UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1995 Commission File No. 2-99673
LINCAM PROPERTIES LTD. SERIES 85
(Exact name of registrant as specified in charter)
Illinois 36-3377785
(State of Organization) (I.R.S. Employer Identification No.)
125 South Wacker Drive, Suite 3100, Chicago, Illinois 60606
(Address of principal executive office)
Registrants's telephone number, including area code: (312) 443-1477
Indicate by check (x) whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No ______
<TABLE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 546,781 823,430
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . 10,850 37,901
Receivable from tenant . . . . . . . . . . . . . . . . . . . . . . . . . 7,845 61,679
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 565,476 923,010
------------ ------------
Note receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,485,000 5,485,000
------------ ------------
Investment properties, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,399,174 4,933,945
Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . 12,002,500 22,307,104
------------ ------------
14,401,674 27,241,049
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . (2,751,484) (5,588,495)
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . . . . . 11,650,190 21,652,554
Deferred expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . -- 86,655
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,496 304,856
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,888,162 28,452,075
============ ============
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL (DEFICITS)
--------------------------------------------
JUNE 30, DECEMBER 31,
1995 1994
------------ -----------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,618 77,063
Unearned income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,952
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . -- 14,383
Funds held for others. . . . . . . . . . . . . . . . . . . . . . . . . . 75,863 126,586
Amounts due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . 61,552 --
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . 140,163 427,116
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . 32,913 113,228
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . 335,109 760,328
Note payable (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . -- 5,000,000
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . 335,109 5,760,328
------------ ------------
Venture partners' investment in venture. . . . . . . . . . . . . . . . . . -- 4,106,229
------------ ------------
Partners' capital (deficits) (note 1):
General Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000
Allocated portion of cumulative net income . . . . . . . . . . . . . . 97,272 63,124
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . (146,558) (102,086)
------------ ------------
(47,286) (36,962)
------------ ------------
Limited Partners:
Interest of $1,000. Authorized 40,001 Interests;
issued and outstanding, 25,016 Interests . . . . . . . . . . . . . . 22,479,645 22,479,645
Allocated portion of cumulative net income . . . . . . . . . . . . . . 9,686,129 6,305,454
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . (14,565,435) (10,162,619)
------------ ------------
17,600,339 18,622,480
------------ ------------
Total partners' capital . . . . . . . . . . . . . . . . . . . . 17,553,053 18,585,518
------------ ------------
Total liabilities and partners' capital. . . . . . . . . . . . . $ 17,888,162 28,452,075
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . $ 469,988 921,166 1,447,523 1,814,221
Charges to tenants . . . . . . . . . . . . . . . 42,021 31,517 76,116 44,636
Interest income. . . . . . . . . . . . . . . . . 140,852 106,186 251,144 211,349
Other income . . . . . . . . . . . . . . . . . . 8,957 18,610 31,493 39,057
----------- ---------- ----------- -----------
Total income . . . . . . . . . . . . . . . 661,818 1,077,479 1,806,276 2,109,263
----------- ---------- ----------- -----------
Expenses:
Property operating expenses. . . . . . . . . . . 178,376 362,901 487,937 668,009
Depreciation . . . . . . . . . . . . . . . . . . 92,337 153,132 248,175 300,416
Interest . . . . . . . . . . . . . . . . . . . . 15,233 87,582 128,434 167,377
Management fees paid to the
General Partner. . . . . . . . . . . . . . . . 18,771 40,039 63,843 79,490
Professional services. . . . . . . . . . . . . . 19,472 19,730 39,245 40,545
Amortization of deferred expenses. . . . . . . . 1,733 12,999 14,731 25,997
General and administrative . . . . . . . . . . . 11,646 4,961 35,609 35,152
----------- ---------- ----------- -----------
Total expenses . . . . . . . . . . . . . . 337,568 681,344 1,017,974 1,316,986
----------- ---------- ----------- -----------
Operating income . . . . . . . . . . . . . 324,250 396,135 788,302 792,277
Gain on sale of investment property. . . . . . . . 4,769,685 -- 4,769,685 --
Venture partner's share of
venture's operations . . . . . . . . . . . . . . (1,958,944) (85,327) (2,071,240) (174,635)
----------- ---------- ----------- -----------
Net income before extra-
ordinary item . . . . . . . . . . . . . . 3,134,991 310,808 3,486,747 617,642
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
Extraordinary item:
Loss on early extinguishment
of debt. . . . . . . . . . . . . . . . 71,924 -- 71,924 --
----------- ---------- ----------- -----------
Net income . . . . . . . . . . . . . . . . $ 3,063,067 310,808 3,414,823 617,642
=========== ========== =========== ===========
Net income per limited
partnership unit:
Before extraordinary item. . . . . . . . $ 124.07 12.30 137.99 24.44
Extraordinary item . . . . . . . . . . . 2.85 -- 2.85 --
----------- ---------- ----------- -----------
Net income . . . . . . . . . . . . . . . $ 121.22 12.30 135.14 24.44
=========== ========== =========== ===========
Cash distributions per limited
partnership interest . . . . . . . . . . $ 158.00 18.00 176.00 34.00
=========== ========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,414,823 617,642
Adjustments to reconcile net income to net cash provided
by operating activities:
Gain on sale of investment property. . . . . . . . . . . . . . . . . . . . . (4,769,685) --
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . 71,924 --
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248,175 300,416
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,731 25,997
Venture Partner's share of income. . . . . . . . . . . . . . . . . . . . . . 2,071,240 174,635
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and other current assets . . . . . 27,051 (8,106)
Decrease in receivable from tenant . . . . . . . . . . . . . . . . . . . . 53,834 --
Decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . 117,360 4,949
Decrease in accounts payable . . . . . . . . . . . . . . . . . . . . . . . (52,445) (40,981)
Decrease in unearned income. . . . . . . . . . . . . . . . . . . . . . . . (1,952) (932)
Decrease in accrued interest payable . . . . . . . . . . . . . . . . . . . (14,383) (737)
Decrease in funds held for others. . . . . . . . . . . . . . . . . . . . . (50,723) (50,443)
Increase in amounts due to affiliates. . . . . . . . . . . . . . . . . . . 61,552 --
Decrease in accrued real estate taxes. . . . . . . . . . . . . . . . . . . (286,953) (124,147)
Increase (decrease) in tenant security deposits. . . . . . . . . . . . . . (80,315) 4,735
------------ -----------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . (2,590,589) 285,386
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . 824,234 903,028
------------ -----------
Cash flows from (for) investing activities:
Additions to buildings and improvements. . . . . . . . . . . . . . . . . . . . (7,695) (133,495)
Net cash proceeds from sale of investment property . . . . . . . . . . . . . . 14,531,569 --
------------ -----------
Net cash provided by (used in) investing activities. . . . . . . . . . 14,523,874 (133,495)
------------ -----------
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994
------------ ------------
Cash flows for financing activities:
Cash distributions to Limited Partners . . . . . . . . . . . . . . . . . . . . (4,402,816) (850,544)
Cash distributions to General Partners . . . . . . . . . . . . . . . . . . . . (44,472) (8,591)
Cash distributions to Venture Partner. . . . . . . . . . . . . . . . . . . . . (6,177,469) (240,000)
Decrease in note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,000,000) --
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . (15,624,757) (1,099,135)
------------ -----------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . (276,649) (329,602)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 823,430 825,370
------------ -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 546,781 495,768
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1994, which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
(1) ORGANIZATION AND BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated venture, LincAm Barton
Venture (Note 3). The effect of all transactions between the Partnership
and the venture has been eliminated.
For purposes of reporting cash flows, cash and cash equivalents
include an investment in a money market account and other investments
(having daily availability) at cost which approximates market.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to reflect the Partnership's
accounts in accordance with generally accepted accounting principles
(GAAP). Such adjustments are not recorded on the records of the
Partnership. The net effect of these items is summarized below:
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1994
------------------------ -------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
----------- --------- ---------- ---------
Total assets . . . .$17,888,162 17,144,399 28,403,714 17,669,982
Partners' capital
(deficits):
General Partners .$ (47,286) (147,602) (35,200) (151,603)
Limited Partners .$17,600,339 16,173,312 18,796,866 15,777,338
Net income:
General Partners .$ 34,148 50,868 6,176 5,387
Limited Partners .$ 3,380,675 5,035,891 611,466 533,357
Net income per
limited partnership
interest. . . . . . $ 135.14 201.31 24.44 21.32
The net income and cash distributions per limited partnership
interest, as presented for the six month periods ended June 30, 1995 and
1994 are based upon the limited partnership interests outstanding at the
end of the periods (25,016).
Deferred commitment fees are amortized using the straight-line method
over the term stipulated in the related agreements.
No provision for Federal income taxes has been made as any liability
for such taxes is that of the partners rather than the Partnership.
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
(UNAUDITED)
Certain amounts in the consolidated 1994 financial statements have
been reclassified to conform to the 1995 presentation.
(2) INVESTMENT PROPERTIES
(A) GENERAL
The Partnership has acquired, either directly or through a joint
venture (Note 3), three apartment complexes, a distribution center, and a
warehouse/research facility. One apartment complex was sold in 1993.
Another apartment complex, owned through the joint venture, was sold in
April, 1995. All three of the properties owned at June 30, 1995 were
completed and in operation.
The cost of the investment properties, as acquired, represents the
total cost to the Partnership or its venture plus miscellaneous acquisition
costs.
Depreciation on the investment properties acquired has been provided
over the estimated useful lives of five to forty years using the straight-
line method.
Maintenance and repair expenses are charged to operations as incurred.
Expenditures which materially add to the value or utility of the property
or appreciably prolong its useful life are capitalized and depreciated over
their estimated useful lives.
(B) OAK VIEW APARTMENTS
On September 30, 1986, the Partnership acquired the Oak View
Apartments, a recently constructed 124 unit apartment complex located in
the Augusta, Georgia metropolitan area, and title to the approximately
twenty acre parcel of land on which the complex is situated.
The Partnership's purchase price was $3,604,460, excluding closing
costs, fees, reserves and prorations, and was determined by arm's-length
negotiations.
An affiliate of the General Partners manages the apartment complex for
a fee equal to 5% of the gross revenue of the property.
(C) 5521 MEADOWBROOK COURT DISTRIBUTION CENTER
On January 12, 1987, the Partnership acquired for $2,492,500 an
approximately 50,000 square foot distribution center and the approximately
110,000 square foot parcel of land on which the building is situated. The
property is located at 5521 Meadowbrook Court in Rolling Meadows, Illinois,
and has been leased to Komori America, Inc. since February 11, 1991.
Komori America, Inc. has entered into a new thirty-two month lease
agreement which commenced August 16, 1993. Under the terms of the new
lease the tenant will occupy approximately 41.67% of the distribution
center and pay a base rent of $4.85 per square foot in year one. The base
rent increases to $4.90 on August 1, 1994. Komori America, Inc. has
amended their lease effective February 1, 1994 to occupy an additional
4,167 square feet (8.33%) for $2.75 per square foot. Komori America, Inc.
currently occupies 50% of the distribution center and is responsible for
50% of all operating expenses including real estate taxes, during 1994.
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
(UNAUDITED)
On January 11, 1994, the Partnership leased the remaining 25,000
square feet of the distribution center to Samsung America, Inc. The
thirty-eight month lease commenced March 6, 1994 and provides for an annual
base rent of $3.75 per square foot in year one. The terms of the lease
provide for three percent annual increases in the base rent. The terms of
the lease also provide that the tenant be responsible for their
proportionate share of all operating expenses, including real estate taxes,
during the term of the lease.
An affiliate of the General Partners manages and provides leasing
services for the distribution center for a fee equal to 6% of the gross
revenue for the property.
(D) WALKER'S MARK APARTMENTS
On July 29, 1987, the Partnership acquired for $5,950,000 the Walker's
Mark Apartments, a 164 unit apartment complex located in Dallas, Texas, and
title to the approximately seven acre parcel of land on which the complex
is situated.
On August 19, 1993, the Partnership sold this apartment complex for
$6,585,000. The Partnership received $911,617 in cash (after closing costs
and commissions) and a note receivable for $5,485,000 which is secured by a
first mortgage on the property. The Partnership is receiving monthly
payments of interest only, at an annual rate of 7.5% with the note balance
due October 1, 1997.
(E) 1880 COUNTRY FARM DRIVE FACILITY
On July 1, 1988, the Partnership acquired a recently completed,
approximately 162,000 square foot office and warehouse/research facility
and title to the approximately 354,000 square foot parcel of land on which
the building is situated. The property is located at 1880 Country Farm
Drive in Naperville, Illinois, and is leased to Babson Bros. for a ten-year
lease term commencing September, 1987. Babson Bros. Co. has two 5-year
options to renew its lease at market rates.
The Partnership's purchase price was $7,840,000, excluding closing
costs, fees, reserves and prorations, and was determined by arm's-length
negotiations.
An affiliate of the General Partners manages the property for a fee
equal to 1% of the gross revenue of the property.
(3) VENTURE AGREEMENT - LINCAM BARTON VENTURE
The Partnership owned a 60% interest in Barton Creek Landing
Apartments, a 250 unit apartment complex located in Austin, Texas which was
completed in 1986, and title to the approximately nineteen acre parcel of
land on which the complex is situated. The Partnership and its venture
partner, an affiliate of the General Partners, made cash contributions
aggregating $7,746,000 and $5,164,000, respectively, to the joint venture
partnership (the "Joint Venture"). The Joint Venture's purchase price was
$12,500,000 plus closing costs, fees, reserves and prorations, and was
determined by arm's-length negotiations.
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
(UNAUDITED)
Under the terms of the Joint Venture Agreement, all costs incurred by
the Joint Venture and all profits and losses and cash distributions will be
shared by the Partnership and its venture partner in proportion to their
ownership percentages (60% and 40%, respectively).
On April 12, 1995, the Joint Venture sold this apartment complex for
$14,871,600 in an all cash transaction. The Partnership received
approximately $9,060,000 in cash distributions from the joint venture which
was used to repay debt (see Note 4 of Notes to Consolidated Financial
Statements) and make a special distribution of $3,537,616 or $140 per
limited partnership interest.
(4) NOTE PAYABLE
The Partnership paid the $5,000,000 note which was owed to a bank in
full in April 1995 upon closing of the sale of the Barton Creek Landing
Apartments.
(5) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the Corporate General Partner and its affiliates as of and
for the six months ended June 30, 1995 and 1994 are summarized as follows:
Six Months Six Months
Ended Ended Unpaid at
June 30, June 30, June 30,
1995 1994 1995
---------- ---------- ----------
Property management fees $63,843 79,490 --
Reimbursement (at cost) for:
Out-of-Pocket expenses $34,836 35,885 1,552
======= ====== ======
(6) ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
necessary for a fair presentation have been made to the accompanying
figures as of June 30, 1995 and December 31, 1994 and for the six-month
periods ended June 30, 1995 and 1994.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On October 23, 1985, the Partnership commenced an offering of
$25,000,000 (subject to increase by up to $15,000,000) of Limited
Partnership Interests pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933. The offering of Limited Partnership
Interests terminated April 15, 1986. A total of 25,015 Interests were
assigned to the public between October 23, 1985 and May 16, 1986.
After deducting selling expenses and other offering costs, the
Partnership had approximately $22,500,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and to satisfy working capital requirements. A portion of the
proceeds was utilized to acquire the properties owned by the Partnership at
June 30, 1995.
On April 12, 1995, the Joint Venture sold Barton Creek Landing
Apartments for $14,871,600 in an all cash transaction. As described in
Notes 3 and 4 of Notes to Consolidated Financial Statements, the
Partnership received approximately $9,060,000 in cash of which $5,000,000
was used to retire the Partnership's bank debt. Of the remaining proceeds,
$140 per limited partnership interest was distributed to the partners via a
special distribution. The remaining cash of approximately $520,000 is
being held or has been used for working capital needs.
At June 30, 1995, the Partnership and its consolidated joint venture
had cash of $212,881 and short-term investments in asset management
accounts of $333,900 which will be utilized for distributions to partners
and for working capital requirements.
At June 30, 1995 the Partnership has total current assets of $565,476
and current liabilities of $335,109 and a current ratio of 1.69. Cash
distributions have also increased. The Partnership distributed $52 per
Limited Partnership Interest in 1993. This distribution increased 23% to
$64 per Limited Partnership Interest in 1994. Including a special
distribution of the net proceeds from the sale of Barton Creek Landing
Apartments equal to $140 per limited partnership interest, cash
distributions are anticipated to be $206 per Limited Partnership Interest
in 1995.
In August 1993, the Partnership replaced its existing bank debt. This
note was repaid in full in April 1995 from the proceeds of the sale of
Barton Creek Landing Apartments.
On January 30, 1993, Komori America, Inc. entered into a new lease
agreement to occupy 20,833 square feet of the 50,000 square foot
distribution center. The lease became effective on August 16, 1993, upon
expiration of their previous lease for 100% of the space of the
distribution center. In February 1994 Komori America, Inc. amended their
lease to occupy an additional 4,167 square feet of the distribution center
bringing their total occupancy to 25,000 square feet. Samsung America,
Inc. has leased the remaining 25,000 square feet of the distribution center
effective March 6, 1994. See Note 2(c) of Notes to Consolidated Financial
Statements.
As described in Note 2(d) of Notes to Consolidated Financial
Statements the Partnership sold Walker's Mark Apartments in Dallas, Texas
for $6,585,000 on August 19, 1993. The Partnership received $911,617 in
cash (net of closing costs) at closing and a note receivable for
$5,485,000. The note provides for monthly payments of interest only in the
amount of $34,281 for 50 months, at which time the note balance is due.
The Partnership used the funds from the sale, together with working capital
reserves, to pay its note payable down to $5,000,000.
The Corporate General Partner will continue to explore selling each of
the properties at a time when, from the standpoint of maximizing value, it
makes the most sense.
RESULTS OF OPERATIONS
At June 30, 1995, the Partnership owned three investment properties,
consisting of one apartment complex, a distribution center and a
warehouse/research facility. Another apartment complex, owned through
joint venture, was sold in April, 1995 for $14,871,600 in an all cash
transaction. The Partnership received approximately $9,060,000 in cash
distributions from the joint venture which was used to repay the note
payable and make a special distribution ($140 per limited partnership
interest) to the partners.
The decrease in rental income for the six months ended June 30, 1995
compared to 1994 of approximately $366,700 (20.2%) is primarily due to less
rental income collected at Barton Creek Landing Apartments ($405,200) due
to its being sold on April 12, 1995. This decrease was partially offset by
increases in rental income at the Rolling Meadows distribution center
($33,600) and at Oak View Apartments in Augusta, Georgia ($4,900). The
increase in charges to tenants for the six months ended June 30, 1995
compared to 1994 of approximately $31,500 (70.5%) is attributable to 1) the
distribution center being fully occupied in the first six months of 1994
($10,150) as Samsung America, Inc.'s lease for 50% of the distribution
center commenced March 6, 1994; and 2) increased real estate taxes and
maintenance costs being paid directly by the Partnership and reimbursed by
the tenants ($21,350). Interest income increased approximately $39,800
(18.8%) for the six months ended June 30, 1995 compared to 1994. This
increase is primarily attributable to increased amounts held in interest
bearing short-term asset management accounts from April 12, 1995 until May
31, 1995. The decrease in other income of approximately $7,560 (19.4%) is
primarily due to the sale of Barton Creek Landing Apartments. Property
operating expenses decreased approximately $180,100 (27%) for the six
months ended June 30, 1995 compared to 1994. This decrease is primarily
attributable to 1) the Barton Creek Landing Apartments being sold
($167,800); and 2) leasing commissions paid in 1994 for Samsung America
Inc.'s lease ($12,900). The decrease in depreciation expense of
approximately $52,000 for the six months ended June 30, 1995 compared to
1994 is primarily due to Barton Creek Landing Apartments being sold
($60,800). This decrease was partially offset by increases in property
placed in service during the second quarter of 1994 at the distribution
center ($9,300). The repayment of the $5,000,000 note payable on April 12,
1995 resulted in a decrease of interest expense of approximately $38,900
(23.3%) for the six months ended June 30, 1995 compared to 1994.
Management fees paid to an affiliate of the General Partners decreased
approximately $15,600 (19.7%) for the six months ended June 30, 1995
compared to 1994. The sale of the Barton Creek Landing Apartments
accounted approximately for a $21,000 decrease in management fees. This
decrease was partially offset by an increase in rental income and charges
to tenants of the distribution center. Professional services and general
and administrative expenses have remained essentially flat for the six
months ended June 30, 1995 compared to 1994. Amortization of deferred
expenses decreased approximately $11,300 (43.3%) for the six months ended
June 30, 1995 compared to 1994 due to the early repayment of the note
payable. This write-off of deferred expenses is captioned as a loss on
early extinguishment of debt ($71,924) on the consolidated statement of
operations.
For the six months ended June 30, 1995, net operating income was
$788,302 or $31.20 per limited partnership interest. The partnership also
recognized a gain on sale of investment property, net of minority interest
of $2,861,811 or $113.26 per limited partnership interest. After an
extraordinary loss of $71,924 on early extinguishment of debt, the net
income for the six months ended June 30, 1995 was $3,414,823 or $135.14 per
limited partnership interest.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the partnership's investment
properties:
<CAPTION>
1994 1995
------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barton Creek Landing Apartments
Austin, Texas. . . . . . . . . . 90% 98% 99% 94% 96% N/A
Oak View Apartments
Augusta, Georgia . . . . . . . . 98% 98% 98% 98% 99% 88%
5521 Meadowbrook Court
Distribution Center
Rolling Meadows, Illinois. . . . 100% 100% 100% 100% 100% 100%
1880 Country Farm Drive
Warehouse/Research Facility
Naperville, IL . . . . . . . . . 100% 100% 100% 100% 100% 100%
<FN>
- --------------------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
1) Form 8-K dated April 12, 1995.
2) Form 8-K/A No. 1 dated April 12, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LINCAM PROPERTIES LTD. SERIES 85
By: LINCAM PROPERTIES, INC.
Corporate General Partner
By: /S/ JOHN E. ALLEN
John E. Allen
President of Corporate
General Partner
Date:August 7, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: LINCAM PROPERTIES, INC.
Corporate General Partner
By: /S/ GREGORY T. MUTZ
Gregory T. Mutz
Chairman and Director
Principal Executive Officer
By: /S/ JOHN E. ALLEN
John E. Allen
President and Director
By: /S/ CHARLES C. KRAFT
Charles C. Kraft, Treasurer
Principal Financial Officer and
Principal Accounting Officer
Date:August 7, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000774489
<NAME> LINCAM PROPERTIES LTD. SERIES 85
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 546,781
<SECURITIES> 0
<RECEIVABLES> 7,845
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 565,476
<PP&E> 14,401,674
<DEPRECIATION> 2,751,484
<TOTAL-ASSETS> 17,888,162
<CURRENT-LIABILITIES> 335,109
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 17,553,053
<TOTAL-LIABILITY-AND-EQUITY> 17,888,162
<SALES> 4,769,685
<TOTAL-REVENUES> 1,806,276
<CGS> 0
<TOTAL-COSTS> 1,017,974
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,434
<INCOME-PRETAX> 3,486,747
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,486,747
<DISCONTINUED> 0
<EXTRAORDINARY> (71,924)
<CHANGES> 0
<NET-INCOME> 3,414,823
<EPS-PRIMARY> 135.14
<EPS-DILUTED> 135.14
</TABLE>
FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): April 12, 1995
LINCAM PROPERTIES LTD. SERIES 85
Illinois 2-99673 36-3377785
(State or other (Commission File No.) (IRS Employee
jurisdiction of Identification No.)
organization)
125 S. Wacker Drive, Suite 3100, Chicago, Illinois 60606
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 312-443-1477<PAGE>
BARTON CREEK LANDING APARTMENTS
Austin, Texas
Item 2. Acquisition or Disposition of Assets
On April 12, 1995, a 60% owned joint venture of Lincam Properties
Ltd. Series 85 (the "Partnership") sold Barton Creek Landing Apartments, a
250-unit luxury garden apartment complex located in Austin, Texas. The
Property sold includes 18.77 acres of land. The buyer, RREEF Barton Creek,
L.P., is not affiliated with the partnership, the affiliate joint venture,
or the general Partners of the Partnership, and the purchase price for the
property was determined by arm's-length negotiations.
The apartment complex was completed in 1986 and consists of 27 two-
story wood frame buildings with brick and wood exteriors: it contains 71
one-bedroom units and 179 two-bedroom units in a variety of floor plans
totalling 220,688 square feet of net rentable area. The apartment complex
includes a swimming pool, a clubhouse/leasing office, a lighted tennis
court and a sports court and is landscaped with tiered garden areas and
spacious greenbelts. All units are well appointed and include such
features as marble entries, fireplaces, individual security alarm systems,
and energy-saving appliances including frost-free refrigerators with
icemakers, automatic dishwashers, disposals, ovens, ranges and microwaves.
The sales price was $14,871,600 for which the affiliate joint venture
received approximately $14,272,000 in cash net of prorations and closing
costs. The Partnership received 60% of the net proceeds ($8,563,200), a
portion of which was used to repay its $5,000,000 outstanding note payable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information. Inclusion of the pro
forma financial information is impracticable at this
time. This information will be filed under the cover of
"Form 8/A-1" as soon as practicable but not later than
sixty (60) days from the date of this report.
(c) Exhibits.
10.1 Agreement of Purchase and Sale of Barton Creek
Landing Apartments properties by LincAm Barton
Venture to RREEF Barton Creek, L.P., and First
Amendment thereto.
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.
LincAm Properties Ltd. Series 85
By: LincAm Properties Inc.
Corporate General Partner
(Registrant)
Date: April 26, 1995 By: JOHN E. ALLEN
-------------- ---------------
(Date) (Signature)
John E. Allen,
President of Corporate
General Partner
FIRST AMENDMENT TO PURCHASE AGREEMENT
This First Amendment to Purchase Agreement is made as of the ___ day
of April, 1995 by and between RREEF America L.L.C., a Delaware limited
liability company ("Purchaser") and Lincam Barton Venture ("Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have entered into that certain Purchase
Agreement dated February 17, 1995 (the "Contract") for the purchase and
sale of the property known as Barton Creek Landing Apartments (the
"Property"), as more particularly described therein;
WHEREAS, Seller and Purchaser have agreed to various changes to the
Contract, as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby amend the
Contract as follows:
1. Purchase Price. The definition of Purchase Price under
paragraph 1.3(a) of the contract is hereby amended to read as follows:
"Purchase Price. The purchase price for the Property (the Purchase Price)
is $14,871,600."
2. Tax Holdback. At closing, the real estate tax credit to be
provided by Seller to Purchaser under the Contract shall be based on
$940.99 for each day of Seller's period of ownership during the tax bill
period. In addition, Seller shall credit to Purchaser an amount equal to
$59.18 for each day of Purchaser's period of ownership during the current
tax bill period, which Purchaser shall hold in its operating account until
the final real estate tax bill attributable to the current billing period
is issued. To the extent the actual tax bill is less than $343,462 and
greater than $321,839, within thirty (30) days after receipt of such final
tax bill, Purchaser shall pay to Seller an amount equal to Purchaser's
share (on a per diem basis) of $343,462 less the greater of (i) the actual
amount of such tax bill, or (ii) $321,839.
3. Confidentiality. The parties hereto agree to keep confidential
all matters relating to the Purchase Price (other than on a need-to-know
basis), and to obtain agreements from their respective brokers, agents and
employees to do the same.
4. Property Owners Association. At Closing, Seller shall deliver
to Purchaser an estoppel letter (in a form reasonably acceptable to
Purchaser) from the Wallingwood P.U.D. Owners Association stating the
annual amount of assessment due for the Property, that Seller has paid all
assessments and other amounts due and owing to date, that no special
assessments are being charged or are anticipated, and that neither Seller
nor the Property is in violation of the terms of the Declaration of
Covenants, Conditions and Restrictions creating such association.
5. Price Allocation. Seller and Purchaser acknowledge that a
portion of the Purchase Price is attributable to personal property to be
conveyed. At or prior to closing, Seller and Purchaser shall negotiate in
good faith to arrive at an allocation of the Purchase Price between the
personal and real property to be conveyed.
6. Zoning: Inspection Period. Upon full execution and delivery
of this First Amendment by Seller and Purchaser, Purchaser hereby approves
of the condition of the Property and waives its right to terminate the
Contract pursuant to paragraph 2.1 thereof, except with regard to zoning
matters. If Purchaser determines, in its sole discretion, that the current
zoning for the Property is unsatisfactory to Purchaser, Purchaser may
terminate this Contract by giving written notice of termination to Seller
on or before April 12, 1995. If Purchaser does not so give such notice of
termination, the Contract shall continue in full force and effect.
7. Severability. If any provision of this Amendment is held to be
illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable; this Amendment shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain
in full force and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom.
8. Continuation of Contract. Other than as amended herein, the
Contract shall remain in full force and effect and all capitalized terms
herein shall have the same definition as those contained in the Contract.
In the event of any conflict between the terms of the Contract and this
First Amendment, the provisions of this First Amendment shall govern.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
the Contract as of the date first set forth above.
Seller: Purchaser:
Lincam Barton Venture RREEF America L.L.C.,
a Delaware limited liability company
By: Lincam Properties Ltd. Series 85
By: Lincam Properties, Inc. By:
a Delaware corporation, ----------------------
general partner Title: Authorized
Representative
By: ____________________________
Title:
By: Lincam Associates, Ltd.
an Illinois limited partnership,
general partner
By: ____________________________
Title:
AGREEMENT OF PURCHASE AND SALE
FOR THE ACQUISITION
OF
BARTON CREEK LANDING APARTMENTS
BY
RREEF AMERICA L.L.C.
FROM
LINCAM PROPERTIES LTD. SERIES 85
Dated as of: February ____, 1995
TABLE OF CONTENTS
Page
ARTICLE 1 CERTAIN TERMS/PROPERTY/PURCHASE PRICE/
ADDITIONAL CONSIDERATION
1.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . . .1
1.2 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . .3
1.3 Purchase Price and Payment . . . . . . . . . . . . . . . . . .3
1.4 Earnest Money. . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE 2 INSPECTION
2.1 Inspection and Review Period. . . . . . . . . . . . . . . . . .3
2.2 Continuing Right of Access for Inspection. . . . . . . . . . .8
ARTICLE 3 TITLE REVIEW
3.1 Delivery of Title Documents. . . . . . . . . . . . . . . . . .8
3.2 Review of Title. . . . . . . . . . . . . . . . . . . . . . . .9
3.3 Further Exceptions . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4 OPERATIONS PRIOR TO CLOSING
4.1 Seller's Operations. . . . . . . . . . . . . . . . . . . . . 10
4.2 Leasing Arrangements and Management Transition . . . . . . . 11
4.3 Removal and Replacement of Tangible Personal Property. . . . 12
4.4 Seller's Obligations . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 5 CLOSING
5.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Seller's Deliveries in Escrow. . . . . . . . . . . . . . . . 13
5.3 Purchaser's Deliveries in Escrow . . . . . . . . . . . . . . 14
5.4 Closing Statements/Transfer Declarations . . . . . . . . . . 15
5.5 Title Policy/Updated UCC Searches. . . . . . . . . . . . . . 15
5.6 Possession . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Termination of Property Management and Other Service
Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Memorandum/Name of Representative. . . . . . . . . . . . . . 16
5.9 Delivery of Books and Records. . . . . . . . . . . . . . . . 16
5.10 Notice to Tenants and Vendors. . . . . . . . . . . . . . . . 16
5.11 Close of Escrow. . . . . . . . . . . . . . . . . . . . . . . 16
5.12 Conditions Precedent . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 6 PRORATIONS/OTHER ALLOCATIONS
AND DELIVERIES/EXPENSES
6.1 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Tenant Deposits. . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Sales, Transfer, and Documentary Taxes . . . . . . . . . . . 20
6.4 Utility Deposits . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Permit Transfer Fees . . . . . . . . . . . . . . . . . . . . 20
6.6 Wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Intentionally Deleted. . . . . . . . . . . . . . . . . . . . 20
6.8 Commissions. . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Transaction Expenses . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7 REPRESENTATIONS AND WARRANTIES
7.1 Seller's Representations and Warranties. . . . . . . . . . . 21
7.2 Purchaser's Representations and Warranties . . . . . . . . . 27
7.3 Survival of Representation, Warranties and Covenants . . . . 28
ARTICLE 8 DAMAGE OR DESTRUCTION/CONDEMNATION
8.1 Damage or Destruction. . . . . . . . . . . . . . . . . . . . 29
8.2 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 9 REMEDIES
9.1 Purchaser's Default. . . . . . . . . . . . . . . . . . . . . 30
9.2 Seller's Default . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 10 MISCELLANEOUS
10.1 Parties Bound. . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.6 No Third Party Beneficiary . . . . . . . . . . . . . . . . . 32
10.7 Entirety and Amendments. . . . . . . . . . . . . . . . . . . 32
10.8 Execution in Counterparts. . . . . . . . . . . . . . . . . . 32
10.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . 32
10.10 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.11 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 33
10.12 U.S. Currency Required . . . . . . . . . . . . . . . . . . . 33
10.13 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . 33
10.14 Use of Pronouns. . . . . . . . . . . . . . . . . . . . . . . 33
10.15 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.16 Construction. . . . . . . . . . . . . . . . . . . . . . . . 34
10.17 Calculation of Time Periods . . . . . . . . . . . . . . . . 34
10.18 Information and Audit Cooperation . . . . . . . . . . . . . 35
10.19 Limitation of Liability . . . . . . . . . . . . . . . . . . 35
10.20 As-Is, Where-Is . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 11 INDEMNIFICATION
11.1 Seller's Agreements. . . . . . . . . . . . . . . . . . . . . 36
11.2 Purchaser's Agreements . . . . . . . . . . . . . . . . . . . 36
11.3 Procedures for Obtaining Indemnification. . . . . . . . . . 37
11.4 Right to Assume Defense. . . . . . . . . . . . . . . . . . . 38
AGREEMENT OF PURCHASE AND SALE
(Barton Creek Landing Apartments)
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of the
___ day of _________________, 1995, by and between RREEF AMERICA L.L.C., a
Delaware limited liability company (the "Purchaser") and LINCAM PROPERTIES
LTD SERIES 85, an Illinois limited partnership (as "Seller") under the
following circumstances:
A. Seller is the owner of the 250-unit apartment project and
related facilities situated on the land described in Exhibit A attached
hereto.
B. Seller desires to sell to Purchaser and Purchaser desires to
buy from the Seller, subject to and upon the terms and conditions
hereinafter set forth, the 250-unit apartment project and related
facilities situated on the land described in Exhibit A hereto.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1: CERTAIN TERMS/PROPERTY/PURCHASE PRICE/
ADDITIONAL CONSIDERATION
1.1 Certain Definitions: As used herein, the terms listed below
shall have the following meanings throughout this Agreement:
(a) The term "Real Property" shall be a reference to the real
property described in Exhibit A attached hereto, together with (i) all
improvements (if any) located thereon, including without limitation all
heating, ventilation, electrical, plumbing and other mechanical or
operational systems (collectively, the "Improvements"), (ii) all and
singular the rights, benefits, privileges, easements, tenements,
hereditaments and appurtenances thereon or in anywise appertaining to such
real property, (iii) all right, title, and interest of the Seller in and to
all strips and gores and any land lying in the bed of any street, road or
alley, open or proposed, adjoining any portion of such real property, and
(iv) all right, title and interest of the Seller in and to all other real
property around, claimed or used by the Seller adjoining or contiguous to
any part of such real property. When the Survey (as defined herein) is
available, the legal description in the Survey shall be accepted by the
parties as the correct legal description of the Real Property, although
material differences from Exhibit A shall be subject to the reasonable
approval of Purchaser.
(b) The term "Leases" shall be a collective reference to all
leases of or other occupancy agreements for apartments and other space in
the Improvements, including leases that may be made by Seller after the
date hereof and prior to the Closing (as defined herein).
(c) The term "Tangible Personal Property" shall be a
collective reference to all equipment, machinery, furniture, furnishings,
supplies and other tangible personal property owned by Seller and Seller's
interest in any such property leased to Seller, now or hereafter located in
and used in connection with the operation, ownership or management of the
Real Property.
(d) The term "Intangible Personal Property" shall be a
collective reference to all intangible personal property related to the
Real Property, including, without limitation: all trade names and
trademarks associated with the Real Property including Seller's rights and
interests, if and to the extent Seller has such rights and interests, in
the name of the Real Property, which is commonly known as "Barton Creek
Landing Apartments"; the plans and specifications and other architectural
and engineering drawings for the Improvements, if and to the extent Seller
has any right, title or interest in and to such plans and specifications
and other architectural and engineering drawings for the Improvements;
contract rights related to the construction, operation, ownership or
management of the Real Property (but excluding the obligations of the
Seller thereunder, except those expressly assumed pursuant to this
Agreement); warranties, zoning approvals, building permits and licenses (to
the extent assignable); tenant lists, correspondence with tenants and
records (including, but not limited to, those relating to taxes, insurance,
maintenance, repairs, capital improvements and services), booklets,
manuals, advertising and promotional materials, including, without
limitation, photographs and negatives, correspondence with suppliers, and
telephone exchange numbers (if available).
(e) The term "Property" shall be a collective reference to
the Real Property and all Improvements, Tangible Personal Property and the
Seller's interest in the Leases and Intangible Personal Property.
1.2 Purchase and Sale. Subject to the applicable terms and
conditions of this Agreement, Seller agrees to sell the Property to
Purchaser, and Purchaser agrees to purchase the Property from Seller.
1.3 Purchase Price and Payment.
(a) Purchase Price. The purchase price for the Property (the
"Purchase Price") is $14,900,000.00.
(b) Payment of Purchase Price. The Purchase Price shall be
payable at Closing (defined below), plus or minus prorations and other
adjustments to the Purchase Price as described herein and after the
application for the benefit of Purchaser of all Earnest Money (including
any interest earned thereon), by wire transfer to the Seller.
1.4 Earnest Money. Purchaser has deposited $50,000.00 into a joint
order escrow account with Chicago Title Insurance Company, National
Business Unit, 7616 LBJ Freeway, Suite 300, Dallas, Texas 75251 (Attn. Ms.
Ellen Schwab) as escrow trustee, with such funds to be deposited in an
insured interest bearing account pursuant to instructions to the Title
Insurer from the Purchaser. Unless the Purchaser terminates this Agreement
by delivery of written notice to Seller on or before the last day of the
Review Period (as determined in accordance with Section 2.1 hereof), the
Purchaser shall deposit within five (5) business days after the last day of
the Review Period (as determined in accordance with Section 2.1 hereof) an
additional $50,000.00 into the Escrow (all such amounts deposited therein,
together with any interest accrued thereon, shall be collectively referred
to herein as the "Earnest Money"). If Purchaser delivers such termination
notice, all Earnest Money shall be returned promptly to Purchaser and,
subject to the provisions of Section 2.1(d) below, this Agreement shall be
null and void. In the absence of such notice, provided Seller fulfills all
its obligations under this Agreement, the Earnest Money shall be
nonrefundable to Purchaser and payable to Seller at Closing or, upon
default of Purchaser, after the expiration of all applicable cure periods.
Purchaser's failure to timely deposit the additional $50,000 referred to
above shall be deemed a default hereunder and Seller shall have the right
to exercise its rights and remedies pursuant to the terms and provisions of
Section 9.1 hereof.
ARTICLE 2: INSPECTION
2.1 Inspection and Review Period. Purchaser shall have forty-five
(45) days after the date hereof (the "Review Period") to receive, review
and inspect all aspects of the Property and to determine, in its sole
discretion, that the Property is satisfactory in all respects.
Notwithstanding anything to the contrary in this Agreement, Purchaser may
terminate this Agreement by giving written notice of termination to Seller
on or before the expiration of the Review Period. If Purchaser does not so
give such notice of termination, this Agreement shall continue in full
force and effect and Purchaser shall deposit with the Title Company, at the
time and in the manner required pursuant to Paragraph 1.4, above, the
additional Earnest Money described therein.
(a) Inspections. The inspections and reviews will include, at a
minimum, the following:
(i) Physical inspections of the entire Property, unit by unit,
including structural, mechanical, life-safety, engineering, civil,
landscaping, paving, plumbing, electrical and all other detail inspections;
(ii) Examination of all construction items, to the extent in
Seller's possession or control (which, for purposes hereof, "control" shall
mean readily available to Seller without cost [other than incidental costs
of postage and other such items]), including as-built architectural, civil,
electrical, life-safety, mechanical and plumbing plans and specifications,
copies of any available construction reports, whether internal or external,
certificates of completion from the project architect and inspecting
architect, certificates of occupancy, building permits, evidence of
compliance with fire code, building code and other governmental or
regulatory code requirements and all other related use permits;
(iii) Examination of all operating statements and supporting
documentation of the Property from and including calendar years 1991
through 1994 as well as 1995 year to date together with the 1995 budget,
reflecting all detailed rental income, operating expense accounts, and the
maintenance log maintained for the Property;
(iv) All documentation maintained in current tenant files, including
all Leases, security deposit information, credit reviews, and the like;
(v) An environmental report for the Property prepared by a
qualified engineering firm acceptable to Purchaser and in form otherwise
satisfactory to Purchaser, which shall be paid for by Purchaser and shall
remain the property of Purchaser;
(vi) All existing title policies and commitments and surveys issued
or prepared in connection with the Property, together with copies of all
exception documents noted therein; and
(vii) Such other documents, reviews and inspections as Purchaser
determines are reasonably necessary.
(b) Access. Purchaser and its agents and contractors shall have
unlimited access to the Property, subject to the limitations set forth
herein (including, without limitation, the rights of all tenants under
their leases), during the Review Period to enable Purchaser to conduct its
review and analysis of the Property. Purchaser shall indemnify, defend and
hold Seller harmless with respect to any damage to the Property or injury
to any person caused by Purchaser, its agents, employees or contractors in
connection with its investigations of the Property, provided, however, that
with respect to any damage to the Property or injury to any person not
caused solely by the negligence of any one or more of Purchaser, its agents
or its contractors, such indemnification to be limited to the extent of
Purchaser's, its agents' or contractors' contributory negligence. All
activities of Purchaser during the Review Period shall be at Purchaser's
sole expense, subject to Section 6.9 and Article 9 below.
Purchaser agrees to provide Seller with twenty-four (24) hours
advance notice of such inspections and further agrees that Seller (i) has
the right to have an employee or agent present during such inspections and
(ii) has the right to approve in its sole discretion the scope and method
of any physically intrusive inspection (for example, a Phase II Site
Assessment).
(c) Cooperation. To the extent such items are in Seller's
possession or control (which, for purposes hereof, "control" shall mean
readily available to Seller without cost [other than incidental costs of
postage and other such items]), Seller shall provide access to the Property
and copies of all items and records noted in Section 2.1(a) above, in this
Section 2.1(c) below, or hereafter requested (collectively the "Property
Information"), to Purchaser and Purchaser's agents during normal business
hours. Purchaser's inspection rights shall include without limitation the
right to conduct a "walk-through" of the individual apartment units located
in the Property during the Review Period or prior to the Closing, upon
appropriate notice (not to exceed twenty-four (24) hours) to tenants
subject to the rights of tenants under their leases. In the course of its
investigations, Purchaser may make inquiries to third parties, including,
without limitation, tenants, lenders, contractors, property managers,
parties to Service Contracts and municipal, local and other government
officials and representatives, and Seller consents to such inquiries.
Seller shall in good faith cooperate with Purchaser and Purchaser's agents
during Purchaser's reviews and inspections, and Seller shall disclose to
Purchaser prior to expiration of the Review Period all physical and
financial aspects of the Property of which Seller has any knowledge.
Specifically, and without limitation, Seller shall provide to Purchaser (to
the extent not already provided) not later than seven (7) days after the
date hereof with copies of or access to the following items for the
Property:
(i) Plans. Copies of architectural and construction plans and
specifications;
(ii) Surveys. Copies of existing surveys;
(iii) Environmental. Copies of all existing environmental
inspections, reports, tests, studies or audits;
(iv) Title. Copies of existing title policies or commitments and
all title exception documents;
(v) Operating Statements. Copies of unaudited annual operating
statements for 1991, 1992 , 1993 and 1994, plus the Property budget for
1995 (collectively, together with those referred to in Section 4.1(f), the
"Operating Statements") together with a breakdown of all sources and
amounts of all income in addition to rental revenues;
(vi) Leases. Access to all Leases and Lease files and service
agreements and maintenance files;
(vii) Permits. A copy of all certificates of occupancy and copies of
all current governmental permits, licenses and approvals;
(viii) Rent Roll. A copy of a current rent roll (the "Rent Roll")
showing unit, tenant, monthly rental, security or other deposit, date of
security or other deposit, date rent paid through, delinquency, free rent
or other concessions, and lease term (including any renewals);
(ix) Tax Statements. Copies or a summary of ad valorem tax
statements (including copies of all notices of valuation or tax protests)
relating to the Property for the current year or other current tax period
(if available) and for the three (3) calendar years preceding this
Agreement;
(x) Lease Form. Copies of Seller's standard lease forms in use at
the Property;
(xi) Service Contracts. Copies of a list (together with access to
copies) of all management agreements, service, supply, equipment rental and
similar contracts related to the operation of the Property (collectively,
the "Service Contracts");
(xii) Maintenance Records. Access to all available maintenance work
orders for the 12 months preceding this Agreement;
(xiii) Utility Bills. Access to all utility bills for the twelve (12)
months preceding this Agreement, if available;
(xiv) List of Capital Improvements. A list of all capital
improvements performed on the Property within the twelve (12) months
preceding this Agreement;
(xv) Inventory. An inventory of the Tangible Personal Property and
the Intangible Personal Property;
(xvi) ADA Reports. Any written reports, results of inspections or
surveys of the Property related to compliance with the Americans with
Disabilities Act or other laws relating to access; and
(xvii) Governmental Notices. Any written notices, reports, citations,
correspondence or memoranda received by Seller from any government agency,
unit, division or department (federal, state, county or municipal)
concerning the Property and not covered in any of the categories above.
(xviii) Litigation. A list of all litigation affecting the Property
from 1992 to date and any pending litigation affecting the Property.
In addition, Seller shall arrange for Purchaser's representatives to meet
as soon as practicable during the Review Period with the property manager
or the person most knowledgeable about the Property to discuss the
Property's operating performance, competitive position in the market,
capital improvements and the like. In addition, Seller agrees to provide
promptly to Purchaser any documents and information described in Sections
2.1(a) and (c) and coming into Seller's possession or produced by Seller
prior to Closing.
(d) Return of Materials. If this transaction does not close for
any reason other than Seller's default, then all materials furnished by
Seller shall be returned promptly to Seller upon receipt by Purchaser of
the Earnest Money. If this Agreement terminates in its entirety pursuant
to this Section 2.1, Purchaser shall deliver $100 to Seller as
consideration for Seller's execution of and entry into this Agreement.
Seller acknowledges that Purchaser expects to expend significant time,
money and other resources in connection with the examination and
investigation of the Property, and that, notwithstanding the fact that this
Agreement may terminate pursuant to this Section 2.1, the payment of the
$100 hereinabove described to be paid to Seller in the event of such a
termination of this Agreement, the delivery of certain items which
Purchaser may obtain, together with such time, money and other resources
that may be expended, constitutes adequate consideration for Seller's
execution of and entry into this Agreement.
2.2 Continuing Right of Access for Inspection. During the pendency
of this Agreement (even after the Review Period), Purchaser and its agents,
employees, and representatives shall have a continuing right of reasonable
access to the Property (which access shall still be subject to Section
2.1(b) above) and the right to examine and make copies of all items to
which Purchaser was granted access during the Review Period.
ARTICLE 3: TITLE REVIEW
3.1 Delivery of Title Documents. Within seven (7) days after the
date of this Agreement, Seller shall cause to be prepared and delivered to
Purchaser the items in clauses (b) and (c) below and Purchaser shall cause
to be prepared and delivered to Purchaser the item in clause (a) below:
(a) A commitment (the "Title Commitment") covering a date not
earlier than ten (10) days prior to the date of this Agreement issued by
Chicago Title Insurance Company (the "Title Insurer" or the "Title
Company") through its agent Heritage Title Insurance Company, Austin,
Texas, to Purchaser providing for the issuance to Purchaser at the Closing
of a Texas Form T-1 Owner's Title Insurance Policy with respect to the Real
Property to be conveyed to Purchaser at Closing, in the amount of the
Purchase Price, which commitment must disclose the Seller as the owner of
fee simple title to the Real Property together with legible copies of all
documents underlying all exceptions to title; and
(b) A survey (including field notes) of the Real Property (the
"Survey") made by Point Line Surveying, Inc. (Melvin D. Lindsey) or other
surveyors or civil engineers approved by Purchaser and duly licensed in the
jurisdiction in which the Real Property is located. The Survey shall be
dated after the date of this Agreement, and Seller shall have same
certified to Purchaser, any parties designated by Purchaser, and Title
Insurer. Seller shall endeavor to have the surveyor certify the Survey
using the form of Exhibit B attached hereto, as having been prepared in
accordance with the standards adopted by the Texas Society of Professional
Surveyors, including the standards for a Category 1A, Condition II survey
as well as ALTA-ASCM Urban standards (provided, however, the only optional
matters to be included regarding ALTA-ASCM Urban standards will be those
that would be required under Texas Category 1A, Condition II standards).
To the extent that the surveyor does not use the language for his
certificate as set forth in Exhibit B, or there are any optional items
Purchaser would prefer to see the survey contain, Purchaser may note any
discrepencies as to the certificate or preferred optional items as Title
Objections. The Survey shall be sufficient for purposes of amending the
areas and boundaries exception in the Title Policy. The Survey shall set
forth all matters required on such a survey, including, but not limited to,
the following: (i) all easements, rights-of-way and other encumbrances and
matters of record affecting or appurtenant to the Real Property; (ii) the
building and setback lines, if any; (iii) the line of the street or streets
abutting the Real Property or any portion thereof; (iv) any and all
encroachments upon the Real Property or any easement appurtenant thereto;
(v) all Improvements on the Real Property (including exterior dimensions);
(vi) the configuration and number of parking spaces; and (vii) the area of
the Real Property; and (viii) stating whether the Real Property is located
in an area designated by HUD as having special flood risks; and
(c) At least fifteen (15) days prior to the Closing (with updates
if the Closing Date is extended pursuant hereto) copies of current Uniform
Commercial Code searches in the name of Seller and the Property issued by
the Title Company or a search company acceptable to Purchaser ("UCC
Searches"), covering a date not earlier than thirty (30) days prior to the
Closing.
3.2 Review of Title. Purchaser shall have ten (10) business days
after the last to be received of the Title Commitment (including true,
correct and complete copies of all exception documents referenced therein)
and the Survey to review title and survey matters with respect to the
Property, and to notify Seller of any objections to such matters ("Title
Objections") with respect to the Property.
Seller shall be obligated to discharge any Title Objections which are
financing liens, mechanics' liens, materialmens' liens or tax liens and
matters arising out of Seller's voluntary acts subsequent to the date of
the Title Commitment, all of which liens, encumbrances and other matters
shall be satisfied, cured or discharged, as appropriate, prior to the
Closing. Purchaser may attempt, but shall not be obligated, to cure any
Title Objections. Within five (5) business days of receipt of a notice
delivered by Purchaser to Seller under the preceding paragraph, Seller
shall notify Purchaser in writing of any Title Objection which it either
refuses to cure or is unable to cure in a manner acceptable to Purchaser;
in the absence of such notice from Seller, Seller shall be deemed to have
agreed to cure or satisfy all Title Objections that were raised in such
notice from Purchaser, and all such Title Objections shall be cured or
satisfied by Seller prior to the applicable Closing.
Purchaser shall have the right by giving notice to Seller within five
(5) business days after Purchaser is notified by Seller of its refusal or
inability to cure any of the Title Objections raised by Purchaser to
(i) elect not to purchase the Property and to terminate this Agreement, in
which event, notwithstanding anything in this Agreement to the contrary,
the Earnest Money shall be returned to Purchaser; (ii) elect to proceed
pursuant to this Agreement, thereby waiving its objection to such Title
Objections; and/or (iii) elect to proceed pursuant to this Agreement, with
the right to deduct from the Purchase Price (1) an amount necessary to
discharge, satisfy or cure those Title Objections that Seller is obligated
to discharge, satisfy or cure pursuant to the first sentence of the
immediately preceding paragraph and (2) an amount, not to exceed $50,000,
necessary to discharge any other liens or encumbrances of a definite or
ascertainable amount. For purposes of this Agreement, the term "Permitted
Exceptions" means (i) general or special real estate taxes not then due and
owing, (ii) acts done or suffered to be done by Purchaser, (iii) leases
entered into in the ordinary course of Seller's business and in accordance
with the terms hereof, (iv) title matters that are disclosed by the Title
Commitment and not objected to by Purchaser and (vi) any Title Objections
waived by Purchaser in writing. If Purchaser fails to give the foregoing
written notice to Seller within the time required in this paragraph, it
shall be conclusively deemed that Purchaser has elected to waive the
applicable Title Objections and has accepted them as additional Permitted
Exceptions.
3.3 Further Exceptions. If Title Insurer issues further amended
Title Commitments or UCC Searches showing additional exceptions or
exclusions from coverage or if further revised Surveys disclose additional
defects, Purchaser may notify Seller of resulting additional Title
Objections, the parties' shall proceed as provided above, and the Closing
shall be extended, as necessary, but not beyond April 15, 1995, to
accommodate Purchaser's right to object and terminate (and receive its
Earnest Money) and the parties' right to cure in the manner provided above.
ARTICLE 4: OPERATIONS PRIOR TO CLOSING
4.1 Seller's Operations. Seller agrees that so long as this
Agreement shall remain in effect, Seller shall:
(a) Insurance. Maintain any and all insurance coverage presently
in effect with respect to the Property, including policies of public
liability, property damage and fire insurance;
(b) Operations and Management. Unless otherwise provided herein,
operate and manage the Property in the ordinary course of business in
accordance with usual business practices in a manner befitting the current
quality of the Property, and maintain the Property in its present
condition, reasonable wear and tear excepted, including needed repairs and
capital improvements consistent with historical practices and quality
maintenance standards;
(c) Contracts. Except as to Leases complying with Section 4.2 and
contracts entered into in the ordinary course of business that are
terminable without cause on 30-day's notice or as otherwise expressly
permitted herein, not enter into any contract that will be an obligation
affecting the Property subsequent to the Closing;
(d) Listings and Other Offers. Not solicit or make or accept any
offers to sell the Property, not engage in any discussions or negotiations
with any third party with respect to the sale or other disposition of the
Property, and not enter into any other contracts or agreements (whether
binding or not) to sell or otherwise dispose of the Property;
(e) Not Violate Agreement. Not take or omit to take any action
that would have the effect of violating any of Seller's representations,
warranties and agreements contained in this Agreement;
(f) Operating Statements. Furnish Purchaser with monthly Operating
Statements and monthly Rent Rolls as they become available, which
statements and rent rolls shall be included in the defined terms "Operating
Statements" and "Rent Rolls" as used herein; and
(g) Access. Furnish Purchaser access to the Property and to
records as set forth in Sections 2.1 and 2.2 and otherwise to verify
management and maintenance practices and to assist any management
transitions which would occur upon the Closing of this transaction.
4.2 Leasing Arrangements and Management Transition. Seller agrees
that:
(a) Leasing. From and after the date of this Agreement, without
Purchaser's prior written consent in each instance: Seller shall not enter
into, amend or terminate any Lease unless in the ordinary course of
business. All Leases entered into during this Agreement shall be on
Seller's current standard lease forms except for non-material deviations,
shall be for terms of no less than six (6) months and no greater than
twelve (12) months at current market rentals, shall not include any
concessions or discounts in excess of those prevalent in the market, and
shall otherwise comply with Seller's current leasing policies. No leasing
commissions will be incurred, except in accordance with Seller's past
practice and in the ordinary course of business.
(b) Management Transition. From and after the date hereof, Seller
shall promptly provide to Purchaser copies of all monthly operating
statements concerning the operation of the Property. It is agreed that
such reports will be prepared on at least a monthly basis. Seller agrees
that Purchaser may contact Seller's or Seller's managing agent's
supervisors to discuss the reports delivered to Purchaser and to discuss
the operation of the Property. Seller agrees to cooperate fully with
Purchaser and Purchaser's representatives to apprise Purchaser of all
matters relating to management of the Property and to facilitate transition
of management at the Closing. Seller shall allow Purchaser's management
personnel to work at the Property with Seller or Seller's managing agent's
management personnel commencing five (5) days prior to the Closing for the
purpose of installing facilities, reviewing files and records, determining
the exact amount of unpaid and prepaid bills and rents, and otherwise
preparing to take over management of the Property. In connection
therewith, Seller shall allow Purchaser access to all files and records
during such period.
4.3 Removal and Replacement of Tangible Personal Property. Seller
shall not remove any Tangible Personal Property, except as may be required
for necessary repair or replacement, and any replacement shall be of equal
quality and quantity as existed as of the time of its removal. Seller
shall maintain supplies and inventories consistent with historical
practices and quality management standards.
4.4 Seller's Obligations. Other than the obligations of Seller
expressly assumed by Purchaser pursuant to this Agreement, Seller, subject
to the terms and conditions of this Agreement, covenants that it shall pay
and discharge any and all liabilities of each and every kind arising out of
or by virtue of the conduct of its business before and as of the Closing on
or related to the Property, each to the extent Purchaser would otherwise be
liable to pay such liabilities.
ARTICLE 5: CLOSING
5.1 Closing Date. Subject to fulfillment of the various conditions
described herein, the consummation of the sale and acquisition of the
Property, as contemplated herein (the "Closing"), shall take place on a
date (the "Closing Date") specified in written notice from Purchaser to
Seller which date shall be not more than fifteen (15) days following the
expiration of the Review Period, and if no notice is given, the Closing
Date shall be on the first business day to occur fifteen (15) days
following expiration of the Review Period. The Closing shall take place
through an escrow with the Title Insurer and/or by other arrangements
satisfactory to the parties wherein all required documents and deliveries
are deposited or otherwise delivered to the appropriate parties.
5.2 Seller's Deliveries in Escrow. At the Closing, Seller shall
deliver to Purchaser the following:
(a) Deed. Special Warranty Deed for the Real Property (in the form
attached hereto as Exhibit C-1) executed and acknowledged by the Seller and
any other parties required to effectuate such conveyance, conveying to
Purchaser good and marketable fee simple title to the Real Property,
subject only to the Permitted Exceptions applicable to the Real Property;
(b) Assignment of Leases. Assignment of Leases for the Property,
containing mutual indemnities for pre- and post-closing matters (in the
form attached hereto as Exhibit C-2);
(c) Bill of Sale. Bill of Sale with respect to the Tangible
Personal Property and Intangible Personal Property (in the form attached
hereto as Exhibit C-3);
(d) Assignment of Intangible Personal Property. Assignment of
Intangible Personal Property with respect to the Property (in the form
attached hereto as Exhibit C-4);
(e) FIRPTA. A Foreign Investment in Real Property Tax Act
affidavit executed by Seller. If Seller fails to provide the necessary
affidavit and/or documentation of exemption on the Closing Date, Purchaser
may proceed with withholding provisions as provided by law;
(f) Certificate of Representations and Warranties. A certificate
(in the form attached hereto as Exhibit C-5) signed by Seller reaffirming
and updating to the Closing Date the representations and warranties given
by Seller under Article 7 that will include an updated Rent Roll and
Operating Statement for the preceding month (or the next preceding month if
the Closing Date is between the 1st and 10th day of a month);
(g) Form 1099B. A Form 1099B executed by Seller;
(h) Authority. Evidence of existence, organization and authority
of Seller and the authority of the person executing documents on behalf of
Seller, reasonably satisfactory to Purchaser and (to the extent applicable)
the Title Insurer, including, without limitation, executed, original
consents from those parties whose consent is required to be obtained and
evidence that such consents are the only consents required to be obtained
with respect to this transaction;
(i) Assignments and Assumptions of Contracts. Assignments of any
and all Service Contracts or other agreements (in the form attached hereto
as Exhibit C-6);
(j) Lien Waivers. Seller shall cause the property manager of the
Property, the broker identified in Section 6.8 hereof, as well as any
leasing broker involved with the Property to deliver to Purchaser, in form
and substance reasonably acceptable to Purchaser and the Title Company, a
waiver wherein such parties release any and all mechanic lien rights and
claims that they or any one claiming by, through or under any of them may
have pursuant to any applicable statute or law.
(k) Additional Documents. Any additional documents required by
this Agreement or that Purchaser or the Title Company may reasonably
require for the proper consummation of the applicable transaction as
contemplated by this Agreement, which documents shall be without cost or
additional liability to the Seller.
5.3 Purchaser's Deliveries in Escrow. At the Closing, Purchaser
shall deliver to the Title Company to hold in escrow for delivery upon the
Closing the following:
(a) Purchase Price. The Purchase Price less the Earnest Money,
plus or minus applicable prorations, shall be deposited by Purchaser with
the Title Company in immediately available funds (all or any part of which
may be the proceeds of a loan).
(b) Authority. Evidence of existence, organization and authority
of Purchaser and the authority of the person executing documents on behalf
of Purchaser reasonably satisfactory to Seller and the Title Insurer.
(c) Counterparts. Counterparts of the applicable Assignments or
other Seller deliveries which are also to be signed by Purchaser, duly
executed by Purchaser.
(d) Additional Documents. Any additional documents required by
this Agreement or that Seller or the Title Company may reasonably require
for the proper consummation of the transactions contemplated by this
Agreement, which documents shall be without cost or additional liability to
the Purchaser.
5.4 Closing Statements/Transfer Declarations. At the Closing, the
Seller and Purchaser shall execute closing statements and transfer tax
declarations (if applicable per Section 6.3 below) consistent with this
Agreement in form reasonably satisfactory to the parties and, if
applicable, as may be required by the Title Company.
5.5 Title Policy/Updated UCC Searches. At the Closing, the Title
Company shall deliver to Purchaser: (i) a Texas Form T-1 Owner's Policy of
Title Insurance (the "Title Policy") issued by the Title Insurer dated as
of the Closing in the amount of the Purchase Price, insuring Purchaser as
owner of good and indefeasible fee simple title to the Real Property,
subject only to the standard printed execptions (provided that the
exception for restrictive covenants shall be deleted or list only
restrictive covenants as may be Permitted Exceptions, the "areas and
boundaries" exception shall, at Purchaser's cost, be amended to except only
to shortages in area, taxes, assessments, standby fees and the like shall
be limited to those due for 1995 and subsequent years, and subsequent
assessments for prior years based on change of usage of ownership, all to
the extent not due and payable and any exception for parties in possession
shall be limited to the rights of tenants, as tenants only, pursuant to
unrecorded leases) and the Permitted Exceptions ; and (ii) updated UCC
Searches dated within five (5) days of Closing disclosing no security
interests or liens affecting the Property being conveyed other than those
to be released at the Closing. The Title Policy may be delivered within a
reasonable time after the applicable Closing if that is the custom for the
locality, provided, that the Title Insurer at the Closing issues a
currently effective, duly executed "marked-up" Title Commitment for the
Real Property and irrevocably commits in writing to issue the Title Policy
in the form of the "marked-up" Title Commitment within no more than ten
(10) days after the Closing Date.
5.6 Possession. At the Closing, Seller shall deliver to Purchaser
possession of the Property, subject only to the applicable Permitted
Exceptions.
5.7 Termination of Property Management and Other Service
Contracts. The Seller shall terminate effective as of the Closing Date any
existing property management agreements and any other terminable Service
Contracts applicable to the Property being conveyed at such Closing and
designated by Purchaser at least five (5) days prior to Closing. In
addition, if Purchaser requests upon expiration of the Review Period,
Seller shall also terminate any existing Leases (whether written, oral or
otherwise) on the applicable Property between Seller and any employee of
the existing property management firm under which rent is waived or is
discounted, such termination to be effective no later than thirty (30) days
from the Closing Date. Seller shall pay to Purchaser at Closing an amount
equal to the difference between (a) the actual rent payable under such
leases and (b) the full rental that would have been payable absent any
waived or discounted rent, for the period of time from the Closing Date
through the effective date of termination. The rent proration provided for
in Section 6.1(b) shall be based on the actual rental received by Seller.
5.8 Memorandum/Name of Representative. At the Closing, the Seller
shall deliver to Purchaser written memoranda containing all information
regarding the location and operation of all water, gas and other utility
meters, water sprinkler lines, valves and systems, air conditioning and
heating equipment, thermostats, fuse boxes and the like for the Property
included in the Closing, and the name of a representative of Seller who
will provide Purchaser with further information regarding the operation
Property after the Closing, such as the location of water, gas and other
utility meters, water sprinkler lines and valves, thermostats, fuse boxes
and the like.
5.9 Delivery of Books and Records. Immediately after the Closing,
Seller shall leave at the Property, or, if such items are not currently at
the Property, shall deliver to the offices of Purchaser or such other
location as Purchaser may designate, the original Leases and Service
Contracts; the Property's operating records including copies or originals
of all books and records of account, contracts, leasing correspondence,
receipts for deposits, unpaid bills and other similar papers or documents
which pertain to the Property; all available operating manuals, equipment
warranties, and the like; all advertising materials, booklets, and other
similar items, if any, used in the promotion of the Property; all keys and
combinations to locks; and all available architectural or construction
plans, specifications and working drawings for Improvements. The Seller's
obligations under this Paragraph shall survive the Closing.
5.10 Notice to Tenants and Vendors. Immediately after the Closing,
the Seller and Purchaser shall deliver to each vendor under the Service
Contracts a notice regarding the sale of the Property in form and substance
reasonably satisfactory to Purchaser and Seller. Immediately after the
Closing, the Seller and Purchaser shall deliver to each tenant under each
Lease a notice regarding the sale of the Property, such notice to be in the
form of Exhibit C-7 attached hereto.
5.11 Close of Escrow. Upon satisfaction or completion of the
foregoing conditions and deliveries and performance by each party of its
other obligations required to be performed prior to and/or at the
applicable Closing, the parties shall direct the Title Company to
immediately record the deed and deliver if not already delivered the
applicable documents described above to the appropriate parties and make
the disbursements according to the closing statements executed by the
Seller and Purchaser and to otherwise perform in accordance with the
parties' respective closing instruction letters, to the extent not
inconsistent with the terms of this Agreement.
5.12 Conditions Precedent.
(a) Conditions to Purchaser's Obligation to Close. Notwithstanding
anything to the contrary herein Purchaser's obligation to consummate its
purchase of the Property shall be further contingent upon:
(i) Seller's representations and warranties contained herein
shall be true and correct in all material respects as of the Closing.
(ii) The timely satisfaction or written waiver by Purchaser of
each obligation to be performed hereunder by Seller prior to and/or at the
Closing.
(iii) The Title Insurer's willingness to issue the Title
Policy.
(iv) The absence of any material litigation or other
proceedings with respect to the Property or otherwise affecting this
transaction, except for any such litigation which Purchaser has, in a
written notice delivered to Seller on or before the Closing Date, expressly
approved after full disclosure by Seller with respect to such proceedings.
(v) The absence of any other material adverse change in the
physical condition, tenancy, operations or financial condition of the
Property or Seller.
(b) Conditions to Seller's Obligation to Close. Notwithstanding
anything to the contrary herein, Seller' obligation at the Closing
hereunder to consummate its sale of the Property to Purchaser shall be
further contingent upon:
(i) Purchaser's representations and warranties contained
herein shall be true and correct in all material respects as of the
Closing.
(ii) The timely satisfaction or written waiver by Seller of
each obligation to be performed hereunder by Purchaser prior to and/or at
the Closing.
ARTICLE 6:
PRORATIONS/OTHER ALLOCATIONS AND DELIVERIES/EXPENSES
6.1 Prorations. The items in subparagraphs (a) through (d) of this
Section 6.1 and other items of Property income and expenses customarily
prorated in similar transactions shall be apportioned or prorated between
the Seller and Purchaser as of the close of the day preceding the Closing
Date in the manner set forth herein, or, if not provided for herein, then
as customary for such items for transactions in the metropolitan Austin,
Texas area. The parties shall endeavor to compute or estimate all closing
adjustments prior to the Closing Date, and the Seller shall supply before
such Closing satisfactory supporting evidence for all such adjustments as
Purchaser reasonably requests. Proration items shall include:
(a) Taxes and Assessments. General real estate taxes and
assessments imposed by governmental authority ("Taxes") and any assessments
by private covenant constituting a lien or charge on the Property for the
then-current calendar year or other current tax period not yet due and
payable. If the Closing for the Property occurs prior to the receipt by
the Seller of the tax bill for such Property for the calendar year or other
applicable tax period in which the Closing occurs, Taxes for such calendar
year or other applicable tax period shall be prorated based upon 100% of
the estimated Taxes calculated based upon the most recent ascertainable
assessed values and tax rates, but not less than 100% of the tax bill for
the previous calendar year or other applicable tax period. All prorations
shall be based upon a fraction determined by dividing the number of days
elapsed through the date of the applicable Closing by 365. Taxes for the
Property shall be re-prorated on the same fractional basis at the time that
the actual amount of the Taxes for the Property for the year or other
applicable tax period in question are finally determined. Payments in
connection with any re-proration of Taxes shall be due within 10 days of
written notice.
(b) Collected Rent. All collected rent and other income (and any
applicable state or local tax on rent) under Leases in effect with respect
to the Property. Seller shall be charged with any rentals collected by
Seller before the Closing, but applicable to any period of time after such
Closing. Uncollected rent and other income shall not be prorated. If
Purchaser collects up to "two month delinquencies" after the Closing,
Purchaser shall apply such rent to the obligations owing Purchaser for its
period of ownership and to its third party costs of collection, remitting
the balance, if any, to the Seller. "Two month delinquencies" are
delinquencies under Leases that are delinquent by only the monthly
installments that were due on the two due dates preceding the Closing Date.
Other than two month delinquencies, as provided above, no other rent
delinquent as of the Closing but collected after the Closing shall be
remitted to Seller. Purchaser shall bill and attempt to collect such
delinquent rent in the ordinary course of business, but shall not be
obligated to engage a collection agency or take legal action to collect any
delinquencies. Once the Closing has occurred, Seller shall not have any
right to seek by legal action or otherwise collection of any rents
delinquent for the Property for any period prior to the Closing, unless the
tenant has vacated the premises under the Lease before the Closing and the
Lease is not assigned to Purchaser. Any rent collected by Seller relating
to periods from and after the Closing shall by promptly paid over to
Purchaser by Seller.
(c) Utilities. Utilities, including water, sewer, electric, and
gas, based upon the last reading of meters at the Property prior to the
Closing. Seller and Purchaser shall endeavor to obtain meter readings and
account changeovers for the Property on the day before the Closing Date,
and if such readings and account changeovers are obtained, there shall be
no proration of such items. In such event, Seller shall pay the bills
therefor for the period to and including such Closing, and Purchaser shall
pay the bills therefor for the period subsequent thereto. If the utility
company will not read meters and issue separate bills, Purchaser will
receive a credit against the Purchase Price for Seller's portion of utility
charges based on historical utility charges for such month adjusted for
current rates per Section 6.1(f). In such event Purchaser will pay the
entire bill prior to delinquency after the subject Closing, but such
amounts will be reprorated per Section 6.1(f). If Seller has paid any
utilities no more than 30 days in advance in the ordinary course of
business, then Purchaser shall be charged its portion of such payment at
the Closing. In the event Seller allows deposits to remain with the
utility companies for the benefit of Purchaser, Seller shall receive a
credit at Closing in the aggregate amount of such deposits.
(d) Fees and Charges under Service Contracts. Fees and charges
under such of the Service Contracts as are being assigned to and assumed by
Purchaser at the Closing shall be apportioned on the basis of the periods
to which such Service Contracts relate. Seller shall pay all locator or
finders fees with respect to tenants who have moved in prior to Closing.
Purchaser shall pay, or reimburse to Seller, all such fees with respect to
tenants moving in after Closing, but only to the extent that any such fees
are due under Service Contracts delivered or made available to Purchaser
during the Review Period and are executed in accordance with Section 4.1
(c).
(e) Final Adjustment After Closing. In the event that final bills
cannot be issued for any charge prior to the Closing, then Purchaser and
Seller agree to allocate such items on a fair and equitable basis as soon
as such bills are available, final adjustment to be made as soon as
reasonably possible after the Closing. Payments in connection with the
final adjustment shall be due within 10 days of written notice. The
parties' obligations to re-prorate the items prorated at Closing shall
survive the Closing of the transactions contemplated hereby.
6.2 Tenant Deposits. All tenant security deposits (and interest
thereon if required by law or contract to be earned thereon) with respect
to the Property that have not been previously applied in accordance with
the terms of the leases shall, at Purchaser's election, be transferred or
credited to Purchaser at the Closing. In accordance with the terms of
Article 11 hereof, Seller shall indemnify and hold Purchaser harmless from
and against any loss, cost, liability or expense incurred by Purchaser by
reason of any security deposit paid by any tenant under any Lease (and
interest thereon, if required by law or contract to be earned thereon)
collected by Seller and not transferred or credited to Purchaser at the
Closing. In accordance with terms of Article 11 hereof, Purchaser shall
indemnify and hold Seller harmless against any liability or expense
incurred by Seller by reason of any tenant security deposit (and interest)
to the extent transferred or credited to Purchaser at Closing.
6.3 Sales, Transfer, and Documentary Taxes. All sales, gross
receipts, or compensating taxes, documentary taxes, transfer taxes, and
similar taxes and fees imposed upon the transfer of the Property under
applicable state, county, city or other local law shall be paid by the
Seller at Closing. The parties will execute and deliver any required
transfer or other similar tax declarations at the Closing.
6.4 Utility Deposits. The amount of deposits, if any, with utility
companies that are transferable and that are assigned by Seller to
Purchaser at Closing shall be credited to Seller.
6.5 Permit Transfer Fees. Customary fees paid or payable with
respect to permits and licenses assigned by Seller to Purchaser at the
Closing, with the consent or approval (if required) of the issuer thereof,
shall be charged to Seller.
6.6 Wages. The Seller shall pay the wages, employment taxes and
fringe benefits applicable thereto payable to employees, if any, of Seller
as of their discharge on the Closing Date.
6.7 Intentionally Deleted.
6.8 Commissions. Seller and Purchaser represent and warrant to one
another that they have not dealt with any real estate broker, sales person
or finder other than Davidson Conine in connection with this transaction.
In accordance with Article 11 hereof, Seller agrees to pay any and all
amounts due to Davidson Conine and indemnify, defend and hold harmless
Purchaser and its affiliates from and against any loss, cost, liability or
expense suffered or incurred by any such party as a result of a claim or
claims for brokerage commissions, finder's fees or other similar fees from
Davidson Conine or any other party or firm that is based on the act or
omission of Seller in breach of the above warranty. Purchaser agrees to
indemnify, defend and hold harmless Seller from and against any loss, cost,
liability or expenses suffered or incurred by any such party as a result of
a claim or claims for brokerage commissions, finder's fees or other similar
fees from any party or firm that is based on the act or omission of
Purchaser in breach of the above warranty.
6.9 Transaction Expenses. Upon the Closing of this transaction,
the parties will share expenses incurred at or in connection with the
Closing (the "Closing Costs") as follows: Seller will pay for the charges
and premiums for the Title Commitment, Title Policy, UCC Searches, Surveys,
recording fees, any transfer taxes, and one-half of any escrow fees;
provided, however, that Seller's costs with respect to the Title Policy
shall not include any amendment to the "areas and boundaries" exception,
which shall be paid by Purchaser. Purchaser will pay for all lender's
title insurance premiums and endorsements and all other matters relating to
Purchaser's financing (including recording fees for security documents),
and one-half of any escrow fees. Each party will pay its own attorneys'
fees in connection with this transaction. Otherwise, Closing Costs will be
borne as is customary for like transactions in the metropolitan Austin,
Texas area.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES
7.1 Seller's Representations and Warranties. As a material
inducement to Purchaser to execute this Agreement and consummate the
transactions contemplated hereunder, Seller represents and warrants to
Purchaser that:
(a) Organization and Authority. Seller has been duly organized and
is validly existing and in good standing under the laws of its jurisdiction
of organization and, if different, is qualified to do business and in good
standing in the state in which the Property is located. Seller has the
full right and authority and has obtained any and all consents required
therefor to enter into and perform this Agreement. The persons signing
this Agreement on behalf of Seller are authorized to do so. This Agreement
and all of the documents to be delivered by Seller at the Closing have or
will have been duly authorized and properly executed and do and will
constitute the valid and binding obligations of Seller.
(b) Conflicts. The execution of and performance under this
Agreement does not and will not conflict with the terms of any of Seller's
constituent documents. There is no agreement to which Seller is a party
or, to Seller's knowledge, which is binding on Seller which is in conflict
with the execution of or performance under this Agreement or with the
obligations imposed upon or rights granted to Seller hereunder.
(c) Contractors and Suppliers. All contractors, subcontractors,
suppliers, architects, engineers and others who have performed services or
labor or supplied material in connection with Seller's ownership or
management of the Property have been paid in full and all liens arising
therefrom (or claims which with the passage of time or notice or both could
mature into liens) have been satisfied and released, except for bills or
work not more than thirty (30) days old incurred for routine maintenance in
the ordinary course of business for which a proration adjustment will be
made.
(d) Pending Actions. There is no litigation, action or proceeding
pending or, to Seller's knowledge, threatened (with respect to material
items) against or pertaining to the Property or any incident thereon, or
which challenges or impairs Seller's ability to execute, deliver or perform
under this Agreement except as set forth on Exhibit D.
(e) Rent Roll. Except as described in the Rent Rolls for the Real
Property, there are no Leases otherwise affecting the Real Property, and no
person, other than tenants under the Leases and subject to the Permitted
Exceptions, has any right of possession of all or any portion of the Real
Property. Except as otherwise specifically and expressly set forth in the
Rent Roll for the Real Property: no presently outstanding rent concessions
have been given to any tenants; no rent has been paid in advance by any
tenants respecting a period subsequent to the Closing (except for the month
in which the Closing occurs); no tenants have any claim against Seller for
any security deposit or other deposits or interest thereon, other than
pursuant to the terms of its Lease with respect to sums specified as
security deposits in the Rent Roll for such Property; no tenants have any
options or rights of first refusal to purchase or to extend or renew their
Leases or rent additional space; and, other than with respect to locator or
finders fees due under Service Contracts delivered or made available to
Purchaser during the Review Period, and payments under which are governed
by Section 6.1(d) above, there are no leasing or other commissions due, nor
will any become due, in connection with any Lease, any renewal or extension
of any Lease for which Seller is not responsible. To Seller's knowledge,
no tenants have asserted nor are there any defenses or offsets to rent
accruing after the Closing with respect to any Lease of the Property. To
Seller's knowledge, except as specifically set forth in the Rent Roll for
the Property, no default or breach exists on the part of any tenant.
Seller has not received any notice of any material default or material
breach on the part of the landlord under any Lease, nor, to the best of
Seller's knowledge, does there exist any such material default or material
breach on the part of the landlord. No understanding or agreement with any
party exists as to payment of any leasing commissions or fees regarding
future leases or as to procuring of tenants for the Property.
(f) Service Contracts. There are no management, service, supply,
equipment, rental or similar agreements affecting the Property, other than
the Service Contracts. The list and copies of Service Contracts provided
to Purchaser are true, correct and complete. No portion of the Property is
leased by Seller as tenant except as set forth on Exhibit E. Neither
Seller nor, to Seller's knowledge, any other party is in default with
respect to any of its material obligations or liabilities pertaining to the
Service Contracts.
(g) Operating Statements. The Operating Statements for the
Property show all items of income and expense (operating and capital)
incurred in connection with the Seller's ownership, operation and
management of the Property for the periods indicated and are true, correct
and complete in all material respects.
(h) Notice of Violations. Seller has not received any written
notice and Seller has no knowledge that the Property or the use thereof
violates or is a non-conforming use with respect to any Codes in any
material respect that have not been resolved to the satisfaction of the
issuer of the notice. With respect to this Section 7.1(h), Purchaser
acknowledges that the Property's compliance or non-compliance with the
Americans With Disabilities Act (the "ADA") is excluded from Seller's
knowledge representation set forth in this Section.
(i) Codes and Restrictions. Except for ADA compliance, to Seller's
knowledge, the Property and its current use and operation comply with all
Codes currently applicable or scheduled to become applicable to the
Property, and with all restrictions, covenants or similar agreements
affecting the Property. Except for items included in the Permitted
Exceptions, Seller has not entered into or has no knowledge of any
agreement with any governmental official, agency or body or with any other
person or entity with respect to any modification, variance or exception
regarding such Codes, or any restrictions, covenants or agreements
applicable to the Property.
(j) Utilities. To Seller's knowledge, all water, sewer, gas,
electric, telephone, drainage facilities and all other utilities required
for the operation of the Property as an apartment complex (collectively
"offsite utilities") are installed to the boundaries of the Property, are
connected with valid permits and fully paid tap-in or recapture fees, to
Seller's knowledge are in proper working order, and to Seller's knowledge
are adequate to serve the Property as presently constituted. To Seller's
knowledge, all licenses, permits, easements and rights-of-way required from
all governmental authorities having jurisdiction over the Property or from
private parties to make use of the offsite utilities in connection with the
operation of the Property are in existence and in full force and effect.
(k) Real Estate Taxes and Assessments. To Seller's knowledge and
except as disclosed in the Operating Statements there are not presently
pending any material assessments, or material governmental or quasi-
governmental (i.e., a body or entity deriving its authority from
legislative or governmental enactments) fees or charges of any nature with
respect to the Property or any part thereof, nor has Seller received any
notice of any such assessments, fees or charges which would be applicable
to the Property being contemplated.
(l) Fair Housing Act. There are no pending or, to Seller's
knowledge, threatened actions in connection with the Fair Housing Act (42
U.S.C. Section 3601 et seq., as amended) against Seller or its property
management company with respect to the Property.
(m) Hazardous Materials. To the best of Seller's knowledge,
without independent investigation, (1) there are no underground storage
tanks currently located on the Property and (2) no prior owner of the
Property or any other party has used the Property or placed under, on, or
above the Property, any Hazardous Materials other than those customarily
used in the management and operation of residential apartment complexes and
that have not been used, stored or disposed of in violation of any
Environmental Laws. Seller has not placed (or, to Seller's knowledge,
caused or permitted to be placed) any Hazardous Materials under, on, or
above the Property other than those customarily used in the management and
operation of residential apartment complexes and that have not been used,
stored or disposed of in violation of any Environmental Laws. Seller has
no knowledge of any claimed or actual noncompliance or violation of
Environmental Laws related to the Property, except in each case as
disclosed in the environmental reports listed on Exhibit F which have been
delivered to Purchaser within the Review Period provided for in Section
2.1. The term "Environmental Laws" shall include, without limitation, the
Clean Air Act, 42 U.S.C. Section 7401 et. seq.; the Clean Water Act, 33
U.S.C. Section 1251 et. seq., and the Water Quality Act of 1987; the
Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C.
Section 136 et. seq.; the Marine Protection, Research, and Sanctuaries Act,
33 U.S.C. Section 1401 et. seq.; the National Environmental Policy Act, 42
U.S.C, Section 4321 et. seq.; the Noise Control Act, 42 U.S.C. Section 4901
et. seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et.
seq.; the Resource Conservation and Recovery Act ("RCRA") 42 U.S.C. Section
6901 et. seq., as amended by the Hazardous and Solid Waste Amendments of
1984; the Safe Drinking Water Act, 42 U.S.C. Section 300f et. seq.; the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et. seq., as amended by the Superfund
Amendments and Reauthorization Act, and the Emergency Planning and
Community Right-to-Know Act; the Toxic Substance Control Act ("TSCA"), 15
U.S.C. Section 2601 et. seq.; and the Atomic Energy Act, 42 U.S.C. Section
2011 et. seq., and any and all other applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations, orders or decrees
regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material;
all as amended from time to time, together with their implementing
regulations and guidelines. The term "Hazardous Materials" shall include,
without limitation, any hazardous substance, pollutant, or contaminant
regulated under CERCLA or any other Environmental Laws; oil and petroleum
products and natural gas, natural gas liquids, liquefied natural gas, and
synthetic gas usable for fuel; pesticides regulated under FIFRA; asbestos,
asbestos containing materials, polychlorinated biphenyls, and other
substances regulated under TSCA; source material, special nuclear material,
and by-product materials regulated under the Atomic Energy Act; and
industrial process and pollution control wastes to the extent regulated
under applicable Environmental Laws.
(n) No Defects in Work. To Seller's knowledge, there are no: (i)
material design, materials or workmanship defects in the Work (as defined
below) with respect to the Property and associated Improvements, (ii)
material deviation in the Work and the Improvements from the plans and
specifications delivered to Purchaser pursuant to Section 2.1 and (iii)
material non-compliance with all applicable Codes, in each case that would
affect Purchaser's ability to operate the Property in the same manner as
Seller has operated the Property. The term "Work" means the labor and
materials used in the construction of the Improvements and includes all
labor, materials, equipment and services of whatever nature required in
connection therewith. Except as otherwise disclosed by Seller to Purchaser
in writing within the applicable Review Period provided in Section 2.1, all
apartment units with respect to the Property are in rentable condition,
suitable for occupancy.
(o) Withholding Obligation. The sale of the Property is not
subject to any Federal, state or local withholding obligation of Purchaser
under the tax laws applicable to Seller or any of the Property.
(p) Condemnation. No condemnation or other governmental taking
proceedings and no rezoning proceedings relating to the Property are
pending or, to Seller's knowledge, threatened.
(q) Insurer Notices. Seller has not received any notice from any
insurance company or board of fire underwriters of any defects or
inadequacies respecting the Property which would adversely affect the
insurability of the Property or cause an increase in the premiums for the
Property which have not been cured or repaired to the satisfaction of the
party issuing the notice.
(r) Deliveries. To the extent prepared by Seller, its property
manager or investment advisor, all Operating Statements, Rent Rolls,
Service Contracts, Leases, books, records, schedules, exhibits, and other
items delivered or made available to Purchaser pursuant to the terms of
this Agreement are true, accurate and complete in all material respects.
The information to be furnished by Seller on which the computation of
closing prorations, adjustments and payments will be based shall, to the
extent then available, be true, correct and complete in all material
respects.
(s) Condition. To the best of Seller's knowledge, except as
disclosed on Exhibit G, (i) all building systems and mechanical equipment,
including, without limitation, the plumbing, air conditioning, heating,
ventilation, hot water heaters and electrical systems, and all appliances
(including, without limitation, substantially all stoves, refrigerators,
and dishwashers associated with individual apartment units) are in
serviceable and safe operating condition, and (ii) the Improvements
including the roofs and foundations thereof are in sound structural
condition, with no material leaks or other material defects.
(t) Financial Statements. All financial statements delivered by or
on behalf of Seller to Purchaser present fairly, in all material respects,
the results of operations for the relevant periods then ended. At
Purchaser's request, Seller agrees to make available to Purchaser or
Purchaser's designated representative (at Purchaser's cost) all financial
books and records for the Property for the period from January 1, 1991
through December 31, 1994.
(u) IRPTA Inapplicability. The Property does not contain any
"facilities" which are subject to reporting under Section 312 of the
Federal Emergency Planning and Community Right-To-Know Act of 1986 and
federal regulations promulgated thereunder nor does the Property contain
underground storage tanks which require notification under Section 9002 of
the Solid Waste Solid Disposal Act, as now or hereafter amended (42 U.S.C.
6991).
(v) ERISA. Based on Purchaser's representation set forth in
Section 7.2(c) hereof, none of the transactions contemplated in this
Agreement constitute a non-exempt prohibited transaction under Section
406(a) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the United States Internal Revenue Code of
1986, as amended (the "Code").
(w) Assignment of Leases. Seller is the absolute owner of all of
the landlord's right, title and interest in and to the Leases and that such
right, title and interest is free of any lien or charge and is not subject
to any assignment, transfer, or hypothecation.
(x) Bill of Sale. Seller is the absolute owner of the property
conveyed pursuant to the Bill of Sale executed pursuant to Section 5.2(c)
hereof, that Seller has not sold, assigned, transferred or set over such
property to any other person or entity, that such property is free and
clear of all liens, charges and encumbrances, that Seller has full right,
power and authority to sell such property and to make and execute such Bill
of Sale, and that there are no taxes or other charges currently due and
owing which could give rise to a lien or charge on such property.
(y) Assignment of Intangible Property. Seller has not assigned,
transferred or hypothecated its interest in the property conveyed pursuant
to the assignment of intangible personal property delivered pursuant to
Section 5.2(d) hereof, to any other person or entity, which assignment or
hypothecation shall not have been released as of the Closing Date.
(z) Assignment of Service Contracts. Seller is the absolute owner
of the respective right, title and interest in and to the Service Contracts
conveyed pursuant to the Assignment of Service Contracts delivered pursuant
to Section 5.2(i) hereof and that such right, title and interest is free of
any lien or charge (other than those charges being prorated pursuant to
this Agreement) and is not subject to any assignment, transfer or
hypothecation.
As used herein, the phrase to "the best of Seller's knowledge" or to
"Seller's knowledge" or any derivation thereof, shall mean the actual
knowledge, without any independent investigation or inquiry, of any one of
John Allen, Cindy Martinez or Frederika Tschoepe.
7.2 Purchaser's Representations and Warranties. As a material
inducement to Seller to execute this Agreement and consummate this
transaction, Purchaser represents and warrants to Seller that:
(a) Organization and Authority. Purchaser has been duly organized
and is validly existing as a Delaware limited liability company, in good
standing in the State of Delaware. Purchaser at Closing will be duly
organized and validly existing and in good standing in its state of
organization and in all jurisdictions where its operations or properties so
require. Purchaser shall have the full right and authority and shall have
obtained any and all consents required to enter into and perform this
Agreement. The persons signing this Agreement on behalf of Purchaser are
authorized to do so. All of the documents to be delivered by Purchaser at
the Closing will have been duly authorized and properly executed and will
constitute the valid and binding obligations of Purchaser.
(b) Conflicts. The execution of and performance under this
Agreement does not and in the case of Purchaser will not conflict with the
applicable organizational documents of Purchaser. There is and at Closing
will be no agreement to which Purchaser is a party or, to Purchaser's
knowledge, binding on Purchaser which is and at Closing will be in conflict
with the execution of or performance under this Agreement.
ve ERISA. Neither Purchaser is, nor will its permitted assignee
pursuant to Section 10.1 hereof be, an entity deemed to hold "plan assets"
within the meaning of 29 C.F.R. Section 2510.3-101 of any employee benefit
plan subject to Title I of ERISA or Section 4975 of the Code nor are they
fiduciaries to the beneficiaries of the shareholder of Seller which
beneficiaries are identified on Exhibit I.
7.3 Survival of Representation, Warranties and Covenants. The
continued validity in all material respects of the foregoing
representations and warranties shall be a condition precedent to the
obligation of the party(ies) to whom the representation and warranty is
given to close the transactions set forth herein. In the event at any time
prior to the Closing, Seller learns or has reason to believe that any of
Seller's representations and warranties is no longer true or correct,
Seller shall immediately notify Purchaser in writing and therein shall
specify the factors rendering or likely to render such representations or
warranties untrue or incorrect.
If Purchaser has actual knowledge (by Seller's notice set forth above
in this Section 7.3 or otherwise) that any of Seller's representations and
warranties shall not be true and correct in all material respects at any
time on or before the Closing Date (whether or not true and correct as of
the date of this Agreement or whether any change in facts or circumstances
has made the applicable representation and warranty no longer true and
correct, and regardless as to whether the applicable representation or
warranty is qualified to Seller's knowledge or otherwise), then Purchaser
may, at Purchaser's option exercised by written notice to Seller delivered
on or before the Closing Date, and as its sole and exclusive remedies,
either (i) proceed with this transaction, thereby accepting and waiving the
applicable representation and warranty as being modified by Seller's
notification, if any, or Purchaser's actual knowledge; or (ii) terminate
this Agreement and declare this Agreement of no further force and effect,
and in which event the Earnest Money then held by the Title Insurer shall
promptly be returned to Purchaser. Purchaser may exercise such rights for
breach of representations and warranties whether or not Seller has notified
Purchaser as provided above. For purposes of this Section 7.3, Purchaser's
"actual knowledge" shall be deemed to include that knowledge actually known
to Purchaser, its employees, agents and contractors as well as any facts
contained in the documents concerning the Property that Seller either
delivered to Purchaser or made available to Purchaser.
All representations and warranties set forth above shall be
continuing and deemed remade as of the Closing Date and shall survive the
Closing, subject to Section 10.5.
ARTICLE 8: DAMAGE OR DESTRUCTION/CONDEMNATION
8.1 Damage or Destruction. The risk of loss of or damage to the
Property by reason of any insured or uninsured casualty during the period
up to and including the Closing Date shall be borne by Seller. In the
event of any material damage to or destruction of the Property, Purchaser
may, at its option, by notice to Seller given within 10 days after
Purchaser is notified of such damage or destruction (and at Purchaser's
option the Closing for the Property shall be extended, if necessary, to
give Purchaser such 10-day period to respond to such notice) elect (i) not
to purchase the Property and (ii) to proceed under this Agreement. In the
event Purchaser is proceeding under clause (ii), Purchaser shall receive
all insurance proceeds for any damage to the Property which are due the
Seller as a result of such damage or destruction. In such event, Purchaser
shall receive a credit at the Closing for any deductible under said
insurance policies, up to the cost of repairing such damage or destruction.
If the Property is not materially damaged, then Purchaser shall not
have the right to terminate this Agreement as a result of such damage but
Seller shall at its cost repair the damage before the Closing in a manner
reasonably satisfactory to Purchaser, or if repairs cannot be completed
before the applicable Closing, credit Purchaser at such Closing, for the
reasonable cost to complete the repair.
For purposes of this Article 8 only "Material damage" and "Materially
damaged" mean damage reasonably exceeding $100,000 to repair.
8.2 Condemnation. In the event of any threatened, contemplated,
commenced or consummated proceedings in eminent domain or other
governmental taking (notice of which shall be given to Purchaser by Seller
immediately) (a "condemnation proceeding") respecting the Property,
Purchaser may, at its option, by notice to Seller given within 10 days
after Purchaser is notified of such actual or possible proceedings (and at
Purchaser's option the Closing shall be extended, if necessary, to give
Purchaser such 10 day period to respond to such notice) Purchaser may (i)
elect not to purchase the Property or (ii) to proceed under this Agreement
without reduction in Purchase Price. In the event Purchaser is proceeding
under clause (ii) Seller shall at the Closing assign to Purchaser its
entire right, title and interest in and to any condemnation award for the
Property and Purchaser shall have the sole right during the pendency of
this Agreement and after the Closing for the Property to negotiate and
otherwise deal with the condemning authorities in respect of such matters.
ARTICLE 9: REMEDIES
fec Purchaser's Default. If the transaction contemplated hereby
does not close by reason of a default by Purchaser in any of the terms
hereof (as opposed to by reason of failure of any contingency to
Purchaser's obligations hereunder), then Seller may, as its sole and
exclusive remedy receive all Earnest Money deposited to the date of such
default, and pursue against Purchaser any and all rights and remedies
available at law or equity to obtain from Purchaser copies of all items to
be delivered pursuant to Section 2.1(e) above. The parties acknowledge
that Seller's actual damages in the event of a default by Purchaser under
this Agreement will be difficult to ascertain, and that Seller's receipt of
the Earnest Money as liquidated damages represent the parties' best
estimate of such damages.
9.2 Seller's Default. If the transaction contemplated hereby does
not close by reason of a default by Seller in any of the terms hereof (as
opposed to by reason of failure of a contingency to any of Seller's
obligations hereunder), then Purchaser may, as its exclusive remedies: (a)
pursue specific performance, injunctive or other similar relief to enforce
this Agreement, or (b) rescind this Agreement and receive a refund of all
Earnest Money deposited to date (including all interest thereon) and in
conjunction therewith pursue against Seller any and all rights and remedies
available at law or equity to obtain from Seller (i) reimbursement for the
payment of all costs and expenses allocable to Seller under Section 6.9 of
this Agreement, and (ii) if Seller's default was due to an intentional, bad
faith breach by Seller of its obligations and covenants under Sections 4.1
(a), (c) and (g), then reimbursement for all out-of-pocket expenses of
Purchaser in connection with this transaction, up to $35,000 (items (i) and
(ii) being agreed liquidated damages). The parties acknowledge that
Purchaser's actual damages in the event of a default by Seller will be
difficult to ascertain, and that such liquidated damages represent the
parties' best estimate of such damages.
ARTICLE 10: MISCELLANEOUS
10.1 Parties Bound. Subject to Purchaser's rights below in this
Section 10.1, no party may assign this Agreement before the Closing without
the prior written consent of the other party hereto, and any such
prohibited assignment shall be void. It is understood that Purchaser may
assign its rights and obligations under this Agreement to an entity (a
"Permitted Assignee") which is owned by Purchaser or is under common
ownership with Purchaser or is an entity which Purchaser manages or
controls, or for which Purchaser is acting as investment manager, or is an
entity in which Purchaser is a general partner, in which case Seller after
receiving notice thereof shall direct all performance and conveyances to
such permitted assignee and title may be taken in the name of a nominee or
a partnership in which a Permitted Assignee is a partner. Subject to the
foregoing, this Agreement and all provisions hereof, including, without
limitation, all representations and warranties made hereunder, shall extend
to, be obligatory upon and inure to the benefit of the respective heirs,
devisees, legal representatives, successors, assigns and beneficiaries of
the parties hereto. No assignment (including an assignment by Purchaser
permitted above) shall relieve the assignor of any obligation under this
Agreement whether arising before or after such assignment. Purchaser and
Seller acknowledge that all of Purchaser's representations and warranties
contained in Section 7.2 hereof shall remain true and correct after such
permitted assignment, with the understanding that the state of organization
of the permitted assignee may be other than Delaware.
10.2 Headings. The article and section headings of this Agreement
are for convenience only and in no way limit or enlarge the scope or
meaning of the language hereof.
10.3 Invalidity. If any portion of this Agreement is held invalid
or inoperative, then so far as is reasonable and possible the remainder of
this Agreement shall be deemed valid and operative, and effect shall be
given to the intent manifested by the portion held invalid or inoperative.
The failure by either party to enforce against the other any term or
provision of this Agreement shall be deemed not to be a waiver of such
party's right to enforce against the other party the same or any other such
term or provision.
10.4 Governing Law. This Agreement shall, in all respects, be
governed, construed, applied and enforced in accordance with the law of the
State of Texas.
10.5 Survival. The provisions of this Agreement that contemplate
performance after the Closing shall survive the Closing and shall not be
deemed to be merged into or waived by the instruments of such Closing;
provided, however, that except for the representations and warranties set
forth in Sections 6.8, 7.1(a) and (b) and Sections 7.2(a) and (b), which
representations and warranties shall survive forever, the representations
and warranties of Seller set forth in Section 7.1 and of Purchaser set
forth in Section 7.2 of this Agreement shall survive only for a period of
one (1) year after the Closing Date, and Purchaser shall have the right to
bring an action thereon only if Purchaser has given Seller written notice
within such applicable one (1) year period setting forth the nature and
basis of its claim.
10.6 No Third Party Beneficiary. Subject to Section 10.1 this
Agreement is not intended to give or confer any benefits, rights,
privileges, claims, actions or remedies to any person or entity as a third
party beneficiary, or otherwise.
10.7 Entirety and Amendments. This Agreement embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings relating to the Property including without limitation that
certain letter agreement between Seller and Purchaser dated January 24,
1995. This Agreement may be amended or supplemented only by an instrument
in writing executed by the party against whom enforcement is sought.
10.8 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an
original, and all of such counterparts shall constitute one Agreement. To
facilitate execution of this Agreement, the parties may execute and
exchange by telephone facsimile counterparts of the signature pages.
10.9 Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered at the
Closing, each party agrees to perform, execute and/or deliver (or cause to
be delivered, executed and/or delivered) to the other party on or after the
Closing, any and all further acts, deeds and assurances as may be
reasonably necessary to consummate the transactions contemplated hereby
and/or to further perfect and deliver to the conveyance, transfer and
assignment of the Property. Such deliveries shall be made at no cost and
with no additional liability to the party requested to deliver such further
assurances.
10.10 Time. Time is of the essence in the performance of each and
every term, condition and covenant contained in this Agreement.
10.11 Confidentiality. The parties will maintain the confidentiality
of the terms of this transaction and the contents of this Agreement and
other related documentation; provided that (a) Purchaser may disclose
material terms in discussions with prospective equityholders or lenders,
(b) Purchaser may disclose all matters which are required to be disclosed
by applicable law in any filings with the Securities and Exchange
Commission, and (c) either party may disclose matters to its accountants,
attorneys and other consultants with a need to know who are informed of
this confidentiality restriction.
10.12 U.S. Currency Required. All sums of money referred to herein
shall be in currency of the United States of America.
10.13 Attorneys' Fees. Should either party employ attorneys to
enforce any of the provisions hereof, the party losing in any final
judgment agrees to pay to the prevailing party all reasonable costs,
charges and expenses, including attorneys' fees, expended or incurred in
connection therewith.
10.14 Use of Pronouns. The use of the neuter singular pronoun to
refer to a party shall be deemed a proper reference, even though such party
may be an individual, partnership or a group of two or more individuals.
The necessary grammatical changes required to make the provisions of this
Agreement apply in the plural sense where there is more than one seller or
purchaser and to either partnerships or individuals (male or female) shall
in all instances be assumed as though in each case fully expressed.
10.15 Notices. All notices required or permitted hereunder shall be
in writing and shall be served on the parties at the following address:
If to Purchaser: c/o The RREEF Funds
875 N. Michigan Avenue
Suite 4114
Chicago, Illinois 60611
Attn: Charles B. Leitner
Phone: (312) 266-9300
Fax: (312) 266-9346
with a copy to: D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attention: Joel D. Rubin
Fax: (312) 580-0923
Phone: (312) 580-2000
If to Seller: Lin AM Series 85 Limited Partnership
c/o Amli Realty Co.
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
ATTN: Mr. John Allen
Fax: (312) 443-0909
Phone: (312) 443-1477
With a copy to: Smith, Stern & Friedman, P.C.
3102 Oak Lawn, Suite 610
Dallas, Texas 75219
ATTN: Clifford L. Friedman, Esq.
Fax: 214-443-0088
Phone: 214-443-0066
Any such notices shall be either (a) sent by certified mail, return
receipt requested, in which case notice shall be deemed received three
business days after deposit, postage prepaid in the U.S. Mail and deemed
given on such deposit, (b) sent by overnight delivery using a nationally
recognized overnight courier, in which case it shall be deemed received one
business day after deposit with such courier and deemed given upon such
deposit, (c) sent by telefax, in which case notice shall be deemed both
given and received upon confirmed transmission of such notice, or (d) sent
by personal delivery, in which case notice shall be deemed both given and
received upon receipt or refusal of receipt. The above addresses may be
changed by written notice to the other party; provided, however, that no
notice of a change of address shall be effective until actual receipt of
such notice. Copies of notices are for informational purposes only, and a
failure to give or receive copies of any notice shall not be deemed a
failure to give notice.
10.16 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of
this Agreement or any exhibits or amendments hereto.
10.17 Calculation of Time Periods. Unless otherwise specified, in
computing any period of time described herein, the day of the act or event
after which the designed period of time begins to run is not to be included
and the last day of the period so computed is to be included, unless
(except as otherwise specified) such last day is a Saturday, Sunday or
legal holiday, in which event the period shall run until the end of the
next day which is not a Saturday, Sunday, or legal holiday. The last day
of any period of time described herein shall be deemed to end at 5 p.m.
Dallas, Texas time.
10.18 Information and Audit Cooperation. Intentionally deleted.
10.19 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN OR IN ANY DOCUMENT EXECUTED IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREIN, NO PERSONAL LIABILITY OR PERSONAL
DEFICIENCY JUDGMENT SHALL BE ASSERTED OR ENFORCED AGAINST ANY PARTNERS OR
MEMBERS OF PURCHASER OR, EXCEPT AS SET FORTH BELOW, THE PARTNERS OR MEMBERS
OF PURCHASER'S ASSIGNEE MADE PURSUANT TO SECTION 10.1 HEREOF, AGAINST THE
TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, PARTNERS, SHAREHOLDERS, PRINCIPALS
OR MEMBERS OF SUCH PARTNERS OR MEMBERS, OR AGAINST THE ASSETS OF ANY SUCH
PARTNERS' PARTNERS, SHAREHOLDERS, PRINCIPALS OR MEMBERS FOR PAYMENT OF ANY
AMOUNT DUE IN CONNECTION THEREWITH OR FOR OBSERVANCE OR PERFORMANCE OF ANY
OF THE OBLIGATIONS OF PURCHASER OR PURCHASER'S ASSIGNEE. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, ANY NEGATIVE CAPITAL ACCOUNT OF ANY
PARTNER OR MEMBER IN PURCHASER OR PURCHASER'S ASSIGNEE OR THE OBLIGATION OF
ANY PARTNER OR MEMBER IN PURCHASER OR PURCHASER'S ASSIGNEE TO MAKE A
CAPITAL CONTRIBUTION TO PURCHASER OR PURCHASER'S ASSIGNEE SHALL NOT BE
DEEMED TO BE AN ASSET OF PURCHASER OR PURCHASER'S ASSIGNEE. SUBJECT TO THE
FOREGOING, ANY LIABILITY OR CLAIM AGAINST PURCHASER OR PURCHASER'S ASSIGNEE
SHALL ONLY BE ENFORCED, (1) IF PURCHASER DOES NOT ASSIGN ITS RIGHTS UNDER
THIS AGREEMENT, OUT OF PURCHASER'S ASSETS ONLY AND (2) IF PURCHASER DOES
ASSIGN ITS RIGHTS UNDER THIS AGREEMENT, OUT OF PURCHASER'S ASSETS AND
PURCHASER'S ASSIGNEE'S ASSETS ONLY INCLUDING THE ASSETS OF ANY GENERAL
PARTNER.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN ANY
DOCUMENT EXECUTED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN,
NO PERSONAL LIABILITY OR PERSONAL DEFICIENCY JUDGMENT SHALL BE ASSERTED OR
ENFORCED AGAINST THE TRUSTEES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
PARTNERS, SHAREHOLDERS OR PRINCIPALS OF LINCAM PROPERTIES, INC., A DELAWARE
CORPORATION OR LINCAM ASSOCIATES, LTD., AN ILLINOIS LIMITED PARTNERSHIP,
THE SOLE GENERAL PARTNERS OF SELLER, OR AGAINST THE ASSETS OF SUCH
TRUSTEES, OFFICERS, DIRECTORS, PARTNERS OR SHAREHOLDERS FOR PAYMENT OF ANY
AMOUNT DUE IN CONNECTION THEREWITH OR FOR OBSERVANCE OR PERFORMANCE OF ANY
OF THE OBLIGATIONS OF SELLER.
10.20 As Is - Where Is. Except for the specific representations and
warranties set forth in this Agreement, Seller is conveying to, and the
Purchaser is accepting, the Property in its "As Is, Where Is" condition on
the Closing Date.
ARTICLE 11: INDEMNIFICATION
11.1 Seller's Agreements. Seller agrees, in addition to any other
indemnities of such parties set forth in this Agreement, to indemnify,
defend and hold harmless Purchaser and its successors and assigns and the
advisers, affiliates, directors, officers, employees, shareholders, members
and partners of any of them (collectively, the "Purchaser Related Parties",
and individually a "Purchaser Related Party"), from and against any and all
claims, liabilities, damages, and penalties and any and all loss, cost, or
expense (including without limitation, reasonable attorneys' fees and court
costs) incurred by, or any amount due to a Purchaser Related Party incident
to, resulting from, or in any way arising out of any of the following
before or after the Closing Date:
(i) Subject to the applicable time periods set forth in
Section 10.5 hereof, any representation or warranty made by Seller
hereunder is not true and correct in all material respects when made or is
not true and correct in all material respects at the Closing; and
(ii) Any tort claim or breach of contract claim for
money due and owing in connection with the ownership or operation of the
Property by Seller to the extent such claim arises from incidents which
occurred prior to the Closing Date and are not monetary obligations
specifically identified and credited to (and assumed by) Purchaser at
Closing.
Subject to the applicable time limitations set forth in Section 10.5,
the obligations of Seller set forth in this Section 11.1 shall survive the
Closing of the transactions contemplated hereunder and, as to the
obligations set forth in Sections 6.8 and 6.9, any termination of this
Agreement.
11.2 Purchaser's Agreements. Purchaser hereby agrees, in addition
to any other indemnities of Purchaser set forth in this Agreement, to
indemnify, defend and hold harmless Seller and its respective successors,
assigns, affiliates, directors, officers, employees and partners
(collectively, the "Seller Related Parties", and individually a "Seller
Related Party") from and against any and all claims, liabilities, damages,
and penalties and any and all loss, costs, or expense (including without
limitation, reasonable attorneys' fees and court costs) incurred by, or any
amount due to a Seller Related Party incident to, resulting from, or in any
way arising out of any of the following:
(i) Any tort claim or breach of contract claim or other
claim for money due and owing in connection with the ownership or operation
of any of the Property by Purchaser to the extent that such claim arises
from incidents which occurred after the Closing Date or from monetary
obligations arising prior to the Closing but specifically identified and
credited to (and assumed by) Purchaser at Closing include those arising
after Closing; and
(ii) Subject to the time periods set forth in Section
10.5 hereof, any representation or warranty made by Purchaser hereunder is
not true and correct in all material respects when made or is not true and
correct in all material respects at the applicable Closing.
Subject to the time limitations set forth in Section 10.5 hereof, the
obligations of Purchaser set forth in this Section 11.2 shall survive the
applicable Closings of the transactions contemplated hereunder and, as to
the obligations set forth in Sections 2.1(b), 6.8 and 6.9, any termination
of this Agreement.
11.3 Procedures for Obtaining Indemnification. Any claim for
indemnification under Section 11.1, Section 11.2 or any other applicable
provision of this Agreement shall be made in accordance with the following
provisions:
(i) Definitions. For purposes of this Section 11.3, (a)
the term "Claim" shall mean any claim, litigation, setoff, defense,
counterclaim or other legal action taken or asserted by any person against
the Asserting Party, (b) the term "Asserting Party" shall mean the
indemnified party against whom a Claim is asserted and who seeks
indemnification under Section 11.1, Section 11.2 or any other applicable
provision of this Agreement and (c) the term "Defending Party" shall mean
the indemnifying party or parties from whom indemnification is sought under
Section 11.1, Section 11.2 or any other applicable provision of this
Agreement.
(ii) Notice of Claim; Assumption of Defense. If a Claim
is made against the Asserting Party which the Asserting Party believes to
be covered by a Defending Party's indemnification obligations hereunder,
the Asserting Party shall promptly notify the Defending Party of the Claim
and, in such notice shall offer to the Defending Party the opportunity to
assume the defense of the Claim within ten (10) business days after receipt
of the notice (with counsel reasonably acceptable to the Asserting Party).
If the Defending Party timely elects to assume the defense of the Claim,
the Defending Party shall do so on behalf of both the Asserting Party and
the Defending Party, unless both the Asserting Party and the Defending
Party are named in the same litigation and representation of both of them
by the same counsel would be inappropriate.
(iii) Right to Settle. If the Defending Party timely
elects to assume the defense of the Claim, the Defending Party shall have
the right to settle the Claim on any terms it considers reasonable as long
as the settlement shall not require the Asserting Party to render any
performance or pay any consideration without the Asserting Party's prior
written consent.
11.4 Right to Assume Defense. If the Defending Party fails timely
to elect to assume the defense of the Claim, or if the Defending Party
timely elects to assume the defense of the Claim but thereafter fails to
defend the Claim with diligence and continuity with counsel reasonably
acceptable to the Asserting Party, then the Asserting Party shall, after
five (5) days written notice to Defending Party, have the right to take
over the defense of the Claim and to settle the Claim on any terms the As-
serting Party considers reasonable. Any such settlement shall be valid as
against the Defending Party.
If the Defending Party assumes the defense of a Claim, the Asserting
Party may employ its own counsel but such employment shall be at the sole
expense of the Asserting Party. If the Defending Party assumes the defense
of a Claim but the same counsel may not appropriately represent both the
Asserting Party and the Defending Party, or if the Defending Party fails
timely to assume the defense of the Claim or, after having elected to
assume the defense fails to defend the Claim with diligence and continuity
with counsel reasonably acceptable to the Asserting Party, the Asserting
Party may, after five (5) days written notice to Defending Party, employ
its own counsel and such employment shall be at the sole expense of the
Defending Party.
Whether or not the Defending Party elects to assume the defense of a
Claim, the Defending Party shall cooperate with the Asserting Party in the
defense of the Claim.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
PURCHASER
RREEF AMERICA L.L.C., a Delaware
limited liability company
By:________________________________
Name:______________________________
Title:_____________________________
SELLER
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
AGREEMENT OF PURCHASE AND SALE
FOR
BARTON CREEK LANDING APARTMENTS
EXHIBITS
A - Legal Description of Real Property
B - Surveyor's Certificate
C - Form Closing Documents
C-1 Form Deed
C-2 Form Assignment of Lease
C-3 Form Bill of Sale
C-4 Form Assignment of Intangible Personal Property
C-5 Form Certificate of Representation and Warranty
C-6 Form Assignment and Assumption of Contract
C-7 Form Tenant Notice Letter
D - Litigation
E - Leased Property
F - Environmental Matters
G - Other Physical Matters
EXHIBIT A
LEGAL DESCRIPTION OF THE REAL PROPERTY
EXHIBIT B
SURVEYOR'S CERTIFICATE
I hereby certify to _________________________________,
________________________________, and ______________________ that on the
________ day of ______________, 1995, this survey was made on the ground
per the field notes and is true, correct, and accurate as to the boundaries
and areas of the subject property and the size, location, and type of
buildings and improvements thereon, and as to the other matters shown
thereon, that the area or quantity of the subject property as set forth in
this survey is accurate to the nearest one ten thousandth (1/10,000) of an
acre, and that this survey correctly shows (a) the location of all
easements, rights-of-way, improvements, signs, fences, drainage ditches,
impoundments, pits, railroads, streams, building setback lines, party
walls, and encroachments visible on the ground, or of record as contained
within a title report prepared by ________________________________________
Title Insurance Company, on ______________, 19__, Commitment No.
_______________, or of which I have knowledge or have been advised, whether
or not of record, affecting the subject property and the location of all
above-ground evidence of utility lines serving the subject property and,
except as shown, there exist on the subject property no such above-ground
evidence of easements, rights-of-way, improvements, signs, fences, drainage
ditches, impoundments, pits, railroads, streams, building setback lines,
party walls, and encroachments, and (b) the location of all above-ground
evidence of utility lines serving the subject property, and (c) the
location and number of all parking spaces, if any, including the location
and number of all parking spaces designated for handicap use, and (d) the
distance of improvements on the subject property at ground surface level to
the nearest facing exterior property line of the subject property, and to
any applicable setback lines and to other buildings on the subject
property, and (e) all curb cuts and means of ingress to and egress from the
subject property and the measured distance between such curb cuts, and (f)
the width(s) of the street(s) on which the subject property abuts and the
applicable right-of-way lines for said street(s).
Encroachments, as used herein, include encroachments or protrusions
onto the subject property by above-ground improvements on adjacent
property, rights-of-way or easements and encroachments or protrusions onto
adjacent property, rights-of-way, easements or building setbacks by any
above-ground improvements on the subject property and any conflicts or
overlaps of the metes and bounds calls of the subject property and those of
adjacent property, easements, or rights-of-way.
The subject property has restricted ingress and egress to and from
________________________________________________________ and
__________________________________________________ which is paved, public
right-of-way and is maintained by the ________ County Department of
Transportation, _________ County, _________.
No part of the subject property lies within a 100-year flood plain or
in an identified "flood hazard," as defined by the United States Department
of Housing and Urban Development, pursuant to the Flood Disaster Act of
1973, as amended.
This Survey substantially complies with the current Texas Society of
Professional Surveyors Standards and Specifications for a Category 1A,
Condition II survey and the standards for an ALTA-ASCM Urban survey.
DATED: _______________________
___________________________________
Registered Public Surveyor
Surveyor Number ___________________
EXHIBIT C-1
SPECIAL WARRANTY DEED
THE STATE OF TEXAS }
} KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF TRAVIS }
THAT, LINCAM PROPERTIES LTD. SERIES 85, an Illinois limited
partnership (hereinafter referred to as "Grantor"), for and in
consideration of the sum of Ten and No/100 Dollars ($10.00) and other
valuable consideration to the undersigned paid by
_____________________________________________________ a
_________________________________________ (hereinafter referred to as
"Grantee"), the receipt and sufficiency of which consideration is hereby
acknowledged, has GRANTED, SOLD AND CONVEYED, and by these presents does
GRANT, SELL AND CONVEY unto Grantee, all of the following described
property in Travis County, Texas, to wit:
that certain parcel of real property described on Exhibit "A"
attached hereto and made a part hereof for all purposes, together with all
improvements thereon and all rights and appurtenances pertaining thereto
and all of the easements, rights-of-way, privileges, liberties,
hereditaments, strips and gores, streets, alleys, passages, ways, waters,
water courses, thereto belonging or appertaining, and all of the estate,
right, title, interest, claims or demands whatsoever of Grantors therein
and the streets and ways adjacent thereto, either in law or in equity;
subject, however, to those matters set forth on Exhibit "B" attached hereto
and made a part hereof.
TO HAVE AND TO HOLD the above described premises, together with all
and singular the rights and appurtenances thereto in anywise belonging unto
the said Grantee, its successors, legal representatives and assigns
forever, and Grantor does hereby bind itself, and its successors and
assigns to WARRANT AND FOREVER DEFEND all and singular the said premises
unto the said Grantee, its successors, legal representatives and assigns,
against every person whomsoever lawfully claiming or to claim the same or
any part thereof, by, through or under Grantor, but not otherwise.
EXECUTED this ______ day of _______________, 1995.
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
[ACKNOWLEDGEMENTS]
Mailing Address of Grantee:
_____________________________
_____________________________
_____________________________
EXHIBIT C-2
ASSIGNMENT AND ASSUMPTION OF LEASES
STATE OF _______ }
} KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF _______ }
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Assignor"), hereby assigns, transfers, sets over and
conveys to _________________________________, a ________ limited
partnership ("Assignee"), all of Assignor's right, title and interest in
and to the leases ("Leases"), including any and all security deposits made
by tenants pursuant to said Leases, in effect at the real property
described on Exhibit A attached hereto, including without limitation, those
described in the rent roll attached hereto as Exhibit B.
Assignor shall defend, indemnify and hold harmless Assignee from any
liability, damages, causes of action, expenses, and attorneys' fees
incurred by Assignee by reason of the failure of Assignor to fulfill,
perform, discharge, and observe its obligations with respect to any of the
Leases arising prior to the date hereof. Assignee shall defend, indemnify
and hold harmless Assignor from any liability, damages, causes of action,
expenses, and attorneys' fees incurred by Assignor by reason of the failure
of Assignee to fulfill, perform, discharge, and observe its obligations
with respect to any of the Leases arising from and after the date hereof.
The provisions of Section 10.19 of that certain Agreement of Purchase
and Sale, dated as of February ___, 1995, by and between Assignor and
Assignee's predecessor in interest, RREEF America L.L.C., are incorporated
herein by reference as if fully set forth herein and are applicable to the
parties' obligations hereunder.
IN WITNESS WHEREOF, this Assignment and Assumption of Leases has been
duly executed and delivered as of this ______ day of _____________, 1995.
ASSIGNOR:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
[ACKNOWLEDGEMENTS]
EXHIBIT C-3
BILL OF SALE
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Seller"), sells, assigns, transfers and sets over to
_________________________________, a _________ limited partnership
("Purchaser"), the following described personal property:
All equipment, machinery, furniture, furnishings, supplies and other
tangible personal property, of every nature and description, and all
replacements thereof, owned by Seller now or hereafter located in or on the
real estate commonly known as "Barton Creek Landing Apartments", which real
estate is described on Exhibit A attached hereto and made a part hereof,
excepting therefrom any furniture, furnishings articles of personal
property belonging to tenants occupying the improvements situated on said
real estate.
The property hereby assigned includes, without limitation, the
property described on Exhibit B attached hereto and made a part hereof.
IN WITNESS WHEREOF, Seller has duly executed and delivered this Bill
of Sale as of this _____ day of ______________________, 1995.
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
[ACKNOWLEDGMENTS]
EXHIBIT C-4
ASSIGNMENT OF INTANGIBLE PROPERTY
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Assignor"), sells, assigns, transfers, and sets over
unto _________________________________, a ________ limited partnership
("Assignee"), all the right, title and interest of Assignor in and to any
and all of the intangible personal property related to or used in
connection with the real property described on Exhibit A attached hereto
(the "Property"), including without limitation, all trade names and
trademarks associated with such Property including Assignors' right and
interest, if and to the extent Assignor has such rights and interests, in
the name of the Property, which is commonly known as "Barton Creek Landing
Apartments," the plans and specifications, and other architectural and
engineering drawings for the Property, if and to the extent Assignor has
any right, title or interest in and to such plans and specifications and
other architectural and engineering drawings for the Property, contract
rights related to the construction, operation, ownership or management of
the Property (but excluding Assignor's obligations thereunder except those
expressly assumed in writing), warranties, zoning approvals, building
permits and licenses (to the extent assignable), tenant lists,
correspondence with tenants and records (including, but not limited to,
those relating to taxes, insurance, maintenance, repairs, capital
improvements and services), booklets, manuals, advertising, and promotional
materials, including, without limitation, photographs and negatives,
correspondence with suppliers and telephone exchange numbers (if
available).
The provisions of Section 10.19 of that certain Agreement of Purchase
and Sale, dated as of February ___, 1995, by and between Assignor and
Assignee's predecessor in interest, RREEF America L.L.C., are incorporated
herein by reference as if fully set forth herein and are applicable to the
parties' obligations hereunder.
IN WITNESS WHEREOF, Assignor and Assignee have duly executed and
delivered this Assignment of Intangible Personal Property as of this _____
day of _______________, 1995.
ASSIGNOR:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
[ACKNOWLEDGEMENTS]
EXHIBIT C-5
CERTIFICATE UPDATING REPRESENTATIONS AND WARRANTIES
LINCAM PROPERTIES LTD. SERIES 85, an Illinois limited partnership
("Seller") certifies to _________________________________, a ________
limited partnership ("Purchaser"), that the representations and warranties
set forth in Article Seven of that certain Agreement of Purchase and Sale
("Agreement") dated as of __________________, 1995 between Seller and RREEF
America L.L.C. conveying the sale of certain real property in the State of
Texas more particularly described in the Agreement, and the updated Rent
Roll, updated list of Service Contracts and updated Operating Statement,
attached hereto as Exhibits A, B and C, respectively, are and remain, true,
complete and correct and are reaffirmed as of this date and survive the
Closing (as defined in the Agreement) for the period described therein.
The Seller makes this certification for Purchaser's benefit with the
understanding that Purchaser is relying upon this certificate in connection
with its purchase of the above-described property.
Duly executed and delivered as of this ______ day of __________,
1995.
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
EXHIBIT C-6
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS
STATE OF _______ }
} KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF _______ }
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Assignor"), hereby assigns, transfers, sets over and
conveys to _________________________________, a ________ limited
partnership ("Assignee"), all of Assignor's right, title and interest in
and to the service contracts and other agreements ("Service Contracts"), in
effect at the real property described on Exhibit A and listed on Exhibit B
attached hereto.
Assignor shall defend, indemnify and hold harmless Assignee from any
liability, damages, causes of action, expenses, and attorneys' fees
incurred by Assignee by reason of the failure of Assignor to fulfill,
perform, discharge, and observe its obligations with respect to any of the
Service Contracts arising prior to the date hereof. Assignee shall defend,
indemnify and hold harmless Assignor from any liability, damages, causes of
action, expenses, and attorneys' fees incurred by Assignor by reason of the
failure of Assignee to fulfill, perform, discharge, and observe its
obligations with respect to any of the Service Contracts arising from and
after the date hereof.
The provisions of Section 10.19 of that certain Agreement of Purchase
and Sale, dated as of February ___, 1995, by and between Assignor and
Assignee's predecessor in interest, RREEF America L.L.C., are incorporated
herein by reference as if fully set forth herein and are applicable to the
parties' obligations hereunder.
IN WITNESS WHEREOF, this Assignment and Assumption of Service
Contracts has been duly executed and delivered as of this ______ day of
_____________, 1995.
ASSIGNOR:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
ASSIGNEE:
___________________________________
EXHIBIT C-7
____________________, 1995
____________________________
Apartment No. ________
Barton Creek Landing
____________________________
Re: Notice of Change of Ownership of Barton Creek Landing
Apartments, Austin, Texas (the "Property")
Dear Resident:
For the purposes of complying with Section 92.105 of the Property
Code of the Revised Civil Statutes of the State of Texas, you are hereby
notified as follows:
1. That as of the date hereof,LincAm Properties Ltd. Series 85, an
Illinois limited partnership, has transferred, sold, assigned, and conveyed
the Property to _________________________________________________ (the "New
Owner").
2. The New Owner is, as of the date hereof, responsible for your
tenant security deposit and/or pet deposit in the aggregate amount of
$_________________ with respect to your leased premises at the Property.
3. Future rental payments with respect to your leased premises at
the Property should be made to the New Owner by delivering to the on-site
manager of the Property a check or money order payable to the order of
______________________.
Yours very truly,
NEW OWNER:
By:________________________________
Title:_____________________________
TRANSFER ACKNOWLEDGED:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a
Delaware corporation, general partner
By:___________________________
Name:_________________________
Title:________________________
BY: LINCAM ASSOCIATES, LTD., an
Illinois limited partnership, general partner
By:___________________________
Name:_________________________
Title:________________________
EXHIBIT D
LITIGATION
[To be provided during the Reveiw Period]
EXHIBIT E
LEASED PROPERTY
[To be provided during the Reveiw Period]
EXHIBIT F
ENVIRONMENTAL MATTERS
[To be provided during the Reveiw Period]
EXHIBIT G
OTHER PHYSICAL MATTERS
[To be provided during the Reveiw Period]
FORM 8-K/A No. 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): April 12, 1995
LINCAM PROPERTIES LTD. SERIES 85
Illinois 2-99673 36-3377785
(State or other (Commission File No.) (IRS Employee
jurisdiction of Identification No.)
organization)
125 S. Wacker Drive, Suite 3100, Chicago, Illinois 60606
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 312-443-1477
BARTON CREEK LANDING APARTMENTS
Austin, Texas
Item 2. Acquisition or Disposition of Assets
On April 12, 1995, a 60% owned joint venture of Lincam Properties Ltd.
Series 85 (the "Partnership") sold Barton Creek Landing Apartments, a 250-
unit luxury garden apartment complex located in Austin, Texas. The Property
sold includes 18.77 acres of land. The buyer, RREEF Barton Creek, L.P., is
not affiliated with the partnership, the affiliate joint venture, or the
General Partners of the Partnership, and the purchase price for the property
was determined by arm's-length negotiations.
The apartment complex was completed in 1986 and consists of 27 two-
story wood frame buildings with brick and wood exteriors: it contains 71
one-bedroom units and 179 two-bedroom units in a variety of floor plans
totalling 220,688 square feet of net rentable area. The apartment complex
includes a swimming pool, a clubhouse/leasing office, a lighted tennis court
and a sports court and is landscaped with tiered garden areas and spacious
greenbelts. All units are well appointed and include such features as
marble entries, fireplaces, individual security alarm systems, and energy-
saving appliances including frost-free refrigerators with ice makers,
automatic dishwashers, disposals, ovens, ranges and microwaves.
The sales price was $17,871,600 for which the affiliate joint venture
received approximately $14,272,000 in cash net of prorations and closing
costs. The Partnership received 60% of the net proceeds ($8,563,200), a
portion of which was used to repay its $5,000,000 outstanding note payable.
The remainder was used to fund a special distribution on May 31 to the
partners of the Partnership.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information.
(c) Exhibits.
10.1 Agreement of Purchase and Sale of Barton Creek Landing
Apartments properties by LincAm Barton Venture to RREEF
Barton Creek, L.P., and First Amendment thereto.
- 2 -
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.
LincAm Properties Ltd. Series 85
By: LincAm Properties, Inc.
Corporate General Partner
Date: June 22, 1995 By: /S/ JOHN E. ALLEN
John E. Allen
President of Corporate
General Partner
- 3 -
LINCAM PROPERTIES LTD. SERIES 85
PRO FORMA FINANCIAL INFORMATION GENERATED FROM
SALE OF BARTON CREEK LANDING APARTMENTS
The following unaudited pro forma financial information for the year
ended December 31, 1994 and for the three months ended March 31, 1995
represents information as if Barton Creek Landing Apartments, located in
Austin, Texas, were sold at the beginning of each period presented. These
estimates do not purport to represent actual or expected operations of the
property for any period in the future. These estimates (which include only
those adjustments to this historical period which can be factually
supported) were prepared in accordance with Rule 11-02 Regulation S-X
promulgated under the Securities Act of 1933 and on the basis described in
the accompanying notes, which should be read in conjunction herewith.
The pro forma financial information consists of four schedules labeled
Schedules A, B, C and D. Schedules A and B represent the proforma balance
sheet and statement of operations as of and for the year ended December 31,
1994. Schedules C and D represent the pro forma balance sheet and statement
of operations as of and for the three months ended March 31, 1995.
- 4 -
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85 SCHEDULE A
PRO FORMA FINANCIAL INFORMATION GENERATED FROM
SALE OF BARTON CREEK LANDING APARTMENTS
Balance Sheet as of December 31, 1994
(Unaudited)
<CAPTION>
ASSETS
Actual Pro Forma Pro Forma
1994 Adjustments 1994
<S>
Current assets: <C> <C> <C>
Cash and cash equivalents $ 823,430 (374,497) 448,933
Prepaid expenses and other 37,901 (1,903) 35,998
Receivable from tenant 61,679 - 61,679
----------- ---------- ----------
Total current assets 923,010 (376,400) 546,610
Note receivable 5,485,000 - 5,485,000
Investment properties, at cost:
Land 4,933,945 (2,534,771) 2,399,174
Buildings and improvements 22,307,104 (10,268,071) 12,039,033
27,241,049 (12,802,842) 14,438,207
Less accumulated depreciation (5,588,495) 3,004,619 (2,583,876)
----------- ---------- ----------
Total investment properties, net of
accumulated depreciation 21,652,554 (9,798,223) 11,854,331
Deferred expenses, net 86,655 (86,655) -
Other assets 304,856 (94,805) 210,051
----------- ---------- ----------
Total assets $28,452,075 (10,356,083) 18,095,992
LIABILITIES AND PARTNERS' CAPITAL (DEFICITS)
Current liabilities:
Accounts payable 77,063 (33,563) 43,500
Accrued interest 14,383 (14,383) -
Funds held for others 126,586 - 126,586
Accrued real estate taxes 427,116 (309,116) 118,000
Tenant security deposits 113,228 (80,445) 32,783
Unearned income 1,952 (1,952) -
----------- ---------- ----------
Total current liabilities 760,328 (439,459) 320,869
Note payable 5,000,000 (5,000,000) -
----------- ---------- ----------
Total liabilities 5,760,328 (5,439,459) 320,869
Venture partner's investment in venture 4,106,229 (4,106,229) -
Partners' capital (deficits):
General Partners:
Capital contributions 2,000 - 2,000
Allocated portion of cumulative net income 63,124 24,240 87,364
Cumulative cash distributions (102,086) (32,344) (134,430)
(36,962) (8,104) (45,066)
Limited Partners:
Interest of $1,000. Authorized 40,001 Interests;
issued and outstanding 25,016 Interests 22,479,645 - 22,479,645
Allocated portion of cumulative net income 6,305,454 2,399,757 8,705,211
Cumulative cash distributions (10,162,619) (3,202,048) (13,364,667)
18,622,480 (802,291) 17,820,189
----------- ---------- ----------
Total partners' capital 18,585,518 (810,395) 17,775,123
----------- ---------- ----------
Total liabilities and partners' capital $28,452,075 (10,356,083) 18,095,992
</TABLE>
- 5 -
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85 SCHEDULE B
PRO FORMA FINANCIAL INFORMATION GENERATED FROM
SALE OF BARTON CREEK LANDING APARTMENTS
Consolidated Statements of Operations for the Year Ended December 31, 1994
(Unaudited)
<CAPTION>
Actual Pro Forma Pro Forma
1994 Adjustments 1994
<S>
Income: <C> <C> <C>
Rental income $3,733,479 (2,161,274) 1,572,205
Charges to tenants 126,333 - 126,333
Interest income 433,354 (14,487) 418,867
Other income 86,867 (59,605) 27,262
----------- ---------- ----------
Total income 4,380,033 (2,235,366) 2,144,667
Expenses:
Property operating expenses 1,300,283 (876,014) 424,269
Depreciation 613,936 (285,941) 327,995
Interest expense 370,010 (370,010) -
Management fees paid to affiliate
of general partner 170,002 (109,935) 60,067
Professional services 70,090 (8,200) 61,890
Amortization of deferred expenses 51,993 (51,993) -
General and administrative 68,859 - 68,859
----------- ---------- ----------
Total expenses 2,645,173 (1,702,093) 943,080
Operating income 1,734,860 (533,273) 1,201,587
Gain on sale of investment property - 4,520,375 4,520,375
Venture partner's share of gain on sale
of investment property (383,693) (1,424,457) (1,808,150)
----------- ---------- ----------
Net income before extraordinary item 1,351,167 2,562,645 3,913,812
----------- ---------- ----------
Net income before extraordinary item
per limited partnership interest $ 53.47 101.42 154.89
----------- ---------- ----------
Cash distribution per limited partnership interest $ 70.00 128.00 198.00
</TABLE>
- 6 -
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85 SCHEDULE C
PRO FORMA FINANCIAL INFORMATION GENERATED FROM
SALE OF BARTON CREEK LANDING APARTMENTS
Balance Sheet as of March 31, 1995
(Unaudited)
ASSETS
<CAPTION>
Actual Pro Forma Pro Forma
1995 Adjustments 1995
<S>
Current assets: <C> <C> <C>
Cash and cash equivalents $ 558,234 (157,786) 400,448
Prepaid expenses and other 36,243 (1,304) 34,939
Receivable from tenant 7,845 - 7,845
----------- ---------- ----------
Total current assets 602,322 (159,090) 443,232
Note receivable 5,485,000 - 5,485,000
Investment properties at cost:
Land 4,933,945 (2,534,771) 2,399,174
Buildings and improvements 22,311,681 (10,311,101) 12,000,580
27,245,626 (12,845,872) 14,399,754
Less accumulated depreciation (5,744,333) 3,076,531 (2,667,802)
----------- ---------- ----------
Total investment property,
net of accumulated deprecation 21,501,293 (9,769,341) 11,731,952
Deferred assets, net 73,657 (73,657) -
Other assets 288,594 (88,635) 199,959
----------- ---------- ----------
Total assets $27,950,866 (10,090,723) 17,860,143
LIABILITIES AND PARTNERS' CAPITAL (DEFICITS)
Current liabilities:
Accounts payable 33,978 (3,256) 30,722
Accrued interest 10,139 (10,139) -
Funds held for others 25,863 - 25,863
Amounts due to affiliates 6,731 1,943 8,674
Accrued real estate taxes 183,402 (83,778) 99,624
Tenant security deposits 108,308 (74,275) 34,033
Unearned income 1,482 (1,482) -
----------- ---------- ----------
Total current liabilities 369,903 (170,987) 198,916
Note payable 5,000,000 (5,000,000) -
----------- ---------- ----------
Total liabilities 5,369,903 (5,170,987) 198,916
Venture partner's investment in venture 4,098,525 (4,098,525) -
Partners' capital (deficits):
General Partners:
Capital contributions 2,000 - 2,000
Allocated portion of cumulative net income 66,642 27,164 93,806
Cumulative cash distributions (106,634) (35,376) (142,010)
(37,992) (8,212) (46,204)
Limited Partners:
Interest of $1,000. Authorized 40,001 Interests;
issued and outstanding 25,016 Interests 22,479,645 - 22,479,645
Allocated portion of cumulative net income 6,653,692 2,689,241 9,342,933
Cumulative cash distributions (10,612,907) (3,502,240) (14,115,147)
18,520,430 (812,999) 17,707,431
----------- ---------- ----------
Total partners' capital 18,482,438 (821,211) 17,661,227
----------- ---------- ----------
Total liabilities and partners' capital $27,950,866 (10,090,723) 17,860,143
</TABLE>
- 7 -
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85 SCHEDULE D
PRO FORMA FINANCIAL INFORMATION GENERATED FROM
SALE OF BARTON CREEK LANDING APARTMENTS
Consolidated Statements of Operations for the Three Months Ended March 31, 1995
(Unaudited)
<CAPTION>
Actual Pro Forma Pro Forma
1995 Adjustments 1995
<S>
Income: <C> <C> <C>
Rental income $ 977,535 (574,499) 403,036
Charges to tenant 34,095 - 34,095
Interest income 110,292 (8,255) 102,037
Other income 22,536 (15,470) 7,066
----------- ---------- ----------
Total income 1,144,458 (598,224) 546,234
Expenses:
Property operating expenses 309,561 (205,573) 103,988
Depreciation 155,838 (71,911) 83,927
Interest expense 113,201 (113,201) -
Management fees paid to affiliate of General Partner 45,072 (29,475) 15,597
Professional services 19,773 (6,000) 13,773
Amortization of deferred expenses 12,998 (12,998) -
General and administrative 23,963 (6,072) 17,891
----------- ---------- ----------
Total expenses 680,406 (445,230) 235,176
----------- ---------- ----------
Operating income 464,052 (152,994) 311,058
Gain on sale of investment property - 4,739,597 4,739,597
Venture partner's share of gain on sale
of investment property (112,296) (1,783,543) (1,895,839)
----------- ---------- ----------
Net income before extraordinary item $ 351,756 2,803,060 3,154,816
Net income before extraordinary item ----------- ---------- ----------
per limited partnership interest $ 13.92 110.93 121.42v
----------- ---------- ----------
Cash distributions per limited partnership interest $ 18.00 140.00 158.00
<FN>
- 8 -
LINCAM PROPERTIES LTD. SERIES 85
NOTES TO PRO FORMA FINANCIAL INFORMATION GENERATED FROM
SALE OF BARTON CREEK LANDING APARTMENTS
1. For the year ended December 31, 1994 and for the three months ended March 31, 1995,
rental income, interest income, other income, property operating expenses, depreciation
expense, management fees, professional services and general and administrative expenses
have been decreased by the amounts generated by Barton Creek Landing Apartments.
2. For each period interest expense from the note payable has been decreased as if the
Partnership paid the note in full immediately upon receiving the cash proceeds from the
sale of Barton Creek Landing Apartments.
3. The amortization of deferred expenses has also been decreased as if the Partnership
expects to recognize extraordinary charges associated with the retirement of the note
payable. This extraordinary charge has not been included in the pro forma statements of
operations.
4. For each period the effect of all property placed in service during the period has been
reversed.
5. For each period the Partnership distributed cash proceeds to its partners equal to
substantially all of the amount by which net cash proceeds from the sale exceeded bank
debt repaid.
</TABLE>
- 9 -
FIRST AMENDMENT TO PURCHASE AGREEMENT
This First Amendment to Purchase Agreement is made as of the ___ day of
April, 1995 by and between RREEF America L.L.C., a Delaware limited liability
company ("Purchaser") and Lincam Barton Venture ("Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have entered into that certain Purchase
Agreement dated February 17, 1995 (the "Contract") for the purchase and sale
of the property known as Barton Creek Landing Apartments (the "Property"), as
more particularly described therein;
WHEREAS, Seller and Purchaser have agreed to various changes to the
Contract, as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby amend the Contract as
follows:
1. Purchase Price. The definition of Purchase Price under paragraph
1.3(a) of the contract is hereby amended to read as follows: "Purchase Price.
The purchase price for the Property (the Purchase Price) is $14,871,600."
2. Tax Holdback. At closing, the real estate tax credit to be
provided by Seller to Purchaser under the Contract shall be based on $940.99
for each day of Seller's period of ownership during the tax bill period. In
addition, Seller shall credit to Purchaser an amount equal to $59.18 for each
day of Purchaser's period of ownership during the current tax bill period,
which Purchaser shall hold in its operating account until the final real
estate tax bill attributable to the current billing period is issued. To the
extent the actual tax bill is less than $343,462 and greater than $321,839,
within thirty (30) days after receipt of such final tax bill, Purchaser shall
pay to Seller an amount equal to Purchaser's share (on a per diem basis) of
$343,462 less the greater of (i) the actual amount of such tax bill, or (ii)
$321,839.
3. Confidentiality. The parties hereto agree to keep confidential
all matters relating to the Purchase Price (other than on a need-to-know
basis), and to obtain agreements from their respective brokers, agents and
employees to do the same.
4. Property Owners Association. At Closing, Seller shall deliver to
Purchaser an estoppel letter (in a form reasonably acceptable to Purchaser)
from the Wallingwood P.U.D. Owners Association stating the annual amount of
assessment due for the Property, that Seller has paid all assessments and
other amounts due and owing to date, that no special assessments are being
charged or are anticipated, and that neither Seller nor the Property is in
violation of the terms of the Declaration of Covenants, Conditions and
Restrictions creating such association.
5. Price Allocation. Seller and Purchaser acknowledge that a portion
of the Purchase Price is attributable to personal property to be conveyed. At
or prior to closing, Seller and Purchaser shall negotiate in good faith to
arrive at an allocation of the Purchase Price between the personal and real
property to be conveyed.
6. Zoning: Inspection Period. Upon full execution and delivery of
this First Amendment by Seller and Purchaser, Purchaser hereby approves of the
condition of the Property and waives its right to terminate the Contract
pursuant to paragraph 2.1 thereof, except with regard to zoning matters. If
Purchaser determines, in its sole discretion, that the current zoning for the
Property is unsatisfactory to Purchaser, Purchaser may terminate this Contract
by giving written notice of termination to Seller on or before April 12, 1995.
If Purchaser does not so give such notice of termination, the Contract shall
continue in full force and effect.
7. Severability. If any provision of this Amendment is held to be
illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable; this Amendment shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance therefrom.
8. Continuation of Contract. Other than as amended herein, the
Contract shall remain in full force and effect and all capitalized terms
herein shall have the same definition as those contained in the Contract. In
the event of any conflict between the terms of the Contract and this First
Amendment, the provisions of this First Amendment shall govern.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
the Contract as of the date first set forth above.
Seller: Purchaser:
Lincam Barton Venture RREEF America L.L.C.,
a Delaware limited
liability company
By: Lincam Properties Ltd. Series 85
By: Lincam Properties, Inc. By:
a Delaware corporation, ___________________________
general partner Title: Authorized
Representative
By: ____________________________
Title:
By: Lincam Associates, Ltd.
an Illinois limited partnership,
general partner
By: ____________________________
Title:
AGREEMENT OF PURCHASE AND SALE
FOR THE ACQUISITION
OF
BARTON CREEK LANDING APARTMENTS
BY
RREEF AMERICA L.L.C.
FROM
LINCAM PROPERTIES LTD. SERIES 85
Dated as of: February ____, 1995
TABLE OF CONTENTS
Page
ARTICLE 1 CERTAIN TERMS/PROPERTY/PURCHASE PRICE/
ADDITIONAL CONSIDERATION
1.1 Certain Definitions. . . . . . . . . . . . . . . . . .1
1.2 Purchase and Sale. . . . . . . . . . . . . . . . . . .3
1.3 Purchase Price and Payment . . . . . . . . . . . . . .3
1.4 Earnest Money. . . . . . . . . . . . . . . . . . . . .3
ARTICLE 2 INSPECTION
2.1 Inspection and Review Period . . . . . . . . . . . . .3
2.2 Continuing Right of Access for Inspection. . . . . . .8
ARTICLE 3 TITLE REVIEW
3.1 Delivery of Title Documents. . . . . . . . . . . . . .8
3.2 Review of Title. . . . . . . . . . . . . . . . . . . .9
3.3 Further Exceptions . . . . . . . . . . . . . . . . . 10
ARTICLE 4 OPERATIONS PRIOR TO CLOSING
4.1 Seller's Operations. . . . . . . . . . . . . . . . . 10
4.2 Leasing Arrangements and Management Transition . . . 11
4.3 Removal and Replacement of Tangible Personal Property12
4.4 Seller's Obligations . . . . . . . . . . . . . . . . 12
ARTICLE 5 CLOSING
5.1 Closing Date . . . . . . . . . . . . . . . . . . . . 13
5.2 Seller's Deliveries in Escrow. . . . . . . . . . . . 13
5.3 Purchaser's Deliveries in Escrow . . . . . . . . . . 14
5.4 Closing Statements/Transfer Declarations . . . . . . 15
5.5 Title Policy/Updated UCC Searches. . . . . . . . . . 15
5.6 Possession . . . . . . . . . . . . . . . . . . . . . 15
5.7 Termination of Property Management and Other Service
Contracts. . . . . . . . . . . . . . . . . . . . . . 15
5.8 Memorandum/Name of Representative. . . . . . . . . . 16
5.9 Delivery of Books and Records. . . . . . . . . . . . 16
5.10 Notice to Tenants and Vendors. . . . . . . . . . . . 16
5.11 Close of Escrow. . . . . . . . . . . . . . . . . . . 16
5.12 Conditions Precedent . . . . . . . . . . . . . . . . 17
ARTICLE 6 PRORATIONS/OTHER ALLOCATIONS
AND DELIVERIES/EXPENSES
6.1 Prorations . . . . . . . . . . . . . . . . . . . . . 18
6.2 Tenant Deposits. . . . . . . . . . . . . . . . . . . 20
6.3 Sales, Transfer, and Documentary Taxes . . . . . . . 20
6.4 Utility Deposits . . . . . . . . . . . . . . . . . . 20
6.5 Permit Transfer Fees . . . . . . . . . . . . . . . . 20
6.6 Wages. . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Intentionally Deleted. . . . . . . . . . . . . . . . 20
6.8 Commissions. . . . . . . . . . . . . . . . . . . . . 20
6.9 Transaction Expenses . . . . . . . . . . . . . . . . 21
ARTICLE 7 REPRESENTATIONS AND WARRANTIES
7.1 Seller's Representations and Warranties. . . . . . . 21
7.2 Purchaser's Representations and Warranties . . . . . 27
7.3 Survival of Representation, Warranties and Covenants 28
ARTICLE 8 DAMAGE OR DESTRUCTION/CONDEMNATION
8.1 Damage or Destruction. . . . . . . . . . . . . . . . 29
8.2 Condemnation . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 9 REMEDIES
9.1 Purchaser's Default. . . . . . . . . . . . . . . . . 30
9.2 Seller's Default . . . . . . . . . . . . . . . . . . 30
ARTICLE 10 MISCELLANEOUS
10.1 Parties Bound. . . . . . . . . . . . . . . . . . . . 31
10.2 Headings . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Invalidity . . . . . . . . . . . . . . . . . . . . . 31
10.4 Governing Law. . . . . . . . . . . . . . . . . . . . 32
10.5 Survival . . . . . . . . . . . . . . . . . . . . . . 32
10.6 No Third Party Beneficiary . . . . . . . . . . . . . 32
10.7 Entirety and Amendments. . . . . . . . . . . . . . . 32
10.8 Execution in Counterparts. . . . . . . . . . . . . . 32
10.9 Further Assurances . . . . . . . . . . . . . . . . . 32
10.10 Time. . . . . . . . . . . . . . . . . . . . . . . . 33
10.11 Confidentiality . . . . . . . . . . . . . . . . . . 33
10.12 U.S. Currency Required. . . . . . . . . . . . . . . 33
10.13 Attorneys' Fees . . . . . . . . . . . . . . . . . . 33
10.14 Use of Pronouns . . . . . . . . . . . . . . . . . . 33
10.15 Notices. . . . . . . . . . . . . . . . . . . . . . 33
10.16 Construction . . . . . . . . . . . . . . . . . . . 34
10.17 Calculation of Time Periods. . . . . . . . . . . . 34
10.18 Information and Audit Cooperation. . . . . . . . . 35
10.19 Limitation of Liability. . . . . . . . . . . . . . 35
10.20 As-Is, Where-Is. . . . . . . . . . . . . . . . . . 35
ARTICLE 11 INDEMNIFICATION
11.1 Seller's Agreements. . . . . . . . . . . . . . . . . 36
11.2 Purchaser's Agreements . . . . . . . . . . . . . . . 36
11.3 Procedures for Obtaining Indemnification. . . . . . 37
11.4 Right to Assume Defense. . . . . . . . . . . . . . . 38
AGREEMENT OF PURCHASE AND SALE
(Barton Creek Landing Apartments)
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of the ___
day of _________________, 1995, by and between RREEF AMERICA L.L.C., a
Delaware limited liability company (the "Purchaser") and LINCAM PROPERTIES LTD
SERIES 85, an Illinois limited partnership (as "Seller") under the following
circumstances:
A. Seller is the owner of the 250-unit apartment project and related
facilities situated on the land described in Exhibit A attached hereto.
B. Seller desires to sell to Purchaser and Purchaser desires to buy
from the Seller, subject to and upon the terms and conditions hereinafter set
forth, the 250-unit apartment project and related facilities situated on the
land described in Exhibit A hereto.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1: CERTAIN TERMS/PROPERTY/PURCHASE PRICE/
ADDITIONAL CONSIDERATION
1.1 Certain Definitions: As used herein, the terms listed below shall
have the following meanings throughout this Agreement:
(a) The term "Real Property" shall be a reference to the real
property described in Exhibit A attached hereto, together with (i) all
improvements (if any) located thereon, including without limitation all
heating, ventilation, electrical, plumbing and other mechanical or
operational systems (collectively, the "Improvements"), (ii) all and
singular the rights, benefits, privileges, easements, tenements,
hereditaments and appurtenances thereon or in anywise appertaining to
such real property, (iii) all right, title, and interest of the Seller
in and to all strips and gores and any land lying in the bed of any
street, road or alley, open or proposed, adjoining any portion of such
real property, and (iv) all right, title and interest of the Seller in
and to all other real property around, claimed or used by the Seller
adjoining or contiguous to any part of such real property. When the
Survey (as defined herein) is available, the legal description in the
Survey shall be accepted by the parties as the correct legal description
of the Real Property, although material differences from Exhibit A shall
be subject to the reasonable approval of Purchaser.
(b) The term "Leases" shall be a collective reference to all
leases of or other occupancy agreements for apartments and other space
in the Improvements, including leases that may be made by Seller after
the date hereof and prior to the Closing (as defined herein).
(c) The term "Tangible Personal Property" shall be a collective
reference to all equipment, machinery, furniture, furnishings, supplies
and other tangible personal property owned by Seller and Seller's
interest in any such property leased to Seller, now or hereafter located
in and used in connection with the operation, ownership or management of
the Real Property.
(d) The term "Intangible Personal Property" shall be a
collective reference to all intangible personal property related to the
Real Property, including, without limitation: all trade names and
trademarks associated with the Real Property including Seller's rights
and interests, if and to the extent Seller has such rights and
interests, in the name of the Real Property, which is commonly known as
"Barton Creek Landing Apartments"; the plans and specifications and
other architectural and engineering drawings for the Improvements, if
and to the extent Seller has any right, title or interest in and to such
plans and specifications and other architectural and engineering
drawings for the Improvements; contract rights related to the
construction, operation, ownership or management of the Real Property
(but excluding the obligations of the Seller thereunder, except those
expressly assumed pursuant to this Agreement); warranties, zoning
approvals, building permits and licenses (to the extent assignable);
tenant lists, correspondence with tenants and records (including, but
not limited to, those relating to taxes, insurance, maintenance,
repairs, capital improvements and services), booklets, manuals,
advertising and promotional materials, including, without limitation,
photographs and negatives, correspondence with suppliers, and telephone
exchange numbers (if available).
(e) The term "Property" shall be a collective reference to the
Real Property and all Improvements, Tangible Personal Property and the
Seller's interest in the Leases and Intangible Personal Property.
1.2 Purchase and Sale. Subject to the applicable terms and conditions
of this Agreement, Seller agrees to sell the Property to Purchaser, and
Purchaser agrees to purchase the Property from Seller.
1.3 Purchase Price and Payment.
(a) Purchase Price. The purchase price for the Property (the
"Purchase Price") is $14,900,000.00.
(b) Payment of Purchase Price. The Purchase Price shall be
payable at Closing (defined below), plus or minus prorations and other
adjustments to the Purchase Price as described herein and after the
application for the benefit of Purchaser of all Earnest Money (including
any interest earned thereon), by wire transfer to the Seller.
1.4 Earnest Money. Purchaser has deposited $50,000.00 into a joint
order escrow account with Chicago Title Insurance Company, National Business
Unit, 7616 LBJ Freeway, Suite 300, Dallas, Texas 75251 (Attn. Ms. Ellen
Schwab) as escrow trustee, with such funds to be deposited in an insured
interest bearing account pursuant to instructions to the Title Insurer from
the Purchaser. Unless the Purchaser terminates this Agreement by delivery of
written notice to Seller on or before the last day of the Review Period (as
determined in accordance with Section 2.1 hereof), the Purchaser shall deposit
within five (5) business days after the last day of the Review Period (as
determined in accordance with Section 2.1 hereof) an additional $50,000.00
into the Escrow (all such amounts deposited therein, together with any
interest accrued thereon, shall be collectively referred to herein as the
"Earnest Money"). If Purchaser delivers such termination notice, all Earnest
Money shall be returned promptly to Purchaser and, subject to the provisions
of Section 2.1(d) below, this Agreement shall be null and void. In the
absence of such notice, provided Seller fulfills all its obligations under
this Agreement, the Earnest Money shall be nonrefundable to Purchaser and
payable to Seller at Closing or, upon default of Purchaser, after the
expiration of all applicable cure periods. Purchaser's failure to timely
deposit the additional $50,000 referred to above shall be deemed a default
hereunder and Seller shall have the right to exercise its rights and remedies
pursuant to the terms and provisions of Section 9.1 hereof.
ARTICLE 2: INSPECTION
2.1 Inspection and Review Period. Purchaser shall have forty-five (45)
days after the date hereof (the "Review Period") to receive, review and
inspect all aspects of the Property and to determine, in its sole discretion,
that the Property is satisfactory in all respects. Notwithstanding anything
to the contrary in this Agreement, Purchaser may terminate this Agreement by
giving written notice of termination to Seller on or before the expiration of
the Review Period. If Purchaser does not so give such notice of termination,
this Agreement shall continue in full force and effect and Purchaser shall
deposit with the Title Company, at the time and in the manner required
pursuant to Paragraph 1.4, above, the additional Earnest Money described
therein.
(a) Inspections. The inspections and reviews will include, at a
minimum, the following:
(i) Physical inspections of the entire Property, unit by unit,
including structural, mechanical, life-safety, engineering, civil,
landscaping, paving, plumbing, electrical and all other detail
inspections;
(ii) Examination of all construction items, to the extent in Seller's
possession or control (which, for purposes hereof, "control" shall
mean readily available to Seller without cost [other than
incidental costs of postage and other such items]), including as-
built architectural, civil, electrical, life-safety, mechanical
and plumbing plans and specifications, copies of any available
construction reports, whether internal or external, certificates
of completion from the project architect and inspecting architect,
certificates of occupancy, building permits, evidence of
compliance with fire code, building code and other governmental or
regulatory code requirements and all other related use permits;
(iii) Examination of all operating statements and supporting
documentation of the Property from and including calendar years
1991 through 1994 as well as 1995 year to date together with the
1995 budget, reflecting all detailed rental income, operating
expense accounts, and the maintenance log maintained for the
Property;
(iv) All documentation maintained in current tenant files, including
all Leases, security deposit information, credit reviews, and the
like;
(v) An environmental report for the Property prepared by a qualified
engineering firm acceptable to Purchaser and in form otherwise
satisfactory to Purchaser, which shall be paid for by Purchaser
and shall remain the property of Purchaser;
(vi) All existing title policies and commitments and surveys issued or
prepared in connection with the Property, together with copies of
all exception documents noted therein; and
(vii) Such other documents, reviews and inspections as Purchaser
determines are reasonably necessary.
(b) Access. Purchaser and its agents and contractors shall have
unlimited access to the Property, subject to the limitations set forth herein
(including, without limitation, the rights of all tenants under their leases),
during the Review Period to enable Purchaser to conduct its review and
analysis of the Property. Purchaser shall indemnify, defend and hold Seller
harmless with respect to any damage to the Property or injury to any person
caused by Purchaser, its agents, employees or contractors in connection with
its investigations of the Property, provided, however, that with respect to
any damage to the Property or injury to any person not caused solely by the
negligence of any one or more of Purchaser, its agents or its contractors,
such indemnification to be limited to the extent of Purchaser's, its agents'
or contractors' contributory negligence. All activities of Purchaser during
the Review Period shall be at Purchaser's sole expense, subject to Section 6.9
and Article 9 below.
Purchaser agrees to provide Seller with twenty-four (24) hours advance
notice of such inspections and further agrees that Seller (i) has the right to
have an employee or agent present during such inspections and (ii) has the
right to approve in its sole discretion the scope and method of any physically
intrusive inspection (for example, a Phase II Site Assessment).
(c) Cooperation. To the extent such items are in Seller's possession
or control (which, for purposes hereof, "control" shall mean readily available
to Seller without cost [other than incidental costs of postage and other such
items]), Seller shall provide access to the Property and copies of all items
and records noted in Section 2.1(a) above, in this Section 2.1(c) below, or
hereafter requested (collectively the "Property Information"), to Purchaser
and Purchaser's agents during normal business hours. Purchaser's inspection
rights shall include without limitation the right to conduct a "walk-through"
of the individual apartment units located in the Property during the Review
Period or prior to the Closing, upon appropriate notice (not to exceed twenty-
four (24) hours) to tenants subject to the rights of tenants under their
leases. In the course of its investigations, Purchaser may make inquiries to
third parties, including, without limitation, tenants, lenders, contractors,
property managers, parties to Service Contracts and municipal, local and other
government officials and representatives, and Seller consents to such
inquiries. Seller shall in good faith cooperate with Purchaser and
Purchaser's agents during Purchaser's reviews and inspections, and Seller
shall disclose to Purchaser prior to expiration of the Review Period all
physical and financial aspects of the Property of which Seller has any
knowledge. Specifically, and without limitation, Seller shall provide to
Purchaser (to the extent not already provided) not later than seven (7) days
after the date hereof with copies of or access to the following items for the
Property:
(i) Plans. Copies of architectural and construction plans and
specifications;
(ii) Surveys. Copies of existing surveys;
(iii) Environmental. Copies of all existing environmental inspections,
reports, tests, studies or audits;
(iv) Title. Copies of existing title policies or commitments and all
title exception documents;
(v) Operating Statements. Copies of unaudited annual operating
statements for 1991, 1992 , 1993 and 1994, plus the Property
budget for 1995 (collectively, together with those referred to in
Section 4.1(f), the "Operating Statements") together with a
breakdown of all sources and amounts of all income in addition to
rental revenues;
(vi) Leases. Access to all Leases and Lease files and service
agreements and maintenance files;
(vii) Permits. A copy of all certificates of occupancy and copies of
all current governmental permits, licenses and approvals;
showing unit, tenant, monthly rental, security or other deposit,
date of security or other deposit, date rent paid through,
delinquency, free rent or other concessions, and lease term
(including any renewals);
(ix) Tax Statements. Copies or a summary of ad valorem tax statements
(including copies of all notices of valuation or tax protests)
relating to the Property for the current year or other current tax
period (if available) and for the three (3) calendar years
preceding this Agreement;
(x) Lease Form. Copies of Seller's standard lease forms in use at the
Property;
(xi) Service Contracts. Copies of a list (together with access to
copies) of all management agreements, service, supply, equipment
rental and similar contracts related to the operation of the
Property (collectively, the "Service Contracts");
(xii) Maintenance Records. Access to all available maintenance work
orders for the 12 months preceding this Agreement;
(xiii) Utility Bills. Access to all utility bills for the twelve (12)
months preceding this Agreement, if available;
(xiv) List of Capital Improvements. A list of all capital improvements
performed on the Property within the twelve (12) months preceding
this Agreement;
(xv) Inventory. An inventory of the Tangible Personal Property and the
Intangible Personal Property;
(xvi) ADA Reports. Any written reports, results of inspections or
surveys of the Property related to compliance with the Americans
with Disabilities Act or other laws relating to access; and
(xvii) Governmental Notices. Any written notices, reports, citations,
correspondence or memoranda received by Seller from any government
agency, unit, division or department (federal, state, county or
municipal) concerning the Property and not covered in any of the
categories above.
(xviii) Litigation. A list of all litigation affecting the Property from
1992 to date and any pending litigation affecting the Property.
In addition, Seller shall arrange for Purchaser's representatives to meet as
soon as practicable during the Review Period with the property manager or the
person most knowledgeable about the Property to discuss the Property's
operating performance, competitive position in the market, capital
improvements and the like. In addition, Seller agrees to provide promptly to
Purchaser any documents and information described in Sections 2.1(a) and (c)
and coming into Seller's possession or produced by Seller prior to Closing.
(d) Return of Materials. If this transaction does not close for any
reason other than Seller's default, then all materials furnished by Seller
shall be returned promptly to Seller upon receipt by Purchaser of the Earnest
Money. If this Agreement terminates in its entirety pursuant to this Section
2.1, Purchaser shall deliver $100 to Seller as consideration for Seller's
execution of and entry into this Agreement. Seller acknowledges that
Purchaser expects to expend significant time, money and other resources in
connection with the examination and investigation of the Property, and that,
notwithstanding the fact that this Agreement may terminate pursuant to this
Section 2.1, the payment of the $100 hereinabove described to be paid to
Seller in the event of such a termination of this Agreement, the delivery of
certain items which Purchaser may obtain, together with such time, money and
other resources that may be expended, constitutes adequate consideration for
Seller's execution of and entry into this Agreement.
2.2 Continuing Right of Access for Inspection. During the pendency of
this Agreement (even after the Review Period), Purchaser and its agents,
employees, and representatives shall have a continuing right of reasonable
access to the Property (which access shall still be subject to Section 2.1(b)
above) and the right to examine and make copies of all items to which
Purchaser was granted access during the Review Period.
ARTICLE 3: TITLE REVIEW
3.1 Delivery of Title Documents. Within seven (7) days after the date
of this Agreement, Seller shall cause to be prepared and delivered to
Purchaser the items in clauses (b) and (c) below and Purchaser shall cause to
be prepared and delivered to Purchaser the item in clause (a) below:
(a) A commitment (the "Title Commitment") covering a date not earlier
than ten (10) days prior to the date of this Agreement issued by Chicago Title
Insurance Company (the "Title Insurer" or the "Title Company") through its
agent Heritage Title Insurance Company, Austin, Texas, to Purchaser providing
for the issuance to Purchaser at the Closing of a Texas Form T-1 Owner's Title
Insurance Policy with respect to the Real Property to be conveyed to Purchaser
at Closing, in the amount of the Purchase Price, which commitment must
disclose the Seller as the owner of fee simple title to the Real Property
together with legible copies of all documents underlying all exceptions to
title; and
(b) A survey (including field notes) of the Real Property (the
"Survey") made by Point Line Surveying, Inc. (Melvin D. Lindsey) or other
surveyors or civil engineers approved by Purchaser and duly licensed in the
jurisdiction in which the Real Property is located. The Survey shall be dated
after the date of this Agreement, and Seller shall have same certified to
Purchaser, any parties designated by Purchaser, and Title Insurer. Seller
shall endeavor to have the surveyor certify the Survey using the form of
Exhibit B attached hereto, as having been prepared in accordance with the
standards adopted by the Texas Society of Professional Surveyors, including
the standards for a Category 1A, Condition II survey as well as ALTA-ASCM
Urban standards (provided, however, the only optional matters to be included
regarding ALTA-ASCM Urban standards will be those that would be required under
Texas Category 1A, Condition II standards). To the extent that the surveyor
does not use the language for his certificate as set forth in Exhibit B, or
there are any optional items Purchaser would prefer to see the survey contain,
Purchaser may note any discrepencies as to the certificate or preferred
optional items as Title Objections. The Survey shall be sufficient for
purposes of amending the areas and boundaries exception in the Title Policy.
The Survey shall set forth all matters required on such a survey, including,
but not limited to, the following: (i) all easements, rights-of-way and other
encumbrances and matters of record affecting or appurtenant to the Real
Property; (ii) the building and setback lines, if any; (iii) the line of the
street or streets abutting the Real Property or any portion thereof; (iv) any
and all encroachments upon the Real Property or any easement appurtenant
thereto; (v) all Improvements on the Real Property (including exterior
dimensions); (vi) the configuration and number of parking spaces; and (vii)
the area of the Real Property; and (viii) stating whether the Real Property is
located in an area designated by HUD as having special flood risks; and
the Closing Date is extended pursuant hereto) copies of current Uniform
Commercial Code searches in the name of Seller and the Property issued by the
Title Company or a search company acceptable to Purchaser ("UCC Searches"),
covering a date not earlier than thirty (30) days prior to the Closing.
3.2 Review of Title. Purchaser shall have ten (10) business days
after the last to be received of the Title Commitment (including true, correct
and complete copies of all exception documents referenced therein) and the
Survey to review title and survey matters with respect to the Property, and to
notify Seller of any objections to such matters ("Title Objections") with
respect to the Property.
Seller shall be obligated to discharge any Title Objections which are
financing liens, mechanics' liens, materialmens' liens or tax liens and
matters arising out of Seller's voluntary acts subsequent to the date of the
Title Commitment, all of which liens, encumbrances and other matters shall be
satisfied, cured or discharged, as appropriate, prior to the Closing.
Purchaser may attempt, but shall not be obligated, to cure any Title
Objections. Within five (5) business days of receipt of a notice delivered by
Purchaser to Seller under the preceding paragraph, Seller shall notify
Purchaser in writing of any Title Objection which it either refuses to cure or
is unable to cure in a manner acceptable to Purchaser; in the absence of such
notice from Seller, Seller shall be deemed to have agreed to cure or satisfy
all Title Objections that were raised in such notice from Purchaser, and all
such Title Objections shall be cured or satisfied by Seller prior to the
applicable Closing.
Purchaser shall have the right by giving notice to Seller within five
(5) business days after Purchaser is notified by Seller of its refusal or
inability to cure any of the Title Objections raised by Purchaser to (i) elect
not to purchase the Property and to terminate this Agreement, in which event,
notwithstanding anything in this Agreement to the contrary, the Earnest Money
shall be returned to Purchaser; (ii) elect to proceed pursuant to this
Agreement, thereby waiving its objection to such Title Objections; and/or
(iii) elect to proceed pursuant to this Agreement, with the right to deduct
from the Purchase Price (1) an amount necessary to discharge, satisfy or cure
those Title Objections that Seller is obligated to discharge, satisfy or cure
pursuant to the first sentence of the immediately preceding paragraph and (2)
an amount, not to exceed $50,000, necessary to discharge any other liens or
encumbrances of a definite or ascertainable amount. For purposes of this
Agreement, the term "Permitted Exceptions" means (i) general or special real
estate taxes not then due and owing, (ii) acts done or suffered to be done by
Purchaser, (iii) leases entered into in the ordinary course of Seller's
business and in accordance with the terms hereof, (iv) title matters that are
disclosed by the Title Commitment and not objected to by Purchaser and (vi)
any Title Objections waived by Purchaser in writing. If Purchaser fails to
give the foregoing written notice to Seller within the time required in this
paragraph, it shall be conclusively deemed that Purchaser has elected to waive
the applicable Title Objections and has accepted them as additional Permitted
Exceptions.
3.3 Further Exceptions. If Title Insurer issues further amended Title
Commitments or UCC Searches showing additional exceptions or exclusions from
coverage or if further revised Surveys disclose additional defects, Purchaser
may notify Seller of resulting additional Title Objections, the parties' shall
proceed as provided above, and the Closing shall be extended, as necessary,
but not beyond April 15, 1995, to accommodate Purchaser's right to object and
terminate (and receive its Earnest Money) and the parties' right to cure in
the manner provided above.
ARTICLE 4: OPERATIONS PRIOR TO CLOSING
4.1 Seller's Operations. Seller agrees that so long as this Agreement
shall remain in effect, Seller shall:
(a) Insurance. Maintain any and all insurance coverage presently in
effect with respect to the Property, including policies of public liability,
property damage and fire insurance;
(b) Operations and Management. Unless otherwise provided herein,
operate and manage the Property in the ordinary course of business in
accordance with usual business practices in a manner befitting the current
quality of the Property, and maintain the Property in its present condition,
reasonable wear and tear excepted, including needed repairs and capital
improvements consistent with historical practices and quality maintenance
standards;
(c) Contracts. Except as to Leases complying with Section 4.2 and
contracts entered into in the ordinary course of business that are terminable
without cause on 30-day's notice or as otherwise expressly permitted herein,
not enter into any contract that will be an obligation affecting the Property
subsequent to the Closing;
(d) Listings and Other Offers. Not solicit or make or accept any
offers to sell the Property, not engage in any discussions or negotiations
with any third party with respect to the sale or other disposition of the
Property, and not enter into any other contracts or agreements (whether
binding or not) to sell or otherwise dispose of the Property;
(e) Not Violate Agreement. Not take or omit to take any action that
would have the effect of violating any of Seller's representations, warranties
and agreements contained in this Agreement;
(f) Operating Statements. Furnish Purchaser with monthly Operating
Statements and monthly Rent Rolls as they become available, which statements
and rent rolls shall be included in the defined terms "Operating Statements"
and "Rent Rolls" as used herein; and
(g) Access. Furnish Purchaser access to the Property and to records
as set forth in Sections 2.1 and 2.2 and otherwise to verify management and
maintenance practices and to assist any management transitions which would
occur upon the Closing of this transaction.
4.2 Leasing Arrangements and Management Transition. Seller agrees
that:
(a) Leasing. From and after the date of this Agreement, without
Purchaser's prior written consent in each instance: Seller shall not enter
into, amend or terminate any Lease unless in the ordinary course of business.
All Leases entered into during this Agreement shall be on Seller's current
standard lease forms except for non-material deviations, shall be for terms of
no less than six (6) months and no greater than twelve (12) months at current
market rentals, shall not include any concessions or discounts in excess of
those prevalent in the market, and shall otherwise comply with Seller's
current leasing policies. No leasing commissions will be incurred, except in
accordance with Seller's past practice and in the ordinary course of business.
(b) Management Transition. From and after the date hereof, Seller
shall promptly provide to Purchaser copies of all monthly operating statements
concerning the operation of the Property. It is agreed that such reports will
be prepared on at least a monthly basis. Seller agrees that Purchaser may
contact Seller's or Seller's managing agent's supervisors to discuss the
reports delivered to Purchaser and to discuss the operation of the Property.
Seller agrees to cooperate fully with Purchaser and Purchaser's
representatives to apprise Purchaser of all matters relating to management of
the Property and to facilitate transition of management at the Closing.
Seller shall allow Purchaser's management personnel to work at the Property
with Seller or Seller's managing agent's management personnel commencing five
(5) days prior to the Closing for the purpose of installing facilities,
reviewing files and records, determining the exact amount of unpaid and
prepaid bills and rents, and otherwise preparing to take over management of
the Property. In connection therewith, Seller shall allow Purchaser access to
all files and records during such period.
4.3 Removal and Replacement of Tangible Personal Property. Seller
shall not remove any Tangible Personal Property, except as may be required for
necessary repair or replacement, and any replacement shall be of equal quality
and quantity as existed as of the time of its removal. Seller shall maintain
supplies and inventories consistent with historical practices and quality
management standards.
4.4 Seller's Obligations. Other than the obligations of Seller
expressly assumed by Purchaser pursuant to this Agreement, Seller, subject to
the terms and conditions of this Agreement, covenants that it shall pay and
discharge any and all liabilities of each and every kind arising out of or by
virtue of the conduct of its business before and as of the Closing on or
related to the Property, each to the extent Purchaser would otherwise be
liable to pay such liabilities.
ARTICLE 5: CLOSING
5.1 Closing Date. Subject to fulfillment of the various conditions
described herein, the consummation of the sale and acquisition of the
Property, as contemplated herein (the "Closing"), shall take place on a date
(the "Closing Date") specified in written notice from Purchaser to Seller
which date shall be not more than fifteen (15) days following the expiration
of the Review Period, and if no notice is given, the Closing Date shall be on
the first business day to occur fifteen (15) days following expiration of the
Review Period. The Closing shall take place through an escrow with the Title
Insurer and/or by other arrangements satisfactory to the parties wherein all
required documents and deliveries are deposited or otherwise delivered to the
appropriate parties.
5.2 Seller's Deliveries in Escrow. At the Closing, Seller shall
deliver to Purchaser the following:
(a) Deed. Special Warranty Deed for the Real Property (in the form
attached hereto as Exhibit C-1) executed and acknowledged by the Seller and
any other parties required to effectuate such conveyance, conveying to
Purchaser good and marketable fee simple title to the Real Property, subject
only to the Permitted Exceptions applicable to the Real Property;
(b) Assignment of Leases. Assignment of Leases for the Property,
containing mutual indemnities for pre- and post-closing matters (in the form
attached hereto as Exhibit C-2);
(c) Bill of Sale. Bill of Sale with respect to the Tangible Personal
Property and Intangible Personal Property (in the form attached hereto as
Exhibit C-3);
(d) Assignment of Intangible Personal Property. Assignment of
Intangible Personal Property with respect to the Property (in the form
attached hereto as Exhibit C-4);
(e) FIRPTA. A Foreign Investment in Real Property Tax Act affidavit
executed by Seller. If Seller fails to provide the necessary affidavit and/or
documentation of exemption on the Closing Date, Purchaser may proceed with
withholding provisions as provided by law;
(f) Certificate of Representations and Warranties. A certificate (in
the form attached hereto as Exhibit C-5) signed by Seller reaffirming and
updating to the Closing Date the representations and warranties given by
Seller under Article 7 that will include an updated Rent Roll and Operating
Statement for the preceding month (or the next preceding month if the Closing
Date is between the 1st and 10th day of a month);
(g) Form 1099B. A Form 1099B executed by Seller;
(h) Authority. Evidence of existence, organization and authority of
Seller and the authority of the person executing documents on behalf of
Seller, reasonably satisfactory to Purchaser and (to the extent applicable)
the Title Insurer, including, without limitation, executed, original consents
from those parties whose consent is required to be obtained and evidence that
such consents are the only consents required to be obtained with respect to
this transaction;
(i) Assignments and Assumptions of Contracts. Assignments of any and
all Service Contracts or other agreements (in the form attached hereto as
Exhibit C-6);
(j) Lien Waivers. Seller shall cause the property manager of the
Property, the broker identified in Section 6.8 hereof, as well as any leasing
broker involved with the Property to deliver to Purchaser, in form and
substance reasonably acceptable to Purchaser and the Title Company, a waiver
wherein such parties release any and all mechanic lien rights and claims that
they or any one claiming by, through or under any of them may have pursuant to
any applicable statute or law.
(k) Additional Documents. Any additional documents required by this
Agreement or that Purchaser or the Title Company may reasonably require for
the proper consummation of the applicable transaction as contemplated by this
Agreement, which documents shall be without cost or additional liability to
the Seller.
5.3 Purchaser's Deliveries in Escrow. At the Closing, Purchaser shall
deliver to the Title Company to hold in escrow for delivery upon the Closing
the following:
(a) Purchase Price. The Purchase Price less the Earnest Money, plus
or minus applicable prorations, shall be deposited by Purchaser with the Title
Company in immediately available funds (all or any part of which may be the
proceeds of a loan).
(b) Authority. Evidence of existence, organization and authority of
Purchaser and the authority of the person executing documents on behalf of
Purchaser reasonably satisfactory to Seller and the Title Insurer.
(c) Counterparts. Counterparts of the applicable Assignments or other
Seller deliveries which are also to be signed by Purchaser, duly executed by
Purchaser.
(d) Additional Documents. Any additional documents required by this
Agreement or that Seller or the Title Company may reasonably require for the
proper consummation of the transactions contemplated by this Agreement, which
documents shall be without cost or additional liability to the Purchaser.
5.4 Closing Statements/Transfer Declarations. At the Closing, the
Seller and Purchaser shall execute closing statements and transfer tax
declarations (if applicable per Section 6.3 below) consistent with this
Agreement in form reasonably satisfactory to the parties and, if applicable,
as may be required by the Title Company.
5.5 Title Policy/Updated UCC Searches. At the Closing, the Title
Company shall deliver to Purchaser: (i) a Texas Form T-1 Owner's Policy of
Title Insurance (the "Title Policy") issued by the Title Insurer dated as of
the Closing in the amount of the Purchase Price, insuring Purchaser as owner
of good and indefeasible fee simple title to the Real Property, subject only
to the standard printed execptions (provided that the exception for
restrictive covenants shall be deleted or list only restrictive covenants as
may be Permitted Exceptions, the "areas and boundaries" exception shall, at
Purchaser's cost, be amended to except only to shortages in area, taxes,
assessments, standby fees and the like shall be limited to those due for 1995
and subsequent years, and subsequent assessments for prior years based on
change of usage of ownership, all to the extent not due and payable and any
exception for parties in possession shall be limited to the rights of tenants,
as tenants only, pursuant to unrecorded leases) and the Permitted Exceptions ;
and (ii) updated UCC Searches dated within five (5) days of Closing disclosing
no security interests or liens affecting the Property being conveyed other
than those to be released at the Closing. The Title Policy may be delivered
within a reasonable time after the applicable Closing if that is the custom
for the locality, provided, that the Title Insurer at the Closing issues a
currently effective, duly executed "marked-up" Title Commitment for the Real
Property and irrevocably commits in writing to issue the Title Policy in the
form of the "marked-up" Title Commitment within no more than ten (10) days
after the Closing Date.
5.6 Possession. At the Closing, Seller shall deliver to Purchaser
possession of the Property, subject only to the applicable Permitted
Exceptions.
5.7 Termination of Property Management and Other Service Contracts.
The Seller shall terminate effective as of the Closing Date any existing
property management agreements and any other terminable Service Contracts
applicable to the Property being conveyed at such Closing and designated by
Purchaser at least five (5) days prior to Closing. In addition, if Purchaser
requests upon expiration of the Review Period, Seller shall also terminate any
existing Leases (whether written, oral or otherwise) on the applicable
Property between Seller and any employee of the existing property management
firm under which rent is waived or is discounted, such termination to be
effective no later than thirty (30) days from the Closing Date. Seller shall
pay to Purchaser at Closing an amount equal to the difference between (a) the
actual rent payable under such leases and (b) the full rental that would have
been payable absent any waived or discounted rent, for the period of time from
the Closing Date through the effective date of termination. The rent
proration provided for in Section 6.1(b) shall be based on the actual rental
received by Seller.
5.8 Memorandum/Name of Representative. At the Closing, the Seller
shall deliver to Purchaser written memoranda containing all information
regarding the location and operation of all water, gas and other utility
meters, water sprinkler lines, valves and systems, air conditioning and
heating equipment, thermostats, fuse boxes and the like for the Property
included in the Closing, and the name of a representative of Seller who will
provide Purchaser with further information regarding the operation Property
after the Closing, such as the location of water, gas and other utility
meters, water sprinkler lines and valves, thermostats, fuse boxes and the
like.
5.9 Delivery of Books and Records. Immediately after the Closing,
Seller shall leave at the Property, or, if such items are not currently at the
Property, shall deliver to the offices of Purchaser or such other location as
Purchaser may designate, the original Leases and Service Contracts; the
Property's operating records including copies or originals of all books and
records of account, contracts, leasing correspondence, receipts for deposits,
unpaid bills and other similar papers or documents which pertain to the
Property; all available operating manuals, equipment warranties, and the like;
all advertising materials, booklets, and other similar items, if any, used in
the promotion of the Property; all keys and combinations to locks; and all
available architectural or construction plans, specifications and working
drawings for Improvements. The Seller's obligations under this Paragraph
shall survive the Closing.
5.10 Notice to Tenants and Vendors. Immediately after the Closing, the
Seller and Purchaser shall deliver to each vendor under the Service Contracts
a notice regarding the sale of the Property in form and substance reasonably
satisfactory to Purchaser and Seller. Immediately after the Closing, the
Seller and Purchaser shall deliver to each tenant under each Lease a notice
regarding the sale of the Property, such notice to be in the form of Exhibit
C-7 attached hereto.
5.11 Close of Escrow. Upon satisfaction or completion of the foregoing
conditions and deliveries and performance by each party of its other
obligations required to be performed prior to and/or at the applicable
Closing, the parties shall direct the Title Company to immediately record the
deed and deliver if not already delivered the applicable documents described
above to the appropriate parties and make the disbursements according to the
closing statements executed by the Seller and Purchaser and to otherwise
perform in accordance with the parties' respective closing instruction
letters, to the extent not inconsistent with the terms of this Agreement.
5.12 Conditions Precedent.
(a) Conditions to Purchaser's Obligation to Close. Notwithstanding
anything to the contrary herein Purchaser's obligation to consummate its
purchase of the Property shall be further contingent upon:
(i) Seller's representations and warranties contained herein
shall be true and correct in all material respects as of the Closing.
(ii) The timely satisfaction or written waiver by Purchaser of
each obligation to be performed hereunder by Seller prior to and/or at
the Closing.
(iii) The Title Insurer's willingness to issue the Title Policy.
(iv) The absence of any material litigation or other proceedings
with respect to the Property or otherwise affecting this transaction,
except for any such litigation which Purchaser has, in a written notice
delivered to Seller on or before the Closing Date, expressly approved
after full disclosure by Seller with respect to such proceedings.
(v) The absence of any other material adverse change in the
physical condition, tenancy, operations or financial condition of the
Property or Seller.
(b) Conditions to Seller's Obligation to Close. Notwithstanding
anything to the contrary herein, Seller' obligation at the Closing hereunder
to consummate its sale of the Property to Purchaser shall be further
contingent upon:
(i) Purchaser's representations and warranties contained herein
shall be true and correct in all material respects as of the Closing.
(ii) The timely satisfaction or written waiver by Seller of each
obligation to be performed hereunder by Purchaser prior to and/or at the
Closing.
ARTICLE 6:
PRORATIONS/OTHER ALLOCATIONS AND DELIVERIES/EXPENSES
6.1 Prorations. The items in subparagraphs (a) through (d) of this
Section 6.1 and other items of Property income and expenses customarily
prorated in similar transactions shall be apportioned or prorated between the
Seller and Purchaser as of the close of the day preceding the Closing Date in
the manner set forth herein, or, if not provided for herein, then as customary
for such items for transactions in the metropolitan Austin, Texas area. The
parties shall endeavor to compute or estimate all closing adjustments prior to
the Closing Date, and the Seller shall supply before such Closing satisfactory
supporting evidence for all such adjustments as Purchaser reasonably requests.
Proration items shall include:
(a) Taxes and Assessments. General real estate taxes and assessments
imposed by governmental authority ("Taxes") and any assessments by private
covenant constituting a lien or charge on the Property for the then-current
calendar year or other current tax period not yet due and payable. If the
Closing for the Property occurs prior to the receipt by the Seller of the tax
bill for such Property for the calendar year or other applicable tax period in
which the Closing occurs, Taxes for such calendar year or other applicable tax
period shall be prorated based upon 100% of the estimated Taxes calculated
based upon the most recent ascertainable assessed values and tax rates, but
not less than 100% of the tax bill for the previous calendar year or other
applicable tax period. All prorations shall be based upon a fraction
determined by dividing the number of days elapsed through the date of the
applicable Closing by 365. Taxes for the Property shall be re-prorated on the
same fractional basis at the time that the actual amount of the Taxes for the
Property for the year or other applicable tax period in question are finally
determined. Payments in connection with any re-proration of Taxes shall be
due within 10 days of written notice.
(b) Collected Rent. All collected rent and other income (and any
applicable state or local tax on rent) under Leases in effect with respect to
the Property. Seller shall be charged with any rentals collected by Seller
before the Closing, but applicable to any period of time after such Closing.
Uncollected rent and other income shall not be prorated. If Purchaser
collects up to "two month delinquencies" after the Closing, Purchaser shall
apply such rent to the obligations owing Purchaser for its period of ownership
and to its third party costs of collection, remitting the balance, if any, to
the Seller. "Two month delinquencies" are delinquencies under Leases that are
delinquent by only the monthly installments that were due on the two due dates
preceding the Closing Date. Other than two month delinquencies, as provided
above, no other rent delinquent as of the Closing but collected after the
Closing shall be remitted to Seller. Purchaser shall bill and attempt to
collect such delinquent rent in the ordinary course of business, but shall not
be obligated to engage a collection agency or take legal action to collect any
delinquencies. Once the Closing has occurred, Seller shall not have any right
to seek by legal action or otherwise collection of any rents delinquent for
the Property for any period prior to the Closing, unless the tenant has
vacated the premises under the Lease before the Closing and the Lease is not
assigned to Purchaser. Any rent collected by Seller relating to periods from
and after the Closing shall by promptly paid over to Purchaser by Seller.
(c) Utilities. Utilities, including water, sewer, electric, and gas,
based upon the last reading of meters at the Property prior to the Closing.
Seller and Purchaser shall endeavor to obtain meter readings and account
changeovers for the Property on the day before the Closing Date, and if such
readings and account changeovers are obtained, there shall be no proration of
such items. In such event, Seller shall pay the bills therefor for the period
to and including such Closing, and Purchaser shall pay the bills therefor for
the period subsequent thereto. If the utility company will not read meters
and issue separate bills, Purchaser will receive a credit against the Purchase
Price for Seller's portion of utility charges based on historical utility
charges for such month adjusted for current rates per Section 6.1(f). In such
event Purchaser will pay the entire bill prior to delinquency after the
subject Closing, but such amounts will be reprorated per Section 6.1(f). If
Seller has paid any utilities no more than 30 days in advance in the ordinary
course of business, then Purchaser shall be charged its portion of such
payment at the Closing. In the event Seller allows deposits to remain with
the utility companies for the benefit of Purchaser, Seller shall receive a
credit at Closing in the aggregate amount of such deposits.
(d) Fees and Charges under Service Contracts. Fees and charges under
such of the Service Contracts as are being assigned to and assumed by
Purchaser at the Closing shall be apportioned on the basis of the periods to
which such Service Contracts relate. Seller shall pay all locator or finders
fees with respect to tenants who have moved in prior to Closing. Purchaser
shall pay, or reimburse to Seller, all such fees with respect to tenants
moving in after Closing, but only to the extent that any such fees are due
under Service Contracts delivered or made available to Purchaser during the
Review Period and are executed in accordance with Section 4.1 (c).
(e) Final Adjustment After Closing. In the event that final bills
cannot be issued for any charge prior to the Closing, then Purchaser and
Seller agree to allocate such items on a fair and equitable basis as soon as
such bills are available, final adjustment to be made as soon as reasonably
possible after the Closing. Payments in connection with the final adjustment
shall be due within 10 days of written notice. The parties' obligations to
re-prorate the items prorated at Closing shall survive the Closing of the
transactions contemplated hereby.
6.2 Tenant Deposits. All tenant security deposits (and interest
thereon if required by law or contract to be earned thereon) with respect to
the Property that have not been previously applied in accordance with the
terms of the leases shall, at Purchaser's election, be transferred or credited
to Purchaser at the Closing. In accordance with the terms of Article 11
hereof, Seller shall indemnify and hold Purchaser harmless from and against
any loss, cost, liability or expense incurred by Purchaser by reason of any
security deposit paid by any tenant under any Lease (and interest thereon, if
required by law or contract to be earned thereon) collected by Seller and not
transferred or credited to Purchaser at the Closing. In accordance with terms
of Article 11 hereof, Purchaser shall indemnify and hold Seller harmless
against any liability or expense incurred by Seller by reason of any tenant
security deposit (and interest) to the extent transferred or credited to
Purchaser at Closing.
6.3 Sales, Transfer, and Documentary Taxes. All sales, gross
receipts, or compensating taxes, documentary taxes, transfer taxes, and
similar taxes and fees imposed upon the transfer of the Property under
applicable state, county, city or other local law shall be paid by the Seller
at Closing. The parties will execute and deliver any required transfer or
other similar tax declarations at the Closing.
6.4 Utility Deposits. The amount of deposits, if any, with utility
companies that are transferable and that are assigned by Seller to Purchaser
at Closing shall be credited to Seller.
6.5 Permit Transfer Fees. Customary fees paid or payable with respect
to permits and licenses assigned by Seller to Purchaser at the Closing, with
the consent or approval (if required) of the issuer thereof, shall be charged
to Seller.
6.6 Wages. The Seller shall pay the wages, employment taxes and
fringe benefits applicable thereto payable to employees, if any, of Seller as
of their discharge on the Closing Date.
6.7 Intentionally Deleted.
6.8 Commissions. Seller and Purchaser represent and warrant to one
another that they have not dealt with any real estate broker, sales person or
finder other than Davidson Conine in connection with this transaction. In
accordance with Article 11 hereof, Seller agrees to pay any and all amounts
due to Davidson Conine and indemnify, defend and hold harmless Purchaser and
its affiliates from and against any loss, cost, liability or expense suffered
or incurred by any such party as a result of a claim or claims for brokerage
commissions, finder's fees or other similar fees from Davidson Conine or any
other party or firm that is based on the act or omission of Seller in breach
of the above warranty. Purchaser agrees to indemnify, defend and hold
harmless Seller from and against any loss, cost, liability or expenses
suffered or incurred by any such party as a result of a claim or claims for
brokerage commissions, finder's fees or other similar fees from any party or
firm that is based on the act or omission of Purchaser in breach of the above
warranty.
6.9 Transaction Expenses. Upon the Closing of this transaction, the
parties will share expenses incurred at or in connection with the Closing (the
"Closing Costs") as follows: Seller will pay for the charges and premiums for
the Title Commitment, Title Policy, UCC Searches, Surveys, recording fees, any
transfer taxes, and one-half of any escrow fees; provided, however, that
Seller's costs with respect to the Title Policy shall not include any
amendment to the "areas and boundaries" exception, which shall be paid by
Purchaser. Purchaser will pay for all lender's title insurance premiums and
endorsements and all other matters relating to Purchaser's financing
(including recording fees for security documents), and one-half of any escrow
fees. Each party will pay its own attorneys' fees in connection with this
transaction. Otherwise, Closing Costs will be borne as is customary for like
transactions in the metropolitan Austin, Texas area.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES
7.1 Seller's Representations and Warranties. As a material inducement
to Purchaser to execute this Agreement and consummate the transactions
contemplated hereunder, Seller represents and warrants to Purchaser that:
(a) Organization and Authority. Seller has been duly organized and is
validly existing and in good standing under the laws of its jurisdiction of
organization and, if different, is qualified to do business and in good
standing in the state in which the Property is located. Seller has the full
right and authority and has obtained any and all consents required therefor to
enter into and perform this Agreement. The persons signing this Agreement on
behalf of Seller are authorized to do so. This Agreement and all of the
documents to be delivered by Seller at the Closing have or will have been duly
authorized and properly executed and do and will constitute the valid and
binding obligations of Seller.
(b) Conflicts. The execution of and performance under this Agreement
does not and will not conflict with the terms of any of Seller's constituent
documents. There is no agreement to which Seller is a party or, to Seller's
knowledge, which is binding on Seller which is in conflict with the execution
of or performance under this Agreement or with the obligations imposed upon or
rights granted to Seller hereunder.
(c) Contractors and Suppliers. All contractors, subcontractors,
suppliers, architects, engineers and others who have performed services or
labor or supplied material in connection with Seller's ownership or management
of the Property have been paid in full and all liens arising therefrom (or
claims which with the passage of time or notice or both could mature into
liens) have been satisfied and released, except for bills or work not more
than thirty (30) days old incurred for routine maintenance in the ordinary
course of business for which a proration adjustment will be made.
(d) Pending Actions. There is no litigation, action or proceeding
pending or, to Seller's knowledge, threatened (with respect to material items)
against or pertaining to the Property or any incident thereon, or which
challenges or impairs Seller's ability to execute, deliver or perform under
this Agreement except as set forth on Exhibit D.
(e) Rent Roll. Except as described in the Rent Rolls for the Real
Property, there are no Leases otherwise affecting the Real Property, and no
person, other than tenants under the Leases and subject to the Permitted
Exceptions, has any right of possession of all or any portion of the Real
Property. Except as otherwise specifically and expressly set forth in the
Rent Roll for the Real Property: no presently outstanding rent concessions
have been given to any tenants; no rent has been paid in advance by any
tenants respecting a period subsequent to the Closing (except for the month in
which the Closing occurs); no tenants have any claim against Seller for any
security deposit or other deposits or interest thereon, other than pursuant to
the terms of its Lease with respect to sums specified as security deposits in
the Rent Roll for such Property; no tenants have any options or rights of
first refusal to purchase or to extend or renew their Leases or rent
additional space; and, other than with respect to locator or finders fees due
under Service Contracts delivered or made available to Purchaser during the
Review Period, and payments under which are governed by Section 6.1(d) above,
there are no leasing or other commissions due, nor will any become due, in
connection with any Lease, any renewal or extension of any Lease for which
Seller is not responsible. To Seller's knowledge, no tenants have asserted
nor are there any defenses or offsets to rent accruing after the Closing with
respect to any Lease of the Property. To Seller's knowledge, except as
specifically set forth in the Rent Roll for the Property, no default or breach
exists on the part of any tenant. Seller has not received any notice of any
material default or material breach on the part of the landlord under any
Lease, nor, to the best of Seller's knowledge, does there exist any such
material default or material breach on the part of the landlord. No
understanding or agreement with any party exists as to payment of any leasing
commissions or fees regarding future leases or as to procuring of tenants for
the Property.
(f) Service Contracts. There are no management, service, supply,
equipment, rental or similar agreements affecting the Property, other than the
Service Contracts. The list and copies of Service Contracts provided to
Purchaser are true, correct and complete. No portion of the Property is
leased by Seller as tenant except as set forth on Exhibit E. Neither Seller
nor, to Seller's knowledge, any other party is in default with respect to any
of its material obligations or liabilities pertaining to the Service
Contracts.
(g) Operating Statements. The Operating Statements for the Property
show all items of income and expense (operating and capital) incurred in
connection with the Seller's ownership, operation and management of the
Property for the periods indicated and are true, correct and complete in all
material respects.
(h) Notice of Violations. Seller has not received any written notice
and Seller has no knowledge that the Property or the use thereof violates or
is a non-conforming use with respect to any Codes in any material respect that
have not been resolved to the satisfaction of the issuer of the notice. With
respect to this Section 7.1(h), Purchaser acknowledges that the Property's
compliance or non-compliance with the Americans With Disabilities Act (the
"ADA") is excluded from Seller's knowledge representation set forth in this
Section.
(i) Codes and Restrictions. Except for ADA compliance, to Seller's
knowledge, the Property and its current use and operation comply with all
Codes currently applicable or scheduled to become applicable to the Property,
and with all restrictions, covenants or similar agreements affecting the
Property. Except for items included in the Permitted Exceptions, Seller has
not entered into or has no knowledge of any agreement with any governmental
official, agency or body or with any other person or entity with respect to
any modification, variance or exception regarding such Codes, or any
restrictions, covenants or agreements applicable to the Property.
(j) Utilities. To Seller's knowledge, all water, sewer, gas,
electric, telephone, drainage facilities and all other utilities required for
the operation of the Property as an apartment complex (collectively "offsite
utilities") are installed to the boundaries of the Property, are connected
with valid permits and fully paid tap-in or recapture fees, to Seller's
knowledge are in proper working order, and to Seller's knowledge are adequate
to serve the Property as presently constituted. To Seller's knowledge, all
licenses, permits, easements and rights-of-way required from all governmental
authorities having jurisdiction over the Property or from private parties to
make use of the offsite utilities in connection with the operation of the
Property are in existence and in full force and effect.
(k) Real Estate Taxes and Assessments. To Seller's knowledge and
except as disclosed in the Operating Statements there are not presently
pending any material assessments, or material governmental or quasi-
governmental (i.e., a body or entity deriving its authority from legislative
or governmental enactments) fees or charges of any nature with respect to the
Property or any part thereof, nor has Seller received any notice of any such
assessments, fees or charges which would be applicable to the Property being
contemplated.
(l) Fair Housing Act. There are no pending or, to Seller's knowledge,
threatened actions in connection with the Fair Housing Act (42 U.S.C. Section
3601 et seq., as amended) against Seller or its property management company
with respect to the Property.
(m) Hazardous Materials. To the best of Seller's knowledge, without
independent investigation, (1) there are no underground storage tanks
currently located on the Property and (2) no prior owner of the Property or
any other party has used the Property or placed under, on, or above the
Property, any Hazardous Materials other than those customarily used in the
management and operation of residential apartment complexes and that have not
been used, stored or disposed of in violation of any Environmental Laws.
Seller has not placed (or, to Seller's knowledge, caused or permitted to be
placed) any Hazardous Materials under, on, or above the Property other than
those customarily used in the management and operation of residential
apartment complexes and that have not been used, stored or disposed of in
violation of any Environmental Laws. Seller has no knowledge of any claimed
or actual noncompliance or violation of Environmental Laws related to the
Property, except in each case as disclosed in the environmental reports listed
on Exhibit F which have been delivered to Purchaser within the Review Period
provided for in Section 2.1. The term "Environmental Laws" shall include,
without limitation, the Clean Air Act, 42 U.S.C. Section 7401 et. seq.; the
Clean Water Act, 33 U.S.C. Section 1251 et. seq., and the Water Quality Act of
1987; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7
U.S.C. Section 136 et. seq.; the Marine Protection, Research, and Sanctuaries
Act, 33 U.S.C. Section 1401 et. seq.; the National Environmental Policy Act, 42
U.S.C, Section 4321 et. seq.; the Noise Control Act, 42 U.S.C. Section 4901 et.
seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et. seq.;
the Resource Conservation and Recovery Act ("RCRA") 42 U.S.C. Section 6901 et.
seq., as amended by the Hazardous and Solid Waste Amendments of 1984; the Safe
Drinking Water Act, 42 U.S.C. Section 300f et. seq.; the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et. seq., as amended by the Superfund Amendments and
Reauthorization Act, and the Emergency Planning and Community Right-to-Know
Act; the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et. seq.;
and the Atomic Energy Act, 42 U.S.C. Section 2011 et. seq.,
and any and all other applicable federal, state or local statutes, laws,
ordinances, codes, rules, regulations, orders or decrees regulating, relating
to, or imposing liability or standards of conduct concerning, any hazardous,
toxic or dangerous waste, substance or material; all as amended from time to
time, together with their implementing regulations and guidelines. The term
"Hazardous Materials" shall include, without limitation, any hazardous
substance, pollutant, or contaminant regulated under CERCLA or any other
Environmental Laws; oil and petroleum products and natural gas, natural gas
liquids, liquefied natural gas, and synthetic gas usable for fuel; pesticides
regulated under FIFRA; asbestos, asbestos containing materials,
polychlorinated biphenyls, and other substances regulated under TSCA; source
material, special nuclear material, and by-product materials regulated under
the Atomic Energy Act; and industrial process and pollution control wastes to
the extent regulated under applicable Environmental Laws.
(n) No Defects in Work. To Seller's knowledge, there are no: (i)
material design, materials or workmanship defects in the Work (as defined
below) with respect to the Property and associated Improvements, (ii) material
deviation in the Work and the Improvements from the plans and specifications
delivered to Purchaser pursuant to Section 2.1 and (iii) material non-
compliance with all applicable Codes, in each case that would affect
Purchaser's ability to operate the Property in the same manner as Seller has
operated the Property. The term "Work" means the labor and materials used in
the construction of the Improvements and includes all labor, materials,
equipment and services of whatever nature required in connection therewith.
Except as otherwise disclosed by Seller to Purchaser in writing within the
applicable Review Period provided in Section 2.1, all apartment units with
respect to the Property are in rentable condition, suitable for occupancy.
(o) Withholding Obligation. The sale of the Property is not subject
to any Federal, state or local withholding obligation of Purchaser under the
tax laws applicable to Seller or any of the Property.
(p) Condemnation. No condemnation or other governmental taking
proceedings and no rezoning proceedings relating to the Property are pending
or, to Seller's knowledge, threatened.
(q) Insurer Notices. Seller has not received any notice from any
insurance company or board of fire underwriters of any defects or inadequacies
respecting the Property which would adversely affect the insurability of the
Property or cause an increase in the premiums for the Property which have not
been cured or repaired to the satisfaction of the party issuing the notice.
(r) Deliveries. To the extent prepared by Seller, its property
manager or investment advisor, all Operating Statements, Rent Rolls, Service
Contracts, Leases, books, records, schedules, exhibits, and other items
delivered or made available to Purchaser pursuant to the terms of this
Agreement are true, accurate and complete in all material respects. The
information to be furnished by Seller on which the computation of closing
prorations, adjustments and payments will be based shall, to the extent then
available, be true, correct and complete in all material respects.
(s) Condition. To the best of Seller's knowledge, except as disclosed
on Exhibit G, (i) all building systems and mechanical equipment, including,
without limitation, the plumbing, air conditioning, heating, ventilation, hot
water heaters and electrical systems, and all appliances (including, without
limitation, substantially all stoves, refrigerators, and dishwashers
associated with individual apartment units) are in serviceable and safe
operating condition, and (ii) the Improvements including the roofs and
foundations thereof are in sound structural condition, with no material leaks
or other material defects.
(t) Financial Statements. All financial statements delivered by or on
behalf of Seller to Purchaser present fairly, in all material respects, the
results of operations for the relevant periods then ended. At Purchaser's
request, Seller agrees to make available to Purchaser or Purchaser's
designated representative (at Purchaser's cost) all financial books and
records for the Property for the period from January 1, 1991 through December
31, 1994.
(u) IRPTA Inapplicability. The Property does not contain any
"facilities" which are subject to reporting under Section 312 of the Federal
Emergency Planning and Community Right-To-Know Act of 1986 and federal
regulations promulgated thereunder nor does the Property contain underground
storage tanks which require notification under Section 9002 of the Solid Waste
Solid Disposal Act, as now or hereafter amended (42 U.S.C. 6991).
(v) ERISA. Based on Purchaser's representation set forth in Section
7.2(c) hereof, none of the transactions contemplated in this Agreement
constitute a non-exempt prohibited transaction under Section 406(a) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the United States Internal Revenue Code of 1986, as amended
(the "Code").
(w) Assignment of Leases. Seller is the absolute owner of all of the
landlord's right, title and interest in and to the Leases and that such right,
title and interest is free of any lien or charge and is not subject to any
assignment, transfer, or hypothecation.
(x) Bill of Sale. Seller is the absolute owner of the property
conveyed pursuant to the Bill of Sale executed pursuant to Section 5.2(c)
hereof, that Seller has not sold, assigned, transferred or set over such
property to any other person or entity, that such property is free and clear
of all liens, charges and encumbrances, that Seller has full right, power and
authority to sell such property and to make and execute such Bill of Sale, and
that there are no taxes or other charges currently due and owing which could
give rise to a lien or charge on such property.
(y) Assignment of Intangible Property. Seller has not assigned,
transferred or hypothecated its interest in the property conveyed pursuant to
the assignment of intangible personal property delivered pursuant to Section
5.2(d) hereof, to any other person or entity, which assignment or
hypothecation shall not have been released as of the Closing Date.
(z) Assignment of Service Contracts. Seller is the absolute owner of
the respective right, title and interest in and to the Service Contracts
conveyed pursuant to the Assignment of Service Contracts delivered pursuant to
Section 5.2(i) hereof and that such right, title and interest is free of any
lien or charge (other than those charges being prorated pursuant to this
Agreement) and is not subject to any assignment, transfer or hypothecation.
As used herein, the phrase to "the best of Seller's knowledge" or to "Seller's
knowledge" or any derivation thereof, shall mean the actual knowledge, without
any independent investigation or inquiry, of any one of John Allen, Cindy
Martinez or Frederika Tschoepe.
7.2 Purchaser's Representations and Warranties. As a material
inducement to Seller to execute this Agreement and consummate this
transaction, Purchaser represents and warrants to Seller that:
(a) Organization and Authority. Purchaser has been duly organized and
is validly existing as a Delaware limited liability company, in good standing
in the State of Delaware. Purchaser at Closing will be duly organized and
validly existing and in good standing in its state of organization and in all
jurisdictions where its operations or properties so require. Purchaser shall
have the full right and authority and shall have obtained any and all consents
required to enter into and perform this Agreement. The persons signing this
Agreement on behalf of Purchaser are authorized to do so. All of the
documents to be delivered by Purchaser at the Closing will have been duly
authorized and properly executed and will constitute the valid and binding
obligations of Purchaser.
(b) Conflicts. The execution of and performance under this Agreement
does not and in the case of Purchaser will not conflict with the applicable
organizational documents of Purchaser. There is and at Closing will be no
agreement to which Purchaser is a party or, to Purchaser's knowledge, binding
on Purchaser which is and at Closing will be in conflict with the execution of
or performance under this Agreement.
pursuant to Section 10.1 hereof be, an entity deemed to hold "plan assets"
within the meaning of 29 C.F.R. Section 2510.3-101 of any employee benefit
plan subject to Title I of ERISA or Section 4975 of the Code nor are they
fiduciaries to the beneficiaries of the shareholder of Seller which
beneficiaries are identified on Exhibit I.
7.3 Survival of Representation, Warranties and Covenants. The
continued validity in all material respects of the foregoing representations
and warranties shall be a condition precedent to the obligation of the
party(ies) to whom the representation and warranty is given to close the
transactions set forth herein. In the event at any time prior to the Closing,
Seller learns or has reason to believe that any of Seller's representations
and warranties is no longer true or correct, Seller shall immediately notify
Purchaser in writing and therein shall specify the factors rendering or likely
to render such representations or warranties untrue or incorrect.
If Purchaser has actual knowledge (by Seller's notice set forth above in
this Section 7.3 or otherwise) that any of Seller's representations and
warranties shall not be true and correct in all material respects at any time
on or before the Closing Date (whether or not true and correct as of the date
of this Agreement or whether any change in facts or circumstances has made the
applicable representation and warranty no longer true and correct, and
regardless as to whether the applicable representation or warranty is
qualified to Seller's knowledge or otherwise), then Purchaser may, at
Purchaser's option exercised by written notice to Seller delivered on or
before the Closing Date, and as its sole and exclusive remedies, either
(i) proceed with this transaction, thereby accepting and waiving the
applicable representation and warranty as being modified by Seller's
notification, if any, or Purchaser's actual knowledge; or (ii) terminate this
Agreement and declare this Agreement of no further force and effect, and in
which event the Earnest Money then held by the Title Insurer shall promptly be
returned to Purchaser. Purchaser may exercise such rights for breach of
representations and warranties whether or not Seller has notified Purchaser as
provided above. For purposes of this Section 7.3, Purchaser's "actual
knowledge" shall be deemed to include that knowledge actually known to
Purchaser, its employees, agents and contractors as well as any facts
contained in the documents concerning the Property that Seller either
delivered to Purchaser or made available to Purchaser.
All representations and warranties set forth above shall be continuing
and deemed remade as of the Closing Date and shall survive the Closing,
subject to Section 10.5.
ARTICLE 8: DAMAGE OR DESTRUCTION/CONDEMNATION
8.1 Damage or Destruction. The risk of loss of or damage to the
Property by reason of any insured or uninsured casualty during the period up
to and including the Closing Date shall be borne by Seller. In the event of
any material damage to or destruction of the Property, Purchaser may, at its
option, by notice to Seller given within 10 days after Purchaser is notified
of such damage or destruction (and at Purchaser's option the Closing for the
Property shall be extended, if necessary, to give Purchaser such 10-day period
to respond to such notice) elect (i) not to purchase the Property and (ii) to
proceed under this Agreement. In the event Purchaser is proceeding under
clause (ii), Purchaser shall receive all insurance proceeds for any damage to
the Property which are due the Seller as a result of such damage or
destruction. In such event, Purchaser shall receive a credit at the Closing
for any deductible under said insurance policies, up to the cost of repairing
such damage or destruction.
If the Property is not materially damaged, then Purchaser shall not have
the right to terminate this Agreement as a result of such damage but Seller
shall at its cost repair the damage before the Closing in a manner reasonably
satisfactory to Purchaser, or if repairs cannot be completed before the
applicable Closing, credit Purchaser at such Closing, for the reasonable cost
to complete the repair.
For purposes of this Article 8 only "Material damage" and "Materially
damaged" mean damage reasonably exceeding $100,000 to repair.
8.2 Condemnation. In the event of any threatened, contemplated,
commenced or consummated proceedings in eminent domain or other governmental
taking (notice of which shall be given to Purchaser by Seller immediately) (a
"condemnation proceeding") respecting the Property, Purchaser may, at its
option, by notice to Seller given within 10 days after Purchaser is notified
of such actual or possible proceedings (and at Purchaser's option the Closing
shall be extended, if necessary, to give Purchaser such 10 day period to
respond to such notice) Purchaser may (i) elect not to purchase the Property
or (ii) to proceed under this Agreement without reduction in Purchase Price.
In the event Purchaser is proceeding under clause (ii) Seller shall at the
Closing assign to Purchaser its entire right, title and interest in and to any
condemnation award for the Property and Purchaser shall have the sole right
during the pendency of this Agreement and after the Closing for the Property
to negotiate and otherwise deal with the condemning authorities in respect of
such matters.
ARTICLE 9: REMEDIES
not close by reason of a default by Purchaser in any of the terms hereof (as
opposed to by reason of failure of any contingency to Purchaser's obligations
hereunder), then Seller may, as its sole and exclusive remedy receive all
Earnest Money deposited to the date of such default, and pursue against
Purchaser any and all rights and remedies available at law or equity to obtain
from Purchaser copies of all items to be delivered pursuant to Section 2.1(e)
above. The parties acknowledge that Seller's actual damages in the event of a
default by Purchaser under this Agreement will be difficult to ascertain, and
that Seller's receipt of the Earnest Money as liquidated damages represent the
parties' best estimate of such damages.
9.2 Seller's Default. If the transaction contemplated hereby does not
close by reason of a default by Seller in any of the terms hereof (as opposed
to by reason of failure of a contingency to any of Seller's obligations
hereunder), then Purchaser may, as its exclusive remedies: (a) pursue specific
performance, injunctive or other similar relief to enforce this Agreement, or
(b) rescind this Agreement and receive a refund of all Earnest Money deposited
to date (including all interest thereon) and in conjunction therewith pursue
against Seller any and all rights and remedies available at law or equity to
obtain from Seller (i) reimbursement for the payment of all costs and expenses
allocable to Seller under Section 6.9 of this Agreement, and (ii) if Seller's
default was due to an intentional, bad faith breach by Seller of its
obligations and covenants under Sections 4.1 (a), (c) and (g), then
reimbursement for all out-of-pocket expenses of Purchaser in connection with
this transaction, up to $35,000 (items (i) and (ii) being agreed liquidated
damages). The parties acknowledge that Purchaser's actual damages in the
event of a default by Seller will be difficult to ascertain, and that such
liquidated damages represent the parties' best estimate of such damages.
ARTICLE 10: MISCELLANEOUS
10.1 Parties Bound. Subject to Purchaser's rights below in this
Section 10.1, no party may assign this Agreement before the Closing without
the prior written consent of the other party hereto, and any such prohibited
assignment shall be void. It is understood that Purchaser may assign its
rights and obligations under this Agreement to an entity (a "Permitted
Assignee") which is owned by Purchaser or is under common ownership with
Purchaser or is an entity which Purchaser manages or controls, or for which
Purchaser is acting as investment manager, or is an entity in which Purchaser
is a general partner, in which case Seller after receiving notice thereof
shall direct all performance and conveyances to such permitted assignee and
title may be taken in the name of a nominee or a partnership in which a
Permitted Assignee is a partner. Subject to the foregoing, this Agreement and
all provisions hereof, including, without limitation, all representations and
warranties made hereunder, shall extend to, be obligatory upon and inure to
the benefit of the respective heirs, devisees, legal representatives,
successors, assigns and beneficiaries of the parties hereto. No assignment
(including an assignment by Purchaser permitted above) shall relieve the
assignor of any obligation under this Agreement whether arising before or
after such assignment. Purchaser and Seller acknowledge that all of
Purchaser's representations and warranties contained in Section 7.2 hereof
shall remain true and correct after such permitted assignment, with the
understanding that the state of organization of the permitted assignee may be
other than Delaware.
10.2 Headings. The article and section headings of this Agreement are
for convenience only and in no way limit or enlarge the scope or meaning of
the language hereof.
10.3 Invalidity. If any portion of this Agreement is held invalid or
inoperative, then so far as is reasonable and possible the remainder of this
Agreement shall be deemed valid and operative, and effect shall be given to
the intent manifested by the portion held invalid or inoperative. The failure
by either party to enforce against the other any term or provision of this
Agreement shall be deemed not to be a waiver of such party's right to enforce
against the other party the same or any other such term or provision.
10.4 Governing Law. This Agreement shall, in all respects, be
governed, construed, applied and enforced in accordance with the law of the
State of Texas.
10.5 Survival. The provisions of this Agreement that contemplate
performance after the Closing shall survive the Closing and shall not be
deemed to be merged into or waived by the instruments of such Closing;
provided, however, that except for the representations and warranties set
forth in Sections 6.8, 7.1(a) and (b) and Sections 7.2(a) and (b), which
representations and warranties shall survive forever, the representations and
warranties of Seller set forth in Section 7.1 and of Purchaser set forth in
Section 7.2 of this Agreement shall survive only for a period of one (1) year
after the Closing Date, and Purchaser shall have the right to bring an action
thereon only if Purchaser has given Seller written notice within such
applicable one (1) year period setting forth the nature and basis of its
claim.
10.6 No Third Party Beneficiary. Subject to Section 10.1 this
Agreement is not intended to give or confer any benefits, rights, privileges,
claims, actions or remedies to any person or entity as a third party
beneficiary, or otherwise.
10.7 Entirety and Amendments. This Agreement embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings relating to the Property including without limitation that
certain letter agreement between Seller and Purchaser dated January 24, 1995.
This Agreement may be amended or supplemented only by an instrument in writing
executed by the party against whom enforcement is sought.
10.8 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
all of such counterparts shall constitute one Agreement. To facilitate
execution of this Agreement, the parties may execute and exchange by telephone
facsimile counterparts of the signature pages.
10.9 Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered at the
Closing, each party agrees to perform, execute and/or deliver (or cause to be
delivered, executed and/or delivered) to the other party on or after the
Closing, any and all further acts, deeds and assurances as may be reasonably
necessary to consummate the transactions contemplated hereby and/or to further
perfect and deliver to the conveyance, transfer and assignment of the
Property. Such deliveries shall be made at no cost and with no additional
liability to the party requested to deliver such further assurances.
10.10 Time. Time is of the essence in the performance of each and every
term, condition and covenant contained in this Agreement.
10.11 Confidentiality. The parties will maintain the confidentiality of
the terms of this transaction and the contents of this Agreement and other
related documentation; provided that (a) Purchaser may disclose material terms
in discussions with prospective equityholders or lenders, (b) Purchaser may
disclose all matters which are required to be disclosed by applicable law in
any filings with the Securities and Exchange Commission, and (c) either party
may disclose matters to its accountants, attorneys and other consultants with
a need to know who are informed of this confidentiality restriction.
10.12 U.S. Currency Required. All sums of money referred to herein
shall be in currency of the United States of America.
10.13 Attorneys' Fees. Should either party employ attorneys to enforce
any of the provisions hereof, the party losing in any final judgment agrees to
pay to the prevailing party all reasonable costs, charges and expenses,
including attorneys' fees, expended or incurred in connection therewith.
10.14 Use of Pronouns. The use of the neuter singular pronoun to refer
to a party shall be deemed a proper reference, even though such party may be
an individual, partnership or a group of two or more individuals. The
necessary grammatical changes required to make the provisions of this
Agreement apply in the plural sense where there is more than one seller or
purchaser and to either partnerships or individuals (male or female) shall in
all instances be assumed as though in each case fully expressed.
10.15 Notices. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the following address:
If to Purchaser: c/o The RREEF Funds
875 N. Michigan Avenue
Suite 4114
Chicago, Illinois 60611
Attn: Charles B. Leitner
Phone: (312) 266-9300
Fax: (312) 266-9346
with a copy to: D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attention: Joel D. Rubin
Fax: (312) 580-0923
Phone: (312) 580-2000
If to Seller:Lin AM Series 85 Limited Partnership
c/o Amli Realty Co.
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
ATTN: Mr. John Allen
Fax: (312) 443-0909
Phone: (312) 443-1477
With a copy to: Smith, Stern & Friedman, P.C.
3102 Oak Lawn, Suite 610
Dallas, Texas 75219
ATTN: Clifford L. Friedman, Esq.
Fax: 214-443-0088
Phone: 214-443-0066
Any such notices shall be either (a) sent by certified mail, return
receipt requested, in which case notice shall be deemed received three
business days after deposit, postage prepaid in the U.S. Mail and deemed given
on such deposit, (b) sent by overnight delivery using a nationally recognized
overnight courier, in which case it shall be deemed received one business day
after deposit with such courier and deemed given upon such deposit, (c) sent
by telefax, in which case notice shall be deemed both given and received upon
confirmed transmission of such notice, or (d) sent by personal delivery, in
which case notice shall be deemed both given and received upon receipt or
refusal of receipt. The above addresses may be changed by written notice to
the other party; provided, however, that no notice of a change of address
shall be effective until actual receipt of such notice. Copies of notices are
for informational purposes only, and a failure to give or receive copies of
any notice shall not be deemed a failure to give notice.
10.16 Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
10.17 Calculation of Time Periods. Unless otherwise specified, in
computing any period of time described herein, the day of the act or event
after which the designed period of time begins to run is not to be included
and the last day of the period so computed is to be included, unless (except
as otherwise specified) such last day is a Saturday, Sunday or legal holiday,
in which event the period shall run until the end of the next day which is not
a Saturday, Sunday, or legal holiday. The last day of any period of time
described herein shall be deemed to end at 5 p.m. Dallas, Texas time.
10.18 Information and Audit Cooperation. Intentionally deleted.
10.19 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN OR IN ANY DOCUMENT EXECUTED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREIN, NO PERSONAL LIABILITY OR PERSONAL DEFICIENCY
JUDGMENT SHALL BE ASSERTED OR ENFORCED AGAINST ANY PARTNERS OR MEMBERS OF
PURCHASER OR, EXCEPT AS SET FORTH BELOW, THE PARTNERS OR MEMBERS OF
PURCHASER'S ASSIGNEE MADE PURSUANT TO SECTION 10.1 HEREOF, AGAINST THE
TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, PARTNERS, SHAREHOLDERS, PRINCIPALS OR
MEMBERS OF SUCH PARTNERS OR MEMBERS, OR AGAINST THE ASSETS OF ANY SUCH
PARTNERS' PARTNERS, SHAREHOLDERS, PRINCIPALS OR MEMBERS FOR PAYMENT OF ANY
AMOUNT DUE IN CONNECTION THEREWITH OR FOR OBSERVANCE OR PERFORMANCE OF ANY OF
THE OBLIGATIONS OF PURCHASER OR PURCHASER'S ASSIGNEE. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, ANY NEGATIVE CAPITAL ACCOUNT OF ANY PARTNER OR
MEMBER IN PURCHASER OR PURCHASER'S ASSIGNEE OR THE OBLIGATION OF ANY PARTNER
OR MEMBER IN PURCHASER OR PURCHASER'S ASSIGNEE TO MAKE A CAPITAL CONTRIBUTION
TO PURCHASER OR PURCHASER'S ASSIGNEE SHALL NOT BE DEEMED TO BE AN ASSET OF
PURCHASER OR PURCHASER'S ASSIGNEE. SUBJECT TO THE FOREGOING, ANY LIABILITY OR
CLAIM AGAINST PURCHASER OR PURCHASER'S ASSIGNEE SHALL ONLY BE ENFORCED, (1) IF
PURCHASER DOES NOT ASSIGN ITS RIGHTS UNDER THIS AGREEMENT, OUT OF PURCHASER'S
ASSETS ONLY AND (2) IF PURCHASER DOES ASSIGN ITS RIGHTS UNDER THIS AGREEMENT,
OUT OF PURCHASER'S ASSETS AND PURCHASER'S ASSIGNEE'S ASSETS ONLY INCLUDING THE
ASSETS OF ANY GENERAL PARTNER.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN ANY
DOCUMENT EXECUTED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN, NO
PERSONAL LIABILITY OR PERSONAL DEFICIENCY JUDGMENT SHALL BE ASSERTED OR
ENFORCED AGAINST THE TRUSTEES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
PARTNERS, SHAREHOLDERS OR PRINCIPALS OF LINCAM PROPERTIES, INC., A DELAWARE
CORPORATION OR LINCAM ASSOCIATES, LTD., AN ILLINOIS LIMITED PARTNERSHIP, THE
SOLE GENERAL PARTNERS OF SELLER, OR AGAINST THE ASSETS OF SUCH TRUSTEES,
OFFICERS, DIRECTORS, PARTNERS OR SHAREHOLDERS FOR PAYMENT OF ANY AMOUNT DUE IN
CONNECTION THEREWITH OR FOR OBSERVANCE OR PERFORMANCE OF ANY OF THE
OBLIGATIONS OF SELLER.
10.20 As Is - Where Is. Except for the specific representations and
warranties set forth in this Agreement, Seller is conveying to, and the
Purchaser is accepting, the Property in its "As Is, Where Is" condition on the
Closing Date.
ARTICLE 11: INDEMNIFICATION
11.1 Seller's Agreements. Seller agrees, in addition to any other
indemnities of such parties set forth in this Agreement, to indemnify, defend
and hold harmless Purchaser and its successors and assigns and the advisers,
affiliates, directors, officers, employees, shareholders, members and partners
of any of them (collectively, the "Purchaser Related Parties", and
individually a "Purchaser Related Party"), from and against any and all
claims, liabilities, damages, and penalties and any and all loss, cost, or
expense (including without limitation, reasonable attorneys' fees and court
costs) incurred by, or any amount due to a Purchaser Related Party incident
to, resulting from, or in any way arising out of any of the following before
or after the Closing Date:
(i) Subject to the applicable time periods set forth in
Section 10.5 hereof, any representation or warranty made by Seller
hereunder is not true and correct in all material respects when
made or is not true and correct in all material respects at the
Closing; and
(ii) Any tort claim or breach of contract claim for money
due and owing in connection with the ownership or operation of the
Property by Seller to the extent such claim arises from incidents
which occurred prior to the Closing Date and are not monetary
obligations specifically identified and credited to (and assumed
by) Purchaser at Closing.
Subject to the applicable time limitations set forth in Section 10.5,
the obligations of Seller set forth in this Section 11.1 shall survive the
Closing of the transactions contemplated hereunder and, as to the obligations
set forth in Sections 6.8 and 6.9, any termination of this Agreement.
11.2 Purchaser's Agreements. Purchaser hereby agrees, in addition to
any other indemnities of Purchaser set forth in this Agreement, to indemnify,
defend and hold harmless Seller and its respective successors, assigns,
affiliates, directors, officers, employees and partners (collectively, the
"Seller Related Parties", and individually a "Seller Related Party") from and
against any and all claims, liabilities, damages, and penalties and any and
all loss, costs, or expense (including without limitation, reasonable
attorneys' fees and court costs) incurred by, or any amount due to a Seller
Related Party incident to, resulting from, or in any way arising out of any of
the following:
(i) Any tort claim or breach of contract claim or other
claim for money due and owing in connection with the ownership or
operation of any of the Property by Purchaser to the extent that
such claim arises from incidents which occurred after the Closing
Date or from monetary obligations arising prior to the Closing but
specifically identified and credited to (and assumed by) Purchaser
at Closing include those arising after Closing; and
(ii) Subject to the time periods set forth in Section 10.5
hereof, any representation or warranty made by Purchaser hereunder
is not true and correct in all material respects when made or is
not true and correct in all material respects at the applicable
Closing.
Subject to the time limitations set forth in Section 10.5 hereof, the
obligations of Purchaser set forth in this Section 11.2 shall survive the
applicable Closings of the transactions contemplated hereunder and, as to the
obligations set forth in Sections 2.1(b), 6.8 and 6.9, any termination of this
Agreement.
11.3 Procedures for Obtaining Indemnification. Any claim for
indemnification under Section 11.1, Section 11.2 or any other applicable
provision of this Agreement shall be made in accordance with the following
provisions:
(i) Definitions. For purposes of this Section 11.3, (a)
the term "Claim" shall mean any claim, litigation, setoff, de-
fense, counterclaim or other legal action taken or asserted by any
person against the Asserting Party, (b) the term "Asserting Party"
shall mean the indemnified party against whom a Claim is asserted
and who seeks indemnification under Section 11.1, Section 11.2 or
any other applicable provision of this Agreement and (c) the term
"Defending Party" shall mean the indemnifying party or parties
from whom indemnification is sought under Section 11.1, Section
11.2 or any other applicable provision of this Agreement.
(ii) Notice of Claim; Assumption of Defense. If a Claim is
made against the Asserting Party which the Asserting Party
believes to be covered by a Defending Party's indemnification
obligations hereunder, the Asserting Party shall promptly notify
the Defending Party of the Claim and, in such notice shall offer
to the Defending Party the opportunity to assume the defense of
the Claim within ten (10) business days after receipt of the
notice (with counsel reasonably acceptable to the Asserting
Party). If the Defending Party timely elects to assume the
defense of the Claim, the Defending Party shall do so on behalf of
both the Asserting Party and the Defending Party, unless both the
Asserting Party and the Defending Party are named in the same
litigation and representation of both of them by the same counsel
would be inappropriate.
(iii) Right to Settle. If the Defending Party timely
elects to assume the defense of the Claim, the Defending Party
shall have the right to settle the Claim on any terms it considers
reasonable as long as the settlement shall not require the Assert-
ing Party to render any performance or pay any consideration with-
out the Asserting Party's prior written consent.
11.4 Right to Assume Defense. If the Defending Party fails timely to
elect to assume the defense of the Claim, or if the Defending Party timely
elects to assume the defense of the Claim but thereafter fails to defend the
Claim with diligence and continuity with counsel reasonably acceptable to the
Asserting Party, then the Asserting Party shall, after five (5) days written
notice to Defending Party, have the right to take over the defense of the
Claim and to settle the Claim on any terms the Asserting Party considers
reasonable. Any such settlement shall be valid as against the Defending
Party.
If the Defending Party assumes the defense of a Claim, the Asserting
Party may employ its own counsel but such employment shall be at the sole
expense of the Asserting Party. If the Defending Party assumes the defense of
a Claim but the same counsel may not appropriately represent both the Assert-
ing Party and the Defending Party, or if the Defending Party fails timely to
assume the defense of the Claim or, after having elected to assume the defense
fails to defend the Claim with diligence and continuity with counsel
reasonably acceptable to the Asserting Party, the Asserting Party may, after
five (5) days written notice to Defending Party, employ its own counsel and
such employment shall be at the sole expense of the Defending Party.
Whether or not the Defending Party elects to assume the defense of a
Claim, the Defending Party shall cooperate with the Asserting Party in the
defense of the Claim.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
PURCHASER
RREEF AMERICA L.L.C., a Delaware limited
liability company
By:________________________________
Name:______________________________
Title:_____________________________
SELLER
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
AGREEMENT OF PURCHASE AND SALE
FOR
BARTON CREEK LANDING APARTMENTS
EXHIBITS
A - Legal Description of Real Property
B - Surveyor's Certificate
C - Form Closing Documents
C-1 Form Deed
C-2 Form Assignment of Lease
C-3 Form Bill of Sale
C-4 Form Assignment of Intangible Personal Property
C-5 Form Certificate of Representation and Warranty
C-6 Form Assignment and Assumption of Contract
C-7 Form Tenant Notice Letter
D - Litigation
E - Leased Property
F - Environmental Matters
G - Other Physical Matters
EXHIBIT A
LEGAL DESCRIPTION OF THE REAL PROPERTY
EXHIBIT B
SURVEYOR'S CERTIFICATE
I hereby certify to _________________________________,
________________________________, and ______________________ that on the
________ day of ______________, 1995, this survey was made on the ground per
the field notes and is true, correct, and accurate as to the boundaries and
areas of the subject property and the size, location, and type of buildings
and improvements thereon, and as to the other matters shown thereon, that the
area or quantity of the subject property as set forth in this survey is
accurate to the nearest one ten thousandth (1/10,000) of an acre, and that
this survey correctly shows (a) the location of all easements, rights-of-way,
improvements, signs, fences, drainage ditches, impoundments, pits, railroads,
streams, building setback lines, party walls, and encroachments visible on the
ground, or of record as contained within a title report prepared by
________________________________________ Title Insurance Company, on
______________, 19__, Commitment No. _______________, or of which I have
knowledge or have been advised, whether or not of record, affecting the
subject property and the location of all above-ground evidence of utility
lines serving the subject property and, except as shown, there exist on the
subject property no such above-ground evidence of easements, rights-of-way,
improvements, signs, fences, drainage ditches, impoundments, pits, railroads,
streams, building setback lines, party walls, and encroachments, and (b) the
location of all above-ground evidence of utility lines serving the subject
property, and (c) the location and number of all parking spaces, if any,
including the location and number of all parking spaces designated for
handicap use, and (d) the distance of improvements on the subject property at
ground surface level to the nearest facing exterior property line of the
subject property, and to any applicable setback lines and to other buildings
on the subject property, and (e) all curb cuts and means of ingress to and
egress from the subject property and the measured distance between such curb
cuts, and (f) the width(s) of the street(s) on which the subject property
abuts and the applicable right-of-way lines for said street(s).
Encroachments, as used herein, include encroachments or protrusions onto
the subject property by above-ground improvements on adjacent property,
rights-of-way or easements and encroachments or protrusions onto adjacent
property, rights-of-way, easements or building setbacks by any above-ground
improvements on the subject property and any conflicts or overlaps of the
metes and bounds calls of the subject property and those of adjacent property,
easements, or rights-of-way.
The subject property has restricted ingress and egress to and from
________________________________________________________ and
__________________________________________________ which is paved, public
right-of-way and is maintained by the ________ County Department of
Transportation, _________ County, _________.
No part of the subject property lies within a 100-year flood plain or in
an identified "flood hazard," as defined by the United States Department of
Housing and Urban Development, pursuant to the Flood Disaster Act of 1973, as
amended.
This Survey substantially complies with the current Texas Society of
Professional Surveyors Standards and Specifications for a Category 1A,
Condition II survey and the standards for an ALTA-ASCM Urban survey.
DATED: _______________________
___________________________________
Registered Public Surveyor
Surveyor Number ___________________
EXHIBIT C-1
SPECIAL WARRANTY DEED
THE STATE OF TEXAS }
} KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF TRAVIS }
THAT, LINCAM PROPERTIES LTD. SERIES 85, an Illinois limited partnership
(hereinafter referred to as "Grantor"), for and in consideration of the sum of
Ten and No/100 Dollars ($10.00) and other valuable consideration to the
undersigned paid by a
(hereinafter referred to as "Grantee"),
the receipt and sufficiency of which consideration is hereby acknowledged, has
GRANTED, SOLD AND CONVEYED, and by these presents does GRANT, SELL AND CONVEY
unto Grantee, all of the following described property in Travis County, Texas,
to wit:
that certain parcel of real property described on Exhibit "A"
attached hereto and made a part hereof for all purposes, together
with all improvements thereon and all rights and appurtenances
pertaining thereto and all of the easements, rights-of-way,
privileges, liberties, hereditaments, strips and gores, streets,
alleys, passages, ways, waters, water courses, thereto belonging
or appertaining, and all of the estate, right, title, interest,
claims or demands whatsoever of Grantors therein and the streets
and ways adjacent thereto, either in law or in equity; subject,
however, to those matters set forth on Exhibit "B" attached hereto
and made a part hereof.
TO HAVE AND TO HOLD the above described premises, together with all and
singular the rights and appurtenances thereto in anywise belonging unto the
said Grantee, its successors, legal representatives and assigns forever, and
Grantor does hereby bind itself, and its successors and assigns to WARRANT AND
FOREVER DEFEND all and singular the said premises unto the said Grantee, its
successors, legal representatives and assigns, against every person whomsoever
lawfully claiming or to claim the same or any part thereof, by, through or
under Grantor, but not otherwise.
EXECUTED this day of , 1995.
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
[ACKNOWLEDGEMENTS]
Mailing Address of Grantee:
_____________________________
_____________________________
_____________________________
EXHIBIT C-2
ASSIGNMENT AND ASSUMPTION OF LEASES
STATE OF _______ }
} KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF _______ }
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Assignor"), hereby assigns, transfers, sets over and
conveys to _________________________________, a ________ limited partnership
("Assignee"), all of Assignor's right, title and interest in and to the leases
("Leases"), including any and all security deposits made by tenants pursuant
to said Leases, in effect at the real property described on Exhibit A attached
hereto, including without limitation, those described in the rent roll
attached hereto as Exhibit B.
Assignor shall defend, indemnify and hold harmless Assignee from any
liability, damages, causes of action, expenses, and attorneys' fees incurred
by Assignee by reason of the failure of Assignor to fulfill, perform,
discharge, and observe its obligations with respect to any of the Leases
arising prior to the date hereof. Assignee shall defend, indemnify and hold
harmless Assignor from any liability, damages, causes of action, expenses, and
attorneys' fees incurred by Assignor by reason of the failure of Assignee to
fulfill, perform, discharge, and observe its obligations with respect to any
of the Leases arising from and after the date hereof.
The provisions of Section 10.19 of that certain Agreement of Purchase
and Sale, dated as of February , 1995, by and between Assignor and
Assignee's predecessor in interest, RREEF America L.L.C., are incorporated
herein by reference as if fully set forth herein and are applicable to the
parties' obligations hereunder.
IN WITNESS WHEREOF, this Assignment and Assumption of Leases has been
duly executed and delivered as of this ______ day of _____________, 1995.
ASSIGNOR:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
[ACKNOWLEDGEMENTS]
EXHIBIT C-3
BILL OF SALE
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Seller"), sells, assigns, transfers and sets over to
_________________________________, a _________ limited partnership
("Purchaser"), the following described personal property:
All equipment, machinery, furniture, furnishings, supplies and other
tangible personal property, of every nature and description, and all
replacements thereof, owned by Seller now or hereafter located in or on
the real estate commonly known as "Barton Creek Landing Apartments",
which real estate is described on Exhibit A attached hereto and made a
part hereof, excepting therefrom any furniture, furnishings articles of
personal property belonging to tenants occupying the improvements
situated on said real estate.
The property hereby assigned includes, without limitation, the property
described on Exhibit B attached hereto and made a part hereof.
IN WITNESS WHEREOF, Seller has duly executed and delivered this Bill of
Sale as of this _____ day of ______________________, 1995.
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
[ACKNOWLEDGMENTS]
EXHIBIT C-4
ASSIGNMENT OF INTANGIBLE PROPERTY
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Assignor"), sells, assigns, transfers, and sets over
unto _________________________________, a ________ limited partnership
("Assignee"), all the right, title and interest of Assignor in and to any and
all of the intangible personal property related to or used in connection with
the real property described on Exhibit A attached hereto (the "Property"),
including without limitation, all trade names and trademarks associated with
such Property including Assignors' right and interest, if and to the extent
Assignor has such rights and interests, in the name of the Property, which is
commonly known as "Barton Creek Landing Apartments," the plans and
specifications, and other architectural and engineering drawings for the
Property, if and to the extent Assignor has any right, title or interest in
and to such plans and specifications and other architectural and engineering
drawings for the Property, contract rights related to the construction,
operation, ownership or management of the Property (but excluding Assignor's
obligations thereunder except those expressly assumed in writing), warranties,
zoning approvals, building permits and licenses (to the extent assignable),
tenant lists, correspondence with tenants and records (including, but not
limited to, those relating to taxes, insurance, maintenance, repairs, capital
improvements and services), booklets, manuals, advertising, and promotional
materials, including, without limitation, photographs and negatives,
correspondence with suppliers and telephone exchange numbers (if available).
The provisions of Section 10.19 of that certain Agreement of Purchase
and Sale, dated as of February , 1995, by and between Assignor and
Assignee's predecessor in interest, RREEF America L.L.C., are incorporated
herein by reference as if fully set forth herein and are applicable to the
parties' obligations hereunder.
IN WITNESS WHEREOF, Assignor and Assignee have duly executed and
delivered this Assignment of Intangible Personal Property as of this _____ day
of _______________, 1995.
ASSIGNOR:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
[ACKNOWLEDGEMENTS]
EXHIBIT C-5
CERTIFICATE UPDATING REPRESENTATIONS AND WARRANTIES
LINCAM PROPERTIES LTD. SERIES 85, an Illinois limited partnership
("Seller") certifies to _________________________________, a ________ limited
partnership ("Purchaser"), that the representations and warranties set forth
in Article Seven of that certain Agreement of Purchase and Sale ("Agreement")
dated as of __________________, 1995 between Seller and RREEF America L.L.C.
conveying the sale of certain real property in the State of Texas more
particularly described in the Agreement, and the updated Rent Roll, updated
list of Service Contracts and updated Operating Statement, attached hereto as
Exhibits A, B and C, respectively, are and remain, true, complete and correct
and are reaffirmed as of this date and survive the Closing (as defined in the
Agreement) for the period described therein.
The Seller makes this certification for Purchaser's benefit with the
understanding that Purchaser is relying upon this certificate in connection
with its purchase of the above-described property.
Duly executed and delivered as of this ______ day of __________, 1995.
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
EXHIBIT C-6
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS
STATE OF _______ }
} KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF _______ }
FOR VALUE RECEIVED, LINCAM PROPERTIES LTD. SERIES 85, an Illinois
limited partnership ("Assignor"), hereby assigns, transfers, sets over and
conveys to _________________________________, a ________ limited partnership
("Assignee"), all of Assignor's right, title and interest in and to the
service contracts and other agreements ("Service Contracts"), in effect at the
real property described on Exhibit A and listed on Exhibit B attached hereto.
Assignor shall defend, indemnify and hold harmless Assignee from any
liability, damages, causes of action, expenses, and attorneys' fees incurred
by Assignee by reason of the failure of Assignor to fulfill, perform,
discharge, and observe its obligations with respect to any of the Service
Contracts arising prior to the date hereof. Assignee shall defend, indemnify
and hold harmless Assignor from any liability, damages, causes of action,
expenses, and attorneys' fees incurred by Assignor by reason of the failure of
Assignee to fulfill, perform, discharge, and observe its obligations with
respect to any of the Service Contracts arising from and after the date
hereof.
The provisions of Section 10.19 of that certain Agreement of Purchase
and Sale, dated as of February , 1995, by and between Assignor and
Assignee's predecessor in interest, RREEF America L.L.C., are incorporated
herein by reference as if fully set forth herein and are applicable to the
parties' obligations hereunder.
IN WITNESS WHEREOF, this Assignment and Assumption of Service Contracts
has been duly executed and delivered as of this ______ day of _____________,
1995.
ASSIGNOR:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
ASSIGNEE:
EXHIBIT C-7
, 1995
Apartment No.
Barton Creek Landing
Re: Notice of Change of Ownership of Barton Creek Landing
Apartments, Austin, Texas (the "Property")
Dear Resident:
For the purposes of complying with Section 92.105 of the Property Code
of the Revised Civil Statutes of the State of Texas, you are hereby notified
as follows:
1. That as of the date hereof,LincAm Properties Ltd. Series 85, an
Illinois limited partnership, has transferred, sold, assigned, and conveyed
the Property to (the "New
Owner").
2. The New Owner is, as of the date hereof, responsible for your
tenant security deposit and/or pet deposit in the aggregate amount of $
with respect to your leased premises at the Property.
3. Future rental payments with respect to your leased premises at the
Property should be made to the New Owner by delivering to the on-site manager
of the Property a check or money order payable to the order of
.
Yours very truly,
NEW OWNER:
By:
Title:
TRANSFER ACKNOWLEDGED:
LINCAM PROPERTIES LTD. SERIES 85
BY: LINCAM PROPERTIES, INC., a Delaware
corporation, general partner
By:
Name:
Title:
BY: LINCAM ASSOCIATES, LTD., an Illinois
limited partnership, general partner
By:
Name:
Title:
EXHIBIT D
LITIGATION
[To be provided during the Reveiw Period]
EXHIBIT E
LEASED PROPERTY
[To be provided during the Reveiw Period]
EXHIBIT F
ENVIRONMENTAL MATTERS
[To be provided during the Reveiw Period]
EXHIBIT G
OTHER PHYSICAL MATTERS
[To be provided during the Reveiw Period]
