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) July 5, 1996
BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-14350
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3333344
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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a) Shadowridge Apartments
In 1983, Shadowridge Apartments, Las Vegas, Nevada, was acquired by a joint
venture (the "Joint Venture") in which the Partnership and an affiliate hold
interests of 70% and 30%, respectively. The affiliate made contributions to
the Joint Venture totaling approximately $2,372,000 and the Partnership made
total capital contributions to the Joint Venture of approximately $5,288,514.
The property was acquired subject to first mortgage financing of $9,008,000.
On July 5, 1996, the Joint Venture contracted to sell the property for a sale
price of $12,750,000 to an unaffiliated party, Sherman Oaks Limited
Partnership. The purchaser has deposited $150,000 into an escrow account as
earnest money. The remaining portion of the sale price will be payable in cash
at closing, which is scheduled to occur on August 23, 1996. From the proceeds
of the sale, the Joint Venture will pay the outstanding balance of the first
mortgage loan which is expected to have an outstanding balance at closing of
approximately $7,962,000 and $255,000 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 for services in connection with
the sale of the property of $95,625. The Joint Venture will receive the
remaining proceeds of approximately $4,437,000, less closing costs, of which
the Partnership's share is expected to be approximately $3,105,000. 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 Joint Venture for actual expenses incurred in connection with
the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
b) North Hill Apartments
In 1985, North Hill Apartments, DeKalb County, Georgia, was acquired by a
limited partnership (the "Joint Venture") the general partner of which was a
joint venture between the Partnership and an affiliate. The limited partner of
the Joint Venture was an affiliate of the seller. The Partnership contributed
approximately $5,772,000 and the affiliate contributed approximately $1,924,275
from their respective offering proceeds towards the purchase of the property.
The property was purchased subject to $18,700,000 of first mortgage financing.
In 1986, the limited partner assigned its interest in the Joint Venture to the
Partnership and affiliate which hold interests of 75% and 25%, respectively, in
the Joint Venture. In 1994, the Joint Venture repaid the first mortgage loan
with proceeds from a new first mortgage loan of $16,795,600, proceeds of a
$1,350,000 note (the "Note"), each from an unaffiliated party, and Joint
Venture cash reserves. The Note is non-interest bearing and will be repaid
only to the extent that the net proceeds from the sale of the property
exceed a certain predetermined level.
<PAGE>
On July 15, 1996, the Joint Venture contracted to sell the property for a sale
price of $24,000,000 to an unaffiliated party, Jupiter Realty Corporation, an
Illinois corporation. The purchase price may be reduced pursuant to an agreed
upon formula based on whether or not the occupancy rate of the property exceeds
92% at closing, scheduled for September 19, 1996. The current occupancy rate
of the property is 97%. The closing may be extended to a date no later than
October 21, 1996 upon notice by the Joint Venture or the purchaser to the other
party on or before September 12, 1996.
The purchaser has deposited $175,000 into an escrow account as earnest money
and is obligated to deposit an additional $175,000 on or before August 29,
1996. The purchaser is expected to purchase the property subject to the first
mortgage loan, which is expected to have an outstanding principal balance of
approximately $16,558,000, at closing. The purchaser will also assume all the
obligations of the Joint Venture under the tax-exempt bonds which fund the
mortgage loan. The remaining $7,442,000 of the sale price will be paid by the
purchaser at closing. From the proceeds of the sale, the Joint Venture will
pay $240,000 to an unaffiliated party as a brokerage commission and a $180,000
fee to an affiliate of the third party providing property management services
for the property for services rendered in connection with the sale. The net
sales proceeds will not exceed the level required in order for the holder of
the Note to receive any proceeds with the result that the Note will not be
repaid but will be canceled by the holder. The Joint Venture will receive the
remaining proceeds of approximately $7,022,000, less closing costs, which will
be distributed among the Partnership and the affiliate in accordance with their
participating percentages in the Joint Venture. The Partnership is expected to
receive approximately $5,266,500, less closing costs. Neither the General
Partner nor any affiliate will receive a brokerage commission in connection
with the sale of the property. The General Partner will be reimbursed by the
Joint Venture for actual expenses incurred in connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions,
including the consent of various parties relating to the first mortgage loan.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
ITEM 5. OTHER INFORMATION
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a) Country Ridge Apartments
As previously reported, on April 23, 1996, the Partnership contracted to sell
Country Ridge Apartments, Farmington Hills, Michigan, to an unaffiliated party,
ERP Operating Limited Partnership, an Illinois limited partnership, for a sale
price of $15,950,000. The sale closed on June 5, 1996. From the proceeds of
the sale, the Partnership paid the outstanding balance of the first mortgage
loan of approximately $8,770,300, legal fees of approximately $15,000 and a
$119,625 fee to an affiliate of the third party providing property management
services for the property for services rendered in connection with the sale.
The Partnership received approximately $7,045,000 of remaining proceeds. Of
such amount, $500,000 is being retained by the Partnership and will not be
available for use or distribution by the Partnership until 120 days after
closing.
<PAGE>
b) Lakeville Resort Apartments
As previously reported, on April 23, 1996, a joint venture consisting of the
Partnership and an affiliate which owns Lakeville Resort Apartments, Petaluma,
California, contracted to sell the property to an unaffiliated party, ERP
Operating Limited Partnership, an Illinois limited partnership. The closing of
the sale has been extended to September 3, 1996.
c) Park Place Apartments, Phase II
As previously reported, on April 23, 1996, the Partnership contracted to sell
Park Place Apartments, Phase II, Plymouth, Minnesota, to an unaffiliated party,
ERP Operating Limited Partnership, an Illinois limited partnership. The
closing of the sale has been extended to September 3, 1996.
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 Shadowridge Apartments, Las Vegas, Nevada.
(b) Agreement of Sale and attachments thereto relating to the
sale of North Hill Apartments, DeKalb County, Georgia.
(99) (a) Master Amendment and Agreement dated May 22, 1996
relating to the sales of Country Ridge Apartments,
Farmington Hills, Michigan; Lakeville Resort Apartments,
Petaluma, California; and Park Place Apartments, Phase II,
Plymouth, Minnesota.
(b) Master Amendment and Agreement #2 dated May 22, 1996
relating to the sales of Country Ridge Apartments,
Farmington Hills, Michigan; Lakeville Resort Apartments,
Petaluma, California; and Park Place Apartments, Phase II,
Plymouth, Minnesota.
(c) Letter Agreements dated May 22, 1996 and July 8, 1996
relating to the sale of Lakeville Resort Apartments,
Petaluma, California.
(d) Letter Agreements dated May 22, 1996 and July 8, 1996
relating to the sale of Park Place Apartments, Phase II,
Plymouth, Minnesota.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: July 19, 1996
<PAGE>
Shadow Ridge
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 5th day of July, 1996, by and
between SHERMAN OAKS LIMITED PARTNERSHIP ("Purchaser") and SHADOWRIDGE
INVESTORS, an Illinois Joint Venture ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Twelve Million Seven Hundred Fifty Thousand and No/100
Dollars ($12,750,000.00) ("Purchase Price"), that certain property ("Property")
in Las Vegas, Nevada, more particularly described on Exhibit A attached hereto,
which Property is known as Shadow Ridge Apartments. Included in the Purchase
Price is all of the personal property set forth on Exhibit B, which shall be
transferred to Purchaser at Closing (as hereinafter defined) by a Bill of Sale.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $150,000.00
("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 C;
b. On the Closing Date (as hereinafter defined), $12,750,000.00
(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
Central Time on the Closing Date. If the funds are not received by 12:00
Noon, then, on the Closing Date, Purchaser shall pay Seller an amount
equal to any additional mortgage per diem interest costs incurred by the
Seller.
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment dated
March 20, 1996 ("Title Commitment") for an owner's standard coverage title
insurance policy ("Title Policy") issued by First American Title Insurance
Company ("Title Insurer"). The owner's Title Policy issued at Closing
will be in the amount of the Purchase Price subject only to real estate
taxes not yet due and payable, the general printed exceptions contained in
the policy and the special title exceptions set forth in
Schedule B-Section 2-Part I, Numbers 7, 8 and 9 and Schedule B-Section
2-Part II, Numbers 3 through 13, 18 through 21, 23 and 24 of the Title
Commitment. All of the above are herein referred to as the "Permitted
Exceptions". The Title Commitment shall be conclusive evidence of good
title as therein shown as to all matters insured by the policy, subject
only to the exceptions therein stated. On the Closing Date, Seller shall
<PAGE>
cause the Title Insurer to issue the Title Policy or a "marked up"
commitment in conformity with the Title Commitment. 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.
b. Purchaser acknowledges receipt of a survey ("Survey") of the
Property prepared by SEA Inc. dated July, 1983. Prior to the Closing,
Seller will have the Survey updated and certified to the Purchaser and the
Title Insurer. Seller shall pay for the cost of the updated Survey
(approximately $9,800.00), but Purchaser shall pay for the cost of the
additional requirements requested by Purchaser (approximately $2,000.00).
If the updated Survey discloses matters which are not reflected on the
original Survey and which would prevent the Title Insurer from deleting
the survey exception from the Title Policy ("Survey Defects"), then upon
notice delivered to Seller by Purchaser within seven (7) days after
Purchaser's execution of this Agreement, 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) 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) 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) 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 Grant, Bargain and Sale 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, if
Seller cannot obtain a title indemnity insuring over such 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.
5. PAYMENT OF CLOSING COSTS. Seller shall pay 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 costs related to any mortgage that
Purchaser causes to be recorded against the Property.<PAGE>
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $100,000 or less, or in the case of Personal Property, for
$10,000 or less, then Seller shall commence the repair or restoration in
an expeditious manner, in which event the Closing Date will be extended
until such date as may reasonably be required to complete the repair or
restoration. Seller shall retain all insurance proceeds. If the cost of
repair or restoration exceeds that amount, then Seller can elect to
either: (a) repair and restore same, in which event the Closing Date will
be extended until such date as may reasonably be required to complete the
repair or restoration; or (b) terminate this Agreement upon notice to
Purchaser served within twenty (20) business days of such casualty. If
Seller elects to terminate this Agreement pursuant to this Paragraph, then
Purchaser will have the option to accept the Property in its damaged
condition together with an assignment from Seller of all insurance
proceeds and receive a credit at Closing in the amount of the deductible,
provided Purchaser notifies Seller by notice served within twenty (20)
days after receipt of Seller's notice of election to terminate.
b. If condemnation proceedings ("Proceedings") 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.
7. AS-IS CONDITION.
a. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspection and investigations of the
Property and that Purchaser will be purchasing the Property "AS IS" and
"WITH ALL FAULTS" based upon the condition of the Property as of the date
of this Agreement, subject to reasonable wear and tear and loss by fire or
other casualty or condemnation from the date of this Agreement until the
Closing Date. Without limiting the foregoing, Purchaser acknowledges
that, except as may otherwise be specifically set forth elsewhere in this
Agreement, neither Seller nor its consultants, brokers or agents have made
any other representations or warranties of any kind upon which Purchaser
is relying as to any matters concerning the Property, including, but not
limited to, the condition of the land or any improvements, the existence
or nonexistence of asbestos, lead in water, lead in paint, radon,
underground or above ground storage tanks, petroleum, toxic waste or any
Hazardous Materials or Hazardous Substances (as such terms are defined
below), the tenants of the Property or the leases affecting the Property,
economic projections or market studies concerning the Property, any <PAGE>
development rights, taxes, bonds, covenants, conditions and restrictions
affecting the Property, water or water rights, topography, drainage, soil,
subsoil of the Property, the utilities serving the Property or any zoning,
environmental or building laws, rules or regulations affecting the
Property. Seller makes no representation that the Property complies with
Title III of the Americans With Disabilities Act or any fire codes or
building codes. Purchaser hereby releases Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for damage,
loss, compensation, contribution, cost recovery or otherwise, against
Seller, whether in tort, contract, or otherwise, relating directly or
indirectly to the existence of asbestos or Hazardous Materials or
Hazardous Substances on, or environmental conditions of, the Property, or
arising under the Environmental Laws (as such term is hereinafter
defined), or relating in any way to the quality of the indoor or outdoor
environment at the Property. This release shall survive the Closing. As
used herein, the term "Hazardous Materials" or "Hazardous Substances"
means (i) hazardous wastes, hazardous materials, hazardous substances,
hazardous constituents, toxic substances or related materials, whether
solids, liquids or gases, including but not limited to substances defined
as "hazardous wastes," "hazardous materials," "hazardous substances,"
"toxic substances," "pollutants," "contaminants," "radioactive materials,"
or other similar designations in, or otherwise subject to regulation
under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601
et seq.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601
et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1802; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. e1101 et seq.; the Atomic Energy Act ("AEA"), 42 U.S.C. Section
2011 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601, et seq.; the Clean Water Act ("CWA"), 33 U.S.C.
Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f
et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq.; and in
any permits, licenses, approvals, plans, rules, regulations or ordinances
adopted, or other criteria and guidelines promulgated pursuant to the
preceding laws or other similar federal, state or local laws, regulations,
rules or ordinance now or hereafter in effect relating to environmental
matters (collectively the "Environmental Laws"); and (ii) any other
substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental
Law, now or hereafter in effect, including but not limited to
(A) petroleum, (B) refined petroleum products, (C) waste oil, (D) waste
aviation or motor vehicle fuel, (E) asbestos, (F) lead in water, paint or
elsewhere, (G) radon, (H) Polychlorinated Biphenyls (PCB's) and
(I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods
of time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at
Purchaser's request solely as illustrative material. Except as may be
specifically set forth elsewhere in this Agreement, Seller makes no
representation or warranty that such material is complete or accurate or <PAGE>
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, except as may be specifically
set forth elsewhere in this Agreement, Purchaser has relied upon its own
investigation and inquiry with respect to the operation of the Property
and, except for any representation of Seller with reference to the
historical information, Purchaser releases Seller from any liability with
respect to such historical information.
8. CLOSING.
a. The closing ("Closing") of this transaction shall be on
August 23, 1996 ("Closing Date"), at the office of the Title Insurer, at
which time Seller shall deliver possession of the Property to Purchaser.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such
other documents as may be reasonably required in order to consummate the
transaction as set forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed (in the form of Exhibit E attached
hereto) subject to the Permitted Exceptions and those Unpermitted
Exceptions waived by Purchaser, if any; an inventory of the Personal
Property and a Bill of Sale for the same (in the form of Exhibit F
attached hereto); an executed closing statement; an executed assignment
and assumption of all service contracts (in the form of Exhibit G attached
hereto); an executed assignment and assumption of all leases and security
deposits (in the form of Exhibit H attached hereto); updated rent roll; a
notice to the tenants of the transfer of title and the assumption by
Purchaser of the landlord's obligations under the leases and the
obligation to refund the security deposits (in the form of Exhibit I
attached hereto); a non-foreign affidavit (in the form of Exhibit J
attached hereto) and such other documents as may be reasonably required by
the Title Insurer in order to consummate the transaction as set forth in
this Agreement.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT, INCLUDING ITS OBLIGATIONS TO MAKE ALL
DEPOSITS ON OR BEFORE THE DATES PROVIDED FOR HEREIN. IF THE PURCHASER FAILS TO
MAKE ITS ADDITIONAL EARNEST MONEY INTO THE ESCROW ON OR BEFORE THE DATE SUCH
DEPOSIT IS DUE AS PROVIDED FOR HEREIN, OR IN THE EVENT OF ANY OTHER DEFAULT OF
THE PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, THEN 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.
<PAGE>
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO SEEK RECOVERY OF ACTUAL
DAMAGES NOT TO EXCEED THE AMOUNT OF EARNEST MONEY THEN ON DEPOSIT, AND THE
RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY
TO EACH OTHER AT LAW OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN
TO THE CONTRARY, IF SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED AND THE
DOCUMENTS SELLER IS REQUIRED TO DELIVER AT CLOSING, THEN PURCHASER WILL BE
ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); water and other
utility charges; fuels; prepaid operating expenses; management fees in the
amount of 5% of collections; real and personal property taxes; and other
similar items shall be adjusted ratably as of 11:59 P.M. on the Closing Date
("Proration Date"), and credited or debited to the balance of the cash due at
Closing. If for any reason the Proration Date is earlier than the Closing
Date, then for the period from the Proration Date through the Closing Date,
Purchaser shall be entitled to the benefit of all of the income from the
Property and shall bear the burden of all of the operating expenses of the
Property, including, but not limited to, insurance, service contracts, employee
wages and benefits, management fees, utility costs and interest on the existing
mortgages encumbering the Property (if any). If the amount of any of the items
to be prorated is not then ascertainable, the adjustment thereof shall be on
the basis of the most recent ascertainable data. All prorations will be final
except as to Delinquent Rents referred to in b below. 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 the calendar month in which the Closing occurs,
then the first rent collected by Purchaser will be delivered to Seller for the
Delinquent Rent. If Delinquent Rent is in arrears for a period prior to the
calendar month in which the Closing occurs, then rents collected by Purchaser
shall first be applied to current rent and then to Delinquent Rent. Purchaser
shall deliver Seller's pro rata share within 10 days of Purchaser's receipt of
that Delinquent Rent. This subparagraph of this Agreement shall survive the
Closing and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph.
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. Seller hereby consents to an
assignment to an entity, the ownership and control of which is held by the same
persons owning and controlling Purchaser, provided such assignment is effected
prior to the expiration of the Mortgage Contingency Date.
<PAGE>
15. BROKER. The parties hereto acknowledge that CB Commercial Real
Estate Group Inc. ("Broker") is the only real estate broker involved in this
transaction. 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.
Purchaser agrees to indemnify, defend and hold harmless the Seller and any
partner, affiliate, parent of Seller, and all shareholders, employees, officers
and directors of Seller or Seller's partner, parent or affiliate (each of the
above is individually referred to as a "Seller Indemnitee") from all claims,
including attorneys' fees and costs incurred by a Seller Indemnitee as a result
of anyone's claiming by or through Purchaser any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated. 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.
16. DOCUMENTS AND INSPECTION OF PROPERTY.
a. Seller has delivered to Purchaser copies of the most recent
available tax bills, rent rolls, insurance premiums, and service contracts
(collectively the "Documents").
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 prior to Purchaser's execution of this
Agreement. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
17. MORTGAGE CONTINGENCY. Purchaser's obligations to consummate the
acquisition of the Property is subject to and conditioned upon Purchaser's
obtaining, in Purchaser's sole and reasonable discretion, a non-recourse
mortgage loan in the amount of $8,925,000 at market rates and terms. Purchaser
has applied for the loan and Purchaser shall deliver a copy of the
application(s) to the Seller. Upon receipt of a written response to any
application for a mortgage, Purchaser shall deliver a copy of that response to
Seller. If on or before July 10, 1996, Purchaser does not deliver to Seller a
copy of Purchaser's application for a mortgage loan and a copy of Purchaser's
check for the mortgage commitment fee in an amount equal to one-half of one
percent (1/2%) of the amount of the mortgage loan, then this Agreement shall be
terminated. If Purchaser is unable to obtain a satisfactory mortgage loan
commitment on or before August 7, 1996 ("Mortgage Contingency Date"), then upon
a Mortgage Contingency Notice (Exhibit A in the Escrow Agreement) delivered to
Seller and Escrow Agent no later than 5:00 P.M. Central Time on August 7, 1996,
Purchaser can elect to terminate this Agreement. In the event of termination
pursuant to this Paragraph, the Earnest Money plus all accrued interest thereon
shall be returned to Purchaser without further notification to or involvement
from seller and neither party shall have any further liability under this
Agreement.
<PAGE>
18. SURVIVAL OF INDEMNITIES. Notwithstanding anything in this Agreement
to the contrary, the parties' obligations to indemnify, defend and hold each
other harmless under various provisions of this Agreement shall forever survive
the termination of this Agreement or the Closing and delivery and recording of
the Deed.
19. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing, shall only mean such knowledge
or notice that has actually been received by Phillip Schechter or Mark Van
De Hey, the asset manager of the Property, and any representation or
warranty of the Seller is based upon those matters of which Phillip
Schechter or Mark Van De Hey 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, warranties and
covenants, 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 present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no
written notice that any such laws, rules or regulations are being
violated.
ii. The rent roll ("Rent Roll") attached hereto as Exhibit K
which will be updated as of the Closing Date is true and accurate.
iii. Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding
concerning the Property.
iv. The financial information which Seller has provided to
Purchaser, as required elsewhere in this Agreement, is the same
information which Seller relies upon when making reports to its
investors and when Seller files its tax returns. Seller has not
intentionally withheld any financial information of a material
nature.
c. The management, operation, leasing and maintenance of the
Property, as presently conducted by the Seller, shall continue until the
Closing Date.
d. If on or prior to the Closing Date, Seller discovers that a
representation or warranty is untrue, then upon receipt of notice from
Seller, Purchaser can elect to terminate this Agreement or take title to
the Property subject to the untrue representation or warranty.
e. For the period commencing with the execution of this Agreement
until the Closing Date, Seller shall deliver to the Purchaser a monthly
rent roll and each week a copy of an occupancy report.<PAGE>
20. SELLER'S RIGHT TO CURE. If on or prior to the Closing Date,
Purchaser discovers that any representation or warranty of Seller is untrue or
misleading in any material respect or that Seller is in default under this
Agreement or that Seller has failed to perform a required covenant
(individually or collectively, a "Breach"), then Purchaser shall give Seller
notice of such Breach. Upon receipt of notice from Purchaser, Seller shall
have ten (10) days in order to cure such Breach and, if necessary, the Closing
Date shall be extended accordingly. If, after making all reasonable efforts,
Seller is unable to cure the Breach, then Purchaser shall elect by notice to
Seller to either waive the Breach or terminate this Agreement. If Purchaser
fails to give Seller notice of a Breach, then Purchaser shall have waived its
rights to assert any claims for such Breach.
21. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit M is a
Phase I Environmental Site Assessment dated April 8, 1996 prepared by EMG
("Environmental Report") of the Property, which Seller is delivering to
Purchaser at Purchaser's request. Seller makes no representation or warranty
that the Environmental Report is accurate or complete. Purchaser hereby
releases Seller from any liability whatsoever with respect to the Environmental
Report, including, without limitation, the matters set forth in the
Environmental Report or the accuracy and/or completeness of the Environmental
Report.
22. 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.
23. 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.
24. TERMINATION. If Purchaser elects to terminate this Agreement
pursuant to any right of termination that Purchaser may have under the
applicable provisions of this Agreement, then upon delivery of a notice to
Seller and the Escrow Agent by Purchaser, the Earnest Money plus all accrued
interest thereon shall immediately be returned to Purchaser.
25. TAX DEFERRED EXCHANGE. Seller will cooperate with Purchaser in order
to enable Purchaser to obtain 1033 tax deferred exchanges; and multiple
forward and reverse 1031 tax deferred exchanges: provided, however, Seller
shall assume no liability with reference to exchanges or any obligation
pertaining to the transfer being made within the time periods required in order
to effectuate the aforesaid exchange.
<PAGE>
26. REVIEW OF PERSONAL PROPERTY. On or before the Closing Date,
Purchaser shall have the right to review the inventory of the personal property
to determine whether or not there has been a material change, and if so,
Purchaser shall receive a credit for the missing items.
27. TIME OF ESSENCE. Time is of the essence of this Agreement.
28. 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 addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
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: Stanley Canter
2120 Plaza Del Dios
Las Vegas, Nevada 89102
619/753-5055
619/753-2339 (FAX)
with a copy to: David Johnson
Woodburn & Wedge
300 S. Fourth Street
Suite 620
Las Vegas, Nevada 89101
702/387-1000
702/387-0024 (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
<PAGE>
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, or on the 4th
business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
29. 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:
a. Earnest Money;
b. One (1) fully executed copy of this Agreement; and
c. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller.
30. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of the State of Nevada.
31. 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.
32. 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.
33. 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
June 30, 1996.
SHERMAN OAKS LIMITED PARTNERSHIP
By: /s/Sherman Oaks Limited Partnership
by Stanley Canter, G.P.
------------------------------------
Executed by Seller on SELLER:
July 5, 1996.
SHADOWRIDGE INVESTORS, an Illinois
Joint Venture
By: Shadowridge Associates, an Illinois
limited partnership, a joint venture partner
By: Balcor Realty Associates-VI,
an Illinois general partnership
By: The Balcor Company, a
Delaware corporation
By: /s/Phillip A. Schechter
-------------------------
Authorized Agent
By: S-R Investors, an Illinois limited
partnership, a joint venture partner
By: Balcor Partners-XVIII, an Illinois
general partnership
By: The Balcor Company, a
Delaware corporation
By: /s/Phillip A. Schechter
-------------------------
Authorized Agent
<PAGE>
Shadow Ridge
CB Commercial Real Estate Group Inc. ("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.
CB COMMERCIAL REAL ESTATE GROUP
INC.
By:
-----------------------------------
___________________________________
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Rent Roll
L - Environmental Report
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 15th
day of July, 1996, by and between Jupiter Realty Corporation, an Illinois
corporation ("Purchaser"), and N.H. Associates, 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, subject to the terms of Paragraph 29 of this Agreement, of
Twenty-Four Million And No/100 Dollars ($24,000,000.00) (the "Purchase Price")
that certain property commonly known as North Hill Apartments, Atlanta,
Georgia, a 420 unit apartment complex legally described on Exhibit A attached
hereto, together with all improvements and fixtures 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.Upon the execution of this Agreement, the sum of One Hundred
Seventy-Five Thousand and No/100 Dollars ($175,000.00) (the "Original 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.On or before 2:00 p.m. Chicago time on August 29, 1996, Purchaser
shall deliver to Escrow Agent funds in the amount of One Hundred Seventy-Five
Thousand and No/100 Dollars ($175,000.00) (the "Additional Earnest Money",
together with the Original Earnest Money, the "Earnest Money"), provided that
Purchaser has not terminated this Agreement pursuant to Paragraph 7;
2.3.The assumption by Purchaser of the obligations relating to the
current financing encumbering the Property evidenced by Purchaser accepting
title to the Property subject to the obligations of Seller, as "Owner" under
the Existing Bond and Mortgage Documents (hereinafter defined); and
2.4.On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price (i.e., $24,000,000.00 less (a) the then outstanding principal
amount of the Bonds (hereinafter defined) and (b) the amount of the Earnest
Money), adjusted in accordance with Section 12 of this Agreement, by federally
wired "immediately available" funds, on or before 11:00 a.m Chicago time.
<PAGE>
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 First American Title
Insurance Company dated February 21, 1996 for the Property (the "Title
Commitment"). For purposes of this Agreement, "Permitted Exceptions" shall
mean: (a) rights of tenants in possession, as tenants only, under unrecorded
leases listed on the rent roll attached hereto as Exhibit L; (b) general real
estate taxes, association assessments, special assessments, special district
taxes and related charges not yet due and payable; (c) matters shown on the
"Survey" (hereinafter defined); (d) matters caused by the actions of Purchaser;
(e) the Existing Bond and Mortgage Documents including, without limitation, the
Regulatory Agreement (hereinafter defined); and (f) the title exceptions set
forth in Schedule B, Part II of the Title Commitment as Numbers 7 and 10
through 18 inclusive, to the extent that same affect the Property. All other
exceptions to title shall be referred to as "Unpermitted Exceptions". On the
Closing Date, Near North National Title Corporation, as agent for First
American Title Insurance Company (hereinafter referred to as "Title Insurer")
shall deliver to Purchaser a standard title policy in conformance with the
previously delivered Title Commitment, subject to Permitted Exceptions and
Unpermitted Exceptions waived by Purchaser (the "Title Policy"). Purchaser
shall pay for the costs of the Title Commitment and Title Policy and Purchaser
shall pay for the cost of any endorsements to, or extended coverage on, the
Title Policy.
3.2.Purchaser has received an updated survey of the Property prepared by
Construction Engineering Associates recertified April 12, 1996 (the "Survey").
Purchaser shall pay for all costs relating to the Survey of the Property.
3.3.The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS. Seller shall pay for the costs of the transfer
tax to be paid with reference to the "Deed" (hereinafter defined). In addition
to the costs set forth in Paragraphs 3.1 and 3.2, Purchaser shall pay for the
costs of all other stamps, intangible, transfer, documentary, recording, sales
tax and surtax imposed by law with reference to any other sale documents
delivered in connection with the sale of the Property to Purchaser and all
other charges of the Title Insurer in connection with this transaction. Each
party shall pay for its respective attorney's fees.
5. CONDITION OF TITLE.
5.1.Within ten (10) business days after the date of this Agreement,
Purchaser shall obtain a date-down to the Title Commitment to Purchaser. If
this date-down to the Title Commitment, any update to the Survey, or any other
date-down to the Title Commitment prior to "Closing" (as hereinafter defined)
discloses any new Unpermitted Exception, Seller shall have thirty (30) days
from the date of the respective date-down to the Title Commitment or updated
Survey, 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
<PAGE>
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 preceding sentence, 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 limited warranty deed (the "Deed") in recordable form subject only to the
Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1.Except as provided in the indemnity provisions contained in Paragraph
7.1 of this Agreement, Seller shall bear all risk of loss with respect to the
Property up to the earlier of the dates upon which either possession or title
is transferred to Purchaser in accordance with this Agreement. Notwithstanding
the foregoing, in the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost less than or equal to
$100,000.00 (as determined by Purchaser and Seller in good faith) Purchaser
shall not have the right to terminate its obligations under this Agreement by
reason thereof, but Seller shall, at Purchaser's discretion, either repair and
restore the Property prior to Closing in a manner satisfactory to Purchaser (in
which case the Closing Date shall be extended until completion of such
restoration, but in no event longer than sixty (60) days after the Closing
Date) 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. If Purchaser elects to
take an assignment of all insurance claims as provided for in this Paragraph 6,
Purchaser shall receive at Closing a credit against the Purchase Price in an
amount equal to any deductible(s) and uninsured amounts applicable thereto.
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 Purchaser and Seller in good faith), then this Agreement may
be terminated at the option of Purchaser, which option shall be exercised, if
at all, by Purchaser's written notice thereof to Seller within five (5)
<PAGE>
business days after Purchaser receives written notice of such fire or other
casualty and Seller's determination of the amount of such damages, and upon the
exercise of such option by Purchaser this Agreement shall become null and void,
the Earnest Money deposited by Purchaser shall be returned to Purchaser
together with interest thereon, and neither party shall have any further
liability or obligations hereunder. In the event that Purchaser does not
exercise the option set forth in the preceding sentence, the Closing shall take
place on the Closing Date and Seller shall assign and transfer to Purchaser on
the Closing Date all of Seller's right, title and interest in and to all
insurance proceeds paid or payable to Seller on account of the fire or
casualty.
6.2.If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3.Purchaser shall then notify Seller, within ten (10) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such ten (10) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1.During the period commencing on the date of the execution of this
Agreement and ending at 5:00 p.m. Chicago time August 29, 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
<PAGE>
Seller, to inspect the Property. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, and unaudited year end 1995 and year-to-date 1996
operating statements.
Purchaser shall have the right to verify, inspect, investigate and review,
in the Purchaser's sole discretion: (i) documentation of any covenants,
conditions and restrictions and other exceptions of title of record, (ii) the
condition of title to the Property and the Survey, as the same may be updated,
(iii) physical inspection of the Property including engineering investigation,
(iv) the Existing Bond and Mortgage Documents, (v) the leases and service
contracts, (vi) environmental condition of the Property, and (vii) any and all
other documentation or evidence relating to the ownership, zoning, financing,
value, income, expense, operation, leasing and maintenance and repair of the
Property. In addition, during the Inspection Period, Purchaser shall have the
right, at its sole cost, to have a licensed termite exterminator conduct an
inspection of the Property to determine whether there is a visible, active
termite infestation. From the date of this Agreement through Closing,
Purchaser and its agents, engineers, surveyors, appraisers, auditors and other
representatives shall have the right to enter upon the Property to inspect,
examine, survey, obtain engineering inspections, appraise, and otherwise do
that which, in the opinion of Purchaser, is necessary to determine the
boundaries, acreage and condition of the Property and to determine the
suitability of the Property for the uses intended by Purchaser (including
without limitation, inspect, review and copy any and all documents in the
possession or control of Seller, its agents, contractors or employees, and
which pertain to the construction, ownership, use, occupancy or operation of
the Property or any part thereof). Any inspection of units shall be made
during ordinary business hours after reasonable advance notice to Seller,
subject to the terms of the existing leases and with minimal interference to
the tenants. Also during such time period, Seller shall make all of Seller's
books, files and records, including without limitation, the current rent roll
for the Property, tax and insurance bills, utility account numbers and service
contracts relating in any way to the Property available for examination by
Purchaser and Purchaser's agents and representatives, who shall have the right,
all at Purchaser's expense, to make copies of such books, files and records and
to extract therefrom such information as they may desire, and who shall have
the right to audit and have certified by the auditors, thoroughly and
completely, all income and expenses, profits and losses, and operational
results of the Property for the calendar years 1993-1995 and for the current
calendar year to date, with delivery of an audit letter by Seller in the form
of Exhibit O attached hereto.
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 as near as reasonably possible
to the condition existing prior to the performance of such tests or
investigations by or on behalf of Purchaser. Purchaser shall defend, indemnify
and hold Seller and any affiliate, parent of Seller, and all shareholders,
employees, officers and directors of Seller or Seller's affiliate or parent
(hereinafter collectively referred to as "Affiliate of Seller") harmless from
any and all liability, cost and expense (including without limitation,
<PAGE>
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 reasonably acceptable to Seller.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph
7.1, Purchaser shall have the right to terminate this Agreement by giving
written notice of such termination to Seller at any time prior to the
expiration of the Inspection Period. If written notice is not received by
Seller pursuant to this Paragraph 7.1 prior to the expiration of the Inspection
Period, then the right of Purchaser to terminate this Agreement pursuant to
this Paragraph 7.1 shall be waived. If Purchaser terminates this Agreement by
written notice to Seller prior to the expiration of the Inspection Period: (i)
Purchaser shall promptly deliver to Seller copies of all studies, reports and
other investigations obtained by Purchaser in connection with its due diligence
during the Inspection Period; and (ii) the Earnest Money deposited by Purchaser
shall be immediately paid to Purchaser, together with any interest earned
thereon, and neither Purchaser nor Seller shall have any right, obligation or
liability under this Agreement, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in this Paragraph 7.1.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.1, shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
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
<PAGE>
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Purchaser,
any affiliate, parent of Purchaser, all shareholders, employees, officers and
directors of Purchaser or Purchaser's affiliate or parent, and their respective
successors and assigns covenant not to sue Seller or the Affiliates of Seller,
and hereby agree not to bring, assert or maintain any action or claim 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, or any liability associated therewith. As used herein,
"Environmental Laws" means all federal, state and local statutes, codes,
regulations, rules, ordinances, orders, standards, permits, licenses, policies
and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation or
conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.,
the Emergency Planning and Community Right-to-Know Act ("Right-to-Know Act"),
42 U.S.C. Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act ("Clean Water Act"), 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe Drinking Water
Act"), 42 U.S.C. Seciton 300f et seq., the Atomic Energy Act ("AEA"), 42 U.S.C.
Section 2011 et seq., the Occupational Safety and Health Act ("OSHA"),
29 U.S.C. Section 651 et seq., and the Hazardous Materials Transportation Act
(the "Transportation Act"), 49 U.S.C. Section 1802 et seq. As used herein,
"Hazardous Materials" means: (1) "hazardous substances," as defined by CERCLA;
(2) "hazardous wastes," as defined by RCRA; (3) any radioactive material
including, without limitation, any source, special nuclear or by-product
material, as defined by AEA; (4) asbestos in any form or condition; (5)
polychlorinated biphenyls; and (6) any other material, substance or waste to
which liability or standards of conduct may be imposed under any Environmental
Laws. Notwithstanding anything contained herein to the contrary, the terms of
this Paragraph 7.2 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
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
<PAGE>
anything contained herein to the contrary, the terms of this Paragraph 7.3
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.4.Seller has provided to Purchaser the following existing report:
Environmental/Industrial Hygiene Assessment Report prepared by Comprehensive
Environmental Assessments for the Lender (hereinafter defined), dated July 11,
1994 ("Existing Report"). Seller makes no representation or warranty
concerning the accuracy or completeness of the Existing Report. Purchaser
hereby releases Seller and the Affiliates of Seller from any liability
whatsoever with respect to the Existing Report, or, including, without
limitation, the matters set forth in the Existing Report, and the accuracy
and/or completeness of the Existing Report. Furthermore, Purchaser
acknowledges that it will be purchasing the Property with all faults disclosed
in the Existing Report. Notwithstanding anything contained herein to the
contrary, the terms of this Paragraph 7.4 shall survive the Closing and the
delivery of the Deeds and termination of this Agreement.
8. CLOSING.
8.1.The closing of this transaction (the "Closing") shall be September
19, 1996 (the "Closing Date"), subject to extension in accordance with the
terms of Paragraphs 5 and 6 of this Agreement, at the office of Title Insurer
in Atlanta, Georgia, or Chicago, Illinois, as the parties agree, at which time
Seller shall deliver possession of the Property to Purchaser. This transaction
shall be closed through an escrow with Title Insurer, in accordance with the
general provisions of the usual and customary form of deed and money escrow for
similar transactions in Georgia, or at the option of either party, the Closing
shall be a "New York style" closing at which the Purchaser shall wire the
Purchase Price to Title Insurer on the Closing Date and prior to the release of
the Purchase Price to Seller, Purchaser shall receive the Title Policy or
marked up commitment dated the date of the Closing Date. In the event of a New
York style closing, Seller shall deliver to Title Insurer any customary
affidavit in connection with a New York style closing.
8.2.On the Closing Date, the Purchaser shall assume all obligations of
the Seller under the Existing Bond and Mortgage Documents accruing from and
after the Closing Date as evidenced and/or secured by, among other items, the
Indenture (hereinafter defined), the Financing Agreement (hereinafter defined),
the Regulatory Agreement, the Guaranty (hereinafter defined), Multifamily Note
(hereinafter defined) and the Multifamily Deed to Secure Debt (hereinafter
defined), which Bonds will have an outstanding principal balance of
approximately $16,675,000.00 as of July 1, 1996. In addition, Purchaser or
Purchaser's affiliate shall assume all obligations accruing from and after the
Closing Date of the "Key Principal" under the terms of the Multifamily Note and
the Multifamily Deed of Trust. Seller hereby authorizes Purchaser to discuss
any and all issues relating to the Bonds and the Existing Bond and Mortgage
Documents with Fannie Mae, the Issuer, the Trustee, the Lender (all such terms,
hereinafter defined) and any other interested parties. Seller will reasonably
cooperate with Purchaser in facilitating such discussions.
<PAGE>
9. CLOSING DOCUMENTS.
9.1.On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, plus or minus prorations under
this Agreement, an assumption of the documents set forth in Paragraphs 9.2.3,
9.2.4 and 9.2.13 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. Except as otherwise provided in this Paragraph 9.2, no later than two
(2) business days prior to the Closing Date, Seller shall deliver to Purchaser
an original or draft of the following:
9.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a special warranty bill of sale conveying the Personal
Property (in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the
service contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, or if original is not available, certified to the
best of Seller's knowledge to be true and correct copies thereof, leases,
certificates of occupancy, plans and specifications, contracts, permits,
guarantees and warranties 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 subject to terms of
the leases;
9.2.9. evidence of the termination of the management agreement;
9.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the
leases and the obligation to refund the security deposits (in the form of
Exhibit K);
9.2.11. an updated rent roll in a form similar to Exhibit L attached
hereto certified by Seller to be true, accurate and complete as of the
date of the rent roll;
<PAGE>
9.2.12. originals, to the extent in Seller's possession or control,
or copies of Existing Bond and Mortgage Documents;
9.2.13. an assignment and assumption of Existing Bond and Mortgage
Documents (in the form of Exhibit M);
9.2.14. an opinion of bond counsel satisfying the requirements of
Paragraph 18.2.2 below;
9.2.15. on the Closing Date, the Title Policy (or marked-up
commitment therefor) insuring fee simple title to the Property in
Purchaser (or Purchaser's assignee, if applicable) in the amount of the
Purchase Price subject only to the Permitted Exceptions and the
Unpermitted Exceptions waived by Purchaser;
9.2.16. to the extent in the possession or control of Seller, all
keys for the Property, with identification of the locks to which each such
key relates;
9.2.17. a certificate from Seller in form and substance satisfactory
to bond counsel to enable bond counsel to render a standard opinion as to
the tax-exempt status of the Bonds, such form to be agreed upon by the
parties prior to the end of the inspection period; and
9.2.18. a properly completed transfer tax form, if required.
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7 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 $50,000.00 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 (which will be
assigned to and assumed by Purchaser and credited to Purchaser at Closing);
water and other utility charges; fuels; prepaid operating expenses; prepaid or
accrued (as the case may be) interest on the Existing Bond and Mortgage
Documents; management fees if and to the extent payable to a third party
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 11:59 p.m. on the Closing Date, and credited against the balance of the cash
due at Closing. To the extent any escrows or bond repayment deposits
established in connection with the Bonds or Existing Bond and Mortgage
Documents are not refunded to Seller at Closing, the proceeds in said escrows
shall be assigned to Purchaser and the amounts thereof shall be a credit to
Seller at the 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 commercially reasonable efforts to
collect all amounts which, upon collection, would constitute Post-Closing
Receipts hereunder. Within 120 days after the Closing Date, Purchaser shall
deliver to Seller a reconciliation statement of Post-Closing Receipts through
the first 90 days after the Closing Date. Upon the delivery of the
Post-Closing Receipts reconciliation, Purchaser shall deliver to Seller any
Post-Closing Receipts owing to Seller and not previously delivered to Seller in
accordance with the terms hereof. Seller retains the right to conduct an
audit, at reasonable times and upon reasonable notice, of Purchaser's books and
records to verify the accuracy of the Post-Closing Receipts reconciliation
statement and upon the verification of additional funds owing to Seller,
Purchaser shall pay to Seller said additional Post-Closing Receipts and the
cost of performing Seller's audit. Paragraph 12.2 of this Agreement shall
survive the Closing and the delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
<PAGE>
consent of Seller to any entity affiliated with Purchaser, or the principals of
Purchaser, or to any fund sponsored by Purchaser or its affiliate, provided
that Purchaser remains liable for and the assignee assumes the obligations of
Purchaser hereunder. If any assignee of Purchaser under this Agreement
petitions or applies for relief in bankruptcy or Assignee is adjudicated as a
bankrupt or insolvent, or Assignee files any petition, application for relief
or answer-seeking or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief for
itself under any present or future federal, state or other statute, law, code
or regulation relating to bankruptcy, insolvency, or other relief for debtors
(collectively, a "Bankruptcy Filing") on or before the Closing Date, said
Bankruptcy Filing shall be a default under this Agreement and Purchaser shall
indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Earnest Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Apartment Realty Advisors ("ARA") (to be paid by Seller) of the
Property in the event the transaction set forth herein closes. Purchaser and
Seller shall indemnify, defend and hold the other party hereto harmless from
any claim whatsoever (including without limitation, reasonable attorney's fees,
court costs and costs of appeal) from anyone claiming by or through the
indemnifying party any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated other than to ARA.
The indemnifying party shall undertake its obligations set forth in this
Paragraph 15 using attorneys selected by the indemnifying party and reasonably
acceptable to the indemnified party. The provisions of this Paragraph 15 will
survive the Closing and delivery of the Deed.
16. REPRESENTATIONS, WARRANTIES AND COVENANTS.
16.1. Any reference herein to Seller's knowledge or notice of any
matter or thing shall only mean such knowledge or notice that has actually been
received by Daniel Charleston or Mike Becker, Asset Manager of the Property,
(the "Seller's Representative"), and any representation or warranty of the
Seller is based upon those matters of which the Seller's Representative has
actual knowledge. Any knowledge or notice given, had or received by any of
Seller's agents, servants or employees shall not be imputed to Seller, the
general partner or limited partners of Seller, the subpartners of the general
partner or limited partners of Seller or Seller's Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties as of the date of
this Agreement and the Closing Date subject to Paragraph 16.4 of this
Agreement, which representations and warranties are made to Seller's knowledge
and which shall not survive Closing: (i) Seller has no knowledge of any
pending or threatened litigation, claim, cause of action or administrative
proceeding concerning the Property; (ii) Seller has the power to execute and
deliver this Agreement and consummate the transactions contemplated herein;
(iii) the rent roll attached hereto as Exhibit L which Seller will update as of
the Closing Date is accurate as of the date set forth thereon; (iv) a true and
<PAGE>
correct list of the Existing Bond and Mortgage Documents is attached as
Exhibit N; (v) Seller has not received any written notice that Seller or Balcor
Realty Investors 85-Series III is in default under any of the Existing Bond and
Mortgage Documents to which they are a party; (vi) Seller has not taken any
action (or failed to take any required action under the Existing Bond and
Mortgage Documents) the effect of which is to cause the Bonds to be "arbitrage
bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986,
as amended (and the regulations thereunder), or to otherwise cause the interest
on the Bonds not to be excluded from gross income for federal income tax
purposes; (vii) Seller has no employees at the Property; (viii) Seller has not
entered into any agreement concerning the sale of the Property which conflicts
with the terms of this Agreement; (ix) the list of service contracts attached
hereto as Exhibit H is complete as of the date noted on Exhibit H, and Seller
has no knowledge of any material default by Seller under the terms of any said
service contracts; (x) Seller has no knowledge of any material default by
Seller under any lease for the Property; (xi) except as may be set forth in the
Existing Report, Seller has not received any notice from any governmental
authority having jurisdiction over the Property of any uncured violation of any
Environmental Law with respect to the Property; (xii) Seller has not received
any notice from any person of any claim of a default on the part of any party
to any of the Existing Bond and Mortgage Documents which questions the
authority of the Issuer to execute and deliver the Bonds or the validity or
enforceability of the Existing Bond and Mortgage Documents; (xiii) Seller has
not received any written notice of any fire or building code violations with
respect to the Property; and (xiv) Seller has no knowledge of any additional
environmental reports of the Property commissioned by Seller since June 1,
1994.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
16.4. If at any time after the execution of this Agreement either
Purchaser or Seller becomes aware of information which causes a representation
or warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose that information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate action to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement and the sole remedy of the other party shall be to terminate
this Agreement. Notwithstanding anything contained herein to the contrary, if
the status of tenancies changes between the date of the rent roll attached
hereto and the date of the rent roll delivered at Closing, provided the change
in status is not caused by a breach of Seller's covenants contained in
Paragraphs 16.2 or 16.6 herein, the Purchaser shall not have the right to
terminate this Agreement or make any claim for a breach of a representation or
warranty hereunder involving the rent roll or tenancies thereunder. Purchaser
and Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement of which the
claiming party has actual knowledge prior to the Closing.
<PAGE>
16.5. The parties agree that the representations contained herein
shall survive Closing for a period of one hundred twenty (120) days (i.e., the
claiming party shall have no right to make any claims against the other party
for a breach of a representation or warranty after the expiration of one
hundred twenty (120) days immediately following Closing).
16.6. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained and operated the Property during the
period of Seller's ownership, subject to reasonable wear and tear and casualty,
including maintaining casualty insurance for the Property.
17. LIMITATION OF LIABILITY.
17.1. Neither any Affiliate of Seller, nor any of their or Seller's
respective beneficiaries, shareholders, partners, directors, officers, agents
or employees, heirs, successors or assigns shall have any personal liability of
any kind or nature for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
17.2. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum aggregate liability of Seller for
damages in connection with or arising out of or in any way related to a breach
by Seller under this Agreement or any document or conveyance agreement in
connection with the transaction set forth herein after the Closing shall be
$300,000.00. Purchaser hereby waives for itself and anyone who may claim by,
through or under Purchaser any and all right to sue or recover from Seller any
amount greater than said limit.
18. CONDITIONS PRECEDENT.
18.1. The Property is currently encumbered by those certain
Multifamily Housing Revenue Refunding Bonds, (North Hill Apartments Project)
Series 1994 in the original aggregate principal amount of $16,880,000.00 (the
"Bonds") as evidenced and/or secured by, among other items, the following
documents (collectively with any other documents made in connection with the
Bonds and the financing and/or refinancing relating thereto with respect to the
Property are hereinafter referred to as the "Existing Bond and Mortgage
Documents"): (a) the Multifamily Note (the "Note") made by Seller for the
benefit of Issuer, endorsed by Issuer to Lender, and endorsed by Lender to the
Federal National Mortgage Association ("Fannie Mae"); (b) that certain
Indenture of Trust dated as of December 1, 1994 (the "Indenture") between the
Housing Authority of the County of DeKalb, Georgia, a public body corporate and
politic of the State of Georgia (the "Issuer") and Bank South N.A., Atlanta,
Georgia, a national banking association (the "Trustee"); (c) the Financing
Agreement dated as of December 1, 1994 (the "Financing Agreement") pursuant to
which the proceeds of the Bonds were loaned to Seller, by and among the Issuer,
the Trustee, the Seller and Washington DUS, Inc., a Delaware corporation (the
"Lender"); (d) the Second Amended and Restated Land Use Restriction Agreement
dated as of December 1, 1994 (the "Regulatory Agreement") by and among the
Issuer, the Seller and the Trustee; (e) the Multifamily Deed to Secure Debt,
<PAGE>
Assignment of Rents and Security Agreement made by Seller for the benefit of
Issuer; (f) the Replacement Reserve and Security Agreement dated December 1,
1994 (the "Replacement Reserve") by and between Seller and Lender; and (g) the
Guaranty Agreement dated December 1, 1994 (the "Guaranty") by and between
Balcor Realty Investors 85-Series III, a Real Estate Limited Partnership, an
Illinois limited partnership, and the Issuer; and (h) those documents listed on
Exhibit N attached hereto.
18.2. Purchaser and Seller agree that the performance of their
obligations under this Agreement shall be subject to the party(ies) (as
specified below) unconditionally procuring, using commercially reasonable
efforts, on or before the Closing Date the following:
18.2.1. Seller and Purchaser obtaining, on terms acceptable to
Purchaser and Seller in their sole and absolute discretion, the written
consent of Issuer, Trustee, Lender and Fannie Mae and any other applicable
parties to (a) the assignment to and assumption by Purchaser of the Bonds
and the Existing Bond and Mortgage Documents and (b) the sale of the
Property to Purchaser;
18.2.2. Purchaser and Seller satisfying all other conditions to the
transfer of the Bonds arising out of the Existing Bond and Mortgage
Documents upon terms reasonably acceptable to Purchaser including, without
limitation, any bond counsel's opinion or opinion of Purchaser's counsel
required by such transfer;
18.2.3. Seller obtaining, on terms acceptable to Seller in Seller's
sole and absolute discretion, the written acknowledgment of Issuer,
Trustee, Lender and Fannie Mae to the release of Seller and Seller's
affiliated entities in connection with any and all liabilities and
obligations arising out of the Bonds and Existing Bond and Mortgage
Documents;
18.2.4. Seller shall have executed and delivered to bond counsel a
certificate in form and substance sufficient to enable bond counsel to
render a standard opinion as to the tax-exempt status of the Bonds; and
18.2.5. Bond counsel shall have committed to issuing its opinion as
required under the Existing Bond and Mortgage Documents.
The foregoing conditions set forth in Paragraphs 18.2.1, 18.2.2, 18.2.3, 18.2.4
and 18.2.5 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 Issuer, Trustee, Lender and Fannie Mae all
reasonably requested financial and other information.
18.3. In the event any of the Conditions Precedent are not satisfied
or waived on or before the Closing Date, 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.
<PAGE>
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: N.H. Associates
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: Jupiter Realty Corporation
1050 17th Street
Suite 1000
Denver, Colorado 80265
Attention: Greg Davine
(303) 893-7073
(303) 893-7001 (FAX)
and to: Jupiter Realty Corporation
92 Broad Street
Charleston, South Carolina 29401
Attention: Jay Luzuriaga
(803) 853-1255
(803) 853-1257 (FAX)
and one copy to: Jenner & Block
330 North Wabash
Chicago, Illinois 60611
Attention: Donald Resnick, Esq.
(312) 222-9350
(312) 527-0484 (FAX)
<PAGE>
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
21. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
22. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Georgia, except that with respect to the retainage of the
Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
23. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
24. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
25. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
26. 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 accruing from and after the Closing Date. 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.
<PAGE>
27. PROPERTY EXCHANGE. At Purchaser's election, the Property will be used by
Purchaser to constitute replacement property, in an exchange under Section 1031
of the Internal Revenue Code, for certain property which Purchaser or its
affiliates currently owns (the "Relinquished Property"). Seller will cooperate
with Purchaser (at no cost to Seller) in effecting such an exchange in
compliance with the Internal Revenue Code and applicable treasury regulations,
to the extent that Seller will consent to and acknowledge an assignment of
Purchaser's rights under this Agreement to the Title Company, or to another
qualified intermediary designated by Purchaser for purposes of acquiring the
Property with proceeds from the disposition of the Relinquished Property.
Seller will not be responsible for the tax consequences to Purchaser of the
transactions contemplated under this Agreement and under the agreement to sell
the Relinquished Property. Seller will not be required to accept title to the
Relinquished Property and will have no obligations whatsoever to the owner of
the Relinquished Property. The assignment by Purchaser of its rights hereunder
to the Title Company, or to another qualified intermediary, for purposes of
effecting such an exchange, will not relieve Purchaser of any of its
obligations under this Agreement.
28. ATTORNEYS' FEES. In the event of a default by either party of its
obligations under this Agreement, the prevailing party in any action or
proceeding in any court in connection therewith shall be entitled to recover
from such other party its costs and expenses, including reasonable legal fees
and associated court costs, subject to the maximum aggregate liability of
Seller under Paragraph 17.2 of this Agreement.
29. PHYSICAL OCCUPANCY REQUIREMENT. If the rent roll delivered at Closing in
accordance with Paragraph 9.2.11 of this Agreement indicates a physical
occupancy rate for the Property of less than ninety-two percent (92%), then the
Purchase Price shall be reduced by an amount equal to the product of (a) Six
Thousand and No/100 Dollars ($6000.00) multiplied by (b) the amount by which
ninety-two percent (92%) exceeds the actual percentage of physical occupancy
for the Property multiplied by 100 (rounded to the nearest whole number). For
example, if the rent roll delivered at Closing reflects a physical occupancy
rate of ninety-five percent (95%), then there will be no reduction in the
Purchase Price. If the rent roll delivered at Closing reflects a physical
occupancy rate of ninety and 40/100 percent (90.40%), then the Purchase Price
will be reduced by $12,000 (i.e., 92% minus 90.4% equals 1.6%, rounded to the
nearest whole number equals 2%, times 100 equals 2, times $6000.00 equals
$12,000.00).
30. SEVERABILITY. If any provision of this Agreement conflicts with
applicable law, such conflict shall not affect other provisions of which can be
given effect without the conflicting provisions, and to this end the provisions
of this Agreement are declared to be severable.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
JUPITER REALTY CORPORATION,
an Illinois corporation
By: /s/Gregory R. Davine
---------------------------
Name: Gregory R. Davine
---------------------------
Its: Vice President
---------------------------
SELLER:
N.H. Associates, an Illinois limited partnership
By: North Hill Partners, an Illinois joint venture, its general partner
By: Thornhill Limited Partnership, an Illinois limited partnership,
a joint venture partner
By: Balcor Partners-XVI, an Illinois general partnership,
its general partner
By: RGF-Balcor Associates-II, an Illinois general partnership,
a partner
By: The Balcor Company, a Delaware corporation,
a general partner
By: /s/Phillip A. Schechter
----------------------------
Name: Phillip A. Schechter
----------------------------
Its: Authorized Agent
----------------------------
<PAGE>
_________________ of Apartment Realty Advisors ("Seller's Broker") executed
this Agreement in its capacity as a real estate broker and acknowledges that
the fee or commission due it from Seller as a result of the transaction
described in this Agreement is as set forth in that certain Listing Agreement,
dated December 5, 1995 between Seller and Seller's Broker (the "Listing
Agreement"). Seller's Broker also acknowledges that payment of the aforesaid
fee or commission is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt to
the Seller at the Closing for the fee or commission due Seller's Broker and a
release in the appropriate form stating that no other fees or commissions are
due to it from Seller or Purchaser.
APARTMENT REALTY ADVISORS
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - FIRPTA Statement
K - Notice to Tenants
L - Rent Roll
M - Assignment and Assumption of Existing Bond and Mortgage Documents
N - Additional Existing Bond and Mortgage Documents
O - Audit Letter
<PAGE>
N.H. ASSOCIATES
July 15, 1996
Jupiter Realty Corporation
1050 17th Street
Suite 1000
Denver, Colorado 80265
Attention: Greg Devine
Re: North Hill Apartments, Atlanta, Georgia
Dear Mr. Devine:
Reference is hereby made to that certain Agreement of Sale (the
"Agreement") dated July 15, 1996 by and between N.H. Associates, an Illinois
limited partnership ("Seller") and Jupiter Realty Corporation, an Illinois
corporation ("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 Condition 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 September 12, 1996 extending the date
for the satisfaction of the Conditions Precedent until October 14, 1996, in
which event the Closing of this transaction shall be extended to the date which
is five (5) business days after the satisfaction of the Conditions Precedent,
but in no event later than October 21, 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 September 12, 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 October 14, 1996,
then the Agreement shall be terminated, and the Earnest Money shall be
immediately paid to Purchaser, together with any interest earned thereon, and
neither Seller nor Purchaser shall have any right, obligation or liability
under the Agreement, except for the indemnity set forth herein in Paragraphs 7
and 15 of the Agreement.
Purchaser hereby agrees to pay all costs and expenses associated with
procuring and satisfying the Conditions Precedent, including, but not limited
to, any opinion of counsel required under the Existing Bond Documents and any
assumption or transfer fee or related fees due Issuer, Trustee, Lender or
<PAGE>
Fannie Mae in connection with the sale of the Property to Purchaser or the
assignment to and assumption of the Existing Bond and Mortgage Documents by
Purchaser. In the event of a termination of the Agreement under either the
terms of Paragraph 7 of the Agreement or the terms of this letter, all expenses
incurred in association with procuring and satisfying the Conditions Precedent
shall be deducted from the Earnest Money and paid. The balance of the Earnest
Money, together with any interest earned thereon, shall then 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,
N.H. Associates, an Illinois limited partnership
By: North Hill Partners, an Illinois joint venture, its general partner
By: Thornhill Limited Partnership, an Illinois limited partnership, a
joint venture partner
By: Balcor Partners-XVI, an Illinois general partnership, its
general partner
By: RGF-Balcor Associates-II, an Illinois general partnership,
a partner
By: The Balcor Company, a Delaware corporation, a general
partner
By: /s/ Phillip A. Schechter
-----------------------------------
Name: Phillip A. Schechter
-----------------------------------
Its: Authorized Agent
-----------------------------------
ACCEPTED AND AGREED TO this day of July, 1996.
JUPITER REALTY CORPORATION,
an Illinois, corporation
By: /s/Gregory R. Davine
---------------------------------
Name: Gregory R. Davine
---------------------------------
Its: Vice President
---------------------------------
<PAGE>
MASTER AMENDMENT AND AGREEMENT
This Master Amendment and Agreement (this "Agreement") is entered into as
of this 22nd day of May, 1996 by and among the selling entities set forth on
the signature pages attached hereto (each entity being referred to herein as a
"Seller" and collectively as the "Sellers") and ERP Operating Limited
Partnership, an Illinois limited partnership ("Purchaser").
R E C I T A L S
A. Each Seller and the Purchaser have entered into an Agreement of Sale
dated as of April 23, 1996 (herein called the "Purchase Agreement") for the
sale by such Seller to Purchaser of certain property described therein. All
capitalized terms which are used herein but which are not otherwise defined
herein shall have the meaning ascribed to such term in the applicable Purchase
Agreement.
B. Each Purchase Agreement provides that during the Approval Period,
Purchaser shall have the right to review the status of title of the Property
(including, determining what endorsements, if any, the Title Insurer will make
available to Purchaser).
C. Each Purchase Agreement further provides that each Seller will
deliver to Purchaser an Updated Survey and Purchaser shall have ten (10) days
from the date of receipt of the Updated Survey to approve the Updated Survey.
D. Purchaser has reviewed the status of title for each Property and has
reviewed certain of the Updated Surveys; provided, however, Purchaser and
Seller have not yet agreed upon "Permitted Exceptions" for each Property.
E. Purchaser and Seller desire to amend each Purchase Agreement to give
Purchaser and Seller until May 23, 1996 to agree upon Permitted Exceptions for
each Property.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Seller (with respect to the Purchase
Agreement to which such Seller is a party) and the Purchaser, hereby agree as
follows:
<PAGE>
A G R E E M E N T
1. RECITALS. The recitals set forth above are hereby incorporated
herein by reference as if same were fully set forth herein.
2. AMENDMENT. Purchaser and Seller hereby agree that Purchaser and
Seller shall have until the later of: (i) the expiration of the Approval Period
(as same may have been extended) or (ii) May 23, 1996 (the "Deadline Date") to
agree upon Permitted Exceptions for each Purchase Agreement (subject to
Purchaser's additional right to have 10 days to review Updated Surveys). If
Purchaser and Seller are unable to agree upon Permitted Exceptions on or prior
to the Deadline Date, then Seller shall have the right to elect to either
terminate the applicable Purchase Agreement, in which case the applicable
Earnest Money, including interest thereon, shall be returned to Purchaser
immediately following the applicable Seller's receipt of the Reports or (ii)
agree to cure the title objections identified by Purchaser as being
problematic, which cure may be effectuated by causing the Title Insurer, at
such Seller's expense, to insure over any objection, if applicable.
3. Miscellaneous
A. Except as modified herein, each Purchase Agreement shall remain
unmodified and in full force and effect.
B. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
PURCHASER
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment
trust
By: /s/Daniel L. Baskes
----------------------------------
Name: Daniel L. Baskes
--------------------------------
Title: Attorney
-------------------------------
<PAGE>
Lakeville Resort Apartments
LAKEVILLE INVESTORS, an Illinois joint venture
By: Balcor Realty Investors 85- Series III A Real
Estate Limited Partnership, a partner in
Lakeville Investors
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
-----------------------------
Name: Alan Lieberman
Its: Senior Vice President
By: Lakeville Partners, an Illinois limited
partnership, a partner in Lakeville Investors
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
------------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
Park Place II Apartments
PLYMOUTH PLACE ASSOCIATES, an Illinois limited
partnership
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
-----------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
Country Ridge Apartments
Country Ridge Associates, an Illinois limited
partnership
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
--------------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
MASTER AMENDMENT AND AGREEMENT #2
This Amendment and Agreement #2 (this "Agreement") is entered into as of
this 22nd day of May, 1996 by and among the selling entities set forth on the
signature pages attached hereto (each entity being referred to herein as a
"Seller" and collectively as the "Sellers") and ERP Operating Limited
Partnership, an Illinois limited partnership ("Purchaser").
R E C I T A L S
A. Each Seller and the Purchaser have entered into an Agreement of Sale
dated as of April 23, 1996 (herein called the "Purchase Agreement") for the
sale by such Seller to Purchaser of certain property described therein. All
capitalized terms which are used herein but which are not otherwise defined
herein shall have the meaning ascribed to such terms in the applicable Purchase
Agreement.
B. Each Purchase Agreement provides that during the Approval Period,
Purchaser shall have the right to review the status of title of the Property
(including, determining what endorsements, if any, the Title Insurer will make
available to Purchaser).
C. Each Purchase Agreement further provides that each Seller will
deliver to Purchaser an Updated Survey and Purchaser shall have ten (10) days
from the date of receipt of the Updated Survey to approve the Updated Survey.
D. Purchaser has reviewed the status of title for each Property and has
reviewed certain of the Updated Surveys.
E. The Purchase Agreements further provide that promptly following the
Approval Period, Purchaser and each Seller will identify the exceptions to
title which have been agreed to by Purchaser and such Seller.
F. The parties desire to enter into this Agreement to identify the
"Permitted Exceptions" for each Property and to set forth the parties agreement
with respect to title and survey matters as of the date hereof and to also set
forth certain additional agreements of the parties.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Seller (with respect to the Purchase
Agreement to which such Seller is a party) and the Purchaser, hereby agree as
follows:
<PAGE>
A G R E E M E N T
1. Surveys.
A. As of the date hereof, Purchaser has not yet received and/or
reviewed the Updated Surveys for the following properties:
(1) Briarwood Place
(2) Canyon Sands
(3) Desert Sands
(4) Sunnyoak Village
(5) Rosehill Pointe
(6) Post Place
In accordance with each Purchase Agreement, Purchaser shall have ten (10)
days following Purchaser's receipt of each Updated Survey to approve or
disapprove of the applicable Updated Survey, all as more specifically set forth
in each Purchase Agreement. If the Updated Survey is approved by Purchaser,
all items disclosed by the Updated Survey shall be "Permitted Exceptions".
B. In addition, Purchaser has reviewed and approved of the Updated
Surveys for the following properties.
(1) Brierwood Apts.
(2) Country Ridge
(3) Forest Ridge I
(4) Forest Ridge II
(5) Lakeville
(6) Mallard Cove
(7) Park Place I
(8) Park Place II
(9) Ridgetree I
(10) Ridgetree II
Each Seller (solely with respect to the Property owned by such Seller)
hereby agrees to reasonably assist Purchaser in causing the surveyor to correct
certain clean up items identified by Purchaser during its review of the Survey.
2. Title Matters. Purchaser has reviewed the title commitments for all
of the properties. Attached hereto as Exhibit A is a list of "Permitted
Exceptions" for each Property. Notwithstanding anything contained in this
Agreement or the exhibits hereto to the contrary, any Permitted Exceptions set
forth on Exhibit A which have the notation "awaiting survey" written next to
the applicable Permitted Exception (herein called "Survey Based Exceptions")
have not been agreed to by Purchaser because Purchaser has not yet reviewed the
Updated Survey which identifies the location of the applicable Permitted
Exception. Purchaser shall have until 10 days following Purchaser's receipt of
the Updated Survey to advise the applicable Seller, in writing, whether any
Survey Based Exception is or is not reasonably acceptable to Purchaser. If
Purchaser advises the applicable Seller that any Survey Based Exception is not
reasonably acceptable to Purchaser, then the applicable Seller shall have five
(5) business days following receipt of such notice, to elect to either
terminate the applicable Purchase Agreement, in which case the applicable
Earnest Money, including interest thereon, shall be returned to Purchaser
immediately following the applicable Seller's receipt of the Reports or (ii)
<PAGE>
agree to cure the title objections identified by Purchaser, which cure may be
effectuated by causing the Title Insurer, at such Seller's expense, to insure
over any objection, if applicable.
3. Assignment of Partnership Interests. If requested to do so by
Purchaser, each Seller hereby agrees, at no cost or expense to such Seller, to
cooperate in good faith with Purchaser in structuring the conveyance of
Property by the applicable Seller to Purchaser as a conveyance of title to such
Property by the applicable Seller into a partnership or limited liability
company having the applicable Seller and/or affiliates of the applicable Seller
as its sole partners (or members) and then, at closing, assigning to Purchaser
the partnership (or membership) interests in the partnership (or limited
liability company). In such case, the Purchaser hereby agrees to indemnify and
hold the applicable Seller harmless from and against any and all loss, cost,
expense, liability or damage (including reasonable attorneys fees) incurred by
such Seller arising out of Seller's conveyance in and out of such partnership
(or limited liability company) provided that such loss, cost, expense,
liability or damage (including reasonable attorneys fees) would not have been
suffered or incurred by such Seller if such Property had been conveyed directly
by such Seller to Purchaser.
4. Miscellaneous
A. Except as modified herein, each Purchase Agreement shall remain
unmodified and in full force and effect.
B. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
[See Attached Signature Blocks]
<PAGE>
PURCHASER
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment
trust
By: /s/Linda A. Menich
------------------------------------
Name: Linda A. Menich
------------------------------------
Title: Assistant Vice President
------------------------------------
<PAGE>
Lakeville Resort Apartments
LAKEVILLE INVESTORS, an Illinois joint venture
By: Balcor Realty Investors 85- Series III A Real
Estate Limited Partnership, a partner in
Lakeville Investors
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
-----------------------------
Name: Alan Lieberman
Its: Senior Vice President
By: Lakeville Partners, an Illinois limited
partnership, a partner in Lakeville Investors
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
------------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
Park Place II Apartments
PLYMOUTH PLACE ASSOCIATES, an Illinois limited
partnership
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
-----------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
Country Ridge Apartments
Country Ridge Associates, an Illinois limited
partnership
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
--------------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
May 22, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between The Lakeville Investors, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Lakeville Apartments, Petaluma, California (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"July 19, 1996" in the seventh line of Section 9 thereof to "August 3, 1996".
Please acknowledge Seller's acceptance of this modification to the Agreement
by executing this letter in the space provided below and returning it via
facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Bruce C. Strohm
----------------------------------
Bruce C. Strohm
Executive Vice President
Approved and Accepted this 22nd day of May, 1996
LAKEVILLE INVESTORS, an Illinois joint venture
By: The Balcor Company, a Delaware corporation,
a general partner of its general partner
By: /s/ Alan Lieberman
------------------------------
Alan Lieberman
Senior Vice President
<PAGE>
July 8, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Lakeville Investors, as Seller, and ERP Operating
Limited Partnership, as Purchaser, for the purchase of Lakeville
Apartments, Petaluma, California (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"August 3, 1996" in the seventh line of Section 9 thereof to "September 3,
1996". Please acknowledge Seller's acceptance of this modification to the
Agreement by executing this letter in the space provided below and returning it
via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
-------------------------------
Shelley L. Dunck
Vice President
Approved and Accepted this 8th day of July, 1996
LAKEVILLE INVESTORS
By: Balcor Realty Investors 85-Series III A Real
Estate Limited Partnership, a partner
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Alan Lieberman
------------------------------
Name: Alan Lieberman
Title: Senior Vice President
<PAGE>
By: Lakeville Partners, an Illinois limited partnership,
a partner
By: Balcor Partners-XIX, an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Alan Lieberman
------------------------------
Name: Alan Lieberman
Title: Senior Vice President
<PAGE>
May 22, 1996
VIA FACSIMILE MAIL
Plymouth Place Associates The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Plymouth Place Associates, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of Park
Place II Apartments, Plymouth, Minnesota (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"July 19, 1996" in the ninth line of Section 9 thereof to "August 3, 1996".
Please acknowledge Seller's acceptance of this modification to the Agreement
by executing this letter in the space provided below and returning it via
facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Bruce C. Strohm
-------------------------------
Bruce C. Strohm
Executive Vice President
Approved and Accepted this 22nd day of May, 1996
PLYMOUTH PLACE ASSOCIATES,
an Illinois limited partnership
By: Balcor Realty Associates-XVIII, an Illinois general partnership
its general partner
By: The Balcor Company, a Delaware corporation,
a general partner
By: /s/ Alan Lieberman
------------------------------
Alan Lieberman
Senior Vice President
<PAGE>
July 8, 1996
VIA FACSIMILE MAIL
Plymouth Place Associates The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Plymouth Place Associates, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Park Place II Apartments, Plymouth, Minnesota (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"August 3, 1996" in the ninth line of Section 9 thereof to "September 3,
1996". Please acknowledge Seller's acceptance of this modification to the
Agreement by executing this letter in the space provided below and returning
it via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
-------------------------------
Shelley L. Dunck
Vice President
Approved and Accepted this 8th day of July, 1996
PLYMOUTH PLACE ASSOCIATES,
an Illinois limited partnership
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Alan Lieberman
------------------------------
Name: Alan Lieberman
Title: Senior Vice President
<PAGE>
