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) November 29, 1996
BALCOR EQUITY PENSION INVESTORS-III
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-14348
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3354308
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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1275 K Street Office Building
In 1985, the Partnership and an affiliate, through a limited partnership (the
"Limited Partnership"), acquired the 1275 K Street Office Building, Washington,
D.C. The Partnership contributed approximately $18,635,000 the acquisition of
the property for a participating percentages in the Limited Partnership of
39.48%.
On December 12, 1996, the Limited Partnership contracted to sell the property
for a sale price of $28,300,000 to an unaffiliated party, Archon Group, L.P., a
Pennsylvania corporation. The sale closed on December 19, 1996. From the
proceeds of the sale, the Partnership paid $566,000 as a brokerage commission
to an affiliate of the third party providing property management services for
the property and $335,470 in closing costs. The Limited Partnership
received the remaining proceeds of $27,398,530. Of such proceeds, $2,287,500
is being retained by the Limited Partnership and will not be available for use
or distribution by the Limited Partnership for nine months after closing. The
Partnership's share of the total proceeds will be $10,816,940. 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 Limited Partnership for actual expenses incurred in
connection with the sale.
The purchaser has simultaneously contracted to purchase another property in
which the Partnership holds an interest, as described in Item 5 below.
ITEM 5. OTHER EVENTS
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a) Ammendale Technology Park - Phase II
In 1986, the Partnership funded a $9,360,000 first mortgage loan collateralized
by the Ammendale Technology Park - Phase II, Prince George's County, Maryland
(the "Property"). The Partnership obtained title to the Property through
foreclosure in 1991. An affiliate of the Partnership (the "Affiliate") that
funded a first mortgage loan collateralized by the Ammendale Technology Park -
Phase I ("Phase I"), which is located adjacent to the Property, obtained title
to Phase I through foreclosure simultaneously with the Partnership's
foreclosure of the Property.
On November 29, 1996, the Partnership contracted to sell the Property for a
sale price of $5,922,000 to an unaffiliated party, Writ Limited Partnership.
The purchaser has deposited $150,000 into an escrow account as earnest money.
The remaining portion of the sale price will be payable in cash at closing,
which is scheduled to occur on January 13, 1997. From the proceeds of the
sale, the Partnership will pay as a brokerage commission a total of $177,660 to
two unaffiliated parties, one of which is an affiliate of the third party
providing property management services for the Property. The Partnership will
receive the remaining proceeds of approximately $5,744,000, less closing costs.
<PAGE>
The Affiliate has simultaneously contracted to sell Phase I to the purchaser.
From the proceeds of the sales of the Property and Phase I, a total of $400,000
will be retained by the Partnership and the Affiliate and will not be available
for use or distribution by the Partnership and/or the Affiliate for nine months
after closing. A termination of either the agreement of sale for the Property
or for Phase I will be deemed a termination of the other agreement of sale.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the Property. The General Partner
will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions,
including the sale of Phase I. 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) Perimeter 400 Center
In 1986, the Partnership and three affiliates (the "Participants") funded a
$37,000,000 first mortgage loan collateralized by the Perimeter 400 Center,
Fulton County, Georgia. The Partnership's share of the loan was $8,121,951 for
a participating percentage of 21.95%. In 1991, in exchange for a release of
its obligations under the loan, the borrower conveyed title to the property to
a general partnership consisting of the participants (the "General
Partnership") in which each Participant holds an interest equal to its
participating percentage in the loan.
On December 2, 1996, the General Partnership contracted to sell the property
for a sale price of $40,700,000 to an unaffiliated party, Devon Properties,
Inc., a New York corporation. The sale closed on December 18, 1996. From the
proceeds of the sale, the General Partnership paid $198,026 in closing costs,
$814,000 as a brokerage commission to an affiliate of the third party providing
property management services for the property and received the remaining
proceeds of $39,687,974. Of such proceeds, $1,750,000 is being retained by
the General Partnership and will not be available for use or distribution by
the General Partnership until nine months after the closing. The Partnership's
share of the total proceeds will be $8,711,510. 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 General
Partnership for actual expenses incurred in connection with the sale.
c) Westech 360 Office Buildings
In 1987, the Partnership and an affiliate (the "Affiliate") funded a
$25,750,000 first mortgage loan collateralized by the Westech 360 Office
Buildings, Austin, Texas. The Partnership's share of the loan was $11,150,000
for a participating percentage of 43.3%. In 1988, a limited partnership (the
"Limited Partnership") in which the Partnership and the Affiliate each holds an
interest equal to its participating percentage in the loan obtained title to
the property pursuant to a deed in lieu of foreclosure.
On December 12, 1996, the Limited Partnership contracted to sell the property
for a sale price of $18,330,000 to an unaffiliated party, Archon Group, L.P., a
Delaware limited partnership. The sale closed on December 19, 1996. From the
proceeds of the sale, the Limited Partnership paid $366,600 as a brokerage
commission to an affiliate of the third party providing property management
<PAGE>
services for the property and closing costs of $101,053. The Limited
Partnership received the remaining proceeds of $17,826,347. Of such proceeds,
$1,395,000 is being retained by the Limited Partnership and will not be
available for use or distribution by the Limited Partnership until nine months
after the closing. The Partnership's share of the total proceeds will be
$7,734,390. 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 Limited Partnership for actual expenses
incurred in connection with the sale.
The purchaser has simultaneously contracted to purchase another property in
which the Partnership holds an interest, as described in Item 2 above.
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) Agreement of Sale and attachments thereto relating to the sale
of the 1275 K Street Office Building, Washington, D.C.
(99) (a) Agreement of Sale and attachment thereto relating to
the sale of the Ammendale Technology Park - Phase
II, Prince George's County, Maryland.
(b) Agreement of Sale and attachment thereto relating to the
sale of the Perimeter 400 Center, Fulton County, Georgia.
(c) Agreement of Sale and attachment thereto relating to the
sale of the Westech 360 Office Buildings, Austin, Texas.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR EQUITY PENSION INVESTORS-III
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Equity Partners-III, an Illinois
general partnership, its general
partner
By: The Balcor Company,
a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: December 27, 1996
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 12th
day of December, 1996, by and between ARCHON GROUP, L.P., a Delaware limited
partnership ("Purchaser"), and THIRTEENTH & K STREETS ASSOCIATES LIMITED
PARTNERSHIP, a District of Columbia limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Subject to the terms and conditions set forth in this
Agreement, Purchaser agrees to purchase and Seller agrees to sell at the price
of Twenty-Eight Million Three Hundred Thousand And No/100 Dollars
($28,300,000.00) (the "Purchase Price"), that certain land and building
commonly known as 1275 K Street, Washington, District of Columbia, 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 Four Hundred
Thousand and No/100 Dollars ($400,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Near North National Title
Corporation as agent for First American Title Insurance Company (hereinafter
referred to as "Title Insurer") dated August 8, 1996 for the Property (the
"Title Commitment"). Seller and Purchaser shall each pay for one-half of the
costs of the Title Commitment and Title Policy and Purchaser shall pay for the
cost of any endorsements to the Title Policy.
3.2. Purchaser has received a survey of the Property prepared by Kamber
Engineering, Inc. dated October 31, 1985 (the "Existing Survey").
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1, Seller and
Purchaser shall each pay for one-half of the costs of (i) the documentary or
transfer stamps to be paid with reference to the "Deed" (hereinafter defined)
and all other stamps, intangible, transfer, documentary, recording, sales tax
and surtax imposed by law with reference to any other sale documents delivered
in connection with the sale of the Property to Purchaser, (ii) all other
charges of the Title Insurer in connection with this transaction, and (iii) the
cost of the new survey.
<PAGE>
5. CONDITION OF TITLE.
5.1. Purchaser shall review the Title Commitment and Existing Survey
during the period between the date of the execution of this Agreement and
December 8, 1996 (the "Title Inspection Period"). Prior to the expiration of
the Title Inspection Period, Purchaser shall provide Seller with a marked-up
copy of the Title Commitment and Existing Survey enumerating its objections to
the Title Commitment and Existing Survey (the "Title and Survey Objections")
and listing those exceptions to title which are acceptable to Purchaser (which
shall include general real estate taxes, association assessments, special
district taxes and related charges not yet due and payable). Seller shall
review the Title and Survey Objections, and respond to Purchaser in writing
prior to the expiration of the Inspection Period (as defined below). If
Purchaser and Seller resolve all Title and Survey Objections, a marked copy of
the Title Commitment and Existing Survey indicating such agreement shall be
initialed by both Purchaser and Seller (hereinafter known as the "Final Title
Commitment" and the "Final Existing Survey") and shall serve as an amendment to
this Agreement. (The exceptions to title set forth on the Final Title
Commitment are hereinafter known as "Permitted Exceptions". All other
exceptions to title shall be referred to as "Unpermitted Exceptions".) If
Purchaser and Seller do not resolve all Title and Survey Objections prior to
the expiration of the Inspection Period, either Purchaser or Seller shall have
the right to terminate this Agreement by delivery of written notice to the
other on or before 5:00 p.m. Chicago time or December 10, 1996, in which event
this Agreement shall terminate, Purchaser shall receive the Earnest Money
together with all interest earned thereon and neither party shall have any
liability hereunder except as set forth herein.
5.2. If, prior to "Closing" (as hereinafter defined) but after the end of
the Inspection Period, a date-down to the Title Commitment discloses any new
Unpermitted Exception, Seller shall have thirty (30) days from the date of the
date-down to the Title Commitment, at Seller's expense, to (i) 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 cure and/or have any
Unpermitted Exceptions which, in the aggregate, equal or exceed $25,000.00,
removed from the Title Commitment or to have the Title Insurer commit to insure
against loss or damage that may be occasioned by such Unpermitted Exceptions
with Purchaser's approval which Purchaser may withhold in its sole discretion.
In such event, the time of Closing shall be delayed, if necessary, to give
effect to said aforementioned time periods. If Seller fails to cure or have
said Unpermitted Exception removed or have the Title Insurer commit to insure
as specified above within said thirty (30) day period or if Seller elects not
to exercise its rights under (ii) in the preceding sentence, Purchaser may
terminate this Agreement upon notice to Seller within five (5) days after the
expiration of said thirty (30) day period. Absent notice from Purchaser to
Seller in accordance with the preceding sentence, Purchaser shall be deemed to
have elected to take title subject to said Unpermitted Exception. If Purchaser
terminates this Agreement in accordance with the terms of this Paragraph 5.2,
this Agreement shall become null and void without further action of the parties
and all Earnest Money theretofore deposited into the escrow by Purchaser
<PAGE>
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.
5.3. Seller agrees to convey fee simple title to the Property to
Purchaser 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 date 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 and which would
not have a material and adverse impact upon the use of the Property as it is
currently being operated (as reasonably determined by Seller in good faith),
Purchaser shall not have the right to terminate its obligations under this
Agreement by reason thereof, but Seller shall have the right to elect to either
repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty and pay to Purchaser any uninsured amount. 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 reasonably determined
by Seller in good faith) or which would have a material and adverse impact upon
the use of the Property as it is currently being operated, 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. 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
<PAGE>
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 or value of the Property as it is currently being operated
(hereinafter collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on December 10, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser, to the extent in Seller's
possession, copies of the current rent roll for the Property, the most recent
tax and insurance bills, utility account numbers, service contracts, structural
reports, environmental reports 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 documents set forth in this Paragraph 7.1 being known as the "Seller
Documents").
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
<PAGE>
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, for any reason whatsoever or for no reason, Purchaser is dissatisfied
with the results of the tests, studies or investigations performed or
information received pursuant to this Paragraph 7.1, Purchaser shall have the
right to terminate this Agreement by giving written notice of such termination
to Seller at any time prior to the expiration of the Inspection Period. If
written notice is not received by Seller pursuant to this Paragraph 7.1 prior
to the expiration of the Inspection Period, then the right of Purchaser to
terminate this Agreement pursuant to this Paragraph 7.1 shall be waived. If
Purchaser terminates this Agreement by written notice to Seller prior to the
expiration of the Inspection Period: (i) Purchaser shall promptly deliver to
Seller copies of all studies, reports and other investigations obtained by
Purchaser in connection with its due diligence during the Inspection Period;
and (ii) the Earnest Money deposited by Purchaser shall be immediately paid to
Purchaser, together with any interest earned thereon, and neither Purchaser nor
Seller shall have any right, obligation or liability under this Agreement,
except for Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in this Paragraph 7.1. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.1, shall
survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.2. Seller acquired title to the Property by foreclosure (or
deed-in-lieu thereof) and, therefore, Seller makes no representations or
warranties relating to the condition of the Property or the Personal Property,
except as expressly set forth in this Agreement. Purchaser acknowledges and
agrees that, except as expressly set forth in this Agreement, 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,
<PAGE>
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
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.
The terms and provisions of this Paragraph 7.2 are subject to Seller's
representations and warranties set forth in Paragraph 18.2 hereof.
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
<PAGE>
request solely as illustrative material. Except as expressly set forth herein,
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. Intentionally deleted.
8. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The obligations of
the Purchaser to purchase the Property from the Seller and to perform the other
covenants and obligations to be performed by it on the Closing Date shall be
subject to the following conditions (all or any of which may be waived, in
whole or in part, by the Purchaser):
8.1. Representations and Warranties True. The representations and
warranties made by the Seller in Paragraph 18.2 shall be true and correct on
the date of this Agreement and shall be true and correct on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of such date.
8.2. Title to Real Property. On the Closing Date, the Title Insurer shall
be prepared, subject to the payment by the Seller of the applicable premium, to
issue to the Purchaser, or its designee, at standard rates, an ALTA Form B
owner's title insurance policy or its equivalent covering the Property, in an
amount equal to the Purchaser Price, insuring title to the Property strictly in
the form set forth in the Final Title Commitment, subject only to Permitted
Exceptions, Unpermitted Exceptions waived in writing by Purchaser, and such
other matters caused by the actions of Purchaser.
8.3. Covenants and Agreements. On or before the Closing Date, the Seller
will have performed all covenants and agreements required to be performed by it
pursuant to the terms of this Agreement.
8.4. No Litigation. On or before the Closing Date, Seller shall not have
received notice of any pending action or proceeding adversely affecting
Seller's ability to perform the transaction contemplated by this Agreement or
the Property for which Seller has not assumed all liability therefor.
8.5. Tenant Certificate Condition to Closing.
8.5.1. The following terms have been defined as follows for
convenience of reference:
8.5.1.1. "Tenant Certificate" means a certificate, commonly
known as an estoppel certificate, signed by a tenant with respect to its Lease,
either in the form set forth on Exhibit L hereto or on such other form as is
substantially consistent with the requirements of the tenant's lease for such
certificates.
<PAGE>
8.5.1.2. "Seller Tenant Certificate" means a Tenant Certificate
signed by the Seller with respect to a particular Lease for which the Tenant in
question has failed to execute and deliver a Tenant Certificate, in which case
the Seller Tenant Certificate shall be in the form of Exhibit L, provided that
a Seller Tenant Certificate shall in all cases be limited to Seller's knowledge
as defined in paragraph 18.1 above.
8.5.1.3. "Qualification" means any assertion in a Tenant
Certificate or Seller Tenant Certificate (whether in the form of Exhibit L or
otherwise) of (i) a claim, counterclaim, offset or defense against the
landlord, (ii) a default on the part of the landlord, (iii) unpaid credits,
allowances or other sums due from the landlord prior to the date of the
estoppel (other than disclosed on EXHIBIT M, EXHIBIT N or Exhibit O attached
hereto or pursuant to a new lease pursuant to Paragraphs 17.1.4 and 17.2.5
herein), (iv) an unfulfilled construction or other obligation on the part of
the landlord prior to the date of estoppel (other than disclosed on EXHIBIT M,
EXHIBIT N or Exhibit O attached hereto or pursuant to a new lease pursuant to
Paragraphs 17.1.4 and 17.2.5 herein), or (v) information which is contrary (in
an adverse respect to the landlord) (x) to the information contained in the
rent roll attached hereto as Exhibit M, or (y) to the information pertaining to
tenant allowances and concessions and leasing commissions contained on Exhibit
N;
8.5.1.4. "Unacceptable Qualification" means any Qualification
other than the following:
(a) a Qualification which is expressly disclosed on the rent
roll attached hereto as Exhibit M or the schedules attached hereto as Exhibit N
or Exhibit O or a Qualification relating to non-payment of November, 1996 or
December, 1996 rent, provided the same is not as a result of a default by
Seller; or
(b) a Qualification expressly disclosed on the other Exhibits
attached hereto and made a part hereof.
8.5.2. If a Qualification is not an Unacceptable Qualification, it
shall not affect Purchaser's obligations to close hereunder or give rise to any
liability from Seller to Purchaser.
8.5.3. Seller shall promptly request a Tenant Certificate in the
form of Exhibit L from all tenants, and shall in good faith pursue the
collection of the same. Seller shall deliver to Purchaser, upon Seller's
receipt thereof, all Tenant Certificates signed by tenants (whether in the form
of Exhibit L or otherwise).
8.5.4. It shall be a condition to Purchaser's obligations
hereunder (the "Estoppel Condition") that Seller deliver to Purchaser, on or
prior to the Closing Date, (i) a Tenant Certificate from Kator Scott & Heller,
Cable & Wireless, Inc. and D.C. Housing Finance Agency ("Major Tenant"), and
such other tenants as to make the square footage leased by all tenants subject
to Tenant Certificates, exclusive of Society of the Plastics, Inc., equal to
50% of net rentable area of the Property (the parties hereto agree that the net
<PAGE>
rentable area of the Property is 225,660 sq. ft.), and (ii) either a Tenant
Certificate or Seller Tenant Certificate from such other tenants so that
Purchaser receives Tenant Certificates or Seller Tenant Certificates, when
added to those Tenant Certificates required by 8.5.4(i), for tenants occupying
75% of the gross rentable area of the Property. Notwithstanding the foregoing
to the contrary, Seller shall not have satisfied the Estoppel Condition if any
of the Tenant Certificates received by Seller or Seller Tenant Certificates
disclose Unacceptable Qualifications other than Unacceptable Qualifications
with an "Estoppel Qualification Sum" (hereinafter defined) of less than
$100,000 in the aggregate. The "Estoppel Qualification Sum" shall mean the
following:
(i) if the claim asserted arises out of a defect which can be cured,
with the expenditure of money on a one time basis, such as a physical defect,
then such sum shall be calculated by a reasonable estimate of the cost to
repair or remediate said defect subject to the reasonable approval of
Purchaser; and
(ii) if the claim asserted affects a continuing obligation of a
tenant under the lease, such as the payment of rent, then the claim shall be
calculated by (i) determining the amount of the claim on a per annum basis,
(ii) multiplying said amount by the number of years or partial years said claim
would affect the monetary obligations under the lease and (iii) discounting
said product on a present value basis using a discount rate of 10% per annum.
If the Unacceptable Qualifications have an Estoppel Qualification Sum of
less than $100,000 in the aggregate, then Seller shall either (i) grant
Purchaser a credit at Closing for an amount equal to the Estoppel Qualification
Sum, or (ii) cure all conditions giving rise to an Unacceptable Qualification
and obtain written confirmation from the applicable tenant that such condition
has been cured on or before the Closing. The determination to perform the
covenant contained in subparagraphs (i) or (ii) in the preceding sentence shall
be made by Seller in its sole discretion. Provided Seller performs its
covenant in this Paragraph 8.5.4, the disclosure of Unacceptable Qualifications
having an Estoppel Qualification Sum of less than $100,000 in the aggregate
shall not affect Purchaser's obligations to close hereunder or give rise to any
additional liability from Seller to Purchaser.
8.5.5. If Seller delivers any Seller Tenant Certificates, then
upon receipt after Closing by Purchaser of a Tenant Certificate containing the
information herein required from a tenant under a Lease for whom Seller has
executed and delivered a Seller Tenant Certificate at Closing, the Seller
Tenant Certificate executed and delivered by Seller at Closing shall become
null and void and the Tenant Certificate received from the tenant shall be
substituted therefor. Seller's liability under Seller Tenant Certificates
shall be limited pursuant to Paragraph 19 herein.
8.5.6. If Seller has not satisfied the Estoppel Condition on or
before 5:00p.m. Chicago time on December 15, 1996, then Purchaser shall have
the right to terminate this Agreement by delivering written notice to Seller on
or before such date. If Purchaser exercises its rights to terminate in
accordance with the terms of this Paragraph 8.5.6, this Agreement shall be null
<PAGE>
and void without further action of the parties and all Earnest Money
theretofore deposited 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 hereof. If
Purchaser does not terminate this Agreement pursuant to the first sentence of
this Paragraph 8.5.6, the parties shall proceed to Closing and (i) Purchaser
shall receive a credit at Closing equal to the amount of the Estoppel
Qualification Sum of the Unacceptable Qualifications contained in the Tenant
Certificates or Seller Tenant Certificates, up to an aggregate amount of
$100,000 or (ii) Seller shall cure all conditions giving rise to an
Unacceptable Qualification Sum up to an aggregate amount of $100,000 and obtain
written confirmation from the applicable tenant that such condition has been
cured. The determination to perform the covenant contained in subparagraphs
(i) or (ii) in the preceding sentence shall be made by Seller in its sole
discretion.
8.6 Except as specifically set forth in Paragraph 8.5, if any one or more
of the conditions set forth in Paragraph 8 above are not satisfied as of the
date specified for Closing hereunder, then Purchaser shall have the option, in
its sole discretion, exercised by written notice to Seller, to: (i) waive such
condition and complete the Closing under this Agreement in accordance with the
terms and conditions hereof, without any reduction or adjustment in the
Purchase Price as a result of such waived condition; or (ii) terminate this
Agreement and obtain a refund of its Earnest Money and all interest earned
thereon, whereupon Seller and Purchaser shall be thereupon released from all
further liability or obligation under this Agreement except with respect to the
provisions hereof which are expressly intended to survive the termination of
this Agreement for any reason.
9. CLOSING. The closing of this transaction (the "Closing") shall be on
December 19, 1996 (the "Closing Date"), at the offices of Seller's counsel,
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 the District of
Columbia, 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.
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, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
<PAGE>
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. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
10.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
10.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
10.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
10.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
10.2.8. possession of the Property to Purchaser, subject to the
terms of leases;
10.2.9. evidence of the termination of the management agreement;
10.2.10. 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);
10.2.11. an updated rent roll certified by the Seller to be true and
correct as of the Closing Date setting forth (i) all past due and uncollected
rent and additional charges, (ii) all prepayments of rent and additional
charges, and (iii) all security deposits (including interest thereon, if any)
held by Seller under all Leases;
10.2.12. all certificates of occupancy in Seller's possession; and
10.2.13. a complete set of the architectural, mechanical, electrical
and structural plans and specifications for the Property in Seller's
possession.
10.3. Notwithstanding anything contained herein to the contrary, on
the Closing Date Purchaser and Seller shall enter into an escrow agreement
("Metzger Escrow Agreement") with Title Insurer in form reasonably acceptable
to Purchaser and Seller related to payments due under that certain office lease
dated April 1, 1991 (the "Metzger Lease") with the tenant known as Metzger,
Gordon, Scully & Mortimer or any of its successors or assigns under the Metzger
<PAGE>
Lease ("Metzger"). On the Closing Date, Purchaser and Seller shall instruct
Metzger to pay the full amount of the rent and all additional rent due under
the Metzger Lease to the Title Insurer each month in accordance with the
schedule attached to the Metzger Escrow Agreement, which schedule shall be
modified by Purchaser and Seller as necessary to reflect any changes in rent or
additional rent payable pursuant to the Metzger Lease, whether due to changes
in maintenance expenses or a modification to the terms of the Metzger Lease by
the Purchaser as set forth below (the "Rent"). The Metzger Escrow Agreement
shall provide that for each month commencing on the first month after the
Closing Date and continuing for an additional fifty-one (51) months after the
Closing Date (the "Metzger Escrow Period") (i) so long as the Title Insurer
receives the full amount of the Rent due for such month, it shall pay
$29,411.76 less the difference between the monthly Rent due on the date hereof
and the actual Rent due in accordance with the schedule attached to the Metzger
Escrow Agreement (the "Seller Payment") to the Seller and the balance of the
funds received shall be paid to the Purchaser, (ii) to the extent that the
Title Insurer receives less than 95% of the full Rent due for such month, the
Title Insurer shall pay the entire amount collected to the Purchaser, and (iii)
to the extent that the Title Insurer receives between 95% and 100% of the full
Rent due for such month, the Title Insurer shall pay the following amount to
the Seller and the balance received to the Purchaser: the Seller Payment less
the difference between the full Rent due and the amount actually
collected (the failure to pay the full Rent due as set forth in items (ii) and
(iii) being known collectively as a "Metzger Default"). Upon the occurrence of
a Metzger Default, Purchaser shall be obligated to make good faith efforts, as
determined by Purchaser in its reasonable discretion but which shall not
include the commencement of litigation against Metzger, to collect the unpaid
amounts due from Metzger for such month (the "Unpaid Amounts"). If the
Purchaser or Title Insurer receives such Unpaid Amounts from Metzger within 90
days from the date due, Purchaser or Title Insurer, as applicable, shall be
obligated to pay the Seller Payment, or the unpaid portion of the Seller
Payment for such month, to the Seller. If at any time during the Metzger
Escrow Period (i) Purchaser rightfully terminates the Metzger Lease, (ii)
Metzger terminates the Metzger Lease for any reason, or (iii) the Metzger Lease
is otherwise terminated as a result of the litigation between Seller and
Metzger, the obligations set forth in this Section 10.3 and in the Metzger
Escrow Agreement shall immediately terminate (the "Termination") and all rents
collected in connection with the Metzger Lease or the premises occupied by
Metzger shall be the sole possession of Purchaser and Seller shall have no
further rights therein whatsoever. In addition, the Metzger Escrow Agreement
shall provide that in all events and circumstances, including the event of a
dispute between Purchaser and Seller, Title Insurer will in any event disburse
to Purchaser all Rent received by Title Insurer in excess of the Seller Payment
on a monthly basis. In the event the Purchaser sells the Property during the
Metzger Escrow Period, it shall require that such new owner of the Property
assume the obligations set forth in this Section 10.3. Purchaser hereby
covenants that (i) neither Purchaser nor any agent or employee of Purchaser
shall disclose the terms of this Paragraph 10.3 or the Metzger Escrow Agreement
to Metzger or any of Metzger's agents or employees and (ii) Purchaser shall
modify or restructure the Metzger Lease only for business reasons, not in bad
faith or solely for the purpose of reducing amounts payable to Seller.
Notwithstanding anything contained in this Agreement to the contrary, in the
<PAGE>
event that the Metzger Lease is terminated for any reason and Purchaser fails
to commence any action against Metzger within 120 days of such termination,
then in such event, Purchaser hereby agrees to subrogate its rights in
connection with remedies under the Metzger Lease to Seller. The terms of this
Paragraph 10.3 shall survive Closing and the delivery of the Deed.
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 AFTER THE EXPIRATION OF THE INSPECTION PERIOD,
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, 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 CLOSING DOCUMENTS SET
FORTH IN PARAGRAPH 10.2 HEREOF, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S
DEFAULT IS (I) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE ACTION
WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY AND WHICH
GIVES RISE TO A RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO PARAGRAPH 5.2
HEREOF; (II) ITS MISREPRESENTATION OF ANY ITEM SET FORTH IN PARAGRAPH 18.2
HEREOF; OR (III) ITS WILLFUL REFUSAL TO DELIVER ANY OF THE CLOSING DELIVERIES
SET FORTH IN PARAGRAPH 10.2 HEREOF, THEN PURCHASER WILL BE ENTITLED TO DEMAND
THE RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL THEN BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES
SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR
PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET
FORTH MORE FULLY IN PARAGRAPH 7 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER
ITS ACTUAL, DOCUMENTED THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS
DUE DILIGENCE HEREUNDER AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED
$175,000 IN THE AGGREGATE.
13. CLOSING PRORATIONS.
13.1. The items described in this Paragraph shall be prorated between
the parties on a per diem basis (on the basis of actual calendar days and a
366-day year) so that credits and charges preceding or on 11:59 P.M. on the
Closing Date shall be allocated to Seller and credits and charges for the
<PAGE>
period after 11:59 P.M. on the Closing Date and all days thereafter shall be
allocated to Purchaser. As of May 1, 1997, Seller and Purchaser shall jointly
prepare a final proration statement in accordance with the provisions of this
Paragraph 13 and a final adjusting payment shall then be made, as provided in
Paragraph 13.3 hereof.
13.1.1. Real estate taxes (on the basis of allowable discounts for
early payment, to the extent the adjustment is made during the discount
period), general and special assessments and the like ("Taxes") for 1996, as
such Taxes may be increased or decreased after the Closing, shall be prorated
as of the Closing Date based on the most recent ascertainable amount.
Purchaser shall promptly bill tenants making annual payments for Taxes, if any,
and other tenants which are obligated to make payments for taxes other than on
a monthly basis and which remain liable for Taxes for a period of Seller's
ownership (said annual paying tenants and non-monthly paying tenants are
hereinafter collectively referred to as "Non-Monthly Tax Payors") in accordance
with their respective Leases. Upon Purchaser's receipt of the payment of Taxes
by each Non-Monthly Tax Payor, said payment shall be prorated as of the Closing
Date and Purchaser shall promptly pay to Seller the prorated portion of the
collected Taxes pertaining to the period prior to the Closing Date.
13.1.2. Minimum rent (exclusive of delinquent rents, but including
prepaid rents) and other fixed charges for operational expenses and taxes paid
under the Leases ("Minimum Rent") shall be prorated as of the Closing Date.
13.1.3. Certain of the Leases provide for reimbursement to landlord
of maintenance and operation charges, taxes, insurance and other expenses
(herein collectively referred to as "Maintenance Expenses"). Some Leases
provide for a determination of the tenant's share of Maintenance Expenses on an
annual basis but provide that an estimated amount thereof (either in the
aggregate or for specified components thereof) shall be paid by tenant to
landlord monthly during the course of the year with a final adjustment to be
made after the close of the year when such costs and expenses have been finally
determined. Seller and Purchaser agree as follows with respect to Maintenance
Expenses:
13.1.3.1. Except as hereinafter provided, Seller shall be
responsible for the payment of all Maintenance Expenses attributable to periods
of time through the Closing Date and shall be entitled to receive and retain
all reimbursements thereof collected from tenants on account thereof with
respect to the period through the Closing Date; and Purchaser shall be
responsible for the payment of all Maintenance Expenses attributable to periods
of time after the Closing Date and shall be entitled to receive and retain from
the tenants all reimbursements thereof collected from tenants on account
thereof with respect to the Closing Date and thereafter. At the Closing,
Seller shall pay to Purchaser the amount of ascertainable Maintenance Expenses
incurred but unpaid at the Closing and Seller shall receive as a credit an
amount equal to all Maintenance Expenses prepaid by Seller for periods after
the Closing Date and not yet incurred.
13.1.3.2. As a part of the final proration referred to in
Section 13.3 hereof:
<PAGE>
(i) Seller shall pay to Purchaser the amounts (if any) received by
Seller from tenants on account of Maintenance Expenses with respect to the
period prior to the Closing Date in excess of amounts incurred by Seller during
such period on account of such Maintenance Expenses with respect to such
period; and
(ii) Purchaser shall pay to Seller the amount (if any) received by
Purchaser on account of Maintenance Expenses paid by tenants with respect to
said year which are attributable to Maintenance Expenses incurred by Seller
prior to Closing Date and not theretofore reimbursed.
13.1.4. Insurance charges payable under the Leases shall be
adjusted in the same manner as provided in 13.1.3.2(i) and (ii) above with
respect to Maintenance Expenses.
13.1.5. To the extent not covered by Paragraph 13.1.3, utility and
fuel charges, including, without limitation, charges for water, electricity,
gas, gasoline, steam, oil and telephones used in connection with the heating,
cooling, lighting, maintenance and operation of the Property and any personal
property included therein or used in connection therewith shall be prorated as
of the Closing Date. Seller shall endeavor to obtain readings of all utility
meters as close to the Closing Date as practicable.
13.1.6. To the extent not covered by Paragraph 13.1.3 annual fees
for permits and licenses required in connection with the operation of the
Property shall be prorated as of the Closing Date.
13.1.7. Personal property taxes, if any, for any personal property
transferred to Purchaser shall be prorated as of the Closing Date.
13.1.8. Purchaser shall cause a reconciliation of the Maintenance
Expenses and Taxes to occur with the tenants no later than February 15, 1997
and shall use diligent efforts in collecting from the tenants any
under-payments for Taxes and Maintenance Expenses for 1996.
13.2. The following amounts, if any (the "Adjustments"), without
duplication shall be made:
13.2.1. All security deposits held by Seller as of the Closing Date
shall be paid to Purchaser at the Closing.
13.2.2. Purchaser shall receive a credit at Closing for all
brokerage commissions and tenant improvement obligations of Seller listed on
Exhibit O attached hereto to the extent not paid by Seller prior to Closing.
Purchaser assumes all obligations for brokerage commissions and tenant
obligations set forth on such Exhibit O and set forth on Exhibit N attached
hereto. Purchaser assumes all obligations of the Association of Flight
Attendants ("AFA") with respect to all premises leased by AFA in the ALPA
Building at 1625 Massachusetts Avenue, Washington, D.C.
13.2.3. All other reasonable expenses normal to the operation and
maintenance of the Property which require payments either in advance or in
arrears for periods which begin prior to the Closing Date or end thereafter
<PAGE>
shall be apportioned between Seller and Purchaser as of 11:59 P.M. on the
Closing Date. The obligations under any contract continuing after the Closing
Date as provided within this Agreement shall be apportioned between Seller and
Purchaser as of the Closing Date.
13.3. In connection with the prorations and the Adjustments herein and
as provided, there shall be prepared the following statements, schedules and
certificate:
13.3.1. Seller shall prepare or cause to be prepared statements in
reasonable detail showing separately each item prorated or adjusted pursuant to
this Agreement and a detailed reconciliation showing separately each item
prorated or adjusted pursuant to this Agreement and a detailed reconciliation
of the Prorations and Adjustments, such statements to be delivered two (2)
business days prior to the Closing and adjusted as necessary at the Closing.
The parties shall mutually agree that said closing statement accurately
reflects the method of proration set forth in this Agreement.
13.3.2. Purchaser, in cooperation with Seller, shall prepare, not
later than May 1, 1997, a final proration statement as of the Closing Date,
presenting correctly the final Prorations and Adjustments in accordance with
the terms of this Agreement and a statement of "Overdue Amounts" (hereinafter
defined). Upon issuance of such final proration statement the parties shall
make a final proration payment as appropriate (including, without limitation, a
settlement of Overdue Amounts). For purposes of preparation of the foregoing
statements and at all reasonable times thereafter, the parties agree to allow
the other party and the other party's accountants and representatives, to
examine so much of the books and records in the possession and control of the
other party as relate to such statements and final reconciliations with tenants
on Taxes, Maintenance Expenses and other charges at the place or places where
they are then regularly maintained. Seller and Purchaser shall retain such
books and records for three (3) years from the Closing Date.
13.4. Minimum Rent owed by tenants which are due but unpaid as of the
Closing Date shall not be adjusted, but after the Closing Date the Purchaser
shall bill, in accordance with the terms of the tenants' Leases, the Minimum
Rent payable by tenants which are accrued but unpaid on the Closing Date
(collectively, "Overdue Amounts"). The Purchaser shall pay to the Seller in
accordance with the priority established in the immediately following sentence
the Overdue Amounts collected from each tenant attributable to the portion of
calendar year 1996 (the "Current Calendar Year") ending at 11:59 P.M. on the
Closing Date, within 15 days after the end of the month in which such Overdue
Amounts are collected. All Overdue Amounts collected by the Purchaser after
the Closing Date from tenants which, on the Closing Date, are not more than 30
days in arrears in the payment of the Minimum Rent shall be applied in the
following order of priority: (i) first to the month preceding the month in
which the Closing Date occurs; (ii) then to the month in which the Closing Date
occurs; and (iii) then to any month or months following the month in which the
Closing Date occurs. All Overdue Amounts collected by the Purchaser after the
Closing Date from tenants which, on the Closing Date, are more than 30 days in
arrears in the payment of Minimum Rent shall be applied in the following order
of priority: (i) first to the month in which the payment is received; and (ii)
then to any month or months preceding the month in which the payment is
received with such payment being applied to the Overdue Amounts in the inverse
order of their due dates.
<PAGE>
13.5. The Purchaser shall use diligent efforts to collect all Overdue
Amounts and in no event shall Purchaser waive any Overdue Amounts. The
Purchaser shall not have any obligation or liability under this Paragraph to
pay any Overdue Amount or any Minimum Rent to the Seller except if, and to the
extent that, such Overdue Amount or Minimum Rent is collected from tenants of
the Property after the Closing Date. After the Closing has occurred, Seller
shall have no right to commence litigation or any other collection proceedings
to collect such Overdue Amounts.
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 10 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 to any entity affiliated with Purchaser, or the principals of
Purchaser, or to any fund sponsored by Purchaser or the principals of
Purchaser, provided that the assignee assumes liability for all obligations of
Purchaser hereunder including the obligations of Purchaser first arising prior
to the effective date of the assignment and Purchaser remains liable as set
forth in the following sentence (and said assignor shall be released from all
other obligations hereunder). If any assignee of Purchaser under this
Agreement petitions or applies for relief in bankruptcy or said assignee is
adjudicated as a bankrupt or insolvent, or said assignee files any petition,
application for relief or answer-seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law, code or regulation relating to bankruptcy, insolvency, or other relief for
debtors (collectively, a "Bankruptcy Filing") on or before the Closing Date,
said Bankruptcy Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Earnest Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
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 Insignia Management Co. (to be paid by Seller). Seller's
commission to Insignia Management Co. 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 Insignia Management Co. The indemnifying party
shall undertake its obligations set forth in this Paragraph 15 using attorneys
selected by the indemnifying party and reasonably acceptable to the indemnified
party. The provisions of this Paragraph 15 will survive the Closing and
delivery of the Deed.
<PAGE>
17. SELLER COVENANTS.
17.1. Affirmative Covenants. Between the date of this Agreement and
the Closing Date, the Seller agrees that it will:
17.1.1. manage and operate the Property in the same manner that it
has managed, operated and maintained the Property during the period of Seller's
ownership, subject to reasonable wear and tear and casualty; and
17.1.2. deliver the Property on the Closing Date in substantially
the same condition it is in on the date of this Agreement, reasonable wear and
tear and damage by fire or other casualty excepted;
17.1.3. deliver to the Purchaser, promptly after receipt by the
Seller, copies of all notices of violation issued by any governmental
authorities with respect to the Property received by the Seller after the date
of this Agreement; and
17.1.4. prior to the expiration of the Inspection Period, deliver to
Purchaser three (3) days prior to the execution thereof, any new Leases.
17.2. Negative Covenants. Between the date of this Agreement and the
Closing Date, the Seller agrees that, without the Purchaser's written consent
in each case, it will not:
17.2.1. voluntarily grant or create any mortgage, lien, encumbrance,
easement, covenant, condition, right-of-way or restriction upon the Property
other than the Permitted Exceptions;
17.2.2. alter or amend any of the Contracts or become a party to any
new similar agreement unless the same is terminable without penalty to the
then-owner of the Property upon not more than 30 days' notice;
17.2.3. alter, amend, renew, extend, or consent to the assignment of
any Lease (or sublease of any related premises), except for renewals pursuant
to renewal options contained in such Lease and described in the Rent Roll;
17.2.4. terminate any Lease, or accept a surrender of the leased
premises thereunder, except for non-payment of rent or breach of non-monetary
covenants which causes default under other Leases; or
17.2.5. after the expiration of the Inspection Period, execute any
new lease affecting the Property without Purchaser's prior written consent,
which consent shall not be unreasonably withheld. Upon requesting Purchaser's
consent, Seller shall deliver a complete copy of said lease to Purchaser
together with a statement of leasing commissions and tenant improvements
payable by the landlord under such lease. Purchaser's consent shall be deemed
given if Purchaser has not responded to the contrary within five (5) business
days after receipt of Seller's written request and the complete copy of said
lease. If approved by Purchaser, a complete copy of any such lease shall be
delivered to Purchaser within ten (10) days of the full execution thereof. All
leasing costs and commissions, tenant improvements and contributions, and up to
$1,000 in reasonable attorneys' fees in the aggregate, incurred in connection
<PAGE>
with any new lease, including all new leases executed prior to the expiration
of the Inspection Period ("New Lease Costs"), shall be paid by Purchaser or
credited to Seller at Closing if already paid by Seller. Notwithstanding
anything contained herein to the contrary, Purchaser hereby approves the terms
of the transactions set forth as "Potential Deals" on Exhibit N and agrees to
pay all New Lease Costs associated therewith or credit Seller for any amounts
paid as of the Closing.
17.2.6. fail to comply with any written notices to Seller received
by Seller prior to Closing of violations of law or municipal ordinances, orders
or requirements issued by any governmental authority against or affecting the
Property (the "Violations"). If Seller has knowledge prior to the Closing of
an assertion by any governmental authority of any Violations, Seller shall
comply with any such assertion prior to Closing. If any Violations remain
uncured on the Closing Date, Purchaser shall receive a credit against the
Purchase Price equal to the estimated cost of curing the same, as estimated by
an architect or engineer selected by Purchaser and reasonably satisfactory to
Seller. Notwithstanding the foregoing, in the event the cost to cure the
Violation exceeds Fifty Thousand Dollars ($50,000.00), then Purchaser at its
election, may as its sole remedy in respect thereof either (A) terminate this
Agreement, in which event the parties shall direct the Escrow Agent to return
the Earnest Money Deposit with any interest accrued thereon to Purchaser and
neither party hereto will have any further obligations except for those which
specifically survive the termination hereof or (B) accept the Property subject
to the Violation and receive a credit equal to $50,000.
18. REPRESENTATIONS AND WARRANTIES.
18.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by James Mendelson and/or Tom Molina (together, 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.
18.2. Subject to the limitations set forth in Paragraph 18.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge:
(i) Except as disclosed on Exhibit P attached hereto, 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 M which
Seller will update as of the Closing Date is accurate as of the date set forth
thereon;
<PAGE>
(iv) The operating statements delivered by Seller to Purchaser
as part of the Seller Documents are the actual operating statements used by
Seller in connection with the day-to-day operation of the Property and were
prepared in accordance with Seller's customary practice in the ordinary course
of business;
(v) Annexed hereto as Exhibit M is a true and complete list of
all of the leases, amendments, and other related documents (the "Leases")
affecting the tenancies at the Property and there are no leases or other
tenancies for any space in the Property other than the Leases. Except as
otherwise disclosed on Exhibit M, the Seller has not received from any tenant
under a Lease nor given to any tenant under a Lease a written notice of default
by the Seller or tenant in performing any of its obligations under such Lease
which has not been cured;
(vi) Contracts. The contracts (the "Contracts") listed on
Exhibit H are all of the contracts disclosed to Purchaser by Seller as part of
the Seller Documents and there are no service or other contracts affecting the
Property other than as set forth on Exhibit H or which are Permitted
Exceptions. The Seller has performed all obligations required to be performed
by it, and is not in default, under any of the Contracts;
(vii) Reports. The Seller has delivered to Purchaser the
most current environmental report on the Property in its possession;
(viii) Condemnation. The Seller has not received written
notice of, and the Seller has no knowledge of, pending or contemplated
condemnation proceedings affecting the Property, or any part thereof;
(ix) Compliance with Laws. Seller has not received a written
notice of uncured violation of any Environmental Laws, statute, rule, law,
obligation, ordinance, or other legal regulation or requirement pertaining to
the use, maintenance, ownership, or operation of the Property;
(x) Brokerage Commissions/Tenant Improvements. There will be
no brokerage commissions or tenant improvement allowances due on the Closing
Date or at any time thereafter in connection with any of the Leases or any
renewals or extensions thereof other than as disclosed in Exhibit N or Exhibit
O; and
(xi) Seller's Representative. James Mendelson is a senior vice
president of The Balcor Company. Tom Molina is the asset manager at The Balcor
Company responsible for the operations of the Property.
(x) Annual Reconciliation. All Leases contain provisions which
provide for the reconciliation of Maintenance Expenses on a calendar year
basis; provided, however, that Purchaser's sole remedy in the event of a breach
of this representation shall be a reproration between Seller and Purchaser in
accordance with Paragraph 13 hereof with respect to any Lease that does not
provide for a calendar year reconciliation promptly following the
reconciliation with the tenant under such Lease.
<PAGE>
18.3. 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.
18.4. If at any time after the execution of this Agreement, either
Purchaser or Seller becomes 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 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.
18.5. The parties agree that the representations contained herein
shall survive Closing for a period of nine (9) months (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 nine (9) months
immediately following Closing).
19. LIMITATION OF LIABILITY. Neither Seller, nor any 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.
19.1. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum liability of Seller after the Closing,
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, shall be $2,287,500.
19.2. Seller further agrees not to distribute $2,287,500 of the
proceeds of the Purchase Price to its partners for the longer of (i) nine (9)
months after the Closing and (ii) final resolution of any claims by Purchaser
and asserted in writing against Seller prior to the expiration of the nine (9)
months after the Closing in accordance with the terms of this Agreement
("Claims"); provided, however, that if any Claims are disputed by Seller,
<PAGE>
Seller shall have the right, by written notice to Purchaser, to require
Purchaser to file suit in a court of competent jurisdiction within ninety (90)
days after such notice to Purchaser. If no suit is filed by such date, said
notice with respect to the Claim in question shall no longer prevent Seller
from distributing the proceeds.
20. TIME OF ESSENCE. Time is of the essence of this Agreement.
21. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, or by facsimile transmission addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4367
(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: c/o Goldman, Sachs & Co.
85 Broad Street
19th Floor
New York, New York 10004
Attention: Stuart Rothenberg
(212) 902-6341
(212) 957-5505 (FAX)
and one copy to: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue
Washington, DC 20036
Attention: Mark Katz, Esq.
(202) 857-6260
(202) 857-6395 (FAX)
<PAGE>
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by overnight courier or by facsimile transmission as
aforesaid shall be deemed to be given, delivered or made upon receipt of the
same by the party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent.
22. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, 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.
23. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the District of Columbia, except that with respect to the retainage of
the Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
24. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
25. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
26. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
27. NO UNINTENDED ASSUMPTION OF LIABILITIES. Except as expressly provided in
this Agreement or in any document to be executed and delivered on the Closing
Date, the Purchaser is not assuming any of the debts, liabilities, taxes or
obligations of, or claims against, the Seller of any kind or character, whether
direct or contingent and whether known or unknown. The only transactions
contemplated by this Agreement are the sale and purchase of the Property. The
Seller is not selling a business. Except as expressly provided in this
Agreement or in any document to be executed and delivered on the Closing Date,
the parties intend that the Purchaser shall not be deemed to be a successor of
the Seller with respect to any of the Seller's liabilities or obligations to
third parties arising before the Closing Date.
<PAGE>
28. EXECUTION BY THE BALCOR COMPANY. The Balcor Company executes this
Agreement solely for the purpose of assuring to Purchaser that if the Seller
fails to withhold or pay the sums required of Seller pursuant to Paragraph 19
and if Purchaser is successful in any claims asserted against the Seller for a
breach of a representation or warranty, then The Balcor Company shall pay to
Purchaser the amount of such claim(s), the total of which shall not exceed
$2,287,500.00. Purchaser may name The Balcor Company in any suit against
Seller, provided that Purchaser may not name The Balcor Company in any suit
unless Seller is also named therein. So long as Seller is determined to be
liable for the amounts due hereunder, Purchaser shall have no obligations to
exhaust its remedies against Seller prior to suing and collecting from The
Balcor Company, so long as Purchaser complies with the provisions of the
preceding sentence.
29. FURTHER ASSURANCES. The Seller agrees that it will, at any time and from
time to time after the Closing Date, upon request of the Purchaser, do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances and assurances as may reasonably be required for the
better assigning, transferring, granting, assuring and confirming to the
Purchaser, or to its successors and assigns, or for aiding and assisting in
collecting and reducing to possession, any or all of the assets or property
being sold to the Purchaser pursuant to this Agreement.
30. INDEMNITY. From and after the Closing Date, Seller and The Balcor Company
hereby agree to indemnify and defend (using attorneys selected by Seller and
reasonably acceptable to Purchaser) Purchaser from any liability arising from
the litigation disclosed as Item 1 on Exhibit P with the result that Purchaser
will not be liable with respect to such claims for any actual loss, costs or
damages in connection therewith, including litigation costs and expenses.
Notwithstanding the foregoing, such indemnification does not cover any damages
incurred by Purchaser in connection with any modification or termination of the
Metzger, Hollis and Gordon lease. The terms of this Paragraph 30 shall survive
the Closing and the delivery of the Deed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
ARCHON GROUP, L.P., a Delaware limited
partnership
By: /s/ James Weston Moffett
-----------------------------------
Name: James Weston Moffett
-----------------------------------
Its: Sr. Vice President
-----------------------------------
SELLER:
THIRTEENTH & K STREETS ASSOCIATES LIMITED
PARTNERSHIP, a District of Columbia limited
partnership
By: Labroc II Limited Partnership, an Illinois
limited partnership, a general partner
By: Balcor Equity Partners-II, an Illinois
general partnership, its general
partner
By: The Balcor Company, a Delaware
corporation, its general partner
By: /s/ James E. Mendelson
-----------------------------
Name: James E. Mendelson
-----------------------------
Its: Sr. V.P.
-----------------------------
JOINDER
The undersigned executes this joinder solely for the purposes of
effectuating its obligations arising under Paragraphs 28 and 30 of this
Agreement.
THE BALCOR COMPANY, a Delaware corporation
By: /s/ James E. Mendelson
----------------------------------
Name: James E. Mendelson
----------------------------------
Its: Sr. V.P.
----------------------------------
<PAGE>
of ("Seller's Broker") executed this Agreement in
its capacity as a real estate broker and acknowledges that the fee or
commission due it from Seller as a result of the transaction described in this
Agreement is as set forth in that certain Listing Agreement, dated __, 199_
between Seller and Seller's Broker (the "Listing Agreement"). Seller's Broker
also acknowledges that payment of the aforesaid fee or commission is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Seller's Broker agrees to deliver a receipt to the Seller at the
Closing for the fee or commission due Seller's Broker and a release, in the
appropriate form, stating that no other fees or commissions are due to it from
Seller or Purchaser.
_____________________________
By:
---------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Tenant Certificate
M - Rent Roll
N - Tenant Allowances and Leasing Commissions To Be Paid by Purchaser
O - Tenant Allowances and Leasing Commissions To Be Paid by Seller
P - Litigation
<PAGE>
AGREEMENT OF SALE
(Ammendale II)
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 29th
day of November, 1996, by and between WRIT LIMITED PARTNERSHIP ("Purchaser")
and AMMENDALE-II 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 Five Million Nine Hundred Twenty-Two Thousand and no/100
Dollars ($5,922,000.00) ("Purchase Price"), and on the terms and conditions
hereinafter set forth, the property commonly known as Lot 17, Ammendale
Business Campus, Beltsville, Prince George's County, Maryland, consisting of
the following:
1.1 All of Seller's right, title and interest in the real property
("Land") and all buildings and other improvements ("Improvements") situated on
the Land, as more particularly described on Exhibit A attached hereto and made
a part hereof (the Land, the Improvements and the other property described
below in this Paragraph 1 are sometimes referred to herein together as the
"Property"), together with all easements and appurtenances thereunto belonging
and all of Seller's right, title and interest in and to all streets, alleys and
public ways adjacent thereto, if any, and together with all of Seller's right,
title and interest in and to all strips and gores located on or adjacent to the
Property or located between any parcels constituting the Land, if any;
1.2 The personal property set forth on Exhibit B attached hereto
("Personal Property"), but shall in all events exclude the personal property
described on Exhibit B under the heading "Excluded Personal Property";
1.3 The tenant leases described in the rent roll set forth on Exhibit C
attached hereto and made a part hereof together with such other tenant leases
of the Property as may be made prior to Closing (as hereinafter defined) in
accordance with the terms of this Agreement ("Leases");
1.4 If and to the extent assignable and to the extent of Seller's
interest therein, if any: (a) all guarantees, warranties and indemnifications,
if any, received from suppliers, contractors, materialmen or subcontractors
arising out of, or in connection with, the installation, construction or
maintenance of the Property including, without limitation, the right to sue any
obligor for any breach of any covenant, agreement, representation, warranty or
guarantee contained therein; (b) all licenses, permits, certificates of
occupancy and franchises issued by any federal, state, county or municipal
authority relating to the use, maintenance or operation of the Property running
to or in favor of Seller or pertaining to the Property; (c) all trade styles,
and trade names, including, without limitation, the name "Ammendale II", and
all contract rights, brochures, manuals, lists of prospective tenants,
advertising material, books and records, utility contracts and telephone
numbers; (d) the plans and specifications for the Improvements and all
unexpired claims and sureties, if any, received in connection with the
construction, improvement or equipment of the Improvements; and (e) the service
and maintenance contracts set forth in Exhibit D which Purchaser elects to
assume ("Service Contracts").
<PAGE>
1.5 Notwithstanding anything contained in this Agreement to the contrary,
Seller is not conveying or assigning to Purchaser the items described in
Paragraph 15.3 hereof.
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 Dollars ($150,000) ("Earnest Money"), by check payable to the escrow
agent, to be held in escrow by and in accordance with the provisions of the
Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit E; and
2.2 On the Closing Date (as hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 2:00 p.m. Chicago time. Any
provisions herein providing for the delivery of the Earnest Money to either
party hereof are intended to mean the Earnest Money plus any interest earned
thereon and less all escrow and investment fees.
3. TITLE COMMITMENT AND SURVEY.
3.1 Attached hereto as Exhibit F is a copy of a title commitment for an
owner's standard title insurance policy issued by Lawyers Title Insurance
Corporation, dated August 17, 1996 for the Property ("Title Commitment"). For
purposes of this Agreement, "Permitted Exceptions" shall mean: (a) general ad
valorem real estate taxes which are not yet due and payable; (b) association
assessments, special district taxes and related charges not yet due and
payable; (c) matters shown on the Survey (as hereinafter defined); (d) matters
caused by the action or inaction of Purchaser or its agents; (e) the title
exceptions set forth in Schedule B Section 2 of the Title Commitment except for
items numbered 1 and 4 thereof; (f) the rights of tenants under leases; and
(g) liens or encumbrances of a definite or ascertainable amount which may be
removed or insured over by the payment of money or other security at the
Closing Date, and which Seller removes or causes to be insured over at the
Closing Date in accordance with Paragraph 5 hereof. All other exceptions to
title shall be referred to as "Unpermitted Exceptions". It shall be a
condition of Purchaser's obligation to close hereunder that on the Closing
Date, Chicago Title Insurance Company ("Title Insurer") shall deliver to
Purchaser a standard title policy in conformance with the Title Commitment
subject only to Permitted Exceptions (excluding, however, the Permitted
Exceptions described in subclause (g) above) and Unpermitted Exceptions waived
in writing by Purchaser ("Title Policy"). The Title Policy shall insure that
title is vested in Purchaser and shall not be subject to any equitable
interests of Balcor Equity Pension Investors III. The Title Policy 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 and requirements
therein stated. 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 as requested by Purchaser or Purchaser's
lender.
<PAGE>
3.2 Purchaser has received a survey of the Property prepared by Davis S.
Oertly under Job Number J-83072 ("Survey"). Purchaser shall pay the cost of
the most recent update to the Survey. Purchaser hereby acknowledges that all
matters disclosed by the Survey are acceptable to Purchaser and are Permitted
Exceptions for purposes of Paragraph 3.1 above.
3.3 The obligations of Purchaser and Seller to pay various costs set
forth in Paragraphs 3.1 and 3.2 shall survive the termination of this
Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1 In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser and Seller shall equally share the State of Maryland and Prince
George's County transfer taxes and the other costs of the documentary or
transfer stamps to be paid with reference to the Deed (as 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.
5. CONDITION OF TITLE.
5.1 If, prior to Closing (as hereinafter defined), a date-down to the
Title Commitment discloses any Unpermitted Exceptions which can be removed for
a cost which does not, in the aggregate, exceed $25,000 (each, a "Minor
Unpermitted Exception"), Seller shall, at Seller's expense, bond over, cure
and/or have such Minor Unpermitted Exceptions removed so that they will not
appear in the Title Policy, or have the Title Insurer commit to insure against
loss or damage that may be occasioned by such Minor Unpermitted Exceptions.
Notwithstanding the foregoing, if such date down to the Title Commitment
discloses any Unpermitted Exceptions which can be removed for a cost which
does, in the aggregate, equal or exceed $25,000 (each, a "Major Unpermitted
Exception"), Seller shall have the right, but not the obligation, to bond over,
cure and/or have such Major Unpermitted Exceptions removed so that they do not
appear in the Title Policy, or have the Title Insurer commit to insure against
loss or damage that may be occasioned by such Major Unpermitted Exceptions. If
Purchaser does not object to a Major Unpermitted Exception in a notice sent to
Seller within five (5) business days from the date of the date down of the
Title Commitment, Purchaser shall be deemed to have elected to take title to
the Property subject to said Major Unpermitted Exception, without any reduction
in or set off against the Purchase Price as a result thereof. If (i) Purchaser
does object to a Major Unpermitted Exception within five (5) business days from
the date of the date down of the Title Commitment, and (ii) Seller fails to
bond over, cure or have such Major Unpermitted Exception removed or to have the
Title Insurer commit to insure as specified above within ten (10) business days
from the date of the date down to the Title Commitment, Purchaser may either
(a) elect to take title to the Property subject to said Major Unpermitted
Exception, without any reduction in or setoff against the Purchase Price as a
result thereof; or (b) terminate this Agreement upon written notice to Seller
within three (3) days after the expiration of such ten (10) business day
period. If Purchaser terminates this Agreement in accordance with the terms of
this Paragraph 5.1, this Agreement shall terminate without further action of
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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 those covenants and obligations that specifically survive
termination of this Agreement.
5.2 Seller agrees to convey fee simple title to the Property to Purchaser
by special warranty deed ("Deed") (in the form attached hereto as Exhibit G) in
recordable form subject only to the Permitted Exceptions and any Unpermitted
Exceptions not objected to by Purchaser in accordance with Paragraph 5.1 above.
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 through the Closing. Seller agrees to maintain its existing "all risk"
replacement cost casualty insurance and rent loss insurance in place until the
Closing Date. 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 $150,000 (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 if such repair or restoration may be
completed prior to the Closing Date or to assign and transfer to Purchaser on
the Closing Date all of Seller's right, title and interest in and to all
insurance proceeds paid or payable to Seller on account of such fire or
casualty plus the amount of Seller's insurance deductible. Notwithstanding the
foregoing, if the cost to repair any such damage would be less than or equal to
$150,000, but the aggregate of such insurance proceeds assigned to Purchaser
and insurance deductible paid to Purchaser would be less than 100% of the cost
of repairing such damage, and if Seller does not agree to adjust the Purchase
Price by the difference between the insurance proceeds (including any paid
deductible) and the repair cost, then Purchaser shall have the right to
terminate this Agreement in accordance with the following provisions of this
Paragraph 6.1. Seller shall promptly notify Purchaser in writing of any such
fire or other casualty and Seller's estimate 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
$150,000 (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 ten (10) business
days after Purchaser receives written notice of such fire or other casualty
from Seller and Seller and Purchaser agree upon the cost to repair any such
damage, and upon the exercise of such option by Purchaser this Agreement shall
terminate without further action by the parties, the Earnest Money deposited by
Purchaser shall be returned to Purchaser together with interest thereon, and
neither party shall have any further liability or obligations hereunder, except
for those covenants and obligations which expressly survive termination of this
Agreement. In the event that Purchaser does not exercise the option to
terminate in accordance with this Paragraph 6.1, 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
<PAGE>
proceeds paid or payable to Seller on account of the fire or casualty and shall
pay to Purchaser the amount of Seller's insurance deductible. Notwithstanding
anything contained herein to the contrary, Seller's obligation to transfer all
insurance proceeds paid to Seller as set forth more fully in this Paragraph 6.1
shall survive the Closing and the recording of the Deed.
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 of any such taking or threatened taking, Purchaser
shall have the right to:
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,
except for those covenants and obligations hereunder which expressly survive
termination of this Agreement; 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 or to be made in connection with such condemnation or eminent domain
proceedings. Notwithstanding anything contained herein to the contrary,
Seller's obligation to transfer Seller's interest in such award as set forth
more fully in this Paragraph 6.2.2 shall survive the Closing and the recording
of the Deed.
Purchaser shall then notify Seller, within five (5) business days after
Purchaser's receipt of Seller's notice, whether Purchaser elects to exercise
its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be delayed,
if necessary, until Purchaser makes such election. If Purchaser fails to make
an election within such five (5) business day period, Purchaser shall be deemed
to have elected to proceed with Closing in accordance with Paragraph 6.2.2.
7. INSPECTION AND AS-IS CONDITION.
7.1 During the period commencing on the date hereof and ending on the
Closing Date, Purchaser and the agents, engineers, employees, contractors and
surveyors retained by Purchaser may enter upon the Property to inspect the
Property and to conduct and prepare such studies, tests and surveys as
Purchaser may deem reasonably necessary and appropriate, including, without
limitation, a review of the Leases, and to conduct tenant interviews, provided
that Purchaser notifies Seller of its intent to conduct such interviews and
allows Seller to be present for any such interviews. In connection with
Purchaser's review of the Property, Seller has delivered to Purchaser copies of
the current rent roll for the Property, the most recent tax and insurance
bills, copies of the Leases, utility account numbers, a personal property
inventory, the Service Contracts, an aged receivables report, unaudited annual
operating statements from 1993-1995 and unaudited operating statements for 1996
(the "Operating Statements"). Seller shall make reasonable efforts to make
<PAGE>
other information within the possession and control of Seller or its property
manager available to Purchaser. Between the date of this Agreement and the
Closing Date, Purchaser shall have the right to inspect all books, records and
other documents in the possession or control of Seller and its agents which
pertain to the construction, ownership, use, operation, occupancy, maintenance,
operation or leasing of the Property ("Seller's Books and Records"). Seller
shall allow such inspections to be conducted during normal business hours upon
reasonable notice to Seller and shall make Seller's Books and Records available
to Purchaser at the Property or at Seller's (or Seller's agent's) office.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be subject to the following:
(i) Such tests, inspections and investigations shall take place
during normal business hours upon reasonable notice to Seller or its designated
agents;
(ii) Except as may be required by Purchaser to complete its due
diligence or to obtain financing in order to close this transaction, all
information set forth in the documents to be reviewed hereunder by Purchaser,
its employees and agents shall be held in strict confidence until Closing and
thereafter in the event that the Closing does not occur;
(iii) In the event the Closing does not occur, Purchaser shall
promptly return to Seller any documents obtained from Seller or Seller's
agents;
(iv) Purchaser shall not suffer or permit any lien, claim or
charge of any kind whatsoever to attach to the Property or any part thereof;
and
(v) such tests, investigations and studies shall be at
Purchaser's sole cost and expense, and in the event of any damage to the
Property caused by Purchaser, its agents, engineers, employees, contractors or
surveyors (including, without limitation, pavement, landscaping and surface
damage), Purchaser shall pay the cost to restore the Property to the condition
existing prior to the performance of such tests, investigations or studies.
Purchaser shall defend, indemnify and hold Seller and any affiliate or parent
of Seller, and all shareholders, employees, officers, directors and partners of
Seller or Seller's affiliate or parent (hereinafter collectively referred to as
"Affiliates of Seller") harmless from any and all liability, cost and expense
(including without limitation, reasonable attorneys' 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, tests,
studies and inspections of the Property. Purchaser shall undertake its
obligation to defend set forth in the preceding sentence using attorneys
selected by Purchaser and 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.
<PAGE>
If Purchaser, in its sole discretion, is dissatisfied with the results of
the tests, studies or investigations performed or information received pursuant
to this Agreement, or otherwise, Purchaser shall have the right to terminate
this Agreement by giving written notice of such termination to Seller at any
time prior to 5:00 p.m. on January 6, 1997. The period between the date hereof
and 5:00 p.m. on January 6, 1997 is herein referred to as the "Inspection
Period". If written notice is not given by Purchaser pursuant to this
Paragraph 7.1 prior to the expiration of the Inspection Period, then the right
of Purchaser to terminate this Agreement pursuant to this Paragraph 7.1 shall
be waived. If Purchaser terminates this Agreement by written notice to Seller
prior to the expiration of the Inspection Period: (i) Purchaser shall promptly
deliver to Seller copies of all studies, reports and other investigations
obtained by Purchaser in connection with its due diligence during the
Inspection Period; and (ii) the Earnest Money deposited by Purchaser shall be
immediately paid to Purchaser, together with any interest earned thereon, less
the sum of One Hundred and No/100 Dollars ($100.00), which shall be paid to
Seller in consideration for such period of inspection, and neither Purchaser
nor Seller shall have any right, obligation or liability under this Agreement,
except for those covenants and obligations which expressly survive the
termination of this Agreement. Notwithstanding anything contained herein to
the contrary, Purchaser's obligation to indemnify Seller and pay the costs of
restoring the Property, as more fully set forth in this Paragraph 7.1, shall
survive Closing and recording of the Deed and the termination of this
Agreement, as applicable.
7.2 Except for the express representations and warranties of Seller set
forth herein, (i) Purchaser acknowledges and agrees that it will be purchasing
the Property, including the Personal Property, based solely upon its
inspections and investigations of the Property, including the Personal
Property, and that Purchaser will be purchasing the Property, including the
Personal Property, "AS IS" and "WITH ALL FAULTS", based upon the condition of
the Property, including the Personal Property as of the date of this Agreement,
ordinary wear and tear and loss by fire or other casualty or condemnation
excepted, and (ii) that Seller makes no warranty or representation, express or
implied, or arising by operation of law, including, but not limited to, any
warranty of condition, habitability, merchantability or fitness for a
particular purpose, in respect of the Property. 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: (i) the condition of the Land
or any improvements comprising the Property; (ii) the existence or
non-existence of any pollutant, toxic waste and/or any hazardous materials or
substances; (iii) economic projections or market studies concerning the
Property, or the income to be derived from the Property; (iv) any development
rights, taxes, bonds, covenants, conditions and restrictions affecting the
Property; (v) the nature and extent of any right of way, lease, lien,
encumbrance, license, reservation or other title matter; (vi) water or water
rights, topography, geology, drainage, soil or subsoil of the Property;
(vii) the utilities serving the Property; (viii) the suitability of the
Property for any and all activities and uses which Purchaser may elect to
<PAGE>
conduct thereon; or (ix) the compliance of the Property with any zoning,
environmental, building or other laws, rules or regulations affecting the
Property. Except as otherwise set forth in this Agreement, Seller makes no
representation or warranty that the Property complies with the Americans with
Disabilities Act or any fire code or building code. Except for claims arising
out of a breach of any representation or warranty by Seller set forth in
Paragraphs 17.2 (m), (n) or (o), 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 or
substances on, or environmental conditions of, the Property, whether known or
unknown. As used herein, the term "hazardous materials or substances" means
(i) hazardous wastes, hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including
but not limited to substances defined as "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants, "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Toxic
Substance Control Act, 15 U.S.C. Section 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802; the Resource Conservation and
Recovery Act, 42 U.S.C. Section 9601. et seq.; the Clean Water Act, 33 U.S.C.
Section 1251; the Safe Drinking Water Act, 42 U.S.C. Section 30Of et seq; the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; and in any permits, licenses,
approvals, plans, rules, regulations or ordinances adopted, or other criteria
and guidelines promulgated pursuant to the preceding laws or other similar
federal, state or local laws, regulations, rules or ordinance now or hereafter
in effect relating to environmental matters (collectively, "Environmental
Laws"); and (ii) any other substances, constituents or wastes subject to any
applicable federal, state or local law, regulation or ordinance, including any
Environmental Law, now or hereafter in effect, including but not limited to (A)
petroleum, (B) refined petroleum products, (C) waste oil, (D) waste aviation or
motor vehicle fuel and (E) asbestos. Purchaser acknowledges that, except as
otherwise expressly set forth herein, having been given the opportunity to
inspect the Property, Purchaser is relying solely on its own investigation of
the Property and not on any information provided or to be provided by Seller.
Purchaser further acknowledges that the information provided and to be provided
with respect to the Property was obtained from a variety of sources, and that
Seller (x) has not made any independent investigation or verification of such
information and (y) makes no representations as to the accuracy or completeness
of such information, except as provided herein.
7.3 Seller has provided to Purchaser the following existing reports: (i)
Phase I Environmental Site Assessment dated June 7, 1991 prepared by Law
Associates, Inc.; and (ii) ACM Survey dated March 9, 1993 prepared by Law
Associates, Inc. ("Existing Reports"). Seller makes no representation or
warranty concerning the accuracy or completeness of the Existing Reports.
Purchaser hereby releases Seller and the Affiliates of Seller from any
liability whatsoever with respect to the Existing Reports, including, without
<PAGE>
limitation, the matters set forth in the Existing Reports, and the accuracy
and/or completeness of the Existing Reports. Furthermore, Purchaser
acknowledges that it will be purchasing the Property with all faults disclosed
in the Existing Reports. Seller represents and warrants that, to its
knowledge, that except for the Existing Reports, there are no reports in
existence regarding the environmental condition of the Property or the
Property's compliance with Environmental Law.
7.4 Notwithstanding anything contained herein to the contrary, the
acknowledgements, agreements, waivers and releases of Purchaser set forth in
this Paragraph 7 shall survive Closing and recording of the Deed and the
termination of this Agreement as applicable.
8. CLOSING. The closing of this transaction ("Closing") shall be on January
13, 1997 as such date may be extended pursuant to the provisions hereof
("Closing Date"), at the office of Purchaser's counsel in Washington D.C., at
which time Seller shall deliver possession of the Property to Purchaser. This
transaction shall be closed in accordance with the provisions of the Escrow
Agreement . All deed and money escrow fees (including, so-called "New York
style" closing fees) shall be divided equally between the parties.
9. CLOSING DOCUMENTS.
9.1 On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3 and 9.2.4, counterparts of any transfer tax
declarations and such other documents as may be reasonably required by the
Title Insurer and not inconsistent with the terms of this Agreement in order to
consummate the transaction as set forth in this Agreement.
9.2 On the Closing Date, Seller shall deliver to Purchaser the following:
9.2.1 the Deed, subject to Permitted Exceptions and those Unpermitted
Exceptions waived by Purchaser in writing or not objected to by Purchaser in
accordance with Paragraph 5.1 hereof;
9.2.2 a special warranty bill of sale conveying the Personal Property
(in the form of Exhibit H attached hereto);
9.2.3 assignment and assumption (with respect to periods from and
after the Closing) of intangible property (in the form attached hereto as
Exhibit I);
9.2.4 an assignment and assumption (with respect to periods from and
after the Closing) of Leases and security deposits (in the form attached hereto
as Exhibit J);
9.2.5 non-foreign affidavit (in the form of Exhibit K attached
hereto);
<PAGE>
9.2.6 originals, and/or copies of (in the case that originals are not
available to Seller), the Leases and Service Contracts that Purchaser elects to
assume (unless Seller and Purchaser agree to leave such documents in the
on-site management office);
9.2.7 all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
9.2.8 possession of the Property to Purchaser, subject to the Leases
and the Permitted Exceptions;
9.2.9 evidence of the termination of the management and leasing
agreements, along with a lien waiver executed by the property manager, if
applicable;
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 refundable security deposits (in the form of
Exhibit L);
9.2.11 an updated rent roll certified by Seller to be true and
correct, subject to the provisions of Paragraph 17.1 and Paragraph 18 hereof;
9.2.12 a Broker's Lien Waiver signed by Insignia Mortgage and
Investment Company ("Insignia") and Scheer Partners, Inc. ("Scheer");
9.2.13 an Owner's Title Affidavit or ALTA extended coverage statement
in form reasonably acceptable to Seller and Title Insurer;
9.2.14 such formative and authorization documents of Seller as may be
reasonably required by Title Insurer;
9.2.15 an updated aged receivables report for the Property;
9.2.16 a statement recertifying that the representations and
warranties contained in Paragraph 17.2 below are still true and correct in all
material respects;
9.2.17 copies of all books, files, statements and records of Seller
regarding the Property, including, without limitation, those statements
necessary to calculate tenant escalations and reconciliations (unless Seller
and Purchaser agree to leave such documents in the on-site management office);
and
9.2.18 The Closing Escrow Agreement (as hereinafter defined).
10. ESTOPPEL CERTIFICATES.
10.1 Seller agrees to use reasonable efforts to obtain tenant estoppel
certificates in the form of Exhibit M-1 ("Tenant Certificates") for tenants
listed on the rent roll attached hereto as Exhibit C. Seller shall attempt to
deliver to Purchaser prior to Closing, Tenant Certificates for tenants at the
<PAGE>
Property (and Purchaser hereby acknowledges that a Tenant may respond on the
form of certificate, if any, required under its Lease) occupying at least 90%
of all leased office space at the Property ("Required Amount"). If Seller is
unable to obtain the Required Amount of Tenant Certificates prior to Closing,
Seller covenants to deliver to Purchaser, not less than five (5) days prior to
Closing, a Seller Tenant Certificate for those tenants who fail to execute and
return a Tenant Certificate, to the extent necessary to achieve the Required
Amount. As used herein, "Seller Tenant Certificate" shall mean a Tenant
Certificate in the form of Exhibit M-2 signed by Seller with respect to a
particular tenant which failed to execute and deliver a Tenant Certificate,
containing terms which are consistent with the information regarding such
tenant contained in Exhibit C. If a tenant submits a certificate containing
terms which are not consistent with the information regarding such tenant set
forth in Exhibit C in all material respects, such certificate shall not be
considered a Tenant Certificate under the provisions of this Paragraph, and
such certificate shall not be counted in determining whether the Required
Amount has been achieved.
10.2 Notwithstanding anything contained herein to the contrary, the
representations and warranties contained in any Seller Tenant Certificate
executed by Seller shall be subject to the provisions of Paragraph 18 hereof.
10.3 Upon receipt after Closing by Purchaser of a Tenant Certificate
containing the information herein required from a tenant under a Lease
(consistent in all material respects with the information regarding such Tenant
contained in Exhibit C) for whom Seller has executed and delivered a Seller
Tenant Certificate at Closing, or from any other tenant or tenants which would,
in computing the Required Amount, negate the need for any or all of the Seller
Tenant Certificates, any Seller Tenant Certificate executed and delivered by
Seller at Closing which is no longer needed in achieving the Required Amount
shall become null and void, and the Tenant Certificates received from the
tenant or tenants shall be substituted therefor.
11. SERVICE CONTRACTS. Except for the Service Contracts Purchaser has elected
not to assume under the terms of this Paragraph 11, Seller shall assign to
Purchaser on the Closing Date the Service Contracts, and Purchaser shall assume
in writing responsibility of the obligations arising from and after the Closing
Date under such Service Contracts. Seller shall use reasonable efforts to
obtain any required consent with respect to the assignment of such Service
Contracts; provided, however, that Seller's inability to obtain such approval
shall not be a default hereunder or a condition precedent to Purchaser's
obligations to close hereunder. Purchaser shall notify Seller in writing of
the Service Contracts that Purchaser elects not to assume prior to Closing
Date. If such notice is delivered thirty-five (35) days or more prior to the
Closing Date, Seller shall cause all Service Contracts identified in such
notice to be terminated as of the Closing Date. If such notice is given less
than thirty-five 35 days prior to the Closing Date, Seller shall promptly
deliver notice of such termination to the service provider; provided, however,
Purchaser agrees to assume such Service Contract at the Closing if the
termination can not be effectuated prior to the Closing Date.
<PAGE>
12. LEASING OF PROPERTY. Prior to the expiration of the Inspection Period,
Seller shall at least five (5) days prior to Seller's execution thereof,
deliver to Purchaser a copy of any new leases or modifications or extensions to
be executed by Seller during the Inspection Period, together with information
as to any tenant improvement obligations and leasing commissions, and such
other information as Purchaser may reasonably require. Any such new leases or
lease modifications and extensions executed by Seller during the Inspection
Period shall be included in the definition of Leases and Purchaser shall be
responsible to pay for all leasing commissions and tenant improvement costs to
be paid by Seller with respect to such leases if Purchaser closes the
transaction contemplated by this Agreement. After the expiration of the
Inspection Period, Seller shall not enter into any lease for any portion of the
Property or any modification of any Lease without first obtaining the prior
written consent of Purchaser in each case, which consent shall not be
unreasonably withheld. If Purchaser has not responded within five (5) business
days of receipt of a request by Seller, Purchaser's consent shall be deemed
given. If Purchaser closes the transaction contemplated by this Agreement,
Purchaser shall be responsible to pay for all leasing commission or tenant
improvement costs incurred or to be incurred by Seller with respect to any such
lease or lease modification approved by Purchaser. Seller agrees to pay any
outstanding brokerage commissions now or hereafter due or payable with respect
to the existing term of any Lease. Further, between the end of the Inspection
Period and the Closing Date, Seller agrees that it shall not, without the prior
written consent of Purchaser in each case, (i) renew or extend any Lease in any
respect, or enter into an agreement with any tenant in the Property ("Tenant")
in respect of the rent to be paid by such Tenant during any period of renewal
or extension of such Tenant's Lease, except, in the case of any renewal or
extension of a Lease, if (A) such renewal or extension is contained in such
Lease and is described in the rent roll attached hereto as Exhibit C, and (B)
the rent to be paid by such Tenant during the renewal or extension period is
fixed by a formula in such Tenant's Lease and is not subject to negotiation
between Seller and such Tenant, (ii) terminate any Lease, or accept a surrender
of the leased premises thereunder, or (iii) agree to any request by a Tenant
for permission to assign its Lease or sublet the leased premises thereunder.
Except for any Seller Tenant Certificate executed by Seller and delivered to
Purchaser, Seller does not represent or warrant that any particular Lease will
be in effect at Closing or that the tenant will have performed the tenant's
obligations thereunder. The termination of any Lease prior to Closing by
reason of a tenant's default will not affect the obligations of Purchaser under
this Agreement in any manner, or entitle Purchaser to an abatement of or credit
against the Purchase Price, or give rise to any other claim by Purchaser, and
if any space in the Improvements is vacant on the Closing Date, Purchaser will
accept the Premises subject to the vacancy. Notwithstanding anything contained
in this Paragraph 12 or elsewhere in this Agreement, (i) Seller shall have no
obligation to conduct any ongoing leasing activity for the Property through the
Closing Date and (ii) Purchaser shall be responsible for the costs set forth on
Exhibit Q attached hereto.
13. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT PURCHASER FAILS TO CLOSE ON THE PURCHASE OF
THE PROPERTY AS REQUIRED UNDER THIS AGREEMENT OR THAT CERTAIN AGREEMENT OF SALE
<PAGE>
OF EVEN DATE HEREWITH BY AND BETWEEN AMMENDALE LIMITED PARTNERSHIP AND
PURCHASER FOR PROPERTY COMMONLY KNOWN AS AMMENDALE I, BELTSVILLE, MARYLAND (THE
"AMMENDALE I CONTRACT") SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE
INTEREST THEREON AS SELLER'S SOLE RIGHT WITH RESPECT TO DAMAGES OR ANY OTHER
REMEDY. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES 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. IF CLOSING OCCURS HEREUNDER BUT, AT THE TIME OF CLOSING, PURCHASER IS
IN DEFAULT OF ONE OR MORE OBLIGATIONS UNDER THIS AGREEMENT SELLER SHALL HAVE
ALL RIGHTS AND REMEDIES AT LAW OR AT EQUITY, WITHOUT LIMITATION, UPON CONDITION
THAT SUCH RIGHTS ARE EXERCISED WITHIN NINE (9) MONTHS AFTER CLOSING, PROVIDED,
HOWEVER, THAT IN NO EVENT SHALL PURCHASER'S LIABILITY UNDER THIS AGREEMENT
AND/OR UNDER THE AMMENDALE I CONTRACT EXCEED, IN THE AGGREGATE, THE SUM OF
$400,000. PURCHASER AND SELLER AGREE THAT THIS AGREEMENT SHALL BE CROSS
DEFAULTED WITH THE AMMENDALE I CONTRACT, AND THAT ANY WRONGFUL FAILURE TO CLOSE
BY PURCHASER UNDER THE AMMENDALE I CONTRACT SHALL BE DEEMED A WRONGFUL FAILURE
TO CLOSE UNDER THIS AGREEMENT.
14. 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 UPON THE RETURN OF THE EARNEST
MONEY THIS AGREEMENT SHALL TERMINATE WITHOUT FURTHER ACTION OF THE PARTIES AND
THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY,
EXCEPT FOR THOSE COVENANTS AND OBLIGATIONS WHICH EXPRESSLY SURVIVE TERMINATION
OF THIS AGREEMENT. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY,
IF SELLER'S DEFAULT RESULTS FROM (i) ITS (AND NOT AN UNRELATED THIRD PARTY'S)
AFFIRMATIVE ACTION DONE WITH THE INTENTION OF PREVENTING THE SALE WHICH RESULTS
IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY AND WHICH GIVES RISE TO
PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO PARAGRAPH 5 HEREOF;
OR (ii) ITS REFUSAL TO DELIVER THE DEED OR FULFILL ITS OBLIGATIONS UNDER THIS
AGREEMENT, THEN PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE. IN
NO EVENT SHALL SELLER BE LIABLE FOR ANY ACTUAL, PUNITIVE, SPECULATIVE OR
CONSEQUENTIAL DAMAGES RESULTING FROM ANY DEFAULT BY SELLER LEADING TO A
TERMINATION OF THIS AGREEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, BUT SUBJECT TO THE LIMITATIONS ON LIABILITY PROVIDED IN
PARAGRAPH 18, IN THE EVENT THE CLOSING OCCURS AND IN THE EVENT OF A BREACH BY
SELLER OF ANY REPRESENTATION, WARRANTY, COVENANT, AGREEMENT, PRORATION OR
REPRORATION OBLIGATION OR INDEMNITY WHICH SURVIVES CLOSING, PURCHASER SHALL
HAVE ALL RIGHTS AND REMEDIES AT LAW OR AT EQUITY, WITHOUT LIMITATION; PROVIDED,
HOWEVER, THAT IN NO EVENT SHALL SELLER'S LIABILITY UNDER ANY REPRESENTATION,
WARRANTY, COVENANT, AGREEMENT, PRORATION, REPRORATION OBLIGATION OR INDEMNITY
MADE HEREUNDER OR UNDER ANY CLOSING DOCUMENTS, UNDER THE AMMENDALE I CONTRACT
AND/OR ANY CLOSING DOCUMENTS UNDER THE AMMENDALE I CONTRACT EXCEED, IN THE
AGGREGATE THE SUM OF $400,000 ("SELLER'S MAXIMUM LIABILITY"). PURCHASER AND
SELLER AGREE THAT THIS AGREEMENT SHALL BE CROSS DEFAULTED WITH THE AMMENDALE I
CONTRACT AND THAT IF PURCHASER TERMINATES THE AMMENDALE I CONTRACT BY REASON OF
A BREACH BY SELLER OF ANY OF THE REPRESENTATIONS OR WARRANTIES MADE BY SELLER
IN THE AMMENDALE I CONTRACT OR THE FAILURE OF SELLER TO PERFORM ANY OF THE
COVENANTS OR AGREEMENTS TO BE PERFORMED BY SELLER UNDER THE AMMENDALE I
CONTRACT, PURCHASER SHALL ALSO IN SUCH EVENT HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT AND SUE TO RECOVER ANY DAMAGES ARISING OUT OF ANY SUCH TERMINATION,
BUT IN NO EVENT IN AN AGGREGATE AMOUNT EXCEEDING SELLER'S MAXIMUM LIABILITY.
<PAGE>
15. PRORATIONS.
15.1 Rent, additional rent, water and other utility charges; fuels;
operating expenses; real and personal property taxes (adjusted for all tenants'
liabilities, if any, for such items); and all other items of expense and income
shall be adjusted ratably as of 12:01 a.m. on the Closing Date ("Proration
Date"). Seller shall be entitled to a credit for all transferable utility
deposits transferred hereunder, if any, and all other utility deposits, if any,
may be withdrawn by and refunded to Seller and Purchaser shall make its own
replacement deposits for utilities as may be required by the respective
utilities involved. Assessments, excluding regular ad valorem real estate
taxes, payable in installments which are due prior to the Closing Date shall be
paid by Seller. Assessments, excluding regular ad valorem real estate taxes,
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. If any ongoing real estate tax contest has not been
finalized as of the Closing Date, Purchaser and Seller agree that the tax bill
existing prior to the contest shall be the most recent data for the tax year
being contested, and (i) Purchaser agrees to re-prorate such amount as it
relates to the real estate tax proration for the current tax year to the extent
such tax contest is successful. All other prorations will be adjusted finally
pursuant to Paragraph 15.4 below. Purchaser shall be credited with and Seller
shall be charged with an amount equal to the sum of (i) all Tenant security
deposits and interest thereon required under the Leases, and (ii) the amount of
any other credits due to Tenants as of the Closing Date in accordance with the
terms of the Leases, including prepaid rent. Seller shall be entitled to
retain all Tenant security deposits, interest thereon, or other such credits
due Tenants for which Purchaser receives credit and Seller is charged pursuant
to this Paragraph. At the Closing, Seller shall give Purchaser credit for an
amount, determined on an accrual basis, equal to the abatement of rent for any
period on and after the Closing Date to which Tenants are entitled under Leases
in effect on the Closing Date. Subject to the other terms of this Agreement,
Purchaser shall assume the performance of all terms, covenants and conditions
of the Leases with respect to the period from and after the Closing Date.
15.2 Delinquent Rent (i.e., rent which is due and payable by a Tenant on
or before the Closing Date but which has not been paid by the Closing Date)
shall be prorated between Seller and Purchaser as of the Closing Date but not
until it is actually collected by Purchaser after the Closing, it being
understood and agreed that Purchaser shall have no obligation to collect
Delinquent Rent on behalf of Seller. Purchaser shall pay to Seller all
Delinquent Rent collected by Purchaser after the Closing Date. After the
Closing, without the express written consent of Purchaser, Seller shall not
take any action against a Tenant owing Delinquent Rent which would affect such
Tenant's right to occupy the premises leased under its Lease. Rent collected
by Purchaser after the Closing, net of the costs of collection (including
reasonable attorneys' fees and costs), shall be applied first to unpaid rent
accruing after the Closing Date, and then to Delinquent Rent. If Seller
mistakenly receives any rent after the Closing Date, Seller shall promptly
deliver such rent to Purchaser. Upon receipt of any such rent from Seller,
Purchaser shall apply such rent first to unpaid rent accruing after the Closing
Date, and then to Delinquent Rent.
<PAGE>
15.3 All refunds in connection with any ongoing real estate tax protests
for the Property initiated by Seller prior to the Closing shall remain the
property of Seller and are not being assigned by Seller to Purchaser pursuant
to this Agreement except to the extent such refunds relate to periods after the
Closing. In the event any such refunds are paid to Purchaser, Purchaser agrees
to promptly remit all such sums to Seller after paying Tenants or retaining any
portion of such refunds as may be owed to Tenants or Purchaser, as the case may
be, in respect of periods following the Closing Date. In the event that any
such refunds are paid to Seller, Seller agrees to promptly remit to Purchaser
any portion of such refunds relating to periods after the Closing Date, and
Purchaser shall pay to Tenants any part of such Seller remittance as may be
owed to Tenants relating to periods after the Closing Date. Purchaser agrees,
at no cost or expense to Purchaser, to execute any documents reasonably
requested by Seller in connection with such tax protests. If any proceeding to
determine the assessed value of the Property or the real estate taxes payable
with respect to the Property has been commenced before the date of this
Agreement and shall be continuing as of the Closing Date, Purchaser shall be
entitled to control the prosecution of such proceeding or proceedings to
completion and to settle or compromise any claim therein. Seller agrees to
cooperate with Purchaser and to execute any and all documents reasonably
requested by Purchaser in furtherance of the foregoing.
15.4 No later than April 30, 1997, Seller and Purchaser shall make a final
adjustment to the prorations made pursuant to this Paragraph (the "Final
Closing Adjustment"). The Final Closing Adjustment shall be made in the
following manner:
(a) General. All adjustments or prorations which could not be
determined at the Closing because of the lack of actual statements, bills or
invoices for the current period, the year-end adjustment of additional rent, or
any other reason shall be made as a part of the Final Closing Adjustment. Any
net adjustment in favor of Purchaser shall be paid in cash by Seller to
Purchaser no later than 30 days after the Final Closing Adjustment. Any net
adjustment in favor of Seller shall be paid in cash by Purchaser to Seller no
later than 30 days after the Final Closing Adjustment. The parties shall
correct any manifest error in the prorations and adjustments made at Closing
promptly after such error is discovered.
(b) Additional Rent Adjustment. Seller and Purchaser shall prorate
the actual amount of additional rent paid by each Tenant for such Tenant's
applicable fiscal year ("Tenant's Fiscal Year"), as follows:
(1) Seller shall be entitled to the portion of the actual
amount of additional rent paid by the Tenant equal to the product obtained by
multiplying such amount by a fraction, the numerator of which is the number of
days in the Tenant's Fiscal Year preceding the Closing Date and the denominator
of which is the total number of days in the Tenant's Fiscal Year; and
(2) Purchaser shall be entitled to the balance of the
additional rent paid by the Tenant.
<PAGE>
If the sum of all interim payments of additional rent collected and retained by
Seller from each Tenant for the Tenant's Fiscal Year exceeds the amount of such
additional rent to which Seller is entitled with respect to such Tenant
pursuant to paragraph (1) above, Seller shall pay such excess to Purchaser. If
the sum of all interim payments of such additional rent collected and retained
by Purchaser from each Tenant for the Tenant's Fiscal Year exceeds the amount
of additional rent to which Purchaser is entitled with respect to such Tenant
pursuant to paragraph (2) above, Purchaser shall pay the excess to Seller. The
adjustment of interim payments received and actual additional rent paid shall
be made separately for each Tenant and for each type of additional rent.
(c) Except for: (i) additional or supplemental real estate taxes,
real estate tax credits or rebates, or other adjustments to real estate taxes
due to back assessments, corrections to previous tax bills or real estate tax
appeals or contests, (ii) any item of additional rent which may be contested by
a Tenant or (iii) manifest errors, the Final Closing Adjustment shall be
conclusive and binding upon Seller and Purchaser, and Seller and Purchaser
hereby waive any right to contest, after the Final Closing Adjustment, any
prorations, apportionments or adjustments to be made pursuant to this
paragraph.
16. BROKER. The parties hereto represent and warrant to the other that no
broker commission or finder fee is due and payable in connection with this
transaction, by reason of their respective actions, other than to Insignia and
Scheer, all in accordance with Seller's listing agreement with Insignia (to be
paid by Seller). Seller's commission to Insignia and Scheer shall be payable
only 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 attorneys' 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 Insignia and Scheer. Seller
shall indemnify, defend and hold Purchaser harmless from any claim (including,
without limitation, reasonable attorneys' fees, court costs and costs of
appeal) for any claim by Insignia or Scheer (to the extent such claim is based
on the listing agreement) for any fee, commission or compensation on account of
this Agreement, its negotiation or the sale hereby contemplated. The
indemnifying party shall undertake its obligations set forth in this Paragraph
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.
17. REPRESENTATIONS, WARRANTIES AND COVENANTS.
17.1 Any reference herein to Seller's knowledge or notice of any matter or
thing shall only mean such knowledge of, or notice that has actually been
received by, James Mendelson and Tom Molina (Seller's asset manager)
(collectively, "Seller's Representative"), and any representation or warranty
of Seller made to Seller's knowledge is based upon those matters of which
Seller's Representative, or either of them, has actual knowledge. Seller agrees
that Seller's Representative has discussed the terms of the representations and
warranties contained in this Section 17 with William Panzer prior to the
execution of this Agreement. Any knowledge or notice
<PAGE>
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 shall survive Closing for a period of nine (9) months: (a) Seller is
a limited partnership duly formed and validly existing under the laws of the
State of Maryland; (b) the requisite number of the general partners of Seller
required by Seller's Limited Partnership Agreement has authorized the execution
and delivery of this Agreement and the transactions contemplated hereby; (c)
the execution and delivery by Seller of, and the performance and compliance by
Seller with the terms and provisions of, this Agreement do not violate any of
the terms, conditions or provisions of (i) Seller's Limited Partnership
Agreement, (ii) any judgment, order, injunction, decree, regulation or ruling
of any court or other governmental authority to which Seller is subject, or
(iii) any agreement or contract listed on any Schedule to this Agreement or, to
Seller's knowledge, any other agreement or contract to which Seller is a party
or to which it or the Property is subject; (d) Seller has no employees; (e) to
the best of Seller's knowledge, Seller has not received from a governmental
authority notice of any, and there is no, pending or contemplated condemnation
proceedings affecting the Property, or any part hereof; (f) Seller is a "United
States person" within the meaning of Sections 1445(f)(3) and 7701(a)(30) of the
Internal Revenue Code of 1986, as amended; (g) neither Seller nor any general
partner of Seller has commenced a voluntary case, consented to the entry of an
order for relief against it in an involuntary case, or consented to the
appointment of a custodian of it or for all or any substantial part of its
property, under any bankruptcy law, nor has a court of competent jurisdiction
entered an order or decree under any bankruptcy law that is for relief against
Seller or any of its general partners in an involuntary case or appoints a
custodian of Seller or any of its general partners or for all or any
substantial part of its or their property; (h) except as listed on Exhibit N,
Seller has no knowledge of any pending or threatened litigation, claim, cause
of action or administrative proceeding concerning the Property; (i) the rent
rolls attached hereto as Exhibit C and updated as of the Closing Date are
accurate in all material respects as of the date set forth therein; (j) to the
best of Seller's knowledge, except for the leases, modifications and agreements
disclosed in the rent rolls attached hereto or otherwise noted in the estoppel
letters delivered pursuant to this Agreement, there are no other agreements in
place between Seller and any tenant for use of space on the Property; (k)
Seller has not given or suffered any assignment, pledge or encumbrance with
respect to any of the Leases or its interests thereunder; (l) to the best of
Seller's knowledge, the list of Service Contracts attached hereto as Exhibit D
is accurate as of the date hereof; (m) except as disclosed in the Existing
Reports, to the best of Seller's knowledge, Seller has received no written
notice or claim from any governmental authority having jurisdiction over the
Property relating to an uncured breach or violation of any Environmental Laws
or other laws in connection with the Property; (n) except as disclosed in the
Existing Reports, to the best of Seller's knowledge, there neither are nor have
been any underground storage tanks on the Property; (o) except as disclosed in
the Existing Reports, to the best of Seller's knowledge, the only hazardous
<PAGE>
materials or substances on the Property are those used in the ordinary course
of the use, operation and management of the Property in compliance with
Environmental Laws; (p) to the best of Seller's knowledge, Seller has received
no notice of any uncured landlord default from any tenant in connection with
any Lease; (q) on the Closing Date, there will be no contract or agreement in
effect for the management or leasing of the Property; and (r) all Operating
Statements have been prepared in the ordinary course of business and have not
been altered for Purchaser.
17.3 Purchaser hereby represents and warrants to Seller that Purchaser has
the full right, power and authority to execute this Agreement and that it will
have, as of the Closing Date, the power and authority to consummate the
transactions contemplated herein.
17.4 Seller covenants and agrees as follows:
(a) Between the date of this Agreement and the Closing Date, Seller
agrees that it will:
(1) manage and operate the Property only in the ordinary and
usual manner, and use all reasonable efforts to keep available the services of
its present property manager and preserve its relations with Tenants, suppliers
and others having business dealings with it;
(2) at its expense, maintain the Property in its present order
and condition, reasonable wear and tear and damage by fire or other casualty
excepted, and deliver the Property on the Closing Date in substantially the
same condition it is in on the date of this Agreement, reasonable wear and tear
and damage by fire or other casualty excepted;
(3) give prompt notice of any fire or other casualty affecting
the Property after the date of this Agreement;
(4) deliver to Purchaser, promptly after receipt by Seller
after the date of this Agreement, a copy of (i) all notices from Tenants, (ii)
notices from the service providers under any Service Contracts and (iii)
notices of violation issued by governmental authorities with respect to the
Property. If Seller receives a notice of violation from a governmental
authority respecting the Property prior to Closing, Seller shall, at its sole
cost and expense, remedy such violation before the Closing Date (any such cost
of remedy being herein referred to as a "Cost of Violations") or credit
Purchaser with the Cost of Violations at the Closing if such remedy cannot be
effectuated prior to the Closing, to the extent the Cost of Violations does not
exceed $25,000. If the Cost of Violations is $25,000 or more, but is less than
$50,000, Seller shall grant Purchaser a $25,000 credit against the Purchase
Price, and Purchaser shall be responsible for the payment of such Cost of
Violations and/or correction of such violation in excess of $25,000. If the
Cost of Violations is $50,000 or more, neither Purchaser nor Seller shall be
obligated to pay such Cost of Violations and Purchaser shall have the right to
accept the Property subject to such violation or terminate this Agreement. If
the Purchaser terminates this Agreement, all Earnest Money, together with any
interest accrued thereon, shall be returned to Purchaser, and neither party
shall have any further liability to the other, except for those covenants an
obligations that specifically survive termination of this Agreement;
<PAGE>
(5) notify Purchaser, promptly after Seller acquires knowledge
thereof, of any facts or events which would cause any of Seller's
representations and warranties to be untrue or incorrect in any material
respect;
(6) perform, observe and comply with all terms and provisions
of all easement agreements affecting the Property to be performed, observed or
complied with by Seller as owner of the Property;
(7) maintain in full force and effect all licenses which are in
effect during the Inspection Period and timely apply for renewals of all
licenses which will expire before the Closing Date; and
(8) furnish Purchaser with a correct and complete list of all
utilities servicing the Property and the account numbers for each.
(b) Between the date of this Agreement and the Closing Date, Seller
agrees that, without Purchaser's written consent in each case, it will not:
(1) alter or amend any of the Service Contracts or become a
party to any new Service Contract unless the new Service Contract is terminable
without penalty to the then-owner of the Property upon not more than 30 days'
notice;
(2) remove any Personal Property from the Property unless the
same is replaced with similar items of equal or better quality before the
Closing Date.
(3) offer the Property for sale to any other person, consider
unsolicited offers from any other person for the purchase of the Property or
enter into a contract for the sale of the Property to any other person, whether
or not such contract is contingent on the termination of this Agreement.
(c) Seller shall cancel, as of the Closing Date, all Service
Contracts designated for cancellation by Purchaser in a notice given to Seller
in accordance with Paragraph 11.
Notwithstanding anything contained in this Paragraph 17.4 or elsewhere in this
Agreement, Seller shall have no obligation to conduct any efforts to enter into
leases with regard to the Property.
17.5 The representations, warranties and covenants set forth herein and in
any Closing Document shall survive Closing for a period of nine (9) months
after the Closing Date ("Survival Period"). All rights of Purchaser hereunder
with respect to any such surviving representation, warranty or covenant shall
be deemed waived if Purchaser does not, by notice to Seller, advise Seller of
any alleged breach of representation, warranty or covenant prior to the
expiration of the Survival Period. Notwithstanding anything herein to the
contrary, Seller's liability under any representation, warranty or covenant
made hereunder in any closing document hereunder, under the Ammendale I
Contract and/or any closing document thereunder shall in no event exceed, in
the aggregate, Seller's Maximum Liability. On the Closing Date, Seller shall
<PAGE>
deposit the aggregate amount of $400,000 into one escrow applicable to both
this Agreement and the Ammendale I Contract in accordance with an escrow
agreement mutually acceptable to the parties hereto (the "Closing Escrow
Agreement"), in order to secure Seller's obligations under any such surviving
representations, warranties or covenants under this Agreement and the Ammendale
I Contract and the related closing documents. Such escrow shall provide that
the escrowed funds shall be disbursed to Seller automatically at the end of the
Survival Period without notice to or consent from either party hereto unless
Purchaser makes a claim against Seller in accordance with this Agreement or the
Ammendale I Contract prior to the expiration of the Survival Period and so
notifies the escrowee within such time period. The Closing Escrow Agreement
shall be attached hereto as Exhibit O prior to the end of the Inspection
Period.
18. LIMITATION OF LIABILITY. None of Seller's beneficiaries, shareholders,
partners, officers, agents, employees, heirs, successors or assigns shall have
any personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 267-1600
(847) 317-4462 (FAX)
TO PURCHASER: Washington Real Estate Investment Trust
10400 Connecticut Avenue
Concourse Level
Kensington, Maryland 20895
Attention: Mary Beth Avedesian
(301) 929-5808
(301) 929-5949 (FAX)
<PAGE>
with copies to: Michael H. Leahy, Esq.
Arent Fox
1050 Connecticut Avenue
Washington, DC 20036
(202) 857-6222
(202) 857-6395 (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 via facsimile transmission and received by
5:00 p.m. Chicago time, or on the fourth (4th) business day after the same is
deposited in the United States Mail as registered or certified mail, addressed
as above provided, with postage thereon fully prepaid. Any such notice, demand
or document not given, delivered or made by registered or certified mail or by
overnight courier or by facsimile 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. All time periods for responses by either party set forth
in this Agreement shall commence upon the receipt of notice as set forth
hereinabove.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied by 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 to the escrow
agent the Earnest Money, along with 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 Purchaser and Seller.
21. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. The obligations of
Purchaser to purchase the Property from Seller and to perform the other
covenants and obligations to be performed by it on the Closing Date shall be
subject to the following conditions (all or any of which may be waived, in
whole or in part, by Purchaser):
(a) The representations and warranties made by Seller in
Paragraph 17.2 shall be true and correct on the date of this Agreement and
shall be true and correct on and as of the Closing Date in all material
respects with the same force and effect as if such representations had been
made on and as of such date, and Seller shall have executed and delivered to
Purchaser a certificate, dated as of the Closing Date, to the foregoing effect.
(b) Seller shall have performed in all material respects all
covenants and obligations required by this Agreement to be performed by it on
or before the Closing Date.
(c) Seller shall be prepared on the Closing Date, to transfer the
Property to Purchaser subject only to Permitted Exceptions and those
Unpermitted Exceptions not objected to by Purchaser (or removed by Seller)
under the provisions of Paragraph 5 hereof.
<PAGE>
(d) Purchaser shall have received Tenant Certificates executed by
the Tenants listed on Exhibit P attached hereto.
This Agreement may be terminated by Purchaser if any one of the conditions
precedent to Purchaser's obligations to close set forth in Paragraph 21 above
is not satisfied on the Closing Date. If Purchaser terminates this Agreement
as aforesaid, all Earnest Money theretofore deposited into 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 those
covenants and obligations that specifically survive termination of this
Agreement.
22. MISCELLANEOUS
(a) Time is of the essence of each provision of this Agreement.
(b) This Agreement and all provisions hereof shall extend to and be
obligatory upon and inure to the benefit of the respective heirs, legatees,
legal representatives, successors and assigns of the parties hereto.
(c) The section and paragraph headings of this Agreement are for
convenience only and in no way define, limit or enlarge the scope or meaning of
the language hereof. The terms "hereby," "herein," "hereof," "hereto,"
"hereunder" and any similar terms used in this Agreement refer to this
Agreement. The term "including" shall not be construed in a limiting nature,
but shall be construed to mean "including, without limitation." Words
importing persons shall include firms, associations, partnerships, trusts,
corporations and other legal entities, including public bodies, as well as
natural persons. Words importing the singular shall include the plural and
vice versa. Words of the masculine gender shall be deemed to include
correlative words of the feminine and neuter genders.
(d) This Agreement contains the entire agreement between the parties
relating to the transactions contemplated hereby, and all prior or
contemporaneous agreements, understandings, representations and statements,
oral or written, are merged herein. No representations, warranties,
undertakings or promises (whether oral or written, express or implied), can be
made or have been made by Seller or its agents, representatives or brokers to
Purchaser or any other person unless expressly stated herein. No modification
or amendment of this Agreement or any waiver of any provision hereof shall be
effective unless the same is in writing signed by the party against whom
enforcement of such modification, amendment or waiver is sought.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland. If any of the provisions of this
Agreement or the application thereof to any persons or circumstances shall, to
any extent, be deemed invalid or unenforceable, the remainder of this Agreement
and the application of such provisions to persons or circumstances other than
those as to whom or which it is held invalid or unenforceable shall not be
affected thereby, and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
<PAGE>
(f) This Agreement and any document or instrument executed pursuant
hereto may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(g) The submission by Seller of this Agreement to Purchaser for
examination does not constitute an offer by Seller to sell, or a reservation of
or option to purchase the Property. This Agreement shall not become a contract
until executed and delivered by Purchaser and Seller in the manner set forth
herein.
(h) Purchaser shall not record this Agreement or any memorandum
hereof, and any such recording shall be a default hereunder.
(i) At all times through the Closing Date, Purchaser and Seller
shall jointly prepare and issue all releases of information relating to the
sale of the Property, and any inquiries regarding the transaction contemplated
hereby shall be responded to only after consultation with the other party
hereto.
(j) If either party institutes a legal action against the other
relating to this Agreement or any default hereunder, the unsuccessful party to
such action will reimburse the successful party for the reasonable expenses of
prosecuting or defending such action, including without limitation, reasonable
attorneys fees and disbursements and court costs.
(k) This Agreement shall not be construed more strictly against one
party than against the other merely by virtue of the fact that the Agreement
may have been prepared primarily by counsel for one of the parties, it being
recognized that both Purchaser and Seller have contributed substantially and
materially to the preparation of this Agreement.
(l) Purchaser shall not have the right to assign its interest in
this Agreement without the prior written consent of 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 13 hereof. Notwithstanding the foregoing, Purchaser
may make one (1) assignment of its interest in this Agreement without the
consent of Seller to any entity affiliated with or controlled by Purchaser
("Assignee"), provided that Purchaser remains liable for and the Assignee
assumes the obligations of Purchaser hereunder. If the Assignee petitions or
applies for relief under any bankruptcy laws or is adjudicated as a bankrupt or
insolvent, or if Assignee files any petition, application for relief or
answer-seeking or acquiescing in any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law, code or regulation
relating to bankruptcy, insolvency, or other relief for debtors (collectively,
a "Bankruptcy Filing") on or before the Closing Date, said Bankruptcy Filing
shall be a default under this Agreement and Purchaser shall indemnify Seller
for all costs, attorney's fees and expenses of Seller resulting from Seller's
efforts to obtain the Earnest Money as liquidated damages and to clear title to
the Property with respect to any encumbrance resulting from the Bankruptcy
Filing.
<PAGE>
(m) Seller and Purchaser waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on any
matter arising out of or in any way connected with this Agreement.
(o) The provisions of this Agreement, in addition to the
representations and warranties of Seller set forth in Paragraph 17.2 hereof,
shall survive Closing and the delivery of the Deed for a period of nine (9)
months, and shall not be merged therein.
(p) If required by rules of the Securities and Exchange Commission,
Seller grants Purchaser the right, at Purchaser's sole expense, to prepare an
audited income statement of the Property for the most recent fiscal year(s) as
specified by Rule 3-14 of Regulation S-X under the Securities Act of 1933 and
the Securities Exchange Act of 1934, and Seller shall provide and/or fully
cooperate in obtaining any and all such other data and financial information
which shall be available to Seller (including, without limitation, data and
information obtainable from Seller's management agent for the Property) and as
advisable in connection with fulfilling Purchaser's disclosure obligations as a
public company subject to the rules and regulations of the Securities and
Exchange Commission.
23. AMMENDALE I CONTRACT. The parties hereto understand and agree that this
Agreement and the Ammendale I Contract are being executed and delivered
simultaneously, and that the parties intend that there will be a simultaneous
closing under this Agreement and the Ammendale I Contract. Accordingly,
Purchaser and Seller agree as follows:
(a) If Purchaser terminates this Agreement during the Inspection
Period under the provisions of Paragraph 7.1 hereof, such termination shall not
be effective unless simultaneously therewith Purchaser also terminates the
Ammendale I Contract.
(b) Any termination of this Agreement other than pursuant to the
provisions of Paragraph 7.1 hereof (for example, under the provisions of
Paragraph 6 hereof resulting from a casualty or condemnation) shall
automatically result in the simultaneous termination of the Ammendale I
Contract, even though there may be no separate grounds for termination of the
Ammendale I Contract.
(c) In general, (i) Seller shall not be required to sell the
Property to Purchaser unless at the same time Seller is able to sell to
Purchaser the property the subject of the Ammendale I Contract, and (ii)
Purchaser shall not be required to purchase the Property from Seller unless at
the same time Purchaser is able to purchase from Seller the property the
subject of the Ammendale I Contract.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
PURCHASER:
WRIT LIMITED PARTNERSHIP
By: Washington Real Estate Investment Trust,
General Partner
By: /s/ Edmund B. Cronin, Jr.
------------------------------------------
Name: Edmund B. Cronin, Jr.
------------------------------------------
Its: President and Chief Executive Officer
------------------------------------------
SELLER:
AMMENDALE-II LIMITED PARTNERSHIP
By: Prince George Partners, Inc., an Illinois
corporation, its general partner
By: /s/ Jerry M. Ogle
------------------------------------
Name: Jerry M. Ogle
------------------------------------
Its: Vice President and Secretary
------------------------------------
<PAGE>
Insignia Mortgage and Investment Company ("Broker") executes this Agreement in
its capacity as a real estate broker and acknowledges that the fee or
commission ("Fee") due to it as a result of the transaction described in this
Agreement is the amount as set forth in the listing agreement between Broker
and Seller. Broker also acknowledges that payment of the aforesaid Fee is
conditioned upon the Closing and the receipt of the Purchase Price by Seller.
Broker agrees to deliver a receipt to Seller at the Closing for the Fee and a
release stating that no other fees or commissions are due to Broker from Seller
or Purchaser.
INSIGNIA MORTGAGE AND
INVESTMENT COMPANY
By:
--------------------------------------
<PAGE>
LIST OF EXHIBITS
A. Legal Description
B. Personal Property
[Excluded Personal Property]
C. Leases/Rent Roll
D. Service and Maintenance Contracts
E. Escrow Agreement
F. Copy of Title Commitment
G. Limited Warranty Deed
H. Special Warranty Bill of Sale
I. Assignment and Assumption of Intangible Property
J. Assignment and Assumption of Leases and Security Deposits
K. FIRPTA
L. Tenant Notice Letter
M-1. Tenant Estoppel Certificate
M-2. Seller Estoppel Certificate
N. Disclosures
O. Closing Escrow Agreement
P. List of Required Tenant Certificates
Q. Pending Lease Costs
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 2nd
day of December, 1996, by and between DEVON PROPERTIES, INC., a New York
corporation ("Purchaser"), and PERIMETER 400 PARTNERS, an Illinois general
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 Forty Million Seven Hundred Thousand And No/100 Dollars
($40,700,000.00) (the "Purchase Price"), that certain property commonly known
as Perimeter 400 Center, 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 Seven Hundred Fifty
Thousand and No/100 Dollars ($750,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
2.3. Purchaser and Seller agree that of the Purchase Price $50,000.00 will
be allocated to the Personal Property and the balance will be allocated to the
Property and improvements situated thereon.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by First American Title
Insurance Company (hereinafter referred to as "Title Insurer") dated July 12,
1996 as to real property located in Fulton County, Georgia and August 15, 1996
as to real property located in DeKalb County, Georgia for the Property (the
"Title Commitment"). For purposes of this Agreement, "Permitted Exceptions"
shall mean: (a) general real estate taxes, association assessments, special
assessments, special district taxes and related charges not yet due and payable
for any tax years of the Closing Date or thereafter; (b) matters shown on the
"Survey" (hereinafter defined); (c) matters caused by the actions of Purchaser;
and (d) the title exceptions set forth in Schedule B Part II of the Title
Commitment as Numbers 7 and 9 through 16 inclusive, to the extent that same
affect the Property. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". On the Closing Date, it will be a condition of
Purchaser's obligation to close that Title Insurer shall deliver to Purchaser a
standard title policy in conformance with the previously delivered Title
Commitment, subject only to Permitted Exceptions and Unpermitted Exceptions
<PAGE>
waived by Purchaser (the "Title Policy"). Seller and Purchaser shall each pay
for one-half of the costs of the Title Commitment and the Title Policy and
Purchaser shall pay for the cost of any endorsements to, or extended coverage
on, the Title Policy. It shall also be a condition of Purchaser's obligation
to close hereunder that the Title Company agree to issue those endorsements and
special coverage requested by Purchaser set forth on Exhibit S.
3.2. Purchaser has received a preliminary survey of the Property prepared
by W. L. Jorden & Co., Inc. dated as of October 29, 1996 (the "Survey").
Seller and Purchaser shall each pay for one-half of the costs of the Survey and
updating the Survey through a date not earlier than the date hereof. Purchaser
hereby acknowledges that all matters disclosed by the Survey dated as of
October 29, 1996 are deemed to be Permitted Exceptions but that any matters
shown on an update of the Survey and not disclosed on the Survey dated as of
October 29, 1996 will be Unpermitted Exceptions.
3.3. The obligation of Purchaser and Seller to pay various costs set forth
in Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement and
the "Closing" (as hereinafter defined) and the delivery of the "Deed" (as
hereinafter defined), provided, however, that in the event the transaction
contemplated hereby does not close due to a default by Seller or Seller's
inability to close or Seller's or Purchaser's election to terminate this
Agreement pursuant to the terms hereof, Purchaser shall not be obligated to pay
various costs set forth in Paragraphs 3.1 and 3.2 hereof.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser and Seller shall each pay for one-half of the costs of the
documentary or transfer stamps to be paid with reference to the Deed and all
other stamps, intangible, transfer, documentary, recording, sales tax and
surtax imposed by law with reference to any other sale documents delivered in
connection with the sale of the Property to Purchaser and all other charges of
the Title Insurer in connection with this transaction.
4.2. Each party shall be responsible for the payment of their own
attorneys' fees and other costs associated with this transaction except as
specified herein.
5. CONDITION OF TITLE.
5.1. If, prior to Closing, a date-down to the Title Commitment or the
Survey discloses any new Unpermitted Exception, Seller, upon notice to
Purchaser, shall have thirty (30) days from the date of the date-down to the
Title Commitment or the Survey at Seller's expense, to (i) bond over, cure
and/or have any Unpermitted Exceptions which, in the aggregate, do not exceed
$100,000.00 (a "Minor Unpermitted Exception"), 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, provided that such Title
Insurer also commits to insure against such Unpermitted Exceptions for any
subsequent purchaser of the Property from Purchaser and any mortgage lender
without any additional premium, or (ii) have the right, but not the obligation,
to bond over, cure and/or have any Unpermitted Exceptions which, in the
<PAGE>
aggregate, exceed $100,000.00, 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, provided that such Title Insurer also commits to
insure against such Unpermitted Exceptions for any subsequent purchaser of the
Property from Purchaser and any mortgage lender without any additional premium.
In such event, the time of Closing shall be delayed, if necessary, to give
effect to said aforementioned time periods. If Seller fails to cure or have
said Unpermitted Exception removed or have the Title Insurer commit to insure
as specified above within said thirty (30) day period or if Seller elects not
to exercise its rights under (ii) in the preceding sentence, Purchaser may
terminate this Agreement upon notice to Seller within ten (10) days after the
expiration of said thirty (30) day period; provided, however, and
notwithstanding anything contained herein to the contrary, if the Unpermitted
Exception which gives rise to Purchaser's right to terminate was recorded
against the Property as a result of the affirmative, willful action of Seller
(and not by any unrelated third party) or as a result of the litigation set
forth on Exhibit P if such litigation becomes a lien on the Property or if
Seller is able to bond over, cure or remove a Minor Unpermitted Exception for a
cost not to exceed $100,000 or the Title Insurer is willing to insure over a
Minor Unpermitted Exception, provided that such Title Insurer also commits to
insure against such Unpermitted Exceptions for any subsequent purchaser of the
Property from Purchaser and any mortgage lender without any additional premium
for a cost not to exceed $100,000 in accordance with the terms hereof and
Seller fails to expend said funds in either case, 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 those obligations which survive the termination hereof.
Notwithstanding the provisions of Paragraph 5 hereof, Purchaser may at any time
accept the Title Insurance Policy in such form as the Title Insurer is willing
to issue, without reduction of the Purchase Price or any credit or allowance on
account thereof or any claims against Seller except that if on the Closing Date
there remain unremoved Involuntary Monetary and Mechanics' Liens (as defined
herein) which have neither been removed by Seller nor insured over the Title
Insurer as provided herein, and Seller has not used the entire sum of $100,000
as provided above (the "Cure Amount") in removing such liens, then Purchaser
may elect to close subject to such unremoved Involuntary Monetary and
Mechanics' Liens and receive the Cure Amount less any amounts previously paid
by Seller or deposited with the Title Insurer to remove or obtain insurance
over any Involuntary Monetary and Mechanics' Liens, Purchaser will be allowed a
credit against the Purchaser Price equal to the remaining Cure Amount.
As used herein the term "Involuntary Monetary and Mechanics Liens" shall
mean the existence of one or more (i) liens or encumbrances or (ii) mechanics'
liens created as a result of work performed at the Property which as to (i) and
(ii), are in liquidated amounts and can be removed or discharged by payment of
a sum of money.
<PAGE>
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser 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 date upon which 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, (a)
repair of which would cost less than or equal to $400,000.00 (as determined by
a licensed engineer or architect selected by Seller and reasonably satisfactory
to Purchaser (the "Approved Engineer")) and (b) which does not directly and
proximately cause tenants in occupancy of ten (10) percent or more of the
leasable area of the Property to actually terminate their leases at the
Property or give notice of their intention to terminate their leases at the
Property in accordance with the terms thereof, Purchaser and Seller shall not
have the right to terminate their obligations under this Agreement by reason
thereof, but 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 such fire or casualty and Seller shall pay
to Purchaser at the Closing the amount of Seller's insurance deductible less
the cost of any repairs effected by or on behalf of Seller with Purchaser's
consent, which consent shall not be unreasonably withheld or delayed, or
without Purchaser's consent with respect to repairs of an emergency nature.
Adjustment of any insurance or condemnation claim shall be conducted jointly by
Seller and Purchaser. Seller shall notify Purchaser in writing on the earlier
of (x) the Closing Date or (y) within ten (10) days of any such fire or other
casualty. In the event of damage to the Property by fire or other casualty
prior to the Closing Date (a) repair of which would cost in excess of
$400,000.00 (as determined by the Approved Engineer), or (b) which directly and
proximately causes tenants in occupancy of ten (10) percent or more of the
leasable area of the Property to actually terminate their leases at the
Property or give notice of their intention to terminate their leases at the
Property in accordance with the terms thereof prior to the Closing, 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 (a) Purchaser receives written notice of such fire
or other casualty and the Approved Engineer's determination of the amount of
such damages, or (b) Purchaser receives written notice of cancellation of
tenant leases representing ten (10) percent of the leasable area of the
Property. Upon the exercise of Purchaser's option to terminate in the
preceding sentence, this Agreement shall become null and void, the Earnest
Money deposited by Purchaser shall be returned to Purchaser together with
interest thereon, and neither party shall have any further liability or
obligations hereunder except for those provisions which expressly survive the
termination hereof. In the event that Purchaser does not exercise the option
set forth in the second preceding sentence, the Closing shall take place on the
Closing Date and Seller shall assign and transfer to Purchaser on the Closing
Date all of Seller's right, title and interest in and to all insurance proceeds
paid or payable to Seller on account of the fire or casualty and Seller shall
pay to Purchaser at the Closing the amount of Seller's insurance deductible.
<PAGE>
6.2. If prior to the Closing Date, any condemnation or eminent domain
proceedings are threatened or initiated (a "Taking") 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
except for those provisions which expressly survive the termination hereof; 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 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 prior to 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, provided Seller has given Purchaser notice thereof
prior to the earlier of (i) ten days after Seller learns thereof or (ii) the
Closing Date, 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 October 18, 1996 and ending at 5:00
p.m. Chicago time on November 20, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases and other tenant files located at the
Property, to interview tenants at the property upon reasonable notice to such
tenants and Seller (so as to allow a representative of Seller to be present at
any such interview) and without materially interfering with the business
operations of the tenants, 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 1993 through 1995 and year to date 1996 operating statements.
<PAGE>
Furthermore, if the following are reasonably available to Seller, Seller shall
deliver to Purchaser plans and specifications for the Property as well as any
engineering reports related to the Property.
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 "Affiliates 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
reasonably satisfactory 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.
Purchaser in its sole discretion 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, provided, however, that Purchaser
shall not be required to deliver to Seller copies of appraisals and financial
analyses prepared by or at the request of Purchaser during the Inspection
Period or any material prepared by Purchaser's attorneys; and (ii) the Earnest
Money deposited by Purchaser shall be immediately paid to Purchaser, together
with any interest earned thereon, and neither Purchaser nor Seller shall have
any right, obligation or liability under this Agreement, except for those
obligations which specifically survive the termination hereof. 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. Notwithstanding anything contained herein to the contrary,
Purchaser hereby acknowledges as of the execution of this Agreement, the
Inspection Period and Purchaser's right to terminate this Agreement pursuant to
this Paragraph 7.1 have expired.
7.2. Seller's predecessor-in-interest acquired title to the Property by
foreclosure (or deed-in-lieu thereof) and, therefore, Seller can make no
representations or warranties relating to the physical condition of the
Property. Purchaser acknowledges and agrees that other than any express
<PAGE>
representation or warranty by Seller made herein 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 but subject to Purchaser's rights under Paragraph 6
hereof. 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. Other than any express representation or warranty by Seller made
herein, 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 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. e 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
<PAGE>
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. Except as set forth herein, 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 except for any representation or warranty of Purchaser expressly
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:
Preliminary Environmental Site Assessment prepared by Law Associates, Inc.
dated January 16, 1991 ("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. The closing of this transaction (the "Closing") shall be on
December 19, 1996 (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 shall be a "New York style" closing at which the
Purchaser shall wire the Purchase Price less the Earnest Money and any
prorations and other adjustments 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.
9. CLOSING DOCUMENTS.
9.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and Purchaser shall deliver at
Closing the following items:
<PAGE>
9.1.1. a certificate confirming the continued accuracy of the
warranties and representations made by Purchaser in this Agreement;
9.1.2. a statement from Purchaser's counsel required by
Section 6045 of the Internal Revenue Code, as amended, and Seller will execute
same at the Closing; and
9.1.3. such other, and further customary instruments and documents
as Seller's counsel may reasonably require to evidence and conclude the
transaction contemplated by this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a special warranty bill of sale conveying the Personal
Property (in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.6. original, and/or certified copies of, leases affecting the
Property ("Leases") which shall be delivered at the Property;
9.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy including documents evidencing Seller's
existence and authority to consummate the transaction contemplated by this
Agreement;
9.2.8. possession of the Property to Purchaser, subject to the terms
of Leases;
9.2.9. evidence of the termination of the management and leasing
agreements;
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;
<PAGE>
9.2.12. an affidavit pursuant to Section 48-7-128 of the Official
Code of Georgia Annotated that Seller is a resident of Georgia, that Seller is
not otherwise subject to Georgia tax withholding or stating the amount of
Seller's gain in which event Purchaser shall retain from the Purchase Price the
amount required by this statute and promptly remit same to the appropriate
governmental agency;
9.2.13. a Georgia Transfer Tax Declaration signed by Seller;
9.2.14. a certificate confirming the continued accuracy of the
warranties and representations made by Seller in this Agreement as required by
Paragraph 16.2, but subject to Paragraph 16.4;
9.2.15. Tenant Certificates and Seller Tenant Certificates in
compliance with Paragraph 26 hereof dated no earlier than 45 days prior to the
Closing Date;
9.2.16. appropriate evidence of Seller's right, power and authority
to sell the Property to Purchaser on the terms and conditions of this Agreement
as Purchaser may reasonably require;
9.2.17. a complete set of all keys and magnetic pass cards, if any,
to the improvements at the Property, appropriately tagged for identification to
the extent in Seller's or its managing agent's possession or control;
9.2.18. to the extent in Seller's or its managing agent's possession
or control, and not already delivered, (a) the maintenance records for the
Property, (b) all original licenses and permits, authorizations and approvals
which are currently in force pertaining to the Property and (c) all guarantees
and warranties which are currently in force and which Seller has received in
connection with any work or services performed or equipment installed in and to
improvements erected on the Property which will all be deemed delivered if
delivered to Purchaser at the site of the Closing or at the on-site management
office at the Property;
9.2.19. the files with respect to overage rents and charges which
will be deemed delivered if delivered to Purchaser at the site of the Closing
or at the on-site management office at the Property;
9.2.20. to the extent in Seller's or its managing agent's possession
or control, the originals of the property documents and in all other instances
copies thereof which will be deemed delivered if delivered to Purchaser at the
site of the Closing or at the on-site management office at the Property;
9.2.21. the current operating files for the Property which will be
deemed delivered if delivered to Purchaser at the site of the Closing or at the
on-site management office at the Property; and
9.2.22. such other, and further customary instruments and documents
as Purchaser's counsel may reasonably require to evidence and conclude the
transaction contemplated by this Agreement.
<PAGE>
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 ON OR PRIOR TO THE CLOSING DATE, 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 THAT SELLER SHALL
RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT
TO DAMAGES OR ANY OTHER REMEDY AND EXCEPT FOR PURCHASER'S OBLIGATIONS TO
INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH IN PARAGRAPH 7.1 HEREOF;
THE PARTIES HERETO ACKNOWLEDGING THE DIFFICULTY OF MORE PRECISELY ASCERTAINING
THE AMOUNT OF SELLER'S DAMAGES IN SUCH EVENT, AGREEING THAT AN AMOUNT EQUAL TO
THE EARNEST MONEY IS A REASONABLE FORECAST THEREOF, AND INTENDING THAT SUCH
AMOUNT BE PAID AS AGREED LIQUIDATED DAMAGES AND NOT AS A PENALTY. 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 AS EXPRESSLY PROVIDED FOR
HEREIN AND 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 (I) ITS WILLFUL
REFUSAL TO DELIVER THE CLOSING DOCUMENTS SET FORTH IN PARAGRAPH 9.2 (OTHER THAN
9.2.15 IF SELLER DOES NOT RECEIVE THE REQUIRED THIRD PARTY TENANT
CERTIFICATES), (II) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE,
WILLFUL ACTION WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE
PROPERTY AND WHICH GIVES RISE TO PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT
PURSUANT TO PARAGRAPH 5 HEREOF; OR (III) ITS FAILURE TO EXPEND UP TO $100,000
IF (A) SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED
EXCEPTION IN ACCORDANCE WITH THE TERMS HEREOF FOR A COST NOT TO EXCEED $100,000
OR (B) THE TITLE INSURER IS WILLING TO INSURE OVER A MINOR UNPERMITTED
EXCEPTION FOR A COST NOT TO EXCEED $100,000 IN ACCORDANCE WITH THE TERMS
HEREOF; (IV) SELLER'S FAILURE TO CURE ANY TITLE EXCEPTION LISTED ON THE TITLE
REPORT ATTACHED HERETO AND NOT LISTED HEREIN AS A PERMITTED TITLE EXCEPTION;
(V) SELLER'S FAILURE TO PAY OVER OR ASSIGN ANY CASUALTY INSURANCE OR
CONDEMNATION PROCEEDS AS PROVIDED FOR IN SECTION 6 HEREOF; OR (VI) SELLER FAILS
TO PERFORM ITS OBLIGATIONS UNDER THE LAST SENTENCE OF SECTION 8 HEREOF, THEN
PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE PLUS ANY REASONABLE
ATTORNEYS' FEES INCURRED BY PURCHASER IN SEEKING TO ENFORCE ITS RIGHTS TO
SPECIFIC PERFORMANCE. NOTWITHSTANDING THE FOREGOING, IF SELLER'S INABILITY TO
CLOSE SHALL RESULT FROM SELLER'S WILLFUL DEFAULT OR WILLFUL MATERIAL
MISREPRESENTATION OR WILLFUL AND MATERIAL BREACH OF WARRANTY, THEN AND IN ANY
SUCH EVENT PURCHASER MAY ELECT TO CANCEL THIS AGREEMENT AND THEN PURCHASER WILL
BE ENTITLED TO DEMAND 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 AS EXPRESSLY PROVIDED FOR HEREIN AND EXCEPT FOR
PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET
FORTH MORE FULLY IN PARAGRAPH 7 AND THOSE OBLIGATIONS WHICH EXPRESSLY SURVIVE
THE TERMINATION HEREOF AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER ITS ACTUAL,
<PAGE>
DOCUMENTED THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE
DILIGENCE HEREUNDER AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED
$250,000 IN THE AGGREGATE ("DUE DILIGENCE EXPENSES") PLUS ANY REASONABLE
ATTORNEYS' FEES INCURRED BY PURCHASER IN SEEKING TO ENFORCE ITS RIGHTS TO
RECEIVE ITS DUE DILIGENCE EXPENSES.
12. CLOSING PRORATIONS.
12.1. The items described in this Paragraph shall be prorated between
the parties on a per diem basis (on the basis of actual calendar days in the
relevant calendar year) so that credits and charges preceding or on 11:59 P.M.
on the day preceding the Closing Date shall be allocated to Seller and credits
and charges for the period after 11:59 P.M. on the day preceding the Closing
Date and all days thereafter shall be allocated to Purchaser. Each payment
received shall be attributed to the most recent period for which such a payment
is due. As of July 1, 1997, Seller and Purchaser shall jointly prepare a final
proration statement in accordance with the provisions of this Paragraph 12 and
a final adjusting payment shall then be made, as provided in Paragraph 12.3
hereof.
12.1.1. Real estate taxes (on the basis of allowable discounts for
early payments), general and special assessments and the like ("Taxes") for the
year of the Closing Date, as such Taxes may be increased or decreased after the
Closing, shall be prorated as of the Closing Date based on the most recent
ascertainable amount as part of the proration of "Maintenance Expenses"
(hereinafter defined) in Paragraph 12.1.3. The parties acknowledge that Seller
has filed an appeal with respect to Taxes affecting the Property for 1995.
Seller currently has paid $324,656.80 on account of 1995 Taxes affecting the
Property. Seller has received notice of a reduction of the 1995 Taxes,
however, such reduction is subject to appeal. Seller agrees to escrow from the
proceeds at Closing an amount equal to the difference between (said amount
being referred to as the "1995 Excess Taxes"): (a) the lower of (i) the Taxes
due and owing for 1995 based on the assessed value sought by Fulton County
together with all interest due and owing thereon ("Maximum 1995 Taxes") and
(ii) the Taxes due and owing for 1995 based on the assessed value awarded
Seller in connection with the appeal if said appeal becomes final and
non-appealable prior to the Closing Date together with all interest due and
owing thereon ("Reduced 1995 Taxes") and (b) $324,656.80. The aforesaid escrow
(the "Tax Escrow") shall be established with the Atlanta office of the First
American Title Insurance ("Tax Escrowee") and shall be in form and substance
reflecting the terms herein and otherwise reasonably acceptable to Purchaser
and Seller. The Tax Escrow shall provide that at such time as the 1995 Excess
Taxes become due and payable in accordance with the applicable Fulton County
laws and ordinances, Purchaser may deliver written notice of such to Seller and
Tax Escrowee. Within fourteen (14) days after receipt of said notice, Tax
Escrowee shall pay to the Fulton County tax collector the 1995 Excess Taxes
with all interest and penalties imposed thereon, if any. Notwithstanding
anything contained herein to the contrary, the Tax Escrow shall provide that if
at any time prior to the disbursement of the proceeds of the Tax Escrow, Seller
delivers to Purchaser and Tax Escrowee evidence of the final, non-appealable
nature of the 1995 appeal which reduces the 1995 Excess Taxes, Tax Escrowee
shall discharge to Seller within fourteen (14) days after receipt of said
<PAGE>
notice an amount equal to the difference between the Maximum 1995 Taxes and the
Reduced 1995 Taxes. Furthermore, the Tax Escrow shall provide that (i)
interest earned on the proceeds shall be disbursed in the same manner as the
proceeds and (ii) and proceeds remaining in the Tax Escrow after the payment of
the 1995 Excess Taxes shall be immediately disbursed to Seller.
Notwithstanding anything contained in the Agreement to the contrary, Seller
shall be entitled to its pro rata share of any refund of Taxes for 1996 and any
such refund received by Purchaser shall be held in trust for Seller. Seller
covenants and agrees to withdraw, and agrees not to file, any appeal for Taxes
for 1996 without the prior consent of Purchaser.
12.1.2. Minimum rent (exclusive of delinquent or unpaid rents, but
including prepaid rents) paid under the Leases shall be prorated as of the
Closing Date. Percentage Rent, if any, shall be prorated in connection with
the final adjustment set forth in Paragraph 12.3 herein.
12.1.3. Certain of the Leases provide for reimbursement to landlord
of maintenance and operation charges, Taxes, insurance and other expenses
(herein collectively referred to as "Maintenance Expenses"). Some Leases
provide for a determination of the tenant's share of Maintenance Expenses on an
annual basis but provide that an estimated amount thereof (either in the
aggregate or for specified components thereof) shall be paid by tenant to
landlord monthly during the course of the year with a final adjustment to be
made after the close of the year when such costs and expenses have been finally
determined. Seller and Purchaser have agreed as follows with respect to
Maintenance Expenses:
(i) Except as hereinafter provided, Seller shall be responsible for
the payment of all Maintenance Expenses attributable to periods of time prior
to the Closing Date (without taking into account "stops" for base years in the
Leases) and Seller shall be entitled to receive and retain all reimbursements
thereof collected from tenants on account thereof with respect to the period
through the Closing Date (taking into account "stops" for base years in the
Leases); and Purchaser shall be responsible for the payment of all Maintenance
Expenses attributable to periods of time from and after the Closing Date
(without taking into account "stops" for base years in the Leases) and
Purchaser shall be entitled to receive and retain from the tenants all
reimbursements thereof collected from tenants on account thereof with respect
to the Closing Date and thereafter (taking into account "stops" for base years
in the Leases). Purchaser shall be entitled to a credit against the Purchase
Price for sums that are due (or accrued) and unpaid as of the Closing Date
under any Service Contracts which have been assigned to Purchaser, and Seller
shall be entitled to a credit to the extent that sums have been paid under any
Service Contracts which have been assigned to Purchaser for services to be
performed or goods to be delivered after the Closing Date.
(ii) As a part of the final proration referred to in Section 12.3
hereof:
Maintenance Expenses received from Tenants shall be separately
prorated under each Lease. Upon final determination of Maintenance Expense
owed by a Tenant under its Lease for the calendar year in which the Closing
occurs and 1995 with respect to Taxes, Seller and Purchaser shall adjust
between themselves amounts owed for such calendar year on account of
<PAGE>
Maintenance Expenses, and Seller's allocable share of such Maintenance Expenses
payable by such Tenant shall be equal to an amount determined by multiplying
separately each of the Maintenance Expense received from such Tenant by the
fraction whose numerator is the number of days in such calendar year before the
Closing Date, and whose denominator is the total number of days in such
calendar year of the Closing. Purchaser shall remit to Seller its allocable
share, less interim payments previously retained by Seller, if any, less a
pro rata share of costs of collection paid to third parties, if any. If Seller
has retained amounts in excess of its allocable share, Seller, within fifteen
(15) days after notice from Purchaser of the excess owed Purchaser, shall remit
such excess to Purchaser less a pro rata share of costs of collection, if any
paid to third parties.
12.1.4. Internationally Deleted.
12.1.5. To the extent not covered by Paragraph 12.1.3, utility and
fuel charges, including, without limitation, charges for water, electricity,
gas, gasoline, steam, oil and telephones used in connection with the heating,
cooling, lighting, maintenance and operation of the Property and any personal
property included therein or used in connection therewith shall be prorated as
of the Closing Date. Seller shall obtain readings of all utility meters no
earlier than 30 days prior to the Closing Date.
12.1.6. To the extent not covered by Paragraph 12.1.3 annual fees
for permits and licenses disclosed in Exhibit 0 shall be prorated as of the
Closing Date.
12.1.7. Personal property taxes, if any, for any personal property
transferred to Purchaser shall be prorated as of the Closing Date.
12.1.8. Purchaser shall cause a reconciliation of the Maintenance
Expenses and Taxes to occur with the tenants no later than April 15, 1997
requesting payment in accordance with the terms of the Lease and shall use
reasonable, good faith efforts in collecting from the tenants any
under-payments for Maintenance Expenses for 1996 and 1995 (with respect to
Taxes for 1995) to the extent Taxes due for such year have been resolved by
such date.
12.2. The following amounts, if any (the "Adjustments"), without
duplication, shall be made:
12.2.1. All security deposits held by Seller as of the Closing Date
shall be paid to Purchaser at the Closing.
12.2.2. All other reasonable expenses normal to the operation and
maintenance of the Property which require payments either in advance or in
arrears for periods which begin prior to the Closing Date or end thereafter
shall be apportioned between Seller and Purchaser as of 11:59 P.M. on the day
preceding the Closing Date.
12.2.3. Purchaser shall receive at Closing a credit equal to the
amount of any unsatisfied obligations for "Outstanding Tenant Improvement and
Commission Obligations" of Seller set forth in Exhibit N. Purchaser agrees to
assume the payment of $51,598 for LaRoche as shown on Exhibit N (without a
<PAGE>
credit from Seller) and to the extent Seller pays any amounts toward the
$51,598 obligation prior to Closing then Seller shall receive a credit from
Purchaser therefor. Seller shall receive a credit, if any, as provided in
Paragraphs 25 and 26.
12.3. In connection with the Prorations and the Adjustments herein and
as provided, there shall be prepared the following statements, schedules and
certificate:
12.3.1. Seller shall prepare or cause to be prepared statements in
reasonable detail showing separately each item prorated or adjusted pursuant to
this Agreement and a detailed reconciliation showing separately each item
prorated or adjusted pursuant to this Agreement and a detailed reconciliation
of the Prorations and Adjustments, such statements to be delivered three (3)
business days prior to the Closing and adjusted as necessary at the Closing.
The parties shall mutually agree after review thereof by Purchaser that said
closing statement accurately reflects the method of proration set forth in this
Agreement.
12.3.2. Purchaser, in cooperation with Seller, shall prepare, not
later than July 1, 1997, a final proration statement as of the Closing Date,
presenting correctly the final Prorations and Adjustments in accordance with
the terms of this Agreement and a statement of "Post-Closing Receipts"
(hereinafter defined). Upon issuance of such final proration statement the
parties shall make a final proration payment as appropriate (including, without
limitation, a settlement of Post-Closing Receipts). For purposes of
preparation of the foregoing statements and at all reasonable times thereafter,
the parties agree to allow the other party and the other party's accountants
and representatives, to examine so much of the books and records in the
possession and control of the other party as relate to such statements and
final reconciliations with tenants on Maintenance Expenses and other charges at
the place or places where they are then regularly maintained. Seller and
Purchaser shall retain such books and records for three (3) years from the
Closing Date.
12.4. All sums paid following the Closing Date by any tenant of the
Property who is indebted to Seller for rent, additional rent or any other sum
due under its Lease for any period prior to and including the Closing Date,
after receipt by Purchaser of all then currently due amounts by said tenant and
any reasonable actual out-of-pocket collection costs of Purchaser shall be
deemed a "Post-Closing Receipt" until such time as all such indebtedness to
Seller is paid in full. Within ten (10) days following each receipt by
Purchaser of a Post-Closing Receipt (other than with respect to a Maintenance
Expense received from a Tenant which will be adjusted as provided in Paragraphs
12.1 and 12.3), 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 Purchaser
shall not be required to institute legal action on account thereof nor to
engage attorneys or other professionals in such efforts. In any event, all
costs and expenses of Purchaser in enforcing collection of Post-Closing
receipts (including applicable legal fees, collection fees, and the like) shall
be paid by Seller as a condition to Seller's receipt of such Post-Closing
Receipts. If by July 1, 1996, Purchaser has not collected all amounts due
<PAGE>
Seller and shall not have commenced litigation to collect such Post-Closing
Receipts, Seller, after notice to Purchaser, may, at Seller's expense, commence
litigation to collect such unpaid arrearage; provided, however, that Seller
shall have no right to commence any proceeding to evict the tenant or recover
possession of any tenant's space or interfere with the tenant's or Purchaser's
ability (other than financial impact resulting from such litigation) to conduct
business or take any action which would limit Purchaser's rights to pursue any
remedy Purchaser may have for a default under any Lease. Purchaser may, by
written notice to Seller within twenty (20) days of receipt of Seller's notice,
restrict Seller from collecting such unpaid arrearage, but only if Purchaser
first pays Seller such unpaid arrearage, in exchange for Seller's assignment to
Purchaser of all of Seller's rights and causes of action with respect thereto.
Seller shall indemnify and hold harmless Purchaser from any action taken by
Seller in violation of the provisions of this Section. Purchaser shall
cooperate fully with Seller, at no expense to Purchaser, in this regard and
shall execute such instruments, if any, as Seller may require in order for
Seller to commence and prosecute any such litigation.
12.5. Paragraph 12 of this Agreement shall survive the Closing and the
delivery and recording of the Deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, this Agreement may be assigned by Purchaser without the consent of
Seller (a) to any entity affiliated with Purchaser, or the principals of
Purchaser, or to any entity owned (directly and indirectly) by any fund with
respect to which Purchaser acts as asset manager or advisor or (b) to any
mortgage lender of Purchaser or any permitted assignee of Purchaser provided
that Purchaser remains liable for (i) any act or omission by Purchaser
occurring prior to the effective date of such assignment for which Purchaser is
obligated to indemnify Seller pursuant to Paragraph 7 hereof and (ii) in
accordance with the terms of the last sentence of this Paragraph 14. Any
permitted assignee shall assume in writing all of the obligations of Purchaser
under this Agreement from and after the date of the assignment. If any
assignee of Purchaser under this Agreement petitions or applies for relief in
bankruptcy or said assignee is adjudicated as a bankrupt or insolvent, or said
assignee files any petition, application for relief or answer-seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law, code or regulation relating to
bankruptcy, insolvency, or other relief for debtors (collectively, a
"Bankruptcy Filing") on or before the Closing Date, said Bankruptcy Filing
shall be a default under this Agreement and Purchaser shall indemnify Seller
for all costs, attorney's fees and expenses of Seller resulting from Seller's
efforts to obtain the Earnest Money as liquidated damages and to clear title to
the Property from any encumbrance resulting from the Bankruptcy Filing.
<PAGE>
15. BROKER. The parties hereto represent and warrant that they have dealt
with no broker or finder in connection with this transaction other than
Insignia Mortgage & Investment Co. Seller agrees to pay the commission to
Insignia Mortgage & Investment Co. which is only due in the event the
transaction closes. Purchaser shall indemnify, defend and hold Seller harmless
from any claim whatsoever (including, without limitation, reasonable attorney's
fees, court costs and costs of appeal) from anyone claiming by or through
Purchaser any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated other than to Insignia Mortgage &
Investment Co. Seller shall indemnify, defend and hold Purchaser harmless from
any claim whatsoever (including, without limitation, reasonable attorneys'
fees, court costs and costs of appeal) from anyone claiming by or through
Seller any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated, including, without limitation, any
such fee owed to Insignia Mortgage & Investment Co. 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 termination of
this Agreement or 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 James E. Mendelson, senior vice-president of The Balcor Company, or
Tom Molina, the asset manager of the Property since February 1991 and any
successors thereto prior to the Closing Date (the "Seller's Representatives").
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. A copy of Paragraph 16.2 shall
be delivered to the on-site management of the Property within two (2) days
after the execution by Seller of this Agreement, with a request to advise Tom
Molina within five (5) business days after receipt by the on-site manager as to
the accuracy and truthfulness of the representations and warranties. If the
on-site manager indicates that any of the representations or warranties were
incorrect, Seller shall notify Purchaser as to the response of the on-site
manager by ten (10) business days after the execution by Seller. If the
on-site manager responds that any of the representations or warranties were
incorrect then the terms of Paragraph 16.4 herein shall apply. If Seller fails
to so notify Purchaser, Purchaser shall be entitled to conclude that the
on-site manager reviewed the representations and warranties and that they are
correct.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties shall, subject to Paragraph 16.4 herein, be
remade at Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action, violation or administrative proceeding
concerning the Property other than as disclosed in Exhibit P; (ii) Seller has
the power to execute and deliver this Agreement and to consummate the
transactions contemplated herein; (iii) to Seller's knowledge, the rent roll
attached hereto as Exhibit M, which Seller will update as of the Closing Date,
<PAGE>
is true, complete and accurate as of the date set forth thereon and to Seller's
knowledge, the description of the Leases contained in the Prepared Tenant
Certificates in Exhibit R pertaining to the identity of the tenant, the date of
the Lease and the existence of amendments is accurate; (iv) Seller owns the
personal property and intangible personal property set forth on Exhibit B free
and clear of all liens, claims and encumbrances; (v) other than the agreement
evidenced hereby, Seller has not entered into any contracts or options for the
sale of the Property; (vi) Seller has not entered into any agreements to
mortgage the Property; (vii) to Seller's knowledge, the service contracts set
forth on Exhibit H represent all of the written service contracts entered into
with respect to the Property including all management agreements and to
Seller's knowledge, no party is in material default under any of the items set
forth in Exhibit H; (viii) to Seller's knowledge, there are no environmental
reports in Seller's possession or that of any of its affiliates which are dated
more recently than the Existing Report provided to Purchaser; (ix) to Seller's
knowledge, the evidence of expenses at the Property furnished by Seller to
Purchaser are accurate in all material respects; (x) to Seller's knowledge,
Seller has not received any written governmental or fire underwriting reports
requesting repair to the Property and Seller has not been denied fire insurance
coverage with respect to the Property; (xi) to Seller's knowledge, Seller has
not received any written notification from any governmental authority regarding
pending or threatened condemnation of all of or a portion of the Property;
(xii) to Seller's knowledge, Seller has not entered into any labor agreements
respecting the Property which are not cancelable as of the Closing Date without
cost to Purchaser; (xiii) except as set forth on the schedule attached hereto
as Exhibit N and except as to new leases as set forth in Paragraph 25 herein,
there are no outstanding leasing commissions and there is no outstanding tenant
improvement work or work credit due under any Leases; (xiv) to Seller's
knowledge, a true, correct and complete list of all licenses and permits which
Seller has regarding operation of the Property is attached hereto as Exhibit O;
(xv) except as may have been set forth in the Existing Report, to Seller's
knowledge, Seller has not received any notice from any governmental authority
having jurisdiction over the Property of any uncured violation of any
Environmental Laws with respect to the Property; (xvi) neither Seller, or any
of its general partners nor the Property is in the hands of a receiver nor is
an application for a receiver pending; neither Seller nor any of its general
partners is insolvent or has made an assignment for the benefit of its
creditors, nor has Seller or any of its general partners filed, or had filed
against it, any petition in bankruptcy; (xvii) Seller is a "non-foreign person"
within the meaning of section 1445 of the United States Internal Revenue Code
of 1986, as amended, and the regulations issued thereunder; (xviii) Seller
maintains full replacement casualty insurance on the Property; (xix) except as
disclosed in Paragraph 12, Seller has not received any written notice addressed
to it from any governmental authority that there are tax abatements or
exemptions affecting the Property, nor has Seller instituted any such pending
proceedings; between the date hereof and the Closing, Seller will advise
Purchaser of any proposed real estate tax assessments and the amounts of such
assessments, and Seller and Purchaser will cooperate jointly in instituting
such proceedings on or before Closing other than for calendar year 1996 which
is addressed in Paragraph 12 hereof; (xx) there are no occupancy rights
(written or oral), leases or tenancies presently affecting the Property other
than the Leases; (xxi) to Seller's knowledge, except for any brokerage
<PAGE>
commissions, fees or other compensation due with respect to any of the New
Leases or as disclosed on Exhibit N or any extension of the term of any of the
Leases or New Leases or expansion of space under any of the Leases or New
Leases which shall occur on or after the Closing Date disclosed in Exhibit Q
("Extension Commissions"), no brokerage commission, fee or other compensation
is payable (or will, with the passage of time or occurrence of any event or
both, be payable), with respect to any Lease pursuant to any existing agreement
which would be binding on the landlord under such Lease after the Closing Date;
(xxii) no management commission, fee or other compensation will be payable by
Purchaser from and after the Closing Date with respect to the management of the
Property prior to the Closing Date; (xxiii) to Seller's knowledge, Seller has
received no notice from any of the Tenants at the Property of any uncured
default on the part of Landlord under the Leases except with respect to any
obligation set forth in Exhibit N; (xxiv) to Seller's knowledge, no appraisal
or other process provided for in the Lease has been instituted in writing by
Seller or any Tenant to establish the rental rate payable with respect to any
pending extension or with respect to any negotiation or appraisal of rent under
any Lease; and (xxv) to Seller's knowledge, no tenant at the Property is in
default, after the expiration of all notice and cure periods, under its Lease.
At Closing, Seller shall deliver to Purchaser a certificate of the Seller
which will confirm that the warranties and representations are in all material
respects true and correct as of the date of the Closing (to Seller's knowledge,
where so specified above), subject to Paragraph 16.4 and changes for matters
beyond Seller's control and otherwise as expressly permitted or contemplated by
this Agreement.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
16.4. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information (a "Change") 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 or did not fail to act (in the ordinary
course of business) to cause the representation or warranty in question to
become untrue in any material respect and did not intentionally make a material
false representation or warranty, said party shall not be in default under this
Agreement and the sole remedy of the other party shall be to terminate this
Agreement, in which case Purchaser will receive a refund of the Earnest Money
with any accrued interest thereon and neither party will have any further
liability under this agreement except to the extent it specifically survives
the termination hereof. Purchaser, provided that it notifies Seller within ten
(10) days after receiving notice from Seller of a Change, may elect to close
subject to such Change and then both parties hereto will be deemed to have
waived their right to terminate this Agreement with respect to such Change.
Notwithstanding anything contained herein to the contrary, if the status of any
of the tenancies changes from the date of the rent roll attached hereto and the
date of the rent roll delivered at Closing, provided the change in status is
not caused by a breach of Seller's covenants contained in Paragraph 16.6 or
<PAGE>
Paragraph 25 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. For the purpose of this
Section 16.4, Purchaser's knowledge will be limited solely to the knowledge of
any of its executive officers after review of all due diligence materials
prepared by or for Purchaser in connection with the acquisition of the Property
and will not be deemed to include any of its agents, employees or contractors.
16.5. The parties agree that the representations and warranties
contained herein shall survive Closing for a period of nine (9) months (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 nine
(9) months immediately following Closing).
16.6. On the Closing Date, Seller shall tender possession of the
Property to Purchaser in the same condition the Property was in on the date of
this Agreement, subject to reasonable use, wear and tear and, subject to
Paragraph 6 hereof, but Seller shall not be required to incur any capital
expenses from or after the date hereof unless failure to do so would constitute
a material breach under any of the Leases. Subject to the provisions of
Paragraph 25 hereof, Seller agrees that between the date hereof and the Closing
Date it shall continue to operate the Property in substantially the same manner
it has operated the Property prior to the date hereof, subject to reasonable
wear and tear and casualty.
16.7. Seller covenants and agrees that from and after the date of this
Agreement until the Closing Date or earlier termination of this Agreement:
16.7.1. Seller will not, without the prior written consent of
Purchaser, enter into any new employment, management, service, maintenance or
union agreements relating to the Property or renew or extend any contracts,
unless such new agreements and such contracts, as renewed or extended, will be
cancelable by Purchaser on not more than thirty (30) days prior notice without
any costs for such cancellation.
16.7.2. Seller shall continue to insure the Property against loss of
casualty with full replacement cost coverage.
16.7.3. Seller will not sell or grant any interest in the Property
or any part thereof other than pursuant to Paragraph 25 herein.
16.7.4. Seller will not initiate any action to alter or amend the
zoning classification of the Property.
16.7.5. Seller shall not solicit or encourage directly or indirectly
(including solicitation or encouragement by any broker retained by Seller),
inquiries or proposals with respect to, furnish any information relating to, or
participate in any negotiation concerning any proposal for the sale of the
Property.
<PAGE>
Seller shall terminate as of the Closing Date the engagement of Seller's
managing and leasing agent for the Property.
From and after the Closing Date, Seller hereby agrees to indemnify and
defend (using attorneys selected by Seller and reasonably acceptable to
Purchaser) Purchaser from any liability arising from the litigation disclosed
on Exhibit P with the result that Purchaser will not be liable with respect to
such claims for any actual loss, costs or damages in connection therewith,
including litigation costs and expenses.
Seller shall comply with any written notices to Seller received by Seller
prior to Closing of violations of law or municipal ordinances, orders or
requirements issued by any governmental authority against or affecting the
Property (the "Violations"). If Seller has knowledge prior to the Closing of
an assertion by any governmental authority of any Violations, Seller shall
comply with any such assertion prior to Closing. If any Violations remain
uncured on the Closing Date, Purchaser shall receive a credit against the
Purchase Price equal to the estimated cost of curing the same, as estimated by
an architect or engineer selected by Purchaser and reasonably satisfactory to
Seller. Notwithstanding the foregoing, in the event the cost to cure the
Violation exceeds One Hundred Fifty Thousand Dollars ($150,000.00), then
Purchaser at its election, may as its sole remedy in respect thereof either
(A) terminate this Agreement, in which event the parties shall direct the
Escrow Agent to return the Earnest Money Deposit with any interest accrued
thereon to Purchaser and neither party hereto will have any further obligations
except for those which specifically survive the termination hereof or (B)
accept the Property subject to the Violation and receive a credit equal to
$150,000.
17. LIMITATION OF LIABILITY. Neither Seller's or Purchaser's partners, nor
any Affiliate of Seller or any affiliate of Purchaser, 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 and Seller each waive for
itself and anyone who may claim by, through or under them any and all rights to
sue or recover on account of any such alleged personal liability.
17.1. Notwithstanding anything contained herein to the contrary but
subject to the penultimate sentence of this Section 17.1, Purchaser hereby
agrees that the maximum liability of Seller after the Closing, 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, shall be $1,750,000; provided, however, in no event shall Seller's
liability in connection with, arising out of or in any way related to a breach
by Seller of a "Non-Tenant Representation or Covenant" exceed $750,000. For
purposes herein, a "Tenant Representation" shall mean Seller's representation
and warranty contained in Paragraphs 16.2(iii), (xiii), (xx), (xxi), (xxiii),
(xxiv) and (xxv) herein and Seller's representations and warranties contained
in any "Seller Tenant Certificate" (hereinafter defined). All other
representations, warranties, indemnities or covenants which may give rise to
liability to Seller after Closing contained in this Agreement, or any document
<PAGE>
or conveyance agreement in connection with the transaction, other than a Tenant
Representation, shall be referred to as a "Non-Tenant Representation or
Covenant." For illustrative purposes only, (a) if Purchaser establishes
liability on the part of Seller for $100,000 arising out of a breach of a
Tenant Representation and $1,000,000 arising out of a breach of a breach of
Non-Tenant Representation or Covenant, then Seller's liability would be
$850,000 and (b) if Purchaser establishes liability on the part of Seller for
$1,500,000 arising out of a breach of a Tenant Representation and $100,000
arising out of a breach of a Non-Tenant Representation or Covenant, then
Seller's liability would be $1,600,000. Notwithstanding the foregoing
limitations of this Section 17.1. there will be no limit on the liability of
Seller with respect to its obligations to indemnify and/or reimburse Purchaser
(a) with respect to the provisions of Paragraphs 12 and 15 and the penultimate
paragraph of Paragraph 16 hereof and (b) any breach of Seller with respect to
the representations, covenants and warranties contained in the following
sentence. Seller represents and warrants to Purchaser and covenants and
agrees, that Seller is (without regard to its partners or subpartners) a single
purpose entity and has no other assets and liabilities other than those
associated with the Property and that Seller agrees that it will engage in no
other business from and after the Closing Date during the longer of nine (9)
months and the period that any claim is outstanding against Seller under this
Agreement.
17.2. Seller further agrees not to distribute $1,750,000 of the
proceeds of the Purchase Price to its partners for the longer of (i) nine (9)
months after the Closing and (ii) final resolution of any claims by Purchaser
and asserted in writing against Seller prior to the expiration of the nine (9)
months 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.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission 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
<PAGE>
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4367
(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: Devon Properties, Inc.
7 West 34th Street
New York, New York 10001
Attention: Mr. Robert H. Rodgers, Jr.
(212) 971-9270
(212) 971-9283 (FAX)
and one copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas, 22nd Floor
New York, New York 10019
Attention: Joseph Browdy, Esq.
(212) 373-3039
(212) 373-2042 (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. Any such notice, demand or document not
given, delivered or made by overnight courier or by facsimile transmission as
aforesaid shall be deemed to be given, delivered or made upon receipt of the
same by the party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
<PAGE>
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Georgia.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
25. NEW LEASES. Seller agrees to deliver to Purchaser five (5) days prior to
the expiration of the Inspection Period any new leases executed by Seller.
After the expiration of the Inspection Period, Seller shall not execute any new
lease affecting the Property or modify, amend or accept the surrender
(collectively or individually a "Modification Agreement") of any of the Leases
without Purchaser's prior written consent. Upon requesting Purchaser's
consent, Seller shall deliver a complete copy of said proposed lease to
Purchaser with a copy of any brokerage commission agreement and statement as to
the cost of any tenant improvement work, contributions, and brokerage
commissions due or to become due in connection therewith (the "Disclosure
Documents"). Purchaser's consent shall be deemed given if Purchaser has not
responded to the contrary within five (5) business days after receipt of
Seller's written request and the complete copy of said lease or Modification
Agreement and other material. If approved by Purchaser, a complete copy of any
such lease or Modification Agreement shall be delivered to Purchaser within
five (5) days of the full execution thereof. With respect to all new leases or
Modification Agreement executed and delivered to Purchaser five (5) days prior
to the expiration of the Inspection Period and with respect to all other new
leases or Modification Agreement, provided Purchaser has approved the new lease
to the extent said approval is required, leasing costs and commissions, tenant
improvements and contributions, and reasonable attorneys' fees, shall be paid
by Purchaser or credited to Seller at Closing if already paid by Seller
provided such costs and expenses were specifically disclosed to Purchaser in
the Disclosure Documents.
26. TENANT CERTIFICATE CONDITION TO CLOSING.
26.1. The following terms have been defined as follows for convenience
of reference:
(i) "Tenant Certificate" means a certificate, commonly known as an
estoppel certificate, signed by a tenant with respect to its Lease, either in
the form set forth on Exhibit L hereto or on such other form as is
substantially consistent with the requirements of the tenant's lease for such
certificates but in no event dated earlier than 45 days prior to the Closing
Date.
<PAGE>
(ii) "Seller Tenant Certificate" means a Tenant Certificate signed by
the Seller with respect to a particular Lease for which the Tenant in question
has either (i) failed to execute and deliver a Tenant Certificate, in which
case the Seller Tenant Certificate shall be in the form of Exhibit L, or (ii)
executed and delivered a Tenant Certificate in a form other than Exhibit L, or
a Tenant Certificate containing less information than required by Exhibit L, in
which case the Seller Tenant Certificate shall be limited to those matters in
Exhibit L which are not addressed in the Tenant Certificate in question.
(iii) "Qualification" means any assertion in a Tenant Certificate
or Seller Tenant Certificate (whether in the form of Exhibit L or otherwise) of
(i) a claim, counterclaim, offset or defense against the landlord, (ii) a
default on the part of the landlord, (iii) unpaid credits, allowances or other
sums due from the landlord prior to the date of the estoppel (other than
expressly disclosed on Exhibit M or Exhibit N attached hereto or pursuant to a
new lease pursuant to Paragraph 25 herein), (iv) an unfulfilled construction or
other obligation on the part of the landlord prior to the date of estoppel
(other than expressly disclosed on Exhibit M or Exhibit N attached hereto or
pursuant to a new lease pursuant to Paragraph 25 herein), or (v) information
which is contrary (x) to the information contained in the rent roll attached
hereto as Exhibit M, or the Prepared Tenant Certificates attached hereto as
Exhibit R (the "Prepared Tenant Certificates") or (y) the information
pertaining to tenant allowances and concessions and leasing commissions
contained on Exhibit N;
(iv) "Unacceptable Qualification" means any Qualification other than
the following:
(a) a Qualification which is expressly disclosed on the
Prepared Tenant Certificates, on the rent roll attached hereto as Exhibit M or
the schedule attached hereto as Exhibit N or a Qualification relating to
non-payment of December, 1996 rent, provided the same is not as a result of a
default by Seller; or
(b) a Qualification expressly disclosed in this Agreement or
the Exhibits attached hereto and made a part hereof, such as litigation
disclosed on Exhibit P.
26.2. If a Qualification is not an Unacceptable Qualification, it
shall not affect Purchaser's obligations to close hereunder or give rise to any
liability from Seller to Purchaser.
26.3. Seller shall promptly request a Tenant Certificate in the form
of Exhibit L from all tenants, and shall in good faith pursue the collection of
the same. Seller shall deliver to Purchaser, upon Seller's receipt thereof,
all Tenant Certificates signed by tenants (whether in the form of Exhibit L or
otherwise).
26.4. It shall be a condition to Purchaser's obligations hereunder
(the "Estoppel Condition") that Seller deliver to Purchaser, at or prior to
5:00 p.m. Chicago time on December 16, 1996 (i) a Tenant Certificate from each
tenant of the Property occupying or leasing at least 10,000 square feet as
shown on the Rent Roll, in the aggregate, of leasable area of the Property
<PAGE>
("Major Tenant"), and (ii) either a Tenant Certificate or Seller Tenant
Certificate for 100% of the non-Major Tenants at the Property. Notwithstanding
the foregoing to the contrary, Seller shall not have satisfied the Estoppel
Condition if any of the Tenant Certificates received by Seller or Seller Tenant
Certificates disclose Unacceptable Qualifications other than Unacceptable
Qualifications with an "Estoppel Qualification Sum" (hereinafter defined) of
less than $200,000 in the aggregate for all of the Leases. The "Estoppel
Qualification Sum" shall mean the following:
(i) if the claim asserted arises out of a defect which can be cured,
with the expenditure of money on a one time basis, such as a physical defect,
then such sum shall be calculated by a reasonable estimate of the cost to
repair or remediate said defect; and
(ii) if the claim asserted affects a continuing obligation of a
tenant under the lease, such as the payment of rent, then the claim shall be
calculated by (i) determining the amount of the claim on a per annum basis,
(ii) multiplying said amount by the number of years or partial years said claim
would affect the monetary obligations under the lease and (iii) discounting
said product on a present value basis using a discount rate of 8% per annum.
If the Unacceptable Qualifications have an Estoppel Qualification Sum of
less than $200,000 in the aggregate for all of the Leases, then Seller shall
either (i) grant Purchaser a credit at Closing for an amount equal to the
Estoppel Qualification Sum, or (ii) cure all conditions giving rise to an
Unacceptable Qualification on or before the Closing. The determination to
perform the covenant contained in subparagraphs (i) or (ii) in the preceding
sentence shall be made by Seller in its sole discretion. Provided Seller
performs its covenant in this Paragraph 26.4, the disclosure of Unacceptable
Qualifications having an Estoppel Qualification Sum of less than $200,000 in
the aggregate shall not affect Purchaser's obligations to close hereunder or
give rise to any additional liability from Seller to Purchaser.
26.5. If Seller delivers any Tenant Certificates containing no
Unacceptable Qualifications after Closing to Purchaser containing all of the
information herein required from a tenant under a Lease for whom Seller has
executed and delivered a Seller Tenant Certificate at Closing, the Seller
Tenant Certificate executed and delivered by Seller at Closing shall become
null and void and the Tenant Certificate received from the tenant shall be
substituted therefor. Seller's liability under Seller Tenant Certificates
shall be limited pursuant to Paragraph 17 herein.
26.6. If Seller has not satisfied the Estoppel Condition on or before
5:00 p.m. Chicago time on December 16, 1996, then Purchaser shall have the
right to terminate this Agreement by delivering written notice to Seller on or
before 5:00 p.m. Chicago time on December 18, 1996. If Purchaser exercises its
rights to terminate in accordance with the terms of this Paragraph 26.6, this
Agreement shall be null and void without further action of the parties and all
Earnest Money theretofore deposited 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 those obligations which
specifically survive the terms hereof. If Purchaser does not terminate this
Agreement pursuant to the first sentence of this Paragraph 26.6, the parties
<PAGE>
shall proceed to Closing and (i) Purchaser shall receive a credit at Closing
equal to the amount of the Estoppel Qualification Sum of the Unacceptable
Qualifications contained in the Tenant Certificates, up to an aggregate amount
of $200,000 or (ii) Seller shall cure all conditions giving rise to an
Unacceptable Qualification Sum up to an aggregate amount of $200,000. The
determination to perform the covenant contained in subparagraphs (i) or (ii) in
the preceding sentence shall be made by Seller in its sole discretion.
27. CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE. The obligation of
Purchaser to close under this Agreement and to pay the balance of the Purchase
Price hereunder shall be subject to the fulfillment on and as of the Closing
Date of all of the following conditions (in addition to any other conditions to
Purchaser's obligation under this Agreement which are set forth elsewhere
herein):
27.1. Seller shall have delivered to Purchaser all of the items
required to be delivered to Purchaser pursuant to the terms of this Agreement.
27.2. Seller shall have performed and observed, in all material
respects, all covenants, agreements and conditions of this Agreement to be
performed and observed by Seller as of the Closing Date. Purchaser shall have
the right, at its election, at or prior to the Closing by notice to Seller, to
waive any condition set forth in this Agreement to its obligation hereunder and
by effecting the Closing, Purchaser shall be deemed to have waived any such
condition not then fulfilled.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
DEVON PROPERTIES, INC., a New York Corporation
By: /s/ Robert H. Rodgers, Jr.
---------------------------------
Name: Robert H. Rodgers, Jr.
---------------------------------
Its: EVP
---------------------------------
[AFFIX CORPORATE SEAL HERE]
SELLER:
PERIMETER 400, PARTNERS, an Illinois
general partnership
By: Labcor VI Limited Partnership,
an Illinois limited partnership,
a general partner
By: Balcor Mortgage Advisors-VI,
an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, its general partner
By: /s/ James E. Mendelson, Jr.
-----------------------------
Name: James E. Mendelson, Jr.
-----------------------------
Its: Authorized Representative
-----------------------------
[AFFIX CORPORATE SEAL HERE]
<PAGE>
Perimeter 400 Center, Atlanta, Georgia
_________________ of Insignia Mortgage & Investment Company ("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 ______________________, 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.
_____________________________
By:
-----------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Tenant Certificate
M - Rent Roll
N - Outstanding Leasing Commissions and Tenant Improvement Work
O - Permits and Licenses
P - Disclosed Litigation
Q - Extension Commission
R - Prepared Tenant Certificates
S - Endorsements
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 12th
day of December, 1996, by and between ARCHON GROUP, L.P., a Delaware limited
partnership ("Purchaser"), and WESTECH 360 LIMITED PARTNERSHIP, an Illinois
limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Subject to the terms and conditions set forth in this
Agreement, Purchaser agrees to purchase and Seller agrees to sell at the price
of Eighteen Million Three Hundred Thirty Thousand And No/100 Dollars
($18,330,000.00) (the "Purchase Price"), that certain land and building
commonly known as Westech 360, Austin, Texas, 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 Four Hundred
Thousand and No/100 Dollars ($400,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Near North National Title
Corporation as agent for First American Title Insurance Company of Texas
(hereinafter referred to as "Title Insurer") dated November 6, 1996 for the
Property (the "Title Commitment"). Seller 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 Bush
Surveying, Inc., dated October 17, 1996 (the "Existing Survey").
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1, Seller shall
pay for the costs of the documentary or transfer stamps to be paid with
reference to the "Deed" (hereinafter defined) and all other stamps, intangible,
transfer, documentary, recording, sales tax and surtax imposed by law with
reference to any other sale documents delivered in connection with the sale of
the Property to Purchaser and all other charges of the Title Insurer in
connection with this transaction.
<PAGE>
5. CONDITION OF TITLE.
5.1. Purchaser shall review the Title Commitment and Existing Survey
during the period between the date of the execution of this Agreement and
December 8, 1996 (the "Title Inspection Period"). Prior to the expiration of
the Title Inspection Period, Purchaser shall provide Seller with a marked-up
copy of the Title Commitment and Existing Survey enumerating its objections to
the Title Commitment and Existing Survey (the "Title and Survey Objections")
and listing those exceptions to title which are acceptable to Purchaser (which
shall include general real estate taxes, association assessments, special
district taxes and related charges not yet due and payable). Seller shall
review the Title and Survey Objections, and respond to Purchaser in writing
prior to the expiration of the Inspection Period (as defined below). If
Purchaser and Seller resolve all Title and Survey Objections, a marked copy of
the Title Commitment and Existing Survey indicating such agreement shall be
initialed by both Purchaser and Seller (hereinafter known as the "Final Title
Commitment" and the "Final Existing Survey") and shall serve as an amendment to
this Agreement. (The exceptions to title set forth on the Final Title
Commitment are hereinafter known as "Permitted Exceptions". All other
exceptions to title shall be referred to as "Unpermitted Exceptions".) If
Purchaser and Seller do not resolve all Title and Survey Objections prior to
the expiration of the Inspection Period, either Purchaser or Seller shall have
the right to terminate this Agreement by delivery of written notice to the
other on or before 5:00 p.m. Chicago time or December 10, 1996, in which event
this Agreement shall terminate, Purchaser shall receive the Earnest Money
together with all interest earned thereon and neither party shall have any
liability hereunder except as set forth herein.
5.2. If, prior to "Closing" (as hereinafter defined) but after the end of
the Inspection Period, a date-down to the Title Commitment discloses any new
Unpermitted Exception, Seller shall have thirty (30) days from the date of the
date-down to the Title Commitment, at Seller's expense, to (i) 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 cure and/or have any
Unpermitted Exceptions which, in the aggregate, equal or exceed $25,000.00,
removed from the Title Commitment or to have the Title Insurer commit to insure
against loss or damage that may be occasioned by such Unpermitted Exceptions
with Purchaser's approval which Purchaser may withhold in its sole discretion.
In such event, the time of Closing shall be delayed, if necessary, to give
effect to said aforementioned time periods. If Seller fails to cure or have
said Unpermitted Exception removed or have the Title Insurer commit to insure
as specified above within said thirty (30) day period or if Seller elects not
to exercise its rights under (ii) in the preceding sentence, Purchaser may
terminate this Agreement upon notice to Seller within five (5) days after the
expiration of said thirty (30) day period. Absent notice from Purchaser to
Seller in accordance with the preceding sentence, Purchaser shall be deemed to
have elected to take title subject to said Unpermitted Exception. If Purchaser
terminates this Agreement in accordance with the terms of this Paragraph 5.2,
this Agreement shall become null and void without further action of the parties
<PAGE>
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.
5.3. Seller agrees to convey fee simple title to the Property to
Purchaser 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 date 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 and which would
not have a material and adverse impact upon the use of the Property as it is
currently being operated (as reasonably determined by Seller in good faith),
Purchaser shall not have the right to terminate its obligations under this
Agreement by reason thereof, but Seller shall have the right to elect to either
repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty and pay to Purchaser any uninsured amount. 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 reasonably determined
by Seller in good faith) or which would have a material and adverse impact upon
the use of the Property as it is currently being operated, 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. 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:
<PAGE>
(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 or value of the Property as it is currently being operated
(hereinafter collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on December 10, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser, to the extent in Seller's
possession, copies of the current rent roll for the Property, the most recent
tax and insurance bills, utility account numbers, service contracts, structural
reports, environmental reports 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 documents set forth in this Paragraph 7.1 being known as the "Seller
Documents").
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
<PAGE>
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, for any reason whatsoever or for no reason, Purchaser is dissatisfied
with the results of the tests, studies or investigations performed or
information received pursuant to this Paragraph 7.1, Purchaser shall have the
right to terminate this Agreement by giving written notice of such termination
to Seller at any time prior to the expiration of the Inspection Period. If
written notice is not received by Seller pursuant to this Paragraph 7.1 prior
to the expiration of the Inspection Period, then the right of Purchaser to
terminate this Agreement pursuant to this Paragraph 7.1 shall be waived. If
Purchaser terminates this Agreement by written notice to Seller prior to the
expiration of the Inspection Period: (i) Purchaser shall promptly deliver to
Seller copies of all studies, reports and other investigations obtained by
Purchaser in connection with its due diligence during the Inspection Period;
and (ii) the Earnest Money deposited by Purchaser shall be immediately paid to
Purchaser, together with any interest earned thereon, and neither Purchaser nor
Seller shall have any right, obligation or liability under this Agreement,
except for Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in this Paragraph 7.1. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.1, shall
survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.2. Seller acquired title to the Property by foreclosure (or
deed-in-lieu thereof) and, therefore, Seller makes no representations or
warranties relating to the condition of the Property or the Personal Property,
except as expressly set forth in this Agreement. Purchaser acknowledges and
agrees that, except as expressly set forth in this Agreement, 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,
<PAGE>
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
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.
The terms and provisions of this Paragraph 7.2 are subject to Seller's
representations and warranties set forth in Paragraph 18.2 hereof.
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
<PAGE>
request solely as illustrative material. Except as expressly set forth herein,
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: Phase
I Environmental Assessment prepared by Law Engineering, dated May 25, 1993
("Existing Report"). Seller makes no representation or warranty concerning
the accuracy or completeness of the Existing Report, except as expressly set
forth herein. 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 Deed and termination of this Agreement.
8. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The obligations of
the Purchaser to purchase the Property from the Seller and to perform the other
covenants and obligations to be performed by it on the Closing Date shall be
subject to the following conditions (all or any of which may be waived, in
whole or in part, by the Purchaser):
8.1. Representations and Warranties True. The representations and
warranties made by the Seller in Paragraph 18.2 shall be true and correct on
the date of this Agreement and shall be true and correct on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of such date.
8.2. Title to Real Property. On the Closing Date, the Title Insurer shall
be prepared, subject to the payment by the Seller of the applicable premium, to
issue to the Purchaser, or its designee, at standard rates, an ALTA Form B
owner's title insurance policy or its equivalent covering the Property, in an
amount equal to the Purchaser Price, insuring title to the Property strictly in
the form set forth in the Final Title Commitment, subject only to Permitted
Exceptions, Unpermitted Exceptions waived in writing by Purchaser, and such
other matters caused by the actions of Purchaser.
8.3. Covenants and Agreements. On or before the Closing Date, the Seller
will have performed all covenants and agreements required to be performed by it
pursuant to the terms of this Agreement.
<PAGE>
8.4. No Litigation. On or before the Closing Date, Seller shall not have
received notice of any pending action or proceeding adversely affecting
Seller's ability to perform the transaction contemplated by this Agreement or
the Property for which Seller has not assumed all liability therefor.
8.5. Tenant Certificate Condition to Closing.
8.5.1. The following terms have been defined as follows for
convenience of reference:
8.5.1.1. "Tenant Certificate" means a certificate, commonly
known as an estoppel certificate, signed by a tenant with respect to its Lease,
either in the form set forth on Exhibit L hereto or on such other form as is
substantially consistent with the requirements of the tenant's lease for such
certificates.
8.5.1.2. "Seller Tenant Certificate" means a Tenant Certificate
signed by the Seller with respect to a particular Lease for which the Tenant in
question has failed to execute and deliver a Tenant Certificate, in which case
the Seller Tenant Certificate shall be in the form of Exhibit L, provided that
a Seller Tenant Certificate shall in all cases be limited to Seller's knowledge
as defined in paragraph 18.1 above.
8.5.1.3. "Qualification" means any assertion in a Tenant
Certificate or Seller Tenant Certificate (whether in the form of Exhibit L or
otherwise) of (i) a claim, counterclaim, offset or defense against the
landlord, (ii) a default on the part of the landlord, (iii) unpaid credits,
allowances or other sums due from the landlord prior to the date of the
estoppel (other than disclosed on EXHIBIT M, EXHIBIT N or Exhibit O attached
hereto or pursuant to a new lease pursuant to Paragraphs 17.1.4 and 17.2.5
herein), (iv) an unfulfilled construction or other obligation on the part of
the landlord prior to the date of estoppel (other than disclosed on EXHIBIT M,
EXHIBIT N or Exhibit O attached hereto or pursuant to a new lease pursuant to
Paragraphs 17.1.4 and 17.2.5 herein), or (v) information which is contrary (in
an adverse respect to the landlord) (x) to the information contained in the
rent roll attached hereto as Exhibit M, or (y) to the information pertaining to
tenant allowances and concessions and leasing commissions contained on Exhibit
N;
8.5.1.4. "Unacceptable Qualification" means any Qualification
other than the following:
(a) a Qualification which is expressly disclosed on the rent roll
attached hereto as Exhibit M or the schedules attached hereto as Exhibit N or
Exhibit O or a Qualification relating to non-payment of November, 1996 or
December, 1996 rent, provided the same is not as a result of a default by
Seller; or
(b) a Qualification expressly disclosed on the other Exhibits attached
hereto and made a part hereof.
8.5.2. If a Qualification is not an Unacceptable Qualification, it
shall not affect Purchaser's obligations to close hereunder or give rise to any
liability from Seller to Purchaser.
<PAGE>
8.5.3. Seller shall promptly request a Tenant Certificate in the
form of Exhibit L from all tenants, and shall in good faith pursue the
collection of the same. Seller shall deliver to Purchaser, upon Seller's
receipt thereof, all Tenant Certificates signed by tenants (whether in the form
of Exhibit L or otherwise).
8.5.4. It shall be a condition to Purchaser's obligations
hereunder (the "Estoppel Condition") that Seller deliver to Purchaser, on or
prior to the Closing Date, (i) a Tenant Certificate from UniSQL, Apollo Travel,
Liant Software and Cadence ("Major Tenant"), and such other tenants as to make
the square footage leased by all tenants subject to Tenant Certificates equal
to 50% of net rentable area of the Property (the parties hereto agree that the
net rentable area of the Property is 177,461 sq. ft.), and (ii) either a Tenant
Certificate or Seller Tenant Certificate from such other tenants so that
Purchaser receives Tenant Certificates or Seller Tenant Certificates, when
added to those Tenant Certificates required by 8.5.4(i), for tenants occupying
75% of the gross rentable area of the Property. Notwithstanding the foregoing
to the contrary, Seller shall not have satisfied the Estoppel Condition if any
of the Tenant Certificates received by Seller or Seller Tenant Certificates
disclose Unacceptable Qualifications other than Unacceptable Qualifications
with an "Estoppel Qualification Sum" (hereinafter defined) of less than
$100,000 in the aggregate. The "Estoppel Qualification Sum" shall mean the
following:
(i) if the claim asserted arises out of a defect which can be cured,
with the expenditure of money on a one time basis, such as a physical defect,
then such sum shall be calculated by a reasonable estimate of the cost to
repair or remediate said defect subject to the reasonable approval of
Purchaser; and
(ii) if the claim asserted affects a continuing obligation of a
tenant under the lease, such as the payment of rent, then the claim shall be
calculated by (i) determining the amount of the claim on a per annum basis,
(ii) multiplying said amount by the number of years or partial years said claim
would affect the monetary obligations under the lease and (iii) discounting
said product on a present value basis using a discount rate of 10% per annum.
If the Unacceptable Qualifications have an Estoppel Qualification Sum of
less than $100,000 in the aggregate, then Seller shall either (i) grant
Purchaser a credit at Closing for an amount equal to the Estoppel Qualification
Sum, or (ii) cure all conditions giving rise to an Unacceptable Qualification
and obtain written confirmation from the applicable tenant that such condition
has been cured on or before the Closing. The determination to perform the
covenant contained in subparagraphs (i) or (ii) in the preceding sentence shall
be made by Seller in its sole discretion. Provided Seller performs its
covenant in this Paragraph 8.5.4, the disclosure of Unacceptable Qualifications
having an Estoppel Qualification Sum of less than $100,000 in the aggregate
shall not affect Purchaser's obligations to close hereunder or give rise to any
additional liability from Seller to Purchaser.
8.5.5. If Seller delivers any Seller Tenant Certificates, then
upon receipt after Closing by Purchaser of a Tenant Certificate containing the
information herein required from a tenant under a Lease for whom Seller has
<PAGE>
executed and delivered a Seller Tenant Certificate at Closing, the Seller
Tenant Certificate executed and delivered by Seller at Closing shall become
null and void and the Tenant Certificate received from the tenant shall be
substituted therefor. Seller's liability under Seller Tenant Certificates
shall be limited pursuant to Paragraph 19 herein.
8.5.6. If Seller has not satisfied the Estoppel Condition on or
before 5:00p.m. Chicago time on December 15, 1996, then Purchaser shall have
the right to terminate this Agreement by delivering written notice to Seller on
or before such date. If Purchaser exercises its rights to terminate in
accordance with the terms of this Paragraph 8.5.6, this Agreement shall be null
and void without further action of the parties and all Earnest Money
theretofore deposited 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 hereof. If
Purchaser does not terminate this Agreement pursuant to the first sentence of
this Paragraph 8.5.6, the parties shall proceed to Closing and (i) Purchaser
shall receive a credit at Closing equal to the amount of the Estoppel
Qualification Sum of the Unacceptable Qualifications contained in the Tenant
Certificates or Seller Tenant Certificates, up to an aggregate amount of
$100,000 or (ii) Seller shall cure all conditions giving rise to an
Unacceptable Qualification Sum up to an aggregate amount of $100,000 and obtain
written confirmation from the applicable tenant that such condition has been
cured. The determination to perform the covenant contained in subparagraphs
(i) or (ii) in the preceding sentence shall be made by Seller in its sole
discretion.
8.6 Except as specifically set forth in Paragraph 8.5, if any one or more
of the conditions set forth in Paragraph 8 above are not satisfied as of the
date specified for Closing hereunder, then Purchaser shall have the option, in
its sole discretion, exercised by written notice to Seller, to: (i) waive such
condition and complete the Closing under this Agreement in accordance with the
terms and conditions hereof, without any reduction or adjustment in the
Purchase Price as a result of such waived condition; or (ii) terminate this
Agreement and obtain a refund of its Earnest Money and all interest earned
thereon, whereupon Seller and Purchaser shall be thereupon released from all
further liability or obligation under this Agreement except with respect to the
provisions hereof which are expressly intended to survive the termination of
this Agreement for any reason.
9. CLOSING. The closing of this transaction (the "Closing") shall be on
December 19, 1996 (the "Closing Date"), at the offices of Seller's counsel,
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 Texas, or at the
option of either party, the Closing shall be a "New York style" closing at
which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. All closing and escrow fees shall be divided equally between
the parties hereto.
<PAGE>
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, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
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. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
10.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
10.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
10.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
10.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
10.2.8. possession of the Property to Purchaser, subject to the
terms of leases;
10.2.9. evidence of the termination of the management agreement;
10.2.10. 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);
10.2.11. an updated rent roll certified by the Seller to be true and
correct as of the Closing Date setting forth (i) all past due and uncollected
rent and additional charges, (ii) all prepayments of rent and additional
charges, and (iii) all security deposits (including interest thereon, if any)
held by Seller under all Leases;
10.2.12. all certificates of occupancy in Seller's possession; and
10.2.13. a complete set of the architectural, mechanical, electrical
and structural plans and specifications for the Property in Seller's
possession.
<PAGE>
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 AFTER THE EXPIRATION OF THE INSPECTION PERIOD,
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, 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 CLOSING DOCUMENTS SET
FORTH IN PARAGRAPH 10.2 HEREOF, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S
DEFAULT IS (I) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE ACTION
WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY AND WHICH
GIVES RISE TO A RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO PARAGRAPH 5.2
HEREOF; (II) ITS MISREPRESENTATION OF ANY ITEM SET FORTH IN PARAGRAPH 18.2
HEREOF; OR (III) ITS WILLFUL REFUSAL TO DELIVER ANY OF THE CLOSING DELIVERIES
SET FORTH IN PARAGRAPH 10.2 HEREOF, THEN PURCHASER WILL BE ENTITLED TO DEMAND
THE RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL THEN BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES
SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR
PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET
FORTH MORE FULLY IN PARAGRAPH 7 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER
ITS ACTUAL, DOCUMENTED THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS
DUE DILIGENCE HEREUNDER AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED
$175,000 IN THE AGGREGATE.
13. CLOSING PRORATIONS.
13.1. The items described in this Paragraph shall be prorated between
the parties on a per diem basis (on the basis of actual calendar days and a
366-day year) so that credits and charges preceding or on 11:59 P.M. on the
Closing Date shall be allocated to Seller and credits and charges for the
period after 11:59 P.M. on the Closing Date and all days thereafter shall be
allocated to Purchaser. As of May 1, 1997, Seller and Purchaser shall jointly
prepare a final proration statement in accordance with the provisions of this
Paragraph 13 and a final adjusting payment shall then be made, as provided in
Paragraph 13.3 hereof.
<PAGE>
13.1.1. Real estate taxes (on the basis of allowable discounts for
early payment, to the extent the adjustment is made during the discount
period), general and special assessments and the like ("Taxes") for 1996, as
such Taxes may be increased or decreased after the Closing, shall be prorated
as of the Closing Date based on the most recent ascertainable amount.
Purchaser shall promptly bill tenants making annual payments for Taxes, if any,
and other tenants which are obligated to make payments for taxes other than on
a monthly basis and which remain liable for Taxes for a period of Seller's
ownership (said annual paying tenants and non-monthly paying tenants are
hereinafter collectively referred to as "Non-Monthly Tax Payors") in accordance
with their respective Leases. Upon Purchaser's receipt of the payment of Taxes
by each Non-Monthly Tax Payor, said payment shall be prorated as of the Closing
Date and Purchaser shall promptly pay to Seller the prorated portion of the
collected Taxes pertaining to the period prior to the Closing Date.
13.1.2. Minimum rent (exclusive of delinquent rents, but including
prepaid rents) and other fixed charges for operational expenses and taxes paid
under the Leases ("Minimum Rent") shall be prorated as of the Closing Date.
13.1.3. Certain of the Leases provide for reimbursement to landlord
of maintenance and operation charges, taxes, insurance and other expenses
(herein collectively referred to as "Maintenance Expenses"). Some Leases
provide for a determination of the tenant's share of Maintenance Expenses on an
annual basis but provide that an estimated amount thereof (either in the
aggregate or for specified components thereof) shall be paid by tenant to
landlord monthly during the course of the year with a final adjustment to be
made after the close of the year when such costs and expenses have been finally
determined. Seller and Purchaser agree as follows with respect to Maintenance
Expenses:
13.1.3.1. Except as hereinafter provided, Seller shall be
responsible for the payment of all Maintenance Expenses attributable to periods
of time through the Closing Date and shall be entitled to receive and retain
all reimbursements thereof collected from tenants on account thereof with
respect to the period through the Closing Date; and Purchaser shall be
responsible for the payment of all Maintenance Expenses attributable to periods
of time after the Closing Date and shall be entitled to receive and retain from
the tenants all reimbursements thereof collected from tenants on account
thereof with respect to the Closing Date and thereafter. At the Closing,
Seller shall pay to Purchaser the amount of ascertainable Maintenance Expenses
incurred but unpaid at the Closing and Seller shall receive as a credit an
amount equal to all Maintenance Expenses prepaid by Seller for periods after
the Closing Date and not yet incurred.
13.1.3.2. As a part of the final proration referred to in
Section 13.3 hereof:
(i) Seller shall pay to Purchaser the amounts (if any) received by
Seller from tenants on account of Maintenance Expenses with respect to the
period prior to the Closing Date in excess of amounts incurred by Seller during
such period on account of such Maintenance Expenses with respect to such
period; and
<PAGE>
(ii) Purchaser shall pay to Seller the amount (if any) received by
Purchaser on account of Maintenance Expenses paid by tenants with respect to
said year which are attributable to Maintenance Expenses incurred by Seller
prior to Closing Date and not theretofore reimbursed.
13.1.4. Insurance charges payable under the Leases shall be
adjusted in the same manner as provided in 13.1.3.2(i) and (ii) above with
respect to Maintenance Expenses.
13.1.5. To the extent not covered by Paragraph 13.1.3, utility and
fuel charges, including, without limitation, charges for water, electricity,
gas, gasoline, steam, oil and telephones used in connection with the heating,
cooling, lighting, maintenance and operation of the Property and any personal
property included therein or used in connection therewith shall be prorated as
of the Closing Date. Seller shall endeavor to obtain readings of all utility
meters as close to the Closing Date as practicable.
13.1.6. To the extent not covered by Paragraph 13.1.3 annual fees
for permits and licenses required in connection with the operation of the
Property shall be prorated as of the Closing Date.
13.1.7. Personal property taxes, if any, for any personal property
transferred to Purchaser shall be prorated as of the Closing Date.
13.1.8. Purchaser shall cause a reconciliation of the Maintenance
Expenses and Taxes to occur with the tenants no later than February 15, 1997
and shall use diligent efforts in collecting from the tenants any
under-payments for Taxes and Maintenance Expenses for 1996.
13.2. The following amounts, if any (the "Adjustments"), without
duplication shall be made:
13.2.1. All security deposits held by Seller as of the Closing Date
shall be paid to Purchaser at the Closing.
13.2.2. Purchaser shall receive a credit at Closing for all
brokerage commissions and tenant improvement obligations of Seller listed on
Exhibit O attached hereto to the extent not paid by Seller prior to Closing.
Purchaser assumes all obligations for brokerage commissions and tenant
obligations set forth on such Exhibit O and set forth on Exhibit N attached
hereto. In addition, Purchaser shall receive a credit at Closing in the amount
of $210,000 which amount Seller expects to receive from AT&T Corp. as a
termination fee. In the event Seller does not receive such amount before
Closing and Purchaser receives such amount after Closing, Purchaser shall
immediately deliver the check received from AT&T Corp., properly endorsed, or
an amount equal to the amount received from AT&T Corp. by Purchaser, to Seller.
The terms of the immediately preceding sentence shall survive Closing and the
delivery of the Deed.
13.2.3. All other reasonable expenses normal to the operation and
maintenance of the Property which require payments either in advance or in
arrears for periods which begin prior to the Closing Date or end thereafter
<PAGE>
shall be apportioned between Seller and Purchaser as of 11:59 P.M. on the
Closing Date. The obligations under any contract continuing after the Closing
Date as provided within this Agreement shall be apportioned between Seller and
Purchaser as of the Closing Date.
13.3. In connection with the prorations and the Adjustments herein and
as provided, there shall be prepared the following statements, schedules and
certificate:
13.3.1. Seller shall prepare or cause to be prepared statements in
reasonable detail showing separately each item prorated or adjusted pursuant to
this Agreement and a detailed reconciliation showing separately each item
prorated or adjusted pursuant to this Agreement and a detailed reconciliation
of the Prorations and Adjustments, such statements to be delivered two (2)
business days prior to the Closing and adjusted as necessary at the Closing.
The parties shall mutually agree that said closing statement accurately
reflects the method of proration set forth in this Agreement.
13.3.2. Purchaser, in cooperation with Seller, shall prepare, not
later than May 1, 1997, a final proration statement as of the Closing Date,
presenting correctly the final Prorations and Adjustments in accordance with
the terms of this Agreement and a statement of "Overdue Amounts" (hereinafter
defined). Upon issuance of such final proration statement the parties shall
make a final proration payment as appropriate (including, without limitation, a
settlement of Overdue Amounts). For purposes of preparation of the foregoing
statements and at all reasonable times thereafter, the parties agree to allow
the other party and the other party's accountants and representatives, to
examine so much of the books and records in the possession and control of the
other party as relate to such statements and final reconciliations with tenants
on Taxes, Maintenance Expenses and other charges at the place or places where
they are then regularly maintained. Seller and Purchaser shall retain such
books and records for three (3) years from the Closing Date.
13.4. Minimum Rent owed by tenants which are due but unpaid as of the
Closing Date shall not be adjusted, but after the Closing Date the Purchaser
shall bill, in accordance with the terms of the tenants' Leases, the Minimum
Rent payable by tenants which are accrued but unpaid on the Closing Date
(collectively, "Overdue Amounts"). The Purchaser shall pay to the Seller in
accordance with the priority established in the immediately following sentence
the Overdue Amounts collected from each tenant attributable to the portion of
calendar year 1996 (the "Current Calendar Year") ending at 11:59 P.M. on the
Closing Date, within 15 days after the end of the month in which such Overdue
Amounts are collected. All Overdue Amounts collected by the Purchaser after
the Closing Date from tenants which, on the Closing Date, are not more than 30
days in arrears in the payment of the Minimum Rent shall be applied in the
following order of priority: (i) first to the month preceding the month in
which the Closing Date occurs; (ii) then to the month in which the Closing Date
occurs; and (iii) then to any month or months following the month in which the
Closing Date occurs. All Overdue Amounts collected by the Purchaser after the
Closing Date from tenants which, on the Closing Date, are more than 30 days in
arrears in the payment of Minimum Rent shall be applied in the following order
of priority: (i) first to the month in which the payment is received; and (ii)
then to any month or months preceding the month in which the payment is
received with such payment being applied to the Overdue Amounts in the inverse
order of their due dates.
<PAGE>
13.5. The Purchaser shall use diligent efforts to collect all Overdue
Amounts and in no event shall Purchaser waive any Overdue Amounts. The
Purchaser shall not have any obligation or liability under this Paragraph to
pay any Overdue Amount or any Minimum Rent to the Seller except if, and to the
extent that, such Overdue Amount or Minimum Rent is collected from tenants of
the Property after the Closing Date. After the Closing has occurred, Seller
shall have no right to commence litigation or any other collection proceedings
to collect such Overdue Amounts.
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 10 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 to any entity affiliated with Purchaser, or the principals of
Purchaser, or to any fund sponsored by Purchaser or the principals of
Purchaser, provided that the assignee assumes liability for all obligations of
Purchaser hereunder including the obligations of Purchaser first arising prior
to the effective date of the assignment and Purchaser remains liable as set
forth in the following sentence (and said assignor shall be released from all
other obligations hereunder). If any assignee of Purchaser under this
Agreement petitions or applies for relief in bankruptcy or said assignee is
adjudicated as a bankrupt or insolvent, or said assignee files any petition,
application for relief or answer-seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law, code or regulation relating to bankruptcy, insolvency, or other relief for
debtors (collectively, a "Bankruptcy Filing") on or before the Closing Date,
said Bankruptcy Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Earnest Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
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 Insignia Management Co. (to be paid by Seller). Seller's
commission to Insignia Management Co. 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 Insignia Management Co. The indemnifying party
shall undertake its obligations set forth in this Paragraph 15 using attorneys
selected by the indemnifying party and reasonably acceptable to the indemnified
party. The provisions of this Paragraph 15 will survive the Closing and
delivery of the Deed.
<PAGE>
17. SELLER COVENANTS.
17.1. Affirmative Covenants. Between the date of this Agreement and
the Closing Date, the Seller agrees that it will:
17.1.1. manage and operate the Property in the same manner that it
has managed, operated and maintained the Property during the period of Seller's
ownership, subject to reasonable wear and tear and casualty; and
17.1.2. deliver the Property on the Closing Date in substantially
the same condition it is in on the date of this Agreement, reasonable wear and
tear and damage by fire or other casualty excepted;
17.1.3. deliver to the Purchaser, promptly after receipt by the
Seller, copies of all notices of violation issued by any governmental
authorities with respect to the Property received by the Seller after the date
of this Agreement; and
17.1.4. prior to the expiration of the Inspection Period, deliver to
Purchaser three (3) days prior to the execution thereof, any new Leases.
17.2. Negative Covenants. Between the date of this Agreement and the
Closing Date, the Seller agrees that, without the Purchaser's written consent
in each case, it will not:
17.2.1. voluntarily grant or create any mortgage, lien, encumbrance,
easement, covenant, condition, right-of-way or restriction upon the Property
other than the Permitted Exceptions;
17.2.2. alter or amend any of the Contracts or become a party to any
new similar agreement unless the same is terminable without penalty to the
then-owner of the Property upon not more than 30 days' notice;
17.2.3. alter, amend, renew, extend, or consent to the assignment of
any Lease (or sublease of any related premises), except for renewals pursuant
to renewal options contained in such Lease and described in the Rent Roll;
17.2.4. terminate any Lease, or accept a surrender of the leased
premises thereunder, except for non-payment of rent or breach of non-monetary
covenants which causes default under other Leases; or
17.2.5. after the expiration of the Inspection Period, execute any
new lease affecting the Property without Purchaser's prior written consent,
which consent shall not be unreasonably withheld. Upon requesting Purchaser's
consent, Seller shall deliver a complete copy of said lease to Purchaser
together with a statement of leasing commissions and tenant improvements
payable by the landlord under such lease. Purchaser's consent shall be deemed
given if Purchaser has not responded to the contrary within five (5) business
days after receipt of Seller's written request and the complete copy of said
lease. If approved by Purchaser, a complete copy of any such lease shall be
delivered to Purchaser within ten (10) days of the full execution thereof. All
leasing costs and commissions, tenant improvements and contributions, and up to
<PAGE>
$1,000 in reasonable attorneys' fees in the aggregate, incurred in connection
with any new lease, including all new leases executed prior to the expiration
of the Inspection Period ("New Lease Costs"), shall be paid by Purchaser or
credited to Seller at Closing if already paid by Seller. Notwithstanding
anything contained herein to the contrary, Purchaser hereby approves the terms
of the transactions set forth as "Potential Deals" on Exhibit N and agrees to
pay all New Lease Costs associated therewith or credit Seller for any amounts
paid as of the Closing.
17.2.6. fail to comply with any written notices to Seller received
by Seller prior to Closing of violations of law or municipal ordinances, orders
or requirements issued by any governmental authority against or affecting the
Property (the "Violations"). If Seller has knowledge prior to the Closing of
an assertion by any governmental authority of any Violations, Seller shall
comply with any such assertion prior to Closing. If any Violations remain
uncured on the Closing Date, Purchaser shall receive a credit against the
Purchase Price equal to the estimated cost of curing the same, as estimated by
an architect or engineer selected by Purchaser and reasonably satisfactory to
Seller. Notwithstanding the foregoing, in the event the cost to cure the
Violation exceeds Fifty Thousand Dollars ($50,000.00), then Purchaser at its
election, may as its sole remedy in respect thereof either (A) terminate this
Agreement, in which event the parties shall direct the Escrow Agent to return
the Earnest Money Deposit with any interest accrued thereon to Purchaser and
neither party hereto will have any further obligations except for those which
specifically survive the termination hereof or (B) accept the Property subject
to the Violation and receive a credit equal to $50,000.
18. REPRESENTATIONS AND WARRANTIES.
18.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by James Mendelson and/or Tom Molina (together, 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.
18.2. Subject to the limitations set forth in Paragraph 18.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge:
(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 M which
Seller will update as of the Closing Date is accurate as of the date set forth
thereon;
<PAGE>
(iv) The operating statements delivered by Seller to Purchaser
as part of the Seller Documents are the actual operating statements used by
Seller in connection with the day-to-day operation of the Property and were
prepared in accordance with Seller's customary practice in the ordinary course
of business;
(v) Annexed hereto as Exhibit M is a true and complete list of
all of the leases, amendments, and other related documents (the "Leases")
affecting the tenancies at the Property and there are no leases or other
tenancies for any space in the Property other than the Leases. Except as
otherwise disclosed on Exhibit M, the Seller has not received from any tenant
under a Lease nor given to any tenant under a Lease a written notice of default
by the Seller or tenant in performing any of its obligations under such Lease
which has not been cured;
(vi) Contracts. The contracts (the "Contracts") listed on
Exhibit H are all of the contracts disclosed to Purchaser by Seller as part of
the Seller Documents and there are no service or other contracts affecting the
Property other than as set forth on Exhibit H or which are Permitted
Exceptions. The Seller has performed all obligations required to be performed
by it, and is not in default, under any of the Contracts;
(vii) Reports. The Seller has delivered to Purchaser the
most current environmental report on the Property in its possession;
(viii) Condemnation. The Seller has not received written
notice of, and the Seller has no knowledge of, pending or contemplated
condemnation proceedings affecting the Property, or any part thereof;
(ix) Compliance with Laws. Seller has not received a written
notice of uncured violation of any Environmental Laws, statute, rule, law,
obligation, ordinance, or other legal regulation or requirement pertaining to
the use, maintenance, ownership, or operation of the Property;
(x) Brokerage Commissions/Tenant Improvements. There will be
no brokerage commissions or tenant improvement allowances due on the Closing
Date or at any time thereafter in connection with any of the Leases or any
renewals or extensions thereof other than as disclosed in Exhibit N or Exhibit
O; and
(xi) Seller's Representative. James Mendelson is a senior vice
president of The Balcor Company. Tom Molina is the asset manager at The Balcor
Company responsible for the operations of the Property.
(x) Annual Reconciliation. All Leases contain provisions which
provide for the reconciliation of Maintenance Expenses on a calendar year
basis; provided, however, that Purchaser's sole remedy in the event of a breach
of this representation shall be a reproration between Seller and Purchaser in
accordance with Paragraph 13 hereof with respect to any Lease that does not
provide for a calendar year reconciliation promptly following the
reconciliation with the tenant under such Lease.
<PAGE>
18.3. 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.
18.4. If at any time after the execution of this Agreement, either
Purchaser or Seller becomes 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 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.
18.5. The parties agree that the representations contained herein
shall survive Closing for a period of nine (9) months (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 nine (9) months
immediately following Closing).
19. LIMITATION OF LIABILITY. Neither Seller, nor any 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.
19.1. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum liability of Seller after the Closing,
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, shall be $1,395,000.
19.2. Seller further agrees not to distribute $1,395,000 of the
proceeds of the Purchase Price to its partners for the longer of (i) nine (9)
months after the Closing and (ii) final resolution of any claims by Purchaser
and asserted in writing against Seller prior to the expiration of the nine (9)
months after the Closing in accordance with the terms of this Agreement
("Claims"); provided, however, that if any Claims are disputed by Seller,
<PAGE>
Seller shall have the right, by written notice to Purchaser, to require
Purchaser to file suit in a court of competent jurisdiction within ninety (90)
days after such notice to Purchaser. If no suit is filed by such date, said
notice with respect to the Claim in question shall no longer prevent Seller
from distributing the proceeds.
20. TIME OF ESSENCE. Time is of the essence of this Agreement.
21. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, or by facsimile transmission addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4367
(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: c/o Goldman, Sachs & Co.
85 Broad Street
19th Floor
New York, New York 10004
Attention: Stuart Rothenberg
(212) 902-6341
(212) 957-5505 (FAX)
and one copy to: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue
Washington, DC 20036
Attention: Mark Katz, Esq.
(202) 857-6260
(202) 857-6395 (FAX)
<PAGE>
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by overnight courier or by facsimile transmission as
aforesaid shall be deemed to be given, delivered or made upon receipt of the
same by the party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent.
22. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, 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.
23. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Texas, except that with respect to the retainage of the
Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
24. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
25. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
26. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
27. NO UNINTENDED ASSUMPTION OF LIABILITIES. Except as expressly provided in
this Agreement or in any document to be executed and delivered on the Closing
Date, the Purchaser is not assuming any of the debts, liabilities, taxes or
obligations of, or claims against, the Seller of any kind or character, whether
direct or contingent and whether known or unknown. The only transactions
contemplated by this Agreement are the sale and purchase of the Property. The
Seller is not selling a business. Except as expressly provided in this
Agreement or in any document to be executed and delivered on the Closing Date,
the parties intend that the Purchaser shall not be deemed to be a successor of
the Seller with respect to any of the Seller's liabilities or obligations to
third parties arising before the Closing Date.
<PAGE>
28. EXECUTION BY THE BALCOR COMPANY. The Balcor Company executes this
Agreement solely for the purpose of assuring to Purchaser that if the Seller
fails to withhold or pay the sums required of Seller pursuant to Paragraph 19
and if Purchaser is successful in any claims asserted against the Seller for a
breach of a representation or warranty, then The Balcor Company shall pay to
Purchaser the amount of such claim(s), the total of which shall not exceed
$1,395,000.00. Purchaser may name The Balcor Company in any suit against
Seller, provided that Purchaser may not name The Balcor Company in any suit
unless Seller is also named therein. So long as Seller is determined to be
liable for the amounts due hereunder, Purchaser shall have no obligations to
exhaust its remedies against Seller prior to suing and collecting from The
Balcor Company, so long as Purchaser complies with the provisions of the
preceding sentence.
29. FURTHER ASSURANCES. The Seller agrees that it will, at any time and from
time to time after the Closing Date, upon request of the Purchaser, do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances and assurances as may reasonably be required for the
better assigning, transferring, granting, assuring and confirming to the
Purchaser, or to its successors and assigns, or for aiding and assisting in
collecting and reducing to possession, any or all of the assets or property
being sold to the Purchaser pursuant to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
ARCHON GROUP, L.P., a Delaware limited
partnership
By: /s/ James Weston Moffett
--------------------------------
Name: James Weston Moffett
--------------------------------
Its: Sr. Vice President
--------------------------------
SELLER:
WESTECH 360 LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Westech 360 Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
-----------------------------------
Name: James E. Mendelson
-----------------------------------
Its: Authorized Representative
-----------------------------------
JOINDER
The undersigned executes this joinder solely for the purposes of
effectuating its obligations arising under Paragraph 28 of this Agreement.
THE BALCOR COMPANY, a Delaware corporation
By: /s/ James E. Mendelson
-----------------------------------
Name:
-----------------------------------
Its: Sr. V.P.
-----------------------------------
<PAGE>
Westech 360
of ("Seller's Broker") executed this Agreement
in its capacity as a real estate broker and acknowledges that the fee or
commission due it from Seller as a result of the transaction described in this
Agreement is as set forth in that certain Listing Agreement, dated __, 199_
between Seller and Seller's Broker (the "Listing Agreement"). Seller's Broker
also acknowledges that payment of the aforesaid fee or commission is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Seller's Broker agrees to deliver a receipt to the Seller at the
Closing for the fee or commission due Seller's Broker and a release, in the
appropriate form, stating that no other fees or commissions are due to it from
Seller or Purchaser.
_____________________________
By:
-------------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Tenant Certificate
M - Rent Roll
N - Tenant Allowances and Leasing Commissions To Be Paid by Purchaser
O - Tenant Allowances and Leasing Commissions To Be Paid by Seller
