ("Seller") and Security Capital Pacific Trust,
a Maryland real estate investment trust ("Purchaser"). All capitalized terms
which are used herein but which are not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
Paragraph 18 of the Agreement provides that the performance of Purchaser's and
Seller's obligations under the Agreement shall be subject to the parties having
satisfied the Conditions Precedent on or before the Closing Date. If any
Conditions Precedent has not been satisfied in accordance with the terms of
Paragraph 18.2, then Seller or Purchaser may deliver notice ("Extension
Notice") to the other party on or before July 2, 1996 extending the date for
the satisfaction of the Conditions Precedent until August 1, 1996, in which
event the Closing of this transaction shall be extended to the date which is
five (5) business days after either party receives notice from the other party
of the satisfaction of the Conditions Precedent, but in no event later than
August 8, 1996. The receiving party shall acknowledge the Extension Notice and
forward a copy of the acknowledged Extension Notice to the Title Company as
evidence of the parties' intent to extend the Closing Date. In the event any
of the Conditions Precedent are not satisfied on or before July 2, 1996, and
Seller or Purchaser does not deliver an Extension Notice in accordance with the
terms hereof, then the Agreement shall be terminated, and the Earnest Money
shall be immediately paid to Purchaser, together with any interest earned
thereon, and neither Seller nor Purchaser shall have any right, obligation or
liability under the Agreement except for the indemnities set forth in
Paragraphs 7 and 15 of the Agreement. In the event Seller or Purchaser elects
to extend the date for satisfying the Conditions Precedent in accordance with
the terms of this letter and the Conditions Precedent have not been satisfied
on or before August 1, 1996, then the Agreement shall be terminated, and the
Earnest Money shall be immediately paid to Purchaser, together with any
interest earned thereon, and neither Seller nor Purchaser shall have any right,
obligation or liability under the Agreement, except for the indemnity set forth
herein in Paragraphs 7 and 15 of the Agreement.
Seller and Purchaser hereby agree to equally share all costs and expenses
of Lender associated with procuring and satisfying the Conditions Precedent,
including, but not limited to, any assumption or transfer fee or related fees
due to, legal fees and expenses incurred by, Lender in connection with the sale
of the Property to Purchaser or the assignment to and assumption of Existing
<PAGE>
Loan Documents by Purchaser. In the event of a termination of the Agreement
pursuant to the terms of (A) any of Paragraphs 3.2, 7, 11, 18.3 of the
Agreement or (B) the terms of this letter, Seller shall pay all outstanding
costs and expenses incurred in connection with procuring and satisfying the
Conditions Precedent, excluding the legal fees of Purchaser, and the Earnest
Money, together with any interest earned thereon, shall be paid to Purchaser.
In the event of an inconsistency between the terms of this letter and the
terms of the Agreement, the terms of this letter shall govern and control.
Please acknowledge your agreement to the foregoing by executing a copy of
this letter and returning it to the undersigned.
Very truly yours,
ELDORITO LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Balcor Current Income Partners-85, Inc.,
an Illinois corporation, its
general partner
By: /s/Al Lieberman
-------------------------------
Name: Al Lieberman
-------------------------------
Its: Senior Vice President
-------------------------------
ACCEPTED AND AGREED TO this 12th day of June, 1996.
SECURITY CAPITAL PACIFIC TRUST,
a Maryland real estate investment trust
By: /s/Anthony R. Arnest
-------------------------------
Name: Anthony R. Arnest
-------------------------------
Its: Vice President
-------------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 6th day of June, 1996 by and
between ROBERT HEIDENBERG ("Purchaser") and AMERICAN WAY PARTNERS, an Illinois
limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Five Million Two Hundred Thousand and No/100 Dollars
($5,200,000.00), that certain property ("Property") in Fairfield, New Jersey,
more particularly described on Exhibit A attached hereto, which Property is
known as the American Way Mall.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $100,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term
is defined in the Escrow Agreement) by and in accordance with the
provisions of the Escrow Agreement ("Escrow Agreement") attached hereto as
Exhibit B;
b. On the Closing Date (as hereinafter defined), $5,200,000.00
(inclusive of all Earnest Money) adjusted in accordance with the
prorations by federally wired "immediately available" funds delivered to
the Title Insurer (as hereinafter defined) no later than 12:00 Noon on the
Closing Date. All or a portion of the cash due at Closing may be funded
through a "money lender escrow".
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit C is a title policy dated December
26, 1986 (the "Original Title Policy") issued by Chicago Title Insurance
Company. The owner's Title Policy ("Title Policy") to be issued at the
closing by First American Title Insurance Company (the "Title Insurer")
will be in the amount of the Purchase Price subject only to real estate
taxes and municipal charges not yet due and payable, the general printed
exceptions contained in the policy and the special title exceptions set
forth in Schedule B, Numbers 1 through 13 inclusive of the Original Title
Policy as well as the exclusions from coverage shown in the Original Title
Policy. All of the above are herein referred to as the "Permitted
Exceptions". The Original Title Policy shall be conclusive evidence of
good title as therein shown as to all matters insured by the policy,
subject only to the exceptions therein stated. On the Closing Date,
Seller shall cause the Title Insurer to issue the Title Policy or a
"marked up" commitment in conformity with the Original Title Policy.
Seller shall pay the costs of the Title Policy; however, Purchaser shall
pay the costs of "extended coverage" or any special endorsements which
Purchaser requires. Notwithstanding the foregoing, the following shall be
applicable with respect to the "Permitted Exceptions":
i. All references to tenancies, whether pursuant to recorded
instrument or otherwise, will be limited to tenants in possession at the
time of closing provided that such tenants do not include any tenants
<PAGE>
other than those shown in the rent roll or are tenants under the
New Leases as hereafter defined. To the extent that any recorded
instrument refers to a tenant whose lease has terminated, references to
that terminated lease will not be a permitted title exception.
ii. References to subleases shall not be a permitted title
exception even if the sublessee is in possession, unless the owner of the
real estate shall have joined in the sublease.
b. Purchaser acknowledges receipt of a survey ("Survey") of the
Property prepared by JMH Associates dated as of August 24, 1985 and revised
through December 20, 1986. Seller has ordered an updated Survey, which will be
certified to the Purchaser and the Title Insurer and will include (i) an ALTA
certification, (ii) Flood Plain certification, if any, (iii) legal description,
(iv) visible unrecorded easements, (v) location of water lines, (vi) identify
access to public roads, and (vii) locate set-backs. Purchaser and Seller shall
equally share the cost of the updated Survey. If the updated Survey discloses
matters which are not reflected on the original Survey or are in addition to
the Permitted Exceptions and which would prevent the Title Insurer from
deleting the survey exception as to said new matters from the Title Policy
("Survey Defects"), then upon notice delivered to Seller by Purchaser within
three (3) business days after receipt of the updated Survey, Seller shall
either cause the Survey Defects to be removed from the updated Survey or cause
the Title Insurer to insure against loss or damage resulting from the Survey
Defects ("Title Indemnity"). If Seller is unwilling to (i) have the Survey
Defects removed from the updated Survey or (ii) cause the Title Insurer to
issue a Title Indemnity to Purchaser within five (5) business days after
receipt of notice from Purchaser of the Survey Defects, then Purchaser shall
have the right to elect to terminate this Agreement. Purchaser shall notify
Seller of its election within three (3) business days after receipt of notice
from Seller that the Survey Defects will not be removed or that the Title
Insurer will not issue the Title Indemnity. If Purchaser fails to make the
election within the aforesaid three (3) business days, then it shall be
conclusively presumed that Purchaser has elected to take title to the Property
subject to the Survey Defects. If Purchaser elects to terminate this Agreement
pursuant to this Paragraph, then the Earnest Money plus all accrued interest
shall be delivered to Purchaser.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed ("Deed") in recordable form
subject only to the Permitted Exceptions. If Seller is unable to convey
title to the Property subject only to the Permitted Exceptions because of
the existence of an additional title exception ("Unpermitted Exception"),
then Purchaser can elect to take title to the Property subject to the
Unpermitted Exception or terminate this Agreement. If Purchaser elects to
terminate this Agreement, then the Earnest Money plus all accrued interest
shall be delivered to the Purchaser. Notwithstanding the aforesaid,
Seller shall be obligated to remove (i) any mortgage liens placed by
Seller against the Property and (ii) all other liens of a definite
ascertainable amount provided said other liens do not exceed $50,000.00.
If Seller fails to remove such other liens, then Purchaser can (i) in the
event said other liens do not exceed $50,000.00, elect to remove those liens
from the proceeds of the cash due at Closing or (ii) if said other liens exceed
$50,000.00 and Seller elects to not remove same, terminate this Agreement and
in such event the Earnest Money plus all accrued interest shall be delivered
to Purchaser.
<PAGE>
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share
the costs of the documentary stamps (if any) to be paid with reference to the
Deed and all other stamps, intangible, documentary, recording, sales tax and
surtax imposed by law with reference to any other documents delivered in
connection with this Agreement. Purchaser shall pay all recording costs and
documentary and/or intangible stamps in connection with any mortgage Purchaser
may obtain.
6. ASSIGNMENT OF REAL ESTATE LEASES. On the Closing Date in addition to
conveying the Property to Purchaser, and in further consideration of the
payment of the Purchase Price described herein, Seller shall also assign its
rights as lessee under those two (2) certain real estate leases (the "Real
Estate Leases") for two (2) certain parcels of real estate adjacent to the
Property (the "Adjacent Property"), copies of which are attached hereto as
Exhibit M. From and after the Closing Date Purchaser shall assume and be bound
by all of the terms and conditions of the Real Estate Leases. On the Closing
Date, Seller and Purchaser shall execute and deliver an assignment and
assumption of real estate leases in the form of Exhibit N attached hereto.
7. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $100,000 or less, then Seller shall commence and complete the
repair or restoration in an expeditious manner. Seller shall retain all
insurance proceeds. If the cost of repair or restoration exceeds that amount,
then Purchaser (upon notice delivered to Seller within twenty (20) days after
notice of such casualty) can elect to either: (a) terminate this Agreement
whereupon the Earnest Money plus all accrued interest thereon shall be
delivered to the Purchaser; or (b) accept the Property in its damaged condition
together with an assignment from Seller of all insurance proceeds including an
assignment of Seller's assignable right to its loss of rental insurance and
receive a credit at Closing in the amount of the deductible.
b. If condemnation proceedings ("Proceedings") are instituted
against the Property and the parties reasonably believe that such Proceedings
will result in an award in excess of $100,000.00, then Purchaser can elect to
either take the Property subject to the Proceedings and an assignment of
Seller's interest in the Proceedings or terminate this Agreement. If Purchaser
elects to terminate this Agreement, it shall be by notice to the Seller within
five (5) days after Seller notifies Purchaser of the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
<PAGE>
8. AS-IS CONDITION.
a. Purchaser is not relying on Seller having made any inquiry as to
the condition of the Property, Adjacent Property or the leases. Purchaser
acknowledges and agrees that it will be purchasing the Property and accepting
the assignment of the Real Estate Leases and assuming Seller's obligations
thereunder based solely upon its inspection and investigations of the Property
and Adjacent Property and that Purchaser will be purchasing the Property and
accepting the assignment of the Real Estate Leases "AS IS" and "WITH ALL
FAULTS" based upon the condition of the Property and Adjacent Property as of
the date of this Agreement, subject to reasonable wear and tear and loss by
fire or other casualty or condemnation from the date of this Agreement until
the Closing Date. Without limiting the foregoing, Purchaser acknowledges that,
except as may otherwise be specifically set forth elsewhere in this Agreement,
neither Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property or Adjacent Property, including, but not
limited to, the condition of the land or any improvements, the existence or
nonexistence of asbestos, lead in water, lead in paint, radon, underground or
above ground storage tanks, petroleum, toxic waste or any Hazardous Materials
or Hazardous Substances (as such terms are defined below), the tenants of the
Property or Adjacent Property or the leases affecting the Property or Adjacent
Property, economic projections or market studies concerning the Property, any
development rights, taxes, bonds, covenants, conditions and restrictions
affecting the Property or Adjacent Property, water or water rights, topography,
drainage, soil, subsoil of the Property or Adjacent Property, the utilities
serving the Property of Adjacent Property or any zoning, environmental or
building laws, rules or regulations affecting the Property or Adjacent
Property. Seller makes no representation that the Property or Adjacent
Property complies with Title III of the Americans With Disabilities Act or any
fire codes or building codes. Purchaser hereby releases Seller from any and
all liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for damage, loss,
compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract, or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property or the Adjacent Property, or arising
under the Environmental Laws (as such term is hereinafter defined), or relating
in any way to the quality of the indoor or outdoor environment at the Property
or Adjacent Property. This release shall survive the Closing. As used herein,
the term "Hazardous Materials" or "Hazardous Substances" means (i) hazardous
wastes, hazardous materials, hazardous substances, hazardous constituents,
toxic substances or related materials, whether solids, liquids or gases,
including but not limited to substances defined as "hazardous wastes,"
"hazardous materials," "hazardous substances," "toxic substances,"
"pollutants," "contaminants," "radioactive materials," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the Clean Water Act
("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401
<PAGE>
et seq.; and in any permits, licenses, approvals, plans, rules, regulations or
ordinances adopted, or other criteria and guidelines promulgated pursuant to
the preceding laws or other similar federal, state or local laws, regulations,
rules or ordinance now or hereafter in effect relating to environmental matters
(collectively the "Environmental Laws"); and (ii) any other substances,
constituents or wastes subject to any applicable federal, state or local law,
regulation or ordinance, including any Environmental Law, now or hereafter in
effect, including but not limited to (A) petroleum, (B) refined petroleum
products, (C) waste oil, (D) waste aviation or motor vehicle fuel,
(E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or that Purchaser will achieve similar
financial or other results with respect to the operations of the Property, it
being acknowledged by Purchaser that Seller's operation of the Property and
allocations of revenues or expenses may be vastly different than Purchaser may
be able to attain. Purchaser acknowledges that it is a sophisticated and
experienced purchaser of real estate and further that Purchaser has relied upon
its own investigation and inquiry with respect to the operation of the Property
and releases Seller from any liability with respect to such historical
information.
9. CLOSING. The closing ("Closing") of this transaction shall be a "New
York Style" closing on July 22, 1996 ("Closing Date"), at the office of the
Seller's attorney, at which time Seller shall deliver possession of the
Property to Purchaser or at such earlier time as may be reasonably requested by
Purchaser upon reasonable notice to Seller.
10. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required in order to consummate the transaction
as set forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed (in the form of Exhibit D attached hereto)
subject to the Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser; an executed closing statement; an executed assignment and assumption
of all service contracts (in the form of Exhibit E attached hereto); an
executed assignment and assumption of all leases and security deposits (in the
form of Exhibit F attached hereto); updated rent roll; a notice to the tenants
of the transfer of title and the assumption by Purchaser of the landlord's
obligations under the leases and the obligation to refund the security deposits
(in the form of Exhibit G attached hereto); a non-foreign affidavit (in the
form of Exhibit H attached hereto) and such other documents as may be
reasonably required by the Title Insurer in order to consummate the transaction
as set forth in this Agreement.
<PAGE>
11. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT OF ANY DEFAULT OF THE
PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF
THE EARNEST MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR
ANY OTHER REMEDY. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
12. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO SUE FOR ACTUAL DAMAGES
NOT TO EXCEED $100,000.00 AND THE RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY
INTEREST ACCRUED THEREON, WHEREUPON THIS AGREEMENT SHALL TERMINATE AND THE
PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
IS ITS REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
13. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); water and other
utility charges; fuels; prepaid operating expenses; real and personal property
taxes prorated on a "net" basis (i.e. adjusted for all tenants' liability, if
any, for such items); common area maintenance charges and other "pass through"
charges to tenants (collectively, "CAM") which are due or will be due to Seller
for the period prior to the Proration Date (as hereinafter defined), and other
similar items shall be adjusted ratably as of 12:01 A.M. on the date which is
fifteen (15) days prior to the Closing Date ("Proration Date"), and credited or
debited to the balance of the cash due at Closing. Percentage rents shall be
adjusted ratably as of the Proration Date, based upon the previous fiscal
year's sales for each tenant. The net amount of the credit due to Seller for
its pro rata share of the percentage rents will be deposited in escrow with the
Title Insurer to be released from escrow when all of the amounts of percentage
rents are finally determined. For the period from the Proration Date through
the Closing Date, Purchaser shall be entitled to the benefit of all of the
income from the Property and shall bear the burden of all of the operating
expenses of the Property, including, but not limited to, insurance, service
contracts, employee wages and benefits, management fees, and utility costs. If
the amount of any of the items to be prorated is not then ascertainable, the
adjustment thereof shall be on the basis of the most recent ascertainable data.
All prorations will be final. If special assessments have been levied against
the Property for completed improvements, then the amount of any installments
which are due prior to the Closing Date shall be paid by the Seller; and the
amount of installments which are due after the Closing Date shall be paid by
the Purchaser. All assessments for incomplete improvements shall be paid by
Purchaser.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears ("Delinquent Rent") for thirty (30) days or less, then Seller's pro
rata share of the first rent collected by Purchaser will be delivered to Seller
for the Delinquent Rent. Purchaser shall deliver such Delinquent Rent to
Seller within 10 days of Purchaser's receipt of that Delinquent Rent. If the
<PAGE>
Delinquent Rent is in arrears for more than thirty (30) days, then the first
rent collected by Purchaser shall be applied towards current rent and then
towards Delinquent Rent. This subparagraph of this Agreement shall survive the
Closing and the delivery and recording of the Deed.
14. TENANT ESTOPPEL CERTIFICATES. Immediately after the execution of
this Agreement and Purchaser's deposit of the Earnest Money with the Escrow
Agent, Seller will request all of the tenants occupying space in the Property
to execute an estoppel certificate in the form of Exhibit J attached hereto
("Tenant Estoppel Certificate"). Purchaser's obligation to close and purchase
the Property is not subject to nor conditioned upon Seller's obtaining a Tenant
Estoppel Certificate from any tenants other than Bennigans, Steak and Ale and
Weight Watchers; however, Seller will attempt to obtain Tenant Estoppel
Certificates from the other tenants. Seller will forward copies of the Tenant
Estoppel Certificates to the Purchaser after they are received by Seller and
will deliver the originals at Closing. Any issues which are raised in the
Tenant Estoppel Certificates shall not constitute a Seller's Default hereunder.
Seller will provide a statement to Purchaser at the Closing for the remaining
tenants (except for the New Leases, as hereinafter defined) who have not
delivered a Tenant Estoppel Certificate. Upon receipt of a Tenant Estoppel
Certificate from one of the remaining tenants, the aforesaid statement from the
Seller shall be exchanged for that particular Tenant Estoppel Certificate.
15. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph .
16. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller.
Any assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph . Seller hereby consents to an
assignment to any entity which is controlled by Robert Heidenberg or Philip
Schonberger, provided such assignment is effected at least five (5) business
days prior to Closing. However, Purchaser shall remain liable for all of the
Purchaser's obligations and undertakings set forth in this Agreement and the
exhibits attached hereto.
17. BROKER. The parties hereto acknowledge that Allen Cooperman and
Associates ("Broker") is the only real estate broker involved in this
transaction. Purchaser has not paid and will not pay at any time before, at or
after the Closing, any fee, commission or compensation whatsoever to any person
whomsoever directly or indirectly on account of this Agreement, its
negotiation, or the sale hereby contemplated. Seller agrees to pay Broker a
commission or fee ("Fee") pursuant to a listing agreement between Seller and
Broker. However, this Fee is due and payable only from the proceeds of the
Purchase Price received by Seller. The foregoing does not apply to any fee
which may be paid by Seller to any affiliate of Seller as a result of this
transaction. Purchaser agrees to indemnify, defend and hold harmless the
Seller and any partner, affiliate, parent of Seller, and all shareholders,
employees, officers and directors of Seller or Seller's partner, parent or
affiliate (each of the above is individually referred to as a "Seller
Indemnitee") from all claims, including attorneys' fees and costs incurred by a
Seller Indemnitee as a result of anyone's claiming by or through Purchaser any
<PAGE>
fee, commission or compensation on account of this Agreement, its negotiation
or the sale hereby contemplated. Purchaser does now and shall at all times
consent to a Seller Indemnitee's selection of defense counsel. Seller agrees
to indemnify, defend and hold harmless the Purchaser and all shareholders,
employees, officers and directors of Purchaser or Purchaser's parent or
affiliate (each of the above is individually referred to as a "Purchaser
Indemnitee") from all claims, including attorneys' fees and costs incurred by a
Purchaser Indemnitee as a result of anyone's claiming by or through Seller any
fee, commission or compensation on account of this Agreement, its negotiation
or the sale hereby contemplated. Seller does now and shall at all times
consent to a Purchaser Indemnitee's selection of defense counsel.
18. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered to Purchaser copies of the most recent
available tax bills, current rent rolls, tenant leases, insurance premiums,
1994 and 1995 financial statements plus year to date financial statements for
1996 for the Property, correspondence relating to zoning and planning issues
with the municipality and correspondence, if any relating to adjacent land and
service contracts (collectively the "Documents"). All of the Documents shall
be subject to approval by Purchaser by the close of business (5:00 P.M. Central
Daylight Time) on June 24, 1996 ("Approval Period"). During the Approval
Period, upon reasonable notice to the Seller, the Purchaser shall have the
right to inspect and approve the condition of the Property during normal
business hours. Purchaser, its engineers, architects, employees, contractors
and agents shall maintain public liability insurance policies insuring against
claims arising as a result of the inspections of the Property being conducted
by Purchaser. Purchaser agrees to indemnify, defend, protect and hold Seller
harmless from any and all loss, costs, including attorneys' fees, liability or
damages which Seller may incur or suffer as a result of Purchaser's conducting
its inspection and investigation of the Property including the entry of
Purchaser, its employees or agents and its lender onto the Property, including
without limitation, liability for mechanics' lien claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
c. If Purchaser disapproves the Documents or the condition of the
Property, it must be by a notice ("Notice of Disapproval") delivered to Seller
and the Escrow Agent prior to the expiration of the Approval Period. The
Notice of Disapproval delivered to Seller shall be accompanied with copies of
all reports ("Reports") which Purchaser has received during the Approval
Period. Upon receipt of the Notice of Disapproval and copies of the Reports,
the Earnest Money plus the interest accrued thereon shall be returned to the
Purchaser. If Purchaser does not deliver a Notice of Disapproval and copies of
the Reports to Seller, then it shall be conclusively presumed that Purchaser
has approved the Documents and the condition of the Property and all Earnest
Money plus the interest accrued thereon shall belong to Seller unless Seller is
in default hereunder.
<PAGE>
19. SURVIVAL OF PURCHASER'S INDEMNITY. Notwithstanding anything in this
Agreement to the contrary, Purchaser's obligation to indemnify, defend and hold
Seller harmless under various provisions of this Agreement shall forever
survive the termination of this Agreement or the Closing and delivery and
recording of the Deed.
20. SELLER'S REPRESENTATIONS AND WARRANTIES.
a. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing, shall only mean such knowledge or
notice that has actually been received by Michael Conter, the asset manager of
the Property, and any representation or warranty of the Seller is based upon
those matters of which Michael Conter has actual knowledge. Any knowledge or
notice given, had or received by any of Seller's agents, servants or employees
shall not be imputed to Seller or the individual partners or the general
partner of Seller.
b. Subject to the limitations set forth in subparagraph a above,
Seller hereby makes the following representations and warranties, all of which
are made to the best of Seller's knowledge, none of which shall survive the
Closing and delivery of the Deed:
i. The rent roll which Seller has submitted to the Purchaser
and which will be updated as of the Closing Date is true and accurate.
ii. There is no pending or threatened litigation, claim, cause
of action or administrative proceeding concerning the Property.
iii. No tenant has filed a claim or threatened to file a claim
against Seller.
iv. Seller has not withheld from the Purchaser any financial
information of a material nature.
v. All security deposits set forth in the tenant leases are
refundable.
vi. Seller has not received any notice of any pending or
threatened condemnation proceeding of the Property.
21. OPERATION AND MANAGEMENT. The management, operation, leasing and
maintenance of the Property, including its present full replacement cost and
loss of rental insurance, as presently conducted and maintained by the Seller,
shall continue until the Closing Date. In addition, Seller shall not enter
into any new lease (the "New Leases") or extensions of any existing leases
without the prior written consent of Purchaser which consent will not be
unreasonably withheld. Seller shall receive a credit on the Closing Date for
any costs expended by Seller for leasing commissions for New Leases or
extensions of existing leases and tenant improvements with respect to New
Leases or extensions of existing leases. Purchaser shall defend, indemnify and
hold Seller harmless for the leasing commissions and costs of tenant
improvements to be paid subsequent to the Closing Date. The provisions of this
paragraph shall survive the Closing and the delivery of the Deed.
<PAGE>
22. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit I is the
following report (the "Report") of the Property, which Seller is delivering to
Purchaser, at Purchaser's request: Phase I Environmental Assessment dated May
13, 1993 prepared by Nova Environmental Services, Inc. Seller makes no
representation or warranty that the Report is accurate or complete. Purchaser
hereby releases Seller from any liability whatsoever with respect to the
Report, including, without limitation, the matters set forth in the Report or
the accuracy and/or completeness of the Report.
23. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
24. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior
to the Closing Date, Purchaser will provide Seller's attorney with copies of
its organizational documents, including a certified copy of its recorded
certificate of limited partnership and a true copy of its Partnership Agreement
or a certified copy of its Articles of Incorporation, corporate resolutions
authorizing the transaction, and an incumbency certificate, whichever is
applicable.
25. TARGET TRANSFER. In consideration of Seller executing this Agreement
with Purchaser and agreeing to convey the Property on the Closing Date in
accordance with the terms hereof to Purchaser, Purchaser agrees that if at any
time on or before August 22, 1996 Purchaser transfers any of the Property to
Target that in connection with said transfer Purchaser shall deliver and pay to
Seller twenty-five (25%) percent of the net sales proceeds in excess of
$5,200,000,.00 received by Purchaser from Target on the date of receipt by
Purchaser of said net sale proceeds. For the purposes of this paragraph (a)
Purchaser shall mean collectively and individually (i) Robert Heidenberg or
Philip Schonberger, (ii) any entity to which this Agreement is assigned
pursuant to paragraph 15 hereof, or (iii) any other entity or person directly
or indirectly controlled by or controlling the entities described in
subparagraphs (i) and (ii); (b) Target shall mean Target Stores or any
subsidiary of or any other entity controlled by or controlling Target Stores or
any subsidiary of same; (c) "net sale proceeds" shall mean any cash, notes or
other consideration received by Purchaser in connection with said transfer and
(d) "transfer" shall mean entry into any contract to sell with, sale, pledge
assignment, or lease of the Property to Target or the transfer of any direct or
indirect ownership of Purchaser to Target. The provisions of this paragraph
shall survive the Closing and the delivery of the Deed. At Closing Purchaser
shall execute a memorandum of agreement (the "Memorandum") in the form of
Exhibit K attached hereto which shall evidence Purchaser's agreements contained
in this paragraph and said Memorandum shall be recorded on the Closing Date.
If subsequent to August 22, 1996 Purchaser delivers an affidavit to Seller
stating that no transfer as defined herein has been done by Purchaser to Target
as of the date of the affidavit Seller shall execute and deliver to Purchaser a
document releasing any interest of Seller in the Property as reflected in the
Memorandum.
<PAGE>
26. TIME OF ESSENCE. Time is of the essence of this Agreement.
27. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
847/267-1600
847/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: Robert Heidenberg
Albemarle Equities, Inc.
231 Farmington Ave.
Farmington, Connecticut 06032
203/678-1745
203/678-1098 (FAX)
with a copy to: Martin K. Blonder
Rosenthal & Schanfield
55 E. Monroe
46th Floor
Chicago, Illinois 60603
312/899-5554
312/236-7274 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, or on the
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4th business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
28. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
(1) Earnest Money;
(2) One (1) fully executed copy of this Agreement; and
(3) Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller.
29. GOVERNING LAW. The provision contained herein with reference to
retention of the Earnest Money in the event of Purchaser's default shall be
governed by the laws of the State of Illinois. The remaining provisions of
this Agreement shall be governed by the laws of the State of New Jersey.
30. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
31. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
32. CAPTIONS. Paragraph titles or captions contained herein are inserted
as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or any provision hereof.
33. MISCELLANEOUS. In addition, it is agreed that if Purchaser at
Purchaser's cost and expense cannot receive from the Title Insurer prior to the
expiration of the Approval Period a commitment to provide extended coverage
over the general exceptions in the Title Policy and provide a 3.1 zoning
endorsement and contiguity endorsement to the Title Policy that a Notice of
Disapproval shall be delivered by Purchaser to Seller and the Escrow Agent
prior to the expiration of the Approval Period and the Earnest Money plus
accrued interest shall then be returned to Purchaser. If Purchaser does not
deliver the Notice of Disapproval then it shall be conclusively presumed that
Purchaser has waived the conditions contained in this paragraph and all Earnest
Money plus the interest accrued thereon shall belong to Seller unless Seller is
in default hereunder.
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IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
June 6, 1996
- ------------------------ /s/Robert Heidenberg
---------------------------------
Robert Heidenberg
Executed by Seller on SELLER:
June 7, 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
/s/Al Lieberman
----------------------------------
Al Lieberman
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Allen Cooperman and Associates ("Broker") executes this Agreement in its
capacity as a real estate broker and acknowledges that the fee or commission
("Fee") due to it as a result of the transaction described in this Agreement is
the amount as set forth in the listing agreement between Broker and Seller.
Broker also acknowledges that payment of the aforesaid Fee is conditioned upon
the Closing and the receipt of the Purchase Price by the Seller. Broker agrees
to deliver a receipt to the Seller at the Closing for the Fee and a release
stating that no other fees or commissions are due to Broker from Seller or
Purchaser.
ALLEN COOPERMAN AND ASSOCIATES
By:
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EXHIBITS
A - Legal
B - Escrow Agreement
C - Title Commitment
D - Deed
E - Assignment of Service Contracts
F - Assignment of Leases and Security Deposits
G - Notice to Tenants
H - Non-Foreign Affidavit
I - Report
J - Tenant Estoppel Certificate
K - Memorandum of Agreement
L - Real Estate Leases
M - Assignment and Assumption of Real Estate Leases
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