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) February 21, 1997
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
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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a) 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 $1,924,000
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 unaffiliated limited partner assigned its interest in the Joint
Venture to the Partnership and the Partnership's 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"), from
two unaffiliated parties, 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.
The Partnership contracted to sell the property to an unaffiliated party, EEA
Development, Inc., a Delaware corporation, on February 21, 1997 for a sale
price of $22,750,000. On February 27, 1997, the purchaser exercised its option
to terminate the agreement of sale. On March 4, 1997, the agreement of sale
was reinstated.
The purchaser has deposited $150,000 into an escrow account as earnest money
and is obligated to deposit an additional $150,000 on or before March 13, 1997.
The purchaser will assume the existing first mortgage loan which is expected to
have an outstanding principal balance of approximately $16,552,000 at closing,
scheduled to occur on March 27, 1997. If certain conditions described in the
agreement of sale relating to the assumption of the loan and the additional
financing of the property by the purchaser have not been satisfied on or before
March 20, 1997, the Joint Venture and the purchaser each have the right to
extend the date by which such obligations must be met to April 21, 1997, in
which event the closing will be held five days after the obligations are
satisfied.
The remaining portion of the sale price will be payable in cash at closing.
From the proceeds of the sale, the Joint Venture will pay $227,500 to an
unaffiliated party as a brokerage commission. No portion of the sale proceeds
will be utilized towards the repayment of the Note, and the Note will be
forgiven. The Joint Venture will receive the remaining proceeds of
approximately $5,971,000, of which the Partnership's share will be
approximately $4,478,000, less the Partnership's share of 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.
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An affiliate of the General Partner sold one property to the purchaser in 1996.
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) Howell Station Apartments
In 1984, the Partnership acquired the Howell Station Apartments (formerly known
as Tempo Station Apartments), Duluth, Georgia (the "Property"), utilizing
approximately $5,216,000 from the Partnership's offering proceeds. The
property was acquired subject to first mortgage financing of approximately
$7,349,000. In 1993, the mortgage loan was refinanced with a new mortgage loan
in the amount of $6,650,000 and the Partnership received a discount of
approximately $191,500 on the prior loan upon repayment.
On February 26, 1997, the Partnership contracted to sell the Property for a
sale price of $9,000,000 to an unaffiliated party, Group One Investments, Inc.,
an Illinois corporation. In addition, the Partnership has executed an
agreement to sell to the purchaser the personal property located at the
Property for a sale price of $1,000,000. The purchaser is obligated to deposit
$100,000 into an escrow account as earnest money. The remaining portion of the
sale price will be payable in cash at closing, scheduled for April 4, 1997.
From the proceeds of the sale, the Partnership will pay the outstanding
principal balance of the mortgage loan, which is expected to be approximately
$6,450,000 at closing, $150,000 to an unaffiliated party as a brokerage
commission and $100,000 to an affiliate of the third party providing property
management services for the property as a fee for services rendered in
connection with the sale of the property. The Partnership will receive the
remaining proceeds of approximately $3,300,000, less closing costs. Of such
proceeds, $100,000 will be retained by the Partnership and will not be
available for use or distribution by the Partnership until 90 days after
closing.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the Property. The General Partner
will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
An affiliate of the General Partner sold one property to the purchaser in
1996.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the Property may not occur.
<PAGE>
ITEM 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) (i) Agreement of Sale relating to the sale of North Hill
Apartments, Atlanta, Georgia.
(ii) Termination Notice relating to the sale
of North Hill Apartments, Atlanta, Georgia.
(iii) Reinstatement of, and First Amendment to, the Agreement
of Sale and Escrow Agreement relating to the sale of
North Hill Apartments, Atlanta, Georgia.
(b) (i) Agreement of Sale relating to the sale of Howell
Station Apartments, Duluth, Georgia.
(ii) Amendment No. 1 to Agreement of Sale relating to the
sale of Howell Station Apartments, Duluth, Georgia.
(iii) Agreement relating to the sale of Howell Station
Apartments, Duluth, Georgia.
(iv) Amendment No. 2 to Agreement of Sale relating to the
sale of Howell Station Apartments, Duluth, Georgia.
No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR 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, Managing Director
and Secretary
Dated: March 7, 1997
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 21st
day of February, 1997, by and between EEA Development, Inc., a Delaware
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 of Twenty-Two Million Seven Hundred Fifty Thousand And No/100
Dollars ($22,750,000.00) (the "Purchase Price"), that certain property commonly
known as North Hill Apartments, Atlanta, Georgia, legally described on
Exhibit A attached hereto (the "Property"). Included in the Purchase Price is
all of the personal property set forth on Exhibit B attached hereto (the
"Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) (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 February 10, 1997, Purchaser
shall deliver to Escrow Agent funds in the amount of One Hundred Fifty Thousand
and No/100 Dollars ($150,000.00) (the "Additional Earnest Money"; the Original
Earnest Money, plus the Additional Earnest Money, if any, being referred to
herein together as 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., $22,750,000.00 less (a) the then outstanding principal
amount of the Bonds (hereinafter defined) and (b) the amount of the Earnest
Money), adjusted in accordance with the prorations, by federally wired
"immediately available" funds, to the appropriate escrow agent, on or before
11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Near North National Title
Corporation as agent for First American Title Insurance Company (hereinafter
referred to as "First American") dated July 8, 1996 for the Property (the "FA
Commitment"). For purposes of this Agreement, "Permitted Exceptions" shall
mean: (a) general real estate taxes, association assessments, special
<PAGE>
assessments, special district taxes and related charges not yet due and
payable; (b) matters shown on the "Survey" (hereinafter defined); (c) matters
caused by the actions of Purchaser; (d) the Existing Bond and Mortgage
Documents including, without limitation, the Regulatory Agreement (hereinafter
defined); and (e) the title exceptions set forth in Schedule B, Part II of the
FA Commitment as Numbers 7 and 9 through 18 inclusive, to the extent that same
affect the Property. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". The FA Commitment shall be conclusive evidence of
good title as therein shown as to all matters to be insured by the title
policy, subject only to the exceptions therein stated. Purchaser intends to
order an updated title commitment (the "Title Commitment") from Chicago Title
Insurance Company (the "Title Insurer"). Any title exception raised on the
Title Commitment and not raised on the FA Commitment resulting from actions or
documents dated on or prior to July 8, 1996 shall be deemed Permitted
Exceptions. On the Closing Date, Title Insurer shall deliver to Purchaser a
standard title policy in conformance with the Title Commitment, subject only 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 a survey of the Property prepared by
Construction Engineering Associates recertified August 2, 1996 (the "Survey").
Purchaser shall update the survey and pay for the costs of the Survey and the
costs of updating the Survey of the Property. Purchaser hereby acknowledges
that all matters disclosed by the Survey are acceptable to Purchaser.
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. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the update of the Survey discloses any new Unpermitted
Exception, Seller shall have thirty (30) days from the date of the date-down to
the Title Commitment or the update of the Survey, as applicable, at Seller's
expense, to (i) bond over, cure and/or have any Unpermitted Exceptions which in
the aggregate, do not exceed $25,000.00, removed from the Title Commitment or
to have the Title Insurer commit to insure against loss or damage that may be
occasioned by such Unpermitted Exceptions, or (ii) have the right, but not the
obligation, to bond over, cure and/or have any Unpermitted Exceptions which, in
the aggregate, equal or exceed $25,000.00, removed from the Title Commitment or
to have the Title Insurer commit to insure against loss or damage that may be
<PAGE>
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 in (i) in the preceding
sentence above within said thirty (30) day period or if Seller elects not to
exercise its rights under (ii) in the preceding sentence and notifies purchaser
of same, Purchaser may either (x) proceed to Closing and receive a credit of up
to $25,000.00 against the Purchase Price or (y) terminate this Agreement upon
notice to Seller within ten (10) days after receipt of notice from Seller
stating its election not to cure said Unpermitted Exception or, if notice is
not delivered, the expiration of said thirty (30) day period; provided,
however, and notwithstanding anything contained herein to the contrary, if the
Unpermitted Exception which gives rise to Purchasers right to terminate was
recorded against the Property as a result of the affirmative, willful action of
Seller (and not by any unrelated third party) with intention to prevent the
sale of the Property in accordance with the terms hereof, then Purchaser shall
have the additional rights contained in Paragraph 11 herein. 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 Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty, together with a credit for any deductible applicable to the claim
relating to such insurance proceeds. Seller shall promptly notify Purchaser in
writing of any such fire or other casualty and Seller's determination of the
cost to repair the damage caused thereby. In the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
<PAGE>
would cost in excess of $100,000.00 (as determined by Seller in good faith
based on initial estimates of repair from one or more independent contractors),
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 ten (10) 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, together with a credit for any deductible applicable
to the claim relating to such insurance proceeds.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated 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.
<PAGE>
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on January 10, 1997 and ending at 5:00
p.m. Chicago time on February 27, 1997 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, and unaudited year end 1995 and year-to-date 1996
operating statements. Furthermore, if the following are reasonably available
to Seller, Seller shall deliver to Purchaser plans and specifications.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion.
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, less $100 which shall be paid to Seller as further consideration for
the Inspection Period, and neither Purchaser nor Seller shall have any right,
<PAGE>
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
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Purchaser
hereby releases Seller and the Affiliates of Seller from any and all liability
in connection with any claims which Purchaser may have against Seller or the
Affiliates of Seller, and Purchaser hereby agrees not to assert any claims for
contribution, cost recovery or otherwise, against Seller or the Affiliates of
Seller, relating directly or indirectly to the existence of asbestos or
Hazardous Materials on, or environmental conditions of, the Property, whether
known or unknown. As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
<PAGE>
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
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 on March 27,
1997 (the "Closing Date"), at the office of Title Insurer, Atlanta, Georgia, at
which time Seller shall deliver possession of the Property to Purchaser. The
Closing Date may be extended in accordance with Paragraph 18.3 hereof. 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,
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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 $16,600,000.00 as of January 1, 1997. 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.
9. CLOSING DOCUMENTS.
9.1. On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3, 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. On or prior to the Closing Date, Seller shall deliver to Purchaser
the following:
9.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
9.2.2. a limited warranty bill of sale conveying the Personal
Property (in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H, and if required by the company providing
telephone service, the form provided by said company for the transfer of such
service;
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);
<PAGE>
9.2.6. original, or if not available, copies of, leases affecting
the Property in Seller's possession to be delivered at the Property;
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy including those necessary to delete the
standard exceptions which do not relate to survey matters;
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;
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.a certificate from Seller to Purchaser in the form of Exhibit
O ("Seller's Certificate"); and
9.2.16.property files and keys to be delivered at the Property.
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. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
<PAGE>
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED OR ANY OTHER
CONVEYANCE DOCUMENT REFERENCED IN PARAGRAPH 9, OR SELLER'S (AND NOT AN
UNRELATED THIRD PARTIES) AFFIRMATIVE, WILLFUL ACTION WHICH RESULTS IN THE
RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY WITH THE INTENTION TO PREVENT
THE SALE OF THE PROPERTY IN ACCORDANCE WITH THE TERMS HEREOF THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); prepaid or
accrued (as the case may be) interest on the Existing Bond and Mortgage
Documents, water and other utility charges; fuels; prepaid operating expenses;
management fees in the amount of 5%; real and personal property taxes; and
other similar items shall be adjusted ratably as of 12:01 a.m. on the Closing
Date, and credited 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 reasonable efforts to collect all
amounts which, upon collection, would constitute Post-Closing Receipts
hereunder, but shall not be liable to Seller for its failure to collect same.
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 the expense of
Seller 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 in the
event Seller's audit discovers additional Post-Closing Receipts greater than
$5,000.00, Purchaser shall pay the cost of performing Seller's audit.
Paragraph 12.2 of this Agreement shall survive the Closing and the delivery and
recording of the deed.
<PAGE>
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest,
provided that Purchaser remains liable for and the assignee assumes the
obligations of Purchaser hereunder.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Apartment Realty Advisors ("ARA") (to be paid by Seller).
Seller's commission to ARA shall only be payable out of the proceeds of the
sale of the Property in the event the transaction set forth herein closes.
Purchaser and Seller shall indemnify, defend and hold the other party hereto
harmless from any claim whatsoever (including without limitation, reasonable
attorney's fees, court costs and costs of appeal) from anyone claiming by or
through the indemnifying party any fee, commission or compensation on account
of this Agreement, its negotiation or the sale hereby contemplated other than
to 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 AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Daniel Charleston or Mike Becker (together, the "Seller's
Representatives"), and any representation or warranty of the Seller is based
upon those matters of which the Seller's Representatives have 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 Representatives.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property; (ii) 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) there are no other leases or occupancy
agreements affecting the Property other than as shown on Exhibit L; (v) there
are no service or maintenance contracts or other contracts or agreements
<PAGE>
affecting the operation of the Property after the Closing now in force between
Seller and any other party with respect to or affecting the Property, except
for the contracts set forth on Exhibit H attached hereto and by reference
incorporated herein, and Seller has delivered to Purchaser true, correct and
complete copies of all of the contracts and all amendments thereto set forth on
Exhibit H; (vi) Seller has not received any written notice or written request
of any municipal department, insurance company or board of fire underwriters
(or organization exercising functions similar thereto) requesting the
performance of any work or alteration with respect to the Property which has
not been satisfied; and (vii) 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.
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. The Parties agree that the representations and warranties
contained herein and in the Seller's Certificate deliverd at Closing shall
survive Closing for a period of ninety (90) days (i.e., the claiming party
shall have no right to make any claims against the other party for a breach of
other representation or warranty after the expiration of ninety (90) days
immediately following the Closing).
16.5. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained, and operated the Property during the
period of Seller's ownership, subject to reasonable wear and tear and casualty.
17. LIMITATION OF LIABILITY. Neither Seller, nor any Affiliate of Seller, nor
any of their 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, the documents delivered at Closing, and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
18. 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
<PAGE>
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,
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 Purchaser the
certificate in the form of Exhibit O attached hereto;
18.2.5. Bond counsel shall have committed to issuing its opinion as
required under the Existing Bond and Mortgage Documents; and
18.2.6. Purchaser shall obtain, on terms reasonably acceptable to
Purchaser, a commitment for additional financing for a "taxable tail" of
approximately $3,500,000.00.
<PAGE>
The foregoing conditions set forth in Paragraphs 18.2.1, 18.2.2, 18.2.3,
18.2.4, 18.2.5 and 18.2.6 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. 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 March 20, 1997 extending
the date for the satisfaction of the Conditions Precedent until April 21, 1997,
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 April 28, 1997. The receiving party
shall acknowledge the Extension Notice and forward a copy of the acknowledged
Extension Notice to the Title Insurer 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 March 20, 1997, 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 this Agreement.
In the event Seller or Purchaser elects to extend the date for satisfying the
Conditions Precedent in accordance with the terms of this Paragraph 18 and the
Conditions Precedent have not been satisfied on or before April 21, 1997, 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 the
Agreement, except for the indemnity set forth herein in Paragraphs 7 and 15 of
this Agreement.
18.4. 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 Fannie Mae in connection with the sale of the Property to Purchaser, the
assignment to and assumption of the Existing Bond and Mortgage Documents by
Purchaser, or the obtaining by Purchaser of the commitment for additional
financing in the approximate amount of $3,500,000.00. In the event of a
termination of this Agreement under either the terms of Paragraph 7 of this
Agreement or the terms of this Paragraph 18, 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.
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:
<PAGE>
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: EEA Development, Inc.
1925 N. Lynn Street
Suite 901
Arlington, Virginia 22209
Attention: Mr. R. Stewart Bartley
(703) 525-1600
(703) 525-1609 (FAX)
and one copy to: Hunton & Williams
NationsBank Plaza, Suite 4100
600 Peachtree Street
Atlanta, GA 30308
Attention: Alexander W. Suto, Esq.
(404) 888-4028
(404) 888-4190 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
<PAGE>
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.
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 ("Service Contracts") affecting the Property. Seller shall assign
the Service Contracts to Purchaser at Closing, and Purchaser shall assume
responsibility and obligations under the Service Contracts. Seller agrees not
to enter into any other service contracts affecting the Property, except for
service contracts which are terminable of not more the thirty (30) days notice.
Seller agrees to terminate any and all management agreements affecting the
Property as of Closing Date. Prior to Closing, Seller agrees to deliver a
notice of termination to both the servicer of the laundry contract and the
servicer of the uniform contract.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
EEA DEVELOPMENT, INC., an
Delaware corporation
By: /s/ R. Stewart Bartley
-------------------------------
Name: R. Stewart Bartley
-------------------------------
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/ Daniel L. Charleston
------------------------------
Name: Daniel L. Charleston
------------------------------
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 - Seller's Certificate
<PAGE>
HUNTON & WILLIAMS
NationsBank Plaza - Suite 4100
600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2216
Telephone (404) 888-4000
Facsimile (404) 888-4190
February 27, 1997
Via Facsimile: 847-317-4462
Original Via UPS Next Day Air
N.H. Associates
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ms. Ilona Adams
RE: Agreement of Sale by and Between EEA Development, Inc., as
Purchaser and N.H. Associates, as Seller, dated as of February 21,
1997, with respect to property known as North Hill Apartments
Dear Ms. Adams:
I am writing to you on behalf of my client, EEA Development, Inc., the
Purchaser under the above-referenced Agreement of Sale (the _Agreement_). Due
to the logistical difficulties in resolving certain issues which have arisen
during our investigation of the above-referenced property, EEA Development,
Inc. is hereby terminating the Agreement.
Very truly yours,
/s/ Alexander W. Suto /stp
-----------------------------
Alexander W. Suto
STP/r/
cc: Mr. Alan Lieberman (via fax)
Daniel J. Perlman, Esq. (via fax)
Kyle R. Hauberg. Esq. (via fax)
Mr. Daniel L. Charleston (via fax)
Mr. Mark Betz (via fax)
Mr. R. Stewart Bartley(via fax)
<PAGE>
REINSTATEMENT AND FIRST AMENDMENT TO
AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS REINSTATEMENT AND FIRST AMENDMENT TO AGREEMENT OF SALE AND ESCROW
AGREEMENT (this "Amendment") is made and entered into as of this 4th day of
March, 1997, by and between N.H. Associates, an Illinois limited partnership
("Seller"), EEA DEVELOPMENT, INC., a Delaware corporation ("Purchaser"), and
CHICAGO TITLE INSURANCE COMPANY ("Escrow Agent").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated February 21, 1997 (the "Agreement"), pursuant to which Purchaser has
agreed to purchase and Seller has agreed to sell certain Property (as defined
in the Agreement) legally described and depicted on Exhibit A attached to the
Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated February 21, 1997 (the "Escrow Agreement"), pursuant to which
Purchaser has deposited funds in escrow to be held by Escrow Agent in
accordance with the terms of the Escrow Agreement.
C. Seller and Purchaser desire to amend the Agreement and the Escrow
Agreement in accordance with the terms of this Amendment.
D. Pursuant to the terms of the Agreement and the Escrow Agreement,
Purchaser terminated its obligations thereunder pursuant to the respective
terms thereof on February 27, 1997.
E. Seller and Purchase desire to reinstate and amend the Agreement and
the Escrow Agreement in accordance with the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. Paragraph 2.2 of the Agreement is deleted in its entirety and replaced with
the following:
2.2 On or before 2:00 p.m. Chicago time on March 13, 1997, Purchaser shall
deliver to Escrow Agent funds in the amount of One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00) (the "Additional Earnest Money"; the Original
Earnest Money, plus the Additional Earnest Money, if any, being referred to
herein together as the "Earnest Money"), provided that Purchaser has not
terminated this Agreement pursuant to Paragraph 7;"
3. The first grammatical sentence of Paragraph 7.1 of the Agreement is deleted
in its entirety and replaced with the following:
<PAGE>
7.1 During the period commencing on January 10, 1997 and ending at 5:00
p.m. Chicago time on March 13, 1997 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate.
4. All references to the date of February 27, 1997 in the Escrow Agreement are
hereby deleted and the date of March 13, 1997 is hereby inserted in lieu
thereof.
5. The Purchaser hereby directs the Escrow Agent that the funds together with
interest thereon (if any) that were (i) heretofore deposited with Escrow Agent
by Purchaser and (ii) subsequently directed to be returned to Purchaser
pursuant to the termination notice delivered on February 27, 1997, shall be
held as, and shall constitute, the Earnest Money, as provided in the Agreement
and the Escrow Agreement.
6. The Agreement is hereby reinstated and, except as amended hereby, the
Agreement shall be and remain unchanged and in full force and effect in
accordance with its terms.
7. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment,
Seller, Purchaser and Escrow Agent may execute and exchange by telephone
facsimile counterparts of the signature pages, with each facsimile being deemed
an "original" for all purposes.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
EEA DEVELOPMENT, INC.,
a Delaware corporation
By: /s/ R. Stewart Bartley
-------------------------------
Name: R. Stewart Bartley
-------------------------------
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/ Daniel L. Charleston
----------------------------------
Name: Daniel L. Charleston
----------------------------------
Its: Authorized Agent
----------------------------------
ESCROW AGENT:
CHICAGO TITLE INSURANCE COMPANY
By:
----------------------------------------
Name:
----------------------------------------
Authorized Agent:
----------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 26 day
of February, 1997, by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 3655 PEACHTREE LIMITED PARTNERSHIP, an Illinois
limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Nine Million Dollars ($9,000,000.00) (the "Purchase Price"),
that certain property commonly known as Howell Station Apartments, Duluth,
Georgia, legally described on Exhibit A attached hereto (the "Property").
The Purchase Price shall also include all of Seller's right, title and
interest in and to the following: (a) intangible property, whether enumerated
in this Agreement or not, now or subsequently used in connection with the
operation or maintenance of the Property, other than any computer software,
including but not limited to all leases, licenses and other agreements to
occupy all or any part of the Property; (b) tenant security deposits; (c) all
unexpired claims, warranties, guarantees and sureties, if any, given in
connection with the construction, improvement or equipment of or on the
Property; (d) all service contracts and management agreements for the benefit
of the Property which Purchaser agrees to assume; (e) all rights to use any
name by which the Property may be commonly called; and (f) all architectural,
engineering and construction plans, tests, reports, drawings and
specifications, if any (collectively the "Intangible Property").
The Purchase Price shall also include all right, title and interest of
Seller (a) to land, if any, lying in the bed of any street, road or avenue,
open or proposed, at the foot of or adjoining the Property to the center line
of such street, road or avenue, (b) to the use of all easements, if any,
whether of record or not, appurtenant to the Property and (c) the use of all
strips and rights-of-way, if any, abutting, adjacent to, contiguous to or
adjoining the Property (collectively the "Appurtenant Rights").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of One Hundred
Thousand and No/100 Dollars ($100,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 3:00 p.m. Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's ALTA title insurance policy issued by Guaranty National Title Company
for $10,000,000 (hereinafter referred to as "Title Insurer") dated December 18,
<PAGE>
1996, endorsed by Endorsements dated February 3, 4, 5, 7, 10 and 13, 1997, for
the Property (the "Title Commitment"). For purposes of this Agreement, but
subject to the terms and conditions hereinafter set forth, "Permitted
Exceptions" shall mean: (a) matters shown on the "Survey" (hereinafter
defined); (b) matters caused by the actions of Purchaser; and (c) the title
exceptions set forth in Schedule B - Section 2 of the Title Commitment as
Numbers 4, 5, 6, 7, 8, 9, 16, 18, 19, 20, 21 and 23. All other exceptions to
title shall be referred to as "Unpermitted Exceptions". Purchaser has reviewed
and approved the Title Commitment, the Title Exceptions and the Survey, and the
endorsements which the Title Company has committed to issue in the Title
Commitment (the "Endorsements"). The Title Commitment shall be conclusive
evidence of good title as therein shown as to all matters to be insured by the
title policy, subject only to the exceptions therein stated. On the Closing
Date, Title Insurer shall deliver to Purchaser or Purchaser's nominee an ALTA
title policy in conformance with the previously delivered Title Commitment,
with extended coverage and including the Endorsements, subject to the Permitted
Exceptions and Unpermitted Exceptions waived by Purchaser (the "Title Policy").
Purchaser shall pay for all of the costs of the Title Commitment and Title
Policy, including, but not limited to, any fees paid to an attorney for an
opinion of counsel required for the Title Insurer to issue the Title Policy.
Purchaser shall also pay for all of the costs of the Endorsements, including,
but not limited to, any fees paid to a Georgia attorney for an opinion of
counsel required for the Title Insurer to issue the Endorsements and fees of
the surveyor to prepare zoning certifications.
3.2. Purchaser has received a survey of the Property prepared by Planners
and Engineers Collaborative dated November 18, 1993 and updated to July 8, 1996
(the "Survey"). The Survey shall be certified to Purchaser, Purchaser's lender
and the Title Insurer, shall be prepared in accordance with the Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys, jointly
established and adopted by ALTA and ACSM in 1992, and shall include the
following item numbers from Table A thereof: 1, 2, 3, 4, 6, 7(a) and (c), 8,
9, 10 and 11(a) - (d), or such other lesser standards acceptable to Purchaser.
The Survey shall also (a) depict the location and the dimensions of the
Property and all of the improvements thereon; (b) indicate the street address
and legal description of the Property, the square footage of the Property and
all of the improvements and the number of parking spaces, if any; (c) show all
curb cuts, driveways, parking spaces, if any, streets and alleys adjacent to
the Property, and vehicular access from the Property to said streets and
alleys; (d) show the present location of all recorded easements, visible
easements, utility lines and building lines on the Property and the location of
any encroachments onto or over easements, building lines, rights of way or any
adjoining property, or onto the Property by any adjoining property; and (e)
certify whether the Property is located in an area identified by an agency or
department of the federal government as having special flood or mudslide
hazards which would require flood insurance under the Flood Insurance Act of
1968, as amended from time to time, or under any other applicable law or
regulation. The parties agree that Purchaser shall not be obligated to
consummate the purchase of the Property unless the Survey is sufficient to
enable the Title Insurer to delete the general survey exception and to issue
the Title Policy free from any survey matters, other than those shown in the
Survey.
<PAGE>
3.3. The obligation of Purchaser to pay the various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
3.4. Purchaser shall obtain containment letters from each utility company
holding an easement encumbering all or any portion of the Property, at
Purchaser's sole expense.
4. PAYMENT OF TRANSFER TAXES AND CLOSING COSTS.
4.1. Seller shall pay for all of the costs of the documentary or transfer
taxes to be paid with reference to the "Deed" (hereinafter defined) and all
other stamps, intangible, transfer, documentary, recording, sales tax and
surtax imposed by law with reference to any other sale documents delivered in
connection with the sale of the Property to Purchaser.
4.2. Purchaser and Seller shall each pay for one-half of all escrow and
other closing fees charged by the Title Insurer in connection with closing the
subject transaction, other than those costs set forth in Paragraph 3.1 and 4.1.
Purchaser and Seller shall each pay for one-half of the cost of updating the
survey to July 8, 1996 of $1,869.77 and of any additional costs for additional
updates or revisions.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the delivery of the Survey discloses any new Unpermitted
Exception, Seller shall have until the Closing Date, at Seller's expense
(except with respect to Partnership Unpermitted Exceptions), to bond over, cure
and/or have any Unpermitted Exceptions removed from the Title Commitment or to
have the Title Insurer commit to insure against loss or damage that may be
occasioned by such Unpermitted Exceptions. In such event, Purchaser shall not
be obligated to close prior to the expiration of the aforementioned time
period, unless Seller has bonded over, cured and or had the Unpermitted
Exceptions removed from the Title Commitment or had the Title Insurer commit to
insure against loss or damage that may be accessed by such Unpermitted
Exceptions. If Seller fails to cure or have said Unpermitted Exceptions
removed or have the Title Insurer commit to insure as specified above on or
before the Closing Date, Purchaser may, at its option, either (a) terminate
this Agreement upon notice to Seller within five (5) days after the Closing
Date; or (b) consummate the subject transaction, in which case Purchaser shall
be entitled to a credit at closing equal to the sum of all Unpermitted
Exceptions of a definite or ascertainable amount. Absent notice from Purchaser
to Seller that it has elected to terminate this Agreement, Purchaser shall be
deemed to have elected to take title subject to said Unpermitted Exceptions,
and shall be entitled to the aforesaid credit at closing. If Purchaser
terminates this Agreement in accordance with the terms of this Paragraph 5.1,
this Agreement shall become null and void without further action of the
parties, and all Earnest Money theretofore deposited into the escrow by
Purchaser, together with any interest accrued thereon, shall be returned to
Purchaser, and neither party shall have any further liability to the other,
except for Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in Paragraph 7.
<PAGE>
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser or its nominee by special warranty deed (the "Deed") in recordable
form subject only to the Permitted Exceptions and any Unpermitted Exceptions
waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty. Seller shall promptly notify Purchaser in writing of any such fire
or other casualty and Seller's determination of the cost to repair the damage
caused thereby. In the event of damage to the Property by fire or other
casualty prior to the Closing Date, repair of which would cost in excess of
$100,000.00 (as determined by Seller in good faith), then this Agreement may be
terminated at the option of Purchaser, which option shall be exercised, if at
all, by Purchaser's written notice thereof to Seller within five (5) business
days after Purchaser receives written notice of such fire or other casualty and
Seller's determination of the amount of such damages, and upon the exercise of
such option by Purchaser this Agreement shall become null and void, the Earnest
Money deposited by Purchaser shall be returned to Purchaser together with
interest thereon, and neither party shall have any further liability or
obligations hereunder. In the event that Purchaser does not exercise the
option set forth in the preceding sentence, the Closing shall take place on the
Closing Date and Seller shall assign and transfer to Purchaser on the Closing
Date all of Seller's right, title and interest in and to all insurance proceeds
paid or payable to Seller on account of the fire or casualty.
6.2. Subject to the provisions hereinafter set forth in this Section 6.2,
if between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which might result in the taking of
any part of the Property or the taking or closing of any right of access to the
Property, Seller shall immediately notify Purchaser of such occurrence, and
provide Purchaser with copies of any documentation received by Seller in
connection therewith (collectively, the "Condemnation Notice"). In the event
that the taking of any part of the Property shall: (a) materially impair access
to the Property; (b) cause any material non-compliance with any applicable law,
ordinance, rule or regulation of any federal, state or local authority or
governmental agencies having jurisdiction over the Property or any portion
thereof; or (c) materially and adversely impair the use of the Property as it
is currently being operated (hereinafter collectively referred to as a
"Material Event"), Purchaser may:
<PAGE>
(i) terminate this Agreement by written notice to Seller, in which
event the Earnest Money deposited by Purchaser, together with interest thereon,
shall be returned to Purchaser and all rights and obligations of the parties
hereunder with respect to the closing of this transaction will cease; or
(ii) proceed with the Closing, in which event Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any award made in
connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of the Condemnation Notice, whether Purchaser elects
to exercise its rights under Paragraph 6.2(i) or Paragraph 6.2(ii). Closing
shall be delayed, if necessary, until Purchaser makes such election. If
Purchaser fails to make an election within such five (5) business day period,
Purchaser shall be deemed to have elected to exercise its rights under
Paragraph 6.2(ii). If between the date of this Agreement and the Closing Date,
any condemnation or eminent domain proceedings are initiated which do not
constitute a Material Event, Purchaser shall be required to proceed with the
Closing, in which event Seller shall assign to Purchaser all of Seller's right,
title and interest in and to any award made in connection with such
condemnation or eminent domain proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on January 10, 1997 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate, including, but not limited to, any appraisals,
engineering, environmental and other due diligence studies, tests and surveys.
In connection with Purchaser's review of the Property, Seller agrees to deliver
to Purchaser actual and complete copies of the current rent roll for the
Property, the most recent tax and insurance bills, utility account numbers,
service contracts, the Survey, and unaudited year end 1995 and year to date
(through August 30, 1996) operating statements. Furthermore, to the extent
that any of the following items are (a) in the possession of Seller or the
"Asset Manager" (as hereinafter defined), or (b) readily available to Seller or
the Asset Manager, Seller shall deliver to Purchaser actual and complete copies
of the following:
(i) unaudited year end 1993, 1994, 1995 and 1996 year to date operating
statements;
(ii) all licenses, permits, authorizations and approvals issued to Seller
by all governmental authorities having jurisdiction over the Property;
(iii) the most recent bills for water charges and other utilities for
the past 12 months, together with proof of payment;
<PAGE>
(iv) the insurance loss history report, including all insurance claims and
settlements relating to the Property within the past three (3) years;
(v) copies of tax bills for the past three (3) years, petitions for
appeal of property taxes and/or assessments for the Property which have been
contested by Seller over the immediately preceding three (3) year period and
the results thereof;
(vi) all "as built" plans and specifications for the improvements and
copies of all reports or studies relating to the engineering, environmental
conditions, physical conditions and/or operation of the Property;
(vii) any operations and maintenance plan or plans implemented for the
Property by Seller; and
(viii) any other information that Purchaser shall reasonably request.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense, and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys (x) selected by
Purchaser, and (y) reasonably acceptable to Seller.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
Notwithstanding the foregoing, Purchase acknowledges that it has had a
full opportunity to inspect the Property during the Inspection Period and that
it has no right to terminate this Agreement on account of the results of such
inspection, all such rights being waived.
7.2. Seller makes no representations or warranties relating to the
condition of the Property except as may otherwise be specifically set forth in
this Agreement. Purchaser acknowledges and agrees that, except with respect to
the representations and warranties contained herein, it will be purchasing the
Property based solely upon its inspections and investigations of the Property,
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS", based upon the condition of the Property as of the date of this
Agreement, wear and tear and loss by fire or other casualty or condemnation
excepted. Without limiting the foregoing, Purchaser acknowledges that, except
<PAGE>
as may otherwise be specifically set forth elsewhere in this Agreement, neither
Seller nor its consultants, brokers or agents have made any representations or
warranties of any kind upon which Purchaser is relying as to any matters
concerning the Property, including, but not limited to, the condition of the
land or any improvements comprising the Property, the existence or
non-existence of "Hazardous Materials" (as hereinafter defined), economic
projections or market studies concerning the Property, any development rights,
taxes, bonds, covenants, conditions and restrictions affecting the Property,
water or water rights, topography, drainage, soil, subsoil of the Property, the
utilities serving the Property or any zoning or building laws, rules or
regulations or "Environmental Laws" (hereinafter defined) affecting the
Property. Seller makes no representation or warranty that the Property
complies with Title III of the Americans with Disabilities Act or any fire code
or building code. Except with respect to a breach by Seller of any
representation or warranty expressly contained herein, Purchaser hereby
releases Seller and the Affiliates of Seller from any and all liability in
connection with any claims which Purchaser may have against Seller or the
Affiliates of Seller, and Purchaser hereby agrees not to assert any claims for
contribution, cost recovery or otherwise, against Seller or the Affiliates of
Seller, relating directly or indirectly to the existence of asbestos or
Hazardous Materials on, or environmental conditions of, the Property, whether
known or unknown. As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means:
(1) "hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA; (4)
asbestos in any form or condition; (5) polychlorinated biphenyls; and (6) any
other material, substance or waste to which liability or standards of conduct
may be imposed under any Environmental Laws. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.2 shall survive
the Closing and the delivery of the Deed and termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
<PAGE>
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and the representations and warranties of Seller
expressly contained herein, and releases Seller and the Affiliates of Seller
from any liability with respect to such historical information, except with
respect to a breach of a representation or warranty of Seller contained herein.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.3 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment prepared by H+GCL dated November 23, 1993 (the
"Existing Report"). Except as expressly set forth herein, Seller makes no
representation or warranty concerning the accuracy or completeness of the
Existing Report. Purchaser hereby releases Seller and the Affiliates of Seller
from any liability whatsoever with respect to the Existing Report, including,
without limitation, the matters set forth in the Existing Report, and the
accuracy and/or completeness of the Existing Report, except with respect to a
breach of a representation or warranty of Seller contained herein.
Furthermore, Purchaser acknowledges that it will be purchasing the Property
with all faults disclosed in the Existing Report. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.4 shall survive
the Closing and the delivery of the Deeds and termination of this Agreement.
8. CLOSING. Subject to the provisions set forth below and subject to the
provisions of Paragraph 25 below, the closing of this transaction (the
"Closing") shall be on March 21, 1997 subject to extension to April 4, 1997,
upon Purchaser's election, to be sent to Seller in writing prior to March 20,
1997 (the "Closing Date"), at the loop office of Title Insurer, Chicago,
Illinois, at which time Seller shall deliver possession of the Property to
Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in Chicago, Illinois, or
at the option of either party, the Closing shall be a "New York style" closing
at which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. All closing and escrow fees shall be divided equally between
the parties hereto.
9. FINANCING CONTINGENCY. Purchaser's and Seller's obligations under this
Agreement are contingent upon Purchaser's ability to procure a commitment for
mortgage financing for the acquisition of the Property in an amount of not less
than $8,500,000 with an interest rate of not more than 165 basis points over
ten (10) years U.S. Treasury Bills per annum and a 25 year amortization and
reasonably acceptable to Purchaser in all material respects (the "Financing
<PAGE>
Contingency") on or before February 28, 1997. Purchaser acknowledges and
agrees that it shall submit its application (or equivalent) for a commitment
for such financing in accordance with the provisions set forth above by five
(5) business days after execution of this Agreement and pay all application and
other fees associated therewith. Upon Seller's request, Purchaser shall
provide Seller with a letter from the proposed lender evidencing that said
application (or equivalent) has been received and completed 10 business days
after execution of this Agreement. In the event Purchaser has complied with
the requirements set forth in the preceding sentence, but is unable to satisfy
the Financing Contingency on or before February 28, 1997, then Purchaser shall
have the option, upon written notice to Seller, exercised no later than
February 28, 1997, to terminate this Agreement, in which case 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 delivered to Purchaser, and neither
party shall have any further liability to the other, except for those covenants
and obligations hereunder which expressly survive the termination of this
Agreement. In the event Purchaser fails to deliver such notice to Seller, the
Financing Contingency shall be deemed satisfied and the parties hereto shall
proceed to Closing.
10. CLOSING DOCUMENTS.
10.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, (a)
Purchaser shall deliver in Escrow to Title Insurer the balance of the Purchase
Price and an assumption of the documents set forth in Paragraph 10.2.2 and
10.2.3 hereof, and (b) Purchaser and Seller shall each execute and deliver in
Escrow to the Title Insurer such other documents as may be reasonably required
by the Title Insurer in order to consummate the transaction as set forth in
this Agreement and allow the Title Insurer to issue the Endorsements,
including, but not limited to: (i) an ALTA Statement; (ii) a GAP Undertaking;
(iii) complete state, county and local transfer tax declarations, to the extent
applicable; and (iv) all applicable partnership and corporate resolutions
and/or certificates of existence.
10.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
10.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
10.2.2. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, any
warranties, certificates, licenses, permits and existing termite bonds and the
service contracts listed in Exhibit H;
10.2.3. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
10.2.4. non-foreign affidavit (in the form of Exhibit J attached
hereto);
<PAGE>
10.2.5. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
10.2.6. keys to the improvements;
10.2.7. possession of the Property to Purchaser, subject to the
terms of leases;
10.2.8. evidence of the termination of the management agreement;
10.2.9. 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);
10.2.10. an updated rent roll, certified by Seller as being actual
and complete;
10.2.11. State of Georgia Real Estate Transfer Tax Declaration; and
10.2.12. Assignment of Development Agreement referenced to in
Exception 19 of the Title Commitment.
10.2.13. Affidavits sufficient to satisfy the requirements of
O.C.G.A. e 48-7-128.
11. 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.
12. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY,
TOGETHER WITH ANY INTEREST ACCRUED THEREON, PLUS ACTUAL DOCUMENTED THIRD PARTY
EXPENSES PAID OR INCURRED BY PURCHASER IN CONNECTION WITH THIS AGREEMENT, BUT
NOT TO EXCEED THE AMOUNT OF THE EARNEST MONEY ON DEPOSIT WITH THE ESCROW AGENT
AT THE TIME OF DEFAULT, AND THIS AGREEMENT SHALL THEN BECOME NULL AND VOID AND
OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT
LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND
RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN PARAGRAPH 7. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT IS ITS WILLFUL
REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
<PAGE>
13. PRORATIONS.
13.1. Rents (exclusive of delinquent rents, but including prepaid rents);
refundable security deposits and, if applicable under the laws of the State of
Georgia, interest thereon (which will be assigned to and assumed by Purchaser
and credited to Purchaser at Closing); water and other utility charges; fuels;
prepaid operating expenses; real and personal property taxes, operating
expenses which are reimbursable by the tenants for the period prior to the
Closing Date less any amount previously paid by the Tenants shall be credited
to Seller; and other similar items shall be adjusted ratably as of 11:59 p.m.
on the Closing Date, and credited against the balance of the cash due at
Closing. If real estate tax bills for the year 1997 are not available, real
estate taxes for the year 1997 shall be prorated based on 105% of 1996 taxes.
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.
13.2. All basic rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date, after the payment to Purchaser of all current
basic rent, shall be deemed a "Post-Closing Receipt" until such time as all
such indebtedness is paid in full. Within ten (10) days following each receipt
by Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-Closing
Receipt to Seller. Purchaser shall use its best efforts to collect all amounts
which, upon collection, would constitute Post-Closing Receipts hereunder.
Within 120 days after the Closing Date, Purchaser shall deliver to Seller a
reconciliation statement of Post-Closing Receipts through the first 90 days
after the Closing Date. Upon the delivery of the Post-Closing Receipts
reconciliation, Purchaser shall deliver to Seller any Post-Closing Receipts
owing to Seller and not previously delivered to Seller in accordance with the
terms hereof. Seller retains the right to conduct an audit, at reasonable
times and upon reasonable notice, of Purchaser's books and records to verify
the accuracy of the Post-Closing Receipts reconciliation statement and upon the
verification of additional funds owing to Seller, 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.
14. 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 11 hereof.
15. 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 11 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller (1) to any entity in which Purchaser's principals or
Purchaser's nominee owns a controlling interest, provided that Purchaser
<PAGE>
remains liable for and the assignee assumes the obligations of Purchaser
hereunder, and (2) to a trust or trusts designated by Purchaser provided that
Purchaser remains liable for and the assignee assumes the obligations of
Purchaser hereunder, and that if Purchaser's proposed lender does not approve
of the ownership structure proposed by Purchaser, Purchaser shall change such
structure to be acceptable to such lender.
16. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to (a) Apartment Realty Advisors ("Seller's Broker") (to be paid by
Seller) and (b) to First Group Properties ("Purchaser's Broker") (to be paid by
Purchaser). Seller's commission to Seller's Broker shall only be payable out
of the proceeds of the sale of the Property in the event the transaction set
forth herein closes, and Purchaser's commission to Purchaser's Broker shall
only be payable in the event that the transaction set forth herein closes.
Purchaser and Seller shall indemnify, defend and hold the other party hereto
harmless from any claim whatsoever (including without limitation, reasonable
attorney's fees, court costs and costs of appeal) from anyone claiming by or
through the indemnifying party any fee, commission or compensation on account
of this Agreement, its negotiation or the sale hereby contemplated, other than
to Seller's Broker or to Purchaser's Broker. The indemnifying party shall
undertake its obligations set forth in this Paragraph 16 using attorneys
selected by the indemnifying party and reasonably acceptable to the indemnified
party. The provisions of this Paragraph 16 will survive the Closing and
delivery of the Deed. At Closing, Purchaser, Seller, Purchaser's broker and
Seller's broker shall execute and deliver such affidavits and lien waivers
which are necessary to satisfy the requirements of O.C.G.A. e 44-14-600 et seq.
17. REPRESENTATIONS AND WARRANTIES.
17.1. 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 Michael Becker, the manager of the Property (the "Asset Manager"),
and Daniel Charleston (Daniel Charleston and the Asset Manager are collectively
referred to as the "Seller's Representative"), and any representation or
warranty of the Seller is based upon those matters of which the Seller's
Representative has actual knowledge. Any knowledge or notice given, had or
received by any of Seller's agents, servants or employees shall not be imputed
to Seller, the general partner or limited partners of Seller, the subpartners
of the general partner or limited partners of Seller or Seller's
Representative.
17.2. Subject to the limitations set forth in Paragraph 17.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
be remade at Closing, subject to Paragraph 17.5:
(a) Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the Property;
(b) Seller has the power to execute and deliver this Agreement and
consummate the transactions contemplated herein;
<PAGE>
(c) the rent roll attached hereto as Exhibit M, which Seller will update
as of the Closing Date, is actual and complete as of the date set forth
thereon;
(d) Seller has not given or suffered any assignment, pledge or encumbrance
with respect to any of the tenant leases or its interests thereunder except as
additional collateral for the existing loan secured by the Property;
(e) except as may be set forth in the Existing Report, Seller has not
received any notice from any governmental authority having jurisdiction over
the Property of any uncured violation of any building, zoning or Environmental
Law with respect to the Property, Seller has no knowledge of the existence of
any environmental or engineering reports, other than the Existing Report;
(f) there are and shall be no liens, claims or unpaid taxes against Seller
and/or applicable to the Property for federal withholding taxes or state sales,
retail or occupation or unemployment taxes, or any other taxes or charges
whatsoever, except general real estate taxes and special assessments, if any,
which are not yet due and payable, and Seller shall obtain all appropriate
releases and make all necessary filings required under applicable law;
(g) Seller's Representative has not received any notice from any insurance
company of any defects or inadequacies in the Property which might adversely
affect the insurability of the Property;
(h) no fact or condition exists to Seller's knowledge which would result
in the termination of access to the Property from any adjoining public or
private streets or ways or which would result in discontinuation of adequate
sewer, water, gas, electric, telephone or other utility service;
(i) Seller has no knowledge of any pending or threatened special taxes or
assessments with respect to the Property, or any proposed increase in the
assessed valuation of the Property for real estate tax purposes;
(j) Seller has no knowledge of any representations made to the tenants of
the Property relating to repairs, alterations and/or other matters which will
not have been performed or otherwise satisfied to Purchaser's reasonable
satisfaction prior to the Closing Date;
(k) neither this Agreement, nor anything required to be done under this
Agreement, violates or shall violate any contract, agreement or instrument to
which Seller is a party or which affects the Property or any part thereof, and
the sale, conveyance or assignment of the Property contemplated under this
Agreement does not require the consent of any party, other than Lender, which
has not been obtained; and
(l) there are no contracts that Purchaser must assume, other than the
Service Contracts.
17.3. 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.
<PAGE>
17.4. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate actions to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement, and the sole remedy of the other party shall be to terminate
this Agreement. Notwithstanding anything contained herein to the contrary, if
the status of any of the tenancies changes from the date of the rent roll
attached hereto and the date of the rent roll delivered at Closing, provided
the change in status is not caused by a breach of Seller's covenants contained
in Paragraph 17.6 herein, then Purchaser shall not have the right to terminate
this Agreement or make any claim for a breach of a representation or warranty
hereunder involving the rent roll or tenancies thereunder. Purchaser and
Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing.
17.5. The parties agree that the representations and warranties
contained herein shall survive Closing for a period of ninety (90) days (i.e.,
the claiming party shall have no right to make any claims against the other
party for a breach of a representation or warranty after the expiration of
ninety (90) days immediately following Closing).
17.6. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained and operated the Property during the
period of Seller's ownership, including the maintenance of the current tenant
rental qualification standards, subject to reasonable wear and tear and
casualty. Seller further covenants that with respect to security deposits and
delinquent rents, after the date of this Agreement, none of the security
deposits shall be applied by Seller to delinquent rents, unless such tenant
shall have vacated the Property or been evicted from the Property prior to the
Closing Date.
18. LIMITATION OF LIABILITY.
18.1. Neither Seller nor Affiliate of Seller, nor any of their
respective beneficiaries, shareholders, partners, officers, directors, agents
or employees, heirs, successors or assigns shall have any personal liability of
any kind or nature for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
18.2. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum aggregate liability of Seller, in
connection with, arising out of or in any way related to a breach by Seller
under this Agreement or any document or conveyance agreement in connection with
the transaction set forth herein after the Closing, shall be $100,000.
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover from Seller any amount
greater than $100,000.
<PAGE>
18.3. Seller further agrees not to distribute $100,000 of the proceeds
of the Purchase Price to its partners for the longer of (a) ninety (90) days
after the Closing and (b) final resolution of any claims by Purchaser and
asserted in writing against Seller prior to the expiration of the ninety (90)
days after the Closing in accordance with the terms of this Agreement
("Claims"); provided, however, that if any Claims are disputed by Seller,
Seller shall have the right, by written notice to Purchaser, to require
Purchaser to file suit in a court of competent jurisdiction within thirty (30)
days after such notice to Purchaser; otherwise said notice with respect to the
Claim in question shall no longer prevent Seller from distributing the
proceeds, and further provided that, at the end of the ninety (90) day period,
Seller shall be entitled to distribute all proceeds of the Purchase Price in
excess of the aggregate amount of the Claims theretofore made in writing by
Purchaser.
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: 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: Daniel Charleston
(847) 267-1600
(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: Group One Investments, Inc.
77 West Washington Street
Suite 1005
Chicago, Illinois 60602
Attention: Robert Weitzman
(312) 346-3434
(312) 346-2382 (FAX)
<PAGE>
and one copy to: Much, Shelist, Freed, Denenberg
Ament, Bell & Rubenstein, P.C.
200 N. LaSalle Street
Suite 2100
Chicago, Illinois 60601
Attention: Michael Sadoff, Esq.
(312) 621-1494
(312) 621-1750 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
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.
<PAGE>
26. EXISTING LOAN. The Property is currently encumbered by a Deed to Secure
Debt and Security Agreement (the "Mortgage") by Seller to Value Line Mortgage
Corporation and assigned, by intermediate assignments, to State Street Bank and
Trust Company, as Trustee for the Registered Holders of Kidder Peabody
Acceptance Corporation I, Multifamily Mortgage Pass Through Certificate dated
December 17, 1993, which secures that certain Promissory Note (the "Note") made
by Seller payable to the order of Lender in the original principal amount of
Six Million Six Hundred Fifty Thousand Dollars ($6,650,000). Seller shall pay
any prepayment fee associated with the repayment of the Note at closing.
27. SECTION 1031 EXCHANGE. Purchaser's nominee desires to exchange other
property of like kind and qualifying use within the meaning of Section 1031 of
the Internal Revenue Code of 1986 ("IRC"), as amended and the Regulations
promulgated thereunder, for fee title in the Land which is the subject of this
contract. Purchaser's nominee expressly reserves the right to assign its
rights, but not its obligations, hereunder to a Qualified Intermediary as
provided in IRC regulation 1.1031(k)-1(g)(4) on or before the closing date.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
----------------------------------
Name: Robert H. Weitzman
----------------------------------
Its: President
----------------------------------
SELLER:
3655 PEACHTREE LIMITED PARTNERSHIP,
an Illinois limited partnership
By: 3655 Peachtree, Inc., an Illinois
corporation, its general partner
By: /s/ Daniel L. Charleston
------------------------------------
Name: Daniel L. Charleston
------------------------------------
Its: Authorized Agent
------------------------------------
<PAGE>
Howell Station
Jay Clark 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
February 16, 1996 between Seller and Seller's Broker (the "Listing Agreement").
Seller's Broker also acknowledges that payment of the aforesaid fee or
commission is conditioned upon the Closing and the receipt of the Purchase
Price by the Seller. Seller's Broker agrees to deliver a receipt to the Seller
at the Closing for the fee or commission due Seller's Broker and a release, in
the appropriate form, stating that no other fees or commissions are due to it
from Seller or Purchaser.
Apartment Realty Advisors
By:
------------------------------------
<PAGE>
Howell Station
of First Group Properties ("Purchaser's Broker") executed
this Agreement in its capacity as a real estate broker and acknowledges that
the fee or commission due it from Purchaser as a result of the transaction
described in this Agreement is as set forth in that certain ,
dated , 199 between Purchaser and Purchaser's Broker. Purchaser's Broker
also acknowledges that payment of the aforesaid fee or commission is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Purchaser's Broker agrees to deliver a receipt to the Purchaser at the
Closing for the fee or commission due Purchaser's Broker and a release, in the
appropriate form, stating that no other fees or commissions are due to it from
Seller or Purchaser.
FIRST GROUP PROPERTIES
By: /s/ Howard Wolkoff
--------------------------------
<PAGE>
Exhibits
A - Legal
B - Intentionally Deleted
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Intentionally Deleted
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Intentionally Deleted
M - Rent Roll
<PAGE>
AMENDMENT NO. 1 TO AGREEMENT OF SALE
THIS AMENDMENT NO. 1 TO AGREEMENT OF SALE (this "Amendment") is dated as
of February 26, 1997, by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser") and PEACHTREE LIMITED PARTNERSHIP, an Illinois
limited partnership ("Seller").
W I T N E S S E T H:
A. Purchaser and Seller have heretofore entered into that certain
Agreement of Sale dated as of February 26, 1997, providing for the sale by
Seller to Purchaser of certain real property and other related property located
in Duluth, Georgia and known as Howell Station Apartments (the "Property")
(said Agreement of Sale is hereinafter referred to as the "Agreement"); and
B. Purchaser and Seller have heretofore entered into that certain
Agreement dated as of February 26, 1997, providing for the sale by Seller to
Purchaser of certain personal property located at the Property (the "Personal
Property") (said Agreement is hereinafter referred to as the "Personal Property
Agreement"); and
C. The parties heretofore desire to amend the terms and conditions of
the Agreement in certain respects, in accordance with the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the recitals set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties, Purchaser and Seller hereby agree as follows:
1. Preambles. The Preambles to this Amendment are fully incorporated
herein by this reference thereto with the same force and effect as through
restated herein.
2. Defined Terms. To the extent not otherwise defined herein to the
contrary, all capitalized terms and/or phrases used in this Amendment shall
have the respective meanings ascribed to them in the Agreement, as modified
hereby.
3. Closing/Event of Default. Notwithstanding anything to the contrary
contained in the Agreement or the Personal Property Agreement, the conveyance
of the Personal Property shall occur simultaneously with the Closing on the
Closing Date through an Escrow with Title Insurer. In the event that Seller
fails to deliver a Special Warranty Bill of Sale to the Purchaser conveying the
Personal Property to Purchaser on the Closing Date, in accordance with the
provisions of the Personal Property Agreement, said failure shall be deemed a
"Seller's Default", and the provisions of paragraph 12 of the Agreement shall
apply. In the event that Purchaser fails to deliver the purchase price for the
Personal Property to Seller on the Closing Date in accordance with the
provisions of the Personal Property Agreement, said failure shall be deemed a
"Purchaser's Default", and the provisions of paragraph 10 of this Agreement
shall apply.
<PAGE>
4. Miscellaneous. (a) Except as may be expressly set forth herein to
the contrary, the Agreement remains unmodified and all of the terms and
conditions of the Agreement shall remain in full force and effect.
Notwithstanding anything to the contrary contained herein, to the extent that
the terms and conditions of this Amendment conflict with the terms and
conditions of the Agreement, this Amendment shall control.
(b) This Amendment shall be governed and construed under the laws of
the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
---------------------------------
Name:
---------------------------------
Its: President
---------------------------------
SELLER:
3655 PEACHTREE LIMITED PARTNERSHIP,
an Illinois limited partnership
By: 3655 Peachtree, Inc., an Illinois
corporation, its general partner
By: /s/ Daniel L. Charleston
------------------------------------
Name: Daniel L. Charleston
------------------------------------
Its: Authorized Agent
------------------------------------
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the 26th
day of February, 1997 by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 3655 PEACHTREE LIMITED PARTNERSHIP, an Illinois
limited partnership
("Seller").
RECITALS:
A. Seller and Purchaser have entered into a certain Agreement of Sale
dated as of the date of this Agreement (the "Sale Agreement") relating to the
property commonly known as the Howell Station Apartments located in Duluth,
Georgia (the "Property").
B. Seller desires to sell, convey and transfer to Purchaser all of
Seller's right, title and interest in, to and under all of the personal
property owned by Seller currently located on the Property and described on
Exhibit A attached hereto (collectively the "Personalty"), and in consideration
therefor, Purchaser has agreed to pay a certain sum to Seller as set forth
below.
C. The parties have agreed that for purposes of this Agreement, the
purchase price for the Personalty is One Million Dollars ($1,000,000.00) (the
"Purchase Price").
NOW, THEREFORE, in consideration of the mutual covenants set forth below,
and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Seller and Purchaser covenant and
agree as follows:
1. The foregoing recitals are incorporated herein and made a part of
this Agreement as though fully set forth herein.
2. In consideration for the Purchase Price, Seller shall sell, assign,
transfer and convey to Purchaser by a special warranty bill of sale in the form
of Exhibit B attached hereto all of Sellers right, title and interest in, to
and under the Personalty. Simultaneously therewith, Purchaser shall pay to
Seller the Purchase Price by federally wired "immediately available" funds.
3. Purchaser acknowledges and agrees that except with respect to the
representations and warranties contained herein, it will be purchasing the
Personalty based solely upon its inspections and investigations of the
Personalty, and that Purchaser will be purchasing the Personalty "AS IS" and
"WITH ALL FAULTS", based upon the condition of the Personalty as of the date of
this Agreement, wear and tear and loss by fire or other casualty or
condemnation excepted. Without limiting the foregoing, Purchaser acknowledges
that except as may otherwise be specifically set forth elsewhere in this
Agreement, neither Seller nor its consultants, brokers or agents have made any
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Personalty.
<PAGE>
4. In order to induce Purchaser to purchase the Personalty, Seller
hereby represents and warrants to Purchaser as follows:
a. Seller is an Illinois limited partnership duly organized,
validly existing and in good standing under the laws of the State of Illinois,
and has all requisite corporate power and authority to enter into this
Agreement, to carry out its terms and to sell and convey the Personalty to
Purchaser.
b. On or before the closing date, all corporate and other action
required to be taken by Seller to authorize the execution and delivery of this
Agreement and to carry out the transaction contemplated hereunder will have
been duly and properly taken.
c. The execution, delivery and performance of this Agreement will
not violate any order of any court or other governmental agency by which Seller
is bound, nor any other agreement to which Seller is a party or by which the
Personalty is bound.
d. As of the date of this Agreement, Seller is not obligated under
any other agreement or commitment to sell the Personalty to any third party.
5. The conveyance of the Personalty as described above shall occur
through the "Title Insurer" on the "Closing Date" as said terms are defined in
the Sale Agreement simultaneously with the closing under the Sale Agreement.
In the event that the Sale Agreement is terminated in accordance with the terms
thereof, this Agreement shall become null and void and of no effect and the
parties shall have no further liability to each other at law or in equity,
except as otherwise provided in the Sale Agreement.
6. Any reference herein to Seller's knowledge or notice of any matter or
thing shall only mean such knowledge or notice that has actually been received
by Daniel Charleston or Michael Becker (collectively "Seller's
Representative"), and any representation or warranty of Seller is based upon
those matters of which Seller's Representative has actual knowledge. Any
knowledge or notice given, had or received by any of Seller's agents, servants
or employees shall not be imputed to Seller, the general partner or limited
partners of Seller, the subpartners of the general partner or limited partners
of Seller or Seller's Representative.
7. Except as otherwise set forth in the Sale Agreement and in this
Agreement, Seller makes no representation or warranty, either express or
implied, with respect to the condition of the Personalty.
8. This Agreement shall be binding upon the parties hereto and their
respective officers, directors, partners, heirs, successors and assigns.
9. This Agreement shall be governed by and construed under the laws of
the State of Illinois.
10. This Agreement and the Sale Agreement, the terms of which are
incorporated herein by reference, embody the entire understanding of the
parties, and all other representations and agreements with respect to the
Personalty, whether oral or in writing, have been merged into and replaced by
this Agreement.
<PAGE>
11. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed as of the date and place first above written.
PURCHASER
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
-----------------------------
Name: Robert H. Weitzman
-----------------------------
Its:
-----------------------------
SELLER
3655 PEACHTREE LIMITED PARTNERSHIP,
an Illinois limited partnership
By: 3655 Peachtree, Inc., an Illinois
corporation, its general partner
By: /s/ Daniel L. Charleston
--------------------------------
Name: Daniel L. Charleston
--------------------------------
Its: Authorized Agent
--------------------------------
<PAGE>
AMENDMENT NO. 2 TO AGREEMENT OF SALE
THIS AMENDMENT NO. 2 TO AGREEMENT OF SALE (this "Amendment") is dated as
of February 28, 1997 by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 3655 PEACHTREE LIMITED PARTNERSHIP, an Illinois
limited partnership ("Seller").
WITNESSETH
A. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement of Sale dated as of February 26, 1997, as amended by that
certain Amendment No. 1 to Agreement of Sale dated as of February 26, 1997,
providing for the sale by Seller to Purchaser of certain real property and
other related property located in Duluth, Georgia and known as the Howell
Station Apartments (the "Property") (said Agreement of Sale, as amended by
Amendment No. 1 thereto, is hereinafter referred to as the "Agreement:); and
B. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement dated as of February 26, 1997 providing for the sale by
Seller to Purchaser of certain personal property located at the Property (the
"Personal Property") (Said Agreement is hereinafter referred to as the
"Personal Property Agreement"); and
C. WHEREAS, the parties heretofore desire to amend the terms and
conditions of the Agreement in certain respects, in accordance with the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the recitals set forth above, the
covenants and agreement hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties, Purchaser and Seller hereby agree as follows:
1. Preambles. The Preambles to this Amendment are fully incorporated
herein by this reference thereto with the same force and effect as though
restated herein.
2. Defined Terms. To the extent not otherwise defined herein to the
contrary, all capitalized terms and/or phrases used in this Amendment shall
have the respective meanings ascribed to them in the Agreement, as modified
hereby.
3. Extension of Financing Contingency. Paragraph 9 of the Agreement is
amended to provide that the expiration of the Financing Contingency shall be
extended from February 28, 1997 to March 21, 1997, and that all references to
the Financing Contingency in both the Agreement and the Personal Property
Agreement shall mean March 21, 1997.
4. Extension of Closing Date. Paragraph 8 of the Agreement is amended to
provide that the Closing Date shall be extended from March 20, 1997 to April 4,
1997, and that all references to the Closing Date in both the Agreement and the
Personal Property Agreement shall mean April 4, 1997.
<PAGE>
5. Survival of Representations and Warranties. Paragraph 17.5 of the
Agreement is amended to provided that the survival period applicable to
Seller's representations and warranties contained in the Agreement shall
continue through and including 5:00 p.m. CDT in June 29, 1997 rather than
ninety (90) days after the Closing Date.
6. Miscellaneous. Except as may be expressly set forth herein to the
contrary, the Agreement remains unmodified and all of the terms and conditions
of the Agreement shall remain in full force and effect. Notwithstanding
anything to the contrary contained herein, to the extend that the terms and
conditions of this Amendment conflict with the terms and conditions of the
Agreement, this Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
-------------------------------
Name: Robert H. Weitzman
-------------------------------
Its: President
-------------------------------
SELLER:
3655 PEACHTREE LIMITED PARTNERSHIP,
an Illinois limited partnership
By: 3655 Peachtree, Inc., an Illinois
corporation, its general partner
By: /s/ Daniel L. Charleston
--------------------------------
Name: Daniel L. Charleston
--------------------------------
Its: Authorized Agent
--------------------------------
<PAGE>
