SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) June 2, 1997
BALCOR EQUITY PENSION INVESTORS-III
A REAL ESTATE LIMITED PARTNERSHIP
------------------------------------------------------------
Exact Name of Registrant
Illinois 0-14348
- ----------------------------------- -----------------------------------
State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3354308
- ----------------------------------- -----------------------------------
Address of principal I.R.S. Employer
executive offices Identification
Number
60015
- -----------------------------------
Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- ------------------------------------------------------------------------
Erindale Centre
In 1986, the Partnership acquired the Erindale Centre shopping center, Colorado
Springs, Colorado, utilizing approximately $17,340,000 of offering proceeds.
On June 2, 1997, the Partnership contracted to sell the property for a sale
price of $8,250,000 to an unaffiliated party, G/B Investments, Inc., a Colorado
corporation. The purchaser is obligated to deposit $200,000 into an escrow
account as earnest money. The remainder of the sale price will be payable in
cash at closing. The closing of the sale is scheduled to occur on July 1,
1997. From the proceeds of the sale, the Partnership will pay $206,250 as a
brokerage commission to an affiliate of the third party providing property
management services for the property. The Partnership will receive the
remaining proceeds of approximately $8,044,000, less closing costs.
Affiliates of the Partnership sold three other properties to affiliates of the
purchaser during 1996.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------------------------------
(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) (i) Agreement of Sale and attachment thereto relating to the
sale of Erindale Centre, Colorado Springs, Colorado.
(ii) First Amendment to Agreement of Sale relating to the sale
of Erindale Centre, Colorado Springs, Colorado.
No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
Signature
- -------------
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
-----------------------------------------
Jerry M. Ogle, Managing Director
and General Counsel
Dated: June 16, 1997
<PAGE>
Erindale Center
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 2 day of June, 1997, by and between
G/B INVESTMENTS, INC., a Colorado corporation ("Purchaser") and ERINDALE
INVESTORS, an Illinois limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Eight Million Two Hundred Fifty Thousand and No/100
Dollars ($8,250,000.00) ("Purchase Price"), that certain Property (as defined
below) in Colorado Springs, Colorado, more particularly described on Exhibit A
attached hereto, which Property is known as Erindale Center. Included in the
Purchase Price is the following:
a. That certain real property ("Real Property") in Colorado
Springs, Colorado, and more particularly described on Exhibit A attached
hereto, together with improvements thereon consisting of a shopping center
("Improvements"), which is known as Erindale Center;
b. All of Seller's right, title and interest in and to any and all
the personal property set forth on Exhibit B which shall be transferred to
Purchaser at Closing (as hereinafter defined) by a Bill of Sale ("Personal
Property");
c. All of Seller's right, title and interest in and to any and all
utility taps, licenses, permits, contract rights, warranties, guarantees, and
all variations thereof (except reimbursements), and in any and all other
intangible personal property associated with or related to the Real Property or
the Improvements ("Intangibles");
d. All of Seller's right, title and interest in and to any and all
contracts and all other intangible personal property associated with or related
to the Real Property and Improvements ("Service Contracts"); and
e. All tenants leases ("Leases") and security deposits at the Real
Property described on the rent roll attached hereto as Exhibit K (the "Rent
Roll"). The Real Property and Improvements, Personal Property, Intangibles,
Service Contracts and Leases are collectively called the "Property".
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $100,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term is
defined in the Escrow Agreement), by and in accordance with the provisions of
the Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit C;
<PAGE>
b. On or before the expiration of the "Approval Period"
(hereinafter defined), the sum of One Hundred Thousand and No/100 Dollars
($100,000.00) (the "Additional Earnest Money") to be held in escrow by and in
accordance with the provisions of the Escrow Agreement (at such time as the
Additional Earnest Money is deposited in Escrow, the term "Earnest Money" shall
include the Additional Earnest Money); and
c. On the Closing Date (as hereinafter defined), $8,250,000.00
(inclusive of all Earnest Money) adjusted in accordance with the prorations by
federally wired "immediately available" funds delivered to the Title Insurer
(as hereinafter defined) no later than 1:00 P.M. Central Time on the Closing
Date. If the funds are not received by the Title Insurer by 1:00 P.M. Central
Time, then, on the Closing Date, Purchaser shall pay Seller an amount equal to
any additional mortgage per diem interest costs incurred by the Seller.
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment dated April
23, 1997, and designated GF# 96260256 ("Title Commitment") for an owner's
standard coverage title insurance policy ("Title Policy") issued by Charter
Title Company, as agent for Lawyers Title Insurance Corporation ("Title
Insurer"). The owner's Title Policy issued at Closing will be in the amount of
the Purchase Price subject only to real estate and personalty taxes not yet due
and payable, and the special title exceptions set forth in Schedule B, Section
2, Numbers 6 through 25 of the Title Commitment plus an exception for leases
and tenancies at the Property. All of the above are herein referred to as the
"Permitted Exceptions". The Title Commitment shall be conclusive evidence of
good title as therein shown as to all matters insured by the policy, subject
only to the exceptions therein stated. On the Closing Date, Seller shall cause
the Title Insurer to issue the Title Policy or a "marked up" commitment in
conformity with the Title Commitment. Seller shall pay the costs of the Title
Policy; however, Purchaser shall pay the costs of "extended coverage" or any
special endorsements which Purchaser requires.
b. Purchaser acknowledges receipt of a survey ("Survey") of the
Property prepared by Mountain Surveying & Mapping, Inc. dated May 2, 1997.
Prior to the Closing, Seller will have the Survey certified to the Purchaser,
the Title Insurer, and the Purchaser's lender. Seller shall pay the cost of
the recertified Survey. However, if Purchaser requires any additional survey
work, Purchaser shall pay for the cost of such additional work. If the
recertified Survey discloses matters which are not reflected on the original
Survey and which would prevent the Title Insurer from deleting the survey
exception from the Title Policy ("Survey Defects"), then upon notice delivered
to Seller by Purchaser within five (5) days after receipt of the updated
Survey, Seller shall either cause the Survey Defects to be removed from the
updated Survey or cause the Title Insurer to insure against loss or damage
resulting from the Survey Defects ("Title Indemnity"). If Seller is unwilling
to (i) have the Survey Defects removed from the updated Survey or (ii) cause
the Title Insurer to issue a Title Indemnity to Purchaser within five (5) days
after receipt of notice from Purchaser of the Survey Defects, then Purchaser
shall have the right to elect to terminate this Agreement. Purchaser shall
<PAGE>
notify Seller of its election within three (3) days after receipt of notice
from Seller that the Survey Defects will not be removed or that the Title
Insurer will not issue the Title Indemnity. If Purchaser fails to make the
election within the aforesaid three (3) days, then it shall be conclusively
presumed that Purchaser has elected to take title to the Property subject to
the Survey Defects. If Purchaser elects to terminate this Agreement pursuant
to this Paragraph, then the Earnest Money plus all accrued interest shall be
delivered to Purchaser.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed ("Deed") in recordable form
subject only to the Permitted Exceptions. If Seller is unable to convey title
to the Property subject only to the Permitted Exceptions because of the
existence of an additional title exception ("Unpermitted Exception"), then
Purchaser can elect to take title to the Property subject to the Unpermitted
Exception or terminate this Agreement. If Purchaser elects to terminate this
Agreement, then the Earnest Money plus all accrued interest shall be delivered
to the Purchaser. Notwithstanding the aforesaid, Seller will be obligated to
remove all Unpermitted Exceptions of a definite ascertainable amount on or
before the Closing Date.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share
the costs of the documentary stamps (if any) to be paid with reference to the
Deed and all other stamps, intangible, documentary, recording, sales tax and
surtax imposed by law with reference to any other documents delivered in
connection with this Agreement.
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of Real
Property for $100,000 or less, or in the case of Personal Property, for $10,000
or less, then Seller shall commence the repair or restoration in an expeditious
manner, in which event the Closing Date will be extended until such date as may
reasonably be required to complete the repair or restoration in a good and
workmanlike manner. Seller shall retain all insurance proceeds. If the cost
of repair or restoration exceeds the amounts stated above, then Seller can
elect to either: (a) repair and restore same upon prior notice to Purchaser
served within twenty (20) business days of such casualty and provided Purchaser
has elected in writing to not terminate this Agreement in its sole discretion,
in which event the Closing Date will be extended until such date as may
reasonably be required to complete the repair or restoration; or (b) terminate
this Agreement upon notice to Purchaser served within twenty (20) business days
of such casualty. If Seller elects to terminate this Agreement pursuant to
this Paragraph, then Purchaser will have the option to accept the Property in
its damaged condition together with an assignment from Seller of all insurance
proceeds and receive a credit at Closing in the amount of the deductible, if
any, provided Purchaser notifies Seller by notice served within twenty (20)
days after receipt of Seller's notice of election to terminate. If Seller is
required to repair or restore the Property, then Purchaser shall have the right
to elect to close prior to the completion of the restoration. In such event,
the parties shall enter into an escrow agreement on the Closing Date whereby
Seller shall deposit into the escrow sufficient funds in order to pay for the
repair or restoration.
<PAGE>
b. If condemnation proceedings ("Proceedings") are instituted
against the Property and the parties reasonably believe that such Proceedings
will result in an award in excess of $100,000.00, then Purchaser can elect to
either take the Property subject to the Proceedings and an assignment of
Seller's interest in the Proceedings or terminate this Agreement. If Purchaser
elects to terminate this Agreement, it shall be by notice to the Seller within
five (5) days after Seller notifies Purchaser of the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph 6a or
6b, then the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
7. AS-IS CONDITION.
a. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspection and investigations of the Property
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS" based upon the condition of the Property as of the date of this
Agreement, subject to reasonable wear and tear and loss by fire or other
casualty or condemnation from the date of this Agreement until the Closing
Date. Without limiting the foregoing, Purchaser acknowledges that, except as
may otherwise be specifically set forth elsewhere in this Agreement or the
Deed, neither Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any Hazardous Materials or Hazardous
Substances (as such terms are defined below), the tenants of the Property or
the leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning, environmental or building laws, rules or regulations
affecting the Property. Seller makes no representation that the Property
complies with Title III of the Americans With Disabilities Act or any fire
codes or building codes. Purchaser hereby releases Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for damage, loss,
compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract, or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property, or arising under the Environmental
Laws (as such term is hereinafter defined), or relating in any way to the
quality of the indoor or outdoor environment at the Property. This release
shall survive the Closing. As used herein, the term "Hazardous Materials" or
"Hazardous Substances" means (i) hazardous wastes, hazardous materials,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solids, liquids or gases, including but not limited to
substances defined as "Hazardous Wastes, hazardous materials," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
<PAGE>
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.,
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S. C. Section 1802; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 1101 et seq.; the
Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum, (B)
refined petroleum products, (C) waste oil, (D) waste aviation or motor vehicle
fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H)
Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. 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 from any liability with respect
to such historical information.
8. CLOSING.
a. The closing ("Closing") of this transaction shall be forty-five
(45) days after the satisfaction of the "Financing Contingency" (hereinafter
defined) ("Closing Date"), at the office of the Purchaser's attorney, at which
time Seller shall deliver possession of the Property to Purchaser.
b. Purchaser can elect to accelerate the Closing Date to an earlier
date which is mutually acceptable to Purchaser and Seller ("Accelerated Closing
Date"), provided that Purchaser delivers notice to the Seller and Escrow Agent
no later than ten (10) days prior to the Accelerated Closing Date.
<PAGE>
c. Upon Notice delivered to the Seller and Escrow Agent no later
than ten (10) days prior to the Closing Date specified in Paragraph 8.a.
herein, Purchaser shall have the one time right to extend the Closing Date for
a maximum of thirty (30) days ("Extended Closing Date") provided that the
Notice is accompanied by federally wired funds or a cashier's or unendorsed
certified check in the sum of $50,000.00 as additional Earnest Money to be
deposited with and held by Escrow Agent in accordance with the provisions of
the Escrow Agreement. Thereafter, all references herein to the Closing Date
shall mean the Extended Closing Date. Upon the deposit of the additional
deposit of $50,000.00, such $50,000.00 shall be included within the meaning of
"Earnest Money" and shall be credited to the balance of the Purchase Price due
at Closing.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required in order to consummate the transaction
as set forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed (in the form of Exhibit E attached hereto)
subject to the Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser; an inventory of the Personal Property and a Bill of Sale for the
same (in the form of Exhibit F attached hereto); an executed closing statement;
an executed assignment and assumption of all Service Contracts (in the form of
Exhibit G attached hereto); an executed assignment and assumption of all leases
and security deposits (in the form of Exhibit H attached hereto); updated and
certified Rent Roll; a notice to the tenants of the transfer of title and title
assumption by Purchaser of the landlord's obligations under the leases and the
obligation to refund the security deposits (in the form of Exhibit I attached
hereto); a non-foreign affidavit (in the form of Exhibit J attached hereto); an
executed Assignment of Intangibles (in the form of Exhibit M attached hereto);
and such other documents as may be reasonably required by the Title Insurer in
order to consummate the transaction as set forth in this Agreement.
Notwithstanding anything contained herein to the contrary, Purchaser's
obligation to close and purchase the Property is not subject to nor conditioned
upon Seller obtaining a Tenant Certificate (as hereinafter defined) for any
tenants. Any issues which are raised in Tenant Certificates shall not
constitute a Seller's default hereunder or give Purchaser the right to
terminate this Agreement. Seller hereby agrees to use commercially reasonable
and good faith efforts to obtain a certificate addressed to Purchaser from each
tenant of the Property (collectively, the "Tenant Certificates") in the form of
Exhibit O attached hereto.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW OR
REQUIRED TO BE DEPOSITED IS TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF
ITS OBLIGATIONS AND UNDERTAKINGS UNDER THIS AGREEMENT. SUBJECT TO PARAGRAPH 16
WITH RESPECT TO THE APPROVAL PERIOD DATE CONTINGENCY, IN THE EVENT OF A
MATERIAL DEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT,
SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST THEREON AND THE
<PAGE>
RIGHT TO RECEIVE ANY EARNEST MONEY REQUIRED TO BE DEPOSITED HEREUNDER, AS
SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY. THE PARTIES HAVE AGREED
THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S
DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO RECOVER ACTUAL THIRD
PARTY COSTS IN AN AMOUNT NOT TO EXCEED THE AMOUNT OF EARNEST MONEY THEN ON
DEPOSIT WITH THE ESCROW AGENT AND THE RETURN OF ALL EARNEST MONEY TOGETHER WITH
ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL TERMINATE AND THE
PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY.
HOWEVER, IF SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED AND THE OTHER
DOCUMENTS REQUIRED TO BE DELIVERED AT CLOSING, THEN PURCHASER MAY SUE FOR
SPECIFIC PERFORMANCE.
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); water and other
utility charges; fuels; prepaid operating expenses incurred for the month prior
to the Closing Date; management fees in the amount of 5% of collections; real
and personal property taxes for the current year prorated on a "net basis
(i.e., adjusted for all tenants' liability, if any, for such items); prepaid
operating expenses which are reimbursable by the tenants for the month prior to
the Closing Date less any amount previously paid by the tenants shall be
credited to Seller; and other similar items shall be adjusted ratably as of
11:59 P.M. on the Closing Date ("Proration Date"), and credited or debited to
the balance of the cash due at Closing. If the amount of any of the items to
be prorated is not then ascertainable, the adjustment thereof shall be on the
basis of the most recent ascertainable data. All prorations will be final
except as to Delinquent Rents referred to in 12b below. If special assessments
have been levied against the Property for completed improvements, then the
amount of any installments which are due prior to the Closing Date shall be
paid by the Seller; and the amount of installments which are due after the
Closing Date shall be paid by the Purchaser. All assessments for incomplete
improvements shall be paid by Purchaser.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears ("Delinquent Rent"), then any Delinquent Rent received by Purchaser
within thirty (30) days of Closing shall be paid to Seller. All other
Delinquent Rent shall remain property of the Purchaser. This subparagraph of
this Agreement shall survive the Closing and the delivery and recording of the
Deed.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph 10.
<PAGE>
14. ASSIGNMENT. Except as provided below, the Purchaser shall not have
the right to assign its interest in this Agreement and the Escrow 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. Seller hereby consents to an assignment of this Agreement and
the Escrow Agreement to an entity in which the same persons owning Purchaser
own an interest even if such interest is not a controlling interest and its
trade facilitator in connection with any IRS Section 1031 exchange; provided
that such assignment is effected at least 15 business days prior to the Closing
Date.
15. BROKER.
a. The parties hereto acknowledge that Insignia Mortgage &
Investment Company ("Broker") is the only real estate broker involved in this
transaction. Seller agrees to pay Broker a commission or fee ("Fee") pursuant
to a listing agreement between Seller and Broker. However, this Fee is due and
payable only from the proceeds of the Purchase Price received by Seller.
Except for fees which Purchaser may pay to its partners or affiliates of its
partners pursuant to Purchaser's partnership agreement, Purchaser has not paid
and will not pay before, at or after the Closing any fees, commissions or
compensation to any person directly or indirectly on account of this Agreement,
its negotiation or the sale contemplated hereby. Purchaser agrees to
indemnify, defend and hold harmless the Seller and any partner, affiliate,
parent of Seller, and all shareholders, employees, officers and directors of
Seller or Seller's partner, parent or affiliate (each of the above is
individually referred to as a "Seller Indemnitee") from all claims, including
attorneys' fees and costs incurred by a Seller Indemnitee as a result of
anyone's claiming by or through Purchaser any fee, commission or compensation
on account of this Agreement, its negotiation or the sale hereby contemplated.
Purchaser does now and shall at all times consent to a Seller Indemnitee's
selection of defense counsel. Seller agrees to indemnify, defend and hold
harmless the Purchaser and all shareholders, employees, officers and directors
of Purchaser or Purchaser's parent or affiliate (each of the above is
individually referred to as a "Purchaser Indemnitee") from all claims,
including attorneys' fees and costs incurred by a Purchaser Indemnitee as a
result of anyone's claiming by or through Seller any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated. Seller does now and shall at all times consent to a Purchaser
Indemnitee's selection of defense counsel.
b. Seller acknowledges that Purchaser and/or its principals are
real estate brokers and/or agents licensed in the states of Colorado, North
Carolina and/or California. Seller also acknowledges that certain principals
of Purchaser are affiliated with (as agents or brokers) the Broker. Seller
also acknowledges that Purchaser and/or principals of Purchaser have no agency
relationship or fiduciary duty to Seller.
<PAGE>
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered (or will make available) to Purchaser
copies of the most recent available tax bills, rent rolls, Survey, Leases
(which are available for inspection and copying at the Property), insurance
premiums, Service Contracts, Title Commitment, and all of Seller's books and
records pertaining to the operation and management of the Property (which are
available for inspection and copying at the Property) (collectively the
"Documents"). All of the Documents shall be subject to approval by Purchaser
by the close of business (5:00 P.M. Central Time) on June 6, 1997 ("Approval
Period"). During the Approval Period, upon reasonable notice to the Seller,
the Purchaser shall, at its sole cost and expense, have the right to inspect
and approve the condition of the Property, including individual Tenant spaces,
during normal business hours. Purchaser, its engineers, architects, employees,
contractors and agents shall maintain public liability insurance policies
insuring against claims arising as a result of the inspections of the Property
being conducted by Purchaser. Prior to commencing any tests, studies and
investigations, Purchaser shall deliver to Seller a certificate of insurance
evidencing the existence of the aforesaid policies and naming Seller as an
additional insured. Purchaser agrees to indemnify, defend, protect and hold
Seller harmless from any and all loss, costs, including attorneys' fees,
liability or damages which Seller may incur or suffer as a result of
Purchaser's conducting its inspection and investigation of the Property
including the entry of Purchaser, its employees or agents and its lender onto
the Property, including without limitation, liability for mechanics' lien
claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
c. If Purchaser disapproves the Documents or the condition of the
Property, which disapproval may be in its sole discretion, it must be by a
notice ("Notice of Disapproval") delivered to Seller and the Escrow Agent prior
to the expiration of the Approval Period. The Notice of Disapproval delivered
to Seller shall be accompanied with copies of all reports ("Reports") which
Purchaser has obtained, either from the Seller or on its own, during the
Approval Period. Upon receipt of the Notice of Disapproval and copies of the
Reports, the Earnest Money plus the interest accrued thereon shall be returned
to the Purchaser. If Purchaser does not deliver a Notice of Disapproval and
copies of the Reports to Seller, then it shall be conclusively presumed that
Purchaser has approved the Documents and the condition of the Property and all
Earnest Money plus the interest accrued thereon shall belong to Seller unless
Seller is in default hereunder.
17. SURVIVAL OF PURCHASER'S INDEMNITY. Notwithstanding anything in this
Agreement to the contrary, Purchaser's obligation to indemnify, defend and hold
Seller harmless under various provisions of this Agreement shall forever
survive the termination of this Agreement or the Closing and delivery and
recording of the Deed.
<PAGE>
18. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing, shall only mean such knowledge or
notice that has actually been received by Alan Muench (the asset manager), and
any representation or warranty of the Seller is based upon those matters of
which Alan Muench has actual knowledge. Any knowledge or notice given, had or
received by any of Seller's agents, servants or employees shall not be imputed
to Seller or the individual partners or the general partner of Seller.
b. Subject to the limitations set forth in subparagraph a above,
Seller hereby makes the following representations, warranties and covenants,
all of which are made to the best of Seller's knowledge, and which shall
survive the Closing and delivery of the Deed for a period of ninety (90) days:
i. The present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no written notice
that any such laws, rules or regulations are being violated.
ii. The Rent Roll attached hereto as Exhibit K which will be
updated as of the Closing Date is true and accurate.
iii. Except as set forth on Schedule 18.b. attached hereto,
Seller has no knowledge of any pending or threatened litigation, claim, cause
of action or administrative proceeding concerning the Property.
iv. Seller has not received any written notice from any
governmental authority that the Property contains Hazardous Materials or
Hazardous Substances.
v. Attached hereto as Exhibit N is a list of all Service
Contracts affecting the Property.
c.Seller covenants that:
i. The management, operation, leasing and maintenance of the
Property, as presently conducted by the Seller, shall continue until the
Closing Date.
d. If on or prior to the Closing Date, Seller discovers that a
representation or warranty is untrue, then upon receipt of notice from Seller,
Purchaser can elect to terminate this Agreement or take title to the Property
subject to the untrue representation or warranty. If Purchaser elects to
terminate this Agreement, then the Earnest Money plus all accrued interest
shall be delivered to Purchaser.
19. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit L is a
list of reports ("Reports") of the Property, which Seller has delivered to
Purchaser, at Purchaser's request. Seller makes no representation or warranty
that the Reports are accurate or complete. Purchaser hereby releases Seller
from any liability whatsoever with respect to the Reports, including, without
limitation, the matters set forth in the Reports or the accuracy and/or
completeness of the Reports.
<PAGE>
20. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein or any
conveyance agreement or document in connection with this transaction, 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. The provisions of this Paragraph 20 shall also
apply to the Assignment of Leases (Exhibit H) notwithstanding that it has been
omitted therefrom.
21. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior
to the Closing Date, Purchaser will provide Seller's attorney with copies of
its organizational documents, including a certified copy of its recorded
certificate of limited partnership and a true copy of its partnership agreement
or a certified copy of its articles of organization and a true copy of its
operating agreement or a certified copy of its articles of incorporation,
corporate resolutions authorizing the transaction, and an incumbency
certificate, whichever is applicable.
22. TIME OF ESSENCE. Time is of the essence of this Agreement.
23. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road Suite A200
Bannockburn, Illinois 60015
Attn: James Mendelson
847/267-1600
847/317-4462 (FAX)
and
Daniel J. Perlman
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661
312/902-5532
312/902-1061 (FAX)
<PAGE>
TO PURCHASER: Ian C. Griffis
Griffis/Blessing
102 N. Cascade Ave.
Fifth Floor
Colorado Springs, Colorado 80903
719/520-1234
719/520-1204 (FAX)
with a copy to: Gilbert G. Weiskopf
Braden, Frindt, Stinar & Stageman L.L.C.
102 N. Cascade
Suite 350
Colorado Springs, Colorado 80903
719/635-4200
719/635-2493 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before 5:00 P.M. Central Time
or the next day if sent by facsimile after 5:00 P.M. Central Time, or on the
4th business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
24. SELLER'S COOPERATION - 1031 EXCHANGES. Seller agrees to cooperate
with Purchaser to effect one or more IRS Code Section 1031 tax deferred
exchanges, provided there shall be no added cost, liability or delay hereunder
to Seller as a result of such cooperation.
25. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
a. Earnest Money;
b. One (1) fully executed copy of this Agreement; and
c. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller.
26. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Colorado.
<PAGE>
27. 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.
28. 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.
29. 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.
30. FINANCING CONTINGENCY. Purchaser's obligation to consummate the
transaction contemplated herein is contingent upon Purchaser obtaining on or
before July 24, 1997, a commitment for an acquisition loan of the Property in
an amount not less than $6,200,000.00 containing the following terms:
non-recourse provisions (subject to customary non-recourse carve-outs) and
otherwise containing terms acceptable to Purchaser in Purchaser's sole
discretion (the aforesaid contingency being hereinafter referred to as the
"Financing Contingency"). Purchaser covenants to submit a completed loan
application requesting a loan in an amount not to exceed $6,200,000.00 to its
prospective lender (and a copy thereof to Seller) on or before June 9, 1997 and
to diligently pursue the satisfaction of the Financing Contingency on or before
July 24, 1997 (collectively, the "Financing Covenant"). If Purchaser has
complied with the Financing Covenant and has not satisfied the Financing
Contingency on or before July 24, 1997, then Purchaser shall have the right to
terminate this Agreement by delivering written notice to Seller on or before
July 24, 1997, in which case this Agreement shall terminate and the Earnest
Money shall be returned to Purchaser and neither party shall have any liability
to the other hereunder, except as specifically set forth herein to the
contrary. If Purchaser has not delivered such notice to Seller on or before
July 24, 1997, then Purchaser shall be deemed to have waived its right to
terminate this Agreement pursuant to this Paragraph 30. If Purchaser has not
satisfied the Financing Contingency on or before July 24, 1997, then
notwithstanding Purchaser's desire to waive the Financing Contingency, Seller
shall have the right to deliver written notice to Purchaser on or before July
28, 1997 terminating this Agreement in which case this Agreement shall
terminate and the Earnest Money shall be returned to Purchaser and neither
party shall have any liability to the other hereunder, except as specifically
set forth herein to the contrary.
31. NEW LEASES. After the execution of this Agreement, Seller shall not
execute any new lease affecting the Property or modify, amend or accept the
surrender of any Lease (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
<PAGE>
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 Agreements (whether executed before or after
the expiration of the Approval Period), 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 of
Seller, shall be assumed and paid by Purchaser (without a credit to Purchaser)
or credited to Seller at Closing to the extent Seller has paid any of said
obligations prior to Closing.
[EXECUTION PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
, 1997.
G/B INVESTMENTS, INC., a Colorado
corporation
By: /s/ Ian Griffus
-----------------------------------
Name: Ian Griffis for G/B Inv.
-----------------------------------
Its: Officer
-----------------------------------
Executed by Seller on SELLER
, 1997.
ERINDALE INVESTORS, an Illinois limited
partnership
By: Balcor Equity Partners-III, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation
By: /s/ John K. Powell, Jr.
----------------------------------
Name: John K. Powell, Jr.
----------------------------------
Its: Senior Vice President
----------------------------------
<PAGE>
Erindale Center
Insignia Mortgage & 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 the
Seller. Broker agrees to deliver a receipt to the Seller at the Closing for
the Fee and a release stating that no other fees or commissions are due to
Broker from Seller or Purchaser.
INSIGNIA MORTGAGE & INVESTMENT COMPANY
By:
----------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Special Warranty Deed
F - Bill of Sale
G - Assignment and Assumption of Service Contracts
H - Assignment and Assumption of Leases
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Rent Roll
L - Reports
M - Assignment and Assumption of Intangible Property
N - Service Contracts
O - Tenant Certificate
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 10th day of June, 1997, by and between G/B INVESTMENTS,
INC., a Colorado corporation ("Purchaser") and ERINDALE INVESTORS, an Illinois
limited partnership ("Seller").
WITNESSETH
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale (the "Agreement"), and Escrow Agreement ("Escrow Agreement") both dated
June 1, 1997 pursuant to which Purchaser has agreed to purchase and Seller has
agreed to sell certain Property (as defined in the Agreement) legally described
and depicted on Exhibit A attached to the Agreement; and
WHEREAS, Seller and Purchaser desire to amend the Agreement in accordance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings
ascribed to each in the Agreement.
2. The first sentence of Paragraph 12.a of the Agreement is hereby
deleted and the following sentence inserted into its place: "Rents (exclusive
of delinquent rents, but including prepaid rents); refundable security deposits
(which will be assigned to and assumed by Purchaser and credited to Purchaser
at Closing): water and other utility charges; fuels; prepaid operating
expenses, i.e., service contracts; management fees in the amount of 5% of
collections; real and personal property taxes for the current year; operating
expenses which are reimbursable by the tenants from January 1, 1997 to the
Closing Date (provided however, that the expenses related to any pre 1997 roof
repair and any unusual expenses in excess of $5,000 per occurrence which occur
from January 1, 1997 to the Closing Date shall not be prorated) less any amount
previously paid by the tenants shall be credited to Seller; and other similar
items shall be adjusted ratably as of 12:01 A.M. on the Closing Date
("Proration Date"), and credited or debited to the balance of the cash due at
Closing."
3. The Closing Date for the transaction shall be July 1, 1997.
4. Purchaser hereby waives any and all rights it may have to terminate
the Agreement during the Approval Period and for any reasons relating to the
Financing Contingency. Purchaser hereby waives the right to send a Notice of
Disapproval and the Financing Contingency is hereby removed.
<PAGE>
5. Concurrently herewith Purchaser will deposit the sum of Two Hundred
Thousand and No/100 Dollars ($200,000.00) into escrow with the Escrow Agent,
which sum represents the entire Earnest Money for this transaction and which
shall be nonrefundable except upon an event of default by Seller.
6. Except as amended hereby, the Agreement and Escrow Agreement shall be
and remain unchanged and in full force and effect in accordance with their
terms.
7. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment, Seller
and Purchaser may execute and exchange by telephone facsimile counterparts of
the signature pages, with each facsimile being deemed an "original" for all
purposes.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
G/B INVESTMENTS, INC.,
a Colorado corporation
By: /s/ Ian C. Griffis
-----------------------------
Name: Ian C. Griffis
-----------------------------
Its: Officer
-----------------------------
SELLER:
ERINDALE INVESTORS,
an Illinois limited partnership
By: Balcor Equity Partners-III, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation
By: /s/ Michael J. Becker
--------------------------------
Name: Michael J. Becker
--------------------------------
Its: Managing Director
--------------------------------
